UNIVERSITY OF THE PHILIPPINES

COLLEGE OF LAW
Bar Operations 2008

LABOR LAW I

Bar Operations Head Arianne Reyes

Academics Head Henry Aguda

Ryan Balisacan

Subject Head Dielle Kapunan

Rowena Salonga
LABOR LAW I LABOR STANDARDS

TABLE OF CONTENTS

Section Topic Page no.

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

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

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

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LABOR LAW I
A workers employment is property in the constitutional sense. He
cannot be deprived of his work without due process of law.
Maneja v. NLRC (98)
Due process requirements are two-fold: substantive and the
procedural.
Substantive - dismissal must be for a valid or authorized cause as
provided by law (Articles 279, 281, 282-284, New Labor Code
Procedural - notice and hearing
Salaw v. NLRC (91)
Notice - intended to inform the employee concerned of the
employer's intent to dismiss and the reason for the proposed
dismissal
Hearing - affords the employee an opportunity to answer his
employer's charges against him and accordingly to defend himself
therefrom before dismissal is effected
Century Textile Mills, Inc. v. NLRC (89)
LIBERT OF CONTRACT and
STATE INTERFERENCE
The prohibition to impair the obligation of contracts is not absolute
and unqualified. In spite of the constitutional prohibition and the
fact that both parties are of full age and competent to contract, it
does not necessarily deprive the State of the power to interfere
1. where the parties do not stand upon an equality, or
2. where the public health demands that one party to the
contract shall be protected against himself.
The State still retains an interest in his welfare, however reckless he
may be. Legislation appropriate to safeguarding said interests may
modify or abrogate contracts already in effect. For not only are
existing laws read into contracts in order to fix the obligations as
between the parties, but the reservation of essential attributes of
sovereign power is also read into contracts as a postulate of the
legal order. Leyte Land Transportation Co. v Leyte Farmers &
Workers Union (48)
WELFARE STATE
welfare state concept found in:
1. constitutional clause on the promotion of social justice to
ensure the well-being and economic security of all the people,
2. the pledge of protection to labor with specific authority to
regulate the relations between landowners and tenants and
between labor and capital
Alalayan v. National Power Corporation (68)
LAISSEZ-FAIRE
Constitution is primarily a document of social justice, and although
it has recognized the importance of the private sector, it has not
embraced fully the concept of laissez faire or relied on pure market
forces to govern the economy Employees Confederation of the
Philippines v. NWPC (91)
PARTICIPATION IN DECISION MAKING PROCESS
While such "obligation" [to participate in decision-making] was
not yet founded in law when the Code was formulated [which,
before the amendment, merely said to promote the enlightenment
of workers concerning their rights and obligations as ees], the
attainment of a harmonious labor-management relationship and
the then already existing state policy of enlightening workers
concerning their rights as employees demand no less than the
observance of transparency in managerial moves affecting
employees' rights. Philippine Airlines, Inc. v. NLRC (93)
Certainly, such participation by the Union in the said
committees is not in the nature of a co-management control of the
business of MERALCO. What is granted by the Secretary is
participation and representation. Thus, there is no impairment of
management prerogatives. Manila Electric Co. v. Quisumbing (99)
LABOR AND THE CIVIL CODE
ROLE OF LAW
LABOR CONTRACTS
Art. 1700, CC The relations between capital and labor are not
merely contractual. They are so impressed with public interest that
labor contracts must yield to the common good. Therefore, such
contracts are subject to special laws
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LABOR STANDARDS
PAL Employees Savings and Loan Assn., Inc. v. NLRC (96)
Generally speaking, contracts are respected as the law
between the contracting parties, and they may establish such
stipulations, clauses, terms and conditions as they may see fit; and
for as long as such agreements are not contrary to law, morals,
good customs, public policy or public order, they shall have the
force of law between them. And under the Civil Code, contracts of
labor are explicitly subject to the police power of the State because
they are not ordinary contracts but are impressed with public
interest. Inasmuch as in this particular instance the contract in
question would have been deemed in violation of pertinent labor
laws, the provisions of said laws would prevail over the terms of the
contract, and private respondent would still be entitled to overtime
pay.
EMPLOYER-EMPLOYEE STANDARD OF CONDUCT
Art. 1701 Neither capital nor labor shall act oppressively against
the other, or impair the interest or convenience of the public.
1. Fair Treatment
the right of an employer to dismiss an employee differs from and
should not be confused with the manner in which such right is
exercised. It must not be oppressive and abusive since it affects
one's person and property. General Bank and Trust Co., v. Court of
Appeals (85)
2. Mutual Obligation
The employer's obligation to give him workers just compensation
and treatment carries with it the corollary right to expect from the
workers adequate work, diligence and good conduct. Firestone Tire
and Rubber Co. v. Lariosa (87)
3. Law Compliance
It is also important to emphasize that the return-to-work order 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 the
worker's will. Sarmiento v. Tuico (88)
4. EE Obedience and Compliance to ERs Orders
The lack of a written or formal designation should not be an excuse
to disclaim any responsibility for any damage suffered by the
employer due to his negligence. The measure of the responsibility
of an employee is that if he performed his assigned task efficiently
and according to the usual standards, then he may not be held
personally liable for any damage arising therefrom. Failing in this,
the employee must suffer the consequences of his negligence if not
lack of due care in the performance of his duties. PCIB v. Jacinto
(91)
To sanction disregard or disobedience by employees of a rule or
order laid down by management, on the pleaded theory that the
rule or order is unreasonable, illegal, or otherwise irregular for one
reason or another, would be disastrous to the discipline and order
that it is in the interest of both employer and his employees to
preserve and maintain in the working establishment and without
which no meaningful operation and progress is possible. Deliberate
disregard or disobedience of rules, defiance of management
authority cannot be countenanced. This is not to say that the
employees have no remedy against rules or orders they regard as
unjust or illegal. They may object thereto, ask to negotiate thereon,
bring proceedings for redress against the employer before the
Ministry of Labor. But until and unless the rules or orders are
declared to be illegal or improper by competent authority, the
employees ignore or disobey them at their peril GTE Directories
Corp. v. Sanchez (91)
5. ERs Obligation
An employer can terminate the services of an employee only for
valid and just causes which must be supported by clear and
convincing evidence. The employer has the burden of proving that
the dismissal was indeed for a valid and just cause. Failure to do so
results in a finding that the dismissal was unjustified. Maneja v.
NLRC (98)
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LABOR LAW I
LABOR AND INTERNATIONAL COVENANTS
Universal Declaration of Human Rights Arts. 3, 7, 17, 22, 23,24, 25
International Covenant on Economic, Social and Cultural Rights
Part III, Arts. 6, 7, 9, 11
International Covenant on Civil and Political Rights Part II, Art. 8
Conventions and Recommendations if the International Labor
Organization (ILO)
INTERNATIONAL CONVENTIONS
International law, which springs from general principles of law,
likewise proscribes discrimination. General principles of law include
principles of equity, i.e., the general principles of fairness and
justice, based on the test of what is reasonable. Numerous treaties
embody the general principle against discrimination, the very
antithesis of fairness and justice. The Philippines, through its
Constitution, has incorporated this principle as part of its national
laws. International School Alliance of Educators v. Quisumbing
(2000)
PART II
THE LABOR CODE OF THE PHILIPPINES
POLICY DECLARATION reiterates Article XIII Sec 3 of the
Constitution
APPLICABILITY
Art 6 - All rights and benefits granted to workers apply alike to all
workers, whether agricultural or non-agricultural.
Art 276 - Government employees - The terms and conditions of
employment of all government employees shall be governed by
the Civil Service Law, rules and regulations. Their salaries shall be
standardized by the National Assembly as provided for in the new
constitution. However, there shall be no reduction of existing
wages, benefits and other terms and conditions of employment
being enjoyed by them at the time of the adoption of this Code.
ART IX, Sec 2 (1), 1987 Constituion - The civil service embraces all
branches, of the Government, including government-owned or
controlled corporations with original charters.
The rule is that only government-owned or controlled corporations
with original charters come under the Civil Service. Since NASECO is
organized under the Corporation Law and not by virtue of a special
legislative charter, its relations with its personnel are governed by
the Labor Code and come under the jurisdiction of the NLRC
Cabrera v. NLRC (91)
APPLICATION OF THE LABOR CODE
Applicability Art. 6
Not of universal application. only applies to:
All workers agricultural and non-agricultural
GOCCs organized under general laws e.g. Corporation Code
All branches of government, and GOCCs, profit or non profit
organizations ONLY with regard to wages 97 (b)
all private and government employees ONLY with regard to
Employees Compensation and State Insurance Fund(167 f)
NOT APPLICABLE TO
Government employees should be Civil Service Law and EO 180
GOCC with original charter Art. 9 B, Sec. 2(1) of the
Constitution
International Agencies and specialized agencies or UN treaty or
international conventions
grant of immunity from suit ex. IRRI, ICMC
by specific treaty grant of immunity, but such treaty
must include provisions for resolution of disputes
if injustice is created due to exemption from suit,
REMEDY: ask Phil Govt to withdraw the grant of
immunity from suit.
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LABOR STANDARDS
International Agencies
In order to assure independence, they are immune from suit, thus,
Phil. Laws do not apply to them. ..The grant of immunity is by
virtue of the Convention on the Privileges and Immunities of
Specialized Agencies of the U.N., which has become part of the law
of the land under the Constitution. Ebro III v. NLRC (96)
SCHOOL TEACHERS
On the issue of whether the individual petitioners were permanent
employees, it is the Manual of Regulations for Private Schools, and
not the Labor Code, which is applicable. National Mines and Allied
Workers Union v NLRC (98)
On issues where the manual expressly provides for the rules, such
as probationary employment, the labor code does not apply.
On issues where the manual is silent, such as termination of school
teachers, the labor code applies.
RELIGIOUS CORPORATIONS
The labor code does not cover ecclesiastical affairs, defined as one
which involves the relationship between the church and its
members and relate to matters of faith, religious doctrines, worship
and governance of the congregation.
However, the Labor Code is comprehensive enough to include
religious corporations on its secular affairs, as provided by Article
278 of the Labor Code which states that the provisions of this Title
shall apply to all establishments or undertakings, whether for profit
or not. Obviously, the cited article does not make any exception in
favor of a religious corporation. Austria v. NLRC (99)
RULE MAKING POWER
Article 5 gives the Secretary of Labor general grant of authority; the
tail end of Labor Code gives him the right to promulgate working
conditions.
Art. 5. Rules and regulations. The Department of Labor and other
government agencies charged with the administration and
enforcement of this Code or any of its parts shall promulgate the
necessary implementing rules and regulations. Such rules and
regulations shall become effective fifteen (15) days after
announcement of their adoption in newspapers of general
circulation.
LIMITATION
1. must be issued under authority of law
2. must not be contrary to law and the Consitution (in other
words, must not amend the Labor Code, Constitution or
other laws in promulgating such rules and regulations)
illustration of #1
SONZA argues that Policy Instruction No. 40 issued by then Minister
of Labor Blas Ople on 8 January 1979 finally settled the status of
workers in the broadcast industry. Under this policy, the types of
employees in the broadcast industry are the station and program
employees. Policy Instruction No. 40 is a mere executive issuance
which does not have the force and effect of law. A mere executive
issuance cannot exclude independent contractors from the class of
service providers to the broadcast industry. Such classification is
not binding on this Court, especially when the classification has no
basis either in law or in fact. Sonza v ABS-CBN Broadcasting Corp.
(04)
Illustration of #2
"it must be pointed out that the Secretary of Labor has exceeded
his authority when he included paragraph (k) in Section 1 of the
Rules Implementing P.D. 1123. "By virtue of such rule-making
authority, the Secretary of Labor issued on May 1, 1977 a set of
rules which exempts not only distressed employers but also 'those
who have granted in addition to the allowance under P.D. 525, at
least P60.00 monthly wage increase on or after January 1, 1977,
provided that those who paid less than this amount shall pay the
difference.' "Clearly, the inclusion of paragraph k contravenes the
statutory authority granted to the Secretary of Labor, and the same
is therefore void, as ruled by this Court in a long line of cases, . . ."
Kapisanan ng mga Manggagawang Pinagyakap v. NLRC (87)
LAW INTERPRETATION
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LABOR LAW I
Doubts in (implementation and interpretation of the Code)
construction resolved in favor of labor Art. 4, Labor Code
In case of doubt, all labor legislation and all labor contracts shall be
construed in favor of the safety and decent living for the laborer.
Art. 170, Civil Code
Liberal Construction
The interpretation herein made gives meaning and substance to the
liberal and compassionate spirit of the law enunciated in Article 4 of
the Labor Code
Salinas v NLRC (99)
Exception: (estoppel)
The policy being questioned is not a policy against marriage. An
employee of the company remains free to marry anyone of his or
her choosing. However, an employees personal decision does not
detract the employer from exercising management prerogatives to
ensure maximum profit and business success.
the assailed company policy which forms part of respondents
Employee Code of Conduct and of its contracts with its employees,
such as that signed by Tescon, was made known to him prior to his
employment. Tecson, therefore, was aware of that restriction when
he signed his employment contract and when he entered into a
relationship with Bettsy. Since Tecson knowingly and voluntarily
entered into a contract of employment with Glaxo, the stipulations
therein have the force of law between them and, thus, should be
complied with in good faith."29 He is therefore estopped from
questioning said policy. Duncan Association v Glaxo Wellcome (04)
Rationale in favor of labor
Art. 4 of the Labor Code provides that all doubts in the
implementation and interpretation of its provisions, including its
implementing rules and regulations, shall be resolved in favor of
labor. For the working mans welfare should be the primordial and
paramount consideration. Asian Transmission Corporation v CA
(04)
Doubt
as a rule, doubts should be resolved in favor of the claimant-
employee. Clemente v. GSIS (87)
APPLICATION OF THE LABOR CODE
Applicability Art. 6
Not of universal application. only applies to:
All workers agricultural and non-agricultural
GOCCs organized under general laws e.g.
Corporation Code
All branches of government, and GOCCs, profit or
non profit organizations ONLY with regard to
wages 97 (b)
all private and government employees ONLY with
regard to Employees Compensation and State
Insurance Fund(167 f)
NOT APPLICABLE TO
Government employees should be Civil Service
Law and EO 180
GOCC with original charter Art. 9 B, Sec. 2(1)
of the Constitution
International Agencies and specialized agencies or
UN treaty or international conventions
grant of immunity from suit ex. IRRI, ICMC
by specific treaty grant of immunity, but such
treaty must include provisions for resolution of
disputes
if injustice is created due to exemption from suit,
REMEDY: ask Phil Govt to withdraw the grant of
immunity from suit.
No Doubt
While we do not dispute petitioner's contention that under the law,
in case of doubt in the implementation and interpretation of the
provisions of the Labor Code, including its implementing rules and
regulations, the doubt shall be resolved in favor of the laborer, we
find that the same has no application in this case since the pertinent
provisions of the Labor Code leave no room for doubt either in their
interpretation or application. Bonifacio v. GSIS (86)
Sweeping Interpretation
we cannot adopt a sweeping interpretation of the law in favor of
100% UP LAW UP BAROPS 2008
LABOR STANDARDS
labor lest we engage in judicial legislation. Bravo v. ECC (86)
Factual Considerations and Rationality
But that care and solicitude (for protection of laborers rights)
cannot justify disregard of relevant facts or eschewal of rationality
in the construction of the text of applicable rules in order to arrive
at a disposition in favor of an employee. PAL v NLRC (91)
Equity and Moral Consideration
The rule embodied in the Labor Code is that a person dismissed for
cause as defined therein is not entitled to separation pay. The cited
cases constitute the exception, based on equity. Equity has been
defined as justice outside law, being ethical rather than jural and
belonging to the sphere of morals than of law. It is grounded on the
precepts of conscience and not on any sanction of positive law.
Hence, it cannot prevail against the express provision of the labor
laws allowing dismissal of employees for cause and without any
provision for separation pay. Manning International Corp. v. NLRC
(91)
Fairness
As a general rule, the sympathy of the Court is on the side of the
laboring classes, because of the one-sided relation between labor
and capital. The Court must take care, however, that in the contest
between labor and capital, the results achieved are fair and in
conformity with the rules. Reliance Surety and Insurance Co. Inc v
NLRC (91)
Balancing Conflicting Claims
No less than the Constitution recognizes the right of enterprises to
adopt and enforce such a policy to protect its right to reasonable
returns on investments and to expansion and growth. Indeed,
while our laws endeavor to give life to the constitutional policy on
social justice and the protection of labor, it does not mean that
every labor dispute will be decided in favor of the workers. The law
also recognizes that management has rights which are also entitled
to respect and enforcement in the interest of fair play. Duncan
Association v Glaxo Wellcome (04)
THE LABOR CODE OF THE PHILIPPINES
POLICY DECLARATION reiterates Article XIII Sec 3 of the
Constitution
APPLICABILITY
Art 6 - All rights and benefits granted to workers apply alike to all
workers, whether agricultural or non-agricultural.
Art 276 - Government employees - The terms and conditions of
employment of all government employees shall be governed by
the Civil Service Law, rules and regulations. Their salaries shall be
standardized by the National Assembly as provided for in the new
constitution. However, there shall be no reduction of existing
wages, benefits and other terms and conditions of employment
being enjoyed by them at the time of the adoption of this Code.
ART IX, Sec 2 (1), 1987 Constituion - The civil service embraces all
branches, of the Government, including government-owned or
controlled corporations with original charters.
The rule is that only government-owned or controlled corporations
with original charters come under the Civil Service. Since NASECO is
organized under the Corporation Law and not by virtue of a special
legislative charter, its relations with its personnel are governed by
the Labor Code and come under the jurisdiction of the NLRC
Cabrera v. NLRC (91)
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LABOR LAW I LABOR STANDARDS

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

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

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LABOR LAW I
these matters constitute substantial evidence adequate to support
a conclusion that petitioner was indeed an employee of private
respondent. Domasig v NLRC (96)
7. ABSENCE
Applying the aforementioned test, an employer-employee
relationship is notably absent in this case. It is undisputed that
petitioner Abante was a commission salesman who received 3%
commission of his gross sales. Yet no quota was imposed on him by
the respondent; such that a dismal performance or even a dead
result will not result in any sanction or provide a ground for
dismissal. He was not required to report to the office at any time or
submit any periodic written report on his sales performance and
activities. Although he had the whole of Mindanao as his base of
operation, he was not designated by respondent to conduct his
sales activities at any particular or specific place. Respondent
company did not prescribe the manner of selling the merchandise;
he was left alone to adopt any style or strategy to entice his
customers. While it is true that he occasionally reported to the
Manila office to attend conferences on marketing strategies, it was
intended not to control the manner and means to be used in
reaching the desired end, but to serve as a guide and to upgrade his
skills for a more efficient marketing performance. We reiterate the
rule that there could be no employer-employee relationship where
the element of control is absent. Where a person who works for
another does so more or less at his own pleasure and is not subject
to definite hours or conditions of work, and in turn is compensated
according to the result of his efforts and not the amount thereof, no
relationship of employer-employee exists. Abante v Lamadrid (04)
8. DENIAL
Denying the existence of an employer-employee relationship,
petitioner insists that the parties agreement was for a contract of
lease of services. We disagree. Petitioner is barred to negate the
existence of an employer-employee relationship. In its petition filed
before this Court, petitioner invoked our rulings on the right of an
employer to dismiss an employee for just cause. Petitioner
maintained that private respondent was justifiably dismissed due to
abandonment of work. By adopting said rulings, petitioner
impliedly admitted that it was in fact the employer of private
respondent. According to the control test, the power to dismiss an
employee is one of the indications of an employer-employee
relationship. Petitioners claim that private respondent was legally
dismissed for abandonment was in fact a negative pregnant: an
acknowledgement that there was no mutual termination of the
alleged contract of lease and that private respondent was its
employee. The fact that petitioner paid private respondent on
commission basis did not rule out the presence of an employee-
employer relationship. Article 97(f) of the Labor Code clearly
provides that an employees wages can be in the form of
commissions. R transport v Ejanedra (04)
INDEPENDENT CONTRACTOR AND LABOR
CONTRACTOR ONLY
A. INDEPENDENT CONTRACTOR
Contractor or sub-contractor - Whenever an employer enters into a
contract with another person for the performance of the former's
work, the employees of the contractor and of the latter's sub-
contractor, if any, shall be paid in accordance with the provisions of
this Code.
In the event that the contractor or sub-contractor fails to pay the
wages of his employees in accordance with this Code, the employer
shall be jointly and severally liable with his contractor or sub-
contractor to such employees to the extent of the work performed
under the contract, in the same manner and extent that he is liable
to employees directly employed by him.
The Secretary of Labor and Employment may, by appropriate
regulations, restrict or prohibit the contracting out of labor to
protect the rights of workers established under this Code. In so
prohibiting or restricting, he may make appropriate distinctions
between labor-only contracting as well as differentiations within
these types of contracting, and determine who among the parties
100% UP LAW UP BAROPS 2008
LABOR STANDARDS
involved shall be considered the employer for purposes of this
Code, to prevent any violation or circumvention of any provision of
this Code.
There is "labor-only" contracting where the person supplying
workers to an employer does not have substantial capital or
investment in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited and placed by
such person are performing activities which are directly related to
the principal business of such employer. In such cases, the person
or intermediary shall be considered merely as an agent of the
employer who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him.
(Art 106)
Indirect employer - The provisions of the immediately preceding
Article shall likewise apply to any person, partnership, association
or corporation which, not being an employer, contracts with an
independent contractor for the performance of any work, task, job
or project. (Art 107)
Solidary liability - The provisions of existing laws to the contrary
notwithstanding, every employer or indirect employer shall be held
responsible with his contractor or subcontractor for any violation of
any provision of this Code. For purposes of determining the extent
of their civil liability under this Chapter, they shall be considered as
direct employers. (art 109)
MANAGEMENT FUNCTION
Additionally, We recognize that contracting out is not unlimited;
rather, it is a prerogative that management enjoys subject to well-
defined legal limitations. As we have previously held, the company
can determine in its best business judgment whether it should
contract out the performance of some of its work for as long as the
employer is motivated by good faith, and the contracting out must
not have been resorted to circumvent the law or must not have
been the result of malicious or arbitrary action. The Labor Code and
its implementing rules also contain specific rules governing
contracting out (Department or Labor Order No. 10, May 30, 1997,
Sections 1-25). Manila Electric Co. v. Quisumbing (99)
REQUIREMENTS INDEPENDENT CONTRACTOR
Labor-only contracting as defined in Section 5, Department Order
No. 18-02, Rules Implementing Articles 106-109 of the Labor Code
refers to an arrangement where the contractor or subcontractor
merely recruits, supplies or places workers to perform job, work or
service for a principal, and any of the following elements is present:
(i) The contractor or subcontractor does not have substantial
capital or investment which relates to the job, work or service to be
performed and the employees recruited, supplied or placed by such
contractor or subcontractor are performing activities which are
directly related to the main business of the principal; or
(ii) The contractor does not exercise the right to control over the
performance of the work of the contractual employee. Manila
Water Co. v Pena (04)
Desirable Unnecessary
We perceive at the outset the disposition of the NLRC that
janitorial services are necessary and desirable to the trade or
business of petitioner Coca-Cola. But this is inconsistent with our
pronouncement in Kimberly Independent Labor Union v. Drilon
where the Court took judicial notice of the practice adopted in
several government and private institutions and industries of hiring
janitorial services on an independent contractor basis. In this
respect, although janitorial services may be considered directly
related to the principal business of an employer, as with every
business, we deemed them unnecessary in the conduct of the
employers principal business. Coca-Cola Bottlers Phil., Inc. v. NLRC
(99)
Employer Employee
In legitimate job contracting, no employer-employee relation
exists between the principal and the job contractor's employees.
Page 8 of 56
LABOR LAW I LABOR STANDARDS

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

INDEPENDENT CONTRACTING CASUAL EMPLOYMENT

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

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LABOR LAW I
- For the employer to know whether employee
is qualified
- For the employee to demonstrate to the
employer his skills
2. Restrictive
Parties may agree for a longer period if company policy
requires or the nature of work requires
Direct rationale connection: unduly long unfair to the worker
Nothing prohibits the employer to abbreviate or shorten the
period
If agreed to extend for the benefit of worker Ex gratia
No obligation to pay the unfinished portion
COVERAGE
applies to all establishments or undertakings whether for profit or
not. (Art 278 LC)
EMPLOYEE CLASSIFICATION
1. Regular
2. EE has been engaged to perform activities which are
usually necessary and desirable in the usual business or
trade of the ER (Art. 280)
3. A casual employee who has rendered at least 1 year of
service, whether continuous or broken, with respect to
the activity in which he is employed and his employment
shall continue while such activity exists (Art. 280)
4. A probationary employee who is allowed to work after
the probationary period (Art. 281)
5. All learners who has been allowed or suffered to work
during the first 2 months shall be deemed regular
employees if training is terminated by the ER before the
end of the stipulated period through no fault of the
learner. [Art. 75 (d)]
6. Casual
7. If not covered by the preceding paragraph (280 LC)
8. Project
9. Employment has been fixed for a specific project or
undertaking the completion or termination of which has
been determined at the time of engagement of the EE
(280 LC)
10. Seasonal
11. The work or services to be performed is seasonal in
nature and the employment is for the duration of the
season. (280 LC)
12. Probationary
13. Employment shall not exceed 6 months from the date the
EE started working unless covered by apprenticeship
agreement stipulating a longer period (281 LC)
RECOGNITION AND TYPES
Article 280 of the Labor Code comprehends three kinds of
employees: (a) regular employees or those whose work is necessary
or desirable to the usual business of the employer; (b) project
employees or those 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
employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of the
season; and, (c) casual employees or those who are neither regular
nor project employees.
A regular employee is one who is engaged to perform activities
which are necessary and desirable in the usual business or trade of
the employer as against those which are undertaken for a specific
project or are seasonal. There are two separate instances whereby
it can be determined that an employment is regular: (1) if the
particular activity performed by the employee is necessary or
desirable in the usual business or trade of the employer; and, (2) if
the employee has been performing the job for at least a year.
In the case of St. Theresas School of Novaliches Foundation vs.
NLRC,[43] we held that Article 280 of the Labor Code does not
proscribe or prohibit an employment contract with a fixed period.
There is thus nothing essentially contradictory between a definite
period of employment and the nature of the employees duties.
In the leading case of Brent School Inc. v. Zamora,[44] we laid
down the guideline before a contract of employment may be held
as valid, to wit:
100% UP LAW UP BAROPS 2008
LABOR STANDARDS
[S]tipulations in employment contracts providing for term
employment or fixed period employment are valid when the period
were agreed upon knowingly and voluntarily by the parties without
force, duress or improper pressure, being brought to bear upon the
employee and absent any other circumstances vitiating his consent,
or where it satisfactorily appears that the employer and employee
dealt with each other on more or less equal terms with no moral
dominance whatever being exercised by the former over the latter.
Pangilingan v General Milling Corp (04)
EMPLOYER DETERMINATION
It is of no moment that petitioner was told when he was hired that
his employment would only be casual, that he was paid through
cash vouchers, and that he did not comply with regular
employment procedure. Precisely, the law overrides such
conditions which are prejudicial to the interest of the worker whose
weak bargaining position needs the support of the State. What
determines whether a certain employment is regular or casual is
not the will and word of the employer, to which the desperate
worker often accedes, much less the procedure of hiring the
employee 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 v. NLRC
(89)
Article 280 reinforces the Constitutional mandate to protect
the interest of labor as it sets the legal framework for ascertaining
ones nature of employment, and distinguishing different kinds of
employees. Its language manifests the intent to safeguard the
tenurial interest of worker who may be denied the enjoyment of
rights and benefits due to an employee, regardless of the nature of
his employment, XXX
XXX Thus, the nature of ones employment does not depend
on the will or word of the employer. Nor on the procedure of hiring
and the manner of designating the employee, but on the nature of
the activities to be performed by the employee, considering the
employers nature of business and the duration and scope of the
work to be done. San Miguel Corporation v. NLRC (98)
A. REGULAR EMPLOYEES
TYPE
A regular employee is one who is engaged to perform activities
which are necessary and desirable in the usual business or trade of
the employer as against those which are undertaken for a specific
project or are seasonal. There are two separate instances whereby
it can be determined that an employment is regular: (1) if the
particular activity performed by the employee is necessary or
desirable in the usual business or trade of the employer; and, (2) if
the employee has been performing the job for at least a year.
Pangilingan v General Milling Corp (04)
NATURE OF WORK
REGULAR WORKERS EVEN IN THE FOLLOWING INSTANCES:
While it may be true that some phases of petitioner company's
processing operations is dependent on the supply of fruits for
a particular season, the other equally important aspects of its
business, such as manufacturing and marketing are not
seasonal. The fact is that large-scale food processing
companies such as petitioner company continue to operate
and do business throughout the year even if the availability of
fruits and vegetables is seasonal. Phil. Fruit and Vegetable
Industries, Inc. v. NLRC (99)
That petitioner employees are "pakyao" or piece workers does
not imply that they are not regular employees entitled to
reinstatement. With more reason, the work of processed food
repackers is necessary in the day-to-day operation[s] of
respondent Empire Food Products. Labor Congress of the Phil.
v. NLRC (98)
The primary standard of determining regular employment is the
reasonable connection between the particular activity performed
by the employee in relation to the usual business or trade of the
employer. The connection can be determined by considering the
nature of the work performed and its relation to the scheme of the
Page 10 of 56
LABOR LAW I
particular business or trade in its entirety. Likewise, the repeated
and continuing need for the performance of the job has been
deemed sufficient evidence of the necessity, if not indispensability
of the activity to the business Some of the petitioners had rendered
more than two decades of service to the MWSS. The continuous
and repeated rehiring of these bill collectors indicate the necessity
and desirability of their services, as well as the importance of the
role of bill collectors in the MWSS. Lopez v MWSS (05)
HIRING PERIOD EXTENDED
We have held that where the employment of project employees is
extended long after the supposed project has been finished, the
employees are removed from the scope of project employees and
considered regular employees. Audio Electric Co., Inc. v. NLRC (99)
CONTRACT TO CONTRACT (REPEATED RENEWAL OF CONTRACT)
The petitioner cannot rightfully say that since the private
respondent's employment hinged from contract to contract, it was
ergo, "temporary", depending on the term of each agreement.
Under the Labor Code, an employment may only be said to be
"temporary" "where [it] has been fixed for a specific undertaking
the completion of or termination of which has been determined at
the time of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the employment
is for the duration of the season." Quite to the contrary, the private
respondent's work, that of "typist-clerk" is far from being "specific"
or "seasonal", but rather, one, according to the Code, "where the
employee has been engaged to perform activities which are usually
necessary or desirable in the usual business." And under the Code,
where one performs such activities, he is a regular employee, "[t]he
provisions of written agreement to the contrary notwithstanding . .
. probationary period for three months before he can quality as a
It is true that in Biboso v. Victorias Milling Company, Inc., we
recognized the validity of contractual stipulations as to the duration
of employment, we can not apply it here because clearly, the
contract-to-contract arrangement given to the private respondent
was but an artifice to prevent her from acquiring security of tenure
and to frustrate constitutional decrees. Beta Electric Corp. v. NLRC
(90)
LENGTH OF TIME
Not controlling, merely serves as a badge of regular employment
Maraguinot v. NLRC (98)
B. PROJECT EMPLOYEES whose employment has been fixed for a
specific project or undertaking the completion or termination of
which has been determined at the time of engagement of the
employee [Art. 280 (1)]
DEFINED
The principal test for determining whether particular employees are
properly characterized as "project employees," as distinguished
from "regular employees," is whether or not the "project
employees" were assigned to carry out a "specific project or
undertaking," the duration (and scope) of which were specified at
the time the employees were engaged for that project. As defined,
project employees are those workers hired (1) for a specific project
or undertaking, and (2) the completion or termination of such
project or undertaking has been determined at the time of
engagement of the employee.
Project employees - employed in connection with a particular
project. Non-project or regular employees - employed without
reference to any particular project. Kiamco v. NLRC (99)
PROJECT EMPLOYEES
Private respondents, as well as the other 30 workers, were
needed as additional hands for the renovation work and not
for ordinary upkeep and maintenance. The erection of the fire
escape and other small jobs after the renovation cannot be
deemed maintenance but more of casual work. Phil. Jai-Alai
and Amusement Corp. v. Clave (83)
private respondents were project employees whose work was
coterminous with the project for which they were hired.
Sandoval Shipyards, Inc. v. NLRC (85)
A project employee is one whose employment has been fixed
for a specific project or undertaking, the completion or
100% UP LAW UP BAROPS 2008
LABOR STANDARDS
termination of which has been determined at the time of the
engagement of the employee or where the work or service to
be performed is seasonal in nature and the employment is for
the duration of the season. In the instant case, petitioner was
engaged to perform data encoding and keypunching, and her
employment was fixed for a specific project or undertaking the
completion or termination of which had been determined at
the time of her engagement, as may be observed from the
series of employment contracts between petitioner and
private respondent, all of which contained a designation of the
specific job contract and a specific period of employment.
Imbuido v NLRC (00)
RATIONALE
The rationale of this rule is that if a project has already been
completed, it would be unjust to require the employer to maintain
them in the payroll while they are doing absolutely nothing except
waiting until another project is begun, if at all. In effect, these
stand-by workers would be enjoying the status of privileged
retainers, collecting payment for work not done, to be disbursed by
the employer from profits not earned. This is not fair by any
standard and can only lead to a coddling of labor at the expense of
management. De Ocampo v. NLRC (90)
EMPLOYER OBLIGATION
The law is clear to the effect that in all cases involving employees
engaged on probationary' basis, the employer shall make known to
the employee at the time he is hired, the standards by which he will
qualify as a regular employee. Nowhere in the employment
contract executed between petitioner company and respondent
Grulla is there a stipulation that the latter shall undergo a
regular employee. There is also no evidence on record showing that
the respondent Grulla had been apprised of his probationary status
and the requirements which he should comply in order to be a
regular employee. In the absence of these requisites, there is
justification in concluding that respondent Grulla was a regular
employee at the time he was dismissed by petitioner, and as such
cannot be done without just and authorized cause. A. M. Oreta and
Co., Inc. v. NLRC (89)
SPECIFIED PERIOD
The Court has upheld the legality of fixed-term employment. It
ruled that the decisive determinant in term employment should not
be the activities that the employee is called upon to perform but
the day certain agreed upon by the parties for the commencement
and termination of their employment relationship. But, this Court
went on to say that where from the circumstances it is apparent
that the periods have been imposed to preclude acquisition of
tenurial security by the employee, they should be struck down or
disregarded as contrary to public policy and morals. Purefoods
Corp. V. NLRC (87)
WORKPOOL EMPLOYEES
A project EE or a member of a work pool may acquire the status of a
regular employee when the following concur:
1. There is a continuous rehiring of project
employees even after cessation of a project; and
2. The tasks performed by the alleged project
employee are vital, necessary, and indispensable
to the usual business or trade of the employer.
However, the length of time during which the EE was
continuously rehired is not controlling, but merely serves as a badge
of regular employment.
A work pool may exist although the workers in the pool do not
receive salaries and are free to seek other employment during
temporary breaks in the business, provided, that the worker shall
be available when called to report for a project. Although primarily
applicable to regular seasonal workers, this set-up can likewise be
applied to project workers insofar as the effect of temporary
cessation of work is concerned. This is beneficial to both the
employer and employee for it prevents the unjust situation of
coddling labor at the expense of capital and at the same time
enables the workers to attain the status of regular employees.
Maraguinot v. NLRC (98)
Members of a work pool from which a construction company draws
its project employees, if considered employees of the construction
Page 11 of 56
LABOR LAW I
company while in the work pool, are non-project employees, or
employees for an indefinite period. If they are employed in a
particular project, the completion of the project or any phase
thereof will not mean severance of the employer-employee
relationship. Aguilar Corp. v. NLRC (97)
LENGTH OF SERVICE
The above-quoted provisions make it clear that a project employee
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 employee or
where the work or services to be performed is seasonal in nature
and the employment is for the duration of the season. In D.M.
Consunji, Inc. v. NLRC, this Court has ruled that the length of
service of a project employee is not the controlling test of
employment tenure but whether or not the 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 employee.
In the present case, the contracts of employment of Puente attest
to the fact that he was hired for specific projects. His employment
was coterminous with the completion of the projects for which he
had been hired. Those contracts expressly provided that his tenure
of employment depended on the duration of any phase of the
project or on the completion of the construction projects.
Furthermore, petitioners regularly submitted to the labor
department reports of the termination of services of project
workers Such compliance with the reportorial requirement confirms
that respondent was a project employee. Filipinas Pre-Fabricated
Building Systems v Puente (05)
C. CASUAL EMPLOYEES
An employment shall be deemed casual if it is not covered by the
preceding paragraph: Provided, that, any employee who has
rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment
shall continue while such activity exists. (Art. 281, 2nd paragraph)
NATURE OF WORK
What determines regularity or casualness is not the employment
contract, written or otherwise, but the nature of the job. If the job
is usually necessary or desirable to the main business of the
employer, then employment is regular. AM Oreta & Co., Inc v. NLRC
(89)
ONE YEAR SERVICE
The fact that the petitioners have been hired on a "temporary or
seasonal" basis merely is no argument either. As we held in
Philippine Bank of Communications v. NLRC, a temporary or casual
employee, under Article 218 of the Labor Code, becomes regular
after service of one year, unless he has been contracted for a
specific project. And we cannot say that merchandising is a specific
project for the obvious reason that it is an activity related to the
day-to-day operations of California.
The records show that the petitioners had been given an initial six-
month contract, renewed for another six months. Accordingly,
under Article 281 of the Code, they had become regular employees
of California and had acquired a secure tenure. Hence, they
cannot be separated without due process of law. Tabas v.
California Manufacturing Co. Inc. (89)
CONTRACT FIXED PERIOD
TESTS VALIDITY
Article 280 of the Labor Code does not proscribe or prohibit an
employment contract with a fixed period provided
the same is entered into by the parties, without any force, duress or
improper pressure being brought to bear upon the employee and
absent any other circumstance vitiating consent. It does not
necessarily follow that where the duties of the employee consist of
activities usually necessary or desirable in the usual business of the
employer, the parties are forbidden from agreeing on a period of
time for the performance of such activities. There is thus nothing
essentially contradictory between a definite period of employment
and the nature of the employee's duties.
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LABOR STANDARDS
It goes without saying that contracts or employment govern the
relationship of the parties. In this case, private respondent's
contract provided for a fixed term of nine (9) months, from June 1,
1991 to March 31, 1992. Such stipulation, not being contrary to
law, morals, good customs, public order and public policy, is valid,
binding and must be respected. St. Theresas School v. NLRC (98)
However, the Court upholds the principle that where from the
circumstances it is apparent that periods have been imposed to
preclude acquisition of tenurial security by the employee, they
should be disregarded for being contrary to public policy. Servidad
v. NLRC (99)
SEASONAL EMPLOYEES
For respondents to be excluded from those classified as regular
employees, it is not enough that they perform work or services that
are seasonal in nature. They must have been employed only for the
duration of one season. While the records sufficiently show that the
respondents work in the hacienda was seasonal in nature, there
was, however, no proof that they were hired for the duration of one
season only. In fact, the payrolls, submitted in evidence by the
petitioners, show that they availed the services of the respondents
since 1991. Absent any proof to the contrary, the general rule of
regular employment should, therefore, stand. It bears stressing that
the employer has the burden of proving the lawfulness of his
employees dismissal.
The disparity in facts between the Mercado case and the instant
case is best exemplified by the fact that the former decision ruled
on the status of employment of farm laborers, who, as found by the
labor arbiter, work only for a definite period for a farm worker,
after which they offer their services to other farm owners,
considering the area in question being comparatively small,
comprising of seventeen and a half (171/2) hectares of land, such
that the planting of rice and sugar cane thereon could not possibly
entail a whole year operation. In Mercado, although respondent
constantly availed herself of the petitioners services from year to
year, it was clear from the facts therein that they were not in her
regular employ. Petitioners therein performed different phases of
agricultural work in a given year. However, during that period, they
were free to work for other farm owners, and in fact they did. In
other words, they worked for respondent, but were nevertheless
free to contract their services with other farm owners. Hacienda
Bino v Cuenca (05)
C. PROBATIONARY EMPLOYEES
Probationary employments hall not exceed six months from the
date the employee started working, unless it is covered by an
apprenticeship agreement stipulating a longer period. The services
of an employee who has been engaged on a probationary basis may
be terminated for a just cause or when he fails to qualify as a
regular employee in accordance with reasonable standards made
known by the employer to the employee at the time of his
engagement. An employee who is allowed to work after a
probationary period shall be considered a regular employee. Art.
281
There is a probationary employment where the employee upon his
engagement, is made to undergo a trial period during which the
employer determines his fitness to qualify for regular employment,
based on reasonable standards made known to him at the time of
engagement. Art. 61, 2nd Sentence, Book VI, Rule 1, Sec. 6,
Omnibus Rules
DEFINITION
A probationary employee is one who is on trial by an employer
during which the employer determines whether or not he is
qualified for permanent employment. International Catholic
Migration Commission v. NLRC (89)
PURPOSE
We find merit in the contention of the petitioner that "private
respondent had not been hired as manager of any firm before his
employment with petitioner. The highest previous position he
attained was that of Finance Officer. His position with petitioner's
Iloilo Branch was his first as Manager. Moreover, Warner, Barnes &
Co., private respondent's previous employer, and petitioner are
engaged in different kinds of business. Managing petitioner's Iloilo
Branch was an entirely new experience for private respondent. It
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LABOR LAW I
was, therefore, necessary for private respondent to undergo a
period of probation to test his qualifications, skill and experience."
Indeed, the employer has the right or is at liberty to choose as to
who will be hired and who will be declined. It is within the exercise
of this right to select his employees that the employer may set or fix
a probationary period within which the latter may test and observe
the conduct of the former before hiring him permanently. "The
right of a laborer to sell his labor to such persons as he may choose
is, in its essence, the same as the right of an employer to purchase
labor from any person whom it chooses. The employer and the
employee have thus an equality of right guaranteed by the
Constitution. 'If the employer can compel the employee to work
against the latter's will, this is servitude. If the employee can
compel the employer to give him work against the employer's will,
this is oppression.'" Grand Motors Corp. v. MOLE (84)
EMPLOYER RIGHT SET PERIOD/OBLIGATION
Indeed, an employer, in the exercise of its management
prerogative, may hire an employee on a probationary basis in order
to determine his fitness to perform work Mitsubishi Motors Corp v
Chrysler (04)
DURATION/EXCEPTION
Central to the matter at hand is Article 281 of the Labor Code which
provides that:
ART. 281. PROBATIONARY EMPLOYMENT. Probationary
employment shall not exceed six (6) months from the date the
employee started working, unless it is covered by an apprenticeship
agreement stipulating a longer period. The services of an employee
who has been engaged on a probationary basis may be terminated
for a just cause or when he fails to qualify as a regular employee in
accordance with reasonable standards made known by the
employer to the employee at the time of his engagement. An
employee who is allowed to work after a probationary period shall
be considered a regular employee. XXX
The first issue we must resolve is whether petitioner was
allowed to work beyond his probationary period and was therefore
already a regular employee at the time of his alleged dismissal. We
rule in the negative.
Petitioner claims that under the terms of his contract, his
probationary employment was only for five months as indicated by
the remark "Please be informed that after five months, your
performance shall be evaluated and any adjustment in salary shall
depend on your work performance." The argument lacks merit. As
correctly held by the labor arbiter, the appointment contract also
stated in another part thereof that petitioners employment status
was "probationary (6 mos.)." The five-month period referred to the
evaluation of his work. Alcira v NLRC (04)
Generally, the probationary period of employment is limited to
six (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 work to be performed by the employee.
In the latter case, there is recognition of the exercise of managerial
prerogatives in requiring a longer period of probationary
employment, such as in the present case where the probationary
period was set for eighteen (18) months, i.e. from May, 1980 to
October, 1981 inclusive, especially where the employee must learn
a particular kind of work such as selling, or when the job requires
certain qualifications, skills, experience or training. Busier v.
Leogardo (84)
Honasan was certainly under observation during her three-week
on-the-job training. If her services proved unsatisfactory then, she
could have been dropped as early as during that period. But she
was not. On the contrary, her services were continued, presumably
because they were acceptable, although she was formally placed
this time on probation.
Even if it be supposed that the probation did not end with the
three-week period of on-the-job training, there is still no reason
why that period should not be included in the stipulated six-month
period of probation. Honasan was accepted for on-the-job training
on April 15, 1991. Assuming that her probation could be extended
beyond that date, it nevertheless could continue only up to October
15, 1991, after the end of six months from the earlier date. Under
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LABOR STANDARDS
this more lenient approach, she had become a regular employee of
Holiday Inn and acquired full security of tenure as of October 15,
1991. Holiday Inn Manila v. NLRC (93)
The contract signed by petitioners is akin to a probationary
employment, during which the bank determined the employees'
fitness for the job. When the bank renewed the contract after the
lapse of the six-month probationary period, the employees thereby
became regular employees. No employer is allowed to determine
indefinitely the fitness of its employees. Bernardo v. NLRC (99)
CRITERIA REGULARIZATION
In all cases of probationary employment, the employer shall make
known to the employee the standards under which he will qualify as
a regular employee at the time of his engagement. Where no
standards are made known to the employee at that time, he shall
be deemed a regular employee.
Conversely, an employer is deemed to substantially comply
with the rule on notification of standards if he apprises the
employee that he will be subjected to a performance evaluation on
a particular date after his hiring. We agree with the labor arbiter
when he ruled that:
In the instant case, petitioner cannot successfully say that he
was never informed by private respondent of the standards that he
must satisfy in order to be converted into regular status. This rans
(sic) counter to the agreement between the parties that after five
months of service the petitioners performance would be evaluated.
It is only but natural that the evaluation should be made vis--vis
the performance standards for the job. Private respondent Trifona
Mamaradlo speaks of such standard in her affidavit referring to the
fact that petitioner did not perform well in his assigned work and
his attitude was below par compared to the companys standard
required of him. Alcira v NLRC (04)
EXTENSION CONTRACT
It is an elementary rule in the law on labor relations that a
probationary employee who is engaged to work beyond the
probationary period of 6 months, as provided under Art. 281 Labor
Code, as amended, or for any length of time set forth by the
employer, shall be considered as a regular employee. Phil.
Federation, etc. v. NLRC (98)
ABSORBED EMPLOYEES
We agree with the Regional Director that private respondents could
not be considered probationary employees because they were
already well-trained in their respective functions. This conclusion is
further bolstered by the factual findings of the Labor Minister that
said order of the Director was supported by substantial evidence. As
stressed by the Solicitor General, while private respondents were
still with the CCAS they were already clerks. Respondent Gelig had
been a clerk for CCAS for more than ten (10) years, while
respondent Quijano had slightly less than ten (10) years of service.
They were, therefore, not novices in their jobs but experienced
workers. Cebu Stevedoring Co. Inc v. Regional Director (88)
DOUBLE PROBATION
There is no basis for subjecting an employee to a new probationary
or temporary employment where he had already become a regular
employee when he was absorbed by a sister company. A Prime
Security Services, Inc. v. NLRC (2000)
TERMINATION AND SALARY
A probationary employee enjoys only a temporary
employment status. This means that he is terminable at any time,
permanent employment not having been attained in the meantime.
The employer could well decided he no longer needed the
probationary employees services or his performance fell short of
expectations, etc. As long as the termination was made before the
termination of the six-month probationary period, the employer
was well within his rights to sever the employer-employee
relationship. A contrary interpretation would defect the clear
meaning of the term probationary.
De la Cruz, Jr. v. NLRC (2003)
Article 281 of the Labor Code does not preclude the employer from
terminating the probationary employment on justifiable causes.
We find unmeritorious, therefore, public respondent's
argument that the security of tenure of probationary employees
Page 13 of 56
LABOR LAW I LABOR STANDARDS

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

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

However, the Court cannot sustain his dismissal on this ground

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

People v. Meris (2000)

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

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

employed or unemployed (Art. 13a)

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

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

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LABOR LAW I
charged, directly or indirectly, from the workers or employers or
both (Art 13c)
E. A License is a document issued by the Department of Labor
authorizing a person or entity to operate a private employment
agency (Art 13d)
F. A "Private recruitment entity" is 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 employers. (Art 13e)
G. An Authority is a document issued by the Department of Labor
authorizing a person or association to engage in recruitment and
placement activities as a private recruitment entity. (Art 13f)
II. Entities allowed to recruit and place
A. General rule
Only public employment offices and the OEDB for overseas
employment, shall engage in the recruitment and placement of
workers (Art 16). The Secretary of Labor shall have the power and
authority to organize and establish new employment offices in
addition to existing employment offices under the Department of
Labor as the need arises. (Art 14g)
B. Exception
Persons or entities allowed under Chapter 2 of the Labor Code (Art
16).
For this purpose, the Labor Code expressly authorizes the
participation of the private employment sector in the recruitment
and placement of workers, locally and overseas, BUT such
recruitment and placement shall be done under such guidelines,
rules and regulations, as may be issued by the Secretary of Labor
and Employment. (Art 25) Private sector participation in
recruitment and placement is sought to be rationalized pursuant to
national development objectives (Art 12f) and in order to harness
and maximize the use of private sector resources and initiative in
the development and implementation of a comprehensive
employment program (Art 25)
C. License/ authority of allowed entities
1. Citizenship Requirement - Only Filipino Citizens or
corporations, partnership 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. (Art 27)
2. Capitalization Requirement - All applicants for authority
to hire or renewal of license to recruit are required to
have such substantial capitalization as determined by the
Secretary of Labor. (Art 28)
3. Non-transferability of license or authority No
license or authority shall be used directly or
indirectly by any person other than the one in
whose favor it was issued or at any place other than that
stated in the license or authority, nor may 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
anywhere shall be subject to the prior approval of the
Department of Labor. (Art 29)
1. Registration Fees The Secretary of Labor shall
promulgate a schedule of fees for the registration of all
applicants for license or authority. (Art 30)
D. SPECIAL CIRCUMSTANCE: DIRECT HIRING FOR WORK ABROAD
General Rule
No employer may directly hire a Filipino worker for overseas
employment. Every employment for work abroad must be coursed
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LABOR STANDARDS
through the Boards and entities authorized by the Department of
Labor and Employment. (Art 18)
E. BAN ON DIRECT HIRING - Exception
Direct hiring by members of the diplomatic service, officials and
employees of international organizations and such other employers
as may be allowed by the Department and Labor and Employment
is not covered by the ban. (Art 18)
III. Entities prohibited to recruit and place
a. Persons and entities other than public employment
offices if not authorized under Chapter 2 of the Labor
Code (Art 16)
b. Employers hiring directly for work abroad without going
through DOLE-authorized boards and entities (Art 18)
c. 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. (Art 26)
IV. Techniques of regulation
A. Bonds
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 an
regulations, and terms and conditions of employment as may be
appropriate. (Art 31)
B. Workers fees
Any person applying with a private fee-charging employment
agency for employment assistance shall not be charged any fee
until he has obtained employment through its efforts or 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 a schedule of allowable fees.
(Art 32)
C. Reports submission
Whenever the public interest so requires, the Secretary of Labor
and Employment 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 jobs, wages, other terms and conditions, and other
employment data. (Art 33)
D. 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 employees for overseas
employment for violation of rules and regulations issued by the
Department of Labor, the Overseas Employment Development
Board, and the National Seamen Board, or for violation of the
provisions of this and other applicable laws, General Orders and
Letters of Instructions. (Art 35)
ILLEGAL RECRUITMENT
- Under the Labor Code, there are two penal
provisions relative to recruitment and placement:
first, is the commission of the Prohibited Acts under Art 34 by a
holder of a license or authority; second, is the
undertaking of recruitment activities under Art 13b
or the commission of the Prohibited Acts under Art 34 by a non-
holder of a license or authority. Only the second case is
considered an act of illegal recruitment. Note that under
the Labor Code, a holder of a license or authority
cannot commit illegal recruitment.
- The Prohibited Activities under Art 34 of the Labor
Code are:
Page 15 of 56
LABOR LAW I
a. To CHARGE or accept directly or indirectly any amount
greater than that specified in the schedule of allowable
fees prescribed by the Secretary of Labor and
Employment, or to make a worker pay any amount
greater than that actually received by him as a loan or
advance;
b. To FURNISH or publish any false notice or information
or document in relation to recruitment or employment;
c. To GIVE any false notice, testimony, information or
document or commit any act or misrepresentation for
the purpose of securing a license or authority under this
Code;
d. To INDUCE or attempt to induce a worker already
employed to quit his employment in order to offer him
another unless the transfer is designed to liberate a
worker from oppressive terms and conditions of
employment;
e. To INFLUENCE or attempt to influence any person or
entity not to employ any worker who has not applied for
employment through his agency;
f. 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;
g. To OBSTRUCT or attempt to obstruct inspection by the
Secretary of Labor and Employment or by his duly
authorized representatives;
h. 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 or information as may be required by the
Secretary of Labor and Employment;
i. To SUBSTITUTE or alter employment contracts
approved and verified by the Department of Labor and
Employment 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 Department of
Labor and Employment.
j. To BECOME officer or member of the Board of any
corporation engaged in travel agency or to be engaged
directly or indirectly in the management of a travel
agency; and
k. To WITHHOLD or deny travel documents from
applicant workers before departure for monetary or
financial considerations other than those authorized
under this Code and its implementing rules and
regulations.
People v. Ordoo, 2000
Illegal recruitment is committed when two elements
concur, namely: (1) the offender has no valid license or authority
required by law to enable one to lawfully engage in recruitment and
placement of workers; and (2) he undertakes either any activity
within the meaning of recruitment and placement defined under
Art. 13 (b), or any of the prohibited practices enumerated under
Art. 34 of the Labor
Code.
A. Illegal recruitment under the Labor Code
1. Illegal recruitment
Any recruitment activities, including the prohibited
practices enumerated under Article 34 of this Code, to be
undertaken by non-licensees or non-holders of authority
shall be deemed illegal and punishable under Article 39
of this Code. The Secretary of Labor and Employment or
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LABOR STANDARDS
any law enforcement officer may initiate complaints
under this Article. (Art 38a)
Economic sabotage
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 Article 39 hereof. Illegal recruitment is deemed
committed by a SYNDICATE if carried out by a group of
three (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 is deemed committed in large scale if
committed against three (3) or more persons individually
or as a group. (Art 38b). Note, however, that the finding
of large-scale illegal recruitment must depend on
whether there are at least three complainants in a single
complaint who alleges illegal recruitment whether
committed to them singly or collectively. Single illegal
recruitment cases cannot be cumulated to add up to a
charge of large-scale illegal recruitment. Consider the
following cases:
People v. Reyes, 1995
There are, it is said, 14 other cases filed/pending in the
courts against the accused for illegal recruitment. These cases
cannot be taken into account for the purpose of Art. 38(b). When
the Labor Code speaks of illegal recruitment "committed against
three (3) or more persons individually or as a group," it must be
understood as referring to the number of complainants in each case
who are 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 of illegal recruitment of three or more persons whether
individually or as a group. Moreover, even if Blanza and Garcia had
been illegally recruited so as to make the number of persons
illegally recruited four and make the crime that of illegal
recruitment of a large scale, since this was not alleged in the
information and this is the more serious offense which includes that
which was charged, the appellant can only be found guilty of the
less serious offense charged, pursuant to Rule 120, 4.
People v. Meris (2000)
Illegal recruitment is conducted in a large scale if
perpetrated against three (3) or more persons individually or as a
group. This crime requires proof that the accused: (1) engaged in
the recruitment and placement of workers defined under Article 13
or in any of the prohibited activities under Article 34 of the Labor
Code; (2) does not have a license or authority to lawfully engage in
the recruitment or and placement of workers; and (3) committed
the infraction against three or more, persons, individually or as a
group.
The power of the Secretary of Labor to issue warrants
of arrest or search which was formerly embodied in
paragraph c of Article 38 has already been nullified in the
following case:
Salazar v. Achacoso
We reiterate that the Secretary of Labor, not being a
judge, may no longer issue search or arrest warrants. Hence, the
authorities must go through the judicial process. To that extent, we
declare Article 38, paragraph (c), of the Labor Code,
unconstitutional and of no force and effect.
B. Illegal recruitment under the Migrant Workers Act of 1995
(RA 8042)
4. Illegal recruitment committed by a non-licensee or non-
holder of authority
ILLEGAL RECRUITMENT shall mean any act of canvassing,
enlisting, contracting, transporting, utilizing, hiring, or
procuring workers and includes: referring, contract
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LABOR LAW I
services, promising or advertising for employment
abroad, whether for profit or not, when undertaken by a
non-licensee or non-holder of authority contemplated
under Article 13(f) of Presidential Decree No. 442, as
amended, otherwise known as the Labor Code of the
Philippines: Provided, That any such non-licensee or non-
holder who, in any manner, offers or promises for a fee
employment abroad to two or more persons shall be
deemed so engaged. (Sec 6, MWA)
i) Illegal recruitment committed regardless of whether or
not licensee or holder of authority
ILLEGAL RECRUITMENT shall likewise include the
following acts, whether committed by any person,
whether a non-licensee, non-holder, licensee or holder of
authority:
a. To CHARGE or accept directly or indirectly any amount
greater than that specified in the schedule of allowable
fees prescribed by the Secretary of Labor and
Employment, or to make a worker pay any amount
greater than that actually received by him as a loan or
advance;
b. To FURNISH or publish any false notice or information
or document in relation to recruitment or employment;
c. To GIVE any false notice, testimony, information or
document or commit any act of misrepresentation for the
purpose of securing a license or authority under the
Labor Code;
d. To INDUCE or attempt to induce a worker already
employed to quit his employment in order to offer him
another unless the transfer is designed to liberate a
worker from oppressive terms and conditions of
employment;
e. To INFLUENCE or attempt to influence any person or
entity not to employ any worker who has not applied for
employment through his agency;
f. 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;
g. To OBSTRUCT or attempt to obstruct inspection by the
Secretary of Labor and Employment or by his duly
authorized representative;
h. To FAIL to submit reports on the status of employment,
placement vacancies, remittance of foreign exchange
earnings, separation from jobs, departures and such
other matters or information as may be required by the
Secretary of Labor and Employment;
i. To SUBSTITUTE or alter to the prejudice of the worker,
employment contracts approved and verified by the
Department of Labor and Employment from the time of
actual signing thereof by the parties up to and including
the period of the expiration of the same without the
approval of the Department of Labor and
Employment;
j. For an OFFICER or agent of a recruitment or placement
agency to become an officer or member of the Board of
any corporation engaged in travel agency or to be
engaged directly or indirectly in the management of a
travel agency;
k. To WITHHOLD or deny travel documents from
applicant workers before departure for monetary or
financial considerations other than those authorized
under the Labor Code and its implementing rules and
regulations;
100% UP LAW UP BAROPS 2008
LABOR STANDARDS
l. FAILURE to actually deploy without valid reason as
determined by the Department of Labor and
Employment; and
m. FAILURE to reimburse expenses incurred by the
worker in connection with his documentation and
processing for purposes of deployment, in cases where
the deployment does not actually take place without the
worker's fault. (Sec 6, MWA)
Economic sabotage
Illegal recruitment when committed by a syndicate or in
large scale shall be considered an offense involving
economic sabotage. Illegal recruitment is deemed
committed by a SYNDICATE if carried out by a group of
three (3) or more persons conspiring or confederating
with one another. It is deemed committed in large scale if
committed against three (3) or more persons individually
or as a group. (Sec 6, MWA)
RULE OF LIABILITY: The persons CRIMINALLY LIABLE for the above
offenses are the principals, accomplices and accessories. In case of
juridical persons, the officers having control, management or
direction of their business shall be liable. (Sec 6, MWA)
C. Enforcement and sanctions
(c) Regulatory power - The Secretary shall have the power to
restrict and regulate the recruitment and placement
activities of all agencies is authorized to issue orders and
promulgate rules and regulations to carry out the
objectives and implement the provisions of this Title. (Art
36)
(ci) Visitorial power - The Secretary or his duly authorized
representatives may at any time inspect the premises,
books of accounts and records of any person or entity
covered by this Title, require it to submit reports
regularly on prescribed forms, and act on violations of
any provision of this Title. (Art 37)
(cii) Penalties
a. The penalty of life imprisonment and a fine of One
Hundred thousand Pesos (P100,000) shall be imposed if
illegal recruitment constitutes economic sabotage as
defined herein:
b. Any license or holder of authority found violating or
causing another to violate any provision of this Title or its
implementing rules and regulations shall, upon conviction
thereof, suffer the penalty of imprisonment of not less
than two years nor more than five years or a fine of not
less than P10,000 nor more than P50,000 or both such
imprisonment and fine, at the discretion of the court;
c. Any person who is neither a licensee nor a holder of
authority under this Title found violating any provision
thereof or its implementing rules and regulations shall,
upon conviction thereof, suffer the penalty of
imprisonment of not less than four years nor more than
eight years or a fine of not less than P20,000 nor more
than P100,000 or both such imprisonment and fine, at
the discretion of the court;
d. 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;
e. In every case, conviction shall cause and carry the
automatic revocation of the license or authority and all
the permits and privileges granted to such person or
entity under this Title, and the forfeiture of the cash and
surety bonds in favor of the Overseas Employment
Development Board or the National Seamen Board, as
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LABOR LAW I
the case may be, both of which are authorized to use the
same exclusively to promote their objectives.
PART VI
ALIEN EMPLOYMENT
A. Coverage
Art. 40 of the Labor Code which requires employment permit refers
to non-resident aliens. The employment permit is required for entry
into the country for employment purposes and is issued after
determination of the non-availability of a person in the Philippines
who is competent, able and willing at the time of application to
perform the services for which the alien is desired. A resident alien
does not fall within the ambit of the provision. (Almodiel v. NLRC,
1993)
B. Requisite: Employment Permit
1. Who may apply for Any alien seeking admission to the
Philippines for employment purposes and any domestic or foreign
employer who desires to engage an alien for employment in the
Philippines shall obtain an employment permit from the
Department of Labor. (Art 40)
2. Requisite for issuance, in general The employment permit may
be issued to a non-resident alien or to the applicant employer after
a determination of the non-availability of a person in the Philippines
who is competent, able and willing at the time of application to
perform the services for which the alien is desired. (Art 40). Note
also that, in issuing employment permits to non-resident aliens,
consideration must also be given to the fact that the Constitution
mandates that the State shall promote the preferential use of
Filipino labor, domestic materials and locally produced goods (Art
XII, Sec 12, Constitution)
General Milling Corp. v. Torres, 1991
The Labor Code itself specifically empowers the Secretary
of Labor to make a determination as to the availability of the
services of a "person in the Philippines who is competent, able and
willing at the time of application to perform the services for which
an alien is desired." In short, the Department of Labor is the agency
vested with jurisdiction to determine the question of availability of
local workers. The constitutional validity of legal provisions granting
such jurisdiction and authority and requiring proof of non-
availability of local nationals able to carry out the duties of the
position involved, cannot be seriously questioned.
3. Requisite for issuance, enterprises registered in preferred areas of
investment The employment permit may be issued upon
recommendation of the government agency charged with the
supervision of said registered enterprise. (Art 40)
C. Prohibition against transfer of employment
After the issuance of an employment permit, the alien shall not
transfer to another job or change his employer without prior
approval of Secretary of Labor and Employment. (Art 41)
D. Consequences of violation
Any non-resident alien who shall take up employment in violation
of the provision of this Title and its implementing rules and
regulations shall be punished in accordance with the provisions of
Articles 289 and 290 of the Labor Code. In addition, the alien
worker shall be subject to deportation after service of his sentence.
(Art 41)
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LABOR STANDARDS
PART VII
EMPLOYMENT OF APPRENTICE,
LEARNERS AND HANDICAPPED WORKERS
A. Policy
It is hereby declared the policy of the State to provide relevant,
accessible, high quality and efficient technical education and skills
development in support of the development of high quality Filipino
middle-level manpower responsive to and in accordance with
Philippine development goals and priorities. The state shall
encourage active participation of various concerned sectors,
particularly private enterprises, being direct participants in an
immediate beneficiaries of a trained and skilled workforce, in
providing technical education and skills development opportunities.
(Sec 2, RA 7796)
B. Goals and objectives
a. Promote and strengthen the quality of technical education and
skills development programs to attain international
competitiveness
b. Focus technical education and skills development or meeting the
changing demands for quality middle-level manpower
c. Encourage critical and creative thinking by disseminating the
scientific and technical knowledge base of middle-level manpower
development programs
d. Recognize and encourage the complementary roles of public and
private institutions in technical education and skills development
and training systems;
e. Inculcate desirable values through the development of moral
character with emphasis on work ethic, self-discipline, self reliance,
and nationalism. (Sec 3, RA 7796)
I. APPRENTICE
A. Definition
Apprenticeship refers to training within employment with
compulsory related theoretical instructions involving a contract
between an apprentice and an employer during an established
period assured by an apprenticeable occupation. (Sec. 4j, RA 7796)
Apprenticeable Occupation is an occupation officially endorsed by
a tripartite body and approved for apprenticeship by the Authority
(Sec 4m, RA 7796)
B. SPECIAL CIRCUMSTANCE: Employment of children
Children below fifteen (15) years of age shall not be employed
except:
1. When a child works directly under the sole responsibility of his
parents or legal guardian and where only members of the
employers family are employed: Provided, however, That his
employment neither endangers his life, safety, health and morals,
nor impairs his normal development: Provided, further, That the
parent or legal guardian shall provide the said minor child with the
prescribed primary and/or secondary education
2. When a childs employment or participation in public and
entertainment or information through cinema, theater, radio or
television is essential: Provided, the employment contract is
concluded by the childs parents or guardian, with the express
agreement of the child concerned, if possible, and the approval of
the Department of Labor and Employment: and Provided, That the
following requirements in all instances are strictly complied with:
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LABOR LAW I
a. The employer shall ensure the protection,
health, safety and morals of the child
b. The employer shall institute measures to prevent the
childs exploitation or discrimination taking into account
the system and level of remuneration, and the duration
and arrangement of working time
c. The employer shall formulate and implement,
subject to the approval and supervision of competent
authorities, a continuing program for training and skills
acquisition of the child.
In the above exceptional cases where any such child may be
employed, the employer shall first secure, before engaging such
child, a work permit from the Department of Labor and
Employment which shall ensure observance of the above
requirements. (Sec. 12, RA 7610, as amended by RA 7658)
C. Terms and conditions of employment
1. Apprenticeship agreements Apprenticeship agreements,
including the main rates of apprentices, shall conform to the rules
issued by the Minister of Labor and Employment. The period of
apprenticeship shall not exceed six months. Apprenticeship
agreements providing for wage rates below the legal minimum
wage, which in no case shall start below 75% per cent of the
applicable minimum wage, may be entered into only in accordance
with apprenticeship program duly approved by the Minister of
Labor and Employment. The Ministry shall develop standard model
programs of apprenticeship. (Art 61; Nitto Enterprises v. NLRC,
1995)
2. No-compensation apprenticeships The Secretary of Labor may
authorize the hiring of apprentices without compensation whose
training on the job is required by the school or training program
curriculum or as a requisite for graduation or board examination.
(Art 72)
3. Deductibility of training costs - An additional deduction from
taxable income of one-half of the value of labor training expenses
incurred for developing the productivity and efficiency of
apprentices shall be granted to the person or enterprise organizing
an apprenticeship program provided such program is duly
recognized by the Department of Labor and Employment; provided
further that such deduction shall not exceed 10 percent of direct
labor wage; and provided finally that the person or enterprise who
wish to avail of this incentive should pay his apprentices the
minimum wages. (Art 71)
D. Enforcement
Upon complaint of any interested person or upon its own initiative,
the appropriate agency of the Department of Labor and
Employment or its authorized representative shall investigate any
violation of any apprenticeship agreement (Art 65)
The decision of the authorized agency of the Department by any
aggrieved person to the Secretary of Labor and Employment within
five days from receipt of the decision. The decision of the Secretary
shall be final and executory. (Art 66)
II. LEARNERS
A. Defined
Learners refer to persons hired as trainees in semi-skilled and
other industrial occupation which are non-apprenticeable.
Learnership programs must be approved by the Authority.
B. Requisites
Learners may be employed when no experienced workers are
available the employment of learners is necessary to prevent
curtailment of employment opportunities, and the employment
does not create unfair competition in terms of labor costs or impair
or lower working standards. (Art 74)
C. Terms and conditions of employment
100% UP LAW UP BAROPS 2008
LABOR STANDARDS
1. Learnership agreement Any employer desiring to employer
learners shall enter into a learnership agreement with them, which
agreement shall include:
a. The NAMES and addresses of the learners;
b. The DURATION of the learnership period, which
shall not exceed three months;
c. The WAGES or salary rates of the learners which
shall begin at not less than 75 percent of the
applicable minimum wage; and
d. A COMMITMENT to employ the learners, if they so
desire, as regular employees upon completion of the
learnership.
The learnership agreement shall be subject to inspection by the
Secretary or his duly authorized representatives. (Art 75)
2. Regularization All learners who have been allowed or suffered
to work during the first two months shall be deemed regular
employees if training is terminated by the employer before the end
of the stipulated period through no fault of the learner. (Art 75)
3. Special circumstance: Learners in piecework Learners employed
in piece or incentive rate jobs during the training period shall be
paid in full for the work done. (Art 76)
III.HANDICAPPED WORKERS
A. Coverage
The Magna Carta for Disabled Persons or RA 7277 shall cover all
disabled persons and, to the extent herein provided, departments,
officers and agencies of the National Government or non-
government organizations involved in the attainment of the
objectives of this Act. (Sec 3, RA 7277)
B. Definitions
Disabled Persons - those suffering from restriction or
different abilities, as a result of a mental, physical or
sensory impairment, to perform an activity in the manner
or within the range considered normal for a human being
(Sec 4a, RA 7277)
Impairment - any loss, dimunition or aberration of
psychological, physiological, or anatomical structure or
function (Sec 4b, RA 7277)
Disability - shall mean
physical or mental impairment that substantially
limits one or more psychological, physiological or
anatomical function of an individual or activities of
such individual;
a record of such an impairment; or
being regarded as having such an impairment (Sec
4c, RA 7277)
4. Handicap - refers to a disadvantage for a given individual,
resulting from an impairment or a disability, that limits or
prevents the function or activity, that is considered
normal given the age and sex of the individual (Sec 4d, RA
7277)
C. Rights and privileges of disabled persons
Equal Opportunity for Employment (Sec 5, RA 7277)
No disabled person shall be denied access to
opportunities for suitable employment. A
qualified disabled employee shall be subject to the
same terms and conditions of employment and the same
compensation, privileges, benefits, fringe benefits, incentives
or allowances as a qualified able-bodied person
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LABOR LAW I
Reserved contractual positions (Sec 5, RA 7277)
Five percent (5%) of all casual, emergency and
contractual positions in the Departments of Social Welfare and
Development; health, Education, Culture and Sports; and
other government agencies, offices or corporations
engaged in social development shall be reserved for
disabled persons.
Sheltered employment (Sec 6, RA 7277)
If suitable employment for disabled persons cannot be
found through open employment as provided in the
immediately preceding Section, the State shall endeavor
to provide it by means of sheltered employment. In the
placement of disabled persons in sheltered employment,
it shall accord due regard to the individual qualities,
vocational goals and inclinations to ensure a good
working atmosphere and efficient production.
Apprenticeship opportunity (Sec 7, RA 7277)
Subject to the provisions of the Labor Code as
amended, disabled persons shall be eligible as apprentices
or learners: Provided, that their handicap is not as much
as to effectively impede the performance of job operations in the
particular occupation for which they are hired; provided,
further, That after the lapse of the period of
apprenticeship, if found satisfactory in the job performance,
they shall be eligible for employment.
D. Incentives for employers
1. Tax incentives for employment of disabled persons (Sec
8, RA 7277)
Private entities that employ disabled persons who meet
the required skills or qualifications, either ad regular
employee, apprentice or learner, shall be entitled to an
additional deduction, from their gross income, equivalent
to 25% of the total amount paid as salaries and wages to
disabled persons: Provided, however, That such entities
present proof as certified by the Department of Labor
and Employment and the Department f Health as to his
disability, skills, and qualifications.
2. Tax incentives for construction of disabled-friendly
facilities (Sec 8, RA 7277)
Private entities that improve or modify their physical
facilities in order to provide
reasonable accommodation for disabled persons shall
also be entitled to an additional deduction from their net
taxable income, equivalent to 50% of the
direct costs of the improvements or modifications.
This Section, however, does not apply to improvements or
modifications or facilities required under Batas
Pambansa Bilang 344. (Sec 8, RA 7277)
Bernardo v. NLRC, 1999
In this light, the Magna Carta for Disabled Persons
mandates that a qualified disabled employee should be given the
same terms and conditions of employment as a qualified able-
bodied person. Since the Magna Carta accords them the rights of
qualified able-bodied persons, they are thus covered by Article 280
of the Labor Code. In the present case, the handicap of petitioners
(deaf-mutes) is not a hindrance to their work. The eloquent proof of
this statement is the repeated renewal of their employment
contracts. Why then should they be dismissed, simply because they
are physically impaired? The Court believes, that, after showing
their fitness for the work assigned to them, they should be treated
and granted the same rights like any other regular employees.
100% UP LAW UP BAROPS 2008
LABOR STANDARDS
PART VIII
Conditions of Employment
Hours of Work
I. Hours Regulation
Rationale and Enforcement
The Eight-Hour Labor Law was designed not only to safeguard the
health and welfare of the laborer or EE, but in a way to minimize
unemployment by forcing employers, in cases where more than 8-
hour operation is necessary, to utilize different shifts of laborers or
EEs working only for eight hours each.
(Manila Terminal Co. Inc v. CIR, 1952)
II. Coverage
The provisions of this Title shall apply to employees in all
establishments and undertakings whether for profit or not. (Art. 82)
Does NOT cover: (Art. 82)
1. government employees,
2. managerial employees,
3. field personnel,
4. members of the family of the ER who are dependent on him
for support,
5. domestic helpers,
6. persons in the personal service of another, and
7. workers who are paid by results as determined by the
Secretary of Labor in appropriate regulations.
managerial employees - those whose primary duty consists of the
management of the establishment in which they are employed or of
a department or subdivision thereof, and to other officers or
members of the managerial staff. (Art. 82)
"Field personnel" - non-agricultural employees who regularly
perform their duties away from the principal place of business or
branch office of the employer and whose actual hours of work in
the field cannot be determined with reasonable certainty. (Art. 82)
Rationale Exemption Managerial Employees
The philosophy behind the exemption of managerial EEs from the 8-
Hour Labor Law is that such workers are not usually employed for
every hour of work but their compensation is determined
considering their special training, experience or knowledge which
requires the exercise of discretion and independent judgment, or
perform work related to management policies or general business
operations along specialized or technical lines. For these workers it
is not feasible to provide a fixed hourly rate of pay or maximum
hours of labor.
(National Waterworks and Severage Authority v. NAWASA
Consolidated Unions, 1965)
Tests Field Personnel
The clause "whose time and performance is unsupervised by the
employer" did not amplify but merely interpreted and expounded
the clause "whose actual hours of work in the field cannot be
determined with reasonable certainty." The former clause is still
within the scope and purview of Article 82 which defines field
personnel. Hence, in deciding whether or not an EE's actual working
hours in the field can be determined with reasonable certainty,
query must be made as to whether or not such EE's time and
performance is constantly supervised by the employer.
(Union of Filipro Employees v. Vivar, 1992)
Actual hours work in the field is to be read in conjunction with
Rule IV, Book III of the Implementing Rules. Therefore field
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LABOR LAW I LABOR STANDARDS

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

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

DISTINCTION BETWEEN THE TWO CLASSES Entry Time Cards

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

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

Meal Time Free Time

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

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LABOR LAW I
(Pan-American Airways v. Pan-American Employees Association,
1961)
The eight-hour work period does not include the meal break.
Employees are not prohibited from going out of the premises as
long as they return to their posts on time.
(Phil. Airlines, Inc. v. NLRC, 1999)
VI. Overtime Work and Offsetting Prohibition
Overtime work - Work may be performed beyond eight (8) hours a
day provided that the employee is paid for the overtime work, an
additional compensation equivalent to his regular wage plus at least
25% thereof. Work performed beyond eight hours on a holiday or
rest day shall be paid an additional compensation equivalent to the
rate of the first eight hours on a holiday or rest day plus at least
30% thereof. (Art. 87)
Undertime not offset by overtime - Undertime work on any
particular day shall not be offset by overtime work on any other
day. Permission given to the employee to go on leave on some
other day of the week shall not exempt the employer from paying
the additional compensation required in this Chapter.
(Art. 88)
Emergency overtime work - Any employee may be required by the
employer to perform overtime work in any of the following cases:
(Art. 89)
a. When the country is at war or when any other national or local
emergency has been declared by the National Assembly or the
Chief Executive;
b. When it is necessary to prevent loss of life or property or in
case of imminent danger to 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;
c. When there is urgent work to be performed on machines,
installations, or equipment, in order to avoid serious loss or
damage to the employer or some other cause of similar
nature;
d. When the work is necessary to prevent loss or damage to
perishable goods; and
e. Where the completion or continuation of the work started
before the eighth hour is necessary to prevent serious
obstruction or prejudice to the business or operations of the
employer. (Art. 89)
* Any employee required to render overtime work under this Article
shall be paid the additional compensation required in this Chapter.
(Art. 89)
Computation of additional compensation - For purposes of
computing overtime and other additional remuneration as required
by this Chapter, the "regular wage" of an employee shall include the
cash wage only, without deduction on account of facilities provided
by the employer.
Definition and Rationale Overtime Pay
Why is there extra compensation for overtime? Because he is made
to work longer than what is commensurate with his agreed
compensation. The effects of spending additional time to work is
multi-faceted: he puts in more effort, physical and/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 engagements; etc. It is thus the
additional work, labor or service employed and the adverse effects
that justify the extra compensation.
Overtime work - the lengthening of hours devoted to the interests
of the employer and the requirements of his enterprise.
(Philippine National Bank v. PNB Employees Association, 1982)
Overtime work consists of hours worked on a given day in excess of
the applicable work period, which here is eight (8) hours. It is not
enough that the hours worked fall on disagreeable or inconvenient
hours. In order that work may be considered as overtime work, the
100% UP LAW UP BAROPS 2008
LABOR STANDARDS
hours worked must be in excess of and in addition to the eight (8)
hours worked during the prescribed daily work period, or the forty
(40) hours worked during the regular work week Monday through
Friday.
(Caltex Regular Employees v. Caltex Phil. Inc., 1995)
No Computation Formula Basic Contract
A contract of employment, which provides for a weekly wage for a
specified number of hours, sufficient to cover both the statutory
minimum wage and overtime compensation, if computed on the
basis of the statutory minimum, and which makes no provision for a
fixed hourly rate or that the weekly wage includes overtime
compensation, does not meet the requirements of the Act.
(Manila Terminal Co. Inc v. CIR, 1952)
Built-in Compensation
Written contracts with a "built-in" overtime pay in the ten-hour
working day and that their basic monthly pay was adjusted to
reflect the higher amount covering the guaranteed two-hour extra
time whether worked or unworked are valid.
(Engineering Equipment Inc v. MOLE, 1985)
Proof of Work
Entitlement to overtime pay must first be established by proof that
said overtime work was actually performed, before an employee
may avail of said benefit.
(Lagatic v. NLRC, 1998)
Where the veracity of the alleged documents as payrolls are
doubtful considering that the laborers paid therein never affixed
their signatures to show that they actually received the amounts
indicated, the fact that a particular laborers name does not appear
is no proof that he did not work in the workplace.
Unwavering testimonies of laborers employment prevail over
incomplete & inconsistent documentary evidence of employer.
To constiture abandonment, there must be clear proof of deliberate
& unjustified intent to sever the ER-EE relationship. Mere absence
of the employee is not sufficient. The burden of proof to show a
deliberate & unjustified refusal of an employee to resume his
employment without any intention of returning rests on the ER.
(Villar v. NLRC, 2000)
Employer Obligation
ER is duty-bound to keep faithful & complete records of his business
affairs, not the least of which would be the salaries of the workers.
(Social Security System v. Court of Appeals, 2000)
VII. Night Work
Night shift differential - Every employee shall be paid a night shift
differential of not less than ten percent (10%) of his regular wage
for each hour of work performed between ten oclock in the
evening and six oclock in the morning. (Art. 86)
At least 110% for each hour of work between 10pm and 6am
Rationale Prohibition
Nightwork cannot be regarded as desirable, either from the point of
view of the employer or of the wage earner. It is uneconomical
unless overhead costs are unusually heavy. Frequently the scale of
wages is higher as an inducement to employees to accept
employment on the night shift, and the rate of production is
generally lower.
Reasons for prohibiting night work:
Health risks
Disarrangement of social life
Moral dangers
Night work lawks to enforce act fixing max period of
employment
Unprofitable; inferior to day work both in quality &
quantity
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LABOR LAW I LABOR STANDARDS

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

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

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LABOR LAW I LABOR STANDARDS

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

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

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

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

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LABOR LAW I
reason of fortuitous cause, as above specified, or causes not
attributable to the employees.
There is no provision of law requiring any employer to make such
adjustments in the monthly salary rate set by him to take account
of legal holidays falling on Sundays in a given year, or, contrary to
the legal provisions bearing on the point, otherwise to reckon a year
at more than 365 days. As earlier mentioned, what the law requires
of employers opting to pay by the month is to assure that "the
monthly minimum wage shall not be less than the statutory
minimum wage multiplied by 365 days divided by twelve," and to
pay that salary "for all days in the month whether worked or not,"
and "irrespective of the number of working days therein."
(Wellington Investment Inc. v. Trajano, 1995)
Proof of Payment
Indeed if petitioner wanted to prove its payment of holiday pays
and salary differentials, it could have easily presented proofs of
such monetary benefits. But it did not. It had failed to comply with
the mandate of the law. As public respondent ruled, the burden of
proof in this regard belongs to the employer, not to the employee.
(Building Care Corp. v. NLRC, 1998)
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LABOR STANDARDS
PART XI
Conditions of Employment Leaves
I. Coverage
Right to service incentive leave - Every employee who has rendered
at least one year of service shall be entitled to a yearly service
incentive leave of five days with pay.
(Art. 95a)
This provision shall not apply to:
those who are already enjoying the benefit herein provided,
those enjoying vacation leave with pay of at least five days and
those employed in establishments regularly employing less
than 10 employees or in establishments exempted from
granting this benefit by the Secretary of Labor and
Employment after considering the viability or financial
condition of such establishment.
(Art. 95b)
Piece-rate workers being paid at a fixed amount for performing
work irrespective of time consumed in the performance thereof fall
under one of the exceptions stated in Section 1(d), Rule V,
Implementing Regulations, Book III, Labor Code.
(Makati Haberdashery Inc. v. NLRC, 1989)
II. Entitlement and Arbitration
Right to service incentive leave - Every employee who has rendered
at least one year of service shall be entitled to a yearly service
incentive leave of five days with pay.
(Art. 95a)
The grant of benefit in excess of that provided herein shall not be
made a subject of arbitration or any court or administrative action.
(Art. 95c)
III. Computation and Liability
Under Arts. 107 and 109, the indirect employer is jointly and
severally liable with the contractor for the workers wages, in the
same manner and extent that it is liable to its direct employees.
This liability of the Client covers the payment of the service
incentive leave pay of the complainants during the time they were
posted at the Cebu Branch of the Client. As service had been
rendered, the liability accrued, even if the complainants were
eventually transferred or reassigned. The service incentive leave is
expressly granted by these pertinent provisions of the Labor Code.
(Sentinel Security Agency, Inc. v. NLRC, 1998)
It is essential to recorgnize that the service incentive leave is a
curious animal in relation to other benefits granted by the law to
every employee. In case of SIL, the EE may choose to either use his
leave credits or commute it to its monetary equivalent if not
exhausted at the end of the year. If the EE does not use or commute
the same, he is entitled upon his resignation or separation from
work to the commutation of his accrued SIL.
(Auto Bus Transport Systems, Inc. v. Bautista, 2005)
Paternity Leave
RA 8187 Paternity Leave Act of 1995 and Implementing Rules
Coverage:
Sec. 2
Page 25 of 56
LABOR LAW I LABOR STANDARDS

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

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

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

miscarriage.

Maternity Leave

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

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

Vacation and Sick Leave II. Wage

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

Fair Day Pay

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

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LABOR LAW I
Discrimination
If an ER accords the same position and rank, the presumption is that
the EEs perform equal work. Equal work must receive equal pay.
(International School Alliance of Educators v. Quisumbing, 2000;
Philex Gold Phils., Inc. v. Philex Buawan Supervisors Union, 2005)
Facilities and Supplements
Supplements - extra remuneration/ special benefits given to or
received by the EEs over and above their ordinary earnings or
wages.
Facilities - items of expense necessary for the laborer's and his
family's existence and subsistence, so that by express provision of
law they form part of the wage and when furnished by the
employer are deductible therefrom, since if they are not furnished,
the laborer would spend and pay for them just the same.
(States Marine Corp. v. Cebu Seamen's Assoc., Inc., 1963)
2. When an employer customarily furnishes his employee board,
lodging or other facilities, the fair and reasonable value
thereof, as determined by the Secretary of Labor and
Employment, is included in "wage."
(Millares v. NLRC, 1999)
3. "Customary" is founded on long-established and constant
practice connoting regularity. The receipt of an allowance on a
monthly basis does not ipso facto characterize it as regular and
forming part of salary because the nature of the grant is a
factor worth considering.
(Millares v. NLRC, 1999)
Tips
2. It denotes a voluntary act, however it has been said that a tip
lacked the essential element of a gift, namely, the free
bestowing of a gratuity without consideration, and that it
despite its apparent voluntariness, there is an element of
compulsion in tipping.
(Ace Navigation Co., Inc. v. CA, 2000)
3. Value depends on the giver, and it is given in addition to the
compensation given by the ER; cannot be demanded.
(Ace Navigation Co., Inc. v. CA, 2000)
Cash Wage/Commissions
The words "wages" and "salary" are in essence synonymous,
both words generally refer to one and the same meaning, that
is, a reward or recompense for services performed. Likewise,
"pay" is the synonym of "wages" and "salary".
(Songco v. NLRC, 1990)
While commissions are incentives to inspire employees to put
more industry on the jobs assigned to them, still these
commissions are direct remuneration for services rendered.
Commissions have been defined as the recompense,
compensation or reward of an agent, salesman, executor,
trustee, receiver, factor, broker or bailee, when the same is
calculated as a percentage on the amount of his transactions
or on the profit to the principal. The nature of the work of a
salesman and the reason for such type of remuneration for
services rendered demonstrate clearly that commissions are
part of a salesman's wage or salary.
(Iran v. NLRC, 1998)
Wages and Salary
Wages - compensation for manual labor, skilled or unskilled, paid
at stated times, and measured by the day, week, month, or season.
5. indicates considerable pay for a lower and less responsible
character of employment.
Salary - denotes a higher degree of employment, or a superior
grade of services, and implies a position of office.
ii) suggestive of a larger and more important service
(Gaa v. CA, 1985)
Gratuity and Wages
100% UP LAW UP BAROPS 2008
LABOR STANDARDS
Gratuity Pay - a money benefit given to the workers whose
purpose is to reward employees or laborers, who have rendered
satisfactory and efficient service to the company.
not intended to pay a worker for actual services rendered.
the grant of such benefit is not mandatory so as to be
considered a part of labor standard law
gratuity pay not based on the actual number of days worked
over the period of years forming its basis.
(Plastic Town Center Corp. v. NLRC, 1989)
PAYMENT OF WAGES
I. Form
Forms of payment NOT allowed:
(ciii) promissory notes,
(civ) vouchers,
(cv) coupons,
(cvi) tokens,
(cvii) tickets,
(cviii) chits, or
(cix) any object other than legal tender
(Art 102)
Payment by check or money order allowed:
when customary on the date of the effectivity of this
Code, or
necessary because of special circumstances as specified
in appropriate regulations or as stipulated in a CBA.
(Art 102)
Payment through banks; Conditions:
written permission of the majority of the EEs/workers
concerned
25 or more EEs
establishment located within 1 km radius of a
commercial, savings or rural bank
payment of wages within the period fixed in the LC.
(RA 6727, Sec 7)
Labor Advisory on Payment of Salaries through Automated Teller
Machine (ATM)
Based on Article 104, as well as the provisions of Sec. 4, Rule VIII,
Book III of the Codes Implementing Rules and considering present-
day circumstances, practices and technology, employers may adopt
a system of payment other than in the workplace, such as through
automated teller machine (ATM) of banks, provided that the
following conditions are met:
1. The ATM system of payment is with the written consent of
the employees concerned.
2. The employees are given reasonable time to withdraw their
wages from the bank facility which time, if done during
working hours, shall be considered compensable hours
worked.
3. The System shall allow workers to receive their wages within
the period or frequency and in the amount prescribed under
the Labor Code, as amended.
4. There is a bank or ATM facility within a radius of one
kilometer to the place of work
5. Upon request of the concerned employee/s, the employer
shall issue a record of payment of wages, benefits and
deductions for particular period.
6. There shall be no additional expenses and no dimunition of
benefits and privileges as a result of the ATM system of
payment
7. The employer shall assume responsibility in case the wage
protection provisions of law and regulations are not
complied with under the arrangement.
Full Payment
The law does not consider as valid any agreement whereby a
worker agrees to receive less compensation than what he is
entitled to recover. A deed of release or quitclaim cannot bar
an EE from demanding benefits to which he is legally entitled.
(Lopez Sugar Corp. v. Franco, 2005)
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LABOR LAW I
The fact of partial payment does not shift the burden of proof
to the EE because partial payment does not extinguish the
obligation.
(G&M (Phil.), Inc. v. Batomalaque, 2005)
Payroll Payment
Under the IRR, every ER is required to pay his EEs by means of
payroll. The payroll should show the EE's rate of pay, deductions
made, and the amount actually paid to the EEs.
Cash Wage
Wages shall be paid only by means of legal tender. The only
instance when an employer is permitted to pay wages in forms
other than legal tender, that is, by checks or money order, is when
the circumstances prescribed in the second paragraph of Article 102
are present.
- payment in tuna liver and intestines not allowed
(Congson v. NLRC, 1959)
II. Time Payment
GR: Wages paid at least
once every 2 weeks or
twice a month at intervals not exceeding 16 days.
Exception:
Force majeure or circumstances beyond the ER's control
ER may pay immediately after such force majeure or
circumstances have ceased
ER must pay at least once a month
(Art 103)
Payment of wages of EEs engaged to perform a task which cannot
be completed in 2 weeks;
Conditions in absence of a CBA or arbitration award:
Payments are made at intervals not exceeding 16 days, in
proportion to the amount of work completed;
Final settlement is made upon completion of work
completed.
(Art 103)
III. 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.
(Art 104)
Labor Advisory on Payment of Salaries through Automated Teller
Machine (ATM)
Based on Article 104, as well as the provisions of Sec. 4, Rule VIII,
Book III of the Codes Implementing Rules and considering present-
day circumstances, practices and technology, employers may adopt
a system of payment other than in the workplace, such as through
automated teller machine (ATM) of banks, provided that the
following conditions are met:
1. The ATM system of payment is with the written consent of
the employees concerned.
2. The employees are given reasonable time to withdraw their
wages from the bank facility which time, if done during
working hours, shall be considered compensable hours
worked.
3. The System shall allow workers to receive their wages within
the period or frequency and in the amount prescribed under
the Labor Code, as amended.
4. There is a bank or ATM facility within a radius of one
kilometer to the place of work
5. Upon request of the concerned employee/s, the employer
shall issue a record of payment of wages, benefits and
deductions for particular period.
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LABOR STANDARDS
6. There shall be no additional expenses and no diminution of
benefits and privileges as a result of the ATM system of
payment
7. The employer shall assume responsibility in case the wage
protection provisions of law and regulations are not
complied with under the arrangement.
IV. Direct Payment
General Rule: Wages shall be paid directly to the workers to whom
they are due.
Exceptions:
3. Force majeure rendering payment impossible or under
other special circumstances to be determined by the
SOLE in appropriate regulations
- worker may be paid through another person under
written authority given by the worker; or
4. Worker has died
- ER may pay the wages to the heirs without necessity for
intestate proceedings; payment through SOLE or his
representative.
- Claimants to execute an affidavit attesting to their
relationship to the deceased and the fact that they are
his heirs.
(Sec 105)
V. Contractor - Subcontractor
In the event that the contractor or subcontractor fails to pay the
wages of his employees in accordance with this Code, the employer
shall be jointly and severally liable with his contractor or
subcontractor to such employees to the extent of the work
performed under the contract, in the same manner and extent that
he is liable to employees directly employed by him.
(Art 106)
PROHIBITION REGARDING WAGES
I. Non-interference in Disposal of Wages
No employer shall limit or otherwise interfere with the freedom of
any employee to dispose of his wages.
He shall not in any manner force, compel, or oblige his employees
to purchase merchandise, commodities or other property from any
other person, or otherwise make use of any store or services of
such employer or any other person.
(Art 112)
II. Wage Deduction
General Rule: No employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages of his employees
Exceptions:
1. The worker is insured with his consent by the employer,
and the deduction is to recompense the employer for the
amount paid by him as premium on the insurance;
2. For union dues, in cases where the right of the worker or
his union to check-off has been recognized by the
employer or authorized in writing by the individual
worker concerned; and
3. In cases where the employer is authorized by law or
regulations issued by the Secretary of Labor and
Employment.
(Art 113)
It shall be unlawful to make any deduction from the wages of any
employee for the benefit of the employer or his representative or
intermediary as consideration of a promise of employment or
retention in employment.
(Art 117)
2. Article 222 Labor Code requires an individual written
authorization as a prerequisite to wage deductions seeks to
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LABOR LAW I LABOR STANDARDS

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

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

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

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LABOR LAW I
basis of the amount to be integrated shall
be the average monthly share of each
employee for the past 12 months
immediately preceding the abolition or
withdrawals of such charges
Relation to Nothing in this rule shall prevent the
agreements employer and his employees from entering
into any agreement with terms more
favorable to the employees than those
provided herein, or be used to diminish any
benefit granted to the employees under
existing laws, agreement and voluntary
employer practice.
Service charges collected during the period of his preventive
suspension:
forms part of his earnings; EE entitled not only to full backwages but
also to other benefits, including a just share in the service charges,
to be computed from the start of his preventive suspension until his
reinstatement.
(Maranaw Hotels, etc. v. NLRC, 1999)
II. Thirteenth Month Pay
Coverage
Revised Guidelines on the implementation of the 13th Month pay
Removal of the Salary Ceiling (Aug 13, 1986, Pres. Aquino's Memo
Order No. 28)
General Rule: ALL EMPLOYERS are hereby required to pay all their
rank and file employees a 13th month pay not later than December
24 of every year, provided that they have worked for at least one
(1) month during a calendar year.
Exempted EMPLOYERS
The Government and any of its political subdivisions,
including government-owned and controlled corporations,
except those corporations operating essentially as private
subsidiaries of the Government;
Employers already paying their employees a 13th month
pay or more in a calendar year or its equivalent at the time of
this issuance;
ITS EQUIVALENT : includes Christmas bonus, mid-year
bonus, cash bonuses and other payments amounting to not
less than 1/12 of the basic salary but shall NOT INCLUDE
cash and stock dividends, cost of living allowances and all
other allowances regularly enjoyed by the employee as
well a non-monetary benefits.
3. Employers of household helpers and persons in the personal
service of another relation to such workers and;
4. Employers of those who are paid on purely commission,
boundary or task basis and those who are paid a fixed
amount for performing specific work, except where the
workers are paid on piece-rate basis in which case the
employer shall grant the required 13th month pay to such
workers.
Workers paid on a piece rate basis: those who are paid a
standard amount for every piece or unit of work produced that is
more or less regularly replicated, without regard to the time spent
in producing the same.
Amount and Date of Payment
Minimum Amount
minimum 13th month = not be less than 1/12 of the total basic
salary earned by an employee within a calendar year for the year
1987
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LABOR STANDARDS
computation of the 13th month pay shall include the cost of living
allowances (COLA) integrated into the basic salary of a covered
employee pursuant to EO 178.
Basic salary
include all remunerations or earning paid by this employer for
services rendered
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 of:
unused vacation and sick leave credits,
overtime,
premium,
night differential and
holiday pay and
cost-of-living allowances.
salary-related benefits included if by individual or collective
agreement, company practice or policy, the same are treated as
part of the basic salary of the employees.
Time of payment
Paid not later than December 24 of each year.
Exception: An employer, however, may give to his employees of
the required 13th Month Pay before the opening of the regular
school year and the other half on or before the 24th of December
every year.
The frequency of payment of this monetary benefit may be the
subject of agreement between the employer and the recognized
CBA of the employees.
13th Month Pay for Certain Type of Employees
Paid by Results
Employees who are paid on piece work basis are by law entitled to
the 13th Month Pay
Employees who are paid a fixed or guaranteed wage plus
commission are entitled to 13th month pay
basis: both their fixed or guaranteed wage and commission.
Those with Multiple Employers
Government employees working part time in a private enterprise,
including private educational institutions, as well as employees
working in two or more private firms, whether on full or part time
bases, are entitled to the required 13th Month Pay from all their
private employers regardless of their total earnings from each or all
their employers.
Private School Teachers
Private school teachers, including faculty members of universities
and colleges, are entitled to the required 13th month pay,
regardless of the number of months they teach or are paid within a
year, if they have rendered service for at least one (1) month within
a year.
Resigned or Separated Employee
An employee who has resigned or whose services were terminated
at any time before the time for payment of the 13th month pay is
entitled to this monetary benefit in proportion to the length of time
he worked during the year, reckoned from the time he started
working during the calendar year up to the time of his resignation
or termination from service.
Manner of Wage Payment
PD 851, as amended by Memorandum Order No. 28, provides that
employees are entitled to the thirteenth-month pay benefit
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LABOR LAW I
regardless of their designation and irrespective of the method by
which their wages are paid.
(Jackson Building v. NLRC, 1995)
Wage Difference
The difference between the minimum wage and the actual salary
received by the EE cannot be deemed as his 13th month pay as such
difference is not equivalent to or of the same import as the said
benefit contemplated by law.
(JPL Marketing Promotions v. CA, 2005)
Househelpers
Ultra Villa Food House v. Geniston, 1999
The Revised Guidelines on the Implementation of the 13th
Month Pay Law also excludes employers of household helpers from
the coverage of Presidential Decree No. 851.
Nevertheless, would be ust to award private respondent 13th
month pay in view of petitioner's practice of according private
respondent such benefit. Indeed, petitioner admitted that she gave
private respondent 13th month pay every December.
Government Employees
An analysis of the "whereases" of PD No. 851 shows that the
President had in mind only workers in private employment when he
issued the decree. There was no intention to cover persons working
in the government service.
(Alliance of Government Workers v. NLRC, 1995)
Terminated Employees
The payment of the 13th month pay may be demanded by the
employee upon the cessation of employer-employee relationship.
This is consistent with the principle of equity that as the employer
can require the employee to clear himself of all liabilities and
property accountability, so can the employee demand the payment
of all benefits due him upon the termination of the relationship.
(Archilles Manufacturing Corp. v. NLRC, 1995)
Rationale of Whereas Clauses and Limitations of PD 851
It is necessary to further protect the level of real wages
from the ravage of world-wide inflation;
There has been no increase in the legal minimum wage
rates since 1970;
The Christmas season is an opportune time for society to
show its concern for the plight of the working masses so
they may properly celebrate Christmas and New Year.
Basic Wage or Commissions
In remunerative schemes consisting of a fixed or guaranteed wage
plus commission, the fixed or guaranteed wage is patently the
"basic salary" for this is what the employee receives for a standard
work period. Commissions are given for extra efforts exerted in
consummating sales or other related transactions. They are, as
such, additional pay, which this Court has made clear do not form
part of the "basic salary."
(Boie Takeda v. Dela Serna, 1993)
Philippine Duplicators Inc v. NLRC, 1995
The sales commissions received for every duplicating machine
sold constituted part of the basic compensation or remuneration of
the salesmen of Philippine Duplicators for doing their job. The
portion of the salary structure representing commissions simply
comprised an automatic increment to the monetary value initially
assigned to each unit of work rendered by a salesman.
The sales commissions were an integral part of the basic salary
structure of Philippine Duplicators' employees salesmen. These
commissions are not overtime payments, nor profit-sharing
payments nor any other fringe benefit. Thus, the salesmen's
commissions, comprising a pre-determined percent of the selling
price of the goods sold by each salesman, were properly included in
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LABOR STANDARDS
the term "basic salary" for purposes of computing their 13th month
pay.
Commissions are considered part of wages. While commissions are,
indeed, incentives or forms of encouragement to inspire employees
to put a little more industry on the jobs particularly assigned to
them, still these commissions are direct remunerations for services
rendered.
(Iran v. NLRC, 1998)
1/12 of standard monthly wage x length of service = basic salary
(Honda Phils. Inc. v. Samahan ng Malayang Manggagawa sa
Honda, 2005)
Substitute Payment
Under Section 3 of PD No. 851, such benefits in the form of food or
free electricity, assuming they were given, were not a proper
substitute for the 13th month pay required by law. Neither may
year-end rewards for loyalty and service be considered in lieu of
13th month pay.(Framanlis Farms, Inc. v. MOLE, 1989)
14th Month Pay
There is no law that mandates the payment of the 14th month pay.
This is emphasized in the grant of exemption under Presidential
Decree 851 (13th Month Pay Law) which states: "Employers already
paying their employees a 13th month pay or its equivalent are not
covered by this Decree." Necessarily then, only the 13th month pay
is mandated.
(Kamaya Port Hotel v. NLRC, 1989)
III. Bonus
Management Function
The grant of a bonus is a prerogative, not an obligation, of the
employer (Traders Royal Bank vs. NLRC). The matter of giving a
bonus over and above the worker's lawful salaries and allowances is
entirely dependent on the financial capability of the employer to
give it.
(Businessday Information Systems and Services, Inc. v. NLRC, 1993)
Nature of Bonus When Demandable
When part of the salary or wage
When there is a contractual agreement promising to pay
such
When it is established company practice
Bonus becomes demandable so when it is made a part of the wage
or salary or compensation. In such a case the latter would be a fixed
amount and the former would be a contingent one dependent upon
the realization of profits. If there be none, there would be no
bonus.
(Luzon Stevedoring Corporation v. CIR, 1965)
If one enters into a contract of employment under an agreement
that he shall be paid a certain salary by the week or some other
stated period and, in addition, a bonus, in case he serves for a
specified length of time, there is no reason for refusing to enforce
the promise to pay the bonus, if the employee has served during
the stipulated time, on the ground that it was a promise of a mere
gratuity.
(Marcos v. NLRC, 1995)
A bonus may be considered demandable based on equitable
considerations as when the giving of such bonus has been the
company's long and regular practice. To be considered a "regular
practice," the giving of the bonus should have been done over a
long period of time, and must be shown to have been consistent
and deliberate.
(Manila Electric Co. v. Quisumbing, 1999)
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LABOR LAW I
IV. Productivity Incentives Act of 1990 (RA 6971)
POLICY (2)
23. To encourage higher levels of productivity, maintain
industrial peace and harmony and promote the principle
of shared responsibility in the relations between workers
and employers, recognizing the right of labor to its just
share in the fruits of production and the right of business
enterprises to reasonable returns of investments and to
expansion and growth, and accordingly to provide
corresponding incentives to both labor and capital for
undertaking voluntary programs to ensure greater
sharing by the workers in the fruits of their labor
COVERAGE (3)
24. Applies to all business enterprises with or without
existing and duly recognized or certified labor
organizations, including government-owned and
controlled corporations performing proprietary functions
25. It shall cover all employees and workers including casual,
regular, supervisory and managerial employees.
DEFINITION (4)
Business Enterprise: industrial, agricultural, or agro-industrial
establishments engaged in the production manufacturing,
processing, repacking, or assembly of goods, including service-
oriented enterprises, duly certified as such by appropriate
government agencies.
Labor-management Committee: a negotiating body in a business
enterprise composed of the representatives of labor and
management created to establish a productivity incentives
program, and to settle disputes arising therefrom in
accordance with Section 9 hereof.
Productivity Incentives Program: a formal agreement established by
the labor-management committee containing a process that
will promote gainful employment, improve working conditions
and result in increased productivity, including cost savings,
whereby the employees are granted salary bonuses
proportionate to increases in current productivity over the
average for the preceding three (3) consecutive years. The
agreement shall be ratified by at least a majority of the
employees who have rendered at least six (6) months of
continuous service.
LABOR MANAGEMENT COMMITTEE (5)
a. A business enterprise or its employees, through their
authorized representatives, may initiate the formation of a
labor-management committee that shall be composed of an
equal number of representatives from the management and
from the rank-and-file employees: Provided, That both
management and labor shall have equal voting rights:
Provided, further, That at the request of any party to the
negotiation, the National Wages and Productivity
Commission of the Department of Labor and Employment
shall provide the necessary studies, technical information
and assistance, and expert advice to enable the parties to
conclude productivity agreements.
b. In business enterprises with duly recognized or certified
labor organizations, the representatives of labor shall be
those designated by the collective bargaining agent(s) of the
bargaining unit(s).
c. In business enterprises without duly recognized or certified
labor organizations, the representatives of labor shall be
elected by at least a majority of all rank-and-file employees
who have rendered at least six (6) months of continuous
service.
PRODUCTIVITY INCENTIVES PROGRAM (6)
a. The productivity incentives program shall contain provisions
for the manner of sharing and the factors in determining
productivity bonuses: Provided, That the productivity
bonuses granted to labor under this program shall not be
less than half of the percentage increase in the productivity
of the business enterprise.
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LABOR STANDARDS
b. Productivity agreements reached by the parties as provided
in this Act supplement existing collective bargaining
agreements.
c. If, during the existence of the productivity incentives
program or agreement, the employees will join or form a
union, such program or agreement may, in addition to the
terms and conditions agreed upon by labor and
management, be integrated in the collective bargaining
agreement that may be entered into between them.
BENEFITS AND TAX INCENTIVES (7)
a. Subject to the provisions of Section 6 hereof, a business
enterprise which adopts a productivity incentives program,
duly and mutually agreed upon by the parties to the labor-
management committee, shall be granted a special
deduction from gross income equivalent to 50% of the total
productivity bonuses given to employees under the program
over and above the total allowable ordinary and necessary
business deductions for said bonuses under the National
Internal Revenue Code, as amended.
b. Grants for manpower training and special duties given to
rank-and-file employees pursuant to a program prepared by
the labor-management committee for the development of
skills identified as necessary by the appropriate government
agencies shall also entitle the business enterprise to a special
deduction from gross income equivalent to 50% of the total
grants over and above the allowable ordinary and necessary
business deductions for said grants under the National
Internal Revenue Code, as amended.
c. Any strike or lockout arising from any violation of the
productivity incentives program shall suspend the effectivity
thereof pending settlement of such strike or lockout:
Provided, That the business enterprise shall not be deemed
to have forfeited any tax incentives accrued prior to the date
of occurrence of such strike or lockout, and the workers shall
not be required to reimburse the productivity bonuses
already granted to them under the productivity incentives
program. Likewise, bonuses which have already accrued
before the strike or lockout shall be paid the workers within
six (6) months from their accrual.
d. Bonuses provided for under the productivity incentives
program shall be given to the employees not later than every
six (6) months from the start of such program over and
above existing bonuses granted by the business enterprise
and by law: Provided, That the said bonuses shall not be
deemed as salary increases due the employees and workers.
e. The special deductions from gross income provided for
herein shall be allowed starting the next taxable year after
the effectivity of this Act.
NOTIFICATION (8)
A business enterprise which adopts a productivity incentives
program shall submit copies of the same to the National Wages and
Productivity Commission and to the Bureau of Internal Revenue for
their information and record.
DISPUTES AND GRIEVANCES (9)
Whenever disputes, grievances, or other matters arise from
the interpretation or implementation of the productivity incentives
program, the labor-management committee shall meet to resolve
the dispute, and may seek assistance of the National Conciliation
and Mediation Board of the Department of Labor and Employment
for such purpose. Any dispute which remains unresolved within 20
days from the time of its submission to the labor-management
committee shall be submitted for voluntary arbitration in line with
the pertinent provisions of the Labor Code, as amended.
The productivity incentives program shall include the name(s)
of the voluntary arbitrator or panel of voluntary arbitrators
previously chosen and agreed upon by the labor-management
committee.
NON-DIMUNITION OF BENEFITS (12)
Nothing in this Act shall be construed to diminish or reduce
any benefits and other privileges enjoyed by the workers under
existing laws, decrees, executive orders, company policy or practice,
or any agreement or contract between the employer and
employees.
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LABOR LAW I
Wage Recovery, Liabilities, and Worker Preference
I. Liability of Employer and Other Parties
In the event that the contractor or sub-contractor fails to pay wages
of employees in accordance with this Code, the employer shall be
JOINTLY AND SEVERALLY liable with his contractor or sub-contractor
to such employees to the extent of the work performed under the
contract, in the same manner and extent that he is liable to
employees directly employed by him.
(Art 106)
In labor-only contracting, the person or intermediary shall be
considered merely as an agent of the employer who shall be
responsible to the workers in the same manner an extent as if the
latter were directly employed by him.
(Art 106)
Art. 107
Indirect employer - The provisions of the immediately preceding
article shall likewise apply to any person, partnership, association or
corporation which, not being an employer, contracts with an
independent contractor for the performance of any work, task, job
or project.
The joint and several liability of the contractor and the principal is
mandated by the Labor Code to assure compliance with the
provisions therein including the minimum wage. The contractor is
made liable by virtue of his status as direct employer. The principal,
on the other hand, is made the indirect employer of the
contractors employees to secure payment of their wages should
the contractor be unable to pay them. Even in the absence of an
employer-employee relationship, the law itself establishes one
between the principal and the employees of the agency for a
limited purpose i.e. in order to ensure that the employees are paid
the wages due them. In the above-mentioned cases, the solidary
liability of the principal and contractor was held to apply to the
aforementioned Wage Order Nos. 5 and 6.
(Lapanday Agricultural Development Corporation v. Court of
Appeals, 2000)
II. Worker Preference Bankruptcy
Art. 110 Labor Code
In the event of bankruptcy or liquidation of an employer's
business, his workers shall enjoy first preference as regards their
wages and other monetary claims, any provision of law to the
contrary notwithstanding.
Such unpaid wages and monetary claims shall be paid in full
before the claims of the Government and other creditors may be
paid. (As amended by R. A. 6715)
Art. 1707, Civil Code
The laborer's wages shall be a lien on the goods manufactured
or the work done.
Art. 2241, Civil Code
With reference to specific movable property of the debtor, the
following claims or liens shall be preferred:
6. Claims for laborers' wages, on the goods manufactured or the
work done;
Art. 2242, Civil Code
With reference to specific immovable property and real rights
of the debtor, the following claims, mortgages and liens shall be
preferred, and shall constitute an encumbrance on the immovable
or real right:
3. Claims of laborers, masons, mechanics and other workmen, as
well as of architects, engineers and contractors, engaged in
the construction, reconstruction or repair of buildings, canals
or other works, upon said buildings, canals or other works;
Art. 2244, Civil Code
With reference to other property, real and personal, of the
debtor, the following claims or credits shall be preferred in the order
named:
4. Compensation due the laborers or their dependents under
laws providing for indemnity for damages in cases of labor
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LABOR STANDARDS
accident, or illness resulting from the nature of the
employment;
Republic v. Peralta (87)
We believe and so hold that Article 110 of the Labor Code did
not sweep away the overriding preference accorded under the
scheme of the Civil Code to tax claims of the government or any
subdivision thereof which constitute a lien upon properties of the
Insolvent. It is frequently said that taxes are the very lifeblood of
government. The effective collection of taxes is a task of highest
importance for the sovereign. It is critical indeed for its own
survival. It follows that language of a much higher degree of
specificity than that exhibited in Article 110 of the Labor Code is
necessary to set aside the intent and purpose of the legislator that
shines through the precisely crafted provisions of the Civil Code. It
cannot be assumed simpliciter that the legislative authority, by
using in Article 110 the words "first preference" and "any provision
of law to the contrary notwithstanding" intended to disrupt the
elaborate and symmetrical structure set up in the Civil Code.
Neither can it be assumed casually that Article 110 intended to
subsume the sovereign itself within the term "other creditors" in
stating that "unpaid wages shall be paid in full before other
creditors may establish any claim to a share in the assets of
employer." Insistent considerations of public policy prevent us from
giving to "other creditors" a linguistically unlimited scope that
would embrace the universe of creditors save only unpaid
employees.
We, however, do not believe that Article 110 has had no
impact at all upon the provisions of the Civil Code. Bearing in mind
the overriding precedence given to taxes, duties and fees by the
Civil Code and the fact that the Labor Code does not impress any
lien on the property of an employer, the use of the phrase "first
preference" in Article 110 indicates that what Article 110 intended
to modify is the order of preference found in Article 2244, which
order relates, as we have seen, to property of the Insolvent that is
not burdened with the liens or encumbrances created or recognized
by Articles 2241 and 2242. We have noted that Article 2244,
number 2, establishes second priority for claims for wages for
services rendered by employees or laborers of the Insolvent "for
one year preceding the commencement of the proceedings in
insolvency." Article 110 of the Labor Code establishes "first
preference" for services rendered "during the period prior to the
bankruptcy or liquidation," a period not limited to the year
immediately prior to the bankruptcy or liquidation. Thus, very
substantial effect may be given to the provisions of Article 110
without grievously distorting the framework established in the Civil
Code by holding, as we so hold, that Article 110 of the Labor Code
has modified Article 2244 of the Civil Code in two respects: (a)
firstly, by removing the one year limitation found in Article 2244,
number 2; and (b) secondly, by moving up claims for unpaid wages
of laborers or workers of the Insolvent from second priority to first
priority in the order of preference established by Article 2244.
Phil. Export etc. v. Court of Appeals (95)
A final observation On 21 March 1989, Article 110 of the Labor
Code was amended by Republic Act No. 6715 so as to read:
"Article 110. Worker preference in case of bankruptcy -
In the event of bankruptcy or liquidation of an employer's
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."
Since then, the Court has had a number of occasions to rule on
the effects of the amendment. In Development Bank of the
Philippines vs. National Labor Relations Commission, the Court has
said:
"The amendment expands worker preference to cover
not only unpaid wages but also other monetary claims
to which even claims of the Government must be
deemed subordinate.
xxx
"Notably, the terms 'declaration' of bankruptcy or
'judicial' liquidation have been eliminated. Does this
mean then that liquidation proceedings have been done
away with?
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LABOR LAW I
"We opine in the negative, upon the following
considerations:
"1. Because of its impact on the entire system of credit,
Article 110 of the Labor Code cannot be viewed in
isolation but must be read in relation to the Civil Code
scheme on classification and preference of credits.
"2. In the same way that the Civil Code provisions on
classification of credits and the Insolvency Law have
been brought into harmony, so also must the kindred
provisions of the Labor Law be made to harmonize with
those laws.
"3. In the event of insolvency, a principal objective
should be to effect an equitable distribution of the
insolvent's property among his creditors. To accomplish
this there must first be some proceeding where notice
to all of the insolvent's creditors may be given and
where the claims of preferred creditors may be
bindingly adjudicated (De Barretto vs. Villanueva).
"4. A distinction should be made between a preference
of credit and a lien. A preference applies only to claims
which do not attach to specific properties. A lien creates
a charge on a particular property. The right of first
preference as regards unpaid wages recognized by
Article 110 does not constitute a lien on the property of
the insolvent debtor in favor of workers. It is but a
preference of credit in their favor, a preference in
application. It is a method adopted to determine and
specify the order in which credits should be paid in the
final distribution of the proceeds of the insolvent's
assets. It is a right to a first preference in the discharge
of the funds of the judgment debtor.
"In fine, the right to preference given to workers under
Article 110 of the Labor Code cannot exist in any
effective way prior to the time of its presentation in
distribution proceedings. It will find application when, in
proceedings such as insolvency such unpaid wages shall
be paid in full before the claims of the Government and
other creditors' may be paid. But, for an orderly
settlement of a debtor's assets, all creditors must be
convened, their claims ascertained and inventoried, and
thereafter the preferences determined in the course of
judicial proceedings which have for their object the
subjection of the property of the debtor to the payment
of his debts or other lawful obligations. Thereby, an
orderly determination of preference of creditors' claims
is assured (Philippine Savings Bank vs. Lantin); the
adjudication made will be binding on all parties-in-
interest, since those proceedings are proceedings in
rem; and the legal scheme of classification, concurrence
and preference of credits in the Civil Code, the
Insolvency Law, and the Labor Code is preserved in
harmony."
Receivership
The law (PD 902-A) is clear: upon the creation of a management
committee or the appointment of a rehabilitation receiver, all claims for
actions "shall be suspended accordingly." No exception in favor of labor
claims is mentioned in the law. Since the law makes no distinction or
exemptions, neither should this Court. Ubi lex non distinguit nec nos
distinguere debemos. Allowing labor cases to proceed clearly defeats
the purpose of the automatic stays and severally encumbers the
management committee's and resources.
(Rubberworld (Phils.), Inc. v. NLRC, 1999)
III. Wage Recovery and Attorney's Fees
Art. 128. Visitorial and enforcement powers
Art. 129. Recovery of wages, simple money claims and other
benefits In connection with Art. 217. ; Jurisdiction of
Labor Arbiters and the Commission
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LABOR STANDARDS
Art. 111.
Attorney's fees
a. In cases of unlawful withholding of wages, the culpable party
may be assessed attorney's fees equivalent to 10 % of the
amount of wages recovered.
b. 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 wages recovered.
PART XIII
Minimum Wages
I. Wages and the Constitution
Art XIII Sec 3, 1987 Constitution guarantees the right the the EE to
a living wage.
The law guarantees the laborer 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 of prices of
commodities and increase in wants, and provide means for a
desirable improvement in his mode of living.
(Atok Big Wedge Mining Co., Inc. v. Atok Big Wedge Mutual Benefit
Assoc., 1953)
Beneficiaries
The establishment of the maximum wage benefits directly the low-
paid employees, who now receive inadequate wages on which to
support themselves and their families. It benefits all wage earners
indirectly by setting a floor below which their remuneration cannot
fail. It raises the standards of competition among employers, since
it would protect the fair-minded employer who voluntarily pays a
wage that supports the wage earner from the competition of the
employer, who operates at lower cost by reasons of paying his
workers a wage below subsistence.
(People v. Gatchalian, 1959)
II. Agencies for Wage-Fixing Machinery
A. National Wages and Productivity Commission
Created thru Art. 120
26. attached to the DOLE for policy and program
coordination.
Powers and Functions of the Commission (Art. 121)
a. To act as the national consultative and advisory body to the
President of the Philippines 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 to determine if these are in
accordance with prescribed guidelines and national
development plans;
e. To undertake studies, researches and surveys necessary for
the attainment of its functions and objectives, and to collect
and compile data and periodically disseminate information
on wages and productivity and other related information,
including, but not limited to, employment, cost-of-living,
labor costs, investments and returns;
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LABOR LAW I
f. To review plans and programs of the Regional Tripartite
Wages and Productivity Boards to determine whether these
are consistent with national development plans;
g. To exercise technical and administrative supervision over the
Regional Tripartite Wages and Productivity Boards;
h. To call, from time to time, a national tripartite conference of
representatives of government, workers, and employers for
the consideration of measures to promote wage
rationalization and productivity; and
i. To exercise such powers and functions as may be necessary
to implement this Act.
Composition of the Commission:
27. Secretary of Labor and Employment as ex-officio
chairman
28. Director-General of the NEDA as ex-officio vice-chairman
29. 2 members each from workers and employer sectors who
shall be appointed by the President upon
recommendation of the Secretary of Labor
30. to be made on the basis of the list of nominees
submitted by the workers & employers sectors,
respectively, and
31. who shall serve for a term of 5 years.
Note: members of the Commission representing labor
and management shall have the same rank, emoluments
& other benefits as those prescribed by law for labor and
mgt reps in the ECC
The Executive Director of the Commission Secretariat shall also
be a member of the Commission.
The Commission shall be assisted by a Secretariat composed
of
1. Executive Director(as head) - same rank/salary/benefits as a
Dept Asst. Secretary
2. Deputy Directors, appointed by the Pres. upon recom. of the
SOLE - same rank, salary, benefits and other emoluments as
that of a Bureau Director.
Prohibition against Injunction (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.
B. Regional tripartite Wages and Productivity Board
Created thru Art. 122
32. referred to as Regional Boards in all regions, including
autonomous regions as may be established by law.
33. The Commission shall determine
offices/headquarters of the respective Regional
Boards.
Powers and Functions in their respective territorial jurisdiction (Art.
122)
a. To develop plans, programs and projects relative to wages,
incomes and productivity improvement for their respective
regions;
34. to be implemented thru the respective regional
offices of the DOLE within their territorial jurisdiction
35. Regional Boards shall have technical supervision over
the regional office of the DOLE with respect to the
implementation of said plans, programs and projects.
b. To determine and fix minimum wage rates applicable in their
respective regions, provinces or industries therein and to
issue the corresponding wage orders, subject to guidelines
issued by the Commission;
c. To undertake studies, researches, and surveys necessary for
the attainment of their functions, objectives and programs
and to collect and compile data on wages, incomes,
productivity and other related information and periodically
disseminate the same;
d. To coordinate with the other Regional Boards as may be
necessary to attain the policy and intention of this Code;
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LABOR STANDARDS
e. To receive, process and act on applications for exemption
from prescribed wage rates as may be provided by law or
any Wage Order; and
f. To exercise such other powers and functions as may be
necessary to carry out their mandate under this Code.
Composition of each Regional Board :
36. Regional Director of DOLE as chairman
37. Regional Directors of NEDA & DTI as vice-chairman
38. 2 members each from workers and employers sectors
who shall be appointed by the President upon
recommendation of the SOLE to be made on the basis of
the list of nominees submitted by the workers and
employers sectors, respectively, and who shall serve for a
term of 5 years.
Each Regional Board to be headed by its chairman shall be
assisted by a Secretariat. (As amended by RA 6727)
Functions
NWPC lays down the guidelines which the RTWPB implements.
(Nasipit Lumber Co. v. NLRC, 1998)
III. Area of Minimum Wages and Criteria
STANDARDS/CRITERIA FOR MINIMUM WAGE FIXING (ART. 124):
39. The regional minimum wage to be established by the
Regional Board shall be as nearly adequate as is
economically feasible to maintain the minimum
standards of living necessary for the health, efficiency
and general well-being of the employees within the
framework of the national economic and social
development program.
40. Factors in determining regional minimum wages:
a. The demand for living wages;
b. Wage adjustment vis-a-vis the consumer price index;
c. The cost of living and changes or increases therein;
d. The needs of workers and their families;
e. The need to induce industries to invest in the
countryside;
f. Improvements in standards of living;
g. The prevailing wage levels;
h. Fair return of the capital invested and capacity to pay of
employers;
i. Effects in employment generation and family income;
and
j. The equitable distribution of income and wealth along
the imperatives of economic and social development.
41. The wages prescribed in accordance with the provisions
of this Title shall be the standard prevailing minimum
wages in every region. These wages shall include wages
varying with 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.
42. Any person, company, corporation , partnership or any
other entity engaged in business shall file and register
annually with the appropriate Regional Board,
Commission and the National Statistics Office an itemized
listing of their labor component specifying the names of
their workers and employees below the managerial level,
including learners, apprentices and
disabled/handicapped workers who were hired under the
terms prescribed in the employment contracts, and their
corresponding salaries and wages.
43. WAGE DISTORTION
44. Where the application of any prescribed wage
increase by virtue of a law or wage order issued by
any regional board results in distortions of wage
structure within an establishment, the employer
and the union shall negotiate to correct the
distortions.
45. Any dispute arising from wage distortions shall be
resolved through the grievance procedure under
their collective bargaining agreement and, if it
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LABOR LAW I
remains unresolved, through voluntary arbitration.
46. Unless otherwise agreed by the parties in
writing, such dispute shall be decided by the
voluntary arbitrator or panel of voluntary
arbitrators within 10 calendar days from the
time said dispute was referred to voluntary
arbitration.
47. In cases where there are no collective bargaining
agreements or recognized labor unions, the
employers and workers shall endeavor to correct
such distortions.
48. Any dispute arising therefrom shall be settled
through the National Conciliation and
Mediation Board and, if it remains unresolved
after 10 calendar days of conciliation, shall be
referred to the appropriate branch of the
National Labor Relations Commission (NLRC).
49. It shall be mandatory for the NLRC to conduct
continuous hearings and decide the dispute
within 20 calendar days from the time said
dispute is submitted for compulsory arbitration
50. The pendency of a dispute arising from a wage
distortion shall not delay the applicability of any
increase in prescribed wage rates pursuant to
provisions of law or wage order.
51. Wage distortion - a situation where an increase in
prescribed wage rates results in the elimination or
severe contraction of intentional quantitative
differences in wage or salary rates between and
among employee 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.
52. All workers paid by result, including those who are paid
on piecework, takay, pakyaw, or task basis, shall receive
not less than the prescribed wage rates per eight 8 hours
of work a day, or a proportion thereof for working less
than 8 hrs.
53. All recognized learnership and apprenticeship
agreements shall be considered automatically modified
insofar as their wage clauses are concerned to reflect the
prescribed wage rates.
10.04 WAGE ORDER
Art. 123
54. Whenever the conditions so warrant, the Regional Board
shall investigate and study all pertinent facts; and based
on the standard and criteria herein prescribed, shall
proceed to determine whether a Wage Order should be
issued.
55. Any such wage order shall take effect after 15 days from
its complete publication in at least 1 newspaper of
general circulation in the region.
56. In the performance of its wage-determination functions,
the Regional Board shall conduct public
hearings/consultations, giving notices to employees &
employers' groups, provincial, city and municipal officials
and other interested parties.
57. Any party aggrieved by the Wage Order issued by the
Regional Board may appeal to the Commission within 10
days from the publication of such order. It shall be
mandatory for the Commission to decide such appeal
within 60 days from the filing thereof.
58. The filing of appeal does not stay the order unless the
person appealing shall file with the Commission, an
undertaking with a surety or sureties for the payment to
the employees affected by the order of the
corresponding increase, in the event such order is
affirmed. (As amended by RA 6727)
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LABOR STANDARDS
MINIMUM WAGE FIXING
Agencies:
1. NWPC
a. Prescribe rules, guidelines for the determination
of appropriate minimum wage and what factors
should be considered
b. Review Regular wage levels set by RTWPB if they
are in accordance to prescribed guidelines
c. REMEMBER, NWPC does not set the minimum
wage.
2. RTWPB
a. Determine and fix the minimum wage rates
applicable to the region, provinces, industries
b. Issue the corresponding wage order subject to
guidelines issued by the NWPC
NOTES:
59. Composition TRIPARTITE: Employer, employee
and government
60. Functions are delineated
Procedure:
RTWPB
61. When conditions warrant, investigate and
study pertinent facts, based criteria (Art. 124)
62. Conduct public hearings/consultations, notice
to employer and employees groups, provinces,
city, municipal officials and other interested
parties
63. Decide to ISSUE or NOT TO ISSUE a wage order
64. If it decides to ISSUE a wage order, the wage
order takes effect after 15 days from complete
publication in at least 1 newspaper of general
circulation in the region
65. Appeal wage order to NWPC within 10
calendar days; mandatory for the NWPC to
decide within 60 calendar days from filing
66. Filing of an appeal DOES NOT STAY order
unless appellant filed an undertaking with
surety, sureties, guarantees payment of
employees if the wage order is affirmed
Methods of Fixing
The Act is meant to rationalize wages, that is, by having permanent
boards to decide wages rather than leaving wage determination to
Congress year after year and law after law. The Court is not of
course saying that the Act is an effort of Congress to pass the buck,
or worse, to abdicate its duty, but simply, to leave the question of
wages to the expertise of experts.
(Employers Confederation of the Philippines v. NWPC, 1991)
Requirements for Validity
Regional Board shall conduct public hearings and
consultations, giving notices to interested parties
The Wage Order shall take effect only after publication in
a newspaper of general circulation in the region.
(Cagayan Sugar Miling Co. v. Secretary, 1998)
Piece Worker
In the absence of wage rates based on time and motion studies
determined by the labor secretary or submitted by the employer to
the labor secretary for his approval, wage rates of piece-rate
workers must be based on the applicable daily minimum wage
determined by the Regional Tripartite Wages and Productivity
Commission.
(Pulp and Paper, Inc. v. NLRC, 1997)
The term wage is broadly defined in Art. 97 of the Labor Code as
remuneration or earnings, capable of being expressed in terms of
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LABOR LAW I LABOR STANDARDS

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

Wage Distortion Art. 100

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

The law recognizes the validity of negotiated wage increases to

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

The concept of wage distortion assumes an existing grouping

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

Wage distortion involves four elements:

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

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LABOR LAW I
PART XIV
WOMEN WORKERS
I. WOMEN AND THE CONSTITUTION
The State recognizes the role of women in nation-building, and shall
ensure the fundamental equality before the law of women and
men.
(Art II Sec 14, 1987 Constitution)
WOMEN WORKERS
The Constitution, cognizant of the disparity in rights between
men and women in almost all phases of social and political life,
provides a gamut of protective provisions:
1. Section 14, Article II on the Declaration of Principles and State
Policies: recognizes the role of women in nation-building and
commands the State to ensure, at all times, the fundamental
equality before the law of women and men.
2. Section 3 of Article XIII: requires the State to afford full protection
to labor and to promote full employment and equality of
employment opportunities for all, including an assurance of
entitlement to tenurial security of all workers.
3. Section 14,Article XIII: mandates that the State shall protect
working women through provisions for opportunities that would
enable them to reach their full potential.
II. COVERAGE
General Rule: shall apply to all employers, whether operating for
profit or not, including educational, religious and charitable
institutions
Exception:
1. Government
2. Government-owned or controlled corporations and
3. Employers of household helpers and persons in their
personal service insofar as such workers are concerned.
(Book III, Rule XIII, Sec. 1, Omnibus Rules)
III. PROHIBITED ACTS
NIGHT WORK AND EXCEPTION
General Rule: Night work Prohibition
No woman, regardless of age, shall be employed or permitted or
suffered to work, with or without compensation:
1. In any industrial undertaking or branch thereof between
10pm & 6am of the following day
2. In any commercial or non-industrial undertaking or branch
thereof, other than agricultural, between 12mn & 6am of
the following day.
3. In any agricultural undertaking at night time unless she is
given a period of rest of not less than 9 consecutive hours.
(Art. 130)
Exceptions:
1. In cases of actual or impending emergencies caused by
serious accident, fire, flood, typhoon, earthquake, epidemic
or other disasters or calamity, to prevent loss of life or
property or in cases of force majeure or imminent danger to
public safety;
2. In case of urgent work to be performed on machineries,
equipment or installation, to avoid serious loss which the
employer would otherwise suffer;
3. Where the work is necessary to prevent serious loss of
perishable goods;
4. Where the woman employee holds a responsible position of
managerial or technical nature, or where the woman
employee has been engaged to provide health and welfare
services;
5. Where the nature of the work requires the manual skill and
dexterity of woman worker and the same cannot be
performed with equal efficiency by male worker;
6. Where the women employees are immediate members of
the family operating the establishment or undertaking; and
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LABOR STANDARDS
7. Under other analogous cases exempted by the Secretary of
Labor and Employment in appropriate regulations.
(ART. 131)
DISCRIMINATION
It shall be unlawful for any employer to discriminate against any
woman employee with respect to terms and conditions of
employment solely on account of her sex.
Acts of discrimination:
1. Payment of a lesser compensation, including wage, salary or
other form of remuneration and fringe benefits, to a female
employee as against a male employee, for work of equal
value; and
2. Favoring a male employee over a female employee with
respect to promotion, training opportunities, study and
scholarship grant solely on account of their sexes.
Criminal liability for the willful commission of any unlawful
acts as provided in this article or any violation of the rules and
regulations issued pursuant to Sec. 2 hereof shall be penalized as
provided in Articles 288 and 289 of this Code: Provided, That the
institution of any criminal action under this provision shall not bar
the aggrieved employee from filing an entirely separate and distinct
action for money claims, which may include claims for damages and
other affirmative reliefs. The action hereby authorized shall proceed
independently of each other.
(Art. 135)
MARRIAGE
It shall be unlawful for an employer:
1. to require as a condition of employment or continuation of
employment that a woman employee shall not get married,
or
2. to stipulate expressly or tacitly that upon getting married a
woman employee shall be deemed resigned or separated
or
3. to actually dismiss, discharge, discriminate or otherwise
prejudice a woman employee merely by reason of her
marriage.
(Art. 136)
GENERAL
It shall be unlawful for any employer:
1. To deny any woman employee 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;
2. To discharge such woman on account of her pregnancy,
while on leave or in confinement due to her pregnancy; or
3. To discharge or refuse the admission of such woman upon
returning to her work for fear that she may again be
pregnant.
(Art. 137)
IV. FACILITIES
Facilities for women:
The Secretary of Labor and Employment shall establish standards
that will ensure the safety and health of women employees. In
appropriate cases, he shall require any employer to:
1. Provide seats proper for women and permit them to use
such seats when they are free from work and during working
hours, provided they can perform their duties in this position
without detriment to efficiency;
2. Establish separate toilet rooms and lavatories for men and
women and provide at least a dressing room for women;
3. Establish a nursery in a workplace for the benefit of the
woman employees therein; and
4. Determine appropriate minimum age and other standards
for retirement or termination in special occupations such as
those of flight attendants and the like.
(Art. 132)
Family planning services; incentives for family planning:
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LABOR LAW I
1. Establishments which are required by law to maintain a clinic
or infirmary shall provide free family planning services to
their employees which shall include, but not limited to, the
application or use of contraceptive pills and intra-uterine
devices.
b. In coordination with other agencies of the government
engaged in the promotion of family planning, the
Department of Labor and Employment shall develop and
prescribe incentive bonus schemes to encourage family
planning among female workers in any establishment or
enterprise.
(Art. 134)
V. SPECIAL CLASSIFICATION, SPECIAL WOMEN WORKERS
Any woman who is permitted or suffered to work with or without
compensation in any night club, cocktail lounge, massage clinic, bar
or similar establishment, under the effective control or supervision
of the employer for a substantial period of time as determined by
the Secretary of Labor and Employment, shall be considered as an
employee of such establishments for purposes of labor and social
legislation.
(Art. 138)
VI. MATERNITY LEAVE
A female employee who has paid at least three (3) monthly
contributions in the twelve-month period immediately preceding
the semester of her childbirth, or miscarriage shall be paid a daily
maternity benefit equivalent to one hundred percent (100%) of her
average salary credit for sixty (60) days or seventy-eight days in case
of caesarean delivery subject to the following conditions:
1. That the employee shall have notified her employer of her
pregnancy and the probable date of her childbirth which
notice shall be transmitted to the SSS in accordance with the
rules and regulations it may provide.
2. The full payment shall be advanced by the employer within
thirty (30) days from the filing of the maternity leave
application.
3. That payment of daily maternity benefits shall be a bar to the
recovery of sickness benefits provided by this Act for the
same period for which daily maternity benefits have been
received.
4. That the maternity benefits provided under this section shall
be paid only for the first four (4) deliveries or miscarriages.
5. That the SSS shall immediately reimburse the employer of
one hundred percent (100%) of the amount of maternity
benefits advanced to the employee by the employer upon
receipt of satisfactory proof of such payment and legality
thereof;
6. That if an employee should give birth or suffer miscarriage
without the required contributions having been remitted for
her by her employer to the SSS, or without the latter having
been previously notified by the employer of time of the
pregnancy, the employer shall pay to the SSS damages
equivalent to the benefits which said employee member
would otherwise have been entitled to.
Paternity Leave Act of 1996 (RA 8187)
Every MARRIED male employee in the private and public sectors
shall be entitled to a paternity leave of seven (7) days with full pay
FOR THE FIRST FOUR (4) DELIVERIES OF THE LEGITIMATE SPOUSE
WITH WHOM HE IS COHABITING.
- The male employee applying for paternity leave shall
notify his employer of the pregnancy of his legitimate
spouse and the expected date of such delivery.
*Delivery includes childbirth or any miscarriage.)\
(Sec.2)
VII. SEXUAL HARASSMENT
POLICY
The State shall:
1. value the dignity of every individual,
2. enhance the development of its human resources,
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LABOR STANDARDS
3. guarantee full respect for human rights, and
4. uphold the dignity of workers, employees, applicants for
employment, students or those undergoing training,
instruction or education.
All forms of sexual harassment in the employment, education
or training environment are hereby declared unlawful.
Work, education or training-related sexual harassment is
committed:
a. by an employer, employee, manager, supervisor, agent of
the employer, teacher, instructor, professor, coach,
trainor or any other person who, having authority,
influence or moral ascendancy over another
b. in a work or training or education environment,
c. demands requests or otherwise requires any sexual favor
from other,
d. regardless of whether the demand, request for
requirement for submission is accepted by the object of
said act.
In a work-related or employment environment, sexual harassment
is
committed when:
a. The sexual favor is made as a condition in the hiring or in
the employment, re-employment or continued
employment of said individual or in granting said
individual favorable compensation, terms, conditions,
promotions, or privileges, or the refusal to grant the
sexual favor results in limiting, segregating or classifying
the employee which in any way would discriminate,
deprive or diminish employment opportunities or
otherwise adversely affect said employee;
b. The above acts would impair the employees rights or
privileges under existing labor laws; or
c. The above acts would result in an intimidating, hostile, or
offensive environment for the employee.
In an education or training environment, sexual harassment is
committed:
a. Against one who is under the care, custody or supervision
of the offender
b. Against one whose education, training, apprenticeship or
tutorship is entrusted to the offender;
c. When the sexual favor is made a condition to the giving
of a passing grade, or the granting of honors and
scholarships, or the payment of a stipend, allowance or
other benefits, privileges, or considerations; or
d. When the sexual advances result in an intimidating,
hostile or offensive environment for the result, trainee or
apprentice.
Any person who directs or induces another to commit any act of
sexual harassment as herein defined, or who cooperates in the
commission thereof by another without which it would not have
been committed, shall also be held liable under this Act.
(Sec. 14 A RA 8282)
DUTY OF THE EMPLOYER OR HEAD OF OFFICE IN A WORK-RELATED,
EDUCATION OR TRAINING ENVIRONMENT OR INSTITUTION
1. to prevent or deter the commission of acts of sexual
harassment and
2. to provide the procedures for the resolution, settlement
or prosecution of acts of sexual harassment.
The employer or head of office shall:
a. Promulgate appropriate rules and regulations in
consultation with and jointly approved by the employees
or students or trainees, through their duly designated
representatives prescribing the procedure for the
investigation of sexual harassment cases and the
administrative sanctions therefore.
The said rules and regulations issued
pursuant to this subsections (a) shall include, among
others, guidelines on proper decorum in the
workplace and educational or training institutions
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LABOR LAW I LABOR STANDARDS

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

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

Circumstances which gravely threaten or endanger the survival

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

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LABOR LAW I LABOR STANDARDS

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

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

NON-FORMAL EDUCATION FOR WORKING CHILDREN

The Department of Education, Culture and Sports shall

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

PROHIBITION ON THE EMPLOYMENT OF CHILDREN IN CERTAIN

ADVERTISEMENTS

No employment of child models in all commercial

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

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LABOR LAW I
PART XVI
HOUSEHELPERS
I. COVERAGE
Coverage: All persons rendering services in households for
compensation.
"Domestic or household services" shall mean service in the
employer's 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
employer's household, including services of family drivers.
(Art. 141)
II. HOUSEHELPERS
- All persons rendering services in households for compensation.
The term `househelper' is synonymous to the term `domestic
servant' and shall refer to any person, whether male or female, who
renders services in and about the employer's home and which
services are usually necessary or desirable for the maintenance and
enjoyment thereof, and ministers exclusively to the personal
comfort and enjoyment of the employer's family. (Apex Mining Co.
v. NLRC)
"Domestic or household services" shall mean service in the
employer's 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
employer's household, including services of family drivers.
(Art. 141)
III. NON-HOUSEHOLD WORK ASSIGNMENT
No househelper shall be assigned to work in a commercial,
industrial or agricultural enterprise at a wage or salary rate lower
than that provided for agricultural or non-agricultural worker as
prescribed herein.
(Art. 145)
Domestic Work
The work that petitioner performed in the temple could not be
categorized as mere domestic work. The petitioner attended to the
visitors, mostly Chinese, who came to pray or seek advice before
Buddha for personal or business problems; arranged meetings
between these visitors and Su and supervised the preparation of
the food for the temple visitors; acted as to urist guide of foreign
visitors; acted as liaison with some government offices; and made
the payment for the temple's Meralco, MWSS and PLDT bills.
Indeed, these tasks may not be deemed activities of a household
helper. They were essential and important to the operation and
religious functions of the temple. (Barcenas v. NLRC, 1990)
IV. CONDITIONS OF EMPLOYMENT
Contract for Domestic Service
The original contract for domestic service shall not last for more
than two years but it may be renewed for such periods as may be
agreed upon by the parties.
(Art. 142)
Minimum Wage
(Art. 143)
Minimum Cash Wage
Minimum wage rates= basic cash wages + lodging, food and medical
attendance.
(Art. 144)
Assignment to non-household work.
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LABOR STANDARDS
No househelper shall be assigned to work in a commercial,
industrial or agricultural enterprise at a wage or salary rate lower
than that provided for agricultural or non-agricultural worker as
prescribed herein
(Art. 145)
Opportunity for education.
If below 18 the employer shall give him or her an opportunity for at
least elementary education. The cost of such education shall be part
of the househelper's compensation, unless there is a stipulation to
the contrary.
(Art. 146).
Treatment of househelpers.
- just and humane manner. In no case shall physical violence be
used upon the househelper.
(Art. 147).
Board, lodging and medical attendance.
ER furnish free of charge suitable and sanitary living quarters +
adequate food and medical attendance.
(Art. 148)
Indemnity for unjust termination of services
If the period of household if period of service fixed = no termination
by either party except for just
unjust dismissal = compensation already earned plus that of 15 days
by way of indemnity.
leaves w/o justifiable reason = any unpaid salary due him or her not
exceeding 15 days.
(Art. 149).
Service of termination notice.
If the duration of the household service is not determined either by
stipulation or by the nature of the service, the employer or the
househelper may give notice to put an end to the relationship five
days before the intended termination of the service.
(Art. 150)
Employment certification.
Upon the severance of the household service relation, the employer
shall give the househelper a written statement of the nature and
duration of the service and his or her efficiency and conduct as
househelper.
(Art. 151)
Employment records.
The employer may keep such records as he may deem necessary to
reflect the actual terms and conditions of employment of his
househelper which the latter shall authenticate by signature or
thumbmark upon request of the employer. (Art. 152) See ARTICLES
1689 1699. NCC
No Overtime Pay for Househelpers
Domestic or household service" shall mean services in the
employers 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
employers household, including services of family drivers. Chapter
III, Title III, Book III, however, is silent on the grant of overtime pay,
holiday pay, premium pay and service incentive leave to those
engaged in the domestic or household service. Moreover, the
specific provisions mandating these benefits are found in Book III,
Title I of the Labor Code, and Article 82, which defines the scope of
the application of these provisions, expressly excludes domestic
helpers from its coverage. (Ultra Villa Food Haus v. Geniston, 1999)
Page 42 of 56
LABOR LAW I
PART XVII
HOMEWORKERS
I. COVERAGE AND REGULATION
Regulations of industrial homework
The employment of industrial homeworkers and field personnel
shall be regulated by the Government through appropriate
regulations issued by the Secretary of Labor and Employment to
ensure the general welfare and protection of homeworkers and
field personnel and the industries employing them.
(Art. 153)
Regulations of Secretary of Labor and Employment
The regulations or orders to be issued pursuant to this Chapter shall
be designed to assure the average employee of an undertaking the
minimum terms and conditions of employment applicable to the
industrial homeworkers or field personnel involved.
(Art. 154)
Coverage
-apply to any person who performs industrial homework for an
employer, contractor or sub-contractor. (1)
Industrial Homework- a system of production under which work for
an employer or contractor is carried out by a homework at his/her
home. Materials may or may not be furnished by the employer or
contractor. (2a)
(Department Order No. 005 92)
II. EMPLOYER
Distribution of homework.
"employer" of homeworkers- includes any person, natural or
artificial, who for his account or benefit or on behalf of any person
residing outside the country, directly or indirectly, or through any
employee, agent, contractor, sub-contractor or any other person:
1. Delivers, or causes to be delivered, any goods, articles or
materials to be processed or fabricated in or about a home
and thereafter to be returned or to be disposed of or
distributed in accordance with his directions; or
2. Sells any goods, articles or materials for the purpose of having
the same processed or fabricated in or about a home and
then rebuys them after such processing or fabrication, either
himself or through some other person. (Art. 155)
100% UP LAW UP BAROPS 2008
LABOR STANDARDS
PART XVIII
TERMINATION OF EMPLOYMENT
GENERAL CONCEPTS
I. SECURITY OF TENURE
General Rule: In case of regular employment, the ER shall NOT
terminate the services of an EE (Art 279)
Exceptions: (Art 279)
4. Termination for just cause
5. Termination authorized by this Title
If EE is unjustly dismissed, he is entitled to:
6. Reinstatement
without loss of seniority rights and other privileges, AND
7. Full backwages
inclusive of allowances, and other benefits or their monetary
equivalent computed from the time compensation was
withheld up to the time of actual reinstatement. (Art 279)
The entitlement of workers to SECURITY of TENURE is recognized in
Art XIII, Sec. 3, 1987 Constitution
A. Nature of Security of Tenure:
5. A right guaranteed by the Constitution - should not be lightly
denied on so nebulous a basis as mere speculation.
(Civil Service Corp. Workers Union v. City Service Corp.1985)
6. NOT an absolute right a worker may still be dismissed for
cause
(Manila Electric Co. vs. NLRC, 1991)
7. Qualified by the Doctrine of Strained Relations Where
reinstatement is not feasible, expedient or practical, as where
reinstatement would only exacerbate the tension and strained
relations between the parties, or where the relationship
between the employer and employee has been unduly
strained by reason of their irreconcilable differences,
particularly where the illegally dismissed employee held a
managerial or key position in the company, it would be more
prudent to order payment of separation pay instead of
reinstatement.
(Quijano vs. Mercury Drug Corp., 1998)
8. Does NOT give an EE an absolute right to his position - When a
transfer is not unreasonable, nor inconvenient, nor prejudicial
to an employee; and it does not involve a demotion in rank or
diminution of his pay, benefits, and other privileges, the
employee may not complain that it amounts to constructive
dismissal.
(Lanzadares vs. Amethyst Security, 2003)
71. B. Coverage
Applies to ALL establishments or undertakings, whether for profit or
not. (Art 278)
h. Regular EE Art 279
i. Contract EE security of tenure to a limited extent, i.e. they
remain secure in their employment during the period their
respective contracts of employment remain in effect
(Labajo vs. Alejandro, 1988)
j. Probationary EE security of tenure to a limited extent
Page 43 of 56
LABOR LAW I
Limitations on power of ER to terminate a probationary
EE:
exercised in accordance with the specific
requirements of the contract
dissatisfaction of the ER must be real and in good
faith, not feigned so as to circumvent the contract
or the law
no unlawful discrimination in the dismissal
(Lopez vs. Javier, 1996)
k. Managerial EE entitled to security of tenure, and cannot be
arbitrarily dismissed at any time, and without cause as
reasonably established in an appropriate investigation.
(Inter Orient Maritime Enterprises, Inc. vs. NLRC, 1994)
C. Management Rights and Security of Tenure
Requisites for Validity of Management Prerogative regarding
Dismissal:
4. Exercised in good faith for the advancement of the ER's
interest, and
5. NOT for the purpose of defeating or circumventing the
rights of the EEs under special laws or under valid
agreements
(San Miguel Brewery, etc. v. Ople, 1989)
The dismissals of the EEs must be made within the parameters
of law and pursuant to the tenets of equity and fair play. The
ER's right to terminate the services of an EE for just or
authorized cause must be exercised in GF. It must NOT amount
to interfering with, restraining or coercing EEs in the exercise
of their right to self-organization because it would amount to
ULP under Art 248.
(Colegio de San Juan de Letran v. Assn. of Employees, etc.,
2000)
D. Guidelines on Imposition of Penalties
6. ER's prerogative to discipline or dismiss its EE must NOT
be exercised wantonly, but must be controlled by
substantive due process and tempered by the
fundamental policy of protection to labor enshrined in
the Constitution.
(Farrol v. CA, 2000)
7. The penalty must be commensurate with the act,
conduct or omission imputed to the employee and
imposed in connection with the employers disciplinary
authority.
(Farrol v. CA, 2000)
8. [P]olicies, rules and regulations on work-related activities
of the employees must always be fair and reasonable,
and the corresponding penalties, when prescribed, must
be commensurate to the offense involved and to the
degree of the infraction.
(VH Manufacturing, Inc. v. NLRC, 2000; St. Michael's
Institute v. Santos, 2001)
9. Employers are allowed a wider latitude of discretion in
terminating the employment of managerial personnel or
those of similar rank performing functions which by their
nature require the employers trust and confidence, than
in the case of ordinary rank-and-file employees.
(Etcuban, Jr. v. Sulpicio Lines, Inc., 2005)
10. Substantial proof is sufficient as basis for the imposition
of any disciplinary action upon the EE. The standard of
substantial evidence is satisfied where the ER has
reasonable ground to believe that the EE is responsible
for the misconduct and participation therein renders his
100% UP LAW UP BAROPS 2008
LABOR STANDARDS
unworthy of trust and confidence demanded by his
position.
(Reyno v. Manila Electric Co., 2004)
E. Factors
iii) Value of articles pilfered
(Associated Labor Union v. NLRC, 1999)
iv) Whether is EE is a managerial or confidential EE.
- managerial or confidential EE: greater trust is placed by
management, and greater fidelity to duty is
correspondingly expected.
- rank-and-file EE: generally mere wage earners whose
dismissal from employment can have severe financial
consequences on their families.
(Associated Labor Union v. NLRC, 1999)
v) Length of service
(PLDT, Inc. v. NLRC, 1999)
vi) Number of violations committed during his employ.
(PLDT, Inc. v. NLRC, 1999)
F. Rules Managerial and Rank-and-File EEs
Managerial EE/Confidential EE
sufficient that there is some basis for such loss of confidence,
such as when the employer has reasonable ground to believe
that the employee concerned is responsible for the purported
misconduct, and the nature of his participation therein renders
him unworthy of the trust and confidence demanded by his
position; proof beyond reasonable doubt is NOT required
(Caoile v. NLRC, 1998)
employment for a long time taken against the EE
(Salvador v. Phil. Mining Service Corp., 2003)
Rank-and-file EE
(cx) loss of trust and confidence as ground for valid dismissal
requires proof of involvement in the alleged events in
question, and that mere uncorroborated assertions and
accusations by the employer will not be sufficient
(Caoile v. NLRC, 1998)
TERMNATION OF EMPLOYMENT BY EMPLOYEE
I. CAUSES
A. Just causes for termination by EE: SICA
(no written notice to ER required)
Serious insult by the ER or his representative on the
honor and person of the EE;
Inhuman and unbearable treatment accorded the EE by
the ER or his representative;
Commission of a crime or offense by the ER or his
representative against the person of the EE or any of the
immediate family members of his family; and
Other causes analogous to any of the foregoing. (Art 285
(b))
B. Termination by EE without just cause:
EE to serve written notice on ER at least 1 month in advance. (Art
285(a))
Effect of failure to serve notice: ER may hold EE liable for damages
(Art 285(a))
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LABOR LAW I
C. Resignation
Definition
The 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 and he has no other choice but to dissociate
himself from his employment.
(Habana vs. NLRC, 1998)
Requisites of Resignation:
5. Unconditional
(Azcor Manufacturing, Inc. v. NLRC, 1999)
6. Intention to relinquish a portion of the term of office
accompanied by an act of relinquishment.
(Azcor Manufacturing, Inc. v. NLRC, 1999)
- No valid resignation where it was made without proper
discernment (Metro Transit Organization, Inc. v. NLRC,
1998)
4. Voluntary
(Pascua v. NLRC, 1998)
4. Acceptance of ER necessary to make the resignation
effective
(Shie Jie Corp./Seastar Ex-im Corp. v. National Federation
of Labor, 2005; Reyes v. CA, 2003)
- Resignations, once accepted and being the sole act of
the employee, may not be withdrawn without the
consent of the employer.
(Intertrod Maritime, Inc. v. NLRC, 1991)
Rule: Filing of an illegal dismissal case is inconsistent with
resignation (Valdez v. NLRC, 98)
Willi Hahn Enterprises v. Maghuyop, 2004:
The rule that the filing of a complaint for illegal dismissal is
inconsistent with resignation is not applicable to the instant case.
The filing of an illegal dismissal case by respondent was evidently a
mere afterthought. It was filed not because she wanted to return
to wok but to claim separation pay and back wages.
Constructive Dismissal
Definition
An involuntary resignation resorted to when continued
employment is rendered impossible, unreasonable, or unlikely;
when there is a demotion in rank and/or a diminution in pay; or
when a clear discrimination, insensibility or disdain by an employer
becomes unbearable to the employee.
(Phil. Wireless, Inc. v. NLRC, 1998)
if the employee was forced to remain without work or
assignment for a period exceeding six months, then he is in
effect constructively dismissed.
(Valdez v. NLRC, 1998)
II. No Termination
Circumstances that shall NOT terminate employment:
Bona fide suspension of the operation of a business or
undertaking NOT exceeding 6 months; OR
Fulfillment by the EE of a military or civic duty. (Art 286)
ER shall reinstate the EE to his former position without loss of
seniority rights if EE indicates his desire to resume to work not
later than 1 month from the resumption of operations of his
ER or from relief from the military or civic duty.
(Art 286)
ER-EE relationship deemed SUSPENDED in case of suspension
of operation, unless suspension is for the purpose of defeating
the rights of the EEs, or mandatory fulfillment of military or
civic duty.
(Bk VI, Rule I, Sec 12, Omnibus Rules)
Payment of wages and grant of other benefits and privileges
while EE is on military or civic duty shall be subject to:
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a. special laws and decrees
b. individual or collective bargaining agreement
c. voluntary ER practice or policy
(Bk VI, Rule I, Sec 12, Omnibus Rules)
When the bona fide suspension of the operation of a business
or undertaking exceeds six months, then the employment of
the employee shall be deemed terminated.
(Valdez v. NLRC, 1998)
TERMINATION OF EMPLOYMENT BY EMPLOYER
PRELIMINARY MATTERS
I. Basis of Right and Requirements
A. Basis:
The right of an employer to freely select or discharge his
employees, is subject to regulation by the State basically in the
exercise of its paramount police power. (Commonwealth Acts
Nos. 103 and 213.) But an employer cannot legally be
compelled to continue with the employment of a person who
admittedly was guilty of misfeasance or malfeasance towards
his employer, and whose continuance in the service of the
latter is patently inimical to his interests. The law, in protecting
the rights of the laborer, authorizes neither oppression nor
self-destruction of the employer.
(Manila Trading and Supply Co., Inc. v. Zulueta, 1940)
[I]t has been established that the right to dismiss or otherwise
impose disciplinary sanctions upon an employee for just and
valid cause, pertains in the first place to the employer, as well
as the authority to determine the existence of said cause in
accordance with the norms of due process.
(Makati Haberdashery, Inc. v. NLRC, 1989)
B. Requisites for Valid Dismissal
Substantive Due Process Dismissal for any of the just or
valid causes under Arts 282 284
Procedural Due Process EE must be given notice with
adequate opportunity to be heard before he is notified of
his actual dismissal for cause.
(Fujitsu v. CA, 2005)
- ER may NOT substitute the required prior notice &
opportunity to be heard with the mere payment of 30
days' salary.
(PNB v. Cabanag, 2005)
Grounds for Termination
Serious misconduct or willful disobedience
Gross or habitual neglect of duties
Fraud or willful breach of trust
Commission of a crime or offense against the person of
the ER or any immediate member of his family or duly
authorized representative
Analogous Causes
Installation of labor saving devices
Redundancy
Retrenchment to prevent losses
Closing or cessation of operation
Disease
II. Just Causes
(Art 282)
A. Serious Misconduct or Willful Disobedience
Art 282 Termination by Employer
An employer may terminate an employment for any of the
following causes:
(a) Serious misconduct or willful disobedience by the employee of
the lawful orders of his employer or representative in connection
with his work;
1. Serious Misconduct
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LABOR LAW I
Definition
Improper or wrong conduct; the transgression of some established
and definite rule of action, a forbidden act, a dereliction of duty,
willful in character, and implies wrongful intent and not mere error
in judgment.
To be serious, the misconduct must be of such grave and
aggravated character. It must be in connection with the employee's
work to constitute just cause for separation.
(Austria v. NLRC, 1999; Samson v. NLRC, 2000; Villamor Golf Club v.
Pehid, 2005; Lakpue Drug, Inc. v. Belga, 2005)
Requisites:
Serious
Related to the performance of the EE's duties; AND
Shows that the EE has become unfit to continue working
for the ER.
(Philippine Aeolus Automotive United Corp. v. NLRC,
2000; Coca-Cola Bottlers, Phil., Inc. v. Kapisanan ng
Malayang Manggagawa sa Coca- Cola, 2005)
2. Willful Disobedience
Requisites:
EE's assailed conduct must have been willful, that is,
characterized by a wrongful and perverse attitude; AND
The order violated must have been:
a. reasonable
b. lawful
c. made known to the EE
d. pertain to the duties which he had been engaged to
discharge.
(Westin Phil. Plaza Hotel v. NLRC, 1999; Micro Sales
Operation Network v. NLRC, 2005)
Not every case of willful disobedience may be penalized by
dismissal; the penalty must be proportionate.
(Bascon v. CA, 2004)
Tierra International Production Corp. v. NLRC, 1996:
According to the report of the company's Site
Administration Officer, private respondents were given three
"options:" (1) to go back to work; (2) to apologize to their
supervisor; and (3) to be repatriated. What private respondents
were given were not really "options." They were given the choice of
apologizing for their refusal to work and then resume working as
ordered, or, else, resign and be sent back home. Under the
circumstances they really had no choice but to resign. It was not
pride or arrogance which made them refuse to work as ordered, but
the assertion of their right not to be made to work outside of what
they had been hired to do. For asserting their right, private
respondents should not be punished. We, therefore, hold that
private respondents' dismissal was illegal and that for this reason
they are entitled to be paid their salaries corresponding to the
unexpired portion of their employment contract, in addition to their
unpaid salaries prior to their dismissal, as found by both the POEA
and the NLRC.
B. Gross and Habitual Neglect of Duties
Art 282 Termination by Employer
An employer may terminate an employment for any of the
following causes:
(b) Gross and habitual neglect by the employee of his duties;
Definition of Gross Negligence and Habitual Neglect:
Gross negligence is negligence characterized by want of even
slight care, acting or omitting to act in a situation where there
is a duty to ac, not inadvertently but willfully and intentionally
with a conscious indifference to consequences insofar as other
persons may be affected.
(Tres Reyes v. Maxim's Tea House, 2003; Cebu Filveneer Corp.
v. NLRC, 1998; Citibank v. Gatchalian, 1995)
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Gross negligence connotes want of care in the performance of
one's duties, while habitual neglect implies repeated failure to
perform one's duties for a period of time, depending upon the
circumstances.
(Chua v. NLRC, 2005)
Requisites for Neglect of Duty to be a Ground for Dismissal:
Gross want of care in the performance one's duties;
Habitual repeated failure to perform one's duties for a
period of time, depending upon the circumstances
(Chua v. NLRC, 2005)
Neglect of duty must be BOTH gross and habitual
Simple Negligence
Under the Labor Code simple negligence is NOT a ground for
the dismissal of an EE.
(RDS Trucking v. NLRC, 1998)
Mere involvement in an accident, absent any showing of fault
or recklessness on the part of the EE, is NOT a valid ground for
dismissal.
(Paguio Transport Corp. v. NLRC, 1998)
C. Fraud Willful Breach of Trust
Art 282 Termination by Employer
An employer may terminate an employment for any of the
following causes:
(c) Fraud or willful breach by the employee of the trust reposed in
him by his employer or duly authorized representative;
Requisites of Loss of Confidence
(PLDT v. Tolentino, 2004; Jardine Davies, Inc. v. NLRC, 1999)
EE concerned holds a position of trust and confidence
- person is entrusted with confidence on delicate
matters, such as care and protection, handling or custody
of the employer's property
(Panday v. NLRC, 1992)
Act complained of must be "work-related"
- act would show the employee concerned to be unfit to
continue working for the employer
Basis for such loss of confidence
- proof beyond reasonable doubt NOT necessary
- sufficient that employer has reasonable ground to
believe that the employee concerned is responsible for
the purported misconduct, and the nature of his
participation therein renders him unworthy of the trust
and confidence demanded of his position
Guidelines for Application of Doctrine of Loss of Confidence
a. Loss of confidence should NOT be simulated;
b. It should NOT be used as a subterfuge for causes which are
improper, illegal or unjustified;
c. It should NOT be arbitrarily asserted in the face of overwhelming
evidence to the contrary;
d. It must be genuine, NOT a mere afterthought to justify earlier
action taken in bad faith;
e. The EE involved holds a position of trust and confidence.
(Vitarich v. NLRC, 1999; Coca-Cola Bottlers, Phils., Inc. v. Kapisanan
ng Malayang Manggagawa sa Coca-Cola, 2005)
Willful Breach of Trust
Willful Breach - breach done intentionally, knowingly,
purposely, without justifiable excuse, as distinguished from an
act done carelessly, thoughtlessly, heedlessly or inadvertently.
(Atlas Consolidated Mining and Development Corp. v. NLRC,
1998)
There must be actual breach of duty which must be
established by substantial evidence.
(Atlas Consolidated Mining and Development Corp. v. NLRC,
1998)
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LABOR LAW I LABOR STANDARDS

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

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

Quarrelsome - Bossy Definition

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

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

Probable Cause Instances that do NOT constitute abandonment:

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

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LABOR LAW I
Employer has Burden of Proving Abandonment
The unflinching rule in illegal dismissal cases is that the employer
bears the burden of proof. To establish a case of abandonment, the
employer must prove the employee's deliberate and unjustified
refusal to resume employment without any intention of returning.
Specifically, the employer has to show the concurrence of the
following: (1) the employee's intention to abandon employment
and (2) overt acts from which such intention may be inferred as
when the employee shows no desire to resume works.
(Mendoza v. NLRC, 1999)
Filing of Case for Illegal Dismissal Inconsistent with Abandonment
The immediate filing of a complaint for illegal dismissal against the
employer is a clear indication that the employee has not given up
on his work.
(CMP Federal Security Agency, Inc. v. NLRC, 1999)
2. Loans
Borrowing Money
Borrowing money is neither dishonest, nor immoral, nor illegal,
much less criminal. (Medical Doctors, Inc. [Makati Medical Center]
v. NLRC)
However, said act becomes a serious misconduct that may justly be
asserted as a ground for dismissal when reprehensible behavior
such as the use of a trust relationship as a leverage for borrowing
money is involved.
(Pearl S. Buck Foundation, Inc. v. NLRC, 1990)
Medical Doctors, Inc. v. NLRC, 1985:
The act of borrowing money by a hospital probationary clerk from a
patient is NOT a ground for termination of employment as her
borrowing was due to economic necessity protected by the
Constitution. She paid what she borrowed, and was recommended
for permanent appointment.
3. Courtesy Resignation
Batongbacal v. Associated Bank, 1988:
Resignation per se means voluntary relinquishment of a position or
office. Adding the word "courtesy" did not change the essence of
resignation. That courtesy resignations were utilized in government
reorganization did not give private respondent the right to use it as
well in its own reorganization and rehabilitation plan. There is no
guarantee that all employers will not use it to rid themselves
arbitrarily of employees they do not like, in the guise of
"streamlining" its organization. On the other hand, employees
would be unduly exposed to outright termination of employment
which is anathema to the constitutional mandate of security of
tenure.
4. Work Attitude
Absences
An employees habitual absenteeism without leave, which violated
company rules and regulations is sufficient cause to justify
termination from service.
(Manila Electric Co. v. NLRC, 1996)
5. Term Employment
Brent Ruling Criteria under which term employment does NOT
Circumvent 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 employee and absent any other circumstances
vitiating his consent; OR
It satisfactorily appears that the employer and the
employee dealt with each other on more or less equal
terms with no moral dominance exercised by the former
or the latter.
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LABOR STANDARDS
(Brent School v. Zamora, 1990; Romares v. NLRC, 1998;
Medenilla v. Phil. Veterans Bank, 2000)
If a contract is for a fixed term and the EE is dismissed without
just cause, he is entitled to the payment of his salaries
corresponding to the unexpired portion of the employment
contract.
(Medenilla v. Phil. Veterans Bank, 2000)
6. Past Infractions
Past Offenses
Previous offenses may be so used as valid justification for dismissal
from work only if the infractions are related to the subsequent
offense upon which basis the termination of employment is
decreed.
(Stellar Industrial Service, Inc. v. NLRC, 1996; La Carlota Planters
Assn. v. NLRC, 1998)
7. Professional Training
Residency Training
Felix v. Buenaseda, 1995:
A residency or resident physician position in a medical
specialty is never a permanent one. Residency connotes training
and temporary status. It is the step taken by a physician right after
post-graduate internship (and after hurdling the Medical Licensure
Examinations) prior to his recognition as a specialist or sub-
specialist in a given field.
Under this system, residents, specially those in university
teaching hospitals enjoy their right to security of tenure only to the
extent that they periodically make the grade, making the situation
quite unique as far as physicians undergoing post-graduate
residencies and fellowships are concerned.
8. Love and Morals
Immorality
When a teacher engages in extra-marital relationship, especially
when the parties are both married, such behavior amounts to
immorality, justifying his termination from employment.
(Santos v. NLRC, 1998)
Love
Chua-Qua v. Clave, 1990:
Private respondent utterly failed to show that petitioner took
advantage of her position to court her student. If the two eventually
fell in love, despite the disparity in their ages and academic levels,
this only lends substance to the truism that the heart has reasons of
its own which reason does not know. But, definitely, yielding to this
gentle and universal emotion is not to be so casually equated with
immorality. The deviation of the circumstances of their marriage
from the usual societal pattern cannot be considered as a defiance
of contemporary social mores.
9. Violation of Company Rules
Company policies and regulations, unless shown to be grossly
oppressive or contrary to law, are generally valid and binding on the
parties and must be complied with until finally revised or amended,
unilaterally or preferably through negotiation, by competent
authority.
(Aparente, Sr. v. NLRC, 2000)
10. Criminal Case
Effect of Acquittal
Dismissal of the criminal case against an EE shall NOT necessarily be
a bar to his dismissal from employment on the ground of loss of
trust and confidence.
(Ramos v. NLRC, 1998)
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LABOR LAW I
Conviction
Sampaguita Garments Corp. v. NLRC, 1994:
The private respondent's conviction of the crime of theft of
property belonging to the petitioner has affirmed the existence of a
valid ground for her dismissal and thus removed the justification for
the administrative decision ordering her reinstatement with back
wages.
Dismissal Criminal Case
Conviction of an EE in a criminal case is NOT indispensable to
warrant his dismissal and the fact that a criminal complaint against
the EE has been dropped by the fiscal is NOT binding and conclusive
upon a labor tribunal.
(Lacoste v. Inciong, 1988)
Guilt or Innocence
The guilt or innocence in a criminal case is NOT determinative of the
existence of a just or authorized cause for dismissal.
(Chua v. NLRC, 1993)
11. Abolition of Position
The abolition of a position deemed no longer necessary is a
management prerogative, which must be done without malice and
arbitrariness.
(Benguet Electric Cooperative v. Fianza, 2004)
12. Dishonesty
Nuguit v. NLRC, 2003:
As custodian of the petty cash fund, he had the duty to
ascertain that the circumstances which brought about any claim
therefrom were in order. He cannot now shirk from this
responsibility by indirectly pinning the blame on the approving
officer and asserting that the transgression was the result of mere
inadvertence.
Transfers Discharge and Suspension
The ER has the right to transfer or assign EEs from one area of
operation to another, or one office to another or in pursuit of its
legitimate business interest, provided there is no demotion in rank
or diminution of salary, benefits and other privileges and not
motivated by discrimination or made in bad faith, or effected as a
form of punishment or demotion without sufficient cause. This
matter is a prerogative inherent in the ER's right to effectively
control and manage the enterprise.
(Lazanderas v. Amethyst Security and General Services, 2003;
Castillo v. NLRC, 1999; Westin Phil. Plaza Hotel v. NLRC, 1999)
When Transfer amounts to Constructive Dismissal
A transfer amounts to constructive dismissal when the transfer is
unreasonable, inconvenient, or prejudicial to the employee, and it
involves a demotion in rank or diminution of salaries, benefits and
other privileges.
(Mendoza v. Rural Bank, 2004; OSS Security and Allied Services, Inc.
v. NLRC, 2000)
Constructive Discharge
Definition
A quitting because continued employment is rendered
impossible, unreasonable or unlikely; as, an offer involving a
demotion in rank and a diminution in pay.
(Mobile Protective and Detective Agency v. Ompad, 2005;
Philippine-Japan Active carbon Corp. v. NLRC, 1989)
There is constructive dismissal when there is a demotion in
rank and/or diminution in pay, or when a clear discrimination,
insensibility or disdain by an employer becomes unbearable to
the employee.
(Dusit Hotel Nikko v. National Union in Hotel, Restaurant and
Allied Industries, 2005)
Constructive dismissal is present when an employee's
functions, which were originally supervisory in nature were
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LABOR STANDARDS
reduced, and such reduction is not grounded on valid grounds
such as genuine business necessity.
(Go v. CA, 2004)
Mark Roche International v. NLRC, 1999:
Respondent was illegally dismissed but there was not
constructive dismissal as it did not involve a demotion in rank or
diminution in pay. They were simply told, without prior warning or
notice, that there was no more work for them.
Employer has Burden of Proof
In constructive dismissals, the employer has the burden has the
burden of proving that the transfer and demotion of an employee
are for just and valid grounds such as genuine business necessity.
(Globe Telecom, Inc. v. Florendo, 2003)
Preventive Suspension
Definition
Preventive suspension is a disciplinary measure for the protection
of the company's property pending investigation of any alleged
malfeasance or misfeasance committed by the employee. The
employer may place the worker concerned under preventive
suspension if his continued employment poses a serious and
imminent threat to the life or property of the employer or of his co-
workers.
(PAL v. NLRC, 1998)
Preventive Suspension Limited to 30 days
Preventive suspension for an indefinite period amounts to a
dismissal, and is violative of Rule XIV, Sec. 4, IRR, which limits the
preventive suspension to 30 days.
(Kwikway Engineering Works v. NLRC, 1991)
III. Other Causes Business Related Causes
Recognition of Right
Uichico v, NLRC, 1997:
The law recognizes the right of every business entity to
reduce its workforce if the same is made necessary by compelling
economic factors which would endanger its existence or stability.
The fundamental law itself guarantees, even during the process of
tilting the scales of social justice towards workers and employees,
the right of enterprises to reasonable returns of investment and to
expansion and growth. To hold otherwise would not only be
oppressive and inhuman, but also counter-productive and
ultimately subversive of the nation's thrust towards a resurgence in
our economy which would ultimately benefit the majority of our
people. Where appropriate and where conditions are in accord with
law and jurisprudence, the Court has authorized valid reductions in
the volume of business which has rendered certain employees
redundant.
Art 283 Closure of Establishment and Reduction of Personnel
The ER may also terminate the employment of any employee due
to:
Installation of labor saving devices
Redundancy
Retrenchment to prevent losses, OR
Closing or cessation of operation of the establishment or
undertaking,
unless the closing is for the purpose of circumventing the
provisions of this Title xxx
Manner of Termination
ER to serve a written notice to:
Wokers, AND
DOLE
at least 1 month before the intended date of termination.
(Art 283)
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LABOR LAW I LABOR STANDARDS

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

In redundancy, what is looked into is:

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

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LABOR LAW I
Procedure - Requisites
Necessity of the retrenchment to prevent losses and
proof of such losses;
Written notice to the EEs and to the DOLE at least one
month prior to the intended date of retrenchment; and
Payment of separation pay equivalent to one month pay
or at least month pay for every year of service,
whichever is higher.
(Guerrero v. NLRC, 1996)
Standards
The losses expected should be substantial and NOT
merely de minimis in extent;
The substantial loss apprehended must be reasonably
imminent, as such imminence can be perceived
objectively and in good faith by the employer;
It must be reasonably necessary and likely to effectively
prevent the expected loss; and
Sufficient and convincing evidence must prove the
alleged losses, if already incurred, or the expected
imminent losses sought to be forestalled.
(Lopez Sugar Corp. v. Federation of Free Workers, 1990;
Blucor Plywood Corp. v. Amarilla, 2005)
Nature of Loss
Losses must be substantial and not merely de minimis in
extent
(Lopez Sugar Corp. v. Federation of Free Workers, 1990)
The ER must prove serious business losses, and not just any
kind of loss. Otherwise, a company may feign excuses to suit
its whims and prejudices or to rid itself of unwanted EEs.
(Bogo-Medellin Sugar Cane Planters Assn., Inc. v. NLRC, 1998)
Working Capital Ratio or Current Ratio:
Tests the liquidity of the ER
Measures the number of times that the current liabilities could
be paid with the current assets
(Cama v. Joni's Food Services, Inc., 2004)
Sliding Income decreasing gross revenues
not necessarily losses, much less serious business losses
(San Miguel Jeepney Service v. NLRC, 1996)
Proof of Loss
Financial statements audited by independent external auditors
constitute the normal method of proof of the profit and loss
performance of a company.
(Lopez Sugar Corp. v. Federation of Free Workers, 1990)
Financial statements for 2 corporate years is insufficient proof
of serious business losses.
(Bogo-Medellin Sugar Cane Planters Assn., Inc. v. NLRC, 1998)
The condition of business losses is normally show by audited
financial documents like yearly balance sheets and profit and
loss statements as well as annual income tax returns. Financial
statements must be prepared and signed by independent
auditors.
(Damas International, Inc. v. Daguman, 2005)
Effect of Rehiring
Re-hiring or reemployment does NOT negate the imminent losses
which prompted the ER to retrench.
(Atlantic Gulf and Pacific Co. of Manila v. Meris, 2005)
D. Closing of Business
Right
An ER may close or cease his business operations or undertaking
even if he is not suffering from serious business losses or financial
reverses, as long as he pays his employees their termination pay in
the amount corresponding to their length of service.
(Catatista v. NLRC, 1995)
100% UP LAW UP BAROPS 2008
LABOR STANDARDS
Requirements
Service of a written notice to the employees and to the
[D]OLE at least 1 month before the bona fide in
character; and
Payment to the employees of termination pay amounting
to at least one-half month pay for every year of service,
or 1 month pay, whichever is higher.
(Caffco International Ltd. v. Office MOLE, 1992)
Partial Closure
The phrase "closure or cessation of operation of an establishment
or undertaking not due to serious business losses or reverses"
under Article 283 of the Labor Code includes both the complete
cessation of all business operations and the cessation of only part of
a companys business.
(Cheniver Deco Print Technics Corp. v. NLRC, 2000)
Temporary Cessation of Operation
The bona fide suspension of operation of a business or undertaking
for a period not exceeding 6 months shall NOT terminate
employment.
(Art 286)
ER to reinstate EE to his former position without loss of seniority
rights if he indicates his intention to resume his work not later than
1 month from the resumption of operations of the ER.
(Art 286)
I. Temporary suspension of operations is recognized as a valid
exercise of management prerogative provided it is not carried
out in order to circumvent the provisions of the Labor Code or
to defeat the rights of the employees under the Code.
(San Pedro Hospital of Digos v. Sec. of Labor, 1996)
II. The burden of proving that such a temporary suspension is
bona fide falls upon the employer.
(San Pedro Hospital of Digos v. Sec. of Labor, 1996)
Effect on ER-EE Relationship
Employers who contemplate terminating the services of their
workers must base their decisions on more than just flimsy excuses,
considering that the dismissal of an employee from work involves
not only the loss of his position but, what is more important, his
means of livelihood. The same principle applies in temporary
suspension of operations, as in this case, considering that it involves
laying off employees for a period of six months.
(San Pedro Hospital of Digos v. Sec. of Labor, 1996)
IV. Disease
ER my terminate an EE who:
1. Has been found to be suffering from any disease; AND
2. whose continued employment is prohibited by law or is
prejudicial to his health as well as as to the health of his
co-employees.
(Art 284)
Separation pay = at least 1 month salary or to salary for every
year of service, whichever is greater.
V. Special Case of Business Transfers
Nature of Labor Contract
Sundowner Development Corp. v. Drilon, 1989:
Unless expressly assumed, labor contracts such as
employment contracts and collective bargaining agreements
are NOT enforceable against a transferee of an enterprise,
labor contracts being in personam, thus binding only between
the parties.
No law requires a bona fide purchaser of assets of an on-going
concern to absorb in its employ the employees of the latter.
The parties are liable to the employees if the transaction
between the parties is colored or clothed with bad faith.
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LABOR LAW I LABOR STANDARDS

PROCEDURAL DUE PROCESS

In General

Agabon v. NLRC, 2004

Procedural Requirements Effect of Failure of Procedural Due Process

Basis for termination Requirements

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

* how computed: from the time of

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

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LABOR LAW I
Art 279
If EE is unjustly dismissed, he is entitled to:
1. Reinstatement
- without loss of seniority rights and other privileges, AND
2. Full Backwages
- inclusive of allowances, and to other benefits or their
monetary equivalent computed from the time his
compensation was withheld up to the time of actual
reinstatement.
Reinstatement and backwages are separate and distinct reliefs
given to an illegally dismissed EE.
(Judy Phils., Inc. v. NLRC, 1998)
I. Reinstatement
Definition
Reinstatement is aimed to restore the situation as nearly as
possible to status quo ante the unfair labor practice. This
requires that those deprived of a recognized and protected
interest by violations of the law should be made whole so as to
prevent the violator from profiting from his misdeeds
(Union of Supervisor, etc. v. Secretary of Labor, 1984)
Employee Right
An illegally dismissed employee is entitled to reinstatement as a
matter of right.
However, where reinstatement is not feasible, expedient or
practical, as where reinstatement would only exacerbate the
tension and strained relations between the parties, or where the
relationship between the employer and employee has been unduly
strained by reason of their irreconcilable differences, particularly
where the illegally dismissed employee held a managerial or key
position in the company, it would be more prudent to order
payment of separation pay instead of reinstatement.
(Quijano v. Mercury Drug Corp., 1998)
Effect of failure to Ask Relief
The relief of reinstatement, to which the EE is entitled to under the
law, may be granted in his favor although he failed to specifically
pray for it in his complaint.
(General Baptist Bible College v. NLRC, 1993)
Exceptions
1. Business Conditions
The reinstatement remedy must always be adapted to
economic-business conditions.
(Union of Supervisors, etc. v. Sec. of Labor, 1984)
Sec. 13, Book IV, of the IRR provides that in the absence of a
retirement plan, agreement or policy an employee may be
retired upon reaching the age of 60 years. Thus, t an employee
may retire, or may be retired by his employer, upon reaching
60. An employee held to be illegally dismissed cannot be
reinstated if he had already reached the age of 60 years at the
time of his second complaint (pressing for reinstatement)
before the Labor Arbiter's Office.
(Espejo v. NLRC, 1996)
2. Strained Relations
Doctrine of Strained Relations:
Where reinstatement is not feasible, expedient or practical, as
where reinstatement would only exacerbate the tension and
strained relations between the parties, or where the
relationship between the employer and employee has been
unduly strained by reason of their irreconcilable differences,
particularly where the illegally dismissed employee held a
managerial or key position in the company, it would be more
prudent to order payment of separation pay instead of
reinstatement. (Quijano vs. Mercury Drug Corp., 1998)
100% UP LAW UP BAROPS 2008
LABOR STANDARDS
The parties to a case should not be forced into a situation
where a peaceful relationship is not feasible. As the petitioner
appears to have lost its trust in private respondent, who in
turn is not seeking reinstatement, it would be an act of
oppression to compel them to return to the status quo ante.
(Pearl S. Buck Foundation, Inc. v. NLRC, 1990)
Sentinel Security Agency, Inc. v. NLRC, 1998:
The Agency cannot reassign them to the Client, as the former
has recruited new security guards; the complainants, on the other
hand, refuse to accept other assignment. Verily, complainants do
not pray for reinstatement; in fact they refused to be reinstated.
Such refusal is indicative of strained relations. Thus, separation pay
is awarded in lieu of reinstatement.
No Strained Relations
Strained relations in order that it may justify the award of
separation pay in lieu of reinstatement with backwages, should be
such, that they are so compelling & so serious in character, that the
continued employment of an employee is so obnoxious to the
person/business of the employer & that the continuation of such
employment has become inconsistent with peace & tranquility
which is an ideal atmosphere in every workplace.
(Sibal v. Notre Dame of Greater Manila, 1990)
Options and Rationale
The order of immediate reinstatement pending appeal, in
cases of illegal dismissal is an ancillary relief under RA 6715
granted to a dismissed employee to cushion him & his family
against the impact of economic dislocation or abrupt loss of
earnings. If the employee chooses not to report for work
pending the resolution of the case on appeal, he foregoes such
a temporary relief and is not paid of his salary.
(Jardine Davies, Inc. v. NLRC, 1993)
The provision of Article 223 is clear that an award for
reinstatement shall be immediately executory even pending
appeal and the posting of a bond by the employer shall not
stay the execution for reinstatement. The legislative intent is
quite obvious, i.e., to make an award of reinstatement
immediately enforceable, even pending appeal. To require the
application for and issuance of a writ of execution as
prerequisites for the execution of a reinstatement award
would certainly betray and run counter to the very object and
intent of Article 223, i.e., the immediate execution of a
reinstatement order. The reason is simple. An application for a
writ of execution and its issuance could be delayed for
numerous reasons.
(Pioneer Texturizing Corp. v. NLRC, 1997)
The posting of a bond by the ER shall NOT stay the execution
for reinstatement.
(International Container Services, Inc. v. NLRC, 1998)
II. Backwages
Definition
The term "backwages" has been defined as that for earnings
lost by a worker due to his illegal dismissal. Backwages are
generally granted on grounds of equity. Payment thereof is a
form of relief that restores the income lost by reason of such
unlawful dismissal. It is not private compensation or damages,
but is awarded in furtherance and effectuation of the public
objectives of the labor Code. Nor is it a redress of a private
right but, rather, in the nature of a command to the employer
to make public reparation for dismissing an employee, either
due to the former's unlawful act or bad faith. (St. Theresa's
School of Novaliches Foundation v. NLRC, 1998)
The term back wages without qualification and deduction
means that the workers are to be paid their back wages fixed
as of the time of the dismissal or strike without deduction for
their earnings elsewhere during their layoff and without
qualification of their wages as thus fixed; i.e., received by their
co-workers who are not dismissed or did not go on strike.
Awards including salary differentials are not allowed. The
salary base properly used should, however, include not only
the basic salary but also the emergency cost of living
allowances and also transportation allowances if the workers
Page 53 of 56
LABOR LAW I LABOR STANDARDS

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

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

Backwages Represents Actual period When Not Allowed

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

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

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

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

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LABOR LAW I LABOR STANDARDS

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

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

EE entitled to receive retirement benefits under:

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

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

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

Private Plan Employer Obligation

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

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