FUNDAMENTAL PRINCIPLES AND POLICIES

Labor

It is the exertion by human beings of physical or mental efforts, or both, towards the production of
goods and services.
The State affirms labor as a primary social economic force. It shall protect the rights of workers
and promote their welfare (1987 Constitution, Art. II, Sec. 18).

Declaration of basic policy

It is the policy of the State to:

1. Afford full protection to labor,
2. Promote full employment,
3. Ensure equal work opportunities regardless of sex, race, or creed and,
4. Regulate the relations between workers and Ers. (Art. XIII, Sec. 3).
5. Assure the rights of workers to self-organization, collective bargaining, security of tenure, just
and humane conditions of work (LC), Art. 3).

Protection to labor
In affording full protection to labor, this Court must ensure equal work opportunities regardless of
sex, race or creed giving maximum aid and protection to labor, promoting their welfare and
reaffirming it as a primary social economic force in furtherance of social justice and national
development. (Angelina Francisco v. NLRC. G.R. No. 170087, August 31, 2006).

CONSTRUCTION IN FAVOR OF LABOR

In case of doubt, all labor legislation and labor contracts shall be construed in favor of the safety
and decent living for the laborers (Art. 1702, NCC).

All doubts in the implementation and interpretation of the provision of the Labor Code, including
its implementing rules and regulations, shall be resolved in favor of labor (Art, 4, LC).

But protection to labor does not mean oppression or destruction of capital. The Ers act will be
sustained when it is in the right. Eastern Shipping Lines v. POEA, 166 SCRA 523 (1998)

Concept of liberal approach in interpreting the labor code and its IRR
All doubts in the implementation and interpretation of the provisions thereof, including its IRR, are
to be resolved in favor of labor.

Compassionate justice
The Constitution does not condone wrong doing by the Ee. However, it urges a moderation of the
sanctions that maybe applied to him in the light of the many disadvantages that weigh heavily on
him like an albatross on his neck. (Gandara Mill Supply and Milagros Sy v. NLRC and Silvestre
Germano, G.R. 126703, December 29, 1998).

Compassion and mercy subordinate to justice for all:

Before there can be an occasion for compassion, sympathy and mercy, there must be justice for
all.(SMC v. NLRC, G.R. No. 117055, March 29, 2006).
The Employees Compensation Law (P.D. 626) operates on the principle of social justice, but
sympathy to the workers should also be placed in a sensible equilibrium with the stability of the
ECC trust fund (Aquino v. SSS, G.R. No. 149256, July 21, 2006).

e.g. An Ee who was validly dismissed may still be given severance pay.

Q: What is the quantum of evidence required in labor case? (2012 BAR)

A: Such amount of relevant evidence which a reasonable mind might accept as adequate to justify
a conclusion. (Tancirco vs. GSIS, G.R. No. 132916, Nov. 16, 2001)

SOCIAL JUSTICE

The State shall promote social justice in all phases of national development (1987 Constitution,
Art. II, Sec. 10).

Q: May social justice as a guiding principle in labor law be so used by the courts in
sympathy with the working man if it collides with the Equal Protection clause of the
Constitution? (2003 BAR)

A: YES. The State is bound under the Constitution to afford full protection to Labor. When
conflicting interests collide, they are to be weighed on the scales of social justice (Fuentes v.
NLRC, 266 SCRA 24, January 2, 1997)

Limitations in invoking the principle of social justice

1. Not to undermine property rights resulting in confiscation (Guido v. Rural Progress Adm, L-
2089, October 31, 1949). It should not tolerate usurpation of property, public or private.

2. May only protect the laborers who come to court with clean hands (Phil. Long Distance
Telephone Co. v. NLRC, G.R. No. 80609, August 23, 1988) and their motives blameless (Gustilo
v. Wyeth Phils., G.R. No. 149629, October 4, 2004).

3. Never result to an injustice or oppression of the Er (Phil. Geothermal Inc. v. NLRC, G.R. No.
106370, September 8, 1994).

4. If it is used to shield wrongdoings. It cannot be permitted to be the refuge of scoundrels (PNCC

v. NLRC, G.R. No. 83320, Feb. 9, 1989).

.
LABOR LAW

Labor law

The law that defines State policies on labor and employment and governs the rights and duties of
the employer (Er) and employees (Ee) with respect to:

1. The terms and conditions of employment; and

2. Labor disputes arising from collective bargaining or other concerted activity respecting such
terms and conditions.
Classification of labor laws
1. Labor Standards Prescribes the terms and conditions of employment as affecting wages or
monetary benefits, hours of work, cost of living allowances, and occupational health, safety and
welfare of the workers. It provides economic benefits to the workers who are actually working.

e.g. 13th month pay

2. Labor Relations Defines and regulates the status, rights and duties, and the institutional
mechanisms, that govern the individual and collective interactions of Ers, Ees or their
representatives. It is concerned with the stabilization of relations of Ers and Ees and seeks to
forestall and adjust the differences between them by the encouragement of CB and the settlement
of labor disputes through conciliation, mediation and arbitration.

e.g. Collective Bargaining Negotiations

3. Social Legislation All laws passed by the State to promote public welfare. It includes statutes
intended to enhance the welfare of the people even where there is no Er-Ee relationship. It
provides economic benefits to workers who are at work because of the hazards of employment.

e.g. GSIS Law, SSS Law, Philhealth benefits, Agrarian Laws

Q: How do the provisions of the law on labor relations interrelate, if at all, with the
provisions pertaining to labor standards? (2003 BAR)

A: The law on Labor Relations provides for rights and procedures by which workers may obtain
from their Er benefits which are over and above the minimum terms and conditions of employment
set by labor standards law. Labor Standards law alone does not guarantee lasting industrial
peace. It is assured through Labor Relations law which enables workers to obtain better benefits
guaranteed by labor standards laws and by providing for a mechanism to settle disputes between
the Er and his Ees.

Labor Legislation vs. Social Legislation

Labor legislation Social legislation

1. Refers to labor 1. Refers to Social

statutes like Labor Security Laws
Relations Law and 2. Those laws that
Labor Standards provide particular
2. Focuses on the kinds of protection or
rights of the worker in benefits to society or
the workplace segments thereof in
furtherance of social
justice

NOTE: All Labor laws are social legislations, but not all social legislations are labor laws.
SOURCES OF LABOR LAWS

1. LC and other related special legislation [including their respective Implementing Rules and
Regulations (IRR)]
2. Contracts
3. Collective Bargaining Agreement (CBA)
4. Company practices
5. Company policies

Contract of labor

It is a consensual, nominate, principal, and commutative contract whereby one person, called the
Er, compensates another, called the laborer, worker or Ee, for the latters service.

Essential characteristics of a contract of labor

1. Er freely enters into a contract with the Ee;

2. Er can select who his Ee will be;
3. Er can dismiss the Ee; the Ee in turn can quit his job;
4. Er must give remuneration; and
5. Er can control and supervise the conduct of the Ee.

Contracts are subject to police power of the State

Labor contracts are placed on a higher plane than ordinary contracts; these are imbued with public
interest (Leyte Geothermal Power Progressive Employees Union-ALU-TUCP v. Philippine
National Oil Company-Energy Development Corporation, G.R. No. 170351, March 30, 2011).

The relation between the capital and the labor are not merely contractual. They are so impressed
with public interest that labor contracts must yield to the common good (Art. 1700, NCC).

Prohibitions on contract of labor:

No law impairing the obligation of contracts shall be passed (1987 Constitution, Art. III, Sec. 10).

No involuntary servitude in any form shall exist except as a punishment for a crime whereof the
party shall have been duly convicted. (1987 Constitution, Art. III, Sec. 18(2)).

No contract which practically amounts to involuntary servitude, under any guise whatsoever, shall
be valid (NCC, Art. 1703).

The CBA operating as a source of law

The CBA is the norm of conduct between Er and Ees and compliance therewith is mandated by
the express policy of the law. (DOLE Philippines, Inc., v. Pawis ng Makabayang Obrero (PAMAO-
NFL), G.R. No. 146650, January 13, 2003 in citing E. Razon, Inc. v. Secretary of Labor and
Employment, G.R. No. 85867, May 13, 1993)
Requisites before past company practices would be considered as a source of labor law

There must be:

1. Voluntarily institution by Er without any legal compulsion
2. A passage of time. It should have been done over a long period of time, and must be
shown to have been consistent and deliberate (American Wire and Cable Daily Rated Employees
Union v. American Wire and Cable Co., Inc., G.R. No. 155059, April 29, 2005).

NOTE: No passage of time is required for a company policy to become a source of labor law.

Basic rights of workers guaranteed by the constitution

1. Security of tenure
2. Living wage
3. Just and humane working conditions
4. Share in the fruits of production
5. Self-organization
6. Collective bargaining
7. Collective negotiations
8. Engage in peaceful concerted activities, including the right to strike
9. Participate in policy and decision making processes (Art. XIII, Sec. 3).

LABOR CODE

Applicability of the labor code

GR: All rights and benefits granted to workers under the LC shall apply alike to all workers,
whether agricultural or non-agricultural.

XPNs:

1. Government Ees
2. Ees of government corporations created by special or original charter
3. Foreign governments
4. International agencies
5. Corporate officers/ intra-corporate disputes which fall under P.D. 902-A and now fall under the
jurisdiction of the regular courts pursuant to the Securities Regulation Code.
6. Local water district except where NLRCs jurisdiction is invoked.
7. As may otherwise be provided by the LC (See: Art. 82 of the LC)

Original charter or manner of creation test

It is determined by the manner of their creation.

 Government
Corporation

Incorporated under

Corporation Code Special (original) charter

from Congress

covered by LC subject to Civil Service rules

Agency that exercises the rule-making power granted in the labor code

The Department of Labor and Employment (DOLE) thru the Secretary of Labor and Employment
(SLE) and other government agencies charged with the administration and enforcement of the
LC or any of its parts shall promulgate the necessary IRRs (Art. 5, LC).

Limitations to the rule-making power granted to the SLE and other government agencies

1. It must be issued under the authority of law

2. It must not be contrary to law and the Constitution

Effectivity of rules and regulations

Such rules and regulations shall become effective 15 days after announcement of their adoption
in newspapers of general circulation (Art. 5, LC).

RECRUITMENT AND PLACEMENT

RECRUITMENT OF LOCAL AND MIGRANT WORKERS

Recruitment and placement

1. Any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers;
and
2. Includes referrals, contact services, promising or advertising for employment, locally or abroad,
whether for profit or not [Art. 13(b), LC].

Article 13(b) contains a proviso that states Provided, that any person which, in ay manner, offers
or promises for a fee, employment to two or more person shall be deemed engaged in
recruitment. This proviso merely lays down a rule of evidence. The number of person dealt with
is not an essential ingredient of the act of recruitment and placement of workers. Any of the act
mentioned in Article 13 (b) will constitute recruitment and placement even if only one prospective
worker is involved (Chan, 2017).
PRIVATE SECTOR PARTICIPATION IN THE RECRUITMENT AND PLACEMENT OF
WORKERS

Entities in the private sectors that can participate in recruitment and placement of workers

1. Shipping or manning agents or representatives

2. Private recruitment offices
3. Public employment offices
4. Construction contractors if authorized by the DOLE and Construction Industry Authority.
5. Persons that may be authorized by the SLE
6. Private employment agencies (Sec. 1, Rule VII, Book I, IRR of the LC).

TRAVEL AGENCIES PROHIBITED FROM RECRUITMENT AND PLACEMENT

Prohibition on travel agencies and sales agencies of airline companies to recruit

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

ILLEGAL RECRUITMENT, ART. 38 (LOCAL), SEC. 6, MIGRANT WORKERS ACT, R.A. 8042

Difference between the prohibited acts under LC and R.A. 8042 or the Overseas Filipinos and
Overseas Migrant Workers Act, as amended by R.A. 10022

R.A. 8042, as amended

LC
by RA 10022

Illegal recruitment under

Sec. 6 means any
1.Illegal
recruitment activity
recruitment under
committed by non-
Art. 38 of LC
licensees/ non-holders of
authority or prohibited acts
2. Prohibited acts Added to the following
under Art. 34 of in the list of prohibited
LC acts:
1. Failure to actually
deploy without valid
reason;
2. Failure to reimburse
expenses incurred by the
worker in connection with
his/her documentation and
 processing for purposes of
deployment;
3. To allow a non-Filipino
citizen to head or manage
a licensed recruitment/
manning agency.

LICENSE v. AUTHORITY

License requirement in the business of recruitment and replacement

The business of recruitment and replacement is regulated by law by requiring them to obtain
license and authority.

LICENSE AUTHORITY
A document issued A document issued
by DOLE authorizing by the DOLE
a person or entity to authorizing a person
operate a private or association to
employment agency. engage in
recruitment and
placement activities
as a private
recruitment entity.

CHARACTERISTICS OF A LICENSE

1. License or authority are non-transferable (Art. 29, LC). License or authority is granted on the
basis of personal qualifications of the grantee. Thus, it is beyond the commerce of man.

2. Prospective in application (People v. Chua, G.R. No. 128280, 4 April 2001)

3. It is place-specific. Engaging in recruitment activities in places other than that specified in the
license is prohibited. [Sec. 143, II (s), Revised POEA Rules and Regulations Governing the
Recruitment and Employment of Landbased Overseas Filipino Workers of 2016]

XPN: Provincial recruitment pursuant to a special recruitment authority

ESSENTIAL ELEMENTS OF ILLEGAL RECRUITMENT

Illegal recruitment is committed when two (2) elements concur: First, the offender does not have
the required license or authority to engage in the recruitment and placement of workers. Second,
the offender undertook (1) recruitment and placement activity defined under Article 13(b) of the
Labor Code or (2) any prohibited practice under Art. 34 of the same code (People v. Gloria
Bartolome, G.R. No. 129486, July 4, 2008, VELASCO CASE).

Way to prove illegal recruitment

To prove illegal recruitment, it must be shown that the accused, without being duly authorized by
law, gave complainants the distinct impression that he had the power or ability to send them
abroad for work, such that the latter were convinced to part with their money in order to be
employed. It is important that there must at least be a promise or offer of an employment from the
person posing as a recruiter, whether locally or abroad. (People v. Laogo, G.R. no. 176264,
January 10, 2011)

By themselves, procuring a passport, airline ticket and foreign visa for another individual, without
more, can hardly qualify as recruitment activities. (Darvin v. CA and People of the Philippines, GR
No. 125044, July 13, 1998)

Bersamin Cases:

Q: Sometime in November and December 2000 in Pangasinan, Edith Abat, not being a
licensee or holder of authority, performed recruitment activities in a large scale by
recruiting Maria, Jocelyn, Sonny, Baltazar, Letecia, Pablito, Tarcila, Caroline and Percy to
a supposed job in Taiwan, for a fee, without first securing the necessary license or permit
to do the same. The RTC convicted her of the crime of large scale illegal recruitment. Is
Edith guilty of such crime?

A: YES. The acts committed by the accused constituted illegal recruitment in large scale, whose
essential elements are the following: (a) The accused engages in acts of recruitment and
placement of workers defined under Article 13(b) of the Labor Code or in any prohibited activities
under Article 43 of the Labor Code; (b) The accused has not complied with the guidelines issued
by the Secretary of Labor and Employment, particularly with respect to the securing of license or
an authority to recruit and deploy workers, either locally or overseas; and (c) The accused
commits the unlawful acts against three or more persons individually or as a group. The State
competently established that the accused, despite having no license or authority to recruit and
deploy workers, either locally or overseas, had represented to the complainants that she could
secure their employment in Taiwan either as factory workers or as computer operators at a
monthly salary of NT$45,000.00 each; and that the complainants had relied on her representation
and given her the amounts she had demanded in the expectation of their placement. And, in order
to make her representation more convincing, she had also told the complainants about her being
related to the Philippine Ambassador to Taiwan, as well as to President Ramos and President
Estrada. (People v. Abat, G.R. No. 168651, March 16, 2011)

Q: The Makati City Prosecutor filed two separate informations charging Maricar, Harleta,
Marissa and Berna with (1) illegal recruitment and (2) estafa. Only Maricar was arrested
and prosecuted, while the three other accused remained at large. The RTC acquitted
Maricar in the case for estafa but convicted her in the case for illegal recruitment
committed in large scale. Maricar appealed to the higher courts, arguing that she is not an
employee of Harvel (the recruitment agency) and that the private complainants did not
directly transacted their overseas work application with her but to the other accused. Is
the contention of Maricar correct?
A: NO. The nature of the obligation of the co-conspirators in the commission of the crime requires
solidarity, and each debtor may be compelled to pay the entire obligation. Under Article 2194 of
the Civil Code, joint tortfeasors are solidarily liable for the resulting damage. Private complainants
commonly testified that Maricar was the one who conducted orientations/briefings on them;
informed them, among others, on how much their salary would be as caregivers in Japan; and
what to wear when they finally will be deployed. She also represented herself as the one
expediting the release of applicants working visa for Japan. It would not be an excuse for any of
the joint tortfeasors to assert that her individual participation in the wrong was insignificant as
compared to those of the others. Joint tortfeasors are not liable pro rata. Hence, Maricars liability
towards the victims of their illegal recruitment was solidary, regardless of whether she actually
received the amounts paid or not, and notwithstanding that her co-accused, having escaped
arrest and untried. (People v. Velasco, et. al, G.R. No. 195668, 25 June 2014)

ILLEGAL RECRUITMENT AS ECONOMIC SABOTAGE

A. Illegal recruitment in large scale

Illegal recruitment in large scale is committed against three or more persons individually or as a
group.
A conviction for large scale illegal recruitment must be based on a finding in each case of illegal
recruitment of three or more persons having been recruited, whether individually or as a group.
When the LC speaks of illegal recruitment committed against three 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, prosecution for single crimes of illegal recruitment can
of large scale illegal recruitment. (People v. Hernandez, GR No. 1052014, March 9, 1995)

Bersamin Cases:

Q: Bayker was convicted of illegal recruitment in large scale for having been proved that
she lacked the authority or license to engage in recruitment and placement, had promised
to certain individuals employment abroad and had then received money from them.
Further, she was also found guilty of estafa for misrepresenting about her power and
authority to deploy a person for overseas employment, thereby inducing him to part with
his money. Does the conviction of Bayker for illegal recruitment committed in large scale
precluded her personal liability for estafa under Article 315(2)(a) of the Revised Penal Code
on the ground of double jeopardy?

A: NO. The conviction of the Bayker for illegal recruitment committed in large scale did not
preclude her personal liability for estafa under Article 3l5(2)(a) of the Revised Penal Code on the
ground of double jeopardy. An illegal recruiter can be held liable for the crimes of illegal
recruitment committed in large scale and estafa without risk of being put in double jeopardy,
provided that the accused has been so charged under separate informations. The elements of
estafa as charged are, namely: (1) the accused defrauded another by abuse of confidence or by
means of deceit; and (2) the offended party, or a third party suffered damage or prejudice capable
of pecuniary estimation. In contrast, the crime of illegal recruitment committed in large scale, as
indicated, requires different elements. Double jeopardy could not result from prosecuting and
convicting the accused-appellant for both crimes considering that they were entirely distinct from
each other not only from their being punished under different statutes but also from their elements
being different. (People v. Bayker, G.R. No. 170192, February 10, 2016)

Q: Spouses Owen and Beatriz Cagalingan represented themselves, to five (5) aspiring
persons, as having a capacity to contract, enlist, hire, and transport Filipino workers for
employment in Macau, China for a fee. The private complainants were asked money on
different occasions for documentation and processing fee. The accused spouses no
longer showed up thereafter even on the day of the supposed departure of the
complainants. Hence, one of the complainants reported the incident and upon verification
with POEA they learned that the accused spouses were not licensed recruiters. The
complainants charged the spouses Cagalingans with Illegal Recruitment in Large Scale
before the RTC and were likewise indicted for three (3) counts of estafa. Were the acts of
the accused spouses considered recruitment and placement of workers defined under
the Labor Code, which, if unlawful constitutes illegal recruitment?

A: YES. It was proven that the acts of the accused constituted recruitment and placement
defined under Article 13(b) of the Labor Code. The complainants testified that they were induced,
offered, and promised by the accused employment in Macau, China for two years for a fee and
made to believe that they were authorized to hire them. Moreover, they paid the accused for
documentation and processing fees, yet, they were unable to go abroad. Said acts proved that
the accused engaged in recruitment and placement activities. It was proved by private
complainants that accused spouses were not licensed neither authorized to engage in recruitment
activities as substantiated by POEAs Certification and testimony by the OIC-POEA who issued
the same; the acts were unlawful exercise of recruitment and placement activities under the
Labor Code; and, lastly, they are five (5) complainants against whom accused spouses are
alleged to have recruited. (People of the Philippines v. Owen Marcelo Cagalingan and Beatriz
Cagalingan, GR No. 198664, November 23, 2016)

B. Illegal recruitment committed by a syndicate

Illegal recruitment is committed by a syndicate if it was carried out by a group of three or more
persons conspiring or confederating with one another.

NOTE: Illegal recruitment in large scale pertains to the number of victims while syndicated
illegal recruitment pertains to the number of recruiters.

To commit syndicated illegal recruitment, three elements must be established: (1) the offender
undertakes either any activity within the meaning of recruitment and placement defined under
Article 13(b), or any of the prohibited practices enumerated under Art. 34 of the Labor Code; (2)
he has no valid license or authority required by law to enable one to lawfully engage in recruitment
and placement of workers; and (3) the illegal recruitment is committed by a group of three (3) or
more persons conspiring or confederating with one another. When illegal recruitment is committed
by a syndicate or in large scale, i.e., if it is committed against three (3) or more persons individually
or as a group, it is considered an offense involving economic sabotage (People v. Gallo et al.,
G.R. No. 187730, June 29, 2010, VELASCO CASE).

Q: What qualifying circumstances will convert illegal recruitment to economic sabotage

thus subjecting its perpetrators to a penalty of life imprisonment and a fine of at least P500,
000.00?
A: An illegal recruitment is considered to have evolved into economic sabotage when it is
committed by a syndicate or committed in large scale. Illegal recruitment is deemed to have been
committed by a syndicate when the recruitment is carried out by a group of three or more persons
conspiring and/or confederating with one another in carrying out any act under Art. 38. On the
other hand, it is deemed committed in large scale if it is committed against three or more persons
individually or as a group.

LIABILITIES

LOCAL RECRUITMENT AGENCY and FOREIGN EMPLOYER

Solidary Liability of the local recruitment agency

A Local Recruitment Angency shall be jointly and severally liable with its principal or foreign-based
Er for any violation of the recruitment agreement and violation of contracts of employment. [Sec.
10(a)(2), Rule V, Book I, IRR]

Liability of corporate officers, directors or partners if the recruitment/ placement agency

is a juridical being
If the recruitment/placement agency is a juridical being, the corporate officers, directors or
partners as the case may be, shall themselves be jointly and solidarily liable with the corporation
or partnership for the claims and damages. (Becmen Service Exporter and Promotion v.
Cuaresma, G.R. Nos. 182978-79, April 7, 2009)

Money claims under Migrant Workers Act

Consistent with the policy encouraging amicable settlement of labor disputes, Sec. 10 of R.A.
8042 allows resolution by compromise of cases filed with the NLRC.
Any compromise/amicable settlement or voluntary agreement on money claims inclusive of
damages shall be paid within four months from the approval of the settlement by the appropriate
authority.

Bersamin Case:

Q: For and in behalf of Baleen Marine, Pentagon International Shipping Services, Inc.
(Pentagon), a licensed domestic private manning agencies engaged in the recruitment of
seafarers. Pentagon hired Madrio and Rubiano as chief officer and second engineer,
respectively. When their 10-month contract expired, they were repatriated to the
Philippines. Alleging non-payment and underpayment of wages, and claiming damages
and attorney's fees, they separately brought claims against Pentagon and the owners and
managers of Baleen Marine. Pentagon denied liability, countering that it had ceased to be
the manning agency of Baleen Marine effective October 1, 1998. JDA Inter-Phil, the new
local agent for Baleen Marine's vessels, insisted that although it had applied with the POEA
for the transfer and accreditation of Baleen Marine's vessels in its favor, it withdrew the
application and did not execute an affidavit of assumption and responsibility as required;
that, consequently, Pentagon continued to be jointly and severally liable with Baleen
Marine for the money claims of Madrio and Rubiano. Was there a valid substitution of the
manning agent from Pentagon to IDA Inter-Phil?

A: NO. Before a transfer of accreditation can be effected, the transferee agency should likewise
have to comply with the requirements for accreditation contained in Section 2, Rule I, Book III of
the Rules and Regulations Governing Overseas Employment. The POEA can act on the transfer
of accreditation only after all the requirements shall have been submitted. In light of the foregoing,
there was no effective transfer of agency from Pentagon to JDA Inter-Phil. Even assuming
arguendo that JDA Inter-Phil did not withdraw its application for accreditation with the POEA,
there was still no valid transfer of agency to speak of in the first place because JDA Inter-Phil did
not submit the required authenticated special power of attorney and manning agreement. The
minutes of the October 9, 1998 meeting could not, by any stretch of the imagination, supplant this
mandatory requirement.

It is relevant to observe that Pentagon cannot feign ignorance of Section 10, paragraph 2, of the
Migrant Workers' Act of 1995 to the effect that its liabilities would continue during the entire period
or duration of the employment contract, and would not be affected by any substitution,
amendment or modification of the contract made either locally or in a foreign country. The
provisions of the POEA Rules and Regulations to the effect that the manning agreement extends
up to and until the expiration of the employment contracts of the employees recruited and
employed pursuant to the recruitment agreement are also clear enough. As such, Pentagon is
not exempt from its liabilities and responsibilities towards Madrio and Rubiano. (PENTAGON
INTERNATIONAL SHIPPING SERVICES v. CA, ET AL., G.R. No. 169158, 01 July 2015)

THEORY OF IMPUTED KNOWLEDGE

Theory of Imputed Knowledge

This theory refers to a cognizance of a circumstance or fact attributed to a party because of its
position, or its relationship with or responsibility for another party.

A rule in insurance law that any information material to the transaction, either possessed by the
agent at the time of the transaction or acquired by him before its completion, is deemed to be the
knowledge of the principal, at least so far as the transaction is concerned, even though in fact the
knowledge is not communicated to the principal at all. (Leonor v. Filipinas Compania, 48 OG 243,
January 10, 1950)
The theory of imputed knowledge ascribes the knowledge of the agent to the principal not the
other way around. The knowledge of the principal-foreign Er cannot, therefore, be imputed to its
agent. (Sunace v. NLRC, G.R. No. 161757, January 25, 2006)

SOLIDARY LIABILITY

Liability of the private employment agency and the principal or foreign-based employer
They are jointly and severally liable for any violation of the recruitment agreement and the
contracts of employment.
NOTE: This solidary liability imposed by law against recruitment agencies and foreign Ers is
meant to assure the aggrieved worker of immediate and sufficient payment of what is due him.
(Becmen Service Exporter and Promotion v. Cuaresma, G.R. Nos. 182978-79, April 7, 2009)
The joint and several liabilities of the private employment agency and the principal or foreign-
based employer shall continue during the entire perior or duration of the employment contract and
shall not be affected by any substitution, amendment, or modification made locally or in foreign
country of the said contract. (Sec. 10, RA No. 8042, as amended by Sec. 7 of RA No. 10022)

PRETERMINATION OF CONTRACT OF MIGRANT WORKER

Basis in computing an employees compensation in case of premature termination of

contract
All the salaries for the entire unexpired portion of their employment contracts, irrespective of the
stipulated term or duration thereof. (Serrano v. Gallant Maritime Services, GR No. 167614, March
24, 2009)
The provision of R.A. No. 10022 providing that, in case of termination of overseas employment
without just, valid or authorized cause as defined by law or contract, or any unauthorized
deductions from the migrant worker's salary, the worker shall be entitled to the full reimbursement
if his placement fee and the deductions made with interest at twelve percent (12%) per annum,
plus his salaries for the unexpired portion of his employment contract or for three (3) months for
every year of the unexpired term, whichever is less was declared UNCONSTITUTIONAL in the
case of Sameer Overseas Placement Agency, Inc. v. Joy C. Cabiles (GR No. 170139, August
05, 2014) reiterating the doctrine laid down by the Court in Serrano v. Gallant Maritime Services
(GR No. 167614, March 24, 2009).

DIRECT HIRING

Direct hiring
It is when an Er hires a Filipino worker for overseas employment without going through the POEA
or entities authorized by the SLE.

Ban on direct hiring

GR: An Er may only hire Filipino worker for overseas employment through POEA or entities
authorized by DOLE.

XPNs: Direct hiring by:

1. International organizations
2. Name hires
3. Members of the diplomatic organizations
4. Other Ers as may be allowed by DOLE

Rationale for the Ban

This is to ensure that such employment is fully regulated by the government through its agencies.
EMPLOYMENT OF NON-RESIDENT ALIENS

Non-residents alien may be hired if an Alien Employment permit is 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, Title II, LC).

But Alien Employment Permit is not exclusive requirement for a foreign natioal to work in the
Philippines. It is only one of the requirements in the issuance of a work visa (9g Visa) to legally
employed in the Philippines.

9G Visa (Pre-arranged Employment Visa)

The Visa required for foreign nationals who are proceeding to Philippines to engage in any lawful
occupation, whether for wages or salary or other forms of compensation (Sec. 9g, Philippine
Immigration Act of 1940)
For Resident Aliens, they are required to to secure an Alien Employment Registration
Certificate.
Article 40 of the LC applies only to non-resident aliens not to long-time resident of the country.
(GMC v. Torres, G.R. No. 9366, April 22, 1991)

Employment of aliens in entities engaged in nationalized activities

GR: Aliens may not be employed or engaged in nationalized activities

XPNs:

1. Secretary of Justice specifically authorizes the employment of technical personnel;

2. Aliens are elected members of the board of directors or governing body of corporations or
associations engaging in partially nationalized activities shall be allowed in proportion to their
allowable participation or share in the capital of such entities [Sec. 2(A), Anti-Dummy Law, as
amended by P.D. 715]; or
3. Enterprises registered under the Omnibus Investment Code in case of technical, supervisory
or advisory positions, but for a limited period.

Persons required to obtain employment permit

GR: All non-resident foreign nationals who intend to engage in gainful employment in the
Philippines.

XPNs:
1. Diplomatic services and foreign government officials;
2. Officers and staff of international organizations and their legitimate spouses;
3. Members of governing board who have voting rights only;
4. Those exempted by special laws;
5. Owners and representatives of foreign principals who interview Filipino applicants for
employment abroad;
6. Aliens whose purpose is to teach, present and/or conduct research studies;
 7. Resident aliens. (D.O. 75-06, Series of 2006)

Duration of the employment permit

GR: Minimum of 1 year

XPN: If the employment contract, consultancy services, or other modes of engagement provides
otherwise, which in no case shall exceed 5 years [DOLE D.O. 97-09, Revised Rules for the
Issuance of Employment Permits to Foreign Nationals (2009)].

REGULATION AND ENFORCEMENT SUSPENSION OR CANCELLATION OF LICENSE OR

AUTHORITY

Person who can suspend or cancel license or authority

The Secretary of Labor and Employment is vested with power to suspend or cancel any license
or authority to recruit employees for overseas employment.

REGULATORY AND VISITORIAL POWERS OF THE DOLE SECRETARY

Regulatory powers of the SOLE

1. Restrict and regulate the recruitment and placement activities of all agencies
2. Issue orders and promulgate rules and regulations

Visitorial power
1. Access to Ers records and premises at any time of the day or night, whenever work is being
undertaken;
2. To copy from said records; and
3. Question any Ee and investigate any fact, condition or matter which may be necessary to
determine violations or which may aid in the enforcement of the LC and of any labor law, wage
order, or rules and regulation issued pursuant thereto.

NOTE: The determination of the existence of an employer-employee relationship by the DOLE

must be respected. The expanded visitorial and enforcement power of the DOLE granted by RA
7730 would be rendered nugatory if the alleged employer could, by the simple expedient of
disputing the employer-employee relationship, force the referral of the matter to the NLRC. If the
DOLE makes a finding that there is an existing employer-employee relationship, it takes
cognizance of the matter, to the exclusion of the NLRC (Peoples Broadcasting Service v.
Secretary of DOLE, G.R. No. 179652, March 6, 2012, VELASCO CASE).

SOLE cannot issue search warrants or warrants of arrest

Under the 1987 Constitution, only a judge may issue search warrants or warrants of arrest. Hence,
Art. 38(c) of the LC is unconstitutional inasmuch as it gives the SLE the power to issue search
warrants and warrants of arrest. The labor authorities must go through the judicial process.
(Salazar v. Achacoso, G.R. No. 81510, March 14, 1990)
PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION (POEA)
While Section 2(c),Republic Act (R.A.) No. 8042 states that the State does not promote overseas
employment as a means to sustain economic growth, the State recognizes the vital role of
overseas Filipino workers to the nations economy and development. Aware that overseas
workers are vulnerable to exploitation, the State sought to protect the interests and well-being of
these workers with creation of specialized bodies such as the POEA under the direct supervision
of the DOLE Secretary. (Republic of the Philippines v.Humanlink Manpower Consultants, Inc.,
G.R. No. 205188, April 22, 2015)

Jurisdiction of the LA v. POEA JURISDICTION

Labor Arbiter POEA

Original and exclusive jurisdiction Original and exclusive jurisdiction
over all claims arising out of Er-Ee over:
relationship or by virtue of any law 1. All cases which are administrative
or contract involving OFWs in character relating to licensing and
including claims for: registration of recruitment and
1. Actual employment agencies
2. Moral 2. Disciplinary Action cases and
3. Exemplary other special cases, which are
4. Other forms of damages (Sec. administrative in character,
10, R.A. 8042). involving Ees, principals,
contracting partners and Filipino
migrant workers (Rule VII, Book VII,
POEA Rules).

Repatriation of a worker

GR: The repatriation of the:

1. Worker and the transport of his personal belongings shall be the primary responsibility of the
agency which recruited or deployed the worker overseas.
2. Remains and transport of the personal belongings of a deceased worker and all costs attendant
thereto shall be borne by the principal and/or the local agency.

XPNs:
1. If the termination of employment is due solely to the fault of the worker, the principal/ Er or
agency shall not be responsible for the repatriation of the former and/or his belongings.
2. In cases of war, epidemic, disaster or calamities, natural or man-made, and other similar event,
and where the principal or recruitment agency cannot be identified, the Overseas Workers
Welfare Administration, in coordination with appropriate international agencies, shall take charge
of the repatriation (Sec. 15, R.A. 8042).

Mandatory repatriation of underage migrant workers

Upon discovery or being informed of the presence of migrant workers whose ages fall below the
minimum age requirement for overseas deployment, the responsible officers in the foreign service
shall without delay repatriate said workers and advise the DFA through the fastest means of
communication available of such discovery and other relevant information. The license of a
recruitment/manning agency which recruited or deployed an underage migrant worker shall be
automatically revoked and shall be imposed a fine of not less than P500,000 but not more than
P1,000,000. (Sec. 9, R.A. 10022)

LABOR STANDARDS

COVERAGE/ EXCLUSIONS

The following employees are not entitled to overtime pay, premium pay for rest days and holidays,
night shift differential pay, holiday pay, service incentive leave and service charges.

GF-MOM-WPD:
1. Government employees
2. Field personnel
3. Managerial employees
4. Officers and members of the managerial staffMembers of the family of the employer
who are dependent on him for support
5. Workers paid by resultsPersons in the personal service of another; ad
6. Domestic helpers (Secs. 1 and 2, Rule I, Book III, Rules Implementing the Labor Code.)

Difference of a Managerial Employee in Book III and Book V

Book III Book V

Managerial Employees refer to Managerial Employee is one

those whose primary duty consistswho is vested with teh powers
of the management of the or prerogative to lay down and
establishment in which they are execute management policies
employed or of a department or and/or to hire, transfer,
subdivision thereof, and to othersuspend, lay-off, recall,
officers or members of the discharge, assign or discipline
managerial staff (Art. 82, LC). employees. Supervisory
employees are those who, in
NOTE: The definition of the the interest of the employer,
managerial employees includes effectively recommend such
managerial staf and supervisors. managerial action if the
exercise of such authority is not
merely routinary or clerical in
nature but requires the use of
independent judgment (Art.
219 (m), as renumbered).
The managerial employees and Only managerial employees
officers and members of the are not entitled to the benefits
of
managerial staff are not covered by Book V. Supervisors, unlike
the provision of Articles 82-96 Book managers, are allowed to form,
III (Art. 82, LC). join or assist the labor union of
fellow supervisors. (Art.
255, LC, as renumbered)

Field Personnel refers to to non-agricultural employees who regularly perform their duties away
from the principal place of business or branch office of the employer AND whose actual work in
the field cannot be determined with reasonable certainty (Art. 82, LC).

The reasons for excluding an outside saleman from the application of the Eight Hour Labor Law
are fairly apparent. He works away from his employers place of business, is not subject to the
personal supervision of his employer and his employer has no way of knowing the number of
hours he work per day. (San Miguel Brewery Inc. v. Democratic Labor Organization, G.R. No. L-
18353, July 31, 1963)

PRINCIPLES IN DETERMINING HOURS WORKED

Compensable Hours Worked

Hours worked shall include:
a. all time during which an employee is required to be on duty or to be at a prescribed workplace;
b. all time during which an employee is suffered or permitted to work. (Art. 84, LC)

Instances of working time (Poquiz, page 180)

a. Time spent by the employee for the benefit of the employer whether such service is necessary
or not such as serving coffee to visitors.

b. Travel time which is in connection with the work of the employee; otherwise, it is not considered
as working time.

c. Waiting time spent by an employee shall be considered as working time if waiting is an integral
part of this work or the employee is required or engaged by the employer to wait. In effect, he is
under the absolute control of the employer such that the employee is effectively deprived of the
time to attend other personal pursuits. (Arica v. NLRC, 170 SCRA 776)

d. Sleeping time is compensable working time if the nature of the employee's work allows sleeping
without interrupting or prejudicing the performance of his work.

e. Time spent by the Union's officers in the collective bargaining table is not compensable working
time, unless it is as provided in the CBA.

f. Rest periods running from five to twenty minutes is considered as compensable hours worked
(Sec. 7, Rule I, Book III, Rules Implementing the Labor Code)

NORMAL HOURS OF WORK

The normal hours of work of any employee shall not exceed eight (8) hours a day (Art. 83, LC).
The eight-hour work requirement does not, however, preclude the employer in the exercise of its
management prerogatives to reduce the number of working hours, provided that there is no
diminution of existing benefits.

XPNs to 8-hour work requirement:

1. Health personnel

GR: 8 hours for 5 days (40-hour workweek), exclusive of time for meals.
XPN: Where the exigencies of the service require that such personnel work for 6 days or 48 hours,
they shall be entitled to an additional compensation of at least 30% of their regular wage for work
on the 6th day (LC, Art. 83).

Health personnel covered by the 40-hour workweek

a. Those in cities and municipalities with a population of at least 1 million; or
b. Those in hospitals and clinics with a bed capacity of at least 100.

2. Compressed workweek

A reduction of the number of regular working days (RWD) is valid where the arrangement is
resorted to by the Er to prevent serious losses due to causes beyond his control, such as when
there is a substantial slump in the demand for his goods or services or when there is a lack of raw
materials. There is one main consideration in determining the validity of reduction of working
hours that the company was suffering from losses. (Linton Commercial v. Hellera, G.R. No.
163147, October 10, 2007).

Conditions where a "compressed workweek" schedule may be legally authorized as an

exception to the "8-hour a day" requirement under the LC (2005 BAR)

1. The Ee voluntarily agrees to it

2. There is no diminution in their weekly or monthly take home pay or fringe benefits
3. The benefits are more than or at least commensurate or equal to what is due to the Ees without
the compressed work week
4. OT pay will be due and demandable when they are required to work on those days which
should have ceased to be working days because of the compressed work week schedule.
5. No strenuous physical exertion or that they are given adequate rest periods.
6. It must be for a temporary duration as determined by the DOLE.

Power Interruption/ Brown-outs

Brown-outs of short duration but not exceeding twenty (20) minutes shall be treated as worked or
compensable hours whether used productively by the employees or not.

Brown-outs running for more than twenty (20) minutes may not be treated as hours worked
provided ANY of the following conditions are present:
 1. The employees can leave their workplace or go elsewhere whether within or outside
the work premises; or
2. The employees can use the time effectively for their own interest (Chan, 2017, p. 112)

It shall be the duty of the every employer to give his employees not less than sixty (60) minutes
time-off for their regular meals. (Art. 85, LC)
Being time-off, it is not compensable hours worked. The employee is free to do anything he wants,
except to work. If he required to work while eating, he should be compensated thereof.

Shortening of Meal Periods

A meal period of not less than 20 minutes may be given by the employer providded that such
shoter meal period is credited as compensable hours worked of the employee:
a. Where the work is non-manual in nature or does not involve strenous physical extension;
b. Where the establishment regularly operates for not less than 16 hours a day;
c. In case of actual or impending emergencies or when there is urgent work to be performed on
machinerie, equipments or installations to avoid serious losses which the employer would
otherwise suffer; and
d. Where the work is necessary to prevent serious loss of perishable goods.

Efffect of Shortening of Meal Period to less than 20 minutes

The law does not allow that meal period shall be shortened to less than 20 minutes. If so reduced,
the same shall no longer be considered as meal time but merely as rest period or coffee breaks
and, therefore, becomes compensable working time.

WAITING TIME

Waiting time considered as working time

1. It is considered working time if waiting is an integral part of his work; or
2. The Ee is required or engaged by the Er to wait (engaged to wait)

The controlling factor is whether waiting time spent in idleness is so spent predominantly for the
Ers benefit or for the Ees.

OVERTIME WORK, OVERTIME PAY

Overtime Work and Overtime Pay

Work may be performed beyond eight hours a day provided that the employee is paid for the
overtime work, an additional compensation equivalent to to his regular wage plus at least 25%
thereof. Work performed beyong 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, LC).

Q: Is an employee entitled to overtime pay for work rendered in excess of eight hours,
despite the fact that his employment contract specifies a 12-hour workday at a fixed
monthly salary rate that is above the legal minimum rate?
A: YES. The contract in question is in violation of pertinent labor laws. And the provisions of the
latter prevail over the terms of the contract. (Pesala v. NLRC, G.R. No. 105963, 22 August 1996)

Undertime cannot Offset 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 additional compensation. (Art. 88, LC)
Where a worker incurs undertime hours during his regular daily work, said undertime hours should
not be offset against the overtime hours on the same day or on any other day. (Azucena, page
233)
The right to overtime pay cannot be waived. The right is intended for the benefit of the laborers
and employees. Any stipulation in the contract that the labourer shall work beyond eight hours
without additional compensation for the extra hours is contrary to law and null and void.

XPNs:
1. When the alleged waiver of overtime pay is in consideration of benefits and privileges which
may be more than what will accrue to them in overtime pay, the waiver may be permitted.
(Azucena, page 228)
2. Compressed workweek

NOTE:Any work performed beyond 12 hours a day or 48 hours a week shall be subject to OT
premium

Q: The employment contract requires work for more than 8 hours a day with a fixed wage
inclusive of OT pay. Is that valid?

A: It depends.
1. When the contract of employment requires work for more than 8 hours at specific wages per
day, without providing for a fixed hourly rate or that the daily wages include OT pay, said wages
cannot be considered as including OT compensation (Manila Terminal Co. v. CIR, et al., 91 Phil.,
625).
2. However, the employment contract may provide for a built-in OT pay. Because of this, non-
payment of OT pay by the employer is valid(Engineering Equipment v. Minister of Labor, G.R.
No. L-64967, September 23, 1985).

Q: LKG Garments Inc. makes baby clothes for export. As part of its measures to meet its
orders, LKG requires its employees to work beyond eight (8) hours everyday, from Monday
to Saturday. It pays its employees an additional 35% of their regular hourly wage for work
rendered in excess of eight (8) hours per day. Because of additional orders, LKG now
requires two (2) shifts of workers with both shifts working beyond eight (8) hours but only
up to a maximum of four (4) hours. Carding is an employee who used to render up to six
(6) hours of overtime work before the change in schedule. He complains that the change
adversely affected him because now he can only earn up to a maximum of four (4) hours
worth of overtime pay. Does Carding have a cause of action against the company? (2015
BAR)

A: NO. A change in work schedule is a management prerogative of LKG. Thus, Carding has no
cause of action against LKG if, as a result of its change to two (2) shifts, he now can only expect
a maximum of four (4) hours overtime work. Besides, Art. 97 of the Labor Code does not
guarantee Carding a certain number of hours of overtime work. In Manila Jockey Employees
Unionv. Manila Jockey Club (517 SCRA 707), the Supreme Court held that the basis of overtime
claim is an employees having been permitted to work. Otherwise, as in this case, such is not
demandable.

NIGHT WORK (R.A. 10151)

NIGHT SHIFT DIFFERENTIAL

Every employee shall be paid night shift differential of not less than ten percent (10%) of his
regular wage for each hour of work performed between ten o'clock in the evening and six o'clock
in the morning. (Art. 86, LC)
The burden of proving a claim for night differential pay rests on the Er. Non-payment of this
benefit, to which an Ee is by law entitled, is a negative allegation which need not be supported by
the evidence. (National Semiconductor HK Distribution, Ltd. V. NLRC and Santos, G.R. No.
123520, June 26, 1998)

Pregnant women and nursing mothers may be allowed to work at night

They are allowed if a competent physician, other than the company physician, shall certify their
fitness to render night work, and specify, in the case of pregnant Ees, the period of the pregnancy
that they can safely work.
Waiver of night differential pay in against public policy, except when it will result to higher or better
benefits.

Night differential and overtime pay

When the tour of duty of an employee falls at night time, the receipt of overtime pay will not
preclude the right to night differential pay. The latter is payment for work done during the night
and the other is payment for the excess of the regular eight-hour work. (NARIC v NARIC Workers
Union, G.R. No. L-12075, May 29, 1959)

REST PERIODS

Weekly Rest Period

It shall be the duty of the of every employer, whether operating for profit or not, to provide each
of his employees a rest period of not less than twenty-four (24) consecutive hours after every six
(6) consecutive normal work days.
The employer shall determine and schedule the weekly rest day of his employees subject to:
1. CBA; and
2. Rules and regulations of the SOLE

The Er shall respect the preference of the employees as to their weekly rest day when such
preference is based on religious grounds. (Art. 91, LC) Rest day cannot offset by regular
workday. (Lagatic v. NLRC, G.R. No 121004, January 28, 1998)

HOLIDAY PAY/PREMIUM PAY

Regular holiday and special day distinguished

a. A covered employee who does not report for work during regular holidays is paid 100% of his
regular wage. On the other hand, a covered employee who fails to report for work on a special
day (special holiday) is not entitled to any compensation under the principle of "no work, no-pay."

b. A covered employee who reports for work on regular holidays is entitled to 200% of his regular
wage. While, a covered employee who works on special days (special holidays) is paid an
additional compensation of not less than 30% of his basic pay or a total of 130%. If the worker
has suffered to work on special days (special holidays) which falls on his scheduled rest day, he
is entitled to an additional pay equivalent to at least 50% over his basic pay or a total of 150%.

Double holiday pay

If two regular holidays fall on the same day (such as Good Friday falling on Araw ng Kagitingan
(April 9), the employees should be paid 300% of the basic wage for both holidays provided he
worked on that day or was on leave of absence with pay or was on authorized absence on the
day prior to the regular holiday

SERVICE CHARGES

These are charges collected by hotels, restaurants and similar establishments at the rate of 85%
for covered Ees equally distributed among them, and 15% for the management to answer for
losses and breakages.

Covered employees

GR: All Ees are covered, regardless of their position, designation, and employment status,
irrespective of the method by which their wages are paid.

NOTE: Applies only to hotels, restaurants and similar establishment collecting service charges.

XPN: Managerial Ees

If it is abolished, the share of the covered Ees shall be considered integrated in their wages on
the basis of the average monthly share of each Ees for the past 12 months immediately preceding
the abolition.

13th MONTH PAY

It is based on wage but not part of wage.It is imposed as a minimum service requirement that
the employee should have worked for atleast one month during a calendar year.

Equivalent forms of the 13th month pay

1. Christmas Bonus
2. Midyear Bonus
3. Profit Sharing Scheme
4. Other Cash bonuses amounting to not less than 1/12 of its basic salary
NOTE: It must always be in the form of a legal tender.
Things not proper substitutes for 13th month pay
1. Free rice
2. Electricity
3. Cash and stock dividends
4. Cost-of-living Allowance (P.D. 851, Sec. 3)

Persons covered by P.D. 851 1.

1. Employees
General Rule Exception
All rank-and-file Ees are covered by P.D. 851 Government Ees;
regardless of the amount of basic salary that they -Ees paid purely on commission basis;
receive in a month, if their Ers are not otherwise -Ees already receiving 13th month pay
exempted from paying the 13th month pay. Such
Ees are entitled to the 13th month pay regardless NOTE: Managerial employees are not entitled to
of said designation of employment status, and 13th month pay.(House of Sara Lee v. Rey, G.R.
irrespective of the method by which their wages No. 149013, August 31, 2006)
are paid. But, managerial employees may receive 13th
Provided, that they have worked for at least 1 month pay, if such payment has been a company
month, during a calendar year practice
Other types of employment entitled to 13th month pay
1. Part-time Employee(Item 5[b], Revised Guidelines of PD 851);
2. Extras;
3. Casual Employee; and
4. Seasonal Employee (BWC Opinion, December 19, 1987)

2. Employers
General Rule Exception
All Ers are covered by PD 581
1. The Government and any of its political
subdivisions, including GOCCs;

XPN to XPN: Corporations operating

essentially as privated subsidiaries of the
Government

2. Ers already paying their Ees 13th month pay

or more in a calendar year ir its equivalent at
the time of the issuance of the Revised
Guidelines;

3. Ers of those who are paid on purely basis

of:
a. Commission;
b. Boundary; or
c. Task; and
d. Fixed amount for performing a specific work

Note: Irrespective of the time consumed in the

performance thereof.

XPN: where the workers are paid on a piece-

rate basis, in which case, the employer shall
be covered by the Revised Guidelines insofar
as the workers are concerned.

Note: Piece-Rate Workers refers to 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.

4. Distressed Ers:
a. Currently incurring substantial losses; or
b. In the case of non-profit institutions and
organizations, where their income, whether
from donations, contributions, grants and
other earnings from any source, has
consistently declined by more than 40% of
their normal income for the last 2 years,
subject to the provision of Sec. 7 of P.D. 851
 RETIREMENT PAY

Persons Covered Not Covered

All Ees in the private sector:
1. Regardless of their position, designation or 1. Ees of the National Government and its political
status; and subdivisions, including GOCCs (if they are
2. Irrespective of the method by which their wages covered by the Civil Service Law);
are paid; 2. Ees of retail, service, and agricultural
3. Part-time Ees; establishments or operations employing not more
4. Ees of service and other job contractors; than 10 Ees
5. Domestic Helpers or Persons in the personal
service of another;
6. Underground mine workers(R.A. 8558);
7. Ees of GOCCs organized under the
Corporation Code (without original charters)

ELIGIBILITY
Age specified in (if there is an agreement) If no agreement or in absence of retirement
plan

1. CBA; 6. Optional Upon reaching 60 years old

2. Employment contract;
3. Retirement plan (IRR, Book VI, Rule II, Sec. 3);
or
4. Optional retirement age of 50years old for
underground mining Ees
5. (compulsory: 60years old)(R.A. 8558)
provided that Ee has rendered 5 years of service.;
or
7. Compulsory 65 years old, regardless of years
of service

Superiority of Benefits Rule

Once the Ee retires, it is not Article 287 that is controlling but the retirement plan under the CBA or
other applicable employment contract. (Chan, 2014)

Article 287 becomes relevant only in the matter of ensuring that the retirement benefits are not less
than whose provided therein.(Elegir v. PAL, Inc., G.R. No. 181995, July 16, 2012)

Computation of retirement benefits in the absence of an applicable agreement or

retirement plan
A retiree is entitled to a retirement pay equivalent to at least month salary for every year of
service, a fraction of at least 6 months being considered as 1 whole year (R.A. 7641).(BAR 2001)

Note: Unlike the public sector, there is no law allowing for commutation of unused or accrued sick
leave credits in the private sector. Commutation in the private sector is allowed only by way of
voluntary endowment by an employer through company policy or by a Collective Bargaining
Agreement (CBA). (Paloma v. PAL, G.R. No. 148415, July 14, 2008).
WAGES

No Work, No Pay Principle (Fair days wage for a fair days labor); Basis of payment.
GR: If there is no work performed by the Ee, without the fault of the Er, there can be no wage or
pay.

XPNs: The laborer was able, willing and ready to work but was:
1. Prevented by management;
2. Illegally locked out;
3. Illegally suspended;
4. Illegally dismissed
5. Illegally prevented from working (Aklan Electric Coop. v. NLRC, G.R. No. 129246, January 10,
2000).

Bonus

GR: The payment of bonus is a management function, not a demandable and enforceable
obligation, which cannot be enforced upon the employer who may not be obliged to assume the
onerous burden of granting bonuses or other benefits aside from the employees basic salaries
or wages. (Philippine National Construction Corporation v. NLRC, G.R. No. 128345, May 18,
1999)

XPN: Bonuses can be demanded as a matter of right if:

a. given without any condition; hence, part of the wage or salary (Atok Big Wedge Mining Co.,
Inc. v. Atok Big Wedge Mutual Benefit Assn., G.R. No. L-7349 , July 19, 1955)
b. grant thereof is a result of an agreement such as the CBA (Grey v. Insular Lumber, G.R. No.
L-45144, April 3, 1939)
c. given on account of company policy or practice (Claparols v. CIR, G.R. No. L-3082, July 31,
1975)
d. grant is mandated by law

e. Bonus is not considered part of wages if it is paid only upon realization of profits or amount of
production or output. (Atok Big Wedge Mining Co., Inc. v. Atok Big Wedge Mutual Benefit Assn.,
G.R. No. L-7349 , July 19, 1955)

Voluntary and contractual bonuses can be credited for the purpose of determining liability for the
13th month pay.

Bersamin Cases:

Q: Netlink Computer, Inc. hired Eric as account manager with the task to canvass and
source clients and convince them to purchase its products and services. He was able to
generate sales worth P35,000,000.00, more or less, from which he earned commissions
amounting to P993,558.89 and US$7,588.30. He then requested payment of his
commissions, but Netlink refused and only gave him partial cash advances chargeable to
his commissions. Eric was refused entry into the company premises by the security guard
pursuant to a memorandum detailing his infractions of the companys attendance policy,
which prompted him to file a complaint for illegal dismissal. Since the courts favored Eric,
he sought for payment of the commissions. Netlink contested that the commission in US
should be paid using the exchange rate at the time of sale and not at the time of payment.
Should the commissions in US dollars be paid using the exchange rate at the time of sale?

A: NO. The rate of exchange at the time of payment, not the rate of exchange at the time of the
sales, controls. This conforms to the principle of non-diminution of benefits, which has been
incorporated in Article 100 of the Labor Code. As a general rule, all obligations shall be paid in
Philippine currency. However, the contracting parties may stipulate that foreign currencies may
be used for settling obligations, pursuant to RA 8183. Since there was no written contract between
Netlink and Eric stipulating that the latters commissions should be paid in US dollars and since
Netlink had the practice of paying its sales agents in US dollars for their US dollar-denominated
sales, he has the right to be paid in such foreign currency. (Netlink Computer, Inc. v. Delmo, G.R.
No. 160827, 18 June 2014)

Q: Defensor is employed as Group Publisher in MMPI. In the belief that her proposal for a
special incentive scheme had been approved and implemented for the year 1999 by Yap
(MMPIs Executive VP), she filed a complaint against MMPI for non-payment of bonus and
incentive compensation with damages, specifically demanding the payment of sales
commissions, 14th month pay, and her share in the incentive scheme for the advertising
and sales staff. The LA dismissed the complaint. The NLRC denied the appeal for lack of
merit. Hence, Defensor filed a motion for reconsideration and a supplement to the motion
for reconsideration. In the supplement, she included a motion to admit additional evidence,
i.e., the affidavit of one Lie Tabingo aimed to rebut the MMPIs claim that its gross revenue
was only P31, 947, 677.00 and did not reach the minimum P35 million necessary for the
grant of the Defensors outright commissions and the special incentive bonus for the sales
staff, inclusive of Defensor. The NLRC denied Defensors motions for reconsideration. The
CA initially affirmed NLRCs resolution but later on overturned its decision. The CA opined
that the NLRC had committed a grave abuse of discretion in finding that there had been no
special incentive scheme approved and implemented for 1999, and in disallowing the
respondent from presenting additional evidence that was crucial in establishing her claim
about MMPIs gross revenue.
a) Is Defensor entitled to the commissions and the incentive bonus being claimed?
b) Confronted with the conflicting claims on MMPIs gross revenue realized in 1999, must
Defensors evidence (Lie Tabingos affidavit) be given more weight?

A: a) NO. Due to the nature of the bonus or special incentive being a gratuity or act of liberality
on the part of the giver, Defensor could not validly insist on the schedule proposed in her
memorandum of April 5, 1999 considering that the grant of the bonus or special incentive
remained a management prerogative. However, the Court agrees with the CAs ruling that the
petitioners had already exercised the management prerogative to grant the bonus or special
incentive. At no instance did Yap flatly refuse or reject the respondents request for commissions
and the bonus or incentive. This is plain from the fact that Yap even "bargained" with the
respondent on the schedule of the rates and the revenues on which the bonus or incentive would
be pegged. What remained contested was only the schedule of the rates and the revenues.

b) YES. The degree of proof required in labor cases is not as stringent as in other types of cases.
This liberal approach affords to the employee every opportunity to level the playing field in which
her employer is pitted against her. Here, on the one hand, were Tabingos memorandum and
affidavit indicating that MMPIs revenues in 1999 totaled P36, 216, 624.07, and, on the other, the
audit report showing MMPIs gross revenues amounting to only P31, 947, 677.00 in the same
year. That the audit report was rendered by the auditing firm of Punongbayan & Araullo did not
make it weightier than Tabingos memorandum and affidavit, for only substantial evidence that
amount of relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion was required in labor adjudication. Moreover, whenever the evidence presented by
the employer and that by the employee are in equipoise, the scales of justice must tilt in favor of
the latter.For purposes of determining whether or not the petitioners gross revenue reached the
minimum target of P35 million, therefore, Tabingos memorandum and affidavit sufficed to
positively establish that it did, particularly considering that Tabingos memorandum was made in
the course of the performance of her official tasks as a traffic clerk of MMPI. In her affidavit, too,
Tabingo asserted that her issuance of the memorandum was pursuant to MMPIs year-end
procedures, an assertion that the petitioners did not refute. (MMPI v. Defensor, G.R. No. 162021,
June 16, 2014)

WAGE v. SALARY
The distinction between salary and wage in Gaa v. Court of Appeals, G.R. No. L-44169 December
3, 1985, was only for the purpose of Art. 1708 of the Civil Code which mandates that "laborer's
wages shall not be subject to execution or attachment except for debts incurred for food, shelter,
clothing and medical attendance." In labor law, the distinction is only a matter of semantics. It is
settled that wage and salary are synonymous. Likewise, the term "pay" is also synonymous with
wage and salary. (Equitable PCI v Sadac, G.R. No. 164772, 8 June 2006)

MINIMUM WAGE DEFINED, MINIMUM WAGE SETTING

Minimum wage
Statutory minimum wage is the lowest wage rate fixed by law that an Er can pay his workers.
a. From Ers standpoint a minimum wage is economically feasible if it will not prevent the
industry from operating efficiently and prosperously over the long run (Dir. Harry Kantors analysis
of Senate Bill No. 202 and House Bill No. 1732);
b. From Ees standpoint an economically feasible minimum wage should be as nearly
adequate to maintain the minimum standard of living necessary for the health, efficiency and
general well-being of employees.

Persons exempted from the coverage of fixing a minimum wage

1. Homeworkers engaged in needle-work;
2. Workers employed in any establishment duly registered with the National Cottage Industries
and Development Authority, provided that such workers perform the work in their respective
homes;
3. Workers in a duly registered cooperative when so recommended by the Bureau of Cooperative
Development and upon approval of the SLE (IRR of LC, Book III, Rule VII, Sec. 2).
4. Workers of a barangay micro business enterprise (R.A. 9178).

Minimum wage non-negotiable; non waivable

The minimum wage fixed by law is mandatory; thus it is non-waivable and non-negotiable. The
enactment is compulsory in nature in order to ensure decent living conditions (PAM Co. v,
PAMEA-FFW, 51 SCRA 98).

Wage deductions
GR: No employer, in his own behalf or in behalf of any person, shall make any deduction from
the wages of his employees (LC, Art. 113).

XPNs:
1. Deductions under Art. 113 of the LC for insurance premiums.
2. Union dues in cases where the right of the worker or his union to check-off has been recognized
by the Er or authorized in writing by the individual worker concerned (LC, Art. 113).
3. Deductions for SSS, PhilHealth and Pag-ibig premiums
4. Taxes withheld pursuant to the Tax Code
5. Deductions under Art. 114 of the LC for loss or damage to tools, materials or equipment
supplied by the employer when the latter is engaged in such trades, occupations or businesses
where the practice of making deductions or requiring deposits is a recognized one or is necessary
or desirable as determined by SLE
6. Deductions made with the written authorization of the Ee for payment to a third person (IRR,
Book III, Rule VIII, Sec 13).
7. Deductions as disciplinary measures for habitual tardiness (Opinion dated March 10, 1975 of
the Labor Secretary).
8. Agency fees under Art. 248(e)of the LC
9. Deductions for value of meals and facilities freely agreed upon
10. In case where the Ee is indebted to the Er where such indebtedness has become due and
demandable (NCC, Art. 1706).
11. In court awards, wages may be subject of execution or attachment, but only for debts incurred
for food, shelter, clothing, and medical attendance (NCC, Art. 1703).
12. Salary deduction of a member of a legally established cooperative (R.A. 6938; LC, Art. 59).

NON-DIMINUTION OF BENEFITS
Diminution of benefits is the unilateral withdrawal by the employer of benefits already enjoyed by
the employees. There is diminution of benefits when it is shown that:
1. the grant or benefit is founded on a policy or has ripened into a practice over a long period;
2. the practice is consistent and deliberate;
3. the practice is not due to error in the construction or application of a doubtful or difficult question
of law; and
4. the diminution or discontinuance is done unilaterally by the employer.

An erroneously granted benefit may be withdrawn without violating the prohibition against
nondiminution of benefits.

Benefit acquired through company practice

An employee can demand as a matter of right benefits granted by the employer for a considerable,
long period of time as the same may ripen into a company practice.(Globe Mackay v. NLRC, 163
SCRA 71)

FACILITIES v. SUPPLEMENTS
 Facilities Supplements
Includes articles and Extra renumeration
services for the or special privileges
benefit of the or benefits given to
employee or his or received by the
family but does not laborers over and
include tools of trade above their ordinary
or articles or services earnings or wages.
primary for the
benefit of the
employer or
necessary to the
conduct of
employers business.

Supplements not part of wages

Supplements are extra remunerations or benefits given to an employee such as vacation leave
pay, overtime pay in excess of the legal rate, profit-sharing benefits, sick pension, retirement and
death benefits, family allowances, Christmas bonus, war-risk or cost-of-living bonuses or other
bonuses other than those paid as reward for extra output or time spent on the jobs (Atok Big
Wedge Mining Co., G.R. No. L-7349 , July 19, 1955). Since they are not considered as part of
wages, their value cannot be deducted from the cash wage of an employee.

Requirements for deducting values for facilities

1. Proof must be shown that such facilities are customarily furnished by the trade
2. The provision of deductible Facilities must be voluntarily accepted in writing
3. The Facilities must be charged at fair and reasonable value (Mabeza v. NLRC, G.R. No.
118506, April 18, 1997).

WAGE DISTORTION/RECTIFICATION

Concept of Wage Distortion (WD)

Contemplates a situation where an increase in presecribed wage rates results in the elimination
or severe contraction of the intentional quantitative difference in wage or salary rates between
and among employee groups in an establishment as to effectively obliterate the distinction
embodied in such wage structure based on skills, length of service or other logical bases of
differentiation. (Art. 124, LC)

It is the disappearance or virtual disappearance of pay differentials between lower and higher
positions in an enterprise because of compliance with a wage order. (P.I. Manufacturing v. P.I.
Manufacturing Supervisors and Foreman, G.R. No. 167217, February 4, 2008)

Wage distortion is non-strikeable. WD is neither a deadlock in collective bargaining nor ULP.

Bersasmin Case:
Q: Pursuant to the enactment of Republic Act No. 6727 on June 9, 1989, the RTWPB-NCR
issued Wage Order No. NCR-07 on October 14, 1999 imposing an increase of P25.50/day
on the wages of all private sector workers and employees in the NCR and pegging the
minimum wage rate in the NCR at P223.50/day. However, Section 2 and Section 9 of Wage
Order No. NCR-07 exempted certain sectors and industries from its coverage. Feeling
aggrieved by their non-coverage by the wage adjustment, the Alliance of Progressive
Labor (APL) and the Tunay na Nagkakaisang Manggagawa sa Royal (TNMR) filed an appeal
with the NWPC assailing Section 2(A) and Section 9(2) of Wage Order No. NCR-07. They
contended that neither the NWPC nor the RTWPB-NCR had the authority to expand the
non-coverage and exemptible categories under the wage order; hence, the assailed
sections of the wage order should be voided. NWPC upheld the validity of Section 2(A) and
Section 9(2) of Wage Order No. NCR-07. The NWPC denied the appeal of APL and TNMR
for its lack of merit. It also denied TNMRs motion for reconsideration. However, the CA
granted the petition for certiorari, holding that the powers and functions of the NWPC and
RTWPB-NCR as set forth in Republic Act No. 6727 did not include the power to grant
additional exemptions from the adjusted minimum wage.
a) Did RTWPB-NCR have the authority to provide additional exemptions from the minimum
wage adjustments embodied in Wage Order No. NCR-07?
b) Did Wage Order No. NCR-07 comply with the requirements set by NWPC Guidelines No.
01, Series of 1996?

A: a) YES. Under the guidelines, the RTWPBs could issue exemptions from the application of the
wage orders as long as the exemptions complied with the rules of the NWPC. In its rules, the
NWPC enumerated four exemptible establishments, but the list was not exclusive. The RTWPBs
had the authority to include in the wage orders establishments that belonged to, or to exclude
from the four enumerated exemptible categories. If the exempted category was one of the listed
ones, the RTWPB issuing the wage order must see to it that the requisites stated in Section 3 and
Section 4 of the NWPC Guidelines No. 01, Series of 1996 were complied with before granting
fully or partially the application of an establishment seeking to avail of the exemption. On the other
hand, if the exemption was outside of the four exemptible categories, like here, the exemptible
category should be: (1) in accord with the rationale for exemption; (2) reviewed/approved by the
NWPC; and (3) upon review, the RTWPB issuing the wage order must submit a strong and
justifiable reason or reasons for the inclusion of such category.
In creating the RTWPBs, Congress intended to rationalize wages, firstly, by establishing full time
boards to police wages round-the-clock, and secondly, by giving the boards enough powers to
achieve this objective. In Employers Confederation of the Phils. v. National Wages and
Productivity Commission, this Court all too clearly pronounced that Congress meant the RTWPBs
to be creative in resolving the annual question of wages without Labor and Management knocking
on the doors of Congress at every turn. The RTWPBs are the thinking group of men and women
guided by statutory standards and bound by the rules and guidelines prescribed by the NWPC.
In the nature of their functions, the RTWPBs investigate and study all the pertinent facts to
ascertain the conditions in their respective regions. Hence, they are logically vested with the
competence to determine the applicable minimum wages to be imposed as well as the industries
and sectors to exempt from the coverage of their wage orders.

b) YES. Wage Order No. NCR-07 is presumed to be regularly issued in the absence of any strong
showing of grave abuse of discretion on the part of RTWPB-NCR. The presumption of validity is
made stronger by the fact that its validity was upheld by the NWPC upon review. (NWPC v. APL,
G.R. No. 150326, March 12, 2014)

LEAVES
SERVICE INCENTIVE LEAVE
Service incentive leave (SIL)
It is 5-days leave with pay for every Ee who has rendered at least 1 year of service. It is
commutable to its money equivalent if not used or exhausted at the end of the year.
At least 1 year of service: Service for not less than 12 months, whether continuous or broken
reckoned from the date the Ee started working, including authorized absences and paid regular
holidays unless the working days in the establishment as a matter of practice or policy, or that
provided in the employment contract is less than 12 months, in which case said period shall be
considered as one year. (Sec. 3, Rule V, Book III, IRR)

Where the leave benefit is other than service incentive leave and is a result of an
individual/collective agreement or employer practice or policy, its equivalent if unused shall be
computed as stipulated in the agreement or policy. (In re: Maxim's Tea House, Opinion of the
Bureau of Working Conditions, 8 March 1988)

A part-time worker is entitled to service incentive leave whether the service within 12 months is
continuous or broken or where the working days in the employment contract as a matter of
practice or plicy is less than 12 months.

Establishments employing less than 10 Ees are exempted by the LC and the Implementing Rules
from paying SIL. The clear policy of the LC is to include all establishments, except a few classes,
under the coverage of the provision granting SIL to workers. (Murillo v. Sun Valley Realty, Inc.,
G.R. No. L-67272 June 30, 1988)

Commutability of SIL to monetary equivalent

It is commutable if not used at the end of the year. It is aimed primarily at encouraging workers to
work continuously and with dedication to the company.

MATERNITY LEAVE

Governing Law: R.A. No. 8292 (Social Security Act)

Maternity Leave is the period of time which may be availed of by a woman employee, married or
unmarried, to undergo and recuperate from childbirth, miscarriage, or complete abortion during
which she is permitted to retain her rights and benefits flowing from her employment.

Requirements in order that maternity benefits may be claimed

1. The female member should be employed at the time of delivery, miscarriage or abortion;
2. She must have notified SS through her employer; and
3. She has paid at least three months of maternity contributions within the 12-month period
immediately before the semester of contingency

Entitlement to maternity leave benefits is not dependent on the civil status of the pregnant woman.
Entitlement to maternity benefi forecloses entitlement to sick benefit.
Maternity leave benefits excluded in the computation of 13th month pay.
Self-employed members not entitled to maternity leave benefits since Voluntary or self-employed
members have no employers to remit such contributions. However, if they have qualifying
contributions using the new contribution schedule, they shall be entitled to maternity benefits.
PATERNITY LEAVE

Governing Law: R.A. No. 8187 (Paternity Leave Act of 1996)

Patenity leave covers a married male employee allowing him not to report for work for seven (7)
CALENDAR DAYS but continues to earn the compensaation thereof, on the condition that his
spouse has delivered a child or suffered miscarriage for purposes of enabling him to effectively
lend support to his wife in her period of recovery and/or in the nursing of the newly-born child.
This leave applies only to the first four deliveries of the LEGITIMATE SPOUSE with whom he is
cohabiting.
In the event it is not availed of, such leave is not convertible to cash. (RA 8187)

PARENTAL LEAVE FOR SOLO PARENTS

Governing Law: R.A. No. 8972 (The Solo Parents Welfare Act of 2000)
Parental leave
Leave benefits granted to a solo parent to enable him/her to perform parental duties and
responsibilities where physical presence is required.
In addition to leave privileges under existing laws, parental leave of not more than 7 working days
every year shall be granted to any solo parent Ee who has rendered service of at least 1 year.
(Sec. 8, RA 8972)

Conditions for entitlement of parental leave

1. He or she must fall among those referred to as a solo parent
2. Must have the actual and physical custody of the child or children
3. Must have at least rendered service of one year to his or her employer
4. He or she must remain a solo parent

LEAVES FOR VICTIMS OF VIOLENCE AGAINST WOMEN and their CHILDREN (R.A. 9262)
A female Ee who is a victim of violence (physical, sexual, or psychological) is entitled to a paid
leave of 10 days in addition to other paid leaves (R.A. 9262, Anti- VAWC Act). This is known as
the battered woman leave.

SPECIAL LEAVE BENEFIT FOR WOMEN

A woman Ee having rendered continuous aggregate employment service of at least 6 months for
the last 12 months shall be entitled to a special leave benefit of 2 months with full pay based on
her gross monthly compensation following surgery caused by gynaecological disorders (Sec. 18,
R.A. 9710, Magna Carta of Women)

WOMEN WORKERS
 Discriminatory Acts Against
Women Ees Re: terms and
conditions of employment on
account of sex
a. Discrimination in pay;
Stipulating as condition
or continuation of
employment
That a woman Ee shall not
get married, or

b. Discrimination in employment That upon marriage, such

opportunity; woman Ee shall be
deemed resigned or
c. Discrimination in hiring; separated

d. Discrimination in dismissal

(Poquiz, 2012)

NOTE: Discrimination in any form from pre-employment to post-employment, based on the actual,
perceived or suspected HIV status of an individual is unlawful (Philippine AIDS Prevention and
Control Act of 1998, R.A. 8504).

Standard of reasonable test

The Er has the burden of proof to prove the existence of a reasonable business necessity that
would justify an employment policy. (Star Paper Corp. v. Simbol, G.R. No. 164774, April 12, 2006).

STIPULATION AGAINST MARRIAGE

No-spouse employment policy may or may not violate provisions of the LC

GR: It may not facially violate Art. 136 of the LC but it creates a disproportionate effect and the
only way it could pass judicial scrutiny is by showing that it is reasonable despite the discriminatory
and disproportionate effect.

XPN: Bona fide occupational qualification rule (BFOQR)

NOTE: There must be a finding of any BFOQ to justify an Ers no spouse employment rule, the
Er must prove two factors:
1. That the employment qualification is reasonably related to the essential operation of the
job involved; and
 2. That there is a factual basis for believing that all or substantially all persons meeting the
qualification would be unable to properly perform the duties of the job (Star Paper v. Simbol, G.R.
No. 164774, April 12, 2006).

ANTI-SEXUAL HARASSMENT ACT (R.A. 7877)

The definition of sexual harassment does not require a categorical demand or request for
sexual favor

It may be discerned, with equal certitude, from the acts of the offender.
Likewise, it is not essential that the demand, request or requirement be made as a condition for
continued employment or for promotion to a higher position. It is enough that the respondents
acts result in creating an intimidating, hostile or offensive environment for the employee
(Domingo v. Rayala, G.R. No. 155831, February 18, 2008).

Nothing under R.A. 7877 shall preclude the victim of work, education or training-related Sexual
Harassment from instituting a separate and independent action for damages and other affirmative
relief.

An act of Sexual Harassment may give rise to civil, criminal and administrative liability on the part
of the offender, each proceeding independently of the others.
Prescription of action: The civil, criminal and administrative action shall prescribe in 3 years.

EMPLOYMENT OF MINOR WORKERS; ACT AGAINST CHILD LABOR (R.A. 9231) AND
CHILD ABUSE LAW (R.A. 7610)

GR:

1. No person under 18 years of age will be allowed to be employed in an undertaking which is

hazardous or deleterious in nature.
2. No Er shall discriminate against any person in respect to terms and conditions of employment
on account of his age.

XPNs:

A. Below 15 yrs. Old

1. The child works directly under the sole responsibility of his parents or legal guardian and where
only members of the family are employed, subject to the following conditions:
a. Employment does not endanger the childs safety, health and morals
b. Employment does not impair the childs normal development
c. Er-parent or legal guardian provides the child with the primary and/or secondary
education prescribed by the Department of Education

2. The childs employment or participation in public entertainment or information through cinema,

theater, radio or television is essential provided:

a. Employment contract is concluded by the childs parents or legal guardian,

b. With the express agreement of the child concerned, if possible, and
 c. The approval of DOLE, the following must be complied with:
i. The employment does not involve advertisement or commercials promoting
alcoholic beverages, intoxicating drinks, tobacco and its by-products or exhibiting
violence
ii. There is a written contract approved by DOLE
iii. The conditions provided in the first instance are met

B. Above 15 but below 18 May be employed in any non-hazardous work

C. Above 18 No prohibition

Q: Determine whether the following minors should be prohibited from being hired and from
performing their respective duties indicated hereunder:
a. A 17-year old boy working as miner at the Walwadi Mining Corporation.
b. An 11-year old boy who is an accomplished singer and performer in different parts of
the country.
c. A 15-year old girl working as a library assistant in a girls' high school.
d. A 16-year old girl working as model promoting alcoholic beverages.
e. A 17-year old boy working as a dealer in a casino. (2006 BAR)

A:
a. YES. He should be prohibited from being hired and from performing the duties of a miner
because such constitutes hazardous work under D.O. No. 04 Series of 1999. Art. 139(c) of LC
expressly prohibits the employment of persons below 18 years of age in an undertaking which is
hazardous or deleterious in nature as determined by the SLE.

b. NO. He should not be prohibited from being hired and from performing as a singer. Under Art.
VIII Sec. 12(2) of R.A. 7619 as amended by R.A. 7658, this constitutes an exception to the general
prohibition against the employment of children below 15 years of age, provided that the following
requirements are strictly complied with:

1. The Er shall ensure the protection, health safety and morals of the child
2. The Er 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;
and
3. The Er shall formulate and implement, subject to the approval and supervision of competent
authorities, a continuing program for training and skill acquisition of the child. Moreover, the child
must be directly under the sole responsibility of his parents or guardian and his employment
should not in any way interfere with his schooling.

c. NO. She should not be prohibited from working as a library assistant because the prohibition in
the LC against employment of persons below 18 years of age merely pertains to employment in
an undertaking which is hazardous or deleterious in nature as identified in the guidelines issued
by the SOLE. Working as a library assistant is not one of undertakings identified to be hazardous
under D.O. No 04 Series of 1999.

d. YES. She should be prohibited from working as a model promoting alcoholic beverages. R.A.
7610 categorically prohibits the employment of child models in all commercials or advertisements
promoting alcoholic beverages and intoxicating drinks, among other things.
e. YES. He should be prohibited from working as a dealer in casino, because Art. 140 of the LC
prohibits the employment of persons below 18 years of age in an undertaking which is hazardous
or deleterious in nature identified in the guidelines issued by the SLE. Working as a dealer in a
casino is classified as hazardous under D.O. No. 04 Series of 1999 as it exposes children to
physical, psychological or sexual abuses.

EMPLOYMENT OF HOUSEHELPERS and HOMEWORKERS

Covered Not Covered

All kasambahay
engaged in domestic 1. Service providers
work, whether on a 2. Family drivers
live-in or live-out 3. Children under
arrangement foster family
arrangement

(BAR 2015); and

4. Any other person
who performs work
occasionally or
sporadically and not
on an occupational
and regular basis.

Domestic workers cannot acquire regularity of employment under RA 10361

All the indicia of regularity of employment remain absent in the employment of domestic helpers.
(Chan, 2017)

XPN: The Supreme Court already held that the mere fact that the househelper is working in
relation to or in connection with its business warrants the conclusion that such househelper or
domestic servant is and should be considered as a regular employee. (Remington Industrial Sales
Corp. v. Castaneda, G.R. 169295-96, November 20, 2006)
The kasambahay is entitled to a total daily rest period of at least 8 hours. The Er cannot require
the kasambahay to work beyond 16 hours at any given workday in return for an equivalent hourly
rate. The eight-hour rest period must be observed.
The kasambahay is entitled to 13th month pay after 1 month of service.

GR: The Er shall pay the SSS premium, and PHILHEALTH and PAG-IBIG contributions of the
kasambahay
XPN: If the wage of the kasambahay is Php 5,000.00 or more, the kasambahay will pay his/her
share in the premiums/contributions.

Househelpers v. Homeworkers

HOUSE HELPERS HOMEWORKERS

Minister to the Performs in or about
personal needs and his own home any
comfort of his Er in processing or
the latters home fabrication of goods
or materials, in whole
or in part, which have
been furnished
directly or indirectly,
by an Er and sold
thereafter to the
latter.

APPRENTICES AND LEARNERS

Learnership v. Apprenticeship

BASIS Learnership Apprenticeship

Nature Training on the Training in trades
job in semi-skilled which are
and other apprenticeable, that is,
industrial practical training on
occupation or the job supplemented
trades which are by related theoretical
non- instruction for more
apprenticeable than 3 months.
and which may be
learned thru
practical training
on the job in a
relatively short
period of time.
Duration Max: 3 months Min: 3 months
(training) Max: 6 months
Commitment to With commitment No commitment to hire
employ to employ the
learner as a
regular Ee if he
desires upon
completion of
learnership
In case of pre- Considered a Worker not considered
termination of con regular Ee if pre- as regular Ee.
tract termination
occurs after2
months of training
and the dismissal
is without fault of
the Learner.
Coverage Semi- Highly technical
skilled/Industrial industries and only in
occupations industrial occupation

List There is a list of No list

learnable trades
by TESDA

Written agreement Requires Requires

learnership apprenticeship
agreement agreement

Prior TESDA Not required. Only Requires TESDA

approval inspection from approval for validity
TESDA is
required

PERSONS WITH DISABILITY

(R.A. 7277 as amended by R.A. 9442)

No PWD shall be denied access to opportunities for sutable employment. Handicaped workers
are entitled to not less than seventy-five percent (75%) of the applicable adjusted minimum wage.
(Article 80, LC)

Persons with disability (PWD)

Those whose earning capacity is impaired by:
1. Physical deficiency
2. Age
3. Injury
4. Disease
5. Mental deficiency
6. Illness

NOTE: Low I.Q. does not make a worker handicapped (2000 BAR)

TERMINATION OF EMPLOYMENT

EMPLOYER-EMPLOYEE RELATIONSHIP

FOUR- FOLD TEST

The fourfold test (indicia of determination):
1. Selection and engagement of the employee;
2. Payment of wages;
3. Power of dismissal; and
4. Power of control (Azucena, Vol. I).

Among the four, the control test assumes primacy in the overall consideration. The power of
control is the right to control not only the end to be achieved but also the means to be used in
reaching such end. (Locsin v. PLDT, G.R. No. 185251, October 2, 2009)

Not every form of control establishes employer-employee relationship. A demarcation line should
be drawn between: (a) rules that merely serve as guidelines which only promote the result, and
(b) rules that fix the methodology and bind or restrict the party hired to the use of such means or
methods. Under the first category, there exists no employer-employee relationship. In the second
category, it has the effect of establishing employer-employee relationship (Insular life v. NLRC,
179 SCRA 439; Consulta v. CA, G.R. No. 145443, March 18, 2005).

Two-tiered test
1. The putative Ers power to control the Ee with respect to the means and methods by which the
work is to be accomplished (Four-fold test);
2. The underlying economic realities of the activity or relationship (economic reality test).

Application of the four-fold test and the two-tiered test

Present Philippine law recognizes a two-tiered test. The first tier of the test is the four-fold test.
The second tier is the economics of the relationship test. But the latter test is used if and only if
there is going to be harshness in the results because of the strict application of the four-fold test.
It is especially appropriate in this case where there is no written agreement or terms of reference
to base the relationship on and due to the complexity of the relationship. (Francisco v. NLRC,
G.R. No. 170087, August 31, 2006).

Bersamin Case:

Q: Charlie maintained that BCC and its President, Terrance, employed him as comptroller
starting from September 1995 to handle the financial aspect of BCCs business; that on
October 1995, the security guards of BCC, acting upon the instruction of Terrance, barred
him from entering the premises of BCC where he then worked; that his attempts to report
to work in November and December 1995 were frustrated because he continued to be
barred from entering the premises of BCC; and that he filed a complaint in December 1995
for illegal dismissal, reinstatement with full backwages, non-payment of wages, damages
and attorneys fees. BCC and Terrance countered that Charlie was not their employee but
the employee of Sobien Food Corporation (SFC), the major creditor and supplier of BCC;
and that SFC had posted him as its comptroller in BCC to oversee BCCs finances and
business operations and to look after SFCs interests or investments in BCC. Is Charlie an
employee of BCC?

A: NO. It can be deduced that BCC and Terrance did not exercise the power of control over him,
because he thereby acted for the benefit and in the interest of SFC more than of BCC. In addition,
Charlie presented no document setting forth the terms of his employment by BCC. Charlie
admitted that he did not receive his salary for the three months of his employment of BCC.
Moreover, his name did not appear in the payroll of BCC despite him having approved the payroll
as comptroller. Lastly, the confusion about the date of his alleged illegal dismissal provides
another indicium of the insincerity of Charlies assertion of employment by BCC. The wide gap
between October 19, 1995 and December 12, 1995 cannot be dismissed as a trivial inconsistency
considering that the several incidents affecting the veracity of his assertion of employment by
BCC earlier noted transpired in that interval. (Jao v. BCC Products Sales Inc. and Ty, G.R. No.
163700, April 18, 2012)

KINDS OF EMPLOYMENT

PROBATIONARY EMPLOYMENT
Employment where the Ee, upon his engagement:
1. Is made to undergo a trial period;
2. During which the Er determines his fitness to qualify for regular employment; and
3. Based on reasonable standards made known to the Ee at the time of engagement (IRR, Book
VI, Rule I, Sec 6).

Rules on probationary employment

1. Er shall make known to the Ee at the time he is hired, the standards by which he will qualify as
a regular Ee;
2. An Ee allowed to continue work after the probationary period shall be considered a regular Ee;
3. During the probationary period, the Ee enjoys security of tenure; his services can only be
terminated for just or authorized causes and when he fails to qualify as a regular Ee in accordance
with reasonable standards made known by the Er to the Ee at the time of his engagement (ICMC
v. NLRC, G.R. No. 72222, January 30, 1989; LC, Art. 281).

GR: It shall not exceed 6 months.

XPNs:
1. Covered by an Apprenticeship or Learnership agreement stipulating a different period
2. Voluntary agreement of parties (especially when the nature of work requires a longer period)
3. The Er gives the Ee a second chance to pass the standards set (Mariwasa Manufacturing, Inc.
v. Leogardo, Jr., G.R. No. 74246, January 26, 1989).
4. When the same is required by the nature of the work, e.g. the probationary period set for
professors, instructors and teachers is 3 consecutive years of satisfactory service pursuant to
DOLE Manual of Regulations for Private Schools.
5. When the same is established by company policy.

NOTE: After the lapse of the probationary period (6 months), Ee becomes regular.
The Er and Ee may validly agree to extend the probationary period beyond six months. Such an
extension may be lawfully agreed upon. Extension is allowed only when:
1. Nature of the job requires extensive training, or
2. If it is a company policy that the period of probationary employment should be an extended
period

Double or successive probation is NOT allowed.

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. If the
probationary employee is being terminated for just cause, he must, of course, be given due
process before his termination. (Enchanted Kingdom, Inc. v. Verzo G.R. No. 209559, December
09, 2015)

REGULAR EMPLOYMENT

TYPES OF REGUAR EMPLOYMENT

NATURE OF WORK YEARS OF SERVICE

An employment shall Any Ee who has

be deemed to be rendered at least one
regular where the Ee year of service,
has been engaged to whether such service
perform activities is continuous or
which are usually broken, shall be
necessary or desirable considered a regular
in the usual business Ee with respect to the
or trade of the Er, the activity in which he is
provisions of written employed and his
agreements to the employment shall
contrary continue while such
notwithstanding and activity exists [IRR,
regardless of the oral Book VI, Rule I, Sec. 5
agreements of the (b)].
parties [IRR, Book VI,
Rule I, Sec. 5 (a)].

Mode of compensation is not determinative of regular employment: While the Ees mode of
compensation was on a per piece basis the status and nature of their employment was that of
regular Ees.(Labor Congress of the Phils v. NLRC, G.R. No. 123938, May 21, 1998).

PROJECT EMPLOYMENT
Project employment is employment that has been fixed for a specific project or undertaking the
completion for which has been determined at the time of engagement of the Ee (IRR, Book VI,
Rule I, Sec. 5(a)]. The period is not the determining factor, so that even if the period is more than
1 year, the Ee does not necessarily become regular.

Repeated hiring on a project-to-project basis is considered necessary and desirable to the

business of the Er. The Ee is regular. (Maraguinot v. NLRC, G.R. No. 120969, July 22, 1998).

Requisites in determining whether an Ee is a project Ee

1. The project Ee was assigned to carry out a specific project or undertaking, (Gadia v. Sykes
Asia, Inc., G.R. No. 209499, January 28, 2015); and
2. The duration and scope of which were specified at the time the Ee was engaged for that project
(ETS v. CA. G.R. No. 157680, October 8, 2008)
3. The Ee must have been dismissed every after completion of his project or phase
4. Report to the DOLE of Ees dismissal on account of completion of contract to satisfy due
process requirements. [Policy Inst. No. 20; D.O. 19 (1997)].

The principal test for determining whether one is a "project employee," as distinguished
from "regular employee," is whether he was assigned to carry out "a specific project or
undertaking," the duration and scope of which were specified at the time the employee
was engaged for that project. (Equipment Technical Services (Ets) & Joseph James Dequito V.
Ca, Alex Albino, Et.Al. G.R. No. 157680, October 8, 2008, Velasco, Jr., J.)

Work Pool

Requisites to acquire regular Ee status of project Ee or a member of work pool

The following must concur to acquire a status of a regular Ee status:
1. There is a continuous rehiring of project Ees even after cessation of a project; and
2. The tasks performed by the alleged project Ee are vital, necessary and indispensable to the
usual business or trade of the Er (D.M. Consunji, Inc. v. JAMIN, G.R. No. 192514, April 18, 2012).

The length of time during which the Ee was continuously re-hired 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 Er and Ee 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 Ees (Maraguinot v. NLRC, G.R. No. 120969, January 22, 1998).

Bersamin Cases:

Q: Innodata Philippines, Inc. (Innodata) hired Jamais, Matuguinas, and Cruz together with
nine (9) others as project employees with functions desirable and necessary to it. The
positions and durations of engagements were clearly stated and explained in the
respective contracts they signed. Upon expiration of their contract, the petitioners filed a
complaint before the Labor Arbiter for illegal dismissal claiming Innodata made it appear
that they had been hired as project employees to prevent their regularization. Were the
petitioners regular or project employees?

A: They were project employees. A fixed term agreement, to be valid, must strictly conform to the
requirements and conditions provided in Article 280 of the Labor Code. The fixed period of
employment must be 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 must satisfactorily appear that the employer and
employee dealt with each other on more or less equal terms with no moral dominance exercised
by either party. The contracts of the petitioners indicated the duration of their engagement as well
as their respective project assignments. There is no indication that they were made to sign the
contracts against their will neither did they refute Innodatas assertion that it did not employ force
or fraudulently manipulate petitioners into signing the contracts. Hence, petitioners knowingly
agreed to the terms and voluntarily signed the same. Further, the necessity and desirability of
work performed by the employees are not determinants in term employment, but rather the day
certain voluntarily agreed upon by the parties. (Alumaymay O. Jamias, et al. v. NLRC, GR No.
159350, March 9, 2016)

Q: Rogelio Bello brought a complaint for illegal dismissal and damages against DMCI
and/or Rachel Consunji. He claimed that DMCI had employed him as a mason without any
interruption from February 1, 1990 until October 10, 1997; that his job as a mason had been
necessary and desirable in the usual business or trade of DMCI; that at that time of his
dismissal, DMCIs projects had not yet been completed. DMCI contended that Bello had
only been a project employee, as borne out by his contract of employment and
appointment papers. Was Rogelio Bello a regular employee?

A: He was a regular employee. In the context of the law, Bello was a project employee of DMCI
at the beginning of their employer-employee relationship. The project employment contract they
then entered into clearly gave notice to him at the time of his engagement about his employment
being for a specific project or phase of work. He was also thereby notified of the duration of the
project, and the determinable completion date of the project. However, the history of Bellos
appointment and employment showed that he performed his tasks as a mason in DMCIs various
constructions projects. Bellos position was undoubtedly a function necessary and desirable to
the business or trade of one engaged in the construction industry like DMCI. His being hired as a
mason by DMCI in not one, but several of its projects revealed his necessity and desirability to its
construction business. It is settled that the extension of the employment of a project employee
long after the supposed project has been completed removes the employee from the scope of a
project employee and makes him a regular employee. (DM Consunji Corporation v. Rogelio P.
Bello, GR No. 159371, July 29, 2013)

SEASONAL EMPLOYMENT

Seasonal employment
Employment where the job, work or service to be performed is seasonal in nature and the
employment is for the duration of the season [IRR, Book VI, Rule I, Sec.5 (a)].

NOTE: For Seasonal Ees, their employment legally ends upon completion of the project or the
season. The termination of their employment cannot and should not constitute an illegal dismissal
(Mercado v. NLRC, G.R. No. 79869, September 5, 1991).

Seasonal Ees as Regular Ees

Seasonal Ees can be considered regular Ees. Seasonal workers who are repeatedly engaged
from season to season performing the same tasks are deemed to have acquired regular
employment. During off-season, the relationship of Er-Ee is not severed; the Seasonal Ee is
merely considered on LOA without pay. (Hacienda Fatima v. National Federation of Sugarcane
Workers-Food and General Trade, G.R. No. 149440, January 28, 2003).

CASUAL EMPLOYMENT
Casual employment
1. It is an employment where the Ee is engaged in an activity which is not usually necessary or
desirable in the usual business or trade of the Er, Provided: such employment is
2. An Ee is engaged to perform a job, work or service which is merely incidental to the business
of the Er, and such job, work or service is for a definite period made known to the Ee at the time
of engagement [IRR, Book Vi, Rule I, Sec. 5 (b)].

Casual Ee becoming a regular Ee

If he has rendered at least 1 year of service, whether such service is continuous or broken, he is
considered as regular Ee with respect to the activity in which he is employed and his employment
shall continue while such activity exists.

FIXED TERM EMPLOYMENT

Term employment
A contract of employment for a definite period terminates by its own terms at the end of such
period. (Brent School v. Zamora, G.R. No. L-48494, February 5, 1990)

Decisive determinant in term employment

It is the day certain agreed upon by the parties for the commencement and the termination of their
employment relation. A day certain being understood to be that which must necessarily come,
although it may not be known when and not whether the work is usually necessary and desirable
to the business of the Er.

JOB CONTRACTING

Job contracting (independent contracting/ subcontracting)

"Contracting" or "subcontracting" refers to an arrangement whereby a principal agrees to farm out
to a contractor the perfomance or completion of specific job or work within a definite or
predetermined period, regardless of whether such job or work is to be performed or completedd
within or outside the premises of the principal. (Sec. 3c, DOLE D.O. No. 174 s. 2017)

Conditions in order to be considered as legitimate job contracting or subcontracting

1. The contractor must be registered in accordance with these Rules and carries a distinct and
independent business and undertakes to perform the job, work or service on its own responsibility,
according to its own manner and method, and free from 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 has substantial capital and/or investment; and
3. The Service Agreement ensures compliance with all the rights and benefits under Labor Laws
(DO 18-A, Sec. 4).

Labor-only contracting
There is labor-only contracting when:
1. The contractor does not have substantial capital, or;

a. The contractor or subcontractor does not have investments in the form of tools,
equipment, machineries, work premises, among others, AND
 b. the contractor or subcontractors Ees recruited and placed are performing activities
which are usually necessary or desirable to the operation of the company, or directly related to
the main business of the principal within a definite or predetermined period, regardless of whether
such job, work or service is to be performed or completed within or outside the premises of the
principal; OR

2. The contractor does not exercise the right to control over the performance of the work of the
Ee (Sec. 5, DOLE D.O. No. 174 s. 2017)

5-5-5 Scheme or Endo

The 5-5-5 or endo workers refers to the hiring practice that is deliberately resorted to prevent
workers from acquiring regular status by reason of length of service of at least 6 months and one
day. Under a subcontracting arrangement, this is done through:
a. repeated short-term arrangements (e.g., 5 months, 5 months, 5-5-5, or less) by one principal
through the same contractor, or under different contractors, or

b. repeated short-term arrangements (e.g., 5 months, 5 months, 5-5-5, or less) through a

Service Agreement of short duration under the same contractor, or different contractors.

Section 7(A)[7) of DOLE Department Order No 18-A series of 2011 makes subcontracting a
prohibited activity when it is done through repeated hiring of workers for a 5 to 6 months
employment contract under the same employer or Service Agreement of the same duration

In case of violation, the Contractors Certificate of Registration can be cancelled, after due
process, and the worker becomes regular employee of the principal, and all benefits due to
him/her shall be the liability of the principal. (http://www.blr.dole.gov.ph/frequently-asked-
questions/36-issues-and-concerns)

Labor-onlycontracting v. Job contracting

LABOR-ONLY JOB CONTRACTING

CONTRACTING

Er is treated as direct Er of the No Er-Eerelationship exist

person recruited in all instances between the Er and the
contractor's Ees except when
the contractor or subcontractor
fails to paythewagesofthe Ees
Liability is limited (shall be Liability extends to all those
solidarily liable with Er only provided under the Labor
when the Er fails to comply with Standards law
requirements as to unpaid
wages and other labor
standards violations)
Prohibited byLaw Permissible, subject only to
certain conditions

Has no substantial capital or The contractor has substantial

investment capital or investment

FACTOR INDEPENDENT LABOR-ONLY

TEST CONTRACTOR CONTRACTOR

Nature of The business of an No separate business

business independent independent and distinct
contractor is entirely from the principal. May be
separateand a cabo or an in-house
distinct from the agency prohibited under
business of the DO 18-02
principal
Substantial Has substantial The only investment is
capital OR capital or bringing individuals to
investment investment. work
Control Control as to only Control as to BOTH results
RESULTS but not and means
the means
Effect VALID VOID

Q: Clean Manpower Inc. (CMI) had provided janitorial services to the National Economic
Development Authority (NEDA) since April 1988. Its service contract was renewed every
three months. However, in the bidding held on July 1992, CMI was disqualified and
excluded. In 1993, six janitors of CMI formerly assigned at NEDA filed a complaint for
underpayment of wages. Both CMI and NEDA were impleaded as respondents for failure
to comply with NCR Wage Orders Nos. 01 and 02, which took effect on November 1, 1990
and January 2, 1992, respectively.
Should NEDA, a government agency subject to budgetary constraints, be held liable
solidarily with CMI for the payment of salary differentials due the complainants? Cite the
legal basis of your answer.
(2004, 2014 BAR)

A:YES, NEDA should be impleaded as a defendant. Art. 106 provides that in the event that the
contractor or subcontractor fails to pay the wages the wages of his employees, 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 the
employees directly employed by him.

Essence of the prohibition on labor-only contracting: It gives rise to confusion as to who is

the real Er of the workers and who is liable to their claims. It also deprives workers of the
opportunity to become regular Ees.
Bersamin Case:
Q: Superior Packaging Corp. engaged the services of Lancer Staffing and Services
Network, Inc., wherein Balagsay et al. were engaged for four months to do tasks such as
loading, unloading, and segregation of corrugated boxes. Balagsay et al. filed a complaint
before the DOLE against Superior Packaging Corp. and its President Cesar Luz for
violation of labor standard laws. During the inspection, DOLE found several labor
standards violations. DOLE denied Superior Packaging Corp.s motion for reconsideration
that Balagsay et al. are Lancer, Inc.s employees; it also ruled that even if they were Lancer
Staffing and Services Network, Inc.s employees, the principal is still jointly and severally
liable with the contractor to contractual employees to the extent of the work performed
when the contractor fails to pay its employees wages. Is the DOLE correct in ruling that
Superior Packaging Corp. is solidarily liable with Lancer Staffing and Services Network,
Inc.?

A: YES. Lancer Staffing and Services Network, Inc. was not an independent contractor but was
engaged in "labor-only contracting"; hence, Superior Packaging Corp. was considered an indirect
employer of respondents and liable to the latter for their unpaid money claims. A finding that a
contractor is a "labor-only" contractor is equivalent to declaring that there is an employer-
employee relationship between the principal and the employees of the supposed contractor, and
the "labor only" contractor is considered as a mere agent of the principal, the real employer. The
former becomes solidarily liable for all the rightful claims of the employees. Superior Packaging
Corp., therefore, being the principal employer and Lancer, being the labor-only contractor, are
solidarily liable for respondents unpaid money claims. (SUPERIOR PACKAGING CORP. v.
BALAGSAY ET AL., G.R. No. 178909, 10 October 2012)

DISMISSAL FROM EMPLOYMENT

In cases of regular employment, substantive due process (Security of Tenure) is when the Er shall
not terminate the services of an Ee except for a just cause or when authorized by the LC on
Termination of Employment (LC, Art. 279).
In every employee dismissal case, the employer bears the burden of proving the validity of the
employee's dismissal.

Types of dismissal
1. Dismissal for a just cause with due process
2. Dismissal for authorized cause with due process
3. Dismissal for health reasons with due process
4. Dismissal without just or authorized cause with due process
5. Dismissal for just or authorized cause without due process (belated due process rule)

JUST CAUSES

Just causes for termination

1. Serious misconduct or willful disobedience by the Ee of the lawful orders of his Er or
representative in connection with his work;
2. Gross and habitual neglect by the Ee of his duties;
3. Fraud or willful breach by the Ee of the trust reposed in him by his Er or duly organized
representative;
4. Commission of a crime or offense by the Ee against the person of his Er or any immediate
member of his family or his duly authorized representative;
5. Other causes analogous to the foregoing (LC, Art. 282).

Serious misconduct or willful disobedience

Elements of serious misconduct:

1. It must be serious or of such a grave and aggravated character;
2. Must relate to the performance of the Ees duties;
3. Ee has become unfit to continue working for the Er (CBTL Philippines, Inc. v. Arenas G.R. No.
208908, March 11, 2015).

Examples of serious misconduct:

1. Sexual Harassment
2. Fighting within the company premises
3. Uttering obscene, insulting or offensive words against a superior
4. Falsification of time records
5. Gross immorality

Bersamin Case:

Q: On May 18, 1998, Del Rosario, one of Northwest Airlines Manila based flight attendants,
was assigned at the Business Class Section of Northwest Flight NW 26 bound for Japan.
A verbal confrontation which escalated into a heated argument ensued between Del
Rosario and Gamboa, another flight attendant assigned in the same flight. A Notice of
Removal from Service was sent to Del Rosario informing her of her dismissal from the
service pending an investigation of the fighting incident between her and Gamboa. On
June 19, 1998, Del Rosario was informed of her termination from the service on the
grounds of serious misconduct and willful disobedience. Northwest stated that based on
the results of the investigation, Del Rosario and Gamboa had engaged in a fight on board
the aircraft, even if there had been no actual physical contact between them; and that
because fighting was strictly prohibited by Northwest to the point that fighting could entail
dismissal from the service even if committed for the first time. Consequently, Del Rosario
filed a complaint for illegal dismissal against Northwest. Was the misconduct serious as
to merit Del Rosarios valid dismissal?

A: NO. Misconduct or improper behavior, to be a just cause for termination of employment, must:
(a) be serious; (b) relate to the performance of the employees duties; and (c) show that the
employee has become unfit to continue working for the employer. The fight between Del Rosario
and Gamboa should be so serious that it entailed the termination of her employment even if it was
her first offense. xxx In several rulings where the meaning of fight was decisive, the Court has
observed that the term fight was considered to be different from the term argument.In People v.
Asto, for instance, the Court characterized fight as not just a merely verbal tussle but a physical
combat between two opposing parties. xxx The incident involving Del Rosario and Gamboa could
not be justly considered as akin to the fight contemplated by Northwest. The understanding of
fight as one that required physical combat was absent during the incident of May 18, 1998.
Moreover, even assuming arguendo that the incident was the kind of fight prohibited by
Northwest's Rules of Conduct, the same could not be considered as of such seriousness as to
warrant Del Rosario's dismissal from the service. The gravity of the fight, which was not more
than a verbal argument between them, was not enough to tarnish or diminish Northwest's public
image. (Northwest Airlines v. Del Rosario, G.R. No. 157633, September 10, 2014)
Requisites of willful disobedience:
1. The Ees assailed conduct must have been willful or intentional, the willfulness being
characterized by a wrongful and perverse attitude.
2. The disobeyed orders, regulations or instructions of the Er must be:

a. Reasonable and lawful

b. Sufficiently known to the Ee
c. In connection with the duties which the Ee has been engaged to discharge (SLMC v.
Sanchez G.R. No. 212054, March 11, 2015).

There is no law that compels an Ee to accept a promotion for the reason that a promotion is in
the nature of a gift or reward, which a person has the right to refuse. The exercise of the Ee of
the right to refuse a promotion cannot be considered in law as insubordination or willful
disobedience (PT&T Corp. v. CA, G.R. No. 152057, September, 29, 2003).

Bersamin Case:

Q: Dongon is a former truck helper leadman of Rapid Movers, which is engaged in the
hauling and trucking business. Dongons area of assignment is the Tanduay Otis
Warehouse, where his job is to load and unload Rapid Movers trucks. Dongon, with his
driver Villaruz, was within the vicinity of Tanduay and they tried to get some goods to be
distributed by the clients. However, the security guard noticed that Villaruz was not
wearing an ID. Dongon said that they will obtain the required permission from management
to warrant the delivery of the goods, but instead, Dongon lent Villaruz his ID. They were
able to get the goods from the warehouse. Realizing this misrepresentation, the security
guard reported this to management, which later on dismissed Dongon after conducting an
investigation. Was Dongons dismissal lawful?

A: NO. Willfulness must be attended by a wrongful and perverse mental attitude rendering the
employees act inconsistent with proper subordination. In any case, the conduct of the employee
that is a valid ground for dismissal under the Labor Code constitutes harmful behavior against the
business interest or person of his employer. It is implied that in every act of willful disobedience,
the erring employee obtains undue advantage detrimental to the business interest of the
employer. Under the foregoing standards, the disobedience attributed to Dongon could not be
justly characterized as willful within the contemplation of Article 296 of the Labor Code. He neither
benefitted from it, nor thereby prejudiced the business interest of Rapid Movers. There could be
no wrong or perversity on his part that warranted the termination of his employment based on
willful disobedience. It is true that an employer is given a wide latitude of discretion in managing
its own affairs. The broad discretion includes the implementation of company rules and
regulations and the imposition of disciplinary measures on its employees. But the exercise of a
management prerogative like this is not limitless, but hemmed in by good faith and a due
consideration of the rights of the worker. (DONGON v. RAPID MOVERS AND FORWARDERS
CO., INC., G.R. No. 163431, 28 August 2013)

Gross and habitual negligence

An employee who was grossly negligent in the performance of his duty, though such negligence
committed was not habitual, may be dismissed especially if the grossly negligent act resulted in
substantial damage to the company. (LBC Express vs. Mateo, G.R. No. 168215, June 9, 2009)
Failure to observe prescribed standards of work or to fulfill reasonable work assignments due to
inefficiency may constitute just cause for dismissal. Such inefficiency is understood to mean
failure to attain work goals or work quotas, either by failing to complete the same within the allotted
reasonable period, or by producing unsatisfactory results

Bersamin Case:

Q: A clog-up occurred at the kettle sheet guide where Victor Albina (Albina), Vicente Uy
(Uy), and Alex Velasquez (Velasquez) were on duty working in their assigned areas. As a
consequence, 20 GI sheets were clogged up inside the kettle causing damage to
Sugarsteel. On the same day, a memorandum was issued by the Mr. Yapjoco, the manager,
requiring Albina, Uy, and Velasquez to submit written explanations on the aforementioned
incident and why no action shall be taken against them for gross negligence. They
submitted their respective explanations. In another memorandum, Mr. Yapjoco informed
all the petitioners to attend a conference in connection with the incidents. Later on, they
were sent individual notices of suspension pending final decision relativce to the incident.
Mr. Yapjoco again sent individual notices of termination of employment of Albina, Uy, and
Velasquez on the ground of gross neglect of duty. Were they illegally dismissed?

A: YES. There was no showing that there was gross negligence on the part of the workers. In
order to warrant the dismissal of the employee for just cause, Article 282 (b) of the Labor Code
requires the negligence to be gross and habitual. Gross negligence is the want of even slight care,
acting or omitting to act in a situation where there is duty to act, not inadvertently but willfully and
intentionally, with a conscious indifference to consequences insofar as other persons may be
affected. Habitual neglect connotes repeated failure to perform one's duties for a period of time,
depending upon the circumstances. Obviously, a single or isolated act of negligence does not
constitute a just cause for the dismissal of the employee. This was the first offense of the workers
and there was no evidence showing that there was habitual neglect on their part thus the just
cause was not concluded. (Sugarsteel Industrial, Inc. and Ben Yapjoco v. Victor Albina, Vicente
Uy, and Alex Velasquez, GR No. 168749, June 6, 2016)

Loss of trust and confidence

It applies only to cases involving:

a. Ees occupying positions of trust and confidence - confidential and managerial Ees

Distinction should be made between managerial and rank and file employees. With respect to
rank-and-file personnel, loss of trust and confidence, as ground for valid dismissal, requires proof
of involvement in the alleged events while for managerial employees, the mere existence of a
basis for believing that such employee has breached the trust of his employer would suffice for
his dismissal (Grand Asian Shipping Lines, Inc. v. Wilfred Galvez, G.R. No. 178184, Jan. 29,
2014).

b. Ees routinely charged with the care and custody of the Ers money or property To this
class belong those who, in the normal and routine exercise of their functions, regularly handle
significant amounts of money or property (Mabeza v. NLRC, G.R. No. 118506, April 18, 1997).
Bersamin Case:

Q: Lagahit was a Sales Manager employed at Pacific Concord Container Lines. On

November 8, 2002, she received a text message from Cuenca, the companys Branch
Manager, informing her that she (Lagahit) is no longer connected with the company. On
the same day, Lagahit also learned that Cuenca had disseminated notices, flyers and
memos informing all clients of Pacific Concord that she was no longer connected with the
company as of that date. Lagahit later on filed a complaint for constructive dismissal. In
its answer, the Pacific Concord contends that the dismissal of Lagahit was valid. It asserts
that Lagahit had betrayed the trust and confidence reposed in her when she applied for
other employment during office hours and using company resources. Is the company
correct?

A: NO. Article 282(c) of the Labor Code authorizes an employer to dismiss an employee for
committing fraud, or for willful breach of the trust reposed by the employer. For this to be a valid
ground for the termination of the employee, the employer must establish that: (1) the employee
must be holding a position of trust and confidence; and (2) the act complained against would
justify the loss of trust and confidence. Lagahits position as sales manager did not immediately
make her a managerial employee. The actual work that she performed, not her job title,
determined whether she was a managerial employee vested with trust and confidence. Her
employment as sales manager was directly related with the sales of cargo forwarding services of
ABC Company, and had nothing to do with the implementation of the managements rules and
policies. Her act of searching for gainful employment opportunities elsewhere should be
considered as inappropriate for being made during office hours but the same did not constitute
willful breach of trust and confidence of the employer. The loss of trust and confidence
contemplated under Article 282(c) of the Labor Codeis not ordinary but willful breach of trust. The
cause of the loss of trust must be work-related as to expose the employee as unfit to continue
working for the employer. (Lagahit vs Pacific, G.R. No. 177680, January 13, 2016)

Abandonment as a just cause for termination

Two (2) factors must be present:
1. The failure to report for work, or absence without valid or justifiable reason; and
2. A clear intention to sever Er-Ee relationship, with the 2nd element as the more
determinative factor, being manifested by some overt acts(Sta. Catalina College v. NLRC,
G.R. No. 144483, November 19, 2003).

Mere absence or failure to work, even after notice to return, is not tantamount to abandonment.
The filing by an employee of a complaint for illegal dismissal with a prayer for reinstatement is
proof enough of his desire to return to work, thus, negating the employers charge of
abandonment. (Essencia Q. Manarpiis v. Texan Philippines, Inc., Richard Tan And Catherine P.
Rialubin-Tan G.R. No. 197011, January 28, 2015, Villarama, Jr., J.)

Commission of a crime or offense

When an offense is committed by the Ee against the person of his Er or any immediate member
of his family or his duly authorized representative, conviction of a crime involving moral turpitude
is not analogous thereto as the element of relation to his work or to his Er is lacking.

Analogous cases
To fall within the ambit of analogous cases the act or omission must have an element similar to
those found in the specific just cause enumerated under Art. 282. (International Rice Research
Institute v. NLRC, G.R. No. 97239, May 12, 1993).
Previous offenses may be so used as a valid justification for dismissal from work ONLY if the
infractions are related to the subsequent offense upon which the basis the termination of
employment is decreed (Stellar Industrial Service Inc. v. NLRC, G.R. No. 117418. Jan. 24, 1996).

Q: Cheryll Leus was a non-teaching personnel employed in St. Scholasticas College

Westgrove (SSCW). Cheryll and her boyfriend conceived a child out of wedlock. SSCW
dismissed her on the ground that her pregnancy out of wedlock constitutes disgraceful
and immoral conduct and ran counter to the moral principles that SSCW stands for and
teaches its students. Does pregnancy out of wedlock (without a legal impediment to marry)
constitutes immoral conduct as a ground for dismissal contemplated by law?

A: NO. It is not the totality of the circumstances surrounding the conduct per se that determines
whether the same is disgraceful or immoral, but the conduct that is generally accepted by society
as respectable or moral. If the conduct does not conform to what society generally views as
respectable or moral, then the conduct is considered as disgraceful or immoral. Tersely put,
substantial evidence must be presented, which would establish that a particular conduct, viewed
in light of the prevailing norms of conduct, is considered disgraceful or immoral. Thus, the
determination of whether a conduct is disgraceful or immoral involves a two-step process: first, a
consideration of the totality of the circumstances surrounding the conduct; and second, an
assessment of the said circumstances vis--vis the prevailing norms of conduct, i.e., what the
society generally considers moral and respectable. There is still a necessity to determine whether
the petitioners pregnancy out of wedlock is considered disgraceful or immoral in accordance with
the prevailing norms of conduct. To stress, pre-marital sexual relations between two consenting
adults who have no impediment to marry each other, and, consequently, conceiving a child out of
wedlock, gauged from a purely public and secular view of morality, does not amount to a
disgraceful or immoral conduct (Leus v. SSCW, G.R. No. 187226, January 28, 2015).
In termination disputes or illegal dismissal cases, the employer has the burden of proving that the
dismissal is for just and valid causes. The employer is bound to adduce clear, accurate,
consistent, and convincing evidence to prove that the dismissal is legal. (Edi-Staffbuilders
International, Inc. vs. National Labor Relations Commission and Eleazar S. Gran G.R. No.
145587, October 26, 2007, Velasco, Jr., J.)

Bersamin Cases:

Q: Minex Import Corp. is engaged in the retail of semi-precious stones, sold in kiosks or
stalls located in various shopping centers within Metro Manila. It employed Concepcion as
a salesgirl, and she was subsequently made into a supervisor. One day, Concepcion and
her salesgirls conducted a cash count from the sales proceeds including those from the
preceding Friday and Saturday and determined the total value to be P50,912.00.
Concepcion wrapped the cash in a plastic bag and deposited it in the drawer of the locked
wooden cabinet of the kiosk. The next day, Concepcion reported to the assistant manager
that the money was missing. Concepcion was immediately placed under arrest and was
detained for a day. She then filed a complaint for illegal dismissal before DOLE, while
Minex filed a complaint for qualified theft against her. After the preliminary investigation,
the assistant prosecutor found probable cause and recommended the filing of information
against the petitioner.
As to the complaint for illegal dismissal, the Labor Arbiter (LA) ruled in favor of
Concepcion, which was reversed by the NLRC, finding that the petitioner had in fact
abandoned her job after being found to have stolen the proceeds of sale. The ruling of
NLRC was sustained by the CA.
(a) Was there just cause for Concepcions dismissal?
(b) Was due process observed in terminating her employment?

A: (a) YES. The court ruled numerous times that neither conviction beyond reasonable doubt for
a crime against the employed nor acquittal after the criminal prosecution was indispensable. Nor
was a formal charge in court for the acts prejudicial to the interest of the employer a pre-requisite
for a valid dismissal, as the quantum of proof prescribed for dismissing an employee is substantial
evidence unlike in the case of convicting an accused which is proof beyond reasonable doubt.
Indeed, the finding or probable cause for qualified theft is sufficient to justify her termination for
loss of confidence.

(B) NO. Notwithstanding the presence of just cause, Minex failed to afford Concepcion of the due
process required for termination such as reasonable opportunity to explain her side, to set a
hearing or conference for the employee concerned and a written notice consisting of grounds
which justified her termination. In light of the circumstances, Minex is obliged to pay Concepcion
an indemnity in the form of nominal damages of P30, 000. Where the dismissal is for a just cause,
as in the instant case, the lack of statutory due process should not nullify the dismissal, or render
it illegal, or ineffectual. However, the employer should indemnify the employee for the violation of
his statutory rights, as ruled in Reta v. National Labor Relations Commission. The indemnity to
be imposed should be stiffer to discourage the abhorrent practice of dismiss now, pay later,
which we sought to deter in the Serrano ruling. The sanction should be in the nature of
indemnification or penalty and should depend on the facts of each case, taking into special
consideration the gravity of the due process violation of the employer. (CONCEPCION v. MINEX,
G.R. No. 153569, 24 January 2012)

AUTHORIZED CAUSES

Authorized causes of termination by the Er:

1. Installation of labor-saving devices (automation/robotics)
2. Redundancy (superfluity in the performance of a particular work) Exists where the services
of an Ee are in excess of what is reasonably demanded by the actual requirements of the
enterprise (Wiltshire File Co., Inc. v. NLRC, G.R. No. 82249, February 7, 1991).Er must be in
good faith in abolishing redundant position and has fair and reasonable criteria in ascertaining
what positions are to be declared redundant.
3. Reorganization
4. Retrenchment Er must be in good faith, has Proof of expected or actual losses, and uses
fair and reasonable criteria in ascertaining who would be retained among the Ees, such as status,
efficiency, seniority, physical fitness, age, and financial hardship of certain workers (FASAP v.
PAL, G.R. No. 178083, October 2, 2009)

Actual losses need not set in prior to retrenchment. (Cajucom VII v. TP Phils Cement Corp., et al,
G.R. No. 149090, February 11, 2005).

Bersamin Case:

Q: Realuyo worked as a pianist at the Legend Hotels Tanglaw Restaurant from September
1992 with an increased rate of P750/night. He was only allowed to perform from 7-10 pm
for three to six times a week. He was also required to conform to the venues motif and
had been subjected to the rules on employees representation checks and chits. On July
9, 1999, the management terminated his service effective at the end of the month, in view
of their cost-cutting measure. Realuyo filed a complaint for alleged unfair labor practice,
constructive illegal dismissal, and other monetary claims. Legend Hotel denied the
existence of employer-employee relationship, insisting that Realuyo was only a talent
engaged to provide live music at the hotel and that the economic crisis that had hit the
country constrained the management to dispense with his service.
(a) Was there employer-employee relationship between Legend Hotel and Realuyo?
(b) Was the termination valid?

A: (a) YES. Firstly, Realuyo was undeniably employed as a pianist of Legend Hotel, as the latter
actually wielded the power of selection at the time it entered into the service contract. Secondly,
Realuyos remuneration, albeit denominated as talent fees, is within the ambit of the term wages
in the context of the Labor Code. Thirdly, Legend Hotel clearly exercised the power of control over
the respondent as regards the time of performance, place, costume and the fact that he is
subjected to the rules on employees representation checks and chits. Lastly, the memorandum
informing Realuyo of the discontinuance of his service showed that Legend Hotel had the power
to dismiss him from employment.
(b) NO. Legend Hotel failed to submit evidence of the losses of its business operation. Its bare
statement fell short to prove that retrenchment is reasonably necessary to avert such losses.
Thus, by failure to present sufficient and convincing evidence to prove the existence of substantial
loss, Realuyos termination due to retrenchment is not allowed. (LEGEND HOTEL v. REALUYO,
G.R. No. 153511, 18 July 2012)

5. Closing or cessation of operation of the establishment or undertaking Must be done in

good faith and not for the purpose of circumventing pertinent labor laws.

Payment of separation pay is required only where closure is neither due to serious business
losses nor due to an act of Government (North Davao Mining Corp v. NLRC, G.R. No. 112546,
Mar. 13, 1996; NFL v. NLRC, G.R. No. 127718, March 2, 2000).

Bersamin Case:

Q: Ronaldo San Miguel had been a checker/customs representative of Zera Brokerage

Corp. Sometime on January 1994, he and other employees were informed that Zeta would
cease operations, and that all affected employees, including him, would be separated. Zeta
informed him through a letter, of his termination effective March 31, 1994. He allegedly
accepted his separation pay subject to the standing offer to be hired to his former position
by petitioner. On April 15, 1994 he was summarily terminated. Hence San Miguel filed a
complaint for unfair labor practice, illegal dismissal, non-payment of salaries and moral
damages against Zeta. For its part, Zeta contended that the dismissal is for a just cause,
cessation of business operations. San Miguel contends that Zeta did not cease operation
due to dissolution because the amendments of the article of incorporation were for the
purpose of changing the corporate name, broadening the primary functions, and
increasing capital stock. Was the dismissal due to the alleged cessation of business valid?

A: NO. The cessation of business operations by Zeta was not a bona fide closure to be regarded
as a valid ground for the termination of employment of San Miguel. The change of name is not a
change of the corporate being. The amendments in the articles of incorporation of Zeta to change
the corporate name to Zuellig Freight and Cargo Systems did not produce its dissolution as a
corporation. Thus, Zuellig is bound to respect and honor Zetas obligation especially with the
employees security of tenure. (Zuellig Freight and Cargo Systems v. NLRC and Ronaldo V. San
Miguel, GR No. 157900, July 266, 2013)
6. Disease (1) Must be incurable within 6 months and the continued employment is prohibited
by law or prejudicial to his health as well as to the health of his co-Ees (2) with a certification from
the public health officer that the disease is incurable within 6 months despite due to medication
and treatment.

The burden of proving compliance with these requisites is on the employer. Non-compliance leads
to the conclusion that the dismissal was illegal (Fuji Television Network v. Espiritu, G.R. No.
204944-45, Dec. 03, 2014).

Other authorized causes

1. Total and permanent disability of Ee
2. Valid application of union security clause
3. Expiration of period in term of employment
4. Completion of project in project employment
5. Failure in probation
6. Relocation of business to a distant place
7. Defiance of return-to work-order
8. Commission of Illegal acts in strike
9. Violation of contractual agreement
10. Retirement

Steps required in termination of an Ees employment for authorized causes:

1. Written Notice to DOLE 30 days prior to the intended day of termination.

Purpose: To enable it to ascertain the veracity of the cause of termination.

2. Written notice to Ee concerned 30 days prior the intended date of termination.
3. Payment of separation pay

There is no obligation to pay separation pay:

a. When the closure of the business is due to serious business loss
b. when the closure is due to an act of the Government.
c. Where closure of business is by compulsion of law because closure of business is not attributed
to Ers will. (e.g.: the land where the building is situated was declared covered by the
Comprehensive Agrarian Reform Law)

When an employee is placed under "floating status" for more than six months, he is considered
to have been constructively dismissed. (Vicente C. Tatel V. Jlfp Investigation Security Agency,
Inc., Jose Luis M. Pamintuan, and Paolo C. Turno G.R. No. 206942, February 25, 2015, Perlas-
Bernabe, J.)