UNIVERSITY OF THE PHILIPPINES COLLEGE OF LAW

Bar Operations 2008

LABOR LAW I

Bar Operations Head Academics Head Subject Head

Arianne Reyes Henry Aguda

Ryan Balisacan

Dielle Kapunan

Rowena Salonga

LABOR LAW I

LABOR STANDARDS

TABLE OF CONTENTS Section SECTION 1 SECTION 2 SECTION 3 SECTION 4 SECTION 5 SECTION 6 SECTION 7 SECTION 8 SECTION 9 SECTION 10 SECTION 11 SECTION 12 SECTION 13 SECTION 14 SECTION 15 SECTION 16 SECTION 17 SECTION 18 SECTION 19 Introduction Labor Code of the Philippines Work Relationship Employee Classification Recruitment and Placement of workers Alien employment Employment of Apprentice, learners and handicapped workers Condition of employment Hours of work Condition of employment Weekly Rest Period Condition of employment Holidays Condition of employment Service Incentive Leave Wages Minimum Wages Women Workers Minors House helpers Home workers Termination of Employment Retirement Topic Page no. 2 4 6 8 13 16 27 19 22 22 24 25 33 37 39 41 42 42 54

LABOR LAW I
PART I INTRODUCTION
LABOR LAW - The law governing the rights and duties of the employer and employees (1) with respect to the terms and conditions of employment and (2) with respect to labor disputes arising from collective bargaining respecting such terms and conditions Classifications: LABOR STANDARDS minimum requirements prescribed by existing laws, rules and regulations relating to wages, hours of work, costof-living allowance, and other monetary and welfare benefits, including occupational safety, and health standards. Maternity Childrens Hospital v. Sec. of Labor (89) LABOR RELATIONS Regulates the institutional relationship between the workers organized into a union and the employers WELFARE LAWS Designed to take care of the contingencies which may affect the workers d. e.

LABOR STANDARDS
PAST PRACTICES American Wire and Cable Co., Inc (05) Done for a long period of time Instituted by the employer (ER) voluntarily COMPANY POLICIES China Banking Corporation v Borromeo (04)

LAW AND THE CONSTITUTION

A. LABOR SECTOR CHARACTERIZED Article II Section 18 The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare. B. PROTECTION OF LABOR GUARANTEES Art XIII SEC 3 (operative provision in Consti) full protection to labor (domestic or overseas) guaranteed rights: labor standards in bold; otherwise, labor relations 7 Cardinal Rights of Workers S right to self-organization C collective bargaining and negotiations P peaceful concerted activities including the T right to strike in accordance with law H security of tenure L humane conditions of work P living wage participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. C. SOCIAL JUSTICE Article II, Section 10 Article XIII Section 1 Article XIII, Section 2 Social justice is "neither communism, nor despotism, nor atomism, nor anarchy," but the humanization of laws and the equalization of social and economic forces by the State so that justice in its rational and objectively secular conception may at least be approximated. Calalang v. Williams (40) Limits of use: Not to undermine property rights resulting in confiscation Guido v. Rural Progress Adm. (49) May only protect the laborers who come with clean hands Phil. Long Distance Telephone Co. v. NLRC (88) Never result to an injustice or oppression of the employer Phil. Geothermal Inc. v NLRC (94) Basis of limitation: Law also guarantees the ER reasonable returns from his investment Asian Alcohol Corp. v. NLRC (99)

Basis:
1987 Constitution Art II Sec 5 protection of life, liberty, & property Art II Sec 18 State affirms labor as a primary social economic force Art XIII Sec1 Congress shall give highest priority to enact measures that protect human dignity LAW AND WORKER SC reaffirmed its concern for the lowly worker who, often at the mercy of his employer must look up to the law for his protection Cebu Royal Plant v. Deputy Minister of Labor (89) LABOR CASE not every relation between management and labor is a labor case. Definition is strict. It is only a labor case if it deals with the Labor Code, CBA and its associated laws/legislation Lapanday Agricultural Development v CA (01) CASE DECISION it should faithfully comply with Section 14, Article VIII of the Constitution which provides that no decision shall be rendered by any court [or quasi-judicial body] without expressing therein clearly and distinctly the facts of the case and the law on which it is based. MANAGEMENT FUNCTION 1. The law recognizes this right as an inherent part of ownership (Duncan v Glaxo) 2. The law imposes a LIMITATION in the manner that it is exercised (Valiao v CA 04) COMPROMISE and WAIVER - FINAL and BINDING upon the parties. NLRC shall only assume jurisdiction in cases of non-compliance or prima facie evidence that it was obtained through FRAUD, MISREPRESENTATION, OR COERCION. (Art 227) Rules: may be valid subject to certain tests 1. Equal bargaining positions 2. Nature of controversy 3. Amount is not unconscionable (no huge disparity between initial claim and compromised amount) Leading case: Periquet v NLRC (90)

CONSTI RIGHTS AND LABOR LAW

LABOR, MANAGEMENT AND THE CONSTITUTION The law in protecting the rights of the employees authorizes neither oppression nor self-destruction of the employer. It should be made clear that when the law tilts the scale of justice in favor of labor, it is but a recognition of the inherent economic inequality between labor and management. Never should the scale be so tilted if the result is an injustice to the employer. Justitia nemini neganda est (Justice is to be denied to none). Phil. Geothermal Inc. v. NLRC (94)

MANAGEMENT AND THE CONSTITUTION

Contracting out is management prerogative so long as done in good faith, must not have been resorted to circumvent the law or must not have been the result of malicious or arbitrary action. Manila Electric Company v. Quisumbing (99) LABOR AS PROPERTY Ones employment is a "property right", and the wrongful interference therewith is an actionable wrong. Sibal v. Notre Dame of Greater Manila (90) DUE PROCESS REQUIREMENT

SOURCES OF LAW
a. b. LABOR CODE AND RELATED SPECIAL LEGISLATION CONTRACT (Art 1305 [a contract is the meeting of the minds]; Art 1306 [may establish stipulations as they may deem conventient provided they are non contrary to law, morals,] COLLECTIVE BARGAINING AGREEMENT (CBA) DOLE Phils., v Pawis ng Makabayang Obrero (03)

c.

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LABOR LAW I
A workers employment is property in the constitutional sense. He cannot be deprived of his work without due process of law. Maneja v. NLRC (98) Due process requirements are two-fold: substantive and the procedural. Substantive - dismissal must be for a valid or authorized cause as provided by law (Articles 279, 281, 282-284, New Labor Code Procedural - notice and hearing Salaw v. NLRC (91) Notice - intended to inform the employee concerned of the employer's intent to dismiss and the reason for the proposed dismissal Hearing - affords the employee an opportunity to answer his employer's charges against him and accordingly to defend himself therefrom before dismissal is effected Century Textile Mills, Inc. v. NLRC (89) LIBERT OF CONTRACT and STATE INTERFERENCE The prohibition to impair the obligation of contracts is not absolute and unqualified. In spite of the constitutional prohibition and the fact that both parties are of full age and competent to contract, it does not necessarily deprive the State of the power to interfere 1. where the parties do not stand upon an equality, or 2. where the public health demands that one party to the contract shall be protected against himself. The State still retains an interest in his welfare, however reckless he may be. Legislation appropriate to safeguarding said interests may modify or abrogate contracts already in effect. For not only are existing laws read into contracts in order to fix the obligations as between the parties, but the reservation of essential attributes of sovereign power is also read into contracts as a postulate of the legal order. Leyte Land Transportation Co. v Leyte Farmers & Workers Union (48) WELFARE STATE welfare state concept found in: 1. constitutional clause on the promotion of social justice to ensure the well-being and economic security of all the people, 2. the pledge of protection to labor with specific authority to regulate the relations between landowners and tenants and between labor and capital Alalayan v. National Power Corporation (68) LAISSEZ-FAIRE Constitution is primarily a document of social justice, and although it has recognized the importance of the private sector, it has not embraced fully the concept of laissez faire or relied on pure market forces to govern the economy Employees Confederation of the Philippines v. NWPC (91) PARTICIPATION IN DECISION MAKING PROCESS While such "obligation" [to participate in decision-making] was not yet founded in law when the Code was formulated [which, before the amendment, merely said to promote the enlightenment of workers concerning their rights and obligations as ees], the attainment of a harmonious labor-management relationship and the then already existing state policy of enlightening workers concerning their rights as employees demand no less than the observance of transparency in managerial moves affecting employees' rights. Philippine Airlines, Inc. v. NLRC (93) Certainly, such participation by the Union in the said committees is not in the nature of a co-management control of the business of MERALCO. What is granted by the Secretary is participation and representation. Thus, there is no impairment of management prerogatives. Manila Electric Co. v. Quisumbing (99)

LABOR STANDARDS
PAL Employees Savings and Loan Assn., Inc. v. NLRC (96) Generally speaking, contracts are respected as the law between the contracting parties, and they may establish such stipulations, clauses, terms and conditions as they may see fit; and for as long as such agreements are not contrary to law, morals, good customs, public policy or public order, they shall have the force of law between them. And under the Civil Code, contracts of labor are explicitly subject to the police power of the State because they are not ordinary contracts but are impressed with public interest. Inasmuch as in this particular instance the contract in question would have been deemed in violation of pertinent labor laws, the provisions of said laws would prevail over the terms of the contract, and private respondent would still be entitled to overtime pay. EMPLOYER-EMPLOYEE STANDARD OF CONDUCT Art. 1701 Neither capital nor labor shall act oppressively against the other, or impair the interest or convenience of the public. 1. Fair Treatment the right of an employer to dismiss an employee differs from and should not be confused with the manner in which such right is exercised. It must not be oppressive and abusive since it affects one's person and property. General Bank and Trust Co., v. Court of Appeals (85) 2. Mutual Obligation The employer's obligation to give him workers just compensation and treatment carries with it the corollary right to expect from the workers adequate work, diligence and good conduct. Firestone Tire and Rubber Co. v. Lariosa (87) 3. Law Compliance It is also important to emphasize that the return-to-work order not so much confers a right as it imposes a duty; and while as a right it may be waived, it must be discharged as a duty even against the worker's will. Sarmiento v. Tuico (88) 4. EE Obedience and Compliance to ERs Orders The lack of a written or formal designation should not be an excuse to disclaim any responsibility for any damage suffered by the employer due to his negligence. The measure of the responsibility of an employee is that if he performed his assigned task efficiently and according to the usual standards, then he may not be held personally liable for any damage arising therefrom. Failing in this, the employee must suffer the consequences of his negligence if not lack of due care in the performance of his duties. PCIB v. Jacinto (91) To sanction disregard or disobedience by employees of a rule or order laid down by management, on the pleaded theory that the rule or order is unreasonable, illegal, or otherwise irregular for one reason or another, would be disastrous to the discipline and order that it is in the interest of both employer and his employees to preserve and maintain in the working establishment and without which no meaningful operation and progress is possible. Deliberate disregard or disobedience of rules, defiance of management authority cannot be countenanced. This is not to say that the employees have no remedy against rules or orders they regard as unjust or illegal. They may object thereto, ask to negotiate thereon, bring proceedings for redress against the employer before the Ministry of Labor. But until and unless the rules or orders are declared to be illegal or improper by competent authority, the employees ignore or disobey them at their peril GTE Directories Corp. v. Sanchez (91) 5. ERs Obligation An employer can terminate the services of an employee only for valid and just causes which must be supported by clear and convincing evidence. The employer has the burden of proving that the dismissal was indeed for a valid and just cause. Failure to do so results in a finding that the dismissal was unjustified. Maneja v. NLRC (98)

LABOR AND THE CIVIL CODE

ROLE OF LAW LABOR CONTRACTS Art. 1700, CC The relations between capital and labor are not merely contractual. They are so impressed with public interest that labor contracts must yield to the common good. Therefore, such contracts are subject to special laws

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LABOR LAW I
LABOR AND INTERNATIONAL COVENANTS
Universal Declaration of Human Rights Arts. 3, 7, 17, 22, 23,24, 25 International Covenant on Economic, Social and Cultural Rights Part III, Arts. 6, 7, 9, 11 International Covenant on Civil and Political Rights Part II, Art. 8 Conventions and Recommendations if the International Labor Organization (ILO) INTERNATIONAL CONVENTIONS International law, which springs from general principles of law, likewise proscribes discrimination. General principles of law include principles of equity, i.e., the general principles of fairness and justice, based on the test of what is reasonable. Numerous treaties embody the general principle against discrimination, the very antithesis of fairness and justice. The Philippines, through its Constitution, has incorporated this principle as part of its national laws. International School Alliance of Educators v. Quisumbing (2000)

LABOR STANDARDS
International Agencies In order to assure independence, they are immune from suit, thus, Phil. Laws do not apply to them. ..The grant of immunity is by virtue of the Convention on the Privileges and Immunities of Specialized Agencies of the U.N., which has become part of the law of the land under the Constitution. Ebro III v. NLRC (96) SCHOOL TEACHERS On the issue of whether the individual petitioners were permanent employees, it is the Manual of Regulations for Private Schools, and not the Labor Code, which is applicable. National Mines and Allied Workers Union v NLRC (98) On issues where the manual expressly provides for the rules, such as probationary employment, the labor code does not apply. On issues where the manual is silent, such as termination of school teachers, the labor code applies.

RELIGIOUS CORPORATIONS
The labor code does not cover ecclesiastical affairs, defined as one which involves the relationship between the church and its members and relate to matters of faith, religious doctrines, worship and governance of the congregation. However, the Labor Code is comprehensive enough to include religious corporations on its secular affairs, as provided by Article 278 of the Labor Code which states that the provisions of this Title shall apply to all establishments or undertakings, whether for profit or not. Obviously, the cited article does not make any exception in favor of a religious corporation. Austria v. NLRC (99) RULE MAKING POWER Article 5 gives the Secretary of Labor general grant of authority; the tail end of Labor Code gives him the right to promulgate working conditions. Art. 5. Rules and regulations. The Department of Labor and other government agencies charged with the administration and enforcement of this Code or any of its parts shall promulgate the necessary implementing rules and regulations. Such rules and regulations shall become effective fifteen (15) days after announcement of their adoption in newspapers of general circulation. LIMITATION 1. must be issued under authority of law 2. must not be contrary to law and the Consitution (in other words, must not amend the Labor Code, Constitution or other laws in promulgating such rules and regulations) illustration of #1 SONZA argues that Policy Instruction No. 40 issued by then Minister of Labor Blas Ople on 8 January 1979 finally settled the status of workers in the broadcast industry. Under this policy, the types of employees in the broadcast industry are the station and program employees. Policy Instruction No. 40 is a mere executive issuance which does not have the force and effect of law. A mere executive issuance cannot exclude independent contractors from the class of service providers to the broadcast industry. Such classification is not binding on this Court, especially when the classification has no basis either in law or in fact. Sonza v ABS-CBN Broadcasting Corp. (04) Illustration of #2 "it must be pointed out that the Secretary of Labor has exceeded his authority when he included paragraph (k) in Section 1 of the Rules Implementing P.D. 1123. "By virtue of such rule-making authority, the Secretary of Labor issued on May 1, 1977 a set of rules which exempts not only distressed employers but also 'those who have granted in addition to the allowance under P.D. 525, at least P60.00 monthly wage increase on or after January 1, 1977, provided that those who paid less than this amount shall pay the difference.' "Clearly, the inclusion of paragraph k contravenes the statutory authority granted to the Secretary of Labor, and the same is therefore void, as ruled by this Court in a long line of cases, . . ." Kapisanan ng mga Manggagawang Pinagyakap v. NLRC (87)

PART II THE LABOR CODE OF THE PHILIPPINES

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

LAW INTERPRETATION

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LABOR LAW I
Doubts in (implementation and interpretation of the Code) construction resolved in favor of labor Art. 4, Labor Code In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer. Art. 170, Civil Code Liberal Construction The interpretation herein made gives meaning and substance to the liberal and compassionate spirit of the law enunciated in Article 4 of the Labor Code Salinas v NLRC (99) Exception: (estoppel) The policy being questioned is not a policy against marriage. An employee of the company remains free to marry anyone of his or her choosing. However, an employees personal decision does not detract the employer from exercising management prerogatives to ensure maximum profit and business success. the assailed company policy which forms part of respondents Employee Code of Conduct and of its contracts with its employees, such as that signed by Tescon, was made known to him prior to his employment. Tecson, therefore, was aware of that restriction when he signed his employment contract and when he entered into a relationship with Bettsy. Since Tecson knowingly and voluntarily entered into a contract of employment with Glaxo, the stipulations therein have the force of law between them and, thus, should be complied with in good faith."29 He is therefore estopped from questioning said policy. Duncan Association v Glaxo Wellcome (04) Rationale in favor of labor Art. 4 of the Labor Code provides that all doubts in the implementation and interpretation of its provisions, including its implementing rules and regulations, shall be resolved in favor of labor. For the working mans welfare should be the primordial and paramount consideration. Asian Transmission Corporation v CA (04) Doubt as a rule, doubts should be resolved in favor of the claimantemployee. Clemente v. GSIS (87)
APPLICATION OF THE LABOR CODE Applicability Art. 6 Not of universal application. only applies to: All workers agricultural and non-agricultural GOCCs organized under general laws e.g. Corporation Code All branches of government, and GOCCs, profit or non profit organizations ONLY with regard to wages 97 (b) all private and government employees ONLY with regard to Employees Compensation and State Insurance Fund(167 f) NOT APPLICABLE TO Government employees should be Civil Service Law and EO 180 GOCC with original charter Art. 9 B, Sec. 2(1) of the Constitution International Agencies and specialized agencies or UN treaty or international conventions

LABOR STANDARDS
labor lest we engage in judicial legislation. Bravo v. ECC (86) Factual Considerations and Rationality But that care and solicitude (for protection of laborers rights) cannot justify disregard of relevant facts or eschewal of rationality in the construction of the text of applicable rules in order to arrive at a disposition in favor of an employee. PAL v NLRC (91) Equity and Moral Consideration The rule embodied in the Labor Code is that a person dismissed for cause as defined therein is not entitled to separation pay. The cited cases constitute the exception, based on equity. Equity has been defined as justice outside law, being ethical rather than jural and belonging to the sphere of morals than of law. It is grounded on the precepts of conscience and not on any sanction of positive law. Hence, it cannot prevail against the express provision of the labor laws allowing dismissal of employees for cause and without any provision for separation pay. Manning International Corp. v. NLRC (91) Fairness As a general rule, the sympathy of the Court is on the side of the laboring classes, because of the one-sided relation between labor and capital. The Court must take care, however, that in the contest between labor and capital, the results achieved are fair and in conformity with the rules. Reliance Surety and Insurance Co. Inc v NLRC (91) Balancing Conflicting Claims No less than the Constitution recognizes the right of enterprises to adopt and enforce such a policy to protect its right to reasonable returns on investments and to expansion and growth. Indeed, while our laws endeavor to give life to the constitutional policy on social justice and the protection of labor, it does not mean that every labor dispute will be decided in favor of the workers. The law also recognizes that management has rights which are also entitled to respect and enforcement in the interest of fair play. Duncan Association v Glaxo Wellcome (04) THE LABOR CODE OF THE PHILIPPINES POLICY DECLARATION reiterates Article XIII Sec 3 of the Constitution APPLICABILITY Art 6 - All rights and benefits granted to workers apply alike to all workers, whether agricultural or non-agricultural. Art 276 - Government employees - The terms and conditions of employment of all government employees shall be governed by the Civil Service Law, rules and regulations. Their salaries shall be standardized by the National Assembly as provided for in the new constitution. However, there shall be no reduction of existing wages, benefits and other terms and conditions of employment being enjoyed by them at the time of the adoption of this Code. ART IX, Sec 2 (1), 1987 Constituion - The civil service embraces all branches, of the Government, including government-owned or controlled corporations with original charters. The rule is that only government-owned or controlled corporations with original charters come under the Civil Service. Since NASECO is organized under the Corporation Law and not by virtue of a special legislative charter, its relations with its personnel are governed by the Labor Code and come under the jurisdiction of the NLRC Cabrera v. NLRC (91)

grant of immunity from suit ex. IRRI, ICMC by specific treaty grant of immunity, but such treaty must include provisions for resolution of disputes if injustice is created due to exemption from suit, REMEDY: ask Phil Govt to withdraw the grant of immunity from suit.

No Doubt While we do not dispute petitioner's contention that under the law, in case of doubt in the implementation and interpretation of the provisions of the Labor Code, including its implementing rules and regulations, the doubt shall be resolved in favor of the laborer, we find that the same has no application in this case since the pertinent provisions of the Labor Code leave no room for doubt either in their interpretation or application. Bonifacio v. GSIS (86) Sweeping Interpretation we cannot adopt a sweeping interpretation of the law in favor of

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LABOR LAW I
PART III WORK RELATIONSHIP
Art. 97 Definition (a) "Person" means an individual, partnership, association, corporation, business trust, legal representative or any organized group of person. (b) "Employer" includes any person acting directly or indirectly in the interest of an employer in relation to an employee and shall include the Government and all its branches, subdivisions and instrumentalities, all government-owned or controlled corporations and institutions, as well as non-profit private institutions or organizations. "Employee" includes any individual employed by an employer. Art. 167 Definition of Terms (f) "Employer" means any person, natural or juridical, employing the services of the employee. (g) "Employee" means any person compulsorily covered by the GSIS under Commonwealth Act numbered one hundred eighty-six, as amended, including members of the Armed Forces of the Philippines, and any person employed as casual, emergency, temporary, substitute or contractual; or any person compulsorily covered by the SSS under Republic Act numbered eleven hundred sixty-one, as amended. Art. 212 Definitions (e) "Employer" includes any person acting in the interest of an employer, directly or indirectly. The term shall not include any labor organization or any of its officers or agents except when acting as employer. (f) "Employee" includes any person in the employ of an employer. The term shall not be limited to the employees of a particular employer, unless this Code so explicitly states. It shall include any individual whose work has ceased as a result of or in connection with any current labor dispute or because of any unfair labor practice if he has not obtained any other substantially equivalent and regular employment. EMPLOYEE As can be seen from this description, a distinction exists between those who have the authority to devise, implement and control strategic and operational policies (top and middle managers) and those whose task is simply to ensure that such policies are carried out by the rank-and-file employees of an organization (first-level managers/supervisors). What distinguishes them from the rank-and-file employees is that they act in the interest of the employer in supervising such rank-and-file employees. "Managerial employees" may therefore be said to fall into two distinct categories: the "managers" per se, who compose the former group described above, and the "supervisors" who form the latter group. Whether they belong to the first or the second category, managers, vis-a-vis employers, are, likewise, employees.

LABOR STANDARDS
the less control the hirer exercises, the more likely the worker is considered an independent contractor.[ Being an exclusive talent does not by itself mean that SONZA is an employee of ABS-CBN. Even an independent contractor can validly provide his services exclusively to the hiring party. In the broadcast industry, exclusivity is not necessarily the same as control. The huge talent fees partially compensates for exclusivity, as in the present case. Sonza v ABS-CBN Broadcasting Corp. (04) 2. ESTABLISHED There is indubitable evidence showing that BSMI is an independent contractor, engaged in the management of projects, business operations, functions, jobs and other kinds of business ventures, and has sufficient capital and resources to undertake its principal business. As a legitimate job contractor, there can be no doubt as to the existence of an employer-employee relationship between the contractor and the workers. Unfortunately, after a study and evaluation of its personnel organization, BSMI was impelled to terminate the services of the respondents on the ground of redundancy. This right to hire and fire is another element of the employer-employee relationship[45] which actually existed between the respondents and BSMI, and not with Wack Wack. Wack-Wack Golf and Country Club v NLRC (05) 3. AGREEMENT Petitioner insists that the most significant determinant of an employer-employee relationship, i.e., the right to control, is absent. The contract of services between MAERC and SMC provided that MAERC was an independent contractor and that the workers hired by it "shall not, in any manner and under any circumstances, be considered employees of the Company, and that the Company has no control or supervision whatsoever over the conduct of the Contractor or any of its workers in respect to how they accomplish their work or perform the Contractor's obligations under the Contract." In deciding the question of control, the language of the contract is not determinative of the parties' relationship; rather, it is the totality of the facts and surrounding circumstances of each case. Thus, The existence of an employer-employees relation is a question of law and being such, it cannot be made the subject of agreement. San Miguel v Abella (05) 4. METHOD WAGE PAYMENT Suffice it to say, the fact that Laudato was paid by way of commission does not preclude the establishment of an employeremployee relationship. Lazaro v SSS (04) 5. HOURS OF WORK Neither does it follow that a person who does not observe normal hours of work cannot be deemed an employee. In Cosmopolitan Funeral Homes, Inc. v. Maalat, the employer similarly denied the existence of an employer-employee relationship, as the claimant according to it, was a supervisor on commission basis who did not observe normal hours of work. This Court declared that there was an employer-employee relationship, noting that [the] supervisor, although compensated on commission basis, [is] exempt from the observance of normal hours of work for his compensation is measured by the number of sales he makes. Lazaro v SSS (04) 6. PROOF It has long been established that in administrative and quasi-judicial proceedings, substantial evidence is sufficient as a basis for judgment on the existence of employer-employee relationship. No particular form of evidence is required to prove the existence of such employer-employee relationship. Any competent and relevant evidence to prove the relationship may be admitted. Substantial evidence has been defined to be such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, and its absence is not shown by stressing that there is contrary evidence on record, direct or circumstantial, for the appellate court cannot substitute its own judgment or criterion for that of the trial court in determining wherein lies the weight of evidence or what evidence is entitled to belief. In a business establishment, an identification card is usually provided not only as a security measure but mainly to identify the holder thereof as a bona fide employee of the firm that issues it. Together with the cash vouchers covering petitioners salaries for the months stated therein, we agree with the labor arbiter that

EMPLOYER-EMPLOYEE RELATIONSHIP
1. FACTUAL TEST/FACTORS/CONTROL TEST Case law has consistently held that the elements of an employeremployee relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the employee on the means and methods by which the work is accomplished. The last element, the so-called control test, is the most important element. Applying the control test to the present case, we find that SONZA is not an employee but an independent contractor. The control test is the most important test our courts apply in distinguishing an employee from an independent contractor. This test is based on the extent of control the hirer exercises over a worker. The greater the supervision and control the hirer exercises, the more likely the worker is deemed an employee. The converse holds true as well

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these matters constitute substantial evidence adequate to support a conclusion that petitioner was indeed an employee of private respondent. Domasig v NLRC (96) 7. ABSENCE Applying the aforementioned test, an employer-employee relationship is notably absent in this case. It is undisputed that petitioner Abante was a commission salesman who received 3% commission of his gross sales. Yet no quota was imposed on him by the respondent; such that a dismal performance or even a dead result will not result in any sanction or provide a ground for dismissal. He was not required to report to the office at any time or submit any periodic written report on his sales performance and activities. Although he had the whole of Mindanao as his base of operation, he was not designated by respondent to conduct his sales activities at any particular or specific place. Respondent company did not prescribe the manner of selling the merchandise; he was left alone to adopt any style or strategy to entice his customers. While it is true that he occasionally reported to the Manila office to attend conferences on marketing strategies, it was intended not to control the manner and means to be used in reaching the desired end, but to serve as a guide and to upgrade his skills for a more efficient marketing performance. We reiterate the rule that there could be no employer-employee relationship where the element of control is absent. Where a person who works for another does so more or less at his own pleasure and is not subject to definite hours or conditions of work, and in turn is compensated according to the result of his efforts and not the amount thereof, no relationship of employer-employee exists. Abante v Lamadrid (04) 8. DENIAL Denying the existence of an employer-employee relationship, petitioner insists that the parties agreement was for a contract of lease of services. We disagree. Petitioner is barred to negate the existence of an employer-employee relationship. In its petition filed before this Court, petitioner invoked our rulings on the right of an employer to dismiss an employee for just cause. Petitioner maintained that private respondent was justifiably dismissed due to abandonment of work. By adopting said rulings, petitioner impliedly admitted that it was in fact the employer of private respondent. According to the control test, the power to dismiss an employee is one of the indications of an employer-employee relationship. Petitioners claim that private respondent was legally dismissed for abandonment was in fact a negative pregnant: an acknowledgement that there was no mutual termination of the alleged contract of lease and that private respondent was its employee. The fact that petitioner paid private respondent on commission basis did not rule out the presence of an employeeemployer relationship. Article 97(f) of the Labor Code clearly provides that an employees wages can be in the form of commissions. R transport v Ejanedra (04)

LABOR STANDARDS
involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. (Art 106) Indirect employer - The provisions of the immediately preceding Article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. (Art 107) Solidary liability - The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers. (art 109) MANAGEMENT FUNCTION Additionally, We recognize that contracting out is not unlimited; rather, it is a prerogative that management enjoys subject to welldefined legal limitations. As we have previously held, the company can determine in its best business judgment whether it should contract out the performance of some of its work for as long as the employer is motivated by good faith, and the contracting out must not have been resorted to circumvent the law or must not have been the result of malicious or arbitrary action. The Labor Code and its implementing rules also contain specific rules governing contracting out (Department or Labor Order No. 10, May 30, 1997, Sections 1-25). Manila Electric Co. v. Quisumbing (99) REQUIREMENTS INDEPENDENT CONTRACTOR Labor-only contracting as defined in Section 5, Department Order No. 18-02, Rules Implementing Articles 106-109 of the Labor Code refers to an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform job, work or service for a principal, and any of the following elements is present: (i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or (ii) The contractor does not exercise the right to control over the performance of the work of the contractual employee. Manila Water Co. v Pena (04) Desirable Unnecessary We perceive at the outset the disposition of the NLRC that janitorial services are necessary and desirable to the trade or business of petitioner Coca-Cola. But this is inconsistent with our pronouncement in Kimberly Independent Labor Union v. Drilon where the Court took judicial notice of the practice adopted in several government and private institutions and industries of hiring janitorial services on an independent contractor basis. In this respect, although janitorial services may be considered directly related to the principal business of an employer, as with every business, we deemed them unnecessary in the conduct of the employers principal business. Coca-Cola Bottlers Phil., Inc. v. NLRC (99) Employer Employee In legitimate job contracting, no employer-employee relation exists between the principal and the job contractor's employees.

INDEPENDENT CONTRACTOR AND LABOR CONTRACTOR ONLY A. INDEPENDENT CONTRACTOR

Contractor or sub-contractor - Whenever an employer enters into a contract with another person for the performance of the former's work, the employees of the contractor and of the latter's subcontractor, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or sub-contractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting as well as differentiations within these types of contracting, and determine who among the parties

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The principal is responsible to the job contractor's employees only for the proper payment of wages. But in labor-only contracting, an employer-employee relation is created by law between the principal and the labor-only contractor's employees, such that the former is responsible to such employees, as if he or she had directly employed them. Besides, the Court has already taken judicial notice of the general practice adopted in several government and private institutions of securing janitorial services on an independent contractor basis. Phil. Airlines, Inc. v. NLRC (98) Liability of indirect Employer The only time the indirect employer may be made solidarily liable with the contractor is when the contractor fails to pay his employees their wages and other benefits claimed. Lanzadares v. Amethyst Security (2003)
2. 3.

LABOR STANDARDS
in the form of tools, equipment, machineries, work premises, among others, the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer.

PART IV EMPLOYEE CLASSIFICATION

REGULAR EMPLOYMENT Test written agreement to contrary notwithstanding and regardless of oral agreement of parties provided by law Employee engaged to perform activities which are usually necessary or desirable to the usual business or trade of employer Other Regular Employees 1. Casual Employment after 1 year of service whether continuous or broken (conditions Art. 280) 2. Probationary Employee allowed to work even after the completion of the probationary period (Art. 281) 3. Learner allowed or suffered to work during the first 2 months of learner period, if training is terminated by the employer before the end of the stipulated period. Not synonymous to permanent employment (no such thing as permanent employment since he can be terminated for cause) EXCEPT: 1. PROJECT EMPLOYMENT Employment fixed on a specific project or undertaking, completion or termination of which is DETERMINED AT THE TIME OF ENGAGEMENT OF EMPLOYEE Must have been forewarned of the name of the project and the duration of the project Whether or not the project has a direct relation to the business of the employer, not important, BUT: a. Employee MUST be informed of the name and duration of the project b. Project and the Principal business of employer are two separate things c. No attempt to deny Security of Tenure to worker 2. SEASONAL EMPLOYMENT Work or services to be performed seasonal in nature, employment is for the duration of the season No continuing need for worker CASUAL EMPLOYMENT When not regular, project, or seasonal Requirement and Effect = Regular Employees 1. One (1) year service whether continuous or broken 2. With respect to activity employed 3. Employment shall continue while such activity exists (Regular in a limited sense) ** Project, Seasonal and Casual Employees may be doing a function that is by definition regular but are not regular because they fall in the exception PROBATIONARY EMPLOYMENT Period duration not exceed 6 months from the date the employee started working, unless covered by an apprenticeship agreement stipulating a longer period Termination of Employment 1. Just causes 2. Fail to qualify as regular employee in accordance with reasonable standards made known by the employer to the employee at the time of engagement Effect of Work beyond 6 months deemed Regular employee by automatic application of the law (even if there is no appointment [Kimberly Clark v. Drilon] Purpose: 1. Observance Period

Requisites (a) when he does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials, and (b) when the workers recruited and placed by him perform activities that relate directly to the principal business or operations of the employer in which the workers are habitually employed. Sec. 9(a), Rule VIII, Book III, of the Omnibus Rules Implementing Article 106 of the Labor Code Ponce v. NLRC (98) Prohibition Labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal. Vinoya v. NLRC (2000) Effect of Finding As we held in Industrial Timber Corporation, et. al. vs. NLRC et. al.: Hence a finding that a contractor is a "labor-only" contractor is equivalent to a finding that there exists as employer-employee relationship between the owner of the project and the employees of the "labor-only" contractor since that relationship is defined and prescribed by law itself. Accordingly, private respondents, are considered employees of the petitioner. Further, private respondents, having performed activities which are directly related to petitioner's business, are deemed regular employees of petitioner pursuant to Article 280 of the Labor Code. And as regular employees, they must be accorded security of tenure in their employment. Verily, their services can be terminated only based on "just" and "authorized" causes under Articles 282, 283 and 284 of the Labor Code. Phil. Airlines, Inc. v. NLRC (98)
INDEPENDENT CONTRACTING Under DOLE Department Order No. 10 (1997), contracting shall be legitimate if the following circumstances concur: 1. The contractor or subcontractor carries on a distinct and independent business and undertakes to perform the job, work or service on its own account and under its own responsibility, according to its own manner and method, and free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof; The contractor or subcontractor has substantial capital or investment; and The agreement between the principal and contractor or subcontractor assures the contractual employees entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social and welfare benefits.

B.

LABOR ONLY CONTRACTOR

2. 3.

LABOR ONLY CONTRACTING 1. the person supplying workers to an employer does not have substantial capital or investment

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For the employer to know whether employee is qualified For the employee to demonstrate to the employer his skills 2. Restrictive Parties may agree for a longer period if company policy requires or the nature of work requires Direct rationale connection: unduly long unfair to the worker Nothing prohibits the employer to abbreviate or shorten the period If agreed to extend for the benefit of worker Ex gratia No obligation to pay the unfinished portion

LABOR STANDARDS
[S]tipulations in employment contracts providing for term employment or fixed period employment are valid when the period were agreed upon knowingly and voluntarily by the parties without force, duress or improper pressure, being brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter. Pangilingan v General Milling Corp (04) EMPLOYER DETERMINATION It is of no moment that petitioner was told when he was hired that his employment would only be casual, that he was paid through cash vouchers, and that he did not comply with regular employment procedure. Precisely, the law overrides such conditions which are prejudicial to the interest of the worker whose weak bargaining position needs the support of the State. What determines whether a certain employment is regular or casual is not the will and word of the employer, to which the desperate worker often accedes, much less the procedure of hiring the employee or the manner of paying his salary. It is the nature of the activities performed in relation to the particular business or trade considering all circumstances, and in some cases the length of time of its performance and its continued existence. De Leon v. NLRC (89) Article 280 reinforces the Constitutional mandate to protect the interest of labor as it sets the legal framework for ascertaining ones nature of employment, and distinguishing different kinds of employees. Its language manifests the intent to safeguard the tenurial interest of worker who may be denied the enjoyment of rights and benefits due to an employee, regardless of the nature of his employment, XXX XXX Thus, the nature of ones employment does not depend on the will or word of the employer. Nor on the procedure of hiring and the manner of designating the employee, but on the nature of the activities to be performed by the employee, considering the employers nature of business and the duration and scope of the work to be done. San Miguel Corporation v. NLRC (98) A. REGULAR EMPLOYEES TYPE A regular employee is one who is engaged to perform activities which are necessary and desirable in the usual business or trade of the employer as against those which are undertaken for a specific project or are seasonal. There are two separate instances whereby it can be determined that an employment is regular: (1) if the particular activity performed by the employee is necessary or desirable in the usual business or trade of the employer; and, (2) if the employee has been performing the job for at least a year. Pangilingan v General Milling Corp (04) NATURE OF WORK
REGULAR WORKERS EVEN IN THE FOLLOWING INSTANCES:

COVERAGE applies to all establishments or undertakings whether for profit or not. (Art 278 LC)

EMPLOYEE CLASSIFICATION
1. Regular 2. EE has been engaged to perform activities which are usually necessary and desirable in the usual business or trade of the ER (Art. 280) 3. A casual employee who has rendered at least 1 year of service, whether continuous or broken, with respect to the activity in which he is employed and his employment shall continue while such activity exists (Art. 280) 4. A probationary employee who is allowed to work after the probationary period (Art. 281) 5. All learners who has been allowed or suffered to work during the first 2 months shall be deemed regular employees if training is terminated by the ER before the end of the stipulated period through no fault of the learner. [Art. 75 (d)] 6. Casual 7. If not covered by the preceding paragraph (280 LC) 8. Project 9. Employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of engagement of the EE (280 LC) 10. Seasonal 11. The work or services to be performed is seasonal in nature and the employment is for the duration of the season. (280 LC) 12. Probationary 13. Employment shall not exceed 6 months from the date the EE started working unless covered by apprenticeship agreement stipulating a longer period (281 LC) RECOGNITION AND TYPES Article 280 of the Labor Code comprehends three kinds of employees: (a) regular employees or those whose work is necessary or desirable to the usual business of the employer; (b) project employees or those whose employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season; and, (c) casual employees or those who are neither regular nor project employees. A regular employee is one who is engaged to perform activities which are necessary and desirable in the usual business or trade of the employer as against those which are undertaken for a specific project or are seasonal. There are two separate instances whereby it can be determined that an employment is regular: (1) if the particular activity performed by the employee is necessary or desirable in the usual business or trade of the employer; and, (2) if the employee has been performing the job for at least a year. In the case of St. Theresas School of Novaliches Foundation vs. NLRC,[43] we held that Article 280 of the Labor Code does not proscribe or prohibit an employment contract with a fixed period. There is thus nothing essentially contradictory between a definite period of employment and the nature of the employees duties. In the leading case of Brent School Inc. v. Zamora,[44] we laid down the guideline before a contract of employment may be held as valid, to wit:

While it may be true that some phases of petitioner company's processing operations is dependent on the supply of fruits for a particular season, the other equally important aspects of its business, such as manufacturing and marketing are not seasonal. The fact is that large-scale food processing companies such as petitioner company continue to operate and do business throughout the year even if the availability of fruits and vegetables is seasonal. Phil. Fruit and Vegetable Industries, Inc. v. NLRC (99) That petitioner employees are "pakyao" or piece workers does not imply that they are not regular employees entitled to reinstatement. With more reason, the work of processed food repackers is necessary in the day-to-day operation[s] of respondent Empire Food Products. Labor Congress of the Phil. v. NLRC (98)

The primary standard of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the

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particular business or trade in its entirety. Likewise, the repeated and continuing need for the performance of the job has been deemed sufficient evidence of the necessity, if not indispensability of the activity to the business Some of the petitioners had rendered more than two decades of service to the MWSS. The continuous and repeated rehiring of these bill collectors indicate the necessity and desirability of their services, as well as the importance of the role of bill collectors in the MWSS. Lopez v MWSS (05) HIRING PERIOD EXTENDED We have held that where the employment of project employees is extended long after the supposed project has been finished, the employees are removed from the scope of project employees and considered regular employees. Audio Electric Co., Inc. v. NLRC (99) CONTRACT TO CONTRACT (REPEATED RENEWAL OF CONTRACT) The petitioner cannot rightfully say that since the private respondent's employment hinged from contract to contract, it was ergo, "temporary", depending on the term of each agreement. Under the Labor Code, an employment may only be said to be "temporary" "where [it] has been fixed for a specific undertaking the completion of or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season." Quite to the contrary, the private respondent's work, that of "typist-clerk" is far from being "specific" or "seasonal", but rather, one, according to the Code, "where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business." And under the Code, where one performs such activities, he is a regular employee, "[t]he provisions of written agreement to the contrary notwithstanding . . . It is true that in Biboso v. Victorias Milling Company, Inc., we recognized the validity of contractual stipulations as to the duration of employment, we can not apply it here because clearly, the contract-to-contract arrangement given to the private respondent was but an artifice to prevent her from acquiring security of tenure and to frustrate constitutional decrees. Beta Electric Corp. v. NLRC (90)

LABOR STANDARDS
termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. In the instant case, petitioner was engaged to perform data encoding and keypunching, and her employment was fixed for a specific project or undertaking the completion or termination of which had been determined at the time of her engagement, as may be observed from the series of employment contracts between petitioner and private respondent, all of which contained a designation of the specific job contract and a specific period of employment. Imbuido v NLRC (00) RATIONALE The rationale of this rule is that if a project has already been completed, it would be unjust to require the employer to maintain them in the payroll while they are doing absolutely nothing except waiting until another project is begun, if at all. In effect, these stand-by workers would be enjoying the status of privileged retainers, collecting payment for work not done, to be disbursed by the employer from profits not earned. This is not fair by any standard and can only lead to a coddling of labor at the expense of management. De Ocampo v. NLRC (90) EMPLOYER OBLIGATION The law is clear to the effect that in all cases involving employees engaged on probationary' basis, the employer shall make known to the employee at the time he is hired, the standards by which he will qualify as a regular employee. Nowhere in the employment contract executed between petitioner company and respondent Grulla is there a stipulation that the latter shall undergo a probationary period for three months before he can quality as a regular employee. There is also no evidence on record showing that the respondent Grulla had been apprised of his probationary status and the requirements which he should comply in order to be a regular employee. In the absence of these requisites, there is justification in concluding that respondent Grulla was a regular employee at the time he was dismissed by petitioner, and as such cannot be done without just and authorized cause. A. M. Oreta and Co., Inc. v. NLRC (89) SPECIFIED PERIOD The Court has upheld the legality of fixed-term employment. It ruled that the decisive determinant in term employment should not be the activities that the employee is called upon to perform but the day certain agreed upon by the parties for the commencement and termination of their employment relationship. But, this Court went on to say that where from the circumstances it is apparent that the periods have been imposed to preclude acquisition of tenurial security by the employee, they should be struck down or disregarded as contrary to public policy and morals. Purefoods Corp. V. NLRC (87) WORKPOOL EMPLOYEES A project EE or a member of a work pool may acquire the status of a regular employee when the following concur: 1. There is a continuous rehiring of project employees even after cessation of a project; and 2. The tasks performed by the alleged project employee are vital, necessary, and indispensable to the usual business or trade of the employer. However, the length of time during which the EE was continuously rehired is not controlling, but merely serves as a badge of regular employment. A work pool may exist although the workers in the pool do not receive salaries and are free to seek other employment during temporary breaks in the business, provided, that the worker shall be available when called to report for a project. Although primarily applicable to regular seasonal workers, this set-up can likewise be applied to project workers insofar as the effect of temporary cessation of work is concerned. This is beneficial to both the employer and employee for it prevents the unjust situation of coddling labor at the expense of capital and at the same time enables the workers to attain the status of regular employees. Maraguinot v. NLRC (98) Members of a work pool from which a construction company draws its project employees, if considered employees of the construction

LENGTH OF TIME
Not controlling, merely serves as a badge of regular employment Maraguinot v. NLRC (98) B. PROJECT EMPLOYEES whose employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of engagement of the employee [Art. 280 (1)] DEFINED The principal test for determining whether particular employees are properly characterized as "project employees," as distinguished from "regular employees," is whether or not the "project employees" were assigned to carry out a "specific project or undertaking," the duration (and scope) of which were specified at the time the employees were engaged for that project. As defined, project employees are those workers hired (1) for a specific project or undertaking, and (2) the completion or termination of such project or undertaking has been determined at the time of engagement of the employee. Project employees - employed in connection with a particular project. Non-project or regular employees - employed without reference to any particular project. Kiamco v. NLRC (99) PROJECT EMPLOYEES Private respondents, as well as the other 30 workers, were needed as additional hands for the renovation work and not for ordinary upkeep and maintenance. The erection of the fire escape and other small jobs after the renovation cannot be deemed maintenance but more of casual work. Phil. Jai-Alai and Amusement Corp. v. Clave (83) private respondents were project employees whose work was coterminous with the project for which they were hired. Sandoval Shipyards, Inc. v. NLRC (85) A project employee is one whose employment has been fixed for a specific project or undertaking, the completion or

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company while in the work pool, are non-project employees, or employees for an indefinite period. If they are employed in a particular project, the completion of the project or any phase thereof will not mean severance of the employer-employee relationship. Aguilar Corp. v. NLRC (97)

LABOR STANDARDS
It goes without saying that contracts or employment govern the relationship of the parties. In this case, private respondent's contract provided for a fixed term of nine (9) months, from June 1, 1991 to March 31, 1992. Such stipulation, not being contrary to law, morals, good customs, public order and public policy, is valid, binding and must be respected. St. Theresas School v. NLRC (98) However, the Court upholds the principle that where from the circumstances it is apparent that periods have been imposed to preclude acquisition of tenurial security by the employee, they should be disregarded for being contrary to public policy. Servidad v. NLRC (99)

LENGTH OF SERVICE

The above-quoted provisions make it clear that a project employee is one whose employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. In D.M. Consunji, Inc. v. NLRC, this Court has ruled that the length of service of a project employee is not the controlling test of employment tenure but whether or not the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee. In the present case, the contracts of employment of Puente attest to the fact that he was hired for specific projects. His employment was coterminous with the completion of the projects for which he had been hired. Those contracts expressly provided that his tenure of employment depended on the duration of any phase of the project or on the completion of the construction projects. Furthermore, petitioners regularly submitted to the labor department reports of the termination of services of project workers Such compliance with the reportorial requirement confirms that respondent was a project employee. Filipinas Pre-Fabricated Building Systems v Puente (05) C. CASUAL EMPLOYEES An employment shall be deemed casual if it is not covered by the preceding paragraph: Provided, that, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. (Art. 281, 2nd paragraph)

SEASONAL EMPLOYEES
For respondents to be excluded from those classified as regular employees, it is not enough that they perform work or services that are seasonal in nature. They must have been employed only for the duration of one season. While the records sufficiently show that the respondents work in the hacienda was seasonal in nature, there was, however, no proof that they were hired for the duration of one season only. In fact, the payrolls, submitted in evidence by the petitioners, show that they availed the services of the respondents since 1991. Absent any proof to the contrary, the general rule of regular employment should, therefore, stand. It bears stressing that the employer has the burden of proving the lawfulness of his employees dismissal. The disparity in facts between the Mercado case and the instant case is best exemplified by the fact that the former decision ruled on the status of employment of farm laborers, who, as found by the labor arbiter, work only for a definite period for a farm worker, after which they offer their services to other farm owners, considering the area in question being comparatively small, comprising of seventeen and a half (171/2) hectares of land, such that the planting of rice and sugar cane thereon could not possibly entail a whole year operation. In Mercado, although respondent constantly availed herself of the petitioners services from year to year, it was clear from the facts therein that they were not in her regular employ. Petitioners therein performed different phases of agricultural work in a given year. However, during that period, they were free to work for other farm owners, and in fact they did. In other words, they worked for respondent, but were nevertheless free to contract their services with other farm owners. Hacienda Bino v Cuenca (05) C. PROBATIONARY EMPLOYEES

NATURE OF WORK
What determines regularity or casualness is not the employment contract, written or otherwise, but the nature of the job. If the job is usually necessary or desirable to the main business of the employer, then employment is regular. AM Oreta & Co., Inc v. NLRC (89)

ONE YEAR SERVICE

The fact that the petitioners have been hired on a "temporary or seasonal" basis merely is no argument either. As we held in Philippine Bank of Communications v. NLRC, a temporary or casual employee, under Article 218 of the Labor Code, becomes regular after service of one year, unless he has been contracted for a specific project. And we cannot say that merchandising is a specific project for the obvious reason that it is an activity related to the day-to-day operations of California. The records show that the petitioners had been given an initial sixmonth contract, renewed for another six months. Accordingly, under Article 281 of the Code, they had become regular employees of California and had acquired a secure tenure. Hence, they cannot be separated without due process of law. Tabas v. California Manufacturing Co. Inc. (89) CONTRACT FIXED PERIOD

Probationary employments hall not exceed six months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee. Art. 281 There is a probationary employment where the employee upon his engagement, is made to undergo a trial period during which the employer determines his fitness to qualify for regular employment, based on reasonable standards made known to him at the time of engagement. Art. 61, 2nd Sentence, Book VI, Rule 1, Sec. 6, Omnibus Rules

DEFINITION

TESTS VALIDITY
Article 280 of the Labor Code does not proscribe or prohibit an employment contract with a fixed period provided the same is entered into by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstance vitiating consent. It does not necessarily follow that where the duties of the employee consist of activities usually necessary or desirable in the usual business of the employer, the parties are forbidden from agreeing on a period of time for the performance of such activities. There is thus nothing essentially contradictory between a definite period of employment and the nature of the employee's duties.

A probationary employee is one who is on trial by an employer during which the employer determines whether or not he is qualified for permanent employment. International Catholic Migration Commission v. NLRC (89) PURPOSE We find merit in the contention of the petitioner that "private respondent had not been hired as manager of any firm before his employment with petitioner. The highest previous position he attained was that of Finance Officer. His position with petitioner's Iloilo Branch was his first as Manager. Moreover, Warner, Barnes & Co., private respondent's previous employer, and petitioner are engaged in different kinds of business. Managing petitioner's Iloilo Branch was an entirely new experience for private respondent. It

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was, therefore, necessary for private respondent to undergo a period of probation to test his qualifications, skill and experience." Indeed, the employer has the right or is at liberty to choose as to who will be hired and who will be declined. It is within the exercise of this right to select his employees that the employer may set or fix a probationary period within which the latter may test and observe the conduct of the former before hiring him permanently. "The right of a laborer to sell his labor to such persons as he may choose is, in its essence, the same as the right of an employer to purchase labor from any person whom it chooses. The employer and the employee have thus an equality of right guaranteed by the Constitution. 'If the employer can compel the employee to work against the latter's will, this is servitude. If the employee can compel the employer to give him work against the employer's will, this is oppression.'" Grand Motors Corp. v. MOLE (84)

LABOR STANDARDS
this more lenient approach, she had become a regular employee of Holiday Inn and acquired full security of tenure as of October 15, 1991. Holiday Inn Manila v. NLRC (93) The contract signed by petitioners is akin to a probationary employment, during which the bank determined the employees' fitness for the job. When the bank renewed the contract after the lapse of the six-month probationary period, the employees thereby became regular employees. No employer is allowed to determine indefinitely the fitness of its employees. Bernardo v. NLRC (99)

CRITERIA REGULARIZATION

EMPLOYER RIGHT SET PERIOD/OBLIGATION

Indeed, an employer, in the exercise of its management prerogative, may hire an employee on a probationary basis in order to determine his fitness to perform work Mitsubishi Motors Corp v Chrysler (04)

DURATION/EXCEPTION
Central to the matter at hand is Article 281 of the Labor Code which provides that: ART. 281. PROBATIONARY EMPLOYMENT. Probationary employment shall not exceed six (6) months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee. XXX The first issue we must resolve is whether petitioner was allowed to work beyond his probationary period and was therefore already a regular employee at the time of his alleged dismissal. We rule in the negative. Petitioner claims that under the terms of his contract, his probationary employment was only for five months as indicated by the remark "Please be informed that after five months, your performance shall be evaluated and any adjustment in salary shall depend on your work performance." The argument lacks merit. As correctly held by the labor arbiter, the appointment contract also stated in another part thereof that petitioners employment status was "probationary (6 mos.)." The five-month period referred to the evaluation of his work. Alcira v NLRC (04) Generally, the probationary period of employment is limited to six (6) months. The exception to this general rule is when the parties to an employment contract may agree otherwise, such as when the same is established by company policy or when the same is required by the nature of work to be performed by the employee. In the latter case, there is recognition of the exercise of managerial prerogatives in requiring a longer period of probationary employment, such as in the present case where the probationary period was set for eighteen (18) months, i.e. from May, 1980 to October, 1981 inclusive, especially where the employee must learn a particular kind of work such as selling, or when the job requires certain qualifications, skills, experience or training. Busier v. Leogardo (84) Honasan was certainly under observation during her three-week on-the-job training. If her services proved unsatisfactory then, she could have been dropped as early as during that period. But she was not. On the contrary, her services were continued, presumably because they were acceptable, although she was formally placed this time on probation. Even if it be supposed that the probation did not end with the three-week period of on-the-job training, there is still no reason why that period should not be included in the stipulated six-month period of probation. Honasan was accepted for on-the-job training on April 15, 1991. Assuming that her probation could be extended beyond that date, it nevertheless could continue only up to October 15, 1991, after the end of six months from the earlier date. Under

In all cases of probationary employment, the employer shall make known to the employee the standards under which he will qualify as a regular employee at the time of his engagement. Where no standards are made known to the employee at that time, he shall be deemed a regular employee. Conversely, an employer is deemed to substantially comply with the rule on notification of standards if he apprises the employee that he will be subjected to a performance evaluation on a particular date after his hiring. We agree with the labor arbiter when he ruled that: In the instant case, petitioner cannot successfully say that he was never informed by private respondent of the standards that he must satisfy in order to be converted into regular status. This rans (sic) counter to the agreement between the parties that after five months of service the petitioners performance would be evaluated. It is only but natural that the evaluation should be made vis--vis the performance standards for the job. Private respondent Trifona Mamaradlo speaks of such standard in her affidavit referring to the fact that petitioner did not perform well in his assigned work and his attitude was below par compared to the companys standard required of him. Alcira v NLRC (04)

EXTENSION CONTRACT

It is an elementary rule in the law on labor relations that a probationary employee who is engaged to work beyond the probationary period of 6 months, as provided under Art. 281 Labor Code, as amended, or for any length of time set forth by the employer, shall be considered as a regular employee. Phil. Federation, etc. v. NLRC (98)

ABSORBED EMPLOYEES
We agree with the Regional Director that private respondents could not be considered probationary employees because they were already well-trained in their respective functions. This conclusion is further bolstered by the factual findings of the Labor Minister that said order of the Director was supported by substantial evidence. As stressed by the Solicitor General, while private respondents were still with the CCAS they were already clerks. Respondent Gelig had been a clerk for CCAS for more than ten (10) years, while respondent Quijano had slightly less than ten (10) years of service. They were, therefore, not novices in their jobs but experienced workers. Cebu Stevedoring Co. Inc v. Regional Director (88)

DOUBLE PROBATION
There is no basis for subjecting an employee to a new probationary or temporary employment where he had already become a regular employee when he was absorbed by a sister company. A Prime Security Services, Inc. v. NLRC (2000)

TERMINATION AND SALARY

A probationary employee enjoys only a temporary employment status. This means that he is terminable at any time, permanent employment not having been attained in the meantime. The employer could well decided he no longer needed the probationary employees services or his performance fell short of expectations, etc. As long as the termination was made before the termination of the six-month probationary period, the employer was well within his rights to sever the employer-employee relationship. A contrary interpretation would defect the clear meaning of the term probationary. De la Cruz, Jr. v. NLRC (2003) Article 281 of the Labor Code does not preclude the employer from terminating the probationary employment on justifiable causes. We find unmeritorious, therefore, public respondent's argument that the security of tenure of probationary employees

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within the period of their probation, as in the case of herein private respondent, justified the award of salary for the unexpired portion of her probationary employment. The termination of private respondent predicated on a just cause negates the application on the right of security of tenure of probationary employees. International Catholic Migration Commission v. NLRC (89) However, the Court cannot sustain his dismissal on this ground because petitioner failed to specify the reasonable standards by which private respondent's alleged poor performance was evaluated, much less to prove that such standards were made known to him at the time of his recruitment in Manila. Neither private respondent's Agency-Worker Agreement with ORIENT EXPRESS nor his Employment Contract with NADRICO ever mentioned that he must first take and pass a Crane Operators' License Examination in Saudi Arabia before he would be allowed to even touch a crane. Neither did he know that he would be assigned as floorman pending release of the results of the examination; more importantly, that he would be subjected to a performance evaluation by his superior one (1) month after his hiring to determine whether the company was amenable to continuing with his employment. Hence, respondent Flores could not be faulted for harboring the impression that he was hired as crane operator for one (1) year to commence upon his arrival at the work-site and to terminate at the end of one (1) year. No other condition was laid out except that he was to be on probation for three (3) months. Due process dictates that an employee be apprised beforehand of the condition of his employment and of the terms of advancement therein. Precisely, implicit in Art. 281 of the Code is the requirement that reasonable standards be previously made known by the employer to the probationary employee at the time of his engagement, as correctly suggested by the POEA. Such an essential requirement was not met by petitioner, even assuming that Flores' alleged unsatisfactory performance was true. Orient
Express Placement Philippines v. NLRC (97)

LABOR STANDARDS

PART V RECRUITMENT AND PLACEMENT OF WORKERS

I. Definitions A. "Recruitment and placement" refers to any act of 14. canvassing, 15. enlisting, 16. contracting, 17. transporting, 18. utilizing, or 19. hiring procuring workers, and also includes 1. referrals, 2. contract services, 3. promising, or 4. advertising for employment, locally or abroad, whether for profit or not Provided, That any person or entity which, in any manner, offers or promises for a fee employment to two or more persons shall be deemed engaged in recruitment and placement. (Art 13b) The number of persons dealt with is not an essential ingredient of the act of recruitment and placement of workers. Any of the acts mentioned in the basic rule in Article 13(b) will constitute recruitment and placement even if only one prospective worker is involved. The proviso merely lays down a rule of evidence that where a fee is collected in consideration of a promise or offer of employment to two or more prospective workers, the individual or entity dealing with them shall be deemed to be engaged in the act of recruitment and placement. The words "shall be deemed" create that presumption. (People v. Panis, 1988)

RULE PRIVATE SCHOOL TEACHERS

To extend a regular appointment: (1) the faculty member must satisfactorily complete the probationary period of four semesters or two years, within which his performance shall be observed and evaluated for the purpose of determining his competency and fitness to be extended permanent status; and (2) the faculty member must pass the PBET or an equivalent civil service examination. Escorpizo v. University of Baguio (99) *Neither are they entitled to LEAVS during the 3 year probationary period, pursuant to the Manual of Regulations for Private Schools . St. Michael Academy v. NLRC (98)

B. Referrals
People v. Meris (2000) In People v. Agustin, the Court ruled: Hence, the inevitable query is whether or not appellant Agustin merely introduced complainants to the Goce couple or her actions went beyond that. The testimonial evidence hereon show that she indeed further committed acts constitutive of illegal recruitment. All four prosecution witnesses testified that it was Agustin whom they initially approached regarding their plans of working overseas. It was from her that they learned about the fees they had to pay, as well as the papers that they had to submit. It was after they had talked to her that they met the accused spouses who owned the placement agency. As such, the Court concluded that appellant that appellant was an employee of the Goce spouses, as she was actually making referrals to the agency. She was therefore, engaged in recruitment activities. The same factual circumstance obtains in this case. Although accused-appellant was not an employee of the alleged illegal recruiter Julie Micua, the evidence show that she was the one who approached complainants and prodded them to seek employment abroad. It was through her that they met Julia Micua. This is clearly an act of referral. Worse, accused-appellant declared that she was capable of placing them in jobs overseas. Suffice it to say that complainants' recruitment would not have been consummated were it not for the direct participation of accusedappellant in the recruitment process. C. "Workers" are any member of the labor force, whether employed or unemployed (Art. 13a) D. A "Private employment agency" is any person or entity engaged in the recruitment and placement of workers for a fee which is

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charged, directly or indirectly, from the workers or employers or both (Art 13c) E. A License is a document issued by the Department of Labor authorizing a person or entity to operate a private employment agency (Art 13d) F. A "Private recruitment entity" is any person or association engaged in the recruitment and placement of workers, locally or overseas, without charging, directly or indirectly, any fee from the workers or employers. (Art 13e) G. An Authority is a document issued by the Department of Labor authorizing a person or association to engage in recruitment and placement activities as a private recruitment entity. (Art 13f) II. Entities allowed to recruit and place A. General rule Only public employment offices and the OEDB for overseas employment, shall engage in the recruitment and placement of workers (Art 16). The Secretary of Labor shall have the power and authority to organize and establish new employment offices in addition to existing employment offices under the Department of Labor as the need arises. (Art 14g) B. Exception Persons or entities allowed under Chapter 2 of the Labor Code (Art 16). For this purpose, the Labor Code expressly authorizes the participation of the private employment sector in the recruitment and placement of workers, locally and overseas, BUT such recruitment and placement shall be done under such guidelines, rules and regulations, as may be issued by the Secretary of Labor and Employment. (Art 25) Private sector participation in recruitment and placement is sought to be rationalized pursuant to national development objectives (Art 12f) and in order to harness and maximize the use of private sector resources and initiative in the development and implementation of a comprehensive employment program (Art 25) C. License/ authority of allowed entities Citizenship Requirement - Only Filipino Citizens or corporations, partnership or entities at least 75 % of the authorized and voting capital stock of which is owned and controlled by Filipino citizens shall be permitted to participate in the recruitment and placement of workers, locally or overseas. (Art 27) 2. Capitalization Requirement - All applicants for authority to hire or renewal of license to recruit are required to have such substantial capitalization as determined by the Secretary of Labor. (Art 28) 3. Non-transferability of license or authority No license or authority shall be used directly or indirectly by any person other than the one in whose favor it was issued or at any place other than that stated in the license or authority, nor may such license or authority be transferred, conveyed, or assigned to any other person or entity. Any transfer of business address, appointment or designation of any agent or representative including the establishment of additional offices anywhere shall be subject to the prior approval of the Department of Labor. (Art 29) 1. Registration Fees The Secretary of Labor shall promulgate a schedule of fees for the registration of all applicants for license or authority. (Art 30) D. SPECIAL CIRCUMSTANCE: DIRECT HIRING FOR WORK ABROAD General Rule No employer may directly hire a Filipino worker for overseas employment. Every employment for work abroad must be coursed 1.

LABOR STANDARDS
through the Boards and entities authorized by the Department of Labor and Employment. (Art 18) E. BAN ON DIRECT HIRING - Exception Direct hiring by members of the diplomatic service, officials and employees of international organizations and such other employers as may be allowed by the Department and Labor and Employment is not covered by the ban. (Art 18) III. Entities prohibited to recruit and place a. b. c. Persons and entities other than public employment offices if not authorized under Chapter 2 of the Labor Code (Art 16) Employers hiring directly for work abroad without going through DOLE-authorized boards and entities (Art 18) Travel agencies and sales agencies of airline companies are prohibited from engaging in the business of recruitment and placement of workers for overseas employment whether for profit or not. (Art 26)

IV. Techniques of regulation A. Bonds All applicants for license or authority shall post such cash and surety bonds as determined by the Secretary of Labor to guarantee compliance with prescribed recruitment procedures, rules an regulations, and terms and conditions of employment as may be appropriate. (Art 31) B. Workers fees Any person applying with a private fee-charging employment agency for employment assistance shall not be charged any fee until he has obtained employment through its efforts or has actually commenced employment. Such fee shall be always covered with the appropriate receipt clearly showing the amount paid. The Secretary of Labor shall promulgate a schedule of allowable fees. (Art 32) C. Reports submission Whenever the public interest so requires, the Secretary of Labor and Employment may direct all persons or entities within the coverage of this Title to submit a report on the status of employment, including job vacancies; details of job requisitions, separation from jobs, wages, other terms and conditions, and other employment data. (Art 33) D. Suspension and/ or cancellation of license or authority The Secretary of Labor shall have the power to suspend or cancel any license or authority to recruit employees for overseas employment for violation of rules and regulations issued by the Department of Labor, the Overseas Employment Development Board, and the National Seamen Board, or for violation of the provisions of this and other applicable laws, General Orders and Letters of Instructions. (Art 35) ILLEGAL RECRUITMENT Under the Labor Code, there are two penal provisions relative to recruitment and placement: first, is the commission of the Prohibited Acts under Art 34 by a holder of a license or authority; second, is the undertaking of recruitment activities under Art 13b or the commission of the Prohibited Acts under Art 34 by a nonholder of a license or authority. Only the second case is considered an act of illegal recruitment. Note that under the Labor Code, a holder of a license or authority cannot commit illegal recruitment. The Prohibited Activities under Art 34 of the Code are: Labor

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a. To CHARGE or accept directly or indirectly any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary of Labor and Employment, or to make a worker pay any amount greater than that actually received by him as a loan or advance; b. To FURNISH or publish any false notice or information or document in relation to recruitment or employment; c. To GIVE any false notice, testimony, information or document or commit any act or misrepresentation for the purpose of securing a license or authority under this Code; d. To INDUCE or attempt to induce a worker already employed to quit his employment in order to offer him another unless the transfer is designed to liberate a worker from oppressive terms and conditions of employment; e. To INFLUENCE or attempt to influence any person or entity not to employ any worker who has not applied for employment through his agency; f. To ENGAGE in the recruitment or placement of workers in jobs harmful to public health or morality or to the dignity of the Republic of the Philippines; g. To OBSTRUCT or attempt to obstruct inspection by the Secretary of Labor and Employment or by his duly authorized representatives; h. To FAIL to file reports on the status of employment, placement vacancies, remittance of foreign exchange earnings, separation from jobs, departures and such other matters or information as may be required by the Secretary of Labor and Employment; i. To SUBSTITUTE or alter employment contracts approved and verified by the Department of Labor and Employment from the time of actual signing thereof by the parties up to and including the period of expiration of the same without the approval of the Department of Labor and Employment. j. To BECOME officer or member of the Board of any corporation engaged in travel agency or to be engaged directly or indirectly in the management of a travel agency; and k. To WITHHOLD or deny travel documents from applicant workers before departure for monetary or financial considerations other than those authorized under this Code and its implementing rules and regulations. People v. Ordoo, 2000 Illegal recruitment is committed when two elements concur, namely: (1) the offender has no valid license or authority required by law to enable one to lawfully engage in recruitment and placement of workers; and (2) he undertakes either any activity within the meaning of recruitment and placement defined under Art. 13 (b), or any of the prohibited practices enumerated under Art. 34 of the Labor Code. A. Illegal recruitment under the Labor Code 1. Illegal recruitment Any recruitment activities, including the prohibited practices enumerated under Article 34 of this Code, to be undertaken by non-licensees or non-holders of authority shall be deemed illegal and punishable under Article 39 of this Code. The Secretary of Labor and Employment or

LABOR STANDARDS
any law enforcement officer may initiate complaints under this Article. (Art 38a) Economic sabotage Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic sabotage and shall be penalized in accordance with Article 39 hereof. Illegal recruitment is deemed committed by a SYNDICATE if carried out by a group of three (3) or more persons conspiring and/or confederating with one another in carrying out any unlawful or illegal transaction, enterprise or scheme defined under the first paragraph hereof. Illegal recruitment is deemed committed in large scale if committed against three (3) or more persons individually or as a group. (Art 38b). Note, however, that the finding of large-scale illegal recruitment must depend on whether there are at least three complainants in a single complaint who alleges illegal recruitment whether committed to them singly or collectively. Single illegal recruitment cases cannot be cumulated to add up to a charge of large-scale illegal recruitment. Consider the following cases: People v. Reyes, 1995 There are, it is said, 14 other cases filed/pending in the courts against the accused for illegal recruitment. These cases cannot be taken into account for the purpose of Art. 38(b). When the Labor Code speaks of illegal recruitment "committed against three (3) or more persons individually or as a group," it must be understood as referring to the number of complainants in each case who are complainants therein, otherwise, prosecutions for single crimes of illegal recruitment can be cumulated to make out a case of large scale illegal recruitment. In other words, a conviction for large scale illegal recruitment must be based on a finding in each case of illegal recruitment of three or more persons whether individually or as a group. Moreover, even if Blanza and Garcia had been illegally recruited so as to make the number of persons illegally recruited four and make the crime that of illegal recruitment of a large scale, since this was not alleged in the information and this is the more serious offense which includes that which was charged, the appellant can only be found guilty of the less serious offense charged, pursuant to Rule 120, 4. People v. Meris (2000) Illegal recruitment is conducted in a large scale if perpetrated against three (3) or more persons individually or as a group. This crime requires proof that the accused: (1) engaged in the recruitment and placement of workers defined under Article 13 or in any of the prohibited activities under Article 34 of the Labor Code; (2) does not have a license or authority to lawfully engage in the recruitment or and placement of workers; and (3) committed the infraction against three or more, persons, individually or as a group. The power of the Secretary of Labor to issue warrants of arrest or search which was formerly embodied in paragraph c of Article 38 has already been nullified in the following case: Salazar v. Achacoso We reiterate that the Secretary of Labor, not being a judge, may no longer issue search or arrest warrants. Hence, the authorities must go through the judicial process. To that extent, we declare Article 38, paragraph (c), of the Labor Code, unconstitutional and of no force and effect.

B. Illegal recruitment under the Migrant Workers Act of 1995 (RA 8042)
4. Illegal recruitment committed by a non-licensee or nonholder of authority ILLEGAL RECRUITMENT shall mean any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers and includes: referring, contract

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services, promising or advertising for employment abroad, whether for profit or not, when undertaken by a non-licensee or non-holder of authority contemplated under Article 13(f) of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines: Provided, That any such non-licensee or nonholder who, in any manner, offers or promises for a fee employment abroad to two or more persons shall be deemed so engaged. (Sec 6, MWA) i) Illegal recruitment committed regardless of whether or not licensee or holder of authority ILLEGAL RECRUITMENT shall likewise include the following acts, whether committed by any person, whether a non-licensee, non-holder, licensee or holder of authority: a. To CHARGE or accept directly or indirectly any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary of Labor and Employment, or to make a worker pay any amount greater than that actually received by him as a loan or advance; b. To FURNISH or publish any false notice or information or document in relation to recruitment or employment; c. To GIVE any false notice, testimony, information or document or commit any act of misrepresentation for the purpose of securing a license or authority under the Labor Code; d. To INDUCE or attempt to induce a worker already employed to quit his employment in order to offer him another unless the transfer is designed to liberate a worker from oppressive terms and conditions of employment; e. To INFLUENCE or attempt to influence any person or entity not to employ any worker who has not applied for employment through his agency; f. To ENGAGE in the recruitment or placement of workers in jobs harmful to public health or morality or to the dignity of the Republic of the Philippines; g. To OBSTRUCT or attempt to obstruct inspection by the Secretary of Labor and Employment or by his duly authorized representative; h. To FAIL to submit reports on the status of employment, placement vacancies, remittance of foreign exchange earnings, separation from jobs, departures and such other matters or information as may be required by the Secretary of Labor and Employment; i. To SUBSTITUTE or alter to the prejudice of the worker, employment contracts approved and verified by the Department of Labor and Employment from the time of actual signing thereof by the parties up to and including the period of the expiration of the same without the approval of the Department of Labor and Employment; j. For an OFFICER or agent of a recruitment or placement agency to become an officer or member of the Board of any corporation engaged in travel agency or to be engaged directly or indirectly in the management of a travel agency; k. To WITHHOLD or deny travel documents from applicant workers before departure for monetary or financial considerations other than those authorized under the Labor Code and its implementing rules and regulations;

LABOR STANDARDS
l. FAILURE to actually deploy without valid reason as determined by the Department of Labor and Employment; and m. FAILURE to reimburse expenses incurred by the worker in connection with his documentation and processing for purposes of deployment, in cases where the deployment does not actually take place without the worker's fault. (Sec 6, MWA)

Economic sabotage Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic sabotage. Illegal recruitment is deemed committed by a SYNDICATE if carried out by a group of three (3) or more persons conspiring or confederating with one another. It is deemed committed in large scale if committed against three (3) or more persons individually or as a group. (Sec 6, MWA)

RULE OF LIABILITY: The persons CRIMINALLY LIABLE for the above offenses are the principals, accomplices and accessories. In case of juridical persons, the officers having control, management or direction of their business shall be liable. (Sec 6, MWA) C. Enforcement and sanctions (c) Regulatory power - The Secretary shall have the power to restrict and regulate the recruitment and placement activities of all agencies is authorized to issue orders and promulgate rules and regulations to carry out the objectives and implement the provisions of this Title. (Art 36) (ci) Visitorial power - The Secretary or his duly authorized representatives may at any time inspect the premises, books of accounts and records of any person or entity covered by this Title, require it to submit reports regularly on prescribed forms, and act on violations of any provision of this Title. (Art 37) (cii) Penalties a. The penalty of life imprisonment and a fine of One Hundred thousand Pesos (P100,000) shall be imposed if illegal recruitment constitutes economic sabotage as defined herein: b. Any license or holder of authority found violating or causing another to violate any provision of this Title or its implementing rules and regulations shall, upon conviction thereof, suffer the penalty of imprisonment of not less than two years nor more than five years or a fine of not less than P10,000 nor more than P50,000 or both such imprisonment and fine, at the discretion of the court; c. Any person who is neither a licensee nor a holder of authority under this Title found violating any provision thereof or its implementing rules and regulations shall, upon conviction thereof, suffer the penalty of imprisonment of not less than four years nor more than eight years or a fine of not less than P20,000 nor more than P100,000 or both such imprisonment and fine, at the discretion of the court; d. If the offender is a corporation, partnership, association or entity, the penalty shall be imposed upon the officer or officers of the corporation, partnership, association or entity responsible for violation; and if such officer is an alien, he shall, in addition to the penalties herein prescribed, be deported without further proceedings; e. In every case, conviction shall cause and carry the automatic revocation of the license or authority and all the permits and privileges granted to such person or entity under this Title, and the forfeiture of the cash and surety bonds in favor of the Overseas Employment Development Board or the National Seamen Board, as

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

LABOR STANDARDS

PART VI ALIEN EMPLOYMENT

A. Coverage Art. 40 of the Labor Code which requires employment permit refers to non-resident aliens. The employment permit is required for entry into the country for employment purposes and is issued after determination of the non-availability of a person in the Philippines who is competent, able and willing at the time of application to perform the services for which the alien is desired. A resident alien does not fall within the ambit of the provision. (Almodiel v. NLRC, 1993) B. Requisite: Employment Permit 1. Who may apply for Any alien seeking admission to the Philippines for employment purposes and any domestic or foreign employer who desires to engage an alien for employment in the Philippines shall obtain an employment permit from the Department of Labor. (Art 40) 2. Requisite for issuance, in general The employment permit may be issued to a non-resident alien or to the applicant employer after a determination of the non-availability of a person in the Philippines who is competent, able and willing at the time of application to perform the services for which the alien is desired. (Art 40). Note also that, in issuing employment permits to non-resident aliens, consideration must also be given to the fact that the Constitution mandates that the State shall promote the preferential use of Filipino labor, domestic materials and locally produced goods (Art XII, Sec 12, Constitution) General Milling Corp. v. Torres, 1991 The Labor Code itself specifically empowers the Secretary of Labor to make a determination as to the availability of the services of a "person in the Philippines who is competent, able and willing at the time of application to perform the services for which an alien is desired." In short, the Department of Labor is the agency vested with jurisdiction to determine the question of availability of local workers. The constitutional validity of legal provisions granting such jurisdiction and authority and requiring proof of nonavailability of local nationals able to carry out the duties of the position involved, cannot be seriously questioned. 3. Requisite for issuance, enterprises registered in preferred areas of investment The employment permit may be issued upon recommendation of the government agency charged with the supervision of said registered enterprise. (Art 40) C. Prohibition against transfer of employment After the issuance of an employment permit, the alien shall not transfer to another job or change his employer without prior approval of Secretary of Labor and Employment. (Art 41) D. Consequences of violation Any non-resident alien who shall take up employment in violation of the provision of this Title and its implementing rules and regulations shall be punished in accordance with the provisions of Articles 289 and 290 of the Labor Code. In addition, the alien worker shall be subject to deportation after service of his sentence. (Art 41)

PART VII EMPLOYMENT OF APPRENTICE, LEARNERS AND HANDICAPPED WORKERS

A. Policy It is hereby declared the policy of the State to provide relevant, accessible, high quality and efficient technical education and skills development in support of the development of high quality Filipino middle-level manpower responsive to and in accordance with Philippine development goals and priorities. The state shall encourage active participation of various concerned sectors, particularly private enterprises, being direct participants in an immediate beneficiaries of a trained and skilled workforce, in providing technical education and skills development opportunities. (Sec 2, RA 7796) B. Goals and objectives a. Promote and strengthen the quality of technical education and skills development programs to attain international competitiveness b. Focus technical education and skills development or meeting the changing demands for quality middle-level manpower c. Encourage critical and creative thinking by disseminating the scientific and technical knowledge base of middle-level manpower development programs d. Recognize and encourage the complementary roles of public and private institutions in technical education and skills development and training systems; e. Inculcate desirable values through the development of moral character with emphasis on work ethic, self-discipline, self reliance, and nationalism. (Sec 3, RA 7796) I. APPRENTICE A. Definition Apprenticeship refers to training within employment with compulsory related theoretical instructions involving a contract between an apprentice and an employer during an established period assured by an apprenticeable occupation. (Sec. 4j, RA 7796) Apprenticeable Occupation is an occupation officially endorsed by a tripartite body and approved for apprenticeship by the Authority (Sec 4m, RA 7796) B. SPECIAL CIRCUMSTANCE: Employment of children Children below fifteen (15) years of age shall not be employed except: 1. When a child works directly under the sole responsibility of his parents or legal guardian and where only members of the employers family are employed: Provided, however, That his employment neither endangers his life, safety, health and morals, nor impairs his normal development: Provided, further, That the parent or legal guardian shall provide the said minor child with the prescribed primary and/or secondary education 2. When a childs employment or participation in public and entertainment or information through cinema, theater, radio or television is essential: Provided, the employment contract is concluded by the childs parents or guardian, with the express agreement of the child concerned, if possible, and the approval of the Department of Labor and Employment: and Provided, That the following requirements in all instances are strictly complied with:

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a. The employer shall ensure the health, safety and morals of the child protection,

LABOR STANDARDS
1. Learnership agreement Any employer desiring to employer learners shall enter into a learnership agreement with them, which agreement shall include: a. The NAMES and addresses of the learners; b. The DURATION of the learnership period, which shall not exceed three months; c. The WAGES or salary rates of the learners which shall begin at not less than 75 percent of the applicable minimum wage; and d. A COMMITMENT to employ the learners, if they so desire, as regular employees upon completion of the learnership. The learnership agreement shall be subject to inspection by the Secretary or his duly authorized representatives. (Art 75) 2. Regularization All learners who have been allowed or suffered to work during the first two months shall be deemed regular employees if training is terminated by the employer before the end of the stipulated period through no fault of the learner. (Art 75) 3. Special circumstance: Learners in piecework Learners employed in piece or incentive rate jobs during the training period shall be paid in full for the work done. (Art 76) III.HANDICAPPED WORKERS A. Coverage The Magna Carta for Disabled Persons or RA 7277 shall cover all disabled persons and, to the extent herein provided, departments, officers and agencies of the National Government or nongovernment organizations involved in the attainment of the objectives of this Act. (Sec 3, RA 7277) B. Definitions

b. The employer shall institute measures to prevent the childs exploitation or discrimination taking into account the system and level of remuneration, and the duration and arrangement of working time c. The employer shall formulate and implement, subject to the approval and supervision of competent authorities, a continuing program for training and skills acquisition of the child. In the above exceptional cases where any such child may be employed, the employer shall first secure, before engaging such child, a work permit from the Department of Labor and Employment which shall ensure observance of the above requirements. (Sec. 12, RA 7610, as amended by RA 7658) C. Terms and conditions of employment 1. Apprenticeship agreements Apprenticeship agreements, including the main rates of apprentices, shall conform to the rules issued by the Minister of Labor and Employment. The period of apprenticeship shall not exceed six months. Apprenticeship agreements providing for wage rates below the legal minimum wage, which in no case shall start below 75% per cent of the applicable minimum wage, may be entered into only in accordance with apprenticeship program duly approved by the Minister of Labor and Employment. The Ministry shall develop standard model programs of apprenticeship. (Art 61; Nitto Enterprises v. NLRC, 1995) 2. No-compensation apprenticeships The Secretary of Labor may authorize the hiring of apprentices without compensation whose training on the job is required by the school or training program curriculum or as a requisite for graduation or board examination. (Art 72) 3. Deductibility of training costs - An additional deduction from taxable income of one-half of the value of labor training expenses incurred for developing the productivity and efficiency of apprentices shall be granted to the person or enterprise organizing an apprenticeship program provided such program is duly recognized by the Department of Labor and Employment; provided further that such deduction shall not exceed 10 percent of direct labor wage; and provided finally that the person or enterprise who wish to avail of this incentive should pay his apprentices the minimum wages. (Art 71) D. Enforcement Upon complaint of any interested person or upon its own initiative, the appropriate agency of the Department of Labor and Employment or its authorized representative shall investigate any violation of any apprenticeship agreement (Art 65) The decision of the authorized agency of the Department by any aggrieved person to the Secretary of Labor and Employment within five days from receipt of the decision. The decision of the Secretary shall be final and executory. (Art 66) II. LEARNERS A. Defined Learners refer to persons hired as trainees in semi-skilled and other industrial occupation which are non-apprenticeable. Learnership programs must be approved by the Authority. B. Requisites Learners may be employed when no experienced workers are available the employment of learners is necessary to prevent curtailment of employment opportunities, and the employment does not create unfair competition in terms of labor costs or impair or lower working standards. (Art 74) C. Terms and conditions of employment

Disabled Persons - those suffering from restriction or different abilities, as a result of a mental, physical or sensory impairment, to perform an activity in the manner or within the range considered normal for a human being (Sec 4a, RA 7277) Impairment - any loss, dimunition or aberration of psychological, physiological, or anatomical structure or function (Sec 4b, RA 7277) Disability - shall mean

physical or mental impairment that substantially limits one or more psychological, physiological or anatomical function of an individual or activities of such individual; a record of such an impairment; or being regarded as having such an impairment (Sec 4c, RA 7277)

4. Handicap - refers to a disadvantage for a given individual, resulting from an impairment or a disability, that limits or prevents the function or activity, that is considered normal given the age and sex of the individual (Sec 4d, RA 7277) C. Rights and privileges of disabled persons

Equal Opportunity for Employment (Sec 5, RA 7277)

No disabled person shall be denied access to opportunities for suitable employment. A qualified disabled employee shall be subject to the same terms and conditions of employment and the same compensation, privileges, benefits, fringe benefits, incentives or allowances as a qualified able-bodied person

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Reserved contractual positions (Sec 5, RA 7277)

LABOR STANDARDS

Five percent (5%) of all casual, emergency and contractual positions in the Departments of Social Welfare and Development; health, Education, Culture and Sports; and other government agencies, offices or corporations engaged in social development shall be reserved for disabled persons.

Sheltered employment (Sec 6, RA 7277) If suitable employment for disabled persons cannot be found through open employment as provided in the immediately preceding Section, the State shall endeavor to provide it by means of sheltered employment. In the placement of disabled persons in sheltered employment, it shall accord due regard to the individual qualities, vocational goals and inclinations to ensure a good working atmosphere and efficient production. Apprenticeship opportunity (Sec 7, RA 7277)

PART VIII Conditions of Employment Hours of Work

I. Hours Regulation

Subject to the provisions of the Labor Code as amended, disabled persons shall be eligible as apprentices or learners: Provided, that their handicap is not as much as to effectively impede the performance of job operations in the particular occupation for which they are hired; provided, further, That after the lapse of the period of apprenticeship, if found satisfactory in the job performance, they shall be eligible for employment. D. Incentives for employers 1. Tax incentives for employment of disabled persons (Sec 8, RA 7277) Private entities that employ disabled persons who meet the required skills or qualifications, either ad regular employee, apprentice or learner, shall be entitled to an additional deduction, from their gross income, equivalent to 25% of the total amount paid as salaries and wages to disabled persons: Provided, however, That such entities present proof as certified by the Department of Labor and Employment and the Department f Health as to his disability, skills, and qualifications. 2. Tax incentives for construction of disabled-friendly facilities (Sec 8, RA 7277) Private entities that improve or modify their physical facilities in order to provide reasonable accommodation for disabled persons shall also be entitled to an additional deduction from their net taxable income, equivalent to 50% of the direct costs of the improvements or modifications. This Section, however, does not apply to improvements or modifications or facilities required under Batas Pambansa Bilang 344. (Sec 8, RA 7277) Bernardo v. NLRC, 1999 In this light, the Magna Carta for Disabled Persons mandates that a qualified disabled employee should be given the same terms and conditions of employment as a qualified ablebodied person. Since the Magna Carta accords them the rights of qualified able-bodied persons, they are thus covered by Article 280 of the Labor Code. In the present case, the handicap of petitioners (deaf-mutes) is not a hindrance to their work. The eloquent proof of this statement is the repeated renewal of their employment contracts. Why then should they be dismissed, simply because they are physically impaired? The Court believes, that, after showing their fitness for the work assigned to them, they should be treated and granted the same rights like any other regular employees.

Rationale and Enforcement The Eight-Hour Labor Law was designed not only to safeguard the health and welfare of the laborer or EE, but in a way to minimize unemployment by forcing employers, in cases where more than 8hour operation is necessary, to utilize different shifts of laborers or EEs working only for eight hours each. (Manila Terminal Co. Inc v. CIR, 1952) II. Coverage

The provisions of this Title shall apply to employees in all establishments and undertakings whether for profit or not. (Art. 82) Does NOT cover: (Art. 82) 1. government employees, 2. managerial employees, 3. field personnel, 4. members of the family of the ER who are dependent on him for support, 5. domestic helpers, 6. persons in the personal service of another, and 7. workers who are paid by results as determined by the Secretary of Labor in appropriate regulations. managerial employees - those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof, and to other officers or members of the managerial staff. (Art. 82) "Field personnel" - non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. (Art. 82) Rationale Exemption Managerial Employees The philosophy behind the exemption of managerial EEs from the 8Hour Labor Law is that such workers are not usually employed for every hour of work but their compensation is determined considering their special training, experience or knowledge which requires the exercise of discretion and independent judgment, or perform work related to management policies or general business operations along specialized or technical lines. For these workers it is not feasible to provide a fixed hourly rate of pay or maximum hours of labor. (National Waterworks and Severage Authority v. NAWASA Consolidated Unions, 1965) Tests Field Personnel The clause "whose time and performance is unsupervised by the employer" did not amplify but merely interpreted and expounded the clause "whose actual hours of work in the field cannot be determined with reasonable certainty." The former clause is still within the scope and purview of Article 82 which defines field personnel. Hence, in deciding whether or not an EE's actual working hours in the field can be determined with reasonable certainty, query must be made as to whether or not such EE's time and performance is constantly supervised by the employer. (Union of Filipro Employees v. Vivar, 1992) Actual hours work in the field is to be read in conjunction with Rule IV, Book III of the Implementing Rules. Therefore field

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personnel are EEs whose time and performance is unsupervised by the employer. (Salazar v. NLRC, 1996) If required to be at specific places at specific times, EEs including drivers cannot be said to be field personnel despite the fact that they are performing work away from principal office of EE. (Auto Bus Transport Systems, Inc. v. Bautista, 2005) Rationale Exemption Piece Worker Philosophy underlying the exclusion of piece workers from the 8hour law is that said workers are paid depending upon the work they do irrespective of the amount of time employed in doing said work. (Red V Coconut Products Ltd., v. CIR, 1966) III. Normal Hours of Work

LABOR STANDARDS
premises of his ER, is not counted as working time only where the work is broken or is not continuous. (National Development Co. v. CIR, 1962) A laborer need not leave the premises of the factory, shop or boat in order that his period of rest shall not be counted, it being enough that he "cease to work", may rest completely and leave or may leave at his will the spot where he actually stays while working, to go somewhere else, whether within or outside the premises of said factory, shop or boat. If these requisites are complied with, the period of such rest shall not be counted. (Luzon Stevedoring Co. v. Luzon Marine Department Union, 1957) Continuous Work The provision of section 1 of Commonwealth Act No. 444, which states that "when the work is not continuous, the time during which the laborer is not working and can leave his working place and can rest completely shall not be counted", finds no application in the present case, where the laborer's work is continuous, and during the time that he is not working he can not leave and completely rest owing to the place and nature of his work. (State Marine Corporation v. Cebu Seamens Association, 1963) Waiting Time

The normal hours of work of any employee shall not exceed eight (8) hours a day. (Art. 83) Special Rule for Health Personnel: Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5) days a week, exclusive of time for meals. (Art. 83) Exception to the Special Rule: Exigencies of the service require work for six 6 days or 48 hours, in which case, they shall be entitled to an additional compensation of at least 30% of their regular wage for work on the sixth day. (Art. 83) "health personnel" 1. resident physicians, 2. nurses, 3. nutritionists, 4. dietitians, 5. pharmacists, 6. social workers, 7. laboratory technicians, 8. paramedical technicians, 9. psychologists, 10. midwives, 11. attendants, and 12. all other hospital or clinic personnel. (Art. 83) DISTINCTION BETWEEN THE TWO CLASSES COMMERCIAL/INDUSTRIA L 8 hrs/day 6 days HEALTH 8 hrs/day 5 days

The thirty (30)-minute assembly is a deeply-rooted, routinary practice of the employees, and the proceedings attendant thereto are not infected with complexities as to deprive the workers the time to attend to other personal pursuits. (Arica v. NLRC, 1989) Travel Time The fact that he picks up employees of Philnor at certain specified points along EDSA in going to the project site and drops them off at the same points on his way back from the field office going home to Marikina, Metro Manila is not merely incidental to petitioner's job as a driver. On the contrary, said transportation arrangement had been adopted, not so much for the convenience of the employees, but primarily for the benefit of the employer, herein private respondent. Since the assigned task of fetching and delivering employees is indispensable and consequently mandatory, then the time required of and used by petitioner in going from his residence to the field office and back, that is, from 5:30 A.M. to 7:00 A.M. and from 4:00 P.M. to around 6:00 P.M., which the labor arbiter rounded off as averaging three hours each working day, should be paid as overtime work. (Rada v NLRC, 1992) Entry Time Cards It is impossible for an EE to arrive at the workplace & leave at exactly the same time day in day out (daily time records). The very uniformity & regularity of the entries are badges of untruthfulness. (Prangan v. NLRC, 1998; Nicario v. NLRC, 1998) It is an error to rely solely on the computations of compensable services submitted by private resources. There must be competent proof such as time cards / office records to show that they actually rendered compensable service during the stated period to entitle them to wages. (Aklan Electric Coop., Inc. v. NLRC, 2000) V. Meal Period

Normal Work Day Normal Work Week

IV. Hours Worked Include: 1. all time during which an employee is required to be on duty or to be at a prescribed workplace; and 2. all time during which an employee is suffered or permitted to work. (Art. 84) * Rest periods of short duration during working hours shall be counted as hours worked. (Art. 84)

Subject to such regulations as the Secretary of Labor may prescribe, it shall be the duty of every employer to give his employees not less than sixty (60) minutes time-off for their regular meals. (Art. 85) Meal Time Free Time

Idle Time The idle time that an employee may spend for resting & dining which he may leave the spot or place of work though not the

During meal period, the laborers are required to stand by for emergency work, or where said meal hour is not one of complete rest, such period is considered overtime.

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(Pan-American Airways v. Pan-American Employees Association, 1961) The eight-hour work period does not include the meal break. Employees are not prohibited from going out of the premises as long as they return to their posts on time. (Phil. Airlines, Inc. v. NLRC, 1999) VI. Overtime Work and Offsetting Prohibition

LABOR STANDARDS
hours worked must be in excess of and in addition to the eight (8) hours worked during the prescribed daily work period, or the forty (40) hours worked during the regular work week Monday through Friday. (Caltex Regular Employees v. Caltex Phil. Inc., 1995) No Computation Formula Basic Contract A contract of employment, which provides for a weekly wage for a specified number of hours, sufficient to cover both the statutory minimum wage and overtime compensation, if computed on the basis of the statutory minimum, and which makes no provision for a fixed hourly rate or that the weekly wage includes overtime compensation, does not meet the requirements of the Act. (Manila Terminal Co. Inc v. CIR, 1952) Built-in Compensation Written contracts with a "built-in" overtime pay in the ten-hour working day and that their basic monthly pay was adjusted to reflect the higher amount covering the guaranteed two-hour extra time whether worked or unworked are valid. (Engineering Equipment Inc v. MOLE, 1985) Proof of Work Entitlement to overtime pay must first be established by proof that said overtime work was actually performed, before an employee may avail of said benefit. (Lagatic v. NLRC, 1998) Where the veracity of the alleged documents as payrolls are doubtful considering that the laborers paid therein never affixed their signatures to show that they actually received the amounts indicated, the fact that a particular laborers name does not appear is no proof that he did not work in the workplace. Unwavering testimonies of laborers employment prevail over incomplete & inconsistent documentary evidence of employer. To constiture abandonment, there must be clear proof of deliberate & unjustified intent to sever the ER-EE relationship. Mere absence of the employee is not sufficient. The burden of proof to show a deliberate & unjustified refusal of an employee to resume his employment without any intention of returning rests on the ER. (Villar v. NLRC, 2000) Employer Obligation ER is duty-bound to keep faithful & complete records of his business affairs, not the least of which would be the salaries of the workers. (Social Security System v. Court of Appeals, 2000) VII. Night Work

Overtime work - Work may be performed beyond eight (8) hours a day provided that the employee is paid for the overtime work, an additional compensation equivalent to his regular wage plus at least 25% thereof. Work performed beyond eight hours on a holiday or rest day shall be paid an additional compensation equivalent to the rate of the first eight hours on a holiday or rest day plus at least 30% thereof. (Art. 87) Undertime not offset by overtime - Undertime work on any particular day shall not be offset by overtime work on any other day. Permission given to the employee to go on leave on some other day of the week shall not exempt the employer from paying the additional compensation required in this Chapter. (Art. 88) Emergency overtime work - Any employee may be required by the employer to perform overtime work in any of the following cases: (Art. 89) a. When the country is at war or when any other national or local emergency has been declared by the National Assembly or the Chief Executive; b. When it is necessary to prevent loss of life or property or in case of imminent danger to public safety due to an actual or impending emergency in the locality caused by serious accidents, fire, flood, typhoon, earthquake, epidemic, or other disaster or calamity; c. When there is urgent work to be performed on machines, installations, or equipment, in order to avoid serious loss or damage to the employer or some other cause of similar nature; d. When the work is necessary to prevent loss or damage to perishable goods; and e. Where the completion or continuation of the work started before the eighth hour is necessary to prevent serious obstruction or prejudice to the business or operations of the employer. (Art. 89) * Any employee required to render overtime work under this Article shall be paid the additional compensation required in this Chapter. (Art. 89) Computation of additional compensation - For purposes of computing overtime and other additional remuneration as required by this Chapter, the "regular wage" of an employee shall include the cash wage only, without deduction on account of facilities provided by the employer.

Night shift differential - Every employee shall be paid a night shift differential of not less than ten percent (10%) of his regular wage for each hour of work performed between ten oclock in the evening and six oclock in the morning. (Art. 86) At least 110% for each hour of work between 10pm and 6am Rationale Prohibition Nightwork cannot be regarded as desirable, either from the point of view of the employer or of the wage earner. It is uneconomical unless overhead costs are unusually heavy. Frequently the scale of wages is higher as an inducement to employees to accept employment on the night shift, and the rate of production is generally lower. Reasons for prohibiting night work: Health risks Disarrangement of social life Moral dangers Night work lawks to enforce act fixing max period of employment Unprofitable; inferior to day work both in quality & quantity

Definition and Rationale Overtime Pay Why is there extra compensation for overtime? Because he is made to work longer than what is commensurate with his agreed compensation. The effects of spending additional time to work is multi-faceted: he puts in more effort, physical and/or mental; he is delayed in going home to his family to enjoy the comforts thereof; he might have no time for relaxation, amusement or sports; he might miss important pre-arranged engagements; etc. It is thus the additional work, labor or service employed and the adverse effects that justify the extra compensation. Overtime work - the lengthening of hours devoted to the interests of the employer and the requirements of his enterprise. (Philippine National Bank v. PNB Employees Association, 1982) Overtime work consists of hours worked on a given day in excess of the applicable work period, which here is eight (8) hours. It is not enough that the hours worked fall on disagreeable or inconvenient hours. In order that work may be considered as overtime work, the

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(Shell Oil Co. Ltd v. National Labor Union, 1948) c.

LABOR STANDARDS
In the event of abnormal pressure of work due to special circumstances, where the employer cannot ordinarily be expected to resort to other measures; d. To prevent loss or damage to perishable goods; e. Where the nature of the work requires continuous operations and the stoppage of work may result in irreparable injury or loss to the employer; and f. Under other circumstances analogous or similar to the foregoing as determined by the Secretary of Labor and Employment. (Art. 92) Work on rest day No regular rest day Work on special holiday Work when special holiday falls on rest day Where the collective bargaining agreement or other applicable employment contract stipulates the payment of a higher premium pay than that prescribed under this Article (Art. 93 30% premium 30% premium for work performed on Sundays & holidays 30% premium (All Saints Day, Dec 31, Ninoy Aquino Day (Aug. 21)) 50% premium The employer shall pay such higher rate

PART IX Conditions of Employment Weekly Rest Period

I. Rationale

Division between public utilities & others is not arbitrary. Public utilities exempt from the prohibition (against compelling employees to work on Subdays & holidays without additional payment) of Sec. 4, CA444 are required to perform a continuous service to the pubic since the public good so demands & are not allowed to collect an extra charge for services performed on those days; while others are not required to do so & are free to operate of not their shops, business or industries on Sundays & legal holidays. If they operate & compel their laborer to work on those days it is but just & natural that they should pay extra compensation to them because it is to be presumed that they can make money or business by operating on those days even if they have to pay such extra enumeration. (Manila Electric Co. v. Public Utilities Employees Assn., 1947) II. Coverage

Coverage - The provisions of this Title shall apply to employees in all establishments and undertakings whether for profit or not. (Art. 82) Except for: 1. government employees, 2. managerial employees, 3. field personnel, 4. members of the family of the employer who are dependent on him for support, 5. domestic helpers, 6. persons in the personal service of another, and 7. workers who are paid by results as determined by the Secretary of Labor in appropriate regulations. (Art. 82) Right to weekly rest day - It shall be the duty of every employer, whether operating for profit or not, to provide each of his employees a rest period of not less than 24 consecutive hours after every 6 consecutive normal work days. (Art. 91a) III. Scheduling of Rest Day

PART X Conditions of Employment Holiday

I. Coverage

Right to holiday pay - Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than 10 workers. (Art. 94a) Coverage and Purpose The Secretary of Labor cannot exempt Mantrade from paying holiday pay just because its employees are uniformly paid by the month irrespective of the number of working days therein. The Labor Code only exempts retail and service establishments regularly employing less than 10 workers. (Mantrade / FMC Division Employees and Workers Union v. Bacungan, 1986) Muslim holidays are provided for in the code of Muslim personal laws. Art. 170 of the same code: 169 must be read in conjunction with Art. 94. There should be no distinction between Muslims & non-Muslims as regards to the payment of benefits for Muslim holidays. Wages & other emoluments granted by law to the working man are determined on the basis of the criteria laid down by laws & not on the basis of the workers faith. Art. 3(3), PD 1083: nothing herein shall be construed to operate to the prejudice of a non-Muslim. (San Miguel Corp. v. Court of Appeal, 2002) Holiday pay - legislative benefit enacted as part of the constitutional imperative that the state shall afford protection to labor. Holiday pay purpose: not merely to prevent diminution of the monthly income of the workers on account of work interruptions, to enable the worker to participate in the national celebrations held during the days identified as with great historical & cultural significance.

Right to weekly rest day - The employer shall determine and schedule the weekly rest day of his employees subject to collective bargaining agreement and to such rules and regulations as the Secretary of Labor and Employment may provide. However, the employer shall respect the preference of employees as to their weekly rest day when such preference is based on religious grounds. (Art. 91b) IV. Compulsory Work and Compensation

When employer may require work on a rest day - The employer may require his employees to work on any day: a. In case of actual or impending emergencies caused by serious accident, fire, flood, typhoon, earthquake, epidemic or other disaster or calamity to prevent loss of life and property, or imminent danger to public safety; b. In cases of urgent work to be performed on the machinery, equipment, or installation, to avoid serious loss which the employer would otherwise suffer;

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Unlike a bonus, which is a management prerogative, holiday pay is a statutory benefit demandable under the law. (Asian Transunion Corp. v. Court of Appeals, 2004) II. Holidays

LABOR STANDARDS
contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof. Work on any regular holiday, not exceeding 8 hours Work on any regular holiday which falls on the scheduled rest day, not exceeding 8 hours Overtime on a regular holiday Overtime on a regular holiday which falls on the scheduled rest day (Sec. 1 Rule 4 of IRR) 200% of regular daily wage

REPUBLIC ACT NO. 9492 AN ACT RATIONALIZING THE CELEBRATION OF NATIONAL HOLIDAYS AMENDING FOR THE PURPOSE SECTION 26, CHAPTER 7, BOOK I OF EXECUTIVE ORDER NO. 292, AS AMENDED, OTHERWISE KNOWN AS THE ADMINISTRATIVE CODE OF 1987 Sec. 1 Section 26, Chapter 7, Book I of Executive Order No. 292, as amended, otherwise known as the Administrative Code of 1987, is hereby amended to read as follows: "Sec. 26, Regular Holidays and Nationwide Special Days. (1) Unless otherwise modified by law, and or proclamation, the following regular holidays and special days shall be observed in the country: a. 1. Regular Holidays New years Day - January 1 Maundy Thursday - Movable date Good Friday - Movable date Eidul Fitr - Movable date Araw ng Kagitingan - Monday nearest April 9 (Bataaan and Corregidor Day) Labor Day - Monday nearest May 1 Independence Day - Monday nearest June 12 National Heroes Day - Last Monday of August Bonifacio Day - Monday nearest November 30 Christmas Day - December 25 Rizal Day - Monday nearest December 30

30% + 200% of regular daily wage

Additional 30% of the 200% of regular daily wage Additional 30% of the 230% of regular daily wage

Faculty Private School It is readily apparent that the declared purpose of the holiday pay which is the prevention of diminution of the monthly income of the employees on account of work interruptions is defeated when a regular class day is cancelled on account of a special public holiday and class hours are held on another working day to make up for time lost in the school calendar. Otherwise stated, the faculty member, although forced to take a rest, does not earn what he should earn on that day. Be it noted that when a special public holiday is declared, the faculty member paid by the hour is deprived of expected income, and it does not matter that the school calendar is extended in view of the days or hours lost, for their income that could be earned from other sources is lost during the extended days. Similarly, when classes are called off or shortened on account of typhoons, floods, rallies, and the like, these faculty members must likewise be paid, whether or not extensions are ordered. (Jose Rizal College v. NLRC, 1987) Divisor as Factor The daily rate, assuming there are no intervening salary increases, is a constant figure for the purpose of computing overtime and night differential pay and commutation of sick and vacation leave credits. Necessarily, the daily rate should also be the same basis for computing the 10 unpaid holidays. (Union of Filipro Employees v. Vivar, 1991) Since the rest days of petitioners fall on a Sunday, the number of unworked but paid legal holidays should be reduced to 9, instead of 10, since one legal holiday under EO 203 always falls on the last Sunday of August. Transasias consistent use of 286 divisor in the computation of its EEs benefits & deductions established that holiday pay is already included in their monthly salaries. (Transasia Phils. Employe Assn. v. NLRC 1999) Computation The cited provisions of PD 442 simply declare that night shift differential and additional remuneration for overtime, rest day, Sunday and holiday work shall be computed on the basis of the employee's regular wage. In like fashion, the 1991 POEA Rules merely require employers to guarantee payment of wages and overtime pay. Thus, petitioners' stance is bereft of any legal support. (Agga v. NLRC, 1998) Sunday In fixing the salary, Wellington used what it calls the "314 factor;" that is to say, it simply deducted 51 Sundays from the 365 days normally comprising a year and used the difference, 314, as basis for determining the monthly salary. The monthly salary thus fixed actually covers payment for 314 days of the year, including regular and special holidays, as well as days when no work is done by

Nationwide Special Holidays: Ninoy Aquino Day - Monday nearest August 21 All Saints Day - November 1 Last Day of the Year - December 31 In the event the holiday falls on a Wednesday, the holiday will be observed on the Monday of the week. If the holiday falls on a Sunday, the holiday will be observed on the Monday that follows: Provided, That for movable holidays, the President shall issue a proclamation, at least six months prior to the holiday concerned, the specific date that shall be declared as a nonworking day Provided, however, The Eidul Adha shall be celebrated as a regional holiday in the Autonomous Region in Muslim Mindanao."

2.

Sec. 2 All laws, orders, presidential issuances, rules and regulations or part thereof inconsistent with this Act are hereby repealed or modified accordingly. III. Holiday Pay

The employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent to twice his regular rate. (Art. 94b) Coverage: (Sec. 1 Rule 4 of IRR) All employees Except: (Sec. 1 Rule 4 of IRR) 1. Those of the government and any of the political subdivision, including government-owned and controlled corporation; 2. Those of retail and service establishments regularly employing less than 10 workers; 3. Domestic helpers and persons in the personal service of another; 4. Managerial employees as defined in Book 3 of the Code; 5. Field personnel and 6. other employees whose time and performance is unsupervised by the employer including those who are engaged on task or

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reason of fortuitous cause, as above specified, or causes not attributable to the employees. There is no provision of law requiring any employer to make such adjustments in the monthly salary rate set by him to take account of legal holidays falling on Sundays in a given year, or, contrary to the legal provisions bearing on the point, otherwise to reckon a year at more than 365 days. As earlier mentioned, what the law requires of employers opting to pay by the month is to assure that "the monthly minimum wage shall not be less than the statutory minimum wage multiplied by 365 days divided by twelve," and to pay that salary "for all days in the month whether worked or not," and "irrespective of the number of working days therein." (Wellington Investment Inc. v. Trajano, 1995) Proof of Payment Indeed if petitioner wanted to prove its payment of holiday pays and salary differentials, it could have easily presented proofs of such monetary benefits. But it did not. It had failed to comply with the mandate of the law. As public respondent ruled, the burden of proof in this regard belongs to the employer, not to the employee. (Building Care Corp. v. NLRC, 1998) I.

LABOR STANDARDS

PART XI Conditions of Employment Leaves

Coverage

Right to service incentive leave - Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay. (Art. 95a) This provision shall not apply to: those who are already enjoying the benefit herein provided, those enjoying vacation leave with pay of at least five days and those employed in establishments regularly employing less than 10 employees or in establishments exempted from granting this benefit by the Secretary of Labor and Employment after considering the viability or financial condition of such establishment. (Art. 95b) Piece-rate workers being paid at a fixed amount for performing work irrespective of time consumed in the performance thereof fall under one of the exceptions stated in Section 1(d), Rule V, Implementing Regulations, Book III, Labor Code. (Makati Haberdashery Inc. v. NLRC, 1989) II. Entitlement and Arbitration

Right to service incentive leave - Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay. (Art. 95a) The grant of benefit in excess of that provided herein shall not be made a subject of arbitration or any court or administrative action. (Art. 95c) III. Computation and Liability

Under Arts. 107 and 109, the indirect employer is jointly and severally liable with the contractor for the workers wages, in the same manner and extent that it is liable to its direct employees. This liability of the Client covers the payment of the service incentive leave pay of the complainants during the time they were posted at the Cebu Branch of the Client. As service had been rendered, the liability accrued, even if the complainants were eventually transferred or reassigned. The service incentive leave is expressly granted by these pertinent provisions of the Labor Code. (Sentinel Security Agency, Inc. v. NLRC, 1998) It is essential to recorgnize that the service incentive leave is a curious animal in relation to other benefits granted by the law to every employee. In case of SIL, the EE may choose to either use his leave credits or commute it to its monetary equivalent if not exhausted at the end of the year. If the EE does not use or commute the same, he is entitled upon his resignation or separation from work to the commutation of his accrued SIL. (Auto Bus Transport Systems, Inc. v. Bautista, 2005) Paternity Leave RA 8187 Paternity Leave Act of 1995 and Implementing Rules Coverage: Sec. 2

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Notwithstanding any law, rules, and regulations to the contrary, every MARRIED male employee in the private and public sectors shall be entitled to a paternity leave of 7 days with full pay for the first four 7 deliveries of the LEGITIMATE spouse with whom he is cohabiting. The male employee applying for paternity leave shall notify his employer of the pregnancy of his legitimate spouse and the expected date of such delivery. For purposes of this Act, delivery shall include childbirth or any miscarriage. Maternity Leave R.A. No. 8282. Sec. 14-A A female employee who has paid at least 3 monthly contributions in the 12-month period immediately preceding the semester of her childbirth, or miscarriage shall be paid a daily maternity benefit equivalent to one 100% of her average salary credit for 60 days or 78 days in case of caesarean delivery subject to the following conditions: a. That the employee shall have notified her employer of her pregnancy and the probable date of her childbirth which notice shall be transmitted to the SSS in accordance with the rules and regulations it may provide. b. The full payment shall be advanced by the employer within 30 days from the filing of the maternity leave application. c. That payment of daily maternity benefits shall be a bar to the recovery of sickness benefits provided by this Act for the same period for which daily maternity benefits have been received. d. That the maternity benefits provided under this section shall be paid only for the first 4 deliveries or miscarriages. e. That the SSS shall immediately reimburse the employer of one 100% of the amount of maternity benefits advanced to the employee by the employer upon receipt of satisfactory proof of such payment and legality thereof; f. That if an employee should give birth or suffer miscarriage without the required contributions having been remitted for her by her employer to the SSS, or without the latter having been previously notified by the employer of time of the pregnancy, the employer shall pay to the SSS damages equivalent to the benefits which said employee member would otherwise have been entitled to. Vacation and Sick Leave The payment of vacation and sick leave is governed by the policy of the employer or the agreement between the employer and employee. (St. Michael Academy v. NLRC, 1998)

LABOR STANDARDS

PART XII WAGES

WAGES IN GENERAL I. Coverage Employer - includes any person acting directly or indirectly in the interest of an employer in relation to an employee and shall include the government and all its branches, subdivisions and instrumentalities, all government-owned or controlled corporations and institutions, as well as non-profit private institutions, or organizations. (Sec 97(b)) Employee includes any individual employed by an employer. (Sec 97(c)) Employ includes to suffer or permit to work. (Sec 97(e)) This Title shall NOT apply to: 20. farm tenancy or leasehold 21. domestic service, & 22. persons working in their respective homes in needle work or in any cottage industry duly registered in accordance with law. (Sec 98) II. Wage Definition 5. paid to any employee shall mean the remuneration or earnings, however designated, d. capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, e. which is payable by an employer to an employee under a written or unwritten contract of employment f. for work done or to be done, or for services rendered or to be rendered and g. includes the fair and reasonable value, as determined by the Secretary of Labor and Employment, of: 1. board, 2. lodging, or 3.other facilities customarily furnished by the employer to the employee. 4. Fair and reasonable value - shall not include any profit to the employer, or to any person affiliated with the employer.

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

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Discrimination If an ER accords the same position and rank, the presumption is that the EEs perform equal work. Equal work must receive equal pay. (International School Alliance of Educators v. Quisumbing, 2000; Philex Gold Phils., Inc. v. Philex Buawan Supervisors Union, 2005) Facilities and Supplements Supplements - extra remuneration/ special benefits given to or received by the EEs over and above their ordinary earnings or wages. Facilities - items of expense necessary for the laborer's and his family's existence and subsistence, so that by express provision of law they form part of the wage and when furnished by the employer are deductible therefrom, since if they are not furnished, the laborer would spend and pay for them just the same. (States Marine Corp. v. Cebu Seamen's Assoc., Inc., 1963) 2. When an employer customarily furnishes his employee board, lodging or other facilities, the fair and reasonable value thereof, as determined by the Secretary of Labor and Employment, is included in "wage." (Millares v. NLRC, 1999) "Customary" is founded on long-established and constant practice connoting regularity. The receipt of an allowance on a monthly basis does not ipso facto characterize it as regular and forming part of salary because the nature of the grant is a factor worth considering. (Millares v. NLRC, 1999)

LABOR STANDARDS
Gratuity Pay - a money benefit given to the workers whose purpose is to reward employees or laborers, who have rendered satisfactory and efficient service to the company. not intended to pay a worker for actual services rendered. the grant of such benefit is not mandatory so as to be considered a part of labor standard law gratuity pay not based on the actual number of days worked over the period of years forming its basis. (Plastic Town Center Corp. v. NLRC, 1989) PAYMENT OF WAGES I. Form Forms of payment NOT allowed: (ciii) promissory notes, (civ) vouchers, (cv) coupons, (cvi) tokens, (cvii) tickets, (cviii) chits, or (cix) any object other than legal tender (Art 102) Payment by check or money order allowed: when customary on the date of the effectivity of this Code, or necessary because of special circumstances as specified in appropriate regulations or as stipulated in a CBA. (Art 102) Payment through banks; Conditions: written permission of the majority of the EEs/workers concerned 25 or more EEs establishment located within 1 km radius of a commercial, savings or rural bank payment of wages within the period fixed in the LC. (RA 6727, Sec 7) Labor Advisory on Payment of Salaries through Automated Teller Machine (ATM) Based on Article 104, as well as the provisions of Sec. 4, Rule VIII, Book III of the Codes Implementing Rules and considering presentday circumstances, practices and technology, employers may adopt a system of payment other than in the workplace, such as through automated teller machine (ATM) of banks, provided that the following conditions are met: 1. The ATM system of payment is with the written consent of the employees concerned. 2. The employees are given reasonable time to withdraw their wages from the bank facility which time, if done during working hours, shall be considered compensable hours worked. 3. The System shall allow workers to receive their wages within the period or frequency and in the amount prescribed under the Labor Code, as amended. 4. There is a bank or ATM facility within a radius of one kilometer to the place of work 5. Upon request of the concerned employee/s, the employer shall issue a record of payment of wages, benefits and deductions for particular period. 6. There shall be no additional expenses and no dimunition of benefits and privileges as a result of the ATM system of payment 7. The employer shall assume responsibility in case the wage protection provisions of law and regulations are not complied with under the arrangement. Full Payment

3.

Tips 2. It denotes a voluntary act, however it has been said that a tip lacked the essential element of a gift, namely, the free bestowing of a gratuity without consideration, and that it despite its apparent voluntariness, there is an element of compulsion in tipping. (Ace Navigation Co., Inc. v. CA, 2000) Value depends on the giver, and it is given in addition to the compensation given by the ER; cannot be demanded. (Ace Navigation Co., Inc. v. CA, 2000)

3.

Cash Wage/Commissions The words "wages" and "salary" are in essence synonymous, both words generally refer to one and the same meaning, that is, a reward or recompense for services performed. Likewise, "pay" is the synonym of "wages" and "salary". (Songco v. NLRC, 1990) While commissions are incentives to inspire employees to put more industry on the jobs assigned to them, still these commissions are direct remuneration for services rendered. Commissions have been defined as the recompense, compensation or reward of an agent, salesman, executor, trustee, receiver, factor, broker or bailee, when the same is calculated as a percentage on the amount of his transactions or on the profit to the principal. The nature of the work of a salesman and the reason for such type of remuneration for services rendered demonstrate clearly that commissions are part of a salesman's wage or salary. (Iran v. NLRC, 1998)

Wages and Salary Wages - compensation for manual labor, skilled or unskilled, paid at stated times, and measured by the day, week, month, or season. 5. indicates considerable pay for a lower and less responsible character of employment. Salary - denotes a higher degree of employment, or a superior grade of services, and implies a position of office. ii) suggestive of a larger and more important service (Gaa v. CA, 1985) Gratuity and Wages

The law does not consider as valid any agreement whereby a worker agrees to receive less compensation than what he is entitled to recover. A deed of release or quitclaim cannot bar an EE from demanding benefits to which he is legally entitled. (Lopez Sugar Corp. v. Franco, 2005)

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The fact of partial payment does not shift the burden of proof to the EE because partial payment does not extinguish the obligation. (G&M (Phil.), Inc. v. Batomalaque, 2005)

LABOR STANDARDS
6. There shall be no additional expenses and no diminution of benefits and privileges as a result of the ATM system of payment 7. The employer shall assume responsibility in case the wage protection provisions of law and regulations are not complied with under the arrangement. IV. Direct Payment General Rule: Wages shall be paid directly to the workers to whom they are due. Exceptions: 3. Force majeure rendering payment impossible or under other special circumstances to be determined by the SOLE in appropriate regulations - worker may be paid through another person under written authority given by the worker; or 4. Worker has died - ER may pay the wages to the heirs without necessity for intestate proceedings; payment through SOLE or his representative. - Claimants to execute an affidavit attesting to their relationship to the deceased and the fact that they are his heirs. (Sec 105) V. Contractor - Subcontractor In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. (Art 106) PROHIBITION REGARDING WAGES I. Non-interference in Disposal of Wages No employer shall limit or otherwise interfere with the freedom of any employee to dispose of his wages. He shall not in any manner force, compel, or oblige his employees to purchase merchandise, commodities or other property from any other person, or otherwise make use of any store or services of such employer or any other person. (Art 112) II. Wage Deduction General Rule: No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees Exceptions: 1. The worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance; 2. For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in writing by the individual worker concerned; and 3. In cases where the employer is authorized by law or regulations issued by the Secretary of Labor and Employment. (Art 113) It shall be unlawful to make any deduction from the wages of any employee for the benefit of the employer or his representative or intermediary as consideration of a promise of employment or retention in employment. (Art 117) 2. Article 222 Labor Code requires an individual written authorization as a prerequisite to wage deductions seeks to

Payroll Payment Under the IRR, every ER is required to pay his EEs by means of payroll. The payroll should show the EE's rate of pay, deductions made, and the amount actually paid to the EEs. Cash Wage Wages shall be paid only by means of legal tender. The only instance when an employer is permitted to pay wages in forms other than legal tender, that is, by checks or money order, is when the circumstances prescribed in the second paragraph of Article 102 are present. - payment in tuna liver and intestines not allowed (Congson v. NLRC, 1959) II. Time Payment GR: Wages paid at least once every 2 weeks or twice a month at intervals not exceeding 16 days. Exception: Force majeure or circumstances beyond the ER's control ER may pay immediately after such force majeure or circumstances have ceased ER must pay at least once a month (Art 103) Payment of wages of EEs engaged to perform a task which cannot be completed in 2 weeks; Conditions in absence of a CBA or arbitration award: Payments are made at intervals not exceeding 16 days, in proportion to the amount of work completed; Final settlement is made upon completion of work completed. (Art 103) III. Place of Payment Payment of wages shall be made at or near the place of undertaking, EXCEPT as otherwise provided by such regulations as the Secretary of Labor may prescribe under conditions to ensure greater protection of wages. (Art 104) Labor Advisory on Payment of Salaries through Automated Teller Machine (ATM) Based on Article 104, as well as the provisions of Sec. 4, Rule VIII, Book III of the Codes Implementing Rules and considering presentday circumstances, practices and technology, employers may adopt a system of payment other than in the workplace, such as through automated teller machine (ATM) of banks, provided that the following conditions are met: 1. The ATM system of payment is with the written consent of the employees concerned. 2. The employees are given reasonable time to withdraw their wages from the bank facility which time, if done during working hours, shall be considered compensable hours worked. 3. The System shall allow workers to receive their wages within the period or frequency and in the amount prescribed under the Labor Code, as amended. 4. There is a bank or ATM facility within a radius of one kilometer to the place of work 5. Upon request of the concerned employee/s, the employer shall issue a record of payment of wages, benefits and deductions for particular period.

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protect the employee against unwarranted practices that would diminish his compensation without his knowledge and consent. (Radio Communication of the Phil., Inc. v. Sec. of Labor, 1989) Assuming there was a call for payment of the unpaid subscription, the NLRC cannot validly set it off against the wages and other benefits due petitioner. (Apodaca v. NLRC, 1989)

LABOR STANDARDS
the wages of its laborers pursuant to its contract w/ them or their labor union w/o contravening the letter and spirit of article 1708. (Pacific Customs Brokerage, Inc. v. Inter-Island Dockmen and Labor Union, 1951) The exemption in Article 1708 of the New Civil Code operates in favor of those who are laboring men or women in the sense that their work is manual. Persons belonging to this class usually look to the reward of a day's labor for immediate or present support, and such persons are more in need of the exemption than any others. (GAA v. CA, 1985) Record Keeping It shall be unlawful for any person to make any statement, report, or record filed or kept pursuant to the provisions of this Code knowing such statement, report or record to be false in any material respect. (Art 119) Sec 11 of Rule X, Book II, IRR: All employment records of the employees of an employer shall be kept and maintained in or about the premises of the workplace. premises of a workplace - main or branch office or establishment, if any, depending upon where the employees are regularly assigned. The keeping of the employee's records in another place is prohibited. OTHER FORMS OF REMUNERATION I. Service Charges ART. 96. Service charges. - All service charges collected by hotels, restaurants and similar establishments shall be distributed: 85% = all covered employees * equally distributed among EEs 15% = management In case the service charge is abolished, the share of the covered employees shall be considered integrated in their wages. (Art 96) Book III Rule VI Omnibus Rules Coverage only establishments collecting service charges such as hotels, restaurants, lodging houses, night clubs, cocktail lounge, massage clinics, bars, casinos and gambling houses and similar enterprises, including those entities operating primarily as private subsidiaries of the Government. Employees shall apply to all employees of covered covered employers REGARDLESS OF THEIR POSITIONS, DESIGNATIONS OR EMPLOYMENT STATUS, and IRRESPECTIVE OF THE METHOD BY WHICH THEIR WAGES ARE PAID Exception MANAGERIAL EMPLOYEES (defined as one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign, or discipline employees or to effectively recommend such managerial actions.) Distribution 85% - employees to be distributed EQUALLY 15% - management (for the disposition by management to answer for losses and breakages and distribution to managerial employees at the discretion of the management in the latter case) Frequency of shall be distributed and paid to the Distribution employees not less than once every two weeks or twice a month at intervals not exceeding 16 days Permanency of In case the service charge is abolished, the service charges share of covered employees shall be considered integrated in their wages. The

3.

Check-off An employer may be compelled to "check-off" union dues from the wages of his employee when it has been authorized to do so by the employee. This is upon the theory that it is necessary to promote the welfare and integrity of the union to which he belongs. It is a forward step to promote social justice as envisaged by our Constitution. (Manila Trading and Supply Co. v. Manila Trading Labor Association, 1953)

III. Deposit General Rule: No employer shall require his worker to make deposits from which deductions shall be made for the reimbursement of loss of or damage to tools, materials, or equipment supplied by the employer Exception: ER is engaged in such trades, occupations or business where the practice of making deductions or requiring deposits is a recognized one, or is necessary or desirable as determined by the SOLE in appropriate rules and regulations. (Art 114) Deduction from the deposits of an employee for the actual amount of the loss or damage Conditions: EE has been heard thereon, and his responsibility has been clearly shown (Art 115) Five J Taxi v. NLRC, 1994 The article providing the rule on deposits for loss or damage to tools, materials or equipment supplied by the employer does not apply to or permit deposits to defray any deficiency which the taxi driver may incur in the remittance of his "boundary." And when worker stops working for employer, the alleged purpose for the unauthorized deposits no longer exists. In other case, any balance due to private respondents after proper accounting must be returned to them with legal interest. IV. Withholding of Wages & Record Keeping It shall be unlawful for any person, directly or indirectly, to: withhold any amount from the wages of a worker or induce him to give up any part of his wages by force, stealth, intimidation, threat or by any other means whatsoever without the workers consent. (Art 116) Garnishment or Attachment What EE ha worked for, his ER must pay. Thus, an ER cannot simply refuse to pay the wages or benefits of its EEs because he has either defaulted in paying a loan guaranteed by the ER, or violated their memorandum of agreement, or failed to render an accounting of his ER's property. (Special Steel Corp. v. Villareal, 2004) Art 1708 NCC: "laborers' wages shall not be subject to execution or attachment, except for debts incurred for food, shelter, clothing and medical attendance". Writ of garnishment issued by CFI, while purporting to include all moneys and properties of the employing company, cannot affect what the co. has in its possession to pay

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basis of the amount to be integrated shall be the average monthly share of each employee for the past 12 months immediately preceding the abolition or withdrawals of such charges Nothing in this rule shall prevent the employer and his employees from entering into any agreement with terms more favorable to the employees than those provided herein, or be used to diminish any benefit granted to the employees under existing laws, agreement and voluntary employer practice.

LABOR STANDARDS
computation of the 13th month pay shall include the cost of living allowances (COLA) integrated into the basic salary of a covered employee pursuant to EO 178. Basic salary include all remunerations or earning paid by this employer for services rendered does not include allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary, such as the cash equivalent of: unused vacation and sick leave credits, overtime, premium, night differential and holiday pay and cost-of-living allowances. salary-related benefits included if by individual or collective agreement, company practice or policy, the same are treated as part of the basic salary of the employees. Time of payment

Relation to agreements

Service charges collected during the period of his preventive suspension: forms part of his earnings; EE entitled not only to full backwages but also to other benefits, including a just share in the service charges, to be computed from the start of his preventive suspension until his reinstatement. (Maranaw Hotels, etc. v. NLRC, 1999) II. Thirteenth Month Pay Coverage Revised Guidelines on the implementation of the 13th Month pay Removal of the Salary Ceiling (Aug 13, 1986, Pres. Aquino's Memo Order No. 28) General Rule: ALL EMPLOYERS are hereby required to pay all their rank and file employees a 13th month pay not later than December

Paid not later than December 24 of each year. Exception: An employer, however, may give to his employees of the required 13th Month Pay before the opening of the regular school year and the other half on or before the 24th of December every year. The frequency of payment of this monetary benefit may be the subject of agreement between the employer and the recognized CBA of the employees. 13th Month Pay for Certain Type of Employees Paid by Results Employees who are paid on piece work basis are by law entitled to the 13th Month Pay Employees who are paid a fixed or guaranteed wage plus commission are entitled to 13th month pay basis: both their fixed or guaranteed wage and commission. Those with Multiple Employers Government employees working part time in a private enterprise, including private educational institutions, as well as employees working in two or more private firms, whether on full or part time bases, are entitled to the required 13th Month Pay from all their private employers regardless of their total earnings from each or all their employers. Private School Teachers Private school teachers, including faculty members of universities and colleges, are entitled to the required 13th month pay, regardless of the number of months they teach or are paid within a year, if they have rendered service for at least one (1) month within a year. Resigned or Separated Employee An employee who has resigned or whose services were terminated at any time before the time for payment of the 13th month pay is entitled to this monetary benefit in proportion to the length of time he worked during the year, reckoned from the time he started working during the calendar year up to the time of his resignation or termination from service. Manner of Wage Payment

24 of every year, provided that they have worked for at least one (1) month during a calendar year. Exempted EMPLOYERS The Government and any of its political subdivisions, including government-owned and controlled corporations, except those corporations operating essentially as private subsidiaries of the Government; Employers already paying their employees a 13th month

pay or more in a calendar year or its equivalent at the time of this issuance; ITS EQUIVALENT : includes Christmas bonus, mid-year bonus, cash bonuses and other payments amounting to not less than 1/12 of the basic salary but shall NOT INCLUDE cash and stock dividends, cost of living allowances and all other allowances regularly enjoyed by the employee as well a non-monetary benefits. 3. Employers of household helpers and persons in the personal service of another relation to such workers and; 4. Employers of those who are paid on purely commission, boundary or task basis and those who are paid a fixed amount for performing specific work, except where the workers are paid on piece-rate basis in which case the employer shall grant the required 13th month pay to such workers.

Workers paid on a piece rate basis: those who are paid a standard amount for every piece or unit of work produced that is more or less regularly replicated, without regard to the time spent in producing the same. Amount and Date of Payment

Minimum Amount minimum 13th month = not be less than 1/12 of the total basic salary earned by an employee within a calendar year for the year 1987

PD 851, as amended by Memorandum Order No. 28, provides that employees are entitled to the thirteenth-month pay benefit

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regardless of their designation and irrespective of the method by which their wages are paid. (Jackson Building v. NLRC, 1995)

LABOR STANDARDS
the term "basic salary" for purposes of computing their 13th month pay. Commissions are considered part of wages. While commissions are, indeed, incentives or forms of encouragement to inspire employees to put a little more industry on the jobs particularly assigned to them, still these commissions are direct remunerations for services rendered. (Iran v. NLRC, 1998) 1/12 of standard monthly wage x length of service = basic salary (Honda Phils. Inc. v. Samahan ng Malayang Manggagawa sa Honda, 2005) Substitute Payment Under Section 3 of PD No. 851, such benefits in the form of food or free electricity, assuming they were given, were not a proper substitute for the 13th month pay required by law. Neither may year-end rewards for loyalty and service be considered in lieu of 13th month pay.(Framanlis Farms, Inc. v. MOLE, 1989) 14th Month Pay There is no law that mandates the payment of the 14th month pay. This is emphasized in the grant of exemption under Presidential Decree 851 (13th Month Pay Law) which states: "Employers already paying their employees a 13th month pay or its equivalent are not covered by this Decree." Necessarily then, only the 13th month pay is mandated. (Kamaya Port Hotel v. NLRC, 1989) III. Bonus Management Function The grant of a bonus is a prerogative, not an obligation, of the employer (Traders Royal Bank vs. NLRC). The matter of giving a bonus over and above the worker's lawful salaries and allowances is entirely dependent on the financial capability of the employer to give it. (Businessday Information Systems and Services, Inc. v. NLRC, 1993) Nature of Bonus When Demandable

Wage Difference The difference between the minimum wage and the actual salary received by the EE cannot be deemed as his 13th month pay as such difference is not equivalent to or of the same import as the said benefit contemplated by law. (JPL Marketing Promotions v. CA, 2005) Househelpers Ultra Villa Food House v. Geniston, 1999 The Revised Guidelines on the Implementation of the 13th Month Pay Law also excludes employers of household helpers from the coverage of Presidential Decree No. 851. Nevertheless, would be ust to award private respondent 13th month pay in view of petitioner's practice of according private respondent such benefit. Indeed, petitioner admitted that she gave private respondent 13th month pay every December. Government Employees An analysis of the "whereases" of PD No. 851 shows that the President had in mind only workers in private employment when he issued the decree. There was no intention to cover persons working in the government service. (Alliance of Government Workers v. NLRC, 1995) Terminated Employees The payment of the 13th month pay may be demanded by the employee upon the cessation of employer-employee relationship. This is consistent with the principle of equity that as the employer can require the employee to clear himself of all liabilities and property accountability, so can the employee demand the payment of all benefits due him upon the termination of the relationship. (Archilles Manufacturing Corp. v. NLRC, 1995) Rationale of Whereas Clauses and Limitations of PD 851

It is necessary to further protect the level of real wages from the ravage of world-wide inflation; There has been no increase in the legal minimum wage rates since 1970; The Christmas season is an opportune time for society to show its concern for the plight of the working masses so they may properly celebrate Christmas and New Year.

When part of the salary or wage When there is a contractual agreement promising to pay such When it is established company practice

Basic Wage or Commissions In remunerative schemes consisting of a fixed or guaranteed wage plus commission, the fixed or guaranteed wage is patently the "basic salary" for this is what the employee receives for a standard work period. Commissions are given for extra efforts exerted in consummating sales or other related transactions. They are, as such, additional pay, which this Court has made clear do not form part of the "basic salary." (Boie Takeda v. Dela Serna, 1993) Philippine Duplicators Inc v. NLRC, 1995 The sales commissions received for every duplicating machine sold constituted part of the basic compensation or remuneration of the salesmen of Philippine Duplicators for doing their job. The portion of the salary structure representing commissions simply comprised an automatic increment to the monetary value initially assigned to each unit of work rendered by a salesman. The sales commissions were an integral part of the basic salary structure of Philippine Duplicators' employees salesmen. These commissions are not overtime payments, nor profit-sharing payments nor any other fringe benefit. Thus, the salesmen's commissions, comprising a pre-determined percent of the selling price of the goods sold by each salesman, were properly included in

Bonus becomes demandable so when it is made a part of the wage or salary or compensation. In such a case the latter would be a fixed amount and the former would be a contingent one dependent upon the realization of profits. If there be none, there would be no bonus. (Luzon Stevedoring Corporation v. CIR, 1965) If one enters into a contract of employment under an agreement that he shall be paid a certain salary by the week or some other stated period and, in addition, a bonus, in case he serves for a specified length of time, there is no reason for refusing to enforce the promise to pay the bonus, if the employee has served during the stipulated time, on the ground that it was a promise of a mere gratuity. (Marcos v. NLRC, 1995) A bonus may be considered demandable based on equitable considerations as when the giving of such bonus has been the company's long and regular practice. To be considered a "regular practice," the giving of the bonus should have been done over a long period of time, and must be shown to have been consistent and deliberate. (Manila Electric Co. v. Quisumbing, 1999)

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IV. Productivity Incentives Act of 1990 (RA 6971) POLICY (2) 23. To encourage higher levels of productivity, maintain industrial peace and harmony and promote the principle of shared responsibility in the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of business enterprises to reasonable returns of investments and to expansion and growth, and accordingly to provide corresponding incentives to both labor and capital for undertaking voluntary programs to ensure greater sharing by the workers in the fruits of their labor COVERAGE (3) 24. Applies to all business enterprises with or without existing and duly recognized or certified labor organizations, including government-owned and controlled corporations performing proprietary functions 25. It shall cover all employees and workers including casual, regular, supervisory and managerial employees. DEFINITION (4) Business Enterprise: industrial, agricultural, or agro-industrial establishments engaged in the production manufacturing, processing, repacking, or assembly of goods, including serviceoriented enterprises, duly certified as such by appropriate government agencies. Labor-management Committee: a negotiating body in a business enterprise composed of the representatives of labor and management created to establish a productivity incentives program, and to settle disputes arising therefrom in accordance with Section 9 hereof. Productivity Incentives Program: a formal agreement established by the labor-management committee containing a process that will promote gainful employment, improve working conditions and result in increased productivity, including cost savings, whereby the employees are granted salary bonuses proportionate to increases in current productivity over the average for the preceding three (3) consecutive years. The agreement shall be ratified by at least a majority of the employees who have rendered at least six (6) months of continuous service. LABOR MANAGEMENT COMMITTEE (5) a. A business enterprise or its employees, through their authorized representatives, may initiate the formation of a labor-management committee that shall be composed of an equal number of representatives from the management and from the rank-and-file employees: Provided, That both management and labor shall have equal voting rights: Provided, further, That at the request of any party to the negotiation, the National Wages and Productivity Commission of the Department of Labor and Employment shall provide the necessary studies, technical information and assistance, and expert advice to enable the parties to conclude productivity agreements. b. In business enterprises with duly recognized or certified labor organizations, the representatives of labor shall be those designated by the collective bargaining agent(s) of the bargaining unit(s). c. In business enterprises without duly recognized or certified labor organizations, the representatives of labor shall be elected by at least a majority of all rank-and-file employees who have rendered at least six (6) months of continuous service. PRODUCTIVITY INCENTIVES PROGRAM (6) a. The productivity incentives program shall contain provisions for the manner of sharing and the factors in determining productivity bonuses: Provided, That the productivity bonuses granted to labor under this program shall not be less than half of the percentage increase in the productivity of the business enterprise.

LABOR STANDARDS
b. Productivity agreements reached by the parties as provided in this Act supplement existing collective bargaining agreements. c. If, during the existence of the productivity incentives program or agreement, the employees will join or form a union, such program or agreement may, in addition to the terms and conditions agreed upon by labor and management, be integrated in the collective bargaining agreement that may be entered into between them. BENEFITS AND TAX INCENTIVES (7) a. Subject to the provisions of Section 6 hereof, a business enterprise which adopts a productivity incentives program, duly and mutually agreed upon by the parties to the labormanagement committee, shall be granted a special deduction from gross income equivalent to 50% of the total productivity bonuses given to employees under the program over and above the total allowable ordinary and necessary business deductions for said bonuses under the National Internal Revenue Code, as amended. b. Grants for manpower training and special duties given to rank-and-file employees pursuant to a program prepared by the labor-management committee for the development of skills identified as necessary by the appropriate government agencies shall also entitle the business enterprise to a special deduction from gross income equivalent to 50% of the total grants over and above the allowable ordinary and necessary business deductions for said grants under the National Internal Revenue Code, as amended. c. Any strike or lockout arising from any violation of the productivity incentives program shall suspend the effectivity thereof pending settlement of such strike or lockout: Provided, That the business enterprise shall not be deemed to have forfeited any tax incentives accrued prior to the date of occurrence of such strike or lockout, and the workers shall not be required to reimburse the productivity bonuses already granted to them under the productivity incentives program. Likewise, bonuses which have already accrued before the strike or lockout shall be paid the workers within six (6) months from their accrual. d. Bonuses provided for under the productivity incentives program shall be given to the employees not later than every six (6) months from the start of such program over and above existing bonuses granted by the business enterprise and by law: Provided, That the said bonuses shall not be deemed as salary increases due the employees and workers. e. The special deductions from gross income provided for herein shall be allowed starting the next taxable year after the effectivity of this Act. NOTIFICATION (8) A business enterprise which adopts a productivity incentives program shall submit copies of the same to the National Wages and Productivity Commission and to the Bureau of Internal Revenue for their information and record. DISPUTES AND GRIEVANCES (9) Whenever disputes, grievances, or other matters arise from the interpretation or implementation of the productivity incentives program, the labor-management committee shall meet to resolve the dispute, and may seek assistance of the National Conciliation and Mediation Board of the Department of Labor and Employment for such purpose. Any dispute which remains unresolved within 20 days from the time of its submission to the labor-management committee shall be submitted for voluntary arbitration in line with the pertinent provisions of the Labor Code, as amended. The productivity incentives program shall include the name(s) of the voluntary arbitrator or panel of voluntary arbitrators previously chosen and agreed upon by the labor-management committee. NON-DIMUNITION OF BENEFITS (12) Nothing in this Act shall be construed to diminish or reduce any benefits and other privileges enjoyed by the workers under existing laws, decrees, executive orders, company policy or practice, or any agreement or contract between the employer and employees.

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Wage Recovery, Liabilities, and Worker Preference I. Liability of Employer and Other Parties In the event that the contractor or sub-contractor fails to pay wages of employees in accordance with this Code, the employer shall be JOINTLY AND SEVERALLY liable with his contractor or sub-contractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. (Art 106) In labor-only contracting, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner an extent as if the latter were directly employed by him. (Art 106) Art. 107 Indirect employer - The provisions of the immediately preceding article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. The joint and several liability of the contractor and the principal is mandated by the Labor Code to assure compliance with the provisions therein including the minimum wage. The contractor is made liable by virtue of his status as direct employer. The principal, on the other hand, is made the indirect employer of the contractors employees to secure payment of their wages should the contractor be unable to pay them. Even in the absence of an employer-employee relationship, the law itself establishes one between the principal and the employees of the agency for a limited purpose i.e. in order to ensure that the employees are paid the wages due them. In the above-mentioned cases, the solidary liability of the principal and contractor was held to apply to the aforementioned Wage Order Nos. 5 and 6. (Lapanday Agricultural Development Corporation v. Court of Appeals, 2000) II. Worker Preference Bankruptcy Art. 110 Labor Code In the event of bankruptcy or liquidation of an employer's business, his workers shall enjoy first preference as regards their wages and other monetary claims, any provision of law to the contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in full before the claims of the Government and other creditors may be paid. (As amended by R. A. 6715) Art. 1707, Civil Code The laborer's wages shall be a lien on the goods manufactured or the work done. Art. 2241, Civil Code With reference to specific movable property of the debtor, the following claims or liens shall be preferred: 6. Claims for laborers' wages, on the goods manufactured or the work done; Art. 2242, Civil Code With reference to specific immovable property and real rights of the debtor, the following claims, mortgages and liens shall be preferred, and shall constitute an encumbrance on the immovable or real right: 3. Claims of laborers, masons, mechanics and other workmen, as well as of architects, engineers and contractors, engaged in the construction, reconstruction or repair of buildings, canals or other works, upon said buildings, canals or other works; Art. 2244, Civil Code With reference to other property, real and personal, of the debtor, the following claims or credits shall be preferred in the order named: 4. Compensation due the laborers or their dependents under laws providing for indemnity for damages in cases of labor

LABOR STANDARDS
accident, or illness resulting from the nature of the employment; Republic v. Peralta (87) We believe and so hold that Article 110 of the Labor Code did not sweep away the overriding preference accorded under the scheme of the Civil Code to tax claims of the government or any subdivision thereof which constitute a lien upon properties of the Insolvent. It is frequently said that taxes are the very lifeblood of government. The effective collection of taxes is a task of highest importance for the sovereign. It is critical indeed for its own survival. It follows that language of a much higher degree of specificity than that exhibited in Article 110 of the Labor Code is necessary to set aside the intent and purpose of the legislator that shines through the precisely crafted provisions of the Civil Code. It cannot be assumed simpliciter that the legislative authority, by using in Article 110 the words "first preference" and "any provision of law to the contrary notwithstanding" intended to disrupt the elaborate and symmetrical structure set up in the Civil Code. Neither can it be assumed casually that Article 110 intended to subsume the sovereign itself within the term "other creditors" in stating that "unpaid wages shall be paid in full before other creditors may establish any claim to a share in the assets of employer." Insistent considerations of public policy prevent us from giving to "other creditors" a linguistically unlimited scope that would embrace the universe of creditors save only unpaid employees. We, however, do not believe that Article 110 has had no impact at all upon the provisions of the Civil Code. Bearing in mind the overriding precedence given to taxes, duties and fees by the Civil Code and the fact that the Labor Code does not impress any lien on the property of an employer, the use of the phrase "first preference" in Article 110 indicates that what Article 110 intended to modify is the order of preference found in Article 2244, which order relates, as we have seen, to property of the Insolvent that is not burdened with the liens or encumbrances created or recognized by Articles 2241 and 2242. We have noted that Article 2244, number 2, establishes second priority for claims for wages for services rendered by employees or laborers of the Insolvent "for one year preceding the commencement of the proceedings in insolvency." Article 110 of the Labor Code establishes "first preference" for services rendered "during the period prior to the bankruptcy or liquidation," a period not limited to the year immediately prior to the bankruptcy or liquidation. Thus, very substantial effect may be given to the provisions of Article 110 without grievously distorting the framework established in the Civil Code by holding, as we so hold, that Article 110 of the Labor Code has modified Article 2244 of the Civil Code in two respects: (a) firstly, by removing the one year limitation found in Article 2244, number 2; and (b) secondly, by moving up claims for unpaid wages of laborers or workers of the Insolvent from second priority to first priority in the order of preference established by Article 2244. Phil. Export etc. v. Court of Appeals (95) A final observation On 21 March 1989, Article 110 of the Labor Code was amended by Republic Act No. 6715 so as to read: "Article 110. Worker preference in case of bankruptcy In the event of bankruptcy or liquidation of an employer's business, his workers shall enjoy first preference as regards their wages and other monetary claims, any provisions of law to the contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in full before claims of the Government and other creditors may be paid." Since then, the Court has had a number of occasions to rule on the effects of the amendment. In Development Bank of the Philippines vs. National Labor Relations Commission, the Court has said: "The amendment expands worker preference to cover not only unpaid wages but also other monetary claims to which even claims of the Government must be deemed subordinate. xxx "Notably, the terms 'declaration' of bankruptcy or 'judicial' liquidation have been eliminated. Does this mean then that liquidation proceedings have been done away with?

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"We opine in the negative, upon the following considerations: "1. Because of its impact on the entire system of credit, Article 110 of the Labor Code cannot be viewed in isolation but must be read in relation to the Civil Code scheme on classification and preference of credits. "2. In the same way that the Civil Code provisions on classification of credits and the Insolvency Law have been brought into harmony, so also must the kindred provisions of the Labor Law be made to harmonize with those laws. "3. In the event of insolvency, a principal objective should be to effect an equitable distribution of the insolvent's property among his creditors. To accomplish this there must first be some proceeding where notice to all of the insolvent's creditors may be given and where the claims of preferred creditors may be bindingly adjudicated (De Barretto vs. Villanueva). "4. A distinction should be made between a preference of credit and a lien. A preference applies only to claims which do not attach to specific properties. A lien creates a charge on a particular property. The right of first preference as regards unpaid wages recognized by Article 110 does not constitute a lien on the property of the insolvent debtor in favor of workers. It is but a preference of credit in their favor, a preference in application. It is a method adopted to determine and specify the order in which credits should be paid in the final distribution of the proceeds of the insolvent's assets. It is a right to a first preference in the discharge of the funds of the judgment debtor. "In fine, the right to preference given to workers under Article 110 of the Labor Code cannot exist in any effective way prior to the time of its presentation in distribution proceedings. It will find application when, in proceedings such as insolvency such unpaid wages shall be paid in full before the claims of the Government and other creditors' may be paid. But, for an orderly settlement of a debtor's assets, all creditors must be convened, their claims ascertained and inventoried, and thereafter the preferences determined in the course of judicial proceedings which have for their object the subjection of the property of the debtor to the payment of his debts or other lawful obligations. Thereby, an orderly determination of preference of creditors' claims is assured (Philippine Savings Bank vs. Lantin); the adjudication made will be binding on all parties-ininterest, since those proceedings are proceedings in rem; and the legal scheme of classification, concurrence and preference of credits in the Civil Code, the Insolvency Law, and the Labor Code is preserved in harmony." Receivership
The law (PD 902-A) is clear: upon the creation of a management committee or the appointment of a rehabilitation receiver, all claims for actions "shall be suspended accordingly." No exception in favor of labor claims is mentioned in the law. Since the law makes no distinction or exemptions, neither should this Court. Ubi lex non distinguit nec nos distinguere debemos. Allowing labor cases to proceed clearly defeats the purpose of the automatic stays and severally encumbers the management committee's and resources. (Rubberworld (Phils.), Inc. v. NLRC, 1999)

LABOR STANDARDS
Art. 111. Attorney's fees a. In cases of unlawful withholding of wages, the culpable party may be assessed attorney's fees equivalent to 10 % of the amount of wages recovered. b. It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the recovery of the wages, attorneys fees, which exceed 10% of the amount of wages recovered.

PART XIII Minimum Wages

I. Wages and the Constitution Art XIII Sec 3, 1987 Constitution guarantees the right the the EE to a living wage. The law guarantees the laborer fair and just wage. The minimum wage can by no means imply only the actual minimum. Some margin or leeway must be provided, over and above the minimum, to take care of contingencies, such as increase of prices of commodities and increase in wants, and provide means for a desirable improvement in his mode of living. (Atok Big Wedge Mining Co., Inc. v. Atok Big Wedge Mutual Benefit Assoc., 1953) Beneficiaries The establishment of the maximum wage benefits directly the lowpaid employees, who now receive inadequate wages on which to support themselves and their families. It benefits all wage earners indirectly by setting a floor below which their remuneration cannot fail. It raises the standards of competition among employers, since it would protect the fair-minded employer who voluntarily pays a wage that supports the wage earner from the competition of the employer, who operates at lower cost by reasons of paying his workers a wage below subsistence. (People v. Gatchalian, 1959)

II. Agencies for Wage-Fixing Machinery A. National Wages and Productivity Commission Created thru Art. 120 26. attached to the DOLE for policy and program coordination. Powers and Functions of the Commission (Art. 121) a. To act as the national consultative and advisory body to the President of the Philippines and Congress on matters relating to wages, incomes and productivity; b. To formulate policies and guidelines on wages, incomes and productivity improvement at the enterprise, industry and national levels; c. To prescribe rules and guidelines for the determination of appropriate minimum wage and productivity measures at the regional, provincial or industry levels; d. To review regional wage levels set by the Regional Tripartite Wages and Productivity Boards to determine if these are in accordance with prescribed guidelines and national development plans; e. To undertake studies, researches and surveys necessary for the attainment of its functions and objectives, and to collect and compile data and periodically disseminate information on wages and productivity and other related information, including, but not limited to, employment, cost-of-living, labor costs, investments and returns;

III. Wage Recovery and Attorney's Fees Art. 128. Visitorial and enforcement powers Art. 129. Recovery of wages, simple money claims and other benefits In connection with Art. 217. ; Jurisdiction of Labor Arbiters and the Commission

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f. To review plans and programs of the Regional Tripartite Wages and Productivity Boards to determine whether these are consistent with national development plans; g. To exercise technical and administrative supervision over the Regional Tripartite Wages and Productivity Boards; h. To call, from time to time, a national tripartite conference of representatives of government, workers, and employers for the consideration of measures to promote wage rationalization and productivity; and i. To exercise such powers and functions as may be necessary to implement this Act. Composition of the Commission: 27. Secretary of Labor and Employment as ex-officio chairman 28. Director-General of the NEDA as ex-officio vice-chairman 29. 2 members each from workers and employer sectors who shall be appointed by the President upon recommendation of the Secretary of Labor 30. to be made on the basis of the list of nominees submitted by the workers & employers sectors, respectively, and 31. who shall serve for a term of 5 years. Note: members of the Commission representing labor and management shall have the same rank, emoluments & other benefits as those prescribed by law for labor and mgt reps in the ECC The Executive Director of the Commission Secretariat shall also be a member of the Commission. The Commission shall be assisted by a Secretariat composed of 1. Executive Director(as head) - same rank/salary/benefits as a Dept Asst. Secretary 2. Deputy Directors, appointed by the Pres. upon recom. of the SOLE - same rank, salary, benefits and other emoluments as that of a Bureau Director. Prohibition against Injunction (Art. 126) No preliminary or permanent injunction or temporary restraining order may be issued by any COURT, TRIBUNAL OR OTHER ENTITY against any proceedings before the Commission or the Regional Boards. B. Regional tripartite Wages and Productivity Board Created thru Art. 122 32. referred to as Regional Boards in all regions, including autonomous regions as may be established by law. 33. The Commission shall determine offices/headquarters of the respective Regional Boards. Powers and Functions in their respective territorial jurisdiction (Art. 122) a. To develop plans, programs and projects relative to wages, incomes and productivity improvement for their respective regions; 34. to be implemented thru the respective regional offices of the DOLE within their territorial jurisdiction 35. Regional Boards shall have technical supervision over the regional office of the DOLE with respect to the implementation of said plans, programs and projects. b. To determine and fix minimum wage rates applicable in their respective regions, provinces or industries therein and to issue the corresponding wage orders, subject to guidelines issued by the Commission; c. To undertake studies, researches, and surveys necessary for the attainment of their functions, objectives and programs and to collect and compile data on wages, incomes, productivity and other related information and periodically disseminate the same; d. To coordinate with the other Regional Boards as may be necessary to attain the policy and intention of this Code;

LABOR STANDARDS
e. To receive, process and act on applications for exemption from prescribed wage rates as may be provided by law or any Wage Order; and f. To exercise such other powers and functions as may be necessary to carry out their mandate under this Code. Composition of each Regional Board : 36. Regional Director of DOLE as chairman 37. Regional Directors of NEDA & DTI as vice-chairman 38. 2 members each from workers and employers sectors who shall be appointed by the President upon recommendation of the SOLE to be made on the basis of the list of nominees submitted by the workers and employers sectors, respectively, and who shall serve for a term of 5 years. Each Regional Board to be headed by its chairman shall be assisted by a Secretariat. (As amended by RA 6727) Functions NWPC lays down the guidelines which the RTWPB implements. (Nasipit Lumber Co. v. NLRC, 1998)

III. Area of Minimum Wages and Criteria STANDARDS/CRITERIA FOR MINIMUM WAGE FIXING (ART. 124): 39. The regional minimum wage to be established by the Regional Board shall be as nearly adequate as is economically feasible to maintain the minimum standards of living necessary for the health, efficiency and general well-being of the employees within the framework of the national economic and social development program. 40. Factors in determining regional minimum wages: a. The demand for living wages; b. Wage adjustment vis-a-vis the consumer price index; c. The cost of living and changes or increases therein; d. The needs of workers and their families; e. The need to induce industries to invest in the countryside; f. Improvements in standards of living; g. The prevailing wage levels; h. Fair return of the capital invested and capacity to pay of employers; i. Effects in employment generation and family income; and j. The equitable distribution of income and wealth along the imperatives of economic and social development. 41. The wages prescribed in accordance with the provisions of this Title shall be the standard prevailing minimum wages in every region. These wages shall include wages varying with industries, provinces or localities if in the judgment of the Regional Board conditions make such local differentiation proper and necessary to effectuate the purpose of this Title. 42. Any person, company, corporation , partnership or any other entity engaged in business shall file and register annually with the appropriate Regional Board, Commission and the National Statistics Office an itemized listing of their labor component specifying the names of their workers and employees below the managerial level, including learners, apprentices and disabled/handicapped workers who were hired under the terms prescribed in the employment contracts, and their corresponding salaries and wages. 43. WAGE DISTORTION 44. Where the application of any prescribed wage increase by virtue of a law or wage order issued by any regional board results in distortions of wage structure within an establishment, the employer and the union shall negotiate to correct the distortions. 45. Any dispute arising from wage distortions shall be resolved through the grievance procedure under their collective bargaining agreement and, if it

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remains unresolved, through voluntary arbitration. 46. Unless otherwise agreed by the parties in writing, such dispute shall be decided by the voluntary arbitrator or panel of voluntary arbitrators within 10 calendar days from the time said dispute was referred to voluntary arbitration. 47. In cases where there are no collective bargaining agreements or recognized labor unions, the employers and workers shall endeavor to correct such distortions. 48. Any dispute arising therefrom shall be settled through the National Conciliation and Mediation Board and, if it remains unresolved after 10 calendar days of conciliation, shall be referred to the appropriate branch of the National Labor Relations Commission (NLRC). 49. It shall be mandatory for the NLRC to conduct continuous hearings and decide the dispute within 20 calendar days from the time said dispute is submitted for compulsory arbitration 50. The pendency of a dispute arising from a wage distortion shall not delay the applicability of any increase in prescribed wage rates pursuant to provisions of law or wage order. 51. Wage distortion - a situation where an increase in prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation. 52. All workers paid by result, including those who are paid on piecework, takay, pakyaw, or task basis, shall receive not less than the prescribed wage rates per eight 8 hours of work a day, or a proportion thereof for working less than 8 hrs. 53. All recognized learnership and apprenticeship agreements shall be considered automatically modified insofar as their wage clauses are concerned to reflect the prescribed wage rates. 10.04 WAGE ORDER Art. 123 54. Whenever the conditions so warrant, the Regional Board shall investigate and study all pertinent facts; and based on the standard and criteria herein prescribed, shall proceed to determine whether a Wage Order should be issued. 55. Any such wage order shall take effect after 15 days from its complete publication in at least 1 newspaper of general circulation in the region. 56. In the performance of its wage-determination functions, the Regional Board shall conduct public hearings/consultations, giving notices to employees & employers' groups, provincial, city and municipal officials and other interested parties. 57. Any party aggrieved by the Wage Order issued by the Regional Board may appeal to the Commission within 10 days from the publication of such order. It shall be mandatory for the Commission to decide such appeal within 60 days from the filing thereof. 58. The filing of appeal does not stay the order unless the person appealing shall file with the Commission, an undertaking with a surety or sureties for the payment to the employees affected by the order of the corresponding increase, in the event such order is affirmed. (As amended by RA 6727) Methods of Fixing MINIMUM WAGE FIXING

LABOR STANDARDS

Agencies: 1. NWPC a. Prescribe rules, guidelines for the determination of appropriate minimum wage and what factors should be considered b. Review Regular wage levels set by RTWPB if they are in accordance to prescribed guidelines c. REMEMBER, NWPC does not set the minimum wage. 2. RTWPB a. Determine and fix the minimum wage rates applicable to the region, provinces, industries b. Issue the corresponding wage order subject to guidelines issued by the NWPC NOTES: 59. Composition TRIPARTITE: Employer, employee and government 60. Functions are delineated Procedure: RTWPB 61. When conditions warrant, investigate and study pertinent facts, based criteria (Art. 124) 62. Conduct public hearings/consultations, notice to employer and employees groups, provinces, city, municipal officials and other interested parties 63. Decide to ISSUE or NOT TO ISSUE a wage order 64. If it decides to ISSUE a wage order, the wage order takes effect after 15 days from complete publication in at least 1 newspaper of general circulation in the region 65. Appeal wage order to NWPC within 10 calendar days; mandatory for the NWPC to decide within 60 calendar days from filing 66. Filing of an appeal DOES NOT STAY order unless appellant filed an undertaking with surety, sureties, guarantees payment of employees if the wage order is affirmed

The Act is meant to rationalize wages, that is, by having permanent boards to decide wages rather than leaving wage determination to Congress year after year and law after law. The Court is not of course saying that the Act is an effort of Congress to pass the buck, or worse, to abdicate its duty, but simply, to leave the question of wages to the expertise of experts. (Employers Confederation of the Philippines v. NWPC, 1991) Requirements for Validity Regional Board shall conduct public hearings and consultations, giving notices to interested parties The Wage Order shall take effect only after publication in a newspaper of general circulation in the region. (Cagayan Sugar Miling Co. v. Secretary, 1998) Piece Worker In the absence of wage rates based on time and motion studies determined by the labor secretary or submitted by the employer to the labor secretary for his approval, wage rates of piece-rate workers must be based on the applicable daily minimum wage determined by the Regional Tripartite Wages and Productivity Commission. (Pulp and Paper, Inc. v. NLRC, 1997) The term wage is broadly defined in Art. 97 of the Labor Code as remuneration or earnings, capable of being expressed in terms of

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money whether fixed or ascertained on a time, task, piece or commission basis. (Lambo v. NLRC, 1999) Wage Distortion Wage Distortion - a situation where an increase in prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation. 1. Cause: implementation of a wage order increase prescribe minimum wage rate 2. Result: 67. Elimination OR severe contraction of intentional quantitative wages/salary rates between or among employees 68. Effectively obliterates distinctions on wage structure which was based on skills, length of service or other logical differences. 3. Procedure for Settlement a. Organized Establishment 1. CBA Grievance Procedure 2. Voluntary Arbitration b. Unorganized Establishment 1. Employer and employee, with aid of National Conciliation Mediation Board (NCMB) settles conciliation mediation 2. NLRC Compulsory Arbitration NOTES: 69. Both the employer and employee cannot use economic weapons (Employer cannot declare a lock-out; Employee cannot declare a strike) because the law has provided for a procedure for settling 70. Cases say that: 1. Parties are encouraged to settle the dispute voluntarily 2. Neither party can use economic weapons 3. Original decree of differential need not be restored 4. NLRC has no authority to impose directly or indirectly under guise of rectifying a wage distortion upon the employer a new scheme of classification

LABOR STANDARDS
(Prubankers Assn. v. Prudential Bank and Co. (99) Effect of Benefits Art. 100 Prohibition against elimination or diminution of benefits Nothing in this Book shall be construed to eliminate or in any way diminish supplements or other employee benefits being enjoyed at the time of the promulgation of this Code. Prubankers Assn. v. Prudential Bank and Co. (99) Petitioner also insists that the Bank has adopted a uniform wage policy, which has attained the status of an established management practice; thus, it is estopped from implementing a wage order for a specific region only. We are not persuaded. Said nationwide uniform wage policy of the Bank had been adopted prior to the enactment of RA 6727. After the passage of said law, the Bank was mandated to regionalize its wage structure. Although the Bank implemented Wage Order Nos. NCR-01 and NCR-02 nationwide instead of regionally even after the effectivity of RA 6727, the Bank at the time was still uncertain about how to follow the new law. In any event, that single instance cannot be constitutive of "management practice."

Night shift differential on a normal day (10pm-6am) Overtime on normal day

Work on any regular holiday, not exceeding 8 hours Work on any regular holiday which falls on the scheduled rest day, not exceeding 8 hours Overtime on a regular holiday Overtime on a regular holiday which falls on the scheduled rest day

110% (Additional 10% of the regular daily wage) 125% (At least an additional 25% of regular daily wage) per hour 200% of regular daily wage 230% (Additional 30% of 200% of regular daily wage) 230% (Additional 30% of the 200% of regular daily wage) per hour 260% (Additional 30% of the 230% of regular daily wage) per hour

The law recognizes the validity of negotiated wage increases to correct wage distortions. The legislative intent is to encourage the parties to seek solution to the problem of wage distortions through voluntary negotiation or arbitration, rather than strikes, lockouts, or other concerted activities of the employees or management. (Associated Labor Union v. NLRC, 1994) The concept of wage distortion assumes an existing grouping or classification of employees which establishes distinctions among such employees on some relevant or legitimate basis. The remedy in Article 124 of the Labor Code, for a wage distortion consisted of negotiations between employer and employees for the rectification of the distortion by re-adjusting the wage rates of the differing classes of employees. As a practical matter, this ordinarily meant a wage increase for one or more of the affected classes of employees so that some gap or differential would be re-established. There was no legal requirement that the historical gap which existed before the implementation of the Wage Orders be restored in precisely the same form or amount. (National Federation of Labor v. NLRC, 1994) Wage distortion involves four elements: 1. An existing hierarchy of positions with corresponding salary rates 2. A significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one 3. The elimination of the distinction between the two levels 4. The existence of the distortion in the same region of the country

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PART XIV WOMEN WORKERS
I. WOMEN AND THE CONSTITUTION The State recognizes the role of women in nation-building, and shall ensure the fundamental equality before the law of women and men. (Art II Sec 14, 1987 Constitution) WOMEN WORKERS

LABOR STANDARDS
7. Under other analogous cases exempted by the Secretary of Labor and Employment in appropriate regulations. (ART. 131) DISCRIMINATION It shall be unlawful for any employer to discriminate against any woman employee with respect to terms and conditions of employment solely on account of her sex. Acts of discrimination: 1. Payment of a lesser compensation, including wage, salary or other form of remuneration and fringe benefits, to a female employee as against a male employee, for work of equal value; and 2. Favoring a male employee over a female employee with respect to promotion, training opportunities, study and scholarship grant solely on account of their sexes. Criminal liability for the willful commission of any unlawful acts as provided in this article or any violation of the rules and regulations issued pursuant to Sec. 2 hereof shall be penalized as provided in Articles 288 and 289 of this Code: Provided, That the institution of any criminal action under this provision shall not bar the aggrieved employee from filing an entirely separate and distinct action for money claims, which may include claims for damages and other affirmative reliefs. The action hereby authorized shall proceed independently of each other. (Art. 135) MARRIAGE It shall be unlawful for an employer: 1. to require as a condition of employment or continuation of employment that a woman employee shall not get married, or 2. to stipulate expressly or tacitly that upon getting married a woman employee shall be deemed resigned or separated or 3. to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of her marriage. (Art. 136) GENERAL It shall be unlawful for any employer: 1. To deny any woman employee the benefits provided for in this Chapter or to discharge any woman employed by him for the purpose of preventing her from enjoying any of the benefits provided under this Code; 2. To discharge such woman on account of her pregnancy, while on leave or in confinement due to her pregnancy; or 3. To discharge or refuse the admission of such woman upon returning to her work for fear that she may again be pregnant. (Art. 137) IV. FACILITIES Facilities for women: The Secretary of Labor and Employment shall establish standards that will ensure the safety and health of women employees. In appropriate cases, he shall require any employer to: 1. Provide seats proper for women and permit them to use such seats when they are free from work and during working hours, provided they can perform their duties in this position without detriment to efficiency; 2. Establish separate toilet rooms and lavatories for men and women and provide at least a dressing room for women; 3. Establish a nursery in a workplace for the benefit of the woman employees therein; and 4. Determine appropriate minimum age and other standards for retirement or termination in special occupations such as those of flight attendants and the like. (Art. 132) Family planning services; incentives for family planning:

The Constitution, cognizant of the disparity in rights between men and women in almost all phases of social and political life, provides a gamut of protective provisions: 1. Section 14, Article II on the Declaration of Principles and State Policies: recognizes the role of women in nation-building and commands the State to ensure, at all times, the fundamental equality before the law of women and men. 2. Section 3 of Article XIII: requires the State to afford full protection to labor and to promote full employment and equality of employment opportunities for all, including an assurance of entitlement to tenurial security of all workers. 3. Section 14,Article XIII: mandates that the State shall protect working women through provisions for opportunities that would enable them to reach their full potential. II. COVERAGE General Rule: shall apply to all employers, whether operating for profit or not, including educational, religious and charitable institutions Exception: 1. Government 2. Government-owned or controlled corporations and 3. Employers of household helpers and persons in their personal service insofar as such workers are concerned. (Book III, Rule XIII, Sec. 1, Omnibus Rules) III. PROHIBITED ACTS NIGHT WORK AND EXCEPTION General Rule: Night work Prohibition No woman, regardless of age, shall be employed or permitted or suffered to work, with or without compensation: 1. In any industrial undertaking or branch thereof between 10pm & 6am of the following day 2. In any commercial or non-industrial undertaking or branch thereof, other than agricultural, between 12mn & 6am of the following day. 3. In any agricultural undertaking at night time unless she is given a period of rest of not less than 9 consecutive hours. (Art. 130) Exceptions: 1. In cases of actual or impending emergencies caused by serious accident, fire, flood, typhoon, earthquake, epidemic or other disasters or calamity, to prevent loss of life or property or in cases of force majeure or imminent danger to public safety; 2. In case of urgent work to be performed on machineries, equipment or installation, to avoid serious loss which the employer would otherwise suffer; 3. Where the work is necessary to prevent serious loss of perishable goods; 4. Where the woman employee holds a responsible position of managerial or technical nature, or where the woman employee has been engaged to provide health and welfare services; 5. Where the nature of the work requires the manual skill and dexterity of woman worker and the same cannot be performed with equal efficiency by male worker; 6. Where the women employees are immediate members of the family operating the establishment or undertaking; and

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1. Establishments which are required by law to maintain a clinic or infirmary shall provide free family planning services to their employees which shall include, but not limited to, the application or use of contraceptive pills and intra-uterine devices. b. In coordination with other agencies of the government engaged in the promotion of family planning, the Department of Labor and Employment shall develop and prescribe incentive bonus schemes to encourage family planning among female workers in any establishment or enterprise. (Art. 134) V. SPECIAL CLASSIFICATION, SPECIAL WOMEN WORKERS Any woman who is permitted or suffered to work with or without compensation in any night club, cocktail lounge, massage clinic, bar or similar establishment, under the effective control or supervision of the employer for a substantial period of time as determined by the Secretary of Labor and Employment, shall be considered as an employee of such establishments for purposes of labor and social legislation. (Art. 138) VI. MATERNITY LEAVE A female employee who has paid at least three (3) monthly contributions in the twelve-month period immediately preceding the semester of her childbirth, or miscarriage shall be paid a daily maternity benefit equivalent to one hundred percent (100%) of her average salary credit for sixty (60) days or seventy-eight days in case of caesarean delivery subject to the following conditions: 1. That the employee shall have notified her employer of her pregnancy and the probable date of her childbirth which notice shall be transmitted to the SSS in accordance with the rules and regulations it may provide. 2. The full payment shall be advanced by the employer within thirty (30) days from the filing of the maternity leave application. 3. That payment of daily maternity benefits shall be a bar to the recovery of sickness benefits provided by this Act for the same period for which daily maternity benefits have been received. 4. That the maternity benefits provided under this section shall be paid only for the first four (4) deliveries or miscarriages. 5. That the SSS shall immediately reimburse the employer of one hundred percent (100%) of the amount of maternity benefits advanced to the employee by the employer upon receipt of satisfactory proof of such payment and legality thereof; 6. That if an employee should give birth or suffer miscarriage without the required contributions having been remitted for her by her employer to the SSS, or without the latter having been previously notified by the employer of time of the pregnancy, the employer shall pay to the SSS damages equivalent to the benefits which said employee member would otherwise have been entitled to. Paternity Leave Act of 1996 (RA 8187) Every MARRIED male employee in the private and public sectors shall be entitled to a paternity leave of seven (7) days with full pay FOR THE FIRST FOUR (4) DELIVERIES OF THE LEGITIMATE SPOUSE WITH WHOM HE IS COHABITING. - The male employee applying for paternity leave shall notify his employer of the pregnancy of his legitimate spouse and the expected date of such delivery. *Delivery includes childbirth or any miscarriage.)\ (Sec.2) VII. SEXUAL HARASSMENT POLICY The State shall: 1. value the dignity of every individual, 2. enhance the development of its human resources,

LABOR STANDARDS
3. guarantee full respect for human rights, and 4. uphold the dignity of workers, employees, applicants for employment, students or those undergoing training, instruction or education. All forms of sexual harassment in the employment, education or training environment are hereby declared unlawful. Work, education or training-related sexual harassment is committed: a. by an employer, employee, manager, supervisor, agent of the employer, teacher, instructor, professor, coach, trainor or any other person who, having authority, influence or moral ascendancy over another b. in a work or training or education environment, c. demands requests or otherwise requires any sexual favor from other, d. regardless of whether the demand, request for requirement for submission is accepted by the object of said act. In a work-related or employment environment, sexual harassment is committed when: a. The sexual favor is made as a condition in the hiring or in the employment, re-employment or continued employment of said individual or in granting said individual favorable compensation, terms, conditions, promotions, or privileges, or the refusal to grant the sexual favor results in limiting, segregating or classifying the employee which in any way would discriminate, deprive or diminish employment opportunities or otherwise adversely affect said employee; b. The above acts would impair the employees rights or privileges under existing labor laws; or c. The above acts would result in an intimidating, hostile, or offensive environment for the employee. In an education or training environment, sexual harassment is committed: a. Against one who is under the care, custody or supervision of the offender b. Against one whose education, training, apprenticeship or tutorship is entrusted to the offender; c. When the sexual favor is made a condition to the giving of a passing grade, or the granting of honors and scholarships, or the payment of a stipend, allowance or other benefits, privileges, or considerations; or d. When the sexual advances result in an intimidating, hostile or offensive environment for the result, trainee or apprentice. Any person who directs or induces another to commit any act of sexual harassment as herein defined, or who cooperates in the commission thereof by another without which it would not have been committed, shall also be held liable under this Act. (Sec. 14 A RA 8282) DUTY OF THE EMPLOYER OR HEAD OF OFFICE IN A WORK-RELATED, EDUCATION OR TRAINING ENVIRONMENT OR INSTITUTION 1. to prevent or deter the commission of acts of sexual harassment and 2. to provide the procedures for the resolution, settlement or prosecution of acts of sexual harassment. The employer or head of office shall: a. Promulgate appropriate rules and regulations in consultation with and jointly approved by the employees or students or trainees, through their duly designated representatives prescribing the procedure for the investigation of sexual harassment cases and the administrative sanctions therefore. The said rules and regulations issued pursuant to this subsections (a) shall include, among others, guidelines on proper decorum in the workplace and educational or training institutions

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b. Create a committee on decorum and investigation of cases on sexual harassment. The Committee shall conduct meetings, as the case may be, with officers and employees, teachers, instructors, professors, coaches, trainors and students or trainees to increase understanding and prevent incidents of sexual harassment. It shall also conduct the investigation of alleged cases constituting sexual harassment. In the case of work-related environment, the committee shall be composed of at least 1 representative each from the management, the union, if any, the employees from the supervisory rank, and from the rank and file employees. In the case of the educational or training institution, the committee shall be composed of at least 1 representative from the administration, the trainors, teachers, instructors, professors or coaches and students or trainees, as the case may be. The employer or head of office, educational or training institution shall disseminate or post a copy of this Act for the information of all concerned.

LABOR STANDARDS
PART XV MINORS
I. MINORS AND THE CONSTITUTION The State recognizes the vital role of the youth in nation-building and shall promote and protect their physical, moral, spiritual, intellectual, and social well-being. It shall inculcate in the youth patriotism and nationalism, and encourage their involvement in public and civic affairs. (Art II Sec 13, 1987 Constitution) II. LAW RA 7610 Special Protection of Children Against Child Abuse, Exploitation and Discrimination Act POLICY OF THE STATE 1. provide special protection to children from all forms of abuse, neglect, cruelty, exploitation and discrimination, and other conditions prejudicial to their development; 2. provide sanctions for their commission and carry out a program for prevention and deterrence of and crisis intervention in situations of child abuse, exploitation and discrimination. 3. intervene on behalf of the child when the parent, guardian, teacher or person having care or custody of the child fails or is unable to protect the child against abuse, exploitation and discrimination or when such acts against the child are committed by the said parent, guardian, teacher or person having care and custody of the same. 4. protect and rehabilitate children gravely threatened or endangered by circumstances which affect or will affect their survival and normal development and over which they have no control. 5. The best interests of children shall be the paramount consideration of all actions concerning them, whether undertaken by public or private social welfare institutions, courts of law, administrative authorities, and legislative bodies, consistent with the principle of First Call for Children as enunciated I the United Nations Convention on the Rights of the Child. Every effort shall be exerted to promote the welfare of children and enhance their opportunities for a useful and happy life. DEFINITION OF TERMS Children are those: 1. below 18 years of age, or 2. those over but are unable to fully take care of themselves or protect themselves from abuse, neglect, cruelty, exploitation or discrimination because of a physical or mental disability or condition Child Abuse maltreatment, whether habitual or not, of the child which includes any of the following: 1. Psychological and physical abuse, neglect, cruelty, sexual abuse and emotional maltreatment; 2. Any act by deeds or words which debases, degrades or demeans the intrinsic worth and dignity of a child as a human being; 3. Unreasonable deprivation of his basic needs for survival, such as food and shelter; or 4. Failure to immediately give medical treatment to an injured child resulting in serious impairment of his growth and development or in his permanent incapacity or death. Circumstances which gravely threaten or endanger the survival and normal development of children, include, but are not limited to, the following: a. Being in a community where there is armed conflict or being affected by armed conflict-related activities; b. Working under conditions hazardous to life, safety and morals which unduly interfere with their normal development

LIABILITY OF THE EMPLOYER, HEAD OF OFFICE, EDUCATIONAL OR TRAINING INSTITUTION The employer or head of office, educational or training institution shall be solidarily liable for damages arising from the acts of sexual harassment committed in the employment, education or training environment if the employer or head of office, educational or training institution is informed of such acts by the offended party and no immediate action is taken thereon. INDEPENDENT ACTION FOR DAMAGES - the victim of work, education or training-related sexual harassment can institute a separate and independent action for damages and other affirmative relief. PENALTIES - violations of this act shall be penalized by imprisonment of not less than 1 month nor more than 6 months, or a fine or not less than P10,0000 nor more than P20,000.00, or both such fine and imprisonment at the discretion of the court. Prescription of Action: 3 years. Sexual Harassment as a valid and just Cause for Termination As a managerial employee, petitioner is bound by more exacting work ethics. He failed to live up to his higher standard of responsibility when he succumbed to his moral perversity. And when such moral perversity is perpetuated against his subordinate, he provides a justifiable ground for his dismissal for lack of trust and confidence. It is the right, nay the duty of every employer to protect its employees from oversexed superiors. (Libres v. NLRC, 1999) Abuse of Power by the Employer The gravamen of the offense in sexual harassment is not the violation of the employee's sexuality but the abuse of power by the employer. Any employee, male or female, may rightfully cry "foul" provided the claim is well substantiated. Strictly speaking, there is no time period within which he or she is expected to complain through the proper channels. The time to do so may vary depending upon the needs, circumstances, and more importantly, the emotional threshold of the employee. (Phil. Aelous Automotive United Corp. v. NLRC, 2000)

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c. Living in or fending for themselves in the streets of urban or rural areas without the care of parents or a guardian or any adult supervision needed for their welfare. d. Being a member of an indigenous cultural community and/or living under conditions of extreme poverty or in an area which is underdeveloped and/or lacks or has inadequate access to basic services needed for a good quality of life; e. Being a victim of a man-made or natural disaster or calamity; or f. Circumstances analogous to those abovestated which endanger the life, safety or normal development of children. Comprehensive program against child abuse, exploitation and discrimination refers to the coordinated program of services and facilities to protect children against: a. Child prostitution and other sexual abuse; b. Child trafficking; c. Obscene publications and indecent shows; d. Other acts of abuse; and e. Circumstances which threaten or endanger the survival and normal development of children. WORKING CHILDREN General Rule: Children below fifteen (15) years of age shall not be employed. Exceptions: 1. works directly under the sole responsibility of his parents or legal guardian and where only members of the employers family are employed, provided: - his employment neither endangers his life, safety, health and morals, nor impairs his normal development, and - the parent or legal guardian shall provide the said minor child with the prescribed primary and/or secondary education; 2. childs employment or participation in public and entertainment or information through cinema, theater, radio or television is essential, provided: - the employment contract is concluded by the childs parents or guardian, with the express agreement of the child concerned, if possible - the approval of the Department of Labor and Employment - the following requirements in all instances are strictly complied with: a. The employer shall ensure the protection, health, safety and morals of the child b. The employer shall institute measures to prevent the childs exploitation or discrimination taking into account the system and level of remuneration, and the duration and arrangement of working time c. The employer shall formulate and implement, subject to the approval and supervision of competent authorities, a continuing program for training and skills acquisition of the child. The employer shall first secure, before engaging such child, a work permit from the Department of Labor and Employment which shall ensure observance of the above requirements. (Sec. 12, RA 7610, as amended by RA 7658)

LABOR STANDARDS
3. tobacco and its byproducts, and 4. violence. (SEC. 14) DUTY OF EMPLOYER Every employer shall comply with the duties provided for in Articles 108 and 109 of PD 603. (SEC. 15) 1. Article 108, PD 603 - Duty of Employer to Submit Report 2. Article 109, PD 603 - Register of Children PENALTIES Violations of this provision shall be penalized by a fine of not less than P1,000.00 but not more than P10,000.00 or imprisonment of not less than 3 months but not more than 3 years, or both at the discretion of the court, In case of repeated violations of the provisions of this Article, the offenders license to operate shall be revoked. (SEC. 16) III. DISCRIMINATION No employer shall discriminate against any person in respect to terms and conditions of employment on account of his age. (Art. 140)

NON-FORMAL EDUCATION FOR WORKING CHILDREN The Department of Education, Culture and Sports shall promulgate a course design under its non-formal education program aimed at promoting the intellectual, moral and vocational efficiency of working children who have not undergone or finished elementary or secondary education. Such course design shall integrate the learning process deemed most effective under given circumstances. (SEC. 13) PROHIBITION ON ADVERTISEMENTS
THE

EMPLOYMENT child

OF

CHILDREN in all

IN

CERTAIN

No employment of advertisements promoting: 1. alcoholic beverages 2. intoxicating drinks,

models

commercial

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PART XVI HOUSEHELPERS
I. COVERAGE Coverage: All persons rendering services in households for compensation. "Domestic or household services" shall mean service in the employer's home, which is usually necessary or desirable for the maintenance and enjoyment thereof and includes ministering to the personal comfort and convenience of the members of the employer's household, including services of family drivers. (Art. 141) II. HOUSEHELPERS - All persons rendering services in households for compensation. The term `househelper' is synonymous to the term `domestic servant' and shall refer to any person, whether male or female, who renders services in and about the employer's home and which services are usually necessary or desirable for the maintenance and enjoyment thereof, and ministers exclusively to the personal comfort and enjoyment of the employer's family. (Apex Mining Co. v. NLRC) "Domestic or household services" shall mean service in the employer's home, which is usually necessary or desirable for the maintenance and enjoyment thereof and includes ministering to the personal comfort and convenience of the members of the employer's household, including services of family drivers. (Art. 141) III. NON-HOUSEHOLD WORK ASSIGNMENT No househelper shall be assigned to work in a commercial, industrial or agricultural enterprise at a wage or salary rate lower than that provided for agricultural or non-agricultural worker as prescribed herein. (Art. 145) Domestic Work The work that petitioner performed in the temple could not be categorized as mere domestic work. The petitioner attended to the visitors, mostly Chinese, who came to pray or seek advice before Buddha for personal or business problems; arranged meetings between these visitors and Su and supervised the preparation of the food for the temple visitors; acted as to urist guide of foreign visitors; acted as liaison with some government offices; and made the payment for the temple's Meralco, MWSS and PLDT bills. Indeed, these tasks may not be deemed activities of a household helper. They were essential and important to the operation and religious functions of the temple. (Barcenas v. NLRC, 1990) IV. CONDITIONS OF EMPLOYMENT Contract for Domestic Service The original contract for domestic service shall not last for more than two years but it may be renewed for such periods as may be agreed upon by the parties. (Art. 142) Minimum Wage (Art. 143) Minimum Cash Wage Minimum wage rates= basic cash wages + lodging, food and medical attendance. (Art. 144) Assignment to non-household work.

LABOR STANDARDS
No househelper shall be assigned to work in a commercial, industrial or agricultural enterprise at a wage or salary rate lower than that provided for agricultural or non-agricultural worker as prescribed herein (Art. 145) Opportunity for education. If below 18 the employer shall give him or her an opportunity for at least elementary education. The cost of such education shall be part of the househelper's compensation, unless there is a stipulation to the contrary. (Art. 146). Treatment of househelpers. - just and humane manner. In no case shall physical violence be used upon the househelper. (Art. 147). Board, lodging and medical attendance. ER furnish free of charge suitable and sanitary living quarters + adequate food and medical attendance. (Art. 148) Indemnity for unjust termination of services If the period of household if period of service fixed = no termination by either party except for just unjust dismissal = compensation already earned plus that of 15 days by way of indemnity. leaves w/o justifiable reason = any unpaid salary due him or her not exceeding 15 days. (Art. 149). Service of termination notice. If the duration of the household service is not determined either by stipulation or by the nature of the service, the employer or the househelper may give notice to put an end to the relationship five days before the intended termination of the service. (Art. 150) Employment certification. Upon the severance of the household service relation, the employer shall give the househelper a written statement of the nature and duration of the service and his or her efficiency and conduct as househelper. (Art. 151) Employment records. The employer may keep such records as he may deem necessary to reflect the actual terms and conditions of employment of his househelper which the latter shall authenticate by signature or thumbmark upon request of the employer. (Art. 152) See ARTICLES 1689 1699. NCC No Overtime Pay for Househelpers Domestic or household service" shall mean services in the employers home which is usually necessary or desirable for the maintenance and enjoyment thereof and includes ministering to the personal comfort and convenience of the members of the employers household, including services of family drivers. Chapter III, Title III, Book III, however, is silent on the grant of overtime pay, holiday pay, premium pay and service incentive leave to those engaged in the domestic or household service. Moreover, the specific provisions mandating these benefits are found in Book III, Title I of the Labor Code, and Article 82, which defines the scope of the application of these provisions, expressly excludes domestic helpers from its coverage. (Ultra Villa Food Haus v. Geniston, 1999)

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PART XVII HOMEWORKERS
I. COVERAGE AND REGULATION Regulations of industrial homework The employment of industrial homeworkers and field personnel shall be regulated by the Government through appropriate regulations issued by the Secretary of Labor and Employment to ensure the general welfare and protection of homeworkers and field personnel and the industries employing them. (Art. 153) Regulations of Secretary of Labor and Employment The regulations or orders to be issued pursuant to this Chapter shall be designed to assure the average employee of an undertaking the minimum terms and conditions of employment applicable to the industrial homeworkers or field personnel involved. (Art. 154) Coverage -apply to any person who performs industrial homework for an employer, contractor or sub-contractor. (1) Industrial Homework- a system of production under which work for an employer or contractor is carried out by a homework at his/her home. Materials may or may not be furnished by the employer or contractor. (2a) (Department Order No. 005 92) II. EMPLOYER Distribution of homework. "employer" of homeworkers- includes any person, natural or artificial, who for his account or benefit or on behalf of any person residing outside the country, directly or indirectly, or through any employee, agent, contractor, sub-contractor or any other person: 1. Delivers, or causes to be delivered, any goods, articles or materials to be processed or fabricated in or about a home and thereafter to be returned or to be disposed of or distributed in accordance with his directions; or 2. Sells any goods, articles or materials for the purpose of having the same processed or fabricated in or about a home and then rebuys them after such processing or fabrication, either himself or through some other person. (Art. 155)

LABOR STANDARDS
PART XVIII TERMINATION OF EMPLOYMENT
GENERAL CONCEPTS I. SECURITY OF TENURE General Rule: In case of regular employment, the ER shall NOT terminate the services of an EE (Art 279) Exceptions: (Art 279) 4. 5. Termination for just cause Termination authorized by this Title

If EE is unjustly dismissed, he is entitled to: 6. 7. Reinstatement without loss of seniority rights and other privileges, AND Full backwages inclusive of allowances, and other benefits or their monetary equivalent computed from the time compensation was withheld up to the time of actual reinstatement. (Art 279)

The entitlement of workers to SECURITY of TENURE is recognized in Art XIII, Sec. 3, 1987 Constitution A. Nature of Security of Tenure: 5. A right guaranteed by the Constitution - should not be lightly denied on so nebulous a basis as mere speculation. (Civil Service Corp. Workers Union v. City Service Corp.1985)

6.

NOT an absolute right a worker may still be dismissed for cause (Manila Electric Co. vs. NLRC, 1991) Qualified by the Doctrine of Strained Relations Where reinstatement is not feasible, expedient or practical, as where reinstatement would only exacerbate the tension and strained relations between the parties, or where the relationship between the employer and employee has been unduly strained by reason of their irreconcilable differences, particularly where the illegally dismissed employee held a managerial or key position in the company, it would be more prudent to order payment of separation pay instead of reinstatement. (Quijano vs. Mercury Drug Corp., 1998) Does NOT give an EE an absolute right to his position - When a transfer is not unreasonable, nor inconvenient, nor prejudicial to an employee; and it does not involve a demotion in rank or diminution of his pay, benefits, and other privileges, the employee may not complain that it amounts to constructive dismissal. (Lanzadares vs. Amethyst Security, 2003)

7.

8.

71.

B. Coverage

Applies to ALL establishments or undertakings, whether for profit or not. (Art 278) h. i. Regular EE Art 279 Contract EE security of tenure to a limited extent, i.e. they remain secure in their employment during the period their respective contracts of employment remain in effect (Labajo vs. Alejandro, 1988) Probationary EE security of tenure to a limited extent

j.

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Limitations on power of ER to terminate a probationary EE: exercised in accordance with the specific requirements of the contract dissatisfaction of the ER must be real and in good faith, not feigned so as to circumvent the contract or the law no unlawful discrimination in the dismissal (Lopez vs. Javier, 1996) k. Managerial EE entitled to security of tenure, and cannot be arbitrarily dismissed at any time, and without cause as reasonably established in an appropriate investigation. (Inter Orient Maritime Enterprises, Inc. vs. NLRC, 1994)

LABOR STANDARDS
unworthy of trust and confidence demanded by his position. (Reyno v. Manila Electric Co., 2004)

E. Factors

iii) iv)

Value of articles pilfered (Associated Labor Union v. NLRC, 1999) Whether is EE is a managerial or confidential EE. - managerial or confidential EE: greater trust is placed by management, and greater fidelity to duty is correspondingly expected. - rank-and-file EE: generally mere wage earners whose dismissal from employment can have severe financial consequences on their families. (Associated Labor Union v. NLRC, 1999)

C. Management Rights and Security of Tenure

Requisites for Validity of Management Prerogative regarding Dismissal:

v) vi)

Length of service (PLDT, Inc. v. NLRC, 1999) Number of violations committed during his employ. (PLDT, Inc. v. NLRC, 1999)

4. 5.

Exercised in good faith for the advancement of the ER's interest, and NOT for the purpose of defeating or circumventing the rights of the EEs under special laws or under valid agreements (San Miguel Brewery, etc. v. Ople, 1989)

F. Rules Managerial and Rank-and-File EEs

Managerial EE/Confidential EE The dismissals of the EEs must be made within the parameters of law and pursuant to the tenets of equity and fair play. The ER's right to terminate the services of an EE for just or authorized cause must be exercised in GF. It must NOT amount to interfering with, restraining or coercing EEs in the exercise of their right to self-organization because it would amount to ULP under Art 248. (Colegio de San Juan de Letran v. Assn. of Employees, etc., 2000)

sufficient that there is some basis for such loss of confidence, such as when the employer has reasonable ground to believe that the employee concerned is responsible for the purported misconduct, and the nature of his participation therein renders him unworthy of the trust and confidence demanded by his position; proof beyond reasonable doubt is NOT required (Caoile v. NLRC, 1998) employment for a long time taken against the EE (Salvador v. Phil. Mining Service Corp., 2003)

D. Guidelines on Imposition of Penalties

Rank-and-file EE (cx) loss of trust and confidence as ground for valid dismissal requires proof of involvement in the alleged events in question, and that mere uncorroborated assertions and accusations by the employer will not be sufficient (Caoile v. NLRC, 1998)

6.

ER's prerogative to discipline or dismiss its EE must NOT be exercised wantonly, but must be controlled by substantive due process and tempered by the fundamental policy of protection to labor enshrined in the Constitution. (Farrol v. CA, 2000) The penalty must be commensurate with the act, conduct or omission imputed to the employee and imposed in connection with the employers disciplinary authority. (Farrol v. CA, 2000) [P]olicies, rules and regulations on work-related activities of the employees must always be fair and reasonable, and the corresponding penalties, when prescribed, must be commensurate to the offense involved and to the degree of the infraction. (VH Manufacturing, Inc. v. NLRC, 2000; St. Michael's Institute v. Santos, 2001) Employers are allowed a wider latitude of discretion in terminating the employment of managerial personnel or those of similar rank performing functions which by their nature require the employers trust and confidence, than in the case of ordinary rank-and-file employees. (Etcuban, Jr. v. Sulpicio Lines, Inc., 2005)

7.

TERMNATION OF EMPLOYMENT BY EMPLOYEE I. CAUSES A. Just causes for termination by EE: SICA (no written notice to ER required)

8.

9.

Serious insult by the ER or his representative on the honor and person of the EE; Inhuman and unbearable treatment accorded the EE by the ER or his representative; Commission of a crime or offense by the ER or his representative against the person of the EE or any of the immediate family members of his family; and Other causes analogous to any of the foregoing. (Art 285 (b))

B. Termination by EE without just cause: EE to serve written notice on ER at least 1 month in advance. (Art 285(a)) Effect of failure to serve notice: ER may hold EE liable for damages (Art 285(a))

10. Substantial proof is sufficient as basis for the imposition of any disciplinary action upon the EE. The standard of substantial evidence is satisfied where the ER has reasonable ground to believe that the EE is responsible for the misconduct and participation therein renders his

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C. Resignation Definition The voluntary act of an EE who finds himself in a situation where he believes that personal reasons cannot be sacrificed in favor of the exigency of the service and he has no other choice but to dissociate himself from his employment. (Habana vs. NLRC, 1998) Requisites of Resignation: 5. 6. Unconditional (Azcor Manufacturing, Inc. v. NLRC, 1999) Intention to relinquish a portion of the term of office accompanied by an act of relinquishment. (Azcor Manufacturing, Inc. v. NLRC, 1999) - No valid resignation where it was made without proper discernment (Metro Transit Organization, Inc. v. NLRC, 1998) Voluntary (Pascua v. NLRC, 1998) Acceptance of ER necessary to make the resignation effective (Shie Jie Corp./Seastar Ex-im Corp. v. National Federation of Labor, 2005; Reyes v. CA, 2003) - Resignations, once accepted and being the sole act of the employee, may not be withdrawn without the consent of the employer. (Intertrod Maritime, Inc. v. NLRC, 1991)

LABOR STANDARDS
a. special laws and decrees b. individual or collective bargaining agreement c. voluntary ER practice or policy (Bk VI, Rule I, Sec 12, Omnibus Rules) When the bona fide suspension of the operation of a business or undertaking exceeds six months, then the employment of the employee shall be deemed terminated. (Valdez v. NLRC, 1998) TERMINATION OF EMPLOYMENT BY EMPLOYER PRELIMINARY MATTERS I. Basis of Right and Requirements A. Basis:

4. 4.

Rule: Filing of an illegal dismissal case is inconsistent with resignation (Valdez v. NLRC, 98) Willi Hahn Enterprises v. Maghuyop, 2004: The rule that the filing of a complaint for illegal dismissal is inconsistent with resignation is not applicable to the instant case. The filing of an illegal dismissal case by respondent was evidently a mere afterthought. It was filed not because she wanted to return to wok but to claim separation pay and back wages. Constructive Dismissal Definition An involuntary resignation resorted to when continued employment is rendered impossible, unreasonable, or unlikely; when there is a demotion in rank and/or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee. (Phil. Wireless, Inc. v. NLRC, 1998)

The right of an employer to freely select or discharge his employees, is subject to regulation by the State basically in the exercise of its paramount police power. (Commonwealth Acts Nos. 103 and 213.) But an employer cannot legally be compelled to continue with the employment of a person who admittedly was guilty of misfeasance or malfeasance towards his employer, and whose continuance in the service of the latter is patently inimical to his interests. The law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the employer. (Manila Trading and Supply Co., Inc. v. Zulueta, 1940) [I]t has been established that the right to dismiss or otherwise impose disciplinary sanctions upon an employee for just and valid cause, pertains in the first place to the employer, as well as the authority to determine the existence of said cause in accordance with the norms of due process. (Makati Haberdashery, Inc. v. NLRC, 1989)

B. Requisites for Valid Dismissal

Substantive Due Process Dismissal for any of the just or valid causes under Arts 282 284 Procedural Due Process EE must be given notice with adequate opportunity to be heard before he is notified of his actual dismissal for cause. (Fujitsu v. CA, 2005) - ER may NOT substitute the required prior notice & opportunity to be heard with the mere payment of 30 days' salary. (PNB v. Cabanag, 2005)

Grounds for Termination

if the employee was forced to remain without work or assignment for a period exceeding six months, then he is in effect constructively dismissed. (Valdez v. NLRC, 1998)

II. No Termination Circumstances that shall NOT terminate employment:

Bona fide suspension of the operation of a business or undertaking NOT exceeding 6 months; OR Fulfillment by the EE of a military or civic duty. (Art 286)

Serious misconduct or willful disobedience Gross or habitual neglect of duties Fraud or willful breach of trust Commission of a crime or offense against the person of the ER or any immediate member of his family or duly authorized representative Analogous Causes Installation of labor saving devices Redundancy Retrenchment to prevent losses Closing or cessation of operation Disease

ER shall reinstate the EE to his former position without loss of seniority rights if EE indicates his desire to resume to work not later than 1 month from the resumption of operations of his ER or from relief from the military or civic duty. (Art 286) ER-EE relationship deemed SUSPENDED in case of suspension of operation, unless suspension is for the purpose of defeating the rights of the EEs, or mandatory fulfillment of military or civic duty. (Bk VI, Rule I, Sec 12, Omnibus Rules) Payment of wages and grant of other benefits and privileges while EE is on military or civic duty shall be subject to:

II. Just Causes (Art 282) A. Serious Misconduct or Willful Disobedience Art 282 Termination by Employer An employer may terminate an employment for any of the following causes: (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; 1. Serious Misconduct

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Definition Improper or wrong conduct; the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. To be serious, the misconduct must be of such grave and aggravated character. It must be in connection with the employee's work to constitute just cause for separation. (Austria v. NLRC, 1999; Samson v. NLRC, 2000; Villamor Golf Club v. Pehid, 2005; Lakpue Drug, Inc. v. Belga, 2005) Requisites:

LABOR STANDARDS
Gross negligence connotes want of care in the performance of one's duties, while habitual neglect implies repeated failure to perform one's duties for a period of time, depending upon the circumstances. (Chua v. NLRC, 2005)

Requisites for Neglect of Duty to be a Ground for Dismissal:

Gross want of care in the performance one's duties; Habitual repeated failure to perform one's duties for a period of time, depending upon the circumstances (Chua v. NLRC, 2005)

Serious Related to the performance of the EE's duties; AND Shows that the EE has become unfit to continue working for the ER. (Philippine Aeolus Automotive United Corp. v. NLRC, 2000; Coca-Cola Bottlers, Phil., Inc. v. Kapisanan ng Malayang Manggagawa sa Coca- Cola, 2005)

Neglect of duty must be BOTH gross and habitual

Simple Negligence

2. Willful Disobedience Requisites:

Under the Labor Code simple negligence is NOT a ground for the dismissal of an EE. (RDS Trucking v. NLRC, 1998) Mere involvement in an accident, absent any showing of fault or recklessness on the part of the EE, is NOT a valid ground for dismissal. (Paguio Transport Corp. v. NLRC, 1998)

EE's assailed conduct must have been willful, that is, characterized by a wrongful and perverse attitude; AND The order violated must have been: a. reasonable b. lawful c. made known to the EE d. pertain to the duties which he had been engaged to discharge. (Westin Phil. Plaza Hotel v. NLRC, 1999; Micro Sales Operation Network v. NLRC, 2005)

C. Fraud Willful Breach of Trust Art 282 Termination by Employer An employer may terminate an employment for any of the following causes: (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; Requisites of Loss of Confidence (PLDT v. Tolentino, 2004; Jardine Davies, Inc. v. NLRC, 1999) EE concerned holds a position of trust and confidence - person is entrusted with confidence on delicate matters, such as care and protection, handling or custody of the employer's property (Panday v. NLRC, 1992) Act complained of must be "work-related" - act would show the employee concerned to be unfit to continue working for the employer Basis for such loss of confidence - proof beyond reasonable doubt NOT necessary - sufficient that employer has reasonable ground to believe that the employee concerned is responsible for the purported misconduct, and the nature of his participation therein renders him unworthy of the trust and confidence demanded of his position Guidelines for Application of Doctrine of Loss of Confidence a. Loss of confidence should NOT be simulated; b. It should NOT be used as a subterfuge for causes which are improper, illegal or unjustified; c. It should NOT be arbitrarily asserted in the face of overwhelming evidence to the contrary; d. It must be genuine, NOT a mere afterthought to justify earlier action taken in bad faith; e. The EE involved holds a position of trust and confidence. (Vitarich v. NLRC, 1999; Coca-Cola Bottlers, Phils., Inc. v. Kapisanan ng Malayang Manggagawa sa Coca-Cola, 2005) Willful Breach of Trust

Not every case of willful disobedience may be penalized by dismissal; the penalty must be proportionate. (Bascon v. CA, 2004)

Tierra International Production Corp. v. NLRC, 1996: According to the report of the company's Site Administration Officer, private respondents were given three "options:" (1) to go back to work; (2) to apologize to their supervisor; and (3) to be repatriated. What private respondents were given were not really "options." They were given the choice of apologizing for their refusal to work and then resume working as ordered, or, else, resign and be sent back home. Under the circumstances they really had no choice but to resign. It was not pride or arrogance which made them refuse to work as ordered, but the assertion of their right not to be made to work outside of what they had been hired to do. For asserting their right, private respondents should not be punished. We, therefore, hold that private respondents' dismissal was illegal and that for this reason they are entitled to be paid their salaries corresponding to the unexpired portion of their employment contract, in addition to their unpaid salaries prior to their dismissal, as found by both the POEA and the NLRC. B. Gross and Habitual Neglect of Duties Art 282 Termination by Employer An employer may terminate an employment for any of the following causes: (b) Gross and habitual neglect by the employee of his duties; Definition of Gross Negligence and Habitual Neglect:

Gross negligence is negligence characterized by want of even slight care, acting or omitting to act in a situation where there is a duty to ac, not inadvertently but willfully and intentionally with a conscious indifference to consequences insofar as other persons may be affected. (Tres Reyes v. Maxim's Tea House, 2003; Cebu Filveneer Corp. v. NLRC, 1998; Citibank v. Gatchalian, 1995)

Willful Breach - breach done intentionally, knowingly, purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. (Atlas Consolidated Mining and Development Corp. v. NLRC, 1998) There must be actual breach of duty which must be established by substantial evidence. (Atlas Consolidated Mining and Development Corp. v. NLRC, 1998)

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Coverage The term trust and confidence is restricted to MANAGERIAL EEs (Fujitsu Computer Products Corp. v. CA, 2005) Lack of Damage The lack of material or pecuniary damages would NOT in any way mitigate a person's liability nor obliterate the loss of trust and confidence. (Cadiz v. CA, 2005) D. Commission of Crime Art 282 Termination by Employer An employer may terminate an employment for any of the following causes: (d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; E. Analogous Cases Art 282 Termination by Employer An employer may terminate an employment for any of the following causes: (e) Other causes analogous to the foregoing. Quarrelsome - Bossy

LABOR STANDARDS
demanded by his position. It cannot be gainsaid that the breach of trust must be related to the performance of the employee's function. On the other hand, the commission of a crime by the employee under Article 282 (d) refers to an offense against the person of his employer or any immediate member of his family or his duly authorized representative. Analogous causes must have an element similar to those found in the specific just cause enumerated under Article 282. Clearly lacking in the ground invoked by petitioner is its relation to his work or to his employer. In the case at bar, the commission of the crime of homicide was outside the perimeter of the IRRI complex, having been committed in a restaurant after office hours and against a non-IRRI employee. Thus, the conviction of Micosa for homicide was not work-related, his misdeed having no relation to his position as laborer and was not directed or committed against IRRI or its authorized agent.

Violation of a company rule prohibiting the infliction of harm or physical injury against any person under the particular circumstances provided for in the same rule may be deemed analogous to "serious misconduct". (Oania v. NLRC, 1995) Gross inefficiency is closely related to gross neglect for both involve specific acts or omission on the part of the employee resulting in damage to the employer or to his business. (Lim v. NLRC, 1996)

F. Others Just Causes Claimed by Employer 1. Abandonment Definition

An EE's attitude problem is a valid ground for dismissal, equivalent to loss of trust and confidence: An EE who cannot get along with his fellow co-EEs is detrimental to the company for he can upset and restrain the working environment. Management has the prerogative to take the necessary action to correct the situation and protect its organization. (Heavylift Manila, Inc. v. CA)

The deliberate and unjustified refusal of an EE to resume his employment; it is a form of neglect of duty. (Nueva Ecija Electric Cooperative v. NLRC, 2005) A deliberate, unjustified refusal of an employee to resume his work, coupled with a clear absence of any intention of returning to his work. (Escobin v. NLRC, 1998)

Requisites: Cathedral School of Technology v. NLRC, 1992: The reason for which private respondent's services were terminated, namely, her unreasonable behavior and unpleasant department in dealing with the people she closely works with in the course of her employment, is analogous to the other "just causes" enumerated under the Labor Code, as amended. Petitioners' averments on private respondent's disagreeable character "quarrelsome, bossy, unreasonable and very difficult to deal with" are supported by the various testimonies of several co-employees and students of the school. The conduct she exhibited on that occasion smacks of sheer disrespect and defiance of authority and assumes the proportion of serious misconduct or insubordination, any of which constitutes just cause for dismissal from employment. Probable Cause 5. 6. Failure to report for work or absence without valid or justifiable reason; and A clear intention, as manifested by some overt act, to sever the ER-EE relationship. (Floren Hotel v. NLRC, 2005; Leonardo v. NLRC, 2000)

Inference Abandonment of position CANNOT be lightly inferred, much less legally presumed from certain equivocal acts such as interim employment. (Hacienda Dapdap v. NLRC, 1998) No Abandonment Instances that do NOT constitute abandonment:

Although after preliminary investigation probable cause has been found and the accused has been detained, this is NOT legal basis for immediate termination of employment. (Standard Electric Manufacturing Corp. v. Standard Electric Union, 2005)

Conviction Moral Turpitude International Rice Research Institute v. NLRC, 1993: Article 282 of the Labor Code enumerates the just causes wherein an employer may terminate an employment. Verily, conviction of a crime involving moral turpitude is not one of these justifiable causes. Neither may said ground be justified under Article 282 (c) nor under 282 (d) by analogy. Fraud or willful breach by the employees of the trust reposed in him by his employer or duly authorized representative under Article 282 (c) refers to any fault or culpability on the part of the employee in the discharge of his duty rendering him absolutely unworthy of the trust and confidence

Mere absence from work, especially where the employee has been verbally told not to report, cannot by itself constitute abandonment. (Mendoza v. NLRC, 1999) EEs do not need to take their meals within the company premises. The act of going home to have dinner does NOT constitute abandonment. (PAL v. NLRC, 1999) The act of leaving his workplace to relieve himself can hardly be characterized as abandonment, much less a willful or intentional disobedience of company rules since he was merely answering the call of nature over which he had no control. (Dimabayo v. NLRC, 1999)

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Employer has Burden of Proving Abandonment The unflinching rule in illegal dismissal cases is that the employer bears the burden of proof. To establish a case of abandonment, the employer must prove the employee's deliberate and unjustified refusal to resume employment without any intention of returning. Specifically, the employer has to show the concurrence of the following: (1) the employee's intention to abandon employment and (2) overt acts from which such intention may be inferred as when the employee shows no desire to resume works. (Mendoza v. NLRC, 1999) Filing of Case for Illegal Dismissal Inconsistent with Abandonment The immediate filing of a complaint for illegal dismissal against the employer is a clear indication that the employee has not given up on his work. (CMP Federal Security Agency, Inc. v. NLRC, 1999) 2. Loans Borrowing Money Borrowing money is neither dishonest, nor immoral, nor illegal, much less criminal. (Medical Doctors, Inc. [Makati Medical Center] v. NLRC) However, said act becomes a serious misconduct that may justly be asserted as a ground for dismissal when reprehensible behavior such as the use of a trust relationship as a leverage for borrowing money is involved. (Pearl S. Buck Foundation, Inc. v. NLRC, 1990) Medical Doctors, Inc. v. NLRC, 1985: The act of borrowing money by a hospital probationary clerk from a patient is NOT a ground for termination of employment as her borrowing was due to economic necessity protected by the Constitution. She paid what she borrowed, and was recommended for permanent appointment. 3. Courtesy Resignation Batongbacal v. Associated Bank, 1988: Resignation per se means voluntary relinquishment of a position or office. Adding the word "courtesy" did not change the essence of resignation. That courtesy resignations were utilized in government reorganization did not give private respondent the right to use it as well in its own reorganization and rehabilitation plan. There is no guarantee that all employers will not use it to rid themselves arbitrarily of employees they do not like, in the guise of "streamlining" its organization. On the other hand, employees would be unduly exposed to outright termination of employment which is anathema to the constitutional mandate of security of tenure. 4. Work Attitude Absences An employees habitual absenteeism without leave, which violated company rules and regulations is sufficient cause to justify termination from service. (Manila Electric Co. v. NLRC, 1996) 5. Term Employment Brent Ruling Criteria under which term employment does NOT Circumvent Security of Tenure

LABOR STANDARDS
(Brent School v. Zamora, 1990; Romares v. NLRC, 1998; Medenilla v. Phil. Veterans Bank, 2000)

If a contract is for a fixed term and the EE is dismissed without just cause, he is entitled to the payment of his salaries corresponding to the unexpired portion of the employment contract. (Medenilla v. Phil. Veterans Bank, 2000)

6. Past Infractions Past Offenses Previous offenses may be so used as valid justification for dismissal from work only if the infractions are related to the subsequent offense upon which basis the termination of employment is decreed. (Stellar Industrial Service, Inc. v. NLRC, 1996; La Carlota Planters Assn. v. NLRC, 1998) 7. Professional Training Residency Training Felix v. Buenaseda, 1995: A residency or resident physician position in a medical specialty is never a permanent one. Residency connotes training and temporary status. It is the step taken by a physician right after post-graduate internship (and after hurdling the Medical Licensure Examinations) prior to his recognition as a specialist or subspecialist in a given field. Under this system, residents, specially those in university teaching hospitals enjoy their right to security of tenure only to the extent that they periodically make the grade, making the situation quite unique as far as physicians undergoing post-graduate residencies and fellowships are concerned. 8. Love and Morals Immorality When a teacher engages in extra-marital relationship, especially when the parties are both married, such behavior amounts to immorality, justifying his termination from employment. (Santos v. NLRC, 1998) Love Chua-Qua v. Clave, 1990: Private respondent utterly failed to show that petitioner took advantage of her position to court her student. If the two eventually fell in love, despite the disparity in their ages and academic levels, this only lends substance to the truism that the heart has reasons of its own which reason does not know. But, definitely, yielding to this gentle and universal emotion is not to be so casually equated with immorality. The deviation of the circumstances of their marriage from the usual societal pattern cannot be considered as a defiance of contemporary social mores. 9. Violation of Company Rules Company policies and regulations, unless shown to be grossly oppressive or contrary to law, are generally valid and binding on the parties and must be complied with until finally revised or amended, unilaterally or preferably through negotiation, by competent authority. (Aparente, Sr. v. NLRC, 2000) 10. Criminal Case Effect of Acquittal Dismissal of the criminal case against an EE shall NOT necessarily be a bar to his dismissal from employment on the ground of loss of trust and confidence. (Ramos v. NLRC, 1998)

The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; OR It satisfactorily appears that the employer and the employee dealt with each other on more or less equal terms with no moral dominance exercised by the former or the latter.

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Conviction Sampaguita Garments Corp. v. NLRC, 1994: The private respondent's conviction of the crime of theft of property belonging to the petitioner has affirmed the existence of a valid ground for her dismissal and thus removed the justification for the administrative decision ordering her reinstatement with back wages. Dismissal Criminal Case Conviction of an EE in a criminal case is NOT indispensable to warrant his dismissal and the fact that a criminal complaint against the EE has been dropped by the fiscal is NOT binding and conclusive upon a labor tribunal. (Lacoste v. Inciong, 1988) Guilt or Innocence The guilt or innocence in a criminal case is NOT determinative of the existence of a just or authorized cause for dismissal. (Chua v. NLRC, 1993) 11. Abolition of Position The abolition of a position deemed no longer necessary is a management prerogative, which must be done without malice and arbitrariness. (Benguet Electric Cooperative v. Fianza, 2004) 12. Dishonesty Nuguit v. NLRC, 2003: As custodian of the petty cash fund, he had the duty to ascertain that the circumstances which brought about any claim therefrom were in order. He cannot now shirk from this responsibility by indirectly pinning the blame on the approving officer and asserting that the transgression was the result of mere inadvertence. Transfers Discharge and Suspension The ER has the right to transfer or assign EEs from one area of operation to another, or one office to another or in pursuit of its legitimate business interest, provided there is no demotion in rank or diminution of salary, benefits and other privileges and not motivated by discrimination or made in bad faith, or effected as a form of punishment or demotion without sufficient cause. This matter is a prerogative inherent in the ER's right to effectively control and manage the enterprise. (Lazanderas v. Amethyst Security and General Services, 2003; Castillo v. NLRC, 1999; Westin Phil. Plaza Hotel v. NLRC, 1999) When Transfer amounts to Constructive Dismissal A transfer amounts to constructive dismissal when the transfer is unreasonable, inconvenient, or prejudicial to the employee, and it involves a demotion in rank or diminution of salaries, benefits and other privileges. (Mendoza v. Rural Bank, 2004; OSS Security and Allied Services, Inc. v. NLRC, 2000) Constructive Discharge Definition

LABOR STANDARDS
reduced, and such reduction is not grounded on valid grounds such as genuine business necessity. (Go v. CA, 2004) Mark Roche International v. NLRC, 1999: Respondent was illegally dismissed but there was not constructive dismissal as it did not involve a demotion in rank or diminution in pay. They were simply told, without prior warning or notice, that there was no more work for them. Employer has Burden of Proof In constructive dismissals, the employer has the burden has the burden of proving that the transfer and demotion of an employee are for just and valid grounds such as genuine business necessity. (Globe Telecom, Inc. v. Florendo, 2003) Preventive Suspension Definition Preventive suspension is a disciplinary measure for the protection of the company's property pending investigation of any alleged malfeasance or misfeasance committed by the employee. The employer may place the worker concerned under preventive suspension if his continued employment poses a serious and imminent threat to the life or property of the employer or of his coworkers. (PAL v. NLRC, 1998) Preventive Suspension Limited to 30 days Preventive suspension for an indefinite period amounts to a dismissal, and is violative of Rule XIV, Sec. 4, IRR, which limits the preventive suspension to 30 days. (Kwikway Engineering Works v. NLRC, 1991) III. Other Causes Business Related Causes Recognition of Right Uichico v, NLRC, 1997: The law recognizes the right of every business entity to reduce its workforce if the same is made necessary by compelling economic factors which would endanger its existence or stability. The fundamental law itself guarantees, even during the process of tilting the scales of social justice towards workers and employees, the right of enterprises to reasonable returns of investment and to expansion and growth. To hold otherwise would not only be oppressive and inhuman, but also counter-productive and ultimately subversive of the nation's thrust towards a resurgence in our economy which would ultimately benefit the majority of our people. Where appropriate and where conditions are in accord with law and jurisprudence, the Court has authorized valid reductions in the volume of business which has rendered certain employees redundant. Art 283 Closure of Establishment and Reduction of Personnel The ER may also terminate the employment of any employee due to: Installation of labor saving devices Redundancy Retrenchment to prevent losses, OR Closing or cessation of operation of the establishment or undertaking, unless the closing is for the purpose of circumventing the provisions of this Title xxx Manner of Termination ER to serve a written notice to: Wokers, AND DOLE at least 1 month before the intended date of termination. (Art 283)

A quitting because continued employment is rendered impossible, unreasonable or unlikely; as, an offer involving a demotion in rank and a diminution in pay. (Mobile Protective and Detective Agency v. Ompad, 2005; Philippine-Japan Active carbon Corp. v. NLRC, 1989) There is constructive dismissal when there is a demotion in rank and/or diminution in pay, or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee. (Dusit Hotel Nikko v. National Union in Hotel, Restaurant and Allied Industries, 2005) Constructive dismissal is present when an employee's functions, which were originally supervisory in nature were

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Procedure Requirements A. Installation of Labor Saving Devices Worker Affected to receive: separation pay = 1 month pay or at least 1 month pay for every year of service B. Redundancy Definition Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. A position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as over hiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise. (Wiltshire File Co., Inc. v. NLRC, 1991; Tierra International Construction Corp. v. NLRC, 1992)

LABOR STANDARDS

The ER must comply with the following requisites: Written notice served on both the EEs and the DOLE at least 1 month prior to the intended date of retrenchment; Payment of separation pay equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher; Good faith in abolishing the redundant positions; and Fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished. (Asian Alcohol Corp. v. NLRC, 1999) Venue of Complaint The appropriate forum for such controversy would, however, be the DOLE and NOT an investigation or hearing to be held by the employer itself. (Wiltshire File Co., Inc. v. NLRC, 1991) C. Retrenchment to Prevent Losses Definition Retrenchment is the termination of employment initiated by the employer through no fault of the employees and without prejudice to the latter, resorted to by management during periods of business recession, industrial depression, or seasonal fluctuations or during lulls occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program or the introduction of new methods or more efficient machinery, or of automation. (FF Marine Corp., v. NLRC, 2005)

In redundancy, what is looked into is: a. the position itself, b. the nature of the services performed by the employee, and c. the necessity of such position. (Tierra International Construction Corp. v. NLRC, 1992; Edge Apparel, Inc. v. NLRC, 1998) Redundancy does NOT refer to duplication of work. That no other person was holding the same position which the dismissed employee held prior to the termination of his services does not show that his position had not become redundant. (Escareal v. NLRC, 1992)

Worker Affected to receive: separation pay = 1 month pay or at least 1 month pay for every year of service Business Judgment The determination of the continuing necessity of a particular officer or position in a business corporation is management's prerogative, and the courts will not interfere with the exercise of such so long as no abuse of discretion or merely arbitrary or malicious action on the part of management is shown. (Wiltshire File Co., Inc. v. NLRC, 1991; DOLE Philippines, Inc. v. NLRC, 2001; Asufrin v. San Miguel Corp., 2004) Financial Loss Art. 283 does NOT require that the ER should be suffering from financial losses before he can terminate and EE on the ground of redundancy. The fact that a company is suffering from financial losses merely provides stronger justification for the termination. (Escareal v. NLRC, 1992) Criteria Selection of Employees A company must have fair and reasonable criteria in implementing its redundancy program, such as but not limited to: a. preferred status (ex. temporary EE) b. efficiency, and c. seniority (Panlilio v. NLRC, 1997; Golden Thread Knitting Industries, Inc. v. NLRC, 1999) Employment of an Independent Contractor Effect An employer's good faith in implementing a redundancy program is not necessarily destroyed by availment of the services of an independent contractor to replace the services of the terminated employees. The reduction of the number of workers in a company made necessary by the introduction of an independent contractor is justified when the latter is undertaken in order to effectuate more economic and efficient methods of production. (Asian Alcohol Corp. v. NLRC, 1999)

Retrenchment Reduction of personnel usually due to poor financial returns so as to cut down on costs of operations in terms of salaries and wages

Redundancy The service of an EE is in excess of what is required by an enterprise

Closure The reversal of the fortune of the ER whereby there is a complete cessation of business operations and/or and actual locking-up of the doors of the, usually due to financial losses Aims to prevent further financial drain upon the ER

Resorted to primarily to avoid or minimize business losses Coverage

14. Contemplates termination of employment to minimize established business losses and to prevent impending business losses (Balbalec v. NLRC, 1995) 15. Applies to non-stock, non-profit organizations (Philippine Tuberculosis Society, Inc. v. NLRC, 1998) Temporary Retrenchment Article 286 may be applied but only by analogy to set a specific period that employees may remain temporarily laid-off or in floating status. The temporary lay-off wherein the employees likewise cease to work should also not last longer than six months. After six months, the employees should either be recalled to work or permanently retrenched following the requirements of the law, and that failing to comply with this would be tantamount to dismissing the employees and the employer would thus be liable for such dismissal.

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Procedure - Requisites Requirements

LABOR STANDARDS

Necessity of the retrenchment to prevent losses and proof of such losses; Written notice to the EEs and to the DOLE at least one month prior to the intended date of retrenchment; and Payment of separation pay equivalent to one month pay or at least month pay for every year of service, whichever is higher. (Guerrero v. NLRC, 1996)

Service of a written notice to the employees and to the [D]OLE at least 1 month before the bona fide in character; and Payment to the employees of termination pay amounting to at least one-half month pay for every year of service, or 1 month pay, whichever is higher. (Caffco International Ltd. v. Office MOLE, 1992)

Partial Closure The phrase "closure or cessation of operation of an establishment or undertaking not due to serious business losses or reverses" under Article 283 of the Labor Code includes both the complete cessation of all business operations and the cessation of only part of a companys business. (Cheniver Deco Print Technics Corp. v. NLRC, 2000) Temporary Cessation of Operation The bona fide suspension of operation of a business or undertaking for a period not exceeding 6 months shall NOT terminate employment. (Art 286) ER to reinstate EE to his former position without loss of seniority rights if he indicates his intention to resume his work not later than 1 month from the resumption of operations of the ER. (Art 286) I. Temporary suspension of operations is recognized as a valid exercise of management prerogative provided it is not carried out in order to circumvent the provisions of the Labor Code or to defeat the rights of the employees under the Code. (San Pedro Hospital of Digos v. Sec. of Labor, 1996) The burden of proving that such a temporary suspension is bona fide falls upon the employer. (San Pedro Hospital of Digos v. Sec. of Labor, 1996)

Standards

The losses expected should be substantial and NOT merely de minimis in extent; The substantial loss apprehended must be reasonably imminent, as such imminence can be perceived objectively and in good faith by the employer; It must be reasonably necessary and likely to effectively prevent the expected loss; and Sufficient and convincing evidence must prove the alleged losses, if already incurred, or the expected imminent losses sought to be forestalled. (Lopez Sugar Corp. v. Federation of Free Workers, 1990; Blucor Plywood Corp. v. Amarilla, 2005)

Nature of Loss

Losses must be substantial and not merely de minimis in extent (Lopez Sugar Corp. v. Federation of Free Workers, 1990) The ER must prove serious business losses, and not just any kind of loss. Otherwise, a company may feign excuses to suit its whims and prejudices or to rid itself of unwanted EEs. (Bogo-Medellin Sugar Cane Planters Assn., Inc. v. NLRC, 1998)

Working Capital Ratio or Current Ratio: Tests the liquidity of the ER Measures the number of times that the current liabilities could be paid with the current assets (Cama v. Joni's Food Services, Inc., 2004) Sliding Income decreasing gross revenues not necessarily losses, much less serious business losses (San Miguel Jeepney Service v. NLRC, 1996) Proof of Loss

II.

Effect on ER-EE Relationship Employers who contemplate terminating the services of their workers must base their decisions on more than just flimsy excuses, considering that the dismissal of an employee from work involves not only the loss of his position but, what is more important, his means of livelihood. The same principle applies in temporary suspension of operations, as in this case, considering that it involves laying off employees for a period of six months. (San Pedro Hospital of Digos v. Sec. of Labor, 1996) IV. Disease ER my terminate an EE who: 1. Has been found to be suffering from any disease; AND 2. whose continued employment is prohibited by law or is prejudicial to his health as well as as to the health of his co-employees. (Art 284) Separation pay = at least 1 month salary or to salary for every year of service, whichever is greater. V. Special Case of Business Transfers Nature of Labor Contract

Financial statements audited by independent external auditors constitute the normal method of proof of the profit and loss performance of a company. (Lopez Sugar Corp. v. Federation of Free Workers, 1990) Financial statements for 2 corporate years is insufficient proof of serious business losses. (Bogo-Medellin Sugar Cane Planters Assn., Inc. v. NLRC, 1998) The condition of business losses is normally show by audited financial documents like yearly balance sheets and profit and loss statements as well as annual income tax returns. Financial statements must be prepared and signed by independent auditors. (Damas International, Inc. v. Daguman, 2005)

Effect of Rehiring Re-hiring or reemployment does NOT negate the imminent losses which prompted the ER to retrench. (Atlantic Gulf and Pacific Co. of Manila v. Meris, 2005) D. Closing of Business Right An ER may close or cease his business operations or undertaking even if he is not suffering from serious business losses or financial reverses, as long as he pays his employees their termination pay in the amount corresponding to their length of service. (Catatista v. NLRC, 1995)

Sundowner Development Corp. v. Drilon, 1989: Unless expressly assumed, labor contracts such as employment contracts and collective bargaining agreements are NOT enforceable against a transferee of an enterprise, labor contracts being in personam, thus binding only between the parties. No law requires a bona fide purchaser of assets of an on-going concern to absorb in its employ the employees of the latter. The parties are liable to the employees if the transaction between the parties is colored or clothed with bad faith.

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PROCEDURAL DUE PROCESS In General Agabon v. NLRC, 2004 Procedural Requirements Basis for termination Just Cause Art 282 Requirements 1. Notice specifying the grounds for which dismissal is sought 2. Hearing or opportunity to be heard 3. Notice of the decision to dismiss Notice to: 1. Employee, & 2. DOLE at least 30 days prior to the effectivity of the separation

LABOR STANDARDS

Effect of Failure of Procedural Due Process Prior to 1989 Wenphil Corp. v. NLRC, 1989 - Belated Due Process Rule termination illegal if termination for just cause = termination valid (NO reinstatement and backwages) + ER to indemnify EE * how computed: depends on the factual circumstances Serrano v. NLRC, 2000 if termination for just or valid cause = termination valid + payment of full backwages * how computed: from the time of dismissal until the Court finds the dismissal to be for just cause Agabon v. NLRC, 2004 if termination for just or authorized cause = termination valid + ER to indemnify EE * sanction in the nature of indemnification or penalty and depends on the facts of each case, taking into special consideration the gravity of the due process violation * indemnity in the form of nominal damages * indemnity stiffer to discourage the practice of dismiss now, pay later Burden of Proof

Authorized Cause Arts 283 & 284

Four Possible Situations

Effect

Liability of ER No liability * separation pay if for authorized cause Reinstatement + Full Backwages * if reinstatement NOT possible = separation pay

Just or Authorized Terminatio Cause + Due n valid Process No Just or Authororized Cause + Due Process Terminatio n invalid

No Just or Authorized Cause + No Due Process

Terminatio n invalid

Reinstatement + Full Backwages * if reinstatement NOT possible = separation pay

Just or Authorized Terminatio Cause + No Due n valid Process

Liable for noncompliance with procedural req'ts *separation pay if for authorized cause

Right to Counsel The right to counsel, a very basic requirement of substantive due process, has to be observed. Indeed, the rights to counsel and to due process of law are two of the fundamental rights guaranteed by the 1987 Constitution to any person under investigation, be the proceeding administrative, civil, or criminal. (Salaw v. NLRC, 1991) Hearing

The burden of proving that the termination of an employee is for a valid or authorized cause rests on the employer. In any event, the employer must comply with due process requirements before any termination is done. (Gothong Lines, Inc. v. NLRC, 1999) Unsubstantiated suspicions and baseless conclusions by employers are not legal justification for dismissing employees. (Maranaw Hotel and Resort Corp. v. NLRC, 1999)

Degree The ground for an employer's dismissal of an employee need be established only by substantial evidence; proof beyond reasonable doubt not required. (Manila Electric Co., Inc. v. NLRC, 1991) Prescription Period An action for reinstatement by reason of illegal dismissal is one based on an injury which may be brought within 4 years from the time of dismissal pursuant to Art. 1146 of the Civil Code. Offer to Reinstate The fact that his ER later made an offer to re-employ the EE did not cure the vice of earlier arbitrary dismissal. (Ranara v. NLRC, 1992) SANCTIONS and REMEDIES

No formal hearing necessary when the EE already admitted his responsibility for the act he was accused of. (Magos v. NLRC, 1998) A formal or trial type hearing is not at all times and in all instances essential to due process, the requirements of which are satisfied where the parties are afforded fair and reasonable opportunity to explain their side of the controversy. It is deemed sufficient for the ER to follow the natural sequence of notice, hearing and judgment. (National Semi-Conductor (HK) Distribution Ltd. v. NLRC, 1998) Ample Opportunity in due process means that kind of assistance that management must accord the EE to enable him to prepare adequately for his defense including legal representation. (La Carlota Planters Assn., Inc. v. NLRC, 1998)

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Art 279 If EE is unjustly dismissed, he is entitled to: 1. 2. Reinstatement without loss of seniority rights and other privileges, AND

LABOR STANDARDS

The parties to a case should not be forced into a situation where a peaceful relationship is not feasible. As the petitioner appears to have lost its trust in private respondent, who in turn is not seeking reinstatement, it would be an act of oppression to compel them to return to the status quo ante. (Pearl S. Buck Foundation, Inc. v. NLRC, 1990) Sentinel Security Agency, Inc. v. NLRC, 1998: The Agency cannot reassign them to the Client, as the former has recruited new security guards; the complainants, on the other hand, refuse to accept other assignment. Verily, complainants do not pray for reinstatement; in fact they refused to be reinstated. Such refusal is indicative of strained relations. Thus, separation pay is awarded in lieu of reinstatement. No Strained Relations Strained relations in order that it may justify the award of separation pay in lieu of reinstatement with backwages, should be such, that they are so compelling & so serious in character, that the continued employment of an employee is so obnoxious to the person/business of the employer & that the continuation of such employment has become inconsistent with peace & tranquility which is an ideal atmosphere in every workplace. (Sibal v. Notre Dame of Greater Manila, 1990) Options and Rationale

Full Backwages - inclusive of allowances, and to other benefits or their monetary equivalent computed from the time his compensation was withheld up to the time of actual reinstatement. Reinstatement and backwages are separate and distinct reliefs given to an illegally dismissed EE. (Judy Phils., Inc. v. NLRC, 1998)

I. Reinstatement Definition

Reinstatement is aimed to restore the situation as nearly as possible to status quo ante the unfair labor practice. This requires that those deprived of a recognized and protected interest by violations of the law should be made whole so as to prevent the violator from profiting from his misdeeds (Union of Supervisor, etc. v. Secretary of Labor, 1984)

Employee Right An illegally dismissed employee is entitled to reinstatement as a matter of right. However, where reinstatement is not feasible, expedient or practical, as where reinstatement would only exacerbate the tension and strained relations between the parties, or where the relationship between the employer and employee has been unduly strained by reason of their irreconcilable differences, particularly where the illegally dismissed employee held a managerial or key position in the company, it would be more prudent to order payment of separation pay instead of reinstatement. (Quijano v. Mercury Drug Corp., 1998) Effect of failure to Ask Relief The relief of reinstatement, to which the EE is entitled to under the law, may be granted in his favor although he failed to specifically pray for it in his complaint. (General Baptist Bible College v. NLRC, 1993) Exceptions 1. Business Conditions

The reinstatement remedy must always be adapted to economic-business conditions. (Union of Supervisors, etc. v. Sec. of Labor, 1984) Sec. 13, Book IV, of the IRR provides that in the absence of a retirement plan, agreement or policy an employee may be retired upon reaching the age of 60 years. Thus, t an employee may retire, or may be retired by his employer, upon reaching 60. An employee held to be illegally dismissed cannot be reinstated if he had already reached the age of 60 years at the time of his second complaint (pressing for reinstatement) before the Labor Arbiter's Office. (Espejo v. NLRC, 1996)

The order of immediate reinstatement pending appeal, in cases of illegal dismissal is an ancillary relief under RA 6715 granted to a dismissed employee to cushion him & his family against the impact of economic dislocation or abrupt loss of earnings. If the employee chooses not to report for work pending the resolution of the case on appeal, he foregoes such a temporary relief and is not paid of his salary. (Jardine Davies, Inc. v. NLRC, 1993) The provision of Article 223 is clear that an award for reinstatement shall be immediately executory even pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. The legislative intent is quite obvious, i.e., to make an award of reinstatement immediately enforceable, even pending appeal. To require the application for and issuance of a writ of execution as prerequisites for the execution of a reinstatement award would certainly betray and run counter to the very object and intent of Article 223, i.e., the immediate execution of a reinstatement order. The reason is simple. An application for a writ of execution and its issuance could be delayed for numerous reasons. (Pioneer Texturizing Corp. v. NLRC, 1997) The posting of a bond by the ER shall NOT stay the execution for reinstatement. (International Container Services, Inc. v. NLRC, 1998)

II. Backwages Definition The term "backwages" has been defined as that for earnings lost by a worker due to his illegal dismissal. Backwages are generally granted on grounds of equity. Payment thereof is a form of relief that restores the income lost by reason of such unlawful dismissal. It is not private compensation or damages, but is awarded in furtherance and effectuation of the public objectives of the labor Code. Nor is it a redress of a private right but, rather, in the nature of a command to the employer to make public reparation for dismissing an employee, either due to the former's unlawful act or bad faith. (St. Theresa's School of Novaliches Foundation v. NLRC, 1998) The term back wages without qualification and deduction means that the workers are to be paid their back wages fixed as of the time of the dismissal or strike without deduction for their earnings elsewhere during their layoff and without qualification of their wages as thus fixed; i.e., received by their co-workers who are not dismissed or did not go on strike. Awards including salary differentials are not allowed. The salary base properly used should, however, include not only the basic salary but also the emergency cost of living allowances and also transportation allowances if the workers

2. Strained Relations Doctrine of Strained Relations: Where reinstatement is not feasible, expedient or practical, as where reinstatement would only exacerbate the tension and strained relations between the parties, or where the relationship between the employer and employee has been unduly strained by reason of their irreconcilable differences, particularly where the illegally dismissed employee held a managerial or key position in the company, it would be more prudent to order payment of separation pay instead of reinstatement. (Quijano vs. Mercury Drug Corp., 1998)

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are entitled thereto. (General Baptist Bible College v. NLRC, 1993) Remedy Backwages Represents compensation that should be earned but not collected because of unjust dismissal Basis of Computation Actual period when EE was unlawfully prevented from working

LABOR STANDARDS
Exception: Separation pay allowed as a measure of social justice in instances where the EE is dismissed for causes other than serious misconduct or those reflecting on his moral character. (PLDT Co. . NLRC, 1988) When Not Allowed Financial assistance is NOT allowed when: 1. The cause of the dismissal is serious misconduct on the part of the EE, or 2. Other causes reflecting adversely on the EE's moral character. IV. Separation Pay Basis Installation of labor saving devices Redundancy Amount 1 month pay or at least 1 month pay for every year of service 1 month pay or at least 1 month pay for every year of service 1 month pay or at least month pay for every year of service, whichever is higher 1 month pay or at least month pay for every year of service, whichever is higher 1 month salary or month salary for every year of service, whichever is greater 1 month pay for every year of service

Separation Pay (due to strained relations)

Granted when Length of EE's reinstatement is service not longer advisable because of strained relations Salaries earned prior to dismissal Salaries actually earned

Unpaid Salary

Effect of Failure to Claim The failure to claim back wages in a complaint for illegal dismissal has been held to be a mere procedural lapse which cannot defeat a right granted under substantive law. (De la Cruz v. NLRC, 1998) Effect of Failure to Order Auror Land, etc. v. NLRC, 1997: In this case, the failure of the Labor Arbiter and the public respondent NLRC to award back wages to the private respondent, who is legally entitled thereto having been illegally dismissed, amounts to a plain error which we may rectify in this petition, although private respondent did not bring any appeal regarding the matter, in the interest of substantial justice. Period - Computation PRIOR TO 1974 Backwages reduced by wages actually earned by EE from employment during the period of his separation, or the wages he could have earned had he been diligent enough to find a job Retrenchment to prevent losses Closure or cessation of operations NOT due to serious business losses Disease

Strained Relations in lieu of Reinstatement Computation

Mercury Drug Co., Inc. Backwages for a period of 3 v. CIR, 1974 years without qualification and deduction RA 6715, 1989 Ferrer v. NLRC, 1993 FULL BACKWAGES Mercury Drug Rule no longer applicable, but Court still allowed ER to deduct any amount earned by EE during period of illegal termination.

Bustamante v. NLRC Backwages to be awarded to an and Evergreen Farms, illegally dismissed EE, should 1996 NOT, as a general rule, be diminished or reduced by the earnings derived by him elsewhere during the period of illegal dismissal. Effect of Inflation The effects of extraordinary inflation are not to be applied without an official declaration thereof by competent authorities. (Lantion v. NLRC, 1990) III. Financial Assistance GR: A person dismissed for cause is NOT entitled to separation pay.

Millares v. NLRC,1999: In case of retrenchment to prevent losses, Art. 283 of the Labor Code imposes on the employer an obligation to grant to the affected employees separation pay equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. Since the law speaks of "pay," the question arises, "What exactly does the term connote?" We correlate Art. 283 with Art. 97 of the same Code on definition of terms. "Pay" is not defined therein but "wage." In Songco the Court explained that both words (as well as salary) generally refer to one and the same meaning, i.e., a reward or recompense for services performed. Specifically, "wage" is defined in letter (f) as the remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee. We invite attention to the above-underlined clause. Stated differently, when an employer customarily furnishes his employee board, lodging or other facilities, the fair and reasonable value thereof, as determined by the Secretary of Labor and Employment, is included in "wage." In order to ascertain whether the subject allowances form part of petitioner's "wages," we divide the discussion on the following "customarily furnished;" "board, lodging or other facilities;" and, "fair reasonable value as determined by the Secretary of Labor." "Customary" is founded on long-established and constant practice connoting regularity. The receipt of an allowance on a monthly basis does not ipso facto characterize it as regular and forming part of salary because the nature of the grant is a factor worth considering.

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Although it is quite easy to comprehend "board" and "lodging," it is not so with "facilities." Thus Sec. 5, Rule VII, Book III, of the Rules Implementing the Labor Code gives meaning to the term as including articles or services for the benefit of the employee or his family but excluding tools of the trade or articles or service primarily for the benefit of the employer or necessary to the conduct of the employer's business. XXX In determining whether a privilege is a facility, the criterion is not so much its kind but its purpose. Effect of Acceptance A dismissed employee who has accepted separation pay is not necessarily estopped from challenging the validity of his or her dismissal. Neither does it relieve the employer of legal obligations. (Anino v. NLRC, 1998) Liability of Corporate Officers In cases of illegal dismissal, corporate directors and officers are solidarily liable with the corporation, where terminations of employment are done with malice or in bad faith. (Bogo-Medelin Sugarcane Planters Assn., Inc. v. NLRC, 1998) V. Damages

LABOR STANDARDS
PART XIX RETIREMENT
Retirement Plan or Agreement An EE may be retired upon reaching the retirement age established in: 1. 2. Collective Bargaining Agreement, OR Other applicable employment contract

EE entitled to receive retirement benefits under: 1. existing laws 2. any collective bargaining agreement 3. other agreements - An EE's retirement benefits under any CBA and other agreements shall not be less than those provided therein No Retirement Plan or Agreement An EE may retire if he has: 1. Reached the age of 60 or more, but not beyond 65; 2. Served at least 5 years in the establishment EE entitled to at least month salary for every year of service a fraction of at least 6 months = 1 year month salary = 15 days + 1/12 of the 13th month pay + cash equivalent of not more than 5 days of service incentive leaves the parties my provide for broader inclusions Underground Mining EE may retire upon reaching the age of 50 or more, but not more than 60, if he has served at least 5 years Exempted 1. 2. 3. 4. Retail Service Agricultural establishments or operations employing not more than 10 EEs or workers

Award of moral and exemplary damages for an illegally dismissed employee is proper where the employee had been harassed and arbitrarily terminated by the employer. Moral damages may be awarded to compensate one for diverse injuries such as mental anguish, besmirched reputation, wounded feelings and social humiliation occasioned by the employers unreasonable dismissal of the employee. (Cruz v. NLRC, 2000) To warrant an award of moral damages, it must be shown that the dismissal of the employee was attended to by bad faith, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy. (Nueva Ecija Electric Cooperative, Inc. v. NLRC, 2000) Moral damages are recoverable only where the dismissal of the employee was tainted by bad faith or fraud, or where it constituted an act oppressive to labor, and done in a manner contrary to morals, good customs, or public policy. Exemplary damages may be awarded only if the dismissal was done in a wanton, oppressive, or malevolent manner. None of these circumstances exist in the present case. (Permex, Inc. v. NLRC, 2000)

Rationale It is intended to help the employee enjoy the remaining years of his life, releasing him from the burden of worrying for his financial support, and are a form of reward for his loyalty. (Producers Bank of the Phils. v. NLRC, 1998) Eligibility Before a right to retirement benefits or pension vests in an employee, he must have met the stated conditions of eligibility with respect to the nature of employment, age and length of service. This is a condition precedent to his acquisition of rights thereunder. (Brion v. South Phil. Union Mission of the Seventh Day Adventist Church, 1999) Accrual of Benefits Entitlement to retirement benefits may accrue either (a) under existing laws or (b) under a collective bargaining agreement or other employment contract. It is at once apparent that Article 287 does not itself purport to impose any obligation upon employers to set up retirement scheme for their employees over and above that already established under existing laws. (Llora Motors, Inc. v. Drilon, 1989) Private Plan Employer Obligation There are 3 kinds of retirement schemes: 1. compulsory and contributory in character 2. set up by agreement between the employer and the employees in collective bargaining agreements or other agreements between them (Llora v. Drilon). 3. one that is voluntarily given by the employer, expressly as in an announced company policy or impliedly as in a failure to contest the EEs claim for retirement benefits (Allied Investigation Bureau, Inc. v. Ople)

Determination of Amount In determining the amount of damages recoverable, the business, social and financial position of the offended parties and the business and financial position of the offender are taken into account. (Nueva Ecija Electric Cooperative, Inc. v. NLRC, 2000)

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