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LABOR STANDARDS

B. LEGAL BASIS
i. 1987 Philippine Constitution

I.

Fundamental Principles and


Policies

a. Social Justice

Social Justice, defined


It is neither communism, nor despotism nor
atomism nor anarchy, but the humanization or laws
A. LABOR LAW
and the equalization of social and economic forces by
That body of statutes, rules and doctrines that the State so that justice in its rational and objectively
2
defines State policies on labor and employment, and secular conception may at least be approximated.
governs the rights and duties of workers and
employers respecting terms and conditions of Sec 5, Art II, 1987 Constitution:
employment by prescribing certain standardsDeclaration of Principles
therefore, or by establishing a legal frameworkThe maintenance of peace and order, the
within which better terms and conditions of workprotection of life, liberty, and property, and the
could be obtained through collective bargaining or promotion of the general welfare are essential
for the enjoyment by all the people of the
other concerted activity.
blessings of democracy.
Labor Law, defined
Law governing the rights and duties of employer and Sec 10, Art II, 1987 Constitution:
Declaration of State Policies
employees respecting term and conditions of
The State shall promote social justice in all
employment by:
phases of national development.
1. Prescribing certain standards, or
2. By establishing a legal framework within
which better terms and conditions of work
could be obtained through:
Sec 1, Art XIII, 1987 Constitution:
a. Collective Bargaining or
Social Justice and Human Rights
b. Other concerted activity
The Congress shall give highest priority to the
enactment of measures that protect and enhance
Elements of labor law
the right of all the people to human dignity,
1. Labor Standards law
reduce
social,
economic,
and
political
Labor Standards is that branch of Labor Law inequalities, and remove cultural inequalities by
that establishes the minimum terms andequitably diffusing wealth and political power for
conditions of employment that an employerthe common good.
must provide to the workers.1
To this end, the State shall regulate the
2. Labor relations
acquisition, ownership, use and, disposition of
Regulates the institutional relationshipproperty and its increments.
between the workers organized into a union
and the employers.
Sec 2, Art XIII, 1987 Constitution
The promotion of social justice shall include the
3. Social Legislation
commitment to create economic opportunities
Includes laws that provide particular kinds based on freedom of initiative and self-reliance.
of protection or benefits to society or
segments thereof in furtherance of social
justice.

1 Abad, Jr, Antonio H. (2008). The Law on Labor Standards. Rex


Printing Company, Inc.
2 Calalang v Williams, 70 Phil. 762 (1940)

b. Protection of Labor
Sec 1, Art XIII, 1987 Constitution:
Social Justice and Human Rights
The Congress shall give highest priority to the
enactment of measures that protect and enhance
the right of all the people to human dignity,
reduce
social,
economic,
and
political
inequalities, and remove cultural inequalities by
equitably diffusing wealth and political power for
the common good.
To this end, the State shall regulate the
acquisition, ownership, use and, disposition of
property and its increments.
Sec 2, Art XIII, 1987 Constitution
The promotion of social justice shall include the
commitment to create economic opportunities
based on freedom of initiative and self-reliance.

ii. Civil Code


Article 1700, Book IV, New Civil Code
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 the special laws on labor unions,
collective bargaining, strikes and lockouts,
closed shop, wages, working conditions, hours of
labor and similar subjects.
Article 1701, Book IV, New Civil Code
Neither capital nor labor shall act oppressively
against the other, or impair the interest or
convenience of the public.

applied the principles of law governing ordinary


contracts. A CBA, as a labor contract within the
contemplation of Article 1700 of the Civil Code of
the Philippines which governs the relations
between labor and capital, is not merely
contractual in nature but impressed with public
interest, thus, it must yield to the common good.
As such, it must be construed liberally rather
than narrowly and technically, and the courts
must place a practical and realistic construction
upon it, giving due consideration to the context
in which it is negotiated and purpose which it is
intended to serve. (Cirtek Employees Labor
Union-FFW v Cirtek Electronics, 2010)
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. vs. CA, 1985)
Mutual obligation
The employer's obligation to give his 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. vs. Lariosa,
1987)
Compliance with law
It is also important to emphasize that the returnto-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 vs. Tuico,
1988)

Employee's compliance and obedience to


Contracts
employer's orders
Under the Civil Code, contracts of labor are
The lack of a written or formal designation
explicitly subject to the police power of the state
should not be an excuse to disclaim any
because they are not ordinary contracts but are
responsibility for any damage suffered by the
impressed with public interest. Inasmuch as in
employer due to his negligence. The measure of
this particular instance the contract in question
the responsibility of an employee is that if he
would have been deemed in violation of
performed his assigned task efficiently and
pertinent labor laws, the provisions of said laws
according to the usual standards, then he may
would prevail over the terms of the contract, and
not be held personally liable for any damage
private respondent would still be entitled to
arising there from. Failing in this, the employee
overtime pay. (PAL Employees Savings And
must suffer the consequences of his negligence if
Loan Assn., Inc. vs. NLRC, 1996)
not lack of due care in the performance of his
duties. (PCIB vs. Jacinto, 1991)
Liberal Construction
While the terms and conditions of a CBA
constitute the law between the parties, it is not iii. Labor Code
however, an ordinary contract to which is

Art. 3. Declaration of basic policy.


The State shall afford protection to labor,
promote full employment, ensure equal work
opportunities regardless of sex, race or creed and
regulate the relations between workers and
employers. The State shall assure the rights of
workers
to
self-organization,
collective
bargaining, security of tenure, and just and
humane conditions of work.
Art. 211. Declaration of Policy.
A. It is the policy of the State:
(a) To promote and emphasize the primacy of
free collective bargaining and negotiations,
including voluntary arbitration, mediation and
conciliation, as modes of settling labor or
industrial disputes;
(b) To promote free trade unionism as an
instrument for the enhancement of democracy
and the promotion of social justice and
development;
(c) To foster the free and voluntary organization
of a strong and united labor movement;
(d) To promote the enlightenment of workers
concerning their rights and obligations as union
members and as employees;
(e) To provide an adequate administrative
machinery for the expeditious settlement of
labor or industrial disputes;
(f) To ensure a stable but dynamic and just
industrial peace; and
(g) To ensure the participation of workers in
decision and policy-making processes affecting
their rights, duties and welfare.
To encourage a truly democratic method of
regulating the relations between the employers
and employees by means of agreements freely
entered into through collective bargaining, no
court or administrative agency or official shall
have the power to set or fix wages, rates of pay,
hours of work or other terms and conditions of
employment, except as otherwise provided
under this Code. (As amended by Section 3,
Republic Act No. 6715, March 21, 1989)
Art. 212. Definitions.
(a) "Commission" means the National Labor

Relations Commission or any of its divisions, as


the case may be, as provided under this Code.
(b) "Bureau" means the Bureau of Labor
Relations and/or the Labor Relations Divisions
in the regional offices established under
Presidential Decree No. 1, in the Department of
Labor.
(c) "Board" means the National Conciliation and
Mediation Board established under Executive
Order No. 126.
(d) "Council" means the Tripartite Voluntary
Arbitration Advisory Council established under
Executive Order No. 126, as amended.
(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 the 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.
(g) "Labor organization" means any union or
association of employees which exists in whole
or in part for the purpose of collective bargaining
or of dealing with employers concerning terms
and conditions of employment.
(h) "Legitimate labor organization" means any
labor organization duly registered with the
Department of Labor and Employment, and
includes any branch or local thereof.
(i) "Company union" means any labor
organization whose formation, function or
administration has been assisted by any act
defined as unfair labor practice by this Code.
(j) "Bargaining representative" means a
legitimate labor organization whether or not
employed by the employer.
(k) "Unfair labor practice" means any unfair
labor practice as expressly defined by the Code.

(l) "Labor dispute" includes any controversy or


matter concerning terms and conditions of
employment or the association or representation
of persons in negotiating, fixing, maintaining,
changing or arranging the terms and conditions
of employment, regardless of whether the
disputants stand in the proximate relation of
employer and employee.
(m) "Managerial employee" is one who is vested
with the powers or prerogatives to lay down and
execute management policies and/or to hire,
transfer, suspend, lay-off, recall, discharge,
assign or discipline employees. Supervisory
employees are those who, in the interest of the
employer,
effectively
recommend
such
managerial actions if the exercise of such
authority is not merely routinary or clerical in
nature but requires the use of independent
judgment. All employees not falling within any of
the above definitions are considered rank-andfile employees for purposes of this Book.
(n) "Voluntary Arbitrator" means any person
accredited by the Board as such or any person
named or designated in the Collective Bargaining
Agreement by the parties to act as their
Voluntary Arbitrator, or one chosen with or
without the assistance of the National
Conciliation and Mediation Board, pursuant to a
selection procedure agreed upon in the
Collective Bargaining Agreement, or any official
that may be authorized by the Secretary of Labor
and Employment to act as Voluntary
Arbitrator upon the written request and
agreement of the parties to a labor dispute.
(o) "Strike" means any temporary stoppage of
work by the concerted action of employees as a
result of an industrial or labor dispute.

peaceful picketing affecting wages, hours or


conditions of work or in the exercise of the right
of self-organization or collective bargaining.
(s) "Strike area" means the establishment,
warehouses, depots, plants or offices, including
the sites or premises used as runaway shops, of
the employer struck against, as well as the
immediate vicinity actually used by picketing
strikers in moving to and fro before all points of
entrance to and exit from said establishment.
Art.
255.
Exclusive
bargaining
representation and workers participation
in policy and decision-making.
The labor organization designated or selected by
the majority of the employees in an appropriate
collective bargaining unit shall be the exclusive
representative of the employees in such unit for
the purpose of collective bargaining. However,
an individual employee or group of employees
shall have the right at any time to present
grievances to their employer.
Any provision of law to the contrary
notwithstanding, workers shall have the right,
subject to such rules and regulations as the
Secretary of Labor and Employment may
promulgate, to participate in policy and
decision-making processes of the establishment
where they are employed insofar as said
processes will directly affect their rights, benefits
and welfare. For this purpose, workers and
employers
may
form
labor-management
councils: Provided, That the representatives of
the workers in such labor-management councils
shall be elected by at least the majority of all
employees in said establishment. (As amended
by Section 22, Republic Act No. 6715, March 21,
1989)

(p) "Lockout" means any temporary refusal of an


employer to furnish work as a result of an
industrial or labor dispute.
(q) "Internal union dispute" includes all disputes
or grievances arising from any violation of or
disagreement over any provision of the
constitution and by laws of a union, including
any violation of the rights and conditions of
union membership provided for in this Code.
(r) "Strike-breaker" means any person who
obstructs, impedes, or interferes with by force,
violence, coercion, threats, or intimidation any

C. WORK RELATIONSHIP
Employer and employee, defined
Person, defined
Art 97. Definitions, (a) Person
The relation between capital and labor are not
merely contractual. They are so impressed with
public interest that labor contracts must yield to

common good. Therefore, such contracts are


subject to the special laws on labor unions,
collective bargaining, strikes and lockouts,
closed shop, wages, working conditions, hours of
labor and similar subjects
Employer, defined
Art 97. Definitions, (b) Employer
Any person acting directly or indirectly in the
interest of an employer in relation to an
employee and shall include government and all
its branches, subdivisions and instrumentalities,
all
government-owned
or
controlled
corporations and institutions, non-profit private
institutions, or organizations.3
Employee, defined
Art 97. Definitions, (c) Employee
Any individual employed by an employer
Art 167. Definitions, (c) Employee
Any person compulsorily covered by the GSIS
under Commonwealth Act no. 186 as amended,
including the members of the Armed Forces of
the Philippines, and any person employed as
casual, emergency, temporary, substitute or
contractual, or any person compulsory covered
by the SSS under RA 1161, as amended.4
Art 212. Definitions, (f) Employee
The term shall not be limited to the employees of
a particular employer, unless the 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.5

i. Employer-employee relationship
3 Art 97. Definitions, (a) Employer

Concept of Employer-Employee relationship


Art 1700, Civil Code
The relation between capital and labor are not
merely contractual. They are so impressed with
public interest that labor contracts must yield to
common good. Therefore, such contracts are
subject to the special laws on labor unions,
collective bargaining, strikes and lockouts,
closed shop, wages, working conditions, hours of
labor and similar subjects
Existence of Employer-Employee
relationship as condition sine quo non.
The law on labor standards is predicated upon the
existence of an employer-employee relationship.
Absent employer-employee relation, the law on labor
standards will not apply.6
Four-Fold Test: The four elements must be
considered to determine the existence of employeremployee relationship:
1. Selection and engagement of the
employees
2. Payment of wages
3. Power of dismissal
4. Power to control the employees conduct in
relation to his work,

The control test is the most crucial indication


of the existence of an employer-employee
relationship.7
Power of control refers to the existence of the
power and not necessarily to the actual exercise
thereof.
The most important is the employers control of
the employees conduct, not only as to the
results of the work to be done, but also as to the
means and methods to accomplish.

ii. Independent contractor and laboronly contractor


Independent contractor, defined
The independent contractor is tasked to do work
according to his own methods and without the
control of the sub-contractor only as to the results.

4 Art 167. Definitions, (c) Employee, Title II: Employees 6 Abad, Jr, Antonio H. (2008). The Law on Labor Standards. Rex
compensation and State Insurance Fund, Book 4: Health, SafetyPrinting Company, Inc.
and Social Welfare Benefits, Labor Code

7 The Manila Hotel Corp v. NLRC, 343 SCRA 1 (2000); Jo v.


5 Art 212. Definitions, (f) Employee, Title I: Policy and NLRC 324 SCRA 437 (2000); Canlubang Security Agency v.
Definitions. Book 5: Labor Relations, Labor Code
NLRC, et al., 216 SCRA 280 (1992).

They must have:


This trilateral relationship is limited
1. Substantial Capital
only to ensure that the employee get paid
2. Assure that the contractual employees are
what is due them.
entitled to all labor and occupational safety
and health standards, free to exercise right
to self-organization, security of tenure and
II. Recruitment and Placement
social and welfare benefits.
Labor only contractor, defined
This happens when the contractors merely supply, A. Definition of Terms
recruit, or place workers to perform job, work/
service for the principal and any of the following are License, defined
present:
Article 13 (d) and (f), Labor Code
A license is a document issued by the
1. Does not have substantial capital and Department of Labor and Employment (DOLE)
2. Does not have substantial Investment authorizing a person or entity to operate a
3. The service to be rendered by the employeeprivate employment agency, while an authority
is directly related to the main business is a document issued by the DOLE authorizing a
4. The recruiter does not exercise controlperson or association to engage in recruitment
over the performance of the contractualand placement activities as a private recruitment
employees
agency.

iii. Liability of indirect employer


Liability of indirect employer
Article 106: Trilateral Relationship in
Contracting Arrangements, Labor Code
In legitimate contracting, there exists a trilateral
relationship under which there is a contract for a
specific job, work or service between the
principal and the contractor or subcontractor,
and a contract of employment between the
contractor or subcontractor and its workers.
Hence, there are three parties involved in these
arrangements, the principal which decides to
farm out a job or service to a contractor or
subcontractor, the contractor or subcontractor
which has the capacity to independently
undertake the performance of the job, work or
service, and the contractual workers engaged by
the contractor or subcontractor to accomplish
the job work or service.

Private Employment Agency and Private


Recruitment Agency, distinguished
Type
Definition
Requires
Private
Any person or
License
Employment entity engaged in
Agency
recruitment and
placement of
workers for a fee
Private
Any person or
Authority
Recruitment association
Agency
engaged in the
recruitment and
placement of
workers, locally or
overseas, without
charging, directly
or indirectly, any
fee

Recruitment and placement, defined


Article 13 (b), Labor Code
Recruitment and placement refers to any act of
An employer who enters into a contract with acanvassing, enlisting, contracting, transporting,
contract for the performance of work for theutilizing, hiring or procuring of workers, and
employer does not create an employee employer includes referrals, contract services, promising
relationship between himself and the contractor.or advertising for employment, locally or abroad
However, when a contractor fails to pay the whether for profit or not: Provided, that any
wages and benefits of the worker they will beperson or entity, which in any manner offers or
promises for a fee employment to two or more
jointly and severally liable.8
persons shall be deemed engaged in recruitment
and placement.
8 Phil. Bank Communications vs. NLRC 146 SCRA 347 (1986)

The number of persons dealt with is not an including the establishment of a registration
essential ingredient of the act of recruitment and and/or work permit system;
placement of workers.9
Any of the acts mentioned in Art 13(b) willf) To strengthen the network of public
constitute recruitment and placement even if employment offices and rationalize the
only prospective worker is involved. The proviso participation of the private sector in the
merely lays down a rule of evidence that when a recruitment and placement of workers, locally
fee is collected in consideration of a promise orand overseas, to serve national development
offer of employment to two or more prospective objectives;
workers, the individual or entity dealing with
them shall be deemed to be engaged in the act of g) To insure careful selection of Filipino workers
recruitment and placement. 10
for overseas employment in order to protect the
good name of the Philippines abroad.

B. EMPLOYMENT POLICIES
Art 2, Section 9, 1987 Constitution
The State shall promote a just and dynamic
social order that will ensure the prosperity and
independence of the nation and free the people
from poverty through policies that provide
adequate
social
services,
promote
full
employment, a rising standard of living, and an
improved quality of life for all.
Art 12, Labor Code
It is the policy of the State:

a) To promote and maintain a state of


full employment through improved
manpower training, allocation and
utilization;
b) To protect every citizen desiring to
work locally or overseas by securing for
him the best possible terms and
conditions of employment;
c) To facilitate a free choice of available
employment by persons seeking work in
conformity with the national interest;
d) To facilitate and regulate the movement of
workers in conformity with the national interest;

RA 8042 redefines the policy of overseas


employment and establishes a higher
standard of protection and promotion of
the welfare of migrant worker, their
families, and of overseas Filipinos in
distress. It declares that the State does not
promote overseas employment as a means to
sustain economic growth and national
development. It conveys that, instead, the State
shall continuously create local employment
opportunities and promote the equitable
distribution of wealth and the benefits of
development. The ultimate aim is local
instead of foreign employment.11
The Act further requires certain guarantee of
protection for the overseas workers before they
are deployed. For instance, the receiving country
should have signed a multi-nation document
affording protection to migrant workers or an
agreement with the Philippine government
protecting the rights of overseas Filipino
workers.12
Selective employment and seasonal bans are two
governmental policies in order to protect the
migrant and overseas employees.

C.
EMPLOYMENT
ENTITIES

e) To regulate the employment of aliens,

Art 12 (f), Labor Code


a. Allowed Entities

9 People v Panis, 142 SCRA 667 (1986)

11 Azucena

10 People v Panis, 142 SCRA 667 (1986)

12 Azucena

AGENCIES/

It is the policy of the State to strengthen the


network of public employment offices and
rationalize the participation of the private sector
in the recruitment and placement of workers,
locally and overseas, to serve national
development objective.
Art 16, Labor Code
Except as provided in Chapter II of this Title, no
person or entity other than the public
employment offices, shall engage in the
recruitment and placement of workers.
Art 18. Ban on Direct Hiring, Labor Code
No employer may hire a Filipino worker for
overseas employment except through the Boards
and entities authorized by the Secretary of
Labor. Direct hiring by members of the
diplomatic corps, international organizations
and such other employers as may be allowed by
the Secretary of Labor is exempted from this
provision.

recruitment and placement of Filipino workers for


overseas employment:13
1.

Filipino citizens, partnerships or corporations at


least seventy-five percent (75%) of the
authorized and voting capital stock of which is
owned and controlled by Filipino citizens;
2. A minimum capitalization of Two Million Pesos
(P2,000,000.00) in case of a single
proprietorship or partnership and a minimum
paid-up capital of Two Million Pesos
(P2,000,000.00) in case of a corporation;
Provided that those with existing licenses shall,
within four years from effectivity hereof, increase
their capitalization or paid up capital, as the case
may be, to Two Million Pesos (P2,000,000.00)
at the rate of Two Hundred Fifty Thousand
(P250,000.00) every year; and
3. Those not otherwise disqualified by law or other
government regulations to engage in the
recruitment and placement of workers for
overseas employment [seafarers].

As a general rule, only public employment officesi. Private Employment Agency


are allowed to engage in recruitment and
placement of workers. The foregoing provisionsPrivate fee-charging employment agency,
show that the law distrusts private entities indefined
recruiting and placing workers because theArt 13 (c), Labor Code
legislators believe that it is in the better interest "Private fee-charging employment agency"
means any person or entity engaged in
of the workers if the State handles this.
recruitment and placement of workers for a fee
which is charged, directly or indirectly, from the
Art 25, Labor Code
workers or employers or both.
Pursuant to national development objectives and
in order to harness and maximize the use of
License, defined
private sector resources and initiative in the
Art 13 (d), Labor Code
development and implementation of a
"License" means a document issued by the
comprehensive employment program, the
Department of Labor authorizing a person or
private employment sector shall participate in
entity to operate a private employment agency.
the recruitment and placement of workers,
locally and overseas, under such guidelines,
rules and regulations as may be issued by the
Secretary of Labor.
ii. Private Recruitment Entity

This article seems to be in contrast to Articles 16 Private recruitment entity, defined


& 18 but instead it allows private sectors toArt 13 (e), Labor Code
create a partnership with the State in"Private recruitment entity" means any person
recruitment and placement of workers.
or association engaged in the recruitment and
placement of workers, locally or overseas,
Qualifications
without charging, directly or indirectly, any fee
Only those who possess the following qualifications from the workers or employers.
may be permitted to engage in the business of
13 POEA Rules and Regulations Governing the Recruitment and
Employment of Land-based Overseas Workers (Sec. 1, Part II,
Rule I, 2002 POEA Rules)

Authority, defined
Article (f), Labor Code
"Authority" means 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.

iii. Public Employment Offices


Article 14, Labor Code
The Secretary of Labor shall have the power and
authority:
a.

To organize and establish new employment


offices in addition to the existing
employment offices under the Department
of Labor as the need arises;
b. To organize and establish a nationwide job
clearance and information system to inform
applicants registering with a particular
employment office of job opportunities in
other parts of the country as well as job
opportunities abroad;
c. To develop and organize a program that will
facilitate occupational, industrial and
geographical mobility of labor and provide
assistance in the relocation of workers from
one area to another; and
d. To require any person, establishment,
organization or institution to submit such
employment information as may be
prescribed by the Secretary of Labor.
Sec. 3(f) Powers and Functions, EO No.
247 (1986) Reorganizing the Philippines
Overseas Employment Administration
and For Other Purposes
The POEA shall recruit and place workers to
service the requirement for trained and
competent Filipino workers by foreign
governments and their instrumentalities and
such other employers as public interest may
require.

iv. Prohibited Entity


Article 26, Labor Code
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.

Disqualifications
The following are not qualified to engage in the
business of recruitment and placement of Filipino
workers overseas:14
1. Travel agencies and sales agencies of airline
companies;
2. Officers or members of the Board of any
corporation or members in a partnership
engaged in the business of a travel agency;
3. Corporations and partnerships, when any of its
officers, members of the board or partners, is
also an officer, member of the board or partner
of a corporation or partnership engaged in the
business of a travel agency;
4. Persons, partnerships or corporations which
have derogatory records, such as but not limited
to the following:
a. Those certified to have derogatory record
or information by the National Bureau of
Investigation or by the Anti-Illegal
Recruitment Branch of the POEA;
b. Those against whom probable cause or
prima facie finding of guilt for illegal
recruitment or other related cases exists;
c. Those convicted for illegal recruitment or
other related cases and/or crimes
involving moral turpitude; and
d. Those agencies whose licenses have been
previously revoked or cancelled by the
Administration for violation of RA 8042,
PD 442 as amended and their
implementing rules and regulations as well
as these rules and regulations.
All applicants for issuance/renewal of
license shall be required to submit
clearances from the National Bureau of
Investigation and Anti-illegal Recruitment
Branch, POEA, including clearances for
their respective officers and employees.
5. Any official or employee of the DOLE, POEA,
OWWA, DFA and other government agencies
directly involved in the implementation of R.A.
8042, otherwise known as Migrant Workers and
Overseas Filipino Act of 1995 and/or any of
his/her relatives within the fourth civil degree of
consanguinity or affinity; and
6. Persons or partners, officers and Directors of
corporations whose licenses have been
previously cancelled or revoked for violation of
recruitment laws.
14 POEA Rules and Regulations Governing the Recruitment and
Employment of Seafarers (Sec. 2, Part II, Rule I, 2003 POEA
Rules)

D. GOVERNMENT TECHNIQUES
REGULATION
PRIVATE RECRUITMENT
i. Issuance of License
Art 27. Citizenship Requirement, POEA
Rules
Only Filipino citizens or corporations,
partnerships or entities at least seventy-five
percent (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.

All applicants for license or authority shall post


such cash and surety bonds as determined by the
Secretary of Labor to guarantee compliance with
prescribed recruitment procedures, rules and
OFregulations, and terms and conditions of
employment as may be appropriate.
Every applicant for license to operate a
private employment agency shall submit a
written application together with the
following requirements:15

A certified copy of the Articles of Incorporation


or of Partnership duly registered with the
Securities and Exchange Commission (SEC), in
the case of corporation or partnership or
Certificate of Registration of the firm or business
name with the Department of Trade and
Industry (DTI), in the case of a single
proprietorship;
2. Proof of financial capacity: In the case of a single
proprietorship or partnership, verified income
Art 28. Capitalization, POEA Rules
tax returns of the proprietors or partners for the
All applicants for authority to hire or renewal of
past two (2) years and a savings account
license to recruit are required to have such
certificate showing a maintaining balance of not
substantial capitalization as determined by the
less than P500,000.00, provided that the
Secretary of Labor.
applicant should submit an authority to examine
such bank deposit.
The minimum paid-up capital for single
3.
In the case of a newly organized corporation,
proprietorship must be at least 2 million pesos.
savings
account
certificate
showing
a
maintaining balance of not less than
Art 29. Non-transferability of license or
P500,000.00 with authority to examine the
authority, POEA Rules
same. For an existing corporation, submission of
Non-transferability of license or authority. - No
a verified financial statement, corporate tax
license or authority shall be used directly or
returns for the past two (2) years and savings
indirectly by any person other than the one in
account certificate showing a maintaining
whose favor it was issued or at any place other
balance of not less than P500,000.00 with the
than that stated in the license or authority be
corresponding authority to examine such
transferred, conveyed or assigned to any other
deposit.
person or entity. Any transfer of business
4.
Proof of marketing capability
address, appointment or designation of any
a. A duly executed Special Power of
agent
or
representative
including
the
Attorney and/or a duly concluded
establishment of additional offices anywhere
Recruitment/Service Agreement;
shall be subject to the prior approval of the
b.
Manpower
request(s)
or
visa
Department of Labor.
certification
from
new
employer(s)/principal(s) for not less
Licenses are non-transferrable because
than one hundred (100) workers; and
1. It can only be used by the person issued to
c.
Certification from Pre-Employment
2. It can only be used at the place designated
Services Office of POEA on the existence
therein.
of new market.
Art 30. Registration fees, POEA Rules
The Secretary of Labor shall promulgate a
schedule of fees for the registration of all
applicants for license or authority.

1.

15 POEA Rules and Regulations Governing the Recruitment and


Employment of Land-based Overseas Workers (Part II, Rule II,
2002 POEA Rules)

Art 31. Bonds, POEA Rules

10

5.

Clearance of all members of the Board of


the company over claims arising from employerDirectors, partner, or proprietor of the applicant
employee relationship.
agency from the National Bureau of 8. Individual income tax return of the proprietor,
Investigation (NBI) and other government
partners, stockholders/ incorporators, as the
agencies as may be required; appropriate
case may be, for the past two (2) years.
clearance in case of persons with criminal cases; 9. Proof of possession by the sole proprietor,
provided that where the member or partner
partner or chief executive officer, as the case may
concerned is a foreigner, clearance from his
be, of a bachelor's degree and three years
country of origin shall be required.
business experience.
6. A verified undertaking stating that the applicant: 10. List of all officials and personnel involved in the
a. Shall select only medically and
recruitment and placement, together with their
technically qualified recruits;
appointment, bio-data and two (2) copies of
b. Shall assume full and complete
their passport-size pictures as well as their
responsibility for all claims and
clearances from the National Bureau of
liabilities which may arise in connection
Investigation and the Anti-illegal Recruitment
with the use of the license;
Branch of the Administration.
c. Shall assume joint and solidary liability 11. Copy of contract of lease or proof of building
with the employer for all claims and
ownership, indicating the office address,
liabilities which may arise in connection
providing for an office space of at least one
with the implementation of the contract,
hundred (100) square meters.
including but not limited to payment of 12. Proof of publication of notice of the application
wages,
death
and
disability
with the names of the proprietor, partners,
compensation and repatriations;
incorporators and officers.
d. Shall guarantee compliance with the13. Certificate of attendance of owner and/or chief
existing labor and social legislations of
executive officer in a preapplication seminar
the Philippines and of the country of
conducted by the Administration.
employment of the recruited workers;
e. Shall assume full and complete
Only applications with complete supporting
responsibility for all acts of its officials,
documents shall be processed.
employees and representatives done in
connection with recruitment andSec 4. Payment of Fees and Posting of
placement;
Bonds, Rule II, Part II, POEA Rules
f. Shall negotiate for the best terms andUpon approval of the application, the applicant
conditions of employment;
shall pay a license fee of P50,000.00. It shall
g. Shall disclose the full terms and submit an Escrow Agreement in the amount of
conditions of employment to theP1,000,000.00, confirmation of escrow deposit
applicant workers;
with an accredited reputable bank and a surety
h. Shall deploy at least 100 workers to its bond of P100,000.00 from a bonding company
new markets within one (1) year from acceptable to the Administration and accredited
the issuance of its license;
with the Insurance Commission.
i. Shall provide orientation on recruitment
procedures, terms and conditions andAgencies with existing licenses shall, within four
other relevant information to its workers years from effectivity hereof, increase their
and provide facilities therefor; and
Escrow Deposit to One Million Pesos.
j. Shall repatriate the deployed workers
and his personal belongings when theValidity of the License. Except in case of a
need arises.
provisional license, every license shall be valid for
k. For the purpose of compliance with itemfour (4) years from the date of issuance unless
(1), the agency may require the worker tosooner cancelled, revoked or suspended for violation
undergo trade testing and medicalof applicable Philippine law, these rules and other
examination only after the worker has pertinent issuances. Such license shall be valid only
been pre-qualified for employment.
at the place/s stated therein and when used by the
7. In case of corporation or partnership, verified licensed person, partnership or corporation.
undertaking by its officers, directors, partners
that they will be jointly and severally liable with A license is generally valid for 4 years but for new
applicants the license is valid only for 1 year.

11

the Secretary of Labor, or to make a worker


pay any amount greater than that actually
received by him as a loan or advance; (i.e.
over charging of fees)
To furnish or publish any false notice or
information or document in relation to
recruitment or employment;
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 this
Code.
To induce or attempt to induce a worker
already employed to quit his employment in
order to offer him to another unless the
transfer is designed to liberate the worker
from oppressive terms and conditions of
employment;
e. To influence or to 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 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.
i. To substitute or alter employment contracts
approved and verified by the Department of
Labor from the time of actual signing
thereof by the parties up to and including
the periods of expiration of the same
without the approval of the Secretary of
be
Labor;
j. 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; and
k.
To withhold or deny travel documents from
for
applicant workers before departure for
monetary or financial considerations other
than those authorized under this Code and
its implementing rules and regulations.

Non-Transferability of License. No license shall be


transferred, conveyed or assigned to any person,
partnership or corporation. It shall not be used
directly or indirectly by any person, partnership or b.
corporation other than the one in whose favor it was
issued.
c.
In case of death of the sole proprietor and to prevent
disruption of operation to the prejudice of the
interest of legitimate heirs, the license may be
extended upon request of the heirs, to continue only
for the purpose of winding up business operations. d.
ii. Workers Fee
Art 32, Labor Code
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.
iii. Reports/Employment Information
Art 33, Labor Code
Whenever the public interest requires, the
Secretary of Labor may direct all persons or
entities within the coverage of this Title to
submit a report on the status of employment,
including job vacancies, details of job
requisitions, separation from jobs, wages, other
terms and conditions and other employment
data.
Failure to comply with this requirement will
deemed an illegal recruitment.
(Anonuevo)
iv. Prohibited Practices
Under the Labor Code, these are grounds
suspension and disqualification of
license. (Anonuevo)
Article 34, Labor Code
It shall be unlawful for any individual, entity,
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

Under Sec. 6 of RA 8042 consider these grounds for


illegal recruitment.
With the addition of two
instances: (Anonuevo)

12

1.

Failure to actually deploy without valid Illegal recruitment is deemed committed in large
reasons as determined by the Department ofscale if committed against three (3) or more persons
Labor and Employment; and
individually or as a group.
2. Failure to reimburse expenses incurred by
the workers in connection with his
d. Syndicated Illegal Recruitment
documentation and processing for purposes
of deployment, in cases where theIllegal recruitment is deemed committed by a
deployment does not actually take place syndicate if carried out by a group of three (3) or
without the worker's fault.
more persons conspiring and/or confederating with
one another in carrying out any unlawful or illegal
The persons criminally liable for the above offenses transaction, enterprise or scheme defined under the
are the principals, accomplices and accessories. Infirst paragraph hereof.
case of juridical persons, the officers having control,
management or direction of their business shall be Definition of Illegal Recruitment under Article 38 is
liable.
impliedly repealed by RA 8042. (Anonuevo)
v . Illegal Recruitment (Art. 38, LC)
Section 6, RA 8042 Migrant Workers and
Overseas Filipinos Act of 1995
Illegal recruitment shall mean any act of
canvassing, enlisting, contracting, transporting,
utilizing, hiring, procuring workers and includes
referring, contact services, promising or
advertising for employment abroad, whether for
profit or not, when undertaken by a non-license
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 such non-license
or non-holder, who, in any manner, offers or
promises for a fee employment abroad to two or
more persons shall be deemed so engaged.
a. Illegal Recruitment w/o license

Elements of illegal recruitment: (1) the person


charged with the crime must have undertaken
recruitment activities; and (2) the said person does
not have a license or authority to do so. (Boneng vs.
People and People vs. Gallo)
Illegal recruitment only becomes large scale when
the two elements concur with the addition of a third
element the recruiter committed the same against
three or more persons, individually or as group.
(People v. Hu)
Failure of the prosecution to prove the guilt of the
accused beyond reasonable doubt does not absolve
the civil obligation to return the money collected.
(Id.)
Illegal recruitment is a crime that is mala prohibita.
(People v. Chua)

Any recruitment activities, including the prohibited vi. Enforcement and Sanctions
practices enumerated under Article 34 of this Code,
to be undertaken by non-licensees or non-holders of Suspension and/or cancellation of license
authority, shall be deemed illegal and punishable or authority. (Art. 35, LC)
The Secretary of Labor shall have the power to
under Article 39 of this Code.
suspend or cancel any license or authority to
The Department of Labor and Employment or anyrecruit employees for overseas employment for
law enforcement officer may initiate complaints violation of rules and regulations issued by the
under this Article. All you need to prove is that the Ministry of Labor, the Overseas Employment
non-licensee is practicing recruitment. (Anonuevo) Development Board, or for violation of the
provisions of this and other applicable laws,
General Orders and Letters of Instructions.
b. Illegal Recruitment w/ license
Sec. 6 of RA 8042 enumerated grounds for illegal Regulatory Power (Art. 36, LC)
recruitment done by those
The Secretary of Labor shall have the power to
who have license. (Id.)
restrict and regulate the recruitment and
placement activities of all agencies within the
c. Large Scale Illegal Recruitment
coverage of this Title and is hereby authorized to
issue orders and promulgate rules and
regulations to carry out the objectives and

13

implement the provisions of this Title.


Secretary of Labor has the power and authority
not only to restrict and regulate the recruitment
and placement activities of all agencies but also
to promulgate rules and regulations to carry
out the objectives and implement the provisions
governing said activities. Implicit in these
powers is the award of appropriate relief to the
victims of the offenses committed by the faulting
agency or contractor. (Eastern Assurance and
Surety Corp. v. Secretary of Labor)
Visitorial Power (Art. 37, LC)
The Secretary of Labor 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 violation of any provisions of this
Title.

that extent, Article 38(c) of the Labor Code is


unconstitutional and of no force and effect. (Salazar
v. Achacoso)
Only the power to issue search or arrests warrants
were stripped from the Secretary of Labor.
(Anonuevo)
Article 39 (d). Penalties, Labor Code
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.

Article 39 (e). Penalties, Labor Code


In every case, conviction shall cause and carry
the automatic revocation of the license or
authority and all the permits and privileges
Close Down Power (Art. 38(c), LC)
granted to such person or entity under this Title,
The Secretary of Labor shall close companies,
and the forfeiture of the cash and surety bonds
establishments and entities found to be engaged
in favor of the Overseas Employment
in the recruitment of workers for overseas
Development Board or the National Seamen
employment, without having been licensed or
Board, as the case may be, both of which are
authorized to do so.
authorized to use the same exclusively to
The Secretary of Labor, not being a judge, may no promote their objectives.
longer issue search or arrest warrants. Hence, the
authorities must go through the judicial process. To
Penalties for Illegal Recruitment under Article 39 and RA 8042
Article 39
RA 8042
Was repealed by implication by
RA 8042. (Anonuevo)
Illegal Recruitment Imprisonment of not less than four years Any person found guilty of illegal
w/o License
nor more than eight years or a fine of recruitment shall suffer the penalty of
not less than P20,000 nor more than imprisonment of not less than six (6)
P100,000 or both such imprisonment years and one (1) day but not more than
and fine, at the discretion of the court.
twelve (12) years and a fine not less than
two
hundred
thousand
pesos
(P200,000.00) nor more than five
Illegal Recruitment Imprisonment of not less than two years hundred thousand pesos
w/ License
nor more than five years or a fine of not (P500,000.00).
less than P10,000 nor more than
P50,000, or both such imprisonment Provided, however, that the maximum
and fine, at the discretion of the court
penalty shall be imposed if the person

Large Scale Illegal


Recruitment

Illegal recruitment when committed by a


syndicate or in large scale shall be
considered
an
offense
involving
economic sabotage and shall be

illegally recruited is less than eighteen


(18) years of age or committed by a nonlicensee or non-holder of authority.
The penalty of life imprisonment and a
fine of not less than five hundred
thousand pesos (P500,000.00) nor
more
than
one
million
pesos

14

penalized in accordance with Article 39


hereof. (Art. 38(b), LC) The penalty of
life imprisonment and a fine of One
Hundred
Thousand
Pesos
(P1000,000.00) shall be imposed if
illegal recruitment constitutes economic
sabotage as defined herein

or more. In case of termination of overseas


employment without just, valid or authorized
cause as defined by law or contract, the worker
shall be entitled to the full reimbursement of his
placement fee with interest at 12% per annum,
plus his salaries for the unexpired portion of his
employment contract or for 3 months every year
of the unexpired term, whichever is less.16

Money Claims Under Sec. 10 of RA 8042


Any compromise/amicable settlement or
voluntary agreement on money claims inclusive
of damages under this section shall be paid
within four (4) months from the approval of the
settlement by the appropriate authority.
In case of termination of overseas employment
without just, valid or authorized cause as
defined by law or contract, the workers shall be
entitled to the full reimbursement of his
placement fee with interest of twelve percent
(12%) per annum, plus his salaries for the
unexpired portion of his employment contract or
for three (3) months for every year of the
unexpired term, whichever is less.
Non-compliance with the mandatory periods for
resolutions of cases provided under this section
shall subject the responsible officials to any or
all of the following penalties:
a.

The salary of any such official who fails to


render his decision or resolutions within the
prescribed period shall be, or caused to be,
withheld until the said official complies
therewith;

b. Suspension for not more than ninety (90)


days; or
c.

Dismissal
from
the
service
with
disqualifications to hold any appointive
public office for five (5) years.

Provided, however, that the penalties herein


provided shall be without prejudice to any
liability which any such official may have
incurred under other existing laws or rules and
regulations as a consequence of violating the
provisions of this paragraph.

(P1,000,000.00) shall be imposed if


illegal recruitment constitutes economic
sabotage as
defined herein.

The choice of which amount to award an illegally


dismissed overseas contract worker, i.e., whether
his salaries for the unexpired portion of his
employment contract, or 3 months salary for
every year of the unexpired term, whichever is
less, comes into play only when the employment
contract concerns has a term of at least 1 year or
more.17

This clause reiterated above was declared


unconstitutional because there is discrimination
and disparity. There is no more choice and the
illegally terminated overseas employee will be
fully paid his unexpired term of his contract.18

E. JOINT AND SEVERAL LIABILITY


OF PRIVATE EMPLOYMENT
AGENCY/ MANNING AGENTAND
EMPLOYER
Section 10 (2 and 3), RA 8042
The liability of the principal/employer and the
16 Olarte vs. Navona

17 Flourish Maritime Shipping v. Almanzor

A plain reading of the above-mentioned


provision clearly reveals that the choice of which 18 Serrano
amount to award an illegally dismissed overseas 24,
2009
contract worker comes into play when the
employment contract has a term of at least 1 year

v. Gallant Maritime Services, GR No. 167614, March

15

recruitment/placement agency for any and all


claims under this section shall be joint and
several. These provisions shall be incorporated
in the contract for overseas employment and
shall be a condition precedent for its approval.
The performance bond to be filed by the
recruitment/placement agency, as provided by
law, shall be answerable for all money claims or
damages that may be awarded to the workers. If
the recruitment/placement agency is a juridical
being, the corporate officers and directors and
partners as the case may be, shall themselves be
jointly and solidarily liable with the corporation
or partnership for the aforesaid claims and
damages. Such liabilities shall continue during
the entire period or duration of the employment
contract and shall not be affected by any
substitution, amendment or modification made
locally or in a foreign country of the said
contract.
Sec. 1(f)(3), Rule II, Part II, 2002 POEA Rules
The applicant for license to operate a private
employment agency shall assume joint and
solidary liability with the employer for all claims
and liabilities which may arise in connection
with the implementation of the contract,
including but not limited to payment of wages,
death and disability compensation and
repatriations.
Sec. 1(e)(8), Rule II, Part II, 2003 POEA Rules
The applicant for license to operate a manning
agency shall assume joint and solidary liability
with the employer for all claims and liabilities
which may arise in connection with the
implementation of the employment contract,
including but not limited to wages, death and
disability compensation and their repatriation.

The liability extends to the expiration of


contract.19

F. JURISDICTION

A criminal action arising from illegal recruitment as


defined herein shall be filed with the Regional Trial
Court of the province or city where the offense was
committed or where the offended party actually
resides at the same time of the commission of the
offense: Provided, That the court where the criminal
action is first filed shall acquire jurisdiction to the
exclusion of other courts. Provided, however, That
the aforestated provisions shall also apply to those
criminal actions that have already been filed in court
at the time of the effectivity of this Act. (Sec. 9, RA
8042)
ii. NLRC, for Money Claims Arising from
Employer-Employee Relations
Notwithstanding any provision of law to the
contrary, the Labor Arbiters of the National Labor
Relations Commission (NLRC) shall have the
original and exclusive jurisdiction to hear and
decide, within ninety (90) calendar days after filing
of the complaint, the claims arising out of an
employer-employee relationship or by virtue of any
law or contract involving Filipino workers for
overseas deployment including claims for actual,
moral, exemplary and other forms of damages.
iii.
POEA,
for
Disciplinary Actions

Administrative

and

Section 28, RA 8042


The POEA shall exercise original and exclusive
jurisdiction to hear and decide:
(a) all cases, which are administrative in
character, involving or arising out of violations
of rules and regulations relating to licensing and
registration of
recruitment and employment agencies or
entities; and
(b) disciplinary action cases and other special
thecases, which are administrative in character,
involving employers, principals, contracting
partners and Filipino migrant workers.

G. ALIEN EMPLOYMENT
REGULATION

i. Regional Trial Court, for Criminal Action


Art. XII, Sec. 12, 1987 Constitution
for Illegal Recruitment
The State shall promote the preferential use of
Filipino labor, domestic materials and locally
produced goods, and adopt measures that help
19 OSM Shipping Philippines, Inc. v. NLRC
make them competitive.

16

The ownership and management of mass media shall for employment purposes and any domestic or
be limited to citizens of the Philippines, or to foreign employer who desires to engage an alien
corporations, cooperatives or associations, wholly-for employment in the Philippines shall obtain
owned and managed by such citizens.
an employment permit from the Department of
The Congress shall regulate or prohibit monopoliesLabor.
in commercial mass media when the public interest
so requires. No combinations in restraint of trade or The employment permit may be issued to a nonunfair competition therein shall be allowed. (Art. resident alien or to the applicant employer after
XVI, Sec. 11(1),
a determination of the non-availability of a
Constitution)
person in the Philippines who is competent, able
and willing at the time of application to perform
Art. XVI, Sec. 11(2), 1987 Constitution
the services for which the alien is desired. For an
enterprise registered in preferred areas of
The advertising industry is impressed with
investments, said employment permit may be
public interest, and shall be regulated by law for
issued upon recommendation of the government
the protection of consumers and the promotion
agency charged with the supervision of said
of the general welfare.
registered enterprise.
Only Filipino citizens or corporations or
associations at least seventy per centum of the
capital of which is owned by such citizens shall
Article 41 of the Labor Code
be allowed to engage in the advertising industry.
Prohibition against transfer of employment.
The participation of foreign investors in the
a. After the issuance of an employment permit,
governing body of entities in such industry shall
the alien shall not transfer to another job or
be limited to their proportionate share in the
change his employer without prior approval
capital thereof, and all the executive and
of the Secretary of Labor.
managing officers of such entities must be
b. Any non-resident alien who shall take up
citizens of the Philippines.
employment in violation of the provision of
this Title and its implementing rules and
Art. XII, Sec. 11, 1987 Constitution
regulations shall be punished in accordance
with the provisions of Articles 289 and 290
No franchise, certificate, or any other form of
of the Labor Code.
authorization for the operation of a public utility
shall be granted except to citizens of the
In addition, the alien worker shall be subject to
Philippines or to corporations or associations
deportation after service of his sentence.
organized under the laws of the Philippines, at
least sixty per centum of whose capital is owned
by such citizens; nor shall such franchise,
certificate, or authorization be exclusive in
Submission of List, Article 42 of the
character or for a longer period than fifty years.
Labor Code
Neither shall any such franchise or right be
Any employer employing non-resident foreign
granted except under the condition that it shall
nationals on the effective date of this Code shall
be subject to amendment, alteration, or repeal
submit a list of such nationals to the Secretary of
by the Congress when the common good so
Labor within thirty (30) days after such date
requires.
indicating their names, citizenship, foreign and
local addresses, nature of employment and
The State shall encourage equity participation in
status of stay in the country. The Secretary of
public utilities by the general public. The
Labor shall then determine if they are entitled to
participation of foreign investors in the
an employment permit.
governing body of any public utility enterprise
shall be limited to their proportionate share in
i. Coverage
its capital, and all the executive and managing
officers of such corporation or association must
Section 1, D.O. 97-09, The Revised Rules
be citizens of the Philippines.
for the Issuance of Employment Permits
to Foreign Nationals
Employment permit of non-resident
All foreign nationals who intend to engage in
aliens, Article 40 of the Labor Code
gainful employment in the Philippines shall
Any alien seeking admission to the Philippines
apply for Alien Employment Permit (AEP).

17

Section 2, D.O. 97-09, The Revised Rules


for the Issuance of Employment Permits
to Foreign Nationals
The following categories of foreign nationals are
exempt from securing an employment permit:
a.

All members of the diplomatic service and


foreign government officials accredited by
and with reciprocity arrangements with the
Philippine government;
b. Officers
and
staff
of
international
organizations of which the Philippine
government is a member, and their
legitimate spouses desiring to work in the
Philippines;
c. Foreign nationals elected as members of the
Governing Board who do not occupy any
other position, but have only voting rights in
the corporation;
d. All foreign nationals granted exemption by
law;
e. Owners and representatives of foreign
principals whose companies are accredited
by the POEA, who come to the Philippines
for a limited period and solely for the
purpose of interviewing Filipino applicants
for employment abroad;
f. Foreign nationals who come to the
Philippines to teach, present and/or conduct
research studies in universities and colleges
as visiting, exchange or adjunct professors
under formal agreements between the
universities or colleges in the Philippines
and foreign universities or colleges; or
between the Philippine government and
foreign government; provided that the
exemption is one a reciprocal basis; and
g) Permanent residing foreign nationals,
probationary or temporary resident visa holders.
ii. Conditions of Grant of Permit
Article 40 of the Labor Code
Employment permit of non-resident aliens. 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.
The employment permit may be issued to a nonresident 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. For an


enterprise registered in preferred areas of
investments, said employment permit may be
issued upon recommendation of the government
agency charged with the supervision of said
registered enterprise.
Section 10, D.O. 97-09
An application of AEP may be denied by the
Regional Director based on any of the following
grounds:
1. misrepresentation
of
facts
in
the
application;
2. submission of falsified documents;
3. the foreign national has a derogatory record;
or
4. availability of a Filipino who is competent,
able and willing to the job intended for the
foreign national.

III. Human Resources


Development
A. DEVELOPMENT OF HUMAN
RESOURCES
i. Policy, Goals and Objectives
Policy, Section 2, R.A. 7796, Technical
Educational and Skills Development Act
of 1994
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 and
immediate beneficiaries of a trained and skilled
work force, in providing technical education and
skills development opportunities.
Section 3: Goals and Objectives, RA 7796
b. Promote and strengthen the quality of
technical education and skills development
programs
to
attain
international
competitiveness;

18

c.

Focus technical education and skills


development on meeting the changing
demands
for
quality
middle-level
manpower;

agreement
with
an occupation during an
individual employer or established
period
any of the entities assured
by
an
recognized under this apprenticeship
Chapter.
agreement
Apprenticeship Agreement
d. Encourage critical and creative thinking by
An employment contract
A contract wherein a
disseminating the scientific and technical
wherein the employer prospective
employer
knowledge base of middle-level manpower
binds himself to train the binds himself to train the
development programs;
apprentice
and
the apprentice who in turn
apprentice
in
turn accepts the terms of
accepts the terms of training for a recognized
e. Recognize
and
encourage
the
training.
apprenticeable
complementary roles of public and private
occupation emphasizing
institutions in technical education and skills
the rights, duties and
development and training systems; and
responsibilities of each
party
f. Inculcate desirable values through the
Apprenticeable Occupation
development of moral character with
Any trade, form of An occupation officially
emphasis on work ethic, self-discipline, selfemployment
or endorsed by a tripartite
reliance and nationalism.
occupation
which body and approved for
requires more than three apprenticeship
by
(3) months of practical the Authority
Middle-Level Manpower
training on the job
1. Those who have acquired practical skills and supplemented by related
theoretical instruction.

B.

knowledge through formal or non-formal


education and training equivalent to at least
a secondary education but preferably at post- i. When Apprentices may be
secondary education with a correspondingEmployed
degree of diploma; or
Prior approval by the Department of
2. Skilled workers who have become highly
Labor and Employment of the proposed
competent in their trade or craft as attested
apprenticeship program is, therefore, a
by industry.
condition sine quo non before an apprenticeship
agreement can be validly entered into. The act of
filing the proposed apprenticeship program with
the Department of Labor and Employment is a
preliminary step towards its final approval and
TRAINING AND EMPLOYMENT
does not instantaneously give rise to an
OF APPRENTICES
employer-apprentice relationship. 20

Apprenticeship, Apprentice, Apprenticeship


Agreement and Apprenticeable Occupation,
defined
Art 58, Labor Code

TESDA Law

Apprenticeship
Practical training on the Training
within
job supplemented by employment
with
related
theoretical compulsory
related
instruction
theoretical instructions
involving
a
contract
between an apprentice
and an employer on an
approved apprenticeable
occupation
Apprentice
A worker who is covered A person undergoing
by
a
written training
for
an
apprenticeship
approved apprenticeable

ii. Qualifications
Sec. 12. Employment of Children, RA
7610: Special Protection of Children
Against Abuse, Exploitation and
Discrimination Act." as amended by RA
7658
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

20 Nitto Enterprises v. NLRC, 248 SCRA 654 (1995)

19

guardian and where only members of the


employer's 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; or
2. Where a child's employment or participation
in public entertainment or information
through cinema, theater, radio or television
is essential: Provided, The employment
contract is concluded by the child's parents
or legal 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:
a. The employer shall ensure the
protection, health, safety, morals
and normal development of the
child;
b. The employer shall institute measures
to prevent the child's exploitation or
discrimination taking into account
the
system
and
level
of
remuneration, and the duration and
arrangement of working time; and
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 requirements.
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 child.
The Department of Labor and Employment shall
promulgate rules and regulations necessary for
the effective implementation of this Section.

To qualify as an apprentice, a person shall:


a.

Be at least fourteen (14) years of


age;
b. Possess vocational aptitude and
capacity for appropriate tests; and
c. Possess the ability to comprehend and
follow oral and written instructions.
d. Trade and industry associations may
recommend to the Secretary of Labor
appropriate educational requirements
for different occupations.
Sec 11. Qualifications of Apprentices, Rule
VI, Book II, IRR

To qualify as apprentice, an applicant


shall:
a. Be at least fifteen years of age;
provided those who are at least
fifteen years of age but less than
eighteen may be eligible for
apprenticeship only in nonhazardous occupations;
b. Be physically fit for the occupation in
which he desires to be trained;
c.

Possess vocational aptitude and capacity


for the particular occupation as
established through appropriate tests;
and

d. Possess the ability to comprehend and


follow oral and written instructions.
Trade and industry associations may, however,
recommend to the Secretary of Labor and
Employment
appropriate
educational
qualifications for apprentices in certain
occupations. Such qualifications, if approved,
shall be the educational requirements for
apprenticeship in such occupations unless
waived by an employer in favor of an applicant
who has demonstrated exceptional ability. A
certification explaining briefly the ground for
such waiver, and signed by the person in charge
of the program, shall be attached to the
apprenticeship agreement of the applicant
concerned.

iii. Allowed employment


Art 59. Qualifications of Apprentice,
Labor Code

Art 60, Employment of apprentices,


Labor Code

20

Only employers in the highly technical


industries may employ apprentices and only in
apprenticeable occupations approved by the
Secretary of Labor and Employment. (As
amended by Section 1, Executive Order No. 111,
December 24, 1986)

iv. Conditions of Employment


Article 61. Contents of apprenticeship
agreements, Labor Code
Apprenticeship agreements, including the wage
rates of apprentices, shall conform to the rules
issued by the Secretary 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 percent of the
applicable minimum wage, may be entered into
only in accordance with apprenticeship
programs duly approved by the Secretary of
Labor and Employment.
The Department shall develop standard model
programs of apprenticeship.
Article 71. Deductibility of training costs,
Labor Code
The Secretary of Labor and Employment may
authorize the hiring of apprentices without
compensation whose training on the job is
required by the school or training program
curriculum or as requisite for graduation or
board examination.
Art 124 (j), Labor Code
In the determination of such regional minimum
wages, the Regional Board shall consider the
equitable distribution of income and wealth
along the imperatives of economic and social
development.

Under TESDA guidelines, the period of


apprenticeship should not be less than 4 months
and not more than 6 months.

remittance to the government in


exchange of the training program given
to apprentice.

v. Enforcement
Art 65 to 67, Labor Code
Investigation
of
violation
of
apprenticeship agreement. 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 an apprenticeship agreement
pursuant to such rules and regulations as may be
prescribed by the Secretary of Labor and
Employment.
Appeal to the Secretary of Labor and
Employment. The decision of the authorized
agency of the Department of Labor and
Employment may be appealed by any aggrieved
person to the Secretary of Labor and
Employment within five (5) days from receipt of
the decision. The decision of the Secretary
of Labor and Employment shall be final and
executory.
Exhaustion of administrative remedies.
No person shall institute any action for the
enforcement of any apprenticeship agreement or
damages for breach of any such agreement,
unless he has exhausted all available
administrative remedies.

TESDA is the appropriate agency of the


Department of Labor and Employment.

Try to settle the dispute first before plant


apprentice committee before filing a complaint
with TESDA.

C. TRAINING AND EMPLOYMENT


OF LEARNINERS
Learners, defined

An apprentice is entitled to the full minimum


Art 73. Learners defined, Labor Code
wage (not 75%) when:
Persons hired as trainees in semi-skilled and
1. The employer stipulates in the contractother industrial occupations which are
non-apprenticeable and which may be
and
2. The employer avails of the tax benefit learned through practical training on the job in a
where he is able to deduct from his relatively short period of time which shall not

21

exceed three (3) months.


RA 7796
Persons hired as trainees in semiskilled and
other industrial occupations which are nonapprenticeable.
Learnership and Apprenticeship, distinguished
Learnership
Semi-Skilled
3 Months

Apprenticeship
Nature
Highly Technical
Period
Not less than 3
months but not more
than 6 months

3 months < P<6 mon


Commitment to employment
At the option of the At the option of the
Learner
employer
Necessity of DOLE approval of program
Not necessary. Only Prior approval by
DOLE
inspection DOLE is necessary
required
Deductibility of expenses
No
provision
for Expenses of training
deductibility
deductible from
income tax
When employed
1. When no
1. The person is at
experienced
least fifteen (15)
workers are
years of age,
available
provided those
who are at least
2. The employment
fifteen (15) years
of learners is
of age but less
necessary to
than eighteen (18)
prevent
may be eligible for
curtailment of
apprenticeship
employment
only in nonopportunities; and
hazardous
occupation;
3. The employment
does not create
2. The person is
unfair
physically fit for
competition in
the occupation in
terms of labor
which he desires
costs or impair or
to be trained;
lower working
standards.
3. The person
possesses
vocational
aptitude and
capacity for the
particular

occupation as
established
through
appropriate tests;
and
4. The person is able
to comprehend
and follow oral
and written
instructions
Wage rate
General Rule
General Rule
Not less than 75% of
Not less than 75% of
the minimum wage
the minimum wage
Exception
Learners in
piecework shall be
paid in full for the
work done.

Exception
No compensation
if SOLE
authorizes, as OJT
is required by the
school

Deductibility of training cost


Not allowed
Allowed
Conditions
1. Program is duly
recognized
by
DOLE
2. Deduction
shall
not exceed 10% of
direct labor wage
3. Payment
of
minimum wage to
apprentices
Regularization
A commitment to
employ the learners if
they so desire, as
regular
employees
upon completion of
the learnership.
All learners who have
been
allowed
or
suffered
to
work
during the first two
(2) months shall
be deemed regular
employees
if
training
is
terminated by the
employer
before
the end of the

22

stipulated period
through no fault of the
learners.

i. When Learners may be Employed


Art 74. When learners may be hired,
Labor Code
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.
RA 7796
Learnership programs must be approved by the
Authority.

ii. Conditions of Employment


Art 75. Regular Learner Employment,
Labor Code
Any employer desiring to employ 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 (3) months;
c. The wages or salary rates of the learners
which shall begin at not less than
seventy-five percent (75%) 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. All
learners who have been allowed or
suffered to work during the first two (2)
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
learners.
Art 76. Learners in Piecework, Labor
Code
Learners employed in piece or incentive-rate
jobs during the training period shall be paid in
full for the work done.

iii. Enforcement

Art 77. Penalty Clause, Labor Code


Any violation of this Chapter or its
implementing rules and regulations shall be
subject to the general penalty clause provided
for in this Code.

D. TRAINING AND EMPLOYMENT


OF DISABLED PERSONS
Handicapped Workers, defined
Art 78. Handicapped worker defined,
Labor Code
Handicapped workers are those whose earning
capacity is impaired by age or physical or mental
deficiency or injury.
Disabled persons, defined
Sec 4 (a). Disabled persons, RA 7277.
Magna Carta for Disabled Persons
Disabled Persons are those suffering from
restriction of 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;
Impairment, defined
Sec 4 (b). Impairment, RA 7277. Magna
Carta for Disabled Persons
Impairment is any loss, diminution or
aberration of psychological, physiological, or
anatomical structure of function;
Disability, defined
Sec 4 (c). Disability, RA 7277. Magna
Carta for Disabled Persons
Disability shall mean:
1. a physical or mental impairment that
substantially
limits
one
or
more
psychological, physiological or anatomical
function of an individual or activities of such
individual;
2. a record of such an impairment; or
3.
being regarded as having such an
impairment;

i. Policy Declaration
Sec 2 . Declaration of Policies, RA 7277.
Magna Carta for Disabled Persons

23

e.

f.

g.

Disabled persons are part of Philippine


society, thus the State shall give full support
to the improvement of the total well-being of
disabled persons and their integration into
the mainstream of society. Toward this end,
the State shall adopt policies ensuring the
rehabilitation, self-development and self
reliance of disabled persons. It shall develop
their skills and potentials to enable them to
compete
favorably
for
available
opportunities.
Disabled persons have the same rights as
other people to take their proper place in
society. They should be able to live freely
and as independently as possible. This must
be the concern of everyone the family,
community and all government and nongovernment
organizations.
Disabled
persons' rights must never be perceived as
welfare services by the Government.
The rehabilitation of the disabled persons
shall be the concern of the Government in
order to foster their capacity to attain a
more meaningful, productive and satisfying
life. To reach out to a greater number of
disabled persons, the rehabilitation services
and benefits shall be expanded beyond the
traditional urban based centers to
community based programs, that will ensure
full participation of different sectors as
supported by national and local government
agencies.

h. The State also recognizes the role of the


private sector in promoting the welfare of
disabled persons and shall encourage
partnership in programs that address their
needs and concerns.
i.

To facilitate integration of disabled persons


into the mainstream of society, the State
shall advocate for and encourage respect for
disabled persons. The State shall exert all
efforts to remove all social, cultural,
economic, environmental and attitudinal
barriers that are prejudicial to disabled
persons.

ii. Coverage
Sec 3. Coverage, RA 7277. Magna Carta
for Disabled Persons
This Act shall cover all disabled persons and,
to the extent herein provided, departments,

offices and agencies of the National Government


or non-government organizations involved in
the attainment of the objectives of this Act.

iii. When Handicapped Workers may


be Employed
Art 79. When employable, Labor Code
Handicapped workers may be employed when
their employment is necessary to prevent
curtailment of employment opportunities and
when it does not create unfair competition in
labor costs or impair or lower working
standards.
Art 80. Employment agreement, Labor
Code
Any employer who employs handicapped
workers shall enter into an employment
agreement with them, which agreement shall
include:
a.

The names and addresses of the


handicapped workers to be employed;
b. The rate to be paid the handicapped workers
which shall not be less than seventy five
(75%) percent of the applicable legal
minimum wage;
c. The duration of employment period; and
d. The work to be performed by handicapped
workers.
Art 81 Eligibility for apprenticeship,
Labor Code
Subject to the appropriate provisions of this
Code, handicapped workers may be hired as
apprentices or learners if their handicap is not
such as to effectively impede the performance of
job operations in the particular occupations for
which they are hired.

iv. Rights and Privileges


Sec 5 (1). Equal Opportunity for
Employment, 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.
Section 5 (2). Guaranteed Employment in
Government, R.A. 7277
Five percent (5%) of all casual emergency and

24

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.
Sec 6. Sheltered Employment, R.A. 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.

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.
"Field personnel" shall refer to nonagricultural 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.

Coverage
General rule: Applicable to all employees in all
establishments and undertakings, whether for profit
or not
Exception: Not covered
1. Government employees
2. Managerial Employees
3. Field personnel
4. Dependent family members
5. Domestic helpers
6. Persons in service of another
7. Piece workers

The Magna Carta for Disabled Persons mandates


that qualified disabled persons be granted the
same terms and conditions of employment as
qualified able-bodied employees. Once they have
attained the status of regular workers, they
should be accorded all the benefits granted by
law, notwithstanding written or verbal contracts
to the contrary. This treatment is rooted not Exempted from the coverage of the
merely on charity or accommodation, but on provisions of Book 3, Title I: Working
justice for all.21
Conditions and Rest Periods under Labor
Code
Government employees
IV. Labor standards
The civil service embraces22
1. All
branches,
subdivisions,
instrumentalities, and agencies of
the Government
2. Government-owned or controlled
A. COVERAGE
corporations with original charters.
Article 82. Coverage
Governing law: Civil Service Law, rules and
The provisions of this Title shall apply to
regulations
employees in all establishments and
Managerial employees
undertakings whether for profit or not, but
Those whose primary duty consists of the
not to government employees, managerial
management of the establishment in which they
employees, field personnel, members of the
are employed or of a department or subdivision
family of the employer who are dependent on
thereof, and to other officers or members of the
him for support, domestic helpers, persons in
managerial staff.23
the personal service of another, and workers
who are paid by results as determined by the
Secretary of Labor in appropriate regulations.
As used herein, "managerial employees"
refer to those whose primary duty consists of the
21 Bernardo v NLRC, 310 SCRA 186 (1999)

22 Sec 2 (1), Art IX-B, 1987 Constitution

23 Art 82, Par 2, Labor Code

25

1. Managerial employees
Must meet all requirements:24
a.

a.

Their primary duty consists


of the management of the
establishment in which they are
employed or of a department or
sub-division thereof.

b. Customarily
and
regularly
exercise
discretion and
independent judgment; and

b. They customarily and regularly


direct the work of two or
more employees therein.
c.

c.

They have the authority to


hire or fire employees of lower
rank; or their suggestions and
recommendations as to hiring
and firing and as to the
promotion or any other change
of status of other employees, are
given particular weight.

Managerial employees 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.25
It is not feasible to provide a fixed hourly
rate of pay or maximum hours of labor.26
2. Officers or members of
managerial staff
If they perform the ff duties:27

The primary duty consists of the


performance of work directly
related to management
policies of their employer;

(i) Regularly and directly


assist a proprietor or a
managerial employee whose
primary duty consists of the
management
of
the
establishment in which he is
employed or subdivision thereof;
or
(ii) execute under general
supervision
work
along
specialized or technical
lines requiring special training,
experience, or knowledge; or
(iii) execute, under general
supervision,
special
assignments and tasks; and

d. Who do not devote more


than 20 percent of their
hours worked in a work week
to activities which are not
directly and closely related to the
performance of the work
described in paragraphs (a), (b)
and (c) above.
3. Supervisory employees
They are those who, in the interest
of
management,
effectively
recommend such managerial actions
if the exercise of such authority is
not merely routinary or clerical in
nature, but requires use of
independent judgment.28

24 Sec 2 (b), Rule 1, Book III, IRR

25 NAWASA v NAWASA Consolidated Unions, 11 SCRA 766

(1964)

A supervisor is deemed a member of the


managerial staff.29

28 Art 212, par N, Labor Code


26 NAWASA v NAWASA Consolidated Unions, 11 SCRA 766
(1964)

27 Sec 2 (c), Rule 1, Book III, IRR

29 Quebec v NLRC, 301 SCRA 627 (1999); Salazar v NLRC, 256


SCRA 273 (1996); National Sugar Refineries Corporation v NLRC
(1993)

26

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.30

In deciding whether or not an employees


actual working hours in the field can be
determined with reasonable certainty, query
must be made as to whether or not such
employees time and performance is
constantly supervised by the employer.31
Field personnel are employees whose time
and performance is unsupervised by the
employer.32
Dependent Family Members
Domestic Helpers
Domestic or household service" shall mean
service 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.33
Governing provisions: Book 3, Title III:
Working Conditions for Special Groups of
Employees, Chapter 3: Employment of
househelpers, Labor Code
Persons in service of another
Domestic servants and persons in the personal
service of another are those who perform such
services in the employer's home which are
usually necessary or desirable for the
30 Art 82, par 3, Labor Code; Sec 2 (f), Rule 1, Book III, IRR

maintenance and enjoyment thereof, or minister


to the personal comfort, convenience, or safety of
the employer as well as the members of his
employer's household. 34
Piece of Work
Workers who are paid by results, including
those who are paid on piece-work, "takay,"
"pakiao" or task basis, and other non-time work
if their output rates are in accordance with the
standards prescribed under Section 8, Rule VII,
Book Three of these regulations, or where such
rates have been fixed by the Secretary of Labor
and Employment in accordance with the
aforesaid Section.35

Piece workers are paid depending upon the


work they do irrespective of the amount of
time employed in doing said work.36

B. HOURS OF WORK
i. Normal hours of work
Art 83, Normal Hours of Work
The normal hours of work of any employee shall
not exceed eight (8) hours a day.
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, except where the exigencies of the service
require that such personnel work for six (6) days
or forty-eight (48) hours, in which case, they
shall be entitled to an additional compensation
of at least thirty percent (30%) of their regular
wage for work on the sixth day. For purposes of
this Article, "health personnel" shall include
resident physicians, nurses, nutritionists,

31 Mercidar fishing corp v nlrc, 297 SCRA 440 (1998); Union of


Filipro Employees v Vivar (1992)
34 Sec 2(d), Rule 1, Book III, IRR

32 Salazar v NLRC (1996)

35 Sec 2 (e), Rule 1, Book III, IRR

33 Art 141, Labor Code

36 Red v Coconut Products Ltd. v CIR, 1966

27

dietitians,
pharmacists,
social
workers,
laboratory technicians, paramedical technicians,
psychologists, midwives, attendants and all
other hospital or clinic personnel.

Conditions. DOLE shall recognize CWW


schemes adopted in accordance with the
following:

1. The CWW scheme is undertaken as a result of


an express and voluntary agreement of
General Rule:
majority of the covered employees or their
The normal hours of work of any employee shall not
duly authorized representatives. This
exceed 8 hours a day, for 6 days a week
agreement may be expressed through
collective bargaining or other legitimate
Exception:
workplace mechanisms of participation such
1.
Health personnel
as labor-management councils, employee
2.
Compressed work week
assemblies or referenda.
3.
Management prerogative

a. Health personnel
Health personnel, included
a. resident physicians
b. nurses, nutritionists
c. dietitians
d. pharmacists
e. social workers
f. laboratory technicians
g. paramedical technicians
h. psychologists
i. midwives
j. attendants
k. All other hospital or clinic personnel.

2. In firms using substances, chemicals and


processes or operating under conditions
where there are airborne contaminants,
human carcinogens or noise prolonged
exposure to which may pose hazards to the
employees' health and safety, there must be
a certification from an accredited health and
safety organization or practitioner or from
the firm's safety committee that work
beyond eight hours is within threshold limits
or tolerable levels of exposure, as set in the
OSHS.
3. The employer shall notify DOLE, through the
Regional Office having jurisdiction over the
workplace, of the adoption of the CWW
scheme. The notice shall be in DOLE CWW
Report Form attached to this Advisory.

Hours of work for health personnel


Health personnel in cities and municipalities:
1.
With a population of at least one million
Effects. A CWW scheme which complies
(1,000,000) or
2.
In hospitals and clinics with a bedwith the foregoing conditions shall have
capacity of at least one hundred (100) the following effects:

1. Unless there is a more favorable practice


Normal working hours:
existing in the firm, work beyond eight
Shall hold regular office hours for eight (8)
hours will not be compensable by
hours a day, for five (5) days a week,
overtime premium provided the total
exclusive of time for meals (40 hours)
number of hours worked per day shall not
exceed twelve (12) hours. In any case, any
Exception:
work performed beyond 12 hours a day or 48
Where exigencies of the service require that
hours a week shall be subject to overtime
such personnel work for six (6) days or fortypremium.
eight (48) hours (48 hours)
Health personnel shall be entitled to an 2. Consistent with Articles 85 of the Labor Code,
employees under a CWW scheme are
additional compensation of at least
entitled to meal periods of not less than sixty
thirty percent (30%) of their regular wage
(60) minutes. Nothing herein shall impair
for work on the sixth day
the right of employees to rest days as well as
to holiday pay, rest day pay or leaves in
b. Compressed workweek
accordance with law or applicable collective
bargaining agreement or company policy.
Compressed Workweek (CWW),
Department Order no. 2, series of 2004

28

3. Adoption of the CWW scheme shall in no case


result in diminution of existing benefits.
Reversion to the normal eight-hour
workday shall not constitute a
diminution of benefits. The reversion
shall be considered a legitimate exercise of
management prerogative, provided that the
employer shall give the employees prior
notice of such reversion within a reasonable
period of time.

And as long as such prerogative is exercised in


good faith for the advancement of the
employer's interest and not for the
purpose of defeating or circumventing
the rights of the employees under special laws
or under valid agreements, this Court will uphold
such exercise.41

ii. Compensable hours of work

Art 83, Hours Worked


Hours worked shall include (a) all time during
which an employee is required to be on duty or
D.O. No. 21 sanctions the waiver of to be at a prescribed workplace; and (b) all time
overtime pay in consideration of the benefits during which an employee is suffered or
that the employees will derive from the adoption permitted to work.
of a compressed workweek scheme.37
The compressed workweek scheme wasRest periods of short duration during working
originally conceived for establishments wishing hours shall be counted as hours worked.
to save on energy costs, promote greater work
efficiency and lower the rate of employee
Compensable hours of work in general
absenteeism, among others.38
1. On duty
All time during which an employee is
Under this scheme, the generally observed
required to be on duty or to be at a
workweek of six (6) days is shortened to five (5)
prescribed workplace
days but prolonging the working hours from
Monday to Friday without the employer being
obliged for pay overtime premium compensation
for work performed in excess of eight (8) hours
on weekdays, in exchange for the benefits above
cited that will accrue to the employees.39

All hours are hours worked which the


employee is required to give his employer,
regardless of whether or not such
hours are spent in productive labor
or involve physical or mental
exertion. 42

c. Management prerogative

Verily and wisely, management retained the


prerogative, whenever exigencies of the
service so require, to change the working
hours of its employees.40

2. At work
All time during which an employee is
suffered or permitted to work.

iii. General Principles in determining


if time is considered as hours worked
(Summary)43

37 Bisig Manggagawa sa Tryco v NLRC, GR 1513098, 2008

1.

All hours are hours worked which the

38 Bisig Manggagawa sa Tryco v NLRC, GR 1513098, 2008

41 San Miguel Brewery Sales Force Union (PTGWO) vs. Ople, 170
SCRA 25 (1989)

39 Bisig Manggagawa sa Tryco v NLRC, GR 1513098, 2008

42 Sec 4(a), Rule 1, Book III, IRR

40 San Miguel Brewery Sales Force Union (PTGWO) vs. Ople, 170 43 Sec 4, Rule I, Book III, IRR, Principles in determining hours
SCRA 25 (1989)
worked.

29

employee is
employer,

required

a.

to

give

his

Rest periods or coffee breaks running from five


(5) to twenty (20) minutes shall be
considered as compensable working time. 45

regardless of whether or not such


hours are spent in productive labor or If more than 20 minutes46
involve physical or mental exertion.
An employee need not leave the premises of
the work place in order that his rest period shall
2. An employee need not leave the
not be counted, it being enough that:
premises of the work place in order
a. he stops working,
that his rest period shall not be
b. may rest completely and
counted, it being enough that:
c. may leave his work place, to go
elsewhere, whether within or outside the
a. he stops working,
premises of his work place.
b. may rest completely and
c. may leave his work place, to go
b. Meal period
elsewhere, whether within or outside the
premises of his work place.
Regular meal period (1 hour)
3. All time spent shall be Considered as hours
worked, if the work was with the Art 85, Meal Periods
knowledge of his employer or immediateSubject to such regulations as the Secretary of
Labor may prescribe, it shall be the duty of every
supervisor.
employer to give his employees not less than
a. If the work performed was necessary,sixty (60) minutes time-off for their regular
meals.
or
b. It benefited the employer, or
c. The employee could not abandon his The eight-hour work period does not
work at the end of his normal working
include the meal break. Nowhere in the law
hours because he had no replacement
may it be inferred that employees must take their
meals within the company premises. Employees
4. The time during which an employee is
are not prohibited from going out of the
inactive by reason of interruptions in his
premises as long as they return to their posts on
work beyond his control shall be considered
time.47
working time either if:
Shorter meal period (less than 1 hour but not
a.
the imminence of the resumption ofless than 20 mins)
work requires the employee's
presence at the place of work or
Sec 7, par 1, Rule I, Book III, IRR
b. if the interval is too brief to be
Meal and Rest Periods. Every employer shall
utilized effectively and gainfully in the
give his employees, regardless of sex, not less
employee's own interest.
than one (1) hour time-off for regular meals,
except in the following cases when a meal
iv. Specific rules determining hours period of not less than twenty (20)
minutes may be given by the employer
of work and compensability
provided that such shorter meal period is

a. Rest period

45 Sec 7, par 2, Rule I, Book III, IRR

Short duration or coffee break


Rest periods of short duration during working
46 Sec 4(b), Rule I, Book III, IRR
hours shall be counted as hours worked.44

44 Art 84(a), Labor Code

47 Philippine Airlines v NLRC, 302 SCRA 582 (1999)

30

credited as compensable hours worked of


the employee:
(a) Where the work is non-manual work in
nature or does not involve strenuous
physical exertion;
(b)

Where the establishment regularly


operates not less than sixteen (16)
hours a day;

(c) In case of actual or impending emergencies


or there is urgent work to be
performed
on
machineries,
equipment or installations to avoid
serious loss which the employer would
otherwise suffer; and

c. Waiting time
Sec 5 (a). Waiting time, Rule 1, Book III,
IRR
Waiting time spent by an employee shall be
considered as working time if waiting is an
integral part of his work or the employee is
required or engaged by the employer to
wait.

Waiting time is compensable if during the


period the employee is subject to the absolute
control of the employer such that the employee is
effectively deprived of the time to attend to other
personal pursuits51

Legal test
Whether waiting time constitute working time
depends upon the circumstances of each
particular case. The facts may show that the
During meal period where the laborers are
employer was engaged or was waiting to be
required to stand by for emergency work or
engaged. The controlling factor is whether
where said meal hour is not one of complete rest,
waiting time spend in idleness is so spent
48
such period is considered overtime.
predominantly for the employers benefit or for
the employees.52
General rule:
Meal periods are not compensable
(d) Where the work is necessary to prevent
serious loss of perishable goods.

d. On call

Exceptions: it is compensable
1. Where meal time is predominantly spentSec 5 (b). Working while on call, Rule 1,
for the employers benefit49
Book III, IRR
2. Meal period of 1 hour is deemedAn employee who is required to remain on call
compensable when employee is onin the employer's premises or so close thereto
continuous shift50
that he cannot use the time effectively
3. Shortened meal period of less than 1 and gainfully for his own purpose shall be
hour but not less than 20 hours subject considered as working while on call.
to qualifications under Sec 7, par 1, Rule
I, Book III, IRR
An employee who is not required to leave word
at his home or with company officials where he
If meal time is less than 20 minutes, it is may be reached is not working while on call.
considered Rest period and shall be
considered compensable time.
48 Philippine Airlines v NLRC, 302 SCRA 582 (1999)

49 Azucena citing 31 Am. Jur. 881; Duka, Labor Laws and Social
Legislation

e. Inactive due to work


interruptions

Sec 4 (d), Rule 1, Book III, IRR


The time during which an employee is inactive
51 Africa v NLRC, 170 SCRA 776 (1989)

50 National Development Co. v. CIR, G.R. No. L-15422 (1962)


52 Azcucena citing Armour v Wantock

31

by reason of interruptions in his work beyond


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

f. Work interruption due to


brownout
Policy instruction no. 36 of the Department
of Labor and Employment
provided the following rides regarding power
interruptions or brownouts:

was with the knowledge of his employer or


immediate supervisor.

All time spent shall be Considered as hours


worked, if the work was with the knowledge
of his employer or immediate supervisor.
a.

If the work performed was necessary,


or
b. It benefited the employer, or
c. The employee could not abandon his
work at the end of his normal working
hours because he had no replacement

h. Lectures, meeting, trainings

1. Brownouts not more than 20 mins


Sec 6. Lectures, meetings, training
Brownouts of short duration but not exceeding programs, Rule 1, Book III, IRR
20 minutes shall be treated as worked or Attendance at lectures, meetings, training
compensable
hours
whether
usedprograms, and other similar activities shall not
productively by the employees or not.
be counted as working time if all of the
following conditions are met:
2. Brownouts for more than 20 mins
Brownouts running for more than 20 minutes (a) Attendance is outside of the employee's
may not be treated as hours worked
regular working hours;
provided any of the following conditions are
present:
(b) Attendance is in fact voluntary; and
a.

The employees can leave their workplace(c) The employee does not perform any
or go elsewhere whether within or
productive work during such attendance.
without the work premises; or
b. The employees can use the time
i. Travel time
effectively for their own interest
(workplace)
In each case, the employer may extend the Official travel away from an employees
53
working hours of his employees outside the is hours of work if travel is:
regular schedules to compensate for the loss of
1. within the days and hours of the employees
productive man-hours without being liable for
regularly
scheduled
administrative
overtime
workweek, including regularly scheduled
overtime hours, or
Industrial enterprise with one or two workshifts may
2. outside the hours of the employees regularly
adopt any of the workshifts prescribed for
scheduled administrative workweek, is
enterprises with 3 workshifts to prevent serious loss
ordered or approved, and meets one of the
or damage to materials, machineries, or equipment
following four conditions:
that may result in case of power interruptions.
a. involves the performance or work while
traveling (such as driving a loaded truck)
g. Work after normal hours
b. is incidental to travel that involves the
performance of work while traveling
Sec 4 (c), Rule 1, Book III, IRR
(such as driving an empty truck back to
If the work performed was necessary, or it
the point of origin)
benefited the employer, or the employee could
not abandon his work at the end of his normal
53 USC 5542(b)(2) and 5 CFR 550. 112(g), US Office of Personnel
working hours because he had no replacement,
Management; Abad (2011), Compendium on labor law
all time spent for such work shall be
considered as hours worked, if the work

32

c.

is carried out under arduous and


unusual conditions (e.g. travel on rough
terrain or under extremely severe
weather contions); or
d. results from an event that could not be
scheduled or controlled administratively
by any individual (such as a job-related
court appearance required by a court
subpoena)

j. Commuting time54
General rule: Normal commuting time from home
to work and from work to home is not hours of work.
Exception:
Commuting time may be hours of work when
the employee is required to perform
substantial work under the control and
supervision of the employer.

k. No work, no pay principle

on the higher salaries agreed upon in the original


contract and to reject the subsequent
impositions of SAM, which obviously thought the
petitioners would have to accept because they
had no choice.57
Work hours of seaman. Seamean are
required to stay on board of their vessels by the
very nature of their duties, and it is for this
reason that, in addition to their regular
compensation, they are given free living
quarters to be on board. It could not
have been the purpose of the law to
require their employers to pay them
overtime pay even when they are not
actually working. The correct criterion in
determining whether or not sailors are entitled
to overtime pay is not, therefore, whether they
are on board and cannot leave ship beyond the
regular eight working number of hours, but
whether they actually rendered service in excess
of said number of hours. 58

v. Overtime work/pay

General Rule: NO WORK, NO PAY


law contemplates a "no work" situation whereArt 87: Overtime work
the employees voluntarily absent themselves. 55 Work may be performed beyond eight (8) hours
a day provided that the employee is paid for the
When not applicable:
overtime work, an additional compensation
Semestral break of private schoolequivalent to his regular wage plus at least
teachers. Petitioners certainly do not, ad twenty-five percent (25%) thereof.
voluntatem absent themselves during semestral
breaks. Rather, they are constrained to take Work performed beyond eight hours on a
mandatory leave from work.56
holiday or rest day shall be paid an additional
compensation equivalent to the rate of the first
The principle of "no work, no pay" does noteight hours on a holiday or rest day plus at least
apply as the fact that the complainants had thirty percent (30%) thereof.
not worked at the jobsite was not of their
own doing. If they were not able to work at all,
a. Overtime work:
it was because they refused to sign the third
Voluntary and consensual
contract providing for another lowering of their
salaries in violation of their first agreement as
approved by the POEA. They had a right to insist Overtime compensation, defined
Overtime compensation is additional pay for service
54 CFC 551.422(b), US Office of Personnel Management; Abad or work rendered or performed in excess of eight
(2011), Compendium on labor law
hours a day by employees or laborers covered by the
Eight-hour Labor Law. 59
55 University of Pangasinan Faculty Union v University of Nature of Overtime work
Pangasinan, GR 64821-23 (1993)
57 Prieto v NLRC, 226 SCRA 232 (1993)

56 University of Pangasinan Faculty Union v University of


Pangasinan, GR 64821-23 (1993)
58 Cagampan, et. al. v. NLRC, G.R. Nos. 85122-24 (1991)

33

To be considered as overtime work, the hours


b. Emergency or compulsory
worked must be in excess of and in addition to
overtime work
the 8 hours worked during the prescribed daily
60
work period.
In case of health personnel, overtime work is Art 89. Emergency overtime work
hours worked in excess of 8 hours during the Any employee may be required by the employer
prescribed daily work period or in excess of 40to perform overtime work in any of the following
hours worked during the regular work week of 5 cases:
days.61
When the country is at war or when any
other national or local emergency has been
Rationale for overtime compensation
There can be no other reason than that he isdeclared by the National Assembly or the Chief
made to work longer than what is commensurate Executive;

with his agreed compensation for the statutorily


fixed or voluntary agreed hours of labor he is When it is necessary to prevent loss of life or
property or in case of imminent danger to
supposed to do.62
In case of health personnel, overtime work is public safety due to an actual or impending
hours worked in excess of 8 hours during the emergency in the locality caused by serious
prescribed daily work period or in excess of 40accidents, fire, flood, typhoon, earthquake,
hours worked during the regular work week of 5 epidemic, or other disaster or calamity;
days.63
When there is urgent work to be performed
on
machines,
installations,
or
When an employee spends additional time to his
equipment, in order to avoid serious loss or
work, the effect upon him is multi-faceted: he
damage to the employer or some other cause of
puts in more effort, physical and/or mental; he is
similar nature;
delayed in going home to his family to enjoy the
comfort thereof; he might have no time for
When the work is necessary to prevent loss or
relaxation, amusement or sports; he might miss
damage to perishable goods; and
important prearranged engagement; etc. it is
thus the additional work labor or service
Where the completion or continuation of the
employed and the adverse effects of his longer
work started before the eighth hour is necessary
stay in his place of work that justify and is the
to prevent serious obstruction or prejudice to
real reason for the extra compensation called
the business or operations of the employer.
64
overtime.
Any employee required to render overtime work
under this Article shall be paid the additional
compensation required in this Chapter.

59 National Shipyard and Steel Corp. v. CIR (1961)

c. Computation of overtime pay


60 Caltex Regular Employees at Manila Office v Caltex Philippines
Art
Inc., 247 SCRA 398 (1995)

61 Art 83, Labor Code

62 PNB v PEMA, 115 SCRA 507 (1982)

63 Art 83, Labor Code

88. 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 90. Computation of additional
compensation.
64 Philippine National Bank v Philippine National Bank
Employees Association, 115 SCRA 507 (1982)

34

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.
Base for overtime pay
Overtime pay shall be based only on the regular
basic pay, exclusive of fringe benefits.65
Fringe benefits not regularly received, and not by
all employees, are not included in the
computation.66
Overtime pay is for extra effort beyond that
contemplated in the employment contract, hence
when additional pay is given for any other
purpose, it is illogical to include the same in the
basis for the computation of overtime pay.67
Burden of proof
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.68

Waiver of overtime pay


General rule:
Overtime compensation cannot be waived, whether
expressly or impliedly; and stipulation to the
contrary is against the law. Quitclaim where workers
agree to forego payment of overtime compensation is
null and void ab initio.70
Exceptions:
1. Non-payment by employer of overtime
pay to employee in excess of the regular
hours worked is valid as overtime pay
was already provided in the written
contract with a built-in overtime pay
and signed by the Director of the Bureau
of Employment Services and enforced by
the employer.71
2.

Adoption of Compressed Workweek


(CWW) on voluntary basis, subject to the
guidelines provided under Department
Order no. 2 series of 2004.

vi. Night work

Factors to consider where Collective


Bargaining Agreement does not contain any Art 86. Night shift differential.
provision on computation of overtime pay:69 Every employee shall be paid a night shift
differential of not less than ten percent
1. Whether or not the addition pay is for extra (10%) of his regular wage for each hour
work done or service rendered; and
of work performed between ten oclock in the
2. Whether the same is intended to beevening and six oclock in the morning.
permanent and regular, not contingent nor
temporary and given only to remedy a
Coverage:72
situation which can change anytime.
All employees
65 Bisig Manggagawa ng Philippien Refining Co., Inc v Phil.
Refining Co., Inc., 107 SCRA 677 (1981)

66 Shell Oil Workers Union v Shell and Affiliates Supervisors


Union, 70 SCRA 238 (1976)

Exception:
1. Government employees
2. Those
of
retail
and
service
establishments regularly employing not
more than five (5) workers;
3. Domestic helpers and persons in the
personal service of another;

70 Pampanga Sugar Development Co., Inc. v CIR, 114 SCRA 725


67 PNB v Phil National Bank Employees Association, 115 SCRA (1982)
507 (1982)

68 Lagatic v NLRC, GR 121004 (1998)

71 Engineering Equipment, Inc. v Minister of Labor, 138 SCRA


616 (1985)

69 PNB V PEMA, 115 SCRA 507 (1982)

72 Sec 1, Rule II, Book III, IRR

35

4. Managerial employees
Work on a scheduled rest day/special holiday
5. Field personnel and other employeesRate: Employee shall be paid a compensation
whose time and performance isequivalent to his regular wage plus at least thirty
unsupervised by the employer including(30%) percent and an additional amount of not less
those who are engaged on task orthan ten (10%) per cent of such premium pay rate for
contract basis, purely commission basis,each hour of work performed.
or those who are paid a fixed amount for
performing work irrespective of the time Work on a regular holiday
consumed in the performance thereof. Rate: regular wage plus an additional compensation
of no less than ten (10%) per cent of such premium
rate for each hour of work performed.
Night shift
Time: 10:00pm 6:00 am
Rate: not less than 10% of his regular wage for each
hour of work
Sec 3. Additional compensation, Rule II.
Night Shift Differential, Book III, IRR
Where an employee is permitted or suffered to
work on the period covered after his work
schedule, he shall be entitled to his regular wage
plus at least twenty-five per cent (25%) and an
additional amount of no less than ten per cent
(10%) of such overtime rate for each hour or
work performed between 10 p.m. to 6 a.m.
Sec 4. Additional compensation on
scheduled rest day/special holiday, Rule
II. Night Shift Differential, Book III, IRR
An employee who is required or permitted to
work on the period covered during rest days
and/or special holidays not falling on regular
holidays, shall be paid a compensation
equivalent to his regular wage plus at least thirty
(30%) per cent and an additional amount of not
less than ten (10%) per cent of such premium
pay rate for each hour of work performed.
Sec 5. Additional compensation on
regular holidays, Rule II. Night Shift
Differential, Book III, IRR
For work on the period covered during regular
holidays, an employee shall be entitled to his
regular wage during these days plus an
additional compensation of no less than ten
(10%) per cent of such premium rate for each
hour of work performed.

vii. CBA provision vis-a-vis overtime


Sec 6. Relation to agreements, Rule II.
Night Shift Differential, Book III, IRR
Nothing in this Rule shall justify an employer in
withdrawing or reducing any benefits,
supplements or payments as provided in existing
individual or collective agreements or employer
practice or policy.

B. WAGES
Wage, defined
Art 97 (f): Definition of Wage
"Wage" paid to any employee shall mean 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
and Employment, of board, lodging, or other
facilities customarily furnished by the employer
to the employee. "Fair and reasonable value"
shall not include any profit to the employer, or
to any person affiliated with the employer.

Definition of wage
1. It is the remuneration or earnings, however
Overtime during 10:00pm 6:00 am
designated capable of being expressed in
Rate: Employee shall be entitled to his regular wage
terms of money,
plus at least twenty-five per cent (25%) and an 2. Whether fixed or ascertained on a time, task,
additional amount of no less than ten per
piece, or commission basis, or other method of
cent (10%) of such overtime rate for each hour
calculating the same,
or work performed between 10 p.m. to 6 a.m.
3. Which is payable by an employer to an employee
4. Under a written or unwritten contract of

36

employment for work done or to be done, or for


services rendered or to be rendered and
5. Includes the fair and reasonable value, as
determined by the Secretary of Labor and
Employment, of board, lodging, or other
facilities customarily furnished by the employer
to the employee
6. Fair and reasonable value - shall not
include any profit to the employer, or to any
person affiliated with the employer.
No work no pay Principle
General Rule
A fair days wage for a fair days labor

provided that such workers work in ther


respective homes.76
4. Workers in any duly registered cooperative
with recommended by the Bureau of
Cooperative
Development
and
upon
approval of the Secretary of Labor and
Employment.77
5. Farm tenancy or leasehold;
6. Workers in registered barangay micro
business enterprise78
Facilities, defined
Board, lodging, and other facilities customarily
provided by an employer to his employees both in
agricultural and non-agricultural enterprises.
Acceptance of facilities must be voluntary.

Exception
When the laborer was able, willing and ready Facilities and Supplements, distinction
to work but was illegally locked out,
Facilities
Supplements
suspended or dismissed, or otherwise
How
treated
illegally prevented from working.73
Wage-deductible
Not wage-deductible
(wage
includes
Equal Work for Equal Pay Principle
facilities)
Persons who work with substantially equal
Purpose
qualifications, skill, effort and responsibility Articles or services Tools of the trade or
under similar working conditions should be paid for the benefit of articles or service
similar salaries.74
the employee or his primarily for the
family.
benefit of the
If an employer accords employees the same
employer or
position and rank, the presumption is that these
necessary to the
employees perform equal work.75
conduct of the
employers business.
Coverage
The rules on wages do not apply to the following
1. Household or domestic helpers, including Criterion. In determining whether a privilege is
family drivers, and persons in the personal
a facility, the criterion is not so much its kind but
service of another
its purpose.79
2. Homeoworkers engaged in needlework
3. Workers employed in any establishment
Requirements for deducting value of facilities
registered with the National Cottage
1. Customarily furnished by the trade Industries and Development Authority
(NACIDA) in accordance with RA 347076 Approved and took effect on 16 June 1962; amended by RA
5326 on 15 June 1968

73 Sugue v Triumph International (2009); Aklan Electric


Cooperative, Inc. vs. NLRC, 323 SCRA 258 (2000)
77 When the cooperative cannot resort to other remedial measures
without serious loss or prejudice to its operation
74 International School Alliance of Educators (ISAE) v
Quisumbing, Maccanley and Internatinal School, Inc, 333 SCRA
13 (2000)
78 RA 9178

75 Philex Gold Philippines, Inc v. Philex Bulawan Supervisors


Union, 468 SCRA 111 (2005)

79 Millares v NLRC & PICOP (1999)

37

"Customary" is founded on long-established andsalary rates between and among employee groups in
constant practice connoting regularity. Thean establishment as to effectively obliterate the
receipt of an allowance on a monthly basis doesdistinctions embodied in such wage structure based
not ipso facto characterize it as regular andon skills, length of service, or other logical bases of
forming part of salary because the nature of the differentiation
grant is a factor worth considering80
2. Voluntarily accepted in writing by the employee; Elements of wage distortion85
and
1. Existing hierarchy of positions with
3. Charged at fair and reasonable value. 81
corresponding salary rates
2. A significant change in the salary rate of a
lower pay class without a concomitant
Wages and Salaries, distinguished
increase in the salary rate of a higher one
3. The elimination of the distinction
Wages
and
salary
are
in
essence
between the two levels; and
synonymous and are used interchangeably.
4. The existence of the distortion in the same
However, strictly speaking, there is a legal
region of the country.
distinction.82
Wage
Paid for skilled or
unskilled manual labor

Salary
Paid to white collar
workers and denote a
higher
grade
of
employment

Not
subject
execution,
garnishment
attachment except
debts
related
necessities83

Not
exempt
execution,
garnishment
attachment84

to
or
for
to

from
or

How to Resolve wage distortion


Organized Establishment (with bargaining
representative)
1. Employer and the union shall negotiate
to correct the distortions.
2. Disputes shall be resolved through the
grievance procedure.
3. If still unresolved, voluntary arbitration.

ii. Wage distortion


Wage distortion, defined
A situation where an increase in prescribed wage
rates results in the elimination or severe contraction
of intentional quantitative differences in wage or

Unorganized Establishment 86
1. Employer and Employees shall endeavor
to correct such distortions.
2. Disputes shall be settled through the
National Conciliation and Mediation
Board.
3. If still unresolved after 10 calendar days
of conciliation, it shall be referred to the
appropriate branch of the NLRC
compulsory arbitration.

80 Millares v. NLRC, (1999)

81 Mabeza v. NLRC (1997)

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
The salary or wage differential does not need
to be maintained.

82 Songco v. NLRC (1990)

83 Art. 1708

85 Prubankers Assn. v. Prudential Bank and Co., (1999)

84 Gaa vs. CA, 1985

86 National Federation of Labor v. NLRC (1994)

In determining an employees regular wage, the


pertinent stipulations in the CBA are controlling,
provided the result is not less than the statutory

38

requirement.87

iii. Non-diminution 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 promulgation of this Code.
General rule
Prohibition against elimination or diminution of
benefits

3. Not due to error in the construction or


application of a doubtful or difficult question
of law.91
4. The diminution or discontinuance is done
unilaterally by the employer.

iv. Workers preference in case of


bankruptcy
Art. 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 provision of law
to the contrary notwithstanding.

Exceptions:
Not applicable When at least one of the
requisites is absent.
Such unpaid wages and monetary claims shall be
1. Mistake in the application of the law88 paid in full before the claims of the Government
2. Negotiated benefits89
and other creditors may be paid. (As amended
Benefits initiated through negotiationby R. A. 6715)
between Employee and Employer, e.g.
CBA, can only be eliminated orArt. 1707, Civil Code
diminished bilaterally.
The laborer's wages shall be a lien on the goods
3. Reclassification of Positions
manufactured or the work done.
e.g. loss of some benefits by promotion.
4. Contingent or Conditional Benefits The
Art 2241 (6)
rule does not apply to a benefit whose
With reference to specific movable property of
grant depends on the existence of certain
the debtor, the following claims or liens shall be
conditions, so that the benefit is not
preferred:
demandable if those preconditions are
absent.
6. Claims for laborers' wages, on the goods
manufactured or the work done;
Requisites
If the following are met, then the employer cannot
Art 2242 (2) and (3)
remove or reduce benefits:
With reference to specific immovable property
1. Ripened company policy
Benefit is founded on a policy which has and real rights of the debtor, the following
ripened into a practice over a long period90 claims, mortgages and liens shall be preferred,
2. Practice is consistent and deliberate and and shall constitute an encumbrance on the
immovable or real right:
87 Philippine National Bank vs. PEMA, 115 SCRA 507

88 Globe Mackay Cable v. NLRC, G.R. No. 74156 (June 29, 1988)

2. Credits for services rendered the insolvent by


employees, laborers, or household helpers
for one year preceding the commencement
of the proceedings in insolvency.

89 Azucena

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

90 Prubankers Assn. vs. Prudential Bank and Co., (1999)

91 Globe Mackay Cable vs. NLRC (1988)

39

buildings, canals or other works


Jurisprudence
Summary
1. It only creates a preference and not a license;
2. Worker preference shall apply only to
ordinary
preferred
credits
(meaning
unencumbered property)
3. It must yield to special preferred credits
where liens are attached;
4. Covers unpaid wages as well as other
monetary claims; and
5. Judicial declaration of insolvency or v.
bankruptcy and filing of claims by workers
still required.

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 Art. 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.
Preference does not apply when the Employer
corporation is under rehabilitation or
receivership. 94

Wage protection
1.

Prohibition against interference in wage


disposal
Prohibition against wage deduction
Prohibition against requirement to make
deposits for loss or damage
Prohibition against withholding of wages
Prohibition against deduction to ensure
employment
Prohibition against retaliatory measures
Prohibition against False Reporting
Prohibition against keeping of employees
records in a place than the workplace
Prohibition against garnishment or
execution

Article 110 of the Labor Code did not sweep away


2.
the overriding preference accorded under the
3.
scheme of the Civil Code: 92
1. Tax claims of the government or any
4.
subdivision thereof which constitute a
5.
lien upon properties of the Insolvent still
preferred over wages.
6.
2. The use of the phrase "first preference"
7.
in Article 110 indicates that what Article
8.
110 intended to modify is the order of
preference found in Art. 2244, which
9.
pertains to unencumbered property.
3. Art. 2241 and 2242 pertain to
encumbered property and such property
a. Prohibition against
shall still remain reserved to its
interference in wage disposal
respective lienholder.
4. Exception is if either 2241 (6) or 2242
Art. 112. Non-interference in disposal of
(3) applies.
wages.
5. Primary effect
It moves wages from 2nd priority inNo employer shall limit or otherwise interfere
2244 to 1st priority; as if 2244 (2)with the freedom of any employee to dispose of
his wages. He shall not in any manner force,
became 2244 (1).
compel, or oblige his employees to purchase
Art. 110 of the Labor Code cannot be viewed in merchandise, commodities or other property
isolation but must be read in relation to the Civil from any other person, or otherwise make use of
Code scheme on classification and preference of any store or services of such employer or any
other person.
credits. 93
Requirements of judicial liquidation or
declaration of bankruptcy still intact; workers
must also file their claims.

92 Republic vs. Peralta (1987)

93 Development Bank of the Philippines vs. NLRC (1995)

1.

No employer shall limit or otherwise


interfere with the freedom of any employee
to dispose of his wages.
2. He shall not in any manner force, compel, or
oblige his employees
3. To purchase merchandise, commodities or
other property from any other person, or
otherwise make use of any store or services

94 Rubberworld (Phils.), Inc. vs. NLRC (1999)

40

of such employer or any other person.

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, such as:

Related Civil Code Provisions


Art. 1705, Civil Code
The laborer's wages shall be paid in legal
currency.
Art. 1706, Civil Code
Withholding of the wages, except for a debt due,
shall not be made by the employer.
Art. 1707, Civil Code
The laborer's wages shall be a lien on the goods
manufactured or the work done.
Art. 1708, Civil Code
The laborer's wages shall not be subject to
execution or attachment, except for debts
incurred for food, shelter, clothing and medical
attendance.
Art. 1709, Civil Code
The employer shall neither seize nor retain any
tool or other articles belonging to the laborer.

a.

Employee debt to employer is due


and demandable95
b. Attachment or execution in cases of
debts incurred for necessities: food,
shelter,
clothing,
medical
attendance96
c. Withholding tax
d. Deductions of a legally established
cooperative
e. Payment to 3rd parties upon written
authority by employee
f. Deductions for loss or damage
g. SSS, Medicare, Pag-IBIG premiums
h. Deduction for value meals and other
facilities.

b. Prohibition against wage


deduction
Art. 113. Wage deduction.
No employer, in his own behalf or in behalf of
any person, shall make any deduction from the
wages of his employees, except:
a.

b.

c.

In cases where 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;
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
In cases where the employer is
authorized by law or regulations issued by
the Secretary of Labor and Employment.

It shall be unlawful to make any deduction from


the wages of any Employee for the benefit of the
Employer as consideration of a promise of
employment or retention in employment. (Art.
117) or to retaliate against the Employee who
filed a complaint. (Art. 118)
Rationale
Prohibition seeks to protect the employee against
unwarranted practices that would diminish his
compensation without his knowledge and consent.97

With Employees
consent in Writing
1. SSS Payments
2. PHILHEALTH
payments
3. Contributions to

1.

Without
Employees
consent
Workers
insurance
acquired by the
employer

95 Art 1706, Civil Code

General Rule
No employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages of
96 Art 1708, Civil Code
his employees.
Exceptions
1. Employee is insured with his consent by
the employer, and the deduction is to 97 Radio Communication of the Phil., Inc. v. Sec. of Labor (1989)
recompense the employer for the

41

PAG-IBIG Fund
4. Value of meals
and other
facilities
5. Payments to third
persons with
employees
consent
6. Deduction of
absences
7. Union dues,
where check-off
is not provided in
the CBA.

2. Union dues,
where the right to
check-off is
recognized by the
employer
(provided in the
CBA)
3. Debts of the
employee to the
employer that
have become due
and demandable

c. Prohibition against
requirement to make
deposits for loss or damage
Art. 114. Deposits for loss or damage.
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, except when the employer 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 Secretary of
Labor and Employment in appropriate rules and
regulations.
Art. 115. Limitations.
No deduction from the deposits of an employee
for the actual amount of the loss or damage shall
be made unless the employee has been heard
thereon, and his responsibility has been clearly
shown.

3. The amount of the deduction is fair and


reasonable and shall not exceed the actual
loss or damage; and
4. The deduction from the employees wage
does not exceed 20% of the employees
wages in a week.98
Daily Deposits to Cover Shortage in Boundary
Illegal
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."
When employee stops working for employer, the
alleged purpose for the unauthorized deposits no
longer exists. Any balance due must be returned
to employee with legal interest.99

d. Prohibition against
withholding of wages
Art. 116. Withholding of wages and
kickbacks prohibited
It shall be unlawful for any person, directly or
indirectly, to withhold any amount from the
wages of a worker or induce him to give up any
part of his wages by force, stealth, intimidation,
threat or by any other means whatsoever
without the workers consent.

e. Prohibition against
deduction to ensure
employment

Art. 117. Deduction to ensure employment


It shall be unlawful to make any deduction from
the wages of any employee for the benefit of the
General Rule
No deposits from which deductions shall be made for employer or his representative or intermediary
as consideration of a promise of employment or
the reimbursement of loss of or damage to tools,
retention in employment.
materials, or equipment supplied by the employer
Exception:
f. Prohibition against
1. Recognized industry practice or
retaliatory measures
2. When such is necessary or desirable as
determined by the DOLE Secretary inArt. 118. Retaliatory measures
appropriate rules and regulations.
98 Art. 115, Labor Code
Conditions for the deductions
1. Employee is clearly shown to be responsible
for the loss or damage
2. The Employee is given ample opportunity to
show cause why deduction should not be99 Five J Taxi vs. NLRC (1994)
made;

42

It shall be unlawful for an employer to refuse to


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

Art. 1708, Civil Code


The laborer's wages shall not be subject to
execution or attachment, except for debts
incurred for food, shelter, clothing and medical
attendance.

General Rule
This article is similar to Art. 248(f) which The laborer's wages shall not be subject to execution
classifies as unfair labor practice (ULP) an or attachment
employers prejudicial act against an employee
Exception
who gave or is about to give a testimony under
For debts incurred for food, shelter, clothing
the Code. However, they differ on the subject of
and medical attendance
the testimony.

Art. 118
Subject of testimony
is wages
The
employers
retaliatory
act
is
unlawful but not ULP
(unless the act is
intended to impair
the right to selforganization
of
employees)

Art. 248(f)
Subject is anything
under the Code
The
employers
retaliatory act is ULP.

g. Prohibition against False


Reporting
Art. 119. False reporting
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.

h. Prohibition against keeping


of employees records in a
place than the workplace
Sec. 11, 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 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.

i. Prohibition against
garnishment or execution

Article 1708 of the New Civil Code to operate in


favor of any but 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.

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.

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.

vi. Criteria/factors for wage setting


Art.124. Standards/Criteria for minimum
wage fixing.
The regional minimum wages 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. In the determination of such regional
minimum wages, the Regional Board shall,
among other relevant factors, consider the
following:
a.

The demand for living wages

b. Wage
adjustment
consumer price index

vis-a -vis

the

43

c.

The cost of living and changes or


increases therein

voluntary arbitrators within ten (10) calendar


days from the time said dispute was referred to
voluntary arbitration.

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 on employment generation and


family income; and

j.

The equitable distribution of income


and wealth along the imperatives of
economic and social development.

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.
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.
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
the wage structure within an establishment, the
employer and the union shall negotiate to
correct the distortions. Any dispute arising from
wage distortions shall be resolved through the
grievance procedure under their collective
bargaining agreement and, if it remains
unresolved, through voluntary arbitration.
Unless otherwise agreed by the parties in
writing, such dispute shall be decided by the

In cases where there are no collective


agreements or recognized labor unions, the
employers and workers shall endeavor to correct
such distortions. Any dispute arising therefrom
shall be settled through the National
Conciliation and Mediation Board and, if it
remains unresolved after ten (10) calendar days
of conciliation, shall be referred to the
appropriate branch of the National Labor
Relations Commission (NLRC). It shall be
mandatory for the NLRC to conduct continuous
hearings and decide the dispute within twenty
(20) calendar days from the time said dispute is
submitted for compulsory arbitration.
The pendency of a dispute arising from a wage
distortion shall not in any way delay the
applicability of any increase in prescribed wage
rates pursuant to the provisions of law or wage
order.
As used herein, a wage distortion shall mean 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.
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 eight
(8) hours.
All recognized learnership and apprenticeship
agreements shall be considered automatically
modified insofar as their wage clauses are
concerned to reflect the prescribed wage rates.
(As amended by Republic Act No. 6727, June 9,
1989)

Factors/Criteria in determining regional


minimum wages:
1.

Demand for living wages;

44

2. Wage adjustment vis-a-vis the consumer


price index;
3. Cost of living and changes or increases
therein;
4. The needs of workers and their families;
5. The need to induce industries to invest in
the countryside;
6. Improvements in standards of living;
7. Prevailing wage levels;
8. Fair return of the capital invested and
capacity to pay of employers;
9. Effects in employment generation and
family income; and
10. Equitable distribution of income and wealth
along the imperatives of economic and
social development.

3. Decide to ISSUE or NOT TO ISSUE a wage


order
Frequency
Wage orders issued may not be disturbed for
12 months from effective date; this serves as
a bar for petitions for wage hikes as well
EXCEPT
When Congress passes a new law
affecting wages or other supervening
circumstances

Procedure for Wage Fixing by Regional


Board
1.

Investigate and study pertinent facts, based


on criteria set in Art. 124
2. Conduct public hearings or consultations
with notice to employer and employee
groups, provinces, city, municipal officials
and other interested parties

Effectivity
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
4. Appeal wage order to Commission within 10
calendar
days;
mandatory
for
the
Commission to decide within 60 calendar
days from filing
Filing of an appeal DOES NOT STAY order
unless appellant files an undertaking with a
surety, to guarantee payment of employees if the
wage order is affirmed (as amended by RA 6727)

Agencies on Wage Studies and Determination

45

Composition

National Wages and Productivity


Commission

Regional Tri-partite Wages and


Productivity Boards

1.

Ex Officio Chairman: Secretary of


Labor and Employment
Ex-officio vice-chairman: DirectorGeneral of NEDA
Two members each from the workers
and employers sectors who shall be
appointed by the President of the
Philippines upon the
recommendation of the Sec. of Labor
Executive Director of the Commission
Headed by the Executive Director
Two (2) Deputy Directors

1. Chairman: Regional Director of DOLE


2. Vice Chairman: Regional Director of
NEDA
3. Vice Chairman: Regional Director of
DTI
4. 2 Members from the employer sector
5. 2 Members from the employee sector
6. Secretariat

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;
To formulate policies and guidelines
on wages, incomes and productivity
improvement at the enterprise,
industry and national levels;
To prescribe rules and guidelines for
the determination of appropriate
minimum wage and productivity
measures at the regional, provincial,
or industry levels;
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;
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-ofliving, labor costs, investments and
returns;
To review plans and programs of the
Regional Tripartite Wages and
Productivity Boards to determine
whether these are consistent with
national development plans;
To
exercise
technical
and
administrative supervision over the

1.

2.
3.

Secretariat

Powers and
Functions

4.
1.
2.

1.

2.

3.

4.

5.

6.

7.

Tri-partite body 3 sectors are


represented:
1. Government
2. Employers
3. Employees.

2.

3.

4.
5.

6.

To develop plans, programs and


projects relative to wages, incomes
and productivity improvement for
their respective regions;
To determine and fix minimum wage
rates applicable in their regions,
provinces or industries therein and to
issue the corresponding wage orders,
subject to guidelines issued by the
Commission;
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;
To coordinate with the other Regional
Boards as may be necessary to attain
the policy and intention of this Code;
To receive, process and act on
applications for exemption from
prescribed wage rates as may be
provided by law or any Wage Order;
and
To exercise such other powers and
functions as may be necessary to carry
out their mandate under this Code.101

46

Regional Tripartite Wages and


Productivity Boards;
8. 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
9. To exercise such powers and functions
as may be necessary to implement this
Act.100
other disaster or calamity to prevent loss of
life and property, or imminent danger to
public safety;

C. REST DAYS
Coverage and Scheduling
Art 91. 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 twenty-four (24) consecutive
hours after every six (6) consecutive
normal work days.
The employer shall determine and schedule the
weekly rest day of his employees subject to
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.

Compulsory Work
Article 92. 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

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;
c.

In the event of abnormal pressure of


work due to special circumstances, where
the employer cannot ordinarily be expected
to resort to other measures;

d. To prevent loss
perishable goods;

or

damage

to

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.

Compensation
Article 93. Compensation for rest day,
Sunday or holiday work.
a.

Where an employee is made or permitted to


work on his scheduled rest day, he shall be
paid an additional compensation of
at least thirty percent (30%) of his
regular wage. An employee shall be

100 Art 121, Labor Code

101 Art 122, Labor Code

47

entitled to such additional compensation for


work performed on Sunday only when it is
his established rest day.
b. When the nature of the work of the
employee is such that he has no regular
workdays and no regular rest days can be
scheduled, he shall be paid an additional
compensation of at least thirty
percent (30%) of his regular wage for
work performed on Sundays and
holidays.
c.

Work performed on any special holiday shall


be paid an additional compensation of at
least thirty percent (30%) of the regular
wage of the employee. Where such holiday
work falls on the employees scheduled rest
day, he shall be entitled to an additional
compensation of at least fifty per cent (50%)
of his regular wage.

d. Where the collective bargaining agreement


or other applicable employment contract
stipulates the payment of a higher premium
pay than that prescribed under this Article,
the employer shall pay such higher
rate.
When work
performed
On scheduled rest day
On Sunday ONLY
established rest day

30% of Regular wage

No regular work and


rest days

30% of regular wage of


work performed on
Sundays and Holidays

On any special
holidays/special day
On any regular holiday
falling on scheduled
rest day

rest day and the benefits as provided in this


Rule.
Sec.3. Weekly rest day, Rule III, Book III,
IRR
Every employer shall give his employees a rest
period of not less than twenty-four (24)
consecutive hours after every six consecutive
normal work days.
Sec.4. Preference of employee, Rule III,
Book III, IRR
The preference of the employee as to his weekly
day of rest shall be respected by the employer if
the same is based on religious grounds. The
employee shall make known his preference to
the employer in writing at least seven (7) days
before the desired effectivity of the initial rest
day so preferred.
Where, however, the choice of the employee as to
his rest day based on religious grounds will
inevitably result in serious prejudice or
obstruction to the operations of the undertaking
and the employer cannot normally be expected
to resort to other remedial measures, the
employer may so schedule the weekly rest day of
his choice for at least two (2) days in a month.

Premium pay
30% of regular wage

30% of regular wage


30% of regular wage

Implementing rules
Sec.1. General statement on coverage,
Rule III, Book III, IRR
This Rule shall apply to all employers whether
operating for profit or not, including public
utilities operated by private persons.
Sec.2. Business on Sundays/Holidays.,
Rule III, Book III, IRR
All establishments and enterprises may operate
or open for business on Sundays and holidays
provided that the employees are given the weekly

Sec.5. Schedule of rest day, Rule III, Book


III, IRR
a. Where the weekly rest is given to all
employees simultaneously, the employer
shall make known such rest period by means
of a written notice posted conspicuously in
the work place at least one week before it
becomes effective.
b. Where the rest period is not granted to all
employees simultaneously and collectively,
the employer shall make known to the
employees their respective schedules of
weekly rest through written notices posted
conspicuously in the work place at least one
week before they become effective.
Sec.6. When work on rest day authorized,
Rule III, Book III, IRR
An employer may require any of his employees
to work on his scheduled rest day for the
duration of the following emergencies and
exceptional conditions:
a.

In

case

of

actual

or

impending

48

emergencies caused by serious accident,


fire, flood, typhoon, earthquake, epidemic or
other disaster or calamity, to prevent loss of
life or property, or in cases of force majeure
or imminent danger to public safety;

scheduled, he shall be paid an additional


compensation of at least 30% of his regular
wage for work performed on Sundays and
holidays.
c.

b. In case of urgent work to be performed on


machineries, equipment or installations to
avoid serious loss which the employer would
otherwise suffer;
c.

In the event of abnormal pressure of


work due to special circumstances, where
the employer cannot ordinarily be expected
to resort to other measures;

d. To prevent serious loss of perishable


goods;

d. The payment of additional compensation for


work performed on regular holiday shall be
governed by Rule IV, Book Three, of these
regulations.
e.

e.

Where the nature of the work is such that


the employees have to work continuously for
seven (7) days in a week or more, as in the
case of the crew members of a vessel to
complete a voyage and in other similar
cases; and

f.

When the work is necessary to avail of


favorable weather or environmental
conditions where performance or quality
of work is dependent thereon.

No employee shall be required against his will to


work on his scheduled rest day except under
circumstances provided in this Section:
Provided, However, that where an employee
volunteers to work on his rest day under other
circumstances, he shall express such desire in
writing, subject to the provisions of Section 7
hereof regarding additional compensation.
Sec.7.
Compensation
on
rest
day/Sunday/holiday, Rule III, Book III,
IRR
a. Except those employees referred to under
Section 2, Rule I, Book Three, an employee
who is made or permitted to work on his
scheduled rest day shall be paid with an
additional compensation of at least 30% of
his regular wage. An employee shall be
entitled to such additional compensation for
work performed on a Sunday only when it is
his established rest day.
b. Where the nature of the work of the
employee is such that he has no regular work
days and no regular rest days can be

Work performed on any special holiday shall


be paid with an additional compensation of
at least 30% of the regular wage of the
employees. Where such holiday work falls on
the employee's scheduled rest day, he shall
be entitled to additional compensation of at
least 50% of his regular wage.

Where the collective bargaining agreement


or other applicable employment contract
stipulates the payment of a higher premium
pay than that prescribed under this Section,
the employer shall pay such higher rate.

Sec.8. Paid-off days, Rule III, Book III,


IRR
Nothing in this Rule shall justify an employer in
reducing the compensation of his employees for
the unworked Sundays, holidays, or other rest
days which are considered paid-off days or
holidays by agreement or practice subsisting
upon the effectivity of the Code.
Sec.9. Relation to agreements, Rule III,
Book III, IRR
Nothing herein shall prevent the employer and
his employees or their representatives in
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,
agreements, and voluntary employer practices.

D. HOLIDAYS
Art. 94. Right to holiday pay.
a. Every worker shall be paid his regular daily
wage during regular holidays, except in retail

49

One principally engaged in the


sale of goods to end-users for
personal or household use104

and
service
establishments
regularly
employing less than ten (10) workers;
b. 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; and
c.

As used in this Article, "holiday" includes:


New Years Day, Maundy Thursday, Good
Friday, the ninth of April, the first of May,
the twelfth of June, the fourth of July, the
thirtieth of November, the twenty-fifth and
thirtieth of December and the day
designated by law for holding a general
election.102

b. Service establishment
One principally engaged in the
sale of service to individuals for
their own or household use and
is generally recognized as such105
3. Domestic helpers and persons in the
personal service of another
4. Managerial employees
5. Field personnel and other employees
whose time and performance is
unsupervised by the employer including
those who are engaged on task or
contract basis, purely commission basis
or those who are paid a fixed amount for
the performing work irrespective of the
time consumed in the performance
thereof.

Holiday pay is a legislated benefit enacted as part


of Constitutional imperative that the state shall
afford protection to labor. Its purpose is not
merely to prevent diminution of the monthly
income of the workers on account of work
interruptions. Xxx although the worker is forced Mechanics of the availment of the holiday pay
to take a rest, he earns what he should earn, that benefit
1. The employee is entitled to the payment of
is, his holiday pay. It is also intended to
his regular daily basic wage (100%) during
enable the worker to participate in the
said holidays, even if the worker did not
national celebrations held during the
report for work on said days.
days identified as with great historical
and cultural significance.103
Provided that he was present or was on leave
of absence with pay on the work day
Coverage
immediately preceding the holiday.
General rule: Every worker should be paid his
regular daily wage during regular holidays
2. If the employee was suffered to work during
the holidays, he will be entitled to payment
Exception:
of holiday premium of 200% of his basic
Holiday pay benefits shall not cover the
wage (100% of basic wage plus 100%)
following persons

Those of the government and any of itsi. Holidays Covered


political
subdivisions,
including
government-owned and controlled-Regular Holidays and Nationwide Special
corporations
Days106
2. Those
of
retail
and
service
establishments regularly employing less
tan 10 workers
1.

104 IRR of RA 6727. Wage Rationalization Act

a. Retail Establishment
102 Amended by RA 9492

105 IRR of RA 6727. Wage Rationalization Act

103 Asian Transmission v CA (2004)

106 RA 9492

50

Unless otherwise modified by law, and orThe following are hereby recognized as legal
proclamation, the following regular holidays andMuslim holidays:
special days shall be observed in the country:
a. 'Amun Jadid (New Year), which falls on the
first day of the first lunar month of
Muharram;
Regular Holidays
b. Maulid-un-Nabi (Birthday of the Prophet
1. New years Day. Jan 1
Muhammad), which falls on the twelfth day
2. Maundy Thursday
of the third lunar month of Rabi-ul-Awwal;
3. Good Friday
4. Eidul Fitr
c. Lailatul Isra Wal Mi'raj (Nocturnal Journey
5. Araw ng Kagitingan
and Ascension of the Prophet Muhammad),
(Bataaan and Corregidor Day).
which falls on the twenty-seventh day of the
Monday nearest Apr 9
seventh lunar month of Rajab;
6. Labor Day. Mon nearest May 1
7. Independence Day. Mon nearest Jun 12 d. 'Id-ul-Fitr (Hari Raya Pausa), which falls on
8. National Heroes Day. Last mon of Aug
the first day of the tenth lunar month of
9. Bonifacio Day. Mon nearest Nov 3
Shawwal, commemorating the end of the
10. Christmas Day. Dec 25
fasting season; and
11. Rizal Day. Mon nearest Dec 30
e.

'Id-ul-Adha (Hari Raja Haji), which falls on


the tenth day of the twelfth lunar month of
Dhu 1-Hijja.

There should be no distinction between


muslims and non-muslims as regards to
the payment of benefits for Muslim
Holidays. Wages and other emoluments
granted by aw to the working man are
determined on the basis of the criteria laid down
by laws and not on workers faith.107

Nationwide Special Holidays


1. Ninoy Aquino Day. Mon nearest 21
2. All Saints Day. Nov 1
3. Last Day of the Year. Dec 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:

ii. Computation of Holiday pay

When work
Premium pay
performed
Provided, That for movable holidays, the
200% of regular daily
President shall issue a proclamation, at least Work on any regular
holiday
wage
six months prior to the holiday concerned,
the specific date that shall be declared as a Work on any regular
200% of regular daily
holiday
nonworking day:
wage
+
+
overtime
30% of such amount
(if it exceeds 8 hours)
Provided, however, The Eidul Adha shall be Work on any regular
200% of regular daily
celebrated as a regional holiday in the holiday which falls on
wage + 30% of such
Autonomous Region in Muslim Mindanao." the scheduled rest day
amount
Work on any regular
Regular holidayholiday which falls on
on0restday rate (200%
Muslim holidays
the scheduled rest day, of regular daily wage +
+
30% of such amount)
Article 169. Official Muslim holidays, PD
1083 Code of Muslim Personal Laws
107 San Miguel Corp v CA (2002)

51

overtime
Work on special
holidays
Work on special
holiday
+
Overtime

+
30% of the rate
Regular daily wage
+
30% of regular wage
Regular daily wage
+
50% of the regular
daily wage

1.

Employee is present on day immediately


preceding first holiday
2. Employee works on first holiday, which
entitles him to pay on second holiday

Role of divisor in determining payment of


holiday pay for monthly paid employees
The divisor assumes an important role in
Special holidays are not the same asdetermining whether or not holiday pay is already
included in the monthly paid employees salary110
special working holidays
Special holidays:
a. National Special days
Ninoy Aquino day
All Saints day
Last day of new year
b. Declared Special days
Special Non-Working Holiday
Special Public Holiday
Special National Holiday

Employee is entitled to holiday for both days if:

Monthly paid employees are not entitled to the


holiday pay if their total annual income is divided by
365 days resulting in a wage which is beyond the
minimum wage per day because they are considered
paid everyday of the year including holidays, rest
days, and other non-working days. The 365 days are
as follows:
365 days
300 ordinary days
51 rest days
11 regular holidays
3 special holidays

Special working holiday is considered an


ordinary working holiday, so there is no
premium pay

Double holiday pay


DOLE explanatory Bulletin on Workers Entitlement
to Holiday pay on 9 April 1993, if 2 holidays fall on
the same day
1. If unworked
200% of basic wage
2. If worked
300% of basic wage

1.

For company with 6-day working


schedule
The divisor 314 means that the 10 legal
holidays are already included in the monthly
pay of the employee

2. For the company with 5-day working


schedule
The divisor 261 means that the holiday pay
is already included in the monthly salary of
the employee

Double Holiday Rule for Monthly-paid


Sundays 111
employees
When a holiday falls on a Sunday, the
For covered employees whose monthly salaries1.
following Monday will not be considered a
are computed based on 365 days and for those
holiday unless a proclamation says so.
other employees who are paid using factor 314,
Furthermore as stated in the Wellington
or 262, or any other factor which already2.
case, a legal holiday falling on a Sunday does
considers the payment for the 11 regular
not create a legal obligation to pay extra,
holidays, NO additional payment is due them.108
aside from the usual holiday pay, to
monthly-paid employees
Successive holiday pay109
108 BWC-WHSD Opinion No. 053, s. 1998

110 Producers Bank v NLRC, 355 SCRA 489 (2001)

109 Sec 10, Rule IV, Book III, IRR

111 Letter of Instruction No. 1087

52

when:

Holidays falling on a Sunday112


1.
Supreme Court ruled that the Regional1. an annual inventory; or
or
cleaning
of
Director erred in saying that if a holiday fell 2. repair
machineries and equipment is
on Sunday, an extra day of pay was created;
undertaken.
thus, an employer should pay twice the
amount of holiday pay on that day.
Regular holidays during the
suspension of work if:

2.

In fixing the salary:


a. Deduct 51 Sundays from the 365
Not entitled
1. Cessation of operation is due to
b. The difference, 314, shall be used as
business reverses, and
divisor for determining the monthly2. Authorized by the Secretary
salary.
of Labor.
c. The monthly salary thus fixed Private school teachers, including faculty
actually covers payment for members of colleges and universities
314 days of the year, including regular
holidays
during
Not entitled
regular and special holidays. semestral vacations.
regular
holidays
during
Entitled
3.
No provision of law requires any employer toChristmas vacation;
make adjustments in the monthly salary rate
Piece workers
set by him to take account of legal holidaysHis holiday pay shall not be less
falling on Sundays in a given year, otherwise than his average daily earnings
to reckon a year at more than 365 days.
for the last seven (7) actual
working days preceding the
Non-working/scheduled rest day
regular holiday;
Entitled
Sec 6 (c), Rule V, Book III, IRR
Provided, However, that in no
Where the day immediately preceding the
case shall the holiday pay be
holiday is a non-working day in the
less
than
the
applicable
establishment or the scheduled rest day of the
statutory minimum wage rate.
employee, he shall not be deemed to be on leave
of absence on that day, in which case he shall be
Seasonal workers
entitled to the holiday pay if he worked on the
During off-season when they
Not entitled
day immediately preceding the non-working day
are not at work
or rest day.
Workers assigned to skeleton
crews that work during the offEntitled
season and regular holidays fall
iii. Right to Holiday Pay
in that duration.
Seafarers
Right to Holiday Pay
Any
hours
of
work
or duty
In case of absences
Entitled to
including
hours
of
watchEmployee is on leave of absence
paid rest day
keeping performed by the
with pay on the day immediately
Entitled
or holiday
seafarer on designated rest days
preceding a regular holiday
pay
and holidays
An employee is on leave of
absence without pay on the day
immediately preceding a regular
holiday

Not entitled

Temporary cessation of work


Entitled

Regular holidays falling within the


period in cases of temporary
shutdowns or cessation of work,

I.

In case of absences

Sec 6 (a), Rule IV, Book III, IRR


All covered employees shall be entitled to the
benefit provided herein when they are on leave
of absence with pay.

112 Wellington Investment and Manufacturing Corporation vs.


Employees
Trajano (1995):

who are on leave of absence without


pay on the day immediately preceding a regular
holiday may not be paid the required holiday pay

53

if he has not worked on such regular holiday.

II.

b. The regular holiday during the cessation of


operation of an enterprise due to business
reverses as authorized by the Secretary of
Labor may not be paid by the employer.
Of teachers, piece workers,
seafarers and seasonal workers

Sec 8. Holiday pay of certain employees,


Rule IV, Book III, IRR
a. Private school teachers, including faculty
members of colleges and universities, may
not be paid for the regular holidays during
semestral vacations. They shall, however, be
paid for the regular holidays during
Christmas vacation;
b. Where a covered employee, is paid by
results or output, such as payment on
piece work, his holiday pay shall not be less
than his average daily earnings for the last
seven (7) actual working days preceding the
regular holiday; Provided, However, that in
no case shall the holiday pay be less than the
applicable statutory minimum wage rate.
c.

They are not entitled to payment of


holiday pay because they are paid only
for work actually done. Since regular
holidays are known to both the school and faculty
members as no class days; certainly the latter
do not expect payment for said unworked
holidays.

2.

They are entitled to their hourly rate on


days declared as special holidays. 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.

3.

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.

In case of temporary cessation of


work

Sec 7, Rule IV, Book III, IRR


a. In cases of temporary or periodic shutdown
and temporary cessation of work of an
establishment, as when a yearly inventory or
when the repair or cleaning of machineries
and equipment is undertaken, the regular
holidays falling within the periods shall be
compensated in accordance with this Rule.

III.

1.

Seasonal workers may not be paid the


required holiday pay during off-season when
they are not at work

d. Workers who have no regular working days


shall be entitled to the benefits provided in
this Rule.

Piece workers
Philosophy underlying the exclusion of piece workers
from the 8-hour law is that said workers are paid
depending upon the work they do irrespective of the
amount of time employed in doing said work.114
Seafarers
Any hours of work or duty including hours of watchkeeping performed by the seafarer on designated rest
days and holidays shall be paid rest day or holiday
pay.115
Seasonal workers
Seasonal workers who do not work during off-season
are not entitled to pay for the regular holidays
occurring during their off-season. Workers assigned
to skeleton crews that work during the off-season
have the right to be paid on regular holidays falling
in that duration.

E. LEAVES
114 Red V Coconut Products Ltd., v. CIR, 1966

Holiday Pay of Hourly-Paid Faculty Members113


113Jose Rizal College v. NLRC, G.R. No. 65482, Dec. 1, 1987

115 Section 11.C, Standard Terms and Conditions Governing the


Employment of Filipino Seafarers on Board Ocean-Going Vessels

54

i. Service incentive leave


Art. 95. 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.
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 ten 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.

employees.116

Teachers of private school on contract basis are


entitled to service incentive leave.117
Piece-rate workers are not entitled to service
incentive leave. 118 However, they shall be
entitled to service incentive leave when, although
they are piece-rate wokers, they are regular
employees.119

Meaning of 1 year of service

Sec 3, Rule V, Book III, IRR


The term "at least one-year service" shall mean
service for not less than 12 months, whether
continuous or broken, reckoned from the date
the employee started working, including
The grant of benefit in excess of that provided
authorized absences and paid regular holidays
herein shall not be made a subject of arbitration
unless the working days in the establishment as
or any court or administrative action.
a matter of practice or policy, or that provided in
the employment contract is less than 12 months,
in which case said period shall be considered as
Coverage
Every employee who has rendered at least one yearone year.
of service shall be entitled to a yearly service
incentive leave of five days with pay.

Exceptions: not covered


1. Those of the government and any of its
political subdivisions, including GOCCs
2. Domestic helpers and persons in the
personal service of another

Entitlement

The grant of benefit in excess of that provided


herein shall not be made a subject of arbitration
or any court or administrative action. 120

The service incentive leave shall be commutable


to its money equivalent if not used or exhausted
at the end of the year. 121

3. Managerial employees as defined in116 Sec. 1, Rule V, Implementing Rules and Regulations
Book 3 of this Code
4. Field personnel and other employees
whose performance is unsupervised by117 Cebu Institute of Technology v. Ople, 156 SCRA 531
the employer including those who are
engaged on task or contract basis, purely
commission basis, or those who are paid
a fixed amount for performing work 118 Makati Haberdashery v NLRC (1989)
irrespective of the time consumed in the
performance thereof
5.

Those who are already enjoying the


benefit herein provided

119 Labor Congress v NLRC (1998)

6. Those enjoying vacation leave with pay120 Art 95 (c)


of at least 5 days
7.

Those employed in establishments


regularly employing less than 10121 Sec 3, Rule V, Book III, IRR

55

Adaily maternity benefit equivalent to 100% of her


The cause of action of an entitled employee toaverage daily salary credit for:
claim his service incentive leave pay accrues
1. 60 days for normal delivery
from the moment the employer refuses to
2. 78 days for caesarean delivery
remunerate its monetary equivalent if the
employee did not make use of said leave credits
but instead chose to avail of its commutation This benefit shall not be included in the
(into money). Accordingly, if the employee computation of 13th month pay as it is granted
wishes to accumulate his leave credits and opts to an employee in lieu of wages which is the basis for
for its commutation upon his resignation or computing 13th month.
separation from employment, his cause of action
to claim the whole amount of his accumulated Avaliment
service incentive leave shall arise when theOther conditions
employer fails to pay such amount at the time of 1. Employer shall advance the payment subject to
reimbursement by the SSS within 30 days from
his
resignation
or
separation
from
filing of leave application.
employment.122

ii. Maternity leave123

2. Availment 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.

3. Employee may only avail of benefit for the first


Coverage
four (4) deliveries or miscarriages.
Every woman in the private sector, whether married
or unmarried, is entitled to the maternity leave
4. Sanction: That if an employee should give birth
benefits.
or suffer miscarriage
a. without the required contributions having
Requisites
been remitted for her by her ER to the SSS,
1. Employment
or
A female employee employed at the time of
b. without the latter having been previously
delivery, miscarriage or abortion
notified by the ER of time of the
pregnancy, then the employer shall pay to
2. Contribution
the SSS damages equivalent to the benefits
Who has paid at least 3 monthly contributions in
which said employee member would
the 12-month period immediately preceding the
otherwise have been entitled to.
semester of her childbirth, or miscarriage
124

iii. Paternity leave


3. Notice
Employee notified employer of her pregnancy
and the probable date of her childbirth, which Coverage
notice shall be transmitted to the SSS in Every married male employee in the private and
accordance with the rules and regulations it maypublic sectors shall be entitled to a paternity leave of
provide.
7 days with full pay for the first four deliveries of the
legitimate spouse with whom he is cohabiting.
Benefits

122 Auto Bus Transport vs. NLRC (2005)

Requisites
1. Employment
2. Marriage to and cohabitation with his legitimate
spouse
3. Delivery of the legitimate spouse
Who is entitled to paternity leave

123 Sec 14-A, RA 1161 as amended by RA 7322 and RA 8282

124 RA 8187: Paternity Leave Act of 1996

56

Married male employee both in the public and


private sectors125
When may it be availed of
It may be availed of for the first 4 deliveries of the
legitimate spouse with whom he is cohabiting126
What are the benefits under the law
A married male employee is allowed not to report
for work for seven (7) days.
While on leave, the employee continues to earn the
compensation, on the condition that his spouse has
delivered a child or suffered a miscarriage for
purposes of enabling him to effectively lend support
to his wife in her period of recovery and/or in the
nursing of the newly-born child.127

For purposes of this Act, delivery shall include


childbirth or any miscarriage.

iv. Parental leave128


Leave benefits granted to a solo parent to enable
him/her to perform parental duties and
responsibilities where physical presence is required.
Coverage
Any solo parent or individual who is left alone
with the responsibility of parenthood due to:

6. Declaration of nullity or annulment of


marriage as decreed by a court or by a
church: Provided, that he/she is entrusted
with the custody of the children
7. Abandonment of spouse for at least one (1)
year
8. Unmarried father/mother who has preferred
to keep and rear his/her child/children,
instead of having others care for them or
give them up to a welfare institution
9. Any other person who solely provides
parental care and support to a child or
children: Provided, that he/she is duly
licensed as a foster parent by the
Department of Social Welfare and
Development (DSWD) or duly appointed
legal guardian by the court; and
10. Any family member who assumes the
responsibility of head of family as a result of
the death, abandonment, disappearance, or
prolonged absence of the parents or solo
parent: Provided, that such abandonment,
disappearance, or prolonged absence lasts
for at least one (1) year.
A change in status or circumstances of parent
claiming benefits, such that he/she is no longer
left alone with the responsibility of parenthood,
shall terminate his/her eligibility for these
benefits129

1.

Giving birth as a result of rape or, as used by


Conditions to entitlement
the law, other crimes against chastity
A solo parent employee shall be entitled to the
2. Death of spouse
3. Spouse is detained or is serving sentence for parental leave under the following conditions:
1. He/she has rendered at least one (1) year of
a criminal conviction for at least one (1) year
service, whether continuous or broken
4. Physical and/or mental incapacity of spouse
2. He/she has notified his/her employer that
as certified by a public medical practitioner
he/she will avail himself/herself of it, within
5. Legal separation or de facto separation from
a reasonable period of time; and
spouse for at least one (1) year: Provided that
3. He/she has presented to his/her employer a
he/she is entrusted with the custody of the
Solo Parent Identification Card, which may
children
be obtained from the DSWD office of the city
or municipality where he/she resides.
125 Sec 2, RA8187. Paternity Leave

126 Sec 2, RA8187. Paternity Leave

127 Sec 3, RA8187. Paternity Leave

128 RA 8972: Parental Leave for Solo Parents

Other Employment-related benefits available


to all solo parents
(See VIII. Labor Standards - Related Special
Laws)
1. Parental leave
2. Flexible work schedule
3. No discrimination policy
129 Sec 3, RA 8972

57

4. Educational benefits
5. Housing benefits
6. Medical assistance

consisting of basic salary and mandatory allowances


fixed by the Regional Wage Board, if any.

v. Leaves for victims of Violence


against Women
Sec 43, RA 9262: Anti Violence against
Women and Children
Victims under this Act shall be entitled to take a
paid leave of absence up to ten (10) days in
addition to other paid leaves under the Labor
Code and Civil Service Rules and Regulations,
extendible when the necessity arises as specified
in the protection order.
Any employer who shall prejudice the right of
the person under this section shall be penalized
in accordance with the provisions of the Labor
Code and Civil Service Rules and Regulations.
Likewise, an employer who shall prejudice any
person for assisting a co-employee who is a
victim under this Act shall likewise be liable for
discrimination.

F. SERVICE CHARGES
Art. 96. Service Charges
All service charges collected by hotels,
restaurants and similar establishments shall be
distributed at the rate of eighty-five percent
(85%) for all covered employees and fifteen
percent (15%) for management. The share of the
employees shall be equally distributed among
them. In case the service charge is abolished, the
share of the covered employees shall be
considered integrated in their wages.
Coverage
This rule shall apply only to establishments which
collect service charges such as: 130
1.

VAWC Victims
A victim of VAWC who is employed shall be entitled
to a paid leave of up to ten (10) days in addition
to other paid leaves under the Labor Code and Civil
Service Rules and Regulations and other existing
laws and company policies:
1.

Hotels, restaurants, lodging houses, night


clubs, cocktail lounge, massage clinics, bars,
casinos and gambling houses and similar
enterprises

2. Including those entities operating primarily


as private subsidiaries of the Government

Shall apply to ALL employees of covered employers

At any time during the application of any


regardless of their positions, designations, or
employment status, irrespective of the method by
protection order, investigation, prosecution
which their wages are paid 131
and/or trial of the criminal case, extendible
when the necessity arises as specified in the
Exception: not covered
protection order.
Managerial employees
2. Upon the issuance of the Punong
Barangay/kagawad or prosecutor or the
Clerk of Court, as the case may be, of a
certification (at no cost) to the womanDistribution of Service Charges
that such an action is pending, and this is allSec. 3.Distribution of service charges,
that is required for the employer toRule VI, Book III, IRR
All service charges collected by covered
comply with the 10- day paid leave.
3. For government employees, in additionemployers shall be distributed at the rate of 85%
to the aforementioned certification, thefor the employees and 15% for the management.
employee concerned must
file anThe 85% shall be distributed equally among the
application for leave citing as basis covered employees. The 15% shall be for the
R.A. 9262.
130 Sec 1, Rule VI, Book 3, IRR

Availment
In addition to other paid leaves under existing labor
laws, company policy, and/or collective bargaining
agreement, the qualified victim employee shall be 131 Sec 2, Rule VI, Book 3, IRR
entitled to a leave of up to 10 days with full pay,

58

disposition by management to answer for losses


and breakages and distribution to managerial
employees at the discretion of the management
in the latter case.
Sec. 4. Frequency of distribution, Rule VI,
Book III, IRR
The shares referred to herein shall be
distributed and paid to the employees not less
than once every two (2) weeks or twice a month
at intervals not exceeding sixteen (16) days.

the reduction or diminution of any benefit being


enjoyed by any employee at the time of
effectivity of this rule.

G. THIRTEENTH (13TH) MONTH PAY


AND OTHER BONUSES132

Rationale
1. To further protect the level of real wages
Service charges are distributed in accordance with
from the ravage of world-wide inflation
the following percentage of sharing:
2. There has been no increase in the legal
1. Eighty-five percent (85%) for the employees to
minimum wage rates since 1970
be distributed equally among them; and The
shares shall be distributed to employees not less
3. The Christmas season is an opportune time
than once every 2 weeks or twice a month at
for society to show its concern for the plight
intervals not exceeding 16 days.
of the working masses so they may properly
celebrate Christmas and New Year.
2. Fifteen percent (15%) for the management to
answer for losses and breakages and, at theCoverage
discretion of the management, distribution to General Rule
managerial employees.
All employers are hereby required to pay all their
rank and file employees a 13th month pay not later
Integration
than Dec 24 of every year,
Provided that they have worked for at least one (1)
Sec. 5. Integration of service charges.,
month during a calendar year.
Rule VI, Book III, IRR
In case the service charges is abolished the share
Exceptions
of covered employees shall be considered
Exempted Employers
integrated in their wages. The basis of the
1. Government, its political subdivisions,
amount to be integrated shall be the average
including GOCCs except those operating
monthly share of each employee for the past
essentially as private subsidiaries of the
twelve (12) months immediately preceding the
Government
abolition of withdrawal of such charges.
2. Employers
already
paying
their
employees a 13th month pay or more in
a calendar year or its equivalent at the
time of this issuance

Sec. 6. Relation to agreements., Rule VI,


Book III, IRR
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.
Sec. 7, Rule VI, Book III, IRR
This rule shall be without prejudice to existing,
future collective bargaining agreements.

Equivalent includes:
a. Christmas bonus, mid-year bonus,
cash bonuses
b. and other payments amounting to
not less than 1/12 of the basic salary
c. but shall NOT INCLUDE cash and
stock dividends, cost of living

132

Revised Guidelines on the Implementation of the 13th


Month Pay Law and PD 851

Nothing in this rule shall be construed to justify

59

allowances and all other allowancesGeneral Rule


regularly enjoyed by the employee as13th month pay is paid not later than Dec 24 of
well a non-monetary benefits.
each year.
3. Employers of household helpers and
persons in the personal service of
another relation to such workers
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

Exception
Where the workers are paid on
piece-rate basis in which case the
employer shall grant the requiredii.
13th month pay to such workers.
1.
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 2.
or less regularly replicated, without
regard to the time spent in
producing the same.

i. Nature of 13th month pay

Exception
Employer may give to his employees half 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 in Special Cases


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 (not purely commission); the basis
for computation shall be both their fixed or
guaranteed wage and commission.

3. 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
Base amount
Month Pay from all their private Employers
Basic salary shall include:
regardless of their total earnings from each or all
1. Cost
of
living
allowances
(COLA)
their Employers.
integrated into the basic salary of a
covered employee pursuant to EO 178.
4. Private School Teacher
Private school teachers, including faculty
2. All remunerations or earning paid by this
members of universities and colleges, are
employer for services rendered.
entitled to the required 13th month pay,
regardless of the number of months they teach or
3. But not the allowances and monetary
are paid within a year, if they have rendered
benefits which are not considered or
service for at least one (1) month within a year.
integrated as part of the regular or basic
salary, such as the cash equivalent of:
Overload pay is NOT included in the
computation for 13th month pay; overload is not
a. unused vacation and sick leave credits,
overtime as it is additional work done within the
b. overtime,
normal shift133
c. premium,
d. night differential
5. Resigned or Separated Employee
e. holiday pay and, and
An Employee who has resigned or whose services
f. cost-of-living allowances.
Amount and Date of Payment
Minimum Amount
1/12 of the total basic salary earned by an employee
within a calendar year for the year 1987

133 Letran Calamba Faculty vs. NLRC, 2008

Time of payment

60

were terminated at any time before the time for


covered by this Decree.138
payment of the 13th month pay is entitled to this
monetary benefit in proportion to the length of iii. Commissions vis--vis 13 th month
time he worked during the year, reckoned from
pay
the time he started working during the calendar
year up to the time of his resignation or Commissions are excluded from the term
termination from service.
basic salary because commissions are
6. Wage Difference
The difference between the minimum wage and
the actual salary received by the Employee
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.134
7.

Terminated Employees
The payment of the 13th month pay may be
demanded by the employee upon the cessation of
employer- employee relationship. 135

Additional Rules

1. Commissions
If the commissions may be properly
considered part of the basic salary, then they
should be INCLUDED. If they are not an
integral part of the basic salary, then they
should be EXCLUDED. 136

paid as productivity bonuses. These have


no clear direct or necessary relation to the
amount of work actually done by each individual
employee.139
A bonus is an amount granted and paid ex gratia
to an employee. If an employer cannot be
compelled to pay a productivity bonus to its
employees, it should follow that such
productivity bonus, when given, should
not be deemed to fall within the basic
salary of employees when the time comes
to compute their 13th month pay140
It appears that petitioner pays its salesmen a
small fixed or guaranteed wage; the greater part
of the salesmens wages or salaries being
composed of the sales or incentive commissions
earned on actual sales closed by them. The
sales commissions were an integral part
of the basic salary structure. They are not
overtime payments, or profit sharing payments
or any other fringe benefit. 141

2. Substitute Payment not allowed


Benefits in the form of food or free
electricity, assuming they were given, were
not a proper substitute for the 13th month iv. CBA vis--vis 13th month pay
pay required by law. Neither may year-end In order to exempt the employer from paying
rewards for loyalty and service be considered
13th month pay, a bonus stipulation in the CBA
in lieu of 13th month pay.137
should be general in scope, applicable to all
employees, not only a few, for the legal
3. 14th Month Pay is not mandated
obligation benefits all employees regardless of
Employers already paying their employees a
their designation or employment status so long
13th month pay or its equivalent are not

134 JPL Marketing Promotions vs. CA, 2005

138Kamaya Port Hotel v. NLRC (1989)

135 Archilles Manufacturing Corp. vs. NLRC (1995)

139 Boie Takada v de la Serna, 228 SCRA 329 (1993)

136 Phil. Duplicators Inc. vs. NLRC (1995)

140 Boie Takada v de la Serna, 228 SCRA 329 (1993)

137 Framanlis Farms, Inc. v. MOLE (1989)

141 Phil. Duplicators vs. NLRC, 227 SCRA 747 (1995)

61

as they have worked at least one month during


the calendar year.142
c.

V. Working Conditions for


Special groups

A. WOMEN WORKERS

oclock in the morning of the following day;


or
In any agricultural undertaking at nighttime
unless she is given a period of rest of not less
than nine (9) consecutive hours.

General rule
No woman should work during the following periods.
Industry
Industrial
Commercia
l

Prohibited hours
10 pm 6 pm (8 hrs)

12 mn to 6 am (6 hrs)
Coverage
Shall apply to all employers, whether operating for
At nighttime unless she is given a
Agricultural
profit or not, including educational, religious and
rest period of not less than 9 hrs144
charitable institutions
Exceptions:145
Exceptions
The prohibitions prescribed by the preceding
The government and its subdivisions
Article shall not apply in any of the following
including GOCCs and to the employers of
cases:
household helpers and persons in their
personal service insofar as such workers are
1. In cases of actual or impending
concerned.143
emergencies caused by serious
accident,
fire,
flood,
typhoon,
earthquake,
epidemic
or
other
disasters
i. Prohibited acts
or
calamity,
to
prevent
loss
of
life or
1. Night work
property,
or
in
cases
of
force
majeure
or
2. Discrimination
imminent danger to public safety;
3. Stipulation against marriage
4. Discharge to prevent enjoyment of benefits
and on account of pregnancy
5. Discharge on account of Testimony

a. Night work
RA 10151(21 June 2011) repealed Art 130 & 131

Art 130. Night work prohibition


No woman, regardless of age, shall be employed
or permitted or suffered to work, with or without
compensation:
In any industrial undertaking or branch
thereof between ten oclock at night and six
oclock in the morning of the following day;
or
b. In any commercial or non-industrial
undertaking or branch thereof, other than
agricultural, between midnight and six

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;

a.

4. Where the woman employee holds a


responsible position of managerial or
technical nature, or where the
woman employee has been engaged to

142 Marcopper Mining Corp. vs. Ople

144 Art 130, Labor Code (Repealed by RA 10151)

143 Sec 1, Rule XII, Book III, IRR

145 Art 131, Labor Code (Repealed by RA 10151)

62

provide health and welfare services;independently of each other. (As amended by


Republic Act No. 6725, May 12, 1989)
5.

Where the nature of the work requires


c. Stipulation against marriage
the manual skill and dexterity of
women workers and the same cannot
be performed with equal efficiency byArt 136. Stipulation against marriage
male workers;
It shall be unlawful for an employer to

require as a condition of employment or


continuation of employment that a
6. Where the women employees arewoman employee shall not get married,
immediate members of the familyor to stipulate expressly or tacitly that
operating
the
establishment
or
upon getting married, a woman
undertaking; and
employee shall be deemed resigned or
separated, or to actually dismiss,
discharge, discriminate or otherwise
7. Under
other
analogous
cases
prejudice a woman employee merely by
exempted by the Secretary of Labor and
Employment in appropriate regulations. reason of her marriage.
b. Discrimination
Art 135. Discrimination prohibited
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.
The following are acts of discrimination:
a. Payment
of
a
lesser
compensation, including wage, salary
or other form of remuneration and
fringe benefits, to a female employees as
against a male employee, for work of
equal value; and
b. Favoring a male employee over a
female employee with respect to
promotion, training opportunities, study
and scholarship grants solely on account
of their sexes.
Criminal liability for the willful commission
of any unlawful act as provided in this Article or
any violation of the rules and regulations issued
pursuant to Section 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
actions hereby authorized shall proceed

d. Discharge to prevent enjoyment


of benefits and on account of
pregnancy
Art 137. Prohibited Act
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, or while on
leave or in confinement due to her
pregnancy;

3.

To discharge or refuse the admission of


such woman upon returning to her work for
fear that she may again be pregnant.

e. Discharge on Account of
Testimony
Sec 13(d), Rule XII, Book III
It shall be unlawful for any employer to
discourage any woman or child or any other
employee for having filed a complaint or having
testified or being about to testify under the code.

63

ii. Facilities and Family planning


services
Art 132. 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, by regulations, require any
employer to:
a.

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;

b.

To establish separate toilet rooms


and lavatories for men and women and
provide at least a dressing room for women;

c.

To establish a nursery in a
workplace for the benefit of the women
employees therein; and

d.

To
determine
appropriate
minimum age and other standards for
retirement or termination in special
occupations such as those of flight
attendants and the like.

Art. 134. Family planning services;


incentives for family planning.
a.
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 be limited to, the application
or use of contraceptive pills and intrauterine
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.

iii. Special women workers


Art. 138. Classification of certain 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
establishments 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 establishment for
purposes of labor and social legislation.

iv. Maternity leave146


Coverage
Every woman in the private sector, whether married
or unmarried, is entitled to the maternity leave
benefits.
Requisites
4. Employment
A female employee employed at the time of
delivery, miscarriage or abortion
5.

Contribution
Who has paid at least 3 monthly contributions in
the 12-month period immediately preceding the
semester of her childbirth, or miscarriage

6. Notice
Employee notified 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.
Benefits
Adaily maternity benefit equivalent to 100% of her
average daily salary credit for:
3. 60 days for normal delivery
4. 78 days for caesarean delivery
This benefit shall not be included in the
computation of 13th month pay as it is granted
to an employee in lieu of wages which is the basis for
computing 13th month.
Avaliment
Other conditions
1 Employer shall advance the payment subject to
reimbursement by the SSS within 30 days from
filing of leave application.
146 Sec 14-A, RA 1161 as amended by RA 7322 and RA 8282

64

Availment shall be a bar to the recovery of


classifying the employee which in a way
sickness benefits provided by this Act for the
would discriminate, deprive or diminish
same period for which daily maternity benefits
employment opportunities or otherwise
have been received.
adversely affect said employee;
3 Employee may only avail of benefit for the first
2. The above acts would impair the
four (4) deliveries or miscarriages.
employees rights or privileges
4 Sanction: That if an employee should give birth
under existing labor laws; or
or suffer miscarriage
3. The above acts would result in an
a. Without the required contributions
intimidating, hostile, or offensive
having been remitted for her by her ER
environment for the employee.
to the SSS, or
b. Without the latter having beenb. In
an
education
or
training
previously notified by the ER of time of
environment, sexual harassment is
the pregnancy, then the employer shall
committed:
pay to the SSS damages equivalent to the
1. Against one who is under the care,
benefits which said employee member
custody or supervision of the
would otherwise have been entitled to.
offender;
2. Against one whose education, training,
apprenticeship
or
tutorship
is
v. Sexual Harrasment147
entrusted to the offender;
3. When the sexual favor is made a
Work, education or training-related sexual
condition to the giving of a passing
harassment, defined
grade, or the granting of honors and
Sec 3. definition, RA 7877
scholarships, or the payment of a
Work, education or training-related sexual
stipend, allowance or other benefits,
harassment is committed by an employee,
privileges, or considerations; or
manager, supervisor, agent of the employer,
4. When the sexual advances result in an
teacher, instructor, professor, coach, trainor, or
intimidating, hostile or offensive
any other person who, having authority,
environment for the student, trainee
influence or moral ascendancy over
or apprentice.
another in a work or training or
education environment, demands, requests
Who are liable
or otherwise requires any sexual favor from
1. The offender:
the other, regardless of whether the demand,
a. Employee
request or requirement for submission is
b. Manager, Supervisor, agent of the
accepted by the object of said Act.
employer
How work-related sexual harassment is
committed
Sec 3. Definition, RA 7877
a. In a work-related or employment
environment, sexual harassment is
committed when:
1. 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
147 RA 7877: Anti-Sexual Harrasment Act

c. Teacher, instructor, professor, coach,


trainer
d. Any other person who, having authority,
influence or moral ascendancy over
another in a work or training or education
environment
2. Any person who directs or induces another to
commit any act of sexual harassment
3. Any person who cooperates in the commission
thereof by another without which it would not
have been committed
Role of the employer or Head of Office
The Employer or Head of Office shall have the duty:
1. To prevent the commission of such acts and
2. To lay down the procedure for the
resolution, settlement or prosecution of
committed acts.

65

Employer shall be solidarily liable for


damages if:
1. The employer or head of office, educational
or training institution is informed of such
acts by the offended party and
2. 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.
Sanctions
1. Criminal: imprisonment of 1 month to mos.
Or fine of P10k to P20k or both
Prescription of such action is in 3
years.
2. Termination

Exceptions:
1. Child works directly under the sole
responsibility of his parents or
legal guardian and where only members
of the ERs family are employed,
provided:
a. his employment does NOT
endanger his life, safety,
health and morals,
b. nor
impairs
his
normal
development, and
c. the parent or legal guardian shall
provide the said minor child with the
prescribed primary and/or
secondary education149
2. Childs employment or participation in
public entertainment or information
through cinema, theater, radio or television
is essential, provided that:150
a.

B. MINOR WORKERS
Article 139. Minimum employable age.
No child below fifteen (15) years of age
shall be employed, except when he works
directly under the sole responsibility of his
parents or guardian, and his employment does
not in any way interfere with his schooling.
Any person between fifteen (15) and
eighteen (18) years of age may be
employed for such number of hours and
such periods of the day as determined by the
Secretary of Labor and Employment in
appropriate regulations.

employment does NOT involve ads


or commercials promoting
alcohol, tobacco and its byproducts or violence.151
b. the employment contract is
concluded
by
the
childs
parents or guardian, and
approved by DOLE
c. The
ER
shall
ensure
the
protection, health, safety and
morals of the child
d. The ER shall institute measures to
prevent the childs exploitation
or discrimination taking into
account the system and level of
remuneration, and the duration and
arrangement of working time
e. The ER shall formulate and
implement, subject to the approval
and supervision of competent
authorities,
a
continuing
program for training and
skills acquisition of the child.152

The foregoing provisions shall in no case allow


the employment of a person below eighteen (18)
years of age in an undertaking which is
hazardous or deleterious in nature as
determined by the Secretary of Labor and
Employment.

149 Sec. 12, RA 7610 as amended by RA 7658

General Rule
Children below 15 shall NOT be employed 148

150 Sec. 12 of RA 7610 as amended by RA 7658

148 Art. 139(a), Labor Code and Sec. 12 to 16 of RA 7610 as


amended by RA 7658 and RA 9231
151 Sec. 14 of RA 7610 as amended by RA 7658

66

Employment of Children from 15 to 18 -(b) The term househelper as used herein is


allowed
but
restricted
to
non-hazardous synonymous to the term domestic servant
undertakings.
and shall refer to any person, whether male or
female, who renders services in and about the
The following are hazardous workplaces: 153
employers home and which services are usually
1. Nature of the work exposes the workers to necessary or desirable for the maintenance and
dangerous
environmental
elements,enjoyment thereof, and ministers exclusively to
contaminants or working conditions;
the persona comfort and enjoyment of the
2. construction work, logging, fire-fighting,employers family.
mining, quarrying, blasting, stevedoring,
dock work, deep sea fishing, and mechanized
farming;
The term `househelper' is synonymous to
3. manufacture or handling of explosives and
the term `domestic servant' and shall refer
other pyrotechnic products;
to any person, whether male or female, who
4. exposure to or use of heavy power-driven
renders services in and about the ER's home and
machinery or equipment;
which services are usually necessary or desirable
5. exposure to or use of power-driven tools
for the maintenance and enjoyment thereof, and
ministers exclusively to the personal comfort and
enjoyment of the ER's family.154
Quantity

Age Bracket
Below 15 y
15 to below 18

Daily Max
4 hours
8 hours

Weekly Max
20 hours
40 hours

Night work prohibition


Age Bracket
Prohibited Hours
Below 15 y
8 pm to 6 am (10 hrs)
15 to below 18
10 pm to 6 am (8 hrs)

C. EMPLOYMENT OF
HOUSEKEEPERS
Domestic or household Service, defined
Art 141. Coverage
This Chapter shall apply to all persons rendering
services in households for compensation.
"Domestic or household services" shall
mean service in the ER'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 ER's.

A househelper or a laundry woman, as well as a


gardener, driver, or a houseboy who work in
the staff house of a company are not
househelpers. 155

The criterion is not the nature of the work


but the personal comfort and enjoyment
of the family of the employer in the home of
said employer. 156

i. Conditions of employment and


rights of househelpers
1. Compensation
Minimum wage rates shall be equivalent to
the basic cash wages plus lodging, food and
medical attendance.157
Art 143. Minimum Wage
Househelpers shall be paid

the

154 Apex Mining Co. v. NLRC, 1991

155 Apex Mining Co. v. NLRC, 1991

Sec1(b), Rule XII, BookIII, IRR


152 Sec. 12 of RA 7610 as amended by RA 7658
156 Apex Mining Co. v. NLRC, 1991

153 Sec 3, Rule XIII, Book III, IRR


157 Art. 143-144; Civil Code Art. 1689

67

shall be paid directly to the househelper to


whom they are due at least once a month. No
deductions therefrom shall be made by the
employer unless authorized by the
househelper himself or by existing laws.158

following minimum wage rates:


1.

Eight hundred pesos


(P800.00)
a
month
for
househelpers in Manila, Quezon,
Pasay, and Caloocan cities and
municipalities of Makati, San Juan,
Mandaluyong,
Muntinlupa,
Navotas, Malabon, Paranaque, Las
Pinas, Pasig, Marikina, Valenzuela,
Taguig and Pateros in Metro
Manila and in highly urbanized
cities;

2.

Six hundred fifty pesos


(P650.00) a month for those in
other chartered cities and firstclass municipalities; and

3.

Five hundred fifty


pesos (P550.00) a month for those
in other municipalities.

Provided, That the employers shall


review the employment contracts of
their househelpers every three (3) years
with the end in view of improving the
terms and conditions thereof.

3. Right against assignment to nonhousehold work at a wage rate lower than


that mandated for agricultural or nonagricultural enterprises depending on the
case.
Art. 145. Assignment to nonhousehold work.
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
workers as prescribed herein.
4. Opportunity for education
If househelper is below 18 years, employer
shall provide for at least elementary
education. The cost shall be part of the
emplyees compensation unless otherwise
agreed upon.

Provided,
further,
That
those
househelpers who are receiving at least
One thousand pesos (P1,000.00) shall
be covered by the Social Security
System (SSS) and be entitled to all the
benefits provided thereunder. (As
amended by Republic Act No. 7655,
August 19, 1993)

Art. 146. Opportunity for


education.
If the househelper is under the age of
eighteen (18) years, the employer shall
give him or her an opportunity for at
least elementary education. The cost of
education shall be part of the
househelpers compensation, unless
there is a stipulation to the contrary.
Art 1691, Civil Code
If the house helper is under the age of
eighteen years, the head of the family
shall give an opportunity to the house
helper for at least elementary
education. The cost of such education
shall be a part of the house helper's
compensation, unless there is a
stipulation to the contrary.

Art 144. Minimum Cash Wage


Minimum cash wage. The minimum
wage rates prescribed under this
Chapter shall be the basic cash wages
which shall be paid to the househelpers
in addition to lodging, food and
medical attendance.
Art. 1689, Civil Code
Household service shall always be
reasonably
compensated.
Any
stipulation that household service is
without compensation shall be void.
Such compensation shall be in addition
to the house helper's lodging, food, and
medical attendance.

5.

Just and humane treatment


The employer shall treat the househelper in
a just and humane manner. In no case shall
physical violence be used upon the

158 Sec 9, Rule XIII, Book III, IRR

2. Time and Manner of Payment: Wages

68

househelper159
6. Board,
lodging
and
medical
attendance shall be furnished by employer
Art. 148. Board, lodging, and
medical attendance
The employer shall furnish the
househelper, free of charge, suitable
and sanitary living quarters as well as
adequate food and medical attendance.
Art 1690, Civil Code
The head of the family shall furnish,
free of charge, to the house helper,
suitable and sanitary quarters as well as
adequate food and medical attendance.
7.

Household work
Non-hazardous work for persons between
15-18 years old.160

8. Contract for Domestic Service shall not


exceed 2 years but renewable annually
Art. 142. Contract of domestic
service.
The original contract of domestic
service shall not last for more than two
(2) years but it may be renewed for
such periods as may be agreed upon by
the parties.
Art 1692, Civil Code
No contract for household service shall
last for more than two years. However,
such contract may be renewed from
year to year.
9. Hours of Work - House helpers shall not
be required to work more than 10 hours a
day
Art 1695, Civil Code
House helper shall not be
required to work more than ten
hours a day. Every house helper shall
be allowed four days' vacation each
month, with pay.
10. Vacation with Pay
159 Art. 147, Labor Code; Art 1694, Civil Code

160 DO 4-99 Sec. 4

Shall be allowed 4 paid vacation days per


month
Art 1695, Civil Code
House helper shall not be required to
work more than ten hours a day.
Every house helper shall be
allowed four days' vacation each
month, with pay.
11. Funeral Expenses
In case of death of the house helper:
a. The head of the family shall bear the
funeral expenses
b. If the house helper has no relatives
in the place where the head of the
family lives, with sufficient means.
Art 1696, Civil Code
In case of death of the house helper, the
head of the family shall bear the funeral
expenses if the house helper has no
relatives in the place where the head of
the family lives, with sufficient means
therefor.
12. Employment Certification
ER shall give the househelper a written
statement of the nature and duration of the
service and his or her efficiency and conduct
as househelper upon severance.
Art 151. 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 1699, Civil Code
Upon the extinguishment of the service
relation, the house helper may demand
from the head of the family a written
statement on the nature and duration
of the service and the efficiency and
conduct of the house helper.
13. 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. Employment record

69

service, the employer or the house helper may


give notice to end, the relationship five days
before the intended termination. (Rule XII, Book
III Sec. 10-17 IRR)

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. 150. Service of termination notice


If the duration of the household service is not
determined either in stipulation or by the nature
of the service, the employer or the househelper
ii. Termination of a housekeeper
may give notice to put an end to the relationship
five (5) days before the intended termination of
1. Fixed- Security of tenure
Termination prior to contract expiry must be forthe service.
just cause, if the duration of the household
service is NOT determined either by stipulationArt. 1698, Civil Code
or by the nature of the service, the ER or the If the duration of the household service is not
househelper may give notice to put an end to determined either by stipulation or by the nature
the relationship five days before the of the service, the head of the family or the house
helper may give notice to put an end to the
intended termination of the service.
service relation, according to the following rules:
If the period for household service is fixed, the
house helper has a right against termination1. If the compensation is paid by the day,
notice may be given on any day that the
before the expiration of the term, except for a
service shall end at the close of the following
just cause.
day
Art. 149. Indemnity for unjust
termination of services.
If the period of household service is fixed,
neither the employer nor the househelper may
terminate the contract before the expiration of
the term, except for a just cause. If the
househelper is unjustly dismissed, he or she
shall be paid the compensation already earned
plus that for fifteen (15) days by way of
indemnity.
If the househelper leaves without justifiable
reason, he or she shall forfeit any unpaid salary
due him or her not exceeding fifteen (15) days.
Art. 1697, Civil Code
If the period for household service is fixed
neither the head of the family nor the house
helper may terminate the contract before the
expiration of the term, except for a just cause. If
the house helper is unjustly dismissed, he shall
be paid the compensation already earned plus
that for fifteen days by way of indemnity. If the
house helper leaves without justifiable reason, he
shall forfeit any salary due him and unpaid, for
not exceeding fifteen days.
2. Not fixed- Indemnity for unjust
termination of service

2. If the compensation is paid by the week,


notice may be given, at the latest on the first
business day of the week, that the service
shall be terminated at the end of the seventh
day from the beginning of the week
3. If the compensation is paid by the month,
notice may be given, at the latest, on the fifth
day of the month, that the service shall cease
at the end of the month.

If unjustly dismissed, the house helper is entitled


to be paid the compensation already earned plus
that for 15 days by way of indemnity.

D. EMPLOYMENT OF HOMEWORKERS
TOPIC K-I. Definition
Note: DO 5, DOLE (February 4, 1992), is now Rule
XIV, Book III of the IRRI.
Homeworker, defined
Sec. 1, Rule XIV, Book III, IRR
Homeworker applies to any person who
performs industrial homework for an employer,
contractor, or sub-contractor.

Employer of a homeworkers, defined


If the duration of the household service is not Art. 155. Distribution of homework.
fixed either by stipulation or by the nature of the For purposes of this Chapter, the "employer"

70

work done on goods or articles not returned


due to homeworkers fault166
7. If subcontractor/contractor fails to pay
homeworker, ER is jointly and severally
liable with the former to the homeworker
for his/her wage167
8. ER shall assist the homeworkers in the
maintenance of basic safe and
healthful working conditions at the
homeworkers place of work168
9. Homework prohibited in the ff: 169
a. explosives, fireworks and articles of
like character;
b. drugs and poisons; and
c. other articles, the processing of
which requires exposure to toxic
substances.

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 an
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 to


be processed or fabricated in or about a
home and then rebuys them after such
processing or fabrication, either by himself
or through some other person.

iii. Rights and benefits of homeworkers

Regional Office
assistance
to
organizations170

shall provide technical


registered
homeworkers

1. Right to form, join or assist organizations 161 iv. Conditions for deduction from
homeworkers earnings
2. Right to acquire legal personality and the
rights and privileges granted by law to
legitimate labor organizations upon issuance
Sec. 8. Deduction, Rule XIV, Book III
of the certification of registration162
3. Immediate payment upon ERs receipt ofNo deduction from the homeworkers earnings
for the value of materials lost, destroyed or
finished goods or articles163
4. SSS, MEDICARE and ECC premiumdamaged unless:
contributions shall be deducted from their
pay
and
shall
be
remitted
by 1. Homeworker is clearly shown to be
164
responsible for loss or damage
ER/contractor/subcontractor to the SSS
2.
Reasonable opportunity to be heard
5. Employer may require homeworker to redo
3.
Amount of deduction is fair and reasonable,
work
improperly
executed
without
and does not exceed actual loss or damage
additional pay165
6. Employer need not pay homeworker for any4. Deduction does not exceed 20% of
homeworkers weekly earnings
161 Sec 3, Rule XIV, Book III

166 Sec 9b, Rule XIV, Book III

162 Sec 4, Rule XIV, Book III

167 Sec 11, Rule XIV, Book III

163 Sec 6, Rule XIV, Book III

168 Sec 11, Rule XIV, Book III

164 Sec 6, Rule XIV, Book III

169 Sec 13, Rule XIV, Book III

165 Sec 9a, Rule XIV, Book III

170 Sec 14, Rule XIV, Book III

71

VI.

In case of regular employment, the employer


shall not terminate the services of an employee.

Termination of employment

Exceptions:173
1. When it is for a just cause174 or
2. When authorized by law175

A. GENERAL CONCEPTS

When unjustly dismissed from work, employee shall

Basic Principles in Termination cases be entitled to:


Balancing of Interest in disciplinary cases
1. Labors interests
Workers right to labor is recognized by the
Constitution as property right. An employee
cannot be deprived of his work without just
cause or due process
2. Managements interests
Discipline of employees is a management
prerogative. The employer cannot be
compelled to continue to employ such
persons whose continuance in the service
will patently be inimical to his interest.171

Art 279. Security of Tenure


In cases of regular employment, the employer
shall not terminate the services of an employee
except for a just cause or when authorized by this
Title. An employee who is unjustly dismissed
from work shall be entitled to reinstatement
without loss of seniority rights and other
privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their
monetary equivalent computed from the time his
compensation was withheld from him up to the
time of his actual reinstatement.

Reinstatement without loss of seniority


rights and
2. Backwages176
The right of employees to security of tenure does
not give them vested rights to their positions to
the extent of depriving management of its
prerogative to change their assignments or to
transfer them.
The employer must be able to show that the
transfer is not unreasonable, inconvenient or
prejudicial to the employee; nor does it involve a
demotion in rank or a diminution of his salaries,
privileges and other benefits. Otherwise the
transfer shall tantamount to constructive
dismissal.177

Security of Tenure
Art 278. Coverage
The provisions of this Title shall apply to all
establishments or undertakings, whether for
profit or not.

1.

The employers privilege to transfer its employees


to different workstations cannot be used as a

173 Subject to the requirements of due process (IRR, Book V, Rule


23, Sec1. Security of Tenure)

174 See Art 282, Labor Code

175 See Art 283-284, Labor Code

Security of Tenure, defined


Security of Tenure means the right not to be
Computed from the time his compensation was withheld from
removed from ones job except for a valid reason and 176
him up to time of his actual reinstatement (as amended by RA
172
through proper procedure.
6715)
171 Virginia Sugue v Triumph International Phils, Inc. (2009)

177 Endico v Quantim Foods Distribution Center


172 azucena

72

subterfuge to rid itself of an undesirable


worker.178

cause as reasonably established in an appropriate


investigation.184

Nature of right
Requisites of a Valid Termination185
Security of tenure is a right of paramount
1. Substantive due process
value guaranteed by the Constitution . 179 It
Legality of the act of dismissal as
stands to reason that a right so highly ranked as
provided under articles 282 to 284 of the
security of tenure should not lightly be denied on
Labor Code.
mere speculation.180
2. Procedural due process
Dismissal based on loss of trust and confidence
Legality in the manner of dismissal
arising from alleged misconduct of employee is
with due observance of the procedural
not to be used as a shield to dismiss an employee
requirements.
arbitrarily.181
Measure of Penalty
Termination without just cause entitles a worker Employees length of service is taken into
to reinstatement regardless of whether he was consideration in imposing the penalty to be
accorded due process.
meted an erring employee.186 But if it is to be
regarded as a justifying circumstance in
Termination for a just cause even without moderating the penalty of dismissal, it will
procedural due process, does not warrant actually become a prize for disloyalty, perverting
reinstatement. The employer incurs only liability the meaning of social justice and undermining the
for damages.182
efforts of labor to cleanse its ranks of all
undesirables.187
Coverage
The penalty must be commensurate with
All workers are entitled to security of tenure. 183
the act, conduct or omission imputed to the
Confidential and Managerial employees are also employee and must be imposed in connection
entitled to security of tenure. They cannot be with the disciplinary authority of the employer.188
arbitrarily dismissed at any time, and without While the employer has the inherent right to
discipline, including that of dismissing its
employees, this prerogative is subject to the
regulation by the State in the exercise of its police
178 Veterans Security Agency Inc. v Gonzalvo, Jr.
power.189

179 Art 11, Sec 9, 1987 Constitution. The State shall afford 184 Inter Oriental Maritime Enterprises, Inc. v NLRC 235 SCRA
protection to labor and "shall assure the rights of workers to . . . 268 (1994)
security of tenure"

185 Shoemart v NLRC, 176 SCRA 385 (1989); Ting v CA, 494
180 Llosa Tan v Silahis International Hotel 181 SCRA 738 (1990); SCRA 610 (2006)
City Service Corp. Workers Union v City Services Corp 135 SCRA
564 (1985)
186 Inter Oriental Maritime Enterprises, Inc. v NLRC 235 SCRA
268 (1994)
181 Llosa Tan v Silahis International Hotel 181 SCRA 738 (1990);

187 Bago v NLRC (2007)


182 Alhambra Industries v NLRC

183 Art XIII, Sec 3, 1987 Constitution

188 Sagales v Rustans Commercial Corporation (2008); Farrol v


CA (2000)

73

B. TERMINATION OF EMPLOYMENT
BY EMPLOYEE
Art. 285. Termination by employee.
a. An employee may terminate without just
cause the employee-employer relationship
by serving a written notice on the employer
at least one (1) month in advance. The
employer upon whom no such notice was
served may hold the employee liable for
damages.
b. An employee may put an end to the
relationship without serving any notice on
the employer for any of the following just
causes:
1. Serious insult by the employer or his
representative on the honor and person
of the employee;
2. Inhuman
and
unbearable
treatment accorded the employee by
the employer or his representative;
3. Commission of a crime or offense
by the employer or his representative
against the person of the employee or
any of the immediate members of his
family; and
4. Other causes analogous to any of the
foregoing.

i. Resignation

If resignation is not voluntary, it can be deemed


to be constructive dismissal.192
Voluntary resignation and illegal dismissal are
adversely opposed modes of terminating
employment relations, in that the presence of one
precludes that of the other193

Not entitled to separation pay194


An employee who voluntarily resigns is not entitled
to separation pay.
Exceptions:
1. When otherwise stipulated in the
employment contract
2. Stipulated in the CBA
3. Sanction by established employer
practice and policy.
Art. 286. When employment not deemed
terminated.
The bona-fide suspension of the operation of a
business or undertaking for a period not
exceeding six (6) months, or the fulfillment by
the employee of a military or civic duty shall not
terminate employment. In all such cases, the
employer shall reinstate the employee to his
former position without loss of seniority rights if
he indicates his desire to resume his work not
later than one (1) month from the resumption of
operations of his employer or from his relief
from the military or civic duty.

ii. RA 7641: Retirement Pay Law

Coverage
Any employee may be retired upon reaching the
Resignation, defined
Voluntary resignation is the act of an employee, whoretirement age established in the collective
agreement
or
other
applicable
finds himself in a situation in which he believes that bargaining
personal reasons cannot be sacrificed in favor of the employment contract.
exigency of the service; thus he has no other choice
but to disassociate himself from his employment.190

Voluntary resignation, when accepted, cannot be


withdrawn without consent of the employer as
192
employer has no longer any right to the job.191

Abad, Jr, Antonio H. (2008). The Law on Labor Standards.


Rex Printing Company, Inc.

189 Sagales v Rustans Commercial Corporation (2008)

193 Alfaro v CA, 363 SCRA 799 (2001)


190 Alfaro v CA, 363 SCRA 799 (2001)

194 CJC Trading, Inc. v NLRC, 246 SCRA 724 (1995)


191 Intertrod Martime, Inc v NLRC, 198 SCRA 318 (1991)

74

Exempted
Retail,
service
and
agricultural
establishments or operations employing
not more than (10) employees or
workers
In the absence of a CBA or an applicable
employment contract:
1. When retirement is optional
Age of sixty (60) years or more, but not
beyond sixty-five (65) years
2. Compulsory
65 years old

or duly authorized representative;


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
representatives; and
Other causes analogous to the foregoing.

a. Serious
Misconduct
Willful disobedience

or

Misconduct

Misconduct, defined
How much are employees entitled to as Improper or wrong conduct. It is the transgression of
retirement pay
some established and definite rule of action, a
At least one-half (1/2) month salary for every year of forbidden act, a dereliction of duty willful in
service, a fraction of at least six (6) months being character, and implies wrongful intent and not mere
considered
as
one
whole
year.
error in judgment.195
Unless the parties provide for broader inclusions, theRequisites for serious misconduct196
1. Conduct must be serious
term one-half (1/2) month salary shall mean fifteen
2. Must relate to the performance of the
(15) days plus one-twelfth (1/12) of the 13th month
employees duties
pay and the cash equivalent of not more than five (5)
3.
Must show that the employee has become
days of service incentive leaves.
unfit to continue working for the
employer
How long is the service requirement for an
employee to be entitled to retirement pay
Employee must have served at least five (5) years in Examples of Serious Misconduct justifying
termination
the said establishment
1. Falsification of time records197
2. Immorality. Teachers must adhere to the
exacting standards of morality and decency.
A teacher, both in his official and personal
conduct, must display exemplary behavior.198

C. TERMINATION OF EMPLOYMENT
BY EMPLOYER
i. Substantive Requirement:
Just Causes
Art. 282. Termination by employer.
An employer may terminate an employment for
any of the following causes:

Serious
misconduct
or
willful
disobedience by the employee of the lawful
orders of his employer or representative in
connection with his work;
Gross and habitual neglect by the
employee of his duties;
Fraud or willful breach by the employee
of the trust reposed in him by his employer

195 Pastor Austria v NLRC, 312 SCRA 410 (1999); Fujitsu


Computer Products Corporation of the Philippines v CA, 454
SCRA 737 (2005)

196 Pastor Austria v NLRC, 312 SCRA 410 (1999); Fujitsu


Computer Products Corporation of the Philippines v CA, 454
SCRA 737 (2005)

197 Felix v Enertech Systems Industries, Inc, 355 SCRA 680


(2001)

198 Santos, Jr v NLRC, 287 SCRA 117 (1998)

75

3. Moonlighting. It is a valid ground forGross Negligence, Habitual Neglect and


dismissal for unauthorized use of companyFraud203
time.199
4. Theft of company property200
Fraud and
5. Drug abuse. Supreme Court has taken Gross
Habitual
willful
judicial notice of scientific findings that drug negligence
neglect
neglect of
abuse can damage the mental faculties of the
duties
user. 201
Want of
Repeated
Imply bad
care in the
failure to
faith on the
Willful disobedience
performance
perform ones part of the
of ones
duties over a
employee in
(Insubordination)
duties
period of
failing to
time,
perform his
Requisites of Willful disobedience202
depending
job to the
1. Employees assailed conduct must have
upon the
detriment of
been willful or intentional,
circumstances
the employer
2. The willfulness being characterized by a
and the
wrongful and perverse attitude;
employers
3. The order violated must have been
business
reasonable, lawful, made known to the
employee and
4. Order must pertain to the duties which he
To be a valid ground for dismissal, neglect must
had been engaged to discharge.
be both gross and habitual.204 However, if gross
negligence, though not habitual, results to loss of
b. Gross and Habitual Neglect trust 205and confidence, dismissal is valid and
legal.
(Neglect of duties)
A single or isolated acts of negligence do not
constitute a just cause for the dismissal of the
Gross and Habitual Negligect
employee.206
An unsatisfactory rating can be a just cause for
dismissal only if it amounts to gross and habitual
Gross Negligence, defined
neglect of duties. The fact that an employees
Want or absence of or failure to exercise slight care
performance is found to be poor or unsatisfactory
of diligence, or the entire absence of care. It evinces a
does not necessarily mean that the employee is
thoughtless disregard of consequences without
grossly and habitually negligent of his duties.207
exerting any effort to avoid them.
Requisites of Neglect of duties
1. Gross neglect of duty
2. Neglect must be habitual

203 JGB and Associates, Inc. v NLRC (1996), 254 SCRA 457

204 National Sugar v NLRC (1998)


199 Capitol Wireless v Balagot, 513 SCRA 672 (2007)

200 Caltex Phils, Inc v Agad (2010)

205 School of the Holy Spirit of Quezon City v Taguiam, GR


165565 (2008)

201 Bughaw Jr v Treasure Island 550 SCRA 307 (2008)

206 National Bookstore, Inc. v CA (2000), 327 SCRA 541

202 First Dominion Resources Corporation v Penaranda, 480 207 Eastern Overseas Employment Center, Inc. v Bea, GR 143023
SCRA 504 (2006)
(2005)

76

Examples of Gross of Habitual neglect of


duties justifying termination
1. Abandonment of work
The deliberate and unjustified refusal of an
employee to resume his employment. It is a
form of neglect of duty, and hence, a just
cause for termination by employer.208
Requisites of Abandonment209
1. Failure to report for work or
absence without valid or justifiable
reason
2. Clear intention to sever the
employer-employee relationship.
The burden of proof to show that there was
unjustified refusal to go back to work rests
on the employer.210
The filing by an employee of a complaint for
illegal dismissal is proof of her desire to
return to work, thus negating the employers
charge of abandonment.211

Repeated
and
habitual
infractions,
committed
despite several
warnings,
constitute gross misconduct. Habitual
absenteeism without leave constitute gross
negligence and is sufficient to justify
termination of an employee.214
Employees infractions are worse than
inefficiency. They border on dishonesty
constituting serious misconduct.215
A series of irregularities when put together
may constitute serious misconduct. We also
held that gross neglect of duty becomes
serious in character due to frequency of
instances. There can be no good faith in
intentionally and habitually incurring
unexcusable absences.216

c. Loss of trust and confidence/


fraud or willful breach of
trust
Loss of trust and confidence

Employer must serve a memo or show-cause


letter to the employee at her last known
address requiring her to report for work or toFraud, defined
Deemed to comprise anything calculated to deceive,
explain her absence, with a warning that her
including all acts, omissions, and concealment
failure to report would be construed asinvolving a breach of legal or equitable duty, trust or
abandonment of work.212
confidences justly reposed, resulting in damage to
another, or by which an undue and unconscientious
Employer should serve the employee a notice advantage is taken of another. Deceit is a specie of
fraud.217
of termination as required by law.213
2. Habitual absenteeism
208 Abad
213 Henlin Panay Company v NLRC, GR no 180718

209 Padilla Machine Shop v Javilgas, 2008, 546 SCRA 351


214 Challenge Socks Corporation v CA, 2005, 474 SCRA 356

210 Tacloban Far East Marketing Corporation v CA, GR 182320,


2009
215 Arseno Quiambao v Manila Electric Company, 2009

211 Henlin Panay Company v NLRC, GR no 180718

216 Quiambao v Manila Electric Co., GR 171023, 2009

212 Henlin Panay Company v NLRC, GR no 180718

217 Yolanda Garcia v People (1999), 375 Phil 1078, 1091

77

Requisites of willful breach of trust leading to


loss of trust and confidence218

trust and confidence.


property custodians)

223

(Cashiers, auditors,

Breach must be willful and not ordinary Rules of dismissal for managerial
employees are different from those
breach219
governing ordinary employees.224
2. Employee hold a position of trust and
confidence
Managerial and
3. Must be in relation to the work
Rank and file
confidential
performed
employees
employees
4. There must exist substantial evidence,
and should not be based on mere surmises, Employers are generally Termination based
allowed
a
wider on the ground of
speculations and conjectures
latitude of discretion loss of trust and
in
terminating confidence requires
Breach must be willful and not ordinary
220
managerial
personnel, proof
of
breach
or those similar rank, involvement in the
functions events in question225
The breach is willful if it is done intentionally, performing
knowingly and purposely without justifiable which, by their nature,
require the employers
excuse.
There must be a cause for the loss of confidence. full trust and confidence
It must rest on some basis which must be
convincingly established. An employee must not Strained Relation Rule
be dismissed on mere presumptions or It would be unjust and inequitable to compel an
employer to continue with the employment of a
suppositions.221
person who occupies a managerial and sensitive
position despite loss of trust and confidence
Employee holds a position of trust and
The relationship must be considered seriously
confidence
strained,
foreclosing
the
remedy
of
226
reinstatement.
General rule: dismissal on the ground of loss of
1.

trust and confidence is restricted to Managerial


employees222

Trust in an employee, once lost is difficult, if not


impossible to regain.227

Exception: it also applies to rank-and-file


employees when position is reposed with
223 Coca Cola v NLRC (1989)
218 Roberto Gonzales v NLRC

219 Salas v Aboitiz One, Inc., GR 178236 (2008)

220 Salas v Aboitiz One, Inc., GR 178236 (2008)

224 Mania Midtown Commercial Corporation v NUHRAIN,


(1988), 159 SCRA 212

225 Mania Midtown Commercial Corporation v NUHRAIN,


(1988), 159 SCRA 212

221 Nozario Austria v NLRC, 310 SCRA 293 (1991)


226 Aurelio v NLRC, 1993, 221 SCRA 432

222 Fujitsu Computer Products Corp v. CA; 2005, Villanueva v


NLRC (1998)
227 Bago v NLRC, Standard Insurance Co. Inc., 2007

78

Strained Relation rule does not apply to ULP


cases where the employee was dismissed for
union activities.228

Penalty of dismissal for breach of trust cannot be


mitigated by length of service.229 The longer an
employee stays in the service of the company, the
greater is his responsibility for knowledge and
compliance with the norms and conduct and the
code of discipline of the company.230

1.
2.
3.
4.

Spouse
Ascendants
Descendants
Legitimate, natural or adopted siblings
of the employer or of his relative by
affinity or consanguinity within the 4th
civil degree

Termination by employer on the basis of


commission of a crime is an act of self-defense
impelled by the natural instinct of selfpreservation.
The acquittal in a criminal prosecution involving
misconduct is not binding and conclusive upon a
labor tribunal.234 Conviction of an employee in a
criminal case is not indispensable to warrant his
dismissal by his employer.235

Requirement of Substantial evidence


Proof beyond reasonable doubt of employees
misconduct is not required. It is sufficient that
employer has reasonable grounds to believe that
the employee is responsible for the misconduct
which renders him unworthy of the trust and
confidence demanded of his position.231
e. Analogous causes
If there is sufficient evidence to show that the
employee occupying a position of trust and
confidence is guilty of a breach of trust, or that his Examples of Analogous causes justifying
employer has ample reason to distrust him, the termination
labor tribunal cannot justly deny the employer
1. Attitude problem is a valid ground for
the authority to dismiss such employee.232
termination.236

d. Commission of a crime
Commission of a crime
Requisites of commission of a crime
Commission of a crime should be made against:
1. The employer himself or
2. Any immediate member of his family233
228 Gubac v NLRC, 187 SCRA 412 (1990)

229 PLDT v NLRC, 164 SCRA 671 (1988)

An employee who cannot get along with his


co-employees is detrimental to the company
for he can upset and strain the working
environment. Thus management has the
prerogative to take the necessary action to
correct the situation and protect its
organization.
It is analogous to loss of trust and
confidence that must be duly proved by the
employer.
2. Stealing the wallet of a co-employee
cannot be a ground for dismissal under
serious misconduct because it is not workrelated. But the employee can be validly

230 Citybank N.A. v Gatchalian, 240 SCRA 212 (1995)

231 Ocean Terminal Services, Inc. v NLRC, 197 SCRA 491 (1991)

234 Starlight Plastic Industrial Corporation v NLRC, 1989, 171


SCRA 315; Commercial motors Corporation v Commissioners,
NLRC. 1990, 192 SCRA 191; Reno Foods Inc. v Nagkakaisang
Lakas ng Manggagawa-Katipunan, 2010

232 Eats-cetera Food Services Outlet v Letran, GR 179507, 2009

235 Mercury Drug Corp. v NLRC, 1989, 177 SCRA 580

233 Art 11 (2), RPC

236 Heavylift Manila, Inc v CA, 473 SCRA 541, 2005

79

dismissed for cause analogous to serious


misconduct.237
A cause analogous to serious misconduct is a
voluntary and/or willful act or omission
attesting to an employee's moral depravity.

are related to the subsequent infraction-basis of


the termination of employment. Previous
infractions, in other words, may be used if they
have a bearing on the proximate offense
warranting dismissal.242

g. Constructive Dismissal

Theft committed by an employee against a


person other than his employer, if proven by Constructive dismissal, defined
substantial evidence, is a cause analogous toQuitting because continued employment is rendered
serious misconduct.
impossible, unreasonable or unlikely, as an offer
involving demotion in rank and a diminution in
3. Obesity of a flight attendant, when thepay.243
airline company constituted a continuing
qualification of an employee to keep the job,May also involve act of clear discrimination,
is a ground for dismissal under Art insensibility, or disdain by an employer that it
282(e). His obesity may not be unintended,becomes so unbearable on the part of the employee
but is nonetheless voluntary.238
that it could foreclose any choice by him except
forego his continued employment.244

f. Others

Test of constructive dismissal


Courtesy resignations were utilized inWhether a reasonable person in the employee's
government reorganization.239
position would have felt compelled to give up his
Change of ownership is a managementposition under the circumstances.245
prerogative. Where such transfer of ownership is
in good faith, the transferee is under no legal duty Resignation contemplates a voluntary act; thus,
to absorb the transferor employees. The most that an employee who is forced to relinquish his
the transferee may do is to give preference to the position due to the employer's unfair or
qualified separated employees in the filling of unreasonable treatment is deemed to have been
vacancies in the facilities of the purchaser.240
illegally terminated or discharged.246
Fixed-term employment. If the contract is for
a fixed term and the employee is dismissed Employers sudden, arbitrary and unfounded
without just cause, he is entitled to the payment adoption of the two-day work scheme which
of his salaries corresponding to the unexpired greatly reduced petitioners salaries renders it
portion of the employment contract.241
liable for constructive dismissal.247
Previous offenses may be used as valid
justification for dismissal from work only if they

242 Mc Donalds v Alba, GR 156382, 2008; La Carlota Planters


237 John hancock life insurance corporation v Davis, GR 169549, Association v NLRC, 1998
2008

243 Jo Cinema Corporation v. Abellana, 2001, 360 SCRA 142


238 Yrasuegui v PAL, GR 168081, 2008

239 Batongbacal v Associated Bank, 168 SCRA 600, 1988

244 Hyatt Taxi Services, Inc v. Catinoy, 2002, 359 SCRA 686;
Gilles v CA, GR 149273, 2009

240 Manlimos v nlrc , 242 SCRA 145, 1995

245 Gilles v CA, GR 149273, 2009;

241 Medenilla v PVB, GR 127673, 2000

246 Gilles v CA, GR 149273, 2009;

80

Demotion is allowed as a penalty. The


appropriateness depends on factors such as
employers tolerance of or laxity in past similar
offences, employees years of service and record,
and even the amount of money or value involved.

h. Preventive Suspension

Nature
A disciplinary measure for a protection of the
companys property pending investigation of any
alleged malfeasance committed by the employee.
Preventive suspension is not a penalty.

The transfer of employees is a management


prerogative subject only to limitations found in
law, collective bargaining agreement, and general
principles of fair play and justice.251
An employees right to security of tenure
does not give him such a vested right in
his position as would deprive the company of
its prerogative to change his assignment or
transfer him where he will be most useful.252
The objection to the transfer being grounded
solely upon the personal inconvenience or
hardship that will be caused to the employee by
reason of the transfer is not a valid reason to
disobey an order of transfer. Employee may be
dismissed for Willful disobedience.253

Period: It cannot exceed 30 days.


After the period, employee must be reinstated
Transfer as valid management prerogative
to his former position
254
If suspension is extended, the employee shalland transfer as constructive dismissal
be entitled to his salaries and other benefits that
Valid
may accrue to him during the period of such
Constructive
management
suspension.248
dismissal
prerogative
When preventive suspension exceeds
When continued
maximum
period
allowed
without
No
demotion
in
rank
employment is
reinstatement or when preventive suspension is
or
diminution
of
rendered impossible,
for indefinite period, only then will constructive
salary, benefits, and
unreasonable or
dismissal set in.249
other privileges, and
unlikely;
the action is not
When there is a
Requirements for preventive suspension250
demotion in rank
1. An employee may be placed in a preventive motivated by
suspension if his continued employment discrimination, made and/or a diminution in
pay; or
poses a serious and imminent threat to the in bad faith, or
effected
as
a
form
of
When a clear
life or property of the employer or his copunishment or
discrimination,
workers.
insensibility or disdain
2. However, when it is determined that there is demotion without
by an employer
no sufficient basis to justify an employees sufficient cause.
becomes unbearable to
preventive suspension, the employee is
the employee.
entitled to the payment of salaries during the
time of preventive suspension

j. Promotion

i. Transfer
247 La Rosa v Ambassador Hotel, GR 177059, 2009

251 Aguanza v Asian Termminal Inc, GR 163505, 2009

248 Philippine Airline v NLRC, 1998

252 PLDT v Paguio, 472 SCRA 453, 2005

249 Mandapat v ADD Force Personnel Services, Inc. 2010

253 Herida v F&C Pawnshop and Jewelry Store, GR 172601, 2009

250 Gatbanton v NLRC, 479 SCRA 416, 2006

254 Aguanza v Asian Termminal Inc, GR 163505, 2009

81

Promotion, defined
The advancement from one position to another with
an increase in duties and responsibilities as
authorized by law, and usually accompanied by an
increase in salary.255

3.
4.
5.
6.

Retrenchment
Closing or cessation of operation
Disease or illness
Totality of infractions

For there to be a promotion is that there must be Art. 283. Closure of establishment and
an advancement from one position to anotherreduction of personnel.
or an upward vertical movement of the
The employer may also terminate the
employees rank or position. Any increase in
employment of any employee due to the
salary should only be considered incidental but
installation of labor-saving devices, redundancy,
never determinative of whether or not a
retrenchment to prevent losses or the closing or
256
promotion is bestowed upon an employee.
cessation of operation of the establishment or
undertaking unless the closing is for the purpose
There is no law that compels an employee to of circumventing the provisions of this Title, by
accept a promotion for the reason that a serving a written notice on the workers and the
promotion is in the nature of a gift or reward, Ministry of Labor and Employment at least one
which a person has a right to refuse.257
(1) month before the intended date thereof. In
case of termination due to the installation of
k. Residency training
labor-saving devices or redundancy, the worker
affected thereby shall be entitled to a separation
Residency or resident physician position in apay equivalent to at least his one (1) month pay
medical specialty is never a permanent one. or to at least one (1) month pay for every year of
Residency connotes training and temporaryservice, whichever is higher. In case of
status. It is a step taken by a physician right afterretrenchment to prevent losses and in cases of
post-graduate internship prior to his recognition closures or cessation of operations of
establishment or undertaking not due to serious
as a specialist or sub specialist in a given field.
business losses or financial reverses, the
The appointment was for a definite andseparation pay shall be equivalent to one (1)
renewable period which, when it was notmonth pay or at least one-half (1/2) month pay
renewed, did not involve a dismissal but an for every year of service, whichever is higher. A
fraction of at least six (6) months shall be
expiration of the petitioner's term.258
considered one (1) whole year.

ii. Substantive Requirement:


Authorized Causes
Authorized causes of termination259
1. Labor-saving devices
2. Redundancy
255 Phil Telegraph v CA, GR 152057, 2003

256 Phil Telegraph v CA, GR 152057, 2003

257 Phil Telegraph v CA, GR 152057, 2003

258 Felix v Buenaseda, 240 SCRA 139, 1995

Termination
of
employment
due
to
authorized causes; procedural steps required
1. Written notice to DOLE 30 days prior to the
intended date of termination
2. Written notice to employee(s) concerned 30
days prior to the intended date of
termination
3. Payment of separation pay:
For Redundancy and installation of
labor saving devices
1 month pay, or 1 month pay for every year of
service (a fraction of 6 months or more to be
considered 1 year), whichever is higher

259 Art 283, 284; Abad

82

For retrenchment, closure not due to seriousWhen position considered redundant


business losses, and diseases
Redundancy exists where the services of an employee
1 month pay, or 1 half month pay for every are in excess of what would reasonably be demanded
year of service (a fraction of 6 months or by the actual requirements of the enterprise.
more to be considered as 1 year) whichever is
higher.
An employer has no legal obligation to keep on the
payroll employees more than the number needed for
Basis of employers right
the operation of the business.264
The law acknowledges the right of every businessCause of Redundancy
entity to reduce its work force if such measure is Redundancy could be a result of a number of factors,
made necessary or compelled by economic factorssuch as the overhiring of workers, a decrease in the
that would otherwise endanger its stability orvolume of business or the dropping of a particular
existence.260
line or service previously manufactured or
undertaken by the enterprise.265
General rule: The wisdom or soundness of the
decision is not subject to discretionary review onRequisites for valid redundancy program266
the part of the Labor Arbiter, the NLRC and the
1. Written notice served on both the
CA.
employee and the DOLE at least one month
Exception: Such decision may, however, be
rejected if the same is found to be in
violation of the law or is arbitrary or
malicious.261

a. Labor-Saving Devices

prior to the intended date of termination;


2. 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;
3. good faith in abolishing the redundant
position; and
4. Use of fair and reasonable criteria in
ascertaining what positions are to be
declared redundant.

Labor-Saving Devices, defined


Contemplates the installation of machinery to effect
economy and efficiency in its method of
production.262
Criteria in implementing
program267
Where the introduction of labor-saving devices is
1. Preferred status
2. Efficiency
resorted to not merely to effect greater
3. Seniority.
efficiency in the operations of the business but
principally because of serious business reverses
and to avert further losses, the device could
c. Retrenchment
then verily be considered one of
retrenchment.263
Retrenchment, defined

redundancy

b. Redundancy
264 Edge Apparel Inc. v NLRC, 286 SCRA 302, 1998
260 Edge Apparel Inc. v NLRC, 286 SCRA 302, 1998

261 Elleccion v NLRC, GR 184735, 2009

265 Edge Apparel Inc. v NLRC, 286 SCRA 302, 1998; Lowe Inc v
CA, GR 164813, 2000

262 Edge Apparel Inc. v NLRC, 286 SCRA 302, 1998

266 Lowe Inc v CA, GR 164813, 2000

263 Edge Apparel Inc. v NLRC, 286 SCRA 302, 1998

267 Lowe Inc v CA, GR 164813, 2000

83

An economic ground to reduce the number of


employees due to business losses or reverses which
are serious, actual and real.

seniority271, physical fitness, age,


financial hardship for certain workers.

Cause of retrenchment
Normally resorted to by management during periods
of business reverses and economic difficulties
occasioned by such events as recession, industrial
depression, or seasonal fluctuations.
Retrenchment as a means of last resort
Retrenchment is only a measure of last resort, when
other less drastic means have been tried and found
to be inadequate.268

and

The fact alone that a mere portion of the business


shut down and not the whole of it does not
necessarily remove the measure within the
meaning of Retrenchment.272
Retrenchment cannot be resorted to once
business losses had already decreased and the
business had picked up.273

d. Closing or
operation

cessation

of

Closure of company may pertain to:


Requirements for valid retrenchment269
1. Complete cessation of business operation
The requirements must be proved by clear and
2. Partial cessation of business operation
convincing evidence
3. Shut-down of establishment
274

1.

That retrenchment is reasonably necessary


and likely to prevent business losses which, Closure may be due to:
1. Serious business loss
if already incurred, are not merely de
2. Not due to business loss
270
minimis, but substantial, serious ,
actual and real, or if only expected, are
reasonably
imminent
as
perceivedRequisites of a valid Closure of business
1. Bona fide closure/cessation of business,
objectively and in good faith by the
i.e., its purpose is to advance the interest of
employer;
the employer and not to defeat or circumvent
2. Written notice served on both the
the rights of employees under the law or a
employee and the DOLE at least one month
valid agreement;
prior to the intended date of termination;
2. Written notice served on both the
3. Payment of separation pay equivalent
employee and the DOLE at least one month
to at least one month pay or at least one
prior to the intended date of termination;
month pay for every year of service,
3.
Separation
pay,
in
case
of
whichever is higher;
closure/cessation of business not due to
4. good faith in exercising managements
financial losses. It must be equivalent to
prerogative to retrench employees for the
month pay for every year of service or one
advancement of its interest and not to defeat
month pay, whichever is higher.
or circumvent the employees' right to
security of tenure; and,
275
5. Used of fair and reasonable criteria inEffects of closure of business
ascertaining who would be dismissed and
who would be retained among the271 Emcor, Inc v Sienes, GR 152101, 2009
employees, such as status, efficiency,
268 Flight Attendants & Stewards Association of the Philippines v
PAL, GR 178083, 2008
272 Edge Apparel Inc. v NLRC, 286 SCRA 302, 1998

269 Flight Attendants & Stewards Association of the Philippines v 273 PSBA v NLRC, 223 SCRA 305 (1993)
PAL, GR 178083, 2008

270 Metro Construction Inc. v Aman, GR 168324, 2009

274 Cheniver Deco Print Technics Corp. v NLRC, 325 SCRA 758
(2000)

84

Due to
NOT due
serious
to serious
business
business
losses
losses
Good faith
Legal
Legal
dismissal
dismissal
No
Employee is
separation
entitled to
benefits
separation
pay.

Closure of
business done
in bad faith

Illegal dismissal
Employee is
entitled to
reinstatement
and payment of
full wages.

If reinstatement
not possible,
employee is
entitled to full
backwages and
separation pay

e.

Temporary Closure

albeit the displacement should not exceed six (6)


months.276
The paramount consideration should be the
dire exigency of the business of the employer
that compels it to put some of its employees
temporarily out of work.277
If the employee was forced to remain without
work or assignment for a period exceeding six
months, then he is in effect constructively
dismissed.278
The so-called "floating status" of an employee
should last only for a legally prescribed period of
time. When that "floating status" of an employee
lasts for more than six months, he may be
considered to have been illegally dismissed from
the service.279

Redundancy, Retrenchment and Closure


distinction

Article 286. When employment not


deemed terminated.
The bona-fide suspension of the operation of a
business or undertaking for a period not
exceeding six (6) months, or the fulfillment by
the employee of a military or civic duty shall
not terminate employment. In all such
cases, the employer shall reinstate the employee
to his former position without loss of seniority
rights if he indicates his desire to resume his
work not later than one (1) month from the
resumption of operations of his employer or
from his relief from the military or civic duty.
bona fide suspension of the operation
less than 6 months:
closure shall not terminate employment

More then 6 months:


employment shall be deemed terminated

276 Eagle Gold Club Inc. v Mirando, GR 179512, 2009

Article 286 applies only when there is a bonafide


suspension of the employers operation of a
business or undertaking for a period not 277 Eagle Gold Club Inc. v Mirando, GR 179512, 2009
exceeding six (6) months. In such a case, there is
no termination of employment but only a
temporary displacement of employees,
278 Valdez v NLRC, 286 SCRA 87, 1998

275 Eastridge Golf Club Inc. v Eastridge Golf Club Inc. Labor
Union, GR 166760, 2008
279 Valdez v NLRC, 286 SCRA 87, 1998

85

Cause

Redundancy

Retrenchment

Closure of business

Management prerogative
Service capability of the
workforce
is
in
excess of what is
reasonably needed to
meet the demands of the
business enterprise

Management prerogative
Effected by management during
periods of business recession,
industrial depression, seasonal
fluctuations, lack of work or
considerable reduction in the
volume of the employers business.
Resorted to by an employer to
avoid or minimize business
losses.

Management prerogative
Carried out to either stave off the
financial ruin or promote the
business interest of the employer.
Art 283 authorizes termination of
employment due to business
closure, regardless of the
underlying
reasons
and
motivations therefor, be it
financial losses or not.

Requisite to 1.Written notice served 1.


on both the employee
be valid

2.

3.

4.

Justification

and the DOLE at least


one month prior to
the intended date of
termination;
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 position;
and
Use of fair and
reasonable
criteria
in
ascertaining
what
positions are to be
declared redundant,
such as: (1) preferred
status; (2) efficiency;
and (3) seniority.280

Employer must prove


that it has become

That
retrenchment
is
reasonably necessary and
likely to prevent business
losses which, if already
incurred, are not merely de
minimis, but substantial,
serious281, actual and
real, or if only expected, are
reasonably
imminent
as
perceived objectively and in
good faith by the employer;
2. Written notice served on
both the employee and the
DOLE at least one month
prior to the intended date of
termination;
3. 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;
4. Good faith in exercising
managements prerogative to
retrench employees for the
advancement of its interest
and not to defeat or
circumvent the employees
right to security of tenure;
and,
5. Used
of
fair
and
reasonable criteria in
ascertaining who would be
dismissed and who would be
retained
among
the
employees, such as status,
efficiency,
seniority282,
physical fitness, age, and
financial hardship for certain
workers.
Employer must prove serious
business losses.

1. Bona fide closure/ cessation


of business, i.e., its purpose is
to advance the interest of the
employer and not to defeat or
circumvent the rights of
employees under the law or a
valid agreement;
2. Written notice served on
both the employee and the
DOLE at least one month
prior to the intended date of
termination;
3. Separation pay, in case of
closure/cessation
of
business not due to financial
losses. It must be equivalent
to month pay for every year
of service or one month pay,
whichever is higher.

Must prove that the closure is


bona fide. Unlike retrenchment,

280 Lowe Inc v CA, GR 164813, 2000

281 Metro Construction Inc. v Aman, GR 168324, 2009

282 Emcor, Inc v Sienes, GR 152101, 2009

86

overmanned.

Evidence
that may be
proffered

f.

New staffing pattern,


feasibility
studies/
proposal on the viability
of the newly created
positions, job description
and the approval by the
management
of
the
restructuring.283

Necessary conditions for the


company
losses
to
justify
retrenchment:
1. Losses must be substantial
and not de minimis;
2. Losses must be actual or
reasonably imminent;
3. the
retrenchment
is
reasonably necessary and is
likely to be effective in
preventing the expected
losses; and
4. the alleged losses, if already
incurred, or the expected
imminent losses sought to
be forestalled, are proven
by
sufficient
and
convincing evidence.
Books of accounts, profit and loss
statements,
and
even
its
accountant to competently amplify
its financial position.284

closure or cessation of business, as


an
authorized
cause
of
termination of employment, need
not depend for validity on
evidence of actual or imminent
reversal of the employer's fortune.

Disease

Article 284. Disease as ground for


termination.
An employer may terminate the services of an
employee who has been found to be suffering
from any disease and whose continued
employment is prohibited by law or is prejudicial
to his health as well as to the health of his coemployees: Provided, That he is paid separation
pay equivalent to at least one (1) month salary or
to one-half (1/2) month salary for every year of
service, whichever is greater, a fraction of at least
six (6) months being considered as one (1) whole
year.

283 AMA v Garcia, GR 166703, 2008

284 Metro Construction Inc. v Aman, GR 168324, 2009

87

Requisites for Disease or illness to be a


ground for termination285

extent of the employee's illness and thus defeat


the public policy in the protection of labor.289

1.

The continued employment of the


g.
Totality of Infraction
employee is prohibited by law or
prejudicial to his health or the health of
Totality of Infraction Doctrine
his co-employees
2. There is a certification by a competent Where the employee has been found to have
public health authority that the diseaserepeatedly incurred several suspensions or warnings
is of such a nature or at such a stage that it on account of violations of company rules and
dismissal as it is
cannot be cured within a period of 6 month,regulations, the law warrants their
290
akin
to
habitual
delinquency.
even with proper medical treatment
3. Notice to the employee and DOLE at
least 1 month prior to the intended date of General rule:
It is the totality, not the compartmentalization of
termination
4. Separation pay of one month or one-halfcompany infractions that the employee had
committed, which justifies the penalty of
month for every year of service, whichever isconsistently
291
dismissal.
higher, a fraction of 6 months or more being
considered as 1 year.
Exceptions:
Previous past infractions may be used as a
Requirements are mandatory for valid
justification for an employees dismissal
286
termination.
from work only if in connection with a
subsequent similar offense.292
The requirement for a medical certificate
under Art 284 of the Labor Code cannot be Past infractions for which an employee had
dispensed with.
already been penalized cannot be collectively
The burden of proving the validity of the taken as a justification for his dismissal from the
dismissal of the employee rests on the service.293
employer.287
The employer, before it can legally dismiss its
employee on the ground of disease, must adduce
a certification from a competent public authority
that the disease of which its employee is suffering D. PROCEDURAL REQUIREMENTS
is of such nature or at such a stage that it cannot
be cured within a period of six months Art 277(b). Miscellaneous provisions.
even with proper treatment.288
Subject to the constitutional right of workers to
The requirement of a medical certificate under
Article 284 cannot be dispensed with; otherwise,
it would sanction the unilateral and arbitrary 289 Crayon Processing v Pula, GR 167727, 2007
determination by the employer of the gravity or
290 Villeno v NLRC, 251 SCRA 494 (1995)
285 Savallana v IT International Corp., 356 SCRA 451 (2001)

291 Manila Electric Company v NLRC, 263 SCRA 531 (1996)


286 Viola Cruz v NLRC, 324 SCRA 770 (2000)

292 Stellar Industrial Services, Inc. v NLRC, 252 SCRA 323 (1996)
287 Savallana v IT International Corp., 356 SCRA 451 (2001)

288 Duterte v Kingswood Trading Co., GR 160325, 2007

293 Tower Industrial Sales v CA, 487 SCRA 556 (2006), citing
Lopez v NLRC, 297 SCRA 508 (1998)

88

security of tenure and their right to be protected


against dismissal except for a just and authorized
cause and without prejudice to the requirement
of notice under Article 283 of this Code, the
employer shall furnish the worker whose
employment is sought to be terminated a written
notice containing a statement of the causes for
termination and shall afford the latter ample
opportunity to be heard and to defend himself
with the assistance of his representative if he so
desires in accordance with company rules and
regulations promulgated pursuant to guidelines
set by the Department of Labor and
Employment. Any decision taken by the
employer shall be without prejudice to the right
of the worker to contest the validity or legality of
his dismissal by filing a complaint with the
regional branch of the National Labor Relations
Commission. The burden of proving that the
termination was for a valid or authorized cause
shall rest on the employer. The Secretary of the
Department of Labor and Employment may
suspend the effects of the termination pending
resolution of the dispute in the event of a prima
facie finding by the appropriate official of the
Department of Labor and Employment before
whom such dispute is pending that the
termination may cause a serious labor dispute or
is in implementation of a mass lay-off. (As
amended by Section 33, Republic Act No. 6715,
March 21, 1989)

Procedural Requirement
Basis for
Requirements
termination
Twin-notices and
Art 282: Just Cause
1.
2.
3.
1.

2.

Art 283 and 284:


Authorized cause

1.
2.
3.
4.

5.

1. First written notice to be served on the


employees. It must contain:
a.

Dismissals based on just causes contemplate acts


or omissions attributable to the employee while
dismissals based on authorized causes involve
grounds under the Labor Code which allow the
employer to terminate employees. 294

Rationale for strict adherence to procedural


requirements
The due process must be observed in effecting an
employees dismissal because the dismissal of an
employee affects not only his position but also his
means of livelihood and his dependents
sustenance.295

294 Agabon v NLRC, 442 SCRA 573, 2004

Labor-saving devices
Redundancy
Retrenchment
Closing or cessation of
operation
Disease or illness

hearing rule
1. Notice specifying
the grounds for
which dismissal is
sought
2. Hearing or
opportunity to be
heard
3. Notice of the
decision to
dismiss
1. Notice to:
a. Employee
b. DOLE
At least 30 days prior
to the effectivity of the
separation

a. Procedural requirements for


termination with just cause
under Art 282

i. General concepts

Serious misconduct or
willful disobedience
Gross and habitual
neglect of duties
Fraud or willful breach
Commission of a crime
or offense
Analogous causes

Specific causes or grounds for


termination
b. Directive that the employees are given
the opportunity to submit their written
explanation within a reasonable period.
c. Detailed narration of the facts and
circumstances that will serve as basis for
the charge
d. Company rules, if any, are violated
and/or which among the grounds
under Art. 282 is being charged
against the employees.
Reasonable opportunity should be
construed as a period of at least 5 calendar days
from receipt of notice.296
2. A hearing or conference wherein the
employees will be given the opportunity to:

296 King of Kings Transport, Inc. v Mamac, GR 166208 (2007)


295 RCPI v NLRC, 221 SCRA 782 (1993)

89

a.

Explain and clarify their defenses to the


charge against them;
b. present evidence in support of their
defenses; and
c. rebut the evidence presented against
them by the management.

authorized
cause

process

Dismissal

Employers
liability

Legal

No liability
Separation
pay if dismissal
is due to
authorized cause

Hearing or conference in termination


cases is not necessary. Employer however
must provide the employee an ample
opportunity to be heard and to defend
himself
with
the
assistance
of
his
representatives if he so desires297

Illegal

Reinstatement
Full backwages
Separation
pay if
reinstatement not
possible

Illegal

Reinstatement
Full backwages

Exception:298
a formal hearing or conference becomes
mandatory only when:

Separation
pay if
reinstatement not
possible

1. Requested by the employee in writing


2. Substantial evidentiary disputes exist
3. company rule or practice requires it
4. When similar circumstances justify it

Ruling
Year

All circumstances involving the


charge against the employees have been
considered; and
2. grounds have been established to
justify
the
severance
of
their
employment.

b. Dismissal without due process

Prior to
1989
1989

Dismissal

298 Perez v Philippine Telegraph and Telephone Company, GR


152048, 2009

Employers liability for


non compliance with
procedural requirements

Illegal
Legal

Damages

Legal

Full backwages

Wenphil Corp
v NLRC

2000
Serrano v
NLRC

Computed from the


time of dismissal until
the court finds the
dismissal to be for just
cause

Consequence of non-compliance with


procedural requirements
Just or
Due
Effects
297

Damages due to
non-compliance
with procedural
requirements

History of the effects of non-compliance


with procedural requirements

of

1.

299 Abiera v NLRC, 215 SCRA 476 (1992)

Legal

Separation
pay if dismissal
is due to
authorized cause

Ample opportunity, connotes every kind of


assistance that management must accord the
employee to enable him to prepare adequately
for his defense, including legal representation299
3. Written
notice
termination indicating that:

2004
Agabon v
NLRC

Legal

Nominal damages

Indenity is stiffer than


Wenphil Corp. v NLRC
to
discourage
the
practive of dismiss
now, pay later

Wenphil or Belated Due process rule


Where the employer had a valid reason to
dismiss an employee but did not follow the due
process requirement, the dismissal may be

90

upheld but the employer will be penalized to pay dismissal.


an indemnity to the employee.300

commit
dismissal.

illegal

Wenphil-Serrano Doctrine
iv. Degree of proof
Serrano modifies Wenphil. The Wenphil
doctrine was meant to discourage dismissal
without due process. But the purpose is not All administrative determinations require only
substantial proof and not clear and
achieved as many employers dismiss now and
convincing evidence.304
pay later. Employer is liable for the full
backwages although the dismissal is not As a general rule, employers are allowed a
wider
latitude
of
discretion
in
outright illegal since it is based on a valid
terminating the services of managerial
reason.
employees who perform functions which by
their nature require the employers' full trust and
The employee remains dismissed. The dismissal
confidence, thus, existence of basis for believing
is merely defective or ineffectual. The doctrine
that the employee has breached the trust of the
applies to dismissals under Art 282, 283 and
employer is sufficient and does not require proof
284.
beyond reasonable doubt. In fact, it has been
held that when the employer has ample
Agabon abandoned Serrano ruling
reason to distrust an employee, a labor
The doctrine in Serrano had already been
tribunal cannot deny the employer the
abandoned in Agabon v. NLRC by ruling that if
authority to dismiss him.305
the dismissal is done without due process, the
employer should indemnify the employee
v.
with nominal damages.301

ii. Right to counsel

Prescription
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.306

It is true that administrative and quasi-judicial


bodies are not bound by the technical rules of
procedure in the adjudication cases. However,
the right to counsel, a very basic
requirement of substantive due process,
has to be observed. Indeed, rights to counsel
and to due process of law are two of fundamental E. RELIEFS IN ILLEGAL DISMISSAL
rights guaranteed by the 1987 Constitution to
person under investigation, be the proceeding The employee who has been illegally terminated
administrate civil, or criminal.302
is entitled to the twin reliefs of reinstatement
and backwages.307

iii. Burden of proof

Burden of Proof303
Employee
Employer
Must first establish the Burdened to prove
fact of his or her that they did not

303 Romeo Basay, et al. v Havienda Consolacion, et al., GR


175532 (2010)

300 Agabon v NLRC, 442 SCRA 573, 2004

304 Manalo v Roldan-Confesor, 215 SCRA 808 (1992)

301 King of Kings Transport, Inc. v Mamac, GR 166208, 2007

305 Rentokil Philippines, Inc. v Sanchez, GR 176219, 2008

302 Salaw v NLRC, 202 SCRA 7, 1991

306 Art 1146, Civil Code

91

1. Reinstatement without loss of seniority


rights and other privileges
2. Full backwages inclusive of allowances,
and to other benefits or their monetary
equivalent computed from the time his
compensation was withheld up to the
time of actual reinstatement

The fact that his employer later made an offer to


re-employ him did not cure the vice of his earlier
arbitrary dismissal.308

i. Reinstatement
Reinstatement, defined
The restoration to a state or condition from which
one had been removed or separated.309
General rule:
An employee illegally dismissed is entitled to
reinstatement.
Exceptions:
1. Closure of business
Reinstatement presupposses that the
previous position from which one had
been removed still exists, or that there is
an unfilled position more or less of
similar nature as the one previously
occupied by the employee.
When the position no longer exists,
order of reinstatement is improper. The
law itself cannot exact compliance with
what is impossible310
2. Prayer is for separation pay in lieu
of reinstatement

Reinstatement is no longer viable where


the employee decides not to be
reinstated. Respondent expressly prayed
for an award of separation pay in lieu of
reinstatement from the very start of the
proceedings. By so doing, he forecloses
reinstatement as a relief by
implication.311
Omission to pray for reinstatement in
employees position paper before the
labor arbiter cannot be considered as an
implied waiver to be reinstated.
Technicalities have no place in labor
cases.312
3. Economic business conditions
When employer is declared to be
insolvent, reinstatement is no longer
feasible.313
4. Employees unsuitability
Reinstatement is no longer possible
when, though innocent herself, her
continued presence of the employee as a
teacher in a catholic school may well be
met with antipathy and antagonism by
some sectors in the school community.314
5. Employees retirement/overage
When during the pendency of the illegal
dismissal case, the employee reaches the
age
of
retirement,
reinstatement
becomes academic.315
6. Strained relations
311 City trucking, Inc. v Balajadia, GR 160769 (2006)

307 Condo Suite Club Travel, Inc. v NLRC, 323 SCRA 679 (2000);
Golden Donuts, Inc. v NLRC, 322 SCRA 294 (2000)
312 Pheschem Industrial Corporation v Moldez, 458 SCRA 339
(2005)
308 Ranara v NLRC, GR 100969, 1992
313 Electruck Asia, Inc. v Meris, 435 SCRA 310 (2004)
309 Pheschem Industrial Corporation v Moldez, 458 SCRA 339,
2005
314 Divine Word High School v NLRC, 143 SCRA 346 (1986)

310 Philippine Engineering Corporation v CIR, 41 SCRA 102


(1971)
315 City Trust Banking Corporation v. NLRC, GR 104860 (1996)

92

In order for the doctrine of strained


employee held a managerial or key position
relations to apply, it should be proved
in the company
that the employee concerned occupies a
4. It would be more prudent to order payment
position where he enjoys the trust and
of separation pay instead of reinstatement
confidence of his employer and that it is
likely that if reinstated, an atmosphereWhen reinstatement no longer available,
of antipathy and antagonism may bepayment of separation pay is awarded
generated as to adversely affect the Clearly, the law intended reinstatement to be
efficiency and productivity of the
the general rule.
It is only when
employee concerned.316
reinstatement is no longer feasible that payment
of separation pay is awarded to an illegally
Indeed, labor disputes almost
dismissed employee.320
always
result
in
"strained
relations," and the phrase cannot Payment of separation pay as a substitute for
be
given
an
overarching
reinstatement is allowed only under
interpretation; otherwise, an unjustly
exceptional circumstances, viz:321
dismissed employee can never be
reinstated.317
1. When reasons exist which are not
7. Not feasible
The impossibility of the reinstatement of
petitioner considering that his position
or any equivalent position may no longer
be available in view of the length of time
that this case has been pending.
Moreover, the protracted litigation may
have seriously abraded the relationship
of the parties so as to render
reinstatement impractical.318
Doctrine of Strained relations rule319

attributable to the fault or beyond


the control of the employer, such
as, when the employer, who is in severe
financial strait and has suffered serious
business losses, has ceased operations,
implemented
retrenchment,
or
abolished the position due to the
installation of labor-saving devices;
2. when the illegally dismissed employee
has contracted a disease and his
reinstatement will endanger the safety of
his co-employees; or,

3. where strained relationship exists


Where reinstatement is not feasible,
between the employer and the dismissed
expedient or practical
employee.
2. Where reinstatement would only exacerbate
the tension and strained relations between
parties
ii. Backwages
3. Where relationship between the employer
and employee has been unduly strained by Backwages, defined
reason of their irreconcilable differences,Earnings lost by a work due to employees illegal
particularly where the illegality dismisseddismissal. It is a form of relief that restores the
1.

316 Cabigting v San Miguel Foods, Inc., GR 167706 (2009)

317 Pentagon Steel Corporation v CA, GR 174141 (2009)

income lost by reason of such unlawful


dismissal.
It is not a private compensation or damages, nor is it
a redress of a private right, but rather, in the nature
320 Pheschem Industrial Corporation v Moldez, 458 SCRA 339
(2005)

318 Goma v Pamplona Plantation, Inc., GR 160905 (2008)

319 Quijano v Mercury Drug Corp (1998)

321 Pheschem Industrial Corporation v Moldez, 458 SCRA 339


(2005)

93

of a command to the employer to make public


reparation for illegally dismissing an employee322
Effect of failure to order Backwages

a.

Emergency cost of living allowances


(ECOLA), transportation allowances, 13th
month pay327
b. Vacation leaves, service incentive leaves
and sick leaves

The fact that the NLRC did not award backwages


to the respondents or that the respondents
themselves did not appeal the NLRC decision
does not bar the Court of Appeals from awarding
backwages.323

Substantive rights like the award of


backwages resulting from illegal dismissalKinds of separation pay
must not be prejudiced by a rigid and technical
1. Separation pay as statutory requirement
application of the rules. The order of the Court of
for authorized causes
Appeals to award backwages being a mere legal
consequence of the finding that respondents
When termination is based on grounds
were illegally dismissed by petitioners, there was
under Art 283 and 284:
no error in awarding the same.324
a. Installation of labor saving devices

Computation of Backwages
1.

Without deduction for their earnings


elsewhere during their layoff325
2. Awards including salary differentials
are not allowed326
3. The salary base properly used should be the
basic salary rate at the time of dismissal
plus the regular allowance.
Allowance includes:

4. The effects of extraordinary inflation


are not to be applied without an official
declaration
thereof
by
competent
authority328

iii. Separation pay

b.
c.
d.
e.

Redundancy
Retrenchment
Cessation of the employers business
Disease

2. Separation pay as financial assistance


Separation pa shall be allowed as a measure
of social justice
Separation Pay as Financial Assistance
When allowed
When not allowed

Though
validly
dismissed, employee may
be awarded as some
equitable
relief
in
consideration of the past
services rendered where
322 St. Thereseas school of Novaliches Foundation v NLRC dismissal was due to

Where employee was


dismissed
for
just
cause under Art 282
of the Labor code330 or
for
an
offense
involving
moral
turpitude, like theft or

(1998)

323 Asian Terminals, Inc. v NLRC, GR 158458 (2007)

327 Paramount Vinyl Product Corpo v NLRC (1990)


324 Asian Terminals, Inc. v NLRC, GR 158458 (2007)

328 Lantion v NLRC (1990)


325 Bustamante v NLRC, 265 v SCRA 61 (1996)

326 Insular Life Assurance Co. v NLRC (1987)

330 BPI and BPI Family Bank v NLRC and Arambulo, GR 179801
(2010)

94

causes other than


just causes under Art
282
or
those
reflecting
on
his
moral character.329

illicit sexual relations


with a fellow worker331

3. Separation pay in lieu of reinstatement


where reinstatement is not feasible
The grant of separation pay was a proper
substitute only for reinstatement; it could
not be an adequate substitute both
for reinstatement and for backwages.332

Oriented towards the


immediate future, the
transitional period the
dismissed
employee
must undergo before
locating a replacement
job.333

Computation of Separation pay


1. Employer may not, in the guise of exercising
management prerogatives, pay separation
benefits unequally.335

2. Allowances and commissions are included in

4. Separation pay as a benefit in the CBA or


company policy
Separation pay and Backwages, distinguish
Separation pay in
lieu of
reinstatement

Backwages

Granted to an illegally
dismissed employee

Granted to an illegally
dismissed employee

Granted
reinstatement
longer feasible.

Granted
reinstatement

where
is
no

Payment of backwages is
a form of relief that
restores the income that
was lost by reason of
unlawful dismissal334

the computation of separation pay336

Employees who receive their separation


pay are not barred from contesting the
legality of their dismissal from the service
and their acceptance of those benefits would not
amount to estoppel. Otherwise, employees who
have been forced to resign and accept their
separation pay can no longer resort to legal
remedies.337

with

Employer must still pay


for backwages.

iv. Damages, Attorneys Fees and


other Indemnity
Moral damages
Recoverable when the dismissal of an employee is
attended by: 338
1.
badfaith,
333 Nissan North EDSA Balintawak v Serrano, GR 162538 (2009)

334 Nissan North EDSA Balintawak v Serrano, GR 162538 (2009)

335 Businessday Information Systems and Services, Inc. v NLRC,


221 SCRA 9, 1993
329 Bristol Myers Squibb v Baban, GR 167449 (2008); Toyota
Motor Phils. Corp Workers Association v NLRC, 537 SCRA 171
(2007)

331 PLDT v NLRC, GR 80609 (1988)

336 Songco v NLRC, 183 SCRA 610 (1990)

337 Amkor Technlogy Philippines, Inc. v Juangco, GR 166507


(2006)

332 Nissan North EDSA Balintawak v Serrano, GR 162538 (2009)


338 PAL v NLRC (1999)

95

fraud
constitutes an act oppressive to
labor
done in a manner contrary to good
customs and public policy

In cases of illegal dismissal, corporate directors


and officers are solidarily liable with the
corporation, where termination of employment
are done with malice or bad faith.343

Such an award cannot be justified solely upon


the premise that the employer fired his
employee without just cause or due process.
Additional facts must be pleaded and proven to
warrant the grant of moral damages under the
Civil Code.339

Corporate veil is pierced:


1. When it is deliberately and maliciously
designed to evade financial obligations
to employees or when used as means to
perpetuate fraud or an illegal act344
2. Directors or trustees who willfully and
knowingly assent to patently unlawful
acts or who are guilty of gross negligence
or bad faith in the managing corporate
affairs345

Otherwise, the manager, officer or the


stockholder s are not liable personally since the
corporation is vested by law with a separate and
distinct personality.346

2.
3.
4.

Exemplary damages
Awarded if the dismissal is effected in a
wanton, oppressive or malevolent
manner.340
Attorneys fees
Not recoverable when there is no sufficient
showing of bad faith.
Justified when claimant is compelled to litigate
with 3rd parsons or to incur expenses to protect
his interest by reason of an unjustified act of
the party against whom it is sought.341
Attorneys fees
Not recoverable when there is no sufficient
showing of bad faith.
Justified when claimant is compelled to litigate
with 3rd parsons or to incur expenses to protect
his interest by reason of an unjustified act of
the party against whom it is sought.342
Liability of Corporate officers

F. RETIREMENT
Art 287. Retirement
Any employee may be retired upon reaching the
retirement age established in the collective
bargaining agreement or other applicable
employment contract.
In case of retirement, the employee shall be
entitled to receive such retirement benefits as he
may have earned under existing laws and any
collective bargaining agreement and other
agreements: Provided, however, That an
employees retirement benefits under any
collective bargaining and other agreements shall
not be less than those provided therein.

339 M+W Zander Philippines, Inc. v Enriquez, GR 169173 (2009) 343 Bogo Medelin Sugarcane Planters Association v NLRC (1998)

340 Kay Products v CA, 464 SCRA 544 (2005)

344 Pabalan v NLRC (1990)

341 Lopez v NLRC (1998)

345 Sec 31 of the Corporation Code

342 Lopez v NLRC (1998)

346 Sunio v NLRC (1984)

96

In the absence of a retirement plan or agreement


providing for retirement benefits of employees in
the establishment, an employee upon reaching
the age of sixty (60) years or more, but not
beyond sixty-five (65) years which is hereby
declared the compulsory retirement age, who has
served at least five (5) years in the said
establishment, may retire and shall be entitled to
retirement pay equivalent to at least one-half
(1/2) month salary for every year of service, a
fraction of at least six (6) months being
considered as one whole year.
Unless the parties provide for broader
inclusions, the term one-half (1/2) month salary
shall mean fifteen (15) days plus one-twelfth
(1/12) of the 13th month pay and the cash
equivalent of not more than five (5) days of
service incentive leaves.

Computation: 22.5 days x number of years


of service
22.5 days is computed at 15 days plus 2.5 days
representing 1/12 of the 13th month pay plus 5
days of service incentive leave347

R.A. No. 7641 does not apply to a


retirement plan which gives to the
retiring employee more than what the
law requires.348
While termination of employment and
retirement from service are common modes of
ending employment, they are mutually exclusive,
with varying juridical bases and resulting
benefits. 349

Termination and Retirement, distinguished350

Retail, service and agricultural establishments or


operations employing not more than ten (10)
employees or workers are exempted from the
coverage of this provision.

Termination
Retirement
mode
of
ending mode
of
ending
employment
employment
Statutory, governed by Contractual, based on
the Labor code and a bilateral agreement
Violation of this provision is hereby declared
other related law as to of the employer and
unlawful and subject to the penal provisions
its grounds, benefits employee
under Article 288 of this Code.
and procedure
Benefits
resulting Article 287 of the
from
termination Labor Code gives
vary, depending on leeway to the parties
to stipulate above a
A retirement plan in a company partakes the the cause
floor of benefits
nature of a contract, with the employer and the
employee as the contracting parties. It creates a
contractual obligation in which the promise to
VII. Management Prerogative
pay retirement benefits is made in consideration
of the continued faithful service of the employee
Management Prerogative, defined
for the requisite period.
Act by which one directing a business is able to

RA 7641
Age requirement
1. Compulsory
Upon reaching 65 years of age; with at least 5
years of service
2. Optional
Upon reaching 60 years of age; with at least 5
years of service; at the option of the employee

347 Capitol Wireless v Confessor, 264 SCRA 68 (1996)

348 Oxales v Unilab, GR 152991, 2008

349 Quevedo v Benguet Electric Cooperative Inc., GR 168927,


2009

Computation of retirement pay


1. 15 days based on the employees latest salary
350 Quevedo
2. 1/12 of the 13th month pay; and
2009
3. cash equivalent of the 5 years service
incentive leave

v Benguet Electric Cooperative Inc., GR 168927,

97

control the variables thereof so as to enhance the


chances of making a profit.
This is also one which, the employer is free to
regulate, according to his own discretion and
judgment all aspects of employment; this
includes hiring, working assignments,
methods, time, place and manner, tools to
be used, process to be followed,
supervision
of
workers,
working
regulations, transfer of employees, lay-off
of workers, discipline, dismissal and
recall of work.

A bonus is a gratuity or act of liberality of the giver


which the recipient has no right to demand as a
matter of right. The grant of a bonus is basically a
management prerogative which cannot be forced
upon the employer who may not be obliged to
assume the onerous burden of granting bonuses or
other benefits aside from the employees basic
salaries or wages.354
A bonus, however, becomes a demandable or
enforceable obligation when it is made part of the
wage or salary or compensation of the employee
which was promised to the employee.355

Discipline
In revising the employees Code of Conduct which
would have repercussions to their security of tenureChange of working hours
and deprive them of their livelihood the company The management is also empowered to change their
so
must have participation in the decision and policy employees work schedule whenever exigencies
356
require
provided
that
it
is
done
in
good
faith.
making process of affecting their rights, duties, and
welfare.351
Marital discrimination
Section 136, Title III, Chapter I,
Transfer of employees
Stipulation Against Marriage
Business enterprises have the right to transfer
employees from one work station to another where it It shall be unlawful for an employer to require as
a condition of employment or continuation of
deems the employee will be most useful and
productive. The limits as to transferring employees employment that a woman employee shall not
get married, or to stipulate expressly or
are as long as there is no unreasonable cause,
352
tacitly that
upon getting married,
a
inconvenience, and prejudice in their transfer.
woman employee shall be deemed resigned or
separated, or to actually dismiss, discharge,
Productivity standard
Failure to observe prescribed standards of work or to discriminate or otherwise prejudice a woman
fulfil
reasonable
work assignments
due
toemployee merely by reason of her marriage.
inefficiency may constitute just cause for dismissal.
Such inefficiency is understood to mean failure to
attain work goals or work quotas, either by failing toPost-employment ban
complete the same within the allotted reasonable Whether such an agreement would be held valid and
period, or by producing unsatisfactory results. This binding will depend on its reasonableness in relation
management prerogative of requiring standards may to the parties concerned, as well as to its public
be availed of so long as they are exercised in good policy.
faith for the advancement of the employer's
interest.353
Grant of bonus

354 Traders Royal Bank v. National Labor Relations


Commission, G.R. No. 88168, August 30, 1990, 189 SCRA 274,
277

351 Philippine Airlines v. NLRC 225 SCRA 301 (1993)

352 Chu vs. NLRC 232 SCRA 764 (1994)

353 Buiser v. Leogardo, Jr. 131 SCRA 151, 158 (1984)

355 Philippine National Construction Corp. v. National Labor


Relations Commission, 366 Phil. 678 (1999); Philippine
Duplicators, Inc. v. National Labor Relations Commission, 311
Phil. 407, 419 (1995)

356 Union Carbide Labor Union vs. Union Carbide Phils., Inc. 215
SCRA 554 (1992)

98

Limitations in its exercise


The limitations of the exercise of management
prerogative is that there must be an exercise of
good faith for the advancement of the employees
interest and not for the purpose of defeating or
circumventing the rights of the employees
under the law are valid exercise of management
prerogative.357
Limitations in their exercise
prerogatives are the following:
1
2
3
4

of

management

amount of death benefits has also been


doubled.359
The employer's duty is only to pay the regular
monthly premiums to the scheme.360
Since there is no employer opposing or fighting a
claim for compensation, the rules on
presumption of compensability and
controversion
cease
to
have
importance.361 The lopsided situation of an
employer versus one employee, which called for
equalization through the various rules and
concepts favoring the claimant, is now absent.362

Constitution
Law
SSS and GSIS
Contracts (CBA)
General principles of fair play and
justice

VIII. Social legislation

A. SOCIAL SECURITY SYSTEM and


GOVERNMENT SERVICE
INSURANCE SYSTEM
Concept
The new law establishes a state insurance
fund built up by the contributions of
employers based on the salaries of their
employees.358

The injured worker does not have to litigate


his right to compensation. No employer
opposes his claim. There is no notice of injury
nor requirement of controversion. The sick
worker simply files a claim with a new neutral
Employees' Compensation Commission which
then determines on the basis of the employee's359 De Jesus v ECC, GR L-56191, 1986
supporting papers and medical evidence whether
or not compensation may be paid. The
payment of benefits is more prompt. The
cost of administration is low. The 360 De Jesus v ECC, GR L-56191, 1986

357 Chu vs. NLRC 232 SCRA 764 (1994)

361 GSIS v de Guzman, GR 173049, 2009

358 De Jesus v ECC, GR L-56191, 1986

362 De Jesus v ECC, GR L-56191, 1986

99

Social Security Act of 1997


RA 8282
Enabling Law
Definition of
terms

RA 1161 as amended by RA 8282 Social Security


Act of 1997.

Government Service
Insurance Act of 1997
RA 8291
RA 8291 amending PD 1146

Employer
Any person, natural or juridical, domestic or
foreign, who carries on in the Philippines any
trade business, industry, undertaking, and uses
the services of another person who is under his
orders as regards the employment, except
those considered as employer under the
GSIS.

National government, its political subdivisions,


branches, agencies or instrumentalities, including
government-owned or controlled corporations
and financial institutions with original charters
(GOCCs).

A self-employed person shall be both at the


same time.

Employee
Any person who performs services for an
employer who receives compensation for
such services, where there is an
Employer-employee relationship.

Any person receiving compensation while in


service of an employer whether by election or
appointment,
irrespective
of
status
of
appointment.

A self-employed person shall be both employer


and employee at the same time.

Self-employed
Any person whose income is not derived
from employment, including, but not limited
to:
a.
b.
c.
d.

No definition provided

self-employed professionals
partners and single proprietors of
businesses;
actors, directors, scriptwriters, news
correspondents
not
considered
as
employees under the above definition;
Individual farmers and fishers.

Dependents
a.
b.

Legal spouse entitled to receive support


Child
unmarried, not gainfully
employed and below 21 or
Child over 21 if he or she became
incapacitated while still a minor:

Same except that a child here is below 18

child may be legitimate, legally adopted, or


illegitimate;
c.

Parent who is receiving regular support.

Beneficiaries
Primary
a. Dependent spouse
b. Dependent children

Same except that RA 8291 does not distinguish


share of legitimate and illegitimate children

Illegitimate children are entitled only to 50% of


the share of legitimate children unless there are
no legitimate children, in which case, they get

100

100%.
Secondary
Shall only receive when the primary
beneficiaries are absent.
a. Dependent parents.
b. Other person designated by employee.

Compensation
all actual remuneration for employment,
including allowance, converted value of noncash
remuneration, except that portion already above
the max salary credit
(P 15,000).

Coverage

Compulsory
a. Employers
b. Employees not over 60 years including
household helpers with at least 1,000
monthly pay; and
c. Self-employed
Voluntary
a. Spouses who devote full time to
managing household and family
affairs;
b. OFWs recruited by foreign-based
employers;
c. Employees already separated from
employment or those self-employed
with no realized income for a given
month, who chose to continue with
contributions to maintain right to full
benefit.

basic pay received excluding per diems, bonuses,


overtime, honoraria, allowances and other
emoluments not integrated into the basic pay
under existing laws.
Public sector employees below the compulsory
retirement age of 65,
Exceptions;
a. AFP and PNP;
b. Members of the Judiciary and
Constitutional Commissions who are
covered only by life insurance as they
have separate retirement schemes.
c. Contractual employees with no
employee-employer relationship
with the agency they serve.

Note: Foreign governments, international


organizations
or
their
wholly
owned
instrumentally employing workers in the
Philippines may enter into an agreement with the
Philippine government to include their
employees in the SSS except those already
covered by their civil service retirement system.

Benefits
(tax-exempt)

1.
2.
3.
4.
5.
6.
7.
8.
9.

Monthly pension
Dependents pension
Retirement benefits
Permanent disability benefits
Death benefits
Funeral benefits
Loan
Sickness benefits.
Maternity Leave benefits.

1.
2.
3.
4.
5.
6.

Reporting
requirements

2.

Each employer shall immediately


report to the SSS the names, ages, civil
status, occupations, salaries and
dependents of all his employees who are
subject to compulsory coverage.363

1.

Monthly pension.
Retirement benefits
Permanent disability benefits
Funeral benefits
Loan GSIS website provides for this
Temporary disability benefits (similar to
sickness)
7. Separation benefits
8. Unemployment benefits
9. Survivorship benefits
10. Life insurance benefits
The employer shall report to the GSIS
the names of all its employees, their
corresponding employment status, positions,
salaries
and
such
other
pertinent
information, including subsequent changes

363 Sec 24, RA 8282. SSS Act

101

3.

Each covered self-employed person shall,


within thirty (30) days from the first day he
started the practice of his profession or
business operations register and report to
the SSS his name, age, civil status, and
occupation, average monthly net income
and his dependents.364

therein, if any, as may be required by the


GSIS; the employer shall deduct each month
from the monthly salary or compensation of
each employee the contribution payable by
him in accordance with the schedule
prescribed in the rules and regulations
implementing this Act.365
2.

Effect of Nonreporting and


Non-remittance
of Contributions

Each employer shall remit directly to


the GSIS the employees and employers
contributions within the first ten (10) days of
the calendar month following the month to
which the contributions apply. The
remittance by the employer of the
contribution to the GSIS shall take priority
over and above the payment of any and all
obligations, except salaries and wages of its
employees.366

To the Employee
Employee is still entitled to SSS benefits even if
the employer fails or refuses to remit the SSS
contributions.
To the Employer
Employer is liable to the employee and must:
1. Pay to SSS damages equivalent to the
benefits of those who die, become
disabled, get sick or reach retirement
age, except that in case of pension
benefits;
2. Pay all unpaid contributions plus a
penalty of 3% per month until paid;
and
3. Be held criminally liable through
an action commenced either by the SS
or the employee concerned.
To the Self-employed
a self employed person who fails to register with
SSS will also be fined and/or imprisoned.
However, in the event the self-employed person
does not realize earnings in a given month,
payment of SSS contributions for that month is
no longer required.
To the Self-employed

and

voluntary

364 Sec 24-A, RA 8282. SS Act of 1997

365 Sec 6. RA 8291. GSI Act of 1997

366 Sec 6. RA 8291. GSI Act of 1997

102

Member
a self-employee and voluntary member who
fails to remit contributions after membership is
approved, may pay the monthly contribution
prospectively but is not allowed to pay
contributions retroactively from the month no
contribution payments were remitted.
Change of Membership Category:
1. Non-working
spouse
gets
employed or becomes selfemployed:
membership shall be
reclassified accordingly as employed
or self-employed or OFW.
2. The receipt of a lump sum
permanent total disability, who is
re-employed or has resumed selfemployment or as an OFW or Nonworking spouse, not earlier than one
year from the date of disability, shall
again be subject to compulsory
coverage and shall be considered a
new member.

Effective Date of
Coverage
Effective
separation from
employment

Dispute
Settlement
Prescriptive
Period

Employer: 1st day of the operation.


Employee: 2nd day at work
Self-employed: upon retirement system
1. Employers contribution, and
2. Employees obligation to pay contribution
both cease at the end of the month of
separation;
3. EE shall be credited with all contribution
paid on his behalf and entitled to all
benefits set forth by the law.
1. Social Security Commission
2. CA (Rule 43; Questions of law and fact)
3. SC (Rule 45; questions of law only)
20 years

Continued membership for the unemployed


member; and entitlement to whatever benefits he
has qualified to in the event of any compensable
contingency.

1. GSIS
2. CA (Rule 43)
3. SC (Rule 45); appeal does not stay execution.
4 years

SSS Benefits

GSIS Benefits
Monthly Pension

Computation of monthly pension: the monthly pension shall


be the highest of the following amounts:
a.

P300 + [20% x (ave. monthly credit)] + [2% x (ave.


monthy credit) x (# of cash credited years of service in
excess of 10 years)]; or

b.

40% x (ave. monthly credit); or

c.

P1,000; provided, that the monthly pension shall in no


case be paid for an aggregate amount of less than 60
months.

d.

Notwithstanding the abovementioned, minimum pension


is P1,200 for members with at least 10 years credit
service, P2,400 for those with 20 years.

The amount shall be:


a.
b.

37.5% x (revalued ave. monthly compensation)


Plus 2.5 x (revalued ave. monthly compensation) x (years
in service in excess of 15 years).
The monthly pension shall not exceed 90% of the average
monthly compensation.
It shall not be less than P2,400 for those with 20 years of
service

Dependents Pension

103

a.
b.
c.

Not available

Paid when member dies, retires or with permanent total


disability.
Paid to each child conceived on or prior to contingency
with the youngest and preferring the legitimate;
Amount is either P250 or 10% of the monthly
pension as computed above, whichever is higher.

Retirement Benefits
Eligibility requirements
120 monthly contributions;
1. 15 years service;
Age
2. 60 years of age; and
3. Not receiving pension benefit from permanent total
65 years old; or
disability.
A member who has reached 60 years may also avail if
he is already separated from employment or has
Note: Retirement is compulsory for employees 65 years of age
ceased to be self-employed.
who have rendered at least 15 years of service; if employee has
less than 15 years of service, he may be allowed to continue in
accordance with civil service laws.
Benefits
Benefit: Choice between
Benefit: Choice between
a.
b.

a.

Monthly pension
Entitled to monthly pension from retirement until
death

b.

Lump sum Alternative


Member may opt to receive his first 18 monthly
pensions in lump sum but such is discounted at a
preferential rate of interest.

a.

b.

60 x (basic monthly pension) lump sum payment at


the time of retirement plusbasic monthly pension
payable monthly for life after expiry of the 5-year
guaranteed period which is already covered by the
lump sum; or
Cash payment equivalent to 18 x (basic monthly
pension) plus monthly pension for life

To those Ineligible to the 60 year old with less than 120


monthly contributions who is no longer employed or selfemployed, and who is not continuing contributions
independently, he is entitled to a lump sum equal to his
total contributions paid.

Permanent Disability Benefits


Eligibility requirements
36 monthly contributions prior to the semester of disability; 1. Disability not due to employees own grave misconduct,
same as death benefit; only difference is that the pension is
notorious negligence, habitual intoxication, or willful
paid directly to the member.
intention to kill himself or another;
2. Employee is:
a. in service at the time of disability; or
b. even if separated, he has paid at least 36 monthly
contributions within the 5-year period immediately
prior to disability or has paid a total of at least 180
monthly contributions prior to disability; and
3. Member is not enjoying old-age retirement benefit.
a.

b.

Benefits
When a permanently disabled member dies. In 1. Permanent Total Disability Monthly income benefit
case the permanently disabled member dies, it would be
for life equal to basic monthly pension This is effective
given the same treatment as a retiree dying.
from date of disability;
For permanent partial disability, the pension is not
lifetime. (e.g. loss of thumb entitles member to only 10
months of pension, while loss of arm 50 months).
It shall be paid in lump sum if the period is less than 12
months.

If member is in service at the time of disability and he has


paid at least 180 monthly contributions, in addition to the
monthly income benefit, he shall receive an additional
cash payment of 18 times basic monthly pension.
2.

To the ineligible
If member has rendered at least 3 years of service, then he

104

c.

For multiple partial disabilities, they shall be additive


when related or deteriorating the percentage shall be
equal to the number of months the partial disability is
entitled to divided by 75 months. (e.g. loss of sight in one
eye 25/75; loss of arm 50/75; if both occur due to same
cause, then 25/75 + 50/75 = 100% so treated as if it were
permanent total disability.

shall receive cash payment equal to 100% of ave. monthly


compensation for each year of service (essentially total
amount of contributions made) or P12,000 whichever is
higher.
3.

Partial Disability
Paid according to GSIS prescribed schedule (this is
similar to the scheme used by SSS; refer to section II
subsection D-3 above); member availing of permanent
partial disability must satisfy condition E.1.a. above
regarding the disability not being due to his own fault and
either E.1.b.i. or E.1.b.ii. regarding employment status and
services rendered.

Death Benefits
Eligibility requirements
36 monthly contributions prior to the semester of death
When member dies, the primary beneficiaries are entitled to
only one of the following:
a.

Survivorship pension
1. If he was in the service when he died; or
2. Even if separated from the service, he has at least 3
years of service and has paid 36 monthly
contributions within the 5 years immediately
preceding death; or
3. Even if separated from the service, he has paid 180
monthly contributions prior to death.

b.

Survivorship pension plus cash payment of


100%ave. monthly compensation for every year of service
1. If he was in the service when he died; and
2. With 3 years of service.

c.

Cash payment equivalent to 100% ave. monthly


compensation for each year of service he paid
contributions or P12,000 whichever is higher
1. With 3 years of service; and
2. He has failed toqualify in the prior 2 schemes.

Benefits
When member dies, the primary beneficiaries are entitled to
only one of the following:
To those ineligible lump sum benefit which shall be the
higher between the two:
a. Survivorship benefits
Beneficiaries are entitled to the following:
a. (monthly pension) x 12; or
1. Basic survivorship pension which is 50% of basic
b. (monthly pension) x (# of monthly contributions)
monthly pension; and
2. Dependent childrens pension not exceeding 50% of
the basic monthly pension.
Monthly pension to primary or secondary beneficiaries.

b. Survivorship pension plus cash payment of 100%ave.


monthly compensation for every year of service (pension
plus total contributions made)
c. Cash payment equivalent to 100% ave. monthly
compensation for each year of service he paid
contributions or P12,000 whichever is higher

Funeral Benefits
Upon death of a member

Eligibility requirements
Entitled to this are the following:
a. Active member;
b. Member separated from service but still entitled to

105

c.
d.

P12,000 in cash or in kind, upon death of member

funeral benefit;
Pensioner;
Retiree who at the time of retirement was of pensionable
age but opted to retire under RA 1616.

Benefits
Beneficiaries are entitled to a P20,000 funeral benefit
payable upon the death of a member or old age pensioner.

Loan
Social Security Commission Resolution No. 669.
Moreover, several SSS-issued circulars such as Circular No.
21-P and No. 52 pertain to the treatment of salary loans,
sometimes providing for more flexible payment terms or
condonation for delinquent payers; Santiago v. CA and
SSS, GR # L-39949 (1984) resolved an issue involving the
treatment of salary loan repayments

Sickness benefits (SSS) / Temporary disability benefits (GSIS)


1.
2.
3.
4.
5.
6.
7.

Eligibility requirements and other conditions


Inability to work due to sickness or injury
1. Employee must be:
Confined for at least 4 days either in a hospital or
a. in service at the time of disability; or
elsewhere with SSS approval;
b. if separated, he has rendered at least 3 years of
At least 3 months of contributions in the 12 month period
service and paid at least 6 monthly contributions in
immediately before the semester of sickness or injury has
the 12 month period immediately prior to disability;
been paid;
All company sick leaves with pay for the current year has 2. All sick leave credits including CBA sick leaves for the
been used up;
current year has been used up; and
Maximum of 120 days per 1 calendar year (so maximum 3. Maximum of 120 days per 1 calendar year (maximum
permissible for the same sickness and confinement is 240
permissible for the same sickness and confinement is 240
days for 2 consecutive years);
days for 2 consecutive years).
The employer has been notified, or, if a separated,
voluntary or self-employed member, the SSS directly
notified within 5 days of confinement;
Notice to employer or SSS not needed when confinement
is in a hospital; notice to employer not required as well
when Employee became sick or injured while working or
within premises of the employer.

Benefits
Daily cash allowance paid for the number of days a member is 75% of the current daily compensation for every day or
unable to work due to sickness or injury equivalent to 90% x fraction thereof of disability or P70 whichever is higher.
(average daily salary credit)

Maternity Leave benefits


Not available

limited only to first four deliveries or miscarriage

Separation Benefits
Not available

Eligibility requirements
1. 60 years of age, or separation from service with at least 3
years but not over 15 years served
2. Below 60 years of age, but at least 15 years of service
rendered.
Benefits
1. For 60 years of age or separated from service with
3 to 15 years of service:
cash payment of 100% of ave. monthly compensation for
each year of service (so essentially, the total amount of all
contributions paid) or P12,000 whichever is higher.
2.

Below 60 years of age and at least 15 years of


service:
cash payment equivalent to 18 x (monthly pension) at the
time of resignation or separation plus an old-age pension

106

benefit equal to basic monthly pension.

Life Insurance Benefits


Not available

Note: Judiciary and Constitutional Commissions are entitled


to life insurance only.

purposes of totalization.

What happens?
Workers shall be combine his years of creditable
service and paid contributions in one sector, private
or public, as represented by his contributions to
either SSS or GSIS, respectively, with his service in
the other sector.

B. RA 7699: LIMITED PORTABILITY


Why?
SCHEME
To be able to satisfy eligibility requirements of
Coverage
1. Workers who transfer employment from one
sector to another; and
2. Those employed in both sectors (private and
public).

benefits provided for by either SSS or GSIS.


Overlapping periods
Overlapping periods of membership in case of those
employed in both sectors at once are to be counted
once only for purposes of totalization.

Definition of terms
1. Portability
Shall refer to the transfer of funds for the
account and benefit of a worker who transfers
C.
from one system to the other367

RA 7875: NATIONAL HEALTH


INSURANCE ACT

2. Totalization
Shall refer to the process of adding up the Coverage: All citizens
periods of creditable services or contributions 1. Paying:
a. Both public and private sector employees;
under each of the Systems, for purposes of
368
and
eligibility and computation of benefits
b. The self-employed
2. Nonpaying:
Sec 3, RA 7699
a. Retirees and pensioners of either SSS or
A covered worker who transfers employment
GSIS;
from one sector to another or is employed in
b. Members who have reached retirement age
both sectors shall have his credible services or
and who at least have paid 120 monthly
contributions in both Systems credited to his
contributions;
service or contribution record in each of the
c. Indigent members; and
Systems and shall be totalized for purposes of
d. Legal dependents.
old-age, disability, survivorship and other
benefits in case the covered member does
Who are dependents?
not qualify for such benefits in either or
1. Legitimate spouse who is not a member,
both Systems without totalization.
(same as SSS);
Provided, however, That overlapping periods of
membership shall be credited only once for
367 Sec 2(b), RA 7699

2. Children below 21 unless incapacitated


(same as SSS; RA 9241 however also includes
step children as well); and
3. Parents who are 60 years old or above whose
monthly income is below an amount to be
determined by Phil Health Insurance Corp
(PHIC).

368 Sec 2(b), RA 7699

National Health Insurance Benefits

107

1.
2.
3.
4.
5.
6.

INCLUDED
In-patient Hospital Care
Room and board
Services of health care professionals
Diagnostics, laboratory, and other medical
examination services
Use of surgical or medical equipment and
facilities
Prescription drugs and biological
Inpatient education packages

Out-patient Care
1. Services of health care professionals
2. Diagnostic, laboratory, and other medical
examination services
3. Personal preventive services; and
4. Prescription drugs and biologists

1.
2.
3.
4.
5.
6.

Emergency and transfer services


Other health care services
NOT INCLUDED369
Non-Prescription drugs and services
Alcohol abuse or dependency treatment
Cosmetic surgery
Optometric Services
Fifth and Subsequent normal obstetrical
deliveries; and
Cost-ineffective procedures, which shall be
defined by the PHIC.

Note: This list of excluded items are subject to


review and revision by the PHIC through
actuarial studies every 3 years.

IX.

Labor Standards-Related
Special Laws

A. RA 8187: Paternity Leave Act of


1996
Who is entitled to paternity leave
Married male employee both in the public and
private sectors371
When may it be availed of
It may be availed of for the first 4 deliveries of the
legitimate spouse with whom he is cohabiting372
What are the benefits under the law
A married male employee is allowed not to report
for work for seven (7) days.
While on leave, the employee continues to earn the
compensation, on the condition that his spouse has
delivered a child or suffered a miscarriage for
purposes of enabling him to effectively lend support
to his wife in her period of recovery and/or in the
nursing of the newly-born child.373

B. PD 851: 13th month pay

What is 13th month pay


Sec 2(a), PD 851
Requisites for availment370
1. Payment of at least 3 monthly contributions Thirteenth-month pay shall mean one twelfth
(1/12) of the basic salary of an employee within a
within the immediate 6 months prior to
calendar year;
availment; and
2. The following need not pay to qualify:
Coverage
a. SSS and GSIS pensioners to
ALL employers, provided that they have worked for
effectively of RA 7875.
b. Members who have reached the age at least one month during the calendar year
of retirement and have paid at least
Exempted:374
120 monthly contributions;
a. Distressed employers
c. Enrolled indigents
371 Sec 2, RA8187. Paternity Leave

369 Sec 11, RA 7875

372 Sec 2, RA8187. Paternity Leave

370 Sec 12, RA 7875

373 Sec 3, RA8187. Paternity Leave

108

those
which
are
currently
Employers are required to pay all their
incurring substantial losses or
rank-and-file employees 13th month pay
in the case of non-profit institutions
and organizations, where their 13th month pay may be the subject of
income, whether from donations,
collective bargaining376
contributions, grants and other The benefits granted under this issuance shall
earnings from any source, has
not be credited as part of the regular
consistently declined by more
wage of the employees for purposes of
than forty (40%) percent of their
determining overtime and premium pay, fringe
normal income for the last two (2)
benefits, as well as premium contributions to the
years, subject to the provision of
State Insurance Fund, social security, medicare
Section 7 of this issuance;
and private welfare and retirement plans.377
b. The Government and any of its
political subdivisions, including
government-owned
and
controlled
corporations,
except
those
corporationsC. RA 7877: Anti-Sexual Harrasment
Act
operating essentially as private
subsidiaries of the Government;
c. Employers already paying their Work, education or training-related sexual
employees 13-month pay or more inharassment, defined
a calendar year of its equivalent at theSec 3. definition, RA 7877
time of this issuance;
Work, education or training-related sexual
d. Employers of household helpers harassment is committed by an employee,
and persons in the personal manager, supervisor, agent of the employer,
service of another in relation to suchteacher, instructor, professor, coach, trainor, or
workers; and
any other person who, having authority,
e. Employers of those who are paid on influence or moral ascendancy over
purely commission, boundary, or another in a work or training or
task basis, and those who are paid a education environment, demands, requests
fixed amount for performing a specific or otherwise requires any sexual favor from
work, irrespective of the time consumedthe other, regardless of whether the demand,
in the performance thereof, exceptrequest or requirement for submission is
where the workers are paid on piece-rate accepted by the object of said Act.
basis in which case the employer shall be
covered by this issuance insofar as such How work-related sexual harassment is
workers are concerned.
committed
Sec 3. Definition, RA 7877
Features of the benefit
d. In
a
work-related
or
employment
Employers shall pay to all their employees
environment,
sexual
harassment
is
receiving a basic salary of not more than
committed when:
P1,000 a month a thirteenth-month pay notVI.
The sexual favor is made as a
later than December 24 of every year.375
condition in the hiring or in the
employment,
re-employment
or
Memorandum Order no. 28, 1986 Aug 13
continued
employment
of
said
removed
limiting
coverage
to
individual, or in granting said individual
workers receiving not more than
favorable
compensation,
terms,
P1,000
conditions, promotions, or privileges; or
the refusal to grant the sexual favor
374 Sec 3, PD 851

376 Sec 5, PD 851

375 Sec 1, PD 851

377 Sec 6, PD 851

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VII.
VIII.

results in limiting, segregating or


classifying the employee which in a way
would discriminate, deprive or diminish
employment opportunities or otherwise
adversely affect said employee;
The above acts would impair the
employees rights or privileges
under existing labor laws; or
The above acts would result in an
intimidating, hostile, or offensive
environment for the employee.

e.

In an education or training environment,


sexual harassment is committed:
VI.
Against one who is under the care,
custody or supervision of the
offender;
VII.
Against one whose education, training,
apprenticeship
or
tutorship
is
entrusted to the offender;
VIII.
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
IX.
When the sexual advances result in an
intimidating, hostile or offensive
environment for the student, trainee
or apprentice.

Employer shall be solidarily liable for


damages if:
3. The employer or head of office, educational
or training institution is informed of such
acts by the offended party and
4. 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.
Sanctions
3. Criminal: imprisonment of 1 month to mos.
Or fine of P10k to P20k or both
Prescription of such action is in 3 years.
4. Termination

D. RA 7277: Magna Carta for the


Disabled Persons
Forms of discrimination
1. Discrimination in employment
2. Discrimination on transportation
3. Discrimination on the use
accommodations and services

of Public
Who are liable
1. The offender:
a. Employee
Forms of discrimination against the the
b. Manager, Supervisor, agent of thehandicapped in employment378
employer
1. Limiting, segregating or classifying a
c. Teacher, instructor, professor, coach,
disabled job applicant in such a manner that
trainer
adversely affects his work opportunities;
d. Any other person who, having authority, 2. Using
qualification
standards,
influence or moral ascendancy over
employment tests or other selection
another in a work or training or education
criteria that screen out or tend to screen
environment
out a disabled person unless such standards,
2. Any person who directs or induces another to
tests or other selection criteria are shown to be
commit any act of sexual harassment
job related for the position on question and are
3. Any person who cooperates in the commission
consistent with business necessity;
thereof by another without which it would not 3. Utilizing standards, criteria, or methods
have been committed
of administration that:
Role of the employer or Head of Office
The Employer or Head of Office shall have the duty:

a. have the effect of discrimination on the basis


of disability; or
b. perpetuate the discrimination of others who
are subject to common administrative
control;

3. To prevent the commission of such acts and


4. To lay down the procedure for the
resolution, settlement or prosecution of378 Sec 32, RA 7277
committed acts.

110

4. Providing less compensation, such as


salary, wage or other forms of
remuneration and fringe benefits, to a
qualified disabled employee, by reason of his
disability, than the amount to which a nondisabled person performing the same work is
entitled;
5. Favoring a non-disabled employee over a
qualified disabled employee with respect to
promotion, training opportunities, study and
scholarship grants, solely on account of the
latters disability;
6. Re-assigning or transferring a disabled
employee to a job or position he cannot
perform by reason of his disability;
7. Dismissing or terminating the services of
a disabled employee by reason of his
disability unless the employer can prove that
he impairs the satisfactory performance of the
work involve to the prejudice of the business
entities; Provided, however, That the employer
first sought provide reasonable accommodations
for disabled persons;
8. Failing to select or administer in the
effective manner employment tests
which accurately reflect the skills,
aptitude or other factor of the disabled
applicant or employee that such test purports to
measure, rather than the impaired sensory,
manual or speaking skills of such applicant or
employee, if any; and
9. Excluding
disabled
persons
from
membership in labor unions or similar
organization.
If the violator is a corporation or an
organization, who is/are liable under the Act
If the violator is a corporation, organization or
any similar entity, the officials thereof
directly involved shall be liable379

(7) working days every year shall be granted


to any solo parent employee who has
rendered service of at least one (1) year.380
2. Flexible work schedule
The employer shall provide for a flexible
working schedule for solo parents: Provided,
That the same shall not affect individual and
company productivity: Provided, further,
That any employer may request exemption
from the above requirements from the DOLE
on certain meritorious grounds.381
3. Non discrimination policy
No employer shall discriminate against any
solo parent employee with respect to terms
and conditions of employment on account of
his/her status.382
4. Educational benefits
The DECS, CHED and TESDA shall provide
the following benefits and privileges:

a.

Scholarship programs for qualified


solo parents and their children in
institutions of basic, tertiary and
technical/skills education; and
b. Nonformal education programs
appropriate for solo parents and
their children.
The DECS, CHED and TESDA shall
promulgate rules and regulations for the
proper implementation of this program.383
5. Housing benefits
Solo parents shall be given allocation in
housing projects and shall be provided with
liberal terms of payment on said government
low-cost housing projects in accordance with
380 Sec 8, RA 8972

E. RA 8972: Paternity Leave Act

381 Sec 6, RA 8972

What are the employment-related benefits


available to all solo parents?
1. Parental leave
382 Sec 7, RA 8972
In addition to leave privileges under existing
laws, parental leave of not more than seven
379 Sec 46 (c), RA 7277

383 Sec 9, RA 8972

111

housing
law
provisions
prioritizing
applicants below the poverty line as declared
by the NEDA.384
6. Medical assistance
The DOH shall develop a comprehensive
health care program for solo parents and
their children. The program shall be
implemented by the DOH through their
retained hospitals and medical centers and
the local government units (LGUs) through
their provincial/ district/ city/ municipal
hospitals and rural health units (RHUs).385

384 Sec 10, RA 8972

385 Sec 11, RA 8972

112