TEACHERS, PIECE WORKERS, SEAFARERS, SEASONAL WORKERS,

ETC. ........................................................................... 25

Fundamental Principles and LEAVES .................................................................... 26

Policies..................................... 1
CONSTITUTIONAL PROVISIONS ................................. 1
CIVIL CODE ................................................................. 2
LABOR CODE .............................................................. 3
Recruitment and Placement . 5
RECRUITMENT OF LOCAL AND MIGRANT WORKERS... 5
ILLEGAL RECRUITMENT ...................................................... 5
DIRECT HIRING ............................................................... 11
REGULATION AND ENFORCEMENT ........................... 11
SUSPENSION OR CANCELLATION OF LICENSE OR AUTHORITY ....... 11
REGULATORY AND VISITORIAL POWERS ................................. 11
REMITTANCE OF FOREIGN EXCHANGE EARNING ....................... 11
PROHIBITED ACTIVITIES .................................................... 11
SERVICE INCENTIVE LEAVE PAY .......................................... 26
MATERNITY LEAVE .......................................................... 26
PATERNITY LEAVE .......................................................... 27
PARENTAL LEAVE .......................................................... 27
LEAVES FOR VICTIMS OF VIOLENCE AGAINST WOMEN ............... 28
SERVICE CHARGES ................................................... 30
COVERAGE ................................................................... 30
EXCEPTIONS ................................................................. 30
DISTRIBUTION ............................................................... 30
INTEGRATION................................................................ 30
THIRTEENTH (13TH) MONTH PAY AND OTHER
BONUSES ................................................................. 30
RATIONALE .................................................................. 30
COVERAGE ................................................................... 30
EXCLUSIONS/EXEMPTIONS FROM COVERAGE ......................... 30
NATURE OF THE 13TH MONTH PAY ....................................... 31
13THE MONTH PAY IN SPECIAL CASES ................................... 31

SEPARATION PAY ..................................................... 32

Labor Standards ...................12 DEFINITION .................................................................. 32
GENERAL RULE .............................................................. 32
COVERAGE ................................................................12 EXCEPTION ................................................................... 32
GOVERNMENT EMPLOYEES ................................................12
AMOUNT ...................................................................... 32
MANAGERIAL EMPLOYEES .................................................12
NOTICE OF TERMINATION ................................................. 32
FIELD PERSONNEL ...........................................................12
BASIS OF SEPARATION PAY ............................................... 32
DEPENDENT FAMILY MEMBERS ........................................... 13
INCLUSION OF REGULAR ALLOWANCE IN THE COMPUTATION ...... 32
GOVERNMENT EMPLOYEES ................................................ 13
DOMESTIC HELPERS ......................................................... 13
RETIREMENT PAY ..................................................... 32
PERSONS IN PERSONAL SERVICE OF ANOTHER ........................ 13
RATIONALE .................................................................. 32
WORKERS PAID BY RESULT ................................................ 13
ELIGIBILITY ................................................................... 32
AMOUNT OF RETIREMENT PAY ........................................... 33
HOURS OF WORK ...................................................... 13 RETIREMENT BENEFITS OF WORKERS WHO ARE PAID BY RESULTS 33
COVERAGE/EXCLUSIONS ................................................... 13
RETIREMENT BENEFIT OF PART-TIME WORKERS ..................... 33
NORMAL HOURS OF WORK ................................................. 13
TAXABILITY................................................................... 33
MEAL BREAK ..................................................................16
WAITING TIME ................................................................16
WOMEN WORKERS ................................................... 34
OVERTIME WORK, OVERTIME PAY ........................................ 17
PROVISIONS AGAINST DISCRIMINATION ................................ 34
NIGHT WORK, NIGHT SHIFT DIFFERENTIAL ............................ 18
STIPULATION AGAINST MARRIAGE ...................................... 34
PART-TIME WORK .......................................................... 18
PROHIBITED ACTS .......................................................... 34
CONTRACT FOR PIECE OF WORK ........................................ 18
ANTI-SEXUAL HARASSMENT ACT ........................................ 34

WAGES ..................................................................... 18 MINOR WORKERS .................................................... 35

GENERAL CONCEPT ......................................................... 18
CONSTITUTIONAL BASIS ................................................... 35
WAGE VS. SALARY .......................................................... 19
EMPLOYMENT OF CHILDREN FROM 15 TO 18 .......................... 36
MINIMUM WAGE............................................................. 19
REGULATION OF WORKING HOURS OF A CHILD ....................... 36
MINIMUM WAGE OF WORKERS PAID BY RESULTS ..................... 20
COMMISSIONS ............................................................... 20
EMPLOYMENT OF HOUSEHELPERS .......................... 36
DEDUCTIONS FROM WAGES .............................................. 20
DEFINITION .................................................................. 36
PART-TIME DEDUCTIONS FROM WAGES ............................... 20
BENEFITS ACCORDED HOUSEHELPERS.................................. 36
NON-DIMINUTION OF BENEFITS ..........................................21
TERMINATION ............................................................... 37
FACILITIES V. SUPPLEMENTS ..............................................21
WAGE DISTORTION/RECTIFICATION .....................................21
EMPLOYMENT OF HOMEWORKERS .......................... 37
DIVISOR TO DETERMINE DAILY RATE .................................... 22
DEFINITION .................................................................. 37
RIGHTS AND BENEFITS ACCORDED HOMEWORKERS ................. 37
REST DAY ................................................................. 22 CONDITIONS FOR DEDUCTION FROM HOMEWORKER’S EARNINGS 37
WEEKLY REST DAY .......................................................... 22
EMERGENCY REST DAY WORK ............................................ 22
APPRENTICES AND LEARNERS ................................. 38
APPRENTICES................................................................ 38
HOLIDAY PAY/PREMIUM PAY ................................... 23 LEARNERS ................................................................... 39
HOLIDAYS .................................................................... 23
COVERAGE ................................................................... 23
HANDICAPPED WORKERS– DIFFERENTLY-ABLED
REGULAR HOLIDAYS........................................................ 23
WORKERS ................................................................ 40
HOLIDAY PAY COMPUTATION ............................................. 23
DEFINITIONS ................................................................. 40
RIGHT TO HOLIDAY PAY .................................................... 24
 EMPLOYEE’S COMPENSATION – COVERAGE AND
WHEN COMPENSABLE .............................................. 63
RIGHTS OF DISABLED WORKERS ......................................... 40
COVERAGE ................................................................... 63
PROHIBITIONS ON DISCRIMINATION AGAINST DISABLED PERSON 41
EFFECTIVITY.................................................................. 64
INCENTIVES FOR EMPLOYERS ............................................ 42
WHEN COMPENSABLE...................................................... 64

Termination of Labor Relations Law.................... 64

Employment......................................... 42 RIGHT TO SELF-ORGANIZATION ............................... 64
BASIS OF RIGHT TO SELF-ORGANIZATION .............................. 64
EMPLOYER-EMPLOYEE RELATIONSHIP .................... 42
RIGHT TO SELF-ORGANIZATION: A FUNDAMENTAL RIGHT .......... 64
FOUR-FOLD TEST ........................................................... 42
INFRINGEMENT OF THE RIGHT TO SELF-ORGANIZATION ............ 64
ECONOMIC DEPENDENCE TEST ........................................... 43
SCOPE OF RIGHT TO SELF-ORGANIZATION ............................. 64
KINDS OF EMPLOYMENT ................................................... 43
WORKER QUALIFICATION.................................................. 65
JOB CONTRACTING ......................................................... 47
DEFINITIONS ................................................................. 65
WHO MAY UNIONIZE FOR PURPOSES OF COLLECTIVE BARGAINING 65
DISMISSAL FROM EMPLOYMENT...............................51
WHO CANNOT FORM, JOIN, OR ASSIST LABOR ORGANIZATIONS .. 66
SECURITY OF TENURE .......................................................51
BARGAINING UNIT .......................................................... 67
CONFLICT WITH MANAGEMENT PREROGATIVES ...................... 52
VOLUNTARY RECOGNITION ............................................... 68
JUST CAUSES ................................................................ 52
CERTIFICATION ELECTION ................................................. 69
AUTHORIZED CAUSES ...................................................... 53
DUE PROCESS ............................................................... 56
RIGHT TO COLLECTIVE BARGAINING ........................ 75
DUTY TO BARGAIN COLLECTIVELY ....................................... 75
RELIEFS FOR ILLEGAL DISMISSAL ............................ 57
MANDATORY PROVISIONS OF CBA ....................................... 76
REINSTATEMENT............................................................ 57
UNION SECURITY ............................................................ 79
BACKWAGES ................................................................. 59
UNFAIR LABOR PRACTICE IN COLLECTIVE BARGAINING ............. 80
UNFAIR LABOR PRACTICE (ULP) ......................................... 81
PREVENTIVE SUSPENSION ....................................... 59
DEFINITION .................................................................. 59
RIGHT TO PEACEFUL CONCERTED ACTIVITIES .......... 83
CONSTITUTIONAL BASIS ................................................... 83
CONSTRUCTIVE DISMISSAL ...................................... 59
STATUTORY BASIS .......................................................... 83
FORMS OF CONCERTED ACTIVITIES ...................................... 83
Management Prerogative...... 59 WHO MAY DECLARE A STRIKE OR LOCKOUT............................ 84
REQUISITES OF A VALID STRIKE .......................................... 84
DISCIPLINE ............................................................... 59
REQUISITES OF A VALID LOCKOUT ....................................... 85
REQUISITES FOR LAWFUL PICKETING ................................... 86
TRANSFER OF EMPLOYEES ...................................... 59
ASSUMPTION OF JURISDICTION BY THE DOLE SECRETARY OR
CERTIFICATION OF THE LABOR DISPUTE TO THE NLRC FOR
PRODUCTIVITY STANDARD ...................................... 59
COMPULSORY ARBITRATION ............................................. 87
NATURE OF ASSUMPTION ORDER OR CERTIFICATION ORDER ...... 87
GRANT OF BONUS .................................................... 60
EFFECT OF DEFIANCE OF ASSUMPTION OR CERTIFICATION ORDERS
................................................................................. 87
CHANGE OF WORKING HOURS ................................. 60
ILLEGAL STRIKE ............................................................. 88
INJUNCTIONS ................................................................ 89
RULES ON MARRIAGE BETWEEN EMPLOYEES OF
COMPETITOR-EMPLOYERS ....................................... 60

POST-EMPLOYMENT BAN ......................................... 60

Social and Welfare Legislation
............................................................................. 60
SSS LAW ................................................................... 60
COVERAGE ................................................................... 60
EXCLUSIONS FROM COVERAGE ............................................61
BENEFITS ......................................................................61
BENEFICIARIES .............................................................. 62
Procedure and Jurisdiction... 90
LABOR ARBITER ....................................................... 90
JURISDICTION ............................................................... 90
REINSTATEMENT PENDING APPEAL ..................................... 91
REQUIREMENTS TO PERFECT APPEAL TO NLRC ....................... 91
NATIONAL LABOR RELATIONS COMMISSION ........... 91
JURISDICTION ............................................................... 91
EFFECT OF NLRC REVERSAL OF LABOR ARBITER’S ORDER OF
REINSTATEMENT ............................................................ 91
REMEDIES .................................................................... 91
CERTIFIED CASES ........................................................... 91

GSIS.......................................................................... 62
BUREAU OF LABOR RELATIONS (BLR) – MED
COVERAGE ................................................................... 62
ARBITERS ................................................................. 92
EXCLUSIONS FROM COVERAGE ........................................... 62
JURISDICTION (ORIGINAL AND APPELLATE) .......................... 92
BENEFITS ..................................................................... 62
BENEFICIARIES .............................................................. 63
NATIONAL CONCILIATION AND MEDIATION BOARD
(NCMB) .................................................................... 92
LIMITED PORTABILITY LAW ...................................... 63
NATURE OF PROCEEDINGS ................................................ 92
COVERAGE ................................................................... 63
CONCILIATION VS. MEDIATION ........................................... 92
PROCESS ..................................................................... 63
WHY? ......................................................................... 63
DOLE REGIONAL DIRECTORS ................................... 93
JURISDICTION ............................................................... 93

DOLE SECRETARY..................................................... 93
VISITORIAL AND ENFORCEMENT POWERS.............................. 93
POWER TO SUSPEND EFFECTS OF TERMINATION ..................... 93
ASSUMPTION OF JURISDICTION .......................................... 94
APPELLATE JURISDICTION ................................................ 94
VOLUNTARY ARBITRATION POWERS .................................... 94

GRIEVANCE MACHINERY AND VOLUNTARY

ARBITRATORS .......................................................... 94
SUBJECT MATTER OF GRIEVANCE ........................................ 94
VOLUNTARY ARBITRATOR................................................. 94

COURT OF APPEALS ................................................. 95

RULE 65, RULES OF COURT .............................................. 95

SUPREME COURT ..................................................... 95

RULE 45, RULES OF COURT .............................................. 95

PRESCRIPTION OF ACTIONS ..................................... 95

MONEY CLAIMS .............................................................. 95
ILLEGAL DISMISSAL......................................................... 96
UNFAIR LABOR PRACTICE ................................................. 96
OFFENSES PENALIZED BY THE LABOR CODE AND IRR ISSUED
PURSUANT THERETO....................................................... 96
PRESCRIPTIVE PERIOD OF ILLEGAL RECRUITMENT CASES .......... 96

ANNEX A................................................................... 97

ANNEX B: COMPARISON BETWEEN SSS AND GSIS ... 99

UP COLLEGE OF LAW
Fundamental Principles and
Policies
CONSTITUTIONAL PROVISIONS
ARTICLE II, SECS. 9, 10, 11, 13, 14, 18, 20.
Article II, Section 9. 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.
Article II, Section 10. The State shall promote social justice
in all phases of national development.
General definition
Social Justice is neither communism, nor despotism, nor
atomism, nor anarchy, but the humanization of laws and
the equalization of social and economic forces by the State
so that justice in its rational and objectively secular
conception may at least be approximated. [Calalang vs.
Williams, 1940]
Welfare State
The welfare state concept is found in the constitutional
clause on the promotion of social justice to ensure the
well-being and economic security of all the people, and in
the pledge of protection to labor with specific authority to
regulate the relations between landowners and tenants
and between labor and capital. [Alalayan vs. National
Power Corporation, 1968]
Article II, Section 11. The State values the dignity of every
human person and guarantees full respect for human
rights.
Article II, Section 13. The State recognizes the vital role of
the youth in nation-building and shall promote and protect
their physical, moral, spiritual, intellectual, and social well-
being. It shall inculcate in the youth patriotism and
nationalism, and encourage their involvement in public
and civic affairs.
Article II, Section 14. The State recognizes the role of
women in nation-building, and shall ensure the
fundamental equality before the law of women and men.
Article II, Section 18. The State affirms labor as a primary
social economic force. It shall protect the rights of workers
and promote their welfare.
Article II, Section 20. The State recognizes the
indispensable role of the private sector, encourages private
enterprise, and provides incentives to needed investments.
Limits of Social Justice
Social justice should be used only to correct an injustice. It
must be founded on the recognition of the necessity of
interdependence among diverse units of a society, and of
the protection that should be equally and evenly extended
to all groups as a combined force in our social and
economic life. As partners in nation-building, labor and
management need each other to foster productivity and
PAGE 1
LABOR LAW BAR OPERATIONS COMMISSION
economic growth; hence, the need to weigh and balance
the rights and welfare of both the employee and employer.
[Agabon vs. NLRC, 2004]
Liberty of Contract/Laissez Faire
The prohibition to impair the obligation of contracts is not
absolute and unqualified. In spite of the constitutional
prohibition and the fact that both parties are of full age
and competent to contract, it does not necessarily deprive
the State of the power to interfere where the parties do not
stand upon an equality, or where the public health
demands that one party to the contract shall be protected
against himself. [Leyte Land Transportation Co. vs. Leyte
Farmers & Workers Union, 1948]
The Constitution is primarily a document of social justice,
and although it has recognized the importance of the
private sector, it has not embraced fully the concept of
laissez-faire or relied on pure market forces to govern the
economy. [Employees Confederation of the Philippines vs.
NWPC, 1991]
ARTICLE III, SECS. 1, 4, 8.
Article III, Section 1. No person shall be deprived of life,
liberty, or property without due process of law, nor shall
any person be denied the equal protection of the laws.
Due Process
Due process requirements are two-fold – substantive
[dismissal should be for a valid and authorized cause as
provided by law] and procedural (due notice and hearing).
[Salaw vs. NLRC, 1991]
Labor as Property Right
One’s employment is a property right, and the wrongful
interference therewith is an actionable wrong. [Sibal vs.
Notre Dame of Greater Manila, 1990]
Article III, Section 4. No law shall be passed abridging the
freedom of speech, of expression, or of the press, or the
right of the people peaceably to assemble and petition the
government for redress of grievances.
Article III, Section 8. The right of the people, including those
employed in the public and private sectors, to form unions,
associations, or societies for purposes not contrary to law
shall not be abridged.
ART. XIII, SECS. 1, 2, 3, 13, 14.
Article XIII, Section 1. The Congress shall give highest
priority to the enactment of measures that protect and
enhance the right of all the people to human dignity,
reduce social, economic, and political inequalities, and
remove cultural inequities by equitably diffusing wealth
and political power for the common good.
To this end, the State shall regulate the acquisition,
ownership, use, and disposition of property and its
increments.
Article XIII, Section 2. The promotion of social justice shall
include the commitment to create economic opportunities
based on freedom of initiative and self-reliance.
Article XIII, Section 3. The State shall afford full protection
to labor, local and overseas, organized and unorganized,
UP COLLEGE OF LAW
and promote full employment and equality of employment
opportunities for all.
It shall guarantee the rights of all workers to self-
organization, collective bargaining and negotiations, and
peaceful concerted activities, including the right to strike in
accordance with law. They shall be entitled to security of
tenure, humane conditions of work, and a living wage.
They shall also participate in policy and decision-making
processes affecting their rights and benefits as may be
provided by law.
The State shall promote the principle of shared
responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes,
including conciliation, and shall enforce their mutual
compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and
employers, recognizing the right of labor to its just share in
the fruits of production and the right of enterprises to
reasonable returns to investments, and to expansion and
growth.
Participation in Decision-Making Process
Verily, a line must be drawn between management
prerogatives regarding business operations per se and
those which affect the rights of the employees. In
treating the latter, management should see to it that its
employees are at least properly informed of its decisions or
modes action. Indeed, industrial peace cannot be achieved
if the employees are denied their just participation in the
discussion of matters affecting their rights. [Phil. Airlines
Inc. vs. NLRC, 1993]
Management and the Constitution:
Management Function/Prerogative
The law in protecting the rights of the employees
authorizes neither oppression nor self-destruction of the
employer. It should be made clear that when the law tilts
the scale of justice in favor of labor, it is but a recognition
of the inherent economic inequality between labor and
management. Never should the scale be so tilted if the
result is an injustice to the employer. [Phil. Geothermal Inc.
vs. NLRC, 1994]
This Court held that the employer’s right to conduct the
affairs of his business according to its own discretion and
judgment, is well-recognized. An employer has a free reign
and enjoys wide latitude of discretion to regulate all
aspects of employment. This is a management
prerogative, where the free will of management to conduct
its own affairs to achieve its purpose takes form. [Torreda
vs. Toshiba, 2007]
But, like other rights, there are limits thereto. The
managerial prerogative to transfer personnel must be
exercised without grave abuse of discretion, bearing in
mind the basic elements of justice and fair play. Having the
right should not be confused with the manner in which the
right is exercised. [Tinio vs. CA, 2007]
This Court declared that it recognizes the exercise of
management prerogatives and it often declines to interfere
with the legitimate business decisions of the employer. xxx
However, as expressed in PAL v NLRC, the privilege is not
absolute, but subject to exceptions. One of these
exceptions is when the Secretary of Labor assumes
jurisdiction over labor disputes involving industries
indispensable to the national interest under Article 263(g)
LABOR LAW BAR OPERATIONS COMMISSION
of the Labor Code. [University of Immaculate Concepcion
Inc v Sec of Labor, 2005]
Article II, Section 13. The State recognizes the vital role of
the youth in nation-building and shall promote and protect
their physical, moral, spiritual, intellectual, and social well-
being. It shall inculcate in the youth patriotism and
nationalism, and encourage their involvement in public
and civic affairs.
Article XIII, Section 14. The State shall protect working
women by providing safe and healthful working conditions,
taking into account their maternal functions, and such
facilities and opportunities that will enhance their welfare
and enable them to realize their full potential in the service
of the nation.
CIVIL CODE
ARTICLE 19
Art. 19. Every person must, in the exercise of his rights and
in the performance of his duties, act with justice, give
everyone his due, and observe honesty and good faith.
ARTICLE 1700
Art. 1700. 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 1702
Art. 1702. In case of doubt, all labor legislation and all
labor contracts shall be construed in favor of the safety
and decent living for the laborer.
Contracts
Under the Civil Code, contracts of labor are explicitly
subject to the police power of the state because they are
not ordinary contracts but are impressed with public
interest. Inasmuch as in this particular instance the
contract in question would have been deemed in violation
of pertinent labor laws, the provisions of said laws would
prevail over the terms of the contract, and private
respondent would still be entitled to overtime pay. [PAL
Employees Savings And Loan Assn., Inc. vs. NLRC, 1996]
Liberal Construction
While the terms and conditions of a CBA constitute the law
between the parties, it is not however, an ordinary contract
to which is 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]
PAGE 2
UP COLLEGE OF LAW
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 return-to-work
order not so much confers a right as it imposes a duty; and
while as a right it may be waived, it must be discharged as
a duty even against the worker's will. [Sarmiento vs. Tuico,
1988]
Employee's compliance and obedience to employer's orders
The lack of a written or formal designation should not be
an excuse to disclaim any responsibility for any damage
suffered by the employer due to his negligence. The
measure of the responsibility of an employee is that if he
performed his assigned task efficiently and according to
the usual standards, then he may not be held personally
liable for any damage arising therefrom. Failing in this, the
employee must suffer the consequences of his negligence
if not lack of due care in the performance of his duties.
[PCIB vs. Jacinto, 1991]
LABOR CODE
ARTICLE 3
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.
ARTICLE 4
Art. 4. Construction in favor of labor. All doubts in the
implementation and interpretation of the provisions of this
Code, including its implementing rules and regulations,
shall be resolved in favor of labor.
ARTICLE 166
Art. 166. Policy. The State shall promote and develop a tax-
exempt employees’ compensation program whereby
employees and their dependents, in the event of work-
connected disability or death, may promptly secure
adequate income benefit and medical related benefits.
ARTICLE 211
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;
LABOR LAW BAR OPERATIONS COMMISSION
(c) To foster the free and voluntary organization of a
strong and united labor movement;
7(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]
ARTICLE 212
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.
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UP COLLEGE OF LAW
(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-and-file 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.
(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 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,
LABOR LAW BAR OPERATIONS COMMISSION
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.
ARTICLE 255
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]
ARTICLE 277
Article 277. Miscellaneous provisions.
(a) All unions are authorized to collect reasonable
membership fees, union dues, assessments and fines
and other contributions for labor education and
research, mutual death and hospitalization benefits,
welfare fund, strike fund and credit and cooperative
undertakings. [As amended by Section 33, Republic Act
No. 6715, March 21, 1989]
(b) Subject to the constitutional right of workers to 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]
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(c) Any employee, whether employed for a definite period
or not, shall, beginning on his first day of service, be
considered as an employee for purposes of
membership in any labor union. [As amended by
Section 33, Republic Act] No. 6715]
(d) No docket fee shall be assessed in labor standards
disputes. In all other disputes, docket fees may be
assessed against the filing party, provided that in
bargaining deadlock, such fees shall be shared equally
by the negotiating parties.
(e) The Minister of Labor and Employment and the
Minister of the Budget shall cause to be created or
reclassified in accordance with law such positions as
may be necessary to carry out the objectives of this
Code and cause the upgrading of the salaries of the
personnel involved in the Labor Relations System of
the Ministry. Funds needed for this purpose shall be
provided out of the Special Activities Fund
appropriated by Batas Pambansa Blg. 80 and from
annual appropriations thereafter. [Incorporated by
Batas Pambansa Bilang 130, August 21, 1981]
(f) A special Voluntary Arbitration Fund is hereby
established in the Board to subsidize the cost of
voluntary arbitration in cases involving the
interpretation and implementation of the Collective
Bargaining Agreement, including the Arbitrator’s fees,
and for such other related purposes to promote and
develop voluntary arbitration. The Board shall
administer the Special Voluntary Arbitration Fund in
accordance with the guidelines it may adopt upon the
recommendation of the Council, which guidelines shall
be subject to the approval of the Secretary of Labor
and Employment. Continuing funds needed for this
purpose in the initial yearly amount of fifteen million
pesos (P15,000,000.00) shall be provided in the 1989
annual general appropriations acts.
The amount of subsidy in appropriate cases shall be
determined by the Board in accordance with
established guidelines issued by it upon the
recommendation of the Council.
The Fund shall also be utilized for the operation of the
Council, the training and education of Voluntary
Arbitrators, and the Voluntary Arbitration Program. [As
amended by Section 33, Republic Act No. 6715, March 21,
1989]
(g) The Ministry shall help promote and gradually develop,
with the agreement of labor organizations and
employers, labor-management cooperation programs
at appropriate levels of the enterprise based on the
shared responsibility and mutual respect in order to
ensure industrial peace and improvement in
productivity, working conditions and the quality of
working life. [Incorporated by Batas Pambansa Bilang
130, August 21, 1981]
(h) In establishments where no legitimate labor
organization exists, labor-management committees
may be formed voluntarily by workers and employers
for the purpose of promoting industrial peace. The
Department of Labor and Employment shall endeavor
to enlighten and educate the workers and employers
on their rights and responsibilities through labor
education with emphasis on the policy thrusts of this
LABOR LAW BAR OPERATIONS COMMISSION
Code. [As amended by Section 33, Republic Act No.
6715, March 21, 1989]
(i) To ensure speedy labor justice, the periods provided in
this Code within which decisions or resolutions of labor
relations cases or matters should be rendered shall be
mandatory. For this purpose, a case or matter shall be
deemed submitted for decision or resolution upon the
filing of the last pleading or memorandum required by
the rules of the Commission or by the Commission
itself, or the Labor Arbiter, or the Director of the Bureau
of Labor Relations or Med-Arbiter, or the Regional
Director.
Upon expiration of the corresponding period, a
certification stating why a decision or resolution has
not been rendered within the said period shall be
issued forthwith by the Chairman of the Commission,
the Executive Labor Arbiter, or the Director of the
Bureau of Labor Relations or Med-Arbiter, or the
Regional Director, as the case may be, and a copy
thereof served upon the parties.
Despite the expiration of the applicable mandatory
period, the aforesaid officials shall, without prejudice to
any liability which may have been incurred as a
consequence thereof, see to it that the case or matter
shall be decided or resolved without any further delay.
[Incorporated by Section 33, Republic Act No. 6715,
March 21, 1989]
Recruitment and Placement
RECRUITMENT OF LOCAL AND MIGRANT WORKERS
ILLEGAL RECRUITMENT
License vs. Authority
A license is a document issued by the Department of Labor
and Employment (DOLE) authorizing a person or entity to
operate a private employment agency, while an authority is
a document issued by the DOLE authorizing a person or
association to engage in recruitment and placement
activities as a private recruitment agency. [Art. 13(d) and (f),
Labor Code]
License Authority
Authorize an entity to Authorize an entity to
operate as a private operate as a private
employment agency recruitment entity
When a license is given, one Does not entitle a private
is also authorized to collect recruitment entity to collect
fees fees.
Entities disqualified from being issued a license
(1) Travel agencies and sales agencies of airline
companies. [Art. 26]
(2) Officers or members of the Board of any corporation or
members in 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,
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member of the board of partner of a corporation or indirectly, any fee

partnership engaged in the business of a travel agency.
(4) Persons, partnerships or corporations which have Requires
derogatory records. License Authority
(5) Any official or employee of the DOLE, POEA, OWWA,
DFA and other government agencies directly involved
Essential elements of illegal recruitment
in the implementation of R.A. 8042 as amended
th Definition of recruitment and placement
and/or any of his/her relatives within the 4 civil
“Recruitment and placement" refers to any act of (C-E-C-
degree of consanguinity and affinity. [POEA Rules of
T-U-H)
2002].
(a) canvassing,
(b) enlisting,
Citizenship requirement
(c) contracting,
(1) Only Filipino citizens or
(d) transporting,
(2) Corporations, partnerships or entities at least seventy-
(e) utilizing, or
five percent (75%) of the authorized and voting capital
(f) hiring procuring workers,
stock of which is owned and controlled by Filipino
citizens shall be permitted to participate in the
And also includes
recruitment and placement of workers, locally or
(a) referrals,
overseas. [Art. 27, LC]
(b) contract services,
(c) promising, or
See: POEA Rules, Part II, Rule I, Sec. 1(a)
(d) advertising for employment, locally or abroad, whether
for profit or not
Capitalization requirement
All applicants for authority to hire or renewal of license to
Provided, That any person or entity which, in any manner,
recruit are required to have such substantial capitalization
offers or promises for a fee employment to two or more
as determined by the Secretary of Labor. [Art. 28, LC]
persons shall be deemed engaged in recruitment and
placement. [Labor Code, Art. 13 (b)]
Based on POEA Rules the following are the substantial
(a) Any of the acts mentioned above constitutes
capital requirements:
recruitment and placement.
(1) Single proprietorships or partnerships with minimum
(b) The proviso provides for a presumption that a person or
capitalization of P2,000,000.
entity so described engages in recruitment and
(2) Corporations with minimum paid-up capital of
placement [See People v. Panis].
P2,000,000.
What constitutes recruitment
Non-transferability of license or authority
The number of persons dealt with is not an essential
(1) No license or authority shall be used directly or
ingredient of the act of recruitment and placement of
indirectly by any person other than the one in whose
workers. Any of the acts mentioned in Article 13(b) will
favor it was issued or at any place other than that
constitute recruitment and placement even if only one
stated in the license or authority,
prospective worker is involved. The proviso merely lays
(2) Nor may such license or authority be transferred,
down a rule of evidence that where a fee is collected in
conveyed, or assigned to any other person or entity.
consideration of a promise or offer of employment to two
or more prospective workers, the individual or entity
Any transfer of business address, appointment or
dealing with them shall be presumed to be engaged in the
designation of any agent or representative including the
act of recruitment and placement. [People v. Panis, 1988]
establishment of additional offices anywhere shall be
subject to the prior approval of the Department of Labor.
Acts of referral
[Art. 29, LC]
The act of referral, which is included in recruitment, is "the
act of passing along or forwarding of an applicant for
SEE: POEA Rules Part II, Rule II, Sec. 7, 8, and 9.
employment after an initial interview of a selected
applicant for employment to a selected employer,
Enforceability of the license - Licensed agencies are
placement officer or bureau." Petitioner’s admission that
prohibited from conducting any recruitment activities of
she brought private complainants to the agency whose
any form outside of the address stated in the license,
owner she knows and her acceptance of fees including
acknowledged branch or extension office, without securing
those for processing betrays her guilt. [Rodolfo vs. People,
prior authority from the POEA. [People vs. Buli-e, 2003]
2006]
Duration of validity – 4 years [POEA Rules of 2002]
Promising employment
The Court finds that accused-appellant was engaged in
Private Employment Agency (PEA) v. Private Recruitment
unlawful recruitment and placement activities. The
Entity (PRE)
prosecution established that accused-appellant promised
Private Employment Agency Private Recruitment Agency three complainants employment as factory workers and he
asked them for money in order to process their papers and
Definition procure their passports. Relying completely upon such
Any person or entity Any person or association representations, complainants entrusted hard-earned
engaged in recruitment and engaged in the recruitment money to accused-appellant in exchange for what they
placement of workers for a and placement of workers, would later discover to be a vain hope of obtaining
fee locally or overseas, without employment abroad. It is not disputed that accused-
charging, directly or appellant is not authorized nor licensed by the DOLE to

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engage in recruitment and placement activities. The
absence of the necessary license or authority renders all of
accused-appellant’s recruitment activities criminal. [People
vs. Saulo, 2000]
Note: To determine which law applies, the place of work is
the determining factor:
(1) If in the Philippines: Labor Code (LC) applies
(2) If abroad: Migrant Worker’s Act [R.A. 8042, as amended
by R.A. 10022].
Illegal recruitment for local workers [governed by the labor
code]
Simple Illegal Recruitment
Elements:
(1) The person charged with the crime must have
undertaken recruitment activities defined under Art.
13(b) or prohibited activities defined under Art. 34; and
(2) The said person does not have a license or authority to
do so. [Art. 38, LC]
Profit or lack thereof is immaterial
In 1996, LCL had no approved POEA license to recruit. C.F.
Sharp’s accreditation as LCL’s new manning agency was
still pending approval at that time. Yet it entertained
applicants for LCL’s vessels, and conducted preparatory
interviews. Based on Art. 13 (b), this is a recruitment
activity. The fact that C.F. Sharp did not receive any
payment during the interviews is of no moment. The act of
recruitment may be "for profit or not." Notably, it is the
lack of the necessary license or authority, not the fact of
payment that renders the recruitment activity of LCL
unlawful. [C.F. Sharp vs. Espanol, 2007]
Accused must give the impression of ability to send
complainant abroad
It is well-settled that to prove illegal recruitment, it must
be shown that appellant gave complainants the distinct
impression that she had the power or ability to send
complainants abroad for work such that the latter were
convinced to part with their money in order to be
employed. [People v. Ochoa, 2011]
Prohibited practices
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 the Secretary of Labor, or to make a
worker pay any amount greater than that actually
received by him as a loan or advance;
(b) To furnish or publish any false notice or information or
document in relation to recruitment or employment;
(c) To give any false notice, testimony, information or
document or commit any act of misrepresentation for
the purpose of securing a license or authority under
this Code.
(d) 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;
LABOR LAW BAR OPERATIONS COMMISSION
(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 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 applicant
workers before departure for monetary or financial
considerations other than those authorized under this
Code and its implementing rules and regulations. [Art.
34, LC]
Offense involving Economic Sabotage (Large-Scale or by a
Syndicate)
Illegal recruitment is considered economic sabotage when
the commission thereof is attended by the ff. qualifying
circumstances:
(1) By a syndicate - if carried out by a group of 3 or more
persons conspiring and confederating with one
another;
(2) In large scale - if committed against 3 or more persons
individually or as a group. [Art. 38(b), LC]
Illegal recruitment by a syndicate
(1) The offender undertakes either any activity within the
meaning of "recruitment and placement" defined
under Article 13(b), or any of the prohibited practices
enumerated under Art. 34 of the Labor Code;
(2) He has no valid license or authority required by law to
enable one to lawfully engage in recruitment and
placement of workers; and
(3) The illegal recruitment is committed by a group of
three
(4) or more persons conspiring or confederating with one
another. [People v. Gallo, 2010]
Illegal recruitment in large scale
The acts committed by the accused constituted illegal
recruitment in large scale, whose essential elements are
the following:
(1) The accused engages in acts of recruitment and
placement of workers defined under Article 13(b) of the
Labor Code or in any prohibited activities under Article
43 of the Labor Code;
(2) The accused has not complied with the guidelines
issued by the Secretary of Labor and Employment,
particularly with respect to the securing of license or an
authority to recruit and deploy workers, either locally or
overseas; and
(3) The accused commits the unlawful acts against three
or more persons individually or as a group.
Three or more complainants must be in a single case
When the Labor Code speaks of illegal recruitment
"committed against three (3) or more persons individually
or as a group," it must be understood as referring to the
number of complainants in each case who are
complainants therein, otherwise, prosecutions for single
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crimes of illegal recruitment can be cumulated to make
out a case of large scale illegal recruitment.
In other words, a conviction for large scale illegal
recruitment must be based on a finding in each case of
illegal recruitment of three or more persons whether
individually or as a group. [People vs. Reyes, 1995]
Illegal recruitment vs estafa
Illegal recruitment and estafa are entirely different
offenses and neither one necessarily includes or is
necessarily included in the other. A person who is
convicted of illegal recruitment may, in addition, be
convicted of estafa by false pretenses or fraudulent acts
under Article 315, paragraph 2(a) of the Revised Penal Code.
In the same manner, a person acquitted of illegal
recruitment may be held liable for estafa. Double jeopardy
will not set in because illegal recruitment
is malum prohibitum, in which there is no necessity to
prove criminal intent, whereas estafa is malum in se, in the
prosecution of which, proof of criminal intent is
necessary. [Rosita Sy vs. People of the Philippines, 2010]
One convicted for IR may still be convicted of estafa
In People v. Cortez the Court explained that: “In this
jurisdiction, it is settled that a person who commits illegal
recruitment may be charged and convicted separately of
illegal recruitment under the Labor Code and estafa under
par. 2(a) of Art. 315 of the Revised Penal Code. The offense
of illegal recruitment is malum prohibitum where the
criminal intent of the accused is not necessary for
conviction, while estafa is malum in se where the criminal
intent of the accused is crucial for conviction. Conviction
for offenses under the Labor Code does not bar conviction
for offenses punishable by other laws. Conversely,
conviction for estafa under par. 2(a) of Art. 315 of the
Revised Penal Code does not bar a conviction for illegal
recruitment under the Labor Code. It follows that one's
acquittal of the crime of estafa will not necessarily result in
his acquittal of the crime of illegal recruitment in large
scale, and vice versa.” [People v. Ochoa, 2011; People v.
Ocden, 2011]
Illegal recruitment for migrant workers [governed by RA
8042, as amended by, RA 10022]
Simple Illegal Recruitment
1st type.—
(1) Person charged undertakes any recruitment activity as
defined in Art.13 (b) of the Labor Code; and
(2) Said person does not have a license or authority to do
so.
2nd type.—
(1) Person charged commits any of the enumerated acts
under Sec. 6 of R.A. 8042, as amended by, R.A. 10022.
(2) It is immaterial whether he is a holder or not of any
license or authority
Definition
Illegal recruitment shall mean any act of canvassing,
enlisting, contracting, transporting, utilizing, hiring, or
procuring workers and includes referring, contract services,
promising or advertising for employment abroad, whether
for profit or not, when undertaken by non-licensee or non-
holder of authority contemplated under Article 13(f) of
Presidential Decree No. 442, as amended, otherwise known
as the Labor Code of the Philippines: Provided, That any
such non-licensee or non-holder who, in any manner,
offers or promises for a fee employment abroad to two or
LABOR LAW BAR OPERATIONS COMMISSION
more persons shall be deemed so engaged. [Sec. 6, RA
8042 as amended]
Other prohibited acts
It shall likewise include the following acts, whether
committed by any person, whether a non-licensee, non-
holder, licensee or holder of authority:
(a) To charge or accept directly or indirectly any amount
greater than that specified in the schedule of allowable
fees prescribed by the Secretary of Labor and
Employment, or to make a worker pay or acknowledge
any amount greater than that actually received by him
as a loan or advance;
(b) To furnish or publish any false notice or information or
document in relation to recruitment or employment;
(c) To give any false notice, testimony, information or
document or commit any act of misrepresentation for
the purpose of securing a license or authority under the
Labor Code, or for the purpose of documenting hired
workers with the POEA, which include the act of
reprocessing workers through a job order that pertains
to nonexistent work, work different from the actual
overseas work, or work with a different employer
whether registered or not with the POEA;
(d) To include or attempt to induce a worker already
employed to quit his employment in order to offer him
another unless the transfer is designed to liberate a
worker from oppressive terms and conditions of
employment;
(e) To influence or attempt to influence any person or
entity not to employ any worker who has not applied
for employment through his agency or who has
formed, joined or supported, or has contacted or is
supported by any union or workers' organization;
(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 fail to submit reports on the status of employment,
placement vacancies, remittance of foreign exchange
earnings, separation from jobs, departures and such
other matters or information as may be required by the
Secretary of Labor and Employment;
(h) To substitute or alter to the prejudice of the worker,
employment contracts approved and verified by the
Department of Labor and Employment from the time
of actual signing thereof by the parties up to and
including the period of the expiration of the same
without the approval of the Department of Labor and
Employment;
(i) For an officer or agent of a recruitment or placement
agency to become an officer or member of the Board of
any corporation engaged in travel agency or to be
engaged directly or indirectly in the management of
travel agency;
(j) To withhold or deny travel documents from applicant
workers before departure for monetary or financial
considerations, or for any other reasons, other than
those authorized under the Labor Code and its
implementing rules and regulations;
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(k) Failure to actually deploy a contracted worker without
valid reason as determined by the Department of Labor
and Employment;
(l) Failure to reimburse expenses incurred by the worker in
connection with his documentation and processing for
purposes of deployment, in cases where the
deployment does not actually take place without the
worker's fault. Illegal recruitment when committed by a
syndicate or in large scale shall be considered an
offense involving economic sabotage; and
(m) To allow a non-Filipino citizen to head or manage a
licensed recruitment/manning agency.
In addition to the acts enumerated above, it shall also
be unlawful for any person or entity to commit the
following prohibited acts:
(1) Grant a loan to an overseas Filipino worker with
interest exceeding eight percent (8%) per annum,
which will be used for payment of legal and allowable
placement fees and make the migrant worker issue,
either personally or through a guarantor or
accommodation party, postdated checks in relation to
the said loan;
(2) Impose a compulsory and exclusive arrangement
whereby an overseas Filipino worker is required to avail
of a loan only from specifically designated institutions,
entities or persons;
(3) Refuse to condone or renegotiate a loan incurred by an
overseas Filipino worker after the latter's employment
contract has been prematurely terminated through no
fault of his or her own;
(4) Impose a compulsory and exclusive arrangement
whereby an overseas Filipino worker is required to
undergo health examinations only from specifically
designated medical clinics, institutions, entities or
persons, except in the case of a seafarer whose medical
examination cost is shouldered by the
principal/shipowner;
(5) Impose a compulsory and exclusive arrangement
whereby an overseas Filipino worker is required to
undergo training, seminar, instruction or schooling of
any kind only from specifically designated institutions,
entities or persons, except for recommendatory
trainings mandated by principals/shipowners where
the latter shoulder the cost of such trainings;
(6) For a suspended recruitment/manning agency to
engage in any kind of recruitment activity including the
processing of pending workers' applications; and
(7) For a recruitment/manning agency or a foreign
principal/employer to pass on the overseas Filipino
worker or deduct from his or her salary the payment of
the cost of insurance fees, premium or other insurance
related charges, as provided under the compulsory
worker's insurance coverage. [Sec. 6, RA 8042 as
amended]
MWA expands the definition of illegal recruitment
The amendments to the Labor Code introduced by
Republic Act No. 8042, otherwise known as the Migrant
Workers and Overseas Filipinos Act of 1995, broadened the
concept of illegal recruitment and provided stiffer
LABOR LAW BAR OPERATIONS COMMISSION
penalties, especially for those that constitute economic
sabotage. [People v. Ocden, 2011]
RA 8042 as amended by RA
Labor Code
10022
Applicability
Local Workers Migrant Workers
Acts Punishable
Art. 13(b) Art. 34 Art. 13(b) Prohibited
Labor Code acts in Sec. 6
Who can be Punished
Non-licensee Non-licensee Non-licensee Licensee/Non-
licensee
Offense involving Economic Sabotage
(Large-Scale or by a Syndicate)
Illegal recruitment is deemed committed by a syndicate if
carried out by a group of three (3) or more persons
conspiring or confederating with one another. It is deemed
committed in large scale if committed against three (3) or
more persons individually or as a group.
Liabilities and penalties for illegal recruitment
Illegal Recruitment Involving Local Workers.—
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;
(a) Any licensee or holder of authority found violating or
causing another to violate any provision of this Title or
its implementing rules and regulations shall, upon
conviction thereof, suffer the penalty of imprisonment
of not less than two years nor more than five years or a
fine of not less than P10,000 nor more than P50,000,
or both such imprisonment and fine, at the discretion
of the court;
(b) Any person who is neither a licensee nor a holder of
authority under this Title found violating any provision
thereof or its implementing rules and regulations shall,
upon conviction thereof, suffer the penalty of
imprisonment of not less than four years nor more than
eight years or a fine of not less than P20,000 nor more
than P100,000 or both such imprisonment and fine, at
the discretion of the court;
(c) 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;
In every case, conviction shall cause and carry the
automatic revocation of the license or authority and all
the permits and privileges granted to such person or
entity under this Title, and the forfeiture of the cash
and surety bonds in favor of the Overseas Employment
Development Board or the National Seamen Board, as
the case may be, both of which are authorized to use
the same exclusively to promote their objectives. [Art.
39, LC]
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Illegal recruitment involving migrant workers.—
(a) Any person found guilty of illegal recruitment shall
suffer the penalty of imprisonment of not less than
twelve (12) years and one (1) day but not more than
twenty (20) years and a fine of not less than One
million pesos (P1,000,000.00) nor more than Two
million pesos (P2,000,000.00).
(b) The penalty of life imprisonment and a fine of not less
than Two million pesos (P2,000,000.00) nor more
than Five million pesos (P5,000,000.00) shall be
imposed if illegal recruitment constitutes economic
sabotage as defined therein. Provided, however, That
the maximum penalty shall be imposed if the person
illegally recruited is less than eighteen (18) years of age
or committed by a non-licensee or non-holder of
authority.
(c) Any person found guilty of any of the prohibited acts
shall suffer the penalty of imprisonment of not less
than six (6) years and one (1) day but not more than
twelve (12) years and a fine of not less than Five
hundred thousand pesos (P500,000.00) nor more
than One million pesos (P1,000,000.00).
If the offender is an alien, he or she shall, in addition to
the penalties herein prescribed, be deported without
further proceedings.
In every case, conviction shall cause and carry the
automatic revocation of the license or registration of
the recruitment/manning agency, lending institutions,
training school or medical clinic. [Sec. 7, RA 8042 as
amended by RA 10022]
Common rules on liability
(1) Employees of a company corporation engaged in illegal
recruitment may be held liable as principal, together with
his employer, if it is shown that he actively and
consciously participated in illegal recruitment. E.g. In
this case the appellant was both the APSC Vice-
President-Treasurer and the Assistant General
Manager. She was a high corporate officer who had
direct participation in the management,
administration, direction and control of the business of
the corporation, and is thus liable under Sec. 6 of RA
8042. The terms “control, management or direction”
broadly cover all phases of business operation,
including the aspects of administration, marketing and
finances, among others. [People vs. Sagayaga, 2004].
(2) Local Employment Agency is solidarily liable with foreign
principal. Severance of relations between local agent
and foreign principal does not affect liability of local
recruiter. Private employment agencies are held jointly
and severally liable with the foreign-based employer
for any violation of the recruitment agreement or
contract of employment. This joint and solidary liability
imposed by law against recruitment agencies and
foreign employers is meant to assure the aggrieved
worker of immediate and sufficient payment of what is
due him. [Becmen Service Exporter and Promotion, Inc.
v. Spouses Cuaresma, G.R. 182978-79, April 7, 2009]
(3) 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. [Becmen Service
LABOR LAW BAR OPERATIONS COMMISSION
Exporter and Promotion, Inc. v. Spouses Cuaresma, G.R.
182978-79, April 7, 2009]
(4) Foreign employer 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
repatriation
Theory of imputed knowledge
This is a doctrine in agency which states that the principal
is chargeable with and bound by the knowledge of or
notice to his agent received while the agent was acting as
such. Simply put, notice to the agent is notice to the
principal. Since the local employment agency is
considered the agent of the foreign employer, the
principal, knowledge of the former of existing labor and
social legislation in the Philippines is binding on the latter.
Consequently, notice to the former of any violation thereof
is notice to the latter.
Joint and Several Liability of Agent and Principal
Sec. 1. Requirements for Issuance of License.- Every
applicant for license to operate a private employment
agency or manning agency shall submit a written
application together with the following requirements:
(f) A verified undertaking stating that the applicant:
xxx
(2) Shall assume full and complete responsibility for all
claims and liabilities which may arise in connection with
the use of license;
(3) 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 repatriation;
(4) Shall guarantee compliance with the existing labor
and social legislations of the Philippines and of the country
of employment of recruited workers; and
(5) Shall assume full and complete responsibility for all
acts of its officials, employees and representatives done in
connection with recruitment and placement; [POEA Rules,
Book II, Rule II, Sec. 1 (f)]
Common Rules on Illegal Recruitment
[Local or Overseas]
Venue: A criminal action arising from illegal recruitment
shall be filed with the RTC of the province or city:
(1) where the offense was committed or
(2) where the offended party actually resides at the time of
the commission of the offense. [Sec. 9, R.A. 8042 [this
part was not amended by R.A. 10022]].
Prescriptive Periods:
(1) Simple Illegal Recruitment – 5 years
(2) Illegal Recruitment involving Economic Sabotage – 20
years. [Sec. 12, R.A. 8042 (this part was not amended by
R.A, 10022)].
Pre-Termination of Contract of Migrant Worker
In case of termination of overseas employment without
just, valid or authorized cause as defined by law or
contract, or any unauthorized deductions from the migrant
worker's salary, the worker shall be entitled to the full
reimbursement of his placement fee and the deductions
made with interest at twelve percent (12%) per annum,
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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. [Sec. 10, R.A.
8042, as amended by R.A. 10022]
Rule before Serrano: 3-month salary rule applies
The employment contract involved in the instant case
covers a two-year period but the overseas contract worker
actually worked for only 26 days prior to his illegal
dismissal. Thus, the three months’ salary rule applies
[Flourish Maritime Shipping v. Almanzor, G.R. No. 177948,
March 14, 2008].
Serrano ruling: invalidated the 3-month salary cap
The issue in this case is the constitutionality of the last
clause of Sec.10 of RA 8042:
Sec. 10. Money Claims. - x x x 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.
The Court held that said clause is unconstitutional for
being an invalid classification, in violation of the equal
protection clause. [Serrano v. Gallant Maritime Services, Inc.,
G.R. No. 167614, March 24, 2009]
DIRECT HIRING
General Rule: No employer may hire a Filipino worker for
overseas employment except through the Boards and
entities authorized by the Secretary of Labor. [Article 18 of
the Labor Code].
Exceptions:
(1) Members of the diplomatic corps;
(2) International organizations;
(3) Such other employees as may be allowed by the Sec. of
Labor;
(4) Name hirees – those individuals who are able to secure
contracts for overseas employment on their own efforts
and representation without the assistance or
participation of any agency. Their hiring, nonetheless,
has to be processed through the POEA. [Part III, Rule III
of the POEA Rules Governing Overseas Employment as
amended in 2002]
REGULATION AND ENFORCEMENT
Note: See also 2002 POEA Rules Governing the Recruitment
and Employment of Land-based Overseas Workers
SUSPENSION OR CANCELLATION OF LICENSE OR AUTHORITY
The Secretary of Labor shall have the power to suspend or
cancel any license or authority to recruit employees for
overseas employment for violation of rules and regulations
issued by the Department of Labor, the Overseas
Employment Development Board, and the National
Seamen Board, or for violation of the provisions of this and
other applicable laws, General Orders and Letters of
Instructions. [Article 35, LC]
The acts prohibited under Article 34 are grounds for
suspension or cancellation of license. Note that they
likewise constitute illegal recruitment under R.A. 8042 as
amended by R.A. 10022.
LABOR LAW BAR OPERATIONS COMMISSION
Who can suspend or cancel the license?
(1) DOLE Secretary
(2) POEA Administrator
The power to suspend or cancel any license or authority to
recruit employees for overseas employment is concurrently
vested with the POEA and the Secretary of Labor. [People
v. Diaz, 259 SCRA 441 (1996)].
REGULATORY AND VISITORIAL POWERS
OF THE DOLE SECRETARY
See [Art. 35, LC]
Regulatory powers
The Secretary of Labor shall have the power to restrict and
regulate the recruitment and placement activities of all
agencies within the coverage of this Title and is hereby
authorized to issue orders and promulgate rules and
regulations to carry out the objectives and implement the
provisions of this Title. [Art. 36, LC]
Visitorial powers
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 violations of any provisions
of this Title. [Art. 37, LC]
REMITTANCE OF FOREIGN EXCHANGE EARNING
It shall be mandatory for all Filipino workers abroad to
remit a portion of their foreign earnings to their families,
dependents, and/or beneficiaries in the country [Art. 22,
LC]
Under Executive Order No. 857, the amount of one’s salary
required to be remitted depends on the type or nature of
work performed by the employee. The following are the
percentages of foreign exchange remittance required from
various kinds of migrant workers:
(1) Seaman or mariner – 80% of their basic salary
(2) Workers for Filipino contractors and construction
companies – 70%
(3) Doctors, engineers, teachers, nurses and other
professional workers whose contract provide for free
board and lodging – 70%
(4) All other professional workers whose employment
contracts do not provide for free board and lodging
facilities – 50%
(5) Domestic and other service workers – 50%
(6) All other workers not falling under the aforementioned
categories – 50%
(7) Performing artists – 50%
The following individuals, however, are exempted from the
mandatory remittance requirement:
(1) The immediate family members, dependents or
beneficiaries of migrant workers residing with the latter
abroad;
(2) Filipino servicemen working within US military
installations;
(3) Immigrants and Filipino professionals working with the
United Nations and its agencies or other specialized
bodies.
PROHIBITED ACTIVITIES
It shall be unlawful for any individual, entity, licensee, or
holder of authority:
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UP COLLEGE OF LAW
(a) To charge or accept, directly or indirectly, any amount
greater than that specified in the schedule of allowable
fees prescribed by the Secretary of Labor, or to make a
worker pay any amount greater than that actually
received by him as a loan or advance;
(b) To furnish or publish any false notice or information or
document in relation to recruitment or employment;
(c) To give any false notice, testimony, information or
document or commit any act of misrepresentation for
the purpose of securing a license or authority under
this Code.
(d) 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 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 applicant
workers before departure for monetary or financial
considerations other than those authorized under this
Code and its implementing rules and regulations. [Art.
34, LC]
Labor Standards
COVERAGE
General rule: Shall apply to employees in all
establishments and undertakings whether for profit or not.
[Art. 82, LC]
Exceptions (NOT Covered) GMFF-DPR:
(1) Government employees [Art. 82; Art. 76]
(2) Managerial Employees including members of the
managerial staff [Art. 82]
(3) Field Personnel [Art. 82]
(4) Members of the family of the employer who are
dependent on him for support [Art. 82];
(5) Domestic helpers and persons in personal service of
another [Art. 141]
(6) Workers who paid by result as determined by DOLE
regulation [Art. 82].
GOVERNMENT EMPLOYEES
The terms and conditions of employment of all
LABOR LAW BAR OPERATIONS COMMISSION
government employees, including employees of GOCCs,
are governed by the Civil Service rules and regulations, not
by the Labor Code. But this exclusion DOES NOT refer to
employees of government agencies and government
corporations that are incorporated under the Corporation
Code.
MANAGERIAL EMPLOYEES
Definition
"Managerial Employees" – Refer to those whose primary
duty consists of the management of the establishment in
which they are employed or of a department or subdivision
thereof, and to other officers or members of the
managerial staff. [Art. 82, LC]
Characteristics of managerial employees
(b) Managerial employees are covered [by the exemption]
if they have the following characteristics:
(1) Their primary duty consists of the management of
the establishment in which they are employed or of
a department or sub-division thereof.
(2) They customarily and regularly direct the work of
two or more employees therein.
(3) 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.
Requisites for managerial staff
to be covered under the exception
Officers or members of a managerial staff if they perform
the following duties and responsibilities:
(1) The primary duty consists of the performance of work
directly related to management policies of their
employer;
(2) Customarily and regularly exercise discretion and
independent judgment; and
(3) (a) 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
(b) execute under general supervision work along
specialized or technical lines requiring special
training, experience, or knowledge; or (c) execute,
under general supervision, special assignments
and tasks; and
(4) 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 (1), (2) and (3) above.
[IRR, Bk III, Rule 1, Sec. 2 (b) & (c): Exemption]
The definition of ‘managerial employees’ in Article 82
covers more people than that in Article 212 (m) as Article
82 also includes managerial staff. In effect, managerial
employees in Article 82 includes supervisors, but Article
212(m) does not.
It follows that under Book V, supervisors are allowed to
form, join or assist a labor union. Supervisors are not,
however, entitled to the benefits under Book III Articles 83
through 96, being part of the exemption of managerial
employees as defined in Article 82. [Azucena]
FIELD PERSONNEL
"Field personnel" shall refer to non-agricultural employees
who regularly perform their duties away from the principal
place of business or branch office of the employer and
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whose actual hours of work in the field cannot be
determined with reasonable certainty. [Art. 82, LC]
Field Personnel – are those whose performance of their
job/service is not supervised by the employer or his
representative, the workplace being away from the
principal office and whose hours and days of work cannot
be determined with reasonable certainty.
Legal Test: Field personnel
The clause "whose time and performance is unsupervised
by the employer" did not amplify but merely interpreted
and expounded the clause "whose actual hours of work in
the field cannot be determined with reasonable certainty."
The former clause is still within the scope and purview of
Article 82 which defines field personnel. Hence, in deciding
whether or not an EE's actual working hours in the field
can be determined with reasonable certainty, query must
be made as to whether or not such EE's time and
performance is constantly supervised by the employer.
[Union of Filipro Employees v. Vivar, 1992]
“Actual hours work in the field…” is to be read in
conjunction with Rule IV, Book III of the Implementing
Rules. Therefore field personnel are EEs whose time and
performance is unsupervised by the employer. [Salazar v.
NLRC, 1996]
If required to be at specific places at specific times,
employees including drivers cannot be said to be field
personnel, despite the fact that they are performing work
away from principal office of EE. [Auto Bus Transport
Systems, Inc. v. Bautista, 2005]
The fishermen, although performing non-agricultural work
away from petitioner’s business offices, the fact remains
that throughout the duration of their work they are under
the effective control and supervision of petitioner through
the vessel’s patron or master. Hence, the fishermen are not
“field personnel”. [Mercidar Fishing Corporation v. NLRC,
1998]
DEPENDENT FAMILY MEMBERS
Workers who are family members of the employer, and
who are dependent on him for their support, are outside
the coverage of this Title on working conditions and rest
periods.
DOMESTIC HELPERS
"Domestic or household service" shall mean service in the
employer’s home which is usually necessary or desirable
for the maintenance and enjoyment thereof and includes
ministering to the personal comfort and convenience of the
members of the employer’s household, including services
of family drivers. [Art. 141, LC]
PERSONS IN PERSONAL SERVICE OF ANOTHER
The provisions of this Rule shall not apply to the following
persons if they qualify for exemption under the conditions
set forth herein:
Domestic servants and persons in the personal service of
another if they perform such services in the employer’s
home which are usually necessary or desirable for the
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. [Bk
III, Rule 1, Sec. 2(d) of the IRR: Exemption]
LABOR LAW BAR OPERATIONS COMMISSION
Exclusivity of function required
Note that the definition contemplates a domestic servant
who is employed in the employer’s home to minister
exclusively to the personal comfort and enjoyment of the
employer’s family. [Azucena]
Thus, it has been held that the following personnel are
NOT domestic employees:
(1) House personnel hired by a ranking company official
but paid by the company itself to maintain a staff
house provided for the official. [Cadiz v. Philippine
Sinter Corp, NLRC Case No. 7-1729, cited by Azucena]
(2) A family cook, who is later assigned to work as a
watcher and cleaner of the employer’s business
establishment, becomes an industrial worker entitled
to receive the wages and benefits flowing from such
status. [Villa v. Zaragosa and Associates, OP Decision
No. 0183, cited by Azucena].
WORKERS PAID BY RESULT
The provisions of this Rule shall not apply to the following
persons if they qualify for exemption under the conditions
set forth herein:
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. [Bk III, Rule 1, Sec. 2
(e) of the IRR]
The 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. [Red vs.
Coconut Products Ltd., v. CIR, 1966]
HOURS OF WORK
COVERAGE/EXCLUSIONS
Note: Please see previous section (Coverage) which deals
with the general rules of coverage and exclusions for the
applicability of the Conditions of Employment provisions in
Book III of the Labor Code.
NORMAL HOURS OF WORK
General Rule: 8-Hour Labor Law
The normal hours of work of any employee shall not
exceed eight (8) hours a day. [Art. 83, LC]
The law prescribes a maximum and not a minimum. Thus,
part-time work, or a day’s work less than eight hours, is not
prohibited.
Exception to the 8-Hour Law: Work Hours of Health Personnel
Health personnel in cities and municipalities with a
population of at least one million (1,000,000) or in
hospitals and clinics with a bed capacity of at least one
hundred (100) shall hold regular office hours for eight (8)
hours a day, for five (5) days a week, exclusive of time for
meals, 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, dietitians,
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pharmacists, social workers, laboratory technicians,
paramedical technicians, psychologists, midwives,
attendants and all other hospital or clinic personnel. [Art.
38, LC]
Note: Medical secretaries are also considered clinic
personnel. [Azucena]
Compensable Hours of Work
Hours worked shall include (a) all time during which an
employee is required to be on duty or to be at a prescribed
workplace; and (b) all time during which an employee is
suffered or permitted to work. [Art. 84, LC]
General principles in determining if time is considered as
hours worked
According to Book III, Rule 1, Sec. 4, “the following
principles shall govern in determining whether the time
spent by an employee is considered hours worked for
purposes of this Rule:”
(1) 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.
(2) An employee need not leave the premises of the work
place in order that his rest period shall not be counted,
it being enough that he stops working, may rest
completely and may leave his work place to go
elsewhere, whether within or outside the premises of
his work place.
(3) If the work performed was necessary, or it benefited the
employer, or the employee could not abandon his work
at the end of his normal working hours because he had
no replacement, all time spent for such work shall be
considered as hours worked, if the work was with the
knowledge of his employer or immediate supervisor.
(4) The time during which an employee is inactive by
reason of interruptions in his work beyond his control
shall be considered working time either:
(a) if the imminence of the resumption of work requires
the employee’s presence at the place of work, or
(b) if the interval is too brief to be utilized effectively
and gainfully in the employee’s own interest.
Rest period – short duration or “coffee break”
Rest periods of short duration during working hours shall
be counted as hours worked. [Art. 84, par. 2, LC]
Rest periods or coffee breaks running from five (5) to
twenty (20) minutes shall be considered as compensable
working time. [Bk III, Rule 1, Sec. 7, par. 2 of IRR]
Preliminary and Postliminary Activities
Preliminary [before work] and postliminary [after work]
activities are deemed performed during working hours if
such activities are controlled or required by the employer
and are pursued necessarily and primarily for the
employer’s benefit.
Rest period
An employee need not leave the premises of the work
place in order that his rest period shall not be counted, it
being enough that he stops working, may rest completely
and may leave his work place, to go elsewhere, whether
within or outside the premises of his work place. [IRR Sec 4
(b)]
Continuous work
The provision of section 1 of Commonwealth Act No. 444,
LABOR LAW BAR OPERATIONS COMMISSION
which states that "when the work is not continuous, the
time during which the laborer is not working and can leave
his working place and can rest completely shall not be
counted", finds no application in the present case, where
the laborer's work is continuous, and during the time that
he is not working he cannot leave and completely rest
owing to the place and nature of his work. [State Marine
Corporation v. Cebu Seamen’s Association, 1963]
On call
An employee who is required to remain on call in the
employer’s premises or so close thereto that he cannot use
the time effectively and gainfully for his own purpose shall
be considered as working while on call.
An employee who is not required to leave word at his home
or with company officials where he may be reached is not
working while on call. [IRR, Book III, Rule 1, Sec. 5(b)]
Inactive due to work interruptions
The time during which an employee is inactive 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.
[IRR, Book III, Rule 1, Sec. 4(d)]
Work interruption due to brownouts
Brownouts of short duration, but not exceeding 20
minutes, shall be treated as hours worked, whether used
productively by the employees or not. If they last more
than 20 minutes, the time may not be treated as hours
worked if the employees can leave their workplace or go
elsewhere whether within or without the work premises; or
the employees can use the time effectively for their own
interest. In this case, the employer may extend the working
hours beyond the regular schedule on that day to
compensate for the loss of productive man-hours without
being liable for overtime pay. [Policy Instruction No. 36,
May 22, 1978]
Note: The time during which an employee is inactive by
reason of work interruptions beyond his control is
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.
[Book III, Rule 1 Sec. 4-c OR]
Work after normal hours
If the work performed was necessary, or it benefited the
employer, or the employee could not abandon his work at
the end of his normal working hours because he had no
replacement, all the time spent for such work shall be
considered as hours worked if the work was with the
knowledge of his employer or immediate supervisor. [IRR,
Book III, Rule 1, Sec. 4(c)]
Lectures, meetings, trainings
Attendance at lectures, meetings, training programs, and
other similar activities shall not be counted as working
time if ALL of the following conditions are met:
(1) Attendance is outside of the employee’s regular
working hours;
(2) Attendance is in fact voluntary; and
(3) The employee does not perform any productive work
during such attendance. [IRR, Book III, Rule 1, Sec. 6]
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Note:
(1) Attendance in lectures, meetings, and training periods
sanctioned by the employer are considered hours
worked.
(2) Attendance in CBA negotiations or grievance meeting
is compensable hours worked.
(3) Attendance in hearings in cases filed by the employee
is NOT compensable hours worked.
(4) Participation in strikes is NOT compensable working
time.
Idle time
The idle time that an employee may spend for resting &
dining which he may leave the spot or place of work
though not the premises of his employer, is not counted as
working time only where the work is broken or is not
continuous. [National Development Co. v. CIR, 1962]
A laborer need not leave the premises of the factory, shop
or boat in order that his period of rest shall not be counted,
it being enough that he "cease to work", may rest
completely and leave or may leave at his will the spot
where he actually stays while working, to go somewhere
else, whether within or outside the premises of said factory,
shop or boat. If these requisites are complied with, the period
of such rest shall not be counted. [Luzon Stevedoring Co. v.
Luzon Marine Department Union, 1957]
Travel time
(1) Travel from home to work – An employee who travels
from home before his regular workday and returns to
his home at the end of the workday is engaged in
ordinary home-to-work travel which is NOT worktime
except:
(a) When called to travel during emergency;
(b) When travel is done through a conveyance
furnished by the employer;
(c) Travel is done under vexing and dangerous
circumstances;
(d) Travel is done under the supervision and control of
the employer.
(2) Travel that is all in the day’s work – Time spent by an
employee in travel from jobsite to jobsite during the
workday, must be counted as hours worked. Where an
employee is required to report at a meeting place to
receive instructions or to perform other work there, the
travel from the designated place to the workplace is
part of the day’s work.
(3) Travel away from home - Travel that keeps an
employee away from home overnight is travel away
from home. Travel away from home is worktime when it
cuts across the employee’s workday. The time is hours
worked not only on regular working hours but also
during the corresponding hours on non-working days.
[Department of Labor Manual].
Semestral Break of Private School Teachers
Regular full-time teachers are entitled to salary during
semestral breaks. These semestral breaks are in the nature
of work interruptions beyond the employees’ control. As
such, these breaks cannot be considered as absences
within the meaning of the law for which deductions may be
made from monthly allowances. [University of the
Pangasinan Faculty Union v. University of Pangasinan, No.
L-63122, Feb. 20, 1984].
Work Hours of Seamen
Seamen are required to stay on board of their vessels by
LABOR LAW BAR OPERATIONS COMMISSION
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. [Cagampan, et. al. v. NLRC, G.R. Nos. 85122-24,
March 2, 1991].
Hours worked: Proof of work
Entitlement to overtime pay must first be established by
proof that said overtime work was actually performed,
before an employee may avail of said benefit. [Lagatic v.
NLRC, 1998]
Hours worked: Burden of Evidence
When an employer alleges that his employee works less
than the normal hours of employment as provided for in
the law, he bears the burden of proving his allegation with
clear and satisfactory evidence. [Prangan v. NLRC, et. al.,
G.R. No. 126529, April 15, 1998].
Compressed Work Week (CWW)
Note: SEE DOLE Advisory No. 02, Series of 2004
Under the CWW scheme, the normal workday goes beyond
eight hours without the corresponding overtime premium.
The total hours of work, however, shall not exceed 12 hours
a day or 48 hours a week, or the employer is obliged to pay
the worker the overtime premium in excess of said work
hours.
Conditions for CWW
(1) The CWW scheme is undertaken as a result of an
express and voluntary agreement of majority of the
covered employees or their duly authorized
representatives. This agreement may be expressed
through collective bargaining or other legitimate
workplace mechanisms of participation such as labor
management councils, employee assemblies or
referenda.
(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 employees’
health and safety, there must be a certification from an
accredited health and safety organization or
practitioner 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.
[DOLE Advisory No. 02-04].
Effects of CWW
(1) Unless there is a more favorable practice existing in the
firm, work beyond eight hours will not be compensable
by overtime premium provided the total number of
hours worked per day shall not exceed twelve (12)
hours. In any case, any work performed beyond 12
hours a day or 48 hours a week shall be subject to
overtime premium.
(2) Consistent with Art. 85 of the LC, employees under a
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CWW scheme are entitled to meal periods of not less
than 60 minutes. There shall be no impairment of the
right of the employees to rest days as well as to holiday
pay, rest day pay or leaves in accordance with law or
applicable collective bargaining agreement or
company practice.
(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.
Rationale
D.O. No. 21 sanctions the waiver of overtime pay in
consideration of the benefits that the employees will derive
from the adoption of a compressed workweek scheme,
thus:
The compressed workweek scheme was originally
conceived for establishments wishing to save on energy
costs, promote greater work efficiency and lower the rate
of employee absenteeism, among others. Workers favor
the scheme considering that it would mean savings on the
increasing cost of transportation fares for at least one (1)
day a week; savings on meal and snack expenses; longer
weekends, or an additional 52 off-days a year, that can be
devoted to rest, leisure, family responsibilities, studies and
other personal matters, and that it will spare them for at
least another day in a week from certain inconveniences
that are the normal incidents of employment, such as
commuting to and from the workplace, travel time spent,
exposure to dust and motor vehicle fumes, dressing up for
work, etc. Thus, under this scheme, the generally observed
workweek of six (6) days is shortened to five (5) 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
abovecited that will accrue to the employees. [Bisig
Manggagawa sa Tryco v. NLRC, et al., 2008]
MEAL BREAK
Regular meal
Subject to such regulations as the Secretary of Labor may
prescribe, it shall be the duty of every employer to give his
employees not less than sixty (60) minutes time-off for
their regular meals. [Art. 85, LC]
Every employer shall give his employees, regardless of sex,
not less than one (1) hour time-off for regular meals. [IRR,
Book III, Rule 1, Sec. 7]
Shorter meal period when allowed (less than 1 hour, but not
less than 20 min)
A meal period of not less than twenty (20) minutes may be
given by the employer provided that such shorter meal
period is credited as compensable hours worked of the
employee:
(1) Where the work is non-manual work in nature or does
not involve strenuous physical exertion;
(2) Where the establishment regularly operates not less
than sixteen (16) hours a day;
(3) 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
(4) Where the work is necessary to prevent serious loss of
perishable goods. [IRR, Book III, Rule 1, Sec. 7]
Synthesis of the Rules
General Rule: Meal periods are NOT compensable.
LABOR LAW BAR OPERATIONS COMMISSION
Exception: It becomes compensable:
(1) Where the lunch period or meal time is predominantly
spent for the employer’s benefit. [Azucena citing 31 Am.
Jur. 881; Duka, Labor Laws and Social Legislation]
(2) Meal periods of 1 hour is deemed compensable when
the employee is on continuous shift. [National
Development Co. v. CIR, G.R. No. L-15422, Nov. 30,
1962].
(3) Shortened meal period of less than 1 hour (say, 30
minutes) must be compensable. [Sec. 7, Rule I, Book III
of the IRR].
Note: To shorten meal time to less than 20 minutes is not
allowed. If the so-called meal time is less than 20 minutes,
it becomes only a REST PERIOD and is considered working
time.
Exception to the Exemption: Shortened meal breaks upon
the employees’ request – NOT compensable. The
employees themselves may request that the meal period
be shortened so that they can leave work earlier than the
previously established schedule. [Drilon: Letter to Kodak
Philippines, Nov. 27, 1989; also Cilindro: BWC-WHSD
Opinion No. 197, s. 1998].
Conditions for shortened meal breaks upon employee’s
request.
(1) The employees voluntarily agree in writing to a
shortened meal period of 30 minutes and are willing to
waive the overtime pay for such shortened meal period;
(2) There will be no diminution whatsoever in the salary
and other fringe benefits of the employees existing
before the effectivity of the shortened meal period;
(3) The work of the employees does not involve strenuous
physical exertion and they are provided with adequate
“coffee breaks” in the morning and afternoon.
(4) The value of the benefits derived by the employees
from the proposed work arrangement is equal to or
commensurate with the compensation due them for
the shortened meal period as well as the overtime pay
for 30 minutes as determined by the employees
concerned;
(5) The overtime pay of the employees will become due
and demandable if ever they are permitted or made
beyond 4:30pm; and
(6) The effectivity of the proposed working time
arrangement shall be of temporary duration as
determined by the Secretary of Labor.
Jurisprudence:
(1) During meal period where the laborers are required to
stand by for emergency work, or where said meal hour
is not one of complete rest, such period is considered
overtime. [Pan-American Airways v. Pan-American
Employees Association, 1961]
(2) The eight-hour work period does not include the meal
break. Employees are not prohibited from going out of
the premises as long as they return to their posts on
time. [Phil. Airlines, Inc. v. NLRC, 1999]
WAITING TIME
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.[IRR, Book III, Rule 1, Sec. 5(a)]
(1) Waiting time spent by the employee shall be
considered as working time if waiting is an integral part
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of his work or the employee is required or engaged by
the employer to wait.
(2) An employee who is required to remain on call in the
employer’s premises or so close thereto that he cannot
use the time effectively and gainfully for his own
purpose shall be considered as working while on call.
[Sec. 5, Rule I, Book III, Labor Code Implementing Rules
and Regulation]
Legal test: Whether waiting time constitutes working time
depends upon the circumstances of each particular case.
The facts may show that the employer was engaged or was
waiting to be engaged. The controlling factor is whether
waiting time spent in idleness is so spent predominantly
for the employer’s benefit or for the employee’s. [Azucena
citing Armour v. Wantock]
OVERTIME WORK, OVERTIME PAY
Note: SEE ALSO: IRR of Labor Code, Sec. 7-10
Definition
Overtime compensation is additional pay for service or
work rendered or performed in excess of eight hours a day
by employees or laborers covered by the Eight-hour Labor
Law. [National Shipyard and Steel Corp. v. CIR, 1961].
Rationale
There can be no other reason than that he is made to work
longer than what is commensurate with his agreed
compensation for the statutorily fixed or voluntary agreed
hours of labor he is supposed to do. [PNB v. PEMA, 1982].
Overtime on ordinary working day
Overtime work. Work may be performed beyond eight (8)
hours a day provided that the employee is paid for the
overtime work, an additional compensation equivalent to
his regular wage plus at least twenty-five percent (25%)
thereof. [Art. 87, LC]
Overtime work on holiday or rest day
Work performed beyond eight hours on a holiday or rest
day shall be paid an additional compensation equivalent
to the rate of the first eight hours on a holiday or rest day
plus at least thirty percent (30%) thereof. [Art. 87, LC]
Computation of additional compensation
For purposes of computing overtime and other additional
remuneration as required by this Chapter, the "regular
wage" of an employee shall include the cash wage only,
without deduction on account of facilities provided by the
employer. [Art. 90, LC]
Emergency or overtime
Any employee may be required by the employer to perform
overtime work in any of the following cases:
(1) When the country is at war or when any other national
or local emergency has been declared by the National
Assembly or the Chief Executive;
(2) When it is necessary to prevent loss of life or property
or in case of imminent danger to public safety due to
an actual or impending emergency in the locality
caused by serious accidents, fire, flood, typhoon,
earthquake, epidemic, or other disaster or calamity;
(3) When there is urgent work to be performed on
machines, installations, or equipment, in order to avoid
serious loss or damage to the employer or some other
cause of similar nature;
(4) When the work is necessary to prevent loss or damage
to perishable goods; and
LABOR LAW BAR OPERATIONS COMMISSION
(5) Where the completion or continuation of the work
started before the eighth hour is necessary to prevent
serious obstruction or prejudice to the business or
operations of the employer. [Art. 89, LC]
Overtime pay does not preclude night differential pay
When the tour of duty of a laborer falls at nighttime
[between 10:00pm and 6:00am], the receipt of overtime
pay will not preclude the right to night differential pay. The
latter is payment for work done during the night while the
other is payment for the excess of the regular eight-hour
work. [Naric v. Naric Workers Union, 1959].
Overtime Rate based on Regular Wage
Base of Computation: Regular wage or – means regular
base pay; it excludes money received in different concepts
such as Christmas bonus and other fringe benefits. [Bisig
ng Manggagawa ng Philippine Refining Co. v. Philippine
Refining Co, G.R. No. L-27761, Sept. 30, 1981].
BUT when the overtime work was performed on the
employee’s rest day or on special days or regular holidays
[Art. 93 and 94], the premium pay, must be included in the
computation of the overtime pay. [See p. 19 of Handbook on
Workers’ Statutory Monetary Benefits, issued by the Bureau
of Working Conditions, 2006].
Synthesis of Rules
(1) Demandable only if the employer had knowledge and
consented to the overtime work rendered by the
employee.
Exception: Express approval by a superior NOT a
requisite to make overtime compensable:
(a) If the work performed is necessary, or that it
benefited the company; or
(b) That the employee could not abandon his work at
the end of his eight-hour work because there was
no substitute ready to take his place. [Manila
Railroad Co. v. CIR, G.R. No. L-4614, July 31, 1952].
Note: However, the Court has also ruled that a claim for
overtime pay is NOT justified in the absence of a written
authority to render overtime after office hours during
Sundays and holidays. [Global Incorporated v. Atienza]
(2) Compensation for work rendered in excess of the eight
(8) normal working hours in a day.
(a) For ordinary days, additional 25% of the basic
hourly rate.
(b) For rest day/special day/holiday, additional 30% of
the basic hourly rate.
(3) Not unless a day is a rest day, the given day is
considered an ordinary day.
(4) Undertime does NOT offset overtime
Undertime work on any particular day shall not be offset by
overtime work on any other day. Permission given to the
employee to go on leave on some other day of the week
shall not exempt the employer from paying the additional
compensation required in this Chapter. [Art. 88, LC]
Jurisprudence:
(1) NO waiver of overtime pay - The right to overtime pay
cannot be waived. Labor Code [Art. 87] requires that an
employee be paid all overtime compensation
notwithstanding any agreement to work for a lesser
wage. Consequently, such an agreement or "waiver"
will not prevent an employee from recovering the
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difference between the wages paid the employee and
the overtime compensation he or she is entitled to
receive. [Cruz v. Yee Sing, G.R. No. L-12046. Oct. 1959].
Exception: When the waiver of overtime pay is in
consideration of benefits and privileges which may be
more than what will accrue to them in overtime pay,
the waiver MAY be permitted. [Meralco Workers Union
v. MERALCo, G.R. No. L-11876, May 29, 1959]
(2) Composite or Package Pay NOT per se illegal –
Composite or “package pay” or “all-inclusive salary” is
an arrangement where the employee’s salary includes
the overtime pay. In other words, the overtime pay is
built-in.
The conditions for validity of the arrangement are:
(a) There is a clear written agreement knowingly and freely
entered by the employee; and
(b) The mathematical result shows that the agreed legal
wage rate and the overtime pay, computed separately,
are equal to or higher than the separate amounts
legally due. [Damasco v. NLRC, G.R. No. 115755,
December 4, 2000].
NIGHT WORK, NIGHT SHIFT DIFFERENTIAL
Note: See R.A. No. 10151
Night worker
‘Night worker’ means any employed person whose work
requires performance of a substantial number of hours of
night work which exceed a specified limit. This limit shall
be fixed by the Sec of Labor after consulting the workers’
representatives/labor organizations and employers. [Art.
154, RA 10151]
Night shift differential
The additional compensation of 10% of an employees
regular wage for each hour of work performed between
10pm and 6am. [Art. 86, LC]
Coverage
This Rule (On night shift differential) covers all employees
except:
(1) Those of the government and any of its political
subdivisions, including government-owned and/or
controlled corporations;
(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;
(4) Managerial employees as defined in Book Three of this
Code;
(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 performing work irrespective of the time
consumed in the performance thereof.
Rest days (night-off)
Night shift employees are entitled to a weekly night-off
[usually Saturday evening] or a weekly rest period of 24
hours beginning at the start of the night shift.
Work on special days
Night shift employees are also entitled to the premium pay
on special days and holidays. These days are reckoned as
calendar days which start at midnight and end at the
LABOR LAW BAR OPERATIONS COMMISSION
following midnight. The premium pay for the night shift
also starts or ends at midnight. However, the employment
contract, company policy or CBA may provide that in the
case of night shift workers, days—including special days
and regular holidays—shall begin on the night before a
calendar day.
PART-TIME WORK
Definition
A single, regular or voluntary form of employment with
hours of work substantially shorter than those considered
as normal in the establishment. [International Labor
Organization]
This excludes those forms of employment which, although
referred to as part-time work, are in particular, irregular,
temporary or intermittent employment, or in cases where
hours of work have been temporarily reduced for
economic, technical or structural reasons.
The wage and benefits of part-time worker are in
proportion to the number of hours worked.
CONTRACT FOR PIECE OF WORK
A contract for the delivery at a certain price of an article
which the vendor in the ordinary course of his business
manufactures or procures for the general market, whether
the same is on hand at the time or not, is a contract of sale,
but if the goods are to be manufactured specially for the
customer and upon his special order, and not for the
general market, it is a contract for a piece of work. [Article
1467, CC]
WAGES
GENERAL CONCEPT
Definition
(1) It is the remuneration or earnings, however designated,
capable of being expressed in terms of money,
(2) whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the
same,
(3) which is payable by an employer to an employee
(4) under a written or unwritten contract of 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. [Art. 97(f)]
“No work no pay” principle
General Rule: a fair day’s wage for a fair day’s labor or no
work no pay
Exception: when the laborer was able, willing and ready to
work but was illegally locked out, suspended or dismissed,
or otherwise illegally prevented from working. [Sugue v
Triumph International (2009) and Aklan Electric
Cooperative, Inc. vs. NLRC (2000)]
“Equal Work for Equal Pay” Principle
Employees working in the Philippines, if they are
performing similar functions and responsibilities under
similar working conditions should be paid equally. If an
employer accords employees the same position and rank,
the presumption is that these employees perform equal
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work. [International School Alliance of Educators v. Hon.
Quisumbing, G.R. No. 128845, June 1, 2000].
Coverage/Exclusions (FHN-CCB)
The Labor Code Title on wages shall not apply to the
following: [Art. 98 and BOOK 3, RULE VII, Sec 3 of the IRR]
(1) Farm tenancy or leasehold;
(2) Household or domestic helpers, including family
drivers and other persons in the personal service of
another;
(3) Homeworkers engaged in needlework;
(4) Workers in registered cottage industries who actually
work at home;
(5) Workers in registered cooperatives when so
recommended by the Bureau of Cooperative
Development upon approval of the Secretary of Labor;
(6) Workers in registered barangay micro business
enterprise [RA 9178].
WAGE VS. SALARY
Wages and salary are in essence synonymous. [Songco v.
NLRC, 1990]
There are slight differences:
Wage Salary
Paid for skilled or unskilled Paid to white collar workers
manual labor and denote a higher grade of
employment
Not subject to execution, Not exempt from execution,
garnishment or attachment garnishment or
attachment[Gaa vs. CA,
except for debts related to
1985]
necessities [Art. 1708
MINIMUM WAGE
See: DOLE Bureau of Working Condition’s Handbook on
Worker’s Statutory Monetary Benefits, 2010 Edition and
Wage Order No. NCR-17, 2012
Definition
Statutory minimum wage is the lowest wage rate fixed by
law that an ER can pay his workers. [IRR, RA 6727, (o)]
Coverage
General Rule: The wage increases prescribed under Wage
Orders apply to all private sector workers and EEs
receiving the daily minimum wage rates or those receiving
up to a certain daily wage ceiling, where applicable,
regardless of their position, designation, or status, and
irrespective of the method by which their wages are paid.
Exception:
(1) Househelpers, including family drivers and workers in
the personal service of another whose conditions of
work are prescribed in RA No. 7655;
(2) Workers of registered barangay micro business
enterprise with Certificates of Authority issued by the
Office of the Municipal or City Treasurer.
Exemptions
Upon application with and as determined by the Regional
Tripartite Wages and Productivity Board, based on
documentation and other requirements in accordance with
applicable rules and regulations issued by the NWPC, the
LABOR LAW BAR OPERATIONS COMMISSION
following may be exempted from the applicability of this
Order:
(1) Distressed establishments;
(2) Retail/Service establishments regularly employing not
more than 10 workers;
(3) Establishments whose total assets including those
arising from loans but exclusive of the land on which
the particular business entity’s office, plant and
equipment are situated, are not more than P3 Million;
and,
(4) Establishments adversely affected by natural
calamities. [Sec. 7, Wage Order No. 17, 2012]
Basis
The basis of the minimum wage rates prescribed by law
shall be the normal working hours of 8 hours a day. [Sec 7,
IRR of RA 6727]
Freedom to bargain
Despite the minimum wage order, employees are not
prevented from bargaining for higher wages with their
employers.
Criteria/Factors for Wage Setting
Factors/Criteria in determining regional minimum wages:
[Art. 124] (DXCN IS PREQ)
(1) Demand for living wages;
(2) Wage adjustment © 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.
Procedure for Wage Fixing by Regional Board [Art. 123]
(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
(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
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]
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MINIMUM WAGE OF WORKERS PAID BY RESULTS
Workers paid by results
All workers paid by results, including homeworkers and
those who are paid on piece rate, takay, pakyaw, or task
basis, shall receive not less than the prescribed minimum
wage rates under the Regional Wage Orders for normal
working hours which shall not exceed 8 hours a day, or a
proportion thereof.
The wage rates of workers who are paid by results shall
continue to be established in accordance with Art. 101 of
the LC, as amended, and its IRR. This will be done through:
(1) Time and motion studies.
(2) Consultation with representatives of ERs’ and workers’
organizations in a tripartite conference called by the
DOLE Sec.
Request for the conduct of time and motion studies, to
determine whether the nontime EEs in an enterprise are
being paid fair and reasonable wage rates, may be filed
with the proper Regional Office.
Where the output rates established by the ER do not
conform to the standards set under the foregoing methods
for establishing output rates, the EE shall be entitled to the
difference between the amount he/she is entitled to
receive and the amount paid by the ER.
The adjustment in the wage rates by reason of mandatory
wage increase for workers paid by results shall be
computed in accordance with the following steps:
Minimum wage of apprentices and learners
Wages of apprentices and learners shall in no case be less
than 75% of the applicable minimum wage rates. [Art. 61 &
75, LC]
Note:
Learners employed in piece or incentive-rate jobs during
the training period shall be paid in full for the work done.
[Art. 76, LC]
wages. xxx While commissions are, indeed, incentives or
forms of encouragement to inspire employees to put a
little more industry on the jobs particularly assigned to
them, still these commissions are direct remunerations for
services rendered.
Likewise, there is no law mandating that commissions be
paid only after the minimum wage has been paid to the
employee. Verily, the establishment of a minimum wage
only sets a floor below which an employee’s remuneration
cannot fall, not that commissions are excluded from wages
in determining compliance with the minimum wage law.
[Iran v. NLRC, 1998]
DEDUCTIONS FROM WAGES [ART. 113, LC]
General Rule: No employer, in his own behalf or in behalf of
any person, shall make any deduction from the wages of
his employees.
Exceptions:
(1) Employee is insured with his consent by the employer,
and the deduction is to recompense the employer for
the amount paid by him as premium on the insurance;
(2) For union dues, in cases where the right of the worker
or his union to check-off has been recognized by the
employer or authorized in writing by the individual
worker concerned; and
(3) In cases where the employer is authorized by law or
regulations issued by the Secretary of Labor and
Employment, such as:
(a) Employee debt to employer is due and
demandable [CC 1706];
(b) Attachment or execution in cases of debts incurred
for necessities: food, shelter, clothing, medical
attendance [CC 1708];
(c) Withholding tax;
(d) Deductions of a legally established cooperative;
rd
(e) Payment to 3 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.

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. 72, LC]
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]

Minimum wage of persons with disability With Employee’s consent in Without Employee’s consent
A qualified disabled EE shall be subject to the same terms Writing
and conditions of employment and the same
compensation, privileges, benefits, fringe benefits or (1) SSS Payments (1) Worker’s insurance
allowances as a qualified able-bodied persons. [Sec 5, RA (2) PHILHEALTH payments acquired by the
7277/the Magna Carta for Disabled Persons] (3) Contributions to PAG-IBIG employer
Fund (2) Union dues, where the
(4) Value of meals and other right to check-off is
COMMISSIONS
facilities recognized by the
Definition
(5) Payments to third persons employer [provided in
Commissions have been defined as the recompense,
with employee’s consent the CBA]
compensation or reward of an agent, salesman, executor,
(6) Deduction of absences
trustee, receiver, factor, broker or bailee, when the same is
Debts of the employee to
calculated as a percentage on the amount of his
Union dues, where check-off is the employer that have
transactions or on the profit to the principal. [Philippine
not provided in the CBA. become due and
Duplicator’s, Inc. v. NLRC, 1993]
demandable
Commissions as part of minimum wage
Rationale: Prohibition seeks to protect the employee
The Court held that the definition of “wage” under Art. 97
against unwarranted practices that would diminish his
(f) of the LC explicitly includes commissions as part of
compensation without his knowledge and consent. [Radio

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Communication of the Phil., Inc. v. Sec. of Labor, 1989] Purpose

NON-DIMINUTION OF BENEFITS For the benefit of the For the benefit or
General Rule: prohibition against elimination or diminution employee and his family; for convenience of the employer
of benefits [Art. 100] their existence and
subsistence
No wage order issued by any regional board shall provide How Treated
for wage rates lower than the statutory minimum wage
rates prescribed by Congress. [Art. 127, as amended by Part of wage so it is Independent of the Wage so
Republic Act No. 6727, June 9, 1989] deductible not deductible

Requisites Requirements for deducting value of facilities

If the following are met, then the employer cannot remove
or reduce benefits:
(1) Ripened company policy: Benefit is founded on a policy
which has ripened into a practice over a long period
[Prubankers Assn. vs. Prudential Bank and Co., 1999]
(2) Practice is consistent and deliberate and
(3) Not due to error in the construction or application of a
doubtful or difficult question of law. [Globe Mackay
Cable vs. NLRC, 1988]
(4) The diminution or discontinuance is done unilaterally by
the employer.
When not applicable: When at least one of the requisites is
absent.
(1) Mistake in the application of the law [Globe Mackay
Cable v. NLRC, G.R. No. 74156, June 29, 1988]
(2) Negotiated benefits [Azucena]
(3) Reclassification of Positions – e.g. loss of some
benefits by promotion.
(4) Contingent or Conditional Benefits – the rule does not
apply to a benefit whose grant depends on the
existence of certain conditions, so that the benefit is
not demandable if those preconditions are absent.
Note: Benefits initiated through negotiation between
Employee and Employer, e.g. CBA, can only be eliminated
or diminished bilaterally.
FACILITIES V. SUPPLEMENTS
The distinction between facilities and supplement is
relevant because the former are wage-deductible while the
latter is not. Simply put, a wage includes facilities. [Art. 97]
The IRR definition [IRR Book III Rule 7-A Sec. 5] has 2
components:
(1) Facilities are articles or services for the benefit of the
st
employee or his family. This 1 part defines facilities.
(2) Facilities shall not include tools of the trade or articles
or service primarily for the benefit of the employer or
necessary to the conduct of the employer’s business.
nd
This 2 part is essentially defines what a supplement.
Criterion: In determining whether a privilege is a facility, the
criterion is not so much its kind but it’s PURPOSE [Millares
v NLRC & PICOP, 1999]. Facilities are items of expense
necessary for the laborer’s and his family’s existence and
subsistence. [States Marine Corp. v. Cebu Seamen's Assoc.,
Inc., 1963]
Comparison between Facilities and Supplements
Facilities Supplements
What it is
Articles or services/items of Extra remuneration or
expense special benefits / articles or
services / tools of the trade
(1) Customarily furnished by the trade - "Customary" is
founded on long-established and constant practice
connoting regularity. The receipt of an allowance on a
monthly basis does not ipso facto characterize it as
regular and forming part of salary because the nature
of the grant is a factor worth considering [Millares v.
NLRC, 1999]
(2) Voluntarily accepted in writing by the employee; and
(3) Charged at fair and reasonable value. [Mabeza v.
NLRC, 1997]
WAGE DISTORTION/RECTIFICATION
Definition
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
4 Elements of wage distortion (ESES)
(1) Existing hierarchy of positions with corresponding
salary rates;
(2) A significant change in the salary rate of a lower pay
class without a concomitant increase in the salary rate
of a higher one;
(3) The elimination of the distinction between the two
levels; and
(4) The existence of the distortion in the same region of the
country. [Prubankers Assn. v. Prudential Bank and Co.,
1999]
How to Resolve (NGU)
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.
Grievance Procedure [under the CBA]  if unresolved
 VOLUNTARY arbitration
Unorganized Establishment
(1) ERs 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
Both the employer and employee cannot use economic
weapons.

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(4) Employer cannot declare a lock-out; Employee cannot Where 278 261 days – ordinary working days
declare a strike because the law has provided for a days = 12 days – regular holidays
procedure for settling 5 days - special days (if
(5) The salary or wage differential does not need to be considered paid; if
maintained. [National Federation of Labor v. NLRC, actually worked, this is
1994] equivalent to 6.5 days)

National Conciliation and Mediation Board  if
unresolved  COMPULSORY arbitration by the NLRC
CBA vis-à-vis Wage Orders – CBA creditability
In determining an employee’s regular wage, the pertinent
stipulations in the CBA are controlling, provided the result
is not less than the statutory requirement [Philippine
National Bank vs. PEMA, 115 SCRA 507]
DIVISOR TO DETERMINE DAILY RATE
Suggested formula for computing the Estimated Equivalent
Monthly Rate
Estimated Equivalent Monthly Rate (EEMR)=
Applicable Daily Rate (ADR) x days/year
-------------------------------------------------
12
For monthly-paid EEs:
Monthly-paid employees are those who are paid every day
of the month, including unworked rest days, special days,
and regular holidays.
[Sec. 6, Rules Implementing RA 6727, 1989]
Note: Under Proclamation No. 459 signed by Pres. Benigno
Aquino on Aug. 16, 2012, there are 12 regular holidays and
5 special days.
REST DAY
Note: See IRR of Labor Code Book III, Rule III
Every employee regardless of the nature of his work is
entitled to at least one whole day every week as his rest
day. The rest day or day off shall be determined by the
employer. However, in cases where the employee is
required by his religious belief to rest on certain days, such
belief shall be respected by the employer.
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. [Art. 91
(a)]

365 days/year Preference of the employee

The employer shall determine and schedule the weekly
Where 365 296 days – ordinary working days rest day of his employees subject to collective bargaining
days/year = 52 days – rest days agreement and to such rules and regulations as the
12 days - regular holidays Secretary of Labor and Employment may provide.
5 days - special days However, the employer shall respect the preference of
employees as to their weekly rest day when such
For daily-paid EEs: preference is based on religious grounds. [Art. 94 (b)]
Daily-paid employees are those who are paid on the days
actually worked and on unworked regular holidays. EMERGENCY REST DAY WORK
(a) For those who are required to work every day including When employer may require work on a rest day
Sundays or rest days, special days and regular The employer may require his employees to work on any
holidays: day:
(a) In case of actual or impending emergencies caused by
394.1 days/year serious accident, fire, flood, typhoon, earthquake,
epidemic or other disaster or calamity to prevent loss of
Where 394.10 296 days – ordinary working days life and property, or imminent danger to public safety;
days = 24 days – 12 regular holidays x (b) In cases of urgent work to be performed on the
200% machinery, equipment, or installation, to avoid serious
67.60 days – 52 rest days x 130 % loss which the employer would otherwise suffer;
6.50 days – 5 special days x (c) In the event of abnormal pressure of work due to
130% special circumstances, where the employer cannot
ordinarily be expected to resort to other measures;
(b) For those who do not work and are not considered paid (d) To prevent loss or damage to perishable goods;
on Sundays or rest days: (e) Where the nature of the work requires continuous
operations and the stoppage of work may result in
313 days/year irreparable injury or loss to the employer; and
(f) Under other circumstances analogous or similar to the
Where 313 296 days – ordinary working days foregoing as determined by the Secretary of Labor and
days = 12 days – regular holidays Employment. [Art. 92, LC]
5 days - special days (if
considered paid; if Synthesis of the Rules
actually worked, this is (1) Rest day of not less than 24 consecutive hours after 6
equivalent to 6.5 days) consecutive days of work.
(2) No work, no pay principle applies
(c) For those who do not work and are not considered paid (3) If an employee works on his designated rest day, he is
on Saturdays and Sundays or rest days: entitled to a premium pay.
(4) Premium pay is additional 30% of the basic pay.
278 days/year (5) Employer selects the rest day of his employees

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(6) However, employer must consider the religious reasons
for the choice of a rest day.
HOLIDAY PAY/PREMIUM PAY
HOLIDAYS
Note: Art. 94 (c) was superseded by E.O. 203, which was
subsequently amended by RA 9177, 9256, 9492, and
Proclamation No. 459.
Holiday pay is a one-day pay given by law to an employee
even if he does not work on a regular holiday. This gift of a
day’s pay is limited to each of the 12 regular holidays.
COVERAGE
General Rule: All employees
Exceptions:
(1) Those of the government and any of the political
subdivision, including government-owned and
controlled corporation;
(2) Those of retail and service establishments regularly
employing less than 10 workers;
(3) Domestic helpers and persons in the personal service
of another;
(4) Managerial employees as defined in Book III
(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 performing work irrespective of the time
consumed in the performance thereof. [Sec. 1, Rule IV of
the IRR]
"Retail Establishment" is one principally engaged in the
sale of goods to end-users for personal or household use;
"Service Establishment" is one principally engaged in the
sale of service to individuals for their own or household use
and is generally recognized as such. [IRR of RA 6727/the
Wage Rationalization Act]
(6) Last Day of the Year - December 31
Special Holiday (for all schools)
EDSA Revolution Anniversary – February 25 (Monday)
P.D. 1083 [Code of Muslim Personal Laws] SEE: Arts. 169-173
Muslim Holidays
Specifically for the Muslim Areas P.D. 1083, in its Book V,
Title, recognizes five (5) Muslim Holidays, namely:
(1) Amun Jadid (New Year) which falls on the first (1st) day
of the lunar month of Muharram;
(2) Mauli-un-Nabi (Birthday of the Prophet Muhammad)
which falls on the twelfth (12th) day of the third (3rd)
lunar month of Rabi-ul-Awwal;
(3) Lailatul Isra Wal Mi Rai (Nocturnal Journey and
Ascencion of the Prophet Muhammand) which falls on
the twenty-seventh [27th] day of the seventh (7th)
lunar month of Rajab;
(4) Id-ul-Fitr (Hari Raja Pausa) which falls on the first (1st)
day of the tenth (10th) lunar month of Shawwal
commemorating the end of the fasting season; and
(5) Id-ul-Adha (Hari Raha Haji) which falls on the tenth
(10th) of the twelfth (12th) lunar month of Dhu’l-Hijja.
Note:
Id-ul-Fitr (Eid’l Fitr) and Id-ul-Adha (Eid’l Adha) have been
added to the list of national legal holidays.
There should be no distinction between Muslims & non-
Muslims as regards to the payment of benefits for Muslim
holidays. Wages & other emoluments granted by law to the
working man are determined on the basis of the criteria
laid down by laws & not on worker’s faith. Art. 3(3), PD
1083 states that nothing herein shall be construed to
operate to the prejudice of a non-Muslim. [San Miguel Corp
vs. CA, 2002]
HOLIDAY PAY COMPUTATION

REGULAR HOLIDAYS
See: Art. 94 Labor Code, Book III, Rule IV of IRR, RA 9424
Proclamation No. 459 signed by President Aquino on 16 and DOLE Memorandum Circular 1 Series of 2004
August 2012, provides for the observance of the regular
holidays and special [non-working] days for the year 2013 General Rule: An employer may require an employee to
on the following dates: work on any holiday but such employee shall be paid a
compensation equivalent to twice his regular rate. [Art.
94(b)]
Regular Holidays
(1) New year’s Day - January 1 (Tuesday) According to the LC, IRR and Memo:
(2) Maundy Thursday – March 28
Work on any regular holiday,
(3) Good Friday – March 29 200% of regular daily wage
(4) Araw ng Kagitingan – April 9 (Tuesday) not exceeding 8 hours
(5) Labor Day – May 1 (Wednesday)
(6) Independence Day – June 12 (Wednesday) Work on any regular holiday, 200% of regular daily wage
(7) National Heroes Day – August 26 (Last Monday of if it exceeds 8
st
(for the 1 8 hours)
August) hours/overtime + 30% of hourly rate on said
(8) Bonifacio Day – November 30 (Saturday) day
(9) Christmas Day - December 25
(10) Rizal Day - December 30 (Monday) Work on any regular holiday 200% of regular daily wage
(11) Eid’l Fitr – date to be determined later which falls on the scheduled + 30% of such amount
(12) Eid’l Adha – date to be determined later rest day, not exceeding 8
hours
Special (Non-Working Days) Work on any regular holiday Regular holiday-on-rest day
(1) Black Saturday – March 30 which falls on scheduled rest rate (200% of regular daily
(2) Ninoy Aquino Day - August 21 (Wednesday) day, if it exceeds 8 wage plus 30% of such
(3) All Saints Day - November 1 (Friday) hours/overtime amount) + 30% of hourly
(4) Additional special (Non-working) days – November 2 rate on said day.
(Saturday) Work on special holiday not Regular daily wage + 30%
(5) December 24 (Tuesday) exceeding 8 hours thereof

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Work on special holiday Regular daily wage + 50%
thereof
Note:
(1) According to DOLE Memo Circular 1-04, a “special
holiday”/”special day” includes the National Special
Days, and declared special days such as Special Non-
working Holiday, Special Public Holiday and Special
National Holiday. Such days are entitled to the rates
prescribed above. These days are not the same as a
special working holiday.
(2) A special working holiday is considered an ordinary
working day, so there is no premium pay.
Double holiday pay
According to “DOLE Explanatory Bulletin on Worker’s
Entitlement to Holiday Pay on 9 April 1993,” if two holidays
fall on the same day:
(1) If unworked, 200% of basic wage.
(2) If worked, 300% of basic wage. [Azucena]
Double Holiday Rule for Monthly-paid employees – For
covered employees whose monthly salaries are computed
based on 365 days and for those other employees who are
paid using factor 314, or 262, or any other factor which
already considers the payment for the 11 regular holidays,
NO additional payment is due them. [BWC-WHSD Opinion
No. 053, s. 1998].
Successive holiday pay
According to IRR, Rule IV, Sec. 10, Employee entitled to
holiday pay for both days, IF:
(1) He is present on day immediately preceding first
holiday; or
(2) He works on first holiday, which entitles him to pay on
second holiday.
Note: SEE IRR Book III, Rule IV, Sec. 10
Divisors
Divisor assumes important role in determining whether or
not holiday pay is already computed.
(1) 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 = 296 days – ordinary days
52 days – rest days
12 days – regular holidays
5 days – special holidays
(2) As a general rule, for a company with a 6-day working
schedule, the divisor 313 already means that the legal
holidays are included in the monthly pay of the
employee. The divisor is arrived at by subtracting all
Sundays from the total number of calendar days in a
year.
(3) As a general rule for a company with a 5-day working
schedule, the divisor 278 means that the holiday pay is
already included in the monthly salary of the employee.
Sundays
Letter of Instruction No. 1087:
(1) When a holiday falls on a Sunday, the following
Monday will not be considered a holiday unless a
proclamation says so.
LABOR LAW BAR OPERATIONS COMMISSION
(2) Furthermore as stated in the Wellington case [see
below], a legal holiday falling on a Sunday does not
create a legal obligation to pay extra, aside from the
usual holiday pay, to monthly-paid employees
[Azucena].
Holidays falling on a Sunday
[Wellington Investment and Manufacturing Corporation vs.
Trajano 1995]:
(a) Supreme Court ruled that the Regional Director erred
in saying that if a holiday fell on Sunday, an extra day
of pay was created; thus, an employer should pay twice
the amount of holiday pay on that day.
(b) In fixing the salary, Wellington simply deducted 51
Sundays from the 365 days normally comprising a year
and used the difference, 314, as divisor for determining
the monthly salary. The monthly salary thus fixed
actually covers payment for 314 days of the year,
including regular and special holidays.
(c) No provision of law requires any employer to make
adjustments in the monthly salary rate set by him to
take account of legal holidays falling on Sundays in a
given year, otherwise to reckon a year at more than 365
days.
Non-working/scheduled rest day
Where the day immediately preceding the holiday is a non-
working day in the establishment or the scheduled rest day
of the employee, he shall not be deemed to be on leave of
absence on that day, in which case he shall be entitled to
the holiday pay if he worked on the day immediately
preceding the non-working day or rest day. [IRR, Book III,
Rule V, Sec 6 (c)]
Example:
If a holiday falls on Monday, and Sunday is a non-working
day in the establishment or is the scheduled rest day of the
employee, the employee shall be entitled to holiday pay if
he worked on Saturday (which is the day immediately
preceding Sunday, the non-working day or rest day).
RIGHT TO HOLIDAY PAY
In case of absences
All covered employees shall be entitled to the benefit
provided herein when they are on leave of absence with
pay.
Employees who are on leave of absence without pay on the
day immediately preceding a regular holiday may not be
paid the required holiday pay if he has not worked on such
regular holiday. [IRR, Book III, Rule IV, Sec 6(a)]
Note:
(1) If an employee is on leave of absence with pay on the
day immediately preceding a regular holiday, he is
entitled to holiday pay.
(2) If an employee is on leave of absence without pay on
the day immediately preceding a regular holiday, he is
not entitled to holiday pay unless he works on such
regular holiday.
In case of temporary cessation of work
(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.
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(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. [IRR, Book III, Rule IV, Sec 7]
An employee is entitled to holiday pay for the regular
holidays falling within the period in cases of temporary
shutdowns or cessation of work, when:
(1) an annual inventory; or
(2) repair or cleaning of machineries and equipment is
undertaken.
The employer may not pay his employees for the regular
holidays during the suspension of work if: the cessation of
operation is due to business reverses, and is authorized by
the Secretary of Labor.
11.C, Standard Terms and Conditions Governing the
Employment of Filipino Seafarers on Board Ocean-Going
Vessels]
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.
Premium Pay
Definition
Premium pay refers to the additional compensation for
work performed within 8 hours on nonwork days, such as
rest days and special days.

TEACHERS, PIECE WORKERS, SEAFARERS, SEASONAL WORKERS, Coverage

ETC. General Rule: All employees
(a) Private school teachers, including faculty members of Exceptions:
colleges and universities, may not be paid for the (1) Those of the government and any of the political
regular holidays during semestral vacations. They subdivision, including government-owned and
shall, however, be paid for the regular holidays during controlled corporations;
Christmas vacation; (2) Managerial employees as defined in Book III;
(b) Where a covered employee, is paid by results or output, (3) Househelpers and persons in the personal service of
such as payment on piece work, his holiday pay shall another;
not be less than his average daily earnings for the last (4) Workers who are paid by results, including those who
seven (7) actual working days preceding the regular are paid on piece rate, takay, pakyaw, or task basis, and
holiday; Provided, However, that in no case shall the other noontime work, if their output rates are in
holiday pay be less than the applicable statutory accordance with the standards prescribed in the
minimum wage rate. regulations, or where such rates have been fixed by the
(c) Seasonal workers may not be paid the required holiday Secretary of Labor and Employment;
pay during off-season when they are not at work (5) Field personnel, if they regularly perform their duties
(d) Workers who have no regular working days shall be away from the principal or branch office or place of
entitled to the benefits provided in this Rule. [SECTION business of the ER and whose actual hours of work in
8, Book III, Rule IV of IRR] the filed cannot be determined with reasonable
certainty.
Holiday Pay of Hourly-Paid Faculty Members
(1) They are not entitled to payment of holiday pay Premium pay rates
because they are paid only for work actually done. Note: SEE DOLE Memorandum Circular 1, Series of 2004.
Since regular holidays are known to both the school
and faculty members as “no class day”; certainly the When Work Performed Premium Pay
latter do not expect payment for said unworked
holidays. On scheduled rest day 30% of regular wage
(2) They are entitled to their hourly rate on days declared
On Sunday ONLY IF 30% of regular wage
as special holidays. Be it noted that when a special
ESTABLISHED rest day
public holiday is declared, the faculty member paid by
the hour is deprived of expected income, and it does No regular work and rest days 30% of regular wage for
not matter that the school calendar is extended in view work performed on
of the days or hours lost, for their income that could be Sundays and holidays
earned from other sources is lost during the extended On any special holiday/special 30% of regular wage
days. day
(3) Similarly, when classes are called off or shortened on
account of typhoons, floods, rallies, and the like, these On any special holiday /special 50% of regular wage
faculty members must likewise be paid, whether or not day falling on scheduled rest
extensions are ordered. [Jose Rizal College v. NLRC, day
G.R. No. 65482, Dec. 1, 1987] On any regular holiday falling 230% of regular wage
on scheduled rest day
Piece workers
Philosophy underlying the exclusion of piece workers from
the 8-hour law is that said workers are paid depending Where the collective bargaining agreement or other
upon the work they do irrespective of the amount of time applicable employment contract stipulates the payment of
employed in doing said work. [Red V Coconut Products Ltd., a higher premium pay than that prescribed under this
v. CIR, 1966] Article, the employer shall pay such higher rate. [Art. 93
(d), LC]
Seafarers
Any hours of work or duty including hours of watch- Nothing in this Rule shall justify an employer in reducing
keeping performed by the seafarer on designated rest days the compensation of his employees for the unworked
and holidays shall be paid rest day or holiday pay. [Section Sundays, holidays, or other rest days which are considered

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UP COLLEGE OF LAW
paid-off days or holidays by agreement or practice
subsisting upon the effectivity of the Code. [IRR Book III,
Rule III, Sec. 8]
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. [Sec. 9, IRR
Book III, Rule III]
LEAVES
SERVICE INCENTIVE LEAVE PAY
Right to service incentive leave
Every employee who has rendered at least one year of
service shall be entitled to a yearly service incentive leave
of five days with pay. [Art. 95, LC]
SIL DOES NOT apply to the following employees:
(1) Those of the government and any of its political
subdivisions, including GOCCs;
(2) Domestic helpers and persons in the personal service
of another;
(3) Managerial employees as defined in Book 3 of this
Code;
(4) Field personnel and other employees whose
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 performing work irrespective of the time
consumed in the performance thereof;
(5) Those who are already enjoying the benefit herein
provided;
(6) Those enjoying vacation leave with pay of at least 5
days;
(7) Those employed in establishments regularly employing
less than 10 employees. [Sec. 1, Rule V, Implementing
Rules and Regulations].
Jurisprudence:
(1) Teachers of private school on contract basis are
entitled to service incentive leave. [Cebu Institute of
Technology v. Ople, 156 SCRA 531].
(2) Piece Rate Workers – In the case of Makati
Haberdashery v. NLRC [G.R. No. 83380-81, Nov. 15,
1989] the Court ruled that piece-rate employees are
not entitled to service incentive leave. However, in the
case of Labor Congress of the Philippines v. NLRC [G.R.
No. 123938, May 21, 1998], the Court held that
petitioners are entitled to service incentive leave. The
Court looked at several factors which led them to
conclude that petitioners, although compensated on a
per piece basis, were regular employees of private
respondents.
Meaning of “1 year of service”
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 authorized absences and paid regular holidays
unless the working days in the establishment as a matter
of practice or policy, or that provided in the employment
contract is less than 12 months, in which case said period
shall be considered as one year. [IRR Book III, Rule V, Sec.
3]
LABOR LAW BAR OPERATIONS COMMISSION
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. [Art. 95 (c), LC]
The service incentive leave shall be commutable to its
money equivalent if not used or exhausted at the end of
the year. [IRR Sec. 5, LC]
The cause of action of an entitled employee to claim his
service incentive leave pay accrues from the moment the
employer refuses to remunerate its monetary equivalent if
the employee did not make use of said leave credits but
instead chose to avail of its commutation [into
money]. Accordingly, if the employee wishes to
accumulate his leave credits and opts for its commutation
upon his resignation or separation from employment, his
cause of action to claim the whole amount of his
accumulated service incentive leave shall arise when the
employer fails to pay such amount at the time of his
resignation or separation from employment. [Auto Bus
Transport vs. NLRC, 2005]
Exclusions from coverage
SIL shall not apply to those
(1) who are already enjoying the benefit herein provided,
(2) those enjoying vacation leave with pay of at least five
days and
(3) those employed in establishments regularly employing
less than ten employees or
(4) in establishments exempted from granting this benefit
by the Secretary of Labor and Employment after
considering the viability or financial condition of such
establishment. [Art. 95, LC]
Commutable nature of benefit
They are not entitled to service incentive leave pay because
as piece-rate workers being paid at a fixed amount for
performing work irrespective of time consumed in the
performance thereof, they fall under one of the exceptions
stated in Section 1(d), Rule V, Book III, IRR of Labor Code.
[Makati Haberdashery vs. NLRC, 1989]
MATERNITY LEAVE
Note: SEE Sec. 14-A of RA 1161 (Social Security Law) as
amended by RA 7322 and RA 8282
Coverage
Every woman in the private sector, whether married or
unmarried, is entitled to the maternity leave benefits.
Conditions to entitlement
Requisites
(1) Employment: A female employee employed at the time
of delivery, miscarriage or abortion…
(2) Contribution: …who has paid at least 3 monthly
contributions in the 12-month period immediately
preceding the semester of her childbirth, or
miscarriage.
(3) 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.
Benefit received
A daily maternity benefit equivalent to 100% of her average
daily salary credit for:
(1) 60 days for normal delivery
(2) 78 days for caesarean delivery
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UP COLLEGE OF LAW
This benefit shall NOT be included in the computation of
th
13 month pay as it is granted to an employee in lieu of
th
wages which is the basis for computing 13 month.
Availment
Other conditions:
(1) Employer shall advance the payment subject to
reimbursement by the SSS within 30 days from filing of
leave application.
(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 four (4)
deliveries or miscarriages.
(4) Sanction:
That if an employee should give birth or suffer
miscarriage
(a) without the required contributions having been
remitted for her by her ER to the SSS, or
(b) without the latter having been previously notified
by the ER of time of the pregnancy, then the
employer shall pay to the SSS damages equivalent
to the benefits which said employee member would
otherwise have been entitled to.
PATERNITY LEAVE
Coverage and purpose
Paternity leave is granted to all married male employees in
the private and public sectors, regardless of their
employment status (e.g. probationary, regular,
contractual, project basis). The purpose of this benefit is to
allow the husband to lend support to his wife during her
period of recovery and/or in nursing her newborn child.
Benefit
It shall apply to the first 4 deliveries of the employee’s
lawful wife with whom he is cohabiting.
It shall be for 7 calendar days, with full pay, consisting of
basic salary and mandatory allowances fixed by the
Regional Wage Board, if any, provided that his pay shall
not be less than the mandated minimum wage.
Note: Cohabiting means the obligation of the husband and
wife to live together. If the spouses are not physically living
together because of the workstation or occupation, the
male employee is still entitled to the paternity leave
benefit.
Usage of the benefit
Usage of the leave shall be after the delivery, without
prejudice to an employer’s policy of allowing the employee
to avail of the benefit before or during the delivery,
provided that the total number of days shall not be more
than 7 days for each covered delivery.
Conditions for entitlement
A married employee shall be entitled to paternity leave
benefit provided that he has met the following conditions:
(1) He is an employee at the time of the delivery of his
child;
(2) He is cohabiting with his spouse at the time that she
gives birth or suffers a miscarriage;
(3) He has applied for paternity leave with his ER within a
reasonable period of time from the expected date of
delivery by his pregnant spouse, or within such period
as may be provided by company rules and regulations,
or by CBA; and,
LABOR LAW BAR OPERATIONS COMMISSION
(4) His wife has given birth or suffered a miscarriage.
Application for paternity leave
See number 4 under conditions for entitlement.
In case of miscarriage, prior application for paternity leave
shall not be required.
Nonconversion to cash
In the event that the paternity leave is not availed of, it
shall not be convertible to cash and shall not be
cumulative.
Crediting of existing benefits
(1) If the existing paternity leave benefit under the CBA,
contract, or company policy is greater than 7 calendar
days as provided for in RA 8187, the greater benefit
shall prevail.
(2) If the existing paternity leave benefit is less than that
provided in RA 8187, the ER shall adjust the existing
benefit to cover the difference.
Where a company policy, contract, or CBA provides for an
emergency or contingency leave without specific provisions
on paternity leave, the ER shall grant to the employee 7
calendar days of paternity leave.
PARENTAL LEAVE
RA 8972 (Solo Parents’ Welfare Act of 2000)
Definition
Leave benefits granted to a solo parent to enable him/her
to perform parental duties and responsibilities where
physical presence is required. (Parental Leave for Solo
Parents, RA 8972)
Coverage
Any solo parent or individual who is left alone with the
responsibility of parenthood due to:
(1) Giving birth as a result of rape or, as used by the law,
other crimes against chastity;
(2) Death of spouse;
(3) Spouse is detained or is serving sentence for a criminal
conviction for at least one (1) year;
(4) Physical and/or mental incapacity of spouse as
certified by a public medical practitioner;
(5) Legal separation or de facto separation from spouse
for at least one (1) year: Provided that he/she is
entrusted with the custody of the children;
(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.
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Conditions for entitlement
A solo parent employee shall be entitled to the parental
leave under the following conditions:
(1) He/she has rendered at least one (1) year of service,
whether continuous or broken;
(2) He/she has notified his/her employer that he/she will
avail himself/herself of it, within a reasonable period of
time; and
(3) He/she has presented to his/her employer a Solo
Parent Identification Card, which may be obtained from
the DSWD office of the city or municipality where
he/she resides.
Availment
The parental leave is an additional benefit which shall be
for seven (7) working days every year, with full pay,
consisting of basic salary and mandatory allowances.
Grant of 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. [Section 6]
Protection against work discrimination
No employer shall discriminate against any solo parent
employee with respect to terms and conditions of
employment on account of his/her status. [Section 7]
Termination of the benefit
A change in the status or circumstance of the parent
claiming the benefit under the law, such that he/she is no
longer left alone with the responsibility of parenthood,
shall terminate his/her eligibility for this benefit.
LEAVES FOR VICTIMS OF VIOLENCE AGAINST WOMEN
[RA 9262]
Coverage and purpose
VAWC leave is granted to women employees who are
victims of violence, as defined in RA 9262. The leave
benefit covers the days that the women employee has to
attend to medical or legal concerns.
Definition of Terms
"Violence against women and their children" refers to any
act or a series of acts committed by any person against a
woman who is his wife, former wife, or against a woman
with whom the person has or had a sexual or dating
relationship, or with whom he has a common child, or
against her child whether legitimate or illegitimate, within
or without the family abode, which result in or is likely to
result in physical, sexual, psychological harm or suffering,
or economic abuse including threats of such acts, battery,
assault, coercion, harassment or arbitrary deprivation of
liberty.
VAWC includes, but is not limited to, the following acts:
(1) “Physical Violence" refers to acts that include bodily or
physical harm;
(2) "Sexual violence" refers to an act which is sexual in
nature, committed against a woman or her child. It
includes, but is not limited to:
(a) rape, sexual harassment, acts of lasciviousness,
treating a woman or her child as a sex object,
making demeaning and sexually suggestive
remarks, physically attacking the sexual parts of
LABOR LAW BAR OPERATIONS COMMISSION
the victim's body, forcing her/him to watch obscene
publications and indecent shows or forcing the
woman or her child to do indecent acts and/or
make films thereof, forcing the wife and
mistress/lover to live in the conjugal home or sleep
together in the same room with the abuser;
(b) acts causing or attempting to cause the victim to
engage in any sexual activity by force, threat of
force, physical or other harm or threat of physical or
other harm or coercion;
(c) Prostituting the woman or child.
"Psychological violence" refers to acts or omissions causing
or likely to cause mental or emotional suffering of the
victim such as but not limited to intimidation, harassment,
stalking, damage to property, public ridicule or
humiliation, repeated verbal abuse and mental infidelity. It
includes causing or allowing the victim to witness the
physical, sexual or psychological abuse of a member of the
family to which the victim belongs, or to witness
pornography in any form or to witness abusive injury to
pets or to unlawful or unwanted deprivation of the right to
custody and/or visitation of common children.
"Economic abuse" refers to acts that make or attempt to
make a woman financially dependent which includes, but
is not limited to the following:
(a) withdrawal of financial support or preventing the victim
from engaging in any legitimate profession,
occupation, business or activity, except in cases
wherein the other spouse/partner objects on valid,
serious and moral grounds as defined in Article 73 of
the Family Code;
(b) deprivation or threat of deprivation of financial
resources and the right to the use and enjoyment of the
conjugal, community or property owned in common;
(c) destroying household property;
(d) controlling the victims' own money or properties or
solely controlling the conjugal money or properties.
[Section 3, RA 9262]
Requirement for entitlement
To be entitled to the leave benefit, the only requirement is
for the victim-employee to present to her employer a
certification from the barangay chairman or barangay
councilor or prosecutor or the Clerk of Court, as the case
may be, that an action relative to the matter is pending.
Benefit
In addition to other paid leaves under existing labor laws,
company policies, and/or CBA, the qualified victim-
employee shall be entitled to a leave of up to 10 days with
full pay, consisting of basic salary and mandatory
allowances fixed by the Regional Wage Board, if any.
Usage of the benefit
The usage of the 10-day leave shall be at the option of the
woman employee. In the event that the leave benefit is not
availed of, it shall not be convertible into cash and shall
not be cumulative.
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) At any time during the application of any protection
order, investigation, prosecution and/or trial of the
criminal case, extendible when the necessity arises as
specified in the protection order.
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(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 woman that such an
action is pending, and this is all that is required for the
employer to comply with the 10- day paid leave.
(3) For government employees, in addition to the
aforementioned certification, the employee concerned
must file an application for leave citing as basis R.A.
9262.
Special Leave Benefits (SLB) For Women
See RA 9710 [Magna Carta of Women] and its IRR, DOLE
DO No. 112, Series of 2011 as amended by DO No. 112-A
Series of 2012
Definitions
Special leave benefit for women means a female employee’s
leave entitlement of two (2) months with full pay from her
employer based on her gross monthly compensation
following surgery caused by gynecological disorders,
provided that she has rendered continuous aggregate
employment service of at least six (6) months for the last
12 months.
Gynecological disorders refers to disorders that would
require surgical procedures such as, but not limited to,
dilatation and curettage and those involving female
reproductive organs such as the vagina, cervix, uterus,
fallopian tubes, ovaries, breast, adnexa and pelvic floor, as
certified by a competent physician. It shall also include
hysterectomy, ovariectomy, and mastectomy.
Gross monthly compensation means the monthly basic pay
plus mandatory allowances fixed by the regional wage
boards.
At least six months continuous aggregate employment
service for the last 12 months prior to surgery means that the
woman employee should have been with the company for
12 months prior to surgery. An aggregate service of at least
six (6) months within the said 12-month period is sufficient
to entitle her to avail of the special leave benefit .
Employment service includes absences with pay such as
use of other mandated leaves, company-granted leaves
and maternity leaves
Competent physician means a medical doctor preferably
specializing in gynecological disorders or is in the position
to determine the period of recuperation of the woman
employee.
Conditions for entitlement of special leave
Any female employee, regardless of age and civil status,
shall be entitled to a special leave benefit, provided she
has complied with the following conditions:
(a) She has rendered at least 6 months continuous
aggregate employment service for the last 12 months
prior to surgery;
(b) She has filed an application for special leave
(c) She has undergone surgery due to gynecological
disorders as certified by a competent physician.
Application for special leave
Application before surgery
The employee shall file her application for leave with her
employer within a reasonable period of time from the
expected date of surgery, or within such period as may be
provided by company rules and regulations or by CBA.
LABOR LAW BAR OPERATIONS COMMISSION
Application after surgery
Prior application for leave shall not be necessary in cases
requiring emergency surgical procedure, provided that the
employer shall be notified verbally or in written form within
a reasonable period of time and provided further that after
the surgery or appropriate recuperating period, the female
employee shall immediately file her application using the
prescribed form.
Period of entitlement
The 2 months special leave is the maximum period of leave
with pay that a woman employee may avail of under RA
9710.
For purposes of determining the period of leave with pay
that will be allowed to a female employee, the certification
of a competent physician as to the required period of
recuperation shall be controlling.
Availment
The special leave shall be granted to the qualified
employee after she has undergone surgery.
Frequency of availment
A woman employee can avail of the SLB for every instance
of surgery due to gynecological disorder for a maximum
total period of 2 months per year.
Special leave benefit vis-à-vis SSS sickness benefit
The SLB is different from the SSS sickness benefit. The
former is granted by the employer in accordance with RA
9710.
It is granted to a woman employee who has undergone
surgery due to gynecological disorder. The SSS sickness
benefit, on the other hand, is administered and given by
the SSS in accordance with RA 1161 as amended by RA
8282.
Special leave benefit vis-à-vis existing statutory leaves
The SLB cannot be taken from existing statutory leaves
(i.e. 5-day SIL, leave for victims of VAWC, Parental leave for
solo parents). The grant of SLB under the law is in
recognition of the fact that patients with gynecological
disorder needing surgery require a longer period of
recovery. The benefit is considered an addition to the leave
benefits granted under existing laws and should be added
on top of said statutory leave entitlements.
If the SLB has already been exhausted, the company leave
and other mandated leave benefits may be availed of by
the woman employee.
Special leave benefit vis-à-vis maternity leave benefit
Where the woman employee had undergone surgery due
to gynecological disorder during her maternity leave, she is
entitled only to the difference between the SLB and
maternity leave benefit.
Crediting of existing or similar benefits
If there are existing or similar benefits under a company
policy, practice or CBA providing similar or equal benefits
to what is mandated by law, the same shall be considered
as compliance, unless the company policy, practice or CBA
provides otherwise.
In the event the company policy, practice or CBA provides
lesser benefits, the company shall grant the difference.
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More liberal existing or similar benefits cannot be
withdrawn or reduced by reason of the mandate of RA
9710.
The term “similar or equal benefits” refers to leave benefits
which are of the same nature and purpose as that of the
SLB.
Mode of payment
The SLB is a leave privilege. The woman employee shall
not report for work for the duration of the leave but she will
still receive her salary covering said period. The employer,
in its discretion, may allow said employee to receive her
pay for the period covered by the approved leave before or
during the surgery. The computation of her “pay” shall be
based on her prevailing salary at the time of the surgery.
Non-commutation of the benefit
The SLB shall be non-cumulative and non-convertible to
cash unless otherwise provided by a CBA
SERVICE CHARGES
COVERAGE
Employers
This rule shall apply only to establishments which collect
service charges such as:
(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 [Sec 1, Rule VI, Book 3]
Employees
Shall apply to ALL employees of covered employers
(1) Regardless of their positions, designations, or
employment status,
(2) Irrespective of the method by which their wages are
paid. [Sec 2, Rule VI, Book 3]
EXCEPTIONS
Managerial employees – or one who is vested with powers
or prerogatives to lay down and execute managerial
policies and/or hire, transfer, suspend, layoff, recall,
discharge, assign or discipline employees or to effectively
recommend such managerial actions. All employees not
falling within this definition shall be considered rank and
file employees.
DISTRIBUTION
Service charges are distributed in accordance with the
following percentage of sharing:
(1) Eighty-five percent (85%) for the employees to be
distributed equally among them; and The shares shall
be distributed to employees not less than once every 2
weeks or twice a month at intervals not exceeding 16
days. [Sec 4, Rule VI, Book 3]
(2) Fifteen percent (15%) for the management to answer
for losses and breakages and, at the discretion of the
management, distribution to managerial employees.
[Sec 3, Rule VI, Book 3]
Note: The P2,000.00 salary ceiling for entitlement thereto
is no longer applicable.
INTEGRATION
In case service charge is abolished:
shares of covered employees shall be considered
integrated in their wages. [Art 96, par. 2]
LABOR LAW BAR OPERATIONS COMMISSION
The basis of the amount to be integrated shall be the
average monthly share of each employee for the past
twelve (12) months immediately preceding the abolition of
withdrawal of such charges. [Sec. 5, Rule VI, Book 3,
sentence 2]
Synthesis of the Rules
(1) Service charges must be pooled;
(2) Where a restaurant or similar establishment does not
collect service charges but has a practice or policy of
monitoring and pooling tips given voluntarily by its
customers to its employees, the pooled tips should be
monitored, accounted for and distributed in the same
manner as the services charges. [DOLE Handbook on
Workers’ Statutory Monetary Benefits, 2006 ed., p. 27].
(3) The amount collected is divided between the company
(15%) and employees (85%);
(4) It shall be given twice a month with intervals of not
more than 15 days;
(5) If discontinued, removed, or stopped, the average share
of the employees of their service charge or tips shall be
integrated with their basic wage.
TH
THIRTEENTH (13 ) MONTH PAY
AND OTHER BONUSES
Revised Guidelines on the Implementation of the 13th Month
Pay Law and PD 851
RATIONALE
(1) To further protect the level of real wages from the
ravage of world-wide inflation;
(2) There has been no increase in the legal minimum wage
rates since 1970;
(3) The Christmas season is an opportune time for society
to show its concern for the plight of the working
masses so they may properly celebrate Christmas and
New Year.
COVERAGE
General Rule: ALL EMPLOYERS are hereby required to pay
all their rank and file employees a 13th month pay not later
than Dec 24 of every year,
(a) Provided that they have worked for at least one (1)
month during a calendar year.
EXCLUSIONS/EXEMPTIONS FROM COVERAGE
Exempted Employers:
(1) Government, its political subdivisions, including GOCCs
except those operating essentially as private
subsidiaries of the Government;
(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;
(3) Employers of household helpers and persons in the
personal service of another relation to such workers;
and
(4) Employers of those who are paid on purely
commission, boundary or task basis and those who are
paid a fixed amount for performing specific work,
irrespective of the time consumed in the performance
thereof (except those workers who are paid on piece-
rate basis, in which case their employer shall grant
th
them 13 month pay).
Note:
“Equivalent” includes:
(a) Christmas bonus, mid-year bonus, cash bonuses
(b) and other payments amounting to not less than 1/12 of
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the basic salary
(c) but shall NOT INCLUDE cash and stock dividends, cost
of living allowances and all other allowances regularly
enjoyed by the employee as well a non-monetary
benefits.
Workers paid on a piece-rate basis
Those who are paid a standard amount for every piece or
unit of work produced that is more or less regularly
replicated, without regard to the time spent in producing
the same.
NATURE OF THE 13TH MONTH PAY
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
Base Amount, which is the basic salary shall include:
(1) cost of living allowances (COLA) integrated into the
basic salary of a covered employee pursuant to EO 178.
(2) all remunerations or earnings paid by this employer for
services rendered.
(3) But not the allowances and monetary benefits which
are not considered or integrated as part of the regular
or basic salary, such as the cash equivalent of:
(a) unused vacation and sick leave credits,
(b) overtime,
(c) premium,
(d) night differential,
(e) holiday pay and, and
(f) cost-of-living allowances.
Time of payment
General Rule: paid not later than Dec 24 of each year.
Exception: ER may give to his employees half (½) 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.
(a) The frequency of payment of this monetary benefit may
be the subject of agreement between the employer and
the recognized CBA of the employees.
13THE MONTH PAY IN SPECIAL CASES
(1) Paid by Results: Employees who are paid on piece work
basis are, by law, entitled to the 13th Month Pay.
(2) 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 Month
Pay from all their private Employers regardless of their
total earnings from each or all their Employers.
(4) Private School Teachers: Private school teachers,
including faculty members of universities and colleges,
are entitled to the required 13th month pay, regardless
of the number of months they teach or are paid within
a year, if they have rendered service for at least one (1)
month within a year.
(a) Overload pay is NOT included in the computation
th
for 13 month pay; overload is not overtime as it is
additional work done within the normal shift
[Letran Calamba Faculty vs. NLRC, 2008]
(5) Resigned or Separated Employee: an Employee who has
resigned or whose services were terminated at any time
LABOR LAW BAR OPERATIONS COMMISSION
before the time for payment of the 13th month pay is
entitled to this monetary benefit in proportion to the
length of time he worked during the year, reckoned
from the time he started working during the calendar
year up to the time of his resignation or termination
from service.
(6) Wage Difference: The difference between the minimum
wage and the actual salary received by the Employee
th
cannot be deemed as his 13 month pay as such
difference is not equivalent to or of the same import as
the said benefit contemplated by law. [JPL Marketing
Promotions vs. CA, 2005]
(7) Terminated Employees: the payment of the 13th month
pay may be demanded by the employee upon the
cessation of employer-employee relationship. [Archilles
Manufacturing Corp. vs. NLRC, 1995]
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. [Phil.
Duplicators Inc. vs. NLRC, 1995]
(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 pay required
by law. Neither may year-end rewards for loyalty and
service be considered in lieu of 13th month pay.
[Framanlis Farms, Inc. v. MOLE, 1989]
th
(3) 14 Month Pay is not mandated: Employers already
paying their employees a 13th month pay or its
equivalent are not covered by this Decree. [Kamaya
Port Hotel v. NLRC, 1989]
Commissions vis-à-vis 13th month pay
The Rule on Productivity Bonuses. The so-called
commissions “paid to or received by medical
representatives of Boie-Takada Chemicals or by the rank-
and-file employees of Philippine Fuji Xerox Co., were
excluded from the term “basic salary” because these were
paid to the medical representatives and rank-and-file
employees as “productivity bonuses.” These have no clear
direct or necessary relation to the amount of work actually
done by each individual employee. More generally, 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
th
comes to compute their 13 month pay [Boie Takada v de la
Serna, 228 SCRA 329; 1993]
The decision in Boie Takada and the doctrine enunciated in
this case in fact co-exist with the other. The two cases
present quite different factual situations (although the
same word “commissions” was used or invoked) the legal
characterizations of which must accordingly differ.
In the instant case, there is no question that the sales
commission earned by the salesmen who make or close a
sale of duplicating machines constitute part of the
compensation or remuneration paid to salesmen for
serving as salesmen, and hence as part of the “wage” or
salary of petitioner’s salesmen. It appears that petitioner
pays its salesmen a small fixed or guaranteed wage; the
greater part of the salesmen’s 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
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UP COLLEGE OF LAW
overtime payments, or profit sharing payments or any
other fringe benefit. [Phil. Duplicators vs. NLRC, 227 SCRA
747; 1995]
CBA vis-à-vis 13th month pay
th
In order to exempt the employer from paying 13 month
pay, a bonus stipulation in the CBA should be general in
scope, applicable to all employees, not only a few, for the
legal obligation benefits all employees regardless of their
designation or employment status so long as they have
worked at least one month during the calendar year.
[Marcopper Mining Corp. vs. Ople]
SEPARATION PAY
[Art. 283 & 284, LC]
From the DOLE Handbook on Worker’s Statutory Monetary
Benefits, 2010]
DEFINITION
Separation pay is defined as the amount that an employee
receives at the time of his severance from the service and is
designed to provide the employee with the wherewithal
during the period that he is looking for another
employment. [A’ Prime Security Services v. NLRC, et al.,
1993]
GENERAL RULE
The rule embodied in the Labor Code is that a person
dismissed for cause as defined therein [see Art, 282] is not
entitled to separation pay. [PLDT v. NLRC, 1988]
EXCEPTION
Considerations of equity as in the cases of Filipro, Inc. v.
NLRC, Metro Drug Corp. v. NLRC, Engineering Equipment,
Inc. v. NLRC, San Miguel Corp v. NLRC.
An employee who voluntarily resigns is not entitled to
separation unless stipulated in the employment contract,
or the collective bargaining agreement, or is sanctioned by
established practice or policy of the employer. [Phimco
Industries v. NLRC, 1997; Hinatuan Mining Corp v. NLRC,
1997 cited in JPL Marketing Promotions v. CA, 2005]
AMOUNT
One-Half (1/2) Month Pay per Year of Service
An EE is entitled to receive separation pay equivalent to ½
month pay for every year of service, a fraction of at least six
(6) months being considered as one whole year, if his/her
separation from the service is due to any of the following
authorized causes:
(1) Retrenchment to prevent losses [i.e. reduction of
personnel effected by management to prevent losses];
(2) Closure or cessation of operation of an establishment
not due to serious losses or financial reverses; and,
(3) When the EE is suffering from a disease not curable
within a period of six (6) months and his/her continued
employment is prejudicial to his/her health or to the
health of his/her co-employees
In no case will an EE get less than one (1) month
separation pay if the separation is due to the above stated
causes and he/she has served for at least six (6) months.
One-Month Pay per Year of Service
An EE is entitled to separation pay equivalent to his/her
one-month pay for every year of service, a fraction of at
least 6 months being considered as one whole year, if
his/her separation from service is due to any of the
following:
(1) Installation by ER of labor-saving devices;
LABOR LAW BAR OPERATIONS COMMISSION
(2) Redundancy, as when the position of the EE has been
found to be excessive or unnecessary in the operation
of the enterprise;
(3) Impossible reinstatement of the EE to his/her former
position or to a substantially equivalent position for
reasons not attributable to the fault of the ER, as when
the reinstatement ordered by a competent authority
cannot be implemented due to closure of cessation of
operations of the establishment/ER, or the position to
which he/she is to be reinstated no longer exists and
there is no substantially equivalent position in the
establishment to which he/she can be assigned. [Gaco
v. NLRC, 1994]
NOTICE OF TERMINATION
The ER may terminate the employment of any EE due to
the above-mentioned authorized causes by serving a
written notice on the EE and the DOLE through its regional
office having jurisdiction over the place of business at least
1 month before the intended date thereof.
BASIS OF SEPARATION PAY
The computation of separation pay of an EE shall be based
on his/her latest salary rate.
INCLUSION OF REGULAR ALLOWANCE IN THE COMPUTATION
In the computation of separation pay, it would be error not
to integrate the allowance with the basic salary. The salary
base properly used in computing the separation pay
should include not just the basic salary but also the regular
allowances that an EE has been receiving. [Planters’
Products, Inc. v. NLRC, 1989]
RETIREMENT PAY
RATIONALE
RA 7641 is undoubtedly a social legislation. The law has
been enacted as a labor protection measure and as a
curative statute that absent a retirement plan devised by,
an agreement with, or a voluntary grant from, an employer
can respond, in part at least, to the financial well-being of
workers during their twilight years soon following their life
of labor. There should be little doubt about the fact that
the law can apply to labor contracts still existing at the
time the statute has taken effect, and that its benefits can
be reckoned not only from the date of the law's enactment
but retroactively to the time said employment contracts
have started. [Enriquez Security Services, Inc. v. Cabotaje,
2006]
Pursuant thereto, this Court imposed two (2) essential
requisites in order that R.A. 7641 may be given retroactive
effect: (1) the claimant for retirement benefits was still in
the employ of the employer at the time the statute took
effect; and (2) the claimant had complied with the
requirements for eligibility for such retirement benefits
under the statute. [Universal Robina Sugar Milling Corp. v.
Cabanella, 2008]
ELIGIBILITY
All employees in the private sector, regardless of their
position, designation, or status, and irrespective of the
method by which their wages are paid [Sec 1, RA 7641]
The only exceptions are:
(1) employees covered by the Civil Service Law;
(2) domestic helpers and persons in the personal service of
another, and
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(3) employees in retail, service and agricultural
establishments or operations regularly employing not
more than ten employees
Exclusions from coverage
R.A. No. 7641, otherwise known as "The Retirement Pay
Law," only applies in a situation where (1) there is no
collective bargaining agreement or other applicable
employment contract providing for retirement benefits for
an employee; or (2) there is a collective bargaining
agreement or other applicable employment contract
providing for retirement benefits for an employee, but it is
below the requirements set for by law. The reason for the
first situation is to prevent the absurd situation where an
employee, who is otherwise deserving, is denied retirement
benefits by the nefarious scheme of employers in not
providing for retirement benefits for their employees. The
reason for the second situation is expressed in the Latin
maxim pacta privata juri publico derogare non possunt.
Private contracts cannot derogate from the public law.
[Oxales v. Unilab, 2008]
Age of retirement
EEs shall be retired upon reaching the age of 60 years or
more but not beyond 65 years old (and have served the
establishment for at least 5 years).
Optional retirement – in the absence of a retirement plan or
other applicable agreement providing for retirement
benefits of EEs in an establishment, an EE may retire upon
reaching the age of 60 or more if he has served for at least
5 years in said establishment.
Compulsory retirement – in the absence of a retirement
plan or other applicable agreement providing for
retirement benefits of EEs in an establishment, an EE shall
be retired at the age of 65 years.
AMOUNT OF RETIREMENT PAY
The minimum retirement pay shall be equivalent to 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.
For the purpose of computing retirement pay, “one-half
month salary” shall include all of the following:
(1) Fifteen (15) days salary based on the latest salary rate;
(2) Cash equivalent of five (5) days of service incentive
leave;
th
(3) One-twelfth (1/12) of the 13 month pay. (1/12 x 365/12
= .083 x 30.41 = 2.52)
Thus, “one-half month salary” is equivalent to 22.5 days.
[Capitol Wireless, Inc. v. Sec. Confesor, 1996]
Other benefits may be included in the computation of the
retirement pay upon agreement of the ER and the EE or if
provided in the CBA.
Retirement pay under RA 7641 vis-à-vis retirement benefits
under SSS and GSIS laws
RA 7641 mandates payment of retirement benefits. All
private sector employees regardless of their position,
designation or status and irrespective of the method by
which their wages are paid are entitled to retirement
benefits upon compulsory retirement at the age of sixty-
five (65) or upon optional retirement at sixty (60) or more
but not 65. The minimum retirement pay due covered
employees shall be equivalent to one-half month salary for
LABOR LAW BAR OPERATIONS COMMISSION
every year of service, a fraction of at least six (6) months
being considered as one whole year. The benefits under this
law are other than those granted by the SSS or the GSIS.
Retirement Benefits under a CBA or Applicable Contract
Any EE may retire or be retired by his/her ER upon
reaching the age established in the CBA or other
applicable agreement/contract and shall receive the
retirement benefits granted therein; provided, however,
that such retirement benefits shall not be less than the
retirement pay required under RA 7641, and provided
further that if such retirement benefits under the
agreement are less, the ER shall pay the difference.
Where both the ER and the EE contribute to a retirement
fund pursuant to the applicable agreement, the ER’s total
contributions and the accrued interest thereof should not
be less than the total retirement benefits to which the EE
would have been entitled had there been no such
retirement benefits’ fund. If such total portion from the ER
is less, the ER shall pay the deficiency.
RETIREMENT BENEFITS OF WORKERS WHO ARE PAID BY RESULTS
For covered workers who are paid by result and do not
have a fixed monthly salary rate, the basis for the
determination of the salary for 15 days shall be their
average daily salary (ADS). The ADS is derived by dividing
the total salary or earning for the last 12 months reckoned
from the date of retirement by the number of actual
working days in that particular period, provided that the
determination of rates of payment by results are in
accordance with established regulations
RETIREMENT BENEFIT OF PART-TIME WORKERS
Part-time workers are also entitled to retirement pay of
“one-month salary” for every year of service under RA 7641
after satisfying the following conditions precedent for
optional retirement:
(a) There’s no retirement plan between the ER and the EE;
and,
(b) The EE should have reached the age of 60 years, and
should have rendered at least 5 years of service with
the ER.
Applying the foregoing principle, the components of
retirement benefit of part-time workers may likewise be
computed at least in proportion to the salary and related
benefits due them.
TAXABILITY [SEC. 1, RA 4917]
Any provision of law to the contrary notwithstanding, the
retirement benefits received by officials and employees of
private firms, whether individual or corporate, in
accordance with a reasonable private benefit plan
maintained by the employer
(1) shall be exempt from all taxes and
(2) shall not be liable to attachment, garnishment, levy or
seizure by or under any legal or equitable process
whatsoever
Exception
Except to pay a debt of the official or employee concerned
to the private benefit plan or that arising from liability
imposed in a criminal action:
Additional conditions
(1) That the retiring official or employee has been in the
service of the same employer for at least ten (10) years
and is not less than fifty years of age at the time of his
retirement;
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(2) That the retirement benefits shall be availed of by an
official or employee only once; and,
(3) That in case of separation of an official or employee
from the service of the employer due to death, sickness
or other physical disability or for any cause beyond the
control of the said official or employee, any amount
received by him or by his heirs from the employer as a
consequence of such separation shall likewise be
exempt as hereinabove provided.
"Reasonable private benefit plan" means a pension,
gratuity, stock bonus or profit sharing plan maintained by
an employer for the benefit of some or all of his officials
and employees, wherein contributions are made by such
employer or officials and employees, or both, for the
purpose of distributing to such officials and employees the
earnings and principal of the fund thus accumulated, and
wherein it is provided in said plan that at no time shall any
part of the corpus or income of the fund be used for, or be
diverted to, any purpose other than for the exclusive
benefit of the said officials and employees.
WOMEN WORKERS
PROVISIONS AGAINST DISCRIMINATION
It shall be unlawful for any employer to discriminate
against any woman employee with respect to terms and
conditions of employment solely on account of her sex.
The following are acts of discrimination:
(1) 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
(2) Favoring a male employee over a female employee
with respect to promotion, training opportunities, study
and scholarship grants solely on account of their sexes.
[Art. 135 LC]
STIPULATION AGAINST MARRIAGE
It shall be unlawful for an employer to require as a
condition of employment or continuation of employment
that a woman employee shall not get married, or to
stipulate expressly or tacitly that upon getting married a
woman employee shall be deemed resigned or separated
or to actually dismiss, discharge, discriminate or otherwise
prejudice a woman employee merely by reason of her
marriage. [Art. 136, LC]
Bona fide occupational qualification exception
When the employer can prove that the reasonable
demands of the business require a distinction based on
marital status and there is no better available or
acceptable policy which would better accomplish the
business purpose, an ER may discriminate against an EE
based in the identity of the EE’s spouse. [Star Paper Corp.
vs. Simbol, 2006]
The Court sustained the validity of employer policy
prohibiting an employee from having a personal or marital
relationship with an employee of a competitor. The
prohibition was reasonable under the circumstances
because relationships of such nature might compromise
the interests of the company. [Duncan Association of
Detailmen vs. Glaxo Wellcome, 2004]
PROHIBITED ACTS [ART. 137, LC]
Note: Nightwork/ Exception [Art 130-131] – No more
nightwork prohibition under R.A. 10151.
LABOR LAW BAR OPERATIONS COMMISSION
Discrimination [Art 135, RA 9710]
See previous section
Stipulation against marriage [Art 136]
See previous section
Discharge to prevent enjoyment of benefits [Art 137(a)(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.
Discharge on account of pregnancy [Art 137(a)(2)]
To discharge such woman on account of her pregnancy,
while on leave or in confinement due to her pregnancy.
Discharge on account of testimony [Art 137(a)(3)]
To discharge or refuse the admission of such woman upon
returning to her work for fear that she may again be
pregnant.
[Book III, Rule XII, Sec 13(d)] It shall be unlawful for any
employer: …to discharge any woman or child or any other
employee for having filed a complaint or having testified or
being about to testify under the Code
Expulsion of Women faculty/ female student
due to pregnancy outside of marriage
[Sec 13c RA 9710 Magna Carta of Women]
(c) Expulsion and non-readmission of women faculty due
to pregnancy outside of marriage shall be outlawed.
No school shall turn out or refuse admission to a
female student solely on the account of her having
contracted pregnancy outside of marriage during her
term in school.
ANTI-SEXUAL HARASSMENT ACT [RA 7877]
Note: SEE RA 7877: Anti-Sexual Harassment Act of 1995
Unlawful Forms of Sexual Harassment
Employment or Work Related
(1) The sexual favor is made as a condition (HFR)
(a) in the hiring or in the employment, re-employment
or continued employment of said individual or
(b) in granting said individual favorable compensation,
terms, conditions, promotions, or privileges, or
(c) in the refusal to grant the sexual favor results in
limiting, segregating or classifying the EE which in
any way would discriminate, deprive or diminish
employment opportunities or otherwise adversely
affect said employee;
(2) The above acts would either:
(a) impair the employee’s rights or privileges under
existing labor laws; or
(b) result in an intimidating, hostile, or offensive
environment for the employee.
Education or Training environment
In an education or training environment, sexual
harassment is committed: (CECI)
(a) Against one who is under the care, custody or
supervision of the offender
(b) Against one whose education, training, apprenticeship
or tutorship is entrusted to the offender;
(c) When the sexual favor is made a condition to the giving
of a passing grade, or the granting of honors and
scholarships, or the payment of a stipend, allowance or
other benefits, privileges, or considerations; or
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(d) When the sexual advances result in an intimidating,
hostile or offensive environment for the result, trainee or
apprentice.
Persons who may be liable
(1) Any employer, employee, manager, supervisor, agent
of the employer, teacher, instructor, professor, coach,
trainer or any other person, regardless of whether the
demand, request for requirement for submission is
accepted by the object of said act having authority,
influence or moral ascendancy over another in a work or
training or education environment, who demands,
requests or otherwise requires any sexual favor from
another,
(2) Any person who directs or induces another to commit
any act of sexual harassment as herein defined. OR
(3) Any person who cooperates in the commission by
another without which it would NOT have been
committed, shall also be held liable under this Act
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.
He shall be solidarily liable for damages:
(1) if he 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
As a managerial employee, petitioner is bound by more
exacting work ethics. When such moral perversity is
perpetuated against his subordinate, he provides a
justifiable ground for his dismissal for lack of trust and
confidence. It is the right, nay the duty of every employer
to protect its employees from oversexed superiors. [Libres
v. NLRC, 1999]
Cortez’s plant manager manifested a special liking for her,
so much so that she was receiving special treatment from
him who would oftentimes invite her "for a date," which
she would as often refuse.
On many occasions, he would make sexual advances -
touching her hands, putting his arms around her
shoulders, running his fingers on her arms and telling her
she looked beautiful. The special treatment and sexual
advances continued during her employment for four (4)
years but eventually, he made her understand that if she
would not give in to his sexual advances he would cause
her termination from the service; and he made good his
threat when he started harassing her.
Public respondent appears baffled why it took private
respondent more than four years to expose William Chua's
alleged sexual harassment. The gravamen of the offense in
sexual harassment is not the violation of the employee's
sexuality but the abuse of power by the employer. Any
LABOR LAW BAR OPERATIONS COMMISSION
employee, male or female, may rightfully cry "foul" provided
the claim is well substantiated. Strictly speaking, there is no
time period within which he or she is expected to complain
through the proper channels. The time to do so may vary
depending upon the needs, circumstances, and more
importantly, the emotional threshold of the employee.
Not many women are made of the stuff that can endure
the agony and trauma of a public, even corporate, scandal.
If petitioner corporation had not issued the third
memorandum that terminated the services of private
respondent, we could only speculate how much longer she
would keep her silence. Perhaps, to private respondent's
mind, for as long as she could outwit her employer's ploys
she would continue on her job and consider them as mere
occupational hazards. [Phil. Aelous Automotive United
Corp. v. NLRC, 2000]
MINOR WORKERS [RA 7610, RA 9231]
CONSTITUTIONAL BASIS
Art II, Sec. 13 of the 1987 Constitution
(1) The State recognizes the vital role of the youth in
nation-building and shall promote and protect their
physical, moral, spiritual, intellectual, and social well-
being.
(2) It shall inculcate in the youth patriotism and
nationalism, and encourage their involvement in public
and civic affairs.
General Rule: Children below 15 shall NOT be employed
Legal Basis: Art. 139(a) of the Labor Code and Sec. 12 to 16
of RA 7610 as amended by RA 7658 and RA 9231
Exceptions
(1) Child works directly under the sole responsibility of his
parents or legal guardian and where only members of
the ER’s family are employed, provided:
(2) his employment does NOT endanger his life, safety,
health and morals,
(3) nor impairs his normal development, and
(a) the parent or legal guardian shall provide the said
minor child with the prescribed primary and/or
secondary education; [Sec. 12 of RA 7610 as
amended by RA 7658]
(4) child’s employment or participation in public
entertainment or information through cinema, theater,
radio or television is essential, provided that: [Sec. 12 of
RA 7610 as amended by RA 7658]
(a) employment does NOT involve ads or commercials
promoting alcohol, tobacco and its by-products or
violence [Sec. 14 of RA 7610]
(b) the employment contract is concluded by the child’s
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
child’s 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. [Sec. 12 of RA 7610 as
amended by RA 7658]
EMPLOYMENT OF CHILDREN FROM 15 TO 18 - allowed but
restricted to non-hazardous undertakings.
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The following are HAZARDOUS workplaces:
(1) Nature of the work exposes the workers to dangerous
environmental elements, contaminants or working
conditions;
(2) construction work, logging, fire-fighting, mining,
quarrying, blasting, stevedoring, dock work, deep sea
fishing, and mechanized farming;
(3) manufacture or handling of explosives and other
pyrotechnic products;
(4) exposure to or use of heavy power-driven machinery or
equipment;
(5) exposure to or use of power-driven tools [IRR Book III
Rule XII Sec. 3]
REGULATION OF WORKING HOURS OF A CHILD
Quantity
Age Bracket Daily Max Weekly Max
Below 15 y 4 hours 20 hours
15 to below 18 8 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)
EMPLOYMENT OF HOUSEHELPERS
DEFINITION
"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 household, including services of
family drivers. [Art. 141, LC]
The term “househelper” as used herein is synonymous to
the term “domestic servant” and shall refer to any person,
whether male or female, who renders services in and about
the employer’s home and which services are usually
necessary or desirable for the maintenance and enjoyment
thereof, and ministers exclusively to the personal comfort
and enjoyment of the employer’s family. [IRR Rule XII
Sec.1(b)]
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. 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. [Apex Mining Co. v. NLRC, 1991]
BENEFITS ACCORDED HOUSEHELPERS
Compensation
Minimum wage rates shall be equivalent to the basic cash
wages plus lodging, food and medical attendance. [Art.
143-144; Civil Code Art. 1689]
Minimum wage [Art. 143, as amended by RA 7655]
Househelpers shall be paid the following minimum wage
rates:
(1) Eight hundred pesos (P800.00) a month for
househelpers in Manila, Quezon, Pasay, and Caloocan
LABOR LAW BAR OPERATIONS COMMISSION
cities and municipalities of Makati, San Juan,
Mandaluyong, Muntinlupa, Navotas, Malabon,
Parañaque, Las Piñas, 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 first-class municipalities; and
(3) Five hundred fifty pesos (P550.00) a month for those
in other municipalities.
Review of employment contract
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.
SSS Membership
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.
Time and Manner of Payment: Wages 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. [Book III, Rule XIII, Sec. 9]
Right against assignment to non-household work at a wage
rate lower than that mandated for agricultural or non-
agricultural enterprises depending on the case. [Art 145]
Opportunity for education if househelper is below 18 years
[Art 146; NCC 1691]
(1) ER shall provide for at least elementary education;
(2) cost shall be part of the EE’s compensation UNLESS
otherwise agreed upon.
Just and humane treatment [Art 147; NCC 1694]
The employer shall treat the househelper in a just and
humane manner. In no case shall physical violence be used
upon the househelper [Art. 147]
Board, lodging and medical attendance shall be furnished
by employer [Art 148; NCC 1690]
Household work - Non-hazardous work for persons
between 15-18 years old. [DO 4-99 Sec. 4]
Contract for Domestic Service shall NOT exceed 2 years but
renewable annually [Art 142; NCC1692]
Hours of Work - House helpers shall NOT be required to
work more than ten hours a day. [NCC 1695]
Vacation with Pay - Shall be allowed 4 paid vacation days
per month [NCC 1695]
Funeral Expenses
In case of death of the house helper:
(1) The head of the family shall bear the funeral expenses
(2) If the house helper has no relatives in the place where
the head of the family lives, with sufficient means.
[NCC 1696]
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; NCC
1699]
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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]
TERMINATION
In case of termination
Fixed - Security of tenure
Termination prior to contract expiry must be for just cause,
if the duration of the household service is NOT determined
either by stipulation or by the nature of the service, the ER
or the househelper may give notice to put an end to the
relationship five days before the intended termination of the
service. [Art 149; NCC 1697]
If the period for household service is fixed, the house
helper has a right against termination before the
expiration of the term, except for a just cause.
Not fixed- Indemnity for unjust termination of service [Art
150; NCC 1698]
If the duration of the household service is not fixed either
by stipulation or by the nature of the 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]
Reliefs for unjust termination
If unjustly dismissed, the house helper is entitled to be
paid the compensation already earned plus that for 15
days by way of indemnity.
EMPLOYMENT OF HOMEWORKERS
Note: DO 5, DOLE (February 4, 1992), is now Rule XIV, Book
III of the IRR.
DEFINITION
Homeworker applies to any person who performs industrial
homework for an employer, contractor, or sub-contractor.
[Sec. 1, Rule XIV, Book III]
Industrial homework
(1) Is a system of production under which work for an ER
or contractor is carried out by a homeworker at his/her
home.
(2) Materials may or may not be furnished by the ER or
contractor.
(3) Decentralized form of production, where there is
ordinarily very little supervision or regulation of
methods of work. [Sec. 2(a), Rule XIV, Book III]
Definition of employer
The employer means any person who
(1) Acts as a contractor – 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 ER’s direction; or
(2) Sells any goods, articles, or materials to be processed
or fabricated in or about a home and then rebuys them
after. [Art. 155, LC]
Note: Sec 2(d), Rule XIV, Book III is substantially similar to
the above.
LABOR LAW BAR OPERATIONS COMMISSION
RIGHTS AND BENEFITS ACCORDED HOMEWORKERS
(1) Right to form, join or assist organizations [Sec 3, Rule
XIV, Book III].
(2) Right to acquire legal personality and the rights and
privileges granted by law to legitimate labor
organizations upon issuance of the certification of
registration [Sec 4, Rule XIV, Book III]
(3) Immediate payment upon ER’s receipt of finished
goods or articles [Sec 6, Rule XIV, Book III]
(4) SSS, MEDICARE and ECC premium contributions shall
be deducted from their pay and shall be remitted by
ER/contractor/subcontractor to the SSS [Sec 6, Rule
XIV, Book III]
(5) ER may require homeworker to redo work improperly
executed without additional pay [Sec 9a, Rule XIV, Book
III]
(6) ER need not pay homeworker for any work done on
goods or articles not returned due to homeworker’s
fault [Sec 9b, Rule XIV, Book III]
(7) If subcontractor/contractor fails to pay homeworker,
ER is jointly and severally liable with the former to the
homeworker for his/her wage [Sec 11, Rule XIV, Book III]
(8) ER shall assist the homeworkers in the maintenance of
basic safe and healthful working conditions at the
homeworkers’ place of work. [Sec 11, Rule XIV, Book III]
(9) Homework prohibited in the ff:
(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. [Sec 13, Rule XIV,
Book III]
Regional Office shall provide technical assistance to
registered homeworkers’ organizations [Sec 14, Rule XIV,
Book III]
CONDITIONS FOR DEDUCTION FROM HOMEWORKER’S EARNINGS
Sec. 8, Rule XIV, Book III: Deduction –
No deduction from the homeworker’s earnings for the
value of materials lost, destroyed or damaged unless:
(1) Homeworker is clearly shown to be responsible for loss
or damage
(2) Reasonable opportunity to be heard
(3) Amount of deduction is fair and reasonable, and does
not exceed actual loss or damage
(4) Deduction does not exceed 20% of homeworker’s
weekly earnings
APPRENTICES AND LEARNERS
APPRENTICES
Definition
Note: Art. 58 has been superseded by Section 4 (j), (k), (l),
(m) of RA 7796 quoted below:
(j) "Apprenticeship" training within employment with
compulsory related theoretical instruction involving a
contract between an apprentice and an employer on an
approved apprenticeable occupation.
(k) “Apprentice" is a person undergoing training for an
approved apprenticeable occupation during an
apprenticeship agreement.
(l) "Apprenticeship Agreement" is a contract wherein a
prospective employer binds himself to train the
apprentice who in turn accepts the terms of training for
a recognized apprenticeable occupation emphasizing
the rights, duties and responsibilities of each party. [RA
7796, Sec. 4]
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Apprenticeable occupation
“Apprenticeable Occupation” is an occupation officially
endorsed by a tripartite body and approved to be
apprenticeable by the authority. [RA 7796, Sec. 4 (m)]
The act of filing the proposed apprenticeship program with
the DOLE is a preliminary step towards its final approval,
and does not instantaneously give rise to an employer-
apprentice relationship. It must be duly approved by the
Minister of Labor and Employment. Hence, since the
apprenticeship agreement between petitioner and
respondent has no force and effect, respondent's assertion
that he was hired not as an apprentice but as a delivery
boy deserves credence. [Nitto Enterprises vs. NLRC, 1995]
Conditions under which children below 15 may be employed
Children below fifteen (15) years of age shall not be
employed except:
(1) When a child works directly under the sole
responsibility of his parents or legal guardian and
where only members of the 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 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 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 child.
In the above exceptional cases where any such child may
be employed, the employer shall first secure, before
engaging child, a work permit from the Department of
Labor and Employment which shall ensure observance of
the above requirements.
The Department of Labor and Employment shall
promulgate rules and regulations necessary for the
effective implementation of this Section. [RA 7160, Sec. 12
as amended by RA 7658, Sec. 1]
Qualifications of apprentice
(b) Possess vocational aptitude and capacity for
appropriate tests; and
(c) Possess the ability to comprehend and follow oral and
written instructions. [Art. 59, LC]
LABOR LAW BAR OPERATIONS COMMISSION
Integrating both the abovementioned provisions then the
qualifications of an apprentice are as follows:
(1) At least 15 years of age [as amended by R.A. 7610],
provided that if he is below 18 years, he shall not be
eligible for hazardous occupation;
(2) Possess vocational aptitude and capacity for
appropriate tests;
(3) Possess the ability to comprehend and follow oral and
written instructions. [Art. 59 of the LC, as amended by
R.A. 7610].
(4) Physically fit for occupation
Allowed employment
See: RA 7769, Sec. 4 (m) above
Employment of Apprentices: When applicable:
(1) Only employers in highly technical industries may
employ apprentices; and
(2) Only in apprenticeable occupations approved by the
Secretary of Labor. [Art. 60]
Terms and conditions
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. [LC, Art. 61]
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. 72, LC]
Note: Wage Order No. NCR-17, May 17, 2012 also provides
that the wages of apprentices and learners shall in no case
be less than seventy-five percent (75%) of the applicable
minimum wage rates.
Enforcement
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. [Art. 67, LC]
Incentives for employers
An additional deduction from taxable income of one-half
(1/2) of the value of labor training expenses incurred for
developing the productivity and efficiency of apprentices
shall be granted to the person or enterprise organizing an
apprenticeship program: Provided, That such program is
duly recognized by the Department of Labor and
Employment: Provided, further, That such deduction shall
not exceed ten (10%) percent of direct labor wage: and
Provided, finally, That the person or enterprise who wishes
to avail himself or itself of this incentive should pay his
apprentices the minimum wage. [LC Art. 71]
Summary of Rules:
(1) The apprentice must be paid not less than 75% of the
prescribed minimum salary [Art. 61];
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Exception: The employer MAY NOT pay any wage if the (3) The wages or salary rates of the learners which shall
apprenticeship training is: begin at not less than seventy-five percent (75%) of the
(a) part of the school curriculum, applicable minimum wage; and
(b) a requirement for graduation, or (4) A commitment to employ the learners if they so desire,
(c) a requirement for board examination [Art. 72] as regular employees upon completion of the
(2) The apprenticeship agreement must be approved by learnership. All learners who have been allowed or
the DOLE Secretary (without such one shall be deemed suffered to work during the first two (2) months shall
a regular employee) [Nitto Enterprises v. NLRC, G.R. No. be deemed regular employees if training is terminated
114337, Sept. 29, 1995]; by the employer before the end of the stipulated period
(3) The employer is not compelled to continue one’s through no fault of the learners.
employment upon termination of apprenticeship; (5) The learnership agreement shall be subject to
(4) One-half (1/2) of the value of labor training expenses inspection by the Secretary of Labor and Employment
incurred for developing the productivity and efficiency or his duly authorized representative. [Art. 75, LC]
of apprentices of the training cost is deducted from the
employer’s income tax but it shall not exceed 10% of Note: Learners employed in piece or incentive-rate jobs
direct labor wage [Art. 71] during the training period shall be paid in full for the work
done. [Art. 76, LC]
Requisites of the deduction:
(a) Apprenticeship program must be duly approved by the Summary of Rules
DOLE; (1) The duration of learnership shall not exceed 3 months
(b) Deduction shall NOT exceed 10% of direct labor wage; [Art. 73];
(c) Employer must pay his apprentices the minimum (2) If the learnership of 3 months is completed, the
wage. employer may be compelled to continue with the
services of the learner as a regular employee [Art.
Working scholars – there is no employer-employee 75(d)];
relationship between students on one hand, and schools, (3) There is a commitment from the employer to employ
colleges or universities on the other, where there is written the learners if they so desire, as regular employees
agreement between them under which the former agree to upon completion of the learnership [Art. 75(d)];
work for the latter in exchange for the privilege to study (4) If the learner is dismissed from service without just and
free of charge, provided, the students are given real valid cause and without due process after 2 months of
opportunities, including such facilities as may be service, he will be deemed as regular employee; and
reasonable and necessary to finish their chosen courses (5) The wages or salary rates of the learners which shall
under such agreement. [Sec. 14, Rule X, IRR] begin at not less than 75% of the applicable minimum
wage.
LEARNERS
Definition Distinctions between Learnership and Apprenticeship
"Learners" refers to persons hired as trainees in semi- Apprenticeship Learnership
skilled and other industrial occupations which are non-
apprenticeable. Learnership programs must be approved Highly technical industries Semi-skilled industrial
by the authority. [RA 7796, Sec. 4] occupations
(Occupations) which may be learned through practical Practical training Practical training whether or
training on the job in a relatively short period of time which supplemented by related not such practical training is
shall not exceed three (3) months. [Art. 73, sentence 2, LC] theoretical instruction supplemented by theoretical
instructions
Allowed employment Apprenticeable occupations Non-apprenticeable
Learners may be employed when no experienced workers approved by the SOLE occupations
are available, the employment of learners is necessary to
prevent curtailment of employment opportunities, and the Written apprentice agreement Learnership agreement
employment does not create unfair competition in terms of ratified by the appropriate
labor costs or impair or lower working standards. [Art. 74, committees
LC] More than three months, shall Shall not exceed 3 months
not exceed six months
When learners may be hired
(1) No experienced workers are available; (1) The person is at least (1) When no experienced
(2) The employment of learners being necessary to fifteen (15) years of age, workers are available;
prevent the curtailment of employment opportunities; provided those who are at (2) The employment of
and least fifteen (15) years of learners is necessary to
(3) The employment will neither create unfair competition age but less than prevent curtailment of
in terms of labor costs nor impair working standards. eighteen (18) may be employment
eligible for apprenticeship opportunities; and
Terms and conditions of employment only in non-hazardous (3) The employment does not
Any employer desiring to employ learners shall enter into a occupation; create unfair competition
learnership agreement with them, which agreement shall (2) The person is physically fit in terms of labor costs or
include: for the occupation in impair or lower working
(1) The names and addresses of the learners; which he desires to be standards.
(2) The duration of the learnership period, which shall not trained;
exceed three (3) months; (3) The person possesses
vocational aptitude and

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capacity for the particular RIGHTS OF DISABLED WORKERS

occupation as established
through appropriate tests;
and
(4) The person is able to
comprehend and follow
oral and written
instructions
Wage rate shall begin at not
less than 75% of the min
wage
(a) No compensation if SOLE
authorizes, as OJT is
required by the school
- to work during the first two
Deductibility of ½ of training
costs incurred, provided:
(a) Program is duly
recognized by DOLE
(b) Deduction shall not
exceed 10% of direct
labor wage
(c) Payment of minimum
wage to apprentices
Equal opportunity for employment
No disabled person shall be denied access to opportunities
for suitable employment. A qualified disabled EE 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. [Sec. 5 [par. 1], RA 7277]
Wage rate shall begin at not Reserved contractual positions
less than 75% of the min 5% of all casual, emergency and contractual positions in
wage the DSWD; DOH, DepEd; and other government agencies,
(a) Learners in piecework offices or corporations engaged in social development
shall be paid in full for the shall be reserved for disabled persons. [Sec 5 [par. 2], RA
work done. 72777]
(a) A commitment to employ
the learners if they so Sheltered employment
desire, as regular If suitable employment for disabled persons cannot be
employees upon found through open employment as provided in the
completion of the immediately preceding Section, the State shall endeavor to
learnership. provide it by means of sheltered employment.
(b) All learners who have
been allowed or suffered In the placement of disabled persons in sheltered
employment, it shall accord due regard to the individual
(2) months shall be qualities, vocational goals and inclinations to ensure a
deemed regular good working atmosphere and efficient production. [Sec 6,
employees if training is RA 7277]
terminated by the
employer before the end of Apprenticeship opportunity
the stipulated period Disabled persons shall be eligible as apprentices or
through no fault of the learners: Provided, that their handicap is NOT as much as
learners. to effectively impede the performance of job operations in
the particular occupation for which they are hired;
provided, further, That after the lapse of the period of
apprenticeship, if found satisfactory in the job
- performance, they shall be eligible for employment. [Sec. 7,
RA 7277]
Full minimum wage
All qualified handicapped workers shall receive the full
amount of the minimum wage rate prescribed herein. [Sec
7, Wage Order No. NCR-17, May 17, 2012]

HANDICAPPED WORKERS [RA 7277] – DIFFERENTLY-
ABLED WORKERS
DEFINITIONS
“Disabled Persons” are those suffering from restriction or
different abilities, as a result of a mental, physical or
sensory impairment, to perform an activity in the manner
or within the range considered normal for a human being
“Impairment” is any loss, diminution or aberration of
psychological, physiological, or anatomical structure or
function
“Disability” shall mean:
(1) 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;
(3) or being regarded as having such an impairment
“Handicap” refers to a disadvantage for a given individual,
resulting from an impairment or a disability, that limits or
prevents the function or activity, that is considered normal
given the age and sex of the individual.
In this light, the Magna Carta for Disabled Persons
mandates that a qualified disabled EE should be given the
same terms and conditions of employment as a qualified
able-bodied person. Since the Magna Carta accords them
the rights of qualified able-bodied persons, they are thus
covered by Article 280 of the Labor Code. In the present
case, the handicap of petitioners [deaf-mutes] is NOT a
hindrance to their work. The eloquent proof of this
statement is the repeated renewal of their employment
contracts. [Bernardo v. NLRC, 1999]
Discounts and other privileges
(a) Persons with disability shall be entitled to the
following:
(b) At least 20% discount from all establishments relative
to the utilization of all services in hotels and similar
lodging establishments; restaurants and recreation
centers for the exclusive use or enjoyment of persons
with disability;
(c) A minimum of 20% discount on admission fees
charged by theaters, cinema houses, concert halls,
circuses, carnivals and other places of culture, leisure
and amusement for the exclusive use or enjoyment of
persons with disability;

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(d) At least 20% discount for the purchase of medicines in
all drugstores for the exclusive use or enjoyment of
persons with disability;
(e) At least 20%% discount on medical and dental services
including diagnostic and laboratory fees such as, but
not limited to, x-rays, computerized tomography scans
and blood tests, in all government facilities, subject to
guidelines to be issued by the DOH in coordination
with the PHILHEALTH.
(f) At least 20% discount on medical and dental services
including diagnostic and laboratory fees and
professional fees of attending doctors in all private
hospitals and medical facilities, in accordance with the
rules and regulations to be issued by the DOH, in
coordination with PHILHEALTH;
(g) At least 20% discount on fare for domestic air and sea
travel for the exclusive use or enjoyment of persons
with disability;
(h) At least 20% discount in public railways, skyways, and
bus fare for the exclusive use and enjoyment of persons
with disability.
(i) Educational assistance to persons with disability, for
them to pursue primary, secondary, tertiary, post
tertiary, as well as vocational or technical education, in
both public and private schools, through the provision
of scholarships, grants, financial aids, subsidies and
other incentives to qualified persons with disability,
including support for books, learning materials and
uniform allowance to the extent feasible; Provided,
That persons with disability shall meet minimum
admission requirements;
(j) To the extent practicable and feasible, the continuance
of the same benefits and privileges given by the GSIS,
SSS, and PAG-IBIG, as the case may be, as are enjoyed
by those in actual service;
(k) To the extent possible, the government may grant
special discounts in special programs for persons with
disability on purchase of basic commodities, subject to
guidelines to be issued for the purpose by the DTI and
the DA; and
(l) Provision of express lanes for persons with disability in
all commercial and government establishments; in the
absence thereof, priority shall be given to them. [Sec
32, RA 7277, as amended by RA 9442]
Conditions for entitlement
The privileges in Sec 32 are available only to persons with
disability who are Filipino citizens upon submission of any
of the following as proof of his/her entitlement thereto:
(a) An identification card issued by the city or municipal
mayor or the barangay captain of the place where the
persons with disability reside;
(b) The passport of the persons with disability concerned;
or,
(c) Transportation discount fare ID issued by the National
Council for the Welfare of Disabled Persons (NCWDP).
The privileges may not be claimed if the persons with
disability claim a higher discount as may be granted by the
commercial establishment and/or under other existing
laws or in combination with other discount program/s.
PROHIBITIONS ON DISCRIMINATION AGAINST DISABLED PERSONS
Discrimination of Employment
No entity, whether public or private shall discriminate
against a qualified disabled person by reason of disability
in regard to job application procedures, the hiring,
promotion, or discharge of employees compensation, job
training and other terms, conditions and privileges of
LABOR LAW BAR OPERATIONS COMMISSION
employment. The following constitute acts of
discrimination:
(1) Limiting, segregating or classifying a disabled job
applicant in such a manner that adversely affects his
work opportunities
(2) Using qualification standards, employment tests or
other selection criteria that screen out or tend to screen
out a disabled person unless such standards, tests or
other selection criteria are shown to be related for the
position in question and are consistent with business
necessity;
(3) Utilizing standards, criteria, or methods of
administration that:
(a) have the effect of discrimination on the basis of
disability; or
(b) perpetuate the discrimination of others who are the
subject to common administrative control.
(4) Providing less compensation, such as salary, wage or
other forms of remuneration and fringe benefits, to
qualified disabled employee, by reason of his disability,
than the amount to which a non-disabled 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 latter's 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 involved to the prejudice of
the business entity; Provided, however, That the
employer first sought to provide reasonable
accommodations for the disabled persons;
(8) Failing to select or administer in the most 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 organizations.
Employment Entrance Examination
Upon an offer of employment, a disabled applicant may be
subjected to medical examinations, on the following
occasions:
(a) all entering employees are subjected to such an
examination regardless of disability;
(b) Information obtained during the medical condition or
history of the applicant is collected and maintained on
separate forms and in separate medical files and is
treated as a confidential medical record; Provided,
however, That:
(1) supervisors and managers may be informed
regarding necessary restrictions on the work or
duties of the employees and necessary
accommodations:
(2) first aid and safety personnel may be informed,
when appropriate, if the disability might require
emergency treatment;
(3) government officials investigating compliance with
this Act shall be provided relevant information on
request; and
(4) the results of such examination are used only in
accordance with this Act. [Sec. 32, RA 7277]
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Prohibition on Verbal, Non-Verbal Ridicule and Vilification
Against Persons with Disability
Public Ridicule
The act of making fun of or contemptuous imitating or
making mockery of persons with disability whether in
writing, or in words, or in action due to their impairments.
[Sec. 39, RA 7277, as amended]
Prohibition
No individual, group or community shall execute any of
these acts of ridicule against persons with disability in any
time and place which could intimidate or result in loss of
self-esteem of the latter.
Vilification includes:
(a) The utterance of slanderous and abusive statements
against a person with disability; and/or,
(b) An activity in public which incites hatred towards,
serious contempt for, or severe ridicule of persons with
disability. [Sec. 41, RA 7277, as amended]
Prohibition
Any individual, group or community is hereby prohibited
from vilifying any person with disability which could result
into loss of self-esteem of the latter.
INCENTIVES FOR EMPLOYERS
Tax incentives for employment of disabled persons
Private entities that employ disabled persons who meet
the required skills or qualifications, either as regular
employee, apprentice or learner, shall be entitled to an
additional deduction, from their gross income, equivalent
to 25% of the total amount paid as salaries and wages to
disabled persons: Provided, however, That such entities
present proof as certified by the Department of Labor and
Employment and the Department of Health as to his
disability, skills, and qualifications. [RA 7277, Sec. 8 (b)]
Tax incentives for construction of disabled-friendly facilities
Private entities that improve or modify their physical
facilities in order to provide reasonable accommodation for
disabled persons shall also be entitled to an additional
deduction from their net taxable income, equivalent to
50% of the direct costs of the improvements or
modifications. This Section, however, does NOT apply to
improvements or modifications or facilities required under
BP 344. [RA 7277, Sec. 8 (c)]
Tax incentives for establishments giving discounts
The establishments may claim the discounts granted in
Sec. 32 (a), (b), (c), (e), (f) and (g) as tax deductions based
on the net cost of the goods sold or services rendered;
Provided, however, That the cost of the discount shall be
allowed as deduction from gross income for the same
taxable year that the discount is granted: Provided, further,
That the total amount of the claimed tax deduction net of
VAT if applicable, shall be included in their gross sales
receipts for tax purposes and shall be subject to proper
documentation and to the provisions of the National
Internal Revenue Code, as amended. [Sec. 32, RA 7277, as
amended by RA 9442]
LABOR LAW BAR OPERATIONS COMMISSION
Termination of Employment
EMPLOYER-EMPLOYEE RELATIONSHIP
The existence or absence of ER-EE relationship is a
question of law and a question of fact, each in its defined
sense.
The recognition of the existence of ER-EE relationship is
not dependent upon the agreement of the parties. The
characterization of the law prevails over that in the
contract. In this sense, the existence of an EE-ER
relationship is a matter of law. [Tabas et.al. v. California
Manufacturing Co., et. Al., G.R. No. 80680, January 26,
1989].
The conclusion that an EE-ER relationship depends upon
the facts of each case. In this sense, it is a question of fact.
[SSS v. CA, G.R. No. 100388, Dec. 14, 2000].
FOUR-FOLD TEST
The “four-fold test” is composed of four elements. This test
is the yardstick to determine employer-employee
relationship:
(1) selection and engagement of the employee;
(2) payment of wages;
(3) power of dismissal; and
(4) employer’s power to control the employee’s conduct
with respect to the means and methods by which the
work is to be accomplished. [Brotherhood Labor Unity
Movement of the Philippines et. al. v. Zamora, G.R. No.
48645, Jan. 7, 1987].
Power to control is the most important element. [Sonza v.
ABS-CBN Broadcasting Corp, G.R. No. 138051, June 10,
2004]
The control test calls merely for the “existence” of the right
to control and not the “actual exercise” of the right.
[Zanotte Shoes v. NLRC, G.R. No. 100665, Feb. 13, 1995]
Although no particular form of evidence is required to
prove the existence of the relationship, and any competent
and relevant evidence to prove the relationship may be
admitted, a finding that the relationship exists must
nonetheless rest on substantial evidence, which is that
amount of relevant evidence that a reasonable mind might
accept as adequate to justify a conclusion. [Legend Hotel
(Manila) v. Titanium Corp., G.R. No. 153511, 18 July 2012]
Not every form of control will have the effect of
establishing ER-EE relationship. The line should be drawn
between:
(1) Rules that merely serve as guidelines towards the
achievement of mutually desired results without
dictating the means or methods to be employed in
attaining it. These aim only to promote the result. In
such case, NO EE-ER relationship exists.
(2) Rules that control or fix the methodology and bind or
restrict the party hired to the use of such means. These
address both the result and the means used to achieve
it and hence, EE-ER relationship exists. [Insurance Life
v. NLRC, G.R. No. 84484, Nov. 15, 1989]
ECONOMIC DEPENDENCE TEST
Two-tiered approach.
(1) First Tier: Control Test (refer to the Four-Fold Test)
(2) Second Tier: The underlying economic realities of the
activity or relationship. [Sevilla v. Court of Appeals].
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The benchmark of economic reality in analyzing possible
employment purposes ought to be the economic
dependence of the worker on his employer.
The standard of “economic dependence” is whether the
worker is dependent on the alleged employer for his
continued employment in that line of business. [Orozco v.
CA, GR No. 155207, 13 August 2008].
KINDS OF EMPLOYMENT
Probationary Employment
Legal basis
Probationary employment shall not exceed 6 months from
the date the employee started working, unless it is covered
by an apprenticeship agreement stipulating a longer
period. The services of an employee who has been
engaged on a probationary basis may be terminated for a
just cause or when he fails to qualify as a regular employee
in accordance with reasonable standards made known by
the employer to the employee at the time of his
engagement. An employee who is allowed to work after a
probationary period shall be considered a regular
employee. [Art. 281, LC]
In all cases of probationary employment, the employer
shall make known to the employee the standards under
which he will qualify as regular employee at the time of his
engagement. Where no standards are made known to the
employee at the time of engagement, he shall be deemed
a regular employee. [IRR, Book VI, Rule 1, Sec. 6(d)]
Definition
A probationary employee is one who is on trial by an
employer during which the employer determines whether
or not he is qualified for permanent employment
[International Catholic Migration Comm. vs. NLRC, 1989]
Termination - Can only be terminated for:
(1) Just causes; or
(2) Failure to qualify as a regular employee in accordance
with reasonable standards made known by the
employer to the employee at the time of engagement.
Note: The probationary employee is entitled to substantial
and procedural due process before termination.
Limitations to termination
(1) It must be exercised in accordance with the specific
requirements of the contract
(2) If a particular time is prescribed, the termination must
be within such time and if formal notice is required,
then that form must be used;
(3) The employer’s dissatisfaction must be real and in
good faith, not feigned so as to circumvent the contract
or the law;
(4) There must be no unlawful discrimination in the
dismissal. [Manila Hotel Corporation v. NLRC, G.R. No.
53453, January 22, 1986].
Purposes
(1) Observance Period – for employer to determine if
employee is qualified and for employee to demonstrate
to the ER his skills
(2) Restrictive- As long as the termination was made
before the expiration of the six-month probationary
period, the employer has a right to sever the employer-
employee relationship
LABOR LAW BAR OPERATIONS COMMISSION
Indeed, the employer has the right or is at liberty to choose
as to who will be hired and who will be declined. It is
within the exercise of this right to select his employees that
the employer may set or fix a probationary period within
which the latter may test and observe the conduct of the
former before hiring him permanently. The right of a
laborer to sell his labor to such persons as he may choose
is, in its essence, the same as the right of an employer to
purchase labor from any person whom it chooses. The
employer and the employee have thus an equality of right
guaranteed by the Constitution. [Grand Motors Corp. vs.
MOLE, 1984]
Duration
Generally, the probationary period of employment is
limited to six (6) months. The exception to this general rule
is when the parties to an employment contract may agree
otherwise, such as when the same is established by
company policy or when the same is required by the nature
of work to be performed by the employee. In the latter
case, there is recognition of the exercise of managerial
prerogatives in requiring a longer period of probationary
employment, such as in the present case where the
probationary period was set for eighteen (18) months, i.e.
from May, 1980 to October, 1981 inclusive, especially where
the employee must learn a particular kind of work such as
selling, or when the job requires certain qualifications,
skills, experience or training. [Busier vs. Leogardo, 1984]
Honasan was certainly under observation during her three-
week on-the-job training. If her services proved
unsatisfactory then, she could have been dropped as early
as during that period. But she was not. On the contrary,
her services were continued, presumably because they
were acceptable, although she was formally placed this
time on probation.
Even if it be supposed that the probation did not end with
the three-week period of on-the-job training, there is still
no reason why that period should not be included in the
stipulated six-month period of probation. Honasan was
accepted for on-the-job training on April 15, 1991.
Assuming that her probation could be extended beyond
that date, it nevertheless could continue only up to
October 15, 1991, after the end of six months from the
earlier date. Under this more lenient approach, she had
become a regular employee of Holiday Inn and acquired
full security of tenure as of October 15, 1991. [Holiday Inn
Manila vs. NLRC, 1993]
Paras started reporting for work on May 27, 1996. The
employers unanimously agreed that his performance was
unsatisfactory. On November 26, 1996, he received a
Notice of Termination dated November 25, 1996, Applying
Article 13 of the Civil Code, the probationary period of six
(6) months consists of one hundred eighty [180] days. As
clearly provided for in the last paragraph of Article 13, in
computing a period, the first day shall be excluded and the
last day included. Thus, the one hundred eighty [180] days
commenced on May 27, 1996, and ended on November 23,
1996. By the time Paras received the letter he was already
a regular employee of the petitioner under Article 281 of
the Labor Code. [Mitsubishi Motors vs. Chrysler Union,
2004]
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To reiterate, the rule on duration may be summarized as
follows:
General Rule: Probationary employment shall not exceed
six (6) months from the date the employee started
working.
Exceptions:
(1) When the parties to an agreement contract otherwise:
(2) When the same is established by company policy;
(3) When the s ame is required by the nature of the work
performed by the employee; and
(4) When it is covered by an apprenticeship agreement
stipulating a longer period
Agreement to extend probationary period
If the extension was ex gratia, an act of liberality on the
part of his employer affording him a second chance to
make good after having initially failed to prove his worth as
an employee. Such an act cannot now unjustly be turned
against said employer’s account to compel it to keep on its
payroll one who could not perform according to its work
standards. [Mariwasa Manufacturing v. Leogardo, G.R. No.
74246, Jan. 26, 1989].
Criteria for regularization must be disclosed
In all cases of probationary employment, the employer
shall make known to the employee the standards under
which he will qualify as a regular employee at the time of
his engagement. Where no standards are made known to
the employee at that time, he shall be deemed a regular
employee. Conversely, an employer is deemed to
substantially comply with the rule on notification of
standards if he apprises the employee that he will be
subjected to a performance evaluation on a particular date
after his hiring. [Alcira vs. NLRC, 2004]
Regular Status after Probation
When the bank renewed the contract after the lapse of the
six-month probationary period, the employees thereby
became regular employees. No employer is allowed to
determine indefinitely the fitness of its employees.
[Bernardo vs. NLRC, 1999]
Absorbed employees
The private respondents could not be considered
probationary employees because they were already well-
trained in their respective functions. As stressed by the
Solicitor General, while private respondents were still with
the CCAS they were already clerks. Respondent Gelig had
been a clerk for CCAS for more than ten (10) years, while
respondent Quijano had slightly less than ten (10) years of
service. They were, therefore, not novices in their jobs but
experienced workers. [Cebu Stevedoring Co., Inc. vs.
Regional Director, 1988]
Double probation
There is no basis for subjecting an employee to a new
probationary or temporary employment where he had
already become a regular employee when he was
absorbed by a sister company. [A Prime Security Services,
Inc. vs. NLRC, 2000]
Termination and salary
A probationary employee enjoys only a temporary
employment status. This means that he is terminable at
any time, permanent employment not having been
attained in the meantime. The employer could well decide
he no longer needed the probationary employee’s services
or his performance fell short of expectations, etc. As long
LABOR LAW BAR OPERATIONS COMMISSION
as the termination was made before the termination of the
six-month probationary period, the employer was well
within his rights to sever the employer-employee
relationship. A contrary interpretation would defect the
clear meaning of the term “probationary.” [De la Cruz, Jr.
vs. NLRC, 2004]
Private school teachers
The provisions of Article 280 of the Labor Code are not
applicable to the present case especially with respect to
the issue of respondent's acquisition of security of tenure. It
is settled that questions respecting a private school
teacher’s entitlement to security of tenure are governed by
the Manual of Regulations for Private Schools and not the
Labor Code. [Paragraph 75 of the 1970 Manual] [Aklan
College vs. Guarino, 2007]
Regular employment
Definition
Regular employment is not synonymous with permanent
employment, because there is no such thing as a
permanent employment. Any employee may be
terminated for just cause.
A regular employee is one who is engaged to perform
activities which are necessary and desirable in the usual
business or trade of the employer as against those which
are undertaken for a specific project or are seasonal. There
are two separate instances whereby it can be determined
that an employment is regular:
(1) if the particular activity performed by the employee is
necessary or desirable in the usual business or trade of
the employer; and,
(2) if the employee has been performing the job for at
least a year. [Pangilinan vs. Gen. Milling Corp., 2004]
Standard of determination [Reasonable connection rule]
The primary standard in determining regular employment
is the reasonable connection between the particular
activity performed by the employee in relation to the usual
business or trade of the employer. The connection can be
determined by considering the nature of the work
performed and its relation to the scheme of the particular
business or trade in its entirety. The repeated and
continuing need for the performance of the job has been
deemed sufficient evidence of the necessity, if not
indispensability of the activity to the business. In the case
at bar, continuous and repeated rehiring, some for nearly
two decades, of these bill collectors indicate the necessity
and desirability of their services, as well as the importance
of the role of bill collectors in the MWSS. [Lopez vs. MWSS,
2005]
Hiring for an extended period
Where the employment of project employees is extended
long after the supposed project has been finished, the
employees are removed from the scope of project
employees and considered regular employees. [Audion
Electric Co., Inc. vs. NLRC, 1999]
Repeated renewal of contract
The petitioner cannot rightfully say that since the private
respondent's employment hinged from contract to
contract, it was "temporary", depending on the term of
each agreement. Under the Labor Code, an employment
may only be said to be "temporary" "where:
(1) it has been fixed for a specific undertaking, the
completion of or termination of which has been
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determined at the time of the engagement of the
employee or
(2) where the work or services to be performed is seasonal
in nature and the employment is for the duration of
the season.
Quite to the contrary, the private respondent's work, that of
"typist-clerk" is far from being "specific" or "seasonal", but
rather, one "where the employee has been engaged to
perform activities which are usually necessary or desirable
in the usual business." And under the Code, where one
performs such activities, he is a regular employee, "(t)he
provisions of written agreement to the contrary
notwithstanding …”
It is true that in Biboso vs Victorias Milling Company, Inc. we
recognized the validity of contractual stipulations as to the
duration of employment. But we cannot apply it here
because clearly, the contract-to-contract arrangement
given to the private respondent was but an artifice to
prevent her from acquiring security of tenure and to
frustrate constitutional decrees. [Beta Electric Corp. vs.
NLRC, 1990]
Length of time involved
Length of time not controlling, merely serves as a badge of
regular employment. [Maraguinot vs. NLRC, 1998]
Project employment
Employment fixed on a specific project or undertaking,
completion or termination of which is determined at the
time of engagement of the employee.
Whether or not the project has a direct relation to the
business of the ER is not important, BUT:
(a) EE must be informed of the nature and duration of
project
(b) project and principal business of ER are two separate
things
(c) no attempt to deny security of tenure to the worker
Test of project employment
The principal test for determining whether employees are
properly characterized as "project employees," as
distinguished from "regular employees," is whether or not
the project employees were assigned to carry out a
"specific project or undertaking," the duration and scope of
which were specified at the time the employees were
engaged for that project. As defined, project employees are
those workers hired:
(1) for a specific project or undertaking, and
(2) the completion or termination of such project or
undertaking has been determined at the time of the
engagement of the employee. [PNOC Energy Dev’t
Corp vs. NLRC, 2007]
Indicators of project employment
(1) The duration of the specific/identified undertaking for
which the worker is engaged is reasonably
determinable;
(2) Such duration, as well as the specific work/service to
be performed, is defined in an employment agreement
and is made clear to the employee at the time of the
hiring;
(3) The work/service to be performed by the employee is in
connection with the particular project/undertaking for
which he is engaged;
LABOR LAW BAR OPERATIONS COMMISSION
(4) The employee, while not employed and awaiting
engagement, is free to offer his services to any other
employer;
(5) The termination of his employment in the particular
project/undertaking is reported to the DOLE Regional
Office having jurisdiction over the workplace within 30
days following the date of his separation from work,
using the prescribed form on employees’ terminations
/dismissals /suspensions;
(6) An undertaking in the employment contract by the
employer to pay completion bonus to the project
employee as practiced by most construction
companies. [Samson v. NLRC, G.R. No. 11366, Feb. 1,
1996].
See Policy No. 2 of 1997 and D.O. 19 of 1993
Samson vs. NLRC (1996):
When the present action for regularization was filed on
November 5, 1989 and during the entire period of
petitioner's employment with private respondent prior to
said date, the rule in force then was Policy Instruction No.
20, which required the employer company to report to the
nearest Public Employment Office the fact of termination
of a project employee as a result of the completion of the
project or any phase in which he is employed.
Furthermore, Department Order No. 19, which was issued
on April 1, 1993, did not totally dispense with the notice
requirement. Instead, it made provisions and considered it
(i.e. the notice) as one of the "indicators" that a worker is a
project employee.
Work pool employee
A project EE or a member of a work pool may acquire the
status of a regular employee when the following concur:
(1) There is a continuous rehiring of project employees
even after cessation of a project; and
(2) The tasks performed by the alleged “project
employee” are vital, necessary, and indispensable to
the usual business or trade of the employer. However,
the length of time during which the EE was
continuously rehired is not controlling, but merely
serves as a badge of regular employment.
A work pool may exist although the workers in the pool do
not receive salaries and are free to seek other employment
during temporary breaks in the business, provided, that the
worker shall be available when called to report for a
project. Although primarily applicable to regular seasonal
workers, this set-up can likewise be applied to project
workers insofar as the effect of temporary cessation of
work is concerned. [Maraguinot vs. NLRC, 1998]
Members of a work pool from which a construction
company draws its project employees, if considered
employees of the construction company while in the work
pool, are non-project employees, or employees for an
indefinite period. If they are employed in a particular
project, the completion of the project or any phase thereof
will not mean severance of the employer-employee
relationship. [Aguilar Corp. vs. NLRC, 1997]
Rationale for project employment
If a project has already been completed, it would be
unjust to require the employer to maintain them in the
payroll while they are doing absolutely nothing except
waiting until another project is begun, if at all. In effect,
these stand-by workers would be enjoying the status of
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privileged retainers, collecting payment for work not done,
to be disbursed by the employer from profits not earned.
[De Ocampo vs. NLRC, 1990]
Examples of project employment
Private respondents, as well as the other 30 workers, were
needed as additional hands for the renovation work and
not for ordinary upkeep and maintenance. The erection of
the fire escape and other small jobs after the renovation
cannot be deemed maintenance but more of casual work.
[Phil. Jai-Alai and Amusement Corp. vs. Clave, 1983]
The corporation does not construct vessels for sale or
otherwise which will demand continuous production of
ships and will need regular workers. It merely accepts
contracts for ship-building or for repair of vessels from
third parties. It is only on occasion when it has work
contract of this nature that it hires workers to do the job
which, needless to say, lasts only for less than a year or
longer. Completion of their work or project automatically
terminates their employment. [Sandoval Shipyards, Inc. vs.
NLRC, 1985]
Petitioner was engaged to perform data encoding and
keypunching, and her employment was fixed for a specific
project or undertaking the completion or termination of
which had been determined at the time of her
engagement. This may be observed from the series of
employment contracts between petitioner and private
respondent, all of which contained a designation of the
specific job contract and a specific period of employment.
[Imbuido vs. NLRC, 2000]
Employer obligation to make standards known
The law is clear that in all cases involving employees
engaged on probationary' basis, the employer shall make
known to the employee at the time he is hired, the
standards by which he will qualify as a regular employee.
Nowhere in the employment contract executed between
petitioner and respondent Grulla is there a stipulation that
the latter shall undergo a probationary period for three
months before he can quality as a regular employee.
There is also no evidence on record showing that the
respondent Grulla had been apprised of his probationary
status and the requirements which he should comply in
order to be a regular employee. In the absence of these
requisites, there is justification in concluding that
respondent Grulla was a regular employee at the time he
was dismissed by petitioner, and as such cannot be done
without just and authorized cause. [A. M. Oreta and Co.,
Inc. vs. NLRC, 1989]
Specified period
The Court has upheld the legality of fixed-term
employment. It ruled that the decisive determinant in term
employment should not be the activities that the employee
is called upon to perform but the day certain agreed upon
by the parties for the commencement and termination of
their employment relationship. But, this Court went on to
say that where from the circumstances it is apparent that
the periods have been imposed to preclude acquisition of
tenurial security by the employee, they should be struck
down or disregarded as contrary to public policy and
morals. [Purefoods Corp. vs. NLRC, 1987]
LABOR LAW BAR OPERATIONS COMMISSION
Continuous rehiring
Despite the insistence of petitioner that they were project
employees, the facts show that as masons, carpenters and
fine graders in petitioner’s various construction projects,
they performed work which was usually necessary and
desirable to petitioner’s business which involves
construction of roads and bridges. It is not enough that an
employee is hired for a specific project or phase of work.
There must also be a determination of, or a clear
agreement on, the completion or termination of the project
at the time the employee was engaged. This second
requirement was not met in this case. [Chua vs. Court of
Appeals, 2004]
The fact that the workers have been employed with the
company for several years on various projects, the longest
being nine (9) years, did not automatically make them
regular employees considering that the definition of
regular employment in Article 280 of the Labor Code,
makes specific exception with respect to project
employment. The re-hiring of petitioners on a project-to-
project basis did not confer upon them regular
employment status. The practice was dictated by the
practical consideration that experienced construction
workers are more preferred. It did not change their status
as project employees. [C.E. Construction Corp vs. Cioco,
2004]
Seasonal employment
Work or services to be performed are seasonal in nature,
employment is for the duration of the season.
No continuing need for the worker.
“Regular Seasonal” Employees after One Season
Regular seasonal employees are those called to work from
time to time. The nature of their relationship with the
employer is such that during off season they are
temporarily laid off but during summer season they are
reemployed, or when their services may be needed. They
are not, strictly speaking, separated from the service but
are merely considered as on leave of absence without pay
until they are reemployed. Their employment relationship
is never severed but only suspended. As such those
employees can be considered as in the regular
employment of the employer. [Manila Hotel Co. v. CIR, G.R.
No. L-18875, Sept. 30, 1963].
For respondents to be excluded from those classified as
regular employees, it is not enough that they perform work
or services that are seasonal in nature. They must have
been employed only for the duration of one season. While
the records sufficiently show that the respondents’ work in
the hacienda was seasonal in nature, there was, however,
no proof that they were hired for the duration of one
season only. In fact, the payrolls, submitted in evidence by
the petitioners, show that they availed the services of the
respondents since 1991. Absent any proof to the contrary,
the general rule of regular employment should, therefore,
stand.
The disparity in facts between the Mercado Sr., vs. NLRC
case and the instant case is best exemplified by the fact
that the farm laborers, work only for a definite period for a
farm worker, after which they offer their services to other
farm owners. In Mercado, although respondent constantly
availed herself of the petitioners’ services from year to year,
it was clear from the facts therein that they were not in her
regular employ. In other words, they worked for
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respondent, but were nevertheless free to contract their
services with other farm owners. [Hacienda Bino vs.
Cuenca, 2005]
Casual employment
When not regular, project or seasonal employee.
Requirements to become Regular employee:
(1) one (1) year service, continuous or broken
(2) with respect to activity employed
(3) employment shall continue while such activity exists
Nature of work
What determines regularity or casualness is not the
employment contract, written or otherwise, but the nature
of the job. If the job is usually necessary or desirable to the
main business of the employer, then employment is
regular. [A. M. Oreta and Co., Inc. vs. NLRC, 1989]
One-year service
The fact that the petitioners have been hired on a
"temporary or seasonal" basis merely is no argument
either.
As held in Philippine Bank of Communications v. NLRC, a
temporary or casual employee, under Article 281 of the
Labor Code, becomes regular after service of one year,
unless he has been contracted for a specific project.
And we cannot say that merchandising is a specific project
for the obvious reason that it is an activity related to the
day-to-day operations of California.
The records show that the petitioners had been given an
initial six month contract, renewed for another six months.
Accordingly, under Article 281 of the Code, they had
become regular employees — of California — and had
acquired a secure tenure. Hence, they cannot be separated
without due process of law. [Tabas vs. California Marketing
Co., Inc., 1989]
Fixed term employment
Article 280 of the Labor Code does not proscribe or
prohibit an employment contract with a fixed period
provided the same is entered into by the parties, without
any force, duress or improper pressure being brought to
bear upon the employee and absent any other
circumstance vitiating consent.
(1) It does not necessarily follow that where the duties of
the employee consist of activities usually necessary or
desirable in the usual business of the employer, the
parties are forbidden from agreeing on a period of time
for the performance of such activities. There is thus
nothing essentially contradictory between a definite
period of employment and the nature of the
employee's duties.
(2) It goes without saying that contracts or employment
govern the relationship of the parties. In this case,
private respondent's contract provided for a fixed term
of nine (9) months, from June 1, 1991 to March 31, 1992.
Such stipulation, not being contrary to law, morals,
good customs, public order and public policy, is valid,
binding and must be respected. [St. Theresa’s School
vs. NLRC 1998]
However, the Court upholds the principle that where from
the circumstances it is apparent that periods have been
imposed to preclude acquisition of tenurial security by the
employee, they should be disregarded for being contrary to
public policy. [Servidad vs. NLRC, 1999]
LABOR LAW BAR OPERATIONS COMMISSION
Requisites for validity
This arrangement does NOT circumvent Security of Tenure
when:
(1) Knowingly and voluntarily agreed upon by the parties
without any force, duress, or improper pressure or any
other circumstances vitiating his consent; OR
(2) The employer and the employee dealt with each other
on more or less equal terms with no moral dominance
exercised by the former or the latter. Brent Doctrine
[Brent School v. Zamora, 1990; Romares v. NLRC, 1998;
Medenilla v. Phil. Veterans Bank, 2000]
(3) If a contract is for a fixed term and the Employee is
dismissed without just cause, he is entitled to the
payment of his salaries corresponding to the unexpired
portion of the employment contract. [Medenilla v. Phil.
Veterans Bank, 2000]
JOB CONTRACTING
Article 106 to 109 of the Labor Code
Article 106. Contractor or subcontractor. Whenever an
employer enters into a contract with another person for the
performance of the former’s work, the employees of the
contractor and of the latter’s subcontractor, if any, shall be
paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to
pay the wages of his employees in accordance with this
Code, the employer shall be jointly and severally liable
with his contractor or subcontractor to such employees to
the extent of the work performed under the contract, in the
same manner and extent that he is liable to employees
directly employed by him.
The Secretary of Labor and Employment may, by
appropriate regulations, restrict or prohibit the
contracting-out of labor to protect the rights of workers
established under this Code. In so prohibiting or
restricting, he may make appropriate distinctions between
labor-only contracting and job contracting as well as
differentiations within these types of contracting and
determine who among the parties involved shall be
considered the employer for purposes of this Code, to
prevent any violation or circumvention of any provision of
this Code.
There is "labor-only" contracting where the person
supplying workers to an employer does not have
substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others,
and the workers recruited and placed by such person are
performing activities which are directly related to the
principal business of such employer. In such cases, the
person or intermediary shall be considered merely as an
agent of the employer who shall be responsible to the
workers in the same manner and extent as if the latter
were directly employed by him.
Article 107. Indirect employer. The provisions of the
immediately preceding article shall likewise apply to any
person, partnership, association or corporation which, not
being an employer, contracts with an independent
contractor for the performance of any work, task, job or
project.
Article 108. Posting of bond. An employer or indirect
employer may require the contractor or subcontractor to
furnish a bond equal to the cost of labor under contract, on
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condition that the bond will answer for the wages due the
employees should the contractor or subcontractor, as the
case may be, fail to pay the same.
Article 109. Solidary liability. The provisions of existing laws
to the contrary notwithstanding, every employer or indirect
employer shall be held responsible with his contractor or
subcontractor for any violation of any provision of this
Code. For purposes of determining the extent of their civil
liability under this Chapter, they shall be considered as
direct employers.
Examples
Aboitiz Haulers vs. Dimapatoi (2006):
The allegation of petitioner that Grigio is an independent
job contractor is without basis. The respondents, as
checkers, were employed to check and inspect cargo, a task
which is clearly necessary for the petitioner’s business of
forwarding and distributing cargo. Grigio did not
undertake the performance of its service contract
according to its own manner and method, free from the
control and supervision of its principal.
The work activities, shifts, and schedules of the
respondents, including time allowed for "recess" were set
under the Written Contract of Services. This clearly
indicates that these matters, which consist of the means
and methods by which the work is to be accomplished,
were not within the absolute control of Grigio.
Petitioner’s allegation that Grigio retained control by
providing supervisors to monitor the performance of the
respondents cannot be given much weight. Instead of
exercising their own discretion or referring the matter to
the officers of Grigio, its supervisors were obligated to refer
to petitioner’s supervisors any discrepancy in the
performance of the respondents.
Lastly, the law casts the burden on the contractor to prove
that it has substantial capital, investment, tools etc. In this
case, neither Grigio nor the petitioner was able to present
any proof that Grigio had substantial capital.
Lakas vs. Burlingame (2007):
No proof was adduced to show F. Garil’s capitalization. The
work of the promo-girls was marketing and selling, and
thus directly related to the principal business or operation
of Burlingame.
Finally, F. Garil did not undertake the performance of its
service contract according to its own manner and method,
free from the control and supervision of Burlingame. Based
on the contract, F. Garil was responsible in the hiring
process only with respect to the screening, testing and pre-
selection of the personnel it provided to Burlingame.
Actual hiring itself was done through the deployment of
personnel to establishments by Burlingame.
The contract also stipulated that Burlingame shall pay F.
Garil a certain sum per worker. F. Garil merely served as
conduit in the payment of wages to the personnel. The
interpretation would have been different if the payment
was for the job, project, or services rendered during the
month and not on a per worker basis.
The Court has taken judicial notice of the practice of
employers who do not issue payslips directly to employees.
Under current practice, a third person, usually the
LABOR LAW BAR OPERATIONS COMMISSION
purported contractor [service or manpower placement
agency], assumes the act of paying the wage.
The contract also provides that “any personnel found to be
inefficient, troublesome, uncooperative and not observing
the rules and regulations set forth by Burlingame shall be
reported to F. Garil and may be replaced upon request.”
Corollary to this circumstance would be the exercise of
control and supervision by Burlingame over workers
supplied by F. Garil in order to establish the nature of
undesirable personnel.
Department Order No. 18-A, Series of 2011: Rules
Implementing Articles 106 to 109 of the LC, as amended (14
November 2011)
Coverage
This shall apply to:
(1) all parties of contracting and subcontracting
arrangements where ER-EE relationships exist
(2) cooperatives engaging in contracting or subcontracting
arrangements
Contractors and subcontractors referred to in these rules
are prohibited from engaging in recruitment and
placement activities as defined in Art. 13(b) of the LC
whether for local or overseas employment.
Definition of terms
Cabo – a persons or group of persons or a labor groups
which, in the guise of a labor organization, cooperative or
any entity, supplies workers to an employer, with or
without any monetary or other consideration, whether in
the capacity of an agent of the employer or as an
ostensible independent contractor.
Contracting or subcontracting – an arrangement whereby a
principal agrees to put out or farm out with a contractor
the performance or completion of a specific job, work or
service within a definite or predetermined period,
regardless of whether such job, work or service is to be
performed or completed within or outside the premises of
the principal.
Contractor – any person or entity, including a cooperative,
engaged in a legitimate contracting or subcontracting
arrangement providing either services, skilled worker,
temporary workers or a combination of services to a
principal under a Service Agreement.
Contractor’s employee – includes one employed by a
contractor to perform or complete a job, work, or service
pursuant to a Service Agreement with a principal.
It shall also refer to regular EEs of the contractor whose
functions are not dependent on the performance or
completion of a specific job, work or service within a
definite period of time i.e. administrative staff.
In-house agency – a contractor which is owned,, managed,
or controlled directly or indirectly by the principal or one
where the principal owns/represents any share of stock,
and which operates solely or mainly for the principal.
Net Financial Contracting Capacity (NFCC) – refers to the
formula to determine the financial capacity of the
contractor to carry out the job, work or services sought to
be undertaken under a Service Agreement.
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Formula:
NFCC = (current assets - current liabilities) x (K – value of
all outstanding or ongoing projects including contracts to
be started)
K stands for contract duration equivalent to:
(a) 10 for one year or less
(b) 15 for more than 1 year up to 2 years
(c) 20 for more than 2 years
Principal – any ER, whether a person or entity, including
government agencies and GOCCs, who/which puts out or
farms out a job, service or work to a contractor.
Right to control – the right reserved to the person for
whom the services of the contractual workers are
performed, to determine not only the end to be achieved,
but also the manner and means to be used in reaching
that end.
Substantial capital – refers to paid-up capital
stocks/shares of at least P3,000,000 in the case of
corporations, partnerships and cooperatives; in case of
single proprietorship, a net worth of at least P3,000,000.
[Sec 3, D.O. 18-A-11]
Service agreement – refers to the contract between the
principal and contractor containing the terms and
conditions governing the performance or completion of a
specific job, work or service being farmed out for a definite
or predetermined period.
Legitimate contracting or subcontracting
Contracting or subcontracting shall be legitimate if all the
following circumstances occur:
(a) The contractor must be registered in accordance with
these rules and carries a distinct and independent
business and undertakes to perform the job, work or
service on its own responsibility, according to its own
manner and method, and free from control and
direction of the principal in all matters connected with
the performance of the work except as to the results
thereof;
(b) The contractor has substantial capital and/or
investment; and,
(c) The Service Agreement ensures compliance with all
the rights and benefits under Labor laws.
Job contracting is permissible only if the following
conditions are met:
(1) the contractor carries on an independent business and
undertakes the contract work on his own account
under his own responsibility according to his own
manner and method, free from the control and
direction of his employer or principal in all matters
connected with the performance of the work except as
to the results thereof; and
(2) the contractor has substantial capital or investment in
the form of tools, equipment, machineries, work
premises, and other materials which are necessary in
the conduct of the business. [Lakas vs. Burlingame
Corp., 2007]
In the case of Aliviado v. Protecter & Gamble Philippines,
Inc., (G.R. No. 160506, 9 March 2010), the SC
conceded that the law and its implementing rules
allow contracting arrangements for the performance of
specific jobs, works, or services. Indeed, it is
management prerogative to farm out any of its
LABOR LAW BAR OPERATIONS COMMISSION
activities, regardless of whether such activity is
peripheral or core in nature. However, in order for such
outsourcing to be valid, it must be made to an
independent contractor because the current labor rules
expressly prohibit labor-only contracting.
Factors to determine existence of independent contractor
relationship
(1) Whether the contractor is carrying on an independent
business
(2) Whether the work is part of the employer’s general
business.
(3) The nature and extend of the work.
(4) The skill required.
(5) The terms and duration of the relationship.
(6) The right to assign the performance of the work to
another.
(7) The control and supervision of the work and the
employer’s powers with respect to the hiring, firing and
payment of salaries.
(8) The duty to supply premises, tools, and appliances.
[Mafinco vs. Ople, 1976]
Prohibition against labor-only contracting
Labor only contracting is prohibited. There is labor-only
contracting where:
(a) The contractor does not have substantial capital or
investments in the form of tools, equipment,
machineries, work premises, among others, and the
employees recruited and places are performing
activities which are usually necessary or desirable to
the operation of the company, or directly related to the
main business of the principal within a definite or
predetermined period, regardless of whether such job,
work or service is to be performed or completed within
or outside the premises of the principal; or
(b) The contractor does not exercise the right to control
the performance of the work of the employee.
Other prohibitions
(A) Contracting out of jobs, works or services when not
done in good faith and not justified by the exigencies of
the business such as the following:
(1) Contracting out of jobs, works or services when the
same results in the termination or reduction of
regular EEs and reduction of work hours or
reduction or splitting of the bargaining unit.
(2) Contracting out of work with a Cabo
(3) Taking undue advantage of the economic situation
or lack of bargaining strength of the contractor’s
EEs, or undermining their security of tenure or basic
rights, or circumventing the provisions of regular
employment in any of the following instances:
(a) Requiring them to perform functions which are
currently being performed by the regular EEs of
the principal; and,
(b) Requiring them to sign, as a precondition to
employment or continued employment, an
antedated resignation letter; a blank payroll; a
waiver of labor standards including minimum
wages and social or welfare benefits; or a
quitclaim releasing the principal, contractor or
from any liability as to payment of future
claims.
(4) Contracting out of a job, work or service through an
in-house agency.
(5) Contracting out of a job, work or service that is
necessary or desirable or directly related to the
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business or operation of the principal by reason of a
strike or lockout whether actual or imminent.
(6) Contracting out of a job, work or service being
performed by union members when such will
interfere with, restrain or coerce EEs in the exercise
of their rights to self-organization as provided in
Art. 248(c) of the LC, as amended.
(7) Repeated hiring of EEs under an employment
contract of short duration or under a Service
Agreement of short duration with the same or
different contractors, which circumvents the LC
provisions on Security of Tenure.
(8) Requiring EEs under a subcontracting arrangement
to sign a contract fixing the period of employment
to a term shorter than the term of the Service
Agreement, unless the contract is divisible into
phases for which substantially different skills are
required and this is made known to the EE at the
time of the engagements.
(9) Refusal to provide a copy of the Service Agreement
and the employment contracts between the
contractor and the EEs deployed to work in the
bargaining unit of the principal’s certified
bargaining agent to the sole and exclusive
bargaining agents.
(10)Engaging or maintaining by the principal of
subcontracted EEs in excess of those provided in
the applicable CBA or as set by the Industry
Tripartite Council.
(B) Contracting out of jobs, works, or services analogous to
the above when not done in good faith and not justified
by the exigencies of the business.
Mafinco vs. Ople (1976): When an independent contractor
and not an employee: We recognize that contracting out is
not unlimited; rather, it is a prerogative that management
enjoys subject to well-defined legal limitations. As we have
previously held, the company can determine in its best
business judgment whether it should contract out the
performance of some of its work for as long as the
employer is motivated by good faith, and
(1) the contracting out must not have been resorted to to
circumvent the law or
(2) must not have been the result of malicious or arbitrary
action. [Manila Electric Co. v. Quisumbing, 1999]
We perceive at the outset the disposition of the NLRC that
janitorial services are necessary and desirable to the trade
or business of petitioner Coca-Cola. But this is inconsistent
with our pronouncement in Kimberly Independent Labor
Union v. Drilon where the Court took judicial notice of the
practice adopted in several government and private
institutions and industries of hiring janitorial services on an
“independent contractor basis.” In this respect, although
janitorial services may be considered directly related to the
principal business of an employer, as with every business,
we deem them unnecessary in the conduct of the
employer’s principal business. [Coca-Cola Bottlers Phil. Inc.
vs. NLRC, 1999]
Rights of contractor’s EEs
All contractor’s EEs, whether deployed or assigned ass
reliever, seasonal, week-ender, temporary, or promo
jobbers, shall be entitled to all the rights and privileges as
provided for in the LC, as amended.
Security of tenure of contractor’s EEs
It is understood that all contractor’s EEs enjoy security of
tenure regardless of whether the contract of employment
LABOR LAW BAR OPERATIONS COMMISSION
is co-terminus with the service agreement, or for a specific
job, work, or service, or phase thereof.
Effect of termination of employment
The termination of the contractor EE prior to the expiration
of the Service Agreement shall be governed by Arts. 282-
284 of the LC.
In case the termination is caused by the pre-termination of
the Service Agreement not due to authorized causes under
Art. 283, the right of the contractor EE to unpaid wages
and other unpaid benefits including unremitted legal
mandatory contributions, e.g., SSS, Philhealth, Pag-ibig,
ECC, shall be borne by the party at fault, without prejudice
to the solidary liability of the parties to the Service
Agreement.
Where the termination result from the expiration of the
Service Agreement, or from the completion of the phase of
the job, work or service for which the EE is engaged, the
latter may opt for payment of separation benefits as may
be provided by law or the Service Agreement, without
prejudice to his/her entitlement to the completion bonuses
or other emoluments, including retirement benefits
whenever applicable.
Mandatory registration
It shall be mandatory for all persons or entities, including
cooperative, acting as contractors, to register with the
Regional Office of the DOLE where it principally operates.
Failure to register shall give rise to the presumption that
the contractor is engaged in labor-only contracting.
Contracting or subcontracting arrangements in the
Construction and other industries
Contracting or subcontracting arrangements in the
Construction Industry, under the licensing coverage of the
Philippine Construction Accreditation Board (PCAB), shall
be covered by the applicable provisions of these Rules and
shall continue to be governed by Dept Order No. 19, Series
of 1993 [Guidelines Governing the Employment of Workers in
the Construction Industry] Dept. Order No 13, Series of 1998
[Guidelines Governing the Occupational Safety and Health in
the Construction Industry]; DOLE-DPWH-DILG-DTI and
PCAB Memorandum of Agreement-Joint Administrative
Order No. 1, Series of 2011 on coordination and
harmonization of policies and programs on occupational
safety and health in the construction industry.
Department Circular No. 01, Series of 2012: Clarifying the
Applicability of DO No. 18-A, 2011 to Business Processing
Outsourcing (BPO)/Knowledge Process Outsourcing (KPO)
and the Construction Industry
Applicability to BPO
DO 18-A speaks of a trilateral relationship that
characterizes the covered contracting/sub-contracting
arrangement. Thus, vendor-vendee relationship for entire
business processes covered by the applicable provisions of
the Civil Code on Contracts is excluded.
DO 18-A contemplates generic or focused singular activity
in one contract between the principal and the contractor
(for example, janitorial, security, merchandising, specific
production work) and does not contemplate information
technology-enabled services involving an entire process
(for example, BPO, KPO, legal process outsourcing,
hardware and/or software support, medical transcription,
animation services, back office operations/support). These
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companies engaged in BPOs may hire employees in
accordance with applicable laws, and maintain these EEs
based on business requirements, which may or may not be
for different clients of the BPOs at different periods of the
EE’s employment.
Applicability to the Construction Industry
Licensing and the exercise of regulatory powers over the
construction industry is lodged with PCAB which is under
the Construction Industry Authority of the Philippines and
not with the DOLE or any of its regional offices.
Thus, the DOLE, through its regional offices shall not
require contractors licensed by PCAB in the Construction
Industry to register under DO 18-A. Moreover, findings of
violation/s on labor standards and occupational health
and safety standards shall be coordinated with PCAB for
its appropriate action, including the possible
cancellation/suspension of the contractor’s license.
Effects of finding that there is labor-only contracting
A finding by a competent authority of labor-only
contracting shall render the principal jointly and severally
liable with the contractor to the latter’s EEs, in the same
manner and extent that the principal is liable to EEs
directly hired by him/her.
A finding of commission of any of the prohibited activities
in Sec. 7 or violation of either Secs. 8 or 9 hereof, shall
render the principal the direct ER of the EEs of the
contractor or subcontractor. [Sec. 27, DO 18-A, 2011]
If found to be labor-only contractor, it is equivalent to
finding that there exists an employer-employee
relationship between the owner of the project and the
employees of the ‘labor-only’ contractor since that
relationship is defined and prescribed by the law itself.
[Industrial Timber Corporation vs. NLRC, 1997]
In legitimate job contracting, no employer-employee
relation exists between the principal and the job
contractor's employees. The principal is responsible to the
job contractor's employees only for the proper payment of
wages. But in labor-only contracting, an employer-
employee relation is created by law between the principal
and the labor-only contractor's employees, such that the
former is responsible to such employees, as if he or she
had directly employed them. [PAL vs. NLRC, 1998]
The only time the indirect employer may be made solidarily
liable with the contractor is when the contractor fails to
pay his employees their wages and other benefits claimed.
[Landazares vs. Amethyst Security, 2003]
Eparwa Security, Inc. vs Liceo de Cagayan University (2006):
Citing Eagle Security Agency vs. NLRC--In the case at bar, it
is beyond dispute that the security guards are the
employees of EAGLE (contractor). That they were assigned
to guard the premises of PTSI (principal) pursuant to the
latter’s contract with EAGLE and that neither of these two
entities paid their wage and allowance increases under the
subject wage orders are also admitted. Thus, the
application of the aforecited provisions of the Labor Code
on joint and several liability of the principal and contractor
is appropriate.
The solidary liability of PTSI and EAGLE, however, does not
preclude the right of reimbursement from his co-debtor by
the one who paid [See Article 1217, Civil Code]. It is with
LABOR LAW BAR OPERATIONS COMMISSION
respect to this right of reimbursement that petitioners can
find support in the aforecited contractual stipulation.
Trilateral Relationship in contracting arrangements
There are three parties involved:
(1) Principal – who decides to farm out a job, work or
service to a contractor;
(2) Contractor – who has the capacity to independently
undertake the performance of the job, work, or service;
and
(3) Contractual workers – engaged by the contractor to
accomplish the job, work or service. [Sec. 3 D.O. 18-A-11]
In legitimate contracting there exists:
(1) An ER-EE relationship between the contractor and the
employees it engaged to perform the specific job, work
or service being contracted
(2) A contractual relationship between the principal and
the contractor as governed by the provisions of the CC.
Note: In the event of any violation of any provisions of the
LC (including failure to pay wages) there exists a solidary
liability on the part of the principal and the contractor for
purposes of enforcing the provisions of the LC and other
social legislation, to the extent of the worked performed
under the employment contract. [Sec. 5, D.O. 18-A-11]
DISMISSAL FROM EMPLOYMENT
Art. 279: in case of regular employment, the employer shall
not terminate the services of an employee except for
(a) just cause [Art. 282]
(b) authorized cause [Art. 283-284]
SECURITY OF TENURE
Definition
Right not be removed from one’s job without valid cause
and valid procedure. [Kiamco v. NLRC, 1999]
Nature
It is a constitutionally protected right [Art. XIII Sec. 3, 1987
Constitution]; it cannot be blotted out by an employment
contract.
It does not give the Employee an absolute right to his
position; when a transfer is not unreasonable, nor
inconvenient, nor prejudicial to an employee; and it does
not involve a demotion in rank or diminution of his pay,
benefits, and other privileges, the employee may not
complain that it amounts to constructive dismissal.
[Lanzadares vs. Amethyst Security, 2003]
Coverage
(1) 1987 Constitution: all workers [Art. XIII Sec. 3]
(2) Labor Code: regular employees [Art. 279] in all
establishments or undertakings, whether for profit or
not [Art. 278], except government and its political
subdivisions including government owned or controlled
corporations or GOCCs [IRR Book VI Rule I Sec. 1]
(3) Security of tenure extends to non regular Employees
[Kiamco vs. NLRC, 1999]
(4) Contract Employees – limited extent; secured during
the period their respective contracts of employment
remain in effect. [Labajo vs. Alejandro, 1988]
(5) Probationary Employees – limited extent; additional
limitations on power of Employer to terminate:
(a) must be exercised in accordance with the specific
requirements of the contract;
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(b) dissatisfaction of the Employer must be real and in (b) in connection with the employee's work. [Lakpue
good faith, not feigned so as to circumvent the Drug, Inc. vs. Belga, 2005]
contract or the law; (2) Shows that the Employee has become unfit to continue
(6) Project/seasonal Employees – limited extent; secured working for the Employer. [Philippine Aeolus
for the duration of the limited period of their Automotive United Corp. vs. NLRC]
employment
(7) Managerial Employees – may be dismissed upon loss Willful disobedience:
of confidence; entitled to security of tenure [Maglutac Requisites:
vs. NLRC, 1990]. (1) The employee’s assailed conduct has been willful or
(8) An employee cannot be arbitrarily dismissed at any intentional, the willfulness being characterized by a
time, and without cause as reasonably established in “wrongful and perverse attitude”; and
an appropriate investigation. [Inter Orient Maritime (2) The order violated must have been:
Enterprises, Inc. vs. NLRC, 1994] (a) Reasonable and lawful;
(9) Fixed-period Employees / Term Employment: this (b) Made known to the employee; and
arrangement does NOT circumvent Security of Tenure (c) In connection to the duties which he has been
when: engaged to discharge. [Acesite Corp. v. NLRC, G.R.
(a) knowingly and voluntarily agreed upon by the No. 152308, January 26, 2005].
parties without any force, duress, or improper
pressure or any other circumstances vitiating his Gross and habitual neglect of duties
consent; OR Gross negligence is want of even slight care, acting or
(b) Brent Doctrine: the employer and the employee omitting to act in a situation where there is a duty to act,
dealt with each other on more or less equal terms not inadvertently but willfully and intentionally with a
with no moral dominance exercised by the former conscious indifference to consequences insofar as other
or the latter. [Brent School v. Zamora, 1990; persons may be affected. [Tres Reyes v. Maxim's Tea House,
Romares v. NLRC, 1998; Medenilla v. Phil. Veterans 2003]
Bank, 2000]
(c) If a contract is for a fixed term and the Employee is Habitual neglect implies repeated failure to perform one's
dismissed without just cause, he is entitled to the duties for a period of time, depending upon the
payment of his salaries corresponding to the circumstances. [Chua v. NLRC, 2005]
unexpired portion of the employment contract.
[Medenilla v. Phil. Veterans Bank, 2000] Requisites
(1) Neglect of duty must be both gross and
CONFLICT WITH MANAGEMENT PREROGATIVES (2) Habitual
Management prerogatives
(1) Discipline [San Miguel v. NLRC, 1980] Fraud or willful breach of trust [loss of trust and confidence]
(2) Right to dismiss or otherwise impose disciplinary Requisites (AWWT)
sanctions upon an employee for just and valid cause, (1) Committed against the Employer or his representative;
pertains in the first place to the employer, as well as (2) willful since fraud implies wrongful intent;
the authority to determine the existence of said cause (3) EE concerned holds a position of trust and confidence;
in accordance with the norms of due process. [Makati and [Mabeza vs. NLRC, 1997]
Haberdashery, Inc. v. NLRC, 1989] (4) Act complained of must be work-related i.e. it must
(3) To Demote [Petrophil vs. NLRC, 1986] show the employee concerned to be unfit to continue
(4) To Dismiss – it is a measure of self protection [Reyes vs. working for the employer.
Ministry of Labor, 1989]
Proof beyond reasonable doubt not necessary
Requisites for the validity of management prerogative Uniwide Sales Warehouse Club v. NLRC (2008)
affecting security of tenure (1) It is sufficient that there is some basis for such loss of
(1) Exercised in good faith for the advancement of the confidence such as when the employer has reasonable
Employer's interest, and ground to believe that the employee concerned is
(2) NOT for the purpose of defeating or circumventing the responsible for the purported misconduct;
rights of the Employees under special laws or under (2) And the nature of his participation therein renders him
valid agreements [San Miguel vs. Ople, 1989] unworthy of the trust and confidence demanded of his
position
JUST CAUSES
No written notice to employer required Loss of confidence: managerial/confidential vs. rank-and-file
employees
Serious misconduct or willful disobedience
Managerial Rank-and-file
Misconduct
(a) improper or wrongful conduct Substantial evidence – Proof of involvement in the
(b) transgression of some established and definite rule of reasonable ground to believe alleged events in question
action, a forbidden act, a dereliction of duty, willful in Employee’s guilt; mere required; mere
character, and implies wrongful intent and not mere existence of a basis for the uncorroborated assertions
error in judgment. [Dept of Labor Manual, Sec. 4343.01; belief [Etcuban vs. Sulpicio and accusations
Hayuan Restaurant vs. NLRC, 2006] Lines, 2005] are not enough [Etcuban vs.
Sulpicio Lines, 2005]
Requisites Employment for a long time
(1) Serious – to be serious, misconduct must be: is counted against the
(a) of such grave and aggravated character Employee [Salvador v. Phil.
Mining Service Corp., 2003]

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General rule: “trust and Except: when rank-and-file (d) expiry of term employment period,
confidence” is restricted to position is reposed with trust (e) completion of project,
MANAGERIAL Employees and confidence [Coca-Cola (f) failure in probation, etc
[Fujitsu Computer Products vs. NLRC, 1989] e.g. care and
Corp. v. CA, 2005] custody of property Redundancy, retrenchment and closure
Redundancy
Dusit School Nikko v. NUWHRAIN (2005):
Abandonment of employment; elements that must concur
(1) [redundancy] exists where the service capability of the
Abandonment is the deliberate and unjustified refusal of
workforce is in excess of what is reasonably needed to
an Employee to resume his employment. [Nueva Ecija
meet the demands of the business enterprise;
Electric Cooperative v. NLRC, 2005]
(2) a reasonably redundant position is one rendered
superfluous by any number of factors, such as
Requisites:
overhiring of workers, decreased volume of business,
(1) Failure to report to work or absence w/o valid reason;
dropping of a particular product line previously
(2) Clear intent to sever the employer-employee
manufactured by the company, or phasing out of
relationship via overt acts [Floren Hotel v. NLRC, 2005]
service activity previously undertaken by the business
(a) Cannot be lightly inferred, much less legally
presumed from certain equivocal acts such as
Redundancy does not refer to duplication of work. That no
interim employment [Hacienda Dapdap v. NLRC,
other person was holding the same position which the
1998]
dismissed employee held prior to the termination of his
services does not show that his position had not become
Termination of employment pursuant to a union security
redundant. [Escareal v. NLRC, 1992]
clause
Art. 283 and 284 are not exhaustive; other authorized
Financial loss is not a requisite. [Escareal v. NLRC, 1992]
causes are:
(a) total and permanent disability,
Creation of positions with functions related or similar to
(b) disease incurable in 6 mos,
those of the abolished functions does not necessarily
(c) valid application of union security clause,
invalidate the declaration of redundancy—the old and new
(d) expiry of term employment period,
positions were different and the declaration was not
(e) completion of project,
maliciously motivated. [Santos v. CA, 2001]
(f) failure in probation, etc
Employer’s good faith in implementing a redundancy
Totality of infractions doctrine
program is not necessarily put in doubt by the availment of
The totality of infractions or the number of violations
services of an independent contractor. [Asian Alcohol Corp.
committed during the period of employment shall be
v. NLRC, 1999]
considered in determining the penalty to be imposed upon
an erring employee. The offenses committed by petitioner
Separation pay entitlement. — Employee is entitled to
should not be taken singly and separately. Fitness for
separation pay of 1 month pay or 1 month pay per year of
continued employment cannot be compartmentalized into
service, whichever is higher
tight little cubicles of aspects of character, conduct and
ability separate and independent of each other. While it
Retrenchment
may be true that petitioner was penalized for his previous
Retrenchment is the termination of employment effected
infractions, this does not and should not mean that his
by management during periods of business recession,
employment record would be wiped clean of his
industrial depressions, seasonal fluctuations, lack of work
infractions. After all, the record of an employee is a
or considerable reduction in the volume of the employer’s
relevant consideration in determining the penalty that
business. [AMA Computer College v. Ely Garcia, 2008]
should be meted out since an employee's past misconduct
and present behavior must be taken together in
General standards for when retrenchment is preventive
determining the proper imposable penalty. [Merin v. NLRC,
rather than curative (SINS). —
2008]
(a) Losses expected are (s)ubstantial and not merely de
minimis in extent;
AUTHORIZED CAUSES
(b) Apprehended losses are reasonably (i)mminent, can be
Recognized right
perceived objectively and in good faith;
The law recognizes the right of every business entity to
(c) Retrenchment must be reasonably (n)ecessary to
reduce its workforce if the same is made necessary by
prevent the expected losses—measure of last resort;
compelling economic factors which would endanger its
and
existence or stability.
(d) Expected or actual losses must be proved by
(s)ufficient and convincing evidence. [Lopez Sugar Corp.
The fundamental law itself guarantees, even during the
v. Federation of Free Workers, 1990]
process of tilting the scales of social justice towards
workers and employees, “the right of enterprises to
Reduction of work days may be considered constructive
reasonable returns of investment and to expansion and
retrenchment [International Hardware v. NLRC, 1989]
growth.” [Uichico v. NLRC, 1997]
Temporary retrenchment or temporary cessation or
Art. 283 and 284 are not exhaustive; other authorized
suspension of operations [Art. 286]
causes are:
(a) total and permanent disability,
A specific period that employees may remain temporarily
(b) disease incurable in 6 mos,
laid-off or in floating status. The temporary lay-off or bona
(c) valid application of union security clause,
fide suspension of operations of a business or undertaking

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wherein the employees likewise cease to work should not (5) financial hardship, or
last longer than 6 months. After 6 months, the employees (6) seniority. [Asian Alcohol Corp. v. NLRC, 1999]
should either be recalled to work or permanently
entrenched following the requirements of the law, and that Standards to be followed
failing to comply with this would be tantamount to Table: Comparison of Retrenchment, Redundancy and
dismissing the employees and the employer would thus be Closure
liable for such dismissal. [International Hardware v. NLRC, Retrenchment Redundancy Closure
1989]
Reduction of The service of an The reversal of the
Separation pay entitlement. — Employee is entitled to
personnel usually Employee is in fortune of the
separation pay of 1 month pay or 1/2 month pay per year of
due to poor excess of what is employer whereby
service, whichever is higher
financial returns so required by an there is a complete
as to cut down on enterprise cessation of
Closure
costs of operations business operations
Employer may close or cease his business operations or
in terms of salaries and/or actual
undertaking even if he is not suffering from serious
and wages locking-up of the
business losses or financial reverses, as long as he pays his
doors of the
employees their termination pay in the amount
establishment,
corresponding to their length of service. [Catatista v. NLRC,
usually due to
1995]
financial losses
It includes both the complete cessation of all business Resorted to To save production Aims to prevent
operations and the cessation of only part of a company’s primarily to avoid or costs further financial
business [Coca-Cola Bottlers, Inc. v. NLRC, 1991] minimize business drain upon the
losses Employer
Requirements. — Must de bona fide or in good faith
Disease or illness
Procedural steps required Separation pay entitlement
At least 1 month before the intended date of termination, Employee is entitled to separation pay of 1 month pay or ½
Employer is to serve written notice to: month pay per year of service, whichever is higher
(1) Affected employees; and
(2) DOLE [Art. 283] Requisites
(1) Employee has been found to be suffering from any
Requirements for valid retrenchment/redundancy.— disease;
Requisites: Redundancy (2) His continued employment is prohibited by law or is
(1) Written notice served on both the Employees and the prejudicial to his health as well as to the health of his
DOLE at least 1 month prior to the intended date; co-employees;
(2) Payment of separation pay equivalent to one month (3) Payment of separation pay;
pay or one month pay for every year of service, (4) A medical certification by a competent public health
whichever is higher; authority that the disease cannot be cured w/in 6
(3) Good faith in abolishing the redundant positions; and months even with proper medical treatment [IRR Book
(4) Fair and reasonable criteria in ascertaining what VI. Rule I. Sec. 8]
positions are to be declared redundant and accordingly (a) Medical certification cannot be dispensed with
abolished. The following are usually considered in [Manlyl Express, Inc. v. Payong, 2005]
redundancy: position itself, nature of the services (b) It must be issued by a competent public health
performed by the employee, and necessity of such authority and not the company physician [Cebu
position. [Edge Apparel v. NLRC, 1998] Royal Plant v. Deputy Minister of Labor, 1987]

Requisites: Retrenchment
(a) Necessary to prevent or minimize losses and such Just Causes Requisites
losses are proven; Serious Misconduct Serious
(b) There must be 1 month written notice to the DOLE and (a) Grave and aggravated character,
the employee; (b) In connection with work; and
(c) Separation pay is paid; Shows that Employee is unfit to work
(d) Exercised in good faith – the prerogative was exercised for Employer.
for the advancement of the employer’s interest and not
to defeat or circumvent the employee’s right to security Willful Willful conduct – wrongful and
of tenure; and Disobedience perverse attitude; and
(e) Fair and reasonable criteria in ascertaining who will be Order violated must be:
affected (a) Reasonable,
(b) Lawful,
Criteria in selecting employees for dismissal. — (c) Sufficiently known to Employee,
Fair and reasonable criteria in ascertaining who will be (d) In connection to the duties.
affected: Gross and Habitual Neglect must be both gross and
(1) preferred status [e.g. temporary, casual or regular Neglect habitual.
Employees],
(2) efficiency Fraud or Willful Loss of Confidence
(3) physical fitness, Breach of Trust (a) Committed against the Employer or
(4) age, his representative [direct];

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(b) willful since fraud implies wrongful ascertaining who will be affected
intent; (a) preferred status (e.g. temporary,
(c) EE concerned holds a position of casual or regular Employees)
trust and confidence [Mabeza vs. (b) efficiency,
NLRC, 1997]; (c) physical fitness,
(d) Act complained of must be work- (d) age,
related. (e) financial hardship, or
(f) seniority. [Asian Alcohol Corp. v.
Additional Guidelines NLRC, 1999]
(a) NOT simulated;
(b) NOT used as a subterfuge; General Standards: (SINS – for when
(c) NOT arbitrarily asserted; and retrenchment is preventive rather than
(d) genuine, NOT a mere afterthought curative
[Vitarich v. NLRC, 1999; Coca-Cola (a) Losses expected are substantial and
Bottlers, Phils., Inc. v. Kapisanan ng not merely de minimis in extent;
Malayang Manggagawa sa Coca- (b) Apprehended losses are reasonably
Cola, 2005] imminent;
Commission of a Crime against the (c) Retrenchment must be reasonably
crime or offense (a) Employer, necessary to prevent the expected
against Employer (b) Immediate member of employer’s losses; and
family, or (d) Expected or actual losses must be
(c) Employer’s duly authorized proved by sufficient and convincing
representative; and evidence. [Lopez Sugar Corp. vs.
Conviction or prosecution NOT Federation of Free Workers, 1990]
required. Closure or (a) Must be done in good faith [bona
Analogous causes Due to a voluntary and/or willful act or Cessation of fide]
omission by Employee [Nadura vs. Operations (b) 1 month written notice to DOLE and
Benguet Consolidated, 1962] Employee
(c) Separation pay equivalent to one
month pay or 1/2 month pay for
Authorized Causes Requisites every year of service, whichever is
higher.
Installation of (a) 1 month written notice to DOLE and
Labor Saving Employee Disease (a) Employee is suffering from any
Devices (b) separation pay equivalent to one disease;
month pay or one month pay for (b) His continued employment is
every year of service, whichever is prohibited by law or is prejudicial to
higher his health as well as as to the health
of his co-employees. [Art. 284]
Redundancy (a) 1 month written notice to DOLE and (c) Separation pay equivalent to at
Employee least one month pay or at least 1/2
(b) separation pay equivalent to one month pay for every year of service,
month pay or one month pay for whichever is higher; and
every year of service, whichever is (d) Medical certification by a competent
higher; public health authority that the
(c) Good faith in abolishing the disease cannot be cured within 6
redundant positions; and mos even with proper medical
(d) Fair and reasonable criteria in treatment. [IRR Book VI Rule I Sec.
choosing those affected [Asian 8]
Alcohol Corp. v. NLRC, 1999], such
as but not limited to: DUE PROCESS
(e) preferred status [e.g. temporary, Substantive Due Process
(f) casual or regular Dismissal for any of the just or authorized causes under
Employees]efficiency, or Arts. 282 – 284
(g) seniority. [Panlilio v. NLRC, 1997;
Golden Thread Knitting Industries, Right to counsel
Inc. v. NLRC, 1999] A very basic requirement of substantive due process; it has
Retrenchment Basic Requisites: (NNSGF) to be observed. Indeed, the rights to counsel and to due
(1) Necessary to prevent or minimize process of law are two of the fundamental rights
losses and such losses are proven guaranteed by the 1987 Constitution to any person under
(2) 1 month written notice to DOLE and investigation, be the proceeding administrative, civil, or
the Employees criminal. [Salaw v. NLRC, 1991]
(3) Separation pay equivalent to at
least one month pay or at least 1/2 Procedural Due Process
month pay for every year of service, Employee must be given notice with adequate opportunity
whichever is higher; to be heard before he/she is notified of his/her actual
(4) Exercise is in good faith; and dismissal for Cause. [Fujitsu v. CA, 2005]
(5) Fair and reasonable criteria in

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ER may NOT substitute the required prior notice &

opportunity to be heard with the mere payment of 30 days' Summary proceeding may be conducted; written
salary. [PNB v. Cabanag, 2005] explanations, affidavits, position papers or other pleadings
may be used as well; what is essential is the ample
Twin-notice requirement opportunity to be heard. [Homeowners Savings and Loan
First notice – notice specifying the grounds for which Assoc. Inc. vs. NLRC, 1996]
dismissal is sought
No formal hearing necessary when the Employee already
Second notice – notice of the decision to dismiss admitted his responsibility for the act he was accused of.
[Magos v. NLRC, 1998]
Procedure to be observed in termination cases. —
Basis for termination Requirements In the leading case of Perez v. Philippine Telegraph and
Telephone Co., G.R. No. 152048, April 7, 2009, the
Just cause – Art. 282 (1) Notice specifying the grounds Supreme Court, in an en banc decision, held that relative to
for which dismissal is sought the hearing requirement in termination cases, a formal
(2) Hearing or opportunity to be hearing or conference becomes mandatory only in the
heard following instances:
(3) Notice of the decision to (1) when requested by the employee in writing;
dismiss [Art. 277(b)] (2) when substantial evidentiary disputes exist; or
(3) when a company rule or practice requires it.
Authorized Cause – Notice to:
Arts. 283 & 284 (1) Employee, and Coming now to the period of time within which the
(2) DOLE employee should submit his reply to the show-cause
at least 1 month prior to the memo, King of Kings Transport v. Mamac, 526 SCRA 116
effectivity of the separation (2007), tells us that an employee under investigation for a
violation of company rules is entitled to a “reasonable
Requisites time” so that he can “prepare adequately for his defense.”
(a) Notice not needed when Employee consented to the Under King of Kings, “reasonable opportunity” has been
retrenchment or voluntarily applied for one. construed to mean “at least five (5) calendar days from
[International Hardware Inc. vs. NLRC, 1989] receipt of the notice to give the (employee) an opportunity
(b) Notice must be individual, not collective. [Shoppers to study the accusation against him, consult a union
Gain Supermart vs. NLRC, 1996]; official or lawyer, gather data and evidence, and decide on
(c) Voluntary arbitration satisfies notice requirement for the defenses he will raise against the complainant.”
authorized causes [Revidad vs. NLRC, 1995]
What the law requires, as held in De Leon v. NLRC, cited by
Consequences for non-compliance. — petitioners, is for the employer to inform the employee of
Situation Effect Liability of ER the specific charges against him and to hear his side or
defenses. This does not however mean a full adversarial
Just or Authorized Dismissal valid No liability proceeding. Litigants may be heard thru: (1) pleadings,
Cause + Due * separation pay if written explanations, position papers, memorandum; (2)
Process for authorized oral argument. In both instances, the employer plays an
cause active role — he must provide the employee the
opportunity to present his side and answer the charges, in
No Just or Dismissal invalid Reinstatement + substantial compliance with due process. Actual
Authorized Cause Full Backwages adversarial proceeding becomes necessary only for
+ Due Process * if reinstatement clarification or when there is a need to propound searching
NOT possible = questions to unclear witnesses. This is a procedural right
separation pay which the employee must, however, ask for it is not an
No Just or Dismissal invalid Reinstatement + inherent right, and summary proceedings may be
Authorized Cause Full Backwages conducted. This is to correct the common but mistaken
+ No Due Process * if reinstatement perception that procedural due process entails lengthy
NOT possible = oral arguments. Hearing in administrative proceedings and
separation pay before quasi-judicial agencies are neither oratorical
contests nor debating skirmishes where cross examination
Just or Authorized Dismissal valid Liable for skills are displayed. Non-verbal devices such as written
Cause + No Due damages due to explanations, affidavits, position papers or other pleadings
Process non-compliance can establish just as clearly and concisely aggrieved
with procedural parties' predicament or defense. What is essential is ample
req'ts opportunity to be heard, meaning, every kind of assistance
*separation pay if that management must accord the employee to prepare
for authorized adequately for his defense. [as cited in Manggagawa ng
cause Komunikasyon sa Pilipinas v. NLRC, 1992]

Hearing; meaning of opportunity to be heard
A formal or trial type hearing is not at all times and in all
instances essential to due process; it is enough to that the
parties are afforded fair and reasonable opportunity to
explain their side of the controversy. [Mendoza vs. NLRC,
1991]
Article 277(b) of the Labor Code provides that, in cases of
termination for a just cause, an employee must be given
"ample opportunity to be heard and to defend himself."
Thus, the opportunity to be heard afforded by law to the
employee is qualified by the word "ample" which ordinarily
means "considerably more than adequate or

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21
sufficient." In this regard, the phrase "ample opportunity
to be heard" can be reasonably interpreted as extensive
enough to cover actual hearing or conference. [Perez v.
Philippine Telegraph and telephone Company, 2009]
Burden of Proof. —
Upon the employer. Employer must comply with due
process requirements before any termination is done.
[Gothong Lines, Inc. v. NLRC, 1999]
(a) Unsubstantiated suspicions and baseless conclusions
by employers are not legal justification for dismissing
employees. [Maranaw Hotel and Resort Corp. v. NLRC,
1999]
General Rule: reinstatement is a matter of right to an
illegally dismissed Employee.
Exceptions:
(a) Closure of business [Retuya vs. Dumarpa, 2003]
(b) Economic business conditions: The reinstatement
remedy must always be adapted to economic-business
conditions. [Union of Supervisors, etc. v. Sec. of Labor,
1984]
(c) EE’s unsuitability [Divine World High School vs. NLRC,
1986]
(d) EE’s Retirement/Coverage [Espejo vs. NLRC, 1996]

Degree of Proof. — Prescription Period

Substantial evidence; proof beyond reasonable doubt not An action for reinstatement by reason of illegal dismissal is
required. [Manila Electric Co., Inc. v. NLRC, 1991] one based on an injury which may be brought within 4
years from the time of dismissal. [Art. 1146 of the Civil Code]
Agabon doctrine. —
Prior to 1989 Illegal dismissal Reinstatement pending appeal
Art. 223 is clear that an award for reinstatement shall be
Wenphil Corp. v. NLRC, Dismissal is valid (NO immediately executory even pending appeal and the
1989 reinstatement and backwages) posting of a bond by the employer shall not stay the
- Belated Due Process Rule BUT Employer to indemnify execution for reinstatement.
Employee for damages
Reinstatement ordered by Labor Arbiter is self-executory;
Serrano v. NLRC, 2000 Dismissal is valid. reinstatement ordered by NLRC is not and, though
EE is entitled to the payment of immediately executory, still requires writ of execution.
full backwages - Computed from [Panuncillo vs. CAP Phil. Inc., 2007]
the time of dismissal until the
Court finds the dismissal to be for Separation pay in lieu of Reinstatement
just cause. Strained Relation rule
Current rule: Agabon v. Dismissal is valid (NO If reinstatement is not feasible, expedient, or practical, as
NLRC, 2004 reinstatement and backwages) where there is strained relations between the parties,
BUT Employer to indemnify particularly where the illegally dismissed employee held a
Employee in the form of nominal managerial or key position [Quijano v. Mercury Drug Corp.
damages 1998]
(a) indemnity stiffer than Wenphil
Corp. vs. NLRC to discourage Quijano v. Mercury Drug Corp. (1998)
the practice of “dismiss now, (a) Where reinstatement is not feasible, expedient or
pay later”. practical,
(b) As where reinstatement would only exacerbate the
tension and strained relations between the parties
RELIEFS FOR ILLEGAL DISMISSAL
A finding of illegal dismissal entitles the Employee to: (c) Or where the relationship between the employer and
(1) reinstatement without loss of seniority rights and employee has been unduly strained by reason of their
privileges, and irreconcilable differences, particularly where the
(2) full backwages inclusive of allowances and to benefits illegally dismissed employee held a managerial or key
position in the company
or their monetary equivalent from the time withheld up
to actual reinstatement [Art. 279] (d) It would be more prudent to order payment of
separation pay instead of reinstatement
REINSTATEMENT
It is the restoration of an employee who was unjustly Kinds
dismissed to the position from which he was removed, that (1) SP as a statutory requirement for authorized causes
is, to his status quo ante dismissal [Santos vs. NLRC, 1987] (2) SP as financial assistance found in the next section
(3) SP in lieu of reinstatement where reinstatement is not
feasible; and
Note: An offer by Employer to re-employ the Employee did
not cure the vice of earlier arbitrary dismissal. [Ranara v. (4) SP as a benefit in the CBA or company policy
NLRC, 1992]
Computation
An order for reinstatement must be specifically declared SP as a statutory requirement is computed by integrating
and cannot be presumed; like back wages, it is a separate the basic salary with regular allowances employee has
been receiving [Planters Products Inc. v. NLRC, 1989];
and distinct relief given to an illegally dismissed employee.
allowances include transportation and emergency living
[Gold City Integrated Port Service, Inc. v. NLRC, 1995] allowances [Santos v. NLRC, 1987]
Alternative
Commissions may not be included since they must be
In lieu of reinstatement, Employee is entitled to separation earned by actual market transactions by employee
pay of 1 month pay per year of service. [Gaco vs. NLRC,
[Soriano v. NLRC, 1989]
1994]

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A dismissed employee who has accepted separation pay is
not necessarily estopped from challenging the validity of
his or her dismissal. Neither does it relieve the employer of
legal obligations. [Anino v. NLRC, 1998]
BACKWAGES
Definition
(1) According to St. Theresa’s School of Novaliches
Foundation v. NLRC (1998): earnings lost by a worker
due to his illegal dismissal; a form of relief that restores
the income lost by reason of such unlawful dismissal;
(2) it is not private compensation or damages; nor is it a
redress of a private right;
(3) but, rather, in the nature of a command to the
employer to make a public reparation for illegally
dismissing an employee.
Effect of failure to order backwages
A “plain error” which may be rectified, even if employee did
not bring an appeal regarding the matter [Aurora Land v.
NLRC, 1997]
Computation
(1) Without deduction for their earnings elsewhere during
the layoff [Bustamante v. NLRC, 1996]
(2) Awards including salary differentials are not allowed
[Insular Life Assurance Co. v. NLRC, 1987]
(3) The salary base properly used should be the basic
salary rate at the time of dismissal plus the regular
allowances; allowances include:
(a) Emergency cost of living allowances (ECOLA),
th
transportation allowances, 13 month pay
[Paramount Vinyl Product Corp. v. NLRC, 1990]
(b) Also included are vacation leaves, service incentive
leaves, and sick leaves
(4) The effects of extraordinary inflation are not to be
applied without an official declaration thereof by
competent authorities [Lantion v. NLRC, 1990]
Limited backwages
General rule: An illegally dismissed employee is entitled to
full backwages.
Exceptions
(1) The Court awarded limited backwages where the
employee was illegally dismissed but the employer was
found to be in good faith.
Jurisprudence
San Miguel Corporation v. Javate, Jr. (1992)
The Court affirmed the consistent findings and conclusions
of the Labor Arbiter, (NLRC), and CA that the employee
was illegally dismissed since he was still fit to resume his
work; but the employer’s liability was mitigated by its
evident good faith in terminating the employee’s services
based on the terms of its Health, Welfare and Retirement
Plan. Hence, the employee was ordered reinstated to his
former position without loss of seniority and other
privileges appertaining to him prior to his dismissal, but
the award of backwages was limited to only one year
considering the mitigating circumstance of good faith
attributed to the employer.
Dolores v. NLRC (1992)
The employee was terminated for her continuous absence
without permission. Although the Court found that the
employee was indeed guilty of breach of trust and violation
of company rules, it still declared the employee’s dismissal
illegal as it was too severe a penalty considering that she
LABOR LAW BAR OPERATIONS COMMISSION
had served the employer company for 21 years, it was her
first offense, and her leave to study the French language
would ultimately benefit the employer who no longer had
to spend for translation services. The Court awarded the
said employee backwages limited to a period of two years,
given that the employer acted without malice or bad faith
in terminating the employee’s services.
(2) Delay of the EE in filing the case for illegal dismissal
Mercury Drug Co., Inc. v. CIR (1974)
The employee filed his ULP charge with reinstatement and
back wages about two years and fifteen days after his
separation on April 10, 1961. The shortest prescriptive
period for the filing of all other actions for which the
statute of limitations does not fix a period, is four years.
The period of delay in instituting this ULP charge with
claim for reinstatement and back wages, although within
the prescriptive period, should be deducted from the
liability of the employer to him for back wages. In order
that the employee however should be relieved from
proving his income during the period he was out of the
service and the employer from submitting counter-proofs,
which may delay the execution of the decision, the
employer was directed to the employee back wages
equivalent to one year, eleven months, and fifteen days
without further disqualifications.
Rationale
Feati University Club vs. Feati University (1974) adopted a
consensus policy of pegging the amount of backwages to
their total equivalent for three years (depending on the
circumstances) without deduction or qualification.
The rationale for the policy was stated in the following
words:
As has been noted, this formula of awarding
reasonable net backwages without deduction or
qualification relieves the employees from proving or
disproving their earnings during their lay-off and the
employers from submitting counterproofs, and
obviates the twin evils of Idleness on the part of the
employee who would "with folded arms, remain
inactive in the expectation that a windfall would come
to him" [Itogon Suyoc Mines, Inc. vs. Sangilo-Itogon
Workers Union (1968), as cited in Diwa ng Pagkakaisa
vs. Filtex International Corp. (1972)] and attrition and
protracted delay in satisfying such award on the part
of unscrupulous employers who have seized upon the
further proceedings to determine the actual earnings
of the wrongfully dismissed or laid-off employees to
hold unduly extended hearings for each and every
employee awarded backwages and thereby render
practically nugatory such award and compel the
employees to agree to unconscionable settlements of
their backwages award in order to satisfy their dire
need. [See La Campana Food Products, Inc. vs. CIR,
(1969) and Kaisahan ng Mga Manggagawa vs. La
Campana Food Products, Inc., (1970)].
PREVENTIVE SUSPENSION
DEFINITION
It is a disciplinary measure for the protection of the
company's property pending investigation of any alleged
malfeasance or misfeasance committed by the employee.
The employer may place the worker concerned under
preventive suspension if his continued employment poses
a serious and imminent threat to the life or property of the
employer or of his co-workers. [PAL v. NLRC, 1998]
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As held in PNB v. Velasco, 564 SCRA 512 (2008), the
employer has the right to preventively suspend an
employee during the pendency of the administrative case
against the latter as a measure of self-protection. In PAL v.
NLRC, 292 SCRA 40 (1998), the Court explained that
preventive suspension, by itself, does not signify that the
employer has already adjudged the employee guilty of the
charges for which he was asked to answer and explain.
Such disciplinary measure is resorted to for the protection
of the company’s property or the life of the employer or of
the co-employees pending investigation of any alleged
malfeasance or misfeasance committed by the employee.
Preventive suspension is limited to 30 days; any more than
that amounts to constructive dismissal. [Pido vs. NLRC,
2007]
In Valenzuela v. Caltex Phil., Inc., G.R. No. 169965-66,
August 15, 2010, it was held that after 30 days of
preventive suspension, the employer shall reinstate the
worker in his former position or substantially equivalent
position. The employer may also extend the period of
suspension provided that during the said period, he shall
pay the wages and other benefits due to the worker.
CONSTRUCTIVE DISMISSAL
The following constitute constructive dismissal:
(1) Bona fide suspension of the operation of a business or
undertaking exceeding 6 months [Valdez v. NLRC,
1998]
(2) Floating status of more than 6 months [Agro
Commercial Security Services v. NLRC, 1989]
An involuntary resignation is resorted to 1) when continued
employment is rendered impossible, unreasonable, or
unlikely; 2) when there is a demotion in rank and/or a
diminution in pay; 3) or when a clear discrimination,
insensibility or disdain by an employer becomes
unbearable to the employee. [Phil. Wireless, Inc. v. NLRC,
1998]
If an employee was forced to remain without work or
assignment for a period exceeding 6 months, then he is in
effect constructively dismissed [Valdez v. NLRC, 1998]
Management Prerogative
This Court held that the employer’s right to conduct the
affairs of his business, according to its own discretion and
judgment, is well-recognized. An employer has a free reign
and enjoys wide latitude of discretion to regulate all
aspects of employment. This is a management
prerogative, where the free will of management to conduct
its own affairs to achieve its purpose takes form. [Torreda
vs. Toshiba, 2007]
DISCIPLINE
The employer’s right to conduct the affairs of his business,
according to its own discretion and judgment, includes the
prerogative to instill discipline in its employees and to
impose penalties, including dismissal, upon erring
employees. This is a management prerogative where the
free will of management to conduct its own affairs to
achieve its purpose takes form. The only criterion to guide
the exercise of its management prerogative is that the
policies, rules and regulations on work-related activities of
LABOR LAW BAR OPERATIONS COMMISSION
the employees must always be fair and reasonable and the
corresponding penalties, when prescribed, commensurate
to the offense involved and to the degree of the infraction.
[Consolidated Food Corporation vs. NRLC, 1999] [St.
Michael’s Institute vs. Santos, 2001] 56
Right to dismiss or otherwise impose disciplinary sanctions
upon an employee for just and valid cause, pertains in the
first place to the employer, as well as the authority to
determine the existence of said cause in accordance with
the norms of due process. [Makati Haberdashery, Inc. v.
NLRC, 1989]
TRANSFER OF EMPLOYEES
Westin Phil. Plaza Hotel v. NLRC (1999):
(1) An Employee’s 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.
(2) The Employer has the right to transfer or assign
Employees from one area of operation to another, or
one office to another or in pursuit of its legitimate
business interest,
(3) provided there is no demotion in rank or diminution of
salary, benefits and other privileges and not motivated
by discrimination or made in bad faith, or effected as a
form of punishment or demotion without sufficient
cause.
Bisig ng Manggagawa sa TRYCO v. NLRC (2008)
This prerogrative extends to the management’s right to
regulate, according to its own discretion and judgment, all
aspects of employment, including the freedom to transfer
and reassign employees from one are to another in order
to meet the requirements of the business is, therefore, not
general constitutive of constructive dismissal. Thus, the
consequent transfer of Tryco’s personnel, assigned to the
Production Department was well within the scope of its
management prerogative.
When the transfer is not unreasonable, or inconvenient, or
prejudicial to the employee, and it does not involve a
demonition in rank or diminution of salaries, benefits, and
other privileges, the employee may not complain that it
amounts to a constructive dismissal.
PRODUCTIVITY STANDARD
The employer has the right to demote and transfer an
employee who has failed to observe proper diligence in his
work and incurred habitual tardiness and absences and
indolence in his assigned work. [Petrophil Corporation vs.
NLRC, 1986]
In the consolidated cases of Leonardo vs. NLRC [G. R. No.
125303, June 16, 2000] and Fuerte vs. Aquino [G. R. No.
126937, June 16, 2000], the employer claimed that the
employee was demoted pursuant to a company policy
intended to foster competition among its employees.
Under this scheme, its employees are required to comply
with a monthly sales quota. Should a supervisor such as
the employee fail to meet his quota for several consecutive
months, he will be demoted, whereupon his supervisor’s
allowance will be withdrawn and be given to the individual
who takes his place. When the employee concerned
succeeds in meeting the quota again, he is re-appointed
supervisor and his allowance is restored. The Supreme
Court held that this arrangement is an allowable exercise
of company rights since an employer is entitled to impose
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UP COLLEGE OF LAW
productivity standards for its workers. In fact, non-
compliance may be visited with a penalty even more severe
than demotion.
GRANT OF BONUS
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"
[Aragon vs. Cebu Portland Cement Co., 61 O.G. 4597]. "It is
something given in addition to what is ordinarily received
by or strictly due the recipient." The granting 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 employee's basic salaries or
wages" … [Kamaya Point Hotel vs. National Labor Relations
Commission, Federation of Free Workers and Nemia
Quiambao, G.R. No. 75289, August 31, 1989]. [Traders Royal
Bank vs. NLRC, 1990]
With regard to the private respondents’ claim for the mid-
year bonus, it is settled doctrine that a grant of a bonus is a
prerogative, not an obligation of the employer. The matter
of giving a bonus over and above the worker’s lawful
salaries and allowances is entirely dependent on the
financial capability of the employer to give it. [Kimberly-
Clark Philippines, Inc. vs. Dimayuga, 2009]
CHANGE OF WORKING HOURS
Further, management retains the prerogative, whenever
exigencies of the service so require, to change the working
hours of its employees. So 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. [Sime Darby Pilipinas Inc. v. NLRC, 1998]
RULES ON MARRIAGE BETWEEN EMPLOYEES OF
COMPETITOR-EMPLOYERS
In the recent case of Duncan Association of Detailman-
PTGWO and Pedro Tecson v. Glaxo Wellcome Philippines,
Inc., we passed on the validity of the policy of a
pharmaceutical company prohibiting its employees from
marrying employees of any competitor company. We held
that Glaxo has a right to guard its trade secrets,
manufacturing formulas, marketing strategies and other
confidential programs and information from competitors.
We considered the prohibition against personal or marital
relationships with employees of competitor companies
upon Glaxo’s employees reasonable under the
circumstances because relationships of that nature might
compromise the interests of Glaxo. In laying down the
assailed company policy, we recognized that Glaxo only
aims to protect its interests against the possibility that a
competitor company will gain access to its secrets and
procedures. [Star Paper Corp. vs. Simbol, 2006]
POST-EMPLOYMENT BAN
In cases where an employee assails a contract containing a
provision prohibiting him or her from accepting
competitive employment as against public policy, the
employer has to adduce evidence to prove that the
restriction is reasonable and not greater than necessary to
protect the employer’s legitimate business interests. The
restraint may not be unduly harsh or oppressive in
curtailing the employee’s legitimate efforts to earn a
livelihood and must be reasonable in light of sound public
policy. [Rivera v Solidbank, 2006]
LABOR LAW BAR OPERATIONS COMMISSION
In Tiu v. Platinum Plan Phils., Inc., 517 SCRA 101 (2007), the
Supreme Court decided a case involving a restrictive
covenant contained in an employment agreement
prohibiting the employee from working for a competitor to
protect its interest. The Court ruled in favor of the
employer, saying that the non-compete or non-
involvement clause has a time limit: two years from the
time the employee’s employment with the company
ended. The restriction was also limited since it only
prohibits the employee from engaging in any pre-need
business akin to the employer’s.
Social and Welfare
Legislation [PD 626]
SSS LAW [RA 8282]
COVERAGE
Compulsory
(1) Employers as defined above;
(2) Employees not over 60 years including domestic
helpers with at least P1,000 monthly pay; and
(3) Self-employed as may be determined by the
Commission, but not limited to:
(a) Self-employed professionals
(b) Partners and single proprietors of businesses
(c) Actors and actresses, directors, scriptwriters, and
news correspondents who do not fall within the
definition of the term “employee” under Section 8
(d)
(d) Professional athletes, coaches, trainers and jockeys
(e) Individual farmers and fishermen
Voluntary
(1) Spouses who devote full time to managing household
and family affairs, unless they are also engaged in
other vocation or employment (which is subject of
compulsory coverage);
(2) OFWs recruited by foreign-based employers;
(3) Employees (previously under compulsory coverage)
already separated from employment or those self-
employed (also under compulsory coverage) with no
realized income for a given month, who chose to
continue with contributions to maintain right to full
benefit.
Note: Foreign governments, international organizations or
their wholly owned instrumentality 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.
EXCLUSIONS FROM COVERAGE
(1) Employment purely casual and not for the purpose of
occupation or business of the employer;
(2) Service performed on or in connection with an alien
vessel by an employee if he is employed when such
vessel is outside the Philippines;
(3) Service performed in the employ of the Philippine
Government or instrumentality or agency thereof;
(4) Service performed in the employ of a foreign
government or international organization, or their
wholly-owned instrumentalities; and
(5) Services performed by temporary and other employees
which may be excluded by SSS regulation. Employees
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of bona fide independent contractors shall not be
deemed employees of the employer engaging the
services of said contractors.
BENEFITS
Monthly pension
Computation of monthly pension: the monthly pension
shall be the highest of the following amounts:
(1) P300 + [20% x (ave. monthly credit)] + [2% x (ave.
monthy credit) x (# of cash credited years of service in
excess of 10 years)]; or
(2) 40% x [ave. monthly credit]; or
(3) P1,000; provided, that the monthly pension shall in no
case be paid for an aggregate amount of less than 60
months.
(4) Notwithstanding the abovementioned, minimum
pension is P1,200 for members with at least 10 years
credit service, P2,400 for those with 20 years.
Dependents’ pension
(a) Paid when member dies, retires or with permanent
total disability;
(b) Paid to each child conceived on or prior to contingency,
but not exceeding 5, beginning with the youngest and
preferring the legitimate;
(c) Amount is either P250 or 10% of the monthly pension
as computed above, whichever is higher.
Retirement benefits
Eligibility requirements
(1) 120 monthly contributions;
(2) Age
(a) 65 years old; or
(b) a member who has reached 60 years may also avail
if he is already separated from employ-ment or has
ceased to be self-employed.
Benefit – entitlement to monthly pension from retirement
until death.
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.
To those ineligible – to the 60 year old with less than 120
monthly contributions who is no longer employed or self-
employed, and who is not continuing contributions
independently, he is entitled to a lump sum equal to his
total contributions paid.
Permanent disability benefits
(a) Eligibility requirement: 36 monthly contributions prior to
the semester of disability; same as death benefit; only
difference is that the pension is paid directly to the
member.
(b) In case the permanently disabled member dies, it
would be given the same treatment as a retiree dying.
(c) 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).
(1) It shall be paid in lump sum if the period is less
than 12 months.
(2) 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,
LABOR LAW BAR OPERATIONS COMMISSION
then 25/75 + 50/75 = 100% so treated as if it were
permanent total disability.)
Death benefits
Eligibility requirement: 36 monthly contributions prior to the
semester of death.
Benefit – monthly pension to primary or secondary
beneficiaries.
To those ineligible – lump sum benefit which shall be the
higher between the two:
(a) (monthly pension) x 12; or
(b) (monthly pension) x (# of monthly contributions)
Funeral benefits
P12,000 in cash or in kind, upon death of member
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; SSS website also
shows loans
Sickness benefits
Eligibility requirements and other conditions
(1) Inability to work due to sickness or injury
(2) Confined for at least 4 days either in a hospital or
elsewhere with SSS approval;
(3) At least 3 months of contributions in the 12 month
period immediately before the semester of sickness or
injury has been paid;
(4) All company sick leaves with pay for the current year
has been used up;
(5) Maximum of 120 days per 1 calendar year [so maximum
permissible for the same sickness and confinement is
240 days for 2 consecutive years];
(6) The employer has been notified, or, if a separated,
voluntary or self-employed member, the SSS directly
notified within 5 days of confinement;
(7) 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.
Benefit: daily cash allowance paid for the number of days a
member is unable to work due to sickness or injury
equivalent to 90% x (average daily salary credit)
Maternity leave benefits. — (limited only to first four
deliveries or miscarriage)
Note: All of these benefits are tax-exempt.
BENEFICIARIES
Primary
(a) Dependent spouse – until remarriage (see above);
(b) Dependent children (legitimate, legitimated, legally
adopted, and illegitimate) (see above); 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%.
Secondary – shall only receive when the primary
beneficiaries are absent
(a) Dependent parents
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Others – shall only receive when the primary and
secondary beneficiaries are absent
(a) Any other person designated by member as his/her
secondary beneficiary.
GSIS [RA 8291]
COVERAGE
All public sector employees below the compulsory
retirement age of 65, irrespective of employment status.
EXCLUSIONS FROM COVERAGE
(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 employer-employee
relationship with the agency they serve.
BENEFITS
Monthly pension
The amount shall be:
(a) 37.5% x (revalued ave. monthly compensation)
(b) Plus 2.5 x (revalued ave. monthly compensation) x
[years in service in excess of 15 years].
(1) The monthly pension shall not exceed 90% of the
average monthly compensation.
(2) It shall not be less than P2,400 for those with 20 years
of service and not less than P1,300 for everyone else.
Retirement benefits
Eligibility requirements
(1) 15 years service;
(2) 60 years of age; and
(3) Not receiving pension benefit from permanent total
disability.
Note: Retirement is compulsory for employees 65 years of
age 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.
Benefit: choice between
(a) 60 x [basic monthly pension] lump sum payment at the
time of retirement plus basic monthly pension payable
monthly for life after expiry of the 5-year guaranteed
period which is already covered by the lump sum; or
(b) Cash payment equivalent to 18 x [basic monthly
pension] plus monthly pension for life immediately but
with no 5-year guarantee
Permanent disability benefits
Eligibility requirements for Permanent Total Disability
(1) Disability not due to employee’s own grave
misconduct, notorious negligence, habitual
intoxication, or willful intention to kill himself or
another;
(2) Employee is: 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.
Injuries deemed as Permanent Total Disability
(1) Complete loss of sight of both eyes
(2) Loss of two limbs at one or above the anke or wrist
(3) Permanent complete paralysis of two limbs
LABOR LAW BAR OPERATIONS COMMISSION
(4) Brain injury resulting in incurable imbecility, insanity, or
other irreversible conditions
Benefit for Permanent Total Disability
Monthly income benefit for life equal to basic monthly
pension – This is effective from date of disability;
(1) 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.
To the ineligible
If member has rendered at least 3 years of service, then he
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.
Partial Disability
Injuries deemed as Permanent Partial Disability
Complete and permanent loss of the use of: any one finger,
any toe, one arm, one hand, one foot, one leg, one or both
ears, sight of one eye or such other cases as may be
determined by the GSIS
Computation of benefits
(1) If member is in the service, benefit is:
Cash payment (CP) = Basic Monthly Pension (BMP) X nos.
of Permanent Partial Disability (PPD) months as
recommended by the GSIS medical evaluator
(2) If the member is separated from the service but has
paid 36 monthly contributions within the last 5 years
immediately preceding the disability or has paid at
least 180 monthly contributions, benefit is:
CP = BMP X nos. of PPD months as recommended by the
GSIS medical evaluator
Death Benefits
When member dies, the primary beneficiaries are entitled
to only one of the following:
(a) Survivorship pension (check G.1 above)
(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 [so
essentially, pension plus total contributions made]
(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 to qualify in the prior 2 schemes.
Funeral benefits
Fixed by GSIS rules and regulations (currently at P20,000)
Entitled to this are the following:
(1) Active member;
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(2) Member separated from service but still entitled to
funeral benefit;
(3) Pensioner;
(4) Retiree who at the time of retirement was of
pensionable age but opted to retire under RA 1616.
Loan – GSIS website provides for this
Temporary disability benefits (similar to sickness)
Eligibility requirements and other conditions:
(5) Employee must be
(a) in service at the time of disability; or
(b) if separated, he has rendered at least 3 years of
service and paid at least 6 monthly contributions in
the 12 month period immediately prior to disability;
(6) All sick leave credits including CBA sick leaves for the
current year has been used up; and
(7) Maximum of 120 days per 1 calendar year (so maximum
permissible for the same sickness and confinement is
240 days for 2 consecutive years).
Benefit
75% of the current daily compensation for every day or
fraction thereof of disability or P70 whichever is higher.
Separation benefits
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.
Benefit
(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 benefit equal to basic monthly pension.
Unemployment benefits – Sec 11
Eligibility requirements
(a) Employee separated from service due to abolition of
his office or position; and
(b) Employee has been paying integrated contributions for
at least 1 year prior to separation.
Benefit
Monthly cash payments of 50% of average monthly
compensation for a duration which is proportional to years
rendered, ranging from 2 months to 6 months.
Survivorship benefits
Beneficiaries are entitled to the following:
(a) Basic survivorship pension which is 50% of basic
monthly pension; and
(b) Dependent children’s pension not exceeding 50% of
the basic monthly pension.
Life insurance benefits
Note: Judiciary and Constitutional Commissions are
entitled to life insurance only.
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LABOR LAW BAR OPERATIONS COMMISSION
BENEFICIARIES
Primary
(a) Dependent spouse – until remarriage;
(b) Dependent children (legitimate, legitimated, legally
adopted, and illegitimate) – but RA 8291 does not
distinguish share of legitimate and illegitimate
children.
Secondary – shall only receive when the primary
beneficiaries are absent
(a) Dependent parents
(b) Legitimate descendants, subject to the restrictions on
dependent children.
[See Annex B for Comparison between the SSS law and the
GSIS Law]
LIMITED PORTABILITY LAW [RA 7699]
COVERAGE
(1) Workers who transfer employment from one sector to
another; or
(2) Those employed in both sectors (public and private).
PROCESS
The covered worker shall have his credible services or
contributions in both Systems credited to his service or
contribution record in each of the Systems and shall be
totalized for purposes of old-age, disability, survivorship
and other benefits in case the covered member does not
qualify for such benefits in either or both systems without
totalization: Provided, however, That overlapping periods
of membership shall be credited only once for purposes of
totalization [Sec. 3]
“Totalization” shall refer to the process of adding up the
periods of creditable services or contributions under each
of the Systems, for purposes of eligibility and computation
of benefits [Sec. 2e].
Note:
Overlapping periods of membership in case of those
employed in both sectors at once are to be counted only
ONCE for purposes of totalization.
WHY?
To be able to satisfy eligibility requirements of benefits
provided for by either SSS or GSIS.
EMPLOYEE’S COMPENSATION – COVERAGE AND
WHEN COMPENSABLE
COVERAGE
(a) Every employer shall be covered.
(b) Every employee not over sixty (60) years of age shall be
covered.
(c) An employee over sixty (60) years of age shall be
covered if he had been paying contributions to the
System prior to age sixty (60) and has not been
compulsorily retired.
(d) An employee who is coverable by both the GSIS and
SSS shall be compulsorily covered by both Systems.
[Sec. 2, IRR of Title II, Book IV of LC]
(e) Filipinos working abroad in the service of an employer
as defined in Section 3 hereof shall be covered by the
System, and entitled to the same benefits as are
provided for employees working in the Philippines.
[Sec. 5, IRR of Title II, Book IV of LC]
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EFFECTIVITY
Coverage of employees shall take effect on the first day of
employment. [Sec. 6]
WHEN COMPENSABLE
Grounds:
(1) For the injury and the resulting disability or death to be
compensable, the injury must be the result of accident
arising out of and in the course of the employment.
(2) For the sickness and the resulting disability or death to
be compensable, the sickness must be the result of an
occupational disease listed under Annex “A” of these
Rules with the conditions set therein satisfied,
otherwise, proof must be shown that the risk of
contracting the disease is increased by the working
conditions.
Limitation: No compensation shall be allowed to the
employee or his dependents when the injury, sickness,
disability, or death was occasioned by any of the following:
(1) his intoxication;
(2) his willful intention to injure or kill himself or another;
or
(3) his notorious negligence
(4) As otherwise provided by law.
Labor Relations Law
RIGHT TO SELF-ORGANIZATION
BASIS OF RIGHT TO SELF-ORGANIZATION
1987 Constitution [Art. III Sec 8, Art. XIII Sec 3]
Art. III Sec. 8. The right of the people, including those
employed in the public and private sectors, to form unions,
associations, or societies for purposes not contrary to law
shall not be abridged.
Art. XIII Sec. 3. The state shall afford full protection to
labor, local and overseas, organized and unorganized, and
promote full employment opportunities for all. It shall
guarantee the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful
concerted activities, including the right to strike in
accordance with law.
Labor Code [Art. 243, 244, LC]
Art. 243. Coverage and Employees’ Right to Self-
Organization
(8) All persons employed in commercial, industrial and
agricultural enterprises and in religious, charitable,
medical, or educational institutions, whether operating
for profit or not, shall have the right to self-organization
and to form, join, or assist labor organizations of their
own choosing for purposes of collective bargaining.
(9) Ambulant, intermittent, and itinerant workers, self-
employed people, rural workers and those without any
definite employers may form labor organizations for
their mutual aid and protection.
Art. 244. Right of Employees in the Public Service
Employees of government corporations established under
the corporation code shall have the right to organize and
to bargain collectively with their respective employers.
RIGHT TO SELF-ORGANIZATION: A FUNDAMENTAL RIGHT
LABOR LAW BAR OPERATIONS COMMISSION
Self-organization is a fundamental right guaranteed by the
Philippine Constitution and the Labor Code. Employees
have the right to form, join or assist labor organizations for
the purpose of collective bargaining or for their mutual aid
and protection. Whether employed for a definite period or
not, any employee shall be considered as such, beginning
on his first day of service, for purposes of membership in a
labor union. [UST Faculty Union v Bitonio]
INFRINGEMENT OF THE RIGHT TO SELF-ORGANIZATION
It shall be unlawful for any person to restrain, coerce,
discriminate against or unduly interfere with employees
and workers in their exercise of the right to self-
organization. [ART. 246]
The BLR correctly observed that the :recognition of the
tenets of the (INC) sect xxx should not infringe on the basic
right to self-organization granted by the constitution to
workers, regardless of religious affiliation. [Kapatiran sa
Meat and Canning Division v Calleja, 1988]
SCOPE OF RIGHT TO SELF-ORGANIZATION
The right to self-organization shall also include:
(1) Right to form, join and assist labor organizations of
their own choosing for the purpose of collective
bargaining through representatives [Art. 246];
(2) Right to engage in lawful concerted activities for the
same purpose or for their mutual aid and protection
[Art. 246];
(3) Right not to exercise it: the right NOT to join, affiliate
with, or assist any union, and to disaffiliate or resign
from a labor organization, is subsumed in the right to
join, affiliate with, or assist any union, and to maintain
membership therein. It is self-evident that just as no
one should be denied the exercise of a right granted by
law, so also, no one should be compelled to exercise
such a conferred right [Reyes v. Trajano, 1992]
Subsumed in the right to join, affiliate with, or assist any
union is the right NOT to join, affiliate with, or assist any
union; or to leave a union and join another one. [Heritage
Hotel Manila v. PIGLAS-Heritage, 2009]
The right of the employees to self-organization is a
compelling reason why their withdrawal from the
cooperative must be allowed. As pointed out by the union,
the resignation of the member-employees is an expression
of their preference for union membership over that of
membership in the cooperative [Central Negros Electric
Cooperative v. Sec. of Labor, 1991]
WORKER QUALIFICATION
Any employee, whether employed for a definite period or
not, shall, beginning on his first day of service, be
considered as an employee for purposes of membership in
any labor union. [Art. 277 (c)]
Whether employed for a definite period or not, any
employee shall be considered as such, beginning on his
first day of service, for purposes of membership in a labor
union. To become a union member, an employee must, as
a rule, not only signify the intent to become one, but also
take some positive steps to realize that intent. [UST Faculty
Union v. Bitonio , 1999]
DEFINITIONS
Employee
“Employee” includes:
(3) Any person in the employ of an employer.
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(4) The term shall not be limited to the employees of a
particular employer, unless this code explicitly states.
(5) 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 [Art 212(f)]
Employer
"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. [Art 212 (e)]
Rank-and-file employees
“Rank-and-File Employee” refers to an employee whose
functions are neither managerial nor supervisory in nature.
[Book V Rule I Sec. 1 (nn)]
Supervisory 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. [Art. 212 (m)]
Managerial employees
A 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.
[Art 212(m)]
Worker's association
A workers’ association means any group of workers,
including ambulant, intermittent, self-employed, rural
workers and those without definite employers, organized
for mutual aid and protection of its members or for any
legitimate purpose other than collective bargaining. [Art.
243]
WHO MAY UNIONIZE FOR PURPOSES OF COLLECTIVE BARGAINING
[COVERED EMPLOYEES/WORKERS]
(a) All employees (general rule)
(b) Government employees in civil service and of
government corporations under the Corporation Code
(c) Supervisors
(d) Aliens with valid working permits
(e) Security personnel
All Employees [General Rule]
Right to Self-Organization: Coverage
General Rule: ALL employees of all kind of employers –
public or private, profit or non-profit, commercial or
religious. [Art. 243]
Art. 244 now allows employees of non-profit organizations
to join, form and/or assist labor organizations. [FEU-Dr.
Nicanor Reyes Medical Foundation Inc. v. Trajano, 1992]
Government Corporate Employees [Corporations created
under the Corporation Code]
The right to self-organization shall not be denied to
government employees. [1987 Constitution, Art. IX-B, Sec. 2
(5)]
Employees of government corporations established under
the Corporation Code shall have the right to organize and
to bargain collectively with their respective employers. All
LABOR LAW BAR OPERATIONS COMMISSION
other employees in the civil service shall have the right to
form associations for purposes not contrary to law. [Art.
244]
All government employees can form, join, or assist
employees’ organizations of their own choosing for the
furtherance and protection of their interests. They can also
form, in conjunction with appropriate government
authorities, labor-management committees, work councils
and other forms of workers’ participation schemes to
achieve the same objectives. [EO 180 Section 2]
Supervisory 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. [Art. 212 (m)]
Supervisory employees shall not be eligible for
membership in a labor organization of the rank-and-file
employees but may join, assist or form separate labor
organizations of their own. [Art 245, second sentence]
Rationale for segregation – conflict of interest
Supervisory employees, while in the performance of
supervisory functions, become the alter ego of the
management in the making and the implementing of key
decisions. It would be difficult to find unity or mutuality of
interests in a bargaining unit consisting of a mixture of
rank-and-file and supervisory employees. [Toyota Motor
Phil. Corp. v Toyota Motor Phil. Corp. Labor Union, 1997]
Effect of Mixed Membership
The inclusion as union members of employees outside the
bargaining unit shall not be a ground for the cancellation
of the registration of the union. Said employees are
automatically deemed removed from the list of
membership of said union. [Art. 245-A]
Membership in the same federation or national union
The rank and file union and the supervisors’ union
operating the same establishment may join the same
federation or national union. [Art. 245]
Aliens
General rule: aliens are strictly prohibited from engaging
directly or indirectly in all forms of trade union activities.
Exception:
(1) they have valid working permits issued by the DOLE;
AND
(2) they are nationals of a country which grants the same
or similar rights to Filipino workers [principle of
reciprocity]. [Art 269]
The DFA provides the certification on the requirement of
reciprocity. [Book V, Rule II, Sec. 2, Par. 1, 3rd sentence]
Security Guards
The security guards and other personnel employed by the
security service contractor shall have the right:
(a) To form, join, or assist in the formation of a labor
organization of their own choosing for purposes of
collective bargaining and
(b) To engage in concerned activities which are not
contrary to law including the right to strike. [D.O. No. 14
Series of 2001 Guidelines Governing the Employment
and Working Conditions of Security Guards and Similar
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Personnel in the Private Security Industry]
In Dec 1986, President Aquino issued EO No. 111 which
eliminated the provision on the disqualification of security
guards and with that security guards were thus free to join
a rank and file organization. Under the old rule, security
guards were barred from joining labor organizations of the
rank-and-file but under RA 6715, they may now freely join a
labor organization with the rank-and-file or the supervisory
union, depending on their rank. [Manila Electric Co. v.Sec. of
Labor, 1991]
WHO CANNOT FORM, JOIN, OR ASSIST LABOR ORGANIZATIONS
(1) Managerial employees
(2) Confidential employees
(3) Non-employees
(4) Member-employee of a cooperative
(5) Employees of international organizations
(6) High-level government employees
(7) Members of the AFP, police officers, policemen,
firemen and jail guards
Managerial Employees
A 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.
[Art 212(m)]
Managerial employees are not eligible to join, assist or
form any labor organization. [Art. 245]
Confidential Employees
Confidential employees are those who:
(1) assist or act in a confidential capacity [integral part of
the job]
(2) to persons who formulate, determine, and effectuate
management policies in the field of labor relations.
(Nature of Access Test)
The two criteria are cumulative, and both must be met if an
employee is to be considered a confidential employee –
that is, the confidential relationship must exist between
the employees and his supervisor, and the supervisor must
handle the prescribed responsibilities relating to labor
relations. [San Miguel Supervisors and Exempt Union v.
Laguesma, 1997]
Rationale of Exclusion of Confidential Employees
Employees should not be placed in a position involving a
potential conflict of interests.
By the very nature of their functions, they assist and act in
a confidential capacity to, or have access to confidential
matters of, persons who exercise managerial functions in
the field of labor relations. (Thus there is a fiduciary and
confidential relationship between manager and employer.) It
is not far-fetched that in the course of CB, they might
jeopardize that interest which they are duty bound to
protect. [Metrolab Industries Inc. v. Roldan-Confessor, 1996]
The disqualification of managerial and confidential
employees from joining a bargaining unit for rank and file
employees is already well-entrenched in jurisprudence.
While Article 245 of the Labor Code limits the ineligibility
to join, form and assist any labor organization to
managerial employees, jurisprudence has extended this
prohibition to confidential employees or those who by
reason of their positions or nature of work are required to
LABOR LAW BAR OPERATIONS COMMISSION
assist or act in a fiduciary manner to managerial
employees and hence, are likewise privy to sensitive and
highly confidential records. [Standard Chartered Bank
Employees Union v SCB, 2008]
Nomenclature not Controlling: Function Test
The mere fact that an employee is designated “manager”
does not ipso facto make him one. Designation should be
reconciled with the actual job description of the employee.
[Paper Indurstries Corp. of the Philippines. v. Laguesma
,2000]
Non-Employees
Since the persons involved are not employees of the
company, they are not entitled to the constitutional right
to join or form a labor organization for purposes of collective
bargaining. [Republic Planters v Laguesma , 1996]
Respondents are found not to be employees of the
Company, they are not entitled to the constitutional right
to join or form a labor organization for purposes of
collective bargaining. Citing La Suerte Cigar and Cigarette
Factory v. Director of Bureau of Labor Relations the court
here reiterated, “The question of whether employer-
employee relationship exists is a primordial consideration
before extending labor benefits under the workmen's
compensation, social security, medicare, termination pay
and labor relations law. Failure to establish this juridical
relationship between the union members and the
employer affects the legality of the union itself. [Singer
Sewing Machine Co. v. Drilon , 1993]
Employee-Member of Cooperative
The right to collective bargaining is not available to an
employee of a cooperative who at the same time is a
member and co-owner thereof.
Exclusion: Fact of Ownership Controlling
The fact of ownership of the cooperative and not the
involvement in the management thereof disqualifies a
member from joining any labor organization within the
cooperative.
Exclusion: Rationale
They cannot invoke the right to collective bargaining for
"certainly an owner cannot bargain with himself or his co-
owners." [Benguet Electric Cooperative v. Ferrer-Calleja]
BUT
Employees who withdrew their membership from the
cooperative are entitled to form or join a labor union for
the negotiations of a CBA. [CENECO v DOLE, 1991]
Employees of International Organizations
International organizations are endowed with some degree
of international legal personality. They are granted
jurisdictional immunity.
A certification election cannot be conducted in an
international organization which the Phil. Government has
granted immunity from local jurisdiction. [International
Catholic Migration Commission v. Calleja, 1990]
High-level or managerial government employees [E.O. 180,
Sec. 3]
High-level Employee: Definition
Is one whose functions are normally considered policy
determining, managerial or one whose duties are highly
confidential in nature.
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Managerial Functions
(1) Effectively recommend managerial actions;
(2) Formulate or execute management policies and
decisions; or
(3) Hire, transfer, suspend, lay-off, recall, dismiss, assign or
discipline employees.
Members of the Armed Forces of the Philippines,
Policemen, Police Officers, Firemen and Jail Guards [E.O.
180, Sec. 4]
BARGAINING UNIT
Definitions
“Bargaining Unit” refers to a group of employees sharing
mutual interests within a given employer unit, comprised
of all or less than all of the entire body of employees in the
employer unit or any specific occupational or geographical
grouping within such employer unit. [Book V, Rule 1,
Sec1(d)]
Appropriate Bargaining Unit
A group of employees of a given employer comprised of all
or less than all of the entire body of employees, which the
collective interests of all the employees indicate to be best
suited to serve reciprocal rights and duties of the parties
consistent with equity to the employer. [Belyca Corp. vs
Calleja, 1988]
Function of an Appropriate Bargaining Unit
(a) An ELECTORAL DISTRICT. – It marks the boundaries of
those who may participate in a certification election.
(b) An ECONOMIC UNIT. – They are a group of employees
with community of interests.
(c) A SOVEREIGN BODY. – It selects the sole and exclusive
bargaining agent.
Role of a bargaining unit
General rule: 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 a unit for the
purpose of collective bargaining.
Exception: 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, to
participate in the 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. [Art.
255, LC]
CBA Coverage
When there has been a factual determination by the Labor
Arbiter that the petitioners were regular employees, said
employees shall fall within the coverage of the bargaining
unit and are therefore entitled to CBA benefits as a matter
of law and contract. [Farley Fulache, et a. v ABS-CBN,
2010]
Effect of Prior Agreement
Prior agreement as to the inclusion or exclusion of workers in
a bargaining unit or prohibition from forming their own
LABOR LAW BAR OPERATIONS COMMISSION
union agreed upon by the corporation with the previous
bargaining representatives can never bind subsequent
federations [General Rubber & Footwear Corp. v BLR, 1987]
RATIONALE: It is a curtailment of the right to self-
organization. During the freedom period, the parties may
not only renew the existing collective bargaining
agreement but may also propose and discuss
modifications or amendments thereto. [DLSU v. DLSUEA,
2000]
Test to determine the constituency of an appropriate
bargaining unit
(WAPE)
(1) Will of the Employees (Globe Doctrine)
(2) Affinity & unity (Community) of Employees interest,
such as substantial similarity of works and duties or
similarity of compensation & working conditions
(3) Prior CB history
(4) Employment status i.e. temporary, seasonal, &
probationary. [UP v. Ferrer-Calleja, 1992 citing
Democratic Labor Assoc v. Cebu Stevedoring Co.]
Other factors:
(1) Geography and location
(2) Policy of avoiding fragmentation of the bargaining unit
Unit Severance and Globe Doctrine
Globe Doctrine: Concept
(a) practice designated as the "Globe doctrine," which
sanctions the holding of a series of elections, not for the
purpose of allowing the group receiving an over all
majority of votes to represent all employees, but for the
specific purpose of permitting the employees in each of
the several categories to select the group which each
chooses as a bargaining unit. [Kapisanan ng mga
Manggagawa sa Manila Road Co. v. Yard Crew Union ,
1960]
Rationale for the Globe Doctrine
Highly skilled or specialized technical workers may choose
to form their own bargaining unit because they may be in
better position to bargain with the employer considering
the market value of their skills.
Community or Mutuality of Interests
Fundamental Test: (t)he basic test of an asserted bargaining
unit’s ACCEPTABILITY is whether or not it is fundamentally
the combination which will best assure to all employees
the exercise of their CB rights. This is related to the policy
of the law in ensuring the right to collective bargain. [UP v.
Ferrer-Calleja, 1992]
Rationale
There are greater chances of success for the collective
bargaining process. The bargaining unit is designed to
maintain the mutuality of interest among the employees in
such unit.
Reason to dissolve, change or expand a certain bargaining
unit: When THE INTEREST BETWEEN GROUPS HAS
CHANGED OVER TIME
Prior Collective Bargaining History
The existence of a prior collective bargaining history is
neither decisive nor conclusive in the determination of
what constitutes an appropriate bargaining unit. [San
Miguel Corp. v. Laguesma, 1994]
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Geography – Location
Geography and location only play a significant role if:
(1) The separation between the camps and the different
kinds of work in each all militate in favor of the system
of separate bargaining units;
(2) When the problems and interests of the workers are
peculiar in each camp or department;
(3) The system of having one collective bargaining unit in
each camp has operated satisfactorily in the past.
[Benguet Consolidated Inc. and Balatok Mining Co. v.
Bobok Lumberjack Assn.,1958]
Policy of avoiding fragmentation of the bargaining unit
It bears noting that the goal of the DOLE is geared towards
"a single employer wide unit which is more to the broader
and greater benefit of the employees working force." The
philosophy is to avoid fragmentation of the bargaining unit
so as to strengthen the employees’ bargaining power with
the management. To veer away from such goal would be
contrary, inimical and repugnant to the objectives of a
strong and dynamic unionism. [Phil. Diamond Hotel and
Resort Inc v Manila Diamond Hotel and Employees Union,
2006]
Since the confidential employees are very few in number
and are by practice and tradition identified with the
supervisors in their role as representatives of management
vis-à-vis the rank and file employees, such identity of
interest has allowed their inclusion in the bargaining of
supervisors for purposes of collective bargaining in turn as
employees in relation to the company as their employer.
This identity of interest logically calls for their inclusion in
the same bargaining unit and at the same time fulfills the
law’s objective of insuring to them the full benefit of their
right to self organization and to collective bargaining,
which could hardly be accomplished if the respondent
association’s membership were to be broken up into five
separate ineffective tiny units. Creating fragmentary units
would not serve the interest of industrial peace. The
breaking up of bargaining units into tiny units will greatly
impair their organizational value. [Filoil Refinery Corp. v
Filoil Supervisory and Confidential Employees Union, 1972]
Corporate Entities
GENERAL RULE: Two companies having separate juridical
personalities shall NOT be treated as a single bargaining
unit.
EXCEPTION: Pervasive Unitary Aspect of Management
Doctrine. – The cross-linking of the agencies command,
control, and communication systems indicate their unitary
corporate personality. [Philippine Scouts Veterans v. Torres]
Principles in determining whether to establish separate
bargaining units: [Indophil Textile Mills Workers Union v.
Calica, 1992; Diatagon Labor Federation v. Ople, 1980]
(1) The existence of a bonafide business relationship
between the 2 companies is not proof of being a single
corporate entity, especially when the services provided
by the other company are merely auxiliary.
(2) The fact that there are as many bargaining units as
there are companies in a conglomeration of companies
is a positive proof that a corporation is endowed with a
legal personality DISTINCTLY ITS OWN, independent
and separate from other corporations.
(3) Separate legitimate purposes militate against treating
one corporation as an adjunct or alter ego of the other.
(4) The fact that the businesses are related, that some of
the employees are the same persons working in the
LABOR LAW BAR OPERATIONS COMMISSION
other company and the physical plants, offices and
facilities are in the same compound are NOT sufficient
to justify piercing the corporate veil. In Umali vs CA,
legal corporate entity is disregarded only if it is sought
to hold the officers and stockholders directly liable for
a corporate debt or obligation.
Spun-off corporations
The transformation of companies is a management
prerogative and business judgment which the courts
cannot look into unless it is contrary to law, public policy or
morals. If, considering the spin-offs, the companies would
consequently have their respective and distinctive concerns
in terms of nature of work, wages, hours of work and other
conditions of employment. The nature of their products
and scales of business may require different skills, volumes
of work, and working conditions which must necessarily be
commensurate by different compensation packages. [San
Miguel Union v Confesor, 1996]
VOLUNTARY RECOGNITION
Definition
“Voluntary Recognition” refers to the process by which a
legitimate labor union is recognized by the employer as
the exclusive bargaining representative or agent in a
bargaining unit, reported with the Regional office in
accordance to Rule VII, Sec 2 of these Rules. [Book V, Rule
1, Sec 1 [bbb]
Substantial Requirements
(1) Unorganized establishment;
(2) Only one union asking for recognition;
(3) The members of the bargaining unit did not object to
the projected recognition of the union.
Procedural Requirements
The notice of voluntary recognition shall be accompanied
by the original copy and two (2) duplicate copies of the
following documents:
(1) A joint statement under oath of voluntary recognition
attesting to the fact of voluntary recognition
(2) Certificate of posting of the joint statement of voluntary
recognition for fifteen (15) consecutive days in at least
two (2) conspicuous places in the establishment or
bargaining unit where the union seeks to operate;
(3) The approximate number of employees in the
bargaining unit, accompanied by the names of those
who support the voluntary recognition comprising at
least a majority of the members of the bargaining unit;
and
(4) A statement that the labor union is the only legitimate
labor organization operating within the bargaining
unit.
All accompanying documents of the notice for voluntary
recognition shall be certified under oath by the employer
representative and president of the recognized labor
union. [Book V Rule VII Sec 2]
The employer may voluntarily recognize the representation
status of a union in unorganized establishments. In this
case, however, the company (SLECC) was not an
unorganized establishment when it voluntarily recognized
SMSLEC as its exclusive bargaining representative. Prior
to the voluntary recognition, another union (CLUP-SLECC)
has already filed a petition for certification election. Thus,
the company’s voluntary recognition of SMSLEC is void.
[SLECC v Sec. of Labor, 2009]
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CERTIFICATION ELECTION
Definition
Certification election is the process of determining,
through secret ballot, the sole and exclusive bargaining
agent of the employees in an appropriate bargaining unit,
for purposes of collective bargaining. [Book V Rule I Section
1 [x]]
The certification election is the best method of determining
the will of the workers on the crucial question of who shall
represent them in their negotiations with the management
for a collective bargaining agreement that will best protect
and promote their interests. It is essential that there be no
collusion against this objective between an unscrupulous
management and a union covertly supporting it while
professing its loyalty to labor, or at least that the hopes of
labor be not frustrated because of its representation by a
union that does not enjoy its approval and support. It is
therefore sound policy that any doubt regarding the real
representation of the workers be resolved in favor of the
holding of the certification election. This is preferable to
the suppression of the voice of the workers through the
prissy observance of technical rules that will exalt
procedure over substantial justice. [Port Workers Union of
the Philippines v Laguesma, 1992]
Purpose
The purpose of a certification election is precisely the
ascertainment of the wishes of the majority of the
employees in the appropriate bargaining unit: to be or not
to be represented by a labor organization, and in the
affirmative case, by which particular labor organization.
[Reyes v Trajano, 1992]
Nature of proceeding
It is not litigation, but a mere investigation of a non-
adversary character. The object of the proceedings is
merely the determination of proper bargaining units and the
ascertainment of the will and choice of the employees in
respect of the selection of the bargaining representative. The
determination of the proceeding does not entail the entry
of remedial orders or redress of rights, but culmination
solely in an official designation of bargaining units and an
affirmation of the employees expressed choice of
bargaining agent. [Young Men Labor Union Stevedores v
CIR, 1965]
It is the most DEMOCRATIC and most efficacious/ effective
way of determining the will of the bargaining unit.
[Samahang Manggagawa sa Permex v Sec. of Labor, 1998]
It is a STATUTORY POLICY. [Belyca Corp. v. Ferrer-Calleja,
1998]
A certification election is different from a union election. In
a union election, the objective is to elect union officers.
Therefore, only union members may vote in a union
election while every member of an appropriate bargaining
unit can vote in a certification election.
Certification election is the fairest and most effective way of
determining which labor organization can truly represent
the working force. It is a fundamental postulate that the
will of the majority given expression in an honest election
with freedom on the part of the voters to make their choice,
is controlling. [PLUM Federation of Industrial and Agrarian
Workers v Noriel, 1978]
LABOR LAW BAR OPERATIONS COMMISSION
Implications
“Technical rules and objections should not hamper the
correct ascertainment of the labor union that has the
support and confidence of the majority of the workers and
is thus entitled to represent them in bargaining for the
terms and conditions of their employment.” [Port Workers
Union v. DOLE, 1992]
Thus it should not be circumvented. There should be no
obstacle in conducting the Certification election. [George &
Peter Lines, Inc. v. Associated Labor Union, 1985]
Who may vote?
All employees whether union members or not, as long as
they belong to the appropriate bargaining unit can vote.
Who may file a petition for certification election
(1) Legitimate labor organization (registered w/ DOLE)
(2) Unregistered local chapter with charter certificate from
national union or federation
(3) National union or federation in behalf of its
local/chapter
(4) Employer (when requested to bargain collectively and
no existing CBA)
Legitimate labor organization
"Legitimate labor organization" means any labor
organization duly registered with the Department of Labor
and Employment, and includes any branch or local thereof.
[Art 212 (f)]
Unregistered local/chapter with charter certificate
A duly registered federation or national union may directly
create a local chapter by issuing a charter certificate
indicating the establishment of the local chapter. The
chapter shall acquire legal personality only for purposes of
filing a petition for certification election from the date it
was issued a charter certificate. [Art 234-A, introduced by
RA 9481]
National union/federation
A national union of federation filing a petition in behalf of
its local/chapter shall not be required to disclose the
names of the local/chapter’s officers and members, but
shall attach to the petition the charter certificate issued to
its local/chapter. [Art. 257]
Employer
The employer may file a petition for certification election
only when he is requested by a labor organization to
bargain. [Art 258 paragraph 1]
Bystander rule. The employer shall not be considered a
party in the petition with a concomitant right to oppose a
petition for certification election. The employer’s
participation shall be limited to:
(1) being notified or informed of petitions of such nature
(2) submitting the list of employees during the pre-
election conference should the Med-arbiter act
favorably on the petition [Art 258-A introduced by RA
9481]
A company’s interference in the CE creates a suspicion that
it intends to establish a company union. [Oriental Tin Can
Labor Union v. Secretary of Labor, 1998]
The employer is not a party to a certification election,
which is the sole or exclusive concern of the workers. The
only instance when the employer may be involved in that
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process is when it is obliged to file a petition for determining whether or not a certification election must be
certification election on its workers’ request to bargain conducted. [Scout Albano Memorial College v. Noriel, 1978]
collectively pursuant to Art. 258. [Hercules Industries, Inc. v
Sec. of Labor, 1992] Effect of withdrawal of signatures
The employees’ withdrawal from a labor union made
Employer is a TOTAL STRANGER in the process of before the filing of the petition for certification election is
Certification Election. Employer has NO STANDING to file presumed voluntary, while withdrawal after the filing of
a MOTION TO DISMISS. [PT&T v Laguesma, 1993] such petition is considered to be involuntary and does not
affect the petition. [S.S. Ventures International vs. S.S.
Venue for filing the petition Ventures Labor Union]
BLR Regional Office which issued the petitioning union’s
certificate of registration or certificate of creation of If performed after the filing of the petition, the withdrawal
chartered local. is presumed to be involuntary and that it was procured
through duress, coercion, or for a valuable consideration.
Certification election in an unorganized establishment [Art. [Oriental Tin Can Labor Union v. Secretary of Labor and
257] Employment, 1998]
Procedure
(a) A petition for certification shall be filed by a legitimate Incumbent as forced intervenor
labor organization. The incumbent bargaining agent shall automatically be
(b) Upon filing of the petition, the Med- Arbiter shall one of the choices in the certification election as forced
automatically conduct a certification election. intervenor. [Book V Rule VIII sec. 7.]
69
Filing of petition is by A LEGITIMATE labor organization. It Substantial support not necessary in intervention
cannot be an unregistered labor organization. This is best The requisite written consent representing substantial
read in relation to Art. 242 which enumerates the rights support of the workers in the bargaining unit [as required
granted to a legitimate labor organization and one of in Art. 256 applies to petitioners for certification only, and
those rights is the right to be chosen as the exclusive not to motions for intervention. [PAFLU v Calleja, 1989]
bargaining representative. This is one way the law
encourages union registration. Appeal from order of Med-Arbiter holding certification
election
Venue: BLR Regional Office which issued the petitioning Appeal to Secretary of Labor on the ground that the rules
union’s certificate of registration or certificate of creation of and regulations or parts established by the Secretary of
chartered local. Labor for the conduct of election have been violated. [Art.
259]
Certification election in an organized establishment [Art.
256] Organized v. Unorganized Establishment
Procedure Art. 256: Organized Art. 257: Unorganized
(1) A verified petition questioning the majority status shall
be filed by a legitimate labor organization Bargaining Agent
(2) It must be filed within the 60-day period before
expiration of CBA (freedom period) Existing, has one None
(3) Supported by written consent of at least 25% of ALL Petition Filed
employees in the bargaining unit (substantial support)
Has to be a VERIFIED No need to be verified
Substantial support rule petition
In organized establishments, the incumbent sole Freedom Period
bargaining agent should not be easily replaced for that
would disturb industrial peace. To justify the disturbance, it No petition for Certification Not applicable.
must appear that at least a substantial number (25% election EXCEPT within 60
requirement) seeks to have a new exclusive bargaining days before the expiration of No freedom period.
unit. the collective bargaining Can file petition anytime.
agreement [See Art. 253 &
Note: A union that is merely filing a MOTION FOR 253-A]
INTERVENTION in a CE filed by another union need NOT
present substantial support. The substantial support is Take note how SC
only needed when filing for a petition for certification interpreted the term
election. [Port Workers Union v DOLE, 1992] “WITHIN”.

Double majority requirement (voters, valid votes) What is the rationale of

To have a valid election, at least a majority of all eligible freedom period in Organized
voters in the unit must have cast their votes. The labor establishments, why is there
union receiving the majority of the valid votes cast shall be none in unorganized
certified as the exclusive bargaining agent of all the establishments?
workers in the unit. [Art. 256] It has something to do with
industrial peace
Discretionary rule
Substantial Support Rule
If the petition does not comply with the substantial
support requirement, the BLR may exercise its discretion in Must be duly supported by NO substantial support rule.

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25% of ALL THE MEMBERS WHY? Contract Bar Rule

OF THE APPROPRIATE Intention of law is to bring in While a valid and registered CBA is subsisting, the BLR is
BARGAINING UNIT. the union, to implement policy not allowed to entertain any petition for certification
behind Art. 211a. election or any other action which may disturb the
Percentage base: all administration of the duly registered existing collective
members of an appropriate bargaining agreements affecting the parties except under
bargaining unit. Articles 253, 253-A and 256 of this Code. [Art 232]
What is intent and purpose of
law for requiring the The contract bar rule shall not apply:
substantial support rule? (a) When the petition is filed during the freedom period in
Law wants to know the Articles 253, 253-A, and 256.
intention of the employees. If (b) When the CBA is incomplete
they really want a CE, since (c) When the CBA is substandard
they already have a (d) When the CBA is prematurely renewed
bargaining agent. (e) When the CBA is unregistered
Notice
Note: No petition for certification election may be filed
Client need not be notified to Client and adverse party need after the lapse of the freedom period. The old CBA is
make it effective to notified to make it effective extended until a new one is agreed upon by the parties.
Applicability [Colegio de San Juan de Letran v. Assoc, 2000]
May be exercised before Generally, it is exercisable only
Freedom Period.—The last 60 days in a Collective
judgment or execution, or when the attorney had already
Bargaining Agreement (CBA) is referred to as the “freedom
regardless thereof secured a favorable judgment
period” when rival union representation can be entertained
for his client
during the existence of a CBA. It is during this particular
period when the majority status of the incumbent
bargaining agent can be challenged. [Tanduay Distillery
Bars to certification election Labor Union v. NLRC, 1987]
(1) One year bar rule
(2) Negotiation bar rule The purpose of the prohibition against the filing of a
(3) Deadlock bar rule petition for certification election outside the so-called
(4) Contract bar rule freedom period is to ensure industrial peace between the
employer and its employees during the existence of the
One year bar rule CBA. [Republic Planters Bank Union v. Laguesma, 1996]
No certification election may be held within 1 year from the
fact that voluntary recognition has been entered, or a valid The premature renewal of a CBA cannot bar the holding of
certification, consent or run-off election has been a certification election by virtue of a bona fide petition filed
conducted within the bargaining unit. [Book V, Rule VIII, within the freedom period if the clear intention was to
Sec 3 (a)] frustrate the constitutional right of the employees to self-
organization. [Associated Labor Union v. Calleja, 1989]
If appealed, the reckoning period is the date when the
decision becomes final and executory. Premature renewal of CBA cannot bar.— The premature
renewal of a CBA cannot bar the holding of a certification
Negotiation bar rule election by virtue of a bona fide petition filed within the
A petition for certification election may be filed anytime freedom period if the clear intention was to frustrate the
EXCEPT: constitutional right of the employees to self-organization.
(a) When the duly certified union has commenced and [Associated Labor Union v. Calleja, 1989]
sustained negotiations in good faith with the employer
(b) In accordance with Art. 250 of the Labor Code Petition for cancellation of union registration does not bar
(c) Within one year period prior to the filing of the filing of certification election.— Certification election can be
the petition for certification election. [Book V, Rule VIII, conducted despite pendency of a petition to cancel the
Sec 3 (b)] union registration certificate. For the fact is that at the
time the union, whose registration certificate is sought to
Deadlock bar rule be cancelled, filed its petition for certification, it still had
A petition for certification election may be filed anytime, legal personality to perform such act absent an order
EXCEPT: directing its cancellation. [Samahan ng mga Manggagawa
xxx when a bargaining deadlock to which an incumbent or v Laguesma, 1997]
certified bargaining agent is a party had been submitted to
conciliation or arbitration or had become the subject of a
Suspension of Election: Prejudicial Question Rule
valid notice of strike or lockout; [Book V, Rule VIII, Sec. 3 (c)]
Formal charge of ULP against the employer for
establishing a company union triggers suspension. [B.F.
A “deadlock” is defined as the “counteraction of things
Goodrich Phils. Marikina v. B.F. Goodrich Confidential and
producing entire stoppage; a state of inaction or of
Salaried Employees Union]
neutralization caused by the opposition of persons or of
factions [as in government or voting body]; standstill.”
Note: The ONLY party who could ask for the suspension of
[Divine World University v Sec of Labor and Employment,
the CE is the labor union which filed a complaint for ULP
1992]
against the employer.

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Suspension of Election: Rationale
If there is a union dominated by the company, to which
some of the workers belong, an election among workers
and employees of the company would not reflect the true
sentiment and wishes of the said workers and employees
because the votes of the members of the dominated union
would not be free. Such charge of company domination is a
prejudicial question that until decided, shall suspend or bar
proceedings for certification election.
If it were a labor organization objecting to the participation
in a certification election of a company-dominated union,
as a result of which a complaint for an unfair labor practice
case against the employer was filed, and when the court
finds that said union is employer-dominated in the unfair
labor practice case, the union selected would be decertified
and the whole election proceedings would be rendered
useless and nugatory.' There would be an impairment of
the integrity of the collective bargaining process if a
company-dominated union were allowed to participate in
a certification election. [United CMC Textile Worker’s Union
v. BLR, 1984]
Certification Election MECHANICS
Posting of Notice
Who: Election Officer shall cause the posting
What: notice of election
Where: 2 conspicuous places in company premises
When: at least 10 days before actual election
Contents of Notice:
(a) Date and Time of election;
(b) Names of all contending unions;
(c) Description of the bargaining unit
(d) List of eligible and challenged Voters.
The posting of the notice of election, the information
required to be included therein and the duration of the
posting cannot be waived by the contending unions or the
employer. [Book V Rule IX Sec 6, IRR]
Voting List and Voters
The basis of determining voters may be agreed upon by
the parties (i.e. the use of payroll). [Acoje Workers Union v
NAMAWU, 1963]
All Employees entitled to vote
All rank-and-file employees in the appropriate bargaining
unit. The Code makes no distinction as to their
employment status. All they need to be eligible to support
the petition is to belong to a bargaining unit. [Airtime
Specialists, Inc. v Director of BLR, 1990]
Employees who have been improperly laid off but who have a
present, unabandoned right to or expectation of
reemployment, are eligible to vote in certification elections. If
the dismissal is under question, employees concerned
could still qualify to vote in the elections. [Philippine Fruits
v Torres, 1992]
Rationale for Non-Distinction Policy
Collective bargaining covers all aspects of the employment
relation and the resultant CBA binds all employees in the
bargaining unit. All rank and file employees, probationary or
permanent, have a substantial interest in the selection of the
bargaining representative. [Reyes v. Trajano , 1992]
Effect of Non-participation in previous election
Failure to take part in previous elections is no bar to the
right to participate in future elections. No law,
LABOR LAW BAR OPERATIONS COMMISSION
administrative rule or precedent prescribes forfeiture of the
right to vote by reason of neglect to exercise the right in
past cases. [Reyes v. Trajano, 1992]
Challenge Voter
An employer has no standing to question a certification
election since this is the sole concern of the workers but
may question the inclusion of any disqualified employee in
the certification election during the exclusion-inclusion
proceedings before the representation officer. [Phil.
Telephone & Telegraph Co. v Laguesma, 1993]
Voting Day
The election shall be set on a regular business day. [IRR,
Book V Rule IX Sec. 2]
Run-off election.— "Run-Off" refers to an election between
the labor unions receiving the two (2) higher number of
voters when a certification election which provides for
three (3) or more choices results in no choice receiving a
majority of the valid votes cast, where the total number of
votes for all contending unions is at least fifty percent
(50%) of the number of votes cast.
Requirements
(1) majority of the bargaining unit voted (first majority of
the double majority rule)
(2) three or more choices (note: “no union” is a choice)
(3) not one of the choices receives a majority of the valid
votes cast
(4) total number of votes for all contending unions is at
least 50% of the total number of votes cast [this means
that at least 50% of the bargaining unit wants to have
a union]
(5) the run-off election shall be conducted between the
labor unions receiving the two highest number of votes
Illustration
The CBU has 100 members and eighty of which voted.
Union “A”= 30; Union “B”= 15; Union “C”=15 and No
Union= 20. There were no invalid votes. Since none got the
majority of the 80 valid votes and the contending unions
obtained 60 votes, which even exceed one-half (½), a run-
off election is proper. The run-off will be between the labor
unions receiving “the two highest number of votes.” The
rematch is NOT between two unions but between “two
highest votes”. Thus the run-off will be among Union “A”,
“B” and “C”. [Azucena]
At the expiration of the freedom period, the employer shall
continue to recognize the majority status of incumbent
bargaining agent where no petition for certification
election is filed.
Re-run election.— A motion for the immediate holding of
another certification or consent election can be filed within
six (6) months from the date of the declaration of failure of
election. [Book V, Rule IX sec 18]
Consent election.— "Consent Election" means the election
voluntarily agreed upon by the parties to determine the
issue of majority representation of all the workers in the
appropriate collective bargaining unit.
The contending unions may agree to the holding of an
election. In which case, it shall be called a consent
election. The Med-Arbiter shall forthwith call for the
consent election reflecting the parties’ agreement and the
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call in the minutes of the conference. [Book V RVIII Sec 10
[as amended by DO 40-F-03 Series of 2008, Nov 8, 2008]]
Certification Election v. Consent Election
Certification Election Consent Election
Purpose
Aimed at determining the sole Merely to determine the
and exclusive bargaining agent issue of majority
of all employees in an representation of all the
appropriate bargaining unit for workers in the appropriate
the purpose of collective collective bargaining unit
bargaining
1st Level of Choice: Yes Union or
No Union
2nd Level of Choice: If “Yes
Union” wins,
WHICH union.
[UST Faculty Union v. Bitonio,
1999]
Conduct
Ordered by the DOLE Voluntarily agreed upon by
the parties, with or w/o
intervention from DOLE
Affiliation and disaffiliation of local union
to mother union. —
Definitions
Affiliate. – An affiliate is an independent union affiliated
with a federated, national union or a chartered local which
was subsequently granted independent registration but
did not disaffiliate from its federation, reported to the
Regional Office and the Bureau in accordance with Rule III
Secs. 6 and 7 of the IRR. [Book V Rule 1 Sec. 1 (a)]
Independent Union. – A labor organization operating at the
enterprise level that required legal personality through
independent registration under Art. 234 of the Labor Code
and Rule III Sec. 2-A of the IRR. [Book V Rule 1 Sec. 1 [w]]
Chartered Local [Local Chapter] – a labor organization in
the private sector operating at the enterprise level that
acquired legal personality through the issuance of a
charter certificate by a duly registered federation or
national union, and reported to the Regional Office in
accordance with Rule III Sec. 2-E of the IRR. [Book V Rule 1
Sec. 1 (i)]
National Union or Federation – a group of legitimate labor
unions in a private establishment organized for collective
bargaining or for dealing with employers concerning terms
and conditions of employment for their member union or
for participating in the formulation of social and
employment policies, standards and programs, registered
with the BLR in accordance with Rule III Sec. 2-B of the
IRR. [Book V Rule 1 Sec. 1 [kk]]
Purpose of affiliation
To foster the free and voluntary organization of a strong
and united labor movement [Art 211, LC]
The sole essence of affiliation is to increase, by collective
action, the common bargaining power of local unions for
the effective enhancement and protection of their
LABOR LAW BAR OPERATIONS COMMISSION
interests. Admittedly, there are times when without
succor and support local unions may find it hard, unaided
by other support groups, to secure justice for themselves.
[Phil Skylanders v. NLRC, 2002]
Nature of Relationship (Agency)
The mother union, acting for and in behalf of its affiliate,
had the status of an agent while the local remained the
basic unit of the association, free to serve the common
interest of all its members, subject only to restraints
imposed by the constitution and by the by-laws of the
association. The same is true even if the local is not a
legitimate labor organization. [Filipino Pipe and Foundry
Corp v. NLRC, 1998]
Effect of Affiliation
Locals remain the basic units of association, free to serve
their own and the common interest of all. Inclusion of FFW
in the registration is merely to stress that they are its
affiliates at the time of registrations. It does not mean that
said local unions cannot stand on their own. Affiliation
does not mean they lost their own legal personality.
[Adamson v. CIR, 1984]
Note: A rank-and-file union and a supervisory union may
be affiliated with the same federation.
Disaffiliation
General rule: Local unions may disaffiliate from the mother
union.
Limitations: Terms of the affiliation agreement (e.g.
agreement may require 2/3 vote to disaffiliate instead of a
majority) [Phil. Skylanders v. NLRC]
A local union, being a separate and voluntary association,
is free to serve the interests of all its members. It has the
right to disaffiliate or declare its autonomy from the
federation to which it belongs when circumstances
warrant, in accordance with the constitutional guarantee
of freedom of association, and such disaffiliation cannot be
considered disloyalty. [Malayang Samahan ng mga
Manggagawa vs. Ramos, 2000]
The locals are separate and distinct units primarily
designed to secure and maintain an equality of bargaining
power between the employer and their employee-
members; and the association of the locals into the
national union was in furtherance of the same end. These
associations are consensual entities capable of entering
into such legal relations with their member. The essential
purpose was the affiliation of the local unions into a
common enterprise to increase by collective action the
common bargaining power in respect of the terms and
conditions of labor. [Tropical Hut Employees Union vs.
Tropical Hut Food Market, Inc ,1990]
Disaffiliation Must be by a Majority Decision
Disaffiliation is a major policy question. Thus, it shall be
made by a majority decision of the entire membership,
after due deliberation, by secret ballot, unless, the nature
of the organization or force majeure renders such secret
ballot impractical, in which case, the board of directors of
the organization may make the decision. [Art. 241(d)]
Effect of disaffiliation
A registered independent union retains its legal
personality while a chartered local loses its legal
personality unless it registers itself.
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Substitutionary doctrine
The "substitutionary" doctrine provides that the employees
cannot revoke the validly executed collective bargaining
contract with their employer by the simple expedient of
changing their bargaining agent. And it is in the light of
this that the phrase "said new agent would have to respect
said contract" must be understood. It only means that the
employees, thru their new bargaining agent, cannot
renege on their collective bargaining contract, except of
course to negotiate with management for the shortening
thereof. [Benguet Consolidated v. BCI Employees and
Workers Union-PAFLU, 1968]
Conditions for the doctrine to apply
(1) change of bargaining agent [through affiliation,
disaffiliation, or other means]
(2) existing CBA with the previous bargaining agent
Effects of the doctrine
(1) new bargaining agent cannot revoke and must respect
the existing CBA
(2) it may negotiate with management to shorten the
existing CBA’s lifetime
Union dues and special assessments. —
Union dues. – Union dues are payments to meet the
union’s general and current obligations. The payment
must be regular, periodic, and uniform. [Azucena]
Every payment of fees, dues or other contributions by a
member shall be evidenced by a receipt signed by the
officer or agent making the collection and entered into the
record of the organization to be kept and maintained for
the purpose. [Art 241 (h)]
Special assessments. — Special assessments are payments
for a special purpose, especially if required only for a
limited time. [Azucena]
No special assessment or other extraordinary fees may be
levied upon the members of a labor organization unless
authorized by a written resolution of a majority of all the
members of a general membership meeting duly called for
the purpose. [Art. 241 (n)]
Other than for mandatory activities under the Code, no
special assessments, attorney’s fees, negotiation fees or
any other extraordinary fees may be checked off from any
amount due to an employee without an individual written
authorization duly signed by the employee. The
authorization should specifically state the amount,
purpose and beneficiary of the deduction. [Art. 241 (o)]
Requirements for validity of check off
(1) Authorization by written resolution of majority of ALL
the members at the general membership meeting
called for that purpose
(2) Secretary’s record of the minutes of the meetings
attested to by the president.
(3) Individual written authorization for check-off duly
signed by the employees concerned.
Check-off.— A check-off is a process or device whereby the
employer, on agreement with the Union, recognized as the
proper bargaining representative, or on prior authorization
from the employees, deducts union dues or agency fees
from the latter’s wages and remits them directly to the
Union. [Marino v Gamilla, 2009]
LABOR LAW BAR OPERATIONS COMMISSION
Attorney’s fees, negotiation fees, and similar charges. –
Attorney’s fees, negotiation fees or similar charges of any
kind arising from any collective bargaining negotiations or
conclusion of the collective agreement shall not be
imposed on individual member of contracting union, but
may be charged against union funds in an amount to be
agreed upon by the parties. Any contract, agreement or
arrangement of any sort to the contrary shall be null and
void. [Art. 222 (b)]
The general rule is that attorney’s fees, negotiation fees,
and similar charges should be charged against the union
funds and not as a special assessment. However, if a
special assessment is required to pay such fees, then the
requirements above must be satisfied.
Strict compliance for special assessment
There must be strict and full compliance with the
requisites. Substantial compliance is not enough. [Palacol
v. Ferrer-Calleja]
Jurisdiction over Check-off disputes
The Bureau of Labor Relations has jurisdiction to hear,
decide and to mete out punishment any reported violation
under Article 241
Note: Sec of Labor or his duly authorized representative
may inquire into financial activities of legitimate labor orgs
– UPON filing of complaint under oath and supported by
written consent of at least 20% of total membership,
Provided, such inquiry shall not be conducted during (60)-
day freedom period nor within the thirty (30) days
immediately preceding the date of election of union
officials [Art. 274].
Agency fees. — [Agency fee] is an amount, equivalent to
union dues, which a non-union member pays to the union 76
because he benefits from the CBA negotiated by the union.
[Azucena]
Legal basis
Employees of an appropriate bargaining unit who are not
members of the recognized collective bargaining agent
may be assessed a reasonable fee equivalent to the dues
and other fees paid by members of the recognized
collective bargaining agent, if such non-union members
accept the benefits under the collective bargaining
agreement: Provided, that the individual authorization
required under Article 242, paragraph (o) of this Code shall
not apply to the non-members of the recognized collective
bargaining agent [Art. 248 (e)]
Rationale for allowing agency fees
Avoiding unjust enrichment on the part of non-union
members who benefit from the union's efforts without
paying any fee therefor, unlike the members of the
bargaining agent.
RIGHT TO COLLECTIVE BARGAINING
DUTY TO BARGAIN COLLECTIVELY
Legal Basis
The State shall guarantee the rights of workers to
collective bargaining and negotiations.
The State shall promote the principle of shared
responsibilities between workers and employers and the
preferential use of voluntary modes in settling disputes,
including conciliation, and shall enforce their mutual
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compliance therewith to foster industrial peace. [1987
Constitution, Art. XIII, Sec. 3]
It is the policy of the State:
To promote and emphasize the primacy of FREE
COLLECTIVE BARGAINING and negotiations, including
voluntary arbitration, mediation and conciliation, as modes
of setting labor or industrial disputes. [Labor Code, Art 211
A]
It is the policy of the State to promote and emphasize the
primacy of free and responsible exercise of the right to
self-organization and collective bargaining, either through
single enterprise level negotiations or through the creation of
a mechanism by which different employers and recognized
certified labor unions in their establishments bargain
collectively. [Book V Rule XVI Sec. 1. Policy]
Definition
Collective bargaining, which is defined as negotiations
towards a collective agreement, is one of the democratic
frameworks under the New Labor Code, designed to
stabilize the relation between labor and management and
to create a climate of sound and stable industrial peace. It
is a mutual responsibility of the employer and the Union
and is characterized as a legal obligation.
So much so that Article 249, par. (g) of the Labor Code
makes it an unfair labor practice for an employer to refuse
"to meet and convene promptly and expeditiously in good
faith for the purpose of negotiating an agreement with
respect to wages, hours of work, and all other terms and
conditions of employment. [Kiok Loy v. NLRC, 1986]
Nature and Purpose of Collective Bargaining
The institution of collective bargaining is a prime
manifestation of industrial democracy at work. The two
parties to the relationship, labor and management, make
their own rules by coming to terms to govern themselves in
matters that really count. [United Employees Union of
Gelmart Industries v. Noriel, 1975]
When employers may be compelled to bargain collectively
(1) Majority representation by the representative labor
organization [exclusive bargaining agent]
(2) Demand by the labor organization [Art. 250 par(a)]
An employer asked by a labor organization to bargain
collectively may file a petition for certification election to
ascertain the will of the bargaining unit or it may
voluntarily recognize the labor organization in proper
circumstances.
Waiver of right to collectively bargain
The right to free collective bargaining includes the right to
suspend it. [Rivera v. Espiritu, 2000]
Meaning of the duty to bargain collectively
It is the performance of a mutual obligation to meet and
convene promptly and expeditiously in good faith for the
purpose of negotiating an agreement.
However, the duty does not compel any party to agree to a
proposal or to make any concession. [Art. 252]
When there is no CBA
In the absence of an agreement or other voluntary
arrangement providing for a more expeditious manner of
collective bargaining, it shall be the duty of employer and
the representatives of the employees to bargain
LABOR LAW BAR OPERATIONS COMMISSION
collectively in accordance with the provisions of this Code.
[Art. 251]
When there exists a collective bargaining agreement
The duty to bargain collectively shall also mean that
neither party shall terminate nor modify such agreement
during its lifetime.
Exception: during the freedom period (60 days prior to
expiration of CBA) where either party may serve a written
notice to terminate or modify the agreement.
The existing CBA continues in full force and effect during
the freedom period and/or until a new agreement is
reached by the parties. [Art. 253]
Rights of the parties during bargaining
The exclusive bargaining agent has the right to be
furnished by the employer, upon written request, with its
annual audited financial statements, including the balance
sheet and the profit and loss statement. [Art. 242 (c)]
The parties may agree to make available such up-to-date
financial information which is normally submitted to
relevant government agencies material and necessary for
meaningful negotiations. They may also agree to the
condition that the information be kept confidential. [Book
V Rule XVI Sec 2]
Bargaining Procedure: [Book V, Rule XVI]
Private Procedure
The parties may provide for their own procedures in
collective bargaining. The law only requires that these
procedures be more expeditious than the procedure in Art.
250. [Art 251]
Rationale. — It is the policy of the state to promote the
primacy of free collective bargaining [Art. 211 (a)]
Labor Code Procedure [Art. 250]
(1) Written notice and statement of proposals. When a party
desires to negotiate an agreement, it shall serve a
written notice upon the other party with a statement of
its proposals.
(2) Reply. The other party shall make a reply thereto not
later than ten (10) calendar days from receipt of such
notice.
(3) Conference. Should differences arise on the basis of
such notice and reply, either party may request for a
conference which shall begin not later than ten (10)
calendar days from the date of request.
(4) Board intervention and conciliation. If the dispute is not
settled, the Board shall intervene upon request of
either or both parties or at its own initiative and
immediately call the parties to conciliation meetings.
The Board shall have the power to issue subpoenas
requiring the attendance of the parties to such
meetings. It shall be the duty of the parties to
participate fully and promptly in the conciliation
meetings the Board may call;
(5) Voluntary arbitration. The Board shall exert all efforts to
settle disputes amicably and encourage the parties to
submit their case to a voluntary arbitrator.
(6) Prohibition against disruptive acts. During the
conciliation proceedings in the Board, the parties are
prohibited from doing any act which may disrupt or
impede the early settlement of the disputes.
Period to reply; bad faith. — The period to reply is merely
procedural, and non-compliance cannot be automatically
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deemed to be an act of ULP. [National Union of Restaurant
Workers vs. CIR, 1964]
Compare with. — More than a month after the proposals
were submitted, the employer has not made any counter-
proposals. The company’s refusal to make a counter-
proposal to the union’s proposed CBA is an indication of its
bad faith. Where the employer did not even bother to
submit an answer to the bargaining proposals of the union,
there is a clear evasion of the duty to bargain collectively.
The employer’s actuations show a lack of sincere desire to
negotiate, rendering it guilty of unfair labor practice.
[Colegio de San Juan de Letran vs. Association, 2000]
Failure to reply as indicia of bad faith. — GMC’s failure to
make a timely reply to the proposal sent by the union is
indicative of its utter lack of interest in bargaining with the
union. Its excuse that it felt the union no longer
represented the workers was mainly dilatory as it turned
out to be utterly baseless. GMC’s refusal to make a
counter-proposal is an indication of its bad faith. Where
the employer did not even bother to submit an answer to
the bargaining proposals of the union, there is a clear
evasion of the duty to bargain collectively. It is guilty of
ULP. [General Milling Corp. vs. CA , 2004]
Conciliation / Preventive Mediation – Privileged
communication. — Information and statements made at
conciliation proceedings shall be treated as privileged
communication and shall not be used as evidence in the
Commission.
Conciliators and similar officials shall not testify in any
court or body regarding any matters taken up at
conciliation proceedings conducted by them. [Art. 233]
Rationale.—
(a) a person is entitled to ‘buy his or her peace’ without
danger of being prejudiced in case his or her efforts fail
(b) offers for compromise are irrelevant because they are
not intended as admissions by the parties making
them [Pentagon Steel v. CA, 2009]
Mandatory bargainable issues. —
(1) Wages
(2) Hours of work
(3) All other terms and conditions of employment
including proposals for adjusting any grievances or
questions arising under such agreement [Art. 252]
Permissive Issues. — Unilateral benefits extended by the
employer [cf., Union of Filipro Employees-Drug v. Nestle,
2008]
A collective bargaining agreement refers to the negotiated
contract between a legitimate labor organization and the
employer concerning wages, hours of work and all other
terms and conditions of employment in a bargaining unit,
including mandatory provisions for grievances and
arbitration machineries. As in all other contracts, the
parties in a CBA may establish such stipulations, clauses,
terms and conditions as they may deem convenient
provided they are not contrary to law, morals, good
customs, public order or public policy. [Manila Fashions v.
NLRC, 1996]
LABOR LAW BAR OPERATIONS COMMISSION
Test for Mandatory Bargainable Issues: NEXUS Between the
Nature of Employment and the Nature of the Demand. —
The “other terms and conditions of employment” to
become a mandatory bargainable issue must have a
connection between the proposal and the nature of the
work.
Importance of determining whether an issue is a mandatory
bargaining issue or only a permissive bargaining issue. —
"The question as to what are mandatory and what are
merely permissive subjects of collective bargaining is of
significance on the right of a party to insist on his position
to the point of stalemate. A party may refuse to enter into
a collective bargaining contract unless it includes a desired
provision as to a matter which is a mandatory subject of
collective bargaining. But a refusal to contract unless the
agreement covers a matter which is not a mandatory
subject is in substance a refusal to bargain about matters
which are mandatory subjects of collective bargaining; and
it is no answer to the charge of refusal to bargain in good
faith that the insistence on the disputed clause was not the
sole cause of the failure to agree or that agreement was
not reached with respect to other disputed clauses.”
[Samahang Manggagawa sa Top Form v. NLRC, 1998]
Such refusal will not be deemed as an unfair labor
practice. However, if a party refuses to contract based on
an issue which is not a mandatory bargainable issue, the
party will be guilty of ULP.
MANDATORY PROVISIONS OF CBA
General Concepts
Collective bargaining Agreement (CBA)
A collective bargaining agreement refers to the negotiated
contract between a legitimate labor organization and the
employer concerning wages, hours of work and all other
terms and conditions of employment in a bargaining unit,
including mandatory provisions for grievances and
arbitration machineries. [Book V Rule I Section 1(j)]
CBA impressed with public policy
A CBA, as a labor contract within the contemplation of
Article 1700 Civil Code 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. [Davao Integrated Port
Stevedoring Services v. Abarquez, 1993]
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. [Art. 1700, Civil Code]
Substandard CBA
A CBA that falls below the minimum standards required by
law is prohibited. Nonetheless, RA 9481 removed
substandard CBAs as a ground for the cancellation of
registration of union registration.
A substandard CBA cannot bar a petition for certification
election under the contract-bar rule.
Confidentiality of registered CBA or parts thereof
General rule: CBA is not confidential
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Exceptions:
(1) confidentiality authorized by Secretary of Labor
(2) when it is at issue in any judicial litigation
(3) public interest or national security requires [Art. 231]
Effect of unregistered CBA
An unregistered CBA is binding upon the parties but
cannot serve as a bar to a petition for certification election
under the contract-bar rule.
Beneficiaries of the CBA
The CBA benefits all workers in a collective bargaining
unit. When a collective bargaining contract is entered into
by the union representing the employees and the
employer, even the non-member employees are entitled to
the benefits of the contract. [New Pacific Timber and Supply
v. NLRC, 2000]
To accord its benefits only to members of the union
without any valid reason would constitute undue
discrimination against non-members.
Nature of Contract and Contract Interpretation
The terms and conditions of a collective bargaining
contract constitute the law between the parties. [Mactan
Workers Union vs. Aboitiz 1972]
Those who are entitled to its benefits can invoke its
provisions. In the event that an obligation therein imposed
is not fulfilled, the aggrieved party has the right to go to
court for redress. [Babcock-Hitachi (Phils.) v. Babcock-
Hitachi, 2005]
Contract Interpretation: Interpretation Tools
A CBA, just like any other contract, is respected as the law
between the contracting parties and compliance in good
faith is mandated. Similarly, the rules embodied in the Civil
Code [Art. 1700] on the proper interpretation of contracts
can very well govern.
GENERAL RULE: If the terms of the contract are clear, the
literal meaning of the stipulations shall control.
EXCEPTION: If the words appear to be contrary to the
evident intention of the parties, the latter shall prevail over
the former. [Kimberly Clark Phils. V. Lorredo, 1993]
Mandatory provisions
Grievance Procedure
The parties to a Collective Bargaining Agreement shall
include therein:
(2) Provisions that will ensure the mutual observance of its
terms and conditions.
(3) A machinery for the adjustment and resolution of
grievances arising from:
(g) the interpretation or implementation of their CBA;
and
(h) those arising from the interpretation or
enforcement of company personnel policies.
(4) All grievances submitted to the grievance machinery
which are not settled within 7 calendar days from the
date of its submission shall be automatically referred
to voluntary arbitration prescribed in the CBA. [Art.
260]
Grievances arising from the interpretation or
implementation of the CBA are subjects of the grievance
procedure. [Navarro III v. Damasco, 1995]
LABOR LAW BAR OPERATIONS COMMISSION
It should be remembered that a grievance procedure is
part of the continuous process of collective bargaining. It is
intended to promote a friendly dialogue between labor and
management as a means of maintaining industrial peace.
[Master Iron Labor Union v. NLRC, 1993]
No particular setup for a grievance machinery is required
by law. Art. 260 of, as incorporated by R.A. 6715, only
mandates that the parties to the CBA establish a
machinery to settle problems arising from "interpretation
or implementation of their collective bargaining
agreement and those arising from the interpretation or
enforcement of company personnel policies." [Caltex
Refinery Employees Association v. Brillantes, 1997]
Voluntary Arbitration
Constitutional basis. — The State shall promote the
principle of shared responsibility between workers and
employers and the preferential use of voluntary modes in
settling disputes, including conciliation, and shall enforce
their mutual compliance therewith to foster industrial
peace. [Art. XIII Section 3]
Automatic referral if grievance machinery fails.—All
grievances submitted to the grievance machinery which
are not settled within 7 calendar days from the date of its
submission shall automatically be referred to voluntary
arbitration prescribed in the CBA. [Art. 260 (3)]
Voluntary arbitration provision in the CBA.—
(1) Parties to a CBA shall:
(b) Name and designate in advance a Voluntary
Arbitrator or panel of Voluntary Arbitrators, OR
(c) Include in the agreement a procedure for the
selection of such Voluntary Arbitrator or panel of
Voluntary Arbitrators preferably from the listing of
qualified Voluntary Arbitrators duly accredited by
the Board.
(2) In case the parties fail to select a Voluntary Arbitrator
or panel of Voluntary Arbitrators, the Board shall
designate the Voluntary Arbitrator or panel of
Voluntary Arbitrators, as may be necessary, pursuant to
the selection Voluntary Arbitrator or panel of
8Arbitrators
0 procedure agreed upon in the CBA, which
shall act with the same force and effect as if the has
been selected by the parties as described above. [Art.
260]
Voluntary arbitration as a condition precedent. —The
stipulation to refer all future disputes to an arbitrator or to
submit an ongoing dispute to one is valid. Being part of a
contract between the parties, it is binding and enforceable
in court in case one of them neglects, fails or refuses to
arbitrate. Going a step further, in the event that they
declare their intention to refer their differences to
arbitration first before taking court action, this constitutes
a condition precedent, such that where a suit has been
instituted prematurely, the court shall suspend the same
and the parties shall be directed forthwith to proceed to
arbitration. A court action may likewise be proper where
the arbitrator has not been selected by the parties. [Chung
Fu Industries v. CA, 1992]
Arbitrable issues. —
(1) interpretation or implementation of the CBA [Art. 261]
(2) interpretation or enforcement of company personnel
policies [Art. 261]
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(3) gross violations of CBA provision [flagrant/malicious
refusal to comply with the economic provisions of the
CBA [Art. 261]
(4) all other labor disputes including ULP and bargaining
deadlock, if the parties agree [Art. 262]
Powers of the voluntary arbitrators.—
(1) hold hearings
(2) receive evidence
(3) take whatever action is necessary to resolve the issue or
issues subject of dispute, including efforts to effect a
voluntary settlement between parties
(4) determine attendance of any third parties
(5) determine exclusion of any witness
(6) issue writ of execution for sheriff of NLRC or regular
courts to execute the final decision, order, or award [Art
262-A]
Finality of the final decision, order, or award.— Award or
decision of the voluntary arbitrator shall be final and
executory after 10 days from receipt of the copy of the
award or decision by the parties. [Art 262-A]
No motion for reconsideration.— The voluntary arbitrator
lost jurisdiction over the case submitted to him the
moment he rendered his decision. Therefore, he could no
longer entertain a motion for reconsideration of the
decision for its reversal or modification. [Solidbank v. BLR]
Appeal.— While there is an express mode of appeal from
the decision of a labor arbiter, Republic Act No. 6715 is
silent with respect to an appeal from the decision of a
voluntary arbitrator.
Assuming arguendo that the voluntary arbitrator or the
panel of voluntary arbitrators may not strictly be
considered as a quasi-judicial agency, board or
commission, still both he and the panel are comprehended
within the concept of a "quasi-judicial instrumentality." A
fortiori, the decision or award of the voluntary arbitrator or
panel of arbitrators should likewise be appealable to the
Court of Appeals. [Luzon Development Bank v. Assoc of
Luzon Dev’t Employees, 1995]
Costs.— The parties to a Collective Bargaining Agreement
shall provide therein a proportionate sharing scheme on
the cost of the voluntary arbitration including the
Voluntary Arbitrators fee. [Art. 262-B]
Voluntary arbitrator's fee.— The fixing of the fee of the
Voluntary Arbitrators, whether shouldered wholly by the
parties or subsidized by the special voluntary arbitration
fund, shall take into account the following factors:
(1) nature of the case
(2) time consumed in hearing the case
(3) professional standing of the voluntary arbitrator
(4) capacity to pay of the parties.
No Strike-No Lockout Clause
A "no strike, no lock-out" provision in the CBA is a valid
stipulation although the clause may be invoked by an
employer only when the strike is economic in nature or one
which is conducted to force wage or other concessions
from the employer that are not mandated to be granted by
the law itself. It would be inapplicable to prevent a strike
which is grounded on unfair labor practice. [Panay Electric
Co. v. NLRC, 1995; Malayang Samahan ng mga
Manggagawa sa Greenfield v. Ramos , 2000]
LABOR LAW BAR OPERATIONS COMMISSION
Labor Management Council
The council is formed by workers and employers for the
purpose of the worker's participation 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 as guaranteed by
the constitution subject to the rules and regulations as the
Secretary of Labor and Employment may promulgate. The
representatives of the workers in such labor-management
councils shall be elected by at least the majority of all
employees in said establishment. [Art. 255]
Duration
Political Aspect [representation]: 5 years. This refers to the
identity and majority status of the collective bargaining
agent that negotiated the CBA.
Non-political aspect: 3 years. This refers to other provisions
in the CBA, economic or otherwise other than
representational or political.
Freedom period. .— No petition questioning the majority
status of the incumbent bargaining agent shall be
entertained and no certification election shall be
conducted by the DOLE outside of the sixty-day period
immediately before the date of the expiry of such five year
term of the Collective Bargaining Agreement. [Contract-
bar rule]
CBA Effectivity.—
(1) If it is the first ever CBA, the effectivity date is whatever
date the parties agree on.
(2) If it is renegotiated CBA, the effectivity date depends
upon the duration of conclusion.
(a) If it is concluded within 6 months from the expiry date,
the new CBA will retroact to the date following the
expiry date [Illustration: expiry date: December 13;
effectivity date: December 14].
(b) If the renegotiated CBA is concluded beyond 6 months
from the expiry date, the matter of retroaction and
effectivity is left with the parties.
Art. 253-A serves as the guide in determining when the
CBA at bar is to take effect. It provides that the
representation aspect of the CBA is to be for a term of 5
years. All other provisions of the CBA shall be renegotiated
not later than 3 years after its execution. Any agreement
on such other provision of the CBA entered into within 6
months from the date of expiry of the term of such other
provisions as fixed in such Collective Bargaining
Agreement shall retroact to the day immediately following
such date. If such agreement is entered into beyond 6
months, the parties shall agree on the duration of the
effectivity thereof. If no agreement is reached within 6
months from the expiry date of the 3 years that follow the
CBA execution, the law expressly gives the parties — not
anybody else — the discretion to fix the effectivity of the
agreement. The law does not specifically cover the
situation where 6 months have elapsed but no agreement
has been reached with respect to effectivity. In this
eventuality, any provision of law should then apply. [Manila
Electric Co. v. Quisumbing, 1999]
Hold Over Principle.—In the absence of a new CBA, the
parties must maintain the status quo and must continue in
full force and effect the terms and conditions of the
existing agreement during the sixty (60) day period and/or
until a new agreement is reached.
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In this manner, the law prevents the existence of a gap in
the relationship between the collective bargaining parties.
[Art. 253]
The last sentence of Article 253, which provides for
automatic renewal pertains only to the economic
provisions of the CBA, and does not include
representational aspect of the CBA. An existing CBA
cannot constitute a bar to a filing of petition for
certification election. When there is a representational
issue, the status quo provision insofar as the need to await
the creation of a new agreement will not apply. Otherwise,
it will create an absurd situation where the union members
will be forced to maintain membership by virtue of the
union security clause existing under the CBA and,
thereafter, support another union when filing a petition for
certification election. If we apply it, there will always be an
issue of disloyalty whenever the employees exercise their
right to self-organization. The holding of a certification
election is a statutory policy that should not be
circumvented, or compromised. [PICOP Resources, Inc. v.
Taneca et. al., 2010]
Arbitrated CBA.— In the absence of an agreement between
the parties, an arbitrated CBA takes on the nature of any
judicial or quasi-judicial award. It operates and may be
executed only prospectively unless there are legal
justifications for its retroactive application. [Manila Electric
Company vs. Quisumbing, 1999]
CBA in this case, on the other hand, is part of an arbitral
award. As such, it may be made retroactive to the date of
expiration of the previous agreement. Therefore, in the
absence of a specific provision of law prohibiting
retroactivity of the effectivity of arbitral awards issued by
the Secretary of Labor pursuant to Art. 263(g), the latter is
deemed vested with plenary and discretionary powers to
determine the effectivity thereof. [Manila Central Line Corp.
v. Manila Central Line Free Workers Union, 1998]
CBA and 3rd Party Applicability.— Labor contracts such as
employment contracts and CBAs are not enforceable
against a transferee of an enterprise, labor contracts being
in personam, is binding only between the parties. As a
general rule, there is no law requiring a bona fide
purchaser of the assets of an on-going concern to absorb
in its employ the employees of the latter. However,
although the purchaser of the assets or enterprise is not
legally bound to absorb in its employ the employees of the
seller of such assets or enterprise, the parties are liable to
the employees if the transaction between the parties is
colored or clothed with bad faith. [Sundowner Dev’t. Corp. v
Drilon, 1989]
General Rule: An innocent transferee of a business
establishment has no liability to the employees of the
transferor to continue employing them. Nor is the
transferee liable for past unfair labor practices of the
previous owner.
Exception:
(1) when the liability therefore is assumed by the new
employer under the contract of sale, or
(2) when liability arises because of the new owner's
participation in thwarting or defeating the rights of the
employees.
The most that the transferee may do, for reasons of public
policy and social justice, is to give preference to the
LABOR LAW BAR OPERATIONS COMMISSION
qualified separated employees in the filling of vacancies in
the facilities of the purchaser. [Manlimos v. NLRC, 1995]
UNION SECURITY
Union security is any form of agreement which imposes
upon employees the obligation to acquire or retain union
membership as a condition affecting employment. [GMC v.
Casio, 2010]
Legal basis
Nothing in this Code or in any other law shall stop the
parties from requiring membership in a recognized
collective bargaining agent as a condition for employment,
except those employees who are already members of
another union at the time of the signing of the collective
bargaining agreement. [Art. 248 (e)]
Purpose
To safeguard and ensure the existence of the union and
thus, promote unionism in general as a state policy.
Limitation to union security clauses
Employees who are already members of another union at
the time of the signing of the collective bargaining
agreement may not be compelled by any union security
clause to join any union. [Art. 248 (e)]
Types of union security clauses
(1) Closed shop
(2) Maintenance of membership shop
(3) Union shop
(4) Modified union shop
(5) Agency shop
Closed shop
A closed shop, on the other hand, may be defined as an
enterprise in which, by agreement between the employer
and his employees or their representatives, no person may
be employed in any or certain agreed departments of the
enterprise unless he or she is, becomes, and, for the
duration of the agreement, remains a member in good
standing of a union entirely comprised of or of which the
employees in interest are a part. [GMC v. Casio, 2010]
Only union members can be hired by the company and
they must remain as members to retain employment in the
company. [Azucena]
Due process in termination under closed shop provision. .—
The requirements laid down by the law in determining
whether or not an employee was validly terminated must
still be followed even if it is based on a closed-shop
provision of a CBA, i.e. the substantive as well as the
procedural due process requirements. [Del Monte v.
Saldivar, 2007]
The employer, however, is not bound to immediately
terminate the employment of a worker who has lost his
union membership pursuant to a union security clause in
the CBA. In General Milling Corp. v. Casio, 615 SCRA 13
(2010), the Supreme Court held that when asked by the
union to terminate an employee under the union security
clause of the CBA, the employer must conduct his own
“separate and independent investigation” to determine the
sufficiency of the evidence supporting the expulsion of the
employee. The employer cannot straight away accede to
the demand of the union to dismiss the employee.
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Construction. .— The closed shop provision is the most
prized achievement of unionism. However it can also be a
potent weapon wielded by the union against the workers
whom the union is supposed to protect in the first place.
Hence, any doubt as to the existence of a closed shop
provision in the CBA will be resolved in favor of the
nonexistence of the closed shop provision.
Maintenance of membership shop
There is maintenance of membership shop when
employees, who are union members as of the effective
date of the agreement, or who thereafter become
members, must maintain union membership as a
condition for continued employment until they are
promoted or transferred out of the bargaining unit or the
agreement is terminated. [GMC v. Casio, 2010]
No employee is compelled to join the union, but all present
or future must, as a condition of employment, remain in
good standing in the union. [Azucena]
Union shop
There is union shop when all new regular employees are
required to join the union within a certain period as a
condition for their continued employment. [GMC v. Casio,
2010]
Non-members may be hired, but to retain employment,
they must become union members after a certain period.
The requirement applies to present and future employees.
[Azucena]
Modified union shop
Employees who are not union members at the time of
signing the contract need not join the union, but all hired
workers thereafter must join. [Azucena]
Agency shop
An agreement whereby employees must either join the
union or pay to the union as exclusive bargaining agent a
sum equal to that paid by the members. [Azucena]
Check-off, Union dues, Agency fees
Please see previous
UNFAIR LABOR PRACTICE IN COLLECTIVE BARGAINING
Both employers and labor organizations can commit acts
of unfair labor practices in collective bargaining. However,
the labor organization must be the representative of the
employees before any act it does may be considered as a
violation of the duty to bargain collectively (ULP). [Art. 248
(g) and Art. 249 (c)]
Examples of ULP in collective bargaining
(1) bargaining in bad faith
(2) refusal to bargaining
(3) individual bargaining
(4) blue sky bargaining
(5) surface bargaining
Bargaining in bad faith
GMC’s refusal to make a counter-proposal to the union’s
proposal for CBA negotiation on the excuse that it felt the
union no longer represented the workers is an indication of
bad faith. xxx Failing to comply with the mandatory
obligation to submit a reply to the union’s proposals, GMC
violated its duty to bargain collectively, making it liable for
unfair labor practice. [GMC v. CA, 2004]
LABOR LAW BAR OPERATIONS COMMISSION
Refusal to bargain
Implied refusal. The school is guilty of unfair labor practice
when it failed to make a timely reply to the proposals of
the union more than one month after the same were
submitted by the union. In explaining its failure to reply,
the school merely offered a feeble excuse that its Board of
Trustees had not yet convened to discuss the matter.
Clearly, its actuation showed a lack of sincere desire to
negotiate. [Colegio de San Juan de Letran v. Association ,
2000]
Individual bargaining
It is an unfair labor practice for an employer operating
under a CBA to negotiate with his employees individually.
That constitutes interference because the company is still
under obligation to bargain with the union as the
bargaining representative. [The Insular Life Assurance Co.
Ltd., Employees Assn. v. Insular Life Assurance Co. Ltd, 1971]
Individual bargaining contemplates a situation where the
employer bargains with the union through the employees
instead of the employees through the union.
Blue sky bargaining
Blue-Sky Bargaining is defined as "unrealistic and
unreasonable demands in negotiations by either or both
labor and management, where neither concedes anything
and demands the impossible." It actually is not collective
bargaining at all.
Source: Harold S. Roberts, Robert’s Dictionary of Industrial
Relations [Revised Edition, 1971, p. 51] – footnote in
[Standard Bank Chartered Employees Union v. Confesor,
2004]
Surface bargaining
Surface bargaining is defined as "going through the
motions of negotiating," without any real intent to reach an
agreement. It violates the Act's requirement that parties
negotiate in "good faith." It is prohibited because, as one
commentator explained: The bargaining status of a union
can be destroyed by going through the motions of
negotiating almost as easily as by bluntly withholding
recognition… As long as there are unions weak enough to
be talked to death, there will be employers who are
tempted to engage in the forms of collective bargaining
without the substance. [K-MART Corporation v NLRB, 1980
626 F.2d 704]
UNFAIR LABOR PRACTICE (ULP)
Unfair labor practices violate the constitutional right of
workers and employees to self-organization. [Art. 247]
Definition
Unfair labor practice refers to acts that violate the workers’
right to organize. The prohibited acts are related to the
workers’ right to self-organization and to the observance of
a CBA. Without that element, the acts, no matter how
unfair, are not unfair labor practices. The only exception is
Art. 248 (f) (i.e. to dismiss, discharge or otherwise prejudice
or discriminate against an employee for having given or
being about to give testimony under this Code). [Philcom
Employees Union v. Phil. Global, 2006]
Nature of ULP
(1) inimical to the legitimate interests of both labor and
management, including their right to bargain
collectively and otherwise deal with each other in an
atmosphere of freedom and mutual respect
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(2) disrupt industrial peace
(3) hinder the promotion of healthy and stable labor-
management relations
(4) violations of the civil rights of both labor and
management but are also criminal offenses [Art. 247]
Purpose of the policy against ULPs
Protection of right to self-organization and/or collective
bargaining:
(1) The employee is not only protected from the employer
but also from labor organizations.
(2) Employer is also protected from ULP committed by a
labor organization.
(3) The public is also protected because it has an interest
in continuing industrial peace.
Employer-employee relationship required; exception
An unfair labor practice may be committed only within the
context of an employer-employee relationship [American
President Lines v. Clave, 1982]
Exception: “yellow dog” condition: to require as a condition
of employment that a person or an employee shall not join
a labor organization or shall withdraw from one to which
he belongs. [Art 248 (b)]
Parties not estopped from raising ULP by eventual signing of
the CBA
The eventual signing of the CBA does not operate to estop
the parties from raising unfair labor practice charges
against each other. [Standard Chartered Bank Union v.
Confesor, 2004]
ULP: Statutory Construction
The Labor Code does not undertake the impossible task of
specifying in precise and unmistakable language each
incident which constitutes an unfair labor practice. Rather,
it leaves to the court the work of applying the law's general
prohibitory language in light of infinite combinations of
events which may be charged as violative of its terms.
[HSBC Employee Union V. NLRC , 1997]
ULP of Employers
(1) Interference, restraint, and coercion
(2) Yellow-dog contracts
(3) Contracting out
(4) Company union
(5) Discrimination
(6) Testimony
(7) Violation of duty to bargain collectively
(8) Payment of negotiation or attorney's fees
(9) Violation of the CBA
Legal basis [Art. 248]
Unfair labor practices of employers. – It shall be unlawful
for an employer to commit any of the following unfair labor
practice:
(a) To interfere with, restrain or coerce employees in the
exercise of their right to self-organization;
(b) To require as a condition of employment that a person
or an employee shall not join a labor organization or
shall with-draw from one to which he belongs;
(c) To contract out services or functions being performed
by union members when such will interfere with,
restrain or coerce employees in the exercise of their
rights to self-organization;
(d) To initiate, dominate, assist or otherwise interfere with
the formation or administration of any labor
LABOR LAW BAR OPERATIONS COMMISSION
organization, including the giving of financial or other
support to it or its organizers or supporters;
(e) To discriminate in regard to wages, hours of work and
other terms and conditions of employment in order to
encourage or discourage membership in any labor
organization. Nothing in this Code or in any other law
shall stop the parties from requiring membership in a
recognized collective bargaining agent as a condition
for employment, except those employees who are
already members of another union at the time of the
signing of the collective bargaining agreement.
Employees of an appropriate bargaining unit who are
not members of the recognized collective bargaining
agent may be assessed a reasonable fee equivalent to
the dues and other fees paid by members of the
recognized collective bargaining agent, if such non-
union members accept the benefits under the
collective bargaining agreement: Provided, that the
individual authorization required under Article 242,
paragraph (o) of this Code shall not apply to the non-
members of the recognized collective bargaining
agent.
(f) To dismiss, discharge or otherwise prejudice or
discriminate against an employee for having given or
being about to give testimony under this Code;
(g) To violate the duty to bargain collectively as prescribed
by this Code;
(h) To pay negotiation or attorney’s fees to the union or its
officers or agents as part of the settlement of any issue
in collective bargaining or any other dispute; or
(i) To violate a collective bargaining agreement.
The provisions of the preceding paragraph
notwithstanding, only the officers and agents of
corporations, associations or partnerships who have
actually participated in, authorized or ratified unfair labor
practices shall be held criminally liable. [Art. 248]
Interference/ Restraint/ Coercion
The act of ULP must interfere with, restrain or coerce
employees in the exercise of their right to self-organization.
Interrogation.—
General rule: employer may interrogate its employees
regarding their union affiliation for legitimate purposes
and with the assurance that no reprisals would be taken
against the unionists.
Exception: when interrogation interferes with or restrains
employees' right to self-organization. [Phil. Steam
Navigation Co. v. Phil. Marine Officer’s Guild, 1965]
Speech.— The subjection by the company of union to
vilification and its participation in soliciting membership
for a competing union is also ULP act. [Phil. Steam
Navigation Co. v. Phil. Marine Officer’s Guild, 1965]
Employer may not send letters containing promises or
benefits, nor of threats of obtaining replacements to
individual workers while the employees are on strike due to
a bargaining deadlock. This is tantamount to interference
and is not protected by the Constitution as free speech.
[Insular Life Assurance Co. Employees Assn. v. Insular Life
Assurance Co. Ltd, 1971]
Espionage.— Espionage and/or surveillance by the
employer of union activities are instances of interference,
restraint or coercion of employees in connection with their
right to organize, form and join unions as to constitute
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unfair labor practice. xxx The information obtained by
means of espionage is invaluable to the employer and can
be used in a variety of cases to break a union. [Insular Life
Assurance Co. Employees Assn. v. Insular Life Assurance Co.
Ltd, 1971]
Yellow dog contracts
Yellow dog contracts require as a condition of employment
that a person or an employee shall not join a labor
organization or shall withdraw from one to which he
belongs.
Examples.—
(a) a representation by the employee that he is not a
member of a labor organization
(b) a promise by the employee that he will not join a union
(c) a promise by the employee that upon joining a labor
organization, he will quit his employment
Contracting out
General rule: contracting out is not ULP
Exception:
(1) contracted-out services or functions are performed by
union members AND
(2) contracting out will interfere with, restrain, or coerce
employees in the exercise of their right to self-
organization. [Art. 248 (c)]
Company union
"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. [Art.
212(i)]
The employer commits ULP if it initiates, dominates, or
otherwise interferes with the formation or administration of
any labor organization.
Example: giving out financial aid to any union's supporters
or organizers.
Discrimination – Encourage/Discourage Unionism
General rule: it is ULP to discriminate in regard to wages,
hours of work and other terms and conditions of
employment in order to encourage or discourage
membership in any labor organization.
Exception [union security clause]: Nothing in this Code or
in any other law shall stop the parties from requiring
membership in a recognized collective bargaining agent as
a condition for employment.
Exception to exception: Those employees who are already
members of another union at the time of the signing of the
collective bargaining agreement. [Art. 248 (e)]
Refer to Union Security Clauses
Testimony
It is an act of ULP by an employer to dismiss, discharge or
otherwise prejudice or discriminate against an employee
for having given or being about to give testimony under
this Code [Art. 248 (f)]
Violate duty to bargain collectively
Please refer to section on Unfair Labor Practice In Collective
Bargaining for some examples.
LABOR LAW BAR OPERATIONS COMMISSION
Payment of negotiation or attorney's fees
Sweetheart contracts
Sweetheart contracts are favorable both to the union and
the employer at the expense of the employees. The
settlement of bargaining issues must be made by fair
bargaining in good faith, and not through the payment of
negotiation or attorney's fees which will ultimately lead to
sweetheart contracts.
To violate a collective bargaining agreement
Flagrant and/or malicious refusal required
Violations of collective bargaining agreements, except
flagrant and/or malicious refusal to comply with its
economic provisions, shall not be considered unfair labor
practice and shall not be strikeable. [IRR]
ULP of Labor Organizations
(1) restraint, coercion
(2) discrimination
(3) violation of duty to bargain collectively
(4) featherbedding [exaction]
(5) asking or accepting negotiation or attorney's fees
(6) violation of collective bargaining agreement
Legal basis
Unfair labor practices of labor organizations. - It shall be
unfair labor practice for a labor organization, its officers,
agents or representatives:
(a) To restrain or coerce employees in the exercise of their
right to self- organization. However, a labor
organization shall have the right to prescribe its own
rules with respect to the acquisition or retention of
membership;
(b) To cause or attempt to cause an employer to
discriminate against an employee, including
discrimination against an employee with respect to
whom membership in such organization has been
denied or to terminate an employee on any ground
other than the usual terms and conditions under which
membership or continuation of membership is made
available to other members;
(c) To violate the duty, or refuse to bargain collectively
with the employer, provided it is the representative of
the employees;
(d) To cause or attempt to cause an employer to pay or
deliver or agree to pay or deliver any money or other
things of value, in the nature of an exaction, for services
which are not performed or not to be performed,
including the demand for fee for union negotiations;
(e) To ask for or accept negotiation or attorney’s fees from
employers as part of the settlement of any issue in
collective bargaining or any other dispute; or
(f) To violate a collective bargaining agreement.
The provisions of the preceding paragraph
notwithstanding, only the officers, members of governing
boards, representatives or agents or members of labor
associations or organizations who have actually
participated in, authorized or ratified unfair labor practices
shall be held criminally liable. [Art. 249]
Restraint, or coercion
“Interfere” is not included in Art. 249 simply because any
act of a labor organization amounts to interference to the
right of self-organization.
Discrimination Encourage/Discourage Unionism
General rule: it is ULP for a labor organization to cause an
employer to discriminate against an employee
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Exception: provisions of a valid union security clause and
other company policies applicable to all employees.
Violate duty to bargain or the CBA
Please refer to section of ULP for some examples.
Exaction (Featherbedding)
Featherbedding or “make-work” by the union is the
practice of the union asking [exacting] for money or other
things of value from the employer in return for services
which are not performed or are not to be performed.
Asking or accepting negotiation and other attorney's fees
See counterpart in ULP by employers (sweetheart
contracts).
Violate a collective bargaining agreement
Flagrant and/or malicious refusal required
Violations of collective bargaining agreements, except
flagrant and/or malicious refusal to comply with its
economic provisions, shall not be considered unfair labor
practice and shall not be strikeable. [IRR]
RIGHT TO PEACEFUL CONCERTED ACTIVITIES
A concerted activity is one undertaken by two or more
employees to improve their terms and conditions of work.
CONSTITUTIONAL BASIS
The state shall guarantee the rights of all workers to xxx
peaceful concerted activities, including the right to strike in
accordance with law. [Art. XIII Section 3]
STATUTORY BASIS
Workers shall have the right to engage in concerted
activities for purposes of collective bargaining or for their
mutual benefit and protection. The right of legitimate
labor organizations to strike and picket and of employers
to lockout, consistent with the national interest, shall
continue to be recognized and respected. However, no
labor union may strike and no employer may declare a
lockout on grounds involving inter-union and intra-union
disputes. [Art. 263]
Right to self-organization includes the right to engage in
lawful concerted activities and may not be abridged
It shall be unlawful for any person to restrain, coerce,
discriminate against or unduly interfere with employees
and workers in their exercise of the right to self-
organization. Such right shall include the right to form,
join, or assist labor organizations for the purpose of
collective bargaining through representatives of their own
choosing and to engage in lawful concerted activities for
the same purpose or for their mutual aid and protection,
subject to the provisions of Article 264 of this Code. [Art.
246]
Reason why concerted activities, particularly strikes, must be
in accordance with law
The strike is a powerful weapon of the working class.
Precisely because of this, it must be handled carefully, like
a sensitive explosive, lest it blow up in the workers’ own
hands. Thus, it must be declared only after the most
thoughtful consultation among them, conducted in the
only way allowed, that is, peacefully, and in every case
conformably to reasonable regulation. Any violation of the
legal requirements and strictures will render the strike
illegal, to the detriment of the very workers it is supposed
LABOR LAW BAR OPERATIONS COMMISSION
to protect. [Batangas Laguna Tayabas Bus Co. v NLRC, G.R.
No. 101858, Aug. 21, 1992]
FORMS OF CONCERTED ACTIVITIES
(a) Strike
(b) Picketing
Employer's economic weapon
(1) Lockout
Strike
A strike is any temporary stoppage of work by the
concerted action of employees as a result of an industrial
or labor dispute. [Art. 212 (o)]
Strikes not limited to work stoppages
The term “strike” shall comprise not only concerted work
stoppages, but also slowdowns, mass leaves, sit-downs,
attempts to damage, destroy or sabotage plant equipment
and facilities, and similar activities. [Samahang
Manggagawa v. Sulpicio Lines, 2004]
As coercive measure by employees
A strike is a coercive measure resorted to by laborers to
enforce their demands. The idea behind a strike is that a
company engaged in a profitable business cannot afford to
have its production or activities interrupted, much less,
paralyzed. [Phil. Can Co. v. CIR, 1950]
No severance of employer-employee relationship during
lawful strike
Although during a strike the worker renders no work or
service and receives no compensation, yet his relationship
as an employee with his employer is not severed or
dissolved. [Elizalde Rope Factory, Inc. v. SSS, 1972]
Payment of wages during lawful strikes
General rule: Striking employees are not entitled to the
payment of wages for un-worked days during the period of
the strike pursuant to the “no work-no pay” principle.
Exception: Agreement to the contrary.
Reinstatement after a lawful strike
When strikers abandon the strike and apply for
reinstatement despite the existence of valid grounds but
the employer either:
(a) refuses to reinstate them or
(b) imposes upon their reinstatement new conditions
then the employer commits an act of ULP.
The strikers who refuse to accept the new conditions and
are consequently refused reinstatement are entitled to the
losses of pay they may have suffered by reason of the
employer’s discriminatory acts from the time they were
refused reinstatement.
Forms of strikes
As to legality
(a) Legal strike – one called for a valid purpose and
conducted through means allowed by law.
(b) Illegal strike – one staged for a purpose not recognized
by law, or if for a valid purpose, conducted through
means not sanctioned by law.
As to grounds
(a) Economic strike – one staged by workers to force wage
or other economic concessions from the employer
which he is not required by law to grant [Consolidated
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Labor Association of the Phil. v. Marsman and Company
1964]
(b) ULP strike – called against a company's unfair labor
practice to force the employer to desist from
committing such practices.
As to how committed
(a) Slowdown strike – one by which workers, without a
complete stoppage of work, retard production or their
performance of duties and functions to compel
management to grant their demands [Ilaw at Buklod ng
Manggagawa v. NLRC, 1991]
A slowdown is inherently illicit and unjustifiable
because while the employees continue to work, they, at
the same time, select what part of their duties they
perform. In essence, they work on their own terms. [Ilaw
at Buklod ng Manggagawa (IBM) v. NLRC, 1991]
(b) Wild-cat strike – one declared and staged without filing
the required notice of strike and without the majority
approval of the recognized bargaining agent.
(c) Sit-down strike – one wherein workers take over
possession of the property of such business to cease
production and to refuse access to owners.
(d) Sympathetic strike– one in which the striking workers
have no demands of their own, but strike to make
common cause with other strikers in other
establishments.
Conversion from economic to ULP strike
It is possible for a strike to change its character from an
economic to a ULP strike. In the instant case, initially, the
strike staged by the Union was meant to compel the
Company to grant it certain economic benefits set forth in
its proposal for collective bargaining. However, the strike
changed its character from the time the Company refused
to reinstate complainants because of their union activities
after it had offered to admit all the strikers and in fact did
readmit the others. It was then converted into an unfair
labor practice strike. [Consolidated Labor Assoc. of the Phil.
v. Marsman and Company, 1964]
Strike cannot be converted to a lockout by a return to work
offer
A strike cannot be converted into a pure and simple
lockout by the mere expedient filing before the trial court a
notice of offer to return to work during the pendency of the
labor dispute between the union and the employer. [Rizal
Cement Workers Union v. CIR, 1962]
Picketing
Picketing is the right of workers to peacefully march to and
fro before an establishment involved in a labor dispute
generally accompanied by the carrying and display of
signs, placards and banners intended to inform the public
about the dispute. [NCMB Manual, Sec. 1]
Legal basis
The right of legitimate labor organizations to strike and
picket and of employers to lockout, consistent with the
national interest, shall continue to be recognized and
respected. [Art 263 (b)]
WHO MAY DECLARE A STRIKE OR LOCKOUT
Who may declare a strike [Book V, Rule XXII, Sec. 6]
(1) certified or duly recognized bargaining representative
LABOR LAW BAR OPERATIONS COMMISSION
(2) any legitimate labor organization in the absence of #1,
but only on grounds of ULP 95
Who may declare a lockout [Book V, Rule XXII, Sec. 6]
(1) employer
REQUISITES OF A VALID STRIKE
A valid strike must have a lawful ground and must conform
to the procedural requirements set by law.
Grounds [Art. 263 (c)]
A strike or lockout may be declared in cases of:
(a) Bargaining deadlocks
(b) ULP
When violations of collective bargaining strikeable as ULP
Violations of collective bargaining agreements must be
flagrant and/or there must be malicious refusal to comply
with its economic provisions.
When no lawful strike can be declared
(1) Ground is an inter-union or intra-union dispute
(2) No notice of strike
(3) No lock-out vote obtained and reported to the NCMB
(4) After assumption or certification by the Secretary of
Labor
Procedural requirements
(1) Effort to bargain
(2) Filing and service of notice of strike
(3) Observance of cooling-off period
(4) Strike vote
(5) Strike vote report
(6) Observance of the waiting period
Effort to bargain
No labor organization or employer shall declare a strike or
lockout without first having bargained collectively in
accordance with Title VII of this Book. [Art. 264 (a)]
Filing and service of notice of strike
Bargaining deadlocks.— The duly certified or recognized
bargaining agent may file a notice of strike or the employer
may file a notice of lockout with the Department at least
30 days before the intended date thereof. [Art. 263(c)]
Unfair labor practice; union busting.—In cases of unfair
labor practice, the period to file notice of strike shall be 15
days. However, in cases of union busting [dismissal of duly
elected union officers from employment], the cooling
period shall not apply. [Art. 263 (c)]
Note: the notice must be served to the employer. Failure to
do so will constitute noncompliance with the procedural
requirements and will result to an illegal strike. Rationale:
due process. [IRR]
Contents of notice of strike [Book V Rule XXII Sec. 8]. –
(1) Names and addresses of the employer and the union
involved
(2) Nature of the industry to which the employer belongs
(3) Number of union members and of workers in the
bargaining unit
(4) Such other relevant data as may facilitate the
settlement of the dispute.
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Additional Requirements. –
In cases of bargaining deadlocks
(1) Statement of Unresolved issues in the bargaining
negotiations
(2) Written Proposals of the union
(3) Counterproposals of the employer
(4) Proof of a request for conference to settle the
differences.
In cases of ULP. –
(1) Statement of Acts complained of
(2) Efforts taken to resolve the dispute amicably.
Action on notice [Book V Rule XXII Sec. 9]
(a) Upon receipt of a valid notice of strike or lockout, the
NCMB, through its Conciliator-Mediators, shall call the
parties to a conference the soonest possible time in
order to actively assist them to explore all possibilities
for amicable settlement.
(b) The Conciliator-Mediator may suggest/offer proposals
as an alternative avenue for the resolution of their
disagreement/conflict which may not necessarily bind
the parties.
(c) If conciliation/mediation fails, the parties shall be
encouraged to submit their dispute for voluntary
arbitration.
Observance of cooling-off periods
Cooling off periods
(1) bargaining deadlock – 30 days
(2) ULP but not union busting – 15 days
(3) ULP and union busting – no cooling-off period
Purpose of cooling-off period.— During the cooling-off
period, it shall be the duty of the Ministry to exert all efforts
at mediation and conciliation to effect a voluntary
settlement. Should the dispute remain unsettled until the
lapse of the requisite number of days from the mandatory
filing of the notice, the labor union may strike or the
employer may declare a lockout. [Art. 263(e)]
The purpose of the cooling-off period is to provide an
opportunity for mediation and conciliation. [National
Federation of Sugar Workers vs. Ovejera, 1982]
Strike vote [Art. 263 (f)]
Requirements for a declaration of a strike in a strike vote.—
(1) approval by a majority of the total union membership
in the ABU
(2) approval is obtained by secret ballot in a
meeting/referendum called for the purpose
Duration of the validity of the strike-vote.—The decision
shall be valid for the duration of the dispute based on
substantially the same grounds considered when the strike
or lockout vote was taken.
Department of Labor and Employment intervention.—The
Department may, at its own initiative or upon the request
of any affected party, supervise the conduct of the secret
balloting.
Strike Vote Report [Art. 263(f)]
In every case, the union or the employer shall furnish the
Department the results of the voting at least 7 days before
the intended strike or lockout, subject to the cooling-off
period herein provided.
LABOR LAW BAR OPERATIONS COMMISSION
Observance of the waiting period
The waiting period, on the other hand, is intended to
provide opportunity for the members of the union or the
management to take the appropriate remedy in case the
strike or lockout vote report is false or inaccurate. [National
Federation of Sugar Workers vs. Ovejera, 1982]
Compliance with both cooling-off and waiting periods;
rationale. – The observance of both periods must be
complied with, although a labor union may take a strike
vote and report the same within the statutory cooling-off
period. The cooling-off and 7-day strike ban provisions of
law constitute a valid exercise of police power of the State.
[National Federation of Sugar Workers vs. Ovejera, 1982]
Strike-vote reported within the cooling-off period. – When the
strike-vote is reported within the cooling-off period, the
phrase “at least 7 days before the intended strike or
lockout, subject to the cooling-off period herein provided.”
in Article 263 (f) admits two interpretations:
(1) Mutually exclusive periods [used in the NCMB Manual].
The cooling off period and the 7-day period are
mutually exclusive. Thus, in the case of Capitol Medical
Center v. NLRC, the Court held that when the strike
vote is conducted within the cooling-off period, the 7-
day requirement shall be counted from the day
following the expiration of the cooling off period.
(2) Coexistent periods. The cooling-off period and the 7-
day requirement may coexist. After all, the purpose of
the 7-day requirement is to give time for the DOLE to
verify if the projected strike is supported by the
majority. There is no reason to add it to the cooling-off
period.
REQUISITES OF A VALID LOCKOUT
Lockout by the employer
Lockout is the temporary refusal of an employer to furnish
work as a result of an industrial or labor dispute. [Art.
212(p)]
No lockout based on intra or inter union disputes
No labor union may strike and no employer may declare a
lockout on grounds involving inter-union and intra-union
disputes. [Art. 263 (b)]
Grounds
Similar to a strike, the proper grounds for a lockout are
(1) bargaining deadlock
(2) ULP by labor organizations
Requisites
(a) Effort to bargain
(b) Filing and service of notice of lockout
(c) Observance of cooling-off period
(d) Lockout vote
(e) Report of lockout vote
(f) Observance of the waiting period
Effort to bargain
No labor organization or employer shall declare a strike or
lockout without first having bargained collectively in
accordance with Title VII of this Book. [Art. 264 (a)]
Filing and service of notice of lockout
Bargaining deadlock
The notice of lockout may be filed by the employer at least
30 days before the intended date thereof. [Art. 263(c)]
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ULP.—In cases of unfair labor practice, the period of notice
shall be 15 days. [Art. 263(c)]
Note: the notice must be served to the employees through
the representative union.
Contents of notice.—
(a) Names and addresses of the employer and the union
involved
(b) Nature of the industry to which the employer belongs
(c) Number of union members and of workers in the
bargaining unit
(d) Such other relevant data as may facilitate the
settlement of the dispute.
Additional Requirements.—
In cases of bargaining deadlocks
(1) Statement of unresolved issues in the bargaining
negotiations
(2) Written proposals of the union
(3) Counterproposals of the employer
(4) Proof of a request for conference to settle the
differences.
In cases of ULP
(1) Statement of acts complained of
(2) Efforts taken to resolve the dispute amicably.
Action on notice.—
(a) Upon receipt of a valid notice of strike or lockout, the
NCMB, through its Conciliator-Mediators, shall call the
parties to a conference the soonest possible time in
order to actively assist them to explore all possibilities
for amicable settlement.
(b) The Conciliator-Mediator may suggest/offer proposals
as an alternative avenue for the resolution of their
disagreement/conflict which may not necessarily bind
the parties.
(c) If conciliation/mediation fails, the parties shall be
encouraged to submit their dispute for voluntary
arbitration. [Book V Rule XXII Sec. 9]
Observance of cooling-off periods
Lockout cooling-off periods:
(a) based on bargaining deadlock – 30 days
(b) based on ULP – 15 days
Lockout vote
A decision to declare a lockout must be approved by a
majority of the board of directors of the corporation or
association or of the partners in a partnership, obtained by
secret ballot in a meeting called for that purpose. [Art.
263(f)]
Duration of the validity of the lockout vote.—The decision
shall be valid for the duration of the dispute based on
substantially the same grounds considered when the strike
or lockout vote was taken. [Art. 263(f)]
Report of lockout vote
In every case, the union or the employer shall furnish the
Ministry the results of the voting at least seven days before
the intended strike or lockout, subject to the cooling-off
period herein provided. [Art. 263(f)]
Observance of waiting period (7 days)
See notes under strike.
LABOR LAW BAR OPERATIONS COMMISSION
Effect of Illegal Lockout.—Any worker whose employment
has been terminated as a consequence of any unlawful
lockout shall be entitled to reinstatement with full
backwages. [Art. 264 (a), par. 3, 1st sentence]
REQUISITES FOR LAWFUL PICKETING
Prohibited activities in picketing [Art. 264]
(1) By any person. No person shall obstruct, impede, or
interfere with, by force, violence, coercion, threats or
intimidation, any peaceful picketing by employees
during any labor controversy or in the exercise of the
right to self-organization or collective bargaining, or
shall aid or abet such obstruction or interference. [Art.
264 (b)]
(2) By police force. The police force shall keep out of the
picket lines unless actual violence or other criminal
acts occur therein: Provided, That nothing herein shall
be interpreted to prevent any public officer from taking
any measure necessary to maintain peace and order,
protect life and property, and/or enforce the law and
legal order. [Art. 264 (d)]
(3) By person engaged in picketing. No person engaged in
picketing shall commit any act of violence, coercion or
intimidation or obstruct the free ingress to or egress
from the employer’s premises for lawful purposes, or
obstruct public thoroughfares. [Art. 264 (e)]
Picketing as part of freedom of speech/expression;
limitations
General rule: picketing enjoys constitutional protection as
part of freedom of speech and/or expression.
Exceptions/limitations:
(1) when picketing is coercive rather than persuasive
[Security Bank Employees Union v. Security Bank]
(2) when picketing is achieved through illegal means
[Mortera v. CIR]
(3) courts may confine the communication/demonstration
to the parties to the labor dispute [PCIB v. Philnabank
Employees Association]
(4) Innocent bystander rule. Courts may insulate
establishments or persons with no industrial
connection or having interest totally foreign to the
context of the dispute [PCIB v. Philnabank Employees
Association]
Innocent bystander rule; test
An "innocent bystander," who seeks to enjoin a labor strike,
must satisfy the court that aside from the grounds
specified in Rule 58 of the Rules of Court, it is entirely
different from, without any connection whatsoever to,
either party to the dispute and, its interests are totally
foreign to the context thereof. [MSF Tire and Rubber Inc. v.
CA, 1999]
Picketing and libel
Libel laws are not applied strictly considering that there is
emotional tension in the picket lines and expected
discourteous and impolite exchanges between the
employees and the employer. [PCIB v. Philnabank
Employees Association, 1981]
Peaceful picketing is legal even in the absence of employer-
employee relationship
Picketing, peacefully carried out, is not illegal even in the
absence of employer-employee relationship, for peaceful
picketing is a part of the freedom of speech guaranteed by
the Constitution. [De Leon v. National Labor Union, 1957]
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ASSUMPTION OF JURISDICTION BY THE DOLE SECRETARY OR
CERTIFICATION OF THE LABOR DISPUTE TO THE NLRC FOR
COMPULSORY ARBITRATION
Conditions for the assumption/certification powers
(1) labor dispute in an industry indispensable to the
national interest
(2) such dispute is causing or is likely to cause a strike or
lockout
Powers of the Secretary of Labor (alternative)
(1) Assumption of jurisdiction. The Secretary of Labor will
decide the labor dispute himself/herself.
(2) Certification for compulsory arbitration. The Secretary of
Labor will certify the labor dispute to the NLRC for
compulsory arbitration.
Powers of the President (not precluded by the powers of the
Secretary of Labor)
(1) determine the industries indispensable to the national
interest
(2) assume jurisdiction over any such labor dispute to
settle or terminate such dispute
Who determines industries indispensable to the national
interest
It is in the discretion of the Secretary of Labor to determine
which industries are indispensable to the national interest.
However, the President may determine such industries
himself:
The foregoing notwithstanding, the President of the
Philippines shall not be precluded from determining the
industries that, in his opinion, are indispensable to the
national interest, and from intervening at any time and
assuming jurisdiction over any such labor dispute in order
to settle or terminate the same. [Art. 263 (g), last sentence]
NATURE OF ASSUMPTION ORDER OR CERTIFICATION ORDER
(1) Automatic injunction
(2) Return-to-work and admission
(3) Immediately executory
Automatic injunction of intended of impending strike or
lockout
Such assumption or certification shall have the effect of
automatically enjoining the intended or impending strike
or lockout as specified in the assumption or certification
nd
order. [Art. 263 (g), 2 sentence]
Return-to-work and readmission if strike or lockout has
already taken place
If one has already taken place at the time of assumption or
certification, all striking or locked out employees shall
immediately return-to-work and the employer shall
immediately resume operations and readmit all workers
under the same terms and conditions prevailing before the
rd
strike or lockout. [Art. 263 (g), 3 sentence]
Nature of return-to-work order
It is also important to emphasize that the return-to-work
order not so much confers a right as it imposes a duty; and
while as a right it may be waived, it must be discharged as
a duty even against the worker's will. Returning to work in
this situation is not a matter of option or voluntariness but
of obligation. The worker must return to his job together
with his co-workers so the operations of the company can
be resumed and it can continue serving the public and
promoting its interest. That is the real reason such return
can be compelled. So imperative is the order in fact that it
LABOR LAW BAR OPERATIONS COMMISSION
is not even considered violative of the right against
involuntary servitude. [Kaisahan ng Mga Manggagawa sa
Kahoy v. Gotamco Sawmills, 1948]
Immediately executory
The assumption and certification orders are executory in
character and must be strictly complied with by the
parties. [Allied Banking v. NLRC, 1996]
Strikes and lockouts in hospitals, clinics and similar medical
institutions [Art. 263 (g)]
Skeletal workforce requirement
It shall be the duty of the striking union or locking-out
employer to provide and maintain an effective skeletal
workforce of medical and other health personnel, whose
movement and services shall be unhampered and
unrestricted, as are necessary to insure the proper and
adequate protection of the life and health of its patients,
most especially emergency cases, for the duration of the
strike or lockout.
Immediate assumption/certification by the Secretary of Labor
In such cases, therefore, the Secretary of Labor and
Employment may immediately assume, within twenty four
(24) hours from knowledge of the occurrence of such a
strike or lockout, jurisdiction over the same or certify it to
the Commission for compulsory arbitration.
Rationale
Highest respect accorded to the right of patients to life and
health.
EFFECT OF DEFIANCE OF ASSUMPTION OR CERTIFICATION ORDERS
Defiance results in a prohibited activity under Art. 264
No strike or lockout shall be declared after assumption of
jurisdiction by the President or the Minister or after
certification or submission of the dispute to compulsory or
voluntary arbitration or during the pendency of cases
involving the same grounds for the strike or lockout. [Art.
264]
Strike/lockout becomes illegal
A strike undertaken despite the issuance by the Secretary
of Labor of an assumption or certification order becomes a
prohibited activity and thus, illegal, pursuant to Article 264
(a) of the Labor Code. [Allied Banking v. NLRC, 1996]
See notes on liabilities of employer, union officers, and
ordinary workers under illegal strike.
Summary of liabilities of participants in an illegal
strike/lockout [Art. 264]
Employer in an illegal lockout – workers terminated due to
illegal lockout shall be entitled to reinstatement plus full
backwages.
Union officers who participated in illegal strike – deemed to
have lost their employment
Union officers who participated in illegal acts during a lawful
strike – deemed to have lost their employment.
Ordinary workers – deemed to have lost their employment
only if they participated in illegal acts.
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Stricter penalties for non-compliance with orders,
prohibitions, and/or injunctions issued by the Secretary of
Labor in strikes involving hospitals, clinics, and similar
medical institutions
(1) immediate disciplinary action against both union and
employer
(2) dismissal/loss of employment for members of the
striking union
(3) payment by employer of backwages, damages, and
other affirmative relief
(4) criminal prosecution against either or both the union
and employer
ILLEGAL STRIKE
(1) Prohibited by law
(2) Improper grounds
(3) Noncompliance with procedural requirements
(4) Unlawful means and methods
(5) Violation of injunction order
(6) No strike/lockout provisions in the CBA
Prohibited by law
Government employees. While the Constitution guarantees
the right of government employees to organize, they are
otherwise not allowed to strike.
Improper grounds
A legal strike must be based on a bargaining deadlock
and/or a ULP act only.
Intra-union and inter-union disputes are not proper
grounds to strike.
Good faith strike
Good faith may be used as a defense if the strike is held on
the basis of an act of ULP by the employer even if it turned
out that there was no act of ULP. However, the mandatory
procedural requirements cannot be dispensed with [notice
of strike, cooling-off period, strike vote, strike vote report].
[Grand Boulevard Hotel v. GLOWHRAIN, 2003]
Good faith strike requires rational basis
A mere claim of good faith would not justify the holding of
a strike under the aforesaid exception as, in addition
thereto, the circumstances must have warranted such
belief. It is, therefore, not enough that the union believed
that the employer committed acts of ULP when the
circumstances clearly negate even a prima facie showing
to sustain such belief. [Interwood Employees Assoc. v. Int’l
Hardwood, 1956]
Noncompliance with procedural requirements
See notes under procedural requirements of a valid strike.
A strike which does not strictly comply with the procedural
requirements set by law and the rules is an
unlawful/illegal strike.
Good faith strike must still comply with procedural
requirements
Even if the union acted in good faith in the belief that the
company was committing an unfair labor practice, if no
notice of strike and a strike vote were conducted, the said
strike is illegal. [Grand Boulevard Hotel v. GLOWHRAIN,
2003]
LABOR LAW BAR OPERATIONS COMMISSION
Unlawful means and methods
Purpose and means test
There must be concurrence between the validity of the
purpose of the strike and the means of conducting it.
A strike is a legitimate weapon in the universal struggle for
existence. It is considered as the most effective weapon in
protecting the rights of the employees to improve the
terms and conditions of their employment. But to be valid,
a strike must be pursued within legal bounds. The right to
strike as a means for the attainment of social justice is
never meant to oppress or destroy the employer. The law
provides limits for its exercise. Among such limits are the
prohibited activities under Art. 264, particularly paragraph
(e), which states that no person engaged in picketing shall:
(a) commit any act of violence, coercion, or intimidation or
(b) obstruct the free ingress to or egress from the
employer's premises for lawful purposes or
(c) obstruct public thoroughfares. [Association of
Independent Unions in the Philippines (AIUP), et. al. v
NLRC, 1999]
A legal strike may turn into an illegal strike
Even if the strike is valid because its objective or purpose is
lawful, the strike may still be declared invalid where the
means employed are illegal. [Phil. Diamond Hotel and
Resort, Inc. v. Manila Diamond Hotel Employees Union,
2006]
Examples of unlawful means and methods
(1) Acts of violence and terrorism
(2) Destruction of property
Guidelines and Balancing of Interest
(1) A strike otherwise valid, if violent in character, may be
placed beyond the pale.
(2) Care is to be taken especially where an unfair labor
practice is involved, to avoid stamping it with illegality
just because it is tainted by such acts. To avoid
rendering illusory the recognition of the right to strike,
responsibility in such a case should be individual and
not collective.
(3) A different conclusion would be called for if the
existence of force while the strike lasts is pervasive and
widespread, consistently and deliberately resorted to
as a matter of policy. It could be reasonably concluded
then that even if justified as to ends, it becomes illegal
because of the means employed'.
(4) This is not by any means to condone the utilization of
force by labor to attain its objectives. It is only to show
awareness that in labor conflicts, the tension that fills
the air as well as the feeling of frustration and
bitterness could break out in sporadic acts of violence.
If there be in this case a weighing of interests in the
balance, the ban the law imposes on unfair labor practices
by management that could provoke a strike and its
requirement that it be conducted peaceably, it would be, to
repeat, unjustified, considering all the facts disclosed, to
stamp the strike with illegality. It is enough that individual
liability be incurred by those guilty of such acts of violence
that call for loss of employee status. Such an approach is
reflected in our recent decisions. [Shell Oil Workers Union v.
Shell Co. of the Phils, 1971]
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Violation of injunction order
An automatic injunction under Article 263 (g) or a valid
injunction order under the exceptions to Article 254 must
be complied with. Otherwise, the strike becomes illegal.
See notes under labor injunctions.
No strike/lockout provisions in the CBA
A “no strike, no lock-out” is a valid provision in the CBA.
However, it only applies to economic provisions. It cannot
prevent a strike which is grounded on unfair labor practice.
[Malayang Samahan ng mga Manggagawa sa Greenfield v.
Ramos , 2000]
Liability of union officers
Any union officer who knowingly participates in an illegal
strike and any worker or union officer who knowingly
participates in the commission of illegal acts during a
strike may be declared to have lost his employment status.
Note: Mere participation in an illegal strike by a union
officer is sufficient ground to terminate his employment. In
case of a lawful strike, the union officer must commit
illegal acts during a strike for him to be terminated.
Liability of ordinary workers
General rule: Participation by a worker in a lawful strike is
not ground for termination of his employment.
Exception: When the worker participated in illegal acts
during the strike.
When the strike is or becomes illegal, the workers who
participate in it are not deemed to have lost their
employment status by express omission in the second
sentence of the third paragraph of Art. 264. Only the union
officers are deemed to have lost their employment status.
Liability of employer
Any worker whose employment has been terminated as a
consequence of any unlawful lockout shall be entitled to
reinstatement with full backwages.
Waiver of illegality of strike
When defense of illegality of strike is deemed waived.—In this
case, the Company alleged that the strike was illegal as
the notice of intention to strike was not sent directly to it.
However, it reinstated its striking workers who expressed
their desire to return to work.
On the illegality of the strike, the Court declared:
xxx it is claimed that the strike was illegal. Admitting for
the sake of argument that the strike was illegal for being
premature, this defense was waived by the Bisaya Land
Transportation Company, when it voluntarily agreed to
reinstate the radio operators. [Bisaya Land Transportation
Co., Inc. v. CIR, 1957]
When defense of illegality of strike is not deemed waived.—
The ruling cited in the Bisaya case that the employer
waives his defense of illegality of the strike upon
reinstatement of strikers is applicable only to strikers who
signified their intention to return to work and were
accepted back ...
Truly, it is more logical and reasonable for condonation to
apply only to strikers who signified their intention to return
and did return to work. The reason is obvious. These
strikers took the initiative in normalizing relations with
their employer and thus helped promote industrial peace.
LABOR LAW BAR OPERATIONS COMMISSION
However, as regards the strikers who decided to pursue
with the case, as in the case of the 114 strikers herein, the
employer could not be deemed to have condoned their
strike, because they had not shown any willingness to
normalize relations with it. [Philippine Inter-Fashion, Inc. v.
NLRC, 1982]
Considering the terms of the compromise agreement (the
parties merely agreed to maintain the status quo before the
commencement of the complaints filed by them without
prejudice to the resolution by the Labor Arbiter), it cannot
thereby be concluded that the petitioner waived its right to
assail the illegality of the strike staged by the respondent
and defend the validity of its termination of the
employment of the members of the respondent who
staged a strike. It must be underscored that a waiver to be
valid and effective must be couched in clear and
unequivocal terms which leave no doubt as to the intention
of a party to give up a right or benefit which legally
pertains to him. [Filcon Manufacturing Corp v. Lakas
Manggagawa sa Filcon-Lakas Manggagawa Labor Center
(LMF-LMLC)]
INJUNCTIONS
General rule: injunction prohibited
No temporary or permanent injunction or restraining order
in any case involving or growing out of labor disputes shall
be issued by any court or other entity, except as otherwise
provided in Articles 218 and 264 of this Code. [Art. 254]
Requisites for labor injunctions
The general rule is that injunctions are prohibited in labor
disputes. The exceptions are provided in Art. 218 in
connection with Art. 264 of the Labor Code.
Requisites for injunction to issue [Art. 218(e) – Powers of the
NLRC]
(a) actual or threatened commission of a prohibited or
unlawful act OR requirement of performance of a
particular act in a labor dispute
(b) if unrestrained or unperformed, the act will cause grave
or irreparable damage to any party OR render
ineffectual any decision in favor of such party
Prohibited activities [Art.264]
(a) No labor organization or employer shall declare a
strike or lockout without first having bargained
collectively in accordance with Title VII of this Book or
without first having filed the notice required in the
preceding Article or without the necessary strike or
lockout vote first having been obtained and reported to
the Ministry.
No strike or lockout shall be declared after assumption
of jurisdiction by the President or the Minister or after
certification or submission of the dispute to compulsory
or voluntary arbitration or during the pendency of cases
involving the same grounds for the strike or lockout.
Any worker whose employment has been terminated
as a consequence of any unlawful lockout shall be
entitled to reinstatement with full backwages. Any
union officer who knowingly participates in an illegal
strike and any worker or union officer who knowingly
participates in the commission of illegal acts during a
strike may be declared to have lost his employment
status: Provided, That mere participation of a worker in
a lawful strike shall not constitute sufficient ground for
termination of his employment, even if a replacement
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had been hired by the employer during such lawful
strike.
(b) No person shall obstruct, impede, or interfere with, by
force, violence, coercion, threats or intimidation, any
peaceful picketing by employees during any labor
controversy or in the exercise of the right to self-
organization or collective bargaining, or shall aid or
abet such obstruction or interference.
(c) No employer shall use or employ any strike-breaker,
nor shall any person be employed as a strike-breaker.
(d) No public official or employee, including officers and
personnel of the New Armed Forces of the Philippines
or the Integrated National Police, or armed person,
shall bring in, introduce or escort in any manner, any
individual who seeks to replace strikers in entering or
leaving the premises of a strike area, or work in place of
the strikers. The police force shall keep out of the
picket lines unless actual violence or other criminal
acts occur therein: Provided, That nothing herein shall
be interpreted to prevent any public officer from taking
any measure necessary to maintain peace and order,
protect life and property, and/or enforce the law and
legal order.
(e) No person engaged in picketing shall commit any act
of violence, coercion or intimidation or obstruct the free
ingress to or egress from the employer’s premises for
lawful purposes, or obstruct public thoroughfares.
“Innocent bystander rule”
An innocent by-stander is entitled to injunction if it is
affected by the activities of a picketing union where no
connection or interest exists between the union and the
innocent by-stander.
The right [to picket] may be regulated at the instance of
third parties or `innocent bystanders' if it appears that the
inevitable result of its exercise is to create an impression
that a labor dispute with which they have no connection or
interest exists between them and the picketing union or
constitute an invasion of their rights. [Liwayway Publishing
v. Permanent Concrete Worker's Union, 1981]
Also, see notes on picketing.
Procedure and Jurisdiction
LABOR ARBITER
JURISDICTION
Except as otherwise provided under the Code the Labor
Arbiters shall original and exclusive jurisdiction to hear and
decide:
(1) Unfair labor practices cases;
(2) Termination disputes;
(3) If accompanied with a claim for reinstatement, those
cases that workers may file involving wages, rates of
pay, hours of work and other terms and conditions of
employment;
(4) Claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee
relations;
LABOR LAW BAR OPERATIONS COMMISSION
(5) Cases arising from any violation of Art. 264 of this
Code, including questions involving the legality of
strikes and lockouts;
(6) Except claims for Employees Compensation, Social
Security, Medicare and maternity benefits, all other
claims, arising from employer-employee relations,
including those of persons in domestic or household
service, involving an amount exceeding five thousand
pesos (P5,000) regardless of whether accompanied
with a claim for reinstatement. [Art. 217]
(7) Money claims arising out of employer-employee
relationship or by virtue of any law or contract,
involving claims for actual, moral, exemplary an other
forms of damages, as well as employment termination
of OFWs;
(8) Wage distortion disputes in unorganized
establishments not voluntarily settled by the parties.
[Art. 124]
(9) Enforcement of compromise agreements when there is
non-compliance by any of the parties. [Art. 227]
(10)Other cases as may be provided by law.
“Exclusive and Original” Jurisdiction subject to Articles 261
and 262.
A case under Art 217 may be lodged instead with a
voluntary arbitrator. The policy of the law is to give primacy
to voluntary modes of settling dispute.
Jurisdiction on Money Claims (Labor Arbiter vs. Regional
Director)
A money claim arising from employer-employee relations,
except SSS, ECC/Medicare claims, is within the jurisdiction
of a labor arbiter if:
(1) The claim, regardless of amount, is accompanied with
a claim of reinstatement; or
(2) The claim exceeds P5,000, whether or not there is a
claim for reinstatement.
The Regional Director has jurisdiction if:
(1) the money claim is not accompanied by reinstatement
AND
(2) the claim does not exceed P5,000
Notes:
(1) The money claim must arise from law or contracts
other than CBA.
(2) Money arising from an implementation of the CBA –
Voluntary Arbitrator or Panel of Voluntary Arbitrators
have jurisdiction
(3) Money claims which does not arise from ER-EE
relations – Regular Courts have jurisdiction.
(4) Nature of Proceeding: Non-litigious. The Labor Arbiter
is not bound by the technical rules of procedure.
(5) The Labor Arbiter shall use every and all reasonable
means to ascertain the facts in each speedily and
objectively. [Art. 221]
(6) Employer-employee relationship is a jurisdictional
requisite, absent of which, the NLRC has no jurisdiction
to hear and decide the case. [Hawaiian-Philippine
Company v. Gulmatico]
(7) Venue: Regional Arbitration Branch (RAB) having
jurisdiction over the workplace of the complainant or
petitioner.
(8) Workplace – place or locality where the employee is
regularly assigned at the time the cause of action
arose.
(9) In the case of field employees, ambulant or itinerant
workers, their workplace is (a) where they are regularly
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assigned or (b) where they are supposed to regularly
receive their salaries and wages or work instructions
from, and report the results of their assignment to their
employers.
Some Rules on Venue
(1) Exclusion. Where 2 or more Regional Arbitration
Branches have jurisdiction over the workplace of the
complainant, that first which acquired jurisdiction over
the case shall exclude others.
(2) Waiver. When venue is not objected to before the filing
of position papers, such issue shall be deemed waived.
(3) Transfer. Venue of an action may be transferred to a
different Regional Arbitration Branch upon written
agreement of the parties or upon order of the LA in
meritorious cases and on motion of the proper party.
(4) OFW Cases. Cases involving overseas Filipino workers
may be filed before the RAB having jurisdiction over
the place where the complainant resides or where the
principal office of any of the respondents is situated.
REINSTATEMENT PENDING APPEAL
An order for reinstatement entitles an employee to receive
his accrued backwages from the moment the
reinstatement order was issued up to the date when the
same was reversed by a higher court without fear of
refunding what he had received. [Garcia v. Philippine
Airlines, Inc., G.R. No.164856, January 20, 2009]
REQUIREMENTS TO PERFECT APPEAL TO NLRC
(1) The appeal should be filed within the reglementary
period;
(2) The Memorandum of Appeal should be under oath;
(3) The appeal fee should be paid;
(4) There should be posting of cash or surety bond, if
judgment involves monetary award; and
(5) There should be proof of service to the adverse party.
NATIONAL LABOR RELATIONS COMMISSION (NLRC)
JURISDICTION
NLRC divisions
(a) Original Jurisdiction: Over petitions for injunction or
temporary restraining order under Art. 218 (e).
(b) Exclusive Appellate Jurisdiction: over all cases decided
by labor arbiters [Art 217(b)] and the DOLE regional
directors under Art 129.
Period of Appeal [2005 NLRC Rules of Procedure]
From Labor Arbiter to NLRC: Decisions and resolutions of
the Labor Arbiter shall be final and executory unless
appealed to the Commission by any or both parties within
(10) calendar days from receipt thereof
From Regional Director to NLRC pursuant to Art. 129:
Decisions and resolutions of the Regional Director shall be
final and executory unless appealed within 5 days from
receipt thereof.
Note: If the 5th or 10th day falls on a Saturday, Sunday, or
a holiday, the last day shall be the next working day.
Grounds of Appeal
(1) If there is prima facie evidence of abuse of discretion on
the part of the Labor Arbiter or Regional Director;
(2) If the decision, resolution or order was secured through
fraud or coercion, including graft and corruption;
(3) If made purely on questions of law; and/or
(4) If serious errors in the findings of fact are raised which,
if not corrected, would cause grave or irreparable injury
to the appellant
LABOR LAW BAR OPERATIONS COMMISSION
EFFECT OF NLRC REVERSAL OF LABOR ARBITER’S ORDER OF
REINSTATEMENT
Even if the order of reinstatement of the Labor Arbiter is
reversed on appeal, it is obligatory on the part of the
employer to reinstate and pay the wages of the dismissed
employee during the period of appeal until reversal by the
higher court.
On the other hand, if the employee has been reinstated
during the appeal period and such reinstatement order is
reversed with finality, the employee is not required to
reimburse whatever salary he received for he is entitled to
such, more so if he actually rendered services during the
period. [Garcia v. Philippine Airlines, Inc., 2009]
REMEDIES
Requisites for Perfection of Appeal to the Court of Appeals
[Rule 43]
(1) The appeal shall be:
(a) Filed within the reglementary period;
(b) Verified by the appellant himself in accordance
with Section 4, Rule 7 of the Rules of Court;
(c) In the form of a memorandum of appeal which
shall state the grounds relied upon and the
arguments in support thereof, the relief prayed for,
and with a statement of the date the appellant
received the appealed decision, resolution or order;
(d) In three (3) legibly typewritten or printed copies;
and
(e) Accompanied by (a) proof of payment of the
required appeal fee; (b) posting of a cash or surety
bond as provided in Section 6 of the 2005 NLRC
Rules, (c) a certificate of non-forum shopping; and
(d) proof of service upon the other parties.
(2) A mere notice of appeal without complying with the
other requisites aforestated shall not stop the running
of the period for perfecting an appeal.
(3) The appellee may file with the Regional Arbitration
Branch or Regional Office where the appeal was filed,
his answer or reply to appellant’s memorandum of
appeal, not later than 10 calendar days from receipt
thereof. Failure on the part of the appellee who was
properly furnished with a copy of the appeal to file his
answer or reply within the said period may be
construed as a waiver on his part to file the same.
(4) Subject to the provisions of Article 218 of the Labor
Code, once the appeal is perfected in accordance with
these Rules, the Commission shall limit itself to
reviewing and deciding only the specific issues that
were elevated on appeal.
CERTIFIED CASES
Definition
Certified labor disputes are cases certified to the
Commission for compulsory arbitration under Art. 263 (g)
of the Labor Code. [Sec. 2, The 2011 NLRC Rules and
Procedures]
When, in his opinion, there exists a labor dispute causing
or likely to cause a strike or lockout in an industry
indispensable to the national interest, the Secretary of
Labor and Employment may assume jurisdiction over the
dispute and decide it or certify the same to the Commission
for compulsory arbitration. Such assumption or certification
shall have the effect of automatically enjoining the intended
or impending strike or lockout as specified in the
assumption or certification order. [Art. 263]
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Function of the NLRC
When sitting in a compulsory arbitration certified to by the
Secretary of Labor, the NLRC is not sitting as a judicial
court but as an administrative body charged with the duty
to implement the order of the Secretary. Its function only is
to formulate the terms and conditions of the CBA and
cannot go beyond the scope of the order. Moreover, the
Commission is further tasked to act within the earliest time
possible and with the end in view that its action would not
only serve the interests of the parties alone, but would also
have favorable implications to the community and to the
economy as a whole. This is the clear intention of the
legislative body in enacting Art. 263 paragraph (g) of the
Labor Code, as amended by Section 27 of R.A. 6175 [Union
of Filipro Employees v. NLRC, 1990]
Effects of Certification
(1) Upon certification, the intended or impending strike or
lockout is automatically enjoined, notwithstanding the
filing of any motion for reconsideration of the
certification order nor the non-resolution of any such
motion which may have been duly submitted to the
Office of the Secretary of Labor and Employment.
(2) If a work stoppage has already taken place at the time
of the certification, all striking or locked out employees
shall immediately return to work and the employer
shall immediately resume operations and readmit all
workers under the same terms and conditions
prevailing before the strike or lockout.
(3) All cases between the same parties, except where the
certification order specifies otherwise the issues
submitted for arbitration which are already filed or may
be filed, and are relevant to or are proper incidents of
the certified case, shall be considered subsumed or
absorbed by the certified case, and shall be decided by
the appropriate Division of the Commission.
(4) The parties to a certified case, under pain of contempt,
shall inform their counsels and the Division concerned
of all cases pending with the Regional Arbitration
Branches and the Voluntary Arbitrators relative or
incident to the certified case before it.
(5) When a certified labor dispute involves a business
entity with several workplaces located in different
regions, the Division having territorial jurisdiction over
the principal office of the company shall acquire
jurisdiction to decide such labor dispute; unless the
certification order provides otherwise. [Section 3, 2011
NLRC Rules and Procedures]
Effects of Defiance
Non-compliance with the certification order of the SOLE
shall be considered as an illegal act committed in the
course of the strike or lockout and shall authorize the
Commission to enforce the same under pain of immediate
disciplinary action, including dismissal or loss of
employment status or payment by the locking-out
employer of backwages, damages and/or other affirmative
relief, even criminal prosecution against the liable parties.
The Commission may also seek the assistance of law
enforcement agencies to ensure compliance and
enforcement of its orders and resolutions. [Sec. 4, 2011
NLRC Rules and Procedures]
The Secretary's assumption and certification orders being
executory in character are to be strictly complied with by
the parties even during the pendency of a petition
questioning their validity for this extraordinary authority
given by law to the Secretary of Labor is "aimed at arriving
LABOR LAW BAR OPERATIONS COMMISSION
at a peaceful and speedy solution to labor disputes,
without jeopardizing national interests." [Union of Filipro
Employees vs. Nestlé Philippines, 1990]
Procedure in certified cases
(a) When there is no need to conduct a clarificatory
hearing, the Commission shall resolve all certified
cases within 30 calendar days from receipt by the
assigned Commissioner of the complete records, which
shall include the position papers of the parties and the
order of the SOLE denying the motion for
reconsideration of the certification order, if any.
(b) Where a clarificatory hearing is needed, the
Commission shall, within 5 calendar days from receipt
of the records, issue a notice to be served on the parties
through the fastest means available, requiring them to
appear and submit additional evidence, if any. All
certified cases shall be resolved by the Commission
within 60 calendar days from receipt of the complete
records by the assigned Commissioner.
(c) No motion for extension or postponement shall be
entertained. [Sec. 5, 2011 NLRC Rules and Procedures]
Execution of judgment
Upon issuance of the entry of judgment, the Commission
motu proprio or upon motion by the proper party, may
cause the execution of the judgment in the certified case.
[Sec. 6, 2011 NLRC Rules and Procedures]
BUREAU OF LABOR RELATIONS (BLR) – MED
ARBITERS
JURISDICTION (ORIGINAL AND APPELLATE)
The Bureau of Labor Relations and the Labor Relations
Divisions in the regional offices of the Department of Labor
and Employment shall have original and exclusive
authority to act, at their own initiative or upon request of
either or both parties, on all inter-union and intra-union
conflicts, and all disputes, grievances or problems arising
from or affecting labor-management relations in all
workplaces whether agricultural or non-agricultural,
except those arising from the implementation or
interpretation of collective bargaining agreements which
shall be the subject of grievance procedure and/or
voluntary arbitration. [Art. 226]
The Bureau shall have fifteen (15) calendar days to act on
labor cases before it, subject to extension by agreement of
the parties.
Appellate Jurisdiction
(1) BLR has the power to review the decision of the
Regional Director
(2) Decisions rendered through its appellate power are
final and executory. Hence, the remedy of the
aggrieved party is to seasonably avail of the special
civil action of certiorari under Rule 65 of the Rules of
Court.
NATIONAL CONCILIATION AND MEDIATION BOARD
(NCMB)
NATURE OF PROCEEDINGS
Conciliation and mediation is non-litigious/non-
adversarial, less expensive, and expeditious. Under this
informal set-up, the parties find it more expedient to fully
ventilate their respective positions without running around
with legal technicalities and, in the course thereof, afford
them wider latitude of possible approaches to the
problem.
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CONCILIATION VS. MEDIATION
Conciliation
A mild form of intervention by a neutral third party, the
Conciliator-Mediator, relying on his persuasive expertise,
takes an active role in assisting parties by trying to keep
disputants talking, facilitating other procedural niceties,
carrying messages back and forth between the parties, and
generally being a good fellow who tries to keep things
calm and forward-looking in a tense situation.
Mediation
A mild intervention by a neutral third party, the
Conciliator-Mediator, wherein the CM advises the parties
or offers solutions or alternatives to the problems with the
end in view of assisting them towards voluntarily reaching
their own mutually acceptable settlement of the dispute.
Preventive Mediation
Preventive mediation case — refers to the potential or
brewing labor dispute which is the subject of a formal or
informal request for conciliation and mediation assistance
sought by either or both parties in order to remedy, contain
or prevent its degeneration into a full blown dispute
through amicable settlement.
DOLE REGIONAL DIRECTORS
JURISDICTION
Small money claims
Art. 129. Recovery of wages, simple money claims and
other benefits. —
Upon complaint of any interested party, the Regional
Director of the Department of Labor and Employment or
any of the duly authorized hearing officers of the
Department is empowered, through summary proceeding
and after due notice, to hear and decide any matter
involving the recovery of wages and other monetary claims
and benefits, including legal interest, owing to an
employee or person employed in domestic or household
service or househelper under this Code, arising from
employer-employee relations: Provided, That such
complaint does not include a claim for reinstatement:
Provided, further, That the aggregate money claims of
each employee or househelper do not exceed five
thousand pesos (P5,000).
The Regional Director or hearing officer shall decide or
resolve the complaint within thirty (30) calendar days from
the date of the filing of the same.
(a) Any sum thus recovered on behalf of any employee or
househelper pursuant to this Article shall be held in a
special deposit account by, and shall be paid, on order
of the Secretary of Labor and Employment or the
Regional Director directly to the employee or
househelper concerned.
(b) Any such sum not paid to the employee or
househelper, because he cannot be located after
diligent and reasonable effort to locate him within a
period of three (3) years, shall be held as a special fund
of the Department of Labor and Employment to be
used exclusively for the amelioration and benefit of
workers.
xxx
The Secretary of Labor and Employment or his duly
authorized representative may supervise the payment of
unpaid wages and other monetary claims and benefits,
including legal interest, found owing to any employee or
househelper under this Code.
LABOR LAW BAR OPERATIONS COMMISSION
DOLE SECRETARY
VISITORIAL AND ENFORCEMENT POWERS
The Secretary of Labor and Employment or his duly
authorized representatives, including labor regulation
officers, shall have access to employer’s records and
premises at any time of the day or night whenever work is
being undertaken therein, and the right to copy therefrom,
to question any employee and investigate any fact,
condition or matter which may be necessary to determine
violations or which may aid in the enforcement of this Code
and of any labor law, wage order or rules and regulations
issued pursuant thereto.
Notwithstanding the provisions of Articles 129 and 217 of
this Code to the contrary, and in cases where the
relationship of employer-employee still exists, the
Secretary of Labor and Employment or his duly authorized
representatives shall have the power to issue compliance
orders to give effect to the labor standards provisions of
this Code and other labor legislation based on the findings
of labor employment and enforcement officers or industrial
safety engineers made in the course of inspection. The
Secretary or his duly authorized representatives shall issue
writs of execution to the appropriate authority for the
enforcement of their orders, except in cases where the
employer contests the findings of the labor employment
and enforcement officer and raises issues supported by
documentary proofs which were not considered in the
course of inspection. [Article 128, LC, As amended by
Republic Act No. 7730, June 2, 1994]
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. [Article 37, LC]
The Secretary of Labor and Employment or his duly
authorized representative is hereby empowered to inquire
into the financial activities of legitimate labor
organizations upon the filing of a complaint under oath
and duly supported by the written consent of at least
twenty percent (20%) of the total membership of the labor
organization concerned and to examine their books of
accounts and other records to determine compliance or
non-compliance with the law and to prosecute any
violations of the law and the union constitution and by-
laws: Provided, That such inquiry or examination shall not
be conducted during the sixty (60)-day freedom period nor
within the thirty (30) days immediately preceding the date
of election of union officials. [Article 274, LC, As amended
by Section 31, Republic Act No. 6715, March 21, 1989]
POWER TO SUSPEND EFFECTS OF TERMINATION
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 the implementation of a mass lay-off.
[Article 277 (b)]
ASSUMPTION OF JURISDICTION
When in his opinion, there exist a labor dispute causing or
likely to cause a strike or lockout in an industry
indispensable to the national interest, the SOLE may
assume jurisdiction over the dispute and decide it or certify
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the same to the Commission for compulsory arbitration.
[Art. 263]
APPELLATE JURISDICTION
(a) Orders issued by the duly authorized representative of
the SOLE under Art. 128 may be appealed to the latter.
(b) Denial of application for union registration or
cancellation of union registration originally rendered by
the BLR may be appealed to the SOLE (if originally
rendered by the Regional Office, appeal should be
made to the BLR)
(c) Decisions of the Med-Arbiter in certification election
cases are appealable to the SOLE (decisions of med-
arbiters in intra-union disputes are appealable to the
BLR) [Art. 259]
VOLUNTARY ARBITRATION POWERS
Before or at any stage of the compulsory arbitration
process, the parties may opt to submit their dispute to
voluntary arbitration.
The Secretary of Labor and Employment, xxx shall decide
or resolve the dispute xxx. [Art. 263, LC]
GRIEVANCE MACHINERY AND VOLUNTARY
ARBITRATORS
SUBJECT MATTER OF GRIEVANCE
Grievance is any question by either the ER or the union
regarding the interpretation or application of the CBA or
company personnel policies or any claim by either party
that the other party is violating any provisions of the CBA
or company personnel policies.
It is a complaint or dissatisfaction arising from the
interpretation or implementation of the CBA and those
arising from interpretation or enforcement of personnel
policies
Grievance machinery
It refers to the mechanism for the adjustment and
resolution of grievances. It is part of the continuing process
of collective bargaining.
VOLUNTARY ARBITRATOR
Jurisdiction
Exclusive and original jurisdiction over grievances
The VA or panel of VAs shall have original and exclusive
jurisdiction to hear and decide all unresolved grievances
(see definition).
Violations of a CBA, except those which are gross in
character, shall no longer be treated as ULP and shall be
resolved as grievances under the CBA.
Note: Gross violations of CBA shall mean flagrant and/or
malicious refusal to comply with the economic provisions of
such agreement.
The Commission, its Regional Offices and the Regional
Directors of the DOLE shall not entertain disputes,
grievances or matters under the exclusive and original
jurisdiction of the VA or panel of Vas and shall immediately
dispose and refer the same to the grievance machinery or
Voluntary Arbitration provided in the CBA. [Art. 261, LC]
Other labor disputes
The VA or panel of Vas, upon agreement of the parties,
shall also hear and decide all other labor disputes
including ULP and bargaining deadlocks. [Art. 262, LC]
LABOR LAW BAR OPERATIONS COMMISSION
Procedure [Rule XI, Book V of the IRR]
Hearing
All parties to the dispute shall be entitled to attend the
arbitration proceedings. The attendance of any third party
or the exclusion of any witness from the proceedings shall
be determined by the VA or panel of Vas. Hearing may be
adjourned for cause or upon agreement by the parites.
Days to render an award/decision
Unless the parties agree otherwise, it shall be mandatory
for the VA or panel of Vas to render an award or decision
within 20 calendar days from the date of submission of the
dispute to voluntary arbitration.
Form of award/decision
The award or decision of the VA or panel of Vas must state
in clear, concise and definite terms the facts, the law
and/contract upon which it is based.
Finality
It shall be final and executory after 10 calendar days from
the receipt of the copy of the award or decision by the
parties.
Execution of award/decision
Upon motion of any interested party, the Voluntary
Arbitrator or panel of Voluntary Arbitrators or the Labor
Arbiter in the region where the movant resides, in case of
the absence or incapacity of the Voluntary Arbitrator or
panel of Voluntary Arbitrators, for any reason, may issue a
writ of execution requiring either the sheriff of the
Commission or regular courts or any public official whom
the parties may designate in the submission agreement to
execute the final decision, order or award. [Art, 262-A, LC]
Remedies
Rule 43, Rules of Court. – The decision of a Voluntary
Arbitrator or panel of Voluntary Arbitrators is appealable
by ordinary appeal under Rule 43 of the Rules of Civil
Procedure directly to the Court of Appeals. [see Sec. 1, Rule
43, ROC]
Note: Department Order No. 40-03 (2003) of the DOLE in
Section 7, Rule XIX thereof, and the Revised Procedural
Guidelines in the Conduct of Voluntary Arbitration
Proceedings (2005) in Rule VII, Sections 6 and 7 thereof,
both provide that the decision of the Voluntary Arbitrator
shall become final and executory after 10 calendar days
from receipt of a copy of the decision by the parties and
that the decision shall not be subject of a motion for
reconsideration. In short, the remedy is for the aggrieved
party to elevate the case to the Court of Appeals on a
petition for review under Rule 43 of the Rules of Court. The
Court of Appeals, in two cases involving Malayan Insurance
Co., Inc. (2005 and 2006), upheld the aforementioned
issuances and declared that a motion for reconsideration is
a prohibited pleading. But in Teng v. Pahagac, G.R. No.
169704, November 17, 2010, the Supreme Court held that
a party aggrieved by the Voluntary Arbitrator’s decision
must first file a Motion for Reconsideration before going up
to the Court of Appeals. It did not, however, say that
Department Order No. 40-03 and the Revised Procedural
Guidelines are unlawful or illegal insofar as they proscribe
the filing of a Motion for Reconsideration. This,
notwithstanding that the parties squarely raised the
question concerning the validity thereof before the Court.
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UP COLLEGE OF LAW
COURT OF APPEALS
RULE 65, RULES OF COURT
Section 1. Petition for certiorari. — When any tribunal, board
or officer exercising judicial or quasi-judicial functions has
acted without or in excess its or his jurisdiction, or with
grave abuse of discretion amounting to lack or excess of
jurisdiction, and there is no appeal, or any plain, speedy,
and adequate remedy in the ordinary course of law, a
person aggrieved thereby may file a verified petition in the
proper court, alleging the facts with certainty and praying
that judgment be rendered annulling or modifying the
proceedings of such tribunal, board or officer, and granting
such incidental reliefs as law and justice may require.
The petition shall be accompanied by a certified true copy
of the judgment, order or resolution subject thereof, copies
of all pleadings and documents relevant and pertinent
thereto, and a sworn certification of non-forum shopping
as provided in the third paragraph of section 3, Rule 46.
(1a)
Section 2. Petition for prohibition. — When the proceedings
of any tribunal, corporation, board, officer or person,
whether exercising judicial, quasi-judicial or ministerial
functions, are without or in excess of its or his jurisdiction,
or with grave abuse of discretion amounting to lack or
excess of jurisdiction, and there is no appeal or any other
plain, speedy, and adequate remedy in the ordinary course
of law, a person aggrieved thereby may file a verified
petition in the proper court, alleging the facts with
certainty and praying that judgment be rendered
commanding the respondent to desist from further
proceedings in the action or matter specified therein, or
otherwise granting such incidental reliefs as law and
justice may require.
The petition shall likewise be accompanied by a certified
true copy of the judgment, order or resolution subject
thereof, copies of all pleadings and documents relevant
and pertinent thereto, and a sworn certification of non-
forum shopping as provided in the third paragraph of
section 3, Rule 46. (2a)
Section 3. Petition for mandamus. — When any tribunal,
corporation, board, officer or person unlawfully neglects
the performance of an act which the law specifically
enjoins as a duty resulting from an office, trust, or station,
or unlawfully excludes another from the use and
enjoyment of a right or office to which such other is
entitled, and there is no other plain, speedy and adequate
remedy in the ordinary course of law, the person aggrieved
thereby may file a verified petition in the proper court,
alleging the facts with certainty and praying that judgment
be rendered commanding the respondent, immediately or
at some other time to be specified by the court, to do the
act required to be done to protect the rights of the
petitioner, and to pay the damages sustained by the
petitioner by reason of the wrongful acts of the
respondent.
SUPREME COURT
Therefore, all references in the amended Section 9 of B.P.
No. 129 to supposed appeals from the NLRC to the
Supreme Court are interpreted and hereby declared to
mean and refer to petitions for certiorari under Rule 65.
Consequently, all such petitions should hence forth be
initially filed in the Court of Appeals in strict observance of
LABOR LAW BAR OPERATIONS COMMISSION
the doctrine on the hierarchy of courts as the appropriate
forum for the relief desired. [St. Martin Funeral Home vs.
NLRC, 1998]
RULE 45, RULES OF COURT
Section 1. Filing of petition with Supreme Court. — A party
desiring to appeal by certiorari from a judgment or final
order or resolution of the Court of Appeals, the
Sandiganbayan, the Regional Trial Court or other courts
whenever authorized by law, may file with the Supreme
Court a verified petition for review on certiorari. The
petition shall raise only questions of law which must be
distinctly set forth. (1a, 2a)
Appeal from CA to SC should be under Rule 45 (Petition
for Review on Certiorari) and not Rule 65 (Special Civil
Action for Certiorari). [Sea Power Shipping Enterprises, Inc.
vs. CA, G. R. No. 138270, June 28, 2001]
Since the Court of Appeals had jurisdiction over the
petition under Rule 65, any alleged errors committed by it
in the exercise of its jurisdiction would be errors of
judgment which are reviewable by timely appeal and not
by a special civil action of certiorari. If the aggrieved party
fails to do so within the reglementary period, and the
decision accordingly becomes final and executory, he
cannot avail himself of the writ of certiorari, his
predicament being the effect of his deliberate inaction.
[Tirazona v Phil EDS Techno-Service Inc, 2009]
PRESCRIPTION OF ACTIONS
No claim for compensation shall be given due course
unless said claim is filed with the System within three (3)
years from the time the cause of action accrued. [Article
201, as amended by Section 5, Presidential Decree No. 1921]
MONEY CLAIMS
Art. 291. Money claims. – All money claims arising from
employer-employee relations accruing during the
effectivity of this Code shall be filed within three (3) years
from the time the cause of action accrued; otherwise they
shall be forever barred.
All money claims accruing prior to the effectivity of this
Code shall be filed with the appropriate entities
established under this Code within one (1) year from the
date of effectivity, and shall be processed or determined in
accordance with the implementing rules and regulations of
the Code; otherwise, they shall be forever barred.
Workmen's compensation claims accruing prior to the
effectivity of this Code and during the period from
November 1, 1974 up to December 31, 1974, shall be filed
with the appropriate regional offices of the Department of
Labor not later than March 31, 1975; otherwise, they shall
forever be barred. The claims shall be processed and
adjudicated in accordance with the law and rules at the
time their causes of action accrued.
The Labor Code has no specific provision on when a
monetary claim accrues. Thus, again the general law on
prescription applies. Article 1150 of the Civil Code provides
that –
Article 1150. The time for prescription for all kinds of
actions, when there is no special provision which ordains
PAGE 95
UP COLLEGE OF LAW
otherwise, shall be counted from the day they may be
brought.
The day the action may be brought is the day a claim
started as a legal possibility. In the present case, the day
came when petitioner learned of Asiakonstrukt’s deduction
from his salary of the amount of advances he had received
but had, by his claim, been settled, the same having been
reflected in his payslips, hence, it is assumed that he
learned of it at the time he received his monthly paychecks.
[Anabe v Asian Const, et al., 2009]
ILLEGAL DISMISSAL
In illegal dismissal cases, the employee concerned is given
a period of four years from the time of his dismissal within
which to institute a complaint. This is based on Article 1146
of the New Civil Code which states that actions based upon
an injury to the rights of the plaintiff must be brought
within four years. [Victory Liner, Inc. v Race, 2007]
Article 1146. The following actions must be instituted within
four years:
(1) Upon an injury to the rights of the plaintiff;
(2) Upon a quasi-delict;
However, when the action arises from or out of any act,
activity, or conduct of any public officer involving the
exercise of powers or authority arising from Martial Law
including the arrest, detention and/or trial of the plaintiff,
the same must be brought within one (1) year. [As amended
by PD No. 1755, Dec. 24, 1980.]
UNFAIR LABOR PRACTICE
Art. 290. Offenses. – Offenses penalized under this Code
and the rules and regulations issued pursuant thereto
LABOR LAW BAR OPERATIONS COMMISSION
shall prescribe in three (3) years. All unfair labor practice
arising from Book V shall be filed with the appropriate
agency within one (1) year from accrual of such unfair labor
practice; otherwise, they shall be forever barred.
Article 247. Concept of unfair labor practice and procedure
for prosecution thereof. [last par.]
No criminal prosecution under this Title may be instituted
without a final judgment finding that an unfair labor
practice was committed, having been first obtained in the
preceding paragraph. During the pendency of such
administrative proceeding, the running of the period of
prescription of the criminal offense herein penalized shall
be considered interrupted: Provided, however, that the
final judgment in the administrative proceedings shall not
be binding in the criminal case nor be considered as
evidence of guilt but merely as proof of compliance of the
requirements therein set forth. [As amended by Batas
Pambansa Bilang 70, May 1, 1980 and later further amended
by Section 19, Republic Act No. 6715, March 21, 1989]
OFFENSES PENALIZED BY THE LABOR CODE AND IRR ISSUED
PURSUANT THERETO
Art. 290. Offenses. – Offenses penalized under this Code
and the rules and regulations issued pursuant thereto
shall prescribe in three (3) years.
PRESCRIPTIVE PERIOD OF ILLEGAL RECRUITMENT CASES
Section 7. Prescription. Illegal recruitment cases under this
Rule shall prescribe in five (5) years; Provided, however,
that illegal recruitment cases involving economic sabotage
shall prescribed in twenty (20) years. [RA 8042]
PAGE 96
 ANNEX A
Cause Terminable Examples Non-Terminable Examples

Serious Misconduct Teacher pressuring colleague to change a failing Borrowing Money: as a general rule, it is neither
grade to a passing one plus misrepresentation. dishonest, nor immoral, nor illegal, much less
[Padilla vs. NLRC, 1997] criminal [Medical Doctors, Inc. [Makati Medical
Center] v. NLRC] except
Obscene, insulting or offensive words against (a) it becomes a serious misconduct when
superior. [Asian Design and Manufacturing vs. Hon. reprehensible behavior such as the use of a
Deputy Minister of Labor, 1986] trust relationship as a leverage for borrowing
money is involved. [Pearl S. Buck Foundation,
Sleeping in post, gross insubordination, dereliction Inc. v. NLRC, 1990]
of duty, challenging a superior to a fight. [Luzon
Stevedoring vs. CIR, 1965] Love: teacher falling in love with student without a
showing that the former took advantage of her
Immorality / Immoral Conduct: conduct which is so position to court her student. Yielding to this gentle
willful, flagrant or shameless as to show and universal emotion is not to be so casually
indifference to the opinion of good and respectable equated with immorality. The deviation of the
members of the community; such conduct must be circumstances of their marriage from the usual
grossly immoral – so corrupt as to constitute a societal pattern cannot be considered as a defiance
crime or so unprincipled as to be reprehensible to a of contemporary social mores [Chua-Qua v. Clave,
high degree or committed under such scandalous 1990]
or revolting circumstances as to shock the common
decency. [Narag vs. Narag, 1998]; to be a valid
cause for dismissal, the immoral act must render
incapable performance of duties/services or
calculated at injuring employer’s business.
(a) When a teacher engages in extra-marital
relationship, especially when the parties are
both married. [Santos v. NLRC, 1998] 50
Willful Disobedience Violation of Company Rules: Company policies and Assertion of employee’s right not to be made to work
regulations, unless shown to be grossly oppressive outside of what he had been hired to do. [Tierra
or contrary to law, are generally valid and binding International Production Corp. v. NLRC, 1996]
on the parties and must be complied with until
finally revised or amended, unilaterally or Refusing a promotion, since promotion is in the
preferably through negotiation, by competent nature of a gift or reward. [PT&TC vs. CA, 2003]
authority. [Aparente, Sr. v. NLRC, 2000] (a) Disobeying an Invalid Order to Transfer: an invalid
transfer amounts to constructive dismissal; it is
Disobeying a Valid Order to Transfer invalid when it fails test of validity. (refer to the
(1) Test of Validity: adjacent column for the test)
(a) Not unreasonable
(b) Not inconvenient
(c) Not prejudicial
(d) No demotion in rank
(e) No diminution in salary, privileges or
benefits [Blue Dairy vs. NLRC, 1999]
(2) Mere inconvenience does not necessarily
invalidate a transfer order; unreasonable
inconvenience makes the order invalid.
[Homeowners Savings and Loan Assoc. vs. NLRC,
1996]
(3) Reasonableness pertains to the character of
orders and to the manner in which they are
made. [Escobin vs. NLRC, 1998]
Gross and Habitual Habitual tardiness and absenteeism [Manila Electric Simple negligence [RDS Trucking v. NLRC, 1998] or
Neglect Co. v. NLRC, 1996] unsatisfactory performance [Oreta vs. NLRC, 1989]

Abandonment – the deliberate and unjustified
refusal of an Employee to resume his employment.
[Nueva Ecija Electric Cooperative v. NLRC, 2005]
(1) Requisites: failure to report to work or absence
w/o valid reason
(2) Clear intent to sever Employee–ER relationship
via overt acts. [Labor v NLRC, 1995; Floren Hotel
v. NLRC, 2005; Leonardo v. NLRC, 2000]
(a) CANNOT be lightly inferred, much less
legally presumed from certain equivocal
acts such as interim employment.
[Hacienda Dapdap v. NLRC, 1998]
Mere involvement in an accident, absent any
showing of fault or recklessness on the part of the
Employee, is NOT a valid ground for dismissal.
[Paguio Transport Corp. v. NLRC, 1998]
Filing a complaint of illegal dismissal is inconsistent
with abandonment;
(a) Except when Employee prays for separation pay
instead of reinstatement [Jo vs. NLRC, 2000]
No Abandonment:
(a) Mere absence from work [Mendoza v. NLRC,
 UP COLLEGE OF LAW LABOR LAW BAR OPERATIONS COMMISSION

1999]
Bank Employee delivered newly approved credit (b) Going home to have dinner; employees do not
cards to a total stranger without verification need to take their meals within the company
protocol. premises. [PAL v. NLRC, 1999]
(c) Leaving his workplace to relieve himself
[Dimabayo v. NLRC, 1999]
Fraud or Willful Breach Dishonesty: Employee is not in a position of trust and confidence.
of Trust (a) Custodian of petty cash fund reimbursed
another employee for services the latter did not
render. [Naguit v. NLRC, 2003]
(b) Falsification of time cards. [San Miguel vs. NLRC,
1989]
(c) Theft of company property. [Firestone Tire and
Rubber Co. vs. Lariosa, 1987] 51
Commission of a crime Theft; the employee here was convicted after she
or offense against won her case for illegal dismissal. In view of the
Employer employee’s conviction, the decision of the NLRC
which had already become final and executory
calling for her reinstatement and the payment of
back wages should not now be enforced.
Otherwise, she would in effect be undeservedly
rewarded when she should instead be punished for
her offense. [Sampaguita Garments Corp. v. NLRC,
1994]
Analogous Causes Quarrelsome – Bossy: an Employee's attitude Probable Cause: Although after preliminary
problem is a valid ground for dismissal, equivalent investigation probable cause has been found and
to loss of trust and confidence; an Employee who the accused has been detained, this is NOT legal
cannot get along with his fellow co-EEs is basis for immediate termination of employment.
detrimental to the company for he can upset and [Standard Electric Manufacturing Corp. v. Standard
restrain the working environment. [Heavylift Manila, Electric Union, 2005]
Inc. v. CA]
Conviction – Moral Turpitude: Conviction of a crime
Conviction – Moral Turpitude: Violation of a involving moral turpitude is not one of these
company rule prohibiting the infliction of harm or justifiable causes.
physical injury against any person under the (a) Not under fraud/willful breach since the crime
particular circumstances provided for in the same was unrelated to the performance of the
rule may be deemed analogous to serious employee's function.
misconduct. [Oania v. NLRC, 1995] (b) Not under commission of crime since it was not
directed at Employer or his family or
Gross inefficiency is closely related to gross neglect representative.
for both involve specific acts or omission on the part (c) Analogous causes must have an element
of the employee resulting in damage to the similar to those found in the specific just cause
employer or to his business. [Lim v. NLRC, 1996] enumerated under Article 282. Clearly lacking
in the ground invoked by petitioner is its relation
Past Offenses: Previous offenses may be so used as to his work or to his employer. [IRRI v. NLRC,
valid justification for dismissal from work only if the 1993]
infractions are related to the subsequent offense (d) In IRRI v. NLRC (1993), homicide outside IRRI
upon which basis the termination of employment is [employer] complex after office hours and
decreed. [Stellar Industrial Service, Inc. v. NLRC, against a non-IRRI employee.
1996; La Carlota Planters Assn. v. NLRC, 1998]
Courtesy Resignation – Resignation must be
Professional Training / Residency Training: a voluntary. Adding the word "courtesy" did not
residency or resident physician position in a medical change the essence of resignation. That courtesy
specialty is never a permanent one. Residency resignations were utilized in government
connotes training and temporary status. It is the reorganization did not give private respondent the
step taken by a physician right after post-graduate right to use it as well in its own reorganization and
internship [and after hurdling the Medical rehabilitation plan. [Batongbacal vs. Associated
Licensure Examinations] prior to his recognition as Bank, 1988]
a specialist or sub-specialist in a given field.
(a) right to security of tenure only to the extent that
they periodically make the grade.[Felix v.
Buenaseda, 1995]

PAGE 98
 ANNEX B: COMPARISON BETWEEN SSS AND GSIS
SSS GSIS

Enabling Law
RA 1161 as amended by RA 8282: Social Security Act of 1997 RA 8291 amending PD 1146
Definition of Terms
Employer – any person, natural or juridical, domestic or Employer – National government, its political subdivisions,
foreign, who carries on in the Philippines any trade business, branches, agencies or instrumentalities, including government-
industry, undertaking, and uses the services of another person owned or controlled corporations and financial institutions with
who is under his orders as regards the employment, except original charters (GOCCs); constitutional commissions; and
those considered as employer under the GSIS. A self-employed judiciary
person shall be both employer and employee at the same
time. Employee – any person receiving compensation while in service of
an employer whether by election or appointment, irrespective of
Employee – any person who performs services for an employer status of appointment; baranggay officials; and sangguniang
in which either or both mental and physical efforts are used officials
and who receives compensation for such services, where there
is an employer—employee relationship; also, a self-employed Note: No counterpart for self-employed.
person who is both employee and employer at the same time

Self-employed – any person whose income is not derived from

employment, including, but not limited to:
(a) self-employed professionals;
(b) partners and single proprietors of businesses;
(c) actors, directors, scriptwriters, news correspondents not
considered as employees under the above definition;
(d) athletes, coaches, trainers, jockeys; and
(e) individual farmers and fishers.
Dependents:
(a) Legal spouse entitled by law to receive support;
(b) Child – unmarried, not gainfully employed, and below 21 or
(c) Child over 21 if he or she became permanently incapacitated Same except that a child here is below 18
and incapable of self-support, physically or mentally,; child
may be legitimate, legitimated, legally adopted, or
illegitimate;
Parent who is receiving regular support.
Beneficiaries
(1) Primary
(a) Dependent spouse – until remarriage (see above);
(b) Dependent children (see above); illegitimate children
are entitled only to 50% of the share of legitimate Same except that RA 8291 does not distinguish share of
children unless there are no legitimate children, in legitimate and illegitimate children
which case, they get 100%.
(2) Secondary – shall only receive when the primary
beneficiaries are absent: Dependent parents
(3) Other – any other person designated by the member as
his/her secondary beneficiary.
Compensation – all actual remuneration for employment, Compensation – basic pay received excluding per diems, bonuses,
including living allowance, as well as the cash value of any overtime, honoraria, allowances and other emoluments not
remuneration paid in any medium other than cash except that integrated into the basic pay under existing laws.
portion already above the max salary credit under Sec. 18 of
the Act.
Coverage
Compulsory Public sector employees below the compulsory retirement age of
(a) Employers as defined above; 65.
(b) Employees not over 60 years including household helpers
with at least P1,000 monthly pay; and Exceptions:
(c) Self-employed. (a) AFP and PNP;
(b) Members of the Judiciary and Constitutional Commissions who
Voluntary are covered only by life insurance as they have separate
(a) Spouses who devote full time to managing household and retirement schemes;
family affairs; (c) Contractual employees with no employee-employer relationship
(b) OFWs recruited by foreign-based employers; with the agency they serve.
(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.

Note: Foreign governments, international organizations or

their wholly owned instrumentality 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.
Effective Date of Coverage
st
Employer: 1 day of operation
st
Employee: 1 day at work
Self-employed: upon registration with SSS
Summary of Benefits
(a) Monthly pension (a) Monthly pension
(b) Dependents’ pension (b) Retirement benefits
(c) Retirement benefits (c) Permanent disability benefits
(d) Permanent disability benefits (d) Death Benefits
(e) Death benefits (e) Funeral benefits
(f) Funeral benefits (f) Loan – GSIS website provides for this
(g) Loan – Social Security Commission Resolution No. 669. (g) Temporary disability benefits [similar to sickness]
Moreover, several SSS-issued circulars such as Circular No. (h) Separation benefits
21-P and No. 52 pertain to the treatment of salary loans, (i) Unemployment benefits – Sec 11
sometimes providing for more flexible payment terms or (j) Survivorship benefits
condonation for delinquent payers; Santiago v. CA and (k) Life insurance benefits
SSS, GR # L-39949 [1984] resolved an issue involving the
treatment of salary loan repayments; SSS website also Note: Judiciary and Constitutional Commissions are entitled to life
shows loans insurance only.
(h) Sickness benefits
(i) Maternity leave benefits
Effects of Separation from Employment
(1) Employer’s contribution, and Continued membership for the unemployed member; and
(2) Employee’s obligation to pay contribution both cease at entitlement to whatever benefits he has qualified to in the event of
the end of the month of separation; any compensable contingency.
(3) EE shall be credited with all contributions paid on his
behalf and entitled to all benefits set forth by the law.
Dispute Settlement
Social Security Commission CA [Rule 43; questions of law GSIS  CA [Rule 43]  SC [Rule 45]; appeal does not stay
and fact]  SC [Rule 45; questions of law only] execution.
Prescriptive Period
20 years 4 years

PAGE 100