PART I: b.
Constitutional Provisions Concerning
LABOR STANDARDS
I. INTRODUCTION TO LEGAL CONCEPTS
a. Definition of Terms:
1.Labor Legislation- consists of statutes, regulations and
jurisprudence governing the relations between
capital and labor.
2.Labor Standards Law- sets out the minimum terms,
conditions, and benefits of employment, which employers
must provide or comply with and to which the employees
are entitled to as a matter of right.
3.Labor Relations Law- defines the statute, rights, duties
and the institutional mechanisms that govern the
individual and collective interactions of employers,
employees or their representatives. It intends to
stabilize the relations of the employees and their
employers, adjust differences between them through the
encouragement of collective bargaining and settle labor
disputes through conciliation, mediation and arbitration.
4.Welfare and Social Legislation- statutes that govern
the effects of employment. It involves long range benefits
and covers employment for profit or non-profit. It affects
the life of employee.
5.Labor - is the exertion by human beings of physical or
mental efforts, or both, towards the production of goods
and services. Labor also means that sector or groups in
a society which derives its livelihood chiefly from
rendition of work or services in exchange for
compensation under managerial direction.
6.Social Justice- is neither communism nor despotism
nor atomism nor anarchy but the humanization of laws
and the equalization of the social and economic forces by
the state so that justice in its rational and objectively
secular conception may at least be approximated.
Purpose: Promotion of the welfare of all the
people and adoption by the government of measures to
insure economic of all the elements of society.
7.Doctrine of Compassionate Justice- social justice
policy mandates a compassionate attitude toward
working class in its relation to management. In calling for
the protection to labor, the Constitution does not condone
wrongdoing by the employee, it nevertheless urges a
moderation of the sanctions that may be applied to him in
the light of the many disadvantages that weigh heavily on
him like an albatross on his neck. (Gandara Mill Supply
vs. NLRC).
8.Labor- exertion by human beings of physical or mental
efforts or both towards the production of goods and
services. Labor also means that sector or groups in a
society which derives its livelihood chiefly from rendition
of work or services in exchange for compensation under
managerial direction.
Labor:
 Article II, Section 18- State affirms labor as a
primary social economic force. It shall protect the right
of workers and promote their welfare.
 Article III, Section 8- The right of the people,
including those employed in the public or private
sectors, to form unions, associations, or societies for
purposes not contrary to law shall not be abridged.
 Article XII, Section 12- State shall promote
preferential use of Filipino Labor, domestic materials
and locally produced goods, and adopt measures that
held make them more competitive.
 Article XIII, Section 3
(1) State shall afford full protection to labor, local and
overseas, organized and unorganized, and promote
full employment and equality of employment
opportunities for all.
(2) State shall guarantee the rights of all workers to
self-organization, collective bargaining and
negotiations, and peaceful concerted activities,
including the right to security of tenure, human
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.
(3) 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.
(4) 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 on investments,
and to expansion and growth.
 Article XIII, Section 14- The State shall protect the
working women by providing safe and healthful
working conditions, taking into account their material
functions, and provide such facilities and opportunities
that will enhance their welfare and enable them to
realize their full potential in the service of the nation.
c. Basic Rights of Workers:
1. Work under humane conditions;
2. Organize;
3. Conduct collective bargaining or negotiation with
management;
4. Receive living wage;
5. Engage in peaceful concerted activities, including
strike in accordance with law;
6. Enjoy security of tenure;
7. Participate in policy and decision-making
processes affecting their rights and benefits as
may be provided by law;
8. Share in the fruits of the production.
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d. Interest of Management
1. Reasonable return of capital;
2. Gain profit;
3. Hire and terminate employees
COLGATE PALMOLIVE PHILIPPINES vs. BLAS F.
OPLE G.R. No. 73681 June 30, 1988 PARAS
Facts:
Respondent Union filed a Notice of Strike with (BLR) on
ground of ULP consisting of alleged refusal to bargain,
dismissal of union officers/members; and coercing
employees to retract their membership with the union and
restraining non-union members from joining the union. The
MOLE assumed jurisdiction over the dispute. Colgate-
Palmolive Co. pointed out that the formation of the union
and the membership therein of Sayson, Reynante and
Mejia were not in any manner connected with the
company’s decision to dismiss the three; that the fact that
their dismissal came at a time when the alleged union was
being formed was purely coincidental. Public respondent
Minister of Labor ordered the reinstatement of the 3
salesmen to the company on the ground that the dismissed
employees were the first offenders.
PETITIONER’s CONTENTION: Respondent Minister
committed grave abuse of discretion when, notwithstanding
his very own finding that there was just cause for the
dismissal of the 2 salesmen, he nevertheless ordered their
reistatement.
Issue: WON the MOLE is correct in reinstating the 3 erring
employees.
Ruling:
The order of the respondent Minister to reinstate the
employees despite a clear finding of guilt on their part is not
in conformity with law. Reinstatement is simply
incompatible with a finding of guilt. Where the totality of the
evidence was sufficient to warrant the dismissal of the
employees the law warrants their dismissal without making
any distinction between a first offender and a habitual
delinquent. Under the law, respondent Minister is duly
mandated to equally protect and respect not only the
labor or workers' side but also the management
and/or employers' side. The law, in protecting the
rights of the laborer, authorizes neither oppression
nor self-destruction of the employer. In the case at
bench, to order the reinstatement of the erring employees
namely, Mejia, Sayson and Reynante would in effect
encourage unequal protection of the laws as a managerial
employee of petitioner company involved in the same
incident was already dismissed and was not ordered to be
reinstated. As stated by in a decided case " an employer
cannot legally be compelled to continue with the
employment of a person who admittedly was guilty of
misfeasance or malfeasance towards his employer, and
whose continuance in the service of the latter is patently
inimical to his interest."
Thus, the order of MOLE is reversed and set aside.
e. Balancing of Interest thru regulation:
The State, through its inherent police power can
regulate the labor relations law to promote general welfare.
In protecting the labor, the State shall not disregard the
capital so as to result to its destruction. Though protecting
the welfare of the labor is the primordial consideration of
the State; the State also recognized the important role
being played by the capital in the national development.
f. Declaration of Basic Policy- (Art. 3,
LC) The State shall:
1. afford protection to labor;
2. promote full employment;
3. regulate the relations between workers and
employers;
4. assure the right of the workers to self-
organization, security of tenure, collective
bargaining, and just and humane conditions of
work; and
5. ensure equal work opportunities regardless of
age, sex, or creed.
g. Basis of Labor Law:
1. Police Power- The regulation of liberty and
property rights of individuals for the promotion and
general welfare of the people.
2. Social Justice- In accordance with the state
policy of affording full protection to labor, when
social justice collides with the equal protection
clause, the law should accord more sympathy and
compassion to the less privileged workingman.
h. Construction/ Interpretation in Favor
of Labor (Art. 4)
 In interpreting Labor Code provisions, the
workingman’s welfare should be the primordial and
paramount consideration. Article 4 of the Labor
Code provides that “all doubts in the implementation
and interpretation of the provisions of the Labor Code
including its implementing rules and regulations shall
be resolved in favor of labor.
 If doubts exist between the evidence presented by the
employer and the employee, the doubt should be
resolved in favor of the employee.
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 The State is bound under the Constitution to afford full
protection to labor and when conflicting interests of
labor and capital are to be weighed on the scales of
social justice, the heavier influence of the latter should
be counterbalanced with the sympathy and
compassion the law accords the less privileged
workingman. This is only fair if the worker is to be
given the opportunity and the right to assert and
defend his cause, not as a subordinate, but as
part of management with which he can negotiate
on even plane. Thus, labor is not a mere
employee of capital but its active and equal
partner. (Fuentes vs. NLRC, 266 S 24).
EASTERN SHIPPING LINES vs. POEA G.R. NO.
76633 OCT. 18, 1988 CRUZ
Facts:
Vitaliano Saco was Chief Officer of the M/V Eastern Polaris
when he was killed in an accident in Tokyo, Japan. His
widow sued for damages under EO 707 and MC No. 2 of
the POEA. The petitioner Eastern Shipping, as owner of the
vessel, argued that the complaint was cognizable not by
the POEA but by the SSS and should have been filed
against the State Insurance Fund. The POEA nevertheless
assumed jurisdiction and after considering the position
papers of the parties, ruled in favor of the complainant. The
award consisted of death benefits and burial expenses. The
award was made by the POEA pursuant to MC 2. Such
award for seamen is separate and distinct from, and will be
in addition to whatever benefits which the seamen is
entitled to under the Philippine laws. This circular
prescribed a standard contract to be adopted by both
foreign and domestic shipping companies in the hiring of
the Filipino seamen for overseas employment. Hence, this
petition.
PETITIONER’s CONTENTION: The company did not enter
into such kind of contract (MC 2) with Saco.
Issue: WON petitioner entered into such kind of contract
with Saco.
Ruling:
Whatever doubts may still remain regarding the rights
of the parties in this case are resolved in favor of the
private respondent, in line with the express mandate
of the Labor Code and the principle that those with
less in life should have more in law. When the
conflicting interests of labor and capital are weighed
on the scales of social justice, the heavier influence
of the latter must be counter-balanced by the
sympathy and compassion the law must accord the
underprivileged worker. This is only fair if he is to be
given the opportunity and the right to assert and
defend his cause not as a subordinate but as a peer
of management, with which he can negotiate on even
plane. Labor is not a mere employee of capital but its
active and equal partner. In the case at bench, the
contention of petitioner is untenable. First, Eastern should
have done such a contract as required by MC 2. MC 2
specifically declared that "all parties to the employment of
any Filipino seamen on board any ocean-going vessel are
advised to adopt and use this employment contract and to
desist from using any other format of employment contract
effective that date." Second, even if it had not done so, the
provisions of the said circular are nevertheless deemed
written into the contract with Saco as a postulate of the
police power of the State. It is not denied that the private
respondent has been receiving a monthly death benefit
pension and that she was also paid a funeral benefit by the
SSS. In addition, as already observed, she also received
burial gratuity from the Welfare Fund for Overseas
Workers. These payments will not preclude allowance of
the private respondent's claim against the petitioner
because it is specifically reserved in the standard contract
of employment for Filipino seamen under MC 2.
Petition is dismissed.
MANILA ELECTRIC COMPANY vs. NLRC G.R. No.
78763 July 12, 1989 MEDIALDEA
Facts:
Private respondent Signo was employed in petitioner
company as supervisor-leadman since January 1963 up to
the time when his services were terminated. A certain
Fernando de Lara filed an application with the petitioner
company for electrical services at his residence at
Peñafrancia Subdivision. Signo facilitated the processing of
the said application as well as the required documentation
for said application at Rizal. In consideration thereof, Signo
received from Fernando de Lara the amount of P7,000.
Signo thereafter filed the application for electric services
with the Power Sales Division of the company. It was
established that the area where the residence of de Lara
was located is not yet within the serviceable point of
Meralco, because the place was beyond the 30-meter
distance from the nearest existing Meralco facilities. In
order to expedite the electrical connections at de Lara's
residence, certain employees of the company, including
Signo, made it appear in the application that the sari-sari
store at the corner of Marcos Highway, an entrance to the
subdivision, is applicant de Lara's establishment, which, in
reality is not owned by the latter. As a result of this scheme,
the electrical connections to de Lara's residence were
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installed and made possible. However, due to the fault of
the Power Sales Division of petitioner company, Fernando
de Lara was not billed for more than a year. Meralco
conducted an investigation of the matter and found Signo
responsible for the said irregularities in the installation.
Thus, the services of the latter were terminated. Signo filed
a complaint for illegal dismissal. NLRC ruled in favor of
Signo and ordered his reinstatement. Hence, this petition
for certiorari.
PETITIONER's CONTENTION: The acts of Signo
constituted breach of trust and caused the petitioner
company economic losses resulting from the unbilled
electric consumption of de Lara
Issue: WON Signo should be dismissed.
Ruling:
The power to dismiss is the normal prerogative of the
employer. An employer, generally, can dismiss or lay-
off an employee for just and authorized causes
enumerated under Articles 282 and 283 of the Labor
Code. However, the right of an employer to freely
discharge his employees is subject to regulation by
the State, basically in the exercise of its paramount
police power. This is so because the preservation of
the lives of the citizens is a basic duty of the State,
more vital than the preservation of corporate profits.
In the case at bench, there is no question that herein Signo
is guilty of breach of trust and violation of company rules,
the penalty for which ranges from reprimand to dismissal
depending on the gravity of the offense. However, the
dismissal should not be meted to Signo considering his 20
years of service in the employ of petitioner, without any
previous derogatory record, in addition to the fact that
petitioner company had awarded him in the past, two (2)
commendations for honesty. If ever the petitioner suffered
losses resulting from the unlisted electric consumption of
de Lara, this was found to be the fault of petitioner's Power
Sales Division. Notwithstanding the existence of a
valid cause for dismissal, such as breach of trust by
an employee, nevertheless, dismissal should not be
imposed, as it is too severe a penalty if the latter has
been employed for a considerable length of time in
the service of his employer. Further, in carrying out
and interpreting the Labor Code's provisions and its
implementing regulations, the workingman's welfare
should be the primordial and paramount
consideration. This kind of interpretation gives
meaning and substance to the liberal and
compassionate spirit of the law as provided for in
Article 4 of the New Labor Code which states that "all
doubts in the implementation and interpretation of the
provisions of the Labor Code including its
implementing rules and regulations shall be resolved
in favor of labor."
Petition is dismissed.
i. Rules and Regulations (Art. 5)
 All rules and regulations issued by the DOLE shall
become effective 15 days after announcement of their
adoption in newspapers of general circulation.
 Every agency shall file with the UP Law Center 3
certified copies of every ruled adopted by it. (Sec. 3,
Chapter 2, RAC)
j. Applicability of Labor Code
Provisions (Art. 6)
 General Rule- Applies alike to all workers, whether
agricultural or non-agricultural.
 Exception- All government employees including
employees of government-owned or controlled
corporations with original charters shall be governed
by Civil Service Law, its Rules and Regulations.
 GOCCs with original charters are governed by Civil
Service Law; while GOCCs not directly chartered or
created by special law but were acquired or taken over
by corporations created under special law, are
governed by the Labor Code.
 Corporate Officers are governed by the SEC
Regulation Code.
II. EMPLOYER-EMPLOYEE RELATIONSHIP
a. Four-fold test in determining
employer-employee relationship
1. Selection and engagement of employee
2. Payment of Wages
3. Power of Dismissal
4. Control Test
 Of the above, control test is commonly regarded as
the most crucial and determinative indicator of the
presence or absence of the ER-EER.
 The right of control test is where the person for
whom the services are performed reserves a right to
control not only the end to be achieved but also the
means to be used in reaching such end.
NOTE: Not every form of control will have the effect of
establishing an employer-employee relationship. A line
should be drawn between:
a. Rules that merely serve as guidelines, which only
promote the result. In such case, no employer-
employee relationship exists.
b. Rules that fix the methodology and bind or restrict
the party hired to the use of such means of
methods. These address both the result and the
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 means employed to achieve it and hence,
employer-employee relationship exists. (Insular
Life vs. NLRC, 179 S 459)
PAZ MARTIN JO vs. NLRC and PETER MEJILA G.R.
No. 121605 February 2, 2000 QUISUMBING
Facts:
Private respondent Peter Mejila worked as barber on a
piece rate basis at Dina's Barber Shop. In 1970, the owner,
Dina Tan, sold the barbershop to petitioners Paz Martin Jo
and Cesar Jo. All the employees, including private
respondent, were absorbed by the new owners. The name
of the barbershop was changed to Windfield Barber Shop.
The owners and the barbers shared in the earnings of the
barber shop. The barbers got 2/3 of the fee paid for every
haircut or shaving job done, while 1/3 went to the owners of
the shop. In 1977, petitioners designated private
respondent as caretaker of the shop because the former
caretaker became physically unfit. Private respondent's
duties as caretaker, in addition to his being a barber, were:
(1) to report to the owners of the barbershop whenever the
airconditioning units malfunctioned and/or whenever water
or electric power supply was interrupted, (2) to call the
laundry woman to wash dirty linen; (3) to recommend
applicants for interview and hiring; (4) to attend to other
needs of the shop. For this additional job, he was given an
honorarium equivalent to one-third (1/3) of the net income
of the shop. As a caretaker, private respondent received
monthly honorarium. In November 1992, private
respondent had an altercation with his co-barber, Jorge
Tinoy. The bickerings became serious so that Private
respondent reported the matter to Atty. Allan Macaraya of
the labor department. Atty. Macaraya directed petitioners'
counsel, Atty. Prudencio Abragan, to thresh out the
problem. During the mediation meeting held at Atty.
Abragan's office a new twist was added. Despite the
assurance that he was not being driven out as caretaker-
barber, private respondent demanded payment for several
thousand pesos as his separation pay and other monetary
benefits. Meanwhile, private respondent continued
reporting for work at the barbershop. But, on January 2,
1993, he turned over the duplicate keys of the shop to the
cashier and took away all his belongings therefrom. On
January 8, 1993, he began working as a regular barber at
the newly opened Goldilocks Barbershop also in Iligan City.
Private respondent filed a complaint for illegal dismissal.
Significantly, the complaint did not seek reinstatement as a
positive relief. Labor Arbiter found that private respondent
was an employee of petitioners, and that private
respondent was not dismissed but had left his job
voluntarily because of his misunderstanding with his co-
worker.The Labor Arbiter dismissed the complaint, but
ordered petitioners to pay private respondent his 13th
month pay and attorney's fees. NLRC sustained the labor
arbiter's finding as to the existence of employer-employee
relationship between petitioners and private respondent,
but it ruled that private respondent was illegally dismissed.
Hence, the petitioners were ordered to reinstate private
respondent and pay the latter's backwages, 13th month
pay, separation pay and attorney's fees. Hence, this
petition.
Issue: WON there is employer-employee relationship
between petitioners and private respondent.
Ruling:
In determining the existence of an employer-
employee relationship, the following elements are
considered: (1) the selection and engagement of the
workers; (2) power of dismissal; (3) the payment of
wages by whatever means; and (4) the power to
control the worker's conduct, with the latter assuming
primacy in the overall consideration. The power of
control refers to the existence of the power and not
necessarily to the actual exercise thereof. It is not
essential for the employer to actually supervise the
performance of duties of the employee; it is enough
that the employer has the right to wield that power.
In the case at bench, there is no clear showing that
petitioners and private respondent had intended to pursue
a relationship of industrial partnership, thus, there is no
doubt that private respondent was employed by petitioners
as caretaker-barber. Initially, petitioners, as new owners of
the barbershop, hired private respondent as barber by
absorbing the latter in their employ. Undoubtedly, the
services performed by private respondent as barber is
related to, and in the pursuit of the principal business
activity of petitioners. Later on, petitioners tapped private
respondent to serve concurrently as caretaker of the shop.
Certainly, petitioners had the power to dismiss private
respondent being the ones who engaged the services of
the latter. In fact, private respondent sued petitioners for
illegal dismissal, albeit contested by the latter. As a
caretaker, private respondent was paid by petitioners
wages in the form of honorarium, originally, at the rate of
1/3 of the shop's net income but subsequently pegged at a
fixed amount per month. As a barber, private respondent
earned 2/3 of the fee paid per haircut or shaving job done.
Furthermore, the following facts indubitably reveal that
petitioners controlled private respondent's work
performance, in that: (1) private respondent had to inform
petitioners of the things needed in the shop; (2) he could
only recommend the hiring of barbers and masseuses, with
petitioners having the final decision; (3) he had to be at the
shop at 9:00 a.m. and could leave only at 9:00 p.m.
because he was the one who opened and closed it, being
the one entrusted with the key. These duties were complied
with by the private respondent upon instructions of
5
petitioners. Moreover, such task was crucial to the business
operation of petitioners. Hence, there was enough basis to
declare private respondent an employee of petitioners.
The Supreme Court found that there was no dismissal of,
but abandonment of work by private respondent. Hence,
the petition is granted.
SOCIAL SECURITY SYSTEM vs. CA and CONCHITA
AYALDE G.R. No. 100388. December 14, 2000
YNARES-SANTIAGO
Facts:
In a petition before the Social Security Commission,
Margarita Tana, widow of the late Ignacio Tana, Sr., alleged
that her husband was, before his demise, an employee of
Conchita Ayalde as a farmhand in the 2 sugarcane
plantations she owned (Had. B-70) and Hda. B-15-M which
leased from the University of the Philippines. She further
alleged that Tana worked continuously 6 days a week, 4
weeks a month, and for 12 months every year between
1961-1979. For his labor, Tana allegedly received a regular
salary according to the minimum wage prevailing at the
time. She further alleged that throughout the given period,
social security contributions, as well as medicare and
employees compensation premiums were deducted from
Tana’s wages. It was only after his death that Margarita
discovered that Tana was never reported for coverage, nor
were his contributions/premiums remitted to SSS.
Consequently, she was deprived of the burial grant and
pension benefits accruing to the heirs of Tana had he been
reported for coverage. The SSS revealed that neither Hda.
B-70 nor respondents Ayalde and Maghari were registered
members-employers of the SSS, and consequently, Ignacio
Tana, Sr. was never registered as a member-employee.
Likewise, SSS records reflected that there was no way of
verifying whether the alleged premium contributions were
remitted since the respondents were not registered
members-employers. Antero Maghari raised the defense
that he was a mere employee who was hired as an
overseer of Hda. B-70 and as such, his job was limited to
those defined for him by the employer which never involved
matters relating to the SSS. Ayalde belied the allegation
that Ignacio Tana, Sr. was her employee, admitting only
that he was hired intermittently as an independent
contractor to plow, harrow, or burrow Hda. No. Audit B-15-
M. Tana used his own carabao and other implements, and
he followed his own schedule of work hours. Social
Security Commission ruled in favor of Tana and absolved
Maghari from liability because he is a mere employee of
Conchita Ayalde. CA reversed the Social Security
Commission and declaring that the late Ignacio Tana, Sr.
was an independent contractor, hence, this petition for
review on certiorari.
Issue: WON an agricultural laborer who was hired on
“pakyaw” basis can be considered an employee entitled to
compulsory coverage and corresponding benefits under the
Social Security Law.
Ruling:
The mandatory coverage under the SSS Law is premised
on the existence of an employer-employee relationship,
and Section 8(d) defines an “employee” as “any
person who performs services for an employer in
which either or both mental and physical efforts are
used and who receives compensation for such
services where there is an employer-employee
relationship.” The essential elements of an employer-
employee relationship are: (a) the selection and
engagement of the employee; (b) the payment of
wages; (c) the power of dismissal; and (d) the power
of control with regard to the means and methods by
which the work is to be accomplished, with the power
of control being the most determinative factor.
In the case at bench, there is no question that Tana was
selected and his services engaged by either Ayalde
herself, or by Antero Maghari, her overseer .
Corollarily, they also held the prerogative of dismissing or
terminating Tana’s employment. As regards the payment
of wages, Margarita Tana and her corroborating witnesses
testified that her husband was paid daily wages “per
quincena” as well as on “pakyaw” basis. Ayalde insists that
Tana was paid solely on “pakyaw” basis. To support her
claim, she presented payrolls. The records readily show
that the exhibits offered are not complete, and are but a
mere sampling of payrolls. While the names of the
supposed laborers appear therein, their signatures are
nowhere to be found. The witnesses did not waver in their
assertion that while Tana was hired by Ayalde as an
“arador” on “pakyaw” basis, he was also paid a daily wage
which Ayalde’s overseer disbursed every 15 days.
Moreover, Tana worked continuously for Ayalde, not only as
“arador” on “pakyaw” basis, but as a regular farmhand,
doing backbreaking jobs for Ayalde’s business. There is no
shred of evidence to show that Tana was only a seasonal
worker, much less a migrant worker. Ayalde herself
testified that Tana and his family resided in the plantation.
If he was a mere “pakyaw” worker or independent
contractor, then there would be no reason for Ayalde to
allow them to live inside her property for free.
Secondly, Ayalde made much ado of her claim that Tana
could not be her employee because she exercised no
control over his work hours and method of performing his
task as “arador.” It is also an admitted fact that Tana, Jr.
used his own carabao and tools. Thus, she contends that,
6
applying the “control test,” Tana was not an employee but
an independent contractor.
The records reveal that while Ayalde herself may not have
directly imposed on Tana the manner and methods to follow
in performing his tasks, she did exercise control through
her overseer. Be that as it may, the power of control
refers merely to the existence of the power. It is not
essential for the employer to actually supervise the
performance of duties of the employee; it is sufficient
that the former has a right to wield the power.
Certainly, Ayalde, on her own or through her overseer,
wielded the power to hire or dismiss, to check on the work,
be it in progress or quality, of the laborers. As the
owner/lessee of the plantations, she possessed the power
to control everyone working therein and everything taking
place therein.
Jurisprudence provides other equally important
considerations which support the conclusion that Tana was
not an independent contractor. First, Tana cannot be said
to be engaged in a distinct occupation or business. His
carabao and plow may be useful in his livelihood, but he is
not independently engaged in the business of farming or
plowing. Second, he had been working exclusively for
Ayalde for eighteen (18) years prior to his demise. Third,
there is no dispute that Ayalde was in the business of
growing sugarcane in the two plantations for commercial
purposes. There is also no question that plowing or
preparing the soil for planting is a major part of the regular
business of Ayalde.
CA is reversed.
1. Selection and Hiring:
ALIPIO R. RUGA vs. NLRC and DE GUZMAN
FISHING ENTERPRISES G.R. No. L-72654-61
January 22, 1990 FERNAN
Facts:
Petitioners Alipio Ruga were the fishermen-crew members
of 7/B Sandyman II, one of several fishing vessels owned
and operated by private respondent De Guzman Fishing
Enterprises which is primarily engaged in the fishing
business. Petitioners rendered service aboard said fishing
vessel in various capacities, as follows: Alipio Ruga and
Jose Parma patron/pilot; Eladio Calderon, chief engineer;
Laurente Bautu, second engineer; Jaime Barbin, master
fisherman; Nicanor Francisco, second fisherman; Philip
Cervantes and Eleuterio Barbin, fishermen. For services
rendered in the conduct of private respondent's regular
business of "trawl" fishing, petitioners were paid on
percentage commission basis in cash by one Mrs. Pilar de
Guzman, cashier of private respondent. Upon arrival at the
fishing port, petitioners were told by Jorge de Guzman,
president of private respondent, to proceed to the police
station at Camaligan, Camarines Sur, for investigation on
the report that they sold some of their fish-catch at midsea
to the prejudice of private respondent. Petitioners denied
the charge claiming that the same was a countermove to
their having formed a labor union. During the investigation,
no witnesses were presented to prove the charge against
petitioners, and no criminal charges were formally filed
against them. Notwithstanding, private respondent refused
to allow petitioners to return to the fishing vessel to resume
their work on the same day. Petitioners filed complaints for
illegal dismissal which were joined and thereafter dismissed
by the Labor Arbiter and affirmed by NLRC. Hence, the
instant petition.
Issue: WON there is an employer-employee relationship
between private respondents and petitioners.
Ruling:
The Supreme Court have consistently ruled that in
determining the existence of an employer-employee
relationship, the elements that are generally considered are
the following (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the employer's power to control the
employee with respect to the means and methods by which
the work is to be accomplished. The employment relation
arises from contract of hire, express or implied. In the
absence of hiring, no actual employer-employee
relation could exist. In the case at bench, petitioners
testified that they were directly hired by private respondent
through its general manager, Arsenio de Guzman, and its
operations manager, Conrado de Guzman; that, except for
Laurente Bautu, they had been employed by private
respondent from 8 to 15 years in various capacities; that
private respondent, through its operations manager,
supervised and controlled the conduct of their fishing
operations as to the fixing of the schedule of the fishing
trips, the direction of the fishing vessel, the volume or
number of tubes of the fish-catch the time to return to the
fishing port, which were communicated to the patron/pilot
by radio (single side band); that they were not allowed to
join other outfits even the other vessels owned by private
respondent without the permission of the operations
manager; that they were compensated on percentage
commission basis of the gross sales of the fish-catch which
were delivered to them in cash by private respondent's
cashier, Mrs. Pilar de Guzman; and that they have to follow
company policies, rules and regulations imposed on them
by private respondent.
Petition is granted.
7
2. Payment of Wages:
NSULAR LIFE ASSURANCE CO. vs. NLRC and
PANTALEON DE LOS REYES G.R. No. 119930
March 12, 1998 BELLOSILLO
Facts:
Petitioner Insular Life Co. entered into an agency contract
with respondent Pantaleon de los Reyes authorizing the
latter to solicit within the Philippines applications for life
insurance and annuities for which he would be paid
compensation in the form of commissions. The contract
was prepared by petitioner in its entirety and De los Reyes
merely signed his conformity thereto. It contained the
stipulation that no employer-employee relationship shall be
created between the parties and that the agent shall be free
to exercise his own judgment as to time, place and means
of soliciting insurance. De los Reyes however was
prohibited by petitioner from working for any other life
insurance company, and violation of this stipulation was
sufficient ground for termination of the contract. Aside from
soliciting insurance for the petitioner, private respondent
was required to submit to the former all completed
applications for insurance within 90 consecutive days, and
collect initial premiums and payments on policy loans.
Private respondent was also bound to turn over to the
company immediately any and all sums of money collected
by him. In a written communication by petitioner to
respondent De los Reyes, the latter was urged to register
with the Social Security System as a self-employed
individual. On 1 March 1993 petitioner and private
respondent entered into another contract where the latter
was appointed as Acting Unit Manager under its office in
Cebu. As such, the duties and responsibilities of De los
Reyes included the recruitment, training, organization and
development within his designated territory. It was similarly
provided in the management contract that the relation of
the acting unit manager and/or the agents of his unit to the
company shall be that of independent contractor. If the
appointment was terminated for any reason other than for
cause, the acting unit manager would be reverted to agent
status and assigned to any unit. As in the previous agency
contract, De los Reyes together with his unit force was
granted freedom to exercise judgment as to time, place and
means of soliciting insurance. Aside from being granted
override commissions, the acting unit manager was given
production bonus, development allowance and a unit
development financing scheme euphemistically termed
"financial assistance.” Private respondent worked
concurrently as agent and Acting Unit Manager until he was
notified by petitioner that his services were terminated.
Delos Reyes filed a complaint for illegal dismissal before
the Labor Arbiter which was dismissed on the ground of
lack of jurisdiction. NLRC, finding there exists employer-
employee relationship between the parties, reversed the
Labor Arbiter, hence, this petition.
Issue: WON there is an employer-employee relationship
between the parties.
Ruling:
The first contract between Insular Life and Delos Reyes is
an agency contract. However, the second contract between
the parties, contained conditionalities that indicate an
employer-employee relationship.
It is axiomatic that the existence of an employer-
employee relationship cannot be negated by
expressly repudiating it in the management contract
and providing therein that the "employee" is an
independent contractor when the terms of the
agreement clearly show otherwise. For, the
employment status of a person is defined and
prescribed by law and not by what the parties say it
should be. In determining the status of the
management contract, the "four-fold test" on
employment earlier mentioned has to be applied. In
the case at bench, on the matter of payment of wages,
petitioner points out that respondent was compensated
strictly on commission basis, the amount of which was
totally dependent on his total output. But, the manager's
contract, speaks differently. The manager’s contract
demonstrates that the performance requirement imposed
on De los Reyes was applicable quarterly while his
entitlement to the free portion (P300) and the validated
portion (P1,200) was monthly starting on the first month of
the twelve (12) months of the appointment. Thus, it has to
be admitted that even before the end of the first quarter and
prior to the so-called quarterly performance evaluation,
private respondent was already entitled to be paid both the
free and validated portions of the UDF every month
because his production performance could not be
determined until after the lapse of the quarter involved. This
indicates quite clearly that the unit manager's quarterly
performance had no bearing at all on his entitlement at
least to the free portion of the UDF which for all intents and
purposes comprised the salary regularly paid to him by
petitioner. Thus it cannot be validly claimed that the
financial assistance consisting of the free portion of the
UDF was purely dependent on the premium production of
the agent. Be that as it may, it is worth considering that the
payment of compensation by way of commission does not
militate against the conclusion that private respondent was
an employee of petitioner. Under Art. 97 of the Labor Code,
"wage" shall mean "however designated, capable of being
expressed in terms of money, whether fixed or ascertained
on a time, task, price or commission basis."
Petition is denied.
8
3. Power of Dismissal:
CECILIO P. DE LOS SANTOS vs. NLRC and
ROGELIO I. RAYALA G.R. No. 121327. December
20, 2001 BELLOSILLO
Facts:
Petitioner De los Santos was first assigned at the LPC
assembly line of Camara Steel Industries Inc., a company
engaged in the manufacture of steel products such as LPG
cylinders and drums. Then, he became operator of a
blasting machine. Later, he was designated as a janitor
assigned to clean the premises of the company, and
occasionally, to transfer scrap and garbage from one site to
another. On 11 May 1993 petitioner was doing his usual
chores as a janitor of CAMARA STEEL when he
momentarily left his pushcart to answer the call of Narciso
Honrado, scrap in-charge, who summoned him to the
company clinic. There Honrado handed him a box which
he placed on top of a drum in his pushcart for transfer to
the other lot of the company near gate 2. On his way out of
gate 2, however, the security guard on duty found in the
box handed to him by Honrado two (2) pieces of electric
cable. Apprehensive that he might be charged with theft,
petitioner De los Santos explained that the electric cord
was declared a scrap by Honrado whose instructions he
was only following to transfer the same to the adjacent lot
of the company as scrap. Narciso Honrado admitted
responsibility for the haul and his error in declaring the
electric cables as scrap. The general manager, apparently
appeased by Honrado’s apology, issued a memorandum
acknowledging receipt of his letter of apology and
exculpated him of any wrongdoing. Taking an unexpected
volte face, however, the company through filed a criminal
complaint for frustrated qualified theft against Honrado and
petitioner De los Santos. The complaint however was
subsequently dismissed by the Provincial Prosecutor of
Pasig for lack of evidence. Upon request of Top-Flite,
alleged manpower agency of De los Santos, CAMARA
terminated the services of the latter. Delos Santos filed an
action for illegal dismissal and the Labor Arbiter ordered his
reinstatement. NLRC reversed the Labor Arbiter and
remanded the case to the arbitration branch of origin for
further proceedings. Hence, this petition for certiorari.
Issue: WON there is employer-employee relationship
between CAMARA and Delos Santos.
Ruling:
There are the four (4) standards in determining the
existence of an employer-employee relationship,
namely: (a) the manner of selection and engagement
of the putative employee; (b) the mode of payment
of wages; (c) the presence or absence of power of
dismisssal; and, (d) the presence or absence of
control of the putative employee's conduct. Most
determinative among these factors is the so-called
"control test." In the case at bench, records would attest
that even the power to dismiss was vested with CAMARA
which admitted in its Reply that "Top-Flite requested
CAMARA to terminate his employment after he was caught
by the security guard committing theft." A cursory reading of
this declaration will confirm the fact that the dismissal of De
los Santos could only be effected by CAMARA and not by
Top-Flite as the latter could only "request" for De los
Santos' dismissal. If Top-Flite was truly the employer of De
los Santos, it would not be asking permission from or
"requesting" respondent CAMARA to dismiss De los Santos
considering that it could very well dismiss him without
CAMARA's assent. All the foregoing considerations affirm
by more than substantial evidence the existence of an
employer-employee relationship between De los Santos
and CAMARA.
Petition is granted.
4. Control Test:
OSCAR VILLAMARIA, JR. vs. CA and JERRY V.
BUSTAMANTE G.R. No. 165881 April 19, 2006
CALLEJO, SR.
Facts:
Petitioner Oscar Villamaria, Jr. was the owner of Villamaria
Motors, a sole proprietorship engaged in assembling
passenger jeepneys. By 1995, Villamaria stopped
assembling jeepneys and retained only nine, four of which
he operated by employing drivers on a “boundary basis.”
One of those drivers was respondent Bustamante.
Bustamante remitted P450.00 a day to Villamaria as
boundary and kept the residue of his daily earnings as
compensation for driving the vehicle. Villamaria verbally
agreed to sell the jeepney to Bustamante under the
“boundary-hulog scheme,” where Bustamante would remit
to Villarama P550.00 a day for a period of four years;
Bustamante would then become the owner of the vehicle
and continue to drive the same under Villamaria’s
franchise. It was also agreed that Bustamante would make
a downpayment of P10,000.00. Villamaria executed a
contract entitled “Kasunduan ng Bilihan ng Sasakyan sa
Pamamagitan ng Boundary-Hulog” over the passenger
jeepney. The parties agreed that if Bustamante failed to
pay the boundary-hulog for three days, Villamaria Motors
would hold on to the vehicle until Bustamante paid his
arrears, including a penalty of P50.00 a day; in case
Bustamante failed to remit the daily boundary-hulog for a
period of one week, the Kasunduan would cease to have
legal effect and Bustamante would have to return the
9
vehicle to Villamaria Motors. Under the Kasunduan,
Bustamante was prohibited from driving the vehicle without
prior authority from Villamaria Motors. Thus, Bustamante
was authorized to operate the vehicle to transport
passengers only and not for other purposes. He was also
required to display an identification card in front of the
windshield of the vehicle; in case of failure to do so, any
fine that may be imposed by government authorities would
be charged against his account. Bustamante further
obliged himself to pay for the cost of replacing any parts of
the vehicle that would be lost or damaged due to his
negligence. In case the vehicle sustained serious damage,
Bustamante was obliged to notify Villamaria Motors before
commencing repairs. Bustamante was not allowed to wear
slippers, short pants or undershirts while driving. He was
required to be polite and respectful towards the
passengers. He was also obliged to notify Villamaria
Motors in case the vehicle was leased for two or more days
and was required to attend any meetings which may be
called from time to time. Aside from the boundary-hulog,
Bustamante was also obliged to pay for the annual
registration fees of the vehicle and the premium for the
vehicle’s comprehensive insurance. Bustamante promised
to strictly comply with the rules and regulations imposed by
Villamaria for the upkeep and maintenance of the jeepney.
Bustamante continued driving the jeepney under the
supervision and control of Villamaria. As agreed upon, he
made daily remittances of P550.00 in payment of the
purchase price of the vehicle. Bustamante failed to pay for
the annual registration fees of the vehicle, but Villamaria
allowed him to continue driving the jeepney. In 1999,
Bustamante and other drivers who also had the same
arrangement with Villamaria Motors failed to pay their
respective boundary-hulog. Villamaria took back the
jeepney driven by Bustamante and barred the latter from
driving the vehicle. Bustamante filed a Complaint for Illegal
Dismissal against Villamaria and his wife Teresita. Labor
Arbiter rendered judgment in favor of the spouses
Villamaria. NLRC dismissed Bustamante’s appeal. CA ruled
in favor of Bustamante, hence, this petition.
Issue: WON there is employer-employee relationship
between Villamaria and Bustamante.
Ruling:
In a decided case, it has been held that the jeepney
owner/operator-driver relationship under the boundary
system is that of employer-employee and not lessor-
lessee. The boundary system is a scheme by an
owner/operator engaged in transporting passengers
as a common carrier to primarily govern the
compensation of the driver, that is, the latter’s daily
earnings are remitted to the owner/operator less the
excess of the boundary which represents the driver’s
compensation. Under this system, the owner/operator
exercises control and supervision over the driver. It is
unlike in lease of chattels where the lessor loses
complete control over the chattel leased but the
lessee is still ultimately responsible for the
consequences of its use. The management of the
business is still in the hands of the owner/operator,
who, being the holder of the certificate of public
convenience, must see to it that the driver follows the
route prescribed by the franchising and regulatory
authority, and the rules promulgated with regard to
the business operations. The fact that the driver
does not receive fixed wages but only the excess of
the “boundary” given to the owner/operator is not
sufficient to change the relationship between them.
Indubitably, the driver performs activities which are
usually necessary or desirable in the usual business
or trade of the owner/operator.
In the case at bench, the Supreme Court agreed with the
CA that under the boundary-hulog scheme incorporated in
the Kasunduan, a dual juridical relationship was created
between petitioner and respondent: that of employer-
employee and vendor-vendee. The Kasunduan did not
extinguish the employer-employee relationship of the
parties extant before the execution of said deed. Under the
Kasunduan, petitioner retained supervision and control over
the conduct of the respondent as driver of the jeepney.
Under the boundary-hulog scheme, petitioner retained
ownership of the jeepney although its material possession
was vested in respondent as its driver. In case respondent
failed to make his P550.00 daily installment payment for a
week, the agreement would be of no force and effect and
respondent would have to return the jeepney to petitioner;
the employer-employee relationship would likewise be
terminated unless petitioner would allow respondent to
continue driving the jeepney on a boundary basis of
P550.00 daily despite the termination of their vendor-
vendee relationship. The juridical relationship of employer-
employee between petitioner and respondent was not
negated by the foregoing stipulation in the Kasunduan,
considering that petitioner retained control of respondent’s
conduct as driver of the vehicle. Neither is such juridical
relationship negated by petitioner’s claim that the terms and
conditions in the Kasunduan relative to respondent’s
behavior and deportment as driver was for his and
respondent’s benefit: to insure that respondent would be
able to pay the requisite daily installment of P550.00, and
that the vehicle would still be in good condition despite the
lapse of four years. What is primordial is that petitioner
retained control over the conduct of the respondent as
driver of the jeepney. Indeed, petitioner, as the owner of
the vehicle and the holder of the franchise, is entitled to
exercise supervision and control over the respondent, by
seeing to it that the route provided in his franchise, and the
rules and regulations of the Land Transportation Regulatory
Board are duly complied with.
10
Petition is denied.
b. Cases where ER-EER Exists
1. Jeepney drivers on boundary basis
ANGEL JARDIN vs. NLRC and GOODMAN TAXI G.R.
No. 119268 February 23, 2000 QUISUMBING
Facts:
Petitioners Angel Jardin were drivers of private respondent,
Philjama International Inc., a domestic corporation engaged
in the operation of "Goodman Taxi." Petitioners used to
drive private respondent's taxicabs every other day on a
24-hour work schedule under the boundary system. Under
this arrangement, the petitioners earned an average of
P400.00 daily. Nevertheless, private respondent admittedly
regularly deducts from petitioners, daily earnings the
amount of P30.00 supposedly for the washing of the taxi
units. Believing that the deduction is illegal, petitioners
decided to form a labor union to protect their rights and
interests.Upon learning about the plan of petitioners,
private respondent refused to let petitioners drive their
taxicabs when they reported for work. Petitioners
suspected that they were singled out because they were
the leaders and active members of the proposed union.
Aggrieved, petitioners filed with the labor arbiter a
complaint against private respondent for unfair labor
practice, illegal dismissal and illegal deduction of washing
fees. The labor arbiter dismissed said complaint. NLRC
reversed the labor arbiter. However, NLRC set aside its
own resolution and granted the MFR filed by private
respondent company. Hence, this petition.
Issue: WON there is an employer-employee relationship
between private respondent and petitioners.
Ruling:
In a number of decided cases, the Supreme Court has
ruled that the relationship between jeepney
owners/operators on one hand and jeepney drivers
on the other under the boundary system is that of
employer-employee and not of lessor-lessee. We
explained that in the lease of chattels, the lessor
loses complete control over the chattel leased
although the lessee cannot be reckless in the use
thereof, otherwise he would be responsible for the
damages to the lessor. In the case of jeepney
owners/operators and jeepney drivers, the former
exercise supervision and control over the latter. The
management of the business is in the owner's hands.
The owner as holder of the certificate of public
convenience must see to it that the driver follows the
route prescribed by the franchising authority and the
rules promulgated as regards its operation. Now, the
fact that the drivers do not receive fixed wages but
get only that in excess of the so-called "boundary"
they pay to the owner/operator is not sufficient to
withdraw the relationship between them from that of
employer and employee. The Supreme Court has
applied by analogy the above-stated doctrine to the
relationships between bus owner/operator and bus
conductor, auto-calesa owner/operator and driver, and
recently between taxi owners/operators and taxi drivers.
Hence, petitioners are undoubtedly employees of private
respondent because as taxi drivers they perform activities
which are usually necessary or desirable in the usual
business or trade of their employer.
Petition is granted.
2. Musicians who were engaged by musical director for
background music in motion pictures are employees of the
film company
LVN PICTURES vs. PHILIPPINE MUSICIANS Guild
G.R. No. L-12582 January 28, 1961 CONCEPCION
Facts:
Philippine Musicians Guild averred that it is a duly
registered legitimate labor organization; that LVN Pictures,
Inc., Sampaguita Pictures, Inc., and Premiere Productions,
Inc. are corporations, duly organized under the Philippine
laws, engaged in the making of motion pictures and in the
processing and distribution thereof; that said companies
employ musicians for the purpose of making music
recordings for title music, background music, musical
numbers, finale music and other incidental music, without
which a motion picture is incomplete; that 95% of all the
musicians playing for the musical recordings of said
companies are members of the Guild; and that the same
has no knowledge of the existence of any other legitimate
labor organization representing musicians in said
companies. Premised upon these allegations, the Guild
prayed that it be certified as the sole and exclusive
bargaining agency for all musicians working in the
aforementioned companies. In their respective answers,
the latter denied that they have any musicians as
employees, and alleged that the musical numbers in the
filing of the companies are furnished by independent
contractors. The film companies also alleged that the
musical directors were the ones who exercise control over
the musicians. The lower court, however, rejected this
pretense and sustained the theory of the Guild, with the
result already adverted to.
11
Issue: WON the musicians in question are employees of
the film companies.
Ruling:
It is well settled that an employer-employee
relationship exists where the person for whom the
services are performed reserves a right to control not
only the end to be achieved but also the means to be
used in reaching such end. The decisive nature of said
control over the "means to be used", is illustrated in one
case, in which, by reason of said control, the employer-
employee relationship was held to exist between the
management and the workers, notwithstanding the
intervention of an alleged independent contractor, who had,
and exercise, the power to hire and fire said workers. The
aforementioned control over the means to be used" in
reading the desired end is possessed and exercised by the
film companies over the musicians in the cases before us.
In the case at bench, the musical directors have no such
control over the musicians. Said musical directors control
neither the music to be played, nor the musicians playing it.
The film companies summon the musicians to work,
through the musical directors. The film companies, through
the musical directors, fix the date, the time and the place of
work. The film companies, not the musical directors,
provide the transportation to and from the studio. The film
companies furnish meal at dinner time. During the
recording sessions, the motion picture director who is an
employee of the company not the musical director
supervises the recording of the musicians and tells them
what to do in every detail". The motion picture director not
the musical director solely directs and performance of the
musicians before the camera. The motion picture director
supervises the performance of all the actors, including the
musicians who appear in the scenes, so that in the actual
performance to be shown in the screen, the musical
director's intervention has stopped. The movie director tells
the musical director what to do; tells the music to be cut or
tells additional music in this part or he eliminates the entire
music he does not (want) or he may want more drums or
move violin or piano, as the case may be. The movie
director directly controls the activities of the musicians. He
says he wants more drums and the drummer plays more or
if he wants more violins or he does not like that.
Order appealed from is affirmed.
3. Tailors, Seamstress paid on piece-rate basis
MAKATI HABERDASHERY vs. NLRC and JACINTO
GARCIANO et.al. G.R. Nos. 83380-81 November 15,
1989 FERNAN
Facts:
Private respondents Jacinto Garciano et.al have been
working for petitioner Makati Haberdashery, Inc. as tailors,
seamstress, sewers, basters (manlililip) and "plantsadoras".
They are paid on a piece-rate basis except Maria Angeles
and Leonila Serafina who are paid on a monthly basis. In
addition to their piece-rate, they are given a daily allowance
of three (P 3.00) pesos provided they report for work before
9:30 a.m. everyday. Private respondents are required to
work from or before 9:30 a.m. up to 6:00 or 7:00 p.m. from
Monday to Saturday and during peak periods even on
Sundays and holidays. Private respondent Dioscoro
Pelobello left with Salvador Rivera, a salesman of petitioner
Haberdashery, an open package which was discovered to
contain a "jusi" barong tagalog. When confronted, Pelobello
replied that the same was ordered by respondent Casimiro
Zapata for his customer. Zapata allegedly admitted that he
copied the design of petitioner Haberdashery. But in the
afternoon, when again questioned about said barong,
Pelobello and Zapata denied ownership of the same.
Consequently a memorandum was issued to each of them
to explain why no action should be taken against them for
accepting a job order which is prejudicial and in direct
competition with the business of the company. Both
respondents allegedly did not submit their explanation and
did not report for work. Hence, they were dismissed by
petitioners.
Issue: WON there is an employer-employee relationship
between petitioner and private respondents.
Ruling:
The test of employer-employee relationship is four-
fold: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the
employee's conduct. It is the so called "control test"
that is the most important element. This simply
means the determination of whether the employer
controls or has reserved the right to control the
employee not only as to the result of the work but
also as to the means and method by which the same
is to be accomplished. The facts at bar indubitably reveal
that the most important requisite of control is present. As
gleaned from the operations of petitioner, when a customer
enters into a contract with the haberdashery or its
proprietor, the latter directs an employee who may be a
tailor, pattern maker, sewer or "plantsadora" to take the
customer's measurements, and to sew the pants, coat or
shirt as specified by the customer. Supervision is actively
manifested in all these aspects the manner and quality of
cutting, sewing and ironing.
NLRC is modified.
4. Caddies golf clubs are employees of the golf clubs
12
 In the case of Manila Golf and Country Club
vs. IAC, 237 S 207, the issue raised was WON the
persons rendering caddying services for members of golf
clubs and their guests in said clubs’ courses or premises
are the employees of such clubs. The Supreme Court held
that in the very nature of things, caddies must submit to
some supervision of their conduct while enjoying the
privilege of pursuing their occupation within the premises
and grounds of whatever club they do their work in. For all
that is made to appear, they work for the club to which they
attach themselves on sufferance but, on the other hand,
also without having to observe any working hours, free to
leave anytime they please, to stay away for as long as they
like. It is not pretended that if found remiss in the
observance of said rules, any discipline may be
meted them beyond barring them from the premises
which, it may supposed the Club may do in any case
even absent any breach of the rules, and without
violating any right to work on their part. All these
considerations clash frontally with the concept of
employment.
c. Cases where NO ER-EER exists
1. Independent Contractor
JOSE Y. SONZA vs . ABS-CBN BROADCASTING
CORP G.R. No. 138051. June 10, 2004 CARPIO
Facts:
ABS-CBN signed an Agreement with the Mel and Jay
Management and Development Corporation (MJMDC).
ABS-CBN was represented by its corporate officers while
MJMDC was represented by Jose Sonza, as President and
General Manager, and Carmela Tiangco, as EVP and
Treasurer. In the Agreement, MJMDC agreed to provide
Sonza’s services exclusively to ABS-CBN as talent for radio
and television. ABS-CBN agreed to pay for Sonza’s
services a monthly talent fee of P310,000 for the first year
and P317,000 for the second and third year of the
Agreement. ABS-CBN would pay the talent fees on the 10th
and 25th days of the month. Sonza wrote a letter to ABS-
CBN rescinding the Agreement in view of the irrevocable
resignation of Sonza because of the recent events
concerning his programs and career, which Sonza
considered as breach of the Agreement by ABS-CBN.
Sonza also waived the remaining amount stipulated due to
him but reserves the right to seek recovery of the other
benefits under said Agreement. Sonza filed a complaint
against ABS-CBN before DOLE complaining that ABS-CBN
did not pay his salaries, separation pay, service incentive
leave pay, 13th month pay, signing bonus, travel allowance
and amounts due under the Employees Stock Option Plan
(ESOP). ABS-CBN filed a Motion to Dismiss on the ground
that no employer-employee relationship existed between
the parties. Meanwhile, ABS-CBN continued to remit
SONZA’s monthly talent fees through his account at PCI
Bank. ABS-CBN opened a new account with the same
bank where ABS-CBN deposited SONZA’s talent fees and
other payments due him under the Agreement. Labor
Arbiter denied the motion to dismiss. The Labor Arbiter
considered the case submitted for resolution. The Labor
Arbiter dismissed the case for lack of jurisdiction which was
affirmed by NLRC and late, the CA. Hence, this petition for
certiorari.
Issue: WON there is employer-employee relationship
between Sonza and ABS-CBN.
Ruling:
A. Selection and Engagement of Employee
ABS-CBN engaged SONZA’s services to co-host its
television and radio programs because of SONZA’s peculiar
skills, talent and celebrity status. SONZA contends that the
discretion used by respondent in specifically selecting and
hiring complainant over other broadcasters of possibly
similar experience and qualification as complainant belies
respondent’s claim of independent contractorship.
Independent contractors often present themselves to
possess unique skills, expertise or talent to
distinguish them from ordinary employees. The
specific selection and hiring of Sonza, because of his
unique skills, talent and celebrity status not possessed by
ordinary employees, is a circumstance indicative, but not
conclusive, of an independent contractual relationship. If
Sonza did not possess such unique skills, talent and
celebrity status, ABS-CBN would not have entered into the
Agreement with Sonza but would have hired him through its
personnel department just like any other employee. In any
event, the method of selecting and engaging Sonza
does not conclusively determine his status.
B. Payment of Wages
ABS-CBN directly paid Sonza his monthly talent fees with
no part of his fees going to MJMDC. Sonza asserts that
this mode of fee payment shows that he was an employee
of ABS-CBN. Sonza also points out that ABS-CBN granted
him benefits and privileges which he would not have
enjoyed if he were truly the subject of a valid job contract.
All the talent fees and benefits paid to Sonza were
the result of negotiations that led to the Agreement. If
Sonza was ABS-CBN’s employee, there would be no
need for the parties to stipulate on benefits such as
“SSS, Medicare, and 13 th month pay” which the law
automatically incorporates into every employer-
13
employee contract. Whatever benefits Sonza enjoyed
arose from contract and not because of an employer-
employee relationship. Sonza’s talent fees,
amounting to P317,000 monthly in the second and
third year, are so huge and out of the ordinary that
they indicate more an independent contractual
relationship rather than an employer-employee
relationship. ABS-CBN agreed to pay Sonza such huge
talent fees precisely because of Sonza’s unique skills,
talent and celebrity status not possessed by ordinary
employees. Obviously, Sonza acting alone possessed
enough bargaining power to demand and receive such
huge talent fees for his services. The power to bargain
talent fees way above the salary scales of ordinary
employees is a circumstance indicative, but not
conclusive, of an independent contractual
relationship. The payment of talent fees directly to
Sonza and not to MJMDC does not negate the status
of Sonza as an independent contractor. The parties
expressly agreed on such mode of payment. Under
the Agreement, MJMDC is the AGENT of Sonza, to whom
MJMDC would have to turn over any talent fee accruing
under the Agreement.
C. Power of Dismissal
For violation of any provision of the Agreement, either party
may terminate their relationship. Sonza failed to show that
ABS-CBN could terminate his services on grounds other
than breach of contract, such as retrenchment to prevent
losses as provided under labor laws.
During the life of the Agreement, ABS-CBN agreed to pay
Sonza’s talent fees as long as AGENT and Jay Sonza shall
faithfully and completely perform each condition of this
Agreement. Even if it suffered severe business losses,
ABS-CBN could not retrench Sonza because ABS-
CBN remained obligated to pay Sonza’s talent fees
during the life of the Agreement. This circumstance
indicates an independent contractual relationship
between Sonza and ABS-CBN. Sonza admits that even
after ABS-CBN ceased broadcasting his programs, ABS-
CBN still paid him his talent fees. Plainly, ABS-CBN
adhered to its undertaking in the Agreement to continue
paying Sonza’s talent fees during the remaining life of the
Agreement even if ABS-CBN cancelled Sonza’s programs
through no fault of Sonza. Sonza assails the Labor Arbiter’s
interpretation of his rescission of the Agreement as an
admission that he is not an employee of ABS-CBN. The
Labor Arbiter stated that “if it were true that complainant
was really an employee, he would merely resign, instead.”
Sonza did actually resign from ABS-CBN but he also, as
president of MJMDC, rescinded the Agreement. Sonza’s
letter clearly bears this out. However, the manner by which
Sonza terminated his relationship with ABS-CBN is
immaterial. Whether Sonza rescinded the Agreement
or resigned from work does not determine his status
as employee or independent contractor.
D. Power of Control
Since there is no local precedent on whether a radio and
television program host is an employee or an independent
contractor, the Supreme Court referred to foreign case law
in analyzing the present case. In a US decided case, it has
been held that a television program host is an independent
contractor. Applying the control test to the present case,
Sonza is not an employee but an independent contractor.
The control test is the most important test the courts
apply in distinguishing an employee from an
independent contractor. This test is based on the
extent of control the hirer exercises over a worker.
The greater the supervision and control the hirer
exercises, the more likely the worker is deemed an
employee. The converse holds true as well – the less
control the hirer exercises, the more likely the worker
is considered an independent contractor.
First, Sonza contends that ABS-CBN exercised control over
the means and methods of his work. Sonza’s argument is
misplaced. ABS-CBN engaged Sonza’s services
specifically to co-host the “Mel & Jay” programs. ABS-CBN
did not assign any other work to Sonza. To perform his
work, Sonza only needed his skills and talent. How Sonza
delivered his lines, appeared on television, and sounded on
radio were outside ABS-CBN’s control. Sonza did not have
to render eight hours of work per day. The Agreement
required Sonza to attend only rehearsals and tapings of the
shows, as well as pre- and post-production staff meetings.
ABS-CBN could not dictate the contents of Sonza’s script.
However, the Agreement prohibited Sonza from criticizing
in his shows ABS-CBN or its interests. The clear implication
is that Sonza had a free hand on what to say or discuss in
his shows provided he did not attack ABS-CBN or its
interests. ABS-CBN was not involved in the actual
performance that produced the finished product of Sonza’s
work. ABS-CBN did not instruct Sonza how to perform his
job. ABS-CBN merely reserved the right to modify the
program format and airtime schedule for more effective
programming. ABS-CBN’s sole concern was the quality of
the shows and their standing in the ratings. Clearly, ABS-
CBN did not exercise control over the means and methods
of performance of Sonza’s work.
In a US decided case, it has been held that, vaudeville
performers were independent contractors although the
management reserved the right to delete objectionable
features in their shows. Since the management did not
have control over the manner of performance of the skills
of the artists, it could only control the result of the work by
deleting objectionable features. In the case at bench,
although ABS-CBN did have the option not to broadcast
14
Sonza’s show, ABS-CBN was still obligated to pay Sonza’s
talent fees. Thus, even if ABS-CBN was completely
dissatisfied with the means and methods of Sonza’s
performance of his work, or even with the quality or product
of his work, ABS-CBN could not dismiss or even discipline
Sonza. All that ABS-CBN could do is not to broadcast
Sonza’s show but ABS-CBN must still pay his talent fees in
full.
Sonza further contends that ABS-CBN exercised control
over his work by supplying all equipment and crew. No
doubt, ABS-CBN supplied the equipment, crew and airtime
needed to broadcast the “Mel & Jay” programs. However,
the equipment, crew and airtime are not the “tools and
instrumentalities” Sonza needed to perform his job. What
Sonza principally needed were his talent or skills and the
costumes necessary for his appearance. Even though ABS-
CBN provided Sonza with the place of work and the
necessary equipment, Sonza was still an independent
contractor since ABS-CBN did not supervise and control
his work. ABS-CBN’s sole concern was for Sonza to
display his talent during the airing of the programs. A radio
broadcast specialist who works under minimal
supervision is an independent contractor. Sonza’s
work as television and radio program host required special
skills and talent, which Sonza admittedly possesses. The
records do not show that ABS-CBN exercised any
supervision and control over how Sonza utilized his skills
and talent in his shows.
Second, Sonza argues that ABS-CBN subjected him to its
rules and standards of performance. Sonza claims that this
indicates ABS-CBN’s control not only over his manner of
work but also the quality of his work.
The Agreement stipulates that Sonza shall abide with the
rules and standards of performance covering talents of
ABS-CBN. The Agreement does not require Sonza to
comply with the rules and standards of performance
prescribed for employees of ABS-CBN. The code of
conduct imposed on Sonza under the Agreement refers to
the “Television and Radio Code of the Kapisanan ng mga
Broadcaster sa Pilipinas (KBP), which has been adopted by
ABS-CBN as its Code of Ethics.” The KBP code applies to
broadcasters, not to employees of radio and television
stations. Broadcasters are not necessarily employees of
radio and television stations. Clearly, the rules and
standards of performance referred to in the Agreement are
those applicable to talents and not to employees of ABS-
CBN. In any event, not all rules imposed by the hiring party
on the hired party indicate that the latter is an employee of
the former. In this case, Sonza failed to show that these
rules controlled his performance. These general rules are
merely guidelines towards the achievement of the
mutually desired result, which are top-rating television and
radio programs that comply with standards of the industry.
In a US case, it has been held that one could still be an
independent contractor although the hirer reserved
certain supervision to insure the attainment of the
desired result. The hirer, however, must not deprive
the one hired from performing his services according
to his own initiative.
Lastly, Sonza insists that the “exclusivity clause” in the
Agreement is the most extreme form of control which ABS-
CBN exercised over him.
This argument is futile. Being an exclusive talent
does not by itself mean that Sonza is an employee of
ABS-CBN. Even an independent contractor can
validly provide his services exclusively to the hiring
party. In the broadcast industry, exclusivity is not
necessarily the same as control. The hiring of exclusive
talents is a widespread and accepted practice in the
entertainment industry. This practice is not designed to
control the means and methods of work of the talent, but
simply to protect the investment of the broadcast station.
The broadcast station normally spends substantial amounts
of money, time and effort “in building up its talents as well
as the programs they appear in and thus expects that said
talents remain exclusive with the station for a
commensurate period of time.” Normally, a much higher fee
is paid to talents who agree to work exclusively for a
particular radio or television station. In short, the huge
talent fees partially compensates for exclusivity, as in the
present case.
MJMDC as Agent of Sonza
Sonza protests the Labor Arbiter’s finding that he is a talent
of MJMDC, which contracted out his services to ABS-CBN.
The Labor Arbiter ruled that as a talent of MJMDC, Sonza
is not an employee of ABS-CBN. Sonza insists that
MJMDC is a “labor-only” contractor and ABS-CBN is his
employer.
In a labor-only contract, there are three parties
involved: (1) the “labor-only” contractor; (2) the
employee who is ostensibly under the employ of the
“labor-only” contractor; and (3) the principal who is
deemed the real employer. Under this scheme, the
“labor-only” contractor is the agent of the principal .
The law makes the principal responsible to the
employees of the “labor-only contractor” as if the
principal itself directly hired or employed the
employees. These circumstances are not present in this
case.
In the case at bench, there are essentially only two parties
involved under the Agreement, namely, Sonza and ABS-
CBN. MJMDC merely acted as Sonza’s agent. The
15
Agreement expressly states that MJMDC acted as the
“AGENT” of Sonza. The records do not show that MJMDC
acted as ABS-CBN’s agent. MJMDC, which stands for Mel
and Jay Management and Development Corporation, is a
corporation organized and owned by Sonza and Tiangco.
The President and General Manager of MJMDC is Sonza
himself. It is absurd to hold that MJMDC, which is owned,
controlled, headed and managed by Sonza, acted as agent
of ABS-CBN in entering into the Agreement with Sonza,
who himself is represented by MJMDC. That would make
MJMDC the agent of both ABS-CBN and Sonza.
CA is affirmed.
2. Shoe store and shoe-shiners
MAMERTO S. BESA vs. CRESENCIANO B.
TRAJANO AND KAISAHAN NG MANGGAGAWANG
PILIPINO G.R. No. 72409 December 29, 1986
PARAS
Facts:
Private respondent Kaisahan ng Mangagawang Pilipino
KAMPIL, a legitimate labor union filed a Petition for
Certification Election in the NLRC. Petitioner Mamerto Besa
opposed it alleging that there is no employer-employee
relationship between Besa's and the petitioners-signatories
to the petition. Acting on the Petition, the Opposition
thereto, and the Reply to the Opposition, The Med-Arbiter
issued an order declaring that there was an employer-
employee relationship between the parties and directed
that an election be conducted. BLR affirmed the Med-
Arbiter, hence, this petition.
Issue: WON there employer-employee relationship
between petitioner Besa and 17 of the members of the
herein respondent Union who are designated as
shoeshiners.
Ruling:
Existence of employer-employee relationship is
determined by the following elements, namely, a]
selection and engagement of the employee; b]
payment of wages; c] powers of dismissal; and d]
power to control the employee's conduct although the
latter is the most important element. The records of the
case reveal that an employer-employee relationship does
not exist between the 17 shoeshiners and petitioner. In the
CIR’s Decision dated December 21, 1965 for complaint of
ULP filed by the shoeshiners against Besa, it has been held
that: The shoe shiner is distinct from a piece worker
because while the latter is paid for work accomplished, he
does not, however, contribute anything to the capital of the
employer other than his service. It is the employer of the
piece worker who pays his wages, while the shoe shiner in
this instance is paid directly by his customer. The piece
worker is paid for work accomplished without regard or
concern to the profit as derived by his employer, but in the
case of the shoe shiners, the proceeds derived from the
trade are always divided share and share alike with
respondent Besa. The shoe shiner can take his share of
the proceeds everyday if he wanted to or weekly as is the
practice of Besa The employer of the piece worker
supervises and controls his work, but in the case of the
shoe shiner, respondent Besa does not exercise any
degree of control or supervision over their person and their
work. All these are not obtaining in the case of a piece
worker as he is in fact an employee in contemplation of law,
distinct from the shoe shiner in this instance who, in relation
to respondent Besa, is a partner in the trade. Consequently,
employer-employee relationship between members of the
Petitioning union and respondent Besa being absent the
latter could not be held guilty of the unfair tabor.
Decision appealed from is declared void.
3. Softdrinks company and contractors selling softdrinks
MAFINCO TRADING CORPORATION vs. BLAS F.
OPLE and RODRIGO REPOMANTA G.R. No. L-
37790 March 25, 1976 AQUINO
Facts:
Cosmos Aerated Water Factory appointed Mafinco as its
sole distributor of Cosmos soft drinks in Manila. Rodrigo
Repomanta and Mafinco executed a peddling contract
whereby Repomanta agreed to "buy and sell" Cosmos soft
drinks. Rey Moralde entered into a similar contract. The
contracts were to remain in force for one year unless
sooner terminated by either party upon five days notice to
the other. Mafinco terminated its contract to Repomanta.
Repomanta filed a complaint with the NLRC, charging
Mafinco with having illegal dismissal. Mafinco filed a motion
to dismiss the complaint on the ground that the NLRC had
no jurisdiction because Repomanta and Moralde were not
its employees but were independent contractors. It stressed
that there was termination of the contract, not a dismissal of
an employee. NLRC dismissed the complaint for lack of
jurisdiction which was reversed by the Secretary of Labor,
hence, this petition.
Issue: WON there is an employer-employee relationship
between Mafinco and Repomante.
Ruling:
16
In determining the existence of employer-employee
relationship, the following elements are generally
considered, namely: (1) the selection and
engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the power
to control the employees' conduct-although the latter
is the most important element. On the other hand, an
independent contractor is one who exercises
independent employment and contracts to do a piece
of work according to his own methods and without
being subject to control of his employer except as to
the result of the work. In the case at bench, under their
peddling contracts Repomanta and Moralde were not
employees of Mafinco but were independent contractors.
They were distributors of Cosmos soft drinks with their own
capital and employees. Ordinarily, an employee or a mere
peddler does not execute a formal contract of employment.
He is simply hired and he works under the direction and
control of the employer. Repomanta and Moralde
voluntarily executed with Mafinco formal peddling contracts
which indicate the manner in which they would sell Cosmos
soft drinks. That circumstance signifies that they were
acting as independent businessmen. They were to sign or
not to sign that contract. If they did not want to sell Cosmos
products under the conditions defined in that contract; they
were free to reject it. But having signed it, they were bound
by its stipulations and the consequences thereof under
existing labor laws. One such stipulation is the right of the
parties to terminate the contract upon five days' prior
notice.
Order appealed from is set aside.
4. Company and Collecting agents on commission basis
SINGER SEWING MACHINE COMPANY vs.
FRANKLIN M. DRILON and SINGER MACHINE
COLLECTORS UNION G.R. No. 91307 January 24,
1991 GUTIERREZ
Facts:
Respondent union filed a petition for direct certification as
the sole and exclusive bargaining agent of all collectors of
the Singer Sewing Machine Company. The Company
opposed the petition mainly on the ground that the union
members are actually not employees but are independent
contractors as evidenced by the collection agency
agreement which they signed. The Med-Arbiter, finding that
there exists an employer-employee relationship between
the union members and the Company, granted the petition
for certification election which was affirmed by the
Secretary of Labor Franklin M. Drilon. Hence, this petition.
Issue: WON there is employer-employee relationship
between the company and the private respondent Union.
Ruling:
The following elements are generally considered in
the determination of the employer-employee
relationship; (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the
employee's conduct although the latter is the most
important element. In the case at bench, the Collection
Agency Agreement defines the relationship between the
Company and each of the union members who signed a
contract. The Agreement confirms the status of the
collecting agent in this case as an independent contractor
not only because he is explicitly described as such but also
because the provisions permit him to perform collection
services for the company without being subject to the
control of the latter except only as to the result of his work.
The requirement that collection agents utilize only receipt
forms and report forms issued by the Company and that
reports shall be submitted at least once a week is not
necessarily an indication of control over the means by
which the job of collection is to be performed. The
agreement itself specifically explains that receipt forms
shall be used for the purpose of avoiding a co-mingling of
personal funds of the agent with the money collected on
behalf of the Company. Likewise, the use of standard report
forms as well as the regular time within which to submit a
report of collection are intended to facilitate order in office
procedures. Even if the report requirements are to be called
control measures, any control is only with respect to the
end result of the collection since the requirements regulate
the things to be done after the performance of the collection
job or the rendition of the service. The monthly collection
quota is a normal requirement found in similar contractual
agreements and is so stipulated to encourage a collecting
agent to report at least the minimum amount of proceeds.
The plain language of the agreement reveals that the
designation as collection agent does not create an
employment relationship and that the applicant is to be
considered at all times as an independent contractor.
Order appealed from is reversed.
5. Sugar Central Company and farm workers
VICTORIAS MILLING CO. vs. NLRC and NATIONAL
FEDERATION OF SUGAR WORKERS-FOOD G.R.
No. 116236 October 2, 1996 PUNO
Facts:
17
Private respondent National Federation of Sugar Workers-
Food, on behalf of "all workers of farm owners," instituted a
suit against petitioner Victorias Milling Co., Inc., a sugar
central in Victorias, before NLRC. Private respondent
sought to recover the share of the workers in the increased
deliveries enjoyed by the planter of unrefined sugar and by-
products produced in petitioner's refinery from 1952 to crop
year 1983-1984. Petitioner moved to dismiss the complaint
for lack of jurisdiction on the ground that there was no
employer-employee relationship between it and private
respondent. The labor arbiter denied the motion which was
affirmed by NLRC. Hence this petition.
Issue: WON there is an employer-employee relationship
between petitioner company and private respondent union.
Ruling:
In a decided case, it has been held that a sugar central
does not have any privity of any kind with the sugar farm
workers, to wit: from the very beginning of the sugar
industry, the centrals have never had any privity of any kind
with the plantation laborers, since they had their own
laborers to take of. In other words, both the centrals and
the planters have always been the one dealing with their
respective laborers regarding the terms and conditions of
their employment, particularly as to wages. Sugar farm
workers/laborers were the direct responsibility of
their respective planters and the central did not deal
with the planter's workers but only with the planter.
R.A. 809 did not create any employer-employee
relationship between the planters' workers and the sugar
centrals. In fact, the law affirmed the old practice of the
central dealing only with the planter by directly issuing to it
the planter's share of the unrefined sugar per their milling
contracts. The planter's share included the workers' share
such that if any increase was made on the planter's
participation in the proceeds, it became the planter's
obligation to pay his workers their 60% share of such
increase. Clearly, there is no privity between the sugar
centrals and the sugar farm workers. The workers are not
employees of the sugar central but of the planter. And R.A.
809 expressly recognizes the planter, not the central, as the
employer of the farm workers by imposing on it the duty of
paying its respective workers their share of the proceeds
from the milled sugar.
Petition is granted.
6. Schools and working scholars
FILAMER CHRISTIAN INSTITUTE vs. IAC and
POTENCIANO KAPUNAN, SR. G.R. No. 75112
August 17, 1992 GUTIERREZ, JR.
Facts:
The private respondents, heirs of the late Potenciano
Kapunan, seek reconsideration of the decision rendered by
the Supreme Court on October 16, 1990 in the case of
Filamer Christian Institute v. Court of Appeals, in which SC
ruled petitioner Filamer is not liable for the injuries caused
by Funtecha on the grounds that the latter was not an
authorized driver for whose acts the petitioner shall be
directly and primarily answerable, and that Funtecha was
merely a working scholar who, is not considered an
employee of the petitioner. In that case, Funtecha was a
working student, being a part-time janitor and a scholar of
petitioner Filamer. He was assigned to clean the school
premises for only 2 hours in the morning of each school
day. Having a student driver's license, Funtecha requested
the driver, Allan Masa, and was allowed, to take over the
vehicle while the latter was on his way home one late
afternoon. The place where Allan lives is also the house of
his father, the school president, Agustin Masa. Moreover, it
is also the house where Funtecha was allowed free board
while he was a student of Filamer Christian Institute. Allan
Masa turned over the vehicle to Funtecha only after driving
down a road, negotiating a sharp dangerous curb, and
viewing that the road was clear. Thereupon, a fast moving
truck with glaring lights nearly hit them so that they had to
swerve to the right to avoid a collision. The vehicle hit
Potenciano Kapunan which caused his death.
Issue: WON Funtecha was an employee of Filamer
Institute.
Ruling:
It is to be noted that the present case does not deal with a
labor dispute on conditions of employment between an
alleged employee and an alleged employer. It invokes a
claim brought by one for damages for injury caused by the
patently negligent acts of a person, against both doer-
employee and his employer. Thus, it is the Civil Code on
torts and damages that should be applied and not the
Labor Code. Hence, in this case, the Supreme Court
granted the MFR and held that Filamer Institute was an
employer of Funtecha and as such, liable for the injuries
caused by Funtecha to Potenciano Kapunan.
In learning how to drive while taking the vehicle home in the
direction of Allan's house, Funtecha definitely was not
having a joy ride. Funtecha was not driving for the purpose
of his enjoyment or for a "frolic of his own" but ultimately, for
the service for which the jeep was intended by the
petitioner school. The Supreme Court is constrained to
conclude that the act of Funtecha in taking over the
steering wheel was one done for and in behalf of his
employer for which act the petitioner-school cannot deny
any responsibility by arguing that it was done beyond the
18
scope of his janitorial duties. The clause "within the scope
of their assigned tasks" for purposes of raising the
presumption of liability of an employer, includes any
act done by an employee, in furtherance of the
interests of the employer or for the account of the
employer at the time of the infliction of the injury or
damage. Even if somehow, the employee driving the
vehicle derived some benefit from the act, the existence of
a presumptive liability of the employer is determined by
answering the question of whether or not the servant was
at the time of the accident performing any act in furtherance
of his master's business. Funtecha is an employee of
petitioner Filamer. He need not have an official appointment
for a driver's position in order that the petitioner may be
held responsible for his grossly negligent act, it being
sufficient that the act of driving at the time of the incident
was for the benefit of the petitioner. Hence, the fact that
Funtecha was not the school driver or was not acting within
the scope of his janitorial duties does not relieve the
petitioner of the burden of rebutting the presumption juris
tantum that there was negligence on its part either in the
selection of a servant or employee, or in the supervision
over him. The petitioner has failed to show proof of its
having exercised the required diligence of a good father of
a family over its employees Funtecha and Allan.
Petition is granted.
7. In contract of agency
DR. CARLOS L. SEVILLA and LINA SEVILLA vs. CA
and TOURIST WORLD SERVICE G.R. No. L-41182-3
April 16, 1988 SARMIENTO
Facts:
Segundina Noguera leased her property to the Tourist
World Service, Inc., represented by Mr. Eliseo Canilao for
the former’s use as a branch office. In the said contract,
Lina Sevilla held herself solidarily liable with the party of the
part for the prompt payment of the monthly rental agreed
on. When the branch office was opened, the same was run
by Lina Sevilla payable to Tourist World Service Inc. by any
airline for any fare brought in on the efforts of Mrs. Lina
Sevilla, 4% was to go to Lina Sevilla and 3% was to be
withheld by the Tourist World Service, Inc. Tourist World
Service appears to have been informed that Lina Sevilla
was connected with a rival firm, the Philippine Travel
Bureau, and, since the branch office was anyhow losing,
the Tourist World Service considered closing down its
office. Because of this, and to comply with the mandate of
the Tourist World Service, the corporate secretary Gabino
Canilao went over to the branch office, and, finding the
premises locked, and, being unable to contact Lina Sevilla,
he padlocked the premises on June 4, 1962 to protect the
interests of the Tourist World Service. When neither the
appellant Lina Sevilla nor any of her employees could enter
the locked premises, a complaint was filed by the herein
appellants against the appellees with a prayer for the
issuance of mandatory preliminary injunction which was
dismissed by the trial court for failure to prosecute. Lina
Sevilla refiled her case which was dismiss for lack of merit.
Issue: WON there is an employee-employer relationship
between Tourist World and Sevilla.
Ruling:
In this jurisdiction, there has been no uniform test to
determine the evidence of an employer-employee
relation. The right of control test is where the person
for whom the services are performed reserves a right
to control not only the end to be achieved but also
the means to be used in reaching such end.
Subsequently, however, in addition to the standard of
right-of control, the existing economic conditions
prevailing between the parties, like the inclusion of
the employee in the payrolls, in determining the
existence of an employer-employee relationship.
In the case at bench, the records show that the Lina
Sevilla, was not subject to control by the private respondent
Tourist World, either as to the result of the enterprise or as
to the means used in connection therewith. In the first
place, under the contract of lease covering the Tourist
Worlds Ermita office, she had bound herself in solidum as
and for rental payments, an arrangement that would be like
claims of a master-servant relationship. In the second
place, when the branch office was opened, the same was
run by Lina Sevilla payable to Tourist World Service, Inc. by
any airline for any fare brought in on the effort of Mrs. Lina
Sevilla. Under these circumstances, it cannot be said that
Sevilla was under the control of Tourist World Service, Inc.
"as to the means used." Sevilla in pursuing the business,
obviously relied on her own gifts and capabilities. It is
further admitted that Sevilla was not in the company's
payroll. For her efforts, she retained 4% in commissions
from airline bookings, the remaining 3% going to Tourist
World. Unlike an employee then, who earns a fixed salary
usually, she earned compensation in fluctuating amounts
depending on her booking successes. The fact that Sevilla
had been designated 'branch manager" does not make her
Tourist World's employee. Employment is determined by
the right-of-control test and certain economic parameters.
But titles are weak indicators.
The Supreme Court is of the opinion, that when the
petitioner, Lina Sevilla, agreed to man the Tourist World
Service, Inc.'s Ermita office, she must have done so
pursuant to a contract of agency. It is the essence of this
contract that the agent renders services "in representation
or on behalf of another. In the case at bench, Sevilla
19
solicited airline fares, but she did so for and on behalf of
her principal, Tourist World Service, Inc. As compensation,
she received 4% of the proceeds in the concept of
commissions. Sevilla herself based on her letter of pre-
assumed her principal's authority as owner of the business
undertaking. Thus, the relationship between Sevilla and
Tourist World is one of principal-agent relationship, rather
than a joint managament or a partnership.
CA is reversed.
d. Contractor or Sub-Contractor (Art.
106)
i. Types of Contractor
1. Labor-only Contractor
2. Job Contractor
 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 persons are
performing activities which are directly related to the
principal business of such employer.
NOTE: Labor-only contracting is prohibited and the
person acting as contractor 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.
 job Contracting- An arrangement whereby a principal
agrees to put out or farm out with a contractor or series
of 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.
 Independent Contractor- One who carries on a
distinct and independent business and undertakes to
perform the job on to do a piece of work on its own
account and under its own manner and methods and
free from the control and direction of the principal in all
matters connected with the performance of the work
except as to the results thereof.
 A mere statement in a contract with a company that
laborers who are paid according to the amount and
quality of work are independent contractors does not
change their status s mere employees in
contemplation of labor laws.
i. Elements of Job Contracting:
1. the contractor or subcontractor carries on a distinct
and independent business and undertakes to
perform the job on his own account and under his
own responsibility, according to its own manner and
method and free from the control and direction of the
principal in all matters connected with the
performance of the work except as to the results
thereof;
2. the contractor or subcontractor has substantial
capital or investment; and
3. the agreement between the principal and contractor
or subcontractor assures the contractual employees
entitlement to all labor and occupational safety and
health standards, free exercise of the right to self-
organization, security of tenure and social and
welfare benefits.
 Substantial Capital- refers to the adequacy of
resources actually or directly used by the contractor or
subcontractor in the performance or completion of the
job, work, service contracted out. Substantial capital
need not be coupled with investment in tools or
equipment. This is clear from the use of the
conjunction “or.”
ii. Scope of Liability in Contracting or
Subcontracting
 When a contractor fails to pay the wage of his
employees in accordance with the Labor Code the
employer who contracted out the job becomes jointly
and severally liable with the contractor “to the extent of
the work performed under the contractor’s employees.”
 The law itself establishes an employer-employee
relationship between the employer and the job
contractor’s employee for a limited purpose, i.e. in
order to ensure the latter get paid the wages due to
them.
 Working Conditions- refers to the terms and
circumstances affecting the employment of
an employee, including policies, programs,
and regulations governing his employment
status, work, and work relationships. They
are, as a rule, determined by the employer.
JOB CONTRACTING LABOR ONLY
CONTRACTING
No ER-EER except when Employer is treated as
the contractor or direct employer of the
subcontractor fails to pay person (contractor is
the wages of the workers. deemed agent of the
20

employer)
Liability is limited. It shall be Liability extends to all rights,
solidarily liable with the duties and liabilities under
employer when the labor standard laws
employer fails to comply including the right to self-
with requirements at to organization
unpaid wages and other
labor standards violations.
Permissible Prohibited by law
Presence of substantial Absence of substantial
capital or investment capital or investment
LAPANDAY AGRICULTURAL vs. CA and
COMMANDO SECURITY SERVICE AGENCY G.R.
No. 112139 January 31, 2000 GONZAGA-REYES
Facts:
Commando Security Service Agency, Inc., and defendant
Lapanday Agricultural Development Corporation entered
into a Guard Service Contract. Plaintiff provided security
guards in defendant's banana plantation. The contract
called for the payment to a guard of P754.28 on a daily 8-
hour basis and an additional P565.72 for a four hour
overtime while the shift-in-charge was to be paid P811.40
on a daily 8-hour basis and P808.60 for the 4-hour
overtime. Wage Orders increasing the minimum wage in
1983 were complied with by the defendant. On June 16,
1984, Wage Order No. 5 was promulgated directing an
increase of P3.00 per day on the minimum wage of workers
in the private sector and a P5.00 increase on the ECOLA.
This was followed on November 1, 1984 by Wage Order
No. 6 which further increased said minimum wage by P3.00
on the ECOLA. Both Wage Orders contain the following
provision: "In the case of contract for construction projects
and for security, janitorial and similar services, the increase
in the minimum wage and allowances rates of the workers
shall be borne by the principal or client of the
construction/service contractor xxx.” Plaintiff demanded
that its Guard Service Contract with defendant be upgraded
in compliance with Wage Order Nos. 5 and 6. Defendant
refused. Private respondent filed a suit before RTC for the
purpose of securing the upgrading of the Guard Service
Contract entered into by herein petitioner and private
respondent. Petitioner assailed the jurisdiction of RTC
arguing that it is the NLRC that has jurisdiction to resolve
the issue involved in this case for it refers to the
enforcement of wage adjustment and other benefits due to
private respondent's security guards mandated under
Wage Order Nos. 5 and 6.
Issue: WON RTC has jurisdiction over the case at bench.
Ruling:
RTC has jurisdiction over the subject matter of the present
case. It is well settled in law and jurisprudence that where
no employer-employee relationship exists between
the parties and no issue is involved which may be
resolved by reference to the Labor Code, other labor
statutes or any collective bargaining agreement, it is
the Regional Trial Court that has jurisdiction. In its
complaint, private respondent is not seeking any relief
under the Labor Code but seeks payment of a sum of
money and damages on account of petitioner's alleged
breach of its obligation under their Guard Service Contract.
The action is within the realm of civil law hence jurisdiction
over the case belongs to the regular courts. While the
resolution of the issue involves the application of labor
laws, reference to the labor code was only for the
determination of the solidary liability of the petitioner to the
respondent where no employer-employee relation exists.
As regards the issue on whether or not petitioner is liable to
the private respondent for the wage adjustments provided
under Wage Order Nos. 5 and, private respondent admits
that there is no employer-employee relationship between it
and the petitioner. The private respondent is an
independent/job contractor who assigned security guards at
the petitioner's premises for a stipulated amount per guard
per month. The Contract of Security Services expressly
stipulated that the security guards are employees of the
Agency and not of the petitioner. In a decided case, it has
been held that that the joint and several liability of the
contractor and the principal is mandated by the Labor Code
to assure compliance with the provisions therein including
the minimum wage. The contractor is made liable by
virtue of his status as direct employer. The principal,
on the other hand, is made the indirect employer of
the contractor's employees to secure payment of
their wages should the contractor be unable to pay
them. Even in the absence of an employer-employee
relationship, the law itself establishes one between
the principal and the employees of the agency for a
limited purpose i . e . in order to ensure that the
employees are paid the wages due them.
III. EMANCIPATION OF TENANTS
a. Agricultural or Farm Workers-
employed in an agricultural or farm tasks which are
directly related to the agricultural activities of the
employer, such as cultivation and tillage of the soil,
dairying, growing and harvesting of any agricultural and
horticultural commodities, the raising of livestock or
21
 poultry, and any activities performed by a farmer as an
incident to or in conjunction with such farming operations.
b. Purpose of the Provisions- Intended to
encourage workers to seek employment in agricultural
enterprise instead of migrating to already overcrowded
urban areas to find work in industrial establishment.
Farm Employer-Farm Tenancy Relationship
Worker Relationship
The lease is one of labor with It is the landowner who is the
the agricultural laborer as the lessor and the tenant as the
lessor of his services and the lessee of agricultural land.
farm employer as the lessee.
The agricultural worker works The tenant derives his income
for the farm employer. He from the agricultural produce or
receives a salary/wage, harvest.
whether the employer makes a
profit or not.
c. Share Tenancy has been abolished
placing in the stead agricultural
leasehold system.
 Under Article 8, the land covered by operation of land
transfer must be private agricultural land, tenanted,
primarily devoted to rice and/or corn, and more than 7
hectares in area.
 Emancipation Patent- the title issued to the tenant
upon compliance with all the requirements of the
government. It represents the full emancipation of the
tenant from the bandage of the soil.
 Prohibition against Alienation- of land is intended
to:
1. Preserve the landholding in the hands of the
owner-tiller and his heirs;
2. Minimize land speculation; and
3. Prevent a return to the regime of land ownership
by a few.
 Land Reform- distribution of land to farmer
beneficiaries.
 Land Reform Code (RA 3844)- abolished the
Share-Tenancy and replaced it with the Leasehold-
Tenancy System.
 Share Tenancy- agrarian system where the partition
between the land-owner-lessor and the farmer-lessee
on the land is in halves.
d. Comprehensive Agrarian Reform
Law- land reform program of the government where
support services are provided to farmers.
 Agricultural Tenancy- The physical possession by a
person of land possessed by another for the purpose
of production through the labor of the former and of the
members of his immediate farm household in
consideration of which the former agrees to share the
harvest with the latter or to pay a price certain or
ascertainable, whether in produce or in money, or both.
(RA 1199, Sec.3)
 Elements of Agricultural Tenancy
a. The parties are the landholder and tenant:
Tenant- a person who by himself, or with the aid
available form his immediate household, cultivates the land
belonging to or possessed by another, with the latter’s
consent for purposes of production, sharing the produce of
the landholder or for a price certain or ascertainable in
produce or in money, or both, under the leasehold tenancy
system. (RA 1199, Sec.5 (a))
Landholder-lessor- any person, natural or
juridical, either as owner, lessee, usufructuary or legal
possessor of agricultural land, who lets leases or rents to
another said property for purposes of agricultural
production and for an price a certain or ascertainable either
in an amount of money or produce. (RA 1199, Sec. 42)
b. The subject is agricultural land;
Agricultural Land- a land devoted to agricultural
activity as defined, and not classified as mineral, forest,
residential, commercial or industrial land. (RA 6657)
Land devoted to any growth, including but not
limited to crop lands, salt beds, fish ponds, idle land and
abandoned land. (RA 3844)
The area of agricultural land that a lessee may
cultivate has no limit, but he should cultivate the entire area
leased. The 3 hectare limit under RA 6657 applies only to
the award that may be given to the agrarian reform
beneficiary.
c. There is consent by the landholder for the tenant to work
on the land, given either orally or in writing, expressly or
impliedly;
NOTE: The tenancy relation does not exist where a
usurper cultivates the land. (Hilario vs. IAC 148 S 573)
Successors-in-interest of the true and lawful
landholder/owner who gave the consent are bound to
recognize the tenancy established before they acquire the
agricultural land. (Endaya vs. CA, 215 S 109)
d. The purpose is agricultural production:
Tenancy status arises only if an occupant of a
parcel of land has been given its possession for the primary
purpose of agricultural production. The fact of sharing alone
is not sufficient to establish a tenancy relationship.
e. There is a personal cultivation or with the help of
immediate farm household. (Evangelista vs. CA, 158 S 41)
Cultivation is not limited to the plowing and
harrowing of the land, but also the husbanding of the
ground to forward the products of the earth by general
industry, the taking care of the lands and fruits growing
thereon, fencing of certain areas, and the clearing thereof
by gathering dried leaves and cutting of grasses.
f. There is compensation in terms of payment of a fixed
amount in money and/or produce. (Qua vs. CA, 198 S 236)
NOTE: All requisites must concur in order to create a
tenancy relationship between the parties. The absence of
one does not make an occupant of a parcel of land, or a
22
cultivator thereof, or a planter thereon, a de jure tenant. 5. To continue in the exclusive possession and enjoyment
(Caballes vs. DAR, 168 S 254) of any homelot the lessee may have occupied upon the
effectivity of RA 3844.
PD 27 RA 6657 6. To be indemnified for the costs and expenses incurred in
Retention Land owners: 7 hecs. 5 hectares the cultivation and for other expenses incidental to the
Limit Children (15 y/o): 3 improvement of the crop in case the lessee surrenders,
hecs.
Benefits 5 hecs. If not irrigated 5 hectares
abandons or is ejected from the landholding.
3 hecs. If irrigated 7. To have the right of pre-emption and redemption.
Disposition Can be disposed within 10 8. To be paid disturbance compensation in case of
of lands years from award conversion of the farmholding has been approved.
through ii. The Lessee shall have the following
hereditary or
government
responsibilities (RA 3844, Sec 29):
succession 1. Cultivate and take care of the farm, growing crops and
Lands not Homesteads, residential Residential lands, other improvements on the land and perform all the work
covered lands, ponds, and those commercial lands, therein in accordance with proven farm practices.
devoted in livestock and industrial lands and 2. Inform the lessor within a reasonable time of any
poulty. homesteads
trespass committed by third persons on the farm without
prejudice to his direct action against the trespasser.
e. Security of Tenure
3. Take reasonable care of the work animals and farm
 Under RA 1199, Sec. 7, the agricultural leasehold
implements delivered to him by the lessor and see to it that
relation, once established, shall confer upon the
they are not used for other purposes other than those
agricultural lessee the right to continue working on the
intended, or used by another without the knowledge and
landholding until such leasehold relation is
consent of the lessor.
extinguished. The agricultural lessee shall be entitled
4. Keep the farm and growing crops attended to during the
to security of tenure on his landholding and cannot be
work season.
ejected therefrom unless authorized by the Court
5. To pay the lease rental to the lessor when it falls due.
causes provided therein.
(RA 3844, Sec. 26)
 The tenant has the right to continue working on the
iii. The Lessor shall have the following
land except when he is ejected therefrom for cause as
rights:
provided by law. (De Jesus vs. IAC, 175 S 559)
1. To inspect and observe the extent of compliance with the
 Transfer of ownership or legal possession does not
terms and conditions of the leasehold contract.
affect security of tenure. (Tanpingco vs. IAC, 207 S
2. To propose a change in the use of the landholding to
653)
other agricultural purposes or in the kind of crop planted.
 Pursuant to PD 27, a farmer-beneficiary cannot make
3. To require the lessee, taking into consideration his
any valid form of transfer of the land adjudicated to
financial capacity and the credit facilities available to him, to
him, except to the government or by hereditary
adopt proven farm practices necessary to the conservation
succession to his respective successors.
of the land, improvement of the fertility and increase in
 The purpose of the agrarian reform law is to ensure the
productivity.
farmer-beneficiary’s continued possession, cultivation
4. To mortgage expected rentals.
and enjoyment of the land he tills. (Toralba vs.
Mercado, GR No. 146480, July 14, 2004)
iv. The Lessor shall have the following
obligations (RA 3844, Sec. 30):
f. Rights and Responsibilities of the
1. To keep the lessee in peaceful possession and
Parties
cultivation of the land; and
2. To keep intact such permanent useful improvements
i. The Lessee shall have the following rights
existing on the landholding at the start of the leasehold
(RA 3844, Secs. 11, 12, 23-25, 36):
relation.
1. To have possession and peaceful enjoyment of the land.
2. To manage and work on the land in a manner and
v. Prohibited Acts of the Lessor (DAR A.O.
method of cultivation and harvest which conform to the
Leasehold Relations, RA 3844, Sec. 8):
proven farm practices.
1. To dispossess the lessee of his landholding except upon
3. To mechanize all or any phase of his farm work.
authorization by the Court;
4. To deal with millers and processors and attend to the
2. To require the lessee to assume, directly or indirectly, the
issuance of quedans and warehouse receipts of the
payment of taxes or part thereof levied by the government
produce due him/her.
on the land;

23
3. To require the lessee to assume, directly or indirectly,
any rent or obligation of the lessor to a third party;
4. To deal with millers or processors without written
authorization of the lessee in cases where the crop has to
be sold in processed form before payment of the lessee
rental;
5. To discourage, directly or indirectly, the formation,
maintenance or growth of unions or organizations of
lessees in his landholding; and
6. For coconut lands, indiscriminate cutting of coconut trees
will be deemed prima facie evidence to dispose the tenants
of his landholdings unless there is written consent of the
lessee and there is PCA certification, copy of the findings
and recommendations of which shall be furnished to
affected tenants or lessees.
g. Termination of Tenancy Relations
i. Causes for Termination of Leasehold
Relations:
1. Abandonment of the landholding without the knowledge
of the agricultural lessor;
Abandon means the giving up absolutely, with
intent never again to resume or claim one’s right or interest.
The act of abandonment constitutes actual, absolute and
irrevocable desertion of one’s right or property. Failure to
cultivate the land by reason of the forcible prohibition to do
so by a third party cannot also amount to abandonment, for
abandonment presupposes free will. (Teodoro vs.
Macaraeg)
2. Voluntary surrender of the landholding by the agricultural
lessee, written notice of which shall be served 3 months in
advance;
The tenant’s intention to surrender landholding
cannot be presumed, much less determined by mere
implication, but must be convincingly and sufficiently
proved. (Nisnisan vs. CA, 294 S 173)
3. Absence of an heir to succeed the lessee in the events of
his death or permanent incapacity. In
case of death or permanent incapacity, the leasehold
relation continues between the lessor and the person who
can cultivate the land personally, chosen by the lessor
within one month from such death or incapacity, from
among the following:
1. the surviving spouse;
2. the eldest direct descendant by consanguinity
3. the next eldest direct descendant/s in the order
of age (RA 3844, Sec. 9)
The leasehold relation is not terminated by death
or permanent incapacity of the landholder-lessor. It binds
his legal heirs. (RA 3944, Sec. 9).
NOTE:
 Conversion of a land to non-agricultural uses also
extinguished the leasehold relations because the
subject land is no longer agricultural land and the
purpose is no longer agricultural production. However,
under Sec. 16 of DAR AO 1, the tenant affected by the
conversion is entitled to disturbance compensation
which must be paid within 60 days from the issuance
of the order of conversion.
 RA 6657 (CARL) Implementation:
1. Letter of Coverage (Given by DAR to landowners to
identify the subject land)
2. Letter of Acquisition (Land Bank of the Philippines may
require bonds)
 Just Compensation- fair and reasonable value of the
land.
If accepted- the government makes the
necessarily process. After the documents are
surrendered, the TCT will be issued.
If refused upon- the government will deposit the
amount to the Land Bank, and it will have the right to
occupy the land.
IV. PRE- EMPLOYMENT
a. Definition of Terms (Art. 13)
1. Worker- means any member of the labor force,
whether employed or unemployed.
2. Recruitment and placement- refers to any act of
canvassing, enlisting, contracting, transporting,
utilizing, hiring or procuring workers, and includes
referrals, contract services, promising or advertising for
employment, locally or abroad, whether for profit or
not: Provided, That any person or entity which, in any
manner, offers or promises for a fee, employment to
two or more persons shall be deemed engaged in
recruitment and placement.
NOTE: The number of persons dealt with is not an
essential factor of the act of recruitment and placement of
workers. The proviso merely creates the presumption.
3. Private fee-charging employment agency- means
any person or entity engaged in recruitment and
placement of workers for a fee which is charged,
directly or indirectly, from the workers or employers or
both.
4. License- means a document issued by the
Department of Labor authorizing a person or entity to
operate a private employment agency.
5. Private recruitment entity- means any person or
association engaged in the recruitment and placement
of workers, locally or overseas, without charging,
directly or indirectly, any fee from the workers or
employers.
6. Authority- means a document issued by the
Department of Labor authorizing a person or
association to engage in recruitment and placement
activities as a private recruitment entity.
7. Seaman means any person employed in a vessel
engaged in maritime navigation.
24
8. Overseas employment- means employment of a
worker outside the Philippines.
9. Emigrant- means any person, worker or otherwise,
who immigrates to a foreign country by virtue of an
immigrant visa or resident permit or its equivalent in
the country of destination.
b. Private Recruitment (Art. 16)
 General Rule- No person or entity other than the
public employment offices shall engage in the
recruitment and placement of workers.
 Exception- Pursuant to national development
objectives and in order to harness and maximize the
use of private sector resources and initiative in the
development and implementation of a comprehensive
employment program, the private employment sector
shall participate in the recruitment and placement of
workers, locally and overseas, under such guidelines,
rules and regulations as may be issued by the
Secretary of Labor. (Art. 25)
 Entities Authorized to Recruit:
1. Public employment offices;
2. Private recruitment entities or private employment
agencies;
3. Shipping or manning agents or representatives;
4. Philippine Overseas Employment Agency;
5. Construction contractors if authorized by the
DOLE and the Construction Industry Authority;
6. Members of the diplomatic corps (but all hiring
must pass through the POEA); and
7. Other persons or entities as may be authorized by
the DOLE Secretary.
 Documentation of Workers:
1. Contract Processing- workers hired through the
POEA shall issue the individual employment
contract and such other documents as may be
necessary for travel.
2. Passport Documentation
3. Visa Arrangement
 Recruitment and Placement by Private Sectors
i. Qualifications:
1. Filipino citizens, partnerships, or corporations at
least 75% of the authorized and voting capital
stock of which is owned and controlled by Filipino
citizens.
2. Minimum capitalization of P1M in case of single
proprietorship or partnership and a minimum of
P1M paid-up capital for corporations; and
3. Not otherwise disqualified by law or these
guidelines to engage in the recruitment and
placement of workers for overseas employment.
4. Cash and Surety Bond
ii. Disqualifications:
1. Travel agencies and sales agencies of airline
companies;
2. Officers or members of the board of any
corporation or members in a partnership engaged
in the business of a travel agency;
3. Corporations and partnerships, when any of its
officers, members of the board or partners, is also
an officer, member of the board of a corporation
engaged in the business of a travel agency;
4. Persons, partnerships, or corporations which have
derogatory records;
5. Persons employed in the DOLE or in other
government agencies directly involved in overseas
employment program and their relatives within the
4th degree of consanguinity or affinity; or
6. Those whose license has been previously
cancelled or revoked.
No license or authority shall be
transferred, conveyed, or assigned to any other
person or entity. Any violation shall result to
automatic revocation of the license.
 Non-licensee or Non-Holder of Authority- any
person, entity, or corporation which has not been
issued a valid license or authority to engage in
recruitment and placement of workers by the Secretary
of Labor, or whose license or authority has been
suspended, revoked, or cancelled by the POEA and
the Secretary.
c. Migrant Workers and Overseas
Filipinos Act (RA 8042)
 It institutes the policies of overseas employment and
establishes a higher standard of protection and
promotion of the welfare of migrant workers, their
families, and of overseas Filipinos in distress.
 The Supreme Court had the occasion to rule on
conflicts of jurisdiction between the courts and the
labor agencies arising from the amendments to PD
1367 by PD 1691. The later law, PD 1691, is a curative
statute which corrected the lack of jurisdiction of the
labor arbiters at the start of the proceedings and
therefore should be given retroactive application vis-à-
vis pending proceedings. It was intended to correct a
situation where two different tribunals had jurisdiction
over separate issues arising from the same labor
conflict. (UST vs. CA, GR No. 124350, Oct. 18, 2004)
NOTE: Repatriation of Workers- The primary
responsibility to repatriate a worker, including his remains
and personal effects, belongs to the principal or the agency
that recruited or deployed the worker. The principal of
agency has to advance the air transport fare and
immediately repatriate the worker, as needed, without
determining the cause of termination of employment.
If the cause of the termination is due solely to the
fault of the worker, the principal or agency may recover the
cost of repatriation from the worker after return to the
country.
25
 Such obligation of the principal/agency to advance
the plane fare and of the worker to refund the cost should
be stipulated in every contract for overseas employment.
In no case shall an employment agency require
any bond or cash deposit from the worker to guarantee
performance under the contract of his repatriation. The
mandatory repatriation bond is abolished as of June 17,
1995 under RA 8042.
 Grounds for Disciplinary Action Under Migrant
Workers Act:
1. Commission of a felony punished under Philippine
laws or by the host country;
2. Drug addiction or possession or trafficking of
prohibited drugs;
3. Desertion or abandonment;
4. Drunkenness, especially where the laws of the host
country prohibit the same;
5. Gambling, especially when the laws of the host
country prohibit the same;
6. Initiating or joining a strike or work stoppage where
laws of host country prohibit the same;
7. Creating trouble at the worksite or in the vessel;
8. Embezzlement of company funds or of money and
properties of a fellow worker entrusted for delivery
to kins or relatives in the Philippines;
9. Theft or robbery;
10. Prostitution;
11. Vandalism;
12. Gunrunning or possession of deadly weapons;
13. Unjust refusal to depart from the worksite after all
employment and travel documents have been duly
approved by the appropriate government agency;
and
14. Violation of the laws and sacred practices of the
host country and unjustified breach of
government-approved employment contract by a
worker.
d. Ban on Direct- Hiring (Art. 18)
 General Rule- Direct hiring of Filipino workers by a
foreign employer is NOT allowed.
 Exceptions:
1.Name hirees-individual workers who are able to
secure contracts for overseas employment on
their own efforts and representation without the
assistance or participation of any agency but
subject to POEA processing;
2.By members of diplomatic corps;
3.By international organizations; and
4.By such other employers as may be allowed by
the DOLE.
i. Minimum Conditions of Overseas
Employment:
1. Guaranteed wages for regular working hours and
overtime pay for services rendered beyond
regular working hours in accordance with the
established standards;
2. Free transportation from point of hire to the site of
employment and return;
3. Free emergency medical and dental treatment
facilities;
4. Just causes for termination of the contract or of
the services of the workers;
5. Workmen’s compensation benefits and war hazard
protection.
6. Repatriation of worker’s remains and properties in
case of death at the point of hire;
7. Assistance on remittance of salaries, allowance,
or allotments to the beneficiaries; and
8. Free and adequate board and lodging facilities or
compensatory food allowance at the prevailing
cost of living standards at the job site.
e. Mandatory Remittance of Foreign
Exchange Earnings (Art. 22)
 Requirements:
1. Seamen or mariners: 80% of the basic salary;
2. Workers for Filipino Contractors and
Construction Companies: 70% of the basic
salary;
3. Doctors, engineers, teachers, nurses and other
professionals whose employment contract
provide for lodging facilities: 70% of the basic
salary;
4. All other professionals without board and
lodging facilities: 50% of the basic salary; and
5. Domestic and other service workers: 50% of the
basic salary.
f. Non-Transferability of License or
Authority (Art. 29)
 No License or authority shall be:
1. used directly or indirectly by any person other that
those in whose favor it was issued or at any
place other than that stated in the license or
authority;
2. transferred, conveyed, assigned to any other
person or entity.
 Effects of Violation:
1. Automatic revocation of the license.
2. Only at their authorized official addresses may
licensees and holders of authority or their duly
authorized representatives undertake
recruitment and placement activities.
g. Fees to be Paid by Workers (Art. 32)
26
 Any person applying with the private fee-charging
employment agency for employment assistance shall
not be charged any fee until he has obtained
employment through its efforts or has actually
commenced employment.
h. Prohibited Practices in Recruitment
and Placement (Art. 34)
1. To charge or accept amount beyond the amount
allowed by law;
2. To furnish or publish false notice or information in
relation to recruitment and placement;
3. To give any false notice or information or commit any
act of misrepresentation to secure license or authority;
4. To induce or attempt to induce workers to quit
employment in order to offer him another:
Except- if transfer is to liberate a worker form
oppressive terms and conditions of employment.
NOTE: It is not necessary that the worker is actually
induced or did quit employment.
5. To influence or attempt to influence any person or
entity not to employ any person who has not applied
employment in his agency;
6. To engage in the recruitment and placement of workers
in jobs harmful to public health or morality or to the
dignity of the Philippines;
7. To obstruct or attempt to obstruct inspections by the
Secretary;
8. To fail to file reports;
9. To substitute or alter employment contracts;
10. To become an officer or board member of a
corporation engaged in the travel agency business;
11. To withhold or deny travel documents before departure
for monetary or financial considerations other than
those authorized by the Code;
12. To fail to actually deploy without valid reason as
determined by the DOLE;
13. To fail to reimburse expenses incurred by the worker in
connection with his documentation and processing for
purposes of employment, in cases where the
deployment does not actually take place without the
worker’s fault.
i. Suspension and/or Cancellation of
License or Authority (Art. 36)
 Authority- document issued by DOLE authorizing a
person or association to engage in recruitment and
placement activities as a private recruitment entity.
 License- a document issued by the DOLE authorizing
a person or entity to operate a private employment
agency.
 Non-licensee or non-holder of authority- any
person, entity, or corporation which has not been
issued a valid license or authority to engage in
recruitment and placement of workers by the Secretary
of Labor, or whose license or authority has been
suspended, revoked, or cancelled by the POEA and
the Secretary.
i. Grounds for Revocation of License:
1. Incurring an accumulated three counts of suspension by
an agency based on final and executory orders within the
validity period of its license;
2. Violations/s of the conditions of license;
3. Engaging in act/s of misrepresentation for the purpose of
securing a license or renewal thereof;
4. Engaging in the recruitment or placement of workers to
jobs harmful to the public health or morality or to the dignity
of the Republic of the Philippines. (POEA 2000 Rules)
ii. Grounds for Suspension/Cancellation of
License:
1. Charging a fee before the worker is employed or in
excess of the authorized amount.
2. Doing recruitment in places outside its authorized area;
3. Deploying workers without processing through the
POEA;
4. Substituting or altering employment contracts; and
5. Publishing job announcements without the POEA’s prior
approval. (Sec. 4, Rule 2, Book IV, POEA Rules)
j. Illegal Recruitment
 Illegal Recruitment- refers to 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 a
non-license or a non-holder of authority. Provided, any
such non-licensee or non-holder of authority who, in
any manner, offers or promises for a fee employment
abroad to two or more persons shall be deemed so
engaged. It shall likewise include the commission of
prohibited acts whether committed by a non-licensee
or a non-holder of authority.
i. Elements of Illegal Recruitment:
1. The offender is a non-holder of authority to lawfully
engage in recruitment and placement of workers;
2. Offender undertakes either any recruitment activities
under Article 13(6) or Article 34 of the Labor Code.
 It is incorrect to maintain that to be liable for illegal
recruitment, one must present himself to the victims as
a duly licensed recruiter. (People vs. Duque, 212 S
607)
 Persons who may be held liable for illegal recruitment
are the principals, accomplices and accessories. An
employee of a company or corporation engaged in
illegal recruitment may be held liable as principal,
together with his employer, it if is shown that he
actively and consciously participated in illegal
recruitment. The existence of the corporate entity does
27
 not shield from prosecution the corporate agent who
knowingly and intentionally causes the corporation to
commit a crime. (Executive Secretary vs. CA GR. No.
131718, May 25, 2004)
ii. Venue of Illegal Recruitment Case
1. RTC of the province where the illegal recruitment was
committed; or
2. RTC of the province where complainant resides;
NOTE: The first RTC to take jurisdiction over the case
excludes the others.
iii. Acts of Illegal Recruitment- Article 34 (supra.)
 Illegal recruitment as a crime involving economic
sabotage:
1. By a syndicate- if carried out by a group of at least 3
persons conspiring and confederating with one another; or
2. In a Large Scale- if committed against at least 3
persons, individually or as a group. (People vs. Bodozo,
215 S 33)
k. Employment of Non-Resident Aliens
(Art. 40)
 When it is allowed:
1. Upon determination by DOLE of the non-
availability of a person in the Philippines who is
competent, able, and willing at the time of the
application to perform the services for which the
alien is desired to be employed;
2. Employment permit from DOLE;
3. Employment will not be in certain nationalized
business;
4. The non-resident alien worker and the employer
shall bind themselves to train at least 2 Filipino
understudies.
 Prohibition against Employment of Aliens:
General Rule: No alien shall be employed in
establishments where or entities which have under their
name or control a right, franchise, privilege, property, or
business; the exercise or enjoyment of which is expressly
reserved by the Constitution or the laws to citizens of the
Philippines, or to corporations or associations at least 60%
of the capital of which is owned by such citizens, (Anti-
Dummy Law, Sec.2-A).
Exceptions:
1. Where the Secretary of Justice specifically authorizes
the employment of technical personnel; and
2. Where the aliens are elected members of the board of
directors or governing body of corporations or associations
in proportion to their allowable participation in the capital of
such entities.
 Prohibition against transfer of employment (Art.
41)
a. After the issuance of an employment permit, the
alien shall not transfer to another job or change his
employer without prior approval of the Secretary of
Labor.
b. Any non-resident alien who shall take up
employment in violation of the provision of this Title
and its implementing rules and regulations shall be
punished in accordance with the provisions of Articles
289 and 290 of the Labor Code.
In addition, the alien worker shall be subject to
deportation after service of his sentence.
l. Philippine Overseas Employment
Agency
i. Principal Functions of the POEA
1. Formulation, implementation, and monitoring of overseas
employment of Filipino workers.
2. Protection of their rights to fair and equitable
employment practices.
3.Deployment of Filipino Workers through government-to-
government hiring.
ii. Regulatory Function of the POEA
 Regulates private sector participation in the
recruitment and overseas placement of workers
through its licensing and registration system.
iii. Adjudicatory Functions of the POEA
1. All cases which are administrative in character, involving
or arising out of violations of rules and regulations relating
to licensing and registration or recruitment and employment
agencies or entities; and
2. Disciplinary action cases and other special cases which
are administrative in character, involving employers,
principals, contracting partners and Filipino migrant
workers.
CASES:
PEOPLE OF THE PHILIPPINES vs. CAROL M. DELA
PIEDRA G.R. No. 121777. January 24, 2001
KAPUNAN
Facts:
Accused Carol M. dela Piedra was charged before RTC in
an information alleging: “That on accused, without having
previously obtained from the Philippine Overseas
Employment Administration, a license or authority to
engage in recruitment and overseas placement of workers,
did then and there, wilfully, unlawfully and feloniously, offer
and promise for a fee employment abroad particularly in
Singapore thus causing Maria Lourdes Modesto et.al, all
qualified to apply, in fact said Maria Lourdes Modesto had
already advanced the amount of P2,000.00 to the accused
for and in consideration of the promised employment which
did not materialized thus causing damage and prejudice to
the latter in the said sum; furthermore, the acts complained
28
of herein tantamount to economic sabotage in that the
same were committed in large scale. ” The trial court
convicted the accused. Hence, this appeal by the accused
questioning her conviction for illegal recruitment in large
scale and assailing the constitutionality of the law defining
and penalizing said crime.
Issue: WON the law defining “recruitment and placement”
violates due process is void for vagueness.
Ruling:
A criminal statute that fails to give a person of ordinary
intelligence fair notice that his contemplated conduct is
forbidden by the statute, or is so indefinite that it
encourages arbitrary and erratic arrests and convictions, is
void for vagueness. However, the act must be utterly vague
on its face, that is to say, it cannot be clarified by either a
saving clause or by construction. It is to be
distinguished, however, from legislation couched in
imprecise language—but which nonetheless specifies
a standard though defectively phrased—in which
case, it may be “saved” by proper construction.
Under Section 13 (b) Labor Code, “Recruitment and
placement” refers to any act of canvassing, enlisting,
contracting, xxx and includes referrals, contract services,
promising or advertising for employment, locally or abroad,
whether for profit or not: Provided, That any person or
entity which, in any manner, offers or promises for a fee
employment to two or more persons shall be deemed
engaged in recruitment and placement. When undertaken
by non-licensees or non-holders of authority,
recruitment activities are punishable as follows: (a)
Any recruitment activities, including the prohibited practices
enumerated under Article 34 of this Code, xxx (b) Illegal
recruitment when committed by a syndicate or in large
scale shall be considered an offense involving economic
sabotage xxx. Illegal recruitment is deemed committed by a
syndicate if carried out by a group of three or more persons
conspiring and/or confederating with one another in
carrying out any unlawful or illegal transaction, enterprise
or scheme defined under the first paragraph hereof. Illegal
recruitment is deemed committed in large scale if
committed against three or more persons individually or as
a group.
The proviso was intended neither to impose a
condition on the basic rule nor to provide an
exception thereto but merely to create a
presumption. The presumption is that the individual
or entity is engaged in recruitment and placement
whenever he or it is dealing with two or more persons
to whom, in consideration of a fee, an offer or
promise of employment is made in the course of the
“canvassing, enlisting, contracting, transporting,
utilizing, hiring or procuring of workers. The number
of persons dealt with is not an essential ingredient of
the act of recruitment and placement of workers. Any
of the acts mentioned in the basic rule in Article 13(b)
will constitute recruitment and placement even if only
one prospective worker is involved. The proviso
merely lays down a rule of evidence that where a fee
is collected in consideration of a promise or offer of
employment to two or more prospective workers, the
individual or entity dealing with them shall be deemed
to be engaged in the act of recruitment and
placement. The words “shall be deemed” create that
presumption. The word “shall be deemed” should by
the same token be given the force of a disputable
presumption or of prima facie evidence of engaging
in recruitment and placement. In this case, Section 13
(b) Labor Code, therefore, is not a “perfectly vague act”
whose obscurity is evident on its face. If at all, the proviso
therein is merely couched in imprecise language that was
salvaged by proper construction. It is not void for
vagueness.
Neither Section 13 (b), Labor Code is void for overbreadth.
A statute may be said to be overbroad where it operates to
inhibit the exercise of individual freedoms affirmatively
guaranteed by the Constitution, such as the freedom of
speech or religion. A generally worded statute, when
construed to punish conduct which cannot be
constitutionally punished is unconstitutionally vague to the
extent that it fails to give adequate warning of the boundary
between the constitutionally permissible and the
constitutionally impermissible applications of the statute. In
the present case, however, appellant did not even specify
what constitutionally protected freedoms are embraced by
the definition of “recruitment and placement” that would
render the same constitutionally overbroad.
Issue: WON petitioner committed illegal recruitment.
Ruling:
Illegal recruitment is committed when two elements concur.
First, the offender has no valid license or authority
required by law to enable one to lawfully engage in
recruitment and placement of workers. Second, he
or she undertakes either any activity within the
meaning of “recruitment and placement” defined
under Article 13 (b), or any prohibited practices
enumerated under Article 34 of the Labor Code. In
case of illegal recruitment in large scale , a third
element is added: that the accused commits said acts
against three or more persons, individually or as a
group.
In this case, the first element is present. The certification of
POEA Officer-in-Charge Macarulay states that appellant is
29
not licensed or authorized to engage in recruitment and
placement. The second element is also present. Appellant
is presumed engaged in recruitment and placement under
Article 13 (b) of the Labor Code. Both Nancy Araneta and
Lourdes Modesto testified that appellant promised them
employment for a fee. That appellant did not receive
any payment for the promised or offered employment
is of no moment. From the language of the statute,
the act of recruitment may be “for profit or not;” it
suffices that the accused “promises or offers for a fee
employment” to warrant conviction for illegal
recruitment.
Issue: WON appellant committed illegal recruitment if large
scale.
Ruling:
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. In this case, only two persons,
Araneta and Modesto, were proven to have been recruited
by appellant. The third person named in the complaint as
having been promised employment for a fee, Jennelyn
Baez, was not presented in court to testify. It is true that
law does not require that at least three victims testify
at the trial; nevertheless, it is necessary that there is
sufficient evidence proving that the offense was
committed against three or more persons. In this case,
evidence that appellant likewise promised her employment
for a fee is sketchy. The only evidence that tends to prove
this fact is the testimony of Nancy Araneta, who said that
she and her friends, Baez and Sandra Aquino, came to the
briefing and that they filled up application forms. The
affidavit Baez executed jointly with Araneta cannot support
Araneta’s testimony. The affidavit was neither identified,
nor its contents affirmed, by Baez. Insofar as it purports to
prove that appellant recruited Baez, therefore, the affidavit
is hearsay and inadmissible. In any case, hearsay
evidence, such as the said affidavit, has little probative
value.
RTC is modified.
PHILSA INTERNATIONAL PLACEMENT vs.
SECRETARY OF LABOR AND VIVENCIO DE MESA
G.R. No. 103144. April 4, 2001 GONZAGA-REYES
Facts:
Petitioner Philsa International Placement is a domestic
corporation engaged in the recruitment of workers for
overseas employment. Private respondents, who were
recruited by petitioner for employment in Saudi Arabia,
were required to pay placement fees. After the execution of
their respective work contracts, private respondents left for
Saudi Arabia. They then began work for Al-Hejailan
Consultants A/E, the foreign principal of petitioner. While in
Saudi Arabia, private respondents were allegedly made to
sign a second contract which changed some of the
provisions of their original contract resulting in the reduction
of some of their benefits and privileges. When they refused
to sign this third contract, their services terminated by Al-
Hejailan and they were repatriated to the Philippines. Upon
their arrival in the Philippines, private respondents
demanded from petitioner Philsa the return of their
placement fees and for the payment of their salaries for the
unexpired portion of their contract. When petitioner
refused, they filed a case before the POEA against
petitioner Philsa and its foreign principal, Al-Hejailan with
illegal dismissal and payment of salary differentials.
Under POEA Rules dated May 21, 1985, complaints
involving employer-employee relations arising out of or by
virtue of any law or contract involving Filipino workers for
overseas employment, including money claims, are
adjudicated by the Workers’ Assistance and Adjudication
Office (WAAO). On the other hand, complaints involving
recruitment violations warranting suspension or
cancellation of the license of recruiting agencies are
cognizable by the POEA thru its Licensing and Recruitment
Office (LRO). In cases where a complaint partakes of the
nature of both an employer-employee relationship case and
a recruitment regulation case, the POEA Hearing Officer
shall act as representative of both the WAAO and the LRO
and both cases shall be heard simultaneously.
On the aspects of the case involving money claims arising
from the employer-employee relations and illegal dismissal,
the POEA ordered respondent PHILSA to pay
complainants, jointly and severally with its principal Al-
Hejailan. Under the Rules and Regulations of the POEA,
the decision of the POEA-Adjudication Office on matters
involving money claims arising from the employer-
employee relationship of overseas Filipino workers may be
appealed to NLRC. Thus, as both felt aggrieved by the
said POEA Decision, petitioner and private respondents
filed separate appeals to NLRC, which modified the award
granted by the POEA. Private respondents then elevated
the decision of the NLRC to the Supreme Court which was
dismissed by the Court.
POEA also found petitioner guilty of illegal exaction,
contract substitution, and unlawful deduction. Petitioner is
ordered to refund the placement fees. Moreover,
petitioner’s license is suspended. Under the POEA Rules
and Regulations, the decision of the POEA thru the LRO
suspending or canceling a license or authority to act as a
recruitment agency may be appealed to the Ministry (now
30
Department) of Labor. The Secretary of Labor affirmed in
toto the POEA.
PETITIONER’s CONTENTION: The Secretary of Labor
committed grave abuse of discretion in holding petitioner
liable for illegal deductions/withholding of salaries. The
Decision of the NLRC absolving it from private respondent
de Mesa’s claim for salary deduction has already attained
finality by reason of the dismissal of private respondents’
petition for certiorari of the said NLRC decision by the
Supreme Court.
Issue: WON petitioner may still be held liable for illegal
deduction or withholding of salaries despite the finality of
NLRC’s decision absolving the former from de Mesa’s claim
for salary deduction.
Ruling:
Petitioner is correct in stating that the Decision of the NLRC
has attained finality by reason of the dismissal of the
petition for certiorari assailing the same. However, the said
NLRC Decision dealt only with the money claims of private
respondents arising from employer-employee relations and
illegal dismissal and as such, it is only for the payment of
the said money claims that petitioner is absolved. The
administrative sanctions, which are distinct and separate
from the money claims of private respondents, may still be
properly imposed by the POEA. The NLRC Decision
absolving petitioner from paying private respondent de
Mesa’s claim for salary deduction based its ruling on a
finding that the said money claim was not raised in the
complaint. But the fact that the claim for salary deduction
was not raised by private respondents in their complaint will
not bar the POEA from holding petitioner liable for illegal
deduction or withholding of salaries as a ground for the
suspension or cancellation of petitioner’s license.
Under the POEA Rules and Regulations, the POEA,
on its own initiative, may conduct the necessary
proceeding for the suspension or cancellation of the
license of any private placement agency on any of
the grounds mentioned therein. As such, even
without a written complaint from an aggrieved party,
the POEA can initiate proceedings against an erring
private placement agency and, if the result of its
investigation so warrants, impose the corresponding
administrative sanction thereof. Moreover, the
POEA, in an investigation of an employer-employee
relationship case, may still hold a respondent liable
for administrative sanctions if, in the course of its
investigation, violations of recruitment regulations are
uncovered. It is thus clear that even if recruitment
violations were not included in a complaint for money
claims initiated by a private complainant, the POEA,
under its rules, may still take cognizance of the same
and impose administrative sanctions if the evidence
so warrants.
As such, the fact that petitioner has been absolved by final
judgment for the payment of the money claim to private
respondent de Mesa does not mean that it is likewise
absolved from the administrative sanctions which may be
imposed as a result of the unlawful deduction or
withholding of private respondents’ salary. The POEA thus
committed no grave abuse of discretion in finding petitioner
administratively liable of one count of unlawful
deduction/withholding of salary.
Decision appealed from is modified.
MANUELA S. CATAN/M.S. CATAN PLACEMENT
AGENCY vs. NLRC and AMELIA DE PEREIRA G.R.
No. 74218 December 14, 1987 NARVASA
Facts:
Eduardo de Pereira was recruited by M.S. Catan
Placement Agency on September 4, 1979 to work as an
electrical maintenance operator for Al Gihaz Establishment
Power Plant in Saudi Arabia. His employment contract (and
the supplement thereto) provided inter alia that: 1. his term
of employment was for 2 years or 24 months; 2. he was
entitled to a thirty-day paid vacation leave upon completion
of 12 months of continuous service, but the precise time of
enjoyment of the leave would be determined by Al Gihaz in
"accordance with work convenience. He claims that after
completing a year's continuous service at the Al Gihaz
Power Plant, he requested for his thirty-day paid vacation
leave pursuant to his contract, but the response of his
employer, a Mr. Abusame, was utterly unexpected and
grossly oppressive, for what Abusame did was to put them
on jail and to force him to sign another 2 year contract
written in Arabicand that he refused because he could not
understand the contents but he had no choice but to sign
the contract as a condition of their release from jail.
Forthwith, Pereira sought the assistance of the Philippine
Embassy for his repatriation but was only able to return to
the Philippines after paying the sum of US$950.00 for his
plane fare and other processing fees to M.S. Catan, who
was then in Saudi Arabia. Once back in Manila, Pereira lost
no time in lodging a complaint with the Bureau of
Employment Services of the Ministry of Labor and
Employment against M.S. Catan Placement Agency and/or
Manuela S. Catan, for recovery of damages arising from
breach of contract. After due proceedings, the POEA-
Worker's Assistance and Adjudication Office rendered a
decision in Pereira's favor, ordering Manuela S. Catan to
pay him. NLRC affirmed the decision appealed from.
Issue: WON Catan is liable for damages.
31
Ruling:
An analysis of Pereira's sworn declarations generates
perplexing questions. If Pereira could not understand the
document that he was being forced to sign because it was
written in Arabic, how could he assert that it was in truth
another two-year employment contract? No answer can be
given on the face of the record. Again, if Pereira had indeed
sabotaged the operations of the power plant as was the
belief, according to Pereira, entertained by his employer,
Abusame why would Abusame be so eager and so insistent
to sign them up for another two-year employment contract?
This simply makes no sense, especially if it be considered
that their original contract still had one year to run, as is the
uncontroverted fact. The patently illogical and unnatural
features of Pereira's evidence make it undeserving of
credence; and that they were apparently ignored and not
taken into account in the general assessment of the proofs
presented by the parties indicates capriciousness and
whimsicality constituting grave abuse of discretion on the
part of the Labor Arbiter and the NLRC. These
unprepossessing features infest and taint the very facts
which form the foundation of Pereira's cause of action;
hence, the conclusions of the POEA based on those facts
must be set aside. Unfortunately, this leaves Pereira with
no other evidence to adequately make out a cause of
action against petitioner Catan.
Petition is granted.
PEOPLE OF THE PHILIPPINES vs. CORAZON
NAVARRA G.R. No. 119361. February 19, 2001
PARDO
Facts:
Job and Rodolfo Navarra, along with Rodolfo’s wife
Corazon Navarra, operated an agency which purported to
have the authority to recruit and place workers for
employment in Taiwan. The agency was named Rodolfo
Navarra’s Travel Consultant and General Services
(RNTCGS), which in the course of its operation was able to
victimize several hapless victims who never left Philippine
soil, and in due time, filed complaints with the Philippine
Overseas Employment Agency (POEA) against accused for
illegal recruitment. Neither RNTCGS nor Rodolfo, Corazon
or Job in their personal capacities were licensed or
authorized by the POEA to recruit workers for overseas
employment. An information against accused for illegal
recruitment committed in a large scale provides: “That the
accused conspiring, confederating and mutually helping
one another, representing themselves to have the capacity
to contract, enlist and transport workers for employment
abroad, did then and there willfully, unlawfully and for a fee,
recruit and promise employment/job placement to Merlie
Villesca, Gliceria Marinas, Jose Lloret, Beinvenida Amutan,
Melba Yacas, Marites De Sagun, Vilma Marana, Ernesto
Amutan, Florie Rose Ramos, Ronald Allan Santos And
Henry Dela Cruz without first securing the required license
and/or authority from POEA.” RTC convicted Rodolfo and
job for Illegal Recruitment Committed in a Large Scale
Resulting to Economic Sabotage. Hence, this appeal.
Issue: WON the accused committed illegal recruitment
committed in a large scale resulting to economic sabotage.
Ruling:
Illegal recruitment has two essential elements: First,
the offender has no valid license or authority required
by law to enable him to lawfully engage in the
recruitment and placement of workers. Second, the
offender undertakes any activity within the meaning
of “recruitment and placement” defined under Article
13 (b), or any prohibited practices enumerated under
Article 34 of the Labor Code. A “nonlicensee or
nonholder of authority” means any person, corporation or
entity without a valid license or authority to engage in
recruitment or placement from the Secretary of Labor, or
whose license or authority has been suspended, revoked
or cancelled by the POEA or the Secretary of Labor. Under
Article 13(b) of the Labor Code, “recruitment and
placement” refer to: “any act of canvassing, enlisting,
contracting, transporting, utilizing, hiring or procuring
workers, and includes referrals, contract services,
promising or advertising for employment, locally or abroad,
whether for profit or not: Provided, that any person or entity
which in any manner, offers or promises for a fee
employment to two or more persons shall be deemed
engaged in recruitment and placement.”
In the case at bench, from the evidence adduced, accused-
appellants committed acts of recruitment and placement,
such as promises to the complainants of profitable
employment abroad and acceptance of placement fees.
Accused-appellants gave the impression that they had the
power to send the complainants to Taiwan for employment.
With the certification from DOLE stating that RNTCGS was
not authorized to recruit workers for overseas employment,
and promises by the accused of employment abroad for
complainants on payment of placements fees, the
conclusion is inescapable that accused are liable for illegal
recruitment.
Article 38 (b) of the Labor Code, as amended by P. D. No.
2018 provides that illegal recruitment shall be
considered an offense involving economic sabotage if
any of the following qualifying circumstances exists:
First , when illegal recruitment is committed by a
syndicate. For purposes of the law, a syndicate
exists when three or more persons conspire or
confederate with one another in carrying out any
32
unlawful or illegal transaction, enterprise or scheme.
Second , there is economic sabotage when illegal
recruitment is committed in a large scale, as when it
is committed against three or more persons
individually or as a group.
In this case, even assuming that there was no conspiracy,
the record clearly shows illegal recruitment committed in a
large scale, since at least 6 complainants were victims,
which is more than the minimum number of persons
required by law to constitute illegal recruitment in a large
scale, resulting in economic sabotage.
RTC is affirmed.
ESALYN CHAVEZ vs. EDNA BONTO-PEREZ and
CENTRUM PROMOTIONS PLACEMENT CORP G.R.
No. 109808 March 1, 1995 PUNO
Facts:
Petitioner Esalyn Chavez, an entertainment dancer,
entered into a standard employment contract for overseas
Filipino artists and entertainers with Planning Japan Co
through its Philippine representative, private respondent
Centrum Placement & Promotions Corporation. The
contract had a duration of 2-6 months, and petitioner was to
be paid a monthly compensation of US$1,5000.00. POEA
approved the contract. Subsequently, petitioner executed
side agreement reducing her salary below the minimum
standard set by the POEA with her Japanese employer
through her local manager, Jaz Talents Promotion.
Petitioner left for Osaka, Japan, where she worked for 6
months. She came back to the Philippines. Petitioner
instituted the case at bench for underpayment of wages
with the POEA Private respondent Centrum Promotions
and Placement Corporation, the Philippine representative
of Planning Japan, Co., Inc., its insurer, Times Surety and
Insurance Co., Inc., and Jaz Talents Promotion. The
complaint was dismissed by POEA which was affirmed by
POEA.
Issue: WON private respondents are not solidarily liable to
her for US$6,000.00 in unpaid wages.
Ruling:
Thirdly, private respondents Centrum and Times as well as
Planning Japan Co., Ltd. the agency's foreign principal are
solidarily liable to petitioner for her unpaid wages. This
solidary liability also arises from the provisions of Section
10(a)(2), Rule V, Book I of the Omnibus Rules
Implementing the Labor Code, as amended, thus: a) A
formal appointment or agency contract executed by a
foreign-based employer in favor of the license holder to
recruit and hire personnel for the former xxx. Such formal
appointment or recruitment agreement shall contain the
following provisions, among others: 2. Power of the agency
to sue and be sued jointly and solidarily with the principal or
foreign based employer for any of the violations of the
recruitment agreement and the contracts of employment.
Our overseas workers constitute an exploited class.
Most of them come from the poorest sector of our
society. They are thoroughly disadvantaged. Their
profile shows they live in suffocating slums, trapped
in an environment of crime. Hardly literate and in ill
health, their only hope lies in jobs they can hardly
find in our country. Their unfortunate circumstance
makes them easy prey to avaricious employers. They
will climb mountains, cross the seas, endure slave
treatment in foreign lands just to survive. Out of
despondence, they will work under sub-human
conditions and accept salaries below the minimum.
The least we can do is to protect them with our laws
in our land. Regretfully, respondent public officials
who should sympathize with the working class appear
to have a different orientation.
Petition is granted.
V. LOCAL EMPLOYMENT
A. CONDITIONS OF EMPLOYMENT
a. Employment of:
1. APPRENTICES
i. Definition of Terms
a.Apprenticeship- means practical training on the job
supplemented by related theoretical instruction.
b.Apprentice- is a worker who is covered by a written
apprenticeship agreement with an individual employer or
any of the entities recognized under this Chapter.
c. Apprenticeable occupation- means any trade, form of
employment or occupation which requires more than
three (3) months of practical training on the job
supplemented by related theoretical instruction.
d.Apprenticeship agreement- is an employment contract
wherein the employer binds himself to train the
apprentice and the apprentice in turn accepts the terms
of training.
ii. Qualifications of Apprentices:
1. At least 15 years of age; provided that those who are at
least 15 years of age but less than 18 may be eligible for
apprenticeship and the apprenticeship agreement shall be
signed in his behalf by the parent or guardian or authorized
representative of DOLE.
33
NOTE: The apprenticeable age under Art. 59 of the Labor
Code is 14 but under the Implementing Rules, the age is
15. The question of variance is rendered moot and
academic by RA 7610 which explicitly prohibits employment
of children below 15 years old. RA 7610 recognizes certain
exceptions, but being an apprentice is not one of the
exceptions.
2. Possess vocational aptitude and capacity for appropriate
tests; and
3. Possess the ability to comprehend and follow oral and
written instructions;
4. The company must have an apprenticeship program duly
approved by the DOLE.
 Trade and industry associations may recommend to
the Secretary of Labor, educational qualifications for
apprentices, if approved, shall be the educational
requirements for apprenticeship in such occupations
unless waived by an employer in favor of an applicant
who has demonstrated exceptional ability.
iii. Requisites for Employment of Apprentices:
1. Employers must be engaged in highly technical
industries;
2. Apprentice may be hired only in apprenticeable
occupations as determined by the Secretary of Labor.
iv. Requisites for a Valid Apprenticeship:
1. Qualifications of the apprentice;
2. Qualifications of the employer;
3. Apprenticeship Agreement duly executed and signed
which shall contain the following:
a. the duration of apprenticeship which shall not
exceed 6 months;
b. the wage rates below the legal minimum wage
which in no case shall start below 75% of the
applicable minimum wage in the place where he is
working (i.e. compensation which must not be less
than 75% of the applicable minimum wage except
on-the-job training (OJT).
4. Apprenticeship program duly approved by the DOLE
(Nitto Enterprises vs. NLRC, GR No. 114337, Sept, 29,
1995); otherwise, there’s a possibility that apprentice may
become a regular employee.
5. Period of apprenticeship shall not exceed 6 months.
v. Signing of Apprenticeship Agreement
 Every apprenticeship agreement shall be signed by the
employer or his duly authorized representative and by
the apprentice.
 An apprenticeship agreement with a minor shall be
signed in his behalf by his parent or guardian, or if the
latter is not available, by an authorized representative
of the DOLE.
vi. Venue of Apprenticeship Programs
 OJT of Apprentices may be undertaken in:
1. the plant, shop or premises, of the employer or
firm concerned if the apprenticeship program is
organized by an individual employer or firm;
2. the premises of one or several firms designated
for the purpose by the organizer of the program if
such organizer is an association of employers,
civic group and the like; and
3. DOLE Training Center or other public training
institutions with which the Bureau has made
appropriate arrangements.
vii. Violation of Apprenticeship Agreement
Art. 65. Investigation of violation of apprenticeship
agreement. Upon complaint of any interested person or
upon its own initiative, the appropriate agency of the
Department of Labor and Employment or its authorized
representative shall investigate any violation of an
apprenticeship agreement pursuant to such rules and
regulations as may be prescribed by the Secretary of Labor
and Employment.
Art. 66. Appeal to the Secretary of Labor and
Employment. The decision of the authorized agency of the
Department of Labor and Employment may be appealed by
any aggrieved person to the Secretary of Labor and
Employment within five (5) days from receipt of the
decision. The decision of the Secretary of Labor and
Employment shall be final and executory.
Art. 67. Exhaustion of administrative remedies. No
person shall institute any action for the enforcement of any
apprenticeship agreement or damages for breach of any
such agreement, unless he has exhausted all available
administrative remedies.
viii. Voluntary Organization of Apprenticeship
Program
 General Rule- The organization of apprenticeship
program shall be primarily a voluntary undertaking of
employers.
 Exception- Instances when organization of program is
compulsory:
1. when national security or particular requirements
of economic development so demand;
2. where services of foreign technicians are utilized
by private companies in apprenticeable trades.
Art. 71. Deductibility of training costs. 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.
34
Art. 72. Apprentices without compensation. The Practical training on the job Hiring of persons as
Secretary of Labor and Employment may authorize the supplemented by related trainees in semi-skilled and
hiring of apprentices without compensation whose training theoretical instruction other industrial occupations
on the job is required by the school or training program which are non-
curriculum or as requisite for graduation or board apprenticeable and which
examination. may be learned through
practical training on the job
 Requisites for Tax Deductions in Case Employers in a relatively short period of
have Apprenticeship Programs: time.
1. the program must be duly recognized by the DOLE; Employer’s Commitment to Hire
2. the deduction shall not exceed 10% of direct labor wage; No commitment to hire With a commitment to
and employ the learner as
3. the employer must pay his apprentices for minimum regular employee if he
wage. desires upon completion of
learnership
2. LEARNERS Effect of Pre-termination
Worker is not considered an Learner is considered
i. Definition of Terms employee regular employee after 2
a. Learners- are persons hired as trainees in semi-skilled months of training and
and other industrial occupations which are non- dismissal is without fault of
apprenticeable and which may be learned through practical learner
training on the job in a relatively short period of time which Focus of Training
shall not exceed three (3) months. Highly skilled or technical Semi-skilled/ industrial
b. Learnership Agreement- refers to the employment industries and in industrial occupation (non-
and training contract entered into between the employer occupation apprenticeable)
and the learner. Approval
ii. When Learners May be Hired Requires DOLE approval for Not required
1. when no experienced workers are available; validity
2. the employment of learners being necessary to prevent Exhaustion of Administrative Remedies in case of Breach
curtailment of employment opportunities; and Precondition for filing action Not required
3. such employment will not create unfair competition in
terms of labor costs nor impair working standards.
iii. Contents of Learnership Agreement 3. HANDICAPPED
1. The names and addresses of the employer and the
learner;
 Handicapped workers- are those whose earning
2. The occupation to be learned and the duration of the
capacity is impaired by age or physical or mental
training period which shall not exceed 3 months.
deficiency or injury.
3. The wage of learner which shall be at least 75% of the
applicable minimum wage; and
4. A commitment to employ the learner, if he so desires, as i. When Employable
a regular employee upon completion of training.
 A learner who has worked during the first 2 months 1. when their employment is necessary to prevent
shall be deemed a regular employee if training is curtailment of employment opportunities; and
terminated by the employer before the end of the 2. when it does not create unfair competition in labor
stipulated period through no fault of the learner. costs or impair or lower working standards.
 Learners in piecework-Learners employed in piece
or incentive-rate jobs during the training period shall be  Subject to the provisions of the Labor Code,
paid in full for the work done. handicapped workers may be hired as regular
workers, apprentices, or learners, if their
APPRENTICESHIP LEARNERSHIP handicap is not such as to effectively impede the
Duration performance of job operations in the particular
Not less than 3 months Practical training on the job occupations for which they were hired.
practical training on the job not to exceed 3 months.
but not more than a 6  Equal Opportunity for Employment (RA 7277)- No
months disable person shall be denied access to opportunities
Concept for suitable employment. Qualified disabled employees
35
 shall be subject to the same terms and conditions  The Rule shall apply to any homeworker who performs
of employment and the same compensation, in or about his home any processing of goods or
privileges, benefits, fringe benefits, incentives or materials, in whole or in part, which have been
allowances as a qualified able-bodies person. Even a furnished directly or indirectly by an employer and
handicapped worker can acquire the status of a therafter to be returned to the latter.
regular employee.
ii. Distribution of Homework
 Duration of Employment- the minimum, no
maximum duration. Dependent on agreement but it is  Employer of Homeworkers- any natural or artificial
necessary that there is a specific duration. person who, for his own account or benefit, or on
behalf of any person residing outside the Philippines
ii. Contents of Employment Agreement directly or indirectly, or through any employee, agent,
contractor, sub-contractor; or any other person:
 Any employer who employs handicapped workers shall 1. Delivers or causes to be delivered any goods or
enter into an employment agreement with them, which articles to be processed in or about a home and
agreement shall include: thereafter to be returned or to be disposed of or
distributed in accordance with his direction; or
1. The names and addresses of the handicapped 2. Sells any goods or articles for the purpose of
workers to be employed; having such goods or articles processed in or
about a home and then repurchases them himself
or through another after such processing.
2. The rate to be paid the handicapped workers
which shall not be less than seventy five (75%)
5. WOMEN
percent of the applicable legal minimum wage;
i. Night Work Prohibition (Art. 130)
3. The duration of employment period; and  General Rule- NO WOMAN, regardless of age, shall
be employed or permitted or suffered to work, with or
4. The work to be performed by handicapped without compensation in any:
workers. 1. Industrial undertaking between 10pm and 6am;
2. Commercial/ Non-industrial undertaking between
NOTE: The employment agreement shall be subject to 12mn and 6am;
inspection by the Secretary of Labor or his duly authorized 3. Agricultural undertaking at nighttime unless she is
representative. given a period of rest of not less than 9
consecutive hours.
 Exceptions- This prohibitions shall NOT APPLY in
any of the following cases:
1. In cases of actual or impending emergencies
HANDICAPPED HANDICAPPED PERSON caused by serious accident, fire, flood, typhoon,
WORKERS under Labor (RA 7277) earthquake, epidemic, or other disasters or
Code calamity, to prevent loss of life or property, or in
cases of force majeure or imminent danger to
Those whose earning Those suffering from public safety;
capacity is impaired by age restriction or different 2. In cases of urgent work to be performed on the
or physical or mental abilities, as a result of a machineries, equipment or installations, to avoid
deficiency or injury. mental, physical or sensory serious loss which the employer would otherwise
impairment, to perform an suffer;
activity in the manner or 3. Where the work is necessary to prevent serious
within the range considered loss of perishable goods;
normal for a human being. 4. Where the woman employee holds a responsible
position of managerial or technical nature, or
where the woman employee has been engaged to
4. HOMEWORKERS
provide health and welfare service;
5. Where the nature of the work requires the manual
i. Regulation of Industrial Home skill and dexterity of women workers and the same
cannot be performed with equal efficiency by male
workers;
36
 6. Where the women employees are immediate
members of the family operation the establishment
or undertaking; and
7. Under other analogous cases exempted by the
Secretary of Labor in appropriate regulations.
ii. Facilities for Women (Art. 132)
 The Secretary of Labor may require employers to:
1. Provide seats proper for women and permit them
to use the seats when they are free from work or
during office hours provided the quality of the work
will not be compromised;
2. Establish separate toilet rooms and lavatories for
men and women and provide at least a dressing
room for women;
3. Establish a nursery in the establishment; and
4. Determine appropriate minimum age and other
standards for retirement or termination in special
occupations such as those of flight attendants and
the like.
iii. Maternity Leave Benefits (Art. 133)
 Maternity Leave under the SSS Law- A female
member, who need not be legally married, who has
paid for at least 3 monthly contributions in the 12-
month period immediately preceding the semester of
her childbirth or miscarriage shall be paid a daily
maternity benefit equivalent to 100% of her average
daily salary credit for 60 days or 78 days, in case of
caesarian delivery.
 Maternity benefits provided herein shall be paid only
for the first four deliveries or miscarriages;
 Maternity benefits like other benefits granted by the
SSS, are granted in lieu of wages and therefore, may
not be included in computing the employee’s 13th
month pay for the calendar year.
a. Qualifications for Entitlement:
1. The female employee should be employed at the
time of the delivery, miscarriage or abortion;
2. The employee shall have notified her employer of
her pregnancy and the probable date of her
childbirth which notice shall be transmitted to the
SSS in accordance with the rules and regulations
in may provide;
3. That full payment shall be advanced by the
employer within 30 days from the filing of the
maternity leave application; and
4. That payment of daily maternity benefits have
been received.
NOTE: Every pregnant woman in the private sector,
whether married or unmarried is entitled to the maternity
leave benefits.
b. Other Important Conditions:
 That the SSS shall immediately reimburse the
employer of 100% of the amount of maternity benefits
advanced to the employee by the employer upon
receipt of satisfactory proof of such payment and
legality thereof; and
 That if employee member should give birth or suffer
miscarriage without the required contributions having
been remitted for her by her employer to the SSS, or
without the latter having been previously notified the
employer of the time of the pregnancy, the employer
shall day to the SSS damages equivalent to the
benefits which said employee would otherwise have
been entitled to.
c. Extension of Maternity Leave:
 The maternity leave shall be extended without pay on
account of illness medically certified to arise out of the
pregnancy, delivery, abortion, or miscarriage, which
renders the woman unit for work, unless she has
earned unused leave credits from which such
extended leave may be charged.
d. PATERNITY LEAVE (RA 8187)
 Grants paternity leave of 7 days with full pay,
consisting of basic salary, to all married male
employees in the public and private sector.
 Available only for the first 4 deliveries of the legitimate
spouse with whom the husband is cohabiting; the term
delivery includes childbirth, miscarriage or abortion.
 In the event that such leave was not availed of, said
leave shall not be convertible to cash.
 Purpose- to enable the husband to lend support to his
wife during the period of recovery and/or in the nursing
of the newly born child.
d.i. Conditions for Entitlement:
1. He is an employee at the time of the delivery of his
child;
2. He is cohabiting with his spouse at the time she gives
birth or suffers a miscarriage;
3. He has applied for paternity leave with his employer;
4. His wife has given birth or suffered a miscarriage; the
term wife refers to the lawful wife which means the
woman who is legally married to the male employee
concerned.
d.ii. Application of Leave:
1. Must be made within a reasonable time from the
expected date of delivery by the pregnant spouse;
2. within such period as may be provided by
company rules and regulations or CBA.
 Prior application for leave shall NOT be required in
case of miscarriage.
iv. Family Planning Services
 Employers who habitually employ more than 200
workers in any locality shall provide free family
planning services to their employees and their spouses
which shall include but not limited to, the application or
use of contraceptive pills and intrauterine devices.
v. Discrimination Prohibited
 It shall be unlawful for any employer to discriminate
against any woman employee with respect to terms
and conditions of employment solely on account of her
sex.
 Acts of Discrimination:
37
 1. Payment of a lesser compensation for work of
equal value.
2. Favoring a male employee over a female
employee solely on the account of their sexes.
vi. Stipulation Against Marriage
 It shall be unlawful for an employer:
1. to require as a condition for employment or
continuation of employment that a woman
employee shall not get married;
2. to stipulate expressly or tacitly that upon getting
married a woman employee shall be deemed
resigned or separated;
3. to actually dismiss, discharge, discriminate or
otherwise prejudice a woman employee merely by
reason of her marriage.
vii. Prohibited Acts
 It shall be unlawful for an employer:
1. To discharge any woman employed by him for the
purpose of preventing such woman from enjoying
the maternity leave, facilities and other benefits
provided under the Code;
2. To discharge such woman employee on account
of her pregnancy, or while on leave or confinement
due to her pregnancy;
3. To discharge or refuse the admission of such
woman upon returning to her work for fear that
she may be pregnant;
4. To discharge any woman or child or any other
employee for having filed a complaint or having
testified on being about to testify under the Code.
viii. Classification of Certain Women Workers
 Any woman who is permitted to work or suffered to
work, with or without compensation, in any night club,
cocktail lounge, massage clinic, bar or similar
establishment, under the effective control or
supervision of the employer for a substantial period of
time as determined by the Secretary of Labor, shall be
considered as an employee of such establishment for
purposes of labor and social legislation.
6. HOUSE HELPERS
i. Rights of House- helpers (Articles 1689-
1699, NCC)
1. non-assignment to non-household work;
2. reasonable compensation (minimum cash wage);
3. lodging, food, and medical attendance;
4. if under 18 years of age, an opportunity for
elementary education (cost of which shall be part
of house helpers’ compensation);
5. contract for household service shall not exceed 2
years (renewable however from year to year);
6. just and humane treatment;
7. right not to be required to work for more than 10
hours a day (if the house helper agrees to work
overtime, and there is additional compensation,
the same is permissible);
8. right to 4 days vacation each month with pay (if
the helper does not ask for the vacation, the
number of vacation days cannot be accumulated,
he is entitled only to its monetary equivalent);
9. funeral expenses must be paid by the employer if
the house helper has no relatives with sufficient
means in the place where the head of the family
lives.
10. termination only for a just cause;
11. indemnity for unjust termination of service;
12. employment certification as to nature and duration
of service and efficiency and conduct of the house
helper.
ii. Indemnity for Unjust Termination of
Service:
1. If the period for household service is fixed, neither
the employer not the house helper may terminate
the contract before the expiration of the term,
except for a just cause.
2. If the house helper is unjustly dismissed, he or she
shall be paid the compensation already earned
plus that for 15 days by way of indemnity.
3. If the house helper leaves without justifiable
reason, he or she shall forfeit an unpaid salary
due him or her not exceeding 15 days.
iii. Employment for Certification
 Upon the severance of the household service
relationship, the house helper may demand from the
employer a written statement of the nature and
duration of the service and his or her efficiency and
conduct as house helper.
7. MINORS (RA 7610)
i. Minimum Employable Age
 General Rule- No child below 15 years old shall be
employed.
 Conditions on the Employment of a Child below
15 years old:
1. When the child works directly under the sole
responsibility of his parents or legal guardian who
employs members of his family only under the
following conditions:
a. employment does not endanger the
child’s life, safely, health and morals;
b. employment does not impair the child’s
normal development; and
c. the parent/ legal guardian provides the
child with the primary and/or secondary
education prescribed by DepEd.
2. Where the child’s employment, or participation in
public entertainment or information through
38
 cinema, theater, radio or television is essential, labor relations]. The two criteria are cumulative, and both
provided that: must be met if an employee is to be considered a
a. employment does not involve confidential employee that is, the confidential relationship
advertisements or commercials must exist between the employee and his superior officer;
promoting alcoholic beverages, and that officer must handle the prescribed responsibilities
intoxicating drinks, tobacco and its by relating to labor relations.
products or exhibiting violence; e. Supervisory Employees- are those who, in the interest
b. there is written contract approved by the of the employer, effectively recommend such managerial
DOLE; and actions if the exercise of such authority is not merely
c. the conditions prescribed for the routinary or clerical in nature but requires the use of
employment of minor are met. independent judgment.
 Any person between 15 and 18 years old may be f. Rank and File Employees- All employees not falling
employed in any non-hazardous work. within any of the above definitions are considered rank-
ii. Non-Hazardous Work or Undertaking and-file employees.
 One where the employee is not exposed to any risk
which constitutes an imminent danger to his safety and ii. Managerial Employee under Labor
health. Standards vs. Managerial Employee under Labor
iii. Hazardous Work Places: Relations
1. where the nature of the work exposes the workers
to dangerous environmental elements, Managerial Employee Managerial Employee
contaminants, or work conditions; under Labor Standards under Labor Relations
2. where the workers are engaged in construction (Art. 82) (Art. 212 m)
work, logging, fire-fighting, mining, quarrying,
blasting, stevedoring, dock work, deep-sea fishing, Used only for purposes of Used only for purposes of
and mechanized farming; Conditions of Employment Labor Organization
3. where the workers are engaged in the Those whose primary duty One who is vested with the
manufacture or handling of explosive and other consists of the management powers or prerogatives to
pyrotechnic products; of the establishment in lay down and execute
4. where the workers use or are exposed to heavy or which they are employed or management policies and/or
power-driven machinery or equipment; and of a department or to hire, transfer, suspend,
5. where the workers use or are exposed to power- subdivision thereof, and to lay-off, recall, discharge,
driven tools. other officers or members of assign or discipline
the managerial staff. employees.

B. TYPES OF EMPLOYEES Supervisors are members of Supervisors are not

the managerial staff included in this term
i. Definition of Terms
a. Managerial employees under Article 82 of the CASES:
Labor Code-refer to those whose primary duty consists of
the management of the establishment in which they are A. D. GOTHONG MANUFACTURING CORPORATION
employed or of a department or subdivision thereof, and to EMPLOYEES UNION-ALU vs. NIEVES CONFESOR
other officers or members of the managerial staff. and A.D. GOTHONG MANUFACTURING
b. Managerial Employee under Article 212 of the CORPORATION G.R. No. 113638 November 16,
Labor Code- is one who is vested with the powers or 1999 GONZAGA-REYES
prerogatives to lay down and execute management policies
and/or to hire, transfer, suspend, lay-off, recall, discharge, Facts:
assign or discipline employees.
c. Field personnel- shall refer to non-agricultural
Petitioner A. D. Gothong Manufacturing Corporation
employees who regularly perform their duties away from
Employees Union-ALU (Union) filed a petition for
the principal place of business or branch office of the
certification election in its bid to represent the unorganized
employer and whose actual hours of work in the field
regular rank-and-file employees of respondent A. D.
cannot be determined with reasonable certainty.
Gothong Manufacturing Corporation (Company) excluding
d. Confidential Employee- Confidential employees are
its office staff and personnel. Respondent Company
those who (1) assist or act in a confidential capacity, in
opposed the petition as it excluded office personnel who
regard (2) to persons who formulate, determine, and
are rank and file employees. In the inclusion-exclusion
effectuate management policies [specifically in the field of
proceedings, the parties agreed to the inclusion of Romulo
39
Plaza and Paul Michael Yap in the list of eligible voters on
condition that their votes are considered challenged on the
ground that they were supervisory employees. Both Plaza
and Yap argued that they are rank-and-file employees.
Plaza claimed that he was a mere salesman based in
Cebu, and Yap argued that he is a mere expediter whose
job includes the facilitation of the processing of the bills of
lading of all intended company shipments. Petitioner Union
maintains that both Plaza and Yap are supervisors who are
disqualified to join the proposed bargaining unit for rank-
and-file employees. The Med-Arbiter declared that the
challenged voters Yap and Plaza are rank-and-file
employees.
Issue: WON Plaza and Yap are supervisory employees for
purposes of labor organization.
Ruling:
The Labor Code recognizes two (2) principal groups of
employees, namely, the managerial and the rank and file
groups. Article 212 (m) of the Code provides: (m)
Managerial employee is one who is vested with powers or
prerogatives to lay down and execute management policies
and/or to hire, transfer, suspend, lay-off, recall, discharge,
assign or discipline employees. 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. Under Rule I, Section 2 (c), Book III of the
Implementing Rules of the Labor Code, to be a member of
managerial staff, the following elements must concur or co-
exist, to wit: (1) that his primary duty consists of the
performance of work directly related to management
policies; (2) that he customarily and regularly exercises
discretion and independent judgment in the performance of
his functions; (3) that he regularly and directly assists in the
management of the establishment; and (4) that he does not
devote more than twenty percent of his time to work other
than those described above.
In the case at bench, the Supreme Court did not disturb the
findings of the Med-Arbiter that the petitioner Union failed to
present concrete and substantial evidence to establish the
fact that challenged voters are either managerial or
supervising employees. Nowhere in the documentary
evidence presented by the Union that therein is stated
about any instance where the challenged voters effectively
recommended any managerial action which would require
the use of independent judgment.
Petition is denied.
SURIGAO DEL NORTE ELECTRIC COOPERATIVE
vs. NLRC AND ELSIE ESCULANO G.R. No. 125212
June 28, 1999 YNARES-SANTIAGO
Facts:
A former employee of petitioner cooperative, Cosette O.
Quinto, sent a letter to its General Manager, petitioner
Eugenio A. Balugo, informing Balugo of her decision to be
separated with SURNECO due to her pressing personal
problems. No action was taken on this matter by either
petitioner Balugo or petitioner cooperative's Board of
Directors. Nearly four months later, private respondent
Elsie Esculano, being then the Personnel Officer of
petitioner cooperative sent a letter to petitioner Balugo
regarding Quinto's letter-request, attached to her letter was
a report containing her findings and recommendations. In
her attached report, private respondent concluded that
petitioner cooperative had not properly accorded Quinto
due process before terminating her services, enumerating
the circumstances evidencing such lack of due process.
Thus, private respondent recommended that petitioner
cooperative grant Quinto separation pay, otherwise, the
latter would be entitled to reinstatement without loss of
seniority rights and other privileges and benefits.
Meanwhile, with no action taken by petitioner cooperative
on her letter-request, Quinto filed a Complaint for Illegal
Dismissal against petitioner cooperative. Without a doubt,
the complaint was based largely on the report submitted to
petitioner Balugo by private respondent Esculano. On
account of the filing of the illegal dismissal case against
petitioner cooperative, based largely on private
respondent's report, Balugo issued a Memorandum to
Esculano in which she was made to explain on why she
made a review of Quinto’s case even if she was not
authorized to do so and for furnishing the copy of the report
to Quinto. Esculano submitted her Written Explanation to
Balugo and reasoned out that it was inherent in her job as
Personnel Officer "to assist Management in formulating and
evaluating plans, policies and procedures on personnel
related matters, and recommend to Management and (the)
Board of Directors wage, salary and other benefits.
Petitioner cooperative, however, through its Board of
Directors, proceeded to act on the case of private
respondent terminating the services of the latter. Private
respondent filed a Complaint for illegal dismissal. Labor
Arbiter declared private respondent's dismissal as valid and
legal which was set aside by the NLRC.
Issue: WON private respondent was illegally dismissed.
Ruling:
First, there is no basis for petitioner cooperative's charge of
serious misconduct on the part of private respondent.
Misconduct is transgression of some established and
40
definite rule of action, a forbidden act, a dereliction of duty,
willful in character, and implies wrongful intent and not
mere error in judgment. In the case at bench, private
respondent's review of Quinto's case hardly qualifies as
serious misconduct.As acknowledged by petitioners,
private respondent, as Personnel Officer, holds a
managerial position. As such, her authority is not merely
routinary or clerical in nature but requires independent
judgment. Indeed, those occupying managerial positions
are considered vested with a certain amount of discretion
and independent judgment. As Personnel Officer, private
respondent could very well take charge of matters involving
employees, even former ones, and proceed to make
recommendations thereon. This is precisely what private
respondent did. To require private respondent to wait for
management authorization before acting on matters
already obviously within her job jurisdiction would be
tantamount to making her a mere rank and file employee
stripped of discretionary powers.
Second, private respondent's dismissal cannot be justified
on the basis of loss of confidence. To be a valid ground for
dismissal, loss of trust and confidence must be based on a
willful breach of trust and founded on clearly established
facts. A breach is willful if it is done intentionally, knowingly
and purposely, without justifiable excuse, as distinguished
from an act done carelessly, thoughtlessly, heedlessly or
inadvertently. It must rest on substantial grounds and not
on the employer's arbitrariness, whims, caprices or
suspicion, otherwise, the employee would eternally remain
at the mercy of the employer. In the case at bench, there
was no direct proof that private respondent did furnish a
copy of her report to Quinto. As such, petitioners cannot
validly rely on loss of confidence as a ground to dismiss
private respondent.
Petition is dismissed.
LEILANI MENDOZA vs. NLRC and ASIAN LAND
STRATEGIES CORPORATION G.R. No. 131405 July
20, 1999 PANGANIBAN
Facts:
Petitioner Leilani Mendoza worked with the private
respondent and later, she was appointed as finance
manager of the private respondent and her tasks included,
among others, custody of and disbursement of company
funds. Petitioner claims that she was summoned by Ms.
Ma. Angela Celeridad, the company's vice-president, who
informed her that management had decided to terminate
her employment Hence, she was told either to resign or
face dismissal. Later that day petitioner alleged that the
president of the company, Johnny P. Lee, announced that
her employment was already terminated. Petitioner lodged
her complaint against the company for illegal dismissal.
Private respondent denies having dismissed the petitioner
as no memorandum or letter of dismissal was issued to her.
The company asserts that it received a complaint from
several of its marketing and sales agents accusing
petitioner of committing deliberate delays in the payment of
their commission in violation of company policy. They
alleged that she refused to release their commissions
despite payment of the price of the properties they had
brokered unless she [was] given a certain amount as her
cut. The company also claims that another employee of the
company, a certain Rufino Pahati, lodged a separate
complaint against petitioner regarding his application for
cash advance. Mr. Pahati claimed that petitioner made him
apply for cash advance but it was she who took the money.
She promised to pay him back but failed. Allegedly, the
company sent a letter to Mendoza demanding her to
explain all the irregularities imputed to her. NLRC ruled in
favor of the company.
Issue: WON Mendoza was illegally dismissed.
Ruling:
True, employers cannot be compelled to retain in
their service employees who are guilty of acts
inimical to the interest of the former. True also,
management has the right to dismiss erring
employees as a measure of self-protection. In the
case of managerial employees, employers are
allowed a wider latitude of discretion in terminating
their employment because they perform functions
which by their nature require the full trust and
confidence of the company. However, loss of trust
and confidence has never been intended to afford an
occasion for abuse. It cannot be used arbitrarily,
whimsically or capriciously; it must be supported with
substantial evidence. Unsubstantiated suspicions,
accusations and conclusions of employers do not
provide legal justifications for dismissing employees.
In case of doubt, such cases should be resolved in
favor of labor, pursuant to the social justice policy of
our labor laws and the Constitution. In the case at
bench, the act of extorting money from sales agents in
exchange for releasing their commissions is a serious
accusation, but allegation is not proof. The employer has
the burden of proof. However, the company failed to
present sufficient evidence that petitioner was responsible
for such abnormality. The relevant evidence for the private
respondent consisted only of the following: (a) Gonzales'
commission voucher; (b) the letter-complaint signed by the
division heads of the Sales Department; (c) Pahatis letter-
complaint; (d) the affidavits of Celeridad, Gonzales and
Mendoza; (e) Lee's letter-notice dated June 2, 1995; (f)
Celeridad's letter-notice dated June 24, 1995; and (g)
several cash disbursement vouchers including those of
Mendoza and Gonzales. While the cash disbursement
41
voucher and Gonzales' affidavit support the claim that her
commission was released to another person, they do not
show that petitioner was responsible for such irregularity.
As finance manager, she approved disbursement of the
company's funds, but the actual payment of cash was
usually the function of the company cashier. Labor tribunals
should be cautioned against confusing conjecture with
evidence. The absence of petitioner, who failed to contest
the charges against her in the investigation conducted by
private respondent, did not mean admission of the
accusations.
Petition is granted.
SUGBUANON RURAL BANK, INC vs. BIENVENIDO
E. LAGUESMA, AND SUGBUANON RURAL BANK,
INC. - ASSOCIATION OF PROFESSIONAL,
SUPERVISORY, OFFICE, AND TECHNICAL
EMPLOYEES UNION G.R. No. 116194. February 2,
2000 QUISUMBING
Facts:
Petitioner Sugbuanon Rural Bank, Inc., (SRBI) is a duly-
registered banking institution. Private respondent SRBI-
Association of Professional, Supervisory, Office, and
Technical Employees Union (APSOTEU) is a legitimate
labor organization affiliated with the Trade Unions
Congress of the Philippines (TUCP). DOLE granted
Certificate of Registration to APSOTEU. The union filed a
petition for certification election of the supervisory
employees of SRBI. SRBI filed a motion to dismiss the
union's petition on the ground that the members of
APSOTEU-TUCP were in fact managerial or confidential
employees. Petitioner submitted detailed job descriptions to
support its contention that the union members are
managerial employees and/or confidential employees
proscribed from engaging in labor activities. Petitioner
argues that the functions and responsibilities of the
employees involved constitute the very core of the bank's
business, lending of money to clients and borrowers,
evaluating their capacity to pay, approving the loan and its
amount, scheduling the terms of repayment, and endorsing
delinquent accounts to counsel for collection. The union
filed its opposition to the motion to dismiss arguing that its
members were not managerial employees but merely
supervisory employees. Med-Arbiter denied petitioner's
motion to dismiss. SRBI appealed the Med-Arbiter's
decision to the Secretary of Labor which was denied for
lack of merit. The certification election was ordered.
Issue: WON the members of the union are managerial
employees and/or highly-placed confidential employees,
hence prohibited by law from joining labor organizations
and engaging in union activities.
Ruling:
Under Article 212 (m), Labor Code: Managerial employee’
is one who is vested with powers or prerogatives to lay
down and execute management policies and/or 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.
In the case at bench, the employees in question only had
recommendatory powers subject to evaluation, review, and
final decision by the bank's management. The job
description forms submitted by petitioner clearly show that
the union members in question may not transfer, suspend,
lay-off, recall, discharge, assign, or discipline employees.
Moreover, the forms also do not show that the Cashiers,
Accountants, and Acting Chiefs of the loans Department
formulate and execute management policies which are
normally expected of management officers. The Cashiers,
Accountant, and Acting Chief of the Loans Department of
the petitioner did not possess managerial powers and
duties.
Neither can these employees be classified as confidential
employees. Confidential employees are those who (1)
assist or act in a confidential capacity, in regard (2) to
persons who formulate, determine, and effectuate
management policies [specifically in the field of labor
relations]. 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 employee and his superior officer; and that
officer must handle the prescribed responsibilities relating
to labor relations. Article 245 of the Labor Code does
not directly, prohibit confidential employees from
engaging in union activities. However, under the
doctrine of necessary implication, the disqualification
of managerial employees equally applies to
confidential employees. The confidential-employee
rule justifies exclusion of confidential employees
because in the normal course of their duties they
become aware of management policies relating to
labor relations. It must be stressed, however, that
when the employee does not have access to
confidential labor relations information, there is no
legal prohibition against confidential employees from
forming, assisting, or joining a union.
In the case at bench, petitioner contends that it has only 5
officers running its day-to-day affairs. They assist in
confidential capacities and have complete access to the
42
bank's confidential data. Petitioner's explanation, however,
does not state who among the employees has access to
information specifically relating to its labor relations
policies. Even Cashier Patricia Maluya, who serves as the
secretary of the bank's Board of Directors may not be so
classified. True, the board of directors is responsible for
corporate policies, the exercise of corporate powers, and
the general management of the business and affairs of the
corporation. As secretary of the bank's governing body,
Patricia Maluya serves the bank's management, but could
not be deemed to have access to confidential information
specifically relating to SRBI's labor relations policies,
absent a clear showing on this matter. Thus, while
petitioner's explanation confirms the regular duties of the
concerned employees, it shows nothing about any duties
specifically connected to labor relations.
Petition is dismissed.
ROBERTO GONZALES vs. NLRC and PEPSI COLA
PRODUCTS G.R. No. 131653 March 26, 2001 DE
LEON
Facts:
Petitioner Roberto Gonzales was an employee of private
respondent PCPPI. He was promoted to the position of
Route Manager with a post at PCPPI Northbay Sales
Office. As Route Manager, he was tasked with the
supervision and coordination of the activities of salesmen
servicing the area under his jurisdiction. Subsequently,
petitioner was served with a notice of termination of his
employment. His dismissal stemmed from alleged
irregularities attributed to him as Route Manager and
concurrently as dealer of Pepsi Cola products. Under his
dealership contract with PCPPI, petitioner was extended by
PCPPI a credit line of P300,000 payable in 30 days. As
concessionaire or dealer, petitioner was entitled to a
concession which is the cash equivalent of the value of
empty bottles and its contents given to a dealer who met
the monthly quota requirements in the sale of Pepsi Cola
products. Petitioner operated under the business name of
RR Store. Petitioner as proprietor of RR Store purchased
Pepsi Cola products on credit amounting to P116,182.00.
The credit transaction was covered by Charge Invoice. To
cover this transaction, petitioner Gonzales issued a post-
dated check. Three days before his said post-dated check
became due and payable, petitioner issued in favor of
respondent PCPPI another post-dated check to cover the
outstanding total debt of P116,182.00. With the issuance of
the new post-dated check, petitioner ordered Mr. Gerry
Alhambra, PCPPI salesman servicing RR Store, to issue an
official receipt in the amount of P116,182.00 to cover his
account. However, issuance of official receipt for post-dated
checks is contrary to respondent PCPPI's company policy
which requires that its official receipt shall be issued only
for cash sales and/or currently dated checks. Nonetheless,
Gerry Alhambra acceded to his superior, the petitioner, and
issued the official receipt. When salesman Alhambra
attempted to settle his account, the settlement clerk noticed
that there was a discrepancy between the cash amount
declared by Alhambra and the sum actually remitted.
Alhambra admitted that petitioner Gonzales pressured him
to issue the official receipt. Alhambra could not likewise
present the post-dated check issued by respondent
Gonzales for the reason that under the company rules and
regulations, any post-dated check must be covered by a
post-dated check receipt, duly signed by Mr. Andy Roxas,
the Sales Office Manager. Petitioner issued a third post-
dated check which was signed by the petitioner himself and
not by the Sales Office Manager who has the sole authority
to issue the same. After investigation and hearing,
petitioner was notified of his termination from employment
on the ground of loss of confidence and of having violated
the company rules and regulations. The Labor Arbiter ruled
in favor of petitioner which was reversed by NLRC, hence
this petition.
Issue: WON petitioner was illegally dismissed.
Ruling:
Substantive due process, for validity of the petitioner's
dismissal, has likewise been met by private respondent
PCPPI. As aptly found by the NLRC, petitioner was
separated or terminated by private respondent PCPPI from
his employment due to loss of trust and confidence, which
is a just and valid cause for dismissal under Article 282(c)
of the Labor Code. We find the evidence adduced in this
case contrary to petitioner's claim that the questionable
credit sale transaction he was charged with was in
connection with his being a dealer or concessionaire of
PCPPI and not as an employee thereof, and thus, there
was allegedly no just and valid cause to dismiss him.
Ruling:
Under the Labor Code, an employer can terminate the
employment of the employee concerned for "fraud or willful
breach by an employee of the trust reposed in him by his
employer or duly authorized representative." The loss of
trust and confidence must be based on the willful breach of
the trust reposed in the employee by his employer.
Ordinary breach will not suffice. A breach of trust is willful if
it is done intentionally, knowingly and purposely, without
justifiable excuse, as distinguished from an act done
carelessly, thoughtlessly, heedlessly or inadvertently. Loss
of confidence, as a just cause for termination of
employment, is premised on the fact that the
employee concerned holds a position of
43
responsibility, trust and confidence. He must be
invested with confidence on delicate matters such as
the custody, handling, care and protection of the
employer's property and/or funds. But in order to
constitute a just cause for dismissal, the act
complained of must be "work-related" such as would
show the employee concerned to be unfit to continue
working for the employer. In a decided case, it has been
held that the test of managerial status has been defined as
an authority to act in the interest of the employer, which
authority is not merely routinary or clerical in nature but
requires in dependent judgment.
In the case at bench, petitioner is not an ordinary rank-and-
file employee. He is a Route Manager, a managerial level
position. As managerial employee, petitioner is tasked to
perform key and sensitive functions, and thus he is bound
by more exacting work ethics. Records show that
maneuvers and machinations on the questionable credit
sale transaction could not have been consummated by the
petitioner if he was not equipped with the knowledge, as a
route manager, of how the respondent company processes
these kinds of transactions. It was highly inconceivable for
a mere dealer to have done what petitioner did. First,
petitioner gave himself a credit extension without proper
authorization. Second, petitioner, as route manager
prevailed upon salesman Alhambra, his subordinate, over
whom he exercises moral and professional ascendancy to
carry out his machination. Third, upon the discovery by the
settlement clerk of the fraudulent official receipt, petitioner
issued another post-dated check together with a post-dated
check receipt (PDCR) signed by petitioner himself although
he was not authorized to do so. These acts of petitioner are
patently dishonest and militate against the rules and
regulations of his employer, herein private respondent
company. Hence, the loss of trust and confidence in him by
private respondent PCPPI.
As a general rule, employers are allowed a wide
latitude of discretion in terminating the employment
of managerial personnel or those who, while not of
similar rank, perform functions which by their nature
require the employer's full trust and confidence.
Proof beyond reasonable doubt is not required. It is
sufficient that there is some basis for loss of
confidence, such as when the employer has
reasonable ground to believe that the employee
concerned is responsible for the purported
misconduct, and the nature of his participation
therein renders him unworthy of the trust and
confidence demanded by his position. This must be
distinguished from the case of ordinary rank-and-file
employees, whose termination on the basis of these
same grounds requires a higher proof of involvement
in the events in question; mere uncorroborated
assertions and accusations by the employer will not
suffice.
In the present case, PCPPI has sufficiently shown that
petitioner has become unworthy of the trust and confidence
demanded of his position. Petitioner betrayed his
employer's trust and confidence when he instigated the
issuance by his subordinate salesman of an official receipt
for his post-dated check whereby petitioner could have
evaded payment to private respondent PCPPI of his debt
amounting to P116,182.00. These acts committed by
petitioner adversely reflected on his integrity. As Route
Manager he disregarded the private respondent company's
rules and regulation prohibiting the issuance of official
receipt for post-dated check payment unless the same is
done by the Sales Office Manager. The fact the private
respondent PCPPI ultimately suffered no monetary damage
as petitioner subsequently settled his account is of no
moment. This was not the reason for the termination of his
employment in the respondent company but the anomalous
scheme he engineered to cover up his past due account,
which constitutes a clear betrayal of trust and confidence.
Petition is dismissed.
C. WORKING CONDITIONS AND WORK
PERIODS
a. Coverage (Art. 82)
 General Rule- Title I, Book III of the Labor Code
dealing with hours of work, weekly rest periods,
holidays, service incentive leaves and service charges,
covers all employees in all establishments, whether for
profit or not.
 Exceptions:
1. Government employees;
2. Managerial employees;
3. Officers and members of the managerial staff;
4. Field Personnel;
5. Members of the family of the employer who are
dependent on him for support;
6. Domestic Helpers;
7. Persons on the Personal Service of Another;
8. Workers Paid by Result
TYPE OF EMPLOYEE REASON WHY NOT
COVERED
Government Employees, Because terms and
including those employed in conditions of employment
GOCC’s not incorporated are governed by Civil
under the Corporation Code Service Law and its IRR
Managerial Employees Because they are employed
by reason of their special
training, experience or
knowledge. The value of
their work cannot be
44
 measured in terms of hours. 1. perform services in the employer’s home which
Non-Agricultural Field Because they are on their are usually necessary and desirable for the
Personnel own in the field and the maintenance or enjoyment thereof; or
number of hours of actual 2. minister to the personal comfort, convenience, or
work they render cannot be safety of the employer, as well as the members of
reasonably ascertained; it the employer’s household.
would be grossly unfair to
require the employer to pay
them benefits such as b. Normal Hours of Work (Art. 83)
overtime compensation.
Members of the Family of The amounts given by the  The normal hours of work of an employee shall not
the employer who are employer by way of support exceed 8 hours a day.
dependent upon him for may far exceed the benefits  Health personnel in government service are excluded
support to which the employee is from the coverage of Arts. 82- 96, Labor Code. Their
entitled under the provisions work hours, NSD, and other employment benefits are
of the Title. specified in RA 7305.
Domestic Helpers and Terms and conditions of i. Purposes of the provisions governing hours
persons in the personal employment are governed of work:
service of another by the provisions of Chapter 1. to safeguard the health and welfare of the laborer;
III, Title III, Book III, Labor and
Code. 2. to minimize unemployment by utilizing different
Workers who are paid By Their compensation is shifts.
Results, such as those on based on the work NOTES:
piece rates or task basis accomplished and not on  It is not prohibited to have normal hours of work of less
the time they spend in than 8 hours a day. What the law regulates is work
accomplishing the work. hours exceeding 8 hours a day.
 8-hour labor law prescribes the maximum but not the
 The aforementioned employees are not entitled to: minimum. Therefore, part-time work, or a day’s work of
1. overtime pay; less than 8 hours is not prohibited.
2. premium pay for rest days and holidays; ii. Normal Hours of Work of Health
3. night shift differential pay; Personnel:
4. holiday pay;  For health personnel in cities and municipalities with a
5. service incentive leave; population of at least 1M or in hospitals and clinics with
6. service charges a bed capacity of at least 100:
 Government Employees- refers only to employees  Regular office hours shall be 8 hours a day for 5
of government agencies, instrumentalities or political days a week, or 40 hours a week, exclusive of
subdivisions and of government corporations that are time for meals.
NOT incorporated under the Corporation Code (those  In case of exigencies, they may work for 6 days or
that have original charters). for 48 hours, but they shall be entitled to an
 Workers Paid on Piece-Rate Basis- those who are additional compensation of at least 30% of their
paid a standard amount for every piece or unit of work regular wage for work performed on the 6th day.
produced that is more or less regularly replicated,  It is possible for an employee to work for 2 calendar
without regard to the time spent in producing the same. days (e.g. Mark’s work schedule is from 10pm of
 Workers Paid By Result- those who are paid based Monday up to 6am of Tuesday, his work day covers 2
on the work completed and not on the time spent in calendar days).
working.
 Field Personnel- non-agricultural employees who c. Hours Worked (Art. 84)
regularly perform their duties away from the principal
place of business or branch office of the employer and  Hours worked shall include:
whose actual hours of work in the field cannot be 1. all time during which an employee is required to
determined with reasonable certainty. be on duty or to be at a prescribed workplace;
They work away from direct supervision 2. all time during which an employee is suffered or
of the employer. permitted to work; and
 Domestic Helpers/ Persons Rendering Personal 3. rest periods of short durations during working
Services- those who: hours.

45
NOTE: Meal period of less than 20 minutes, becomes only sand. While gravel is being leaving at 6am and arriving
a rest period and is thus considered as work time. loaded, he engaged himself at 6pm. He is completely
i. Principles in Determining Hours Worked: in a mahjong session and relieved from all duty until
1.All hours are hours worked which the employee s then slept. Is the time spent 8pm, when he again goes
required to give to his employer, regardless of playing and sleeping on duty for the return trip to
whether or not such hour are spent in productive compensable? Pagudpud. Is his idle time
labor or involve physical or mental exertion. working time?
2.An employee need not leave the premises of the Answer:
workplace in order that his rest period shall not be Yes, because he is engaged Answer:
counted, it being enough that he stops working, may to wait for waiting is an No, because during his idle
rest completely and may leave his workplace, to go integral part of the job. time, he is specifically
elsewhere whether within or outside the premises of relieved from all duty. He is
his workplace. merely waiting to be
3.If the work performed was necessary or it benefited engaged.
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 iii. Preliminary and Postliminary Activities
shall be considered as hours worked if the work is  Compensable when:
with the knowledge of his employer or immediate 1. controlled or required by employer;
supervisor. 2. are pursued necessarily and primarily for the
4.The time during which an employee is inactive by employer’s benefit
reason of interruptions in his work beyond his control  Preliminary- before work (e.g. preparation for business
shall be considered time worked either if the presentations)
imminence of the resumption of work requires the  Postliminary- after actual work (e.g. overtime)
employee’s presence at the place of work or if the
interval is too brief to be utilized effectively and iv. Travel Time
gainfully in the employee’s own interest.
ii. Rules on Hours of Work Travel from Travel that is All Travel Away
a. Waiting Time Home to Work in Days Work from Home
 Considered as hours worked if waiting: Normal travel The time spent by Travel that keeps
1. is an integral part of his work; or from home to an employee in an employee
2. the employee is required or engaged by the work which is not travel as part of away from home
employer to wait. work time his principal overnight.
3. when employee is required to remain on call in the activity, like travel
employer’s premises or so close thereto that he from jobsite to
cannot use the time effectively and gainfully for his jobsite during the
own purpose. workday.
b. Working while on Call General Rule- Compensable Considered as
 When employee is required to remain on call in the not compensable and must be work time when it
employer’s premises or so close thereto that he cannot Exception- counted as hours cuts across an
use the time effectively and gainfully for his own where the worker worked. employee’s
purpose. is made to work workday
 However, if he is not required to leave work at his on an emergency (because it
home or with company officials where he may be call and travel is substitutes for the
reached, he is not considered working while on call. necessary in hours that the
proceeding to the employee should
ENGAGED TO WAIT WAITING TO BE workplace, the have been in the
ENGAGED time spent on office.
When waiting is an integral Idle time is not working time; travel is
part of the job, the time it is not compensable. compensable.
spent waiting is
compensable. NOTE: In travel from home to work, if same is via shuttle
Example: Example: service sponsored by the company, travel time is not
Mark works as a driver and Spencer works as a Florida compensable because service is for the benefit of the
his task is to drive a truck to Transit bus driver. His route employee.
Ilocos to load gravel and is from Pagudpud to Manila,
46
 In travel away from home, if instruction was given
by the employer to the employee to go to a warehouse and
to go back to the main office afterwards, the time traveled is
considered as hours worked; however, if instead of going
back to the office, the employee went home, only the travel
to the warehouse is considered as hours worked.
v. Power Interruptions
a. First 20 minutes is compensable;
b. Succeeding minutes not compensable, but is despite the
lapse of the first 20 minutes the employees are required to
stay in their workplaces, such time is compensable.
vi. Semestral Break of Teachers
 Compensable hours worked for it is a form of
interruption beyond their control.
 Only for regular full-time teachers. (University of
Pangasinan Faculty Union vs. University of
Pangasinan; February 20, 1984)
vii. Lectures, Meetings, Trainings, Programs
 Not counted as working time if all the following
conditions are met:
1. attendance is outside of the employee’s regular
working hours;
2. attendance is in fact voluntary; and
3. employee does not perform any productive work
during such attendance.
viii. Work Hours of Seamen
 Presence on board for more than 8 hours a day is
required by the nature of their service.
 Conditions to be satisfied before a seaman be entitled
to overtime pay;
1. Actual rendition of overtime work.
2. Submission of sufficient proof that said work was
actually performed.
c. Meal Periods (Art. 85)
1. Meal periods should not be less than 60 minutes,
and is time-off/non-compensable.
2. Under specified cases, may be less than 60
minutes but should not be less than 20 minutes
and must be with full pay.
3. If less than 20 minutes, it becomes only a rest
period and is thus considered as work time.
NOTE: The employee must be completely relieved from
duty. Otherwise, it is compensable as hours worked.
 Mealtime is not compensable, EXCEPT:
1. where the lunch period or meal time is
predominantly spent for the employer’s benefit; or
2. where it is less than 60 minutes.
i. Shortened Meal Break Upon Employees
Request
 Employees may request that their meal period be
shortened so that they can leave work earlier than the
previously established schedule.
 Requisites:
1. employees voluntarily agree in writing to a
shortened meal period and are willing to waive the
overtime pay for such shortened meal;
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;
4. the value of benefits is equal to the compensation
due them for the shortened meal period;
5. overtime pay will become due and demandable if
ever they are permitted or made to work beyond
4:30pm.
6. the arrangement is of temporary duration.
d. Night Shift Differential (Art. 86)
i. Concept
 Additional compensation of not less than 10% of
an employee’s regular wage for every hour of
work done between 10pm and 6am, whether or not
such period is part of the worker’s regular shift.
 If work done between 10pm and 6am is overtime
work, then the 10% night shift differential should be
based on the overtime rate.
 Not Waivable- Additional compensation for nighttime
work is founded on public policy. (Mercury Drug vs.
Dayao, GR No. L-30452, September 30, 1982)
ii. Computation of Night Shift Pay
1. Where night shift (10pm to 6am) work is Regular Work:
a. On an ordinary day- Plus 10% of the basic
hourly rate or a total of 110% of the basic hourly rate.
b. On a rest day, special day or regular
holiday- Plus 10% of the regular hourly rate on a rest day,
special day or regular holiday or a total of 110% of the
regular hourly rate.
NOTE: Since special days and regular holidays are
calendar day (24 hour period from 12 midnight to 12
midnight of the following day), the night shift is either cut-off
or starts only at 12 midnight. Hence, the night shift pay for
such days may be determined by the hour on the basis of
the hourly rate not the daily rate.
2. Where night shift (10pm to 6am) work is Overtime
Work:
47
 a. On an ordinary day- Plus 10% of the
overtime hourly rate on an ordinary day or a total of 110%
of the overtime hourly rate on an ordinary day.
b. On a rest day/special day/ a regular
holiday- Plus 10% of the overtime hourly rate on a rest
day/special day/ regular holiday.
iii. Illustration
Daily Wage: P1000
Work Schedule: 6pm to 2am
Night Shift Hours: 4 hours
Step 1: Get Hourly Wage Rate (HWR) by dividing the Daily
Wage Rate (DWR) to number of Working Hours (WH)
HWR= DWR ÷ WH
P1000 ÷ 8 hrs. = P125 HWR
Step 2: Get the 10% of HWR
P125 HWR x .10= P12. 50
Step 3: Compute NSD by multiplying the 10% of HWR to
no. of Hours Performed between 10pm to 6am (night shift
hours; NSH)
NSD= 10% of HWR x NSH
P125 HWR x .10 = P12.50
x 4 hrs
= P 50 NSD
Step 4: To get the Total Wage Earned for the Day:
Get the Wage Earned for the Day (WED) by multiplying
HWR to number of WH and then add it to the NSD
WED= [HWR x WH] + NSD
P125 x 8 hrs. = P1000
+ P 50 NSD
= P 1050 Total Wage Earned for the
day
e. Overtime Work (Art. 87)
 Overtime Pay- additional compensation for work
performed beyond 8 hours within the worker’s 24-hors
workday regardless of whether the work covers 2
calendar days.
 The employee is paid for the overtime work on
additional compensation equivalent to his regular wage
plus at leas 25% thereof.
 Overtime work performed on a holiday or rest day shall
be paid an additional compensation equivalent to the
rate of the first 8 hours on a holiday or rest day plus at
least 30% thereof.
 Premium Pay- is additional compensation for work
rendered by the employee on days when normally he
should not be working such as special holidays and
weekly rest day.
 Work Day- the 24-hour period which commences from
the time the employee regularly starts to work (e.g. if
the worker starts to work 8am today, the workday is
from 8am today to 8am tomorrow).
 The minimum normal working hours fixed by law need
not be continuous to constitute the legal working day,
so long as it is within the work day.
 Rationale- The employee is given OT pay because he
is made to work longer than what is commensurate
with his agreed compensation for the staturorily fixed
of voluntarily agreed hours of labor he is supposed to
do.
 Waiver of Overtime Pay- As a rule, no waiver of
overtime pay whether express or implied. Any contrary
stipulation is null and void, as it is intended to benefit
laborers and employees.
 Exceptions:
1. When the waiver is med in consideration of
benefits and privileges which may be more that
what will accrue to them in overtime pay (Meralco
Workers Union vs. Meralco; GR No. L- 11876,
May 29, 1959).
2. Compressed workweek proposed by employees.
This is allowed only under the following conditions:
a. It is voluntary on the part of the worker;
b. There will be no diminution of the weekly or
monthly take-home pay and fringe benefits of
the employee.
c. The value of the benefits that will accrue to the
employees under the proposed schedule is
more than or at least commensurate with the
one-hour OT pay that is due them during
weekdays based on the employee’s
quantification;
d. The work does not involve strenuous physical
exertion and employee must have adequate rest
periods; and
e. The arrangement is of temporary duration.
i. Factual & Legal Basis for Claim
 As a rule, express instruction from the employer to
the employee to render overtime work is not required
for the employee to be entitled to overtime pay. It is
sufficient that the employee is permitted or suffered to
work.
NOTE: Meal periods during overtime work is not given to
workers performing overtime for the reason that OT work is
usually for a short period ranging from 1 to 3 hours and to
deduct from the same 1 full hour as meal period would
reduce to nothing the employee’s OT work.
 Basis of Overtime- Regular Basic Wage includes
cash wage only, without any deduction on account of
facilities provided by the employer.
ii. Rules:
 Work performed beyond 8 hours a day must
be paid an additional compensation
equivalent to the employee’s regular wage
plus at least 25% thereof.
48
  Work performed beyond 8 hours on a holiday
or rest day shall be paid an additional
compensation equivalent to the rate for the
first 8 hours on a holiday or rest day plus 30%
thereof.
iii. Illustration:
Daily Wage: P1000
Work Schedule: 9am to 6pm (inclusive of 1 hour meal
period)
OT: 6pm to 1am
Step 1: Get HWR
P1000/ 8 hrs. = P125
Step 2: Get Over Time Premium Pay (OTP) by adding the
25% of HWR to HWR and multiply it to number of Over
Time Hours (OTH)
OTP= [25% of HWR + HWR] x OTH
P125 x .25 = P 31. 25 (25% of HWR)
+ P125 (HWR)
= P 156. 25
x 7 hours (OTH)
= P 1093. 75 (OTP)
Step 3: Compute Total wage earned for the day by adding
the OTP to Daily Wage
P 1093. 75 OTP
+ P 1000 daily wage
= P 2093. 75 Total wage earned for the day
Article 88. Undertime Not Offset by Overtime-
Undertime work on any particular day shall not be offset by
overtime work on any other day. Permission given to the
employee to go on leave on some other day of the week
shall not exempt the employer from paying the additional
compensation required in this Chapter.
Article 89. Emergency Overtime Work- 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 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, installation, 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 in perishable good; and
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.
f. Week Rest Period (Art.91)
i. Right to a Weekly Rest Day
 Concept of Rest Day- Employee should be provided
a rest period of not less than 24 consecutive hours
after every 6 consecutive normal work days.
 Weekly rest period is within the purview of employer’s
prerogative.
 The employer shall schedule the weekly rest day of is
employees subject to CBA. However, the employer
shall respect preference of employees as to their
weekly rest day when such preference is based
on religious grounds. But when such preference will
prejudice the operations of the undertaking and the
employer cannot normally result to order remedial
measures, the employer may so schedule the weekly
rest day that meets the employee’s choice for at least
2 days a month.
ii. When Employer may Require Work on a
Rest Day (Art. 92)
 General Rule- It shall be the duty of every employer,
whether operating for profits or not to provide a rest
period of not less than 24 consecutive hours after
every 6 consecutive normal work days to his
employees.
 Exception:
 The employer may require his employees to work on
any day even on a rest day:
1. In cases of urgent work to be performed on the
machinery, equipment or installation, to avoid
serious loss which the employer would otherwise
suffer;
2. To prevent loss or damage to perishable goods;
3. In case of actual or impending emergencies
caused by serious accident, fire, flood, typhoon,
earthquake, epidemic, or other disaster or
calamity to prevent loss of life and property, or
imminent danger to public safety;
4. Where the nature of the work requires continuous
operations and the stoppage of work may result in
irreparable injury or loss to the employer; and
5. In the event of abnormal pressure of work due to
special circumstances, where the employer cannot
ordinarily be expected to resort to other measures;
6. Under other circumstances analogous to the
foregoing as determined by the Secretary of
Labor.
49
 iii. Compensation for Rest Day, Sunday or Work on Special Holidays 30% of regular wage
Holiday Work (Art. 93) Holiday Work falls on 50% of regular wage
Scheduled Rest Day
 This Article does not prohibit a stipulation in the CBA
for higher benefits
a. List of Special Holidays: g. Right to Holiday Pay (Art. 94)
1. November 1- All Saint’s Day
2. December 31- Last Day of the Year  Holiday Pay (legal holiday)- A day’s pay given by
3. All other days declared by law law to an employee even if he does not work on a
4. Local Holiday (that which declared by law or regular holiday. It is limited to the 11 regular holiday
Ordinance as holiday of a particular LGU. This is listed by law. The employee should not have been
for that specific LGU only, e.g. Quezon City Day) absent without pay on the working day preceding the
b. List of Regular Holidays: regular holiday.
1. January 1- New Year’s Day  Premium Pay- Additional compensation for work
2. Maundy Thursday (movable date) performed on a scheduled rest day or holiday.
3. Good Friday (movable date) i. Rule on Compensability
4. April 9- Araw ng Kagitingan  Compensable whether worked or unworked subject to
5. May 1- Labor Day certain conditions.
6. June 12- Independence Day  Legal holiday falling on a Sunday does not create an
7. National Heroes Day (Last Sunday of additional workday nor create a legal obligation for the
August) employer to pay extra aside from the usual holiday pay
8. November 30- Bonifacio Day to its monthly paid employees.
9. December 25- Christmas Day ii. Double Holiday Pay
10. December 30- Rizal Day 1. 200% of the basic wage- entitled even if said
11. Eid’l Fitr (movable date) under RA 9177, holiday is unworked. To give employee only 100%
November 13, 2002. would reduce the number of holidays under DO
NOTE: There must be no distinction between Muslims and No. 3.
Non-Muslims as regards payment of benefits for Muslim 2. 300% if he worked on 2 regular holidays falling on
Holidays; wages and other emoluments are laid down by the same day (e.g. April 9 and Maundy Thursday)
law and not based on faith or religion. ILLUSTRATION:
a. Single Holiday Rule- provided that the
REGULAR HOLIDAY SPECIAL HOLIDAY employee:
Compensable even if Not compensable if 1. worked;
unworked subject to certain unworked. 2. was on leave with pay; or
conditions. 3. was on authorized absence on the day prior to the
Limited to the 10 Not exclusive since a law of regular holiday.
enumerated by the Labor ordinance may provide for  Successive Regular Holiday- If there are two
Code. other special holidays. successive regular holidays (e.g. Maundy Thursday
Rate is twice the regular Rate is 130% of the regular and Good Friday), the employee must be present the
rate if worked. wage if worked. day before the scheduled regular holiday to be entitled
to compensation to both; otherwise, he must work on
iii. When Entitled to Premium Pay the first holiday to be entitled to holiday pay on the
second regular holiday.
 If worked- regular wage plus 30% premium pay
 If not worked- no compensation/ no premium Wed. Thurs. Fri. Entitled to
be Paid?
iv. Additional Compensation for Work on a Present REST DAY REGULAR Yes
Rest Day, Sunday or Holiday: HOLIDAY
Absent with REST DAY REGULAR Yes
DAY RATE OF ADDITIONAL pay HOLIDAY
COMPENSATION Absent SPECIAL REGULAR No
Work on a scheduled rest 30% of regular wage without pay DAY HOLIDAY
day Present SPECIAL Yes
No regular workdays and 30% of regular wage for DAY
rest days work on Sundays and Absent with SPECIAL Yes
Holidays Pay DAY
50
Absent SPECIAL No established practice of the employer provides
without Pay DAY otherwise.
 No employer shall discriminate against any solo parent
b. Successive Holiday Rule employee with respect to terms and conditions of
Wed. Maunday Good Entitled to employment on account of his/her status.
Thurs. Friday be Paid?  In addition to leave privileges under existing laws,
Present REGULAR REGULAR Yes- Both parental leave of not more than 7 working days every
HOLIDAY HOLIDAY year shall be granted to any solo parent employee who
Absent with REGULAR REGULAR Yes- Both has rendered service of at least 1 year.
pay HOLIDAY HOLIDAY
Absent REGULAR REGULAR No- Both i. Service Charges (Art. 96)
without pay HOLIDAY HOLIDAY
Absent WORKED Yes- but only  Concept- All service charges collected by hotels,
without pay to the restaurants, and similar establishment shall be
holiday pay distributed:
on Friday 1. 85% for all covered employees to be equally
distributed among them.
2. 15% for management.
h. Right to Service Incentive Leave  Share of the employees shall be equally distributed
(Art. 95) among them. The shares referred to herein shall be
distributed and paid to employees not less than once
 Concept of Service Incentive Leave (SIL)- 5 days every 2 weeks or twice a month at intervals not
leave with pay for every employee who has rendered exceeding 16 days.
at least 1 year of service.  The 15% management share shall be for disposition by
 SIL does not apply to those who are: management to answer for losses and breakages and
1. already enjoying the said benefits; distribution to employees receiving more than
2. already enjoying vacation leave with pay for at P2,000.00 a month at the discretion of the
least 5 days; management in the latter case.
3. employed in establishments regularly employing  In case the service charge is abolished, the share of
less than 10 employees; and the covered employees shall be considered integrated
4. employed in establishments exempted by the in their wages.
Secretary of Labor.  The basis of the amount to be integrated shall be the
 1 Year of Service- service within 12 months, whether average share of each employee for the past 12
continuous or broken, reckoned from the date the months immediately preceding the abolition or
employee started working including authorized withdrawal of such charge.
absences and paid regular holidays unless the number  Coverage- Apply only to hotels, restaurants and
of working days in the establishment, as a matter of similar establishment collecting service charges.
practice or policy or a provided in the employment  Pooled Tips- Monitored, accounted for, and
contract, is less than 12 months. distributed in the same manner as service charges.
 SIL is commutable, i.e. convertible to cash the cash
equivalent is aimed primarily at encouraging workers to CASES:
work continuously and with dedication to the company.
 Part-time workers are entitled to the full benefit of the ACE NAVIGATION CO. vs. CA and ORLANDO
yearly 5-days SIL. The reason is that the provisions of ALONSAGAY G.R. No. 140364. August 15, 2000
Article 95, Labor Code speak of the number of months PUNO
in a year for entitlement to said benefit.
Facts:
i. Vacation and Sick Leave
Ace Navigation Co. recruited private respondent Orlando
 Not statutorily required; matter of management Alonsagay to work as a bartender on board the vessel M/V
discretion or a product of CBA. "Orient Express" owned by its principal, Conning Shipping
 Benefits are non-cumulative and non-commutative; Ltd. (Conning). Under their POEA approved contract of
must be enjoyed by the employee within 1 year employment, Orlando shall receive a monthly basic salary
otherwise they are considered waived or forfeited. of U.S. $450.00, flat rate, including overtime pay for 12
Exception is when the labor contract or the hours of work daily plus tips of S. $2.00 per passenger per
day. He was also entitled to 2.5 days of vacation leave with
51
pay each month. The contract was to last for one (1) year.
Petitioners alleged that Orlando was deployed and boarded
M/V "Orient Express" at the seaport of Hong Kong. After
the expiration of the contract on June 13, 1995, Orlando
returned to the Philippines and demanded from Ace Nav,
his vacation leave pay. Ace Nav. did not pay him
immediately. It told him that he should have been paid prior
to his disembarkation and repatriation to the Philippines.
Moreover, Conning did not remit any amount for his
vacation leave pay. Ace Nav, however, promised to verify
the matter and asked Orlando to return after a few days.
Orlando never returned. Orlando filed a complaint before
the labor arbiter for vacation leave pay and unpaid tips.
Labor Arbiter ordered Ace Nav and Conning to pay jointly
and severally Orlando his vacation leave pay. The claim for
tips of Orlando was dismissed for lack of merit. NLRC
ordered petitioner and Conning to pay Orlando his unpaid
tips. CA denied the petition for certiorari, hence, this
petition.
Issue: WON petitioners are liable to pay the tips to Orlando.
Ruling:
The word “tip” has several meanings, with origins more or
less obscure, connected with "tap" and with "top." in the
sense of a sum of money given for good service. It is more
frequently used to indicate additional compensation, and in
this sense "tip" is defined as meaning a gratuity; a gift; a
present; a fee; money given, as to a servant to secure
better or more prompt service. A tip may range from pure
gift out of benevolence or friendship, to a compensation for
a service measured by its supposed value but not fixed by
an agreement, although usually the word is applied to what
is paid to a servant in addition to the regular compensation
for his service in order to secure better service or in
recognition of it. Tipping is done to get the attention
and secure the immediate services of a waiter, porter
or others for their services. Since a tip is considered
a pure gift out of benevolence or friendship, it can not
be demanded from the customer. Whether or not tips
will be given is dependent on the will and generosity
of the giver. Although a customer may give a tip as a
consideration for services rendered, its value still
depends on the giver. They are given in addition to
the compensation by the employer. A gratuity given
by an employer in order to inspire the employee to
exert more effort in his work is more appropriately
called a bonus.
In the case at bench, NLRC and CA held that petitioners
were liable to pay tips to Orlando because of the contract of
employment. However, the contract of employment
between petitioners and Orlando is categorical that the
monthly salary of Orlando is US$450.00 flat rate. This
already included his overtime pay which is integrated in his
12 hours of work. The words "plus tips of US$2.00 per
passenger per day" were written at the line for overtime.
Since payment for overtime was included in the monthly
salary of Orlando, the supposed tips mentioned in the
contract should be deemed included thereat. The
actuations of Orlando during his employment also show
that he was aware his monthly salary is only US$450.00,
no more no less. He did not raise any complaint about the
non-payment of his tips during the entire duration of his
employment. After the expiration of his contract, he
demanded payment only of his vacation leave pay. He did
not immediately seek the payment of tips. He only asked
for the payment of tips when he filed this case before the
labor arbiter. This shows that the alleged non-payment of
tips was a mere afterthought to bloat up his claim. The
records of the case do not show that Orlando was deprived
of any monthly salary. It will now be unjust to impose a
burden on the employer who performed the contract in
good faith. Furthermore, it is presumed that the parties
were aware of the plain, ordinary and common meaning of
the word "tip." It is also absurd that petitioners intended to
give Orlando a salary higher than that of the ship captain.
However, Orlando should be paid his vacation leave pay.
Petitioners denied this liability by raising the defense that
the usual practice is that vacation leave pay is given before
repatriation. But petitioners did not present any evidence to
prove that they already paid the amount. The burden of
proving payment was not discharged by the petitioners.
CA is reversed.
PHILIPPINE NATIONAL CONSTRUCTION
CORPORATION vs. NLRC and ROLANDO S.
ANGELES G.R. No. 128345 May 18, 1999 PUNO
Facts:
Private respondents Rolando S. Angeles and Ricardo P.
Pablo, Jr. were employed by petitioner corporation as
tollway guards. Their services, however, were terminated
on the ground of serious misconduct. Rosario C. Maravilla
complained to the Tollway General Manager, Mr. Ibarra G.
Paulino, about the "mulcting activities" of some security
personnel. Acting on the complaint, Mr. Paulino formed an
investigating team which staged an entrapment. They
marked one P500.00 bill and two P100.00 bills and handed
to Maravilla with instruction to give it to whoever demands
money from her. Thus, the team, together with Maravilla,
boarded the latter's passenger jeepney driven by Eustaquio
Paa. The Jeepney was then carrying a cargo of dogs. The
jeepney was stopped by Angeles who was on duty at that
time. He allegedly suspected them of illegally transporting
dogs. Angeles approached the driver, asked for his driver's
license and told him to park at the shoulder of the road. The
members of the investigating team saw private respondents
52
accept cash and a sack containing a dog from Maravilla,
after which they allowed the jeepney to leave. Mr. Ibarra
issued a Notice of Dismissal to private respondents
requiring them to answer the charge of serious misconduct.
After conducting a formal investigation, the investigating
officer recommended the dismissal of private respondents
which was adopted by Mr. Ibarra issued and issued a
Notice of Termination to private respondents informing
them that their employment shall cease. The Labor Arbiter
ruled that private respondents' dismissal was illegal. He
held that petitioner failed to prove by clear and convincing
evidence that private respondents committed serious
misconduct. However, instead of ordering their
reinstatement, the Labor Arbiter ordered the payment of
separation pay because of strained relations. He also
ordered petitioner to pay private respondents their
backwages and mid-year bonus, which was modified by
NLRC.
Issue: WON pay private respondents are entitled to mid-
year bonus notwithstanding the fact that private
respondents committed grave and serious misconduct.
Ruling:
Private respondents are not entitled to the mid-year bonus
they are claiming. A bonus is a gift from the employer and
the grant thereof is a management prerogative. Petitioner
may not be compelled to award a bonus to private
respondents whom it found guilty of serious misconduct. In
a decided case, it has been held that a bonus is a gratuity
or an act of liberality of the giver which the recipient has no
right to demand as a matter of right. 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. A bonus, however, is a
demandable or enforceable obligation when it is
made part of the wage or salary or compensation of
the employee. Whether or not a bonus forms part of
wages depends upon the circumstances and conditions for
its payment. If it is additional compensation which the
employer promised and agreed to give without any
conditions imposed for its payment, such as success of
business or greater production or output, then it is part of
the wage. But if it is paid only if profits are realized or if a
certain level of productivity is achieved, it cannot be
considered part of the wage. Where it is not payable to all
but only to some employees and only when their labor
becomes more efficient or more productive, it is only an
inducement for efficiency, a prize therefor, not a part of the
wage.
In the case at bench, private respondents in this case
neither alleged nor adduced evidence to show that the
bonus they are claiming is a regular benefit which has
become part of their compensation. Thus, the presumption
is that it is not a demandable obligation from the employer
and the latter may not be compelled to grant the same to
underserving employees.
Petition is granted.
PRODUCERS BANK OF THE PHILIPPINES vs. NLRC
and PRODUCERS BANK EMPLOYEES
ASSOCIATION G.R. No. 100701 March 28, 2001
GONZAGA-REYES
Facts:
Producers Bank of the Philippines, a banking institution,
has been providing several benefits to its employees since
1971 when it started its operation. Among the benefits it
had been regularly giving is a mid-year bonus equivalent to
an employee's one-month basic pay and a Christmas
bonus equivalent to an employee's one whole month salary
(basic pay plus allowance). When the law granting a 13 th
month pay, took effect, the basic pay previously being given
as part of the Christmas bonus was applied as compliance
to the 13th Month Law, the allowances remained as
Christmas bonus From 1981 up to 1983, the bank
continued giving one month basic pay as mid-year bonus,
one month basic pay as 13th month pay but the Christmas
bonus was no longer based on the allowance but on the
basic pay of the employees which is higher. In the early
part of 1984, the bank was placed under conservatorship
but it still provided the traditional mid-year bonus. By virtue
of an alleged Monetary Board Resolution No. 1566, bank
only gave a one-half (1/2) month basic pay as compliance
of the 13th month pay and none for the Christmas bonus.
Private respondent Producers Bank Employees Association
with NLRC charging petitioner Bank with diminution of
benefits, non-compliance with Wage Order No. 6 and non-
payment of holiday pay. In addition, private respondent
prayed for damages. Labor Arbiter Nieves V. de Castro
found private respondent's claims to be unmeritorious and
dismissed its complaint. NLRC granted all of private
respondent's claims, except for damages.
The issues are discussed in seriatim.
Bonuses
Ruling:
A bonus is an amount granted and paid to an
employee for his industry and loyalty which
53
contributed to the success of the employer's business
and made possible the realization of profits. It is an
act of generosity granted by an enlightened employer
to spur the employee to greater efforts for the
success of the business and realization of bigger
profits. The granting of a bonus is a management
prerogative, something given in addition to what is
ordinarily received by or strictly due the recipient. Thus, a
bonus is not a demandable and enforceable
obligation, except when it is made part of the wage,
salary or compensation of the employee. However, an
employer cannot be forced to distribute bonuses
which it can no longer afford to pay. To hold
otherwise would be to penalize the employer for his
past generosity.
In the case at bench, it was established by the labor arbiter
and NLRC and admitted by both parties that petitioner was
placed under conservatorship by the Monetary Board.
Petitioner was not only experiencing a decline in its profits,
but was reeling from tremendous losses triggered by a
bank-run which began in 1983. In such a depressed
financial condition, petitioner cannot be legally compelled to
continue paying the same amount of bonuses to its
employees. Thus, the conservator was justified in reducing
the mid-year and Christmas bonuses of petitioner's
employees. To hold otherwise would be to defeat the
reason for the conservatorship which is to preserve the
assets and restore the viability of the financially precarious
bank. Ultimately, it is to the employees' advantage that the
conservatorship achieve its purposes for the alternative
would be petitioner's closure whereby employees would
lose not only their benefits, but their jobs as well.
13 th Month Pay
Ruling:
PD 851, which was issued by President Marcos on 16
December 1975, requires all employers to pay their
employees receiving a basic salary of not more than P
1,000 a month, regardless of the nature of the employment,
a 13th month pay, not later than December 24 of every year.
However, employers already paying their employees a 13th
month pay or its equivalent are not covered by the law.
Under the Revised Guidelines on the Implementation of the
13th Month Pay Law, the term "equivalent" shall be
construed to include Christmas bonus, mid-year bonus,
cash bonuses and other payments amounting to not less
than 1/12 of the basic salary. The intention of the law
was to grant some relief - not to all workers - but only
to those not actually paid a 13 th month salary or what
amounts to it, by whatever name called. It was not
envisioned that a double burden would be imposed
on the employer already paying his employees a 13 th
month pay or its equivalent whether out of pure
generosity or on the basis of a binding agreement. To
impose upon an employer already giving his
employees the equivalent of a 13 th month pay would
be to penalize him for his liberality and in all
probability, the employer would react by withdrawing
the bonuses or resist further voluntary grants for fear
that if and when a law is passed giving the same
benefits, his prior concessions might not be given
due credit.
In the case at bench, even assuming the truth of private
respondent's claims regarding the payments received by its
members in the form of 13th month pay, mid-year bonus and
Christmas bonus, it is noted that, for each and every year
involved, the total amount given by petitioner would still
exceed, or at least be equal to, one month basic salary and
thus, may be considered as an "equivalent" of the 13th
month pay mandated by PD 851. Thus, petitioner is
justified in crediting the mid-year bonus and Christmas
bonus as part of the 13th month pay.
Holiday Pay
Article 94 of the Labor Code provides that every worker
shall be paid his regular daily wage during regular
holiday and that the employer may require an
employee to work on any holiday but such employee
shall be paid a compensation equivalent to twice his
regular rate. In this case, the Labor Arbiter found that the
divisor used by petitioner in arriving at the employees' daily
rate for the purpose of computing salary-related benefits is
314. This finding was not disputed by the NLRC. However,
the divisor was reduced to 303 by virtue of an inter-office
memorandum issued on 13 August 1986. Private
respondent admits that, prior to 18 August 1986, petitioner
used a divisor of 314 in arriving at the daily wage rate of
monthly-salaried employees. Private respondent also
concedes that the divisor was changed to 303 for purposes
of computing overtime pay only. Apparently, the divisor of
314 is arrived at by subtracting all Sundays from the total
number of calendar days in a year, since Saturdays are
considered paid rest days, as stated in the inter-office
memorandum. Thus, the use of 314 as a divisor leads to
the inevitable conclusion that the ten legal holidays are
already included therein. The reduction of the divisor to 303
was done for the sole purpose of increasing the employees'
overtime pay, and was not meant to exclude holiday pay
from the monthly salary of petitioner's employees. In fact, it
was expressly stated in the inter-office memorandum- that
the divisor of 314 will still be used in the computation for
cash conversion and in the determination of the daily rate.
Thus, based on the records of this case and the parties'
own admissions, SC holds that petitioner has complied with
the requirements of Article 94 of the Labor Code.
NLRC is set aside.
54
AUTO BUS TRANSPORT SYSTEMS vs. ANTONIO
BAUTISTA G.R. No. 156367 May 16, 2005 CHICO-
NAZARIO
Facts:
Antonio Bautista has been employed by petitioner Auto Bus
Transport Systems, Inc. (Autobus), as driver-conductor.
Respondent was paid on commission basis, 7% of the total
gross income per travel, on a twice a month basis. While
respondent was driving Autobus No. 114, the bus he was
driving accidentally bumped the rear portion of Autobus No.
124, as the latter vehicle suddenly stopped at a sharp curve
without giving any warning. Respondent averred that the
accident happened because he was compelled by the
management to go back to Roxas, Isabela, although he
had not slept for almost 24 hours, as he had just arrived in
Manila from Roxas, Isabela. Respondent further alleged
that he was not allowed to work until he fully paid the
amount representing 30% of the cost of repair of the
damaged buses and that despite respondent’s pleas for
reconsideration, the same was ignored by management.
After a month, management sent him a letter of termination.
Respondent instituted a Complaint for Illegal Dismissal with
Money Claims for nonpayment of 13th month pay and
service incentive leave pay against Autobus. Petitioner, on
the other hand, maintained that respondent’s employment
was replete with offenses involving reckless imprudence,
gross negligence, and dishonesty. To support its claim,
petitioner presented copies of letters, memos, irregularity
reports, and warrants of arrest pertaining to several
incidents wherein respondent was involved. The Labor
Arbiter dismissed the complaint, however, petitioner was
ordered to pay private respondent his 13th month pay and
SIL. NLRC maintained the award of SIL which was affirmed
by CA, hence, this petition.
Issue: WON private respondent is entitled to service
incentive leave;
Ruling:
Under the law, every employee who has rendered at least
one year of service shall be entitled to a yearly service
incentive leave of five days with pay. This rule shall apply
to all employees except: (d) 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 in a fixed amount for performing work irrespective of
the time consumed in the performance thereof .
A careful perusal of said provisions of law will result
in the conclusion that the grant of service incentive
leave has been delimited by the IRR of the Labor
Code to apply only to those employees not explicitly
excluded by Section 1 of Rule V. According to the
IRR, Service Incentive Leave shall not apply to
employees classified as "field personnel." The phrase
"other employees whose performance is unsupervised by
the employer" must not be understood as a separate
classification of employees to which SIL shall not be
granted. Rather, it serves as an amplification of the
interpretation of the definition of field personnel
under the Labor Code as those "whose actual hours of
work in the field cannot be determined with reasonable
certainty." The same is true with respect to the phrase
"those who are engaged on task or contract basis, purely
commission basis." Said phrase should be related with
"field personnel," applying the rule on ejusdem generis
that general and unlimited terms are restrained and limited
by the particular terms that they follow. Hence, employees
engaged on task or contract basis or paid on purely
commission basis are not automatically exempted
from the grant of service incentive leave, unless, they
fall under the classification of field personnel.
It is necessary to stress that the definition of a "field
personnel" is not merely concerned with the location where
the employee regularly performs his duties but also with the
fact that the employee’s performance is unsupervised by
the employer. Thus, in order to conclude whether an
employee is a field employee, it is also necessary to
ascertain if actual hours of work in the field can be
determined with reasonable certainty by the
employer. In so doing, an inquiry must be made as to
whether or not the employee’s time and performance
are constantly supervised by the employer.
In the case at bench, as observed by the Labor Arbiter, in
each and every depot, there is always the Dispatcher
whose function is precisely to see to it that the bus and its
crew leave the premises at specific times and arrive at the
estimated proper time. The driver was therefore under
constant supervision while in the performance of this work.
He cannot be considered a field personnel. Respondent is
a regular employee who performs tasks usually necessary
and desirable to the usual trade of petitioner’s business.
Accordingly, respondent is entitled to the grant of service
incentive leave.
Petition is denied.
C. PLANAS COMMERCIAL vs. NLRC and ALFREDO
OFIALDA G.R. No. 144619 November 11, 2005
AUSTRIA-MARTINEZ
Facts:
55
Private respondents Ofialda, Morente and Allauigan et.al
filed a complaint for underpayment of wages, nonpayment
of employee’s other benefits petitioners C. Planas
Commercial and Marcial Cohu. Private respondents alleged
that petitioner Marcial Cohu, owner of C. Planas
Commercial, is engaged in wholesale of plastic products
and fruits of different kinds with more than 24 employees;
that private respondents were hired by petitioners as
helpers/laborers; that they were paid below the minimum
wage law for the past 3 years; that they were required to
work for more than 8 hours a day without overtime pay; that
they never enjoyed holiday pay and did not have a rest day
as they worked for 7 days a week; and they were not paid
SIL pay although they had been working for more than one
year. Private respondent Ofialda asked for NSD as he had
worked from 8 p.m. to 8 a.m. the following day for more
than one year. Petitioners admitted that private
respondents were their helpers. Petitioners averred that
private respondents were not entitled to holiday and SIL
pays for they were employed in a retail and service
establishment regularly employing less than ten
workers. The Labor Arbiter dismissed the money claims.
Private respondents filed their appeal with the NLRC.
However, pending the appeal, private respondents Morente
and Allauigan filed their respective motions to dismiss with
release and quitclaim before the NLRC. NLRC ordered
petitioners to pay private respondents an amount
representing their combined salary differentials, holiday
pay, and SIL pay, which was affirmed in toto by CA.
Issue: WON petitioner is exempted from paying
the minimum wage and the SIL pay.
Ruling:
R.A. No. 6727 known as the Wage Rationalization Act
provides for the statutory minimum wage rate of all workers
and employees in the private sector. Section 4 of the Act
provides for exemption from the coverage and for a
retail/service establishment to be exempted from the
coverage of the minimum wage law, it must be shown
that the establishment is regularly employing not
more than 10 workers and had applied for
exemptions with and as determined by the
appropriate Regional Board in accordance with the
applicable rules and regulations issued by the
Commission. Likewise the Labor Code and its IRR
provide for the exclusive list of who are exempted from the
payment of SIL pay, one of the exempted is an
establishment employing less than 10 employees.
Therefore, it was incumbent upon the employer-
establishment to prove that it belonged to a class excepted
by law from the general rule. Specifically, it was the duty of
the employer to prove that there were less than 10
employees in the company. In the case at bench,
petitioners had not shown any evidence to show that they
had applied for such exemption and if they had applied, the
same was granted.
CA is modified.
D. WAGES
a. Definition of Terms:
1. Person- means an individual, partnership, association,
corporation, business trust, legal representatives, or
any organized group of persons.
2. Employer- includes any person acting directly or
indirectly in the interest of an employer in relation to an
employee and shall include the government and all its
branches, subdivisions and instrumentalities, all
government-owned or controlled corporations and
institutions, as well as non-profit private institutions, or
organizations.
3. Employee- includes any individual employed by an
employer.
4. Agriculture- includes farming in all its branches and,
among other things, includes cultivation and tillage of
soil, dairying, the production, cultivation, growing and
harvesting of any agricultural and horticultural
commodities, the raising of livestock or poultry, and
any practices performed by a farmer on a farm as an
incident to or in conjunction with such farming
operations, but does not include the manufacturing or
processing of sugar, coconuts, abaca, tobacco,
pineapples or other farm products.
5. Employ- includes to suffer or permit to work.
6. Wage- paid to any employee shall mean the
remuneration or earnings, however designated,
capable of being expressed in terms of money,
whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the
same, which is payable by an employer to an
employee under a written or unwritten contract of
employment for work done or to be done, or for
services rendered or to be rendered and includes the
fair and reasonable value, as determined by the
Secretary of Labor and Employment, of board, lodging,
or other facilities customarily furnished by the employer
to the employee.
7. Fair and reasonable value- shall not include any
profit to the employer, or to any person affiliated with
the employer.
8. Fair Day’s Wage for a Fair Day’s Labor- If there is
no work performed by the employee, there can be not
wage or pay unless the laborer was able, willing, and
ready to work but was prevented by management or
was illegally locked out, suspended or dismissed.
9. Equal Pay for Equal Work- Persons who work with
substantially equal qualifications, skills, effort and
responsibilities under similar conditions, should be paid
56
 similar salaries. If an employer accords employees
same position and rank, the presumption is that these
employees perform equal work.
NOTE: Wage is compensation for manual labor; while
Salary corresponds to higher degree of employment.
 What does wage or salary include?
1. commission;
2. facilities;
3. commodities/ supplements
They are deemed included in the term
SALARY if the following conditions concur:
a. that the grant thereof is unconditional;
b. consistent and deliberate over a period of time;
c. customarily given such that the employee expects
to receive the same.
 Commission- direct remunerations received by an
agent, salesman, executor, broker, or trustee
calculated as a percentage on the amount of his
transactions or on the profit to the principal.
 Facilities- shall include all articles or services for the
benefit of the employee or his family but shall not
include tools of the trade or articles or services
primarily for the benefit of the employer or necessary
to the conduct of the employer’s business.
i. Legal Requirements before Facilities can
be Deducted from the Employees’ Wages:
1. Proof must be shown that such facilities are
customarily furnished by the trade;
2. The provision of deductible facilities must be
voluntarily accepted in writing by the employee;
and
3. The facilities must be charged at fair and
reasonable value.
 Gratuity- something given freely or without
recompense to reward employees who have rendered
satisfactory and efficient service to the company.
Facilities Supplements
Items of expense necessary Constitute extra
for the laborer’s and his remuneration or special
family’s existence and privileges or benefits given
subsistence. to or received by the
laborers over and above
their ordinary earnings
wages.
Part of the wage Independent of the wage
Deductible from the wage Not wage deductible
ii. Application of Provisions on Wages
The provisions on wages do not apply to the following:
1. farm tenancy or leasehold;
2. household or domestic helpers;
3. homeworkers engaged in needle work;
4. workers employed in any establishment duly
registered with the National Cottage Industry
Development Authority;
5. workers in duly registered cooperatives.
b. Regional Minimum Wages (Art. 99)
 Minimum wage rates for agricultural and non-
agricultural employees and workers in each and every
region of the country shall be those prescribed by the
Regional Tripartite Wages and Productivity Boards.
 Minimum Wage- lowest wage rate fixed by that an
employer can pay his employees.
 The employer cannot exempt himself from liability to
pay minimum wages because of poor financial
condition of the company; the payment of minimum
wage is not dependent on the employer’s ability to pay
(De Racho vs. Municipality of Iligan, GR No. L- 23542).
 The acceptance by an employee of the wages paid
him without objection does not give rise to estoppel
precluding him from suing for the difference between
the amount received and the amount he should have
received pursuant to a valid minimum wage law where
it does not appear that the employer changed his
position to his own prejudice.
c. Prohibition against Elimination or
Diminution of Benefits (Art. 100)
 Non-Diminution Rule- Nothing in the Labor Code
shall be construed to eliminate or in any way diminish
supplements, or other employee benefits being
enjoyed at the time of promulgation of this Code.
 Benefits being given to employees cannot be taken
back or reduced unilaterally by the employer because
the benefit has become part of the employment
contract, written or unwritten.
 The rule is applicable if it is shown that the grant of the
benefit is:
1. based on an express policy, or
2. has ripened into practice over a long period of
time and the practice is consistent and deliberate,
and it is not due to an error in the construction/
application of a doubtful or difficult question of law.
 But even in cases of error, it should be shown that the
correction is being done soon after the discovery of the
error.
 Bonus- A supplement or employment benefit given
under certain conditions, such as success of the
business or greater production or output.
57
 As a rule, it is an amount granted voluntarily to an
employee for his industry and loyalty which contributed
to the success and realization of profits of the
employer’s business.
Therefore, from a legal point of view, it is not
demandable and enforceable obligation unless it was
promised to be given without any conditions imposed
for its payment in which case it is deemed part of the
wage.
 An employee who has resigned or whose services
were terminated at any time before the 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 of his resignation or
termination from service.
i. 13 th Month Pay or its Equivalent-
 Additional income based on wage required by PD 851
which is equivalent to 1/12 of the total basic salary
earned by an employee within a calendar year.
 It may be given anytime but not later than December
24.
a. Coverage
 All rank-and-file employees regardless of their
designation or employment status and irrespective of
the method by which their wages are paid, are entitled
to this benefit, provided, that they have worked for at
least 1 month during the calendar year.
b. Forms
1. Christmas bonus;
2. midyear bonus;
3. profit sharing payments; and
4. other cash bonuses amounting to not less than
1/12 of its basic salary.
 It must always be in the form of legal tender.
 Difference of opinion on how to compute the 13 th
month pay does not justify a strike.
 Free rice, electricity cash and stock dividends, COLA
are NOT proper substitutes for the 13th month pay.
ii. 14 th Month Pay
 A misnomer because it is basically a bonus and
gratuitous in character.
 Granting thereof is a management prerogative which
can not be forced upon the employer.
iii. Productivity Incentives Act of 1990 (RA
6971, November 22, 1990)
 Kind of bonus that comes from productivity gain.
 Aims to institute productivity at company level and the
sharing of productivity gain between employers and
employees.
 Nature of salary bonus is proportionate to increase in
current productivity.
 Employees whose positions are reclassified from rank
and file to supervisory lose overtime pay and other
benefits under Articles 82-96. Promotion produces the
same effect. But the promotion and position
reclassification must be done in good faith. The
personnel movement should not be intended to
circumvent the law to deprive employees of the
benefits they used to receive.
d. Payment by Results (Art. 101)
i. Categories of Piece-Rate Workers (as to
the presence of control)
1. those who work directly under the supervision of
their employer (piece-rate worker)
2. those who work away from the employer’s work
premises and are not directly supervised by the
employer (pakiaw or takay)
ii. Categories of Piece-Rate (as to the rate of
payment)
1. those who are paid piece rates as prescribed in
piece rate orders by the DOLE.
2. those who are paid output rates which are
prescribed by the employer and are not yet
approved by the DOLE.
iii. Workers Paid on Piece-Rate Basis
 Those who are paid a standard amount for every piece
or unit of work produced that is more or less regularly
relicated, without regard to the time spent in producing
the same.
iv. Benefits Payable to Piece-Rate Workers
Whose Work is Directly Supervise by the
Employer
1. Applicable statutory minimum daily rate.
2. Yearly service incentive leave of 5 days with pay.
3. NSD Pay
4. Holiday Pay
5. Meal and Rest Periods
6. OT Pay (conditional)
7. Premium Pay (conditional)
8. 13th Month Pay
9. Other benefits granted by law, individual or
collective bargaining agreements or company
policy and practice.
 The rules implementing the Labor Code on NSD and
SIL do not apply to employees whose time and
performance is unsupervised by the employers,
including those who are engaged on task or contract
basis, purely commission or those who are paid a fixed
amount for performing work irrespective of the time
consumed in the performance thereof.
e. Forms of Payment (Art. 102)
 Employer cannot pay his workers by means of:
1. promissory notes;
2. vouchers;
3. coupons;
4. tokens;
5. tickets;
6. chits; or
58
 7. any object other than legal tender
 General Rule- Payment by legal tender
 Exceptions- payment by check or money order may
be allowed if the same is:
a. customarily on the date of effectivity of the Labor
Code;
b. necessary because of special circumstances as
determined by the Secretary of Labor;
c. stipulated in the CBA; or
d. where the following conditions are met:
e. there is a bank or other facility for encashment
within the radius of 1km from the work place;
f. the employer, or any of his agent or
representatives, does not receive any pecuniary
benefit directly or indirectly from the arrangement;
g. the employees are given reasonable time during
banking hours to withdraw their wages from the
bank which time shall be considered as
compensable hours worked if done during working
hours; and
h. the payment by check is with the written consent
of the employees concerned if there is no CBA
authorizing the payment of wages by bank checks.
f. Time of Payment (Art. 103)
 When to Pay?- At least once ever 2 weeks; or twice a
month at intervals not exceeding 16 days.
 In case of force majeure or other circumstances
beyond the employer’s control, payment must be made
immediately after such occurrence has ceased.
 If engaged to perform a task which cannot be
completed in 2 weeks and in the absence of CBA:
a. payment shall be made at intervals not exceeding
16 days, in proportion to the amount of work
completed;
b. that final settlement is made upon completion of
the work.
g. Place of Payment (Art. 104)
 Where to Pay?- At or near the place of undertaking.
 Exceptions:
1. When payment cannot be effected at or near the
place of work by reason of deterioration of peace
and order conditions, or by reason of actual or
impending emergencies caused by fire flood or
other calamity rendering payment thereat
impossible.
2. When the employer provides for free
transportation to the employees back and forth;
and
3. Under any other analogous circumstances
 No employer shall pay his employees in any bar, night
or day club, drinking establishment, massage clinic,
dance hall, or other similar places or in places where
games are played with stakes or money or things
representing money except in the case of persons
employed in said places.
 Requisites of Payment through Banks:
1. There must be written permission of the majority
of the employees concerned in an establishment;
2. The establishment must have 25 or more
employees; and
3. The establishment must be located within 1km
radius to the bank.
 Payment through ATM is allowed.
h. Direct Payment of Wages (Art. 105)
 General Rule- Wages shall be paid directly to the
workers to whom they are due:
 Exceptions:
1. payment through another person
 in case of force majeure rendering such
payment impossible provided said person
is under written authority given by the
worker for the purpose;
 when authorized under existing law,
including payments for insurance
premiums of the employee and union
dues where the right to check-off has
been recognized by the employer in
accordance with a CBA or authorized in
writing by the individual employees
concerned.
2. payment through heirs of worker
 in case where the worker has died
employer may pay wages of the
deceased worker to the heirs of the latter
without the necessity of intestate
proceedings.
Procedure:
1. claimants shall execute an affidavit attesting
their relationship to the deceased and the fact
that they are his heirs, to the exclusion of all
others;
2. in case of a minor heir, affidavit shall be
executed on his behalf by his natural guardian
or next of kin;
3. affidavit shall be presented to the employer
who shall make payment through the
Secretary of Labor or his representatives.
4. the representative shall act as referee in
dividing the amount paid among the heirs;
5. payment of wages under this Article shall
absolve the employer of any further liability
with respect to the amount paid.
3. payment through member of worker’s family
 Where the employer is authorized in
writing by the employee to pay his wages
to a member of his family.
59

What must Legal tender; promissory notes, vouchers,
be paid? coupons, tokens, tickets, chits, or any other
object other than legal tender is prohibited.
When? Once every 2 weeks or twice a month at
intervals not exceeding 16 days.
Where? At or near the place or undertaking.
How? Directly to the employee entitled thereto
i. Non-Interference in Disposal of Wages
Article 1705, NCC- The laborer’s wages shall be paid in
legal currency.
Article 1706- Withholding of the wages, except for a debt
due, shall not be made by the employer.
Article 1707- The laborer’s wages shall be a lien on the
goods manufactured or the work done.
Article 1708- The laborer’s wages shall not be subject to
execution or attachment except for debts incurred for food,
shelter, clothing and medial attendance.
Article 1709- The employer shall neither seize nor retain
any tool or other articles belonging to the laborer.
 Prohibitions Regarding Wages:
1.Payment of wages with less frequency than once a
month;
2.Limitations/ interference by the employer with the
employees freedom to dispose of his wages;
3.Forcing, compelling/obliging employees to purchase
merchandise, commodities, or other properties from
the employer or from any other person, or to make
use of any store or service of such employer or any
other person;
4.Withholding wages;
5. Deduction of wages as consideration of a
promise of employment or retention in employment;
6.Refusal to pay/reduction of wages and benefits,
discharge/discrimination against any employee as
retaliatory measures against any employee who has
filed any complaint or instituted any proceedings
against his employer.
j. Wage Deductions (Art. 113)
 General Rule- Wage deduction is strictly prohibited.
 Exceptions (allowable deductions):
a. with employee’s consent:
1. SSS payments;
2. PHILHEALTH payments;
3. Contributions to PAG-IBIG Fund;
4. Value of meals and other facilities;
5. payments to third persons with employee’s
consent;
6. deduction of absences
b. without employee’s consent:
1. worker’s insurance acquired by the employer;
2. union dues, where the right to check-off has been
recognized by the employer;
3. cases where the employer is authorized by law or
regulations issued by the Secretary of Labor;
4. debts of the employee to the employer which have
become due and demandable.
k. Deposits for Loss or Damage (Art.
114)
 General Rule- No employer shall require his worker
to make deposits for the reimbursement of loss of or
damage to material, equipment, or tools supplied by
the employer.
 Exception- When the trade, occupation or business of
the employer recognizes or considers the practice or
making deductions or requiring deposits necessary or
desirable.
i. Requisites of Deduction for Loss or
Damage:
1. the employee is clearly shown to be responsible
for the loss or damage;
2. the employee is given ample opportunity to show
cause why deduction should not be made;
3. the amount of the deduction is fair and reasonable
and shall not exceed the actual loss or damage;
and
4. the deduction from the employee’s wage does not
exceed 20% of the employee’s wages in a week.
ii. 10 Commandments for the Employer:
1. No employer shall interfere with the employee’s
freedom to dispose his wages;
2. No employer shall force, compel or oblige
employees to purchase merchandise,
commodities or other property from the employer
or from any other person or otherwise make use of
any store or services of such employer or any
other person.
3. No employer shall make any deductions from the
employee’s wages except when authorized;
4. No employer shall require the worker to make
deposits from which deductions shall be made for
reimbursement of loss of or damage to tools,
materials, or equipment supplied by the employer
except when the employer is engaged in such
business requiring such deposits as determined
by the Secretary of Labor.
5. No employer shall make any deduction from the
employee’s deposits for the actual amount of the
loss or damage unless the employee has been
heard thereon and his responsibilities has been
clearly shown;
6. No employer shall withhold any amount from the
wages unless authorized to do so.
60
 7. No employer shall induce the employee to give up
any part of his wages by force, stealth,
intimidation, threat or dismissal or by any other
means without the worker’s consent;
8. No employer shall make deductions as
consideration of a promise of employment or
retention of employment;
9. No employer shall refuse to pay or reduce the
wages and benefits or otherwise discharge the
employee who has filed any complaint under this
Title, or has testified or is about to testify in such
proceedings;
10. No employer shall make any statement report or
record knowing such statement; report, or record
to be false in any material respect.
l. Wage Studies, Agreements and
Determination
Art. 120. Creation of National Wages and Productivity
Commission. There is hereby created a National Wages
and Productivity Commission, hereinafter referred to as the
Commission, which shall be attached to DOLE for policy
and program coordination. (As am. by Republic Act No.
6727, June 9, 1989).
Art. 121. Powers and functions of the Commission.
The Commission shall have the following powers and
functions: a. To act as the national consultative and
advisory body to the President of the Philippines and
Congress on matters relating to wages, incomes and
productivity; b. To formulate policies and
guidelines on wages, incomes and productivity
improvement at the enterprise, industry and national levels;
c. To prescribe
rules and guidelines for the determination of appropriate
minimum wage and productivity measures at the regional,
provincial, or industry levels; d. To
review regional wage levels set by the Regional Tripartite
Wages and Productivity Boards to determine if these are in
accordance with prescribed guidelines and national
development plans; e. To
undertake studies, researches and surveys necessary for
the attainment of its functions and objectives, and to collect
and compile data and periodically disseminate information
on wages and productivity and other related information,
including, but not limited to, employment, cost-of-living,
labor costs, investments and returns;
f. To review plans
and programs of the Regional Tripartite Wages and
Productivity Boards to determine whether these are
consistent with national development plans; g. To
exercise technical and administrative supervision over the
Regional Tripartite Wages and Productivity Boards;
h. To call,
from time to time, a national tripartite conference of
representatives of government, workers and employers for
the consideration of measures to promote wage
rationalization and productivity; and
i. To exercise such powers and functions as may be
necessary to implement this Act.
Art. 122. Creation of Regional Tripartite Wages and
Productivity Boards. There is hereby created Regional
Tripartite Wages and Productivity Boards, hereinafter
referred to as Regional Boards, in all regions, including
autonomous regions as may be established by law. The
Commission shall determine the offices/headquarters of the
respective Regional Boards.
The Regional Boards shall have the following
powers and functions in their respective territorial
jurisdictions:
a. To develop plans, programs and projects relative to
wages, incomes and productivity improvement for their
respective regions;
b. To determine and fix minimum wage rates applicable in
their regions, provinces or industries therein and to issue
the corresponding wage orders, subject to guidelines
issued by the Commission;
c. To undertake studies, researches, and surveys
necessary for the attainment of their functions, objectives
and programs, and to collect and compile data on wages,
incomes, productivity and other related information and
periodically disseminate the same;
d. To coordinate with the other Regional Boards as may be
necessary to attain the policy and intention of this Code;
e. To receive, process and act on applications for
exemption from prescribed wage rates as may be provided
by law or any Wage Order; and
f. To exercise such other powers and functions as may be
necessary to carry out their mandate under this Code.
m. Wage Order
 Wage Order- An order issued by the Regional
Tripartite Wages and Productivity Board whenever the
conditions in the region so warrant after investigating
and studying all pertinent facts and based on the
standards and criteria prescribed by the Labor Code,
the Regional Board proceeds to determine whether to
issue the same or not.
 Effectivity of Wage Order- It shall take effect after 15
days from its complete publication in at least one
newspaper of general circulation in the region.
 Frequency of a Wage Order- A Wage Order issued
by the Board may not be disturbed for a period of 12
months from its effectivity and no petition for wage
increase shall be entertained during said period,
except, when the Congress itself issues a law
increasing wages.
n. Standards/ Criteria For Minimum
Wage Fixing
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Art. 124. Standards/Criteria for minimum wage fixing.
The regional minimum wages to be established by the
Regional Board shall be as nearly adequate as is
economically feasible to maintain the minimum standards
of living necessary for the health, efficiency and general
well-being of the employees within the framework of the
national economic and social development program. In the
determination of such regional minimum wages, the
Regional Board shall, among other relevant factors,
consider the following:
a. The demand for living wages;
b. Wage adjustment vis-à-vis the consumer price index;
c. The cost of living and changes or increases therein;
d. The needs of workers and their families;
e. The need to induce industries to invest in the
countryside;
f. Improvements in standards of living;
g. The prevailing wage levels;
h. Fair return of the capital invested and capacity to pay of
employers;
i. Effects on employment generation and family income;
and j. The equitable distribution of income and wealth along
the imperatives of economic and social development.
Art. 125. Freedom to bargain. No wage order shall be
construed to prevent workers in particular firms or
enterprises or industries from bargaining for higher wages
with their respective employers. (As amended by Republic
Act No. 6727, June 9, 1989)
 WAGE DISTORTION- A situation where an increase
in prescribed wage rates results in the elimination or
sever 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.
 Correction of Wage Distortion:
a. Unionized Establishment
1. Negotiate to correct the distortion
2. Any dispute arising therefrom should be resolved
through grievance procedure under their CBA.
3. If the dispute remains unresolved, through
voluntary arbitration.
b. Establishment without Union
1. The employer and workers shall
endeavor to correct the distortion;
2. Any dispute arising therefrom shall be
settled through the NCMB and
3. If it remains unresolved after 10 days of
conciliation, it shall be referred to the
NLRC.
NOTE: Wage Distortion is non-strikaable.
Q. Is the employer legally obliged to correct a wage
distortion?
A. It appears so. Article 124, Labor Code provides that “the
employer and the union shall negotiate to correct the
distortions.” If there is no union, “the employer and the
workers shall endeavor to correct such distortions.”
Q. Must the previous pay gaps be restored?
A. While that is the aim, it need not necessarily be restored
to the last peso. An appreciable differential, a significant
pay gap should suffice as correction of the distortion.
CMP FEDERAL SECURITY AGENCY vs. NLRC and
VALENTIN TAPIS G.R. No. 122107 June 2, 1999
BELLOSILLO
Facts:
Between 1988 to 1992 private respondents Valentin Tapis
et.al. were employed by petitioner as security guards and
assigned to its various clients. Respondent individuals filed
a complaint against petitioner for illegal dismissal,
underpayment of wages, and non-payment of other
benefits. The alleged illegal dismissal was premised on
private respondents’ lack of assignment for several months.
On the other hand, petitioner interposed the defense of
prematurity of the complaint due to the fact that it was filed
even before the lapse of the 6 months floating period
allowed security agencies in posting assignments. The
Labor Arbiter Labor Arbiter acknowledged that "the
complaint for illegal dismissal was prematurely filed but he
found that private respondents were constructively
dismissed and were thus awarded back wages, separation
pay, differentials and the return of the cash bonds. NLRC
reversed the Labor Arbiter and deleted the back wages and
separation pay. However, it maintained the differentials and
the return of the cash bonds.
Issue: WON NLRC erred in not re-computing the wage
differentials despite the fact that re-computation could not
be avoided because of the modification of the decision of
the Labor Arbiter on illegal dismissal.
Ruling:
As held by the Labor Arbiter: “For lack of evidence (payrolls
and time cards), complainants are entitled to their
monetary claims from the time they started working with
the respondents till their last detail or assignment but
limited to the prescriptive period of three years. Their wage
differentials should be computed under the minimum
standard rate for employees who are tasked to work 12
hours a day including Sundays and Holidays. However, the
salaries, overtime pay and 13th month pay received by the
complainants should be deducted to arrive at the proper
wage differentials.”
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This simply means that the basis for the differentials
was never extended to cover the period when back
wages were allowable. That this should be the case
is explained by the very nature of back wages which
demands that the period covered refers to the
duration of unemployment, for back wages are the
earnings lost by reason of the unjustified dismissal.
Wage differentials, on the other hand, are accrued and
unpaid wages which necessarily require the
employment of the wage earner at the time the wage
differentials accrued. It would naturally follow that the
differentials were never computed to include the time for
which the back wages were awarded as erroneously
contended by petitioner.
NLRC is affirmed.
VI. POST EMPLOYMENT
A. Kinds of Employment
1. REGULAR EMPLOYMENT (Art. 280)
 Regular Employment- One wherein an employee is
engaged to perform activities which are usually
necessary or desirable in the usual business or trade
of the employer.
 Except:
1.where the employment has been fixed for a specific
project or undertaking the completion or termination
of which has been determined at the time of
engagement of the employee; or
2.where the work or services to be performed is
seasonal in nature and the employment is for the
duration of the season.
 He is regular employee at the point of hiring.
i. Who are considered Regular Employee?
1. Those who have been engaged to perform activities
which are usually necessary or desirable in the usual
business or trade of the employer.
2. Casual employees who have rendered at least 1 year of
service is continuous or broken; they are considered
regular employees with respect to the activities in which
they are employed; their employment shall continue while
such activity exists.
3. A probationary employee who is allowed to work after the
probationary period.
4. Learners who have been allowed or suffered work during
the first 2 months if training is terminated by the employer
before the end of the stipulated period through no fault of
the learner.
i. Test in Determining Regular Employment:
a. Reasonable Connection Rule
 The primary standard of determining a 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 test is whether the activity performed by the
employee is usually necessary or desirable in 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 (de Leon vs. NLRC, 171 S 615).
 Additionally, an employee is regular because of the
nature of work and the length of service, not
because of the mode or even the reason for hiring
them (Prudential Bank vs. Reyes, 352 S 316)
 Whether the work undertaken by the employee is
necessary or desirable can be assessed by looking
at the services rendered and its relation to the
general scheme under which the business or trade is
pursued (Magsalin vs. National Organization of
Working Men, May 9, 2003).
2. PROJECT EMPLOYMENT
 Project Employment- Where the employment has
been fixed for a specific project or undertaking the
completion or termination of which has been
determined at the time of the engagement of the
employee.
i. Test of Project Employment
 The principal test for determining whether an
employee is project employee is whether or not such
employee is assigned to carry out a specific project
or undertaking, the duration and scope of which
were specified at the time the employee was
engaged for that project
 A common basic requisite is that the designation of
named employee as project employees and their
assignment to a specific project are effected and
implemented in good faith.
 The services of project are conterminous with the
project. They may be terminated upon the end or
completion of that project or phase thereof for which
they were hired. The employer has no obligation to pay
them separation pay.
 The contract workers are not considered regular
employees, their services being needed only when
there are projects to be undertaken. The rationale of
the rule is that if a project has already been completed,
it would be unjust to require the employer to maintain
them in the payroll while they are doing absolutely
nothing except waiting until another project is begun.
 Members of a work pool from which a construction
company draws its project employees, if considered
employee 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
63
 project, the completion of the project or any phase
thereof will not mean severance of employer-employee
relationship.
ii. When project employee may acquire the
status of regular employee?
1. there is a continuous rehiring of the project
employees ever 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.
3. SEASONAL EMPLOYMENT
 Seasonal Employment- Seasonal workers are those
who are called to work from time to time according to
the occurrence of varying need during a season, and
are laid off after completion of the required of work.
 Nature of ER- EER- The nature of the relationship of
the seasonal workers with their employer is such that
during off season they are temporarily laid off but
during the season of work, they are re-employed. They
are not, strictly speaking, separated from the service
but merely considered as on leave of absence without
pay until they are re-employed. Their employment
relationship is never severed but only suspended.
 Seasonal workers who work for more than one season
are deemed to have acquired regular employment
(Hacienda Fatima vs. National Federation of
Sugarcane Workers, January 28, 2003).
4. CASUAL EMPLOYMENT
 Under Article 280, Labor Code, Casual Employment
is one where employment is neither regular nor
seasonal or fixed for a specific project.
 Employment is casual when and where it is not
permanent nor periodically regular, but occasional or
by chance, and not in the usual course of the
employer’s trade or business.
 An employee who has rendered at least 1 year of
service, whether such service is continuous or broken,
shall be considered a regular employee with respect to
the activity in which he is employed and his
employment shall continue while such activity exists.
 Casual employees who are dismissed from their
employment before the expiration of the 1-year period,
cannot lawfully claim that they are illegally dismissed.
 The status of regular employment attaches to the
casual employee on the day immediately after the end
of his first year of service.
5. FIXED PERIOD EMPLOYMENT (Termed
Employment)
 Employment that will last only for a definite period, as
agreed by the parties, is not per se illegal or against
public policy even if this kind of employment is not
mentioned in Art. 280, Labor Code.
 Fixed-term Employment- those to which the parties
by free choice have assigned a specific date of
termination of employment. To be valid, the parties
must have knowingly and voluntarily agreed thereto.
 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.
6. PROBATIONARY EMPLOYMENT
Article 281- 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 tie of his engagement.
An employee who is allowed to work after a probationary
period shall be considered as a regular employee.
 Probationary Employee- is one who is no trial by an
employer during which the employer determines
whether or not he is qualified for permanent
employment.
 Probationer enjoys security of tenure and he cannot be
removed from employment before his contract expires,
except for cause provided for by law.
 General Rule- probationary period of employment is
6 months.
 Exceptions:
1. When the parties voluntary agreed to a longer
period; or
2. When the parties lawfully agreed for an extension
to give an employee a second chance.
 Requisites for acquisition of permanent
employment of Private School Teachers:
1. full-time teacher;
2. must have rendered at least 3 consecutive years
of service; and
3. such service must have been satisfactory.
CASES:
RICARDO S. MEDENILLA vs. PHILIPPINE
VETERANS BANK G.R. No. 127673. March 13, 2000
PURISIMA
Facts:
64
Petitioners were employees of the Philippine Veterans
Bank (PVB). Their services were terminated as a result of
the liquidation of PVB pursuant to the order of the Monetary
Board of the Central Bank. On the same day of their
termination, petitioners were rehired through PVB’s Bank
Liquidator, Antonio T. Castro, Jr.. However, all of them were
required to sign employment contracts which provided that:
“(1) The employment shall be strictly on a temporary basis
and only for the duration of the particular undertaking for
which a particular employee is hired; (2) Such temporary
employment will not entitle an employee to any benefits
except those granted by law; (3) The Liquidator reserves
the right to terminate the services of the employee at any
time during the period of such employment if the employee
is found not qualified, competent or, efficient in the
performance of his job, or have violated any rules and
regulations, or such circumstances and conditions
recognized by law.” Petitioners received a uniform notice of
dismissal effective a month from the date of receipt, which
notice contained the reasons justifying the termination: “(a)
To reduce costs and expenses in the liquidation of closed
banks; (b) The employment were on strictly temporary
basis." Petitioners instituted a case for illegal dismissal.
Labor Arbiter ruled in favor of the petitioners which was
reversed by NLRC.
Issue: WON NLRC erred in ruling that there was a valid
fixed-period of employment of the petitioners.
Ruling:
In a decided case, it has been held that the two guidelines
by which fixed contracts of employment can be said NOT
to circumvent security of tenure, are either: 1. The fixed
period of employment was knowingly and voluntarily
agreed upon by the parties, without any force, duress or
improper pressure being brought to bear upon the
employee and absent any other circumstances vitiating his
consent; or 2. It satisfactorily appears that the
employer and employee dealt with each other on
more or less equal terms with no moral dominance
whatever being exercised by the former on the latter.
In the case at bench, the employment contract entered into
by the parties herein appears to have observed the said
guidelines. Furthermore, it is evident from the records that
the subsequent re-hiring of petitioners which was to
continue during the period of liquidation and the process of
liquidation ended prior to the enactment of RA 7169
entitled, "An Act to Rehabilitate Philippine Veterans Bank",
which was promulgated on January 2, 1992. However,
petitioners were illegally dismissed.
It is settled that in cases of illegal dismissal, the burden is
on the employer to prove that there was a valid ground for
dismissal. Mere allegation of reduction of costs without any
proof to substantiate the same cannot be given credence
by the Supreme Court. Here, respondents failed to rebut
petitioners’ evidence, thus, irresistible conclusion is that the
dismissal in question was illegal. Such illegal dismissal
warrants reinstatement and payment of backwages.
However, since petitioners’ reinstatement is now
considered impractical because the new Philippine
Veterans Bank has been rehabilitated by virtue of RA 7169,
the Supreme Court limits the relief to be granted to the
petitioners to the unpaid wages during the remaining period
of their employment contract. If the 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. In this case, the unpaid wages
should be reckoned on February 18, 1991 to January 1,
1992. January 1, 1992 is considered the date of expiration
of the period of liquidation since January 2, 1992 was the
effectivity of RA 7169.
Petition is partly granted.
D. M. CONSUNJI, INC vs. NLRC and ALEXANDER
AGRAVIADOR G.R. No. 116572. December 18, 2000
KAPUNAN
Facts:
Private respondents were hired by petitioner as project
employees to work on its Cebu Super Block Project in
Cebu City. Their separate but identical contracts state
among others:
“You are hired/appointed as project employee as
___________ for an estimated period of employment for
_____________________ in the company's construction
project at Cebu Superblock.
THE TERMS AND CONDITIONS OF YOUR
EMPLOYMENT ARE AS FOLLOWS:
The period of employment is for an estimated period of one
month that is for ___________________ to
_____________________ provided that it shall not extend
beyond the duration of the project xxx..”
Private respondents’ services were terminated allegedly
without regard to the date of termination as specified in
their contracts of employment. Petitioner reported the
termination of their services to DOLE alleging that the term
of the contracts of employment had expired. The private
respondents then filed their respective complaints for illegal
dismissal Labor Arbiter rendered a decision finding the
dismissal of the private respondents without just cause and
ordering petitioner to reinstate them to their former
65
positions without loss of benefits and seniority rights and to
pay them, which was affirmed by NLRC.
Issue: WON the private respondents were project
employees.
Ruling:
Project employee is one whose employment has been
fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the
engagement of the employee or where the work or services
to be performed is seasonal in nature and the employment
is for the duration of the season. Supreme Court has held
that the length of service of a project employee is not
the controlling test of employment tenure but whether
or not “the employment has been fixed for a specific
project or undertaking the completion or termination
of which has been determined at the time of the
engagement of the employee.
In the case at bench, private respondents are project
employees. Their contracts of employment readily show
that the private respondents were employed with respect to
a specific project. The private respondents in this case
were workers in a construction project of the petitioner.
While employed with respect to a specific project, the
contracts of employment between the private respondents
and the petitioner provide that the former were employed
for a term of 1 month which was the estimated period for
the project to be finished. The private respondents do not
even claim to be regular employees but merely that, as
employees at the Cebu Super Block, they were terminated
before the completion of the project without just cause and
due process. As project employees, there is no showing
that they were part of the work pool of the petitioner
construction company. Hence, private respondents admit
that “they are not unaware that as project employees their
employment can be terminated upon the completion of the
project.”
Issue: WON the termination of their employment was
illegal.
Ruling:
Examining the standard contracts signed by the private
respondents, there are three ways by which their
employment may be terminated: one, the expiration of the
one month period, which was the estimated period for the
completion of the project; two, the completion of the project
or phase of the project for which they were engaged prior
to the expiration of the one month period; and three, upon
the finding of unsatisfactory services or other just cause.
The private respondents admitted that they signed their
employment contract voluntarily. By this admission, the
private respondents necessarily bound themselves to be
employed for a fixed duration knowingly and voluntarily
without any force, duress or improper pressure. There is
no showing that the term fixed was used to preclude
acquisition of tenurial security since private respondents
were admittedly employed with respect to a specific project,
the Cebu Super Block. Inescapably, being a valid contract
between the private respondents and the petitioner, the
provisions thereof, specifically with respect to the one (1)
month period of employment, has the force of law between
the parties.
At the time of the termination of the private respondents’
employment on March 2, 1993, the respective periods or
terms of employment of private respondents Barcelona,
Laspuna and Diaz had already expired. The fact that they
were allowed to work for weeks after the expiration of their
contracts would not necessarily show that petitioner had
dishonored the contracts. Indeed, some phases of the
project may not have been completed after the estimated
one month period and that their services were still
necessary.
On the other hand, the one month period under the
contracts of Agraviador and Mendrez had not yet expired
when their services were terminated on March 2, 1993.
Petitioner has not alleged, much less established, that the
premature termination of the services of private
respondents Agraviador and Mendrez was due to the
earlier completion of the project or any phase or phases
thereof to which they were assigned. Neither has it been
shown that the services of Agraviador and Mendrez were
unsatisfactory. In termination cases, the burden of
proving that an employee has been lawfully
dismissed lies with the employer. It is in the interest
of justice to require employers to state the reason for
their project employees’ dismissal and prove this
ground once its veracity is challenged. Employers who
hire project employees are mandated to prove the actual
basis of the latter’s dismissal. The inescapable conclusion
is that Agraviador and Mendrez were terminated prior to the
expiration of the period of their employment without just
cause, hence, their termination was illegal. However,
private respondents can not be reinstated since the project
they were assigned to was already completely finished.
NLRC is reversed.
PLDT vs. ROSALINA C. ARCEO G.R. No. 149985
May 5, 2006 CORONA
Facts:
66
On May, 1990, Respondent Rosalina Arceo (Arceo) applied
for the position of telephone operator with petitioner
Philippine Long Distance Telephone Co. She, however,
failed the pre-employment qualifying examination. Having
failed the test, Arceo requested PLDT to allow her to work
at the latter’s office even without pay. PLDT agreed and
assigned her to its commercial section where she was
made to perform various tasks like photocopying
documents, sorting out telephone bills and notices of
disconnection, and other minor assignments and activities.
After two weeks, PLDT decided to pay her the minimum
wage. On February 15, 1991, PLDT saw no further need for
Arceo’s services and decided to fire her but, through the
intervention of PLDT’s commercial section supervisor, Mrs.
Beatriz Mataguihan, she was recommended for an on-the-
job training on minor traffic work. When she failed to
assimilate traffic procedures, the company transferred her
to auxiliary services, a minor facility. Subsequently, Arceo
took the pre-qualifying exams for the position of telephone
operator two more times but again failed in both attempts.
Finally, on October 13, 1991, PLDT discharged Arceo from
employment. She then filed a case for illegal dismissal
before the labor arbiter. The Labor
Arbiter ordered PLDT to reinstate Arceo to her "former
position or to an equivalent position." This decision became
final and executory. On June 9, 1993, Arceo was reinstated
as casual employee with a minimum wage. She was
assigned to photocopy documents and sort out telephone
bills. On September 3, 1996 or more than three years after
her reinstatement, Arceo filed a complaint for ULP alleging
that, since her reinstatement, she had yet to be regularized
and had yet to receive the benefits due to a regular
employee. On August 18, 1997, Labor Arbiter ruled that
Arceo was already qualified to become a regular employee.
He also found that petitioner denied her all the benefits and
privileges of a regular employee.
Issue: WON Arceo eligible to become a regular employee
of PLDT.
Ruling:
Under Art. 280, Labor Code, the provisions of written
agreement to the contrary notwithstanding and regardless
of the oral agreement of the parties, an employment shall
be deemed to be regular where the employee has
been engaged to perform activities which are usually
necessary or desirable in the usual business or trade
of the employer, except where the employment has been
fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of
engagement of the employee or where the work or services
to be performed is seasonal in nature and employment is
for the duration of the season.
An employment shall be deemed to be casual if it is not
covered by the preceding paragraph. Provided, that, any
employee who has rendered at least one year of
service, whether such service is continuous or
broken, shall be considered a regular employee with
respect to the activity in which he is employed and
his employment shall continue while such activity
exists. Under the foregoing provision, a regular
employee is (1) one who is either engaged to perform
activities that are necessary or desirable in the usual
trade or business of the employer or (2) a casual
employee who has rendered at least one year of
service, whether continuous or broken, with respect
to the activity in which he is employed.
Under the first criterion, respondent is qualified to be a
regular employee. Her work, consisting mainly of
photocopying documents, sorting out telephone bills and
disconnection notices, was certainly "necessary or
desirable" to the business of PLDT. But even if the contrary
were true, the uncontested fact is that she rendered service
for more than one year as a casual employee. Hence,
under the second criterion, she is still eligible to become a
regular employee. Petitioner’s argument that respondent’s
position has been abolished, if indeed true, does not
preclude Arceo’s becoming a regular employee. The order
to reinstate her also included the alternative to reinstate her
to "a position equivalent thereto." Thus, PLDT can still
"regularize" her in an equivalent position.
Petition is denied.
VIVIAN Y. IMBUIDO vs . NLRC and INTERNATIONAL
INFORMATION SERVICES G.R. No. 114734. March
31, 2000 BUENA
Facts:
Petitioner Vivian Imbuido was employed as a data encoder
by private respondent International Information Services,
Inc., a domestic corporation engaged in the business of
data encoding and keypunching, from August 26, 1988 until
October 18, 1991 when her services were terminated. From
August 26, 1988- October 18, 1991, petitioner entered into
13 separate employment contracts with private respondent,
each contract lasting only for a period of 3 months. Aside
from the basic hourly rate, specific job contract number and
period of employment. Petitioner allegedly agreed to the
filing of a petition for certification election involving the rank-
and-file employees of private respondent. Thus, Lakas
Manggagawa sa Pilipinas filed a petition for certification
election. Subsequently, petitioner received a termination
letter from Edna Kasilag, Administrative Officer of private
respondent, allegedly "due to low volume of work." Thus,
petitioner filed a complaint for illegal dismissal. Labor
67
Arbiter ruled in favor of petitioner and ordered her
reinstatement, which was reversed by NLRC.
Issue: WON petitioner is a regular employee.
Ruling:
Petitioner is a project employee. The principal test for
determining whether an employee is a project
employee or a regular employee is whether the
project employee was assigned to carry out a specific
project or undertaking, the duration and scope of
which were specified at the time the employee was
engaged for that project. A project employee is one
whose employment has been fixed for a specific
project or undertaking, the completion or termination
of which has been determined at the time of the
engagement of the employee or where the work or
service to be performed is seasonal in nature and the
employment is for the duration of the season. In the
instant case, petitioner was engaged to perform activities
which were usually necessary or desirable in the usual
business or trade of the employer, petitioner worked as a
data encoder for private respondent, a corporation engaged
in the business of data encoding and keypunching, and her
employment was fixed for a specific project or undertaking
the completion or termination of which had been
determined at the time of her engagement, as may be
observed from the series of employment contracts between
petitioner and private respondent, all of which contained a
designation of the specific job contract and a specific period
of employment.
However, even though petitioner is a project employee,
petitioner has acquired the status of a regular employee. In
a decided case, it has been held that a project employee 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 [the]
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.
In this case, the evidence on record reveals that petitioner
was employed by private respondent as a data encoder,
performing activities which are usually necessary or
desirable in the usual business or trade of her employer,
continuously for a period of more than 3 years, from August
26, 1988 to October 18, 1991 and contracted for a total of
13 successive projects. It should be noted, however, that
the length of time during which the employee was
continuously re-hired is not controlling, but merely
serves as a badge of regular employment. Based on
the foregoing, Petitioner has attained the status of a regular
employee of private respondent. Being a regular employee,
petitioner is entitled to security of tenure and could only be
dismissed for a just or authorized cause.
Petition is granted.
RADIN C. ALCIRA vs. NLRC and PHILIPPINES
CORPORATION G.R. No. 149859 June 9,
2004CORONA
Facts:
Respondent Middleby Philippines Corporation (Middleby)
hired petitioner as engineering support services supervisor
on a probationary basis for six months. Apparently unhappy
with petitioner’s performance, respondent Middleby
terminated petitioner’s services. Alcira claimed that his
employment started on May 20, 1996 while the company
alleged that Alcira was employed on May 27, 1996. The
documents presented indicate petitioner’s employment
status as "probationary (6 mos.)" and a remark that "after
five months (petitioner’s) performance shall be evaluated
and any adjustment in salary shall depend on (his) work
performance." Petitioner asserts that, on November 20,
1996, in the presence of his co-workers and subordinates,
Middleby in bad faith withheld his time card and did not
allow him to work. Considering this as a dismissal "after the
lapse of his probationary employment," petitioner filed on
November 21, 1996 a complaint against respondent
Middleby contending that he had already become a regular
employee as of the date he was illegally dismissed. The
Labor Arbiter dismissed the complaint which was affirmed
by NLRC.
Issue: WON petitioner was allowed to work beyond his
probationary period.
Ruling:
Under the law, 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.
In the case at bench, the appointment contract expressly
states that petitioner’s employment status was
"probationary (6 mos.)." The five-month period referred to
the evaluation of his work. Petitioner however, insists that
he already attained the status of a regular employee when
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he was dismissed on November 20, 1996 because, having
started work on May 20, 1996, the six-month probationary
period ended on November 16, 1996. As the appointment
provided that petitioner’s status was "probationary (6 mos.)"
without any specific date of termination, the 180th day fell
on November 16, 1996. Thus, when he was dismissed on
November 20, 1996, he was already a regular employee.
Petitioner’s contention is incorrect. It has been held that the
computation of the 6-month probationary period is
reckoned from the date of appointment up to the same
calendar date of the 6th month following. In short, since the
number of days in each particular month was irrelevant,
petitioner was still a probationary employee when
respondent Middleby opted not to "regularize" him on
November 20, 1996.
Issue: WON petitioner was illegally dismissed when
respondent Middleby opted not to renew his contract on the
last day of his probationary employment.
Ruling:
It is settled that even if probationary employees do not
enjoy permanent status, they are accorded the
constitutional protection of security of tenure. This
means they may only be terminated for just cause or
when they otherwise fail to qualify as regular
employees in accordance with reasonable standards
made known to them by the employer at the time of
their engagement. However, it has been held that this
constitutional protection ends on the expiration of the
probationary period. On that date, the parties are free to
either renew or terminate their contract of employment. In
the case at hand, Middleby exercised its option not to
renew the contract when it informed petitioner on the last
day of his probationary employment that it did not intend to
grant him a regular status.
Petition is denied.
PERPETUAL HELP CREDIT COOPERATIVE vs.
BENEDICTO FABURADA, SISINITA VILLAR G.R. No.
121948. October 8, 2001 SANDOVAL-GUTIERREZ
Facts:
Private respondents Benedicto Faburada, Sisinita Vilar,
Imelda Tamayo and Harold Catipay filed a complaint
against the Perpetual Help Credit Cooperative, Inc.
(PHCCI), for illegal dismissal. Petitioner PHCCI filed a
motion to dismiss the complaint on the ground that there is
no employer-employee relationship between them as
private respondents are all members and co-owners of the
cooperative. Furthermore, private respondents have not
exhausted the remedies provided in the cooperative by-
laws. Labor Arbiter denied petitioner's motion to dismiss,
holding that the case is impressed with employer-employee
relationship and that the law on cooperatives is subservient
to the Labor Code.
Issue: WON private respondents are regular employees.
Ruling:
Article 280 of the Labor Code provides for three kinds of
employees: (1) regular employees or those who have been
engaged to perform activities which are usually necessary
or desirable in the usual business or trade of the employer;
(2) project employees or those whose employment has
been fixed for a specific project or undertaking, the
completion or termination of which has been determined at
the time of the engagement of the employee or where the
work or service to be performed is seasonal in nature and
the employment is for the duration of the season; and (3)
casual employees or those who are neither regular nor
project employees. The employees who are deemed
regular are: (a) those who have been engaged to
perform activities which are usually necessary or
desirable in the usual trade or business of the
employer; and (b) those casual employees who have
rendered at least one (1) year of service, whether
such service is continuous or broken, with respect to
the activity in which they are employed.
The elements of the ER-EER are present in this case.
PHCCI, through Mr. Edilberto Lantaca, Jr., its Manager,
hired private respondents to work for it. They worked
regularly on regular working hours, were assigned specific
duties, were paid regular wages and made to accomplish
daily time records just like any other regular employee.
They worked under the supervision of the cooperative
manager. But unfortunately, they were dismissed.
Moreover, private respondents were rendering services
necessary to the day-to-day operations of petitioner
PHCCI. This fact alone qualified them as regular
employees. All of them, except Harold D. Catipay, worked
with petitioner for more than 1 year. That Benedicto
Faburada worked only on a part-time basis, does not mean
that he is not a regular employee. One’s regularity of
employment is not determined by the number of
hours one works but by the nature and by the length
of time one has been in that particular job.
Consequently, petitioner's contention that private
respondents are mere volunteer workers, not regular
employees, must necessarily fail. As regular employees or
workers, private respondents are entitled to security of
tenure. Thus, their services may be terminated only for a
valid cause, with observance of due process.
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Petition is denied.
ABESCO CONSTRUCTION AND DEVELOPMENT
CORPORATION vs. ALBERTO RAMIREZ G.R. No.
141168 April 10, 2006 CORONA
Facts:
Petitioner company was engaged in a construction
business where respondents were hired on different dates
from 1976 to 1992 either as laborers, road roller operators,
painters or drivers. Respondents filed complaintsfor illegal
dismissal against the company. Petitioners allegedly
dismissed them without a valid reason and without due
process of law. Petitioners denied liability to respondents
and countered that respondents were "project employees"
since their services were necessary only when the
company had projects to be completed. Petitioners argued
that, being project employees, respondents' employment
was coterminous with the project to which they were
assigned. They were not regular employees who enjoyed
security of tenure and entitlement to separation pay upon
termination from work. The Labor Arbiter ruled that private
respondents are regular employees.
Issue: WON private respondents were regular employees.
Ruling:
Private respondents were regular employees. Employees
(like respondents) who work under different project
employment contracts for several years do not
automatically become regular employees; they can
remain as project employees regardless of the
number of years they work. Length of service is not a
controlling factor in determining the nature of one's
employment. Moreover, employees who are
members of a "work pool" from which a company (like
petitioner corporation) draws workers for deployment
to its different projects do not become regular
employees by reason of that fact alone. It has been
held that members of a "work pool" can either be project
employees or regular employees. The principal test for
determining whether employees are "project employees" or
"regular employees" is whether they are assigned to carry
out a specific project or undertaking, the duration and
scope of which are specified at the time they are engaged
for that project. Such duration, as well as the particular
work/service to be performed, is defined in an
employment agreement and is made clear to the
employees at the time of hiring.
In this case, petitioners did not have that kind of agreement
with respondents. Neither did they inform respondents of
the nature of the latter's work at the time of hiring. Hence,
for failure of petitioners to substantiate their claim that
respondents were project employees, the Supreme Court is
constrained to declare them as regular employees.
Petition is denied.
B. Management Prerogatives
 Management prerogative refers to the right of an
employee to regulate all aspects of employment.
a. Scope
1. Right to set Pre-employment Qualifications:
a. Civil Status;
b. Height;
c. Age;
d. Gender/sex;
e. Academic background;
f. Residence
2. Right to Manage People in General
 The free will of management to conduct its own affairs
to achieve its purpose cannot be denied.
 Except as limited by special laws, an employer is free
to regulate according to his own discretion and
judgment, all aspects of employment including, the
power to:
a. Determine the time, place, and manner of work;
b. Determine the tools to be used;
c. Lay-off of workers;
d. Dismiss erring employees;
e. Promote, transfer, or demote an employee to other
positions;
f. Rotate an employee from the day shift to the night
shift;
g. Prescribe reasonable rules and regulations
necessary or proper for the conduct of its
business;
h. Provide certain disciplinary measures in order to
implement prescribed rules;
i. Merge or consolidate the business with another;
j. Abolish positions which it deems no longer
necessary;
k. Close the business; and
l. Contract out services performed by employees to
outside agencies.
 Every business enterprise endeavors to increase
its profits. In the process it may adopt or devise
means designed toward that goal.
 So long as the management prerogatives are
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, such
prerogatives will be upheld.
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NOTE: The Court upheld the right of the management to
prescribe a policy prohibiting an employee from having a
relationship with an employee of a competitor company
(Tecson vs. Glaxo Wellcome Philippines, GR No. 162994,
September 17, 2004)
2. Right to Discipline Employees
 The employer has the prerogative to instill discipline in
his employees and to impose reasonable penalties,
including dismissal, on erring employees pursuant to
company rules and regulations.
 Although the employer has the prerogative to discipline
or dismiss its employee, such prerogative cannot be
exercised wantonly, but must be controlled by
substantive due process and tempered by the
fundamental policy of protection to labor enshrined in
the Constitution.
 Infractions committed by an employee should merit
only the corresponding sanction demanded by the
circumstances. The penalty must be commensurate
with the act, conduct or omission imputed to the
employee and imposed in connection with the
employer’s disciplinary authority.
3. Right to Transfer Employees
 It is management prerogative to transfer or assign an
employee from one office to another within the
business establishment, in the pursuance of its
legitimate business interest provided there is no
demotion in rank or diminution of his salary.
 An employee’s right to security of tenure does not give
him such vested right in his position as would deprive
the company of its prerogative to change his
assignment or transfer him.
 It is the prerogative of management to transfer an
employee where he can be most useful to the
company.
Q. When transfer may constitute constructive dismissal?
A. A transfer amounts to constructive dismissal when the
transfer is unreasonable, inconvenient or prejudicial to the
employee, and involves a demotion in rank or diminution of
salaries, benefits and other privileges.
NOTE: A transfer that results of promotion or demotion,
advancement or reduction or a transfer that aims to lure an
employee away from his permanent position cannot be
done without the employee’s consent.
 Re-assignment pending investigation by the
management falls within the management
prerogatives. The purpose of re-assignment is no
different from that of preventive suspension which
management could validly impose as a disciplinary
measure for the protection of the company’s property
pending investigation of any alleged misfeasance or
malfeasance committed by an employee.
4. Right to Demote
 It is management prerogative to transfer, demote, and
even dismiss an employee to protect its business,
provided it is not tainted with unfair labor practices.
 Management is at liberty, absent any malice on its part,
to abolish positions which it deems no longer
necessary.
 Abolition of position due to company reorganization or
merger is a management prerogative and will be
upheld provided the same is undertaken without any
malice on the part of the management.
 The company has the prerogative to adopt a
redundancy/retrenchment program to minimize if not,
to avert losses in the conduct of its operations.
 Promotion of employees is a management prerogative.
5. Right to Dismiss
 The right of the company to dismiss its employee is a
measure of self-protection. An employer cannot legally
be compelled to continue with the employment of a
person who admittedly was guilty of malfeasance
towards his employer, and whose continuance in the
service of the latter is patently inimical to its interest.
NOTE:
a.Services Performed by Personnel- with respect to the
determination of whether services should be performed
by its personnel or contracted to outside agencies, the
contracting out should be motivated by good faith and
must not have been resorted to circumvent the law or
must not have been the result of malicious or arbitrary
action.
b.Closing of Business- with respect to the closing of
business, although the employer may close or cease his
business operations or undertaking even if he is not
suffering from serious business losses or financial
reverses, the same may be undertaken as long as he
pays his employees their termination pay in the amount
corresponding to their length of service.
CASES:
ANGELITO P. DELES, JR vs. NLRC and FIRST PHIL.
INDUSTRIAL CORP. G.R. No. 121348. March 9, 2000
QUISUMBING
Facts:
Respondent company operates a pipeline system which
transports petroleum products from the refineries by Caltex
and Shell in Batangas to terminal receiving facilities in
Metro Manila. Petitioner was employed by the company as
shift supervisor. He was assigned at its joint terminal facility
in Pandacan, Manila, where he was the highest ranking
officer at the terminal during his shift. His primary task was
to oversee the entire pipeline operation in the terminal.
Admittedly, he was a member of the management team. On
the night of March 19, 1993, petitioner was the shift
supervisor on duty while Eduardo Yumul and Leonardo
Espejon were the assigned shift operator and gauger,
respectively. During this shift, there was a scheduled
delivery for Shell through respondent company’s pipeline of
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about 3,000 barrels of kerosene (KE) to be followed by a
delivery of aviation turbine fuel (AV). Forthwith, petitioner
instructed his chief operator (Yumul) to effect a batch
change from the kerosene tank to the aviation fuel tank
when the joint terminal facility turbine meter registers 2,944
barrels of kerosene delivered. Apparently, Yumul failed to
execute correctly petitioner’s order. Instead of effecting the
batch change at the prescribed reading of 2,944 barrels,
Yumul caused the batch change when the reading already
reached 3,341 barrels. Thus, about 397 barrels of the
succeeding batch of aviation turbine fuel went to the
kerosene batch thereby downgrading the former. When
informed of the incident, the company required petitioner to
explain why he should not be charged administratively for
neglect of duty. Petitioner was placed under preventive
suspension pending the outcome of the investigation. The
company conducted a joint formal investigation and found
petitioner, Yumul and Espejon guilty as charged.
Accordingly, private respondent Flaviano Santos,
respondent company’s assistant vice president, informed
petitioner that he was found to have violated the section on
Neglect of Duty of respondent company’s Code of
Discipline and for this violation he was meted the penalty of
3 months suspension. For their part, Yumul was meted the
penalty of dismissal while Espejon was suspended for one
and a half months. Petitioner filed a complaint before the
NLRC, questioning the legality of his suspension.
Issue: WON petitioner was illegally dismissed.
Ruling:
regarding the legality of petitioner’s suspension, petitioner
was found remiss in his duties in connection with the wrong
batch change operation on March 19, 1993. He contends
though that his suspension for three months is too harsh,
whimsical and biased. In essence, he decries the penalty
imposed on him which he considered too severe.
However, petitioner loses sight of the fact that the right of
an employer to regulate all aspects of employment is well
settled. This right, aptly called management
prerogative, gives employers the freedom to regulate,
according to their discretion and best judgment, all
aspects of employment, including work assignment,
working methods, processes to be followed, working
regulations, transfer of employees, work supervision,
lay-off of workers and the discipline, dismissal and
recall of workers. In general, management has the
prerogative to discipline its employees and to impose
appropriate penalties on erring workers pursuant to
company rules and regulations. Thus, petitioner’s
protestation unfounded. For, based on the record, the
company imposed said penalty pursuant to the Company
Code of Discipline which the labor agencies find to be fair
and in accordance with law. In fact, the penalty for violating
the provision on Neglect of Duty ranges from warning to
dismissal depending on the gravity of the offense.
Respondent company explained that mishandling the
delivery of highly flammable petroleum products could
result in enormous damage to properties and loss of lives
at the terminal and surrounding areas. Hence, it has to
exercise extraordinary diligence in conducting its
operations in view of the delicate nature of its business.
Considering the attendant circumstances, we are
constrained to agree that the penalty of suspension first
imposed on petitioner is reasonable and appropriate as well
as legally unassailable.
Petition is denied.
FLOREN HOTEL vs. NLRC and RODERICK A.
CALIMLIM G.R. No. 155264 May 6, 2005
QUISUMBING
Facts:
At the time of their termination, private respondents
Roderick A. Calimlim and Ronald Rico were working in the
hotel as room boys and Lito F. Bautista as front desk man.
Petitioner Dely Lim randomly inspected the hotel rooms to
check if they had been properly cleaned. When she entered
Room 301, she found Lito Bautista sleeping half-naked with
the air-conditioning on. Lim immediately called the attention
of the hotel’s acting supervisor, Diosdado Aquino, who had
supervision over Bautista. Lim admonished Aquino for not
supervising Bautista more closely, considering that it was
Bautista’s third offense of the same nature. When she
entered Room 303, she saw private respondents Calimlim
and Rico drinking beer, with four bottles in front of them.
They had taken these bottles of beer from the hotel’s coffee
shop. Like Bautista, they had switched on the air
conditioning in Room 303. Dely Lim prepared a
memorandum for Bautista. In the presence of Acting
Supervisor Aquino as well as the other workers, Lim tried to
give Bautista a copy of the memorandum but Bautista
refused to receive it. Bautista then went on absence without
leave. Calimlim and Rico, embarrassed by the incident,
went home. When they returned to work the next day, they
were served with a notice of suspension for one week. Like
Bautista, they refused to receive the notice of suspension,
but opted to serve the penalty. Upon their return on June
15, 1998, they saw a memorandum on the bulletin board
announcing the suspension as room boys of Calimlim and
Rico, or alternately returning to work on probation as
janitors. The memorandum also included Calimlim and
Rico’s new work schedule. Calimlim and Rico submitted
handwritten apologies and pleaded for another chance,
before they went AWOL (absent without leave). Calimlim,
Rico and Bautista filed separate complaints, for illegal
dismissal and money claims, before the Labor Arbiter.
Calimlim and Rico claimed they were constructively
72
dismissed, while Bautista claimed that Dely Lim orally told
him not to go back to work because he was already
dismissed. Labor Arbiter dismissed the complaints but
ordered petitioners to pay private respondents their
proportionate 13th month pay, and SIL pay. He likewise
ordered petitioners to pay Calimlim and Rico indemnity.
NLRC reversed Labor Arbiter and ordered the hotel
management to immediately reinstate private respondents
to their former positions without loss of seniority rights, with
full backwages and other benefits until they are actually
reinstated. CA ruled that petitioners had constructively
dismissed private respondents Calimlim and Rico, hence
the petitioners are liable to the private respondents for their
proportionate 13th month pay, SIL pay, and indemnity.
Issue: WON private respondents Calimlim and Rico were
constructively dismissed.
Ruling:
For the transfer of the employee to be considered a
valid exercise of management prerogatives, the
employer must show that the transfer is not
unreasonable, inconvenient or prejudicial to the
employee; neither would it involve a demotion in rank
or a diminution of his salaries, privileges and other
benefits. Should the employer fail to discharge this
burden of proof, the employee’s transfer shall be
tantamount to constructive dismissal, which has been
defined as a quitting because continued employment
is rendered impossible, unreasonable or unlikely, as
in an offer involving a demotion in rank and
diminution in pay.
In the case at bench, Calimlim and Rico were being forced
to accept alternate work periods in their new jobs as
janitors, otherwise they would be unemployed. Not only did
their new schedule entail a diminution of wages, because
they would only be allowed to work every other week, the
new schedule was also clearly for an undefined period. The
memorandum did not state how long the schedule was to
be effective. Indeed, it appears that the period could
continue for as long as management desired it. These
unreasonable new terms of employment were imposed in
the memorandum, which was issued two days before
Calimlim and Rico returned from their week-long
suspension. They were imposed for alleged past infractions
for which neither Calimlim nor Rico was given the chance
to be heard. Under the circumstances, the Supreme Court
fail to see how the temporary transfer of Calimlim and Rico
could be a valid exercise of management prerogatives.
Even the employer’s right to demote an employee requires
the observance of the twin-notice requirement.
CA is modified.
LOPEZ SUGAR CORPORATION vs. LEONITO G.
FRANCO G.R. No. 148195 May 16, 2005 CALLEJO
Facts:
Private respondents Leonito G. Franco et.al were
supervisory employees of the Lopez Sugar Corporation.
Franco was hired by the Corporation as Shift Supervisor in
the Sugar Storage Department. On the other hand, Perrin
and Candelario were employed as Planter Service
Representatives (PSRs), who rose from the ranks and, by
1994, occupied supervisory positions in the Corporation’s
Cane Marketing Section. By 1994, the supervisory
employees of the Corporation, spearheaded by Franco
et.al. decided to form a labor union called Lopez Sugar
Corporation Supervisor’s Association. DOLE issued a
Certificate of Registration to the union. During its
organizational meeting, Franco was elected president and
Pabalan as treasurer. The officers of the union and the
management held a meeting, which led to the submission
of the union’s proposals for a CBA. The Corporation’s
president issued a Memorandum to the vice-president and
department heads for the adoption of a special retirement
program for supervisory and middle level managers. He
emphasized that the management shall have the final say
on who would be covered, and that the program would be
irrevocable once approved. Perrin and Candelario were on
leave when they were invited by Juan Masa, Jr., the head
of the Cane Marketing Section. The latter informed them
that they were all included in the special retirement
program and would receive their respective notices of
dismissal shortly. Franco et.al. received copies of the
Memorandum from the Corporation’s Vice-President for
Administration and Finance, informing them that they were
included in the "special retirement program" for supervisors
and middle level managers; hence, their employment with
the Corporation was to be terminated effective and they
would be paid their salaries. Thereafter, the private
respondents filed separate complaints against the
corporation with the NLRC for illegal dismissal, ULP,
reinstatement and damages. NLRC ruled in favor of private
respondents which was affirmed by CA.
Issue: WON private respondents were illegally dismissed.
Ruling:
In a decided case, it has been held that it is imperative for
the employer to have fair and reasonable criteria in
implementing its redundancy program, such as but not
limited to (a) preferred status; (b) efficiency; and (c)
seniority. The general rule is that the characterization
by an employer of an employee’s services as no
longer necessary or sustainable is an exercise of
business judgment on the part of the employer. The
wisdom or soundness of such characterization or
73
decision is not, as a general rule, subject to
discretionary review on the part of the Labor Arbiter,
the NLRC and the CA. Such characterization may,
however, be rejected if the same is found to be in
violation of the law or is arbitrary or malicious. It is
settled that the hiring, firing or demotion of employees
is a management prerogative, but is subject to
limitations stated in the collective bargaining
agreement, if any, or general principles of fair play
and justice. Indeed, the Supreme Court will not
hesitate to strike down a redundancy program
structured by a corporation to downsize its
personnel, solely for the purpose of weakening the
union leadership, thereby preventing it from securing
reasonable terms and conditions of employment in
their CBA with the employer.
In the case at bench, petitioner illegally dismissed the
private respondents from their employment by including
them in its special retirement program, thus, debilitating the
union, rendering it pliant by decapacitating its leadership.
As such, the so-called "downsizing" of the Cane Marketing
Department and SMSD based on the SGV Study Report
was a farce capricious and arbitrary. Foremost, the
petitioner failed to formulate fair and reasonable criteria in
ascertaining what positions were declared redundant and
accordingly obsolete, such as preferred status, efficiency or
seniority. It, likewise, failed to formulate fair and reasonable
parameters to determine who among the supervisors and
middle-level managers should be "retired" for redundancy.
Using the SGV report as anchor, the petitioner came out
with a special retirement program for its 108 supervisors
and middle-level managers, making it clear that its decision
to eliminate them was final and irrevocable. Moreover, the
private respondents were not properly apprised of the
existence of the special retirement program, as well as the
criteria for the selection of the supervisors to be "retired,"
and those to be retained or transferred or demoted.
Petitioner downsized the Cane Marketing Department by
eliminating private respondents Perrin and Candelario; and
Franco and Candelario from the Sugar and Molasses
Storage Department, respectively, without due regard to the
SGV report. The downsizing of personnel was not among
the foregoing recommendations, and yet this was what the
petitioner did, through its special retirement program, by
including private respondents Franco and Pabalan, thereby
terminating their employment. It is too much of a
coincidence that the two private respondents were active
members of the union.
Petition is denied.
C. TERMINATION OF
EMPLOYMENT
a. Security of Tenure
 Security of Tenure- the Constitutional right granted to
the employee that the employer shall not terminate the
services of an employee except for just cause or when
authorized cause.
 Nature of the Right to Security of Tenure and the
Right to terminate employment:
 Termination of employment is not anymore a mere
cessation or severance of contractual relationship
but an economic phenomenon affecting members
of the family. This explains why under the broad
principles of social justice the dismissal of
employee is adequately protected by the laws of
the State.
 However, the worker’s right to security of tenure is
not an absolute right for the law provides that he
may be dismissed for cause. The law in protecting
the rights of the labor authorizes neither
oppression nor self-destruction of the capital.
 Substantive Due Process of Dismissal- an
employee cannot be dismissed except for just or
authorized cause of dismissal.
 Procedural Due Process- the process of termination
that should be observed by the employer such as the
twin-notice and hearing requirement and the 30-day
notice requirement.
b. Causes of Termination by Employer
(Substantive Due Process of
Dismissal)
b.i. JUST CAUSES
1. Serious Misconduct or willful disobedience by the
employee of the lawful orders of his employer or
representative in connection with his work:
1.a. Serious Misconduct
 Misconduct- transgression of some established and
definite rule of action, a forbidden act, a dereliction of
duty, willful in character, and implies wrongful intent
and not mere error in judgment.
 Requisites:
1.misconduct must be serious;
2.must relate to the performance of the employee’s
duties; and
3.must show that the employee has become unfit to
continue working for the employer.
 Examples:
1. challenging a superior officer to a fight;
2. use of insulting and offensive language towards
superiors;
3. drinking liquor on company time in company
premises;
4. sexual intercourse on company time and in
company premises;
5. falsification of time cards;
74
 6. drunkenness and disorderly or violent behavior;
7. using the employer’s property, equipment and
personnel in the personal business of the
employee;
8. sexual harassment (the manager’s act of fondling
the hands, massaging the shoulder and caressing
the nape of the secretary).
1.b. Requisites of Willful Disobedience of
Lawful Orders
1. The employee’s assailed conduct must have been
willful or intentional, the willfulness is being
characterized by a wrongful and perverse attitude;
2. Order violated must be reasonable and lawful and
made known to the employee and must pertain to
the duties which he had been engaged to
discharge.
 Examples:
1. using company vehicles for private purpose
without authority from management;
2. refusal to report in the worker’s new work
assignment in defiance of management
prerogative;
3. driving without a valid driver’s license in violation
of the company rules and regulations.
2. Gross and habitual neglect by the employee of his
duties;
 Gross negligence- the want or absence of even
slight care or diligence as to amount to a reckless
disregard of the safety of person or property. It evinces
a thoughtless disregard of consequences without
exerting any effort to avoid them.
 Habitual neglect- implies repeated failure to perform
one’s duties for a period of time, depending upon the
circumstances.
 In order to constitute a just cause for the employee’s
dismissal, the neglect of duties must not only be
gross but also habitual. Thus, the single or isolated
act of negligence does not constitute a just cause for
the dismissal of the employee.
 Examples:
1. Unjustified absences;
2. habitual absenteeism;
3. abandonment of work
NOTE: To constitute abandonment of work, two
elements must concur:
1. The failure to report for work or absence without
valid or justifiable reason; and
2. a clear intention to sever the employer-employee
relationship.
 The second element is the more determinative factor
and being manifested by some overt acts.
 Abandoning one’s job means the deliberate, unjustified
refusal of the employee to resume his employment and
the burden of proof is on the employer to show a clear
and deliberate intent on the part of the employee to
discontinue employment.
3. Fraud of willful breach by the employee of the trust
reposed in him by his employer or duly authorized
representative;
 The lost of trust and confidence must be based on
the willful breach of the trust reposed in the
employee by his employer. Ordinary breach will not
suffice.
 A breach of trust is willful if it is done intentionally,
knowingly and purposely, without justifiable excuse, as
distinguished from an act done carelessly,
thoughtlessly, heedlessly or inadvertently.
 Loss of confidence, as a just cause for termination of
employment, is premised on the fact that the
employee concerned holds a position of
responsibility, trust and confidence. He must be
invested with confidence on delicate matters such as
the custody, handling, care and protection of the
employer’s property and/or funds.
 Loss of Confidence (Guidelines)
1. not simulated;
2. should not be used as a subterfuge for causes
which are improper;
3. may not be arbitrarily asserted in the face of
overwhelming evidence to the contrary;
4. must be genuine;
5. must be substantial
 Examples:
1. theft of company property;
2. forgery or falsification of voucher
4. Commission of a crime or offense by the employee
against the person of his employer or any immediate
member of his family or his duly authorized representative;
NOTE: Conviction or prosecution is not required.
5. Other causes analogous to the foregoing causes.
 Examples:
1. unreasonable behavior and unpleasant
deportment in dealing with co-workers;
2. failure to meet assigned sales quota;
3. gross inefficiency;
4. violation of the company’s code of conduct or
company rules and regulations
 Doctrine of Incompatibility- Upon employment, an
employee is expected to behave in such a manner that
would ensure the efficient and orderly operation of the
employer’s business. Where the employee has done
something that is contrary or incompatible to the
performance of his duties, his employer has just cause
for terminating his employment.
 Substantial proof and NOT clear and convincing
evidence or proof beyond reasonable doubt is
75
 sufficient as basis for the imposition of any disciplinary
action upon the employee.
CASES:
IMELDA B. DAMASCO vs. NLRC and MANILA
GLASS SUPPLY G.R. No. 115755. Dec. 4, 2000
Quisimbing
Facts:
Ms. Imelda Damasco was a regular sales clerk in Manila
Glass Supply in Olongapo City. Manila Glass Supply is a
sole proprietorship engaged in the sale of glass with main
store in Olongapo City and branch in Metro Manila.
Bonifacio K. Sia is private respondent is the owner of
Manila Glass Supply. Damasco was employed by Manila
Glass Supply and Bonifacio K. Sia as Sales Clerk,
receiving lately a daily wage of P140.00. As sales clerk, she
was ordered to do almost all the works related to the glass
business of respondents including the cutting, sales and
delivery of glass as well as balancing, accounting and
checking of capital and profits every end of the month. On
August 28, 1992, while she was working, Bonifacio Sia
called her up and told her to finish all her works that night,
but she told respondent that she would not be able to finish
them all because it was already late; that she then left
respondent’s room but respondent called her again and
asked her why she could not finish what she was told to do,
to which Damasco answered that it was already late and
there were still a lot of things to do. Sia asked Damasco
why she was not teaching her 2 other co-workers on what
to do, and she answered she would not do it anymore
because if the other co-workers should commit mistakes in
accounting, she was the first one to be lambasted by
respondent and even required to share in paying the
shortages. Sia ordered Damasco to go out of the room and
told her that he does not want to see her face anymore.
Sia, on the other hand, alleged that Damasco was
instructed to report for work in their store in Metro Manila as
there is a necessity for her detail thereat for reasons that
the employees there are new. Damasco objected for
reasons that her husband is working in Olongapo City and
she does not want to work in Manila and thereafter,
Damasco did not report for work in the respondent’s store
in Olongapo City. Sia received a copy of complaint for
illegal dismisssal filed by Damasco. Immediately, Sia sent a
letter to complainant directing her to report for work which
was ignored by Damasco. The Labor Arbiter ruled in favor
of Damasco which was modified by NLRC.
Issue: WON Damasco was illegally dismissed.
Ruling:
To constitute abandonment, two elements must
concur: (1) the failure to report for work or absence
without valid or justifiable reason, and (2) a clear
intention to sever the employer-employee
relationship, with the second element as the more
determinative factor when manifested by some overt
acts. Abandoning one’s job means the deliberate,
unjustified refusal of the employee to resume his
employment and the burden of proof is on the
employer to show a clear and deliberate intent on the
part of the employee to discontinue employment.
In the case at bench, there are no overt acts established by
Sia from which we can infer the clear intention of Damasco
to desist from employment. Sia’s letters for Damasco to
report for work deserve scant consideration. Note that
those orders were made four months after Damasco was
told not to show herself again in the store, and after Sia had
received a copy of Damasco’s complaint for illegal
dismissal. It is indeed highly incredible for an employer to
require his employee without an approved leave to report to
work only after four months of absence. If at all, the charge
of abandonment is disingenuous to say the least. Moreover,
it was unlikely that Damasco had abandoned her job for no
reason at all considering the hardship of the times. In
addition, if Damasco had truly forsaken her job, she would
not have bothered to file a complaint for illegal dismissal
against her employer and prayed for reinstatement. An
employee who forthwith took steps to protect her layoff
could not by any logic be said to have abandoned her work.
As regards Sia’s allegation that Damasco committed
serious misconduct or willful disobedience of lawful order in
connection with her work, the same is not tenable. Even if
Sia directed her to be assigned at his store in Metro Manila,
her act of refusing to be detailed in Metro Manila could
hardly be characterized a willful or intentional disobedience
of her employer’s order. It was Sia’s order that appears to
us whimsical if not vindictive. Reassignment to Metro
Manila is prejudicial to Ms. Damasco, as she and her family
are residing in Olongapo City. This would entail separation
from her family and additional expenses on her part for
transportation and food. Damasco’s reassignment order
was unreasonable, considering the attendant
circumstances.
Petition is granted.
ST. MICHAEL'S INSTITUTE vs. CARMELITA A.
SANTOS G.R. No. 145280 December 4, 2001 DE
LEON
Facts:
76
Petitioner St. Michael's Institute is an institute of learning.
Carmelita Santos et.al. were regular classroom teachers.
Respondent Santos began teaching at St. Michael's
Institute in 1979 while respondents Magcamit and Rosarda
joined its school faculty only in 1990. Their service with the
school was abruptly interrupted when each of them was
served a notice of termination of employment on 1993. The
termination allegedly stemmed from an incident that
occurred on August 10, 1993. On said date, a public rally
was held at the town plaza of Bacoor, Cavite in the vicinity
of petitioner school. The rally, organized and participated in
by faculty members, parents and some students of
petitioner school, was, among others, aimed at calling the
attention of the school administration to certain grievances
relative to substandard school facilities and the economic
demands of teachers and other employees of St. Michael's
Institute. Blanco, as school principal, sent each of the
respondents identical memoranda requiring them to explain
their acts of leading the aforementioned rally of students
outside the school premises; preventing students from
attending classes; and denouncing the school authority in
their speeches. Respondents denied all the accusations
attributed to them, and explained that they were invited by
the core group of parents and merely joined them in
expressing their sentiments. After investigation, the
Investigating Committee found respondents to have led and
actively participated in the said rally and consequently
recommended their termination from service. Respondents
were sent letters informing them of their termination from
the service "for serious disrespect" to their superior,
petitioner Fr. Victorino, and for "serious misconduct that
resulted in the disruption of classes." In the illegal dismissal
case, the Labor Arbiter declared that there was just cause
for the dismissal of the respondents' complaints since they
were guilty of dereliction of duty, which was reversed by
NLRC.
Issue: WON private respondents were illegally dismissed.
Ruling:
In termination of employment disputes that the burden of
proof is always on the employer to prove that the dismissal
was for a just and valid cause. Evidence must be clear,
convincing and free from any inference that the prerogative
to dismiss an employee was abused and unjustly used by
the employer to further any vindictive end.
Misconduct is the transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty,
willful in character, and implies wrongful intent and not
mere error of judgment. As a just cause for termination,
the misconduct must be serious, which implies that it
must be of such grave and aggravated character and
not merely trivial or unimportant. On the other hand,
disobedience, as a just cause for termination, must
be willful or intentional. Willfulness is characterized by a
wrongful and perverse mental attitude rendering the
employee's act inconsistent with proper subordination. Not
every case of insubordination or willful disobedience
by an employee of a lawful work-connected order of
the employer is reasonably penalized with dismissal.
There must be reasonable proportionality between,
on the one hand, the willful disobedience by the
employee and, on the other hand, the penalty
imposed therefor. In the case at bench, evidence is
wanting on the depravity of conduct, and willfulness of the
disobedience on the part of the respondents. Absence of
one day of work to join a public rally cannot be of such
great dimension as to equate it with an offense punishable
with the penalty of dismissal. The reinstatement of the
respondents is, thus, just and proper.
Petition is denied.
PHILIPPINE AEOLUS AUTOMOTIVE UNITED C
CORP vs. NLRC and ROSALINDA. CORTEZ G.R.
No. 124617. April 28, 2000 BELLOSILLO
Facts:
Petitioner Philippine Aeolus Automotive United Corporation
(PAAUC) is a domestic corporation, petitioner Francis Chua
is its President while private respondent Rosalinda C.
Cortez was a company nurse of petitioner corporation until
her termination. A memorandum was issued by Ms. Myrna
Palomares, Personnel Manager of petitioner corporation,
addressed to private respondent Cortez requiring her to
explain within 48 hours why no disciplinary action should be
taken against her (a) for throwing a stapler at Plant
Manager William Chua, her superior, and uttering
invectives against him; (b) for losing the amount of
P1,488.00 entrusted to her by Plant Manager Chua to be
given to Mr. Fang of the CLMC Department; and, (c) for
asking a co-employee to punch-in her time card thus
making it appear that she was in the office in the morning of
6 September 1994 when in fact she was not. The
memorandum however was refused by private respondent
although it was read to her and discussed with her by a co-
employee. She did not also submit the required
explanation, so that while her case was pending
investigation the company placed her under preventive
suspension for 30 days. While Cortez was still under
preventive suspension, another memorandum was issued
by petitioner giving her 72 hours to explain why no
disciplinary action should be taken against her for allegedly
failing to process the ATM applications of her 9 co-
employees with the Allied Banking Corporation. The
memorandum was also refused to receive by private
respondent. A third memorandum was issued to private
respondent, this time informing her of her termination from
the service on grounds of gross and habitual neglect of
77
duties, serious misconduct and fraud or willful breach of
trust. Labor Arbiter rendered a decision holding the
termination of Cortez as valid and legal, which was
reversed by NLRC.
Issue: WON private respondent was illegally dismissed.
Ruling:
The Labor Code provides specific grounds by which
an employer may validly terminate the services of an
employee, which grounds should be strictly construed
since a person’s employment constitutes "property"
under the context of due process of law and, as such,
the burden of proving that there exists a valid ground
for termination of employment rests upon the
employer. Likewise, in light of the employee's right to
security of tenure, where a penalty less punitive than
dismissal will suffice, whatever missteps may have
been committed by labor ought not to be visited with
a consequence so severe.
The Supreme Court, in a litany of decisions on serious
misconduct warranting dismissal of an employee, has ruled
that for misconduct or improper behavior to be a just cause
for dismissal (a) it must be serious; (b) must relate to the
performance of the employee’s duties; and, (c) must show
that the employee has become unfit to continue working for
the employer. In the case at bench, the act of private
respondent in throwing a stapler and uttering abusive
language upon the person of the plant manager may be
considered, from a lay man's perspective, as a serious
misconduct. However, in order to consider it a serious
misconduct that would justify dismissal under the law,
it must have been done in relation to the performance
of her duties as would show her to be unfit to
continue working for her employer. The acts
complained of, under the circumstances they were done,
did not in any way pertain to her duties as a nurse. Her
employment identification card discloses the nature of her
employment as a nurse and no other. Also, the
memorandum informing her that she was being
preventively suspended pending investigation of her case
was addressed to her as a nurse. Likewise, the act of
private respondent in asking a co-employee to punch-in her
time card, although a violation of company rules, likewise
does not constitute serious misconduct.
On alleged failure to process the ATM applications of her 9
co-employees with the Allied Banking Corporation, the truth
is that the money entrusted to private respondent was in
fact deposited in the respective accounts of the employees
concerned, although belatedly. Gross negligence implies a
want or absence of or failure to exercise slight care or
diligence, or the entire absence of care. It evinces a
thoughtless disregard of consequences without exerting
any effort to avoid them. The negligence, to warrant
removal from service, should not merely be gross but also
habitual. Likewise, the ground "willful breach by the
employee of the trust reposed in him by his employer" must
be founded on facts established by the employer who must
clearly and convincingly prove by substantial evidence the
facts and incidents upon which loss of confidence in the
employee may fairly be made to rest. All these
requirements prescribed by law and jurisprudence are
wanting in the case at bar.
NLRC is affirmed.
SANTIAGO ALCANTARA vs. CA and THE
PENINSULA MANILA G.R. No. 143397. August 6,
2002 KAPUNAN
Facts:
Petitioner Santiago Alcantara, Jr., an employee of
respondent The Peninsula Manila. At the time of his
dismissal, petitioner worked as Commis II of the Food and
Beverage Department of the Peninsula. He was also a
Director of the National Union of Workers in Hotels
Restaurants. The controversy stems from a Memorandum
issued by respondent Hotel prohibiting the union from using
the union office from midnight until 6:00 in the morning. The
union office was located in the hotel premises. On several
occasions, petitioner and his companions were seen inside
the union office from midnight until morning. The Hotel sent
a memorandum to petitioner directing him to submit his
written explanation within 24 hours from receipt thereof.
Petitioner explained that the Memorandum prohibiting the
use of the union office was inconsistent with the CBA and
was necessarily ineffective. Petitioner argued that
inasmuch as the Hotel operated 24 hours a day, the union
office should be available whenever the union found it
necessary. This was how the CBA had always been
applied. Petitioner also pointed out that the charge against
him did not pertain to his duties in the Hotel. He claimed he
used the union office only during his breaks or when he
was off duty. The Hotel sent petitioner a Notice of
Termination for alleged willful and blatant refusal to comply
with a lawful and valid issued by his employer. CA found
that petitioner was legally dismissed on the ground of willful
disobedience.
Issue: WON petitioner was illegally dismissed.
Ruling:
Willful disobedience of the employer’s lawful orders,
as a just cause for the dismissal of an employee,
envisages the concurrence of at least two requisites:
(1) the employee’s assailed conduct must have been
78
willful or intentional, the willfulness being
characterized by a “wrongful and perverse attitude;”
and (2) the order violated must have been
reasonable, lawful, made known to the employee and
must pertain to the duties which he had been
engaged to discharge.
Company policies and regulations are, unless shown to be
grossly oppressive or contrary to law, generally binding and
valid on the parties and must be complied with until finally
revised or amended unilaterally or preferably through
negotiation or by competent authority. It would be
dangerous doctrine indeed to allow employees to refuse to
comply with rules and regulations, policies and procedures
laid down by their employer by the simple expedient of
formally challenging their reasonableness or the motives
which inspired them, or to give the employees the power to
suspend compliance with company rules or policies by
requesting that they be first subject of collective
bargaining. It would be well nigh impossible under these
circumstances for any employer to maintain discipline in its
establishment.
In the case at bench, the subject Memorandum is not
grossly oppressive. It is not patently contrary to law. While
petitioner argues that its application was discriminatory –
the two employees found with him in the union room were
not at all subjected to disciplinary action – the
Memorandum was not discriminatory on its face.
Petitioner’s violation of his employer’s order, prior to its
revocation, was therefore inexcusable. Nevertheless,
petitioner’s behavior did not constitute the “wrongful and
perverse attitude” that would sanction his dismissal. The
surrounding circumstances indicate that petitioner was
motivated by a his honest belief that the Memorandum was
indeed unlawful and unreasonable. Previous practice
allowed the use of the union office 24 hours a day. Viewed
in this light, petitioner’s attitude can hardly be characterized
as “wrongful and perverse.” While these circumstances do
not justify his violation of the regulation, they do not justify
his dismissal either.
Petition is granted.
PHILIPPINE NATIONAL CONSTRUCTION CORP vs.
ROLANDO MATIAS G.R. No. 156283 May 6, 2005
PANGANIBAN
Facts:
Rolando Matias was employed by Construction and
Development Corp as Chief Accountant and Administrative
Officer. During his employment with the company, various
parcels of land situated at Don Carlos Bukidnon were
placed in the names of certain employees as trustees for
the purpose of owning vast tracts of land more than the
limit a corporation can own which were primarily intended
for CDCP agricultural businesses. By internal arrangement
documents transferring back the properties to the
corporation were executed. A land was registered in the
name of Matias covered by OCT. In 1984, the loans of
CDCP from various government entities were converted to
equity thus making it a GOCC and the name of CDCP was
changed to Philippine National Construction Corporation
(PNCC). Under a new set up, PNCC offered a
retrenchment program and Matias availed of the said
program. In July 1992, two former CDCP employees,
namely Reynaldo Tac-an and Luciano Tadena went to the
house of Matias and brought with them duly accomplished
documents and SPA for his signature and informed him that
the lands in Bukidnon under his name with all the others
were invaded by squatters, and that the said land were
covered by CARP where Matias’ name was included in the
list of landowners. Matias reluctantly signed the document
and after six months, he signed an acknowledgment receipt
of P100,000.00. The Register of Deeds cancelled the OCT
originally registered in the name of Matias and issued a
new TCT in the name of the Republic of the Philippines.
Matias was rehired by PNCC as Project Controller in
Zambales PMMA Project. Later, Matias was dismissed by
PNCC on the ground of lost of trust and confidence.
Petitioner alleges that respondent fraudulently breached its
trust and confidence when, without its knowledge and
consent, he disposed of the Bukidnon property; though
actually belonging to petitioner, that property had
purportedly been merely placed in trust under his name.
Thereafter, he assigned the same property to petitioner,
allegedly despite his full knowledge that the title had
already been transferred -- with his active planning and
participation -- to the Republic of the Philippines.
Issue: WON private respondent was illegally dismissed.
Ruling:
It is a basic principle that in termination cases that the
employer bears the burden of proving that the dismissal of
the employee is for a just or an authorized cause. Failure to
dispose of the burden would imply that the dismissal is not
lawful, and that the employee is entitled to reinstatement,
back wages and accruing benefits. Moreover, dismissed
employees are not required to prove their innocence of the
employer’s accusations against them. Under Article 282 of
the Labor Code, loss of confidence must be based on
"fraud or willful breach by the employee of the trust
reposed in him by his employer or duly authorized
representative." Ordinary breach does not suffice. A breach
of trust is willful if it is done intentionally and knowingly
without any justifiable excuse, as distinguished from an act
done carelessly, thoughtlessly or inadvertently.
79
In the present case, petitioner invokes loss of trust and
confidence as the ground for dismissing respondent. The
allegations of petitioner are unsupported by substantial
evidence or by established facts. It was more than 7 years
after respondent had been separated from the employ of
petitioner when two of his former co-employees at CDCP
(petitioner’s predecessor) -- Reynaldo Tac-an and Luciano
Tadena -- went to see him at his home in Quezon City,
carrying accomplished documents and a SPA. They
informed him that the pieces of land in Bukidnon, including
that which had been placed by petitioner in his name, were
covered by CARP; and that he therefore had to sign the
documents. Relying on their representations, he did as he
had been told. Petitioner has not at any time denied or
repudiated the acts of Tac-an and Tadena. Thus, private
respondent cannot be faulted for presuming that both
employees were acting on its behalf.
Furthermore, loss of confidence as a just cause for
termination of employment is premised on the fact
that the employee concerned holds a position of
responsibility, trust and confidence. In order to
constitute a just cause for dismissal, the act
complained of must be so related to the performance
of the duties of the dismissed employee as would
show that he or she is unfit to continue working for
the employer. Undeniably, the position of project controller
-- the position of respondent at the time of his dismissal --
required trust and confidence, for it related to the handling
of business expenditures or finances. However, his act
allegedly constituting breach of trust and confidence was
not in any way related to his official functions and
responsibilities as controller. In fact, the questioned act
pertained to an unlawful scheme deliberately engaged in by
petitioner in order to evade a constitutional and legal
mandate.
Petition is denied.
CARMELITA NOKOM vs. NLRC and RENTOKIL
(PHILS.) G.R. No. 140043. July 18, 2000 DE LEON
Facts:
Petitioner Nokom was employed as a manager by private
respondent Rentokil (Phils.) for its Healthcare Division. As
manager, she was responsible for managing the Healthcare
Division in accordance with the policies of Rentokil and she
reported directly to the General Manager, Framie Ong-dela
Luna. Private respondents Paul Stern and Russel Harris,
Rentokil’s Area Director and Regional Finance Controller,
respectively, received information that fictitious invoices
were sent to Rentokil clients in the Healthcare Division
whose contracts have already been terminated. The
fictitious invoices were allegedly made to inflate the gross
revenues of the Healthcare Division to make up for the
shortfall in its target revenues for the year 1995. Because
initial findings showed that petitioner Nokom, as Manager
of the Healthcare Division, was involved in the anomaly,
private respondents placed her on preventive suspension.
Later on, it was found out that petitioner knew of the
fraudulent activities which, as discovered by the new
Finance Manager. Thereafter, Stern informed petitioner of
the findings of their auditor. Petitioner admitted the
irregularities and, in her written explanation as required
under the notice of preventive suspension, petitioner told
Stern that she had no explanation and said that she was
leaving her fate up to management. During the hearing
conducted by Rentokil management, petitioner failed to
appear despite notice. After the investigation, it was found
out that petitioner was aware, tolerated and in fact
participated in the production of fictitious invoices. Thus,
petitioner’s employment was terminated. NLRC dismissed
the complaint for illegal dismissal for being without merit.
Issue: WON Nokom was illegally dismissed.
Ruling:
In a decided case, it has been held that the guidelines for
the application of the doctrine of loss of confidence
are: a..loss of confidence should not be simulated; b..
it should not be used as a subterfuge for causes
which are improper, illegal or unjustified; c. it may not
be arbitrarily asserted in the face of overwhelming
evidence to the contrary; and d..it must be genuine,
not a mere afterthought to justify earlier action taken
in bad faith.
In the case at bench, petitioner was holding a managerial
position with Rentokil. As manager of the Healthcare
Division, petitioner was duty-bound to perform her functions
in accordance with company policies. During her
incumbency, fraudulent activities transpired for which she
must be held accountable. Petitioner has not presented any
persuasive evidence or argument to convince us otherwise.
True it is that an employer enjoys a wide latitude of
discretion in the promulgation of company rules and
regulations that at times become the root of abuse by
management. In this case, however, the policies of private
respondent Rentokil are fair and reasonable, the decision
to terminate the employment of petitioner was justified and
appropriate in the light of the acts committed by her, and
considering that the requirements of the constitutional right
to due process were duly accorded to petitioner.
Petition is denied.
b.iii. AUTHORIZED CAUSES
1. Installation of Labor-Saving Devices;
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 The installation of labor-saving devices must be to
effect economy and efficiency in the method of
production.
 Requisites for validity:
1. must be done in good faith;
2. purpose is to save on cost, enhance efficiency and
other justifiable economic reasons;
3. no other option available to the employer;
4. reasonable and fair standards or criteria in
selecting who to terminate;
5. compliance with the 30-day notice requirement;
and
6. payment of separation pay.
2. Redundancy;
 Redundancy exists where the services of an
employee are in excess of what is reasonably
demanded by the actual requirements of the
enterprise; a position is redundant when it is
superfluous.
 Requisites for validity:
1. written notice on both the affected employees and
DOLE;
2. payment of separation pay equivalent to at least 1
month pay or to at least ½ month pay for every
year of service, whichever is higher;
3. good faith in abolishing the redundant positions;
and
4. fair and reasonable criteria in ascertaining what
positions are to be declared redundant and
accordingly.
3. Retrenchment
 Retrenchment- it is an act of the employer of
dismissing employees because of losses in the
operation of a business’ lack of work’ and considerable
reduction of the volume of his business.
 Requisites for validity:
1. reasonably necessary and likely to prevent
business losses;
2. written notice both to the employees and DOLE;
3. separation pay equivalent to 1 month pay or at
least ½ month pay for every year of service,
whichever is higher;
4. must be done in good faith;
5. fair and reasonable criteria in ascertaining who
would be dismissed.
 Retrenchment is an authorized cause for termination of
employment which the law accords an employer who is
not making good in its operations in order to cut back
on expenses for salaries and wages by laying off some
employees.
 The purpose of retrenchment is to save a financially
ailing business establishment from eventually
collapsing.
 Conditions under which an employer may
retrench:
1. substantial loss which are not merely de minimis
in extent;
2. imminence of such substantial losses;
3. retrenchment would effectively prevent the
expected and additional losses;
4. the alleged losses and expected losses must be
proven by sufficient and convincing evidence.
4. Closing or cessation of operation of the establishment or
undertaking;
 To abolish means to do away with, to annul, abrogate
or destroy completely. It denotes an intention to do
away with the office wholly and permanently. A valid
abolition of offices is neither removal nor separation of
the incumbents. No dismissal or separation arises
because the position itself ceases to exists (Tan vs.
DPWH, GR No. 143289, November 11, 2004).
 Requisites for validity:
1. must be in good faith;
2. purpose should not be to circumvent the
provisions of the Labor Code;
3. no other option available to the employer except to
close or cease operations;
4. notice requirement;
5. separation pay.
 Obligations of Transferee in case of Sale in Good
Faith- There is no law which requires the purchaser to
absorb the employees of the selling company. As there
is no such law, the most that the purchasing company
may do, for purposes of public policy and social
justice,, is to give preference to the qualified separated
employees of the selling company who in its judgment
are necessary in the continued operation of the
business establishment (MDII Supervisors Association
vs. Presidential Assistant on Legal Affairs, 79 SCRA
40).
 Sale in Bad Faith- 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 clothed with bad
faith.
 In case of Merger- A succession of employment
rights and obligations has occurred.
 The principle that employment contract is in personam
and binding only between the parties applies only
when the transferee is an entirely new corporation with
a distinct personality from the integrating firms and
NOT where the transferee was found to be merely an
alter ego of the different merging firms.
5. Disease
 Requisites for validity:
1. employee is suffering from a disease;
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 2. his continued employment is either: (1) prohibited
by law; (2) prejudicial to his health; or (3)
prejudicial to the health of his co-employees;
3. certification by a competent public health authority
that the disease is incurable within 6 months;
4. notice of termination;
5. separation pay of at least 1 month salary or to ½
month salary for every year of service, whichever
is greater, a fraction of at least 6 months shall be
considered 1 whole year.
CASES:
NDC-GUTHRIE PLANTATIONS vs. NLRC and EDWIN
M. CRUZ et.al G.R. No. 110740 August 9, 2001 DE
LEON
Facts:
Petitioner companies are both government-controlled
corporations, 60% of their stocks being owned by the
National Development Corporation. They were incorporated
in the early 1980's to develop, operate and maintain
integrated palm projects in Agusan del Sur. Pursuant to
their purpose clause, NGPI and NGEI hired hundreds of
farm workers to establish and maintain their respective
plantations as well as several supervisors to oversee and
superintend their workers. Kumar Das was the designated
general manager of petitioner companies at the time of the
supposed illegal dismissal. NGPI discovered that it was
sustaining tremendous losses which threatened to further
upset its precarious financial condition. In a desperate
attempt to reverse its fortune and prevent its coffers from
further depletion, NGPI terminated the services of 72 field
workers. Still, the company was confronted with an audit
report prepared by COA reflecting losses. Faced with
mounting losses, NGPI further terminated the employment
of 49 field workers, followed by another 158 farm hands.
With this as backdrop, several employees of petitioner
companies bonded together and formed the NDC-
GUTHRIE Union. Petitioner companies notified the DOLE
of their financial condition and their decision to retrench
employees numbering 120. Subsequently, petitioner
companies sent notices to 17 of their office and supervisory
employees advising them that in view of the companies'
financial problems, they would be retrenched from their
employment. Believing that their dismissal was resorted to
because of their union activities and hence, in violation of
their rights to self-organization and to collective bargaining,
the said 17 employees who were laid off filed with the
Labor Arbiter a Complaint for illegal dismissal and unfair
labor practice against petitioner companies and petitioner
Kumar Das. NLRC ruled in favor of private respondents.
Issue: WON private respondents were illegally dismissed.
Ruling:
As the retrenchment programs undertaken by petitioner
companies were purely business decisions properly within
the reasonable exercise of management prerogative, the
NLRC cannot delve into their wisdom and soundness.
Indeed, management cannot be denied recourses to
retrenchment if it can successfully prove the
existence of the following factors: (a) substantial
losses which are not merely de minimis in extent; (b)
imminence of such substantial losses; (c)
retrenchment would effectively prevent the expected
additional losses; and, (d) alleged losses and
expected losses must be proven by sufficient and
convincing evidence. In the case at bench, these
guidelines were faithfully observed by petitioner companies.
However, notwithstanding the propriety of the retrenchment
programs, petitioner companies are not excused from
complying with the required written notice to the affected
employees and DOLE at least one month before the
intended date of termination. In this case, it is undisputed
that petitioner companies informed both the retrenched
employees and DOLE of the impending retrenchment. The
requirement of law mandating the giving of notices
was intended not only to enable the employees to
look for other employment and therefore ease the
impact of the loss of their jobs and the corresponding
income, but, more importantly, to give the DOLE the
opportunity to ascertain the verity of the alleged
authorized cause of termination. Accordingly, inasmuch
as private respondents' separation from service was both
substantively and procedurally just, petitioner companies
should only be held liable for separation pay and the
proportionate 13th month pay.
Petition is granted.
EDGAR AGUSTILO vs. CA and SAN MIGUEL CORP
G.R. No. 142875 September 7, 2001 MENDOZA
Facts:
Petitioner Edgar Agustilo was hired by respondent San
Miguel Corporation (SMC) as a temporary employee at its
Mandaue Brewery in Mandaue, Cebu. On October 1, 1979,
he was made permanent and designated as a safety clerk.
He was transferred to the Engineering Department of the
SMC Mandaue Brewery as an administrative secretary.
SMC Mandaue Brewery adopted a policy that managers
would no longer be assigned secretaries and that only
director level positions may be given secretaries. As a
result, petitioner's position as administrative secretary was
abolished and he was transferred to the company's Plant
Director's Office-Quality Improvement Team. Petitioner was
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informed that 584 employees, including him, would be
retrenched due to the modernization program of the
company. Petitioner was told that his services would be
terminated and that he would be paid his benefits 30 days
after he was cleared of all accountabilities. SMC notified
the DOLE of its modernization program. Petitioner then
filed a complaint against respondents for unfair labor
practice, illegal dismissal, and payment of separation pay.
The Labor Arbiter dismissed the complaint.
Issue: WON petitioner was illegally dismissed.
Ruling:
Art. 283 of the Labor Code provides: The employer may
also terminate the employment of any employee due
to the installation of labor saving devices,
redundancy, retrenchment to prevent losses or the
closing or cessation of operation of the establishment
or undertaking unless the closing is for the purpose
of circumventing the provisions of this Title xxx.
In the case at bench, petitioner was not constructively
dismissed but his services was terminated on the ground of
the installation of labor saving devices by SMC. As stated in
the notice of termination sent to petitioner the PDO-QIT
GROUP has been abolished after a thorough study.
Consequently, petitioner’s position therein has also been
abolished. As stated by the Court of Appeals: “Private
respondent demonstrated before the Labor Arbiter by clear
and convincing evidence that the Mandaue plant where
petitioners used to work had instituted a modernization
program. The operations of which are "all automated using
microprocessor and electronic process controllers and
instrumentation systems through intelligent interfacing with
Siemens Industrial computers." All of these high-
technology innovations, at the cost of 2.6 billion pesos,
truly render the functions of the Plant Director's Office
Quality Control Unit, where private respondent was
transferred after his post as Administrative Secretary to the
plant manager was validly abolished, upon management
prerogative that the same "did not add value to the
organization."
Petition is denied.
NATIONAL FEDERATION OF LABOR vs. NLRC and
PATALON COCONUT ESTATE G.R. No. 127718
March 2, 2000 DE LEON
Facts:
Petitioners are bona fide members of the National
Federation of Labor (NFL), a legitimate labor organization
duly registered with DOLE. They were employed by private
respondents Charlie Reith and Susie Galle Reith, general
manager and owner, respectively, of the 354-hectare
Patalon Coconut Estate. Patalon Coconut Estate was
engaged in growing agricultural products and in raising
livestock. In 1988, Congress enacted the Comprehensive
Agrarian Reform Law which mandated the compulsory
acquisition of all covered agricultural lands for distribution
to qualified farmer beneficiaries under the so-called CARP.
Pursuant to R.A. No. 6657, the Patalon Coconut Estate
was awarded to the Patalon Estate Agrarian Reform
Association (PEARA), a cooperative accredited by DAR, of
which petitioners are members and co-owners. As a result
of this acquisition, private respondents shut down the
operation of the Patalon Coconut Estate and the
employment of the petitioners was severed. Petitioners did
not receive any separation pay. The cooperative took over
the estate. Petitioners filed complaints praying for their
reinstatement with full backwages on the ground that they
were illegally dismissed. The petitioners were represented
by their labor organization, the NFL. NLRC ruled that
petitioners were not illegally dismissed. Hence, this petition.
Issue: WON petitioners were illegally dismissed.
Ruling:
Under Article 283 of the Labor Code the employer may also
terminate the employment of any employee due xxx closing
or cessation of operation of the establishment or
undertaking xxx. In cases of xxx closures or cessation of
operations of establishment or undertaking not due to
serious business losses or financial reverses, the
separation pay shall be equivalent to one (1) month pay or
at least one-half (1/2) month pay for every year of service,
whichever is higher. A fraction of at least six (6) months
shall be considered as one (1) whole year.
It is clear that Article 283 of the Labor Code applies
in cases of closures of establishment and reduction
of personnel. The peculiar circumstances in the case at
bar, however, involves neither the closure of an
establishment nor a reduction of personnel as
contemplated under the aforesaid article. When the Patalon
Coconut Estate was closed because a large portion of the
estate was acquired by DAR pursuant to CARP, the
ownership of that large portion of the estate was precisely
transferred to PEARA and ultimately to the petitioners as
members thereof and as agrarian lot beneficiaries. Hence,
Article 283 of the Labor Code is not applicable to the case
at bench.
Even assuming, arguendo, that the situation in this case
were a closure of the business establishment called
Patalon Coconut Estate of private respondents, still the
petitioners/employees are not entitled to separation pay.
The closure contemplated under Article 283 of the
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Labor Code is a unilateral and voluntary act on the
part of the employer to close the business
establishment as may be gleaned from the wording of
the said legal provision that "The employer may also
terminate the employment of any employee due to xxx.”
The use of the word "may," in a statute, denotes that it is
directory in nature and generally permissive only. In other
words, Article 283 of the Labor Code does not contemplate
a situation where the closure of the business establishment
is forced upon the employer and ultimately for the benefit of
the employees.
In this case, the Patalon Coconut Estate was closed down
because a large portion of the said estate was acquired by
the DAR pursuant to the CARP. Hence, the closure of the
Patalon Coconut Estate was not effected voluntarily by
private respondents who even filed a petition to have said
estate exempted from the coverage of RA 6657.
Petition is denied.
c. Procedure of Termination (Procedural
Due Process of Dismissal)
i. Notice and Hearing
a. For Just Causes:
1. Written Notice- a written notice served on the
employee specifying the ground or grounds for
termination, and giving to said employee
reasonable opportunity within which to explain his
side;
2. Hearing- A hearing or conference during which
the employee concerned, with the assistance of
counsel if the employee so desires, is given
opportunity to respond to the charge, present his
evidence or rebut the evidence presented against
him; and
3. Written Notice of Termination- A written notice
of termination served on the employee indicating
that upon due consideration of all the
circumstances, grounds have been established to
justify his termination. In case of termination, the
foregoing notices shall be served on the
employee’s last known address.
b. For Authorized Causes:
 The requirements of due process shall be deemed
complied with upon service of a written notice to the
employee and the appropriate Regional Office of
the DOLE at least 30 days before effectivity of the
termination, specifying the ground or grounds for
termination.
NOTES:
 When termination of employment is brought by the
failure of an employee to meet the standards of the
employer in case of probationary employment, it shall
be sufficient that a written notice is served the
employee within a reasonable time from the effective
date of termination.
 When termination is brought about by the completion
of the contract or phase thereof, no prior notice is
required.
ii. Burden of Proof
 The employer has the burden of proving the lawfulness
of his employee’s dismissal. The validity of the charge
must be clearly established in a manner consistent
with due process.
iii. Preventive Suspension
 When there is an imminent threat to the lives and
properties of the employer; his family and
representatives as well as the offender’s co-workers by
the continued service of the employee, then he may be
placed under preventive suspension pending his
investigation.
 Preventive suspension should not last for more than 30
days. The employee should be made to resume his
work after 30 days.
 It can be extended provided the employee’s wages are
paid after the 30 day period.
CASES:
VH MANUFACTURING vs. NLRC and HERMINIO C.
GAMIDO G.R. No. 130957 January 19, 2000 DE
LEON
Facts:
Private respondent was employed in petitioner's, business
of manufacturing liquefied petroleum gas (LPG) cylinders.
He served as a quality control inspector with the principal
duty of inspecting LPG cylinders for any possible defects
and earning P155.00 a day. His service with the company
was abruptly interrupted on February 14, 1995, when he
was served a notice of termination of his employment. His
dismissal stemmed from an incident wherein petitioner's
company President, Alejandro Dy Juanco, allegedly caught
private respondent sleeping on the job. On that same day,
private respondent was asked through a written notice to
explain why no disciplinary action should be taken against
him for his violation of Company Rule 15-b which provides
for a penalty of separation for sleeping during working
hours. Without delay, private respondent replied in a letter
which reads: “Sir, ipagpaumanhin po ninyo kung nakapikit
ako sa aking puwesto dahil hinihintay ko po ang niliha hi
Abreu para i quality pasensiya na po kung hindi ko po
namalayan ang pagdaan ninyo dahil maingay po ang
painting booth.” Notwithstanding his foregoing reply, he was
terminated. Feeling aggrieved, private respondent initially
instituted a criminal suit for Estafa, for alleged withholding
of his salary, against the company President. Said
complaint was dismissed for improper forum. He then filed
a complaint for illegal. Labor Arbiter declared that private
84
respondent's dismissal is anchored on a valid and just
cause and the latter's contention of denial of due process
as devoid of merit. NLRC reversed the Labor Arbiter and
ordered herein petitioner to reinstate private respondent
with full backwages less one-month pay.
Issue: WON private respondent was illegally dismissed.
Ruling:
While an employer enjoys a wide latitude of
discretion in the promulgation of policies, rules and
regulations on work-related activities of the
employees, those directives, however, must always
be fair and reasonable, and the corresponding
penalties, when prescribed, must be commensurate
to the offense involved and to the degree of the
infraction . In the case at bench, petitioner's claim that
private respondent slept on the job on February 10, 1995
was not substantiated by any convincing evidence other
than the bare allegation of petitioner. The report of Ronaldo
M. Alvarez, Acting Quality Control Department Head of
petitioner corporation, on the circumstances which
ultimately served as basis for the termination of private
respondent's employment, did not confirm the alleged
violation by private respondent of the pertinent Company
Rule 15-b. The report merely stated private respondent's
denial and response to petitioner's allegation which he
reiterated in his written reply. Moreover, the dismissal
meted out on private respondent for allegedly sleeping on
the job, under the attendant circumstances, appears to be
too harsh a penalty, considering that he was being held
liable for first time, after 9 long years of unblemished
service, for an alleged offense which caused no prejudice
to the employer, aside from absence of substantiation of
the alleged offense. The authorities cited by petitioner are
also irrelevant for the reason that there is no evidence on
the depravity of conduct, willfulness of the disobedience, or
conclusiveness of guilt on the part of private respondent.
Neither was it shown that private respondent's alleged
negligence or neglect of duty, if any, was gross and
habitual. Thus, reinstatement is just and proper.
Petition is dismissed.
MARICALUM MINING CORP vs. ANTONIO
DECORION G.R. No. 158637 April 12, 2006 TINGA
Facts:
Antonio Decorion was a regular employee of Maricalum
Mining who started out as a Mill Mechanic assigned to the
Concentrator Maintenance Department and was later
promoted to Foreman I. The Concentrator Maintenance
Supervisor called a meeting which Decorion failed to attend
as he was then supervising the workers under him.
Because of his alleged insubordination for failure to attend
the meeting, he was placed under preventive suspension
on the same day. He was also not allowed to report for
work the following day. A month after, Decorion was served
a Notice of Infraction and Proposed Dismissal to enable
him to present his side. He submitted to the Personnel
Department his written reply to the notice. A grievance
meeting was held upon Decorion’s request, during which
he manifested that he failed to attend the meeting on April
11, 1996 because he was then still assigning work to his
men. He maintained that he has not committed any offense
and that his service record would show his efficiency.
Decorion filed NLRC a complaint for illegal dismissal.
Maricalum Mining insists that Decorion was not dismissed
but merely preventively suspended. Petitioner contends
that constructive dismissal occurs only after the lapse of
more than 6 months from the time an employee is placed
on a "floating status" as a result of temporary preventive
suspension from employment. Thus, it goes on to argue,
since Decorion was suspended for less than 6 months, his
suspension was legal.
Issue: WON private responded was merely suspended
from work.
Ruling:
Under the IRR of Labor Code, 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 his co-
workers. No preventive suspension shall last longer
than thirty (30) days xxx. The Rules are explicit that
preventive suspension is justified where the
employee’s continued employment poses a serious
and imminent threat to the life or property of the
employer or of the employee’s co-workers. Without
this kind of threat, preventive suspension is not
proper.
In this case, Decorion was suspended only because he
failed to attend a meeting called by his supervisor. There is
no evidence to indicate that his failure to attend the meeting
prejudiced his employer or that his presence in the
company’s premises posed a serious threat to his employer
and co-workers. The preventive suspension was clearly
unjustified. What is more, Decorion’s suspension persisted
beyond the 30-day period allowed by the IRR. A
preventive suspension which lasts beyond the
maximum period allowed by the Implementing Rules
amounts to constructive dismissal. Similarly, from the
time Decorion was placed under preventive suspension up
to the time a grievance meeting was conducted, 55 days
had already passed. Another 48 days went by before he
filed a complaint for illegal dismissal. Thus, at the time
85
Decorion filed a complaint for illegal dismissal, he had
already been suspended for a total of 103 days. Maricalum
Mining’s contention that there was as yet no illegal
dismissal at the time of the filing of the complaint is
evidently unmeritorious. Decorion’s preventive suspension
had already ripened into constructive dismissal at that time.
While actual dismissal and constructive dismissal do take
place in different fashion, the legal consequences they
generate are identical. Decorion’s employment may not
have been actually terminated in the sense that he was not
served walking papers but there is no doubt that he was
constructively dismissed as he was forced to quit because
continued employment was rendered impossible,
unreasonable or unlikely by Maricalum Mining’s act of
preventing him from reporting for work.
Petition is denied.
d. Termination by Employee
i. Resignation
 Resignation- is defined as the voluntary act of an
employee who finds himself in a situation where he
believes that personal reasons cannot be sacrificed in
favor of the exigency of the service and, that he has no
other choice but to disassociate himself from his
employment.
 Resignation is withdrawable even if the employee has
called it irrevocable. But after it is accepted or
approved by the employer, its withdrawal need the
employer’s consent.
a. Requisites for Termination without Just Cause:
1. written notice of the termination (resignation
letter);
2. service of the resignation letter to the employer at
least 1 month in advance.
NOTE: An employer upon whom no such notice was
served may hold the employee liable for damages.
b. Termination with Just Cause:
 No written notice (resignation letter) is necessary in the
following cases:
1. serious insult by the employer or his
representative on the honor and person of the
employee;
2. inhuman and unbearable treatment accorded the
employee by the employer or his representative;
3. commission of a crime or offense by the employer
or his representative against the person of the
employee or any of the immediate members of the
family; and
4. other causes analogous to any of the foregoing.
e. Constructive Dismissal
 This refers to an involuntary resignation resorted to
when continued employment becomes impossible,
unreasonable or unlikely; when there is a demotion in
rank or a diminution in pay; or when a clear
discrimination, insensibility or disdain by an employer
becomes unbearable to an employee.
 An employee is likewise deemed constructively
dismissed where his status is changed from regular to
casual.
 An unwarranted transfer or demotion of an employee,
or other unjustified action prejudicial to the employee
may give rise to a complaint for constructive dismissal.
f. When Employment not Deemed
Terminated (Art. 286)
 The bona fide suspension of the operation of a
business or undertaking for a period exceeding 6
months, or the fulfillment by the employee of a military
or civic duty shall not terminate employment. In all
such cases, the employer shall reinstate the employee
to his former position without loss of seniority rights if
he indicates his desire to resume his work not later
than 1 month from the resumption of operations of his
employer or from his relief from the military or civic
duty.
 Article 283 speaks of a permanent retrenchment as
opposed to a temporary lay-off. There is no specific
provision of law which treats of a temporary
retrenchment or lay-off. To remedy this situation or fill
the hiatus, Article 286 may be applied but only by
analogy to set a specific period that employees may
remain temporarily laid-off or in floating status.
 6 months is the period set by law that the operation of
a business of the employees concerned. The
temporary lay-off wherein the employees likewise
cease to work should also not last long than 6 months.
After 6 months, the employees should either be
recalled to work or permanently retrenched following
the requirements of the law.
g. Consequence of Termination
i. Separation Pay
 General Rule- If there is valid cause to terminate an
employee, no separation pay need by paid.
 Exceptions:
1. Article 283, Labor Code
 Installation of labor saving device and
redundancy- 1 month pay or ½ moth pay for
every year of service, whichever is higher
 Retrenchment to prevent losses and closure or
cessation of operation or establishment or
undertaking not due to serious business losses
or financial reverses- 1 month pay or ½ month
pay for every year of service, whichever is
higher.
 If due to severe financial losses, no separation
pay.
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 2. Article 284, Labor Code
 Disease- 1 month salary or ½ month salary for
every year of service, whichever is higher. A
fraction of at least 6 months shall be considered
1 whole year.
3. Discerning Compassion Doctrine
 Separation pay shall be allowed as a measure
of social justice for instances where the
employee is validly dismissed for causes other
that serious misconduct or those reflecting on
his moral character (i.e. Employee was found to
have demanded and received money in
consideration for promise to facilitate approval
of telephone line application).
4. Antipathy and Antagonism Reinstatement is
no longer possible
 Strained relations in order that is may justify
award of separation pay in lieu of reinstatement
with backwages, should be of such, that they
are so compelling and so serious in character,
that the continued employment has become
inconsistent with peace and tranquility which is
an ideal atmosphere in every workplace.
5. Even if an employee resigns, he shall be
given a separation pay if there is a company
policy to that effect.
NOTE: Financial assistance may be allowed as a measure
of social justice and exceptional circumstances, and as an
equitable concession.
ii. Computation of Separation Pay
 Includes not just the basic salary but also the regular
allowances the employee has been receiving.
However, commissions are not included in such base
figure.
 Effect- Receipt- An employee who received his
separation pay is not barred from contesting the
legality of their dismissal. The acceptance of those
would not amount to estoppel.
iii. Backwages
 Backwages- the relief given to an employee to
compensate him for lost earnings during the period of
his dismissal.
 An employee who is unjustly dismissed from work shall
be entitled to full backwages, inclusive of allowances,
and to his other benefits or their monetary equivalents
computed from the time his compensation was
withheld up to the time of his actual reinstatement.
 Backwages in general are granted on grounds of
equity which a worker has lost due to his illegal
dismissal. As a general rule, an employee is entitled to
backwages only where his dismissal is due to the
unlawful act of the employer to the latter’s bad faith.
 While generally, an order of reinstatement carries with
it an award of backwages, the court may not only
mitigate, but absolve the employer from liability for
backwages where good faith is evident.
 Separation Pay vs. Backwages- Separation pay is
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.
Backwages, on the other hand, represent
compensation that should be earned but not controlled
because of the unjust dismissal.
 The basis of computing the two are different, the
separation pay is being computed usually on the basis
of the length of the employee’s service and the
backwages are computed from the actual period when
he was unlawfully prevented from working.
 Inclusions to Backwages:
1. transportation and emergency allowance;
2. vacation or service incentive leave and sick leave;
3. 13th month pay.
NOTE: Facilities such as uniforms, shoes, helmets and
ponchos should not be included in the computation of
backwages because said item are given free to be used
only during official tour of duty and not for private or
personal use.
 Circumstances that prevent award of backwages:
1. death of the employee;
2. physical and mental incapacity
3. business reverses;
4. closure of business;
5. reinstatement of dismissed employee confinement
in jail.
iv. Reinstatement
 Reinstatement- is a restoration to a state which on e
has been removed or separated. It is the turn to the
position from which he was removed and assuming
again the functions of the office already held.
Reinstatement presupposes that the previous position
from which one had been removed still exists, or that
there is an unfilled position more or less of a similar
nature as the one previously.
 Forms of Reinstatement:
1. Actual or Physical Reinstatement- the
employee shall be admitted back to work.
2. Payroll Reinstatement- the employee is merely
reinstated in the payroll.
Q. May a court order the reinstatement of a dismissed
employee even if the prayer of the complaint did not include
such relief?
A. Yes, so long as there is a finding that the employee was
illegally dismissed, the court can order the reinstatement of
an employee even if the complaint does not include a
prayer for reinstatement, unless, of course, the employee
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has waived his right to reinstatement. By law, an employee
who is unjustly dismissed is entitled to reinstatement,
among others. The mere fact that the complaint did not
pray for reinstatement will not prejudice the employee,
because technicalities of law and procedures are frowned
upon in labor proceedings (General Baptist Bible College
vs. NLRC, 219 S 549).
Q. What happens if there is an order of reinstatement but
the position is no longer available?
A. The employee should be given a substantially
equivalent position. If no substantially equivalent position is
available, reinstatement should not e ordered because that
would in effect compel the employer to do the impossible.
In such a situation, the employee should merely be given
separation pay consisting of one month salary for every
year of service.
 Circumstances when company may not reinstate
despite order of reinstatement:
1. Transfer of Business Ownership- There is no
law requiring a purchasing corporation to absorb
the employees of the selling corporation. A fortiori,
reinstatement of unjustly dismissed employees
CANNOT be enforced against the new owner
UNLESS there is an express agreement on the
assumption of liabilities by the purchasing
corporation;
2. Reinstatement is rendered impossible due to
abolition of the position;
3. When the business has closed down;
4. Physical incapacity of the employee; and
5. Doctrine of Strained Relations- When the
employee can no longer trust the employee and
vice-versa, reinstatement could not effectively
serve as a remedy. This doctrine only applies to
positions which require trust and confidence.
Under the circumstances where the
employment relationship has become so strained
to preclude a harmonious working relationship and
that all hopes at reconciliation are nil after
reinstatement, it would be more beneficial to
accord the employee backwages and separation
pay.
v. Damages
 Moral damages are recoverable in dismissal cases
only where the dismissal was attended by bad faith or
fraud or constituted an act oppressive to labor, or was
done in a manner contrary to morals, good customs, or
public policy.
 Exemplary damages in dismissal cases may be
awarded only if the dismissal was effected in wanton,
oppressive or malevolent manner.
vi. Quitclaims
 Generally, quitclaims are commonly frowned upon for
being contrary to public policy, there are, however,
legitimate waivers that represent a voluntary and
reasonable settlement of a worker’s claim which
should be respected by the courts as the law between
the parties.
 Where the person making the waiver has done so
voluntarily, with a full understanding thereof, and the
consideration for the quitclaim is credible and
reasonable, the transaction must be recognized as
being a valid and binding undertaking.
 Not all quitclaims are per se invalid or against policy,
except: (1) where there is clear proof that the waiver
was wangled from an unsuspecting or gullible person,
or (2) where the terms of settlement are
unconscionable on their face; in these cases, the law
will step in to annul the questionable transaction.
 Requisites for Recovery of Wages, Simple Money
Claims and Other Benefits:
1. The aggregate money claim of each employee or
house helper does not exceed P5K.
2. The claim is presented by an employee or person
employed in domestic or household service or
househelper.
3. The claim arises from ER-EER
4. The claimant does not seek reinstatement.
NOTE:
 In the absence of any of the requisites, it is the Labor
Arbiter who shall have exclusive jurisdiction over claims
arising from employer-employee relations, except claims
for employees’ compensation, SSS, Philihealth and
Maternity benefits. The proceedings before the Regional
Office shall be summary and non-litigous in nature.
 The RD or any of his duly authorized hearing officer is
empowered through summary proceeding and after due
notice, to hear and decide cases involving recovery of
wages and other monetary claims and benefits, including
legal interests.
Article 292. Institution of Money Claims- Money claims
specified in Article 291 shall be filed before the appropriate
entity independently of the criminal action that may be
instituted in the proper courts.
Pending the final determination of the merits of
money claims filed with the appropriate entity, no civil
action arising from the same cause of action shall be filed
with any court. This provision shall not apply to employee
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compensation cases which shall be processed and
determined strictly in accordance with the pertinent
provisions of the Labor Code.
 Worker Preference in case of Bankruptcy (Art.
110):
 Principle- Workers shall enjoy firs preference as
regards their unpaid wages and other monetary claims,
ay provision of law to the contrary notwithstanding.
 Just establishes a preference and not a lien;
 Applicable only to ordinary preferred credit, hence,
must yield to special preferred credits e.g. secure
creditors.
 This Article did not sweep away the overriding
preference accorded under the scheme of the Civil
Code to tax claims of the government.
 Conditions sine qua non to the operation of the
preference accorded to workers under Art. 110:
1. formal declaration of insolvency or bankruptcy
2. general judicial liquidation proceedings of the
employer’s business
3. filing of claims by workers
 The worker preference is not applicable in case the
employer is under rehabilitation.
 Art. 110 covers not only unpaid wages but also all
other monetary claims.
 Attorney’s Fees (Art. 111):
a. In cases of unlawful withholding of wages, the
culpable party may be assessed attorney’s fees
equivalent to 10% of the amount of wages
recovered.
b. It shall be unlawful for any person to demand or
accept, in any judicial or administrative
proceedings for the recovery of the wages,
attorney’s fees which exceed 10% of the amount
of wages recovered.
 Attorney’s fees presupposes attorney-client
relationship.
 Any agreement on such other provisions of the CBA
made within 6 months after the date of expiry of the
CBA is subject to automatic retroaction to the day
immediately following such date of expiry.
CASES:
MOBILE PROTECTIVE & DETECTIVE AGENCY vs.
ALBERTO OMPAD G.R. No. 159195 May 9, 2005
PUNO
Facts:
Respondent alleged that he was employed by the Agency
as security guard in January 1990 and was, since then,
detailed to its various clients. He claimed having worked 12
hours a day, even during rest days and holidays, without
receiving overtime pay, rest day pay, holiday pay, service
incentive leave pay and 13th month pay. Sometime in June
1997, respondent inquired from the project manager of the
Agency's client, Manila Southwoods, if the latter had
already paid their backwages to the Agency. When
petitioners found out about his query, respondent was
allegedly relieved from his post and never given another
assignment. Petitioners allegedly promised that they would
pay respondent his money claims provided he signs a
resignation letter. He was also told to copy in his
handwriting the same resignation letter. As he needed the
money, he complied. Thereafter, petitioners would give him
only the meager amount of P5,000.00, which he rejected.
Respondent filed a complaint for illegal dismissal and
prayed for reinstatement with backwages or backwages
with separation pay and money claims. Petitioners denied
respondent's allegations and claimed that respondent was
not dismissed but resigned as evidenced by another
resignation letter signed by respondent.
Issue: WON respondent has resigned.
Ruling:
As a rule quitclaims, waivers or releases are looked
upon with disfavor and are commonly frowned upon
as contrary to public policy and ineffective to bar
claims for the measure of a worker's legal rights. In
this case, the Supreme Court sustained the findings of CA
and NLRC that the two resignation letters are not
resignation letters but a bare reading of their content would
reveal that they are in the nature of a quitclaim, waiver or
release. They were written in a language obviously not of
respondent's and "lopsidedly worded" to free the Agency
from liabilities. As held by CA: "When the first resignation
letter was a pro forma one, entirely drafted by the petitioner
Agency for the private respondent to merely affix his
signature, and the second one entirely copied by the
private respondent with his own hand from the first
resignation letter, voluntariness is not attendant." Moreover,
it is a rule that resignation is difficult to reconcile with
the filing of a complaint for illegal dismissal. Hence,
the finding that respondent's resignation was involuntary is
further strengthened by the fact that respondent filed the
instant case the day after the alleged tender of resignation.
Petition is dismissed.
LITONJUA GROUP OF COMPANIES vs. TERESITA
VIGAN G.R. No. 143723 June 28, 2001 GONZAGA
Facts:
Respondent Teresita Vigan alleged that she was hired by
the Litonjua Group of Companies as telex operator. Later,
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she was assigned as accounting and payroll clerk under
the supervision of Danilo Litonjua. She had been
performing well until 1995, when Danilo Litonjua who was
already naturally a very ill-tempered, ill-mouthed and violent
employer, became more so due to business problems. In
fact, a complaint letter was sent by the Litonjua Employees
to the father and his junior regarding the boorishness of
their kin Danilo Litonjua but apparently the management
just glossed over this. Danilo Litonjua became particularly
angry with Vigan and threw a stapler at her when she
refused to give him money upon the instructions of Eddie
Litonjua. From then on, Danilo Litonjua had been rabid
towards her and even threatened to hit her for some petty
matters. Danilo Litonjua would order the security guards to
forcibly eject her or prevent her entry in the office premises
whenever he was angry. The incidents prompted Vigan to
write Danilo Litonjua letters asking why she was treated so
and what was her fault. She suspected that Danilo Litonjua
wanted her out for he would not let her inside the office
such that even while abroad he would order the guards by
phone to bar her. She pleaded for forgiveness or at least for
explanation but it fell on deaf ears. Later, Danilo Litonjua
changed tack and charged that Vigan had been hysterical,
emotional and created scenes at the office. He even
required her to secure psychiatric assistance, but despite
proof that she was not suffering from psychosis or organic
brain syndrome as certified to by a Psychiatrist of Danilo
Litonjua’s choice, still she was denied by the guards entry
to her work upon instructions again of Danilo Litonjua. Left
with no alternative, Vigan filed this case for illegal
dismissal. Labor Arbiter rendered his decision finding Vigan
diseased and unfit for work under Article 284 of the Labor
Code and awarded the corresponding separation pay. CA
ruled that respondent was illegally dismissed.
Issue: WON respondent is entitled to damages and
attorney’s fees.
Ruling:
The Supreme Court sustained the findings of CA that
respondent Vigan did not abandon her job but was illegally
dismissed. In Vigan’s letter addressed to petitioner Danilo
Litonjua, respondent Vigan had complained of petitioner
Danilo’s inhumane treatment in barring her from entering
her workplace. Notwithstanding the fact the she was
refused entrance to her workplace, respondent Vigan, to
show her earnest desire to report for work, would sneak her
way into the premises and punched her time card but she
could not resume work as the guards in the company gate
would prevent her per petitioner Danilo Litonjua’s
instructions. Respondent’s actuations militate against
petitioners’ claim that she did not heed the notices to return
to work and abandoned her job. She had been going to her
workplace to report for work but was prevented from
resuming her work upon the instructions of petitioner Danilo
Litonjua. It would be the height of injustice to allow an
employee to claim as a ground for abandonment a situation
which he himself had brought about.
Since respondent Vigan was illegally dismissed from her
employment, she is entitled to: (1) either reinstatement, if
viable, or separation pay if reinstatement is no longer
viable, and (2) backwages. The award of moral and
exemplary damages to the respondent is also proper. As a
rule, moral damages are recoverable only where the
dismissal of the employee was attended by bad faith
or fraud or constituted an act oppressive to labor, or
was done in a manner contrary to morals, good
customs or public policy. In this case, bad faith attended
respondent’s dismissal from her employment. Bad faith
involves a state of mind dominated by ill will or motive. It
implies a conscious and intentional design to do a wrongful
act for a dishonest purpose or some moral obliquity.
Petitioner Danilo Litonjua showed ill will in treating
respondent Vigan in a very unfair and cruel manner which
made her suffer anxieties by reason of such job difficulties.
Respondent Vigan is also entitled to exemplary damages
as her dismissal was effected in an oppressive and
malevolent manner. The award of attorney’s fees is likewise
sustained. It is settled that in actions for recovery of
wages or where an employee was forced to litigate
and incur expenses to protect his rights and interest,
he is entitled to an award of attorney’s fees.
Petition is denied.
OSS SECURITY & ALLIED SERVICES vs. NLRC and
EDEN LEGASPI G.R. No. 112752 Feb. 9, 2000 DE
LEON
Facts:
Private respondent worked as a lady security guard of OSS
Security Agency from June 16, 1986. Petitioner of acquired
the assets and properties of OSS Security Agency and
absorbed some of its personnel, including private
respondent. As a lady security guard she was assigned to
render security services to the different clients of petitioner.
In a memorandum addressed to petitioner's company
President, the Building Administrator of VM Condominium II
complied of the laxity of the guards in enforcing security
measures. In compliance therewith, petitioner issued Duty
Detail Order relieving private respondent and another lady
security guard of their assignment at VM Condominium II
for reassignment to other units or detachments where
vacancy exists. Private respondent was detailed to the
Minami International Corporation from to replace lady
security guard Susan Tan who filed her vacation leave for
August 1991. However, it appears that private respondent
did not report for duty at her new assignment. Private
respondent filed her complaint for under payment and
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constructive dismissal. Labor Arbiter declared that private
respondent's transfer was not sanctioned by law, hence
illegal and tantamount to unjust dismissal. The Labor
Arbiter ordered for respondent’s reinstatement and
payment of backwagedHence, this petition.
Issue: WON respondent is entitled to reinstatement and
payment of backwages.
Ruling:
In the employment of personnel, the employer can
prescribe the hiring, work assignments, working methods,
time, place and manner of work, tools to be used,
processes to be followed, supervision of workers, working
regulations, transfer of employees, work supervision, lay-off
of workers and the discipline, dismissal and recall of work,
subject only to limitations imposed by laws. These are
called management prerogatives in which the free will of
management to conduct its own affairs to achieve its
purpose, takes from. Thus, the transfer of an employee
ordinarily lies within the ambit of management
prerogatives. However, a transfer amounts to
constructive dismissal when the transfer is
unreasonable, inconvenient, or prejudicial to the
employee, and it involves a demotion in rank or
diminution of salaries, benefits and other privileges.
In the case at bench, nowhere in the record does it show
that that the transfer of private respondent was anything but
done in good faith, without grave abuse of discretion, and in
the best interest of the business enterprise. First. No malice
should be imputed from the fact that private respondent
was relieved of her assignment and, a day later, assigned a
new post. When a security guard is placed "off detail" or on
"floating" status, in security agency parlance, it means
"waiting to be posted. Private respondent has not even
been "off detail" for a week when she filed her complaint.
Second. Evidence is wanting to support the Labor Arbiter's
conclusion that petitioner discriminated against private
respondent when it ordered her relief and transfer of
assignment. Petitioner proved that such transfer was
effected in good faith to comply with the reasonable request
of its client, Madrigal Condominium for a more disciplined
service of the security guards on detail. The renewal of the
contract of petitioner with MCCI hinged on the action taken
by the former on the latter's request. Third. It appears that
private respondent declined the post assigned to her
inasmuch as she considered it "a booby trap of crippling
and dislocating private respondent from her employment".
Private respondent lived in Sta. Mesa, Manila, and her new
assigned post is in Taytay, Rizal, as against her previous
post at VM Condominium II in Makati. Her new assigned
post would entail changes in her routine, something that
she was not agreeable with. But the mere fact that it would
be inconvenient for her, as she has been assigned to VM
Condominium II for a number of years, does not by itself
make her transfer illegal. Thus, there was no basis to
order reinstatement and back wages inasmuch as
private respondent was not constructively dismissed.
Neither is private respondent entitled to the award of
money claims for underpayment, absent evidence to
substantiate the same.
Petition is granted.
CANDIDO ALFARO vs. CA and STAR PAPER CORP
G.R. No. 140812 August 28, 2001 PANGANIBAN
Facts:
Petitioner Candido Alfaro was employed as a
helper/operator of private respondent Star Paper Corp.
since November 8, 1990. Alfaro took a sick leave. When he
reported back to work, he was surprised to find out that
another worker was recruited to take his place, and instead,
he was transferred to the wrapping section where he was
required to work with overtime up to 9:30 PM, from his
regular working hours of from 7:00 a.m., to 4:00 p.m.,
despite the fact that he had just recovered from illness. He
was given a new assignment where the work was even
more difficult and when he complained of what he felt was
rude treatment or sort of punishment since he was being
exposed to hard labor notwithstanding his predicament of
just coming from sickness, petitioner was told to look for
another job because he was dismissed, when petitioner
was seeking his 13th month pay and 15 days SIL, he was
ignored when he refused to sign documents which
indicated that he was renouncing claims against private
respondent. Petitioner sought private respondent to pay
him, but he was told to come next year. When petitioner
came back, private respondent dangled to him a check
worth P3,000.00 which would be released to him, only if he
signed the documents, being forced upon him to sign on
the day he was dismissed. Desperate for the money to
support his subsistence, and against his will, petitioner was
constrained to sign the said documents which contained no
amount of money released to him. The actual sum of
money received by petitioner from private respondent
amounted to P3,000.00 in the form of check, while his
claims for 15 days sick leave pay was secured by him from
SSS. The Labor Arbiter found that petitioner was not
illegally dismissed bur resigned from employment. Hence,
this petition.
Issue: WON petitioner is entitled to separation pay.
Ruling:
Generally, an employee who voluntarily resigns from
employment is not entitled to separation pay.
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Voluntary resignation is defined as the act of an
employee, who finds himself in a situation in which
he believes that personal reasons cannot be
sacrificed in favor of the exigency of the service;
thus, he has no other choice but to disassociate
himself from his employment. In this case, The factual
findings of the labor arbiter and the NLRC, as affirmed by
the CA, reveal that petitioner resigned from his work due to
his illness, with the understanding that private respondent
would give him separation pay. He was already suffering
from a lingering illness at the time he tendered his
resignation. His continued employment would have been
detrimental not only to his health, but also to his
performance as an employee of private respondent. Hence,
the termination of the employment relations of petitioner
with private respondent was ultimately, if not outrightly
inevitable. Petitioner negotiated for a resignation with
separation pay as the manner in which his employment
relations with private respondent would end, because
resignation with separation pay was the best option for him
under the circumstances. Rightly so, this was the mode
adopted and agreed upon by the parties, as evidenced by
the Release and Quitclaim petitioner executed in
connection with his resignation.Clearly then, the claim of
petitioner that he was illegally dismissed cannot be
sustained. It should be noted that dismissal and
voluntary resignation are adversely opposed modes
of terminating employment relations, in that the
presence of one precludes that of the other.
Not all waivers and quitclaims are invalid as against
public policy. If the agreement was voluntarily
entered into and represented a reasonable
settlement, it is binding on the parties and may not
later be disowned, simply because of a change of
mind. Unfortunately, it private respondent did not keep its
promise to grant the separation pay, prompting petitioner to
institute the present action for illegal dismissal. Thus, the
Supreme Court gave due course to this petition.
Petition is denied.
GLOBE TELECOM vs. JOAN FLORENDO-FLORES
G.R. No. 150092 September 27, 2002 BELLOSILLO
Facts:
Petitioner GLOBE TELECOM is a domestic corporation
while respondent Joan Florendo-Flores was the Senior
Account Manager for Northern Luzon. Joan Florendo-
Flores filed an amended complaint for constructive
dismissal against GLOBE and alleged that Cacholo M.
Santos never accomplished and submitted her
performance evaluation report thereby depriving her of
salary increases, bonuses and other incentives which other
employees of the same rank had been receiving. GLOBE
claimed that after receiving her salary in the second week
of May 1998 Florendo-Flores went AWOL without signifying
through letter or any other means that she was resigning
from her position; that notwithstanding her absence and the
filing of her case, respondent’s employment was not
terminated as shown by the fact that salary was still
provided her until July 1998 to be released upon her
presentation of the attendance-record sheet indicating that
she already returned and reported for work; that she
continued to have the use a of company car and company
"handyphone" unit; that she was replaced only when her
absence became indefinite and intolerable as the marketing
operations in Northern Luzon began to suffer. Labor Arbiter
ruled that respondent was illegally dismissed. NLRC ruled
that petitioners did not dismiss respondent but that the
latter actually abandoned her employment because of a
disagreement with her immediate superior which she failed
to bring to the attention of GLOBE and its officers.
However, NLRC ordered GLOBE to pay backwages to
respondent.
Issue: WON respondent is entitled to backwages.
Ruling:
Constructive dismissal exists where there is
cessation of work because continued employment is
rendered impossible, unreasonable or unlikely, as an
offer involving a demotion in rank and a diminution in
pay. In constructive dismissal, the employer has the
burden of proving that the transfer and demotion of
an employee are for just and valid grounds such as
genuine business necessity. The employer must be
able to show that the transfer is not unreasonable,
inconvenient, or prejudicial to the employee. If the
employer cannot overcome this burden of proof, the
employee's demotion shall be tantamount to unlawful
constructive dismissal.
All these are discernible in respondent's situation. She was
singularly edged out of employment by the unbearable or
undesirable treatment she received from her immediate
superior Cacholo M. Santos who discriminated against her
without reason - not preparing and submitting her
performance evaluation report that would have been the
basis for her increased salary; not forwarding her project
proposals to management that would have been the source
of commendation; diminishing her supervisor stature by
assigning her to house-to-house sales or direct sales; and
withholding from her the enjoyment of bonuses, allowances
and other similar benefits that were necessary for her
efficient sales performance. Although respondent
continued to have the rank of a supervisor, her functions
were reduced to a mere house-to-house sales agent or
direct sales agent. This was tantamount to a demotion.
She might not have suffered any diminution in her basic
92
salary but petitioners did not dispute her allegation that she
was deprived of all benefits due to another of her rank and
position, benefits which she apparently used to receive. For
this act of illegal dismissal, she deserves no less than full
back wages starting from the time she had been illegally
dismissed until her actual reinstatement to her former
position without loss of seniority rights and other benefits -
earned, accrued and demandable. She shall continue to
enjoy her benefits, privileges and incentives including the
use of the company car and "handyphone." It should be
noted that the award of back wages in the instant
case is justified upon the finding of illegal dismissal,
and not under the principle of " act of grace " for past
services rendered.
Decision appealed from is modified.
PATERNO S. MENDOZA vs. SAN MIGUEL FOODS
G.R. No. 158684. May 16, 2005 CALLEJO
Facts:
Paterno S. Mendoza, Jr., was hired by San Miguel
Corporation (SMC) as a marketing coordinator in its
Trading Department. He was transferred to San Miguel
Foods, Inc. (SMFI), a subsidiary of SMC, and was assigned
to Instafood Corporation of the Philippines (Instafood) as a
Purchasing Officer. He, however, remained an employee of
SMFI. In the course of its operations, Instafood suffered
serious business losses for successive years and was
closed. SMFI also suffered serious business losses; it had
to implement a redundancy program and give benefits to
affected employees. One of those whose employment was
terminated on account of redundancy was Mendoza. He
accepted benefits equivalent to two months salary for every
year of service. SMFI, sent Mendoza a letter of termination
informing him that the severance of his employment was to
take effect at the close of business hours of November 30,
1996, and that his separation benefits would be released
30 days thereafter. Pursuant to company policy, Mendoza
was allowed to go on a one-month terminal leave before
the date of his severance from employment. In this case,
petitioner challenges that deed of release and quitclaim that
he signed and insists that he was merely forced to execute
and sign it, and that he received only half of what he was
entitled to receive; worse, he spent as much as
P300,000.00 for processing the release of the subject
shipment. The petitioner invokes the rule that quitclaims
are disfavored and do not bar recovery of the full measure
of a worker’s rights and benefits.
Issue: WON the quitclaim in question is valid.
Ruling:
Generally, quitclaims are commonly frowned upon for
being contrary to public policy, there are, however,
legitimate waivers that represent a voluntary and
reasonable settlement of a worker’s claim which
should be respected by the courts as the law
between the parties. Where the person making the
waiver has done so voluntarily, with a full
understanding thereof, and the consideration for the
quitclaim is credible and reasonable, the transaction
must be recognized as being a valid and binding
undertaking. Not all quitclaims are per se invalid or
against policy, except (1) where there is clear proof
that the waiver was wangled from an unsuspecting or
gullible person, or (2) where the terms of settlement
are unconscionable on their face; in these cases, the
law will step in to annul the questionable transaction.
In the case at bench, the petitioner is not an unsuspecting
or a gullible person. As adverted to by the respondents, the
petitioner is a graduate of the University of the Philippines
no less, with a Bachelor of Arts degree in Economics.
Surely, he knew the nature and the legal effect of the said
deed. Neither is the amount involved in the quitclaim
unconscionable. Under Article 283 of the Labor Code, in
case of termination of employment by virtue of redundancy,
the worker affected thereby shall be entitled to a separation
pay equivalent to at least one (1) month pay or to at least
one (1) month pay for every year of service, whichever is
higher. In this case, the amount involved in the quitclaim is
a rather hefty sum, a gross amount of P1,102,386.25,
equivalent to two months’ salary for every year of service.
Even assuming that the petitioner, indeed, spent half of
what he received in facilitating the release of the shipment,
the remainder thereof is still compliant with the provision of
the aforesaid Article 283, as it would still be equivalent to
about one month of his salary for every year of service.
Petition is denied.
SPS. AGABON vs. NLRC and RIVIERA HOME
IMPROVEMENTS G.R. No. 158693 November 17,
2004 YNARES-SANTIAGO
Facts:
Private respondent Riviera Home Improvements, Inc. is
engaged in the business of selling and installing
ornamental and construction materials. It employed
petitioners Virgilio Agabon and Jenny Agabon as gypsum
board and cornice installers on January 2, 1992 until
February 23, 1999 when they were dismissed for
abandonment of work. Petitioners then filed a complaint for
illegal dismissal and payment of money claims and the
Labor Arbiter rendered a decision declaring the dismissals
illegal and ordered private respondent to pay the monetary
claims.NLRC reversed the Labor Arbiter because it found
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that the petitioners had abandoned their work, and were not
entitled to backwages and separation pay. The other
money claims awarded by the Labor Arbiter were also
denied for lack of evidence. Petitioners assert that they
were dismissed because the private respondent refused to
give them assignments unless they agreed to work on a
"pakyaw" basis when they reported for duty. They did not
agree on this arrangement because it would mean losing
benefits as SSS members. Petitioners also claim that
private respondent did not comply with the twin
requirements of notice and hearing. Private respondent, on
the other hand, maintained that petitioners were not
dismissed but had abandoned their work. In fact, private
respondent sent two letters to the last known addresses of
the petitioners advising them to report for work. Private
respondent's manager even talked to petitioner Virgilio
Agabon by telephone to tell him about the new assignment
at Pacific Plaza Towers. However, petitioners did not report
for work because they had subcontracted to perform
installation work for another company. Petitioners also
demanded for an increase in their wage to P280.00 per
day. When this was not granted, petitioners stopped
reporting for work and filed the illegal dismissal case.
Issue: WON petitioners were illegally dismissed.
Ruling:
To dismiss an employee, the law requires not only the
existence of a just and valid cause but also enjoins the
employer to give the employee the opportunity to be heard
and to defend himself. Article 282 of the Labor Code
enumerates the just causes for termination by the
employer: xxx (b) gross and habitual neglect by the
employee of his duties; xxx. Abandonment is the deliberate
and unjustified refusal of an employee to resume his
employment. It is a form of neglect of duty, hence, a just
cause for termination of employment by the employer. For
a valid finding of abandonment, these two factors should
be present: (1) the failure to report for work or absence
without valid or justifiable reason; and (2) a clear intention
to sever employer-employee relationship, with the second
as the more determinative factor which is manifested by
overt acts from which it may be deduced that the
employees has no more intention to work. The intent to
discontinue the employment must be shown by clear proof
that it was deliberate and unjustified.
In the case at bench, petitioners were frequently absent
having subcontracted for an installation work for another
company. Subcontracting for another company clearly
showed the intention to sever the employer-employee
relationship with private respondent. This was not the first
time they did this. In January 1996, they did not report for
work because they were working for another company.
Private respondent at that time warned petitioners that they
would be dismissed if this happened again. Petitioners
disregarded the warning and exhibited a clear intention to
sever their employer-employee relationship. The record of
an employee is a relevant consideration in determining the
penalty that should be meted out to him. In a decided
case, it has been held that an employee who deliberately
absented from work without leave or permission from his
employer, for the purpose of looking for a job elsewhere, is
considered to have abandoned his job. We should apply
that rule with more reason here where petitioners were
absent because they were already working in another
company.
The law imposes many obligations on the employer such
as providing just compensation to workers, observance of
the procedural requirements of notice and hearing in the
termination of employment.
Issue: WON private respondent is liable to indemnify
petitioner.
Ruling:
Dismissals based on just causes contemplate acts or
omissions attributable to the employee while
dismissals based on authorized causes involve
grounds under the Labor Code which allow the
employer to terminate employees. A termination for
an authorized cause requires payment of separation
pay. When the termination of employment is declared
illegal, reinstatement and full backwages are
mandated under Article 279. If reinstatement is no
longer possible where the dismissal was unjust,
separation pay may be granted.
Procedurally, (1) if the dismissal is based on a just
cause under Article 282, the employer must give the
employee two written notices and a hearing or
opportunity to be heard if requested by the employee
before terminating the employment: a notice
specifying the grounds for which dismissal is sought
a hearing or an opportunity to be heard and after
hearing or opportunity to be heard, a notice of the
decision to dismiss; and (2) if the dismissal is based
on authorized causes under Articles 283 and 284, the
employer must give the employee and DOLE written
notices 30 days prior to the effectivity of his
separation.
From the foregoing rules four possible situations may be
derived: (1) the dismissal is for a just cause under Article
282 of the Labor Code, for an authorized cause under
Article 283, or for health reasons under Article 284, and
due process was observed; (2) the dismissal is without just
or authorized cause but due process was observed; (3) the
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dismissal is without just or authorized cause and there was
no due process; and (4) the dismissal is for just or
authorized cause but due process was not observed.
In the first situation, the dismissal is undoubtedly valid and
the employer will not suffer any liability. In the second and
third situations where the dismissals are illegal, Article 279
mandates that the employee is entitled to
reinstatement without loss of seniority rights and
other privileges and full backwages, inclusive of
allowances, and other benefits or their monetary
equivalent computed from the time the compensation
was not paid up to the time of actual reinstatement.
In the fourth situation, the dismissal should be upheld.
While the procedural infirmity cannot be cured, it
should not invalidate the dismissal. However, the
employer should be held liable for non-compliance
with the procedural requirements of due process.
The present case squarely falls under the fourth situation.
The dismissal should be upheld because it was established
that the petitioners abandoned their jobs to work for
another company. Private respondent, however, did not
follow the notice requirements and instead argued that
sending notices to the last known addresses would have
been useless because they did not reside there anymore.
Unfortunately for the private respondent, this is not a valid
excuse because the law mandates the twin notice
requirements to the employee's last known address. Thus,
it should be held liable for non-compliance with the
procedural requirements of due process.
In cases involving dismissals for cause but without
observance of the twin requirements of notice and
hearing, t the dismissal was for just cause and
should be upheld but imposing sanctions on the
employer. Where the dismissal is for a just cause, as
in the instant case, the lack of statutory due process
should not nullify the dismissal, or render it illegal, or
ineffectual. However, the employer should indemnify
the employee for the violation of his statutory rights.
The sanction should be in the nature of
indemnification or penalty and should depend on the
facts of each case, taking into special consideration
the gravity of the due process violation of the
employer.
Petition is denied.
JAKA FOOD PROCESSING CORP vs . DARWIN
PACOT G.R. No. 151378. March 28, 2005 GARCIA
Facts:
Respondents Darwin Pacot et.al were earlier hired by
petitioner JAKA Foods Processing Corporation (JAKA) until
the latter terminated their employment because the
corporation was “in dire financial straits”. It is not disputed,
however, that the termination was effected without JAKA
complying with the requirement under Article 283 of the
Labor Code regarding the service of a written notice upon
the employees and the DOLE at least one (1) month before
the intended date of termination. In time, respondents filed
complaints for illegal dismissal, underpayment of wages
and nonpayment of service incentive leave and 13th month
pay against JAKA. Labor Arbiter rendered a decision
declaring the termination illegal and ordering JAKA to
reinstate respondents with full backwages, and separation
pay if reinstatement is not possible. NLRC modified the
Labor Arbiter and set aside the awards of backwages,
service incentive leave pay but ordered JAKA to indemnify
petitioners for its failure to observe due process in effecting
the retrenchment.
Issue: WON petitioner is liable to indemnify private
respondents.
Ruling:
In a decided case, it has been held that where the
dismissal is for a just cause, the lack of statutory due
process should not nullify the dismissal, or render it illegal,
or ineffectual. However, the employer should indemnify the
employee for the violation of his statutory rights. The
violation of petitioners’ right to statutory due process by the
private respondent warrants the payment of indemnity in
the form of nominal damages. The amount of such
damages is addressed to the sound discretion of the court,
taking into account the relevant circumstances.
A dismissal for just cause under Article 282 implies that
the employee concerned has committed, or is guilty
of, some violation against the employer, i.e. the
employee has committed some serious misconduct, is
guilty of some fraud against the employer. Thus, it can be
said that the employee himself initiated the dismissal
process. On another breath, a dismissal for an
authorized cause under Article 283 does not
necessarily imply delinquency or culpability on the
part of the employee. Instead, the dismissal process
is initiated by the employer’s exercise of his
management prerogative, i.e. when the employer opts to
install labor saving devices, when he decides to cease
business operations or when, as in this case, he
undertakes to implement a retrenchment program. The
clear-cut distinction between a dismissal for just
cause under Article 282 and a dismissal for
authorized cause under Article 283 is further
reinforced by the fact that in the first, payment of
separation pay, as a rule, is not required, while in the
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second, the law requires payment of separation pay.
For these reasons, there ought to be a difference in
treatment when the ground for dismissal is one of the just
causes under Article 282, and when based on one of the
authorized causes under Article 283.
Accordingly, it is wise to hold that: (1) if the dismissal
is based on a just cause under Article 282 but the
employer failed to comply with the notice
requirement, the sanction to be imposed upon him
should be tempered because the dismissal process
was, in effect, initiated by an act imputable to the
employee; and (2) if the dismissal is based on an
authorized cause under Article 283 but the employer
failed to comply with the notice requirement, the
sanction should be stiffer because the dismissal
process was initiated by the employer’s exercise of
his management prerogative.
In the case at bench, , JAKA was suffering from serious
business losses at the time it terminated respondents’
employment. It is, therefore, established that there was
ground for respondents’ dismissal, i.e., retrenchment, which
is one of the authorized causes enumerated under Article
283 of the Labor Code. Likewise, it is established that
JAKA failed to comply with the notice requirement under
the same Article. Considering the factual circumstances in
the instant case and the above ratiocination, the Supreme
Court deem it proper to fix the indemnity at P50,000.00.
SC held that CA erred when it ordered JAKA to pay
respondents separation pay equivalent to 1)month salary
for every year of service. This is because the rule is that in
all cases of business closure or cessation of operation or
undertaking of the employer, the affected employee is
entitled to separation pay. This is consistent with the state
policy of treating labor as a primary social economic force,
affording full protection to its rights as well as its welfare.
The exception is when the closure of business or
cessation of operations is due to serious business
losses or financial reverses; duly proved, in which
case, the right of affected employees to separation
pay is lost for obvious reasons.
Petition is granted.
EASTERN SHIPPING LINES, INC vs. DIOSCORO D.
SEDAN G.R. No. 159354 April 7, 2006 QUISUMBING
Facts:
Petitioners hired on a per-voyage basis private respondent
Dioscoro Sedan as 3rd marine engineer and oiler in one of
the vessels owned by petitioners. His last voyage was on
July 27, 1997 on board the vessel M/V Eastern Universe.
His monthly pay was P22,000. Additionally, after each
voyage his earned leave credits are monetized and paid in
cash. He said he was disembarking because he was going
to take the board examinations for marine engineers. Two
months later, Sedan sent a letter to petitioners applying for
optional retirement, citing as reason the death of his only
daughter, hence the retirement benefits he would receive
would ease his financial burden. However, petitioners
deferred action on his application for optional retirement
since his services on board ship were still needed.
Nonetheless, according to petitioners, the company
expressed intention to extend him a loan in order to defray
the costs incurred for the burial and funeral expenses of his
daughter. Sedan sent petitioners another letter insisting on
the release of half of his optional retirement benefits. Later,
he said that he no longer wanted to continue working on
board a vessel for reasons of health. Sedan sent another
letter to petitioners threatening to file a complaint if his
application was not granted. In reply, according to
petitioners, the company management sent a telegram
informing Sedan that his services were needed on board a
vessel and that he should report immediately for work as
there was no available replacement. Sedan claims he did
not receive the telegram, nor was this fact proved by the
company before the Labor Arbiter or the NLRC. Sedan
proceeded to file a complaint with the Labor Arbiter against
petitioners demanding payment of his retirement benefits,
leave pay, 13th month pay and attorney’s fees. The Labor
Arbiter ruled in favor of Sedan. CA sustained NLRC and the
Labor Arbiter and ruled that private respondent is entitled to
financial assistance.
Issue: WON private respondent is entitled to financial
assistance.
Ruling:
The Supreme Court is not unmindful of the rule that
Financial assistance is allowed only in instances where the
employee is validly dismissed for causes other than serious
misconduct or those reflecting on his moral character.
Neither it is unmindful of this of the Supreme Court’s ruling
in one case where it has been held that when there is no
dismissal to speak of, an award of financial assistance is
not in order.
The Supreme Court did allow, in several instances, the
grant of financial assistance. Financial assistance may
be allowed as a measure of social justice and
exceptional circumstances, and as an equitable
concession. In the case at bench, private respondent
joined the company when he was a young man of 25 years
and stayed on until he was 48 years old; that he had given
to the company the best years of his youth, working on
board ship for almost 24 years; that in those years there
was not a single report of him transgressing any of the
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company rules and regulations; that he applied for optional
retirement under the company’s non-contributory plan when
his daughter died and for his own health reasons; and that
it would appear that he had served the company well, since
even the company said that the reason it refused his
application for optional retirement was that it still needed
his services; that he denies receiving the telegram asking
him to report back to work; but that considering his age and
health, he preferred to stay home rather than risk further
working in a ship at sea. These special circumstances
warrants the grant of financial assistance.
Petition is denied.
HA YUAN RESTAURANT vs. NLRC and JUVY SORIA
G.R. No. 147719 January 27, 2006 AUSTRIA-
MARTINEZ
Facts:
Respondent Juvy Soria worked as a cashier in petitioner’s
establishment located inside the SM Food Court Makati.
Respondent assaulted her co-worker Ma. Teresa
Sumalague resulting in a scuffle between the two. Despite
the intervention of their supervisor Fiderlie Recide, they
were not pacified, prompting Recide to call for security
assistance. The two were then brought to the SM Food
Court Administration Office where they continued to cast
tirades at each other notwithstanding the request of the SM
Food Court Manager to stop. Because they refused to be
mollified, they were brought to the Customer Relations
Office for further investigation. As a result of the incident,
the SM Food Court Manager banned the two from working
within the SM Food Court’s premises. Respondent then
filed with the Labor Arbiter a complaint for illegal dismissal
which was dismissed by the Labor Arbiter for lack of merit.
NLRC modified the Labor Arbiter and awarded separation
pay to private respondent.
Issue: WON private respondent is entitled to separation
pay.
Ruling:
In a decided case, it has been held that separation pay
shall be allowed as a measure of social justice only
in those instances where the employee is validly
dismissed for causes other than serious misconduct
or those reflecting on his moral character . Where the
reason for the valid dismissal is, for example, habitual
intoxication or an offense involving moral turpitude, like
theft or illicit sexual relations with a fellow worker, the
employer may not be required to give the dismissed
employee separation pay, or financial assistance, or
whatever other name it is called, on the ground of social
justice. Separation pay therefore, depends on the
cause of dismissal, and may be accordingly awarded
provided that the dismissal does not fall under either
of two circumstances: (1) there was serious
misconduct, or (2) the dismissal reflected on the
employee’s moral character.
In the case at bench, respondent’s cause of dismissal in
this case amounts as a serious misconduct and as such,
separation pay should not have been awarded to her. Thus,
the petition should be granted. While it is true, that the
Labor Arbiter did not tag private respondent cause of
dismissal as serious misconduct, nevertheless, it is its
nature, not its label that characterizes the cause as serious
misconduct. There is no question as regards the incident
that caused respondent’s dismissal. While respondent’s co-
worker Sumalague was eating at the back of the store,
respondent rushed toward Sumalague and hit the latter on
the face causing injuries. A scuffle ensued and despite their
supervisor Recide’s pleas, the two continued to fight,
prompting Recide to call the mall security. When the two
were brought to the administration office, they continued
bickering and did not heed the request of the manager to
stop, and thus they were brought to the Customer Relations
Office. Because of the incident, the two were banned from
working within the premises. The fact that Sumalague
sustained injuries is a matter that cannot be taken lightly.
Moreover, the incident disturbed the peace in the work
place, not to mention that respondent and Sumalague
committed a breach of its discipline. Clearly, respondent
committed serious misconduct within the meaning of Art.
282 of the Labor Code providing for the dismissal of
employees. Her cause of dismissal amounting to a serious
misconduct, respondent is not entitled to an award of
separation pay.
Petition is granted.
h. Retirement (Art. 287)
 Retirement Age- The age of retirement is that
specified in the CBA or in the employment contract. In
the absence of a retirement plan or agreement
providing for retirement benefits of employees in an
establishment, an employee upon reaching the age of
60 years old or more; but not beyond 65 years of age
which is hereby declared as the compulsory retirement
age, who has served at least 5 years in said
establishment.
 The rule is different with respect to underground
mining employees whose optional retirement age is
50-60 provided they have at least served for a period
of 5 years.
 Benefits:
 A retiree is entitled to a retirement pay equivalent
to at least ½ month salary for every year of
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 service, a fraction of at least 6 months being
contracted as one whole year.
 Unless the parties provide for broader inclusions,
the term “one half month salary” shall means:
 15 days plus 1/12 of the 13th month pay and
 the cash equivalent of NOT more than 5 days
of SIL (22.5 days per year of service).
 Under Section 26, RA 4670 (Magna Carta for Public
School Teachers), public school teachers having
fulfilled the age and service requirements of the
applicable retirement laws shall be given ONE RANGE
SALARY RAISE upon retirement, which shall be the
basis of the computation of the lump sum of the
retirement pay and the monthly benefit thereafter.
NOTE: Exempted from the payment of retirement pay are
retail, service and agricultural establishments or operations
employing not more than 10 employees or workers.
AGE RETIREMENT
60-65 Optional but the employee must have served
at least 5 years
65 Compulsory (no need for 5 years of service)
CAINTA CATHOLIC SCHOOL vs. CAINTA CATHOLIC
SCHOOL EMPLOYEES UNION (CCSEU) G.R. No.
151021 May 4, 2006 TINGA
Issue: WON a stipulation in a CBA that allows management
to retire an employee in its employ for a predetermined
lengthy period but who has not yet reached the minimum
compulsory retirement age provided in the Labor Code is
valid.
Ruling:
Retirement is a different specie of termination of
employment from dismissal for just or authorized
causes under Articles 282 and 283 of the Labor
Code. While in all three cases, the employee to be
terminated may be unwilling to part from service,
there are eminently higher standards to be met by
the employer validly exercising the prerogative to
dismiss for just or authorized causes. In those two
instances, it is indispensable that the employer
establish the existence of just or authorized causes
for dismissal as spelled out in the Labor Code.
Retirement, on the other hand, is the result of a
bilateral act of the parties, a voluntary agreement
between the employer and the employee whereby the
latter after reaching a certain age agrees and/or
consents to sever his employment with the former.
Article 287 of the Labor Code, as amended, governs
retirement of employees, stating: Any employee may be
retired upon reaching the retirement age established in the
collective bargaining agreement or other applicable
employment contract. In case of retirement, the employee
shall be entitled to receive such retirement benefits as he
may have earned under existing laws and any collective
bargaining agreement and other agreements: Provided,
however, That an employee’s retirement benefits under any
collective bargaining agreement and other agreements
shall not be less than those provided herein. In the
absence of a retirement plan or agreement providing for
retirement benefits of employees in the establishment, an
employee upon reaching the age of sixty (60) years or
more, but not beyond sixty-five (65) years which is hereby
declared the compulsory retirement age, who has served at
least five (5) years in the said establishment, may retire
and shall be entitled to retirement pay equivalent to at least
one-half (1/2) month salary for every year of service, a
fraction of at least six (6) months being considered as one
whole year.We are impelled to reverse the Court of Appeals
and affirm the validity of the termination of employment of
Llagas and Javier, arising as it did from a management
prerogative granted by the mutually-negotiated CBA
between the School and the Union.
In the case at bench, the CBA provided that the School has
the option to retire an employee upon reaching the age limit
of sixty (60) or after having rendered at least twenty (20)
years of service to the School, the last three (3) years of
which must be continuous. The CBA established 60 as the
compulsory retirement age. However, it is not alleged that
either Javier or Llagas had reached the compulsory
retirement age of 60 years, but instead that they had
rendered at least 20 years of service in the School, the last
3 years continuous. Clearly, the CBA provision allows the
employee to be retired by the School even before reaching
the age of 60, provided that he/she had rendered 20 years
of service.
Would such a stipulation be valid?
Yes, such stipulation is valid. In a decided case, it has been
held that Labor Code permitted employers and
employees to fix the applicable retirement age at
below 60 years of age. Moreover, there was no illegal
dismissal since it was the CBA itself that incorporated
the agreement reached between the employer and
the bargaining agent with respect to the terms and
conditions of employment; hence, when an employee
ratified the CBA with his union, he concurrently
agreed to conform to and abide by its provisions. By
their acceptance of the CBA, the Union and its members
are obliged to abide by the commitments and limitations
they had agreed to cede to management. The questioned
retirement provisions cannot be deemed as an imposition
foisted on the Union, which very well had the right to have
98
refused to agree to allowing management to retire retire
employees with at least 20 years of service.
i. Periods of Prescription (Art. 292)
CAUSE Period of Prescription
Money Claims 3 years from the accrual of the causes of
action
ULP 1 year from the accrual of the cause of
action
Illegal 4 years from the accrual of the cause of
Dismissal action
Reinstatement 4 years
 The period of prescription under Article 292, Labor
Code, refers to and is limited to money claims, all other
cases on injury to rights of a workingman being
governed by the Civil Code. Hence, reinstatement
prescribes in 4 years.
AUTO BUS TRANSPORT SYSTEMS vs. ANTONIO
BAUTISTA supra.
Issue: WON the 3-year prescriptive period provided under
Article 291 of the Labor Code, as amended, is applicable to
respondent’s claim of service incentive leave pay.
Ruling:
Article 291 of the Labor Code states that all money claims
arising from employer-employee relationship shall be filed
within 3 years from the time the cause of action accrued;
otherwise, they shall be forever barred.
When does the cause of action for money claims accrue in
order to determine the reckoning date of the three-year
prescriptive period?
It is settled that one of the elements of a cause of action is
the act or omission on the part of the defendant violative of
the right of the plaintiff or constituting a breach of the
obligation of the defendant to the plaintiff. Thus, in the
computation of the three-year prescriptive period, a
determination must be made as to the period when the act
constituting a violation of the workers’ right to the benefits
being claimed was committed. For if the cause of action
accrued more than 3 years before the filing of the money
claim, said cause of action has already prescribed in
accordance with Article 291. Consequently, in cases of
nonpayment of allowances and other monetary
benefits, if it is established that the benefits being
claimed have been withheld from the employee for a
period longer than three 3 years, the amount
pertaining to the period beyond the three-year
prescriptive period is therefore barred by
prescription. The amount that can only be demanded
by the aggrieved employee shall be limited to the
amount of the benefits withheld within 3 years before
the filing of the complaint. It is essential at this point,
however, that in the case of SIL, the employee may
choose to either use his leave credits or commute it
to its monetary equivalent if not exhausted at the end
of the year. Furthermore, if the employee entitled to
service incentive leave does not use or commute the
same, he is entitled upon his resignation or
separation from work to the commutation of his
accrued service incentive leave.
Correspondingly, it can be conscientiously deduced that 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. 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.
In the case at bench, respondent had not made use of his
service incentive leave nor demanded for its commutation
until his employment was terminated by petitioner. Neither
did petitioner compensate his accumulated service
incentive leave pay at the time of his dismissal. It was only
upon his filing of a complaint for illegal dismissal, one
month from the time of his dismissal, that respondent
demanded from his former employer commutation of his
accumulated leave credits. His cause of action to claim the
payment of his accumulated service incentive leave thus
accrued from the time when his employer dismissed him
and failed to pay his accumulated leave credits.
Therefore, the prescriptive period with respect to his claim
for service incentive leave pay only commenced from the
time the employer failed to compensate his accumulated
service incentive leave pay at the time of his dismissal.
Since respondent had filed his money claim after only one
month from the time of his dismissal, necessarily, his
money claim was filed within the prescriptive period
provided for by Article 291 of the Labor Code.
MEDICAL AND DENTAL SERVICES
Art. 156- First Aid Treatment
 First Aid Treatment- adequate, immediate and
necessary medical and dental attention or remedy
99
 given in case of injury or illness suffered by a worker
during employment, irrespective of whether or not such
injury or illness is work-connected, before a more
extensive medical and/or dental treatment.
 First Aider- any person trained and duly certified as
qualified to administer first aid by the Philippine
National Red Cross, or by any other organization
accredited by the former.
3. If the injury is sustained elsewhere, the employee
must have been executing an order for the
employer.
4. The injury was not due to the employee’s
intoxication, willful intention to injure or kill himself
or another, notorious negligence or as otherwise
provided under this Title.

 Workmen’s Compensation- a general and 5. Injuries incurred by a health worker while doing
comprehensive term applied to those laws providing overtime work shall be presume work-connected.
for compensation for loss resulting from the injury,
disablement or death of a workman through industrial  Sickness- any illness accepted as an occupational
accident, casualty or disease. disease listed by the Commission or any illness
caused by employment subject to proof that the risk of
 Compensation- money relief offered according contraction the same is increased by working
to the scale established under the statue as conditions.
differentiated from compensatory damages i. Conditions for an occupational disease and
recoverable in an action at law for breach of the resulting disability or death to be
contract or for tort. compensable:
a. The employee’s work must involve the risk
described therein;
b. The disease was contracted as a result of the
Workmen’s Employees employee’s exposure to the described risks;
Compensation Act Compensation Law c. The disease was contracted within the period of
exposure and under such factors necessary to
There is presumption of No presumption of contract it; and
compensability compensability d. There was no notorious negligence on the part of
the employee.
There is a presumption of No presumption of  Death- loss of life resulting from injury or sickness.
aggravation aggravation  Disability- loss or impairment of a physical or mental
function resulting from injury or sickness.
There is a need for the No need for the employer to  Direct Premises Rule- as a general rule, the
employer to controvert the controvert the claim accident should have occurred at the place of work to
claim within 14 days be compensable.
otherwise he is deemed to  Exceptions to the Direct Premises Rule:
have waived the right a. Ingress- Egress/ Proximity Rule- When the
injury is sustained when the employee is
Payment of compensation is Payment of the proceeding to or from his work on the premises of
made by the employer. compensation is made by the employer, the injury is compensable.
the SSS/GSIS through the b. Going to or Coming from Work- When the
State Insurance Fund injury is sustained when the employee is
proceeding to or from his work on the premises of
Art. 167. Definition of Terms the employer, the injury is compensable.
1. the act of the employee of going to, or coming
from, the work place, must have been a
 Injury- any harmful change in the human organism
continuing act, that is, he had not been
from any accident arising out of and in the course of
diverted therefrom by any other activity, and
employment.
he had departed from his usual route to, or
 Conditions for an injury to be compensable:
from, his workplace; and
2. an employee on a special errand must have
1. The employee must have been injured at the
been official and in connection with his work.
place where the work requires him to be.
c. Extra-Premises Rule (Shuttle Bus Rule)- The
company which provides the means of
2. The employee must have performing his official transportation in going to or coming from the place
functions. of work is liable to the injury sustained by the
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 employees while on board said means of
transportation.
d. Special Errand Rule- Injury sustained outside
the company premises is compensable if his being
out is covered by an office order or a locator slip
or a pass for official business.
e. Dual Purpose Doctrine- allows compensation
where a special trip would have to be made for the
employer if the employee had not combined the
service for the employer with his going or coming
trip.
f. Special Engagement Rule- covers field trips,
outings, intramurals and picnics when initiated and
sanctioned by the employer.
g. Positional and Local Risks Doctrine- if an
employee by reason of his duties is exposed to a
special or peculiar danger from the elements, that
is, one greater than that to which other persons in
the community are exposed and an unexpected
injury occurs, the injury is compensable.
Art. 168. Compulsory Coverage
 Employees Compensation Law applies to all
employers, public or private, and to all employees,
public or private including casual, emergency,
temporary, or substitute employees.
 An employee who is over 60 years of age and paying
contributions to qualify for the retirement or life
insurance benefit administered by the system shall be
subject to compulsory coverage.
Art. 170. Effective Date of Coverage
 The employer is covered compulsorily fro the first day
of operation and the employee from the first day of
employment.
Art. 172. Limitations of Liability
 No Compensation can be obtained if the injury, death
or disability is a result of the employee’s”
1. intoxication;
2. willful intention to injure or kill himself or another;
3. notorious negligence; or
4. otherwise provided by the Labor Code.
 Notorious Negligence- deliberate act of the
employee to disregard to is own personal safety.
 As a rule, death through suicide is not
compensable. However, a self-inflicted death could
be compensable:
1. by agreement of the parties;
2. if the suicide/death is caused by work-related or
compensable illness or disease.
Art. 173. Extent of Liability
 Simultaneous recovery under the Labor Code and the
Civil Code cannot be made. The action is selective and
the employee may either choose to file the claim under
either. But once the election is made, the claimant
cannot opt for the other remedy.
 State Insurance Fund- all covered employees are
required to remit to a common fund a monthly
contribution equivalent to 1% of the monthly salary of
credit of every covered employees. The employee
pays no contribution to the fund. Any agreement to the
contrary is prohibited.
Disability Benefits:
 Temporary Total Disability- if as a result of the injury
or sickness, the employee is unable to perform any
gainful occupation for a continuous period not
exceeding 120 days.
 Permanent Total Disability- if as a result of the injury
or sickness, the employee is unable to perform any
gainful occupation for a continuous period exceeding
120 days.
 Permanent Partial Disability- if as a result of the
injury or sickness, the employee suffers a permanent
partial loss of the user of any part of his body.
 Death Benefits- The System shall pay to the primary
beneficiaries upon the death of the covered employee
an amount equal to his monthly income benefit, plus
10% thereof for each dependent child, but not
exceeding 5, beginning with the youngest and without
substitution. The income benefit shall be guaranteed
for 5 years.
i. Dependents:
1. The legitimate, legitimated, and legally adopted or
acknowledged natural child who is unmarried, not
gainfully employed and not over 21 years of age
or over 21 years of age provided that he is
incapable of self-support due to a physical or
mental defect which is congenital or acquired
during his minority.
2. Legitimate spouse living with the employee.
3. The parents of said employee wholly dependent
upon him for regular support.
ii. Benefits:
1. For life to the primary beneficiaries, guaranteed for
5 years.
2. For not more than 60 months to the secondary
beneficiaries in case there are no primary
beneficiaries.
3. In no case shall the total benefit be less than
P15,000.
iii. Beneficiaries
a. Primary Beneficiaries:
1. dependent spouse until he remarries
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 2. dependent children (legitimate, legitimated, natural a. Compulsory:
born or legally adopted) 1. Compulsory upon all employers not over 60 years
b. Secondary Beneficiaries: of age and their employees;
1. illegitimate children and legitimate descendants 2. In case of domestic helpers, their monthly income
2. parents, grandparents, grandchildren should not be less than P1,000.
b. Limitations:
 Any benefit already earned by the employers
under private benefit plans existing at the time of
the approval of the Act shall not be discontinued,
reduced or otherwise impaired.
 Private planes which are existing and in force at
the time of compulsory coverage shall be
integrated with the plan of the SSS in such a way
where the employer’s contribution to his private
plan is more than that required of him in this Act,
he shall pay to the SSS only the contribution
required of him and he shall continue his
contribution to such private plan less his
contribution to the SSS so that the employer’s
total contribution to his benefit plan and to the
SSS shall be the same as his contribution to his
private benefit plan before any compulsory
coverage.
 Any changes, adjustments, modifications,
eliminations or improvements in the benefits to be
available under the remaining private plan, which
may be necessary to adopt by reason of the
reduced contribution thereto as a result of the
integration shall be subject to agreements
between the employers and the employees
concerned.
 The private benefit plan which the employer shall
continue for his employees shall remain under the
employer’s management and control unless there
is an existing agreement to the contrary.
 Nothing in this Act shall be construed as a
limitation on the right of employers and employees
to agree on and adopt benefits which are over and
above those provided under this Act.
3. Compulsory upon such self-employed persons as
may be determined by the Commission including
but not limited to the following:
 All self employed professionals;
 Partners and single proprietors;
 Actors and actresses directors, scriptwriters and
news correspondents who do not fall within the
definition of the term employee in Section 8 (d) of
this Act;
PART II  Professional athletes, coaches, trainers, and
SOCIAL LEGISLATION jockeys;
 Individual farmers and fisherman.
A. RA No. 1161 “SOCIAL SECURITY SYSTEM” as c. Voluntary:
amended by RA No. 8282 1. Spouses who devote full time to managing the
household and family affairs, unless they are also
i. Coverage: engaged in other vocation or employment which is

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 subject to mandatory coverage, may be covered
by the SSS on a voluntary basis.
2. Filipinos recruited by foreign based employers for
employment abroad may be covered by the SSS
on a voluntary basis.
3. Employees separated from employment may
continue to pay contributions to maintain his right
to full benefits.
4. Self-employed with no income.
d. By Agreement:
 Any foreign government, international
organization, or their wholly-owned instrumentality
employing workers in the Philippines, may enter
into an agreement with the Philippine government
for the inclusion of such employees in the SSS
except those already covered by their respective
civil service retirement systems.
e. Excluded Employment:
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 employed of a foreign
government, international organization, or their wholly
owned instrumentality;
5. Services performed by temporary employees, which
may be excluded by regulation of the commission.
f. Effective Date of Coverage:
1. Employer- it shall take effect on the first day of his
operation.
2. Employee- on the day of his employment.
3. Self-employed- it shall take effect upon his
registration with SSS.
ii. Definition of Terms:
 Employer- Any person natural or juridical,
domestic or foreign, who carries on in the
Philippines, any trade business, industry
undertaking or activity of any kind and uses the
services of another person who is under his orders
as regards the employment except the
Government and any of its political subdivisions,
branches or instrumentalities, including
corporations owned or controlled by the
Government.
Self-employed person shall be both the
employer and employee at the same time.
 Employee- Any person who performs services for
an employer in which either or both mental and
physical efforts are used and who receives
compensation for such services, where there is an
employer-employee relationship.
 Defendents:
1. The legal spouse entitled by law to receive
support from the member;
2. The legitimate, legitimated or legally adopted
and illegitimate child who is unmarried, not
gainfully employed and has not reached 21
years of age or if 21 years of age, he is
congenitally incapacitated or while still a
minor, has been permanently incapacitated
and incapable of self-support physically and
mentally and;
3. The parent who is receiving regular support
from the member.
 Beneficiaries:
1. The dependent spouse until he or she
remarries, the dependent legitimate,
legitimated or legally adopted and illegitimate
children who shall be the primary
beneficiaries of the member.
2. PROVIDED that the dependent illegitimate
children shall be entitled to 50% of the share
of the legitimate, legitimated or legally
adopted children.
3. PROVIDED FURTHER in the absence of
the legitimated, legally adopted or legitimate
children, illegitimate children shall be entitled
to 100% of the benefits.
4. IN THEIR ABSENCE, the dependent
parents who shall be the secondary
beneficiaries.
5. IN THE ABSENCE OF ALL of the
foregoing, any person designated by the
covered employee as secondary benefits.
iii. Benefits:
1. Monthly Pension;
2. Dependents Pension;
 It shall be paid for each dependent child conceived on
or before the date of the contingency but not
exceeding five, beginning with the youngest without
substitution provided that where there are legitimate
and illegitimate children, the former shall be preferred.
3. Retirement Benefits
 A member who has paid at least 120 monthly
contributions prior to the semester of retirement and
who:
a. has reached the age of 60 years and is
already separated from employment or
has ceased to be self-employed
b. has reached the age of 65
 A covered member who is 60 years old not qualified
under Letter a, shall still be entitled to retirement
benefits PROVIDED, he is separated from
employment and is not continuing payment of
contributions to the SSS on his own.
 Suspension of Monthly Pension- Upon the re-
employment or resumption of self-employment of a
retired employee who is less than 65 years old.
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4. Death Benefits;
5. Permanent Disability Benefits;
6. Funeral Benefits;
 A funeral grant equivalent to P12,000 shall be paid, in
cash or in kind, to help defray the cost of funeral
expenses upon the death of a member, including
permanently totally disabled member or retiree.
7. Sickness Benefits (Requirements);
a. A member must have paid at least 3 monthly
contributions in the twelve month period
immediately preceding the semester of sickness
or injury; and
b. is confined therefore for more than 3 days in a
hospital or elsewhere with the approval of the
SSS.
8. Maternity Leave Benefit:
 It shall be paid to a female employee who has paid at
least 3 monthly contributions in the twelve month
period immediately preceding the semester of her
childbirth or miscarriage PROVIDED:
1. that the employee shall have notified her employer
of her pregnancy and the probable date of her
childbirth which notice shall be transmitted to the
SSS.
2. The full payment shall be advanced by the
employer within 30 days from the filing of the
maternity leave application.
3. Payment of daily maternity benefits shall be a bar
to the recovery of sickness benefits.
4. The maternity benefits provided under this Section
shall be paid only for the first 4 deliveries or
miscarriages.
5. The SSS shall immediately reimburse the
employer 100% of the benefits advanced by the
latter.
6. If no contributions were remitted by the employer
or no notice was given to SSS, the employer shall
be liable for damages equivalent to the benefits
which said employee member would otherwise
have been entitled to.
iv. Non-Transferability of Benefits
 Such benefits are not transferable and no power
of attorney or other document executed by those
entitled thereto, in favor of any agent, attorney or
any other person for the collection thereof on their
behalf shall be recognized, except when they are
physically unable to collect personally such
benefits.
v. Sources of Fund
1. Collection:
 Beginning on the last day of the month when an
employee’s compulsory coverage takes effect and
every month thereafter during his employment, his
employer shall pay the employer’s contribution
and shall deduct and withhold from such
employee’s monthly salary the employees
contribution.
The same time of collection for self-
employed.
2. Remittance:
 It shall be remitted within the first 10 days of each
calendar month following the month for which they
are applicable or within such time as the
Commission may prescribe.
 For self-employed they shall remit their
contributions quarterly on such dates and
schedules as the Commission may require.
B. RA NO. 8291- GOVERNMENT SERVICE
INSURANCE SYSTEM
i. Compulsory Membership
 Compulsory for all employees (as defined in Section 2
(d) of GSIS Law) receiving compensation who have
not reached the compulsory retirement age,
irrespective of employment status, EXCEPT
MEMBERS OF THE ARMED FORCES AND THE
PNP, subject to the condition that they must settle first
their financial obligations with the GSIS and
contractuals who have no employer and employee
relationship with the agencies.
 EXCEPT FOR THE MEMBERS OF THE
JUDICIARY AND CONSTITUTIONAL
COMMISSIONS WHO SHALL HAVE LIFE
INSURANCE ONLY, all members of the GSIS shall
have life insurance, retirement and all other social
security protection such as disability, survivorship,
separation and unemployment benefits.
 Computation of Service
 The computation of service for the purpose of
determining the amount of benefits payable shall
be from the date of the original appointment/
election including periods of service at different
times under the authority of the Republic of the
Philippines and those that may be prescribed by
the GSIS in coordination with the Civil Service
Commission.
 All service credited for retirement, resignation or
separation for which corresponding benefits have
been awarded shall be excluded in the
computation of service in case of reinstatement in
the service of an employer and subsequent
retirement or separation which is compensable.
ii. Definition of Terms:
 Employer- The national government, its political
subdivisions, branches, agencies or
instrumentalities including GOCCs and financial
institutions with original charters, the
Constitutional Commissions and the Judiciary.
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  Employee/ Member- Any person receiving
compensation while in the service of an employer
as defined herein, whether by election or
appointment, irrespective of status appointment.
 Dependents:
1. The legitimate spouse dependent for support
upon the member or pensioner
2. The legitimate, legitimated legally adopted
child, including the illegitimate child who is:
a. unmarried,
b. not gainfully employed,
c. not over the age of majority, or
d. is over the age of majority but
incapacitated and incapable of self-
support due to a mental or physical
defect acquired prior to age of majority.
3. Parents dependent upon the members for
support.
 Primary Beneficiary- The legal dependent
spouse until he/she remarries.
 Secondary Beneficiary- The dependent parents
and subject to the restrictions on dependent
children, the legitimate descendants.
 Disability- Any loss or impairment of the normal
functions of the physical and/or mental faculty of a
member which reduces or eliminates his/her
capacity to continue with his/her current gainful
occupation or engage in any other gainful
occupation.
 Total Disability- Complete incapacity to continue
with his present employment or engage in any
gainful occupation due to the loss or impairment of
the normal functions of the physical and/or mental
faculties of the member.
 Permanent Total Disability- Accrues or arises
when recovery from impairment mentioned in
Section 2 (Q) (defining disability) is medically
remote.
 Temporary Total Disability- Accrues or arises
when impaired physical and/or mental faculties
can be rehabilitated and /or restored to their
normal functions.
 Permanent Partial Disability- Accrues or arises
upon the irrevocable loss or impairment of certain
portion/s of the physical faculties, despite which
the member is able to pursue a gainful occupation.
iii. Sources of Fund:
a. Contributions:
1. It shall be mandatory for the member and the
employer to pay the monthly contributions.
2. The employer shall include the in its annual
appropriation the necessary amounts for its share
of the contributions indicated above PLUS any
additional premiums that may be required on
account of the hazards or risks of its employees
occupation.
3. Failure to do so shall subject the employers to
penal or administrative sanctions.
b. Collection and Remittance:
1. Collection- The employer shall report to the GSIS
all pertinent information regarding the employee
and shall deduct each month for the salary or
compensation of each employee the contribution
payable by him.
2. Remittance- The employer shall remit directly to
the GSIS the employees and employers
contributions within the first 10 days of the
calendar month following to which the
contributions apply.
iv. Benefits:
1. Separation Benefits:
Separation benefits are given to the:
a. The member resigns or separates from the service after
he has rendered at least 3 years of service but less than 15
years.
b. The member resigns or separates from office after he
has rendered 15 days of service and is below 60 years of
age at the time of resignation or separation.
Separation benefits likewise include:
 Unemployment or Involuntary Separation
Benefits- shall be paid to a permanent employee
who is involuntarily separated from the service
due to the abolition of his office or position usually
resulting from reorganization PROVIDED that he
has been paying integrated contributions for at
least 1 year prior to contributions.
2. Retirement Benefits:
 Conditions for entitlement:
a. Member has rendered at least 15 years of service.
b. He is at least 60 years of age at the time of retirement.
c. He is not receiving a monthly pension benefit from
permanent total disability.
3. Permanent Disability Benefits:
 General Conditions for Entitlement- the member
must have suffered permanent disability for
reasons NOT DUE to:
a. Grave misconduct,
b. notorious negligence,
c. habitual intoxication, or willful intention to kill himself or
another.
 Specific Conditions for entitlement- he shall
receive monthly income benefit for life equal to the
basic monthly pension effective from the date of
the disability, PROVIDED:
a. He is in the service at the time of the disability.
b. If separated from service, he has paid at least 36
monthly contributions within the 5 year period immediately
preceding the disability or has paid a total of at least 180
monthly contributions prior to the disability.
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c. If he was in service and has paid a total of at least
a total of at least 180 monthly contributions, in
addition to the monthly income benefit, he shall receive a
cash payment equivalent to 18 times his basic monthly
pension.
d. However, a member cannot enjoy the monthly income
benefit for permanent disability and the old age retirement
simultaneously.
 Unless the member has reached the minimum
retirement age, disability benefits shall be
suspended when:
a. he is reemployed
b. he recovers from his disability as determined by the
GSIS, whose decision shall be final and binding
d. he fails to present himself for medical examination when
required by the GSIS.
 Permanent Partial Disability- he must satisfy
specific conditions 1-3.
4. Temporary Disability Benefits
 The member shall be entitled to 75% of the
current daily compensation for each day or
fraction thereof of temporary disability benefit not
exceeding 120 days in one calendar year after
exhausting all sick leave credits and collective
bargaining sick leave benefits. PROVIDED:
he is in service at the time of his disability.
if separated, he has rendered at least 3 years of
service and has paid at least 6 monthly
contributions in the 12 month period immediately
preceding the disability.
 However, a member cannot enjoy temporary total
disability benefit and sick leave pay
simultaneously.
 In addition, if the disability requires more
extensive treatment that lasts beyond 120 days,
the payment of the temporary total disability
benefit may be extended by the GSIS but not to
exceed a total of 240 days.
 Lastly, and in no case shall the benefit be less
than P70 a day.
5. Survivorship Benefits:
 For purposes of survivorship benefits, legitimate
children shall include legally adopted and
legitimated children.
v. Death of a Member- upon the death of a
member, the primary beneficiaries shall be entitled
to:
1. Survivorship Pension, provided:
a. Member was in service at the time of his death.
b. If separated from service has rendered at least 3
years of service and paid 36 monthly contributions
with the 5-years period immediately preceding his
death or has paid a total of at least 180 monthly
contributions.
2. Survivorship Pension plus a cash payment
equivalent to 100% of his average monthly
compensation for every year of service, provided:
 The deceased was in the service at the time of his
death with at least 3 years of service.
3. Survivorship Pension plus a cash payment
equivalent to 100% of his average monthly
compensation for every year of service he paid
contributions but not less than P12,000, provided:
 That the deceased has rendered at least 3 years
of service prior to his death but does not qualify
under 1 and 2.
a. Order of Payment of the Survivorship
Pension:
1. When the dependent spouse is the only survivor, he
shall receive the basic survivorship pension for life or
until he/she remarries.
2. When only dependent children are the survivors, they
shall be entitled to the basic survivorship pension for
as long as they are qualified, plus the dependent
children’s pension.
3. When the survivors are the dependent spouse and the
dependent children, the dependent spouse shall
receive the basic survivorship pension for life or until
he/she remarries, and the dependent children shall
receive the dependents pension.
b. In the absence of Primary Beneficiaries,
the secondary beneficiaries shall be entitled
to:
1. Cash payment equivalent to 100% of his average
monthly compensation for each year of service he paid
contributions, but not less than P12, 000 PROVIDED that
the member is in service at the time of his death and has at
least 3 years of service.
2. In the absence of secondary beneficiaries, the benefits
under this paragraph shall be paid to the legal heirs.
6. Funeral Benefits:
 It shall not be less than P12, 000 PROVIDED that
it shall be increased to at least P18, 000 after 5
years and shall be paid upon death.
7. Life Insurance Benefits:
 All employees except members of the AFP and
the PNP shall be compulsorily covered with life
insurance.
vi. Adjudication of Claims and Disputes
 Prescription of Claims- Claims for benefits under the
Act except for life and retirement shall prescribe after 4
years from the date of contingency.
 Jurisdiction- GSIS shall have the exclusive and original
jurisdiction to settle any dispute arising under the Act
and any other laws administered by the GSIS.
Appealable under Rule 43 and 45, Rules of Court.
The appeal shall not stay the execution of the order or
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 award unless ordered by the Boards, CA, or SC and the
appeal shall be without prejudice to the special civil
action for certiorari when proper.
C. Salient Provisions of RA NO. 8972 “SOLO PARENTS
WELFARE ACT OF 2000”
Section 2. Declaration of Policy. - It is the policy of the
State to promote the family as the foundation of the nation,
strengthen its solidarity and ensure its total development.
Section 3. Definition of Terms. - Whenever used in this
Act, the following terms shall mean as follows:
(a) Solo parent - any individual who falls under any of the
following categories:
(1) A woman who gives birth as a result of rape
and other crimes against chastity even without a final
conviction of the offender: Provided, That the mother keeps
and raises the child;
(2) Parent left solo or alone with the responsibility
of parenthood due to death of spouse;
(3) Parent left solo or alone with the responsibility
of parenthood while the spouse is detained or is serving
sentence for a criminal conviction for at least one (1) year;
(4) Parent left solo or alone with the responsibility
of parenthood due to physical and/or mental incapacity of
spouse as certified by a public medical practitioner;
(5) Parent left solo or alone with the responsibility
of parenthood due to legal separation or de facto
separation from spouse for at least one (1) year, as long as
he/she is entrusted with the custody of the children;
(6) Parent left solo or alone with the responsibility
of parenthood due to declaration of nullity or annulment of
marriage as decreed by a court or by a church as long as
he/she is entrusted with the custody of the children;
(7) Parent left solo or alone with the responsibility
of parenthood due to abandonment of spouse for at least
one (1) year;
(8) Unmarried mother/father who has preferred to
keep and rear her/his 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;
(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.
A change in the status or circumstance of the
parent claiming benefits under this Act, such that he/she is
no longer left alone with the responsibility of parenthood,
shall terminate his/her eligibility for these benefits.
(b) Children - refer to those living with and dependent
upon the solo parent for support who are unmarried,
unemployed and not more than eighteen (18) years of age,
or even over eighteen (18) years but are incapable of self-
support because of mental and/or physical defect/disability.
(c) Parental responsibility - with respect to their minor
children shall refer to the rights and duties of the parents as
defined in Article 220 of Executive Order No. 209, as
amended, otherwise known as the "Family Code of the
Philippines."
(d) Parental leave - shall mean leave benefits granted to a
solo parent to enable him/her to perform parental duties
and responsibilities where physical presence is required.
(e) Flexible work schedule - is the right granted to a solo
parent employee to vary his/her arrival and departure time
without affecting the core work hours as defined by the
employer.
Section 4. Criteria for Support. - Any solo parent whose
income in the place of domicile falls below the poverty
threshold as set by the National Economic and
Development Authority (NEDA) and subject to the
assessment of the DSWD worker in the area shall be
eligible for assistance: Provided, however, That any solo
parent whose income is above the poverty threshold shall
enjoy the benefits mentioned in Sections 6, 7 and 8 of this
Act.
Section 5. Comprehensive Package of Social
Development and Welfare Services. - A comprehensive
package of social development and welfare services for
solo parents and their families will be developed by the
DSWD, DOH, DECS, CHED, TESDA, DOLE, NHA and
DILG, in coordination with local government units and a
nongovernmental organization with proven track record in
providing services for solo parents. The DSWD shall
coordinate with concerned agencies the implementation of
the comprehensive package of social development and
welfare services for solo parents and their families. The
package will initially include:
(a) Livelihood development service xxx.
(b) Counseling services xxx.
(c) Parent effectiveness services xxx.
(d) Critical incidence stress debriefing xxx.
(e) Special projects for individuals in need of protection xxx.
Section 6. 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 7. 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 8.
Parental Leave. - In addition to leave privileges under
existing laws, parental leave of not more than seven (7)
working days every year shall be granted to any solo parent
employee who has rendered service of at least one (1)
year. Section 9.
Educational Benefits. - The DECS, CHED and TESDA
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shall provide the following benefits and privileges: (1)
Scholarship programs for qualified solo parents and their
children in institutions of basic, tertiary and technical/skills
education; and (2) Nonformal education programs
appropriate for solo parents and their children. xxx
Section 10.
Housing Benefits. - Solo parents shall be given allocation
in housing projects and shall be provided with liberal terms
of payment on said government low-cost housing projects
in accordance with housing law provisions prioritizing
applicants below the poverty line as declared by the NEDA.
Section 11.
Medical Assistance. - The DOH shall develop a
comprehensive health care program for solo parents and
their children. The program shall be implemented by the
DOH through their retained hospitals and medical centers
and the local government units (LGUs) through their
provincial/district/city/municipal hospitals and rural health
units (RHUs).
D. Salient Provisions of RA NO. 8187- PATERNITY ACT
OF 1996
SECTION 2. Notwithstanding any law, rules and
regulations to the contrary, every married male employee in
the private and public sectors shall be entitled to a paternity
leave of seven (7) days with full pay for the first four (4)
deliveries of the legitimate spouse with whom he is
cohabiting. The male employee applying for paternity leave
shall notify his employer of the pregnancy of his legitimate
spouse and the expected date of such delivery.
For purposes, of this Act, delivery shall include
childbirth or any miscarriage.
SECTION 3. Definition of Term. - For purposes of this
Act, Paternity Leave refers to the benefits granted to a
married male employee allowing him not to report for work
for seven (7) days but continues to earn the compensation
therefor, on the condition that his spouse has delivered a
child or suffered a miscarriage for purposes of enabling him
to effectively lend support to his wife in her period of
recovery and/or in the nursing of the newly-born child.
SECTION 5. Any person, corporation, trust, firm,
partnership, association or entity found violating this Act or
the rules and regulations promulgated thereunder shall be
punished by a fine not exceeding P25,000 or imprisonment
of not less than 30 days nor more than 6 months.
If the violation is committed by a corporation, trust
or firm, partnership, association or any other entity, the
penalty of imprisonment shall be imposed on the entity's
responsible officers, including, but not limited to, the
president, vice-president, chief executive officer, general
manager, managing director or partner directly responsible
therefor. SECTION 6.
Non-diminution Clause . - Nothing in this Act shall be
construed to reduce any existing benefits of any
form granted under existing laws, decrees, executive
orders, or any contract agreement or policy between
employer and employee.
E. Salient Provisions of RA NO. 7610 SPECIAL
PROTECTION OF CHILDREN AGAINST ABUSE,
EXPLOITATION AND DISCRIMINATION ACT, AS
AMENDED BY RA NO. 7658
Section 2. Declaration of State Policy and Principles.
- It is hereby declared to be the policy of the State to
provide special protection to children from all firms of
abuse, neglect, cruelty exploitation and discrimination and
other conditions, prejudicial their development; provide
sanctions for their commission and carry out a program for
prevention and deterrence of and crisis intervention in
situations of child abuse, exploitation and discrimination.
The State shall intervene on behalf of the child when the
parent, guardian, teacher or person having care or custody
of the child fails or is unable to protect the child against
abuse, exploitation and discrimination or when such acts
against the child are committed by the said parent,
guardian, teacher or person having care and custody of the
same. It shall be the policy of the State
to protect and rehabilitate children gravely threatened or
endangered by circumstances which affect or will affect
their survival and normal development and over which they
have no control. The best interests of children shall be the
paramount consideration in all actions concerning them,
whether undertaken by public or private social welfare
institutions, courts of law, administrative authorities, and
legislative bodies, consistent with the principle of First Call
for Children as enunciated in the United Nations
Convention of the Rights of the Child. Every effort shall be
exerted to promote the welfare of children and enhance
their opportunities for a useful and happy life.
Section 3. Definition of Terms. -
(a) Children refers to person below eighteen (18) years of
age or those over but are unable to fully take care of
themselves or protect themselves from abuse, neglect,
cruelty, exploitation or discrimination because of a physical
or mental disability or condition;
(b) Child abuse refers to the maltreatment, whether
habitual or not, of the child which includes any of the
following:
(1) Psychological and physical abuse, neglect,
cruelty, sexual abuse and emotional maltreatment;
(2) Any act by deeds or words which debases,
degrades or demeans the intrinsic worth and dignity of a
child as a human being;
(3) Unreasonable deprivation of his basic needs
for survival, such as food and shelter; or
(4) Failure to immediately give medical treatment
to an injured child resulting in serious impairment of his
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growth and development or in his permanent incapacity or
death.
(c) Circumstances which gravely threaten or
endanger the survival and normal development of
children include, but are not limited to, the following;
(1) Being in a community where there is
armed conflict or being affected by armed conflict-related
activities;
(2) Working under conditions hazardous to life,
safety and normal which unduly interfere with their normal
development;
(3) Living in or fending for themselves in the
streets of urban or rural areas without the care of parents or
a guardian or basic services needed for a good quality of
life;
(4) Being a member of a indigenous cultural
community and/or living under conditions of extreme
poverty or in an area which is underdeveloped and/or lacks
or has inadequate access to basic services needed for a
good quality of life;
(5) Being a victim of a man-made or natural
disaster or calamity; or
(6) Circumstances analogous to those above-
stated which endanger the life, safety or normal
development of children.
Section 12. Employment of Children. - Children below
fifteen (15) years of age shall not be employed except:
1) When a child works directly under the sole responsibility
of his parents or legal guardian and where only members of
the employer's family are employed: Provided, however,
That his employment neither endangers his life, safety,
health and morals, nor impairs his normal development;
Provided, further, That the parent or legal guardian shall
provide the said minor child with the prescribed primary
and/or secondary education; or
2) Where a child's employment or participation in public
entertainment or information through cinema, theater, radio
or television is essential: Provided, The employment
contract is concluded by the child's parents or legal
guardian, with the express agreement of the child
concerned, if possible, and the approval of the Department
of Labor and Employment: and Provided, That the following
requirements in all instances are strictly complied with:
(a)The employer shall ensure the protection,
health, safety, morals and normal development of the child;
(b) The employer shall institute measures to
prevent the child's exploitation or discrimination taking into
account the system and level of remuneration, and the
duration and arrangement of working time; and
(c) The employer shall formulate and implement,
subject to the approval and supervision of competent
authorities, a continuing program for training and skills
acquisition of the requirements.
In the above exceptional cases where any such
child may be employed, the employer shall first secure,
before engaging such child, a work permit from the
Department of Labor and Employment which shall ensure
observance of the child.
Section 13. Non-formal Education for Working
Children. - The Department of Education, Culture and
Sports shall promulgate a course design under its non-
formal education program aimed at promoting the
intellectual, moral and vocational efficiency of working
children who have not undergone or finished elementary or
secondary education. Such course design shall integrate
the learning process deemed most effective under given
circumstances.
Section 14. Prohibition on the Employment of
Children in Certain Advertisements. - No person shall
employ child models in all commercials or advertisements
promoting alcoholic beverages, intoxicating drinks, tobacco
and its byproducts and violence.
Section 15. Duty of Employer. - Every employer shall
comply with the duties provided for in Articles 108 and 109
of Presidential Decree No. 603.
Section 16. Penalties. - Any person who shall violate any
provision of this Article shall suffer the penalty of a fine of
not less than One thousand pesos (P1,000) but not more
than Ten thousand pesos (P10,000) or imprisonment of not
less than three (3) months but not more than three (3)
years, or both at the discretion of the court; Provided, That,
in case of repeated violations of the provisions of this
Article, the offender's license to operate shall be revoked.
F. RA 7875- NATIONAL HEALTH INSURANCE ACT
OF 1995
i. General Objectives
1.Provide all citizens of the Philippines with the
mechanism to gain financial access to health
services.
2.Prioritize and accelerate the provision of health
services to all Filipinos, especially that segment of
the population who cannot afford services;
3.Establish the Philippine Health Insurance
Corporation hereinafter referred to as the
Corporation, that will administer the Program at
the central and local levels; and
4.Create the National Health Insurance hereinafter
referred to as the Program to serve as the means
of help the people pay for health care services.
ii. Definition of Terms:
 Dependent
a. The legitimate spouse who is not a member;
b. The unmarried and unemployed legitimate,
legitimated, illegitimate, acknowledged children as
appearing in the birth certificate; legally adopted or
step-children below 21 years of age;
c. Children who are 21 years old or above but suffering
from congenital disability, either physical or mental,
or any disability acquired that renders them totally
dependent on the member of support;
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 d. Parents who are 60 years old or above whose
monthly income is below an amount to be
determined by the Corporation
 Employer- A natural or juridical person who
employs the services of an employee.
 Employee- Any person who performs services for
a employer in which either or both mental and
physical efforts are used and who receives
compensation for such services, where there is an
employer-employee relationship.
iii. The National Health Insurance Program
 Establishment and Purpose- it shall provide
health insurance coverage and ensure affordable,
acceptable, accessible and available health care
services for all citizens of the Philippines.
It shall as a means for the healthy to help
pay for the care of the sick and for those who can
afford medical care to subsidize those who
cannot.
 Coverage- All citizens of the Philippines shall be
covered by the National Health Insurance
Program.
 Benefit Package
1. Inpatient hospital care:
a. room and board
b. services of health care professionals
c. diagnostic, laboratory and other medical examination
services
d. use of surgical or medical equipment and facilities
e. prescription drugs and biologicals
2. Outpatient care:
a. services of health care professionals
b. diagnostic, laboratory and other medical examination
services
c. personal preventive services
d. prescription drugs and biological
3. Emergency and transfer services
4. Other health care services
 Excluded Personal Health Services
1. non-prescription drugs and services
2. outpatient psychotherapy and counseling for
mental disorders
3. drug and alcohol abuse or dependency surgery
4. cosmetic surgery
5. home and rehabilitation services
6. optometric services
7. normal obstetrical services
8. cost-ineffective procedures which shall be defined
by the Corporation
 Entitlement to Benefits
1. A member whose premium for at least 3 months
have been paid within 6 months prior to the first
day of his or his dependents availment.
2. He must show that he contributes thereto with
sufficient regularity as evidenced by their health
insurance ID Card.
3. He must not be currently subject to legal penalties
 Monthly Contributions need not be paid by
the following to be entitled to the Program’s
Benefits:
1. Retirees and pensioners of SSS and GSIS;
2. Members who have paid at least 120 monthly
contributions; and
3. Enrolled indigents.
NOTE: Transfer of Health Insurance Funds of SSS and
GSIS.
 It shall be transferred to the Corporation within 60
days from the promulgation of the IRR.
The SSS and GSIS shall continue to
perform Medicare functions under contract with
the Corporation until such time that such functions
are assumed by the Corporation.
 Transfer of Medicare Functions of the SSS
and GSIS- Within 5 years from the promulgation
of the IRR, but the SSS and GSIS shall continue
performing its Medicare functions beyond the
stipulated 5-year period if such extension will
benefit Program members.
G. Salient Provisions of RA NO. 7877 ANTI-SEXUAL
HARASSMENT ACT OF 1995
Sec. 2. Declaration of Policy . – The State shall value
the dignity of every individual, enhance the development of
it human resources, guarantee full respect for human
rights, and uphold the dignity of workers, employees,
applicants for employment, students or those undergoing
training, instruction or education. Towards this end, all
forms of sexual harassment in the employment, education
or training environment are hereby declared unlawful.
Sec. 3. Work, Education or Training-related Sexual
Harassment Defined. – Work, education or training-
related sexual harassment is committed by an employee,
manager, supervisor, agent of the employer, teacher,
instructor, professor, coach, trainor, or any other person
who, having authority, influence or moral ascendancy over
another in a work or training or education environment,
demands, requests or otherwise requires any sexual favor
from the other, regardless of whether the demand, request
or requirement for submission is accepted by the object of
said Act.
(a) In a work-related or employment environment,
sexual harassment is committed when:
(1) The sexual favor is made as a condition in the
hiring or in the employment, re-employment or continued
employment of said individual, or in granting said individual
favorable compensation, terms, conditions, promotions, or
privileges; or the refusal to grant the sexual favor results in
limiting, segregating or classifying the employee which in a
way would discriminate, deprive or diminish employment
110
opportunities or otherwise adversely affect said employee;
(2) The above acts would impair the employee’s
rights or privileges under existing labor laws; or
(3) The above acts would result in an intimidating,
hostile, or offensive environment for the employee.
(b) In an education or training environment, sexual
harassment is committed:
(1) Against one who is under the care, custody or
supervision of the offender;
(2) Against one whose education, training,
apprenticeship or tutorship is entrusted to the offender;
(3) 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
(4) When the sexual advances result in an
intimidating, hostile or offensive environment for the
student, trainee or apprentice.
Any person who directs or induces another to
commit any act of sexual harassment as herein defined, or
who cooperates in the commission thereof by another
without which it would not have been committed, shall also
be held liable under this Act.
Sec.4. Duty of the Employer or Head of Office in a
Work-related, Education or Training Environment . – It
shall be the duty of the employer or the head of the work-
related, educational or training environment or institution, to
prevent or deter the commission of acts of sexual
harassment and to provide the procedures for the
resolution, settlement or prosecution of acts of sexual
harassment. Towards this end, the employer or head of
office shall:
(a) Promulgate appropriate rules and regulations in
consultation with the jointly approved by the employees or
students or trainees, through their duly designated
representatives, prescribing the procedure for the
investigation or sexual harassment cases and the
administrative sanctions therefor.
Administrative sanctions shall not be a bar to
prosecution in the proper courts for unlawful acts of sexual
harassment.
The said rules and regulations issued pursuant to
this section (a) shall include, among others, guidelines on
proper decorum in the workplace and educational or
training institutions.
(b) Create a committee on decorum and investigation of
cases on sexual harassment. The committee shall conduct
meetings, as the case may be, with other officers and
employees, teachers, instructors, professors, coaches,
trainors and students or trainees to increase understanding
and prevent incidents of sexual harassment. It shall also
conduct the investigation of the alleged cases constituting
sexual harassment.
In the case of a work-related environment, the
committee shall be composed of at least one (1)
representative each from the management, the union, if
any, the employees from the supervisory rank, and from the
rank and file employees.
In the case of the educational or training
institution, the committee shall be composed of at least one
(1) representative from the administration, the trainors,
teachers, instructors, professors or coaches and students
or trainees, as the case maybe.
The employer or head of office, educational or
training institution shall disseminate or post a copy of this
Act for the information of all concerned.
Sec. 5. Liability of the Employer, Head of Office,
Educational or Training Institution . – The employer or
head of office, educational training institution shall be
solidarily liable for damage arising from the acts of sexual
harassment committed in the employment, education or
training environment if the employer or head of office,
educational or training institution is informed of such acts
by the offended party and no immediate action is taken
thereon.
Sec. 6. Independent Action for Damages . – Nothing in
this Act shall preclude the victim of work, education or
training-related sexual harassment from instituting a
separate and independent action for damages and other
affirmative relief.
Sec. 7. Penalties . – Any person who violates the
provisions of this Act shall, upon conviction, be penalized
by imprisonment of not less than one (1) month nor more
than six (6) months, or a fine of not less than Ten thousand
pesos (P10,000) nor more than Twenty thousand pesos
(P20,000), or both such fine and imprisonment at the
discretion of the court.
Any action arising from the violation of the
provision of this Act shall prescribe in three (3) years.
H. RA 8042- MIGRANT WORKERS AND OVERSEAS
FILIPINOS ACT OF 1995
 Approved on June 8, 1995 and took effect on July 15,
1995. as indicated in its Title, the law institutes the
policies of overseas employment and establishes a
higher standard of protection and promotion of the
welfare of migrant workers, their families and of
overseas Filipinos in distress.
i. Guarantee of Protection for Overseas
Workers
 The State shall deploy overseas Filipino workers only
in countries where the rights of Filipino migrant
workers are protected. The government recognizes
any of the following as a guarantee for the protection of
the receiving country of the rights of overseas Filipino
workers:
1. It has existing labor and social laws protecting the
rights of migrant workers;
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 2. It is signatory to multilateral conventions,
declarations or resolutions relating to the
protection of migrant workers;
3. It has concluded a bilateral agreement or
arrangement with the government protecting the
rights of overseas Filipino workers; and
4. It is taking positive, concrete measures to protect
the rights of migrant workers.
ii. Jurisdiction
a. NLRC
 Money Claims
 The Labor Arbiters of the NLRC shall have the original
and exclusive jurisdiction to hear and decide the claims
arising out of an employer-employee relationship or by
virtue of any law or contract involving Filipino workers
for overseas deployment including claims for actual,
moral, exemplary and other forms of damages.
 Liabilities
 The liability of the principal/employer and the
recruitment/ placement agency for any and all claims
under this Section shall be joint and several. The
performance bond to be filed by the recruitment/
placement agency, as provided by law, shall be
answerable for all money claims, or damages that may
be awarded to the workers. If the recruitment/
placement agency is a juridical being, the corporate
officers and directors and partners as the case may be,
shall themselves be jointly and solidarily liable with the
corporation or partnership for the aforesaid claims and
damages.
 Such liabilities shall continue during the entire period
or duration of the employment contract and shall not
be affected by any substitution, amendment or
modification made locally or in a foreign country of the
said contract.
 13 th Month Pay Under RA 8042
 The date the employment termination occurred is
material. On or after July 15, 1995, the law to apply is
RA 8042.
 Under Section 10, RA 8042, a worker dismissed from
overseas employment without just, valid or authorized
cause as defined by law or contract, is entitled to the
full reimbursement of his placement fee with interest of
12% per annum, plus his salary for the unexpired
portion of his employment contract or for 3 months of
every year of the unexpired term, whichever is less.
b. POEA
 The POEA retains original and exclusive jurisdiction to
hear and decide:
1.All cases which are administrative in character,
involving or arising out of violations of rules and
regulations relating to licensing and registration of
recruitment and employment agencies or entities;
and
2.Disciplinary action cases and other special cases
which are administrative in character, involving
employers, principals, contracting partners and
Filipino migrant workers.
 Venue- It may be filed with the POEA Adjudication
Office or the DOLE/POEA regional office of the place
where the complainant applied or was recruited at the
option of the complainant. The office with which the
complaint was first filed shall take cognizance of the
case.
 Disciplinary action cases and other special cases, as
mentioned in the preceding Section, shall be filed with
POEA Adjudication Office.
c. RTC
 A criminal action arising from illegal recruitment shall
be filed with the RTC of the province or city where the
offense was committed or where the offended party
actually resides at the time of the commission of the
offense. The court where the criminal action is first filed
shall acquire jurisdiction to the exclusion of other
courts.
iii. Mandatory Periods for Resolution of
Illegal Recruitment Cases
 The preliminary investigations of cases under this Act
shall be terminated within a period of 30 calendar days
from the date of their filing.
 Where the preliminary investigation is conducted by a
prosecution office an a prima facie case is established,
the corresponding information shall be filed in court
within 24 hours from the termination of the
investigation.
 If the preliminary investigation is conducted by a
Judge, and a prima facie case is found to exist, the
corresponding information shall be filed by the proper
prosecution officer within 48-hours from the date of
receipt of the records of the case.
iv. Prescriptive Period
 Illegal recruitment cases under this Act shall prescribe
in 5 years; provided, however, that illegal recruitment
cases involving economic sabotage as defined herein
shall prescribe in 29 years.
v. Prohibited Acts in Recruitment and
Placement of Workers under the Labor Code
are Retained. Under RA 8042, there are
additional acts:
1. Failure to deploy employee without valid reason;
2. Failure to reimburse expenses incurred in connection
with his documentation and processing in cases that
deployment did not take place.
vi. Different Funds Created under this Act:
1. Repatriation fund
2. Loan guaranty fund
3. Legal Assistance fund
4. Congressional Migrant Workers Scholarship fund.
vii. Government Agencies Mobilized:
1. DFA
2. DOLE
3. POEA
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4. OWWA- The Welfare Officer or in his absence, the
Center Coordinator of the Filipinos Resource Center shall
make proper representation with the employer/ principal
and/ or agency as the case may be, through conciliation
meetings or conferences for the purpose of enforcing
Contractual Obligations concerning migrant workers. For
this purpose, the officer may enlist the assistance of the
OWWA officer.
5. Re-placement and Monitoring Center- it shall:
a. Provide a mechanism for the reintegration into the
Philippine society;
b. Serve as a promotion house for their local
employment;
c. Tap their skills and potentials for national
development.
I. Salient Provisions of PD NO. 851- 13 th Month Pay
Law and its IRR
Sec. 1, PD 851- All employers are hereby required to pay
all their employees receiving a basic salary of not more
than P1,000 a month, regardless of the nature of their
employment, a 13th-month pay not later than December 24
of every year.
Sec. 2, PD 851- Employers already paying their
employees a 13th-month pay or its equivalent are not
covered by this Decree.
Section 1. Payment of 13th-month Pay. - All employers
covered by Presidential Decree No. 851, hereinafter
referred to as the "Decree", shall pay to all their employees
receiving a basic salary of not more than P1,000 a month a
thirteenth-month pay not later than December 24 of every
year.
Sec. 2. Definition of certain terms. - As used in this
issuance:
(a) Thirteenth-month pay shall mean one twelfth (1/12)
of the basic salary of an employee within a calendar year;
(b) Basic salary shall include all remunerations or
earnings paid by an employer to an employee for services
rendered but may not include cost-of-living allowances
granted pursuant to Presidential Decree No. 525 or Letter
of Instructions No. 174, profit-sharing payments, and all
allowances and monetary benefits which are not
considered or integrated as part of the regular or basic
salary of the employee at the time of the promulgation of
the Decree on December 16, 1975.
Sec. 3. Employers covered. - The Decree shall apply to
all employers except to:
(a) Distressed employers, such as (1) those which are
currently incurring substantial losses or (2) in the
case of non-profit institutions and organizations,
where their income, whether from donations,
contributions, grants and other earnings from any
source, has consistently declined by more than
forty (40%) percent of their normal income for the
last two (2) years, subject to the provision of
Section 7 of this issuance;
(b) The Government and any of its political
subdivisions, including government-owned and
controlled corporations, except those corporations
operating essentially as private subsidiaries of the
Government;
(c) Employers already paying their employees 13-
month pay or more in a calendar year or its
equivalent at the time of this issuance;
(d) Employers of household helpers and persons in
the personal service of another in relation to such
workers; and
(e) Employers of those who are paid on purely
commission, boundary, or task basis, and those
who are paid a fixed amount for performing a
specific work, irrespective of the time consumed in
the performance thereof, except where the
workers are paid on piece-rate basis in which case
the employer shall be covered by this issuance
insofar as such workers are concerned.
As used herein, workers paid on piece-rate basis
shall refer to those who are paid a standard amount for
every piece or unit of work produced that is more or less
regularly replicated, without regard to the time spent in
producing the same.
The term "its equivalent" as used in paragraph c)
hereof shall include Christmas bonus, mid-year bonus,
profit-sharing payments and other cash bonuses amounting
to not less than 1/12th of the basic salary but shall not
include cash and stock dividends, cost of living allowances
and all other allowances regularly enjoyed by the
employee, as well as non-monetary benefits. Where an
employer pays less than 1/12th of the employees basic
salary, the employer shall pay the difference.
Sec. 4. Employees covered. - Except as provided in
Section 3 of this issuance, all employees of covered
employers shall be entitled to benefit provided under the
Decree who are receiving not more than P1,000 a month,
regardless of their position, designation or employment
status, and irrespective of the method by which their wages
are paid, provided that they have worked for at least one
month during the calendar year.
Sec. 5. Option of covered employers. - A covered
employer may pay one-half of the 13th-month pay required
by the Decree before the opening of the regular school year
and the other half on or before the 24th day of December of
every year.
In any establishment where a union has been
recognized or certified as the collective bargaining agent of
the employees therein, the periodicity or frequency of
payment of the 13th-month pay may be the subject of
agreement.
Nothing herein shall prevent employers from
giving the benefits provided in the Decree to their
employees who are receiving more than One Thousand
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(P1,000) Pesos a month or benefits higher than those
provided by the Decree.
Sec. 6. Special feature of benefit. - The benefits
granted under this issuance shall not be credited as part of
the regular wage of the employees for purposes of
determining overtime and premium pay, fringe benefits, as
well as premium contributions to the State Insurance Fund,
social security, medicare and private welfare and retirement
plans.
Sec. 7. Exemption of Distressed employers. -
Distressed employers shall qualify for exemption from the
requirement of the Decree upon prior authorization by the
Secretary of Labor. Petitions for exemptions may be filed
within the nearest regional office having jurisdiction over
the employer not later than January 15, 1976. The regional
offices shall transmit the petitions to the Secretary of Labor
within 24 hours from receipt thereof.
Sec. 9. Adjudication of claims. - Non-payment of the
thirteenth-month pay provided by the Decree and these
rules shall be treated as money claims cases and shall be
processed in accordance with the Rules Implementing the
Labor Code of the Philippines and the Rules of the National
Labor Relations Commission.
Sec. 10. Prohibition against reduction or elimination
of benefits. - Nothing herein shall be construed to
authorize any employer to eliminate, or diminish in any way,
supplements, or other employee benefits or favorable
practice being enjoyed by the employee at the time of
promulgation of this issuance.
J. RA NO. 6657- COMPREHENSIVE AGRARIAN
REFORM LAW
i. Coverage
 In General- Regardless of tenurial arrangement and
commodity produced, all public and private agricultural
lands as provided in Proc. No. 131 and EO No. 229,
including other lands of the public domain suitable for
agriculture.
 Specifically:
1. All alienable and disposable lands of the public
domain devoted to or suitable for agriculture;
2. All lands of the public domain in excess to the
specific limits as determined by Congress;
3. All other lands owned by the Government devoted
to or suitable for agriculture; and
4. All private lands devoted to or suitable for
agriculture regardless of the agricultural products
raised or that can be raised thereon.
ii. Excluded:
 Lands actually, directly and exclusively used and found
to be necessary for the following purposes:
1. for parks, wildlife, forest reserves, reforestation;
2. for fish sanctuaries and breeding grounds;
3. for watersheds and mangroves;
4. for national defense;
5. for school sites and campuses, including
experimental farm stations operated by public or
private schools for educational purposes;
6. for seeds and seedlings research and pilot
production center;
7. for church sites and convents appurtenant thereto;
8. for mosque sites and Islamic centers appurtenant
thereto;
9. for communal burial grounds and cemeteries;
10. for penal colonies and penal farms actually
worked by the inmates;
11. for government and private research and
quarantine centers;
12. all lands with 18% slope and over, except those
already developed;
13. Ancestral lands belonging to indigenous cultural
communities until their boundaries and extent are
duly identified and delineated by the proper
governmental agency and segregated as part of
the public domain.
iii. Definition of Terms:
 Public Domain- refers to lands to which the
government has propriety rights.
 Government Lands- include both public lands and
other lands of the government already reserved for
or devoted to public use or subject to private rights.
 Private Agricultural Lands- are those devoted to
commercial livestock, poultry and swine raising,
aquaculture including saltbeds, fishponds, and
prawn ponds, fruit farms, orchards, vegetables and
cut-flower farms, and cacao, coffee and rubber
plantation.
 Share Tenancy- means the relationship which
exists whenever two persons agree on a joint
undertaking for agricultural production wherein one
party furnishes the land and the other his labor, with
either or both contributing any one or several of the
items of production, the tenant cultivating the land
personally with the aid or labor available from
members of his immediate farm household, and the
produce thereof to be divided between the
landholder and the tenant.
 Leasehold System- is characterized by a tenant-
farmer personally and actually cultivating the
farmholding under a leasehold relationship whereby
the lessee pays a fixed amount of rental whether in
cash or in kind to the lessor (owner or legal
possessor) of the land.
iv. Establishment of Leasehold Relationship
1. By agreement of the parties (between the lessor
and lessees)- this may be entered into either orally
or in writing, expressly or impliedly.
2. By operation of law- this is brought about by the
implementation of RA No. 3844, Agricultural Land
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 Reform Code, providing for the abolition of share viii. Rights of Child of Landowners under
tenancy. CARL
v. Establishment of Implied Leasehold 1. 3 hectares- may be awarded to each child of the
Relationship landowner, regardless of the number of children
 Implied leasehold relationship is established when the landowner has, and whether they are
the landholder: legitimate or illegitimate, provided that the filiation
1. does not object to the continued cultivation of the land, of the children who are illegitimate must be
or lawfully recognized by the landowner or duly
2. tolerates the continued cultivation thereof by the established according to law, subject to the
agricultural worker, and/or following qualifications:
3. the landholder continues to receive benefits from the  That he is at least 15 years old;
cultivation of the land.  That he is actually tiling the land
or directly managing the farm.
SHARE TENANCY LEASEHOLD TENANCY 2. Children of landowners who are qualified, shall be
Tenant has physical Lessee pays the landowner given preference in the distribution of the land of
possession of another’s a fixed rent for the use and their parents.
land of the purpose of cultivation of land ix. Exception to the Retention Limit:
cultivating it giving the 1. Landowners whose lands have been covered by
owner the share of the PD No. 27 shall be allowed to keep the area
property. originally retained by them thereunder.
The tenant may choose to The tenant-lessee always NOTE: Under PD 27, landowners covered are entitled to
shoulder in addition to labor, shoulders all items or retain 7 hectares of his landholding devoted to the
any one or more items or production except land production of rice and corn.
production such as farm 2. Original homestead grantees or direct compulsory
implements work animals, heirs who still own the original homestead at the
cost of final harrowing and time of the approval of CARL (June 15, 1988) shall
transplanting. retain the same areas as long as they continue to
The tenant and the The tenant is the sole cultivate said homestead.
landholder are co-managers manager of the farm holding x. Qualified Beneficiaries:
of farm holding. 1. landless residents of the same barangay; or in the
The tenant and the The tenant or lessee gets absence thereof
landholder divide the the whole produce with 2. landless residents of the same municipality in the
harvest in proportion to their mere obligation to pay rental following order of priority:
contributions.  agricultural lessees and share tenants;
 regular farm workers;
vi. Family Sized Farm  seasonal farm workers;
 Under the Agricultural Land Reform Code or RA3844,  other farm workers;
a family sized farm constitutes an area of farmland  actual tillers or occupants of public lands;
that permits efficient use of labor and capital resources  collective or cooperatives of the above
of the farm family and will produce an income sufficient beneficiaries; and
to provide a modest standard of living to meet a farm  others directly working on the land.
family’s needs for food, clothing, shelter and education xi. Preferential Right of Children in the
with possible allowance for payment of yearly Distribution of Privately-owned Agricultural
installments on the land, and reasonable reserves to Land Covered by CARL
absorb yearly fluctuations in income.  Children of landowners who are qualified shall be
vii. Retention Limit given preference in the distribution of the land of their
 Except as otherwise provided, no person may own or parents. Provided, further, that actual tenant-tillers in
retain, directly, any public or private agricultural land, the landholding shall not be ejected or remove
the size of which shall vary according to factor therefrom.
governing a viable family-sized farm, infrastructure, xii. Qualifications of a Beneficiary:
and soil fertility as determined by the Presidential 1. his willngness;
Agrarian Reform Council (PARC), but in no case shall 2. aptitude;
the retention by the landowner exceed 5 hectares. 3. ability to cultivate and make land as productive as
 The right to foreclose the area to be retained, which possible.
shall be compact or contiguous, shall pertain, to the xiii. Disqualifications:
landowner.
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 1. Any beneficiary guilty of negligence or misuse of
the land or any support extended to him shall
forfeit his right to continue as such beneficiary.
2. Beneficiaries under PD 27 who have culpably
sold, disposed of, or abandoned their land are
disqualified to become beneficiaries under their
program.
xiv. Distribution Ceiling:
 No qualified beneficiary may own more than 3 hectares
of agricultural land.
 Beneficiaries shall be awarded an area not exceeding
3 hectares, which may cover a contiguous tract of land
or several parcels of land cumulated up to the
prescribed award limits.
xv. Circumstances when Distribution Ceiling
may be Exceeded
 The beneficiaries may opt for collective ownership,
such as co-workers or farmers’ cooperative or some
other form of collective organization.
 In such case, the total area that may be awarded shall
not exceed the total number of workers or members of
the cooperative or collective organization multiplied by
the award limit above prescribed, except in
meritorious cases as determined by PARC.
 Title to the property shall be issued in the name of the
co-owners or the cooperative or collective
organization, as the case may be.
xvi. Landless Beneficiary:
 For purposes of this Act, a landless beneficiary is one
who owns less than 3 hectares of agricultural land.
 As a landless beneficiary, he can demand that the
award ceiling of 3 hectares shall be completed which
may be taken from other available private agricultural
lands to be acquired either by voluntary offer to sell,
voluntary land transfer or compulsory modes under the
CARL.
xvii. Rights given to Actual Tenant Tillers or
Farmers in Place in cases where the Land
Tilled by them is Transferred to a Qualified
Beneficiary:
a. Actual tenant-tillers in the landholding shall not be
rejected or removed therefrom.
b. Farmers already in place and those not
accommodated in the distribution of privately
owned lands will be given preferential rights in the
distribution of lands from the public domain.
xviii. Rights given to those qualified
beneficiaries who were not accommodated
due to insufficiency of lands to be distributed
 If due to landowner’s retention rights or to the number
of tenants, lessees, or workers on the land, there is not
enough land to accommodate any or some of them,
they may be granted ownership of other lands
available for distribution under this Act, at the option of
the beneficiaries.
xix. Conditions for Sale or Conveyance to
Third Persons of Land Retained
 The sale or disposition of agricultural lands retained by
a landowner shall be valid as long as:
the sale or disposition of agricultural lands after the
effectivity of CARL should conform with the
provisions of the said law, otherwise, such sale or
disposition shall be null and void.
the tenant’s or lessee’s preferential right to purchase
the same should be recognized. In case the land
is sold to third persons without his knowledge, he
shall have a right to redeem the land in the
manner prescribed by law.
the total landholdings that shall be owned by the
transferee thereof inclusive of the land to be
acquired shall not exceed the landholdings
ceilings provided for in this Act.
transferees of agricultural lands shall furnish the
appropriate Register of Deeds and the PARC with
an affidavit attesting that his total landholdings as
a result of the said acquisition do not exceed the
landholding ceiling. The RD shall not register the
transfer of any agricultural land without the
submission of this sworn statement together with
proof of service of a copy thereof to the PARC.
xx. Rights of the said Tenant-Farmer under
CARL when Area selected for Retention by
Landowner is Tenanted:
1. In case the area selected for retention by the
landowner is tenanted, the tenant shall have the
option to choose whether to remain therein or be a
beneficiary in the same or another agricultural
land with similar or comparable features.
If the choice is to remain in the retained
area- he shall be considered a leaseholder and
shall lose his right to be a beneficiary under this
Act.
If the choice is to be a beneficiary- he
loses his right as a leaseholder to the land
retained by the landowner.
Period to exercise the option- the tenant
must exercise this option within a period of 1 year
from the time the landowner manifests his choice
of the area for retention.
2. In all case, the security of tenure of the farmer or
farm workers on the land prior to the approval of
this Act shall be respected.
xxi. Modes of Acquiring Private Agricultural
Lands under CARL:
1. Voluntary Offer to Sell- by and between the
landowner and the government. Purchase price
agreed upon by parties and paid by LBP. Exempt
from taxes.
2. Voluntary Land Transfer- directly by and
between the landowner and the beneficiary.
Purchase price agreed upon by said parties but
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 paid by LBP subject to approval of DAR. Not
exempt from taxes.
 Conditions for Voluntary Land Transfer:
a. All notices for voluntary land transfer must be
submitted to the DAR within the first year of the
implementation of the CARP. Negotiations
between the landowners and qualified
beneficiaries covering any voluntary land
transfer which remain unresolved after 1 year
shall not be recognized and such land shall
instead be acquired by the government and
transferred pursuant to this Act.
b. The terms and conditions of such transfer shall
not be less favorable to the transferee than
those of the government’s standing offer to
purchase from the landowner and to resell to
the beneficiaries, if such offers have been made
and are fully known to both parties.
3. Compulsory Acquisition- undertaken by
government, thru DAR, in the exercise of police
power if landowner fails to avail of the two modes
or when parties in the second mode disagrees on
the price of the land.
xxii. Procedure for the Acquisition of Private
Lands under CARL
a. Identification of the land, the landowners and the
beneficiaries.
b. DAR shall sent notice to acquire the land with offer
to pay the corresponding value to the owners
thereof, by personal delivery or registered mail,
and post the same in a conspicuous place in the
municipal building and barangay shall of the place
where the property is located.
c. Within 30 days from the date of receipt of written
notice, the landowner, his administrator or
representative shall inform the DAR of his
acceptance or rejection of the offer.
d. In case landowner accepts the offer, the LBP shall
pay the landowner the purchase price of land
within 30 days after he executes and delivers a
deed of transfer in favor of the Government and
surrenders the Certificate of Title and other
muniments of title.
e. In case of rejection or failure to reply, the DAR
shall conduct summary administrative proceedings
to determine just compensation. After the
expiration of the above period, the matter is
deemed submitted for decision. The DAR shall
decide the case within 30 days after it is submitted
for decision.
f. Upon receipt by the landowner of the
corresponding payment or in case of rejection or
no response from the landowner, upon the deposit
with an accessible bank designated by the DAR of
the compensation in cash or LBP bonds, the DAR
shall take immediate possession of the land and
shall request the proper RD to issue TCT in the
name of the Republic. The DAR shall thereafter
proceed with the redistribution of the land to the
qualified beneficiaries.
g. Any party who disagrees with the decision may
bring the matter to the court of proper jurisdiction
for final determination of just compensation.
xxiii. Compensation
 In determining just compensation, the following shall
be considered:
1. the cost of acquisition of the land;
2. the current value of like properties,
3. its nature, actual use and income,
4. the sworn valuation by the owner, the tax
declaration,
5. the assessment made by government assessors,
6. additional factor, such as:
 the social and economic benefits contributed
by the farmers and the farm workers and by
government to the property
 non-payment of taxes or loans secured from
any government financing institution on the
said land.
xxiv. Amount of Just Compensation for Lands
Acquired under CARL
 The LBP shall compensate the landowner in such
amount:
1. as may be agreed upon by the landowner and the
DAR and LBP; or
2. as may be finally determined by the court as just
compensation for the land.
xxv. Determination of Just Compensation by
DAR for Lands Acquired under CARL is not
an usurpation of Judicial Function
 According to the Supreme Court, the determination of
just compensation is a function addressed to the courts
of justice and may not be usurped by any other branch
of official of the government. A reading of Section 16
(d) will readily show that it does not suffer from the
arbitrariness that rendered the challenged decrees
constitutionally objectionable.
 The determination of the just compensation by the
DAR is not by any means final and conclusive upon
the landowner or any other interested party who may
bring the matter to the court of proper jurisdiction for
final determination of just compensation. The
determination made by the DAR is only preliminary
unless accepted by all parties concerned. Otherwise,
the courts of justice will still have the right to review
with finality the said determination in the exercise of
what is admittedly a judicial function (Nicolas vs.
Manaay GR No. 79777).
Payments to the Payments by the
Landowner Beneficiary
1. CASH payment, under the 1. Payments shall be made to the
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following terms and conditions: LBP in 30 annual installments at SECTION 27. Transferability of Awarded Lands. —
a. Lands 24 hectares and 6% interest per annum; Lands acquired by beneficiaries under this Act may not be
below- 35% cash + balance to be 2. Payments for the first 3 years
paid in government financial shall be at reduced amounts as sold, transferred or conveyed except through hereditary
instruments negotiable at any may be established by the PARC; succession, or to the government, or the LBP, or to other
time. 3. Payments corresponding to the qualified beneficiaries for a period of ten (10) years:
b. Lands above 24 hectares first 5 annual amortizations may provided, however, that the children or the spouse of the
and up to 50 hectares- 30% cash not exceed 5% of the value of the
transferor shall have a right to repurchase the land from the
+ balance to be paid in annual gross production as
government financial instruments established by DAR. government or LBP within a period of two (2) years. Due
negotiable at any time. 4. Annual payments as scheduled notice of the availability of the land shall be given by the
c. For lands above 50 by the LBP that exceeds 10% of LBP to the Barangay Agrarian Reform Committee (BARC)
hectares, insofar as the excess in the annual gross production after of the barangay where the land is situated. The Provincial
50 hectares is concerned- 25% the 5th year of amortizations, may
cast + balance to be paid in be entitled to a reduction of the Agrarian Reform Coordinating Committee (PARCCOM) as
government financial instruments interest rate provided in this Act, or herein provided, shall, in turn, be given due notice thereof
negotiable at any time. a reduction of the principal by the BARC. If the land has not yet been fully paid by
2. SHARES OF STOCK in obligation, whichever is deemed the beneficiary, the rights to the land may be transferred or
GOCC, LBP preferred shares, beneficial and less burdensome to
conveyed, with prior approval of the DAR, to any heir of the
physical assets or other qualified the beneficiary and affordable.
investments in accordance with This is provided that the failure to beneficiary or to any other beneficiary who, as a condition
guidelines set by the PARC. produce is not attributable to the for such transfer or conveyance, shall cultivate the land
3. TAX CREDITS which can be beneficiary’s fault like drought, himself. Failing compliance herewith, the land shall be
used against any tax liability. typhoon, fire, flood or other natural transferred to the LBP which shall give due notice of the
4. LBP BONDS calamities or fortuitous
circumstances. availability of the land in the manner specified in the
immediately preceding paragraph. In the event of such
xxvi. Effects of Failure to Pay by the transfer to the LBP, the latter shall compensate the
Beneficiary beneficiary in one lump sum for the amounts the latter has
 All lands awarded under RA 6657 are mortgaged with already paid, together with the value of improvements he
the LBP which has a first lien thereof, failure on the has made on the land.
part of the awardee to pay at least 3 aggregate annual SECTION 28. Standing Crops at the Time of
amortizations, shall be sufficient ground for the Acquisition. — The landowner shall retain his share of any
foreclosure of the mortgage. standing crops unharvested at the time the DAR shall take
 Foreclosure has the effect of forfeiture of the possession of the land under Section 16 of the Act, and
beneficiary’s landholding in favor of the government shall be given a reasonable time to harvest the same.
and thereafter the DAR shall award such forfeited
landholdings to other qualified beneficiary. Administrative Adjudication
a. Limitation:
SECTION 50. Quasi-Judicial Powers of the DAR. —
 Lands acquired by beneficiaries under this Act may not
The DAR is hereby vested with the primary jurisdiction to
be sold, transferred or conveyed for a period of 10
determine and adjudicate agrarian reform matters and shall
years, except:
have exclusive original jurisdiction over all matters involving
1. through hereditary succession, or
the implementation of agrarian reform except those falling
2. when sold, transferred or conveyed to:
under the exclusive jurisdiction of the Department of
 the LBP, or
Agriculture (DA) and the Department of Environment and
 the government, or Natural Resources (DENR).
 other qualified beneficiaries It shall not be bound by technical rules of
b. Rationale for 10 years Limitation: procedure and evidence but shall proceed to hear and
 The reason is that after making use of land deriving decide all cases, disputes or controversies in a most
maximum benefits and income therefrom for the period expeditious manner, employing all reasonable means to
of 10 years, the awardee must have already attained ascertain the facts of every case in accordance with justice
his dream of providing proper education for his children and equity and the merits of the case. Toward this end, it
or at least his hunger for the soil which he can call his shall adopt a uniform rule of procedure to achieve a just,
own, must have been satisfied reasonably. expeditious and inexpensive determination for every action
At least that after 10 continuous years of or proceeding before it.
enjoyment of the government’s bounty the tenant- It shall have the power to summon witnesses,
farmer has not more reason to complain that he has administer oaths, take testimony, require submission of
been neglected by the government. reports, compel the production of books and documents
and answers to interrogatories and issue subpoena, and
subpoena duces tecum, and enforce its writs through
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sheriffs or other duly deputized officers. It shall likewise
have the power to punish direct and indirect contempts in
the same manner and subject to the same penalties as
provided in the Rules of Court.
Responsible farmer leaders shall be allowed to
represent themselves, their fellow farmers, or their
organizations in any proceedings before the DAR:
provided, however, that when there are two or more
representatives for any individual or group, the
representatives should choose only one among themselves
to represent such party or group before any DAR
proceedings.
Notwithstanding an appeal to the Court of
Appeals, the decision of the DAR shall be immediately
executory.
SECTION 51. Finality of Determination. — Any case
or controversy before it shall be decided within thirty (30)
days after it is submitted for resolution. Only one (1) motion
for reconsideration shall be allowed. Any order, ruling or
decision shall be final after the lapse of fifteen (15) days
from receipt of a copy thereof.
SECTION 52. Frivolous Appeals. — To discourage
frivolous or dilatory appeals from the decisions or orders on
the local or provincial levels, the DAR may impose
reasonable penalties, including but not limited to fines or
censures upon erring parties.
SECTION 53. Certification of the BARC. — The
DAR shall not take cognizance of any agrarian dispute or
controversy unless a certification from the BARC that the
dispute has been submitted to it for mediation and
conciliation without any success of settlement is presented:
provided, however, that if no certification is issued by the
BARC within thirty (30) days after a matter or issue is
submitted to it for mediation or conciliation the case or
dispute may be brought before the PARC.
Judicial Review
SECTION 56. Special Agrarian Court. — The
Supreme Court shall designate at least one (1) branch of
the Regional Trial Court (RTC) within each province to act
as a Special Agrarian Court.
The Supreme Court may designate more
branches to constitute such additional Special Agrarian
Courts as may be necessary to cope with the number of
agrarian cases in each province.n the designation, the
Supreme Court shall give preference to the Regional Trial
Courts which have been assigned to handle agrarian cases
or whose presiding judges were former judges of the
defunct Court of Agrarian Relations.
The Regional Trial Court (RTC) judges assigned
to said courts shall exercise said special jurisdiction in
addition to the regular jurisdiction of their respective courts.
The Special Agrarian Courts shall have the
powers and prerogatives inherent in or belonging to the
Regional Trial Courts.
SECTION 57. Special Jurisdiction. — The Special
Agrarian Courts shall have original and exclusive
jurisdiction over all petitions for the determination of just
compensation to landowners, and the prosecution of all
criminal offenses under this Act. The Rules of Court shall
apply to all proceedings before the Special Agrarian Courts,
unless modified by this Act.
The Special Agrarian Courts shall decide all
appropriate cases under their special jurisdiction within
thirty (30) days from submission of the case for decision.
SECTION 65. Conversion of Lands. — After the
lapse of five (5) years from its award, when the land ceases
to be economically feasible and sound for agricultural
purposes, or the locality has become urbanized and the
land will have a greater economic value for residential,
commercial or industrial purposes, the DAR, upon
application of the beneficiary or the landowner, with due
notice to the affected parties, and subject to existing laws,
may authorize the reclassification or conversion of the land
and its disposition: provided, that the beneficiary shall have
fully paid his obligation.
SECTION 66. Exemptions from Taxes and Fees of
Land Transfers. — Transactions under this Act involving a
transfer of ownership, whether from natural or juridical
persons, shall be exempted from taxes arising from capital
gains. These transactions shall also be exempted from the
payment of registration fees, and all other taxes and fees
for the conveyance or transfer thereof; provided, that all
arrearages in real property taxes, without penalty or
interest, shall be deductible from the compensation to
which the owner may be entitled.
SECTION 67. Free Registration of Patents and
Titles. — All Registers of Deeds are hereby directed to
register, free from payment of all fees and other charges,
patents, titles and documents required for the
implementation of the CARP.
SECTION 68. Immunity of Government Agencies
from Undue Interference. — No injunction, restraining
order, prohibition or mandamus shall be issued by the lower
courts against the Department of Agrarian Reform (DAR),
the Department of Agriculture (DA), the Department of
Environment and Natural Resources (DENR), and the
Department of Justice (DOJ) in their implementation of the
program.
SECTION 73. Prohibited Acts and Omissions. —
The following are prohibited:
(a) The ownership or possession, for the purpose of
circumventing the provisions of this Act, of agricultural
lands in excess of the total retention limits or award ceilings
by any person, natural or juridical, except those under
collective ownership by farmer-beneficiaries.
(b) The forcible entry or illegal detainer by persons who
are not qualified beneficiaries under this Act to avail
themselves of the rights and benefits of the Agrarian
Reform Program.
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(c) The conversion by any landowner of his agricultural
land into any non-agricultural use with intent to avoid the
application of this Act to his landholdings and to dispossess
his tenant farmers of the land tilled by them.
(d) The willful prevention or obstruction by any person,
association or entity of the implementation of the CARP.
(e) The sale, transfer, conveyance or change of the
nature of lands outside of urban centers and city limits
either in whole or in part after the effectivity of this Act. The
date of the registration of the deed of conveyance in the
Register of Deeds with respect to titled lands and the date
of the issuance of the tax declaration to the transferee of
the property with respect to unregistered lands, as the case
may be, shall be conclusive for the purpose of this Act.
(f) The sale, transfer or conveyance by a beneficiary of
the right to use or any other usufructuary right over the land
he acquired by virtue of being a beneficiary, in order to
circumvent the provisions of this Act.
SECTION 74. Penalties. — Any person who knowingly
or willfully violates the provisions of this Act shall be
punished by imprisonment of not less than one (1) month to
not more than three (3) years or a fine of not less than one
thousand pesos (P1,000.00) and not more than fifteen
thousand pesos (P15,000.00), or both, at the discretion of
the court.
If the offender is a corporation or association, the
officer responsible therefore shall be criminally liable.
K. Salient Provisions of RA NO. 9231 amending RA NO.
7610
SEC. 2. Section 12 of the same Act, as amended, is
hereby further amended to read as follows:
SEC. 12. Employment of Children. – Children below
fifteen (15) years of age shall not be employed except:
1) When a child works directly under the sole
responsibility of his/her parents or legal guardian and
where only members of his/her family are employed:
Provided, however, That his/her employment neither
endangers his/her life, safety, health, and morals, nor
impairs his/her normal development: Provided, further, That
the parent or legal guardian shall provide the said 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,
television or other forms of media is essential: Provided,
That the Employment contract is concluded by the child’s
parents or legal guardian, with the express agreement of
the child concerned, if possible, and the approval of the
Department of Labor and Employment: Provided, further,
That the following requirements in all instances are strictly
complied with:
(a) The employer shall ensure the protection,
health, safety, morals and normal development of the child:
(b) The employer shall institute measures to
prevent the child’s exploitation or discrimination taking into
account the system and level of remuneration, and the
duration and arrangement of working time; and
(c) The employer shall formulate and implement,
subject to the approval and supervision of competent
authorities, a continuing program for training and skills
acquisitions of the child. In the above-exceptional cases
where any such child may be employed, the employer shall
first secure, before engaging such child, a work permit from
the Department of Labor and Employment which shall
ensure observance of the above requirements.
For purposes of this Article, the term "child" shall
apply to all persons under eighteen (18) years of age."
SEC. 3. The same Act, as amended, is hereby further
amended by adding new sections to be denominated as
Sections 12-A, 12-B, 12-C, and 12-D to read as follows:
SEC. 12-A. Hours of Work of a Working
Child. – Under the exceptions provided in Section 12 of
this Act, as amended:
(1) A child below fifteen (15) years of age
may be allowed to work for not more than twenty (20) hours
a week: Provided, That the work shall not be more than
four (4) hours at any given day;
(2) A child fifteen (15) years of age but below
eighteen (18) shall not be allowed to work for more than
eight (8) hours a day, and in no case beyond forty (40)
hours a week: (3) No child below fifteen (15) years
of age shall be allowed to work between eight o’clock I the
evening and sic o’clock in the morning of the following day
and no child fifteen (15) years of age but below eighteen
(18) shall be allowed to work between ten o’clock in the
evening and six o’clock in the morning of the following day.
SEC. 12-B.
Ownership, Usage and administration the Working
Child’s Income. – The wages, salaries, earnings and
other income of the working child shall belong to him/her in
ownership and shall be set aside primarily for his/her
support, education or skills acquisition and secondarily to
the collective needs of the family: Provided, That not more
than twenty percent (20%) of the child’s income may be
used for the collective needs of the family.
The income of the
working child and/or the property acquired through the work
of the child shall be administered by both parents. In the
absence or incapacity of either of the parents, the other
parent shall administer the same. In case both parents are
absent or incapacitated, the order preference on parental
authority as provided for under the Family Code shall apply.
Sec. 12-C. Trust fund to
Preserve Part of the Working Child’s Income . – The
parent or legal guardian of a working child below eighteen
(18) years of age shall set up a trust fund for at least thirty
percent (30%) of the earnings of the child whose wages
and salaries from work and other income amount to at least
two hundred thousand pesos (P200,000.00) annually, for
which he/she shall render a semi-annual accounting of the
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fund to the Department of Labor and Employment, in
compliance with the provisions of this Act. The child shall
have full control over the trust fund upon reaching the age
of majority. Sec. 12-D. Prohibition
Against Worst Forms of Child Labor . – No child shall
be engaged in the worst forms of child labor. The phrase
"worst forms of child labor" shall refer to any of the
following: (1) All forms of
slavery, as defined under the "Anti-trafficking in Persons Act
of 2003", or practices similar to slavery such as sale and
trafficking of children, debt bondage and serfdom and
forced or compulsory labor, including recruitment of
children for use in armed conflict; or
(2) The use,
procuring, offering or exposing of a child for prostitution, for
the production of pornography or for pornographic
performances; or (3) The use,
procuring or offering of a child for illegal or illicit activities,
including the production and trafficking of dangerous drugs
and volatile substances prohibited under existing laws; or
(4)
Work which, by its nature or the circumstances in which it is
carried out, is hazardous or likely to be harmful to the
health, safety or morals of children, such that it:
a) Debases, degrades or demeans the intrinsic
worth and dignity of a child as a human being: or
b) Exposes the child to physical, emotional or
sexual abuse, or is found to be highly stressful
psychologically or may prejudice morals; or
c) Is performed underground, underwater or at
dangerous heights; or
d) Involves the use of dangerous machinery,
equipment and tools such as power-driven or explosive
power-actuated tools; or
e) Exposes the child to physical danger such as,
but not limited to the dangerous feats of balancing, physical
strength or contortion, or which requires the manual
transport of heavy loads; or
f) Is performed in an unhealthy environment
exposing the child to hazardous working conditions,
elements, substances, co-agents or processes involving
ionizing, radiation, fire, flammable substances, noxious
components and the like, or to extreme temperatures, noise
levels, or vibrations; or
g) Is performed under particularly difficult
conditions: or
h) Exposes the child to biological agents such as
bacteria, fungi, viruses, protozoans, nematodes and other
parasites; or
I) Involves the manufacture or handling of
explosives and other pyrotechnic products.
Sec. 4. Section 13 of the same Act is hereby amended to
read as follows:
SEC. 13. Access to Education and Training
for Working Children –
a) No child shall be deprived of formal or non-formal
education. In all cases of employment allowed in this Act,
the employer shall provide a working child with access to at
least primary and secondary education.
b) To ensure and guarantee the access; of the working
child to education and training, the Department of
Education (DEPED) shall:
(1) formulate, promulgate, and implement relevant
and effective course designs and educational programs;
(2) conduct the necessary training for the
implementation of the appropriate curriculum for the
purpose;
(3) ensure the availability of the needed
educational facilities and materials; and
(4) conduct continuity research and development
program for the necessary and relevant alternative
education of the working child.
c) The DEPED shall promulgate a course design under its
non-formal education program aimed at promoting the
intellectual, moral and vocational efficiency to working
children who have not undergone or finished elementary or
secondary education. Such course design shall integrate
the learning process deemed most effective under given
circumstances.
SEC. 5. Section 14 of the same Act is hereby amended to
read as follows:
Sec.14. Prohibition on the Employment of
Children in Certain Advertisements . – No child shall be
employed as a model in any advertisement directly or
indirectly promoting alcoholic beverage, intoxicating drinks,
tobacco and its byproducts, gambling or any for of violence
or pornography.
-END-
Respect the works of others.
Liberty Roxas
Ll.B
121