TOPIC 2 Social Welfare Benefits – Pag-IBIG, PhillHealth, SSS, Employee’s
BASIC PRINCIPLES Compensation Program, and other related laws.
Rights of Worker; In General
Constitutional rights in relation to labor standards
(Just Live Human)
1. Right to a living wage
2. Humane working conditions
3. Just share in the fruits of production
Implementing law is the Productivity Incentive Act of 1990.
"Productivity Incentives Program" refers to a formal agreement
established by the labor-management committee containing a
process that will promote gainful employment, improve working
conditions and result in increased productivity, including cost
savings, whereby the employees are granted salary bonuses
proportionate to increases in current productivity over the average
for the preceding three (3) consecutive years. The agreement shall
be ratified by at least a majority of the employees who have
rendered at least six (6) months of continuous service.
Constitutional rights in relation to labor relations
1. Self-organization
2. Collective bargaining and negotiation
3. Peaceful concerted activities including the right to strike
4. Security of tenure
5. Participate in policy and decision making processes affecting their
rights and benefits as may be provided by law.
Sources of Labor Laws
Labor Standard
(ROLJ)
1. Labor Code
2. Judicial Decisions
3. Rules and Regulations issued by Administrative Agencies
4. Omnibus Rules
Labor Relations
Primary
1. Constitution
2. Statutes
3. Supreme Court Decisions
Secondary
1. Decision of foreign courts
2. Reviewers
3. Opinions of labor departments and agencies
4. Rules and Regulations issued by DOLE
State’s Policy on Tripartism
A. Established a National Tripartite Industrial Peace Council (NTIPC)
Headed by SOLE
20 representatives each from labor and employer’s sectors, using the
most representative organization xxx of ILO Convention No. xxx
NTIPC has an oversight function when DOLE does not implement..
B. Established Tripartite Industrial Peace Council (TIPC) at the
regional or industry level
Representatives from government =, workers and employers
Serve as continuing forum for empowering workers xxx organization,
enhancing xxx
D.O. 4, S. 2016
Hours of work – not exceed 8 hours a day. If required to work beyond
8 hours, shall not exceed 12 hours in any 24-hour period.
Waiting Time – considered working time
Occupational Safety and Health – must be ensured
Transportation – shall be provided to the workers. Otherwise, workers
shall be reimbursed of costs.
Accommodation – shall be provided if work is “on location/set”
Minimum benefits – not lower than provided under the Labor Code
Labor Law Review – Atty. JMM
TOPIC 3
RIGHT TO HIRE
Right to Hire (Power to Hire)
Nature of Power: strictly speaking, it is not a right but a prerogative;
this is inherent in management
Management Prerogative - It is an act of the employer according
to his own judgment or discretion to regulate his business. This
includes hiring, transfer, dismissal, etc.
Limitations
a. Laws/Special Laws;
b. Collective Bargaining Agreement (CBA)or the Contract;
c. Principles of equity, fair play and justice.
Restrictions prior to hiring; Labor Code
1. Art. 136: An employer is prohibited from requiring as a
condition of employment that a woman employee shall not get
married.
The downside: this policy will encourage illicit or live-in relationships
2. Art. 248 (b): An employer is prohibited from requiring as a
condition of employment that a person or an employee shall not
join a labor organization or shall withdraw from one to which
he belongs.
- This is the only Unfair Labor Practice (ULP) which can be committed
even without Er-Ee relationship yet.
- Subject to criminal and civil liabilities.
- a.k.a. Yellow Dog Contract
3. Art. 139: An employer is prohibited from employing any
person below 18 years old in an undertaking which is hazardous
or deleterious in nature.
- As long as not below 15.
- Examples: Work which exposes children to physical, psychological or
sexual abuse, e.g. lewd shows (stripteasers, burlesque dancers),
bars (KTV, karaoke bars), massage clinics, gambling halls and
places, etc. - these are nominated as the worst forms of child labor.
These are deleterious and no person below 18 can be employed.
-Work underground, underwater at dangerous heights or at unguarded
heights of 2 meters and above or in confined places, e.g. mining,
deep sea fishing/diving, painting buildings, window cleaning, etc.
- WON there is parental consent is immaterial
- It is criminal under R.A. 9231: "b) Any person who violates the
provision of Section 12-D of this act or the employer of the
subcontractor who employs, or the one who facilitates the
employment of a child in hazardous work, shall suffer the penalty of
a fine of not less than One hundred thousand pesos (P100,000.00)
but not more than One million pesos (P1,000,000.00), or
imprisonment of not less than twelve (12) years and one (1) day to
twenty (20) years, or both such fine and imprisonment at the
discretion of the court.
Note: See D.O. 149, S. 2016
Restrictions prior to hiring: Special laws
1. Section 14, RA 7610, as amended by RA 7658
An employer is prohibited from employing child models in all
commercials or advertisements, promoting alcoholic beverages,
intoxicating drinks, tobacco and its by-products, and violence.
2. Section 32, Title 3, Chap. 1, RA 7277, Magna Carta for
Disabled Persons
No entity shall discriminate against a qualified disabled person by
reason of disability in regard to job application procedures, hiring,
etc.
3. RA 7877; Anti-Sexual Harassment Act of 1995
University of San Carlos
An employer in a work-related or employment environment, is
prohibited from asking sexual favor as a condition in the hiring or in
the employment, re-employment or continued employment of an
individual.
4. Section 55, RA 8791: General Banking Laws of 2000
No bank shall employ casual or non-regular personnel on too lengthy
probationary personnel in the conduct of its business involving
deposits.
- Hiring casual employees for too lengthy a time compromises bank
secrecy and threatens national security because banks are
essential to the economy. If there are no more people depositing
in banks because of lack of Bank Secrecy then the bank cannot
extend loans. If they cannot extend loans then there will be no
businesses, if there are no businesses then it would not be good
for the economy.
- This does not mean that banks cannot hire casual employees. Only
that they cannot handle bank deposits.
Note: Atty JMM's interpretation of "too lengthy" - beyond 6 months
which is the regular probationary period
5. Section 35, RA 8504, Philippine Aids Prevention and
Control Act of 1998
Discrimination in any form from pre-employment to post-employment,
including hiring, etc., based on actual, perceived or suspected HIV
status of an individual is prohibited.
6. IRR, RA 10354 (Reproductive Health Act, still subjected
to a TRO)
An employer is prohibited from suggesting, requiring, xxx any applicant
for employment xxx to submit himself/herself to sterilization, use
any modern methods of family planning, or not use such methods
as a condition of employment, continued employment, promotions
or the provision of employment benefits. Further, pregnancy or
the number of children shall not be a ground for non-hiring
or termination of employment.
- Discrimination based on the number of children is also illegal.
7. New Law; Anti-Age Discrimination in Employment Act; RA
10911
A. Objective/s
- To promote employment on basis of abilities, knowledge, skills,
qualifications, rather than on age
- To prohibit arbitrary age limitations and promote equal
employment opportunities
B. Coverage
- Employers
- Publishers
- Labor Contractors
- Labor Organization
C. Prohibitions
- To require declaration of age or birth date during the application
process or decline employment application by reason of one’s age,
unless age is a bona fide occupational qualification.
- To discriminate in terms of compensation, terms and conditions,
or privileges, or deny promotion or training opportunity on account
of age, unless age is a bona fide occupational qualification.
Doctrine; Principle of Law
Bona Fide Occupational Qualification rule
Employment in particular may not be imited to persons of a particular
sex, religion, regional origin unless the employer show that they are
bona fide…
Jurisprudence; Marital Discrimination
No spouse employment policy (2006 Star Paper) violates the employee's
marital status IF it discriminates against all spouses of present
employees without regard to the particular individual's qualification
or work performance.
Labor Law Review – Atty. JMM
Prohibiting employee from having personal or marital relationship with
employee of a rival company (2004 Glaxo Wellcome Phils.) is valid
IF it applies to men and women equally, and there exists compelling
business necessity.
Post retirement competitive employment ban (2006 Rivera)
Not valid if there is no evidence relating to the legitimate interest of the
employer which might be protected in terms of time, space and
types of activity proscribed.
Employer's qualifying "weight" standards for its flight steward
That is prescribed under its cabin and manual crew, considered a
continuing qualification to keep one's job, it involving flight safety
issues. It applies prior to and after hiring (2008 Yrasuegui case)
Expanding the positions reserved for persons with disabillity
(RA No. 10524, amending Section 5, RA No. 7277, published
on May 2, 2013)
An amendment to the magna carta for disabled persons. At least 1% of
all positions in the government agencies should be reserved xxxx
TOPIC 4
WAGE
WAGE AND WAGE RATIONALIZATION ACT
Wages: Concept (1985 Gaa)
Gaa is occupying a managerial/supervisory position in El Grande Hotel.
Her salary is not exempted from garnishment since that the
legislature intended the exemption in Article 1708 of the New Civil
Code to operate in favor of any but those who are laboring men or
women in the sense that their work is manual. Persons belonging to
this class usually look to the reward of a day's labor for immediate
or present support, and such persons are more in need of the
exemption than any others. Petitioner Rosario A. Gaa is definitely
not within that class.
Similar to Salary? (2006 Equitable Bank)
According to respondent Sadac, the catena of cases uniformly holds
that it is the obligation of the employer to pay an illegally dismissed
employee the whole amount of the salaries or wages, plus all other
benefits and bonuses and general increases to which he would have
been normally entitled had he not been dismissed; and therefore,
salary increases should be deemed a component in the computation
of backwages.
Bank: The established rule being that upon reinstatement, illegally
dismissed employees are to be paid their backwages without
deduction and qualification as to any wage increases or other
benefits that may have been received by their co-workers who were
not dismissed or did not go on strike.
Petitioner: The rule only speaks of WAGES, not salary. Therefore, being
a salary-earner, I am not covered.
Court: The reliance is misplaced. The distinction between salary and
wage in Gaa was for the purpose of Article 1708 of the Civil Code
which mandates that, "[t]he laborer's wage shall not be subject to
execution or attachment, except for debts incurred for food, shelter,
clothing and medical attendance." In labor law, however, the
distinction appears to be merely semantics. Paramount and
Evangelista may have involved wage earners, but the petitioner in
Espejo was a General Manager with a monthly salary of P9,000.00
plus privileges. That wage and salary are synonymous has been
settled in Songco v. National Labor Relations Commission. 63 We
said:
Broadly, the word "salary" means a recompense or consideration made
to a person for his pains or industry in another man's business.
Whether it be derived from "salarium," or more fancifully from "sal,"
the pay of the Roman soldier, it carries with it the fundamental idea
of compensation for services rendered. Indeed, there is eminent
authority for holding that the words "wages" and "salary" are in
essence synonymous (Words and Phrases, Vol. 38 Permanent
University of San Carlos
 Edition, p. 44 citing Hopkins vs. Cromwell, 85 N.Y.S. 839, 841, 89
App. Div. 481; 38 Am. Jur. 496). "Salary," the etymology of which is
the Latin word "salarium," is often used interchangeably with
"wage", the etymology of which is the Middle English word "wagen".
Both words generally refer to one and the same meaning, that is, a
reward or recompense for services performed. Likewise, "pay" is the
synonym of "wages" and "salary"
See Article 97 (f) for the definition of wage
For the purposes of the LC, there is no distinction between salary and
wage
“Wage” paid to any employee shall mean the remuneration or earnings,
however designated, capable of being expressed in terms of money,
whether fixed or ascertained on a time, task, piece, or commission
basis, or other method of calculating the same, which is payable by
an employer to an employee under a written or unwritten contract
of employment for work done or to be done, or for services rendered
or to be rendered and includes the fair and reasonable value, as
determined by the Secretary of Labor and Employment, of board,
lodging, or other facilities customarily furnished by the employer to
the employee. “Fair and reasonable value” shall not include any
profit to the employer, or to any person affiliated with the employer.
Doctrine; Principle of Law
In labor law, the distinction between salary and wage is merely
semantics
Both words refer to one and the same meaning, that is, reward or
recompense for services performed (2006 Equitable Bank Corp)
Distinction; When Relevant
Distinction applies under Article 1708 of the CC, which exempts the
laborers' wage from execution or attachment except for debts
incurred for food, shelter, clothing and medical attendance (1985
Gaa)
Wages refer to compensation for manual labor, skilled or unskilled
Salary denotes a higher grade of employment or a superior grade of
services and implies a position or office
o Meals and lodging provided to employees in order to maintain
their efficiency and health while working at their respective
project sites, are supplements, and not facilities. (ibid)
How do we know the proper valuation of the facilities?
o D.O. 126-13
o Revised guidelines on the conduct of facility evaluation
Facility Evaluation, Concept
Section 3 – Scope. Shall govern the conduct of evaluation by the
Regional Tripartite Wages and Productivity Boards of facilities
provided by the employer to his employees but shall exclude
supplements.
Refers to articles or services provided by the employer for the benefit
of the employee or his/her family such as:
 Meals
 Housing for dwelling purposes
 Fuel including electricity, water, gas for the non-commercial
personal use of the employee
 Transportation furnished to the employee between his
home and work where the travel time does not constitute
compensable hours worked.
 Xxx other articles and services given to benefit him and his
family
Mechanics; Evaluation of Facility
How initiated?
Filing of the application for the conduct of facility evaluation with the
RTWPB having jurisdiction over the workplace (Section 1, Rule 2)
Proper party?
Union, worker; owner/manager
Timeline:
If new, before the introduction of the proposed facilities
If existing: at any time

Wage; Concept Result:

Facilities; concept The RD/DOLE shall issue a Facility Evaluation Order
Articles or services for the benefit of the employee or his family
Deductible, facilities; requisites (Mabeza) Remedy:
(1) proof that such facilities are customarily furnished by the trade; Appeal to the NWPC (Rule V)
(2) voluntary acceptance in writing by the employees of the deductible Will not stay the order (Section 4, Rule V)
facilities; and Will stay effective until its revoked xxx
(3) proof of the fair and reasonable value of the facilities charged.
Publication:
Can you pay employee partly in kind? Employer must post in the bulletin board or in a conspicuous place and
o GR: No. submit certificate of posting to the RTWPB (section 4, Rule IV)
o Except: facilities
Enforcement:
Requisites of a Facility Visitorial and Enforcement Power and Simple Money Claims (Rule VI)
1. Customarily given
2. Fair and reasonable value (fair valuation by the SOLE but now, by Requisites for Deductibility of Facilities (from Ee's wage)
the RTWPB under DO 126-13) o Mabeza case (CVF)
3. Accepted in writing by employees o Also see DO 126-13
Supplement Article 97 also tells us the methods of determining
Extra remuneration or special privileges or benefits given to or received compensation;
by the laborer over and above his earnings or wages (2011 SLL Note: enumeration here is not exclusive
International Cable Specialist)
This is not deductible from the wage METHODS OF FIXING COMPENSATION
In determining the classification, the basis is not the kind but the Time (daily paid and monthly paid)
purpose (for whose benefit is it given?) A. Time Spent; Concept
Once the agreed period of work is completed, the compensation is
Jurisprudence; Supplement, Not Facilities earned and becomes due regardless of result.
o Free board and lodging 7 days a week (2010 SIP Food House)
o Food allowance, and allowance for lodging house, transportation, Two types; time-based earners: divisors
electricity, water and snacks (2011 SLL International Cable For monthly-paid employees: 365
Specialist) For daily-paid employees
a. 393.50 (mon-sun)

Labor Law Review – Atty. JMM University of San Carlos

 b. 313 (mon-sat) (it used to be 312 but because there are
now 12 regular holidays, the divisor became 313)
c. 261 (mon-fri)
For example: 261 x 327 = 85,347/12
Note: We now have 12 regular holidays, thus, the divisor has changed.
Frequency of payment is not the basis of the type of time-based worker
that you are but the divisor that is used in the computation of the
salary.
B. Job or task
C. Piece-rate
D. Commission
E. Boundary
F. Partly-fixed and partly-based on performance
Daily-Paid Worker
No work, no pay
Jurisprudence
Use of 360 divisor for Monday to Friday work (2007 Leyte IV Electric
Cooperative)
In this case, the employees are required to work only from Monday to
Friday. Thus, the minimum allowable divisor is 263, which is arrived
at by deducting 51 un-worked Sundays and 51 un-worked Saturdays
from 365 days. Considering that petitioner used the 360-day
divisor, which is clearly above the minimum, indubitably,
petitioner's employees are being given their holiday pay.
Thus, the Voluntary Arbitrator should not have simply brushed aside
petitioner's divisor formula. In granting respondent's claim of non-
payment of holiday pay, a "double burden" was imposed upon
petitioner because it was being made to pay twice for its employees'
holiday pay when payment thereof had already been included in the
computation of their monthly salaries.
Use of 314 divisor for Monday to Saturday work (2006 Arellano
University Employees and Workers' Union; see also 1995 Wellington
Investment)
Arellano Case – As for petitioners claim of substantial diminution of their
salary on account of the divisor used by the University in its
computation 314 days, instead of 365 days, this Court finds nothing
wrong therewith. Sundays being un-worked and considered unpaid
rest days, while regular holidays as well as special holidays
considered as paid days, the factor used by the University merely
complies with the basic rule in this jurisdiction of no work, no pay.
The right to be paid for un-worked days is generally limited to the
ten legal holidays in a year.
Wellington Investment - In this case, the monthly salary was fixed by
Wellington to provide for compensation for every working day of the
year including the holidays specified by law — and excluding only
Sundays. In fixing the salary, Wellington used what it called the "314
factor"; that is, it simply deducted 51 Sundays from the 365 days
normally comprising a year and used the difference, 314, as basis
for determining the monthly salary. The monthly salary thus fixed
actually covered payment for 314 days of the year, including regular
and special holidays, as well as days when no work was done by
reason of fortuitous cause, such as transportation strike, riot, or
typhoon or other natural calamity, or cause not attributable to the
employees.
Monthly Paid Employee; Concept
Reversion from 365 divisor (1999 Phil. Veterans Bank)
Petitioner can no longer invoke the 26.16 factor after it voluntarily
adopted the 365 factor as a policy even prior to its receivership. To
abandon such policy and revert to its old practice of using the 26.16
factor would be a diminution of a labor benefit, which is prohibited
by the Labor Code. It cannot be doubted that the 365 factor favors
petitioner's employees, including MOLINA, because it result in a
higher determination of their monthly salary.||| (Philippine Veterans
Labor Law Review – Atty. JMM
Bank v. National Labor Relations Commission, G.R. No. 130439,
[October 26, 1999], 375 PHIL 957-970)
Covered by "no work, no pay" if absent without pay (2004
Odango)
We have long ago declared void Section 2, Rule IV of Book III of the
Omnibus Rules Implementing the Labor Code. In Insular Bank of
Asia v. Inciong, 14 we ruled as follows:
Section 2, Rule IV, Book III of the Implementing Rules and Policy
Instructions No. 9 issued by the Secretary (then Minister) of Labor
are null and void since in the guise of clarifying the Labor Code's
provisions on holiday pay, they in effect amended them by enlarging
the scope of their exclusion.
The Labor Code is clear that monthly-paid employees are not
excluded from the benefits of holiday pay. However, the
implementing rules on holiday pay promulgated by the then
Secretary of Labor excludes monthly-paid employees from the said
benefits by inserting, under Rule IV, Book III of the implementing
rules, Section 2 which provides that monthly-paid employees are
presumed to be paid for all days in the month whether worked or
not.
Thus, Section 2 cannot serve as basis of any right or claim. Absent any
other legal basis, petitioners' claim for wage differentials must fail.
Even assuming that Section 2, Rule IV of Book III is valid, petitioners'
claim will still fail. The basic rule in this jurisdiction is "no work, no
pay." The right to be paid for un-worked days is generally limited
to the ten legal holidays in a year. Petitioners' claim is based on a
mistaken notion that Section 2, Rule IV of Book III gave rise to a
right to be paid for un-worked days beyond the ten legal holidays.
In effect, petitioners demand that ANTECO should pay them on
Sundays, the un-worked half of Saturdays and other days that they
do not work at all. Petitioners' line of reasoning is not only a violation
of the "no work, no pay" principle, it also gives rise to an invidious
classification, a violation of the equal protection clause. Sustaining
petitioners' argument will make monthly-paid employees a privileged
class who are paid even if they do not work.
The use of a divisor less than 365 days cannot make ANTECO
automatically liable for underpayment. The facts show that
petitioners are required to work only from Monday to Friday and half
of Saturday. Thus, the minimum allowable divisor is 287, which is
the result of 365 days, less 52 Sundays and less 26 Saturdays (or 52
half Saturdays). Any divisor below 287 days means that ANTECO's
workers are deprived of their holiday pay for some or all of the ten
legal holidays. The 304 days divisor used by ANTECO is clearly
above the minimum of 287 days.
Job or Task, Concept
A flat or fixed sum is paid for each particular job or task completed,
without regard to the number of hours actually spent in the
performance or completion.
Piece Work, Concept
A standard amount is fixed 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.
Workers Paid by Results
There are two types: those whose time and performance are supervised
and those who are not supervised
Significance: Article 82 of the Labor Code
Workers paid by results are not entitled to the benefits under the same
Title (Title I: Working Conditions and Rest Periods); not covered by
certain labor standards
Art. 82. Coverage. The provisions of this Title shall apply to
employees in all establishments and undertakings whether for profit
or not, but not to government employees, managerial employees,
University of San Carlos
 field personnel, members of the family of the employer who are
dependent on him for support, domestic helpers, persons in the
personal service of another, and workers who are paid by
results as determined by the Secretary of Labor in appropriate
regulations.
Jurisprudence:
Tailors (1999 Lambo) - classified as a piece-rate worker
In this case, private respondents exercised control over the work of
petitioners. As tailors, petitioners worked in the company’s premises
from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays.
The mere fact that they were paid on a piece-rate basis does not
negate their status as regular employees of private respondents. The
term "wage" is broadly defined in Art. 97 of the Labor Code as
remuneration or earnings, capable of being expressed in terms of
money whether fixed or ascertained on a time, task, piece or
commission basis. Payment by the piece is just a method of
compensation and does not define the essence of the relations. Nor
does the fact that petitioners are not covered by the SSS affect the
employer-employee relationship.
Sewer, ironer, tailor, and repairman (Villuga) - these are
workers paid by result
The mere fact that petitioners were paid on a piece-rate basis is no
argument that herein petitioners were not employees. The term
"wage" has been broadly defined in Article 97 of the Labor Code as
remuneration or earnings, capable of being expressed in terms of
money whether fixed or ascertained on a time, task, piece or
commission basis. . . ." The facts of this case indicate that payment
by the piece is just a method of compensation and does not
define the essence of the relation. 13 The petitioners were
allowed to perform their work at home does not likewise
imply absence of control and supervision. The control test calls
merely for the existence of a right to control the manner of
doing the work, not the actual exercise of the right.
In the employ of private respondent as early as 1972 or at the latest
in 1976, faithfully rendering services which are desirable or
necessary for the business of private respondent, and observing
management's approved standards set for their respective lines of
work as well as the customers' specifications, petitioners should be
considered employees, not independent contractors.
Commission; Concept
A percentage or a fraction of the proceeds resulting from sales or similar
transactions effected is fixed
Commission is only a method of payment.
Salesmen (1990 Songco)
Granting, in gratia, that the commission were in the form of incentives
or encouragement, so that the petitioners were would be inspired to
put a little more industry on the jobs particularly assigned to them,
still these commissions are direct remuneration services rendered
which contributed to the increase in the income of Zuellig.
Commision is the recompense, compensationor reward of an agent,
salesman xxx, when the same is calculated as percentage on the
amount of his transactions or on the profit to the principal.
The nature of the work of a salesman anf the reason for such type of
remuneration for services rendered demonstrate clearly that
commission are part of petitioner’s wage or salary.
We take judicial notice of the fact that some salesman do not
receive any basic salary but depends on commissions and
allowances or commissions alone, although an employer-
employee relationship exists.
If we adopt the view that commissions do not form part of wage or
salary, then, in effect, we will be saying that this kind of salesmen
do not receive any salary and therefore, not entitled to separation
pay. This is not in accord with the liberal spirit of our labor laws and
considering the purpose of separation pay which is, to alleviate the
Labor Law Review – Atty. JMM
difficulties which confront dismissed employee thrown the streets to
face the harsh necessities of life.
Applying by analogy the case in Soriano v. NLRC, since the
commissions in the present case were earned by actual
market transactions attributable to petitioners, these
should be included in their separation pay.
Drivers and dispatchers (1996 San Miguel Jeepney Services)
Regular employees since they are performing work that is necessary
and desirable in the business of SMJS. Without the drivers and
dispatchers, SMJS could not have conducted their business of
providing transportation services. They have also rendered 2-8 years
of services, making them regular employees (See Article 280, LC).
The mere fact they were paid on commission basis does not affect or
change their status are regular employees. The test for determining
whether an employee is regular or causal has nothing to do with the
manner of computing or paying employees’ wages or compensation.
Boundary System; Concept
A fixed amount is remitted by the driver to the owner/operator and he
gets to earn the amount in excess thereof
If there are many passengers, the driver benefits from it (2011 Caong,
Jr.)
It is already settled that the relationship between jeepney
owners/operators and jeepney drivers under the boundary system
is that of employer-employee and not of lessor-lessee. The fact
that the drivers do not receive fixed wages but only get the
amount in excess of the so-called “boundary” that they pay to
the owner/operator is not sufficient to negate the relationship
between them as employer and employee.
Partly-Fixed-Partly-Performance Based
Employment of drivers and conductors in the public utility bus transport
industry under D.O. No. 118-12, S. 2012 dated January 13, 2012
Salient points:
 Amount mutually agreed
 BUT not lower than the applicable minimum wage (Basic + COLA)
 Shall include wage-related benefits
 Maybe fixed based on time (e.g. daily/monthly) per trip or per
kilometer/distance, within an 8 hour period; result or output based
(Section 2, Rule II, NWPC Guidelines No. 1, S. 2012)
Performance-based Component:
1. Business performance (revenue/ridership)
2. Safety performance (safety record i.e. incidence of road accident,
traffic violations)
Compliance of this department regulation is a prerequisite to a renewal
with the LTFRB
Jurisprudence; per trip basis
Paying on a per trip basis is merely a method of computing
compensation (2005 chavez)
Wages are defined as 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 service rendered or to be
rendered.[13] That the petitioner was paid on a per trip basis is not
significant. This is merely a method of computing compensation and
not a basis for determining the existence or absence of employer-
employee relationship. One may be paid on the basis of results or
time expended on the work, and may or may not acquire an
employment status, depending on whether the elements of an
employer-employee relationship are present or not.[14] In this case,
it cannot be gainsaid that the petitioner received compensation from
the respondent company for the services that he rendered to the
latter.
University of San Carlos

2013 RECENT DOLE REGULATIONS*
Revised guidelines on the conduct of time and motion study
published on April 20, 2013 (DOLE D.O. No. 125-13 dated April 1, 2013)
- Upon application with the RTWPB, a production order or piece rate
order which will serve as the guide to how much will be paid the
worker
- Employer, EE, Union may file
- If it turns out the you are paying less than what was fixed, the ER
may be held liable for the difference
Time and Motion Study, defined
Systematic determination of work method and time standards using
various tools/technologies (Section 5, No. 15, Rule I)
Coverage
All workers of micro, small and medium enterprises who are paid by
results, including:
a. pakyao,
b. piecework and
c. other non-time work pursuant to Article 101 of the Labor Code
(Section 4, Rule I)
Art. 101. Payment by results.
The Secretary of Labor and Employment shall regulate the payment of
wages by results, including pakyao, piecework, and other non-time
work, in order to ensure the payment of fair and reasonable wage
rates, preferably through time and motion studies or in consultation
with representatives of workers’ and employers’ organizations.
Scope
The guidelines shall govern the conduct of time and motion study by
the RTWPB (Section 3, Rule I)
How initiated
Filing of application for the conduct of time and motion study with the
RTWPB having jurisdiction over the workplace (Section 1, Rule II)
Proper Party: union, worker, owner/manager
Note: There is no need for this study when you are paying your
employees by time.
Timeline
- If new: before the rates are given effect
- If existing: at any time
Result
The RD/DOLE as RTWPB Chairperson shall issue a piece rate and/or
production standard order
Remedy: appeal to the NWPC
Effectivity: until revoked or suspended or revised or reviewed (Rule
III)
Publication: employer must post in the bulletin board or in a
conspicuous place, and submit certificate of posting to the RTWPB
(Rule III)
Enforcement: visitorial and enforcement power and simple money
claims (Rule IV)
Doctrines; Principles of Law
Fair day's wage for a fair day's labor, or no work, no pay (1997 Caltex
Refinery Employees Association; 2004 Odango)
1997 Caltex Refinery Employees Association
Private respondent is merely asking that an employee should be paid
on the basis of work done. If such employee is absent on a
certain day, he should not, as a rule, be paid wages for that
day. And if the employee has worked only for a portion of a
Labor Law Review – Atty. JMM
day, he is not entitled to the pay corresponding to a full day.
A contrary precept would ultimately result in the financial
ruin of the employer. The age-old general rule governing relations
between labor and capital, or management and employee, is “a fair
day’s wage for a fair day’s work.” If no work is performed by the
employee, there can be no wage or pay unless, of course,
the laborer was ready, willing and able to work but was
locked out, dismissed, suspended or otherwise illegally
prevented from working.
2004 Odango
The Labor Code is clear that monthly-paid employees are not
excluded from the benefits of holiday pay. However, the
implementing rules on holiday pay promulgated by the then
Secretary of Labor excludes monthly-paid employees from the said
benefits by inserting, under Rule IV, Book III of the implementing
rules, Section 2 which provides that monthly-paid employees are
presumed to be paid for all days in the month whether worked or
not.
Thus, Section 2 cannot serve as basis of any right or claim. Absent any
other legal basis, petitioners' claim for wage differentials must fail.
Even assuming that Section 2, Rule IV of Book III is valid, petitioners'
claim will still fail. The basic rule in this jurisdiction is "no work, no
pay." The right to be paid for un-worked days is generally limited
to the ten legal holidays in a year. Petitioners' claim is based on a
mistaken notion that Section 2, Rule IV of Book III gave rise to a
right to be paid for un-worked days beyond the ten legal holidays.
In effect, petitioners demand that ANTECO should pay them on
Sundays, the un-worked half of Saturdays and other days that they
do not work at all. Petitioners' line of reasoning is not only a violation
of the "no work, no pay" principle, it also gives rise to an invidious
classification, a violation of the equal protection clause. Sustaining
petitioners' argument will make monthly-paid employees a privileged
class who are paid even if they do not work.
Equal pay for equal work
2000 International School Alliance of Educators vs. Quisumbing
The foregoing provisions impregnably institutionalize in this jurisdiction
the long honored legal truism of "equal pay for equal work." Persons
who work with substantially equal qualifications, skill, effort and
responsibility, under similar conditions, should be paid similar
salaries. This rule applies to the School, its "international character"
notwithstanding.
2015 SSS/Ubana
If an employer accords employees the same position and rank,
the presumption is that these employees perform equal
work.
There is no evidence here that foreign-hires perform 25% more
efficiently or effectively than the local-hires. Both groups have
similar functions and responsibilities, which they perform
under similar working conditions.
For the same reason, the "dislocation factor" and the foreign-hires'
limited tenure also cannot serve as valid bases for the distinction in
salary rates. The dislocation factor and limited tenure affecting
foreign-hires are adequately compensated by certain benefits
accorded them which are not enjoyed by local-hires, such as
housing, transportation, shipping costs, taxes and home leave travel
allowances.
Such classification is against public policy.
FIXING OF MINIMUM WAGE; AGENCIES
University of San Carlos
RTWPB; composition and powers and jurisdiction***1
1. (1) Chairman - Regional Director of DOLE
2. (2) Vice-chairmen – Regional Directors of National Economic and
Development Authority (NEDA) and Department of Trade and
Industry (DTI)
3. (2) Members from workers sectors
4. (2) Members from employers sectors
Note: 3 and 4 shall be appointed by the President, upon the
recommendation of the Secretary of Labor and Employment, to be
made on the basis of the list of nominees submitted by the workers
and employers sectors, respectively, and who shall serve for a term
of 5 years.
5. Each Regional Board to be headed by its chairman shall be
assisted by a Secretariat.
Power to fix the minimum wage and grant exemptions2
NWPC; composition, powers and jurisdiction
1. (1) Ex officio Chairman – Secretary of DOLE
2. (1) Ex officio Vice Chairman – Director-General of NEDA
3. (2) Members from workers sectors
4. (2) Members from employers sectors
Note: 3 and 4 shall be appointed by the President, upon the
recommendation of the Secretary of Labor and Employment, to be
made on the basis of the list of nominees submitted by the workers
and employers sectors, respectively, and who shall serve for a term
of 5 years.
5. The Executive Director of the Commission shall also be a member
of the Commission.
Powers
It cannot fix the minimum wage but the wage orders are subject to the
review of the NWPC
Promulgate rules and regulations
Fixing the Minimum Wage – through an issuance of a Wage Order
Advantages: enhances the morale of workers
Disadvantages:
a. it might lead to unemployment if the employer cannot afford such
b. Legitimizes poverty
Employee, by himself, cannot file for wage distortion. He has to be
represented by a union.
Appeal wage order with NWPC 10 days from PUBLICATION.
Principal policies
- Rationalize the fixing of minimum wage
- Promote collective bargaining as primary mode of settling wages
(primary mode of settling wage disputes)
Employer's right to reasonable returns on investment and to
expansion and growth
2004 Duncan Association of Detailman-PTGWO
Glaxo’s policy prohibiting an employee from having a relationship with
an employee of a competitor company is a valid exercise of
management prerogative.
Glaxo has a right to guard its trade secrets, manufacturing formulas,
marketing strategies and other confidential programs and
information from competitors, especially so that it and Astra are rival
companies in the highly competitive pharmaceutical industry.
The prohibition against personal or marital relationships with employees
of competitor companies upon Glaxo’s employees is reasonable
under the circumstances because relationships of that nature might
compromise the interests of the company. In laying down the
assailed company policy, Glaxo only aims to protect its interests
1 2
Bar question
Labor Law Review – Atty. JMM
against the possibility that a competitor company will gain access to
its secrets and procedures.
That Glaxo possesses the right to protect its economic interests cannot
be denied. No less than the Constitution recognizes the right
of enterprises to adopt and enforce such a policy to protect
its right to reasonable returns on investments and to
expansion and growth. Indeed, while our laws endeavor to give
life to the constitutional policy on social justice and the protection of
labor, it does not mean that every labor dispute will be decided in
favor of the workers. The law also recognizes that management has
rights which are also entitled to respect and enforcement in the
interest of fair play.
Wage Distortion; Concept
A wage distortion shall mean a situation where an increase in prescribed
wage results in the elimination or severe contraction of intentional
quantitative differences in wage or salary rates between and among
employee groups in an establishment as to effectively obliterate the
distinctions embodied in such wage structure based on skills, length
of service, or other logical bases of differentiation. (Art. 124, LC)
4 requisites
1999 Prubankers Association
Wage distortion involves four elements:
1. An existing hierarchy of positions with corresponding salary rates
2. A significant change in the salary rate of a lower pay class without
a concomitant increase in the salary rate of a higher one
3. The elimination of the distinction between the two levels
4. The existence of the distortion in the same region of the country.
There must be a wage order
How to Resolve (unorganized and organized establishment)
Organized
The employer and the union should negotiate to correct the
distortions. Any dispute arising from wage distortions should be
resolved through the grievance procedure under their CBA and,
if it remains unresolved, through voluntary arbitration. Unless
otherwise agreed by the parties in writing, such dispute shall be
decided by the Voluntary Arbitrator or panel of Voluntary Arbitrators
within 10 days from the time said dispute was referred to voluntary
arbitration.
Unorganized
Any dispute arising therefrom should be settled through the National
Conciliation and Mediation Board (NCMB) and, if it remains
unresolved after 10 days of conciliation, should be referred to any
of the Labor Arbiters of the appropriate branch of the NLRC.
It shall be mandatory for the NLRC to conduct continuous hearings
and decide the dispute within 20 days from the time said dispute is
submitted to compulsory arbitration.
Methods of Determining Wages
1. Floor wage method; and
- This usually causes wage distortion
2. Salary-ceiling method
1991 Employers Confederation of the Philippines;
As the Commission noted, the increasing trend is toward the second
mode, the salary-cap method, which has reduced disputes arising
from wage distortions (brought about, apparently, by the floor-wage
method). Of course, disputes are appropriate subjects of collective
bargaining and grievance procedures, but as the Commission
observed and as we are ourselves agreed, bargaining has helped
very little in correcting wage distortions. Precisely, Republic Act No.
6727 was intended to rationalize wages, first, by providing for full-
time boards to police wages round-the-clock, and second, by giving
the boards enough powers to achieve this objective. The Court is of
the opinion that Congress meant the boards to be creative in
resolving the annual question of wages without labor and
Bar question
University of San Carlos
 management knocking on the legislature's door at every turn. The
Court's opinion is that if Republic No. 6727 intended the boards
alone to set floor wages, the Act would have no need for a board
but an accountant to keep track of the latest consumer price index,
or better, would have Congress done it as the need arises, as the
legislature, prior to the Act, has done so for years. The fact of the
matter is that the Act sought a "thinking" group of men and women
bound by statutory standards.
2007 Metropolitan Bank
In the Metropolitan Bank case, the RTWPB exercises quasi-
legislative power when it fixes wage order
In the issuance of the assailed Wage Order, respondent RTWPB did not
act in any judicial, quasi-judicial capacity, or ministerial capacity. It
was in the nature of subordinate legislation, promulgated by it in the
exercise of delegated power under R.A. No. 6727. It was issued in
the exercise of quasi-legislative power. Quasi-legislative or rule-
making power is exercised by administrative agencies through the
promulgation of rules and regulations within the confines of the
granting statute and the doctrine of non-delegation of certain
powers flowing from the separation of the great branches of the
government.
Court: As a general rule, certiorari or prohibition is not available against
a body exercising quasi-legislative power, however, the Court
dispensed with technicalities that tend to frustrate, rather than
promote substantial justice, must always be eschewed
In the present case, the RTWPB did not determine or fix the minimum
wage rate by the floor-wage method or the salary-ceiling method in
issuing the Wage Order. The RTWPB did not set a wage level nor a
range to which a wage adjustment or increase shall be added.
Instead, it granted an across-the-board wage increase of
P15.00 to all employees and workers of Region 2. In doing so, the
RTWPB exceeded its authority by extending the coverage of
the Wage Order to wage earners receiving more than the
prevailing minimum wage rate, without a denominated
salary ceiling.
Jurisprudence; No Wage Distortion
If increase in hiring rate is brought about by the employer voluntarily
and unilaterally even without increasing the salary rates of old
employees
2004 Bankard Employees Union
If the compulsory mandate under Article 124 to correct wage distortion
is applied to voluntary and unilateral increases by the employer in
fixing hiring rates which is inherently a business judgment
prerogative, then the hands of the employer would be completely
tied even in cases where an increase in wages of a particular group
is justified due to a re-evaluation of the high productivity of a
particular group, or as in the present case, the need to increase the
competitiveness of Bankards hiring rate. An employer would be
discouraged from adjusting the salary rates of a particular group of
employees for fear that it would result to a demand by all employees
for a similar increase, especially if the financial conditions of the
business cannot address an across-the-board increase.
Note
GR: Salary increase cannot be demanded when the wage distortion was
caused by other instances other than the issuance of wage order
(i.e. salary given by ERs)
XPN: is when the giving of salary increases already ripened into a
company practice which is not the case here.
Wage Distortion; Jurisprudence
No right to wage increase under a wage order if employee is receiving
above minimum wage
2006 Pag-asa Steel Work
Not one of the members of respondent Union was then receiving less
than P250.00 per day, the minimum wage requirement in said wage
Labor Law Review – Atty. JMM
order. Thus, they are not entitled to a wage increase under the wage
order.
Note: An exception to this is when the giving of salary increases already
ripened into a company practice which is not the case here.
Moreover, to ripen into a company practice that is demandable as a
matter of right, the giving of the increase should not be by reason
of a strict legal or contractual obligation, but by reason of an act of
liberality on the part of the employer.
Violation of Wage Order/s: Penalty
Civil liability: double indemnity (DOLE D.O. 10, S. 1998; 2009 Phil.
Hoteliers, Inc)
The Court, however, finds no basis to hold Dusit Hotel liable for double
indemnity. Under Section 2(m) of DOLE Department Order No. 10,
Series of 1998,30 the Notice of Inspection Result "shall specify the
violations discovered, if any, together with the officer's
recommendation and computation of the unpaid benefits due each
worker with an advice that the employer shall be liable for double
indemnity in case of refusal or failure to correct the violation within
five calendar days from receipt of notice." A careful review of the
Notice of Inspection Result dated 29 May 2002, issued herein by the
DOLE-NCR to Dusit Hotel, reveals that the said Notice did not contain
such an advice. Although the Notice directed Dusit Hotel to correct
its noted violations within five days from receipt thereof, it was not
sufficiently apprised that failure to do so within the given period
would already result in its liability for double indemnity.
Criminal Liability
The LA does not have the power to impose criminal liability; BP 129
governs
Terms, Definitions (DOLE D.O. 10, S. 1998)***
Wage rates - the lowest basic pay that the employer can pay his workers
including cost of living allowances as fixed by the Board, but excludes
other wage-related benefits such as overtime pay, bonuses, night
shift differential pay, holiday pay, premium pay, 13th month pay,
premium pay, leave benefits, among others.
Wage order - the order promulgated by the board pursuant to its wage
fixing authority
Unpaid benefits - the prescribed wage rates which the employer failed
to pay upon the effectivity of a wage order exclusive of other wage-
related benefits. "Unpaid benefits" as herein understood shall be the
principal basis for computing the double indemnity.
- Basis for computing the double indemnity
Double Indemnity - the payment to a concerned employee of the
prescribed increases or adjustments in the wage rates, which was
not paid by an employer in amount equivalent to twice the unpaid
benefits owing to such employee.
Notice of inspection result - the inspection form duly accomplished and
issued by the labor standards enforcement officer to the employer
or his representative after the completion of the inspection. The
notice shall specify the violations discovered, if any, together with
the officers recommendation and computation of the unpaid benefits
due each worker with an advice that the employer shall be liable for
double indemnity in case of refusal or failure to correct the violation
within five (5) calendar days from receipt of notice.
- Violation must be corrected within 5 days from receipt
Compliance order - the order issued by the regional director, after due
notice and hearing conducted by himself or a duly authorized
hearing officer finding that a violation has been committed and
directing the employer to pay the amount due each worker within
ten (10) calendar days from receipt thereof.
- Ten days to comply; otherwise, it becomes final
Double Indemnity; Rules; DO No. 10, S. 1998
University of San Carlos
When to start period of computation
SECTION 4. Double Indemnity, when to Start Period of Compution.
a. The computation for double indemnity as herein defined shall start
from the effectivity of the prescribed increases or adjustments as
indicated in the wage order.
Basis for the computation
b. The basis for the computation of double indemnity shall be limited to
the unpaid benefits as defined herein.
Effect of partial compliance
c. Where there is partial compliance with the prescribed increase or
adjustment the basis for computing double indemnity shall be the
balance of unpaid benefits reckoned from the effectivity of the wage
order.
Exemption from Wage Order
A. By application (NWPC Guidelines No. 01, S. 1996)
1. Distressed establishments
2. New business enterprises (NBEs)
3. Retail/Service establishments employing not more than ten (10)
workers
4. Establishments adversely affected by natural calamities
Distressed establishment (1997 Joy Brothers, Inc)
- Including those affected by natural calamities
Since Wage Order No. NCR-03 was published on December 1, 1993 and
thus became effective on December 16, 1993, the coverage of the
interim period for the year 1993 is the time frame at issue herein.
Petitioner suggests that since the wage order took effect on
December 16, 1993, the interim period referred to by the
implementing rules ends on December 15, 1993. Initially, however,
petitioner contended that said interim period ends on December 31,
1993. Petitioner adds that interim period has been misinterpreted to
mean partial accounting period, i.e. from January 1, 1993 to
September 30, 1993.
The Revised Guidelines on Exemption further provides that the following
documents shall be submitted in support of the corporations
application:
For Distressed Establishments:
b. Available audited financial statements (together with the notes
thereto) for the last 2 full accounting periods preceding the
effectivity of the Order filed with and stamped received by the BIR
and SEC.
Interim quarterly financial statements (together with the notes thereto)
for the period immediately preceding the effectivity of the Order.
Income tax returns for the last 2 taxable periods filed with and stamped
received by the BIR.[11]
The Guidelines expressly require interim quarterly financial
statements for the period immediately preceding December
16, 1993. It is clear that the financial statements worthy of
consideration are those of the three quarters prior to
December 16, 1993, the third quarter ending on September
30, 1993. Thus, petitioner manifestly errs in claiming that
said interim period is up to December 15, 1993 or December
31, 1993.
Retail/service establishments (1999 C. Planas Commercial) (10 and
below employees; retail=selling goods directly to consumers)
1999 C. Planas Commercial
Retail/service establishments regularly employing not more than ten
(10) workers may be exempted from the applicability of this Act
upon application with and as determined by the appropriate
Regional Board in accordance with the applicable rules and
Labor Law Review – Atty. JMM
regulations issued by the Commission. Whenever an application for
exemption has been duly filed with the appropriate Regional Board,
action on any complaint for alleged non-compliance with this Act
shall be deferred pending resolution of the application for exemption
by the appropriate Regional Board.
BMBE (capitalization of 3 Million)
B. By operation of law (Article 98)3
This Title shall not apply to farm tenancy or leasehold, domestic service
and persons working in their respective homes in needle work or in
any cottage industry duly registered in accordance with law.
 GR: home workers are entitled to minimum wage
 Exception: home workers doing needle work
Effect of Pendency; Issuance of Compliance Order
No compliance order shall be issued during the application for
exemption
Remedy: RTWPB -NWPC-CA (rule 43?)- SC
------------------------------- End of part 1 -------------------------------------
-------------------------- Start of Part 2-------------------------------------
Wage enforcement and recovery tools
A. Visitorial and enforcement power of the SOLE (Article 128/
Section 9, RA 6727)
o Other visitorial powers (Article 274)
B. Simple money claims; requisites (Article 129; 1993 Rajah
Humabon Hotel) – RD
Regional directors can assume authority only upon the concurrence of
these requisites:
1. The claim is presented by an employee or person employed in
domestic or household service, or househelper under the code;
2. The claimant, no longer being employed, does not seek
reinstatement;
3. The aggregate money claim of the employee or housekeeper does
not exceed five thousand pesos (P5,000.00).
 Scope of Power; Visitorial and Enforcement Power (Article
128)
o The DOLE is fully empowered to determine the
existence of employer-employee relationship,
subject to judicial review, not review by the NLRC.
NO limitation is imposed by law. The DOLE does not
need to seek the NLRC's determination (2012
People's Broadcasting Service [Bombo Radyo,
Phils.])
o It may constitute res judicata, if the requisites are
complied with (e.g. same parties, etc.)
Article 128
Types of DOLE Inspection
Issuance of Compliance Order
A. Routine Inspection
B. Complaint Inspection
Rules on Labor Law Compliance
Published on August 7, 2013 (DOLE D.O. No. 131-13 dated July 19,
2013)
The basis of this is Article 128.
Before, they have the Manual for Labor Inspection but this has already
been superseded by this new Labor Law Compliance D.O.
Labor Law Compliance System; Coverage
University of San Carlos
All matters arising from the visitorial and enforcement power of the
Sec/DOLE under Article 128 of the Labor Code
LLCS Modes of Implementation
o It could be any or all of the following:
1. Joint assessment - involves self-assessment/checklist
A. Coverage
o Engaged in hazardous work
o Employing child employees
o Engaged in contracting and subcontracting
arrangements
o Phil. Registered ships or vessels engaged in
domestic shipping
o Employing 10 or more employees
2. Compliance visit
A. Upon receipt of SeNa referral (Section 7, DO No.
107, S. 2010)
B. When a complaint is filed against an establishment
o A surprise and unexpected visit
o Random interview of employees in an
establishment
3. Occupational safety and health standards investigation
A. Coverage:
o Existence of imminent danger
o Dangerous occurrences
o Accident resulting to disabling injury
o Occupational safety and health standards violations
committed in plain view or in the presence of the
LLCO
 You cannot stop, impede, interfere or delay these
inspections/compliance checks (Article 128).
 LLCO : Labor Law Compliance Officer - person doing the
compliance checks (previously inspections)
 Applicable Procedure in Joint Assessment and Compliance
Visit***
A. A hearing officer conducts mandatory and continuous
conferences in a summary character.
B. RD/DOLE issues a compliance order
C. Appeal of compliance order to the Sec/DOLE
A. 10 day period
B. Grounds
C. Appeal bond - equivalent to the judgment award
D. Memorandum of appeal - a mere notice of appeal
will not suffice
E. Reply or opposition to appeal
F. Transmittal of records
G. Clarificatory conference
H. Finality of resolution/decision of sec/DOLE
 There is no more appeal from the decision of the
Secretary; remedy is certiorari to the CA under Rule
65
 Filing of petition for certiorari from
decision/resolution of sec/DOLE
 Execution
 Without a restraining order, it will not stop the
execution.
 Jurisprudence; Article 128
o Stoppage of operations under Article 128 will not
apply if the stoppage is ordered by the DENR and
not the DOLE.
o Thus, "no work, no pay" during the period of
stoppage of operation (2008 National Mines and
Allied Workers Union; Article 128)
 The suspension of MARCOPPER's operations was decreed in
an Ex-Parte Order dated April 1, 1996 issued by the Pollution
Labor Law Review – Atty. JMM
Adjudication Board of the DENR. Separately from this Order,
the DENR Secretary ordered on June 21, 1996 the cancellation
of MARCOPPER's ECC without which MARCOPPER could not
continue to undertake its mining operations. Thus, as of that
date (June 21, 1996), the temporary suspension of operations
that started on April 12, 1996 became permanent so that
MARCOPPER did not have to wait for the end of the six-month
suspension of operations before the services of the three
employees were deemed terminated. In Labor Code terms,
the cancellation of the ECC on June 21, 1996 amounted to a
company closure governed by Article 283 of the Labor Code -
the provision that governs the relationship of employers and
employees in closure situations.While the mine tailing leakage
and pollution of the Boac River cannot but affect the health
and safety of those in the MARCOPPER vicinity, particularly its
employees, we find that the Department of Labor and
Employment (DOLE) Regional Director - at whose initiative a
suspension of operation must originate for the above-quoted
provision to apply - did not act as envisioned by the above
rule. Specifically, there was no ruling or directive from the
DOLE that the environmental incident was a workplace health
and safety concern that required a suspension of operation.
There is likewise nothing in the laws applicable to pollution,
specifically, P.D. No. 984 and P.D. No. 1586 and their
implementing rules, that speak of the consequences of a
DENR-ordered suspension of operations on employment
relationships. Neither does the CBA between MARCOPPER and
NAMAWU provide for the consequences of a suspension of
operation due to environmental causes. Under the
circumstances, we can only conclude that the general
"no work, no pay" rule should prevail with respect to
employees' wages during the suspension period,
subject to existing CBA terms on leave credits and
similar benefits of employees.
 Closure; Applicable Rule
o See: DOLE Dept. Circ. No. 3, S. 2009, Guidelines on
the Procedure for Closure of Business under RA
9231 dated October 22, 2009
 "close now, explain later"
 Under this Circular, the SOLE or the
Regional Director may order the closure
of any business, firm, or establishment
found to have violated any of the
provisions of RA 9231 more than 3 times
TN: RA 9231: An act providing for the
elimination of the worst forms of labor
and affording stronger protection for the
working child
o Closure after notice and hearing
Prior notice and hearing is required before the
issuance of such closure order, unless there is
ground for immediate closure. The hearing for the
issuance of the closure order shall be summary in
nature.
o Immediate closure (close now, hear later –
summary in nature)
Grounds:
 The violation of RA 9231 has resulted in the
death, insanity or serious physical injuy of a
child employed in such establishment
 Such firm or establishment is employing a child
for prostitution or obscene or lewd shows; or
 There is imminent danger to the life and limb
of the child. Imminent danger- a condition/
practice that could reasonably be expected to
cause death or serious physical harm before
abatement under the enforcement procedures
can be accomplished.
In the above circumstances, the procedure is
close-now-hear-later process. In this
University of San Carlos
 procedure, the notice of closure shall include
a statement duly notifying the establishment
concerned of a subsequent hearing that will be
conducted to determine whether to affirm or
reverse the closure order
TN: proceedings for closure may be motu
propio by dept or upon complaint. It may be
initated by RD without a prior rescue operation
or even WITHOUT DOLE PRESENCE
o Immediate- reasonable time not to exceed 5
working days from receipt of RD of complaint or
petition
 No Jurisdiction; Article 128 (?); Requisites
a. Where the employer-employee relationship has
ceased; and
b. Where no such relationship has ever existed (2009
People's Broadcasting [Bombo Radyo Phils]
Case: If the DOLE makes a finding that there is an
existing employer-employee relationship, it takes
cognizance of the matter, to the exclusion of the
NLRC. The DOLE would have no jurisdiction only if
the employer-employee relationship has already
been terminated, or it appears, upon review, that
no employer-employee relationship existed in the
first place.
 Article 128; Jurisprudence
o Article 128 applies even if the amount involved
exceeds 5,000.00
Cited in Balladares case: This was further affirmed
in our ruling in Cirineo Bowling Plaza, Inc. v.
Sensing, where we sustained the jurisdiction of the
DOLE Regional Director and held that :the visitorial
and enforcement powers of the DOLE Regional
director to order and enforce compliance with labor
standard laws can be exercised even where the
individual claim exceeds P5,000.
However, if the labor standards case is covered by
the exception clause in Article 128 (b) of the Labor
Code, then the Regional Director will have to
endorse the case to the appropriate Arbitration
Branch of the NLRC. In order to divest the Regional
Director or his representatives of jurisdiction, the
following elements must be present: (a) that the
employer contests the findings of the labor
regulations officer and raises issues thereon; (b)
that in order to resolve such issues, there is a need
to examine evidentiary matters; and (c) that such
matters are not verifiable in the normal course of
inspection. The rules also provide that the employer
shall raise such objections during the hearing of the
case or at any time after receipt of the notice of
inspection results.
In this case, the Regional Director validly assumed
jurisdiction over the money claims of private
respondents even if the claims exceeded P5,000
because such jurisdiction was exercised in
accordance with Article 128(b) of the Labor Code
and the case does not fall under the exception
clause
o The worker need not litigate to get what legally
belongs to him. The whole enforcement machinery
of the DOLE exists to insure its expeditious delivery
to him free of charge (2009 Balladares)
 This is inquisitorial in nature.
 May be initiated motu proprio.
Labor Law Review – Atty. JMM
 Complaint is usually docketed as LS
(labor standard compliance case) and
there is no docket fee.
Exception Clause; Article 128
The regional director/DOLE is divested of jurisdiction under
Article 128 under the so-called "Exception Clause" (2009
Meteoro*)
What is the exception clause?
The power of the Regional Director to hear and decide the monetary
claims of employees is not absolute. The last sentence of Article 128
(b) of the Labor Code, otherwise known as the exception clause,
provides an instance when the Regional Director or his
representatives may be divested of jurisdiction over a labor
standards case.
Under prevailing jurisprudence, the so-called exception clause has the
following elements, all of which must concur:
(a) that the employer contests the findings of the labor regulations
officer and raises issues thereon;
(b) that in order to resolve such issues, there is a need to examine
evidentiary matters; and
(c) that such matters are not verifiable in the normal course of
inspection
TN: To be sure, raising lack of jurisdiction alone is not the contest
contemplated by the exception clause. It is necessary that the
employer contest the findings of the labor regulations officer during
the hearing or after receipt of the notice of inspection results. More
importantly, the key requirement for the Regional Director and the
DOLE Secretary to be divested of jurisdiction is that the evidentiary
matters be not verifiable in the course of inspection. Where the
evidence presented was verifiable in the normal course of inspection,
even if presented belatedly by the employer, the Regional Director,
and later the DOLE Secretary, may still examine it; and these officers
are not divested of jurisdiction to decide the case
Remedies; Article 128 vs. Article 129
Remedy of aggrieved party from decision of RD/DOLE under Article
128?
This is inquisitorial, either by complaint or motu proprio.
Remedy of aggrieved party from decision of RD/DOLE under Article
129?
 This is adversarial because it is initiated by a complaint.
 Same requisites with an appeal from the Labor Arbiter to the
NLRC; within 10 days.
 Posting of a bond equal to the amount of the judgment award;
only the employer should post a bond.
 NLRC - MR with NLRC - CA - SC under Rule 45
 Nature of Power; Jurisprudence
o Determination of liability of employer by the
RD/DOLE under Article 128 - an exercise of quasi-
judicial power.
o Issuance of wage order by the RTWPB – an exercise
of quasi-legislative power.
 Recemt DOLE Regulation
Revised Rules on Labor Laws Compliance System, published on June 8,
2016 (DOLE D.O. No. 131-B, S. 2016)
Labor Laws Compliance System; Coverage
All matters arising from visitorial and enforcement power of the
Sec/Dole under Art. 128 of the Labor Code.
Revised Rules on LLCO
Old Rules
Joint Assessment
Compliance Visit
University of San Carlos
 WAGE PROTECTION PROVISIONS
Prohibitions regarding wages, i.e. withholding of wages and
authorized deductions
Non-interference in disposal of wages
Art. 112. Non-interference in disposal of wages. No employer shall limit
or otherwise interfere with the freedom of any employee to dispose
of his wages. He shall not in any manner force, compel, or oblige his
employees to purchase merchandise, commodities or other property
from any other person, or otherwise make use of any store or
services of such employer or any other person.
Art. 288. Other similar coercions; (Compulsory purchase of merchandise
and payment of wages by means of tokens.) — The penalty of
arresto mayor or a fine ranging from 200 to 500 pesos, or both, shall
be imposed upon any person, agent or officer, of any association or
corporation who shall force or compel, directly or indirectly, or shall
knowingly permit any laborer or employee employed by him or by
such firm or corporation to be forced or compelled, to purchase
merchandise or commodities of any kind.
Prohibition against compulsory patronage
No force, no inducement, no compulsion from the employer to patronize
the latter's products.
Jurisprudence; Withholding of Wages
While an employer has management prerogative, it has no right to
withhold salary/wages without consent of the employee (Article 116,
cited in 2010 SHS Perforated Materials, Inc.)
Withholding respondent’s salary was not a valid exercise of
management prerogative.
Management prerogative refers “to the right of an employer to regulate
all aspects of employment, such as the freedom to prescribe work
assignments, working methods, processes to be followed, regulation
regarding transfer of employees, supervision of their work, lay-off
and discipline, and dismissal and recall of work.” Although
management prerogative refers to “the right to regulate all aspects
of employment,” it cannot be understood to include the right to
temporarily withhold salary/wages without the consent of the
employee.
Any withholding of an employee’s wages by an employer may only be
allowed in the form of wage deductions under the circumstances
provided in Article 113 of the Labor Code, as set forth below:
ART. 113. Wage Deduction. – No employer, in his own behalf or in
behalf of any person, shall make any deduction from the wages of
his employees, except:
(a) In cases where the worker is insured with his consent by the
employer, and the deduction is to recompense the employer for the
amount paid by him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his union
to check-off has been recognized by the employer or authorized in
writing by the individual worker concerned; and
(c) In cases where the employer is authorized by law or regulations
issued by the Secretary of Labor.
Deductions Authorized by law:
 Deduction for value of meals and other facilities
 In cases where the employee is insured with his consent
by the employer, deductions for the amount paid by said
employer as premiums on the insurance
 In cases where the right of the employees or his union to
checkoff has been recognized by the employer or
authorized in writing by the individual employee
concerned
 In cases where the employee is indebted to the employer
where such indebtedness has become due and
demandable
 In court awards, wages may be the subject of execution
or attachment, but only for debts incurred for food,
shelter, clothing and medical attendance
 Withholding tax
Labor Law Review – Atty. JMM
 Salary deductions of a member of a legally established
cooperative
 SSS, medicare and pag-ibig contributions
TN: DOLE Dept Order No. 11 s. 2014
Deductions or requiring cash deposits from employees to answer for
reimbursement of loss or damage on tools, materials or equipment
supplied by the employer is ALLOWED IN PRIVATE SECURITY
AGENCIES as a recognized and reasonable industry practice given
the nature of the service/ business. The following must be observed:
a. The employee is clearly shown to be responsible for the loss or
damage
b. The employee is given reasonable opportunity to show cause why
deductions should not be made
c. The amount of such deduction is fair and reasonable and shall NOT
EXCEED the actual loss or damage
d. The deduction of the wages of the employee does not exceed 20%
of the employee’s wages in a week.
o Any withholding of wages may only be
allowed in the form of wage deductions
under Article 113 of the Labor Code
(ibid).
 Doctrine; Principle of Law
o Deductions for loss or damage to tools,
materials, etc., supplied by employer or
requiring deposit to answer for such loss
or damage (5J Taxi; 2000 Jardin)- wala
sa kaso
Art. 114. Deposits for loss or damage. No employer shall
require his worker to make deposits from which deductions
shall be made for the reimbursement of loss of or damage to
tools, materials, or equipment supplied by the employer,
except when the employer is engaged in such trades,
occupations or business where the practice of making
deductions or requiring deposits is a recognized one, or is
necessary or desirable as determined by the Secretary of
Labor and Employment in appropriate rules and regulations.
Art. 115. Limitations. No deduction from the deposits of an
employee for the actual amount of the loss or damage shall
be made unless the employee has been heard thereon, and
his responsibility has been clearly shown.
 Deposit/Cash Bond to answer for Loss or Damage;
Deductions
The employer's policy must be authorized by law, or regulations issued
by the Sec/DOLE. It must be proved to be a recognized practice in
the jewelry manufacturing business, or that the Sec/DOLE has come
up with the appropriate rules that such policy is necessary or
desirable (2012 Nina Jewelry Manufacturing case)
- The petitioner here imposed a policy for goldsmiths, which were
intended to answer for any loss or damage which Niña Jewelry may
sustain by reason of the goldsmiths' fault or negligence in handling
the gold entrusted to them, requiring them to post cash bonds or
deposits in varying amounts but in no case exceeding 15% of the
latter's salaries per week. The petitioners here failed to prove
that their imposition of the new policy upon the goldsmiths
under Niña Jewelry's employ falls under the exceptions
specified in Articles 113 and 114 of the Labor Code.
There are laws in the Philippines that require their employees to be
bonded (as a condition for continued employment). Unfortunately,
there is none in the Labor Code that requires bonded
employees. The reason is not to unduly burden the employee's
wage. - Atty. JMM
Special Law; Authorized Deduction
University of San Carlos
A member of a cooperative may in an instrument, authorize his
employer to deduct his wage and remit to the cooperative for the
payment of his unpaid obligation.
In such a case, the obligation of the employer is mandatory (Article 58,
R.A. 9520 Philippine Cooperative Code of 2008)
 Non-diminution of benefits
o Principle against diminution of benefits
and supplements (Article 100; Article
127)
Art. 100. Prohibition against elimination or diminution of
benefits. Nothing in this Book shall be construed to eliminate
or in any way diminish supplements, or other employee
benefits being enjoyed at the time of promulgation of this
Code.
Art. 127. Non-diminution of benefits. No wage order issued by
any regional board shall provide for wage rates lower than the
statutory minimum wage rates prescribed by Congress. (As
amended by Republic Act No. 6727, June 9, 1989)
The rule against diminution of supplements or benefits is applicable if it
is shown that: (LCEU)
1. The grant of the benefit is based on an express policy or
has ripened into a practice over a long period of time
2. The practice is consistent and deliberate
3. The practice is not due to error in the construction or
application of a doubtful or difficult question of law
4. The diminution or discontinuance is done unilaterally by
the employer
o Before effectivity of Labor Code - no
distinction; cannot be unilaterally
withdrawn
o After effectivity of the Labor Code
 Is it a company policy?
 Did it ripen into practice?
o 13th month pay (1993 Davao Fruits;
2005 Honda Phils.)
Davao Fruits: rom 1975 to 1981, petitioner had
freely, voluntarily and continuously included in the
computation of its employees’ thirteenth month
pay, the payments for sick, vacation and maternity
leaves, premiums for work done on rest days and
special holidays, and pay for regular holidays. The
considerable length of time the questioned items
had been included by petitioner indicates a
unilateral and voluntary act on its part, sufficient in
itself to negate any claim of mistake. A company
practice favorable to the employees had indeed
been established and the payments made pursuant
thereto, ripened into benefits enjoyed by them. And
any benefit and supplement being enjoyed by the
employees cannot be reduced, diminished,
discontinued or eliminated by the employer, by
virtue of Section 10 of the Rules and Regulations
Implementing P.D. No. 851, and Article 100 of the
Labor Code of the Philippines, which prohibit the
diminution or elimination by the employer of the
employees’ existing benefits
Honda: That a full month payment of the 13th
month pay is the established practice at Honda is
further bolstered by the affidavits executed by
Feliteo Bautista and Edgardo Cruzada. Both
attested that when they were absent from work due
to motorcycle accidents, and after they have
exhausted all their leave credits and were no longer
receiving their monthly salary from Honda, they still
received the full amount of their 13th month, 14th
month and financial assistance pay.
The case of Davao Fruits Corporation v. Associated
Labor Unions, et al. presented an example of a
Labor Law Review – Atty. JMM
voluntary act of the employer that has ripened into
a company practice. In that case, the employer,
from 1975 to 1981, freely and continuously included
in the computation of the 13th month pay those
items that were expressly excluded by the law. We
have held that this act, which was favorable to the
employees though not conforming to law, has
ripened into a practice and therefore can no longer
be withdrawn, reduced, diminished, discontinued or
eliminated. Furthermore, in Sevilla Trading
Company v. Semana, we stated:
With regard to the length of time the company
practice should have been exercised to constitute
voluntary employer practice which cannot be
unilaterally withdrawn by the employer, we hold
that jurisprudence has not laid down any rule
requiring a specific minimum number of years. In
the above quoted case of Davao Fruits Corporation
vs. Associated Labor Unions, the company practice
lasted for six (6) years. In another case, Davao
Integrated Port Stevedoring Services vs. Abarquez,
the employer, for three (3) years and nine (9)
months, approved the commutation to cash of the
unenjoyed portion of the sick leave with pay
benefits of its intermittent workers. While in
Tiangco vs. Leogardo, Jr. the employer carried on
the practice of giving a fixed monthly emergency
allowance from November 1976 to February 1980,
or three (3) years and four (4) months. In all these
cases, this Court held that the grant of these
benefits has ripened into company practice or policy
which cannot be peremptorily withdrawn. In the
case at bar, petitioner Sevilla Trading kept the
practice of including non-basic benefits such as paid
leaves for unused sick leave and vacation leave in
the computation of their 13th-month pay for at least
two (2) years. This, we rule likewise constitutes
voluntary employer practice which cannot be
unilaterally withdrawn by the employer without
violating Art. 100 of the Labor Code.
o Gas and uniform allowance (1997 Manila
Bank)
o VL/SL xxx
 Cont., Non-diminution of benefits
o Xxx
----- started here after Midterm Part I:
13th month pay (1993 Davao Fruits; 2005 Honda Phils.)
Prorating of the 13th and 14th month pay due to period of strike is not
valid, as it is contrary to company practice under the CBA, citing
1993 case of Davao Fruits (2005 Honda Phils.)
Gas and uniform allowance (1997 Manila Bank)
Whether the bank was in financial distress or not, the employer is
prohibited from unilaterally withdrawing the employees' gas and
uniform allowance.
VL/SL (1991 Nestle)
There is nothing that prevents the employer from being generous even
if the VL/SL is a mere grant of employment benefit and NOT found
in the Labor Code. Nestle set conditions for the availment of these
benefits (e.g. if you do not claim it, you cannot convert it to cash).
When some employees were not able to claim their Vl/SL, they
complained.
Held: SC ruled in favor of Nestle. Since the benefit is just an additional
grant, the employees should follow the conditions set by the
company.
University of San Carlos
Use of divisor (1999 Philippine Veterans Bank; 2001 Producers
Bank)
The bank used a divisor of 365 since the employees are not really
monthly paid workers. When the bank changed it, the employees
complained.
Held: SC ruled in favor of the employees.
Case:
The old practice of the bank in using factor 365 days in a year
in determining your equivalent monthly salary cannot
unilaterally be changed by your employer without the consent
of the employees, such practice being now a part of the terms
and conditions of your employment. An employment
agreement, whether written or unwritten, is a bilateral
contract and as such either party thereto cannot change or
amend the terms thereof without the consent of the other
party thereto.
From the foregoing, it is clear that you are entitled to the wage
increase under R.A. 6440 computed on the basis of 365 paid
days and to the corresponding salary differentials as a result
of the application of this factor. [Emphasis supplied]
Evidently, the use of the 365 factor is binding and conclusive,
forming as it did part of the employment contract. Petitioner
can no longer invoke the 26.16 factor after it voluntarily
adopted the 365 factor as a policy even prior to its
receivership. To abandon such policy and revert to its
old practice of using the 26.16 factor would be a
diminution of a labor benefit, which is prohibited by
the Labor Code. It cannot be doubted that the 365 factor
favors petitioners employees, including MOLINA, because it
results in a higher determination of their monthly salary.
Bonus (1999 Manila Electric Co.)
If the bonus is granted out of generosity and has not ripened into a
company benefit (all the conditions are met), the employees should
follow the conditions. It will be discretionary on the part of the
employer.
As a rule, a bonus is not a demandable and enforceable obligation;it
may nevertheless be granted on equitable consideration as when
the giving of such bonus has been the companys long and regular
practice.To be considered a regular practice, the giving of the bonus
should have been done over a long period of time, and must be
shown to have been consistent and deliberate. Thus we have ruled
in National Sugar Refineries Corporation vs. NLRC:
The test or rationale of this rule on long practice requires an indubitable
showing that the employer agreed to continue giving the benefits
knowing fully well that said employees are not covered by the law
requiring payment thereof.
In the case at bar, the record shows the MERALCO, aside from
complying with the regular 13th month bonus, has further been
giving its employees an additional Christmas bonus at the tail-end of
the year since 1988. While the special bonuses differed in amount
and bore different titles, it cannot be denied that these were given
voluntarily and continuously on or about Christmas time. The
considerable length of time MERALCO has been giving the special
grants to its employees indicates a unilateral and voluntary act on
its part, to continue giving said benefits knowing that such act was
not required by law.
Jurisprudence; OT pay, Not Benefit
Change of work schedule in the CBA from 9 am to 5 pm to 1 pm to 8
pm due to change in the program of horse races is management
prerogative.
(2007 Manila Jockey Club Employees Labor Union-PTGWO)
Labor Law Review – Atty. JMM
The same provision of the CBA also grants respondent the prerogative
to relieve employees from duty because of lack of work. Petitioners
argument, therefore, that the change in work schedule violates
Article 100 of the Labor Code because it resulted in the diminution
of the benefit enjoyed by regular monthly-paid employees of
rendering overtime work with pay, is untenable. Section 1, Article
IV, of the CBA does not guarantee overtime work for all the
employees but merely provides that "all work performed in excess
of seven (7) hours work schedule and on days not included within
the work week shall be considered overtime and paid as such."
Respondent was not obliged to allow all its employees to render
overtime work everyday for the whole year, but only those
employees whose services were needed after their regular working
hours and only upon the instructions of management. The
overtime pay was not given to each employee consistently,
deliberately and unconditionally, but as a compensation for
additional services rendered. Thus, overtime pay does not fall within
the definition of benefits under Article 100 of the Labor Code on
prohibition against elimination or diminution of benefits.
It was done in good faith; there was no intent to deprive the employees
of their OT pay.
Coca Cola Bottlers Philippines case (new one)- ang question here kay
EE relationship. Walay about dismissal
Article 100. Prohibition Against Elimination or Diminution of
Benefits.
Nothing in this Book shall be construed to eliminate or in any way
diminish supplements, or other employee benefits being enjoyed at
the time of promulgation of this Code.
Jurisprudence; OT Pay, Not Benefit
Overtime pay is not a benefit. It requires rendition of additional
services; and is not freely given. The requirement of rendering
additional service differentiates xxx
Non- Diminution of Benefits
The rule on company practice is generally used with respect to grant of
additional benefits to employees, not to issues involving diminution
of benefits. (2011 University of the East)
The Court agrees with petitioner UE that the change in the distribution
of the 70% incremental proceeds of tuition fee increase from equal
sharing to percentage of salaries is not a diminution of benefits. Its
distribution to covered employees based on equal sharing scheme
cannot be considered to have ripened into a company practice that
the respondents have a right to demand.
Generally, employees have a vested right over existing benefits
voluntarily granted to them by their employer, thus, said benefits
cannot be reduced, diminished, discontinued or eliminated by the
latter.[29] This principle against diminution of benefits,
however, is applicable only if the grant or benefit is founded
on an express policy or has ripened into a practice over a
long period of time which is consistent and deliberate.[30] It
does not contemplate the continuous grant of unauthorized or
irregular compensation but it presupposes that a company practice,
policy and tradition favourable to the employees has been clearly
established; and that the payments made by the company pursuant
to it have ripened into benefits enjoyed by them.[31] The test or
rationale of this rule on long practice requires an indubitable showing
that the employer agreed to continue giving the benefits knowing
fully well that said employees are not covered by the law requiring
payment thereof.[32] In sum, the benefit must be characterized by
regularity, voluntary and deliberate intent of the employer to grant
the benefits over a significant period of time.[33]
In the case at bench, contrary to UEEAs claim, the distribution of the
70% incremental proceeds based on equal sharing scheme cannot
be held to have ripened into a company practice that the
respondents have a right to demand. Jurisprudence is replete with
University of San Carlos
 the rule specifying a minimum number of years within which a
company practice must be exercised in order to constitute voluntary
company practice.[34] Even if UE had been continuously distributing
the 70% incremental proceeds based on equal sharing scheme to all
its covered employees, the same could not have ripened into a
vested right because such grant would not have been characterized
by a deliberate and voluntary act on the part of the petitioner.
VI. PAYMENT OF WAGES
Payment
Form (1995 Congson; 2004 National Federation of Labor)
Check is valid form of payment ONCE it is encashed.
Art. 102.- Forms of Payment. No employers shall pay the wages of an
employee by means of promissory notes, vouchers, coupons,
tokens, tickets, chits or any object other than legal tender, even
when expressly requested by the employee.
Payment of wages by check or money order shall be allowed when such
payment is customary on the date of effectivity of this Code, or is
necessary because of special circumstances as specified in
appropriate regulations to be issued by the Secretary of Labor or a
stipulation in a collective bargaining agreement.
Payment by check- payment of wages by bank checks, postal checks or
money orders is allowed where such manner of wage payment is
customary on the date of the effectivity of the Code, where it is
stipulated in a collective bargaining agreement, or where all of the
following conditions are met:
1. There is a bank or other facility for encashment within a radius of
one (1) kilometer from the workplace;
2. The employer, or any of his agents or representatives, does not
receive any pecuniary benefit directly or indirectly from the
arrangement;
3. The employee 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 the working hours; and
4. The payment by check is with the written consent of the employees
concerned if there is no collective agreement authorizing the
payment of wages by bank checks.[28]
The term wage was defined in Article 97(f) of the Labor Code as the
remuneration or earnings, however, designated, capable of being
expressed in terms of money, whether fixed or ascertained on a
time, task, piece, or commission basis, or other method of
calculating the unwritten contract of employment for work done or
to be done, or for services rendered or to be rendered and includes
the fair and reasonable value, as determined by the Secretary of
Labor, of board, lodging, or other facilities customarily furnished by
the employer to the employee.[29] Wages shall be paid only by
means of legal tender. The only instance when an employer is
permitted to pay wages in forms other than legal tender, that is by
checks or money order, is when the circumstances prescribed in the
second paragraph of Article 102 are present.
In the present case, the petitioners separation pay, other benefits, and
the wages from January 1 to 17 were paid in check. Strictly
speaking, SDPI violated the Labor Code when it included wages from
January 1 to 17, 1998 in the check. Considering, however, the
amount of other monetary benefits to be paid, payment in check
was the most convenient form for both the petitioners and the
respondent.
Place (1996 North Davao Mining); Bank (RA 6727); ATM (DOLE
Labor Advisory, S. 1996)
SC held that North Davao Mining should reimburse the transportation
expenses of the employees who had to travel for about 2 1/2 hours
to collect their salaries.
Labor Law Review – Atty. JMM
Payment through automated teller machine (ATM) of banks provided
the following conditions are met:
1. the ATM system of payment is with the written consent of the
employees concerned;
2. The employees are given reasonable time to withdraw their wages
from the bank facility which time, if done during working hours, shall
be considered compensable hours worked;
3. The system shall allow workers to receive their wages within the
period or frequency and in the amount prescribed under the Labor
Code, as amended;
4. There is a bank or ATM facility within a radius of one (1) kilometer
to the place of work;
5. Upon request of the concerned employee/s, the employer shall issue
a record of payment of wages, benefits and deductions for a
particular period;
6. There shall be no additional expenses and no diminution of benefits
and privileges as a result of the ATM system of payment;
7. The employer shall assume responsibility in case the wage protection
provisions of law and regulations are not complied with under the
arrangement. (Explanatory Bulletin issued by DOLE Secretary
Leonardo Quisumbing dated November 25, 1996)
Payee: the worker
Exceptions to the rule (when the employer can pay to another person);
examples cited by Atty. JMM:
 When there is authorization letter
 Affidavit of "heirship" if the worker died before he was able to
claim his salary

GR: Direct payment of wages. Wages shall be paid directly to the
workers to whom they are due, except:
1. In cases of force majeure rendering such
payment impossible or under other special
circumstances to be determined by the
Secretary of Labor and Employment in
appropriate regulations, in which case, the
worker may be paid through another person
under written authority given by the worker
for the purpose; (Art 105)
2. Where the employee is authorized in writing
by the employee to pay his wages to a
member of his family
3. Where payment to another person is
authorized under existing law
4. In case of the death of employee(RULE VII,
Book III, Sec5)
- Where the worker has died, in which
case, the employer may pay the wages
of the deceased worker to the heirs of
the latter without the necessity of
intestate proceedings. The claimants, if
they are all of age, shall execute an
affidavit attesting to their relationship to
the deceased and the fact that they are
his heirs, to the exclusion of all other
persons. If any of the heirs is a minor,
the affidavit shall be executed on his
behalf by his natural guardian or next-
of-kin. The affidavit shall be presented
to the employer who shall make
payment through the Secretary of Labor
and Employment or his representative.
The representative of the Secretary of
Labor and Employment shall act as
University of San Carlos
 referee in dividing the amount paid
among the heirs.
o
Time and frequency
GR: Wages shall be paid at least once every two (2) weeks or twice a
month at intervals not exceeding sixteen (16) days.
EXC: If on account of force majeure or circumstances beyond the
employer’s control, payment of wages on or within the time herein
provided cannot be made, the employer shall pay the wages
immediately after such force majeure or circumstances have ceased.
No employer shall make payment with less frequency than once a
month.
The payment of wages of employees engaged to perform a task
which cannot be completed in two (2) weeks shall be subject to the
following conditions, in the absence of a collective bargaining
agreement or arbitration award:
 That payments are made at intervals not exceeding
sixteen (16) days, in proportion to the amount of
work completed;
 That final settlement is made upon completion of
the work.
(Source: Art 103)
 Unjust Enrichment Principle
o Where workers' advances exceeded their
unpaid salaries, the overpaid amount
made by the employer should be paid
back to the latter to avoid unjust
enrichment (2006 Business Services of
the Future Today)
o Solutio indebiti
 Concept; Principle of Law
VII. CONDITIONS OF EMPLOYMENT
 Hours of Work; Normal
o Other Hours of Work;
 Children (RA 7610, as
amended by RA 9231)
Source: DO no. 65-04 series of 2004
SECTION 15. Hours of Work of
a Working Child – The following hours of
work shall be observed for any child
allowed to work under RA 9231 and these
rules:
(a) For a child below 15 years of age, the
hours of work shall not be more than
twenty 20 hours a week, provided that
the work shall not be more than four
hours at any given day
(b) For a child 15 years of age but below
18, the hours of work shall not be more
than eight hours a day, and in no case
beyond 40 hours a week; and eight hours
a day, and in no case beyond 40 hours a
week; and
(c) No child below 15 years of age shall
be allowed to work between eight o’ clock
in the evening and six o’clock in the
morning of the following day and no child
15 years of age but below 18 shall be
allowed to work between ten o’clock in
the evening and six o’ clock in the
morning of the following day.
Sleeping time as well as travel time of a
child engaged in public entertainment or
information from his/her residence to
his/her workplace shall not be included as
hours worked without prejudice to the
Labor Law Review – Atty. JMM
application of existing rules on
employees compensation.
 Kasambahay (RA 10361)
Section 20. Daily Rest Period. – The
domestic worker shall be entitled to an
aggregate daily rest period of eight (8)
hours per day.
Section 21. Weekly Rest Period. – The
domestic worker shall be entitled to at
least twenty-four (24) consecutive hours
of rest in a week. The employer and the
domestic worker shall agree in writing on
the schedule of the weekly rest day of
the domestic worker: Provided, That
the employer shall respect the
preference of the domestic worker
as to the weekly rest day when such
preference is based on religious
grounds. Nothing in this provision shall
deprive the domestic worker and the
employer from agreeing to the following:
(a) Offsetting a day of absence with a
particular rest day;
(b) Waiving a particular rest day in return
for an equivalent daily rate of pay;
(c) Accumulating rest days not exceeding
five (5) days; or
(d) Other similar arrangements.
o Hours worked; meaning: rest period (5-
20 minutes); work interruptions; waiting
time' assembly time' attendance at
seminars (p. 217 of Codals)
Art. 84. Hours worked. Hours worked shall include
(a) all time during which an employee is required to
be on duty or to be at a prescribed workplace; and
(b) all time during which an employee is suffered or
permitted to work.
Rest periods of short duration during working hours
shall be counted as hours worked.
Art. 85. Meal periods. Subject to such regulations
as the Secretary of Labor may prescribe, it shall be
the duty of every employer to give his employees
not less than sixty (60) minutes time-off for their
regular meals.
 See: IRR***
SECTION 5. Waiting time. — (a) Waiting time spent
by an employee shall be considered as working time
if waiting is an integral part of his work or the
employee is required or engaged by the employer
to wait.cralaw
(b) An employee who is required to remain on call
in the employer's premises or so close thereto that
he cannot use the time effectively and gainfully for
his own purpose shall be considered as working
while on call. An employee who is not required to
leave word at his home or with company officials
where he may be reached is not working while on
call.cralaw
SECTION 6. Lectures, meetings, training programs.
— Attendance at lectures, meetings, training
programs, and other similar activities shall not be
counted as working time if all of the following
conditions are met:
University of San Carlos
 (a) Attendance is outside of the employee's regular
working hours;
(b) Attendance is in fact voluntary; and
(c) The employee does not perform any productive
work during such attendance.cralaw
SECTION 7. Meal and Rest Periods. — Every
employer shall give his employees, regardless of
sex, not less than one (1) hour time-off for regular
meals, except in the following cases when a meal
period of not less than twenty (20) minutes may be
given by the employer provided that such shorter
meal period is credited as compensable hours
worked of the employee:
(a) Where the work is non-manual work in nature
or does not involve strenuous physical exertion;
(b) Where the establishment regularly operates not
less than sixteen (16) hours a day;
(c) In case of actual or impending emergencies or
there is urgent work to be performed on
machineries, equipment or installations to avoid
serious loss which the employer would otherwise
suffer; and
(d) Where the work is necessary to prevent serious
loss of perishable goods.cralaw
Rest periods or coffee breaks running from five (5)
to twenty (20) minutes shall be considered as
compensable working time.cralaw
 If there is a brownout but there
is imminence of resumption =
compensable.
o Meal period (Article 85); shortened meal
period (1998 Sime Darby)
 When the company reverted to
the 60-minute meal period
from the 20-minutes
compensable meal period
which it implemented for some
time, the employees
complained that there is
diminution of benefits.
 Held: No diminution of
benefits. The company is only
exercising its management
prerogative and the 60-minute
meal period is stipulated in the
law as well.
 Workweek:
a. Normal
b. Compressed (DOLE Dept. Advisory No. 2, S. 2004)
 As long as it does not exceed 12 hours a
day or 48 hours a week. If it exceeds
such, they will still be entitled to the
overtime pay despite the waiver that
they've signed pursuant to the
Compressed Work Week
o *** Health Personnel: workweek (1997
San Juan de Dios case)
 When the policy instruction
went beyond the authority
vested under the law, such P.I.
is void.
 Compressed Workweek; Concept
o An alternative arrangement whereby the
normal workweek xxx
Concept:
The Department recognizes the desirability an practicability of
flexible work arrangements that may be considered by
employers after consultation with the employees, taking into
Labor Law Review – Atty. JMM
account the adverse consequence of the situation on the
performance and financial condition of the company
Flexible Work arrangements refer to alternative arrangements
or schedules other than the traditional or standard work
hours, workdays and workweek xxx
 Objectives:
o Xxx
o Under the existing guidelines, the
approval of the majority of the
employees will suffice to implement such
CWW.
 Jurisprudence
o Illegal compressed workweek when work
days were reduced from 6 to 3 days a
week, resulting to illegal reduction of
work hours, as there was no adequate
proof of losses (2007 Linton Commercial
and 2009 Rosa)
 Rest day; Non-regular Employees
o At least 24 consecutive hours; the rest
day is fixed by the employer, subject to
the IRR (if the choice of the rest day is
based on religion, the employer should
honor it)
 No rest day; instances
o Instances:
Source: IRR SECTION 6. When work on rest day
authorized. — An employer may require any of his
employees to work on his scheduled rest day for the
duration of the following emergencies and
exceptional conditions:
(a) In case of actual or impending emergencies
caused by serious accident, fire, flood, typhoon,
earthquake, epidemic or other disaster or calamity,
to prevent loss of life or property, or in cases of
force majeure or imminent danger to public safety;
(b) In case of urgent work to be performed on
machineries, equipment or installations to avoid
serious loss which the employer would otherwise
suffer;
(c) In the event of abnormal pressure of work due
to special circumstances, where the employer
cannot ordinarily be expected to resort to other
measures;
(d) To prevent serious loss of perishable goods;
(e) Where the nature of the work is such that the
employees have to work continuously for seven (7)
days in a week or more, as in the case of the crew
members of a vessel to complete a voyage and in
other similar cases; and
(f) When the work is necessary to avail of favorable
weather or environmental conditions where
performance or quality of work is dependent
thereon.cralaw
No employee shall be required against his will to
work on his scheduled rest day except under
circumstances provided in this Section: Provided,
However, that where an employee volunteers to
work on his rest day under other circumstances, he
shall express such desire in writing, subject to the
provisions of Section 7 hereof regarding additional
compensation.cralaw
 Labor Standards; Exclusion
o Employees excluded from labor
standards (Article 82; 1993 National
Sugar Refineries; 1996 Salazar)
Art. 82. Coverage. The provisions of this Title shall
apply to employees in all establishments and
undertakings whether for profit or not, but not to
government employees, managerial employees,
University of San Carlos
 field personnel, members of the family of the
employer who are dependent on him for support,
domestic helpers, persons in the personal service of
another, and workers who are paid by results as
determined by the Secretary of Labor in appropriate
regulations.
As used herein, "managerial employees" refer to
those whose primary duty consists of the
management of the establishment in which they are
employed or of a department or subdivision thereof,
and to other officers or members of the managerial
staff.
"Field personnel" shall refer to non-agricultural
employees who regularly perform their duties away
from the principal place of business or branch office
of the employer and whose actual hours of work in
the field cannot be determined with reasonable
certainty.
IRR: The provisions of this Rule shall not apply to
the following persons if they qualify for exemption
under the conditions set forth herein:
(a) Government employees whether employed by
the National Government or any of its political
subdivision, including those employed in
government-owned and/or controlled corporations;
(b) Managerial employees, if they meet all of the
following conditions:
(1) Their primary duty consists of the management
of the establishment in which they are employed or
of a department or sub-division thereof.cralaw
(2) They customarily and regularly direct the work
of two or more employees therein.cralaw
(3) They have the authority to hire or fire
employees of lower rank; or their suggestions and
recommendations as to hiring and firing and as to
the promotion or any other change of status of
other employees, are given particular weight.cralaw
(c) Officers or members of a managerial staff if they
perform the following duties and responsibilities:
(1) The primary duty consists of the performance of
work directly related to management policies of
their employer;
(2) Customarily and regularly exercise discretion
and independent judgment; and
(3) (i) Regularly and directly assist a proprietor or a
managerial employee whose primary duty consists
of the management of the establishment in which
he is employed or subdivision thereof; or (ii)
execute under general supervision work along
specialized or technical lines requiring special
training, experience, or knowledge; or (iii) execute,
under general supervision, special assignments and
tasks; and
(4) Who do not devote more than 20 percent of
their hours worked in a work week to activities
which are not directly and closely related to the
performance of the work described in paragraphs
(1), (2) and (3) above.cralaw
(d) Domestic servants and persons in the personal
service of another if they perform such services in
the employer's home which are usually necessary
or desirable for the maintenance and enjoyment
thereof, or minister to the personal comfort,
convenience, or safety of the employer as well as
the members of his employer's household.cralaw
(e) Workers who are paid by results, including those
who are paid on piece-work, "takay," "pakiao" or
Labor Law Review – Atty. JMM
task basis, and other non-time work if their output
rates are in accordance with the standards
prescribed under Section 8, Rule VII, Book Three of
these regulations, or where such rates have been
fixed by the Secretary of Labor and Employment in
accordance with the aforesaid Section.cralaw
(f) Non-agricultural field personnel if they regularly
perform their duties away from the principal or
branch office or place of business of the employer
and whose actual hours of work in the field cannot
be determined with reasonable certainty.cralaw
Salazar: Although petitioner cannot strictly be
classified as a managerial employee, nonetheless
he is still not entitled to payment of the aforestated
benefits because he falls squarely under another
exempt category — “officers or members of a
managerial staff” as defined under sec. 2(c) of the
abovementioned implementing rules:
Sec. 2. Exemption. — The provisions of this Rule
shall not apply to the following persons if they
qualify for exemption under the condition set forth
herein:xxx
(c) Officers or members of a managerial staff xxx
That petitioner was paid overtime benefits does not automatically and
necessarily denote that petitioner is entitled to such benefits
o *shift engineer, no right to overtime and
premium pay as he is an officer or
member of managerial staff (2006
Peneranda)
Peneranda:
His duties and responsibilities conform to the definition of a member of
a managerial staff under the Implementing Rules.
Petitioner supervised the engineering section of the steam plant boiler.
His work involved overseeing the operation of the machines
and the performance of the workers in the engineering
section. This work necessarily required the use of discretion
and independent judgment to ensure the proper functioning of
the steam plant boiler. As supervisor, petitioner is deemed a member
of the managerial staff.35
Noteworthy, even petitioner admitted that he was a supervisor. In his
Position Paper, he stated that he was the foreman responsible for
the operation of the boiler.36 The term foreman implies that he was
the representative of management over the workers and the
operation of the department.37 Petitioner’s evidence also showed
that he was the supervisor of the steam plant.38 His classification
as supervisor is further evident from the manner his salary was paid.
He belonged to the 10% of respondent’s 354 employees who were
paid on a monthly basis; the others were paid only on a daily basis.
Managerial employees and members of the managerial staff are
exempted from the provisions of the Labor Code on labor standards.
Since petitioner belongs to this class of employees, he is not entitled
to overtime pay and premium pay for working on rest days.
Who are managerial staff? - see IRR see above
Wage-Related Benefits; Examples
o Overtime pay
Ordinary day: plus at least twenty-five percent
(25%)
Premium and overtime pay for holiday and rest day
work. — (a) Except employees referred to under
Section 2 of this Rule, an employee who is
permitted or suffered to work on special holidays or
on his designated rest days not falling on regular
holidays, shall be paid with an additional
compensation as premium pay of not less than
University of San Carlos
 thirty percent (30%) of his regular wage. For work
performed in excess of eight (8) hours on special
holidays and rest days not falling on regular
holidays, an employee shall be paid an additional
compensation for the overtime work equivalent to
his rate for the first eight hours on a special holiday
or rest day plus at least thirty percent (30%)
thereof.
o Bonuses
o Night shift differential pay- 10% of the
basic or regular rate between 10 to 6 pm
o Holiday pay
 Regular holiday: even if you
don’t work, you will still be
paid; if you work, you get
double compensation for that
day
 12 (2 of which are
Muslim holidays)
 Special day
 SECTION 4. Compensation for
holiday work. — Any employee
who is permitted or suffered to
work on any regular holiday,
not exceeding eight (8) hours,
shall be paid at least two
hundred percent (200%) of his
regular daily wage. If the
holiday work falls on the
scheduled rest day of the
employee, he shall be entitled
to an additional premium pay
of at least 30% of his regular
holiday rate of 200% based on
his regular wage rate.cralaw
SECTION 5. Overtime pay for holiday
work. — For work performed in excess of
eight hours on a regular holiday, an
employee shall be paid an additional
compensation for the overtime work
equivalent to his rate for the first eight
hours on such holiday work plus at least
30% thereof.cralaw
Where the regular holiday work
exceeding eight hours falls on the
scheduled rest day of the employee, he
shall be paid an additional compensation
for the overtime work equivalent to his
regular holiday-rest day for the first 8
hours plus 30% thereof. The regular
holiday rest day rate of an employee shall
consist of 200% of his regular daily wage
rate plus 30% thereof.cralaw
o Premium pay
o Leave benefits
Maternity leave benefits. — Every employer shall
grant to a pregnant woman employee who has
rendered an aggregate service of at least six (6)
months for the last twelve (12) months immediately
preceding the expected date of delivery, or the
complete abortion or miscarriage, maternity leave
of at least two (2) weeks before and four (4) weeks
after the delivery, miscarriage or abortion, with full
pay based on her regular or average weekly
wages.cralaw
Service Incentive Leave
SECTION 1. Coverage. — This rule shall apply to all
employees except:
(a) Those of the government and any of its political
subdivisions, including government-owned and
controlled corporations;
Labor Law Review – Atty. JMM
(b) Domestic helpers and persons in the personal
service of another;
(c) Managerial employees as defined in Book Three
of this Code;
(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 a fixed amount for performing work
irrespective of the time consumed in the
performance thereof;
(e) Those who are already enjoying the benefit
herein provided;
(f) Those enjoying vacation leave with pay of at
least five days; and
(g) Those employed in establishments regularly
employing less than ten employees.cralaw
SECTION 2. Right to service incentive leave. —
Every employee who has rendered at least one year
of service shall be entitled to a yearly service
incentive leave of five days with pay.cralaw
SECTION 3. Definition of certain terms. — The term
"at least one-year service" shall mean service for
not less than 12 months, whether continuous or
broken reckoned from the date the employee
started working, including authorized absences and
paid regular holidays unless the working days in the
establishment as a matter of practice or policy, or
that provided in the employment contract is less
than 12 months, in which case said period shall be
considered as one year.cralaw
TN: Labor code: This provision shall not apply to
those who are already enjoying the benefit herein
provided, those enjoying vacation leave with pay of
at least five days and those employed in
establishments regularly employing less than ten
employees or in establishments exempted from
granting this benefit by the Secretary of Labor and
Employment after considering the viability or
financial condition of such establishment.
o 13th month pay (DOLE D.O. No. 10, S.
1998)-about double indemniy man ang
DO, di sya 13th month pay)
Note: Remember the rates!
 Doctrine; Principle of Law
o ** categories of workers paid by result;
supervised and unsupervised xxx (1999
Lambo and 2002 Tan cases)
Case: The Bureau of Working Conditions 32 classifies workers paid by
results into two groups, namely; (1) those whose time and
performance is supervised by the employer, and (2) those whose
time and performance is unsupervised by the employer. The first
involves an element of control and supervision over the manner the
work is to be performed, while the second does not. If a piece
worker is supervised, there is an employer-employee relationship,
as in this case. However, such an employee is not entitled to
service incentive leave pay since, as pointed out in Makati
Haberdashery v. NLRC 33 and Mark Roche International v. NLRC, 34
he is paid a fixed amount for work done, regardless of the time he
spent in accomplishing such work.
 Jurisprudence
o "driver-conductor" is not a field personnel
(2005 Autobus Transport System). Thus,
entitled to service incentive leave pay
At this point, 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
University of San Carlos
 by the employer. As discussed above, field  Overtime; Rule and Exceptions
personnel are those who regularly perform their o Actual work (1991 Cagampan; 1996 Stolt Nielsen
duties away from the principal place of business of Services)
the employer and whose actual hours of work in the
 The complainant should prove the actual
field cannot be determined with reasonable
work done (burden is on the claimant);
certainty. Thus, in order to conclude whether
[what will be shifted to the employer later
an employee is a field employee, it is also
on is the burden of evidence, not the
necessary to ascertain if actual hours of work
burden of proof?]
in the field can be determined with
reasonable certainty by the employer. In so
CAGAMPAN
doing, an inquiry must be made as to whether or
Petitioners have conveniently adopted the view that the "guaranteed or
not the employee's time and performance are
fixed overtime pay of 30% of the basic salary per month" embodied
constantly supervised by the employer.
in their employment contract should be awarded to them as part of
Respondent is not a field personnel but a
a "package benefit." They have theorized that even without
regular employee who performs tasks usually
sufficient evidence of actual rendition of overtime work, they would
necessary and desirable to the usual trade of
automatically be entitled to overtime pay. Their theory is erroneous
petitioner's business. Accordingly, respondent is
for being illogical and unrealistic. Their thinking even runs counter
entitled to the grant of service incentive
to the intention behind the provision. The contract provision means
leave.
that the fixed overtime pay of 30% would be the basis for computing
the overtime pay if and when overtime work would be rendered.
The clear policy of the Labor Code is to grant service
Simply, stated, the rendition of overtime work and the
incentive leave pay to workers in all establishments,
submission of sufficient proof that said work was actually
subject to a few exceptions. Section 2, Rule V, Book
performed are conditions to be satisfied before a seaman
III of the Implementing Rules and Regulations
could be entitled to overtime pay which should be computed
provides that "every employee who has rendered at
on the basis of 30% of the basic monthly salary. In short,
least one year of service shall be entitled to a yearly
the contract provision guarantees the right to overtime pay
service incentive leave of five days with pay."
but the entitlement to such benefit must first be
o Driver who is required to be at a specific established. Realistically speaking, a seaman, by the very nature
place and time with fixed hours of work,
of his job, stays on board a ship or vessel beyond the regular eight-
not a field personnel (2007 Duterte) as
hour work schedule. For the employer to give him overtime pay for
his time and performance if supervised.
the extra hours when he might be sleeping or attending to his
As a final consideration, the Court notes that the
personal chores or even just lulling away his time would be
NLRC, as sustained by the CA, considered the
extremely unfair and unreasonable.
petitioner as a field worker and, on that basis,
denied his claim for benefits under Articles 9413 to
STOLT NIELSEN SERVICES
9514 of the Labor Code, such as holiday pay and
Respondent is not entitled to the overtime pay awarded to him by the
service incentive leave pay. Article 82 of the Code
POEA. The correct criterion in determining whether or not
lists personnel who are not entitled to the benefits
sailors or not sailors are entitled to overtime pay is not,
aforementioned.15 Among the excluded group are
therefore, whether they were on board and can not leave
"field personnel," referring to non-agricultural
ship beyond the regular eight working hours a day, but
employees who regularly perform their duties away
whether they actually rendered service in excess of said
from the principal place of business or branch office
number of hours. (citing National Shipyards and Steel Corporation
of the employer and whose actual hours of work in
vs. CIR and Malondras)
the field cannot be determined with reasonable
certainty. As a general proposition, field personnel
o Waiver (1993 Lagatic; 2008 Bisig ng Manggagawa
are those whose job/service are not or cannot
sa Tryco) under CWW
be effectively monitored by the employer or
his representative, their workplace being away  Refusal to work when there is justifiable
from the principal office and whose hours and days and reasonable need for such? -
of work cannot be determined with reasonable insubordination which is a ground for
certainty. Field personnel are paid specific amount disciplinary action
for rendering specific service or performing specific
work. BISIG NG MANGGAGAWA SA TRYCO
D.O. No. 21 sanctions the waiver of overtime pay in consideration of
If required to be at specific places at specific the benefits that the employees will derive from the adoption of a
times, employees, including drivers, cannot compressed workweek scheme
be said to be field personnel despite the fact The MOA complied with the following conditions set by the DOLE, under
that they are performing work away from the D.O. No. 21, to protect the interest of the employees in the
principal office of the employer. Thus, to implementation of a compressed workweek scheme:
determine whether an employee is a field 1. The employees voluntarily agree to work more than eight (8)
employee, it is also necessary to ascertain if hours a day the total in a week of which shall not exceed their
actual hours of work in the field can be normal weekly hours of work prior to adoption of the
determined with reasonable certainty by the compressed workweek arrangement;
employer. In so doing, an inquiry must be made
as to whether or not the employee’s time and 2. There will not be any diminution whatsoever in the weekly or
performance are constantly supervised by the monthly take-home pay and fringe benefits of the employees;
employer.16
3. If an employee is permitted or required to work in excess of
Guided by the foregoing norms, petitioner was his normal weekly hours of work prior to the adoption of the
definitely a regular employee of respondent compressed workweek scheme, all such excess hours shall be
company and not its field personnel, as the term is considered overtime work and shall be compensated in
used in the Labor Code. accordance with the provisions of the Labor Code or applicable
Collective Bargaining Agreement (CBA);

Labor Law Review – Atty. JMM University of San Carlos

 4. Appropriate waivers with respect to overtime premium pay for
work performed in excess of eight (8) hours a day may be
devised by the parties to the agreement.
5. The effectivity and implementation of the new working time
arrangement shall be by agreement of the parties.
Considering that the MOA clearly states that the employee
waives the payment of overtime pay in exchange of a five-
day workweek, there is no room for interpretation and its
terms should be implemented as they are written.
LAGATIC
The D. O. 21 involves the shortening of the workweek from six days to
five days but with prolonged hours on those five days. Under this
scheme, non-payment of overtime premiums was allowed
in exchange for longer weekends for employees. In the
instant case, petitioners workweek was never compressed. Instead,
he claims payment for work over and above his normal 5 days of
work in a week. Applying by analogy the principle that
overtime cannot be offset by undertime, to allow off-setting
would prejudice the worker. He would be deprived of the
additional pay for the rest day work he has rendered and
which is utilized to offset his equivalent time off on regular
workdays. To allow Cityland to do so would be to circumvent the
law on payment of premiums for rest day and holiday work.
Notwithstanding, petitioner failed to show his entitlement to overtime
and rest day pay due, to the lack of sufficient evidence as to the
number of days and hours when he rendered overtime and rest day
work. Entitlement to overtime pay must first be established
by proof that said overtime work was actually performed,
before an employee may avail of said benefit.To support his
allegations, petitioner submitted in evidence minutes of meetings
wherein he was assigned to work on weekends and holidays at
Citylands housing projects. Suffice it to say that said minutes do not
prove that petitioner actually worked on said dates.
o Undertime; offset?
 Holiday Pay
o Holiday Pay (Article 94) Rationale; Exclusions
o Power to Fix Regular and Special Days (E.O. 292 as
amended - revised administrative code)
 Lodged with the President by
Proclamation to move the dates of
holidays except those with "historical
significance" - Atty. JMM
 Entitlement to Holiday Pay
o A regular holiday falling on employee's rest day –
260% if worked
o 2 regular holidays falling on employee's rest day –
390% if worked
o 2 regular holidays falling on the same day
 Worked: 300
 Not worked: 200
 No holiday pay; forfeiture
o GR: No forfeiture of holiday pay.
o Exception:
 IRR* : When an employee is on leave
without pay on the workday immediately
preceding a regular holiday (UNLESS he
works on such regular holiday)
 This has not been challenged yet (
petition for declaratory relief)
 Doctrine; Principle of Law
o Applicability of Muslim holidays to non-muslims in
Muslim regions (2002 San Miguel Corp.)
SAN MIGUEL CORP
Labor Law Review – Atty. JMM
Petitioner asserts that Article 3(3) of Presidential Decree No. 1083
provides that "the provisions of this Code shall be applicable only to
Muslims." However, there should be no distinction between Muslims
and non-Muslims as regards payment of benefits for Muslim
holidays. Wages and other emoluments granted by law to the
working man are determined on the basis of the criteria laid
down by laws and certainly not on the basis of the worker’s
faith or religion. In addition, the 1999 Handbook on Workers’
Statutory Benefits, categorically stated: Considering that all private
corporations, offices, agencies, and entities or establishments
operating within the designated Muslim provinces and cities are
required to observe Muslim holidays, both Muslim and Christians
working within the Muslim areas may not report for work on the days
designated by law as Muslim holidays.
o DOLE Explanatory Bulletin dated March 11, 1993
affirmed as valid, on two (2) regular holidays falling
on the same day (2004 Asian Transmission Corp.)
as there is no reduction of number of holidays.
ASIAN TRANSMISSION CORP
Petitioners should pay its employees “200% and not just 100% of their
regular daily wages for the unworked April 9, 1998 which covers two
regular holidays, namely, Araw ng Kagitingan and Maundy
Thursday.”
Holiday pay is a legislated benefit enacted as part of the Constitutional
imperative that the State shall afford protection to labor. Its purpose
is not merely "to prevent diminution of the monthly income of the
workers on account of work interruptions. In other words, although
the worker is forced to take a rest, he earns what he should earn,
that is, his holiday pay."
The provision is mandatory, regardless of whether an
employee is paid on a monthly or daily basis. Unlike a bonus,
which is a management prerogative, holiday pay is a
statutory benefit demandable under the law.
 Flexi-holidays schedule; Concept
o One where the employees agree to avail the
holidays at some other days provided there is no
diminution of existing benefits as a result of such
arrangement (DOLE Dept. Advisory No. 2, S. 2009)
 The swap should be with consent of the
employees and should not lead to
diminution.
-------------
 Service Incentive Leave (Article 95); Exclusion
 Night Shift Differential
 xxx
Other Labor Standards
 Service Incentive[ Leave (Article 95); Exclusion
 Night Shift Differential Pay (Article 86)
 Service Charges (Article 96)
TOPIC 10
Other Special Benefits
Special Laws; Other Benefits
1. Rank and file workers (PD 851)
2. Married male workers (RA 8187)
3. Adoptive parents (RA 8552)
4. Solo parents (RA 8972)
5. Retirees (Article 287)
6. Battered women (RA 9262)
7. Women workers (RA 9710)
8. Nursing employees (RA 10028)
University of San Carlos
 9. Drivers and conductors in public utility transport system
(DOLE D.O. No. 118-12, S. 2012)
10. Night workers (RA 10151)
I. RANK AND FILE WORKERS (PD 851)
13th month pay (PD 851, as amended)
 Purpose
 Coverage and exclusions
o Only to rank and file employees regardless of salary
o Piece-rate employees even if they are paid are
result are entitled to this benefit
o Kasambahays but under the new law
 How much
o At least 1/12 of total basic salary EARNED during
the calendar year
 When due and payable
 Jurisprudence:
o Driver who is paid on a boundary basis, not entitled
to 13th month pay (G and E case)
o Commissions not part of basic salary if in the form
of profit sharing payments, and absence of clear,
direct or necessary relation to the amount of work
actually performed (2007 Reyes case)
 Basic salary excludes, in general,
commissions. This is subject to the
qualification expressed by the SC xxx
REYES (citing Philippine Duplicators and Boie Takeda)
In Philippine Duplicators, the salesmen’s commissions, comprising a
predetermined percentage of the selling price of the goods sold by
each salesman were properly included in the term basic salary for
purposes of computing the 13th month pay. The salesmen’s
commission are not overtime payments, nor profit-sharing
nor any other fringe benefit, but a portion of the salary structure
which represents an automatic increment to the monetary value
initially assigned to each unit of work rendered by a salesman.
In Boie-Takeda, the so-called commissions paid to or received by
medical representatives of Boie-Takeda Chemicals or by the rank
and file employees of Philippine Fuji Xerox Co., were excluded from
the term basic salary because these were paid to the medical
representatives and rank and file employees as productivity
bonuses, which are generally tied to the productivity or capacity for
revenue production of a corporation and such bonuses closely
resemble profit-sharing payments and have no clear direct
or necessary relation to the amount of work actually done
by each individual employee
The additional payments made to petitioner were not in fact sales
commissions but rather partook of the nature of profit-sharing
business. Certainly from the foregoing, the doctrine in Boie-
Takeda Chemicals which pronounced that commissions are
additional pay that does not form part of the basic salary,
applies to the present case.
o Overload pay, excluded from the 13th month pay,
as it is paid for additional work in excess of the
regular teaching load (2008 Letran Calamba Faculty
and Employees Association)
o
LETRAN CALAMBA FACULTY AND EMPLOYEES ASSOCIATION
TLDR: (13 month computed on basis of basic salary; overtime pay not
considered part of basic salary. Overtime is additional compensation
because it is being paid for additional work performed in excess of
the regular teaching load).
"Art. 87 - Overtime work. Work may be performed beyond eight (8)
hours a day provided that the employee is paid for the overtime
work, additional compensation equivalent to his regular wage plus
at least twenty-five (25%) percent thereof."
Labor Law Review – Atty. JMM
It is clear that overtime pay is an additional compensation
other than and added to the regular wage or basic salary,
for reason of which such is categorically excluded from the
definition of basic salary under the Supplementary Rules and
Regulations Implementing Presidential Decree 851.
An overload pay, owing to its very nature and definition, may not be
considered as part of a teacher's regular or basic salary,
because it is being paid for additional work performed in
excess of the regular teaching load.
The peculiarity of an overload lies in the fact that it may be performed
within the normal eight-hour working day. This is the only reason
why the DOLE, in its explanatory bulletin, finds it proper to include
a teacher's overload pay in the determination of his or her 13th-
month pay. However, the DOLE loses sight of the fact that even if
it is performed within the normal eight-hour working day,
an overload is still an additional or extra teaching work
which is performed after the regular teaching load has been
completed. Hence, any pay given as compensation for such
additional work should be considered as extra and not
deemed as part of the regular or basic salary.
II. Married male workers (RA 8187); Paternity Leave Act
 Paternity leave; requisites
o Employee at the time of delivery
o Cohabiting with his spouse
o Applied for leave
 Features
o Up to 4 births or miscarriages only
o 7 days
o No need to apply for leave if it is miscarriage
because there would be no prior notice
III. Adoptive parents (RA 8552); Domestic Adoption Act of 1998
 Adoptive parents shall enjoy all the benefits that the parents
are entitled to
o Maternity and paternity benefits and other benefits
given to biological parents upon birth of the child
shall be enjoyed if the adoptee is below 7 years of
age as of the date the child is placed with the
adoptive parents thru the pre-adoptive parents xxx
IV. Solo parents (RA 8972)
 Parental leave; requisites (NEDA social development
committee res. No. 2, S. 2002)
o At least one year of service
o Prior notice to employer
o Solo parent identification card
 This is renewable; entitlement is not
indefinite (e.g. once you get married, you
cease to be entitled to this benefit)
o This is not convertible to cash and no cumulative
 Flexible Work Arrangement
V. Retirees (Article 287)
 Requisites; age
o 60 with at least 5 years of service (option of the
employee)
o 65 (compulsory); no length of service required
 How much?
o 1/2 month salary for every year of service (?)
 22.5 day's worth
 Exemption
o Article 287: ONLY 2 EXEMPTIONS
o Government employees
o Retail or service establishments employing not
more than 10 employees
 Underground workers have a different retirement
University of San Carlos
 o 50 and 60 ?
 Forfeiture (2006 Sy)
o Labor code applies only in the absence of a
reasonable retirement plan; otherwise, the
retirement plan prevails and the employee is
governed by its terms and conditions
SY v METROPOLITCAN BANK
Under the Labor Code, only unjustly dismissed employees are
entitled to retirement benefits and other privileges including
reinstatement and backwages. Since petitioner’s dismissal was
for a just cause, he is not entitled to any retirement benefit.
To hold otherwise would be to reward acts of willful breach of trust
by the employee. It would also open the floodgate to potential
anomalous banking transactions by bank employees whose
employments have been extended. Since a bank’s operation is
essentially imbued with public interest, it owes great fidelity to the
public it deals with. In turn, it cannot be compelled to continue in its
employ a person in whom it has lost trust and confidence and whose
continued employment would patently be inimical to the bank’s
interest
While the Court commiserates with petitioner who has spent with the
bank the best three decades of his employable life, we find no room
to accord him compassionate justice. Records showed that he
violated the bank policies prior to his compulsory
retirement. Thus, there can be no earned retirement benefits to
speak of. No such provision is provided for by the Labor Code.
VI. Battered women (RA 9262)
 10 day paid leave; must have a TPO presented to the
employer for availment
 In addition to other leave benefits
VII. Women workers (RA 9710); Magna Carta of Women
 Special leave benefit; full pay for 2 months based on GROSS
monthly compensation
 In addition to leave privileges under existing laws
 Special Leave Benefit; Definition
o Female employee's leave entitlement
o 2 months with full pay based on gross monthly
compensation
o Following surgery caused by gynecological
disorders (Sec. 1)
o Provided, she has rendered continuous aggregate
employment service of at least 6 months for the last
12 months
o Different from SSS Sickness Benefit
 In addition to leave benefits granted under existing laws (Sec.
8)
 However, similar or equal xxx (2012 IRR!!!! The previous one
has been repealed!) ***
 Maximum Period of Leave with Pay
o 2 months maximum (Section 4)
o Allowable period of leave with pay - depends on
certification of a competent physician as to required
period of recuperation
 Availment and Frequency
o When: after undergoing surgery (Section 5)
o Xxx
 Mode of Payment:
o After surgery
o But employer, may in its discretion, pay before or
during surgery (Section 11)
o Non cumulative and non convertible to cash (Sec.
12)
VIII. Nursing employees (RA 10028); Expanded Breastfeeding
Promotion Act of 2009
Labor Law Review – Atty. JMM
 Any female worker, regardless of employment status, who is
lactating or breastfeeding, her infant and/or young child
(Section 5, Rule II)
o Infant: birth to 12 months; young child: 1-3 year
old
 Accessible to the breastfeeding women
 There is no distinction as to what kind of establishment—
commercial, industrial, private, government, etc.; as long as
there are nursing employees
 Clean, well ventilated area xxx
 Ensures privacy to express milk and/or in appropriate cases,
breastfeed
 In no case shall it be located in the toilet (Section 10, Rule III)
 There should be privacy
 Lactation station, definition:
o Private, clean, sanitary, and well-ventilated room
xxx (where you can store it afterward)
o Not less than 40 minutes for every 8 hours working
period
 This is on top of the meal period
 40 minutes if compensable time
 Include the time to get to and from the
workplace lactation station, considered
compensable hours worked
 Duration and frequency of breaks may be
agreed upon by employees and employer
with the minimum being 40 minutes
o In addition to regular time-off for meals (Section
12)
o Employers can, however, apply for an exception
with the DOH.
 You can apply for exemption (See D.O) –
Exemptible Establishments:
a) No nursing or lactating employee
b) No pregnant employees
At the time of the application provided further that there are no women
clients visit/transact business in the establishment
IX. Drivers and conductors in public utility transport system
(DOLE D.O. No. 118-12, S. 2012 dated January 13, 2012)
- Benefits apply to drivers and conductors of bus, not applicable to
taxis and jeepneys
 Hours of work; not exceed 8 hours a day
 If required to work overtime, max hours of work shall not
exceed 12 hours in any 24 hour period, subject to safety and
and operational conditions of the bus (Sec. 3, Rule II)
 At least 1 hour, exclusive of meal breaks, within a 12 hour
shift
 Paid partly fixed, partly performance based. Before, they were
paid on commission on boundary basis. However, that
encouraged them to drive fast. Endangering the life and limb
of commuting public. DOLE came up with a regulation.
Partly fixed, performance
a) Fixed component – they should be paid at the very least the
prescribed daily minimum wage. Of course, they can agree for
more.
b) Performance based
a. safety performance – more accident, no
performance compensation
b. revenue performance – more riders, more
compensation
 There must be a written contract of employment which must
be notarized so the employees can use it to enforce rights
under existing labor laws. Just like the case of employment of
domestic workers. Other than these two, the employment
contract may be oral. Those contracts are consensual.
University of San Carlos
 X. Night workers (RA 10151
 Night workers
Hours of work is between 10 PM-6 AM, provided that he has
rendered 7 hours of work. Can be male or female.

A. Health assessment/health advice

1. Free of charge, when requested by the employee
a. Before taking up an assignment as night worker
b. At regular intervals during such assignment
c. If he/she experiences health problems during such
assignment

- Employer has the duty to provided medical and dental services to

employees
- Conducted by a qualified nurse/doctor/any other similar
professionals who can perform health assessment

B. Mandatory Facilities (FL-TET)

A. Suitable first aid and emergency facilities (Rule 1960, OSHS)
B. Lactation station (RA 10028; expanded breastfeeding
promotion act of 2008)
C. Separate toilet facilities for men and women
D. Facility for eating with potable4 drinking water
TN: This is specifically for night workers. Dayworkers are also
entitled, but the governing law is the labor code.
E. Transportation facility and or properly ventilated temporary
sleeping or resting quarters, separate for male and female
workers

Does not necessarily mean that the company will buy a car as
long as you can be transported safely to your home.

-There are also exemptions

XI. Domestic Workers

- Hourse of work; Daily rest period: Emphasis is on the total 8
hour aggregate rest period, 16 hours of work

- Service incentive leave: Article 82 of Labor Code is deemed

repealed insofar as entitlement to SIL; the governing law is the
Batas Kasambahay.

- 13th month pay: If they have rendered at least 1 month of

service; computation same as regular workers

- Retirement benefits: 65 compulsory age; 60 optional; with at

least 5 years, 22.5 per year of service; entitled to monthly wage,
not daily wage. See minimum wage

- SSS, Philhealth, Pag-ibig membership: at least 1 month

of service; WON they will contribute to SSS depends on how much
they are paid. If they are paid 5, 000 and above, they have to
share. Otherwise, the contribution shall be paid solely by the
employer.

TN: This is very important because should the kasambahay suffer

from accident in connection to her function, the employer will
be made liable if the kasambahay is not a member of the
aforementioned.

Notes
 There must be an employment agreement
 Must be registered in the nearest barangay

4
Fit for human consumption
Labor Law Review – Atty. JMM University of San Carlos

Topic 11
Right to Security of Tenure
Security of Tenure – right to continue his employment until he is
terminated for just and authorized causes; codified under the Labor
Code.
- Covers all types of establishment—commercial, industrial or
agricultural
- Available to regular employees and also to probationary employees
during the period of probation, as well as to project employees
only during the project, to the seasonal employee but only the
duration of the season
 Constitutional Basis (Article XIII, Section 3, Constitution, 2009
Serrano)
In cases involving security guards, a relief and transfer order in itself
does not sever employment relationship between a security guard
and his agency. An employee has the right to security of tenure, but
this does not give him a vested right to his position as would deprive
the company of its prerogative to change his assignment or transfer
him where his service, as security guard, will be most beneficial to
the client. Temporary "off-detail" or the period of time security
guards are made to wait until they are transferred or assigned to a
new post or client does not constitute constructive dismissal, so long
as such status does not continue beyond six months.
The onus of proving that there is no post available to which the security
guard can be assigned rests on the employer x x x. (emphasis
supplied)
It cannot, therefore, be gainsaid that the right of security guards to
security of tenure is safeguarded by administrative issuances and
jurisprudence, in parallel with the mandate of the Labor Code and
the Constitution to protect labor and the working people.
Nonetheless, while the Court has recognized the security guards’
right to security of tenure under the "floating status" rule, the Court
has similarly acknowledged the management prerogative of security
agencies to transfer security guards when necessary in conducting
its business, provided it is done in good faith.
 Statutory Basis (Article 279; Article 277 (b))
- Only terminated for just and authorized causes
- Twin requirements: 1) Notice and 2) Hearing
 Establishment covered (278) and employees covered (280
and 281)
o All establishments are covered, even those which
are not operating for profit.
- 280: Regular and Casual Employment
Regular:
GR: Performing activities which are usually necessary or desirable in the
usual trade or business of the employer
XPNs:
a) Fixed term - duration must be determined at the time of the
engagement of the employee
b) Seasonal – employment for the duration of the season
Casual: if not regular. Provided, that considered Regular if employed for
at least one year.
- 281: Probationary employment
Shall not exceed 6 months, unless covered by apprenticeship
agreement
Grounds for termination:
a) Just cause
b) Failure to qualify
Labor Law Review – Atty. JMM
Reqs: Reasonable standards, made known to him, at the time of
his engagement
 Legal Principle
o Section 3, Article XIII is not self-actuating; it is not
judicially enforceable. It cannot on its own be a
source of a positive enforceable right. It cannot be
treated as a principal source of direct enforceable
rights (2009 Serrano, citing 2004 Agabon)
Section 3. The State shall afford full protection to labor, local and
overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective
bargaining and negotiations, and peaceful concerted activities,
including the right to strike in accordance with law. They shall be
entitled to security of tenure, humane conditions of work, and a
living wage. They shall also participate in policy and decision-making
processes affecting their rights and benefits as may be provided by
law.
The State shall promote the principle of shared responsibility between
workers and employers and the preferential use of voluntary modes
in settling disputes, including conciliation, and shall enforce their
mutual compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers,
recognizing the right of labor to its just share in the fruits of
production and the right of enterprises to reasonable returns to
investments, and to expansion and growth.
 Interference of the property right of the
employer pursuant to the police power of
the State
A. Classification of Employees
1. Regular employees (article 280); concept (Section 5, a), Rule
1, Book VI)
a. By nature of work
- primary test? Necessary and desirable
Ex: teacher
b. By years of service
- casual employees becoming regular after 1 year
of service
2. Casual employee (Article 280); Concept (Section 5, b), Rule I,
Book VI : IRR:
a) Engaged to perform a job, work, or service
b) the job that he performs is merely incidental to the trade
of the employer and
c) for duration made known to him
3. Probationary Employees (Article 281); Concept (Section 6,
Rule 1, Book VI)
o A regular worker is either a probationary worker or
a regular worker
o A probationary employee is one, who, for a given
period of time, is being observed and evaluated to
determine whether or not he is qualified for a
permanent position (2007 Pasamba)
o No definition offered by the Labor Law, rely on
jurisprudence
o Maximum ceiling of probation: Article 296 (281)
placed a ceiling on probationary employment, i.e.
not to exceed 6 months from the date the employee
started working (1994 Central Negros Electric
Cooperative)
TN: It could be less than 6, depends on the
prerogative of the management. For managerial
positions, usually they are regular on day 1, or other
periods lesser than 6 months.
PASAMBA
Petitioner was not dismissed for serious misconduct, which is among
the grounds for dismissing regular employees enumerated under
University of San Carlos
 Article 282 of the Labor Code. Petitioner was a probationary
employee, not a regular employee. A probationary employee is one,
who, for a given period of time, is being observed and evaluated to
determine whether or not he is qualified for a permanent position.
A probationary appointment affords the employer an opportunity to
observe the skill, competence, as well as the attitude of a
probationer.
The services of an employee hired on probationary basis may be
terminated when he or she 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. The law does not
preclude the employer from terminating the probationary
employment, if the employer finds that the probationary employee
is not qualified for regular employment. As long as the termination
was made for reasons provided under Article 281 of the Labor Code
before the expiration of the six-month probationary period, the
employer is well within its rights to sever the employer-employee
relationship
There is no dispute that petitioner was informed that uttering
slanderous remarks is an infraction of the rules and
regulations of SLMC
Petitioner, in making these slanderous utterances, violated the
Code of Discipline, which contained the standards she knew
she must comply with before she could be accorded regular
status. An employer, such as SLMC, cannot be compelled to
continue employing a probationary employee who, as early as three
months after she was hired, had shown herself inclined to violate
the more serious of the company's rules
o May also become a regular employee if he is
permitted to work beyond the probationary period
Legal Principle
o The right of a laborer to sell his labor to such persons as he
may choose is, in its essence, the same as the right of an
employer to purchase labor from any person whom it chooses.
The employer and the employee have thus an equality
of right guaranteed by the Constitution (2007 Phil Daily
Inquirer) - it is in this right that the employer and the
employee stand in equal footing!***
PDI
The right of a laborer to sell his labor to such persons as he may choose
is, in its essence, the same as the right of an employer to purchase
labor from any person whom it chooses. The employer and the
employee have thus an equality of right guaranteed by the
Constitution. If the employer can compel the employee to work
against the latter's will, this is servitude. If the employee can compel
the employer to give him work against the employer's will, this is
oppression.
PDI was only exercising its statutory hiring prerogative when it refused
to hire Magtibay on a permanent basis upon the expiration of the
six-month probationary period. This was established during the
proceedings before the labor arbiter and borne out by the records
and the pleadings before the Court. When the NLRC disregarded the
substantial evidence establishing the legal termination of Magtibay's
probationary employment and rendered judgment grossly and
directly contradicting such clear evidence, the NLRC commits grave
abuse of discretion amounting to lack or excess of jurisdiction. It
was, therefore, reversible error on the part of the appellate court
not to annul and set aside such void judgment of the NLRC
o Period of probation: a. Labor Code; b. Manual of Regulations
for Private Higher Education of 2008, 2010 Revised Manual of
Regulations for Private Schools in Basic Education
 LC: NOT EXCEEDING 6 months
o Counting of Period of Probation ( 2004 Alcira and 2004
Mitsubishi Motor Phils.) ***
Counting period of probation; jurisprudence
Labor Law Review – Atty. JMM
The computation of the 6 month period of probation is
reckoned from the date xxx
ALCIRA
Petitioner insists that he already attained the status of a regular
employee when 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. According to petitioner’s
computation, since Article 13 of the Civil Code provides that one
month is composed of thirty days, six months total one hundred
eighty days. 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. Our
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.
MITSUBISHI MOTOR PHILS
Respondent Paras was employed as a management trainee on a
probationary basis. During the orientation conducted on May 15,
1996, he was apprised of the standards upon which his
regularization would be based. He reported for work on May 27,
1996. As per the company’s policy, the probationary period was from
three (3) months to a maximum of six (6) months. Applying Article
13 of the Civil Code, the probationary period of six (6) months
consists of one hundred eighty (180) days.This is in conformity with
paragraph one, Article 13 of the Civil Code, which provides that the
months which are not designated by their names shall be understood
as consisting of thirty (30) days each. The number of months in the
probationary period, six (6), should then be multiplied by the
number of days within a month, thirty (30); hence, the period of one
hundred eighty (180) days. As clearly provided for in the last
paragraph of Article 13, in computing a period, the first day shall be
excluded and the last day included. Thus, the one hundred
eighty (180) days commenced on May 27, 1996, and ended
on November 23, 1996. The termination letter dated
November 25, 1996 was served on respondent Paras only at
3:00 a.m. of November 26, 1996. He was, by then, already a
regular employee of the petitioner under Article 281 of the
Labor Code.
 We depend on the Civil Code because we do not
have a provision on the counting in the Labor Code.
 When the employer specifically mentions the
months of the probation, the specific number of
days corresponding to the months should be taken
into account.
Jurisprudence
o Probationary employee, considered regular if employee is not
informed of the standards (2005 Aberdeen Court and 2005
Clarion Printing House; Section 6, d; Rule 1, Book VI) and
more so, if he did not undergo any performance evaluation
(2006 Dusit Hotel Nikko)
ABERDEEN
It can be gleaned from Article 281 of the Labor Code that there are two
grounds to legally terminate a probationary employee. It may be
done either: a) for a just cause or b) when employee fails to qualify
as a regular employee in accordance with reasonable standards
made known by the employer to the employee at the start of the
employment.
Petitioners say that Agustin was terminated because he failed to qualify
as a regular employee. Petitioners, however, allegedly did not show
that respondent was apprised of these reasonable standards at the
start of the employment.
University of San Carlos
The rule, however, should not be used to exculpate a probationary
employee who acts in a manner contrary to basic knowledge and
common sense, in regard to which there is no need to spell out a
policy or standard to be met. This is what the NLRC found to be the
fact in this case:
…We concur with the respondents that by his omission, lack of
concern and grasp of basic knowledge and common sense,
complainant has shown himself to be undeserving of
continued employment from probationary employee to
regular employee
It bears stressing that even if technically the reading of air exhaust
balancing is not within the realm of expertise of the complainant,
still it ought not to be missed that prudence and due diligence
imposed upon him not to readily accept the report handed to him by
the workers of Centigrade Industries. Required of the complainant
was that he himself proceed to the work area, inquire from the
workers as to any difficulties encountered, problems fixed and
otherwise observe for himself the progress and/or condition/quality
of the work performed.
As it is, We find it hard to believe that complainant would just have
been made to sign the report to signify his presence. By saying so,
complainant is inadvertently degrading himself from an electrical
engineer to a mere watchdog. It is in this regard that We concur
with the respondents that by his omission, lack of concern and grasp
of basic knowledge and common sense, complainant has shown
himself to be undeserving of continued employment from
probationary employee to regular employee
Informing the Probationer of Reasonable Standards at
the Time of Engagement
CLARION
This Court's finding that Miclat's termination was justified
notwithstanding, since at the time she was hired on probationary
basis she was not informed of the standards that would qualify her
as a regular employee, under Section 6, Rule I of the Implementing
Rules of Book VI of the Labor Code which reads:
SEC. 6. Probationary employment. — There is probationary
employment where the employee, upon his engagement, is
made to undergo a trial period during which the employer
determines his fitness to qualify for regular employment,
based on reasonable standards made known to him at the
time of engagement.
"Probationary employment shall be governed by the following
rules:
(d) In all cases of probationary employment, the
employer shall make known to the employee the
standards under which he will qualify as a regular
employee at the time of his engagement. Where no
standards are made known to the employee at that time, he
shall be deemed a regular employee" (Emphasis and
underscoring supplied),
she was deemed to have been hired from day one as a regular
employee.
DUSIT HOTEL NIKKO
The petitioner did not present proof that the respondent was evaluated
from November 21, 1998 to February 21, 1999, nor that his
probationary employment was validly extended.
In the absence of any evaluation or valid extension, we cannot conclude
that respondent failed to meet the standards of performance set by
the hotel for a chief steward. At the expiration of the three-month
period, Gatbonton had become a regular employee. It is an
elementary rule in the law on labor relations that a probationary
employee engaged to work beyond the probationary period of six
months, as provided under Article 281 of the Labor Code, or for any
length of time set forth by the employer (in this case, three months),
shall be considered a regular employee
Labor Law Review – Atty. JMM
Since respondent was not dismissed for a just or authorized cause, his
dismissal was illegal
 Aberdeen: without standards=regular employee
 Examples of standards: work attitude, initiative,
meet rating of 80% or above, etc. ; must be
reasonable
 Period of probation commences to run from the day
the employee ACTUALLY STARTED WORKING,
unless the contract stipulates otherwise.
o Fixing of probation is for the benefit of both parties (2003
Cebu Marine Beach Resort)
Failure to qualify; termination of probationary employee;
jurisprudence
o 2014 Aboott Laboratory case: The adequate performance of
the duties and responsibilities constitute inherent and implied
standards for xxx
o 2015 Enchanted Kingdom v. Verzo: Ideally, the employer has
to be informed from day one. Strict compliance is not
required. True test is one of reasonableness. As long as it is
in the early phase, it is deemed met.
CEBU MARINE BEACH RESORT
It is settled that while probationary employees do not enjoy permanent
status, they are entitled to the constitutional protection of security
of tenure. Their employment may only be terminated for just cause
or when they fail to qualify as regular employees in accordance with
reasonable standards made known to them by their employer at the
time of engagement, and after due process
Indeed, we find no indication that respondents have shown by some
overt acts their intention to sever their employment in petitioner
company. To constitute abandonment, there must be clear proof of
deliberate and unjustified intent to sever the employer-employee
relationship. Clearly, the operative factor is still the employer's
ultimate act of putting an end to his employment.
Here, respondents did not report back for work because they were
warned by petitioner Sasaki not to return. But immediately, they filed
with the Labor Arbiter's Office a complaint for illegal dismissal. It is
a settled doctrine that the filing of a complaint for illegal dismissal is
inconsistent with the charge of abandonment, for an employee who
takes steps to protest his dismissal cannot by logic be said to have
abandoned his work
 Neither of the parties can unilaterally terminate the
period of probation
 You can also terminate the probationary employee
even before the end of the probationary period for
failure to meet standards/criteria (ground: failure to
qualify).
Exceptions to regular employment
o Xxx.
Next meeting: January 6, 2014
Special laws on Probation
A. JobStart Trainee cannot be placed under probation if he has
successfully completed his internship technical training phase
B. Special program for employment of students (SPES Law): Period
of employment of poor but deserving students, out-of-shoul youth
(OSY), or displaced workers considered part of student’s
probationary period should they apply in the same company (RA
10197, amending RA xxx)
Exceptions to regular employment
 Labor Code: project and seasonal employment
University of San Carlos
 o SC: this is not exclusive. The list should allow those
analogous or similar to these types of employment.
o Project employees: requisites; 2 types of activities (1994 ALU-
TUCP and 1996 Cosmos Bottling)
COSMOS
A project employee has been defined to be 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 realm of business and industry, "project" could refer to at least
two (2) distinguishable types of activities. First, a project could refer
to a particular job or undertaking that is within the regular or usual
business of the employer company, but which is distinct and
separate, and identifiable as such, from the other undertakings of
the company. Such job or undertaking begins and ends at
determined or determinable times. Second, a project could also refer
to a particular job or undertaking that is not within the regular
business of the corporation. Such a job or undertaking must also be
identifiably separate and distinct from the ordinary or regular
business operations of the employer. The job or undertaking also
begins and ends at determined or determinable times
The case at bar presents what appears as a typical example of the first
type
Clearly, therefore, private respondent being a project employee, or to
use the correct term, seasonal employee, considering that his
employment was limited to the installation and dismantling of
petitioner's annex plant machines after which there was no more
work to do, his employment legally ended upon completion of the
project. 16 That being so, the termination of his employment cannot
and should not constitute an illegal dismissal. Neither should it
constitute retrenchment as private respondent was a seasonal
employee whose services were already terminated on May 21, 1990
prior to the termination of the other regular employees of Cosmos
by reason of retrenchment
ALU-TUCP
The principal test for determining whether an employee is properly
characterized as project employees is whether or not the project
employees were carrying out a specific project or undertaking, the
duration and the scope of which were specified at the time the
employees were engaged for that project. There are two types of
project activities. First is that a project could refer to a particular job
or undertaking that is within the regular or usual business of the
employer company, but which is distinct and separate and
identifiable as such, from the other undertakings of the company.
Such job or undertaking begins and ends at determined or
determinable times. Second is a particular job or undertaking that is
not within the regular business of the corporation. Such a job or
undertaking must also be identifiably separate and distinct from the
ordinary or regular business operations of the employer. It must also
begin and end at determined or determinable times. The case at bar
falls on the second type of project activity. The carrying out of the
Five Year Expansion Program constitutes a distinct undertaking
identifiable from the ordinary business and activity of NSC. Each
component project, of course, begins and ends at specified times
which had already been determined by the time petitioners were
engaged. During the time petitioners rendered services to NSC, their
work was limited to one or another of the specific component
projects which made up the Five Year Expansion Program. They
were not hired or assigned to any other purpose.
 Repeated and continuous re-hiring of project
employee (Maraguinot; 2005 Integrated
Construction and Plumbing Work)
MARAGUINOT
Labor Law Review – Atty. JMM
this ruling does not mean that simply because an employee is a project
or work pool employee even outside the construction industry, he is
deemed, ipso jure, a regular employee. All that we hold today is that
once a project or work pool employee has been: (1) continuously,
as opposed to intermittently, re-hired by the same employer for the
same tasks or nature of tasks; and (2) these tasks are vital,
necessary and indispensable to the usual business or trade of the
employer, then the employee must be deemed a regular employee,
pursuant to Article 280 of the Labor Code and jurisprudence. To rule
otherwise would allow circumvention of labor laws in industries not
falling within the ambit of Policy Instruction No. 20/Department
Order No. 19, hence allowing the prevention of acquisition of tenurial
security by project or work pool employees who have already gained
the status of regular employees by the employer's conduct
INTEGRATED CONSTRUCTION
The test to determine whether employment is regular or not is the
reasonable connection between the particular activity performed by
the employee in relation to the usual business or trade of the
employer. Also, if the employee has been performing the job for at
least one year, even if the performance is not continuous or merely
intermittent, the law deems the repeated and continuing need for
its performance as sufficient evidence of the necessity, if not
indispensability of that activity to the business.[18] Thus, we held
that where the employment of project employees is
extended long after the supposed project has been finished,
the employees are removed from the scope of project
employees and are considered regular employees.
While length of time may not be the controlling test for project
employment, it is vital in determining if the employee was hired for
a specific undertaking or tasked to perform functions vital, necessary
and indispensable to the usual business or trade of the employer.
Here, private respondent had been a project employee several times
over. His employment ceased to be coterminous with specific
projects when he was repeatedly re-hired due to the demands of
petitioners business.
 If the case of construction worker, there is an
existing guideline in determining their employment
status.
 While there was repeated re-hiring, the hiring was
not, however, continuous, as in fact there was lapse
of 33 months after the next project, the employee
is a project and not regular (2009 Alcatel Phils)
ALCATEL
Respondent was a project employee. The specific projects for which
respondent was hired and the periods of employment were specified
in his employment contracts. The services he rendered, the duration
and scope of each employment are clear indications that respondent
was hired as a project employee.
We do not agree with respondent that he became a regular employee
because he was continuously rehired by Alcatel every termination of
his contract.
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. 21 (Emphasis ours)
While respondent performed tasks that were clearly vital, necessary and
indispensable to the usual business or trade of Alcatel, respondent
was not continuously rehired by Alcatel after the cessation of every
project.
o Seasonal employee; seasonal industry; 2 requisites (2003
Hacienda Fatima and 2005 Hacienda Bino/Hortencia Stark)
University of San Carlos
2014 Manalo et. al.
Continuous and repeated hiring and rehiring will indicate
indispensability of your job to the trade and business
HACIENDA FATIMA
For respondents to be excluded from those classified as regular
employees, it is not enough that they perform work or services that
are seasonal in nature. They must have also been employed only for
the duration of one season. The evidence proves the existence of
the first, but not of the second, condition. The fact that respondents
— with the exception of Luisa Rombo, Ramona Rombo, Bobong
Abriga and Boboy Silva — repeatedly worked as sugarcane workers
for petitioners for several years is not denied by the latter. Evidently,
petitioners employed respondents for more than one season.
Therefore, the general rule of regular employment is applicable.
HACIENDA BINO/HORTENCIA STARK
For respondents to be excluded from those classified as regular
employees, it is not enough that they perform work or services that
are seasonal in nature. They must have been employed only for the
duration of one season. 29 While the records sufficiently show that
the respondents' work in the hacienda was seasonal in nature, there
was, however, no proof that they were hired for the duration of one
season only. In fact, the payrolls, 30 submitted in evidence by the
petitioners, show that they availed the services of the respondents
since 1991. Absent any proof to the contrary, the general rule of
regular employment should, therefore, stand. It bears stressing that
the employer has the burden of proving the lawfulness of his
employee's dismissal
 Regular seasonal employee; Concept (1963 Manila
Hotel; 1991 Mercado reconciled in 1998 Phil.
Tobacco Flue Curing and Redrying Corp.)
MANILA HOTEL
Where it appears that the questioned employees were never separated
from the service but their status is that of regular seasonal
employees who are called to work from time to time, mostly during
summer season, and the nature of their relationship with the hotel
is such that during off season they are temporarily laid off but during
summer season they are re-employed, or when their services are
needed, and they are not strictly speaking separated from the
service but are merely considered as on leave of absence without
pay until they are re-employed, it is held that their employment
relationship is never severed but only suspended, and as such, they
can be considered as in the regular employment of the hotel
MERCADO
A project employee has been defined to be 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, 26 as in the present case
Petitioners being project employees, or, to use the correct term,
seasonal employees, their employment legally ends upon completion
of the project or the season.
PHIL TOBACCO FLUE
This Court has previously ruled in Manila Hotel Company v. CIR 13 that
seasonal workers who are called to work from time to time and are
temporarily laid off during off-season are not separated from service
in said period, but are merely considered on leave until reemployed,
viz.:
"The nature of their relationship . . . is such that during off season
they are temporarily laid off but during summer season they
are re-employed, or when their services may be needed. They
are not strictly speaking separated from the service but are
merely considered as on leave of absence without pay until
they are re-employed."
Labor Law Review – Atty. JMM
It follows that the employer-employee relationship between herein
petitioner and members of the Lubat group was not terminated at
the end of the 1993 season. From the end of the 1993 season until
the beginning of the 1994 season, they were considered only on
leave but nevertheless still in the employ of petitioner.
 Jurisprudence: deep sea fishing business is not a
seasonal undertaking. Catching fish is not seasonal
(2006 Poseidon Fishing) especially where the boat
crew although employed on a per trip basis, has
been working for 12 years.
POSEIDON
The "activity of catching fish is a continuous process and could hardly
be considered as seasonal in nature."
We ruled that once a project or work pool employee has been: (1)
continuously, as opposed to intermittently, re-hired by the same
employer for the same tasks or nature of tasks; and (2) these tasks
are vital, necessary and indispensable to the usual business or trade
of the employer, then the employee must be deemed a regular
employee.
In fine, inasmuch as private respondent's functions as described above
are no doubt "usually necessary or desirable in the usual business
or trade" of petitioner fishing company and he was hired
continuously for 12 years for the same nature of tasks, we are
constrained to say that he belongs to the ilk of regular employee
o Fixed Term Employee; Requisites (1990 brent School; 2004
Pangilinan)
BRENT SCHOOL
[S]tipulations in employment contracts providing for term employment
or fixed period employment are valid when the period were agreed
upon knowingly and voluntarily by the parties without force, duress
or improper pressure, being brought to bear upon the employee and
absent any other circumstances vitiating his consent, or where it
satisfactorily appears that the employer and employee dealt with
each other on more or less equal terms with no moral dominance
whatever being exercised by the former over the latter.
There is nothing essentially contradictory between a definite period of
an employment contract and the nature of the employee's duties set
down in that contract as being "usually necessary or desirable in the
usual business or trade of the employer." The concept of the
employee's duties as being "usually necessary or desirable in the
usual business or trade of the employer" is not synonymous with or
identical to employment with a fixed term. Logically, the decisive
determinant in term employment should not be the activities that
the employee is called upon to perform, but the day certain agreed
upon by the parties for the commencement and termination of their
employment relationship, a day certain being understood to be "that
which must necessarily come, although it may not be known when."
PANGILINAN
The petitioners were employees with a fixed period, and, as such, were
not regular employees.
In the case of St. Theresa’s School of Novaliches Foundation vs. NLRC,
43 we held that Article 280 of the Labor Code does not proscribe or
prohibit an employment contract with a fixed period. We furthered
that it does not necessarily follow that where the duties of the
employee consist of activities usually necessary or desirable in the
usual business of the employer, the parties are forbidden from
agreeing on a period of time for the performance of such activities.
There is thus nothing essentially contradictory between a definite
period of employment and the nature of the employee’s duties
An examination of the contracts entered into by the petitioners showed
that their employment was limited to a fixed period, usually five or
six months, and did not go beyond such period.
University of San Carlos
  Seafarers are contractual workers and not regular
workers (2002 Millares, reiterated in 2004 Gi-Miro
case and 2005 Ravago)
MILLARES
It is clear that seafarers are considered contractual employees. They
cannot be considered as regular employees under Article 280 of the
Labor Code. Their employment is governed by the contracts they
sign everytime they are rehired and their employment is terminated
when the contract expires. Their employment is contractually fixed
for a certain period of time. They fall under the exception of Article
280 whose employment has been fixed for a specific project or
undertaking the completion or termination of which has been
determined at the time of engagement of the employee or where
the work or services to be performed is seasonal in nature and the
employment is for the duration of the season. We need not depart
from the rulings of the Court in the two aforementioned cases which
indeed constitute stare decisis with respect to the employment
status of seafarers. . . Moreover, it is an accepted maritime industry
practice that employment of seafarers are for a fixed period only.
Constrained by the nature of their employment which is quite
peculiar and unique in itself, it is for the mutual interest of both the
seafarer and the employer why the employment status must be
contractual only or for a certain period of time. Seafarers spend most
of their time at sea and understandably, they can not stay for a long
and an indefinite period of time at sea. Limited access to shore
society during the employment will have an adverse impact on the
seafarer. The national, cultural and lingual diversity among the crew
during the COE is a reality that necessitates the limitation of its
period.
GI MIRO
Seafarers are contractual workers and not regular workers.
RAVAGO
In Brent School, Inc. v. Zamora, the Court ruled that seamen and
overseas contract workers are not covered by the term "regular
employment" as defined in Article 280 of the Labor Code. The Court
said in that case:
The question immediately provoked . . . is whether or not a
voluntary agreement on a fixed term or period would be valid
where the employee "has been engaged to perform activities
which are usually necessary or desirable in the usual business
or trade of the employer." The definition seems non sequitur.
From the premise — that the duties of an employee entail
"activities which are usually necessary or desirable in the usual
business or trade of the employer" — the conclusion does not
necessarily follow that the employer and employee should be
forbidden to stipulate any period of time for the performance
of those activities. There is nothing essentially contradictory
between a definite period of an employment contract and the
nature of the employee's duties set down in that contract as
being "usually necessary or desirable in the usual business or
trade of the employer." The concept of the employee's duties
as being "usually necessary or desirable in the usual business
or trade of the employer" is not synonymous with or identical
to employment with a fixed term. Logically, the decisive
determinant in term employment should not be the activities
that the employee is called upon to perform, but the day
certain agreed upon by the parties for the commencement
and termination of their employment relationship, a day
certain being understood to be "that which must necessarily
come, although it may not be known when." Seasonal
employment, and employment for a particular project are
merely instances of employment in which a period, were not
expressly set down, is necessarily implied.
Some familiar examples may be cited of employment contracts
which may be neither for seasonal work nor for specific
projects, but to which a fixed term is an essential and natural
appurtenance: overseas employment contracts, for one,
to which, whatever the nature of the engagement, the
Labor Law Review – Atty. JMM
concept of regular employment with all that it implies does
not appear ever to have been applied, Article 280 of the Labor
Code notwithstanding;
 Jurisprudence: industry practice to hire a reliever
to ensure the smooth flowing 24 hour stevedoring
and arrastre operations at the pier area;
employment is similar to seasonal or project or term
employee albeit on a daily basis (2007 Pier 8
Arrastre and Stevedoring Services)***
o 1987 Purefoods
o 2003 Magsalip case
o 2004 Fadriquela
o 2015 Basan; Kintanar case
o Designtech v. Caccam
PIER 8 ARRASTRE
Court takes judicial notice 24 that it is an industry practice in port
services to hire "reliever" stevedores in order to ensure smooth-
flowing 24-hour stevedoring and arrastre operations in the port area.
No doubt, serving as a stevedore, respondent performs tasks
necessary or desirable to the usual business of petitioners. However,
it should be deemed part of the nature of his work that he can only
work as a stevedore in the absence of the employee regularly
employed for the very same function
The second paragraph of Art. 280 stipulates in unequivocal terms that
all other employees who do not fall under the definitions in the first
paragraph of regular, project and seasonal employees, are deemed
casual employees. Not qualifying under any of the kinds of
employees covered by the first paragraph of Article 280 of
the Labor Code, then respondent is a casual employee under
the second paragraph of the same provision.
The same provision, however, provides that a casual employee can be
considered as regular employee if said casual employee has
rendered at least one year of service regardless of the fact that such
service may be continuous or broken. Section 3, Rule V, Book II of
the Implementing Rules and Regulations of the Labor Code clearly
defines the term "at least one year of service" to mean service within
12 months, whether continuous or broken, reckoned from the date
the employee started working, including authorized absences and
paid regular holidays, unless the working days in the establishment
as a matter of practice or policy, or that provided in the employment
contract, is less than 12 months, in which case said period shall be
considered one year. 26 If the employee has been performing the
job for at least one year, even if the performance is not continuous
or merely intermittent, the law deems the repeated and continuing
need for its performance as sufficient evidence of the necessity, if
not indispensability, of that activity to the business of the employer.
27 Applying the foregoing, respondent, who has performed
actual stevedoring services for petitioners only for an
accumulated period of 228.5 days does not fall under the
classification of a casual turned regular employee after
rendering at least one year of service, whether continuous
or intermittent.
NONETHELESS, this Court still finds respondent to be a regular
employee on the basis of pertinent provisions under the CBA
between PASSI and its Workers' union
 A forklift operator who was initially hired as casual
employee, and made to rest, and then re-hired, for
more than one year, and eventually placed under
fixed term employment, is considered regular
employee. The term employment was a mere ploy
to deprive the worker of his tenurial security (2009
San Miguel, citing 1990 Brent School)
SAN MIGUEL
University of San Carlos
The nature of respondent's work is necessary in the business in which immediately after the end of his probationary
SMC is engaged. SMC is primarily engaged in the manufacture and employment. ****
marketing of beer products, for which purpose, it specifically
maintains a brewery in Bacolod City. 27 Respondent, on the other
hand, was engaged as a forklift operator tasked to lift and transfer 3. Xxx a part time employee cannot acquire regular permanent
pallets and pile them from the bottling section to the piling area. status and hence may be terminated when a qualified teacher
SMC admitted that it hired respondent as a forklift operator since becomes available.
the third quarter of 1991 when, in the absence of fully automated
palletizers, manual transfers of beer cases and empties would be Sir: The part-time teacher will be terminated when a qualified teacher
extensive within the brewery and its premises. becomes available.

Respondent is a regular employee of SMC. Consequently, the
employment contract with a fixed period which SMC had respondent
execute was meant only to circumvent respondent's right to security
of tenure and is, therefore, invalid.
While this Court recognizes the validity of fixed-term employment
contracts, it has consistently held that this is the exception rather
than the general rule. Verily, a fixed-term contract is valid only under
certain circumstances. 28 In the oft-cited case of Brent School, Inc.
v. Zamora, 29 this Court made it clear that a contract of employment
stipulating a fixed term, even if clear as regards the existence of a
period, is invalid if it can be shown that the same was executed with
the intention of circumventing an employee's right to security of
tenure, and should thus be ignored. Moreover, in that same case,
this Court issued a stern admonition that where from the
circumstances, it is apparent that the period was imposed to
preclude the acquisition of tenurial security by the employee, then it
should be struck down as being contrary to law, morals, good
customs, public order and public policy
 Other classifications of employees
1. Workers in the construction industry ( DOLE D.O.
no. 19, S. 1993)
a) Project
b) Non-project
 Regular
 Probationary
 Casual
Sir: Project employees adopted definition as that under the labor code.
For non-project—regular, probationary, casual. If you are truly a
project worker, at the completion of the project, you have to report
the termination at the nearest DOLE Regional Office. Otherwise, the
employment is not project but regular.
There are indicators so you are classified as project. This is not regular
employment although you are performing work that are necessary
and desirable.
2. Personnel in private educational institution
2 types
 Academic
a) Full time
b) Part-time
 Non-academic
i. manual of regulations for private higher
education of 2008
1. Section 117. xxx the
probationary period of
academic personnel
-- not be more than six (6) consecutive semesters or nine (9)
consecutive trimesters of satisfactory service, as the case may be.
2. Section 118. Regular or Permanent Status. A full time
academic teaching personnel who has probationary
employment and who possesses the minimum qualifications
required by the Commission and the institution shall acquire
a regular or permanent status if he is re-hired or re-appointed
Labor Law Review – Atty. JMM
ii. 2010 revised manual of regulations for private schools in
basic education)
1. Section 63. Probationary Period; Regular or
Permanent Status. A probationary period of not
more than three (3) years in the case of the school
teaching personnel and not more than six months
for non-teaching personnel shall be required for
employment in private schools.
A school personnel who has successfully undergone the probationary
period herein specified and who is fully qualified under the existing
rules and regulations of the school shall be considered permanent.
Sir: Basic education: Probationary is not more than 3 years for teaching.
Not more than 6 months for non-teaching.
TERMINATION OF EMPLOYMENT
 Just cause/s, and prior notice and hearing rule (Art. 297 (282)
and Art. 292 (277 (b))
 Authorized Cause/s, and prior notice and hearing rule (Art.
298 (293) and Art. 292 (277 (b)) and Art. 299
Bar: Distinguish prior notice and hearing rule vs 30 day notice rule.
Dismissal; 2 Aspects/Facets of Due Process
 Substantive – act of dismissal
 Procedural – manner of dismissal
Recent Dole Regulation
DOLE DO No. 147-15, S. 2015
Burden to prove legality of dismissal, law and jurisprudence
 The burden of proving that the termination was for a valid or
authorized cause shall be upon the employer. (2012 Naranio)
Sir: The reason why employer must prove is because of security of
tenure.
 If the employer denies dismissing the employer in the first
place, and it is the employee who claims illegal dismissal, the
burden of proof is upon the employee.
(a) Just cause/s
1) Labor Code
2) Manual of Regulations of Private Higher Education
of 2008 Revised Manual of Regulations for Private
School xxx
Just causes; Substantive Aspect
a) Serious misconduct
b) Willful disobedience of lawful orders
c) Gros and habitual neglect of duty
d) Fraud
- Equivalent to dishonesty
e) Willful breach of trust
f) Commission of a crime or offense against the person of his
employer or immediate family xxx
g) Other analogous causes (Art. 297, Labor Code)
Analogous causes; Examples
1. Gross Inefficiency or poor performance (1984 Buiser)
University of San Carlos
2. Abandonment of work (2004 Agabon) – analogous to gross and
habitual neglect of duty; abandonment must be accompanied with
intent to sever relations coupled with absences which are not valid.
Agabon: Employees were found to be working for a company. They
were warned but they persisted. It was a manifestation of intent to
sever relations with the employer.
3. Sexual harassment (1994 Villar) – analogous to serious misconduct
4. Drug use/abuse –
5. Disloyalty or conflict of interest – willful breach of trust (2005 Lopez)
6. Attitude Problem (2005 Heavylift Manila)
7. Lack of common sense – analogous to gross and habitual neglect of
duty (Aberdeen Court)
8. Theft of co-employees Property (2008 John Hancock)
9. Failure to meet the employer’s qualifying standards, which applies
prior to after hiring, a continuing qualification to keep one’s job
(2008 Yrasuegui)
Pre-marital sex in catholic schools
An assistant to the Director of the Lay Apostolate Director who got
herself pregnant our of wedlock but who married the father of her
child is not guilty of disgraceful or immoral conduct. The law speaks of
public and secular morality and not religious morality. The conduct
must be detrimental to these conditions upon which depend the
existence of human society and not because of the beliefs of one
religion. (2015 Leus v. st. Scholastica College)
Cannot compel of an HR Resource Officer to marry just because she
got herself pregnant out of wedlock. Cannot make it as a condition nor
basis for termination. After all, it involves two consenting adults who
do not have a legal impediment to marry.
(2016 Cadiz v. Brent Hospital & Colleges)
PROCEDURAL DUE PROCESS
1. Notice to explain
- Opportunity to explain. If you do not avail, that will constitute a
waiver.
- 2015 Phil Pizza – Defective first notice
- 2006 Dr. Ting/GST xxx Fishing Enterprises)
- 2016 Hongkong & Shanghai Banking Corp. Employee Union v.
NLRC
- 2016 Puncia
2. Notice of decision
 Continue from: OTHER MANAGEMENT PREROGATIVES!!! :)
Employee’s Right to Ample Opportunity to be Heard
A) Right to explain and offer evidence in support thereof
 Evidence consisting of daily company records (201 file) and
sworn statement
Right to explain and offer evidence
** Prepare his explanation personally or with the assistance of a
representative or counsel
Ask the employer to copy of the records material to his defense
May request for hearing conference
Formal conference; when mandatory
When requested by employee in writing; or
When substantial evidentiary dispute exists; or
When a company rule or practice requires it or
When similar circumstances so require it (2009 Perez, En Banc)
Labor Law Review – Atty. JMM
Right to ample opportunity
c) Right to adduce evidence in his/her
defense
d) C) opportunity to confront witnesses
against chim
e) Xxx
Enforcing disciplinary action; 3rd step
- Terminating or ending the investigation
- Notify the employee
Imposable penalty v. penalty to be imposed
Basic principle
Employer’s rules cannot preclude the State from inquiring whether the
strict and rigid application or interpretation thereof would be harsh
on the employee
Sir: The employee is not precluded from inquiring into any decision of
the employer
Imposable penalty
Double jeopardy or penalty rule (1990 Filipro, Inc.)
Employee cannot be penalized twice for the same offense
To do so would make the employee suffer again for the same offense
(1990 Continental Arrastre and Stevedoring Co.)
Past or previous infraction rule
Previous infractions which may be used as justification for an
employee’s dismissal from work which must be in connection with a
subsequent similar offense
It cannot be used if the recently committed is different from the
previous offense (1996 Stellar)
Totality of infraction rule
The number of violations commited during the period of employment
shall be considered in determining the penalty to be imposed upon
an erring employee.
The offenses commited xxx
Doctrine of discretionary justice
Where a penalty less punitive would suffice, whatever misteps may be
commited by labor ought not to be visited with a consequence so
severe.
Imposable penalty; Jurisprudence
It must be commensurate with the act, conduct or omission imputed to
the employee (RCPI v. NLRC) and must consider the employee’s
length of service in the company and his previous infractions
(Bonatan)
GR: Number of years must be taken in his favor
XPN: Aggravating if employee is guilty of serious misconduct
Payment of dismissal; too harsh
An employee who incurred tardiness once, and who left his post twice
without permission – deemed harsh (1996 Ram)
A marine engineer whi has been employed for 8 years incurred absences
on 4 different occasions – too harsh
Enforcing disciplinary action; final step
Notifying the employee of the decision
Service of 2nd notice – notice of decision
Mode of service: Personal or any modes (do not apply the rules of court)
as long as there is proof of actual receipt
In every instance where there is dismissal, ER is duty-bound to report
to DOLE within the month (ex: Dismissal is on January, report on
February). It does not affect the validity of dismissal.
Jurisprudence; defective 2nd notice
Xxx since you dod not submit the written letter of explanation as
requested in your preventive suspension notice dated Nov. 9, 2006
University of San Carlos
under Art xxx, you are dismissed from service – the SC said that this is
defective because there was no explanation why he was dismissed. IT
will constitute a violation of due process of the employee; right to notice

Employer must ensure proof of service; Importance;

Jurisprudence
Mere copy of the notice sent without proof of receipt, or in the very least
actual service thereof; does not constitute sufficient evidence

Twin notices;

Legal principles
When an employee voluntarily terminates his employment, he is not
entitled to separation pay and backwages (2006 Abad)

Payment of separation pay generally applies only to termination due to

authorized causes. There may be dismissal from employment although
valid where the employee may be awarded separation pay by way of
financial assistance. Jurisprudence tells us that the SP is ½ month pay
for every year of service.

Principle of discerning compassion, if the employee is dismissed due to

serious misconduct like dishonesty, no separation pay by way of financial
assistance will be given.

CONSTRUCTIVE DISMISSAL

Dismissal in disguise.

 Illegal reduction of workdays, as cost cutting measure then hired

more employees, negating cost cutting measure
 Illegal demotion amounting to constriuctive dismissal

Constructive dismissal – forced resignation

A. The employee does not quit his employment

a. Illegal transfer
b. Illegal demotion
c. Illegal suspension

B. Employee quits his employment

a.

Labor Law Review – Atty. JMM University of San Carlos

August 31, 2017 If the contractor is unable to pay the wages of the employees, the
principal will be held jointly and severally liable with the contractor
without prejudice for reimbursement.
Management Prerogative
The reason why the rules have been changing is the Secretary of DOLE
Termination of employment is also a prerogative of an employer. It is
may restrict or prohibit labor contracting. He is given that power.
inherent. Only that because of the Constitutional right of security of
Labor contracting is prohibited.
tenure, the labor code has to regulate it.
Has the Secretary of Labor prohibited labor contracting? It did not
In the case of promotion, demotion, transfer, they cannot be found in
totally prohibit it. It only restricted it as provided under D.O. 174-
the labor code. No need to put one because they are inherent.
17.
Promotion
The Labor code also tells is what is the effect of labor contracting? It is
Scalar assent from lower position to a higher position usually
not illegal per se. What is illegal is labor ONLY contracting.
accompanied with increase in rank or status. May or may not involve
increase in salary.
In labor only contracting, the law considers him the mere agent. The
liability is single which falls upon the employer/principal. Unlike in
It is in the nature of a gift. The employee has the right to reject it.
permissible labor contracting where there is legitimate labor contracting.
Nobody can be compelled to be promoted in a higher position if he does
Subject of labor contracting is really the performance of labor.
not want to.
If what will apply is a trilateral relationship, that is when the labor code
Demotion
is applicable. If not, apply civil code (BPOs, one-time transaction)
Movement to a lower position accompanied with a demotion in status
and may or may not involve reduction in salary.
ENDO
There should be no repeated continuous hiring and rehiring. Otherwise,
The salary may be decreased in this case. Since it affects the right to
they are regular employees.
security of tenure, there must be:
a) Valid cause
There is an interplay of Article 106-109, but also regular, casual
b) Opportunity to be heard
employees.
It cannot be resulted to as a form of discrimination. Otherwise, it is a
form of constructive dismissal.
Labor contracting is valid in case of permissible job contracting. It is
illegal only in labor only contracting.
Transfer
Whenever the employer affects transfer, it must be in good faith. If
Management prerogative
there is illegal transfer, it may constitute illegal dismissal.
If you are into manufacturing and production of goods or products, but
there are certain parts where you want to contract out, as long as the
It must not cause unnecessary or prejudice. May involve transfer from
requisites are complied with.
one position to another, or one place to another.
Labor contracting is usually resorted to for purposes of economy and by
reason of contractor’s expertise.
In banks, reshuffling of personnel is a legitimate exercise of
management prerogative. They do not have a vested right to
Man-power service is not allowed. Legitimate service provider should be
position nor location.
the correct term.
If the company decides to reorganize by abolishing certain department,
Bilateral relationship
this is a valid exercise of management prerogative as long as the
Contractors and his workers. The repeated continuous hiring, firing and
employer is in good faith.
rehiring will violate the labor code.
Adoption of a job evaluation program
Legitimate end of contract type of employment
The employer may decide to evaluate the job description of a worker.
1. Project employment
E.g. Law Professors by changing the approach of teaching
2. Seasonal employment
Granting of bonus
Illegal end of contract
If the company decides to add to the bonus given under the law. If the
Mehitabl – cannot hire seasonal employees because you operate for the
bonus is conditional, no vested right. Otherwise, the principle of
entire year, not only for a particular season.
diminution of benefits will apply if it is stipulated in the contract.
Fadriquela –
Change of work schedule
Duterte
Suspension of Work, Jurispurdence
He is against ENDO, but he is only referring to the illegal ENDO, not the
The employer can stipulate that in case the driver cannot meet his
ENDO that is authorized by the Labor Code.
boundary, the driver can be suspended by the operator. He cannot
complain of illegal dismissal since there is no intent to sever the
Labor Advisory No. 10
management relations. It is the obligation of the driver to meet the
Simply reiterated what is provided in the Labor Code.
boundary.
D.O. No. 1, Series of 2016
Contracting Arrangement (Arts. 106-109)
There are two types of employers:
1. Direct
2. Indirect

Applicable law and rules

Permissible labor-contracting

Labor Law Review – Atty. JMM University of San Carlos