Labor Law Final Exam Suggested Answers 2C

LABOR LAW 1
FINAL EXAM REVIEWER
1. Enumerate Special and Regular Holidays
Regular Holidays
New year’s Day-January 1

Maundy Thursday-Movable date
Good Friday-Movable date
Eidul Fitr-Movable date
Araw ng Kagitingan-Monday nearest April 9
Eidul Adha - Movable date
Labor Day-Monday nearest May 1
Independence Day-Monday nearest June 12
National Heroes Day-Last Monday of August
Bonifacio Day-Monday nearest November 30
Christmas Day-December 25
Rizal Day-Monday nearest December 30
Nationwide Special Holidays:
Ninoy Aquino Day-Monday nearest August 21

All Saints Day-November 1
Last Day of the Year-December 31
2. Holiday pay meaning and purpose
Holiday pay is a day’s pay given by law to an employee even if he does not work
on a regular holiday, provided that he is present or is in leave with pay on the work
day immediately preceding the holiday. The purpose is to prevent diminution of
the monthly income of workers on account of work interruptions declared by the
State. (In other words, although the worker is forced by law to take a rest, he is not
deprived of what he should earn)
3. Compute regular holiday pay where the employee’s regular workday; rest
day; over time.
Regular wage per hour = P100

Regular work Hours = 8 hours
Daily Wage = P800
a. Regular holiday pay on regular workday (200%)
If the employee worked = 200% of regular wage

800 X 200% = P1600 Take home pay
If the employee did not work (100%)

800 X 100% = P800 Take home pay
b. Regular holiday pay on rest day (200% + 30%)
800 X 200% = 1600 Regular holiday pay

1600 x 30 % = 480 Rest day premium
1600 + 480 = P2080 Take home pay
c. Regular holiday pay with over time (200% + (25% x hours worked))
(Let’s say 2 hours OT)

800 X 200% = 1600 Regular holiday pay
1600/8 = 200 per hour rate
2hrs (OT) x 200 = 400 OT pay
400 x 25% = 100 OT premium pay
1600 + 400 + 100 = P2100 Take home pay
4. Distinctions between regular and special holidays
The following are the distinctions between “regular holidays” and “special days”:
a. A covered employee who does not work during regular holidays is paid 100% of
his regular daily wage; while a covered employee who does not work during a
special day does not receive any compensation under the principle of “no work, no
pay.”
b. A covered employee who works during regular holidays is paid 200% of his
regular daily wage; while a covered employee who works during special days is
only paid an additional compensation of not less than 30% of the basic pay or a
total of 130% and at least 50% over and above the basic pay or a total of 150%, if
the worker is permitted or suffered to work on special days which fall on his
scheduled rest day.
5. Effect of absence on entitlement of holiday pay?
The following are the effect of absences on entitlement to regular holiday pay:
a. Employees on leave of absence with pay - entitled to regular holiday pay.
b. Employees on leave of absence without pay on the day immediately preceding a

regular holiday - may not be paid the required holiday pay if he has not worked on
such regular holiday.
c. Employees on leave while on SSS or employee's compensation benefits-

Employers shall grant the same percentage of the holiday pay as the benefit
granted by competent authority in the form of employee’s compensation or social
security payment, whichever is higher, if they are not reporting for work while on
such benefits.
d. When the day preceding regular holiday is a non-working day or scheduled rest
day - Employee shall not be deemed to be on leave of absence on that day, in
which case, he shall be entitled to the regular holiday pay if he worked on the day
immediately preceding the non-working day or rest day.
6. Successive holiday; holidays falling on the same day
Successive holiday:
The rule in case of successive regular holidays is as follows: An employee may not
be paid for both holidays if he absents himself from work on the day immediately
preceding the first holiday, unless he works on the first holiday, in which case, he
is entitled to his holiday pay on the second holiday.
Holidays falling on the same day
DOLE Explanatory Bulletin on Workers’ Entitlement to Holiday Pay on 9 April

1993, Araw ng Kagitingan and Good Friday enunciated the following rule in
case of two regular holidays falling on the same day (e.g., Araw ng Kagitingan and
Good Friday falling on April 9, 1993):
1. If employee did not work: 200% of basic pay;
2. If employee worked: 300% of basic pay.
Said bulletin dated March 11, 1993, including the manner of computing the
holiday pay, was reproduced on January 23, 1998, when April 9, 1998 was both
Maundy Thursday and Araw ng Kagitingan. .
7. Explain the case of April 9, 2004
On April 9, 2004 , Araw ng Kagitingan coincides with Good Friday. This is a

case where two holidays are falling on the same day. Thus, the rule to be apply was
given by the DOLE Explanatory Bulletin on Workers’ Entitlement to Holiday Pay
on April 9,1993.
DOLE Explanatory Bulletin on Workers’ Entitlement to Holiday Pay on 9 April

1993, Araw ng Kagitingan and Good Friday enunciated the following rule in
case of two regular holidays falling on the same day (e.g., Araw ng Kagitingan and
Good Friday falling on April 9, 1993):
1. If employee did not work: 200% of basic pay;
2. If employee worked: 300% of basic pay.
Said bulletin dated March 11, 1993, including the manner of computing the
holiday pay, was reproduced on January 23, 1998, when April 9, 1998 was both
Maundy Thursday and Araw ng Kagitingan.
In the 2004 case of Asian Transmission Corporation vs. CA, [G. R. No. 144664,
March 15, 2004], the petitioner sought the nullification of the said March 11, 1993
Explanatory Bulletin. The Supreme Court, in affirming the validity thereof, ruled
that Article 94 of the Labor Code, as amended, affords a worker the enjoyment of
ten paid regular holidays. 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. Since a worker is entitled to the enjoyment of
ten paid regular holidays, the fact that two holidays fall on the same date should
not operate to reduce to nine the ten holiday pay benefits a worker is entitled to
receive.
8. Holiday pay for private school teachers; paid by result; field personnel &
seasonal workers.
Rule IV: Holiday with pay
Section 1. This rule shall apply to all employees except:
 Those of the government and any of the political subdivision, including

government-owned and controlled corporation;
 Those of retail and service establishments regularly employing less than ten
(10) workers;
 Domestic helpers and persons in the personal service of another;
 Managerial employees as defined in Book Three of the Omnibus Rules to

Implement the Labor Code of the Philippines;
 Field personnel and other employees whose time and performance is

unsupervised by the employer including those who are engaged on task or
contract basis, purely commission basis, or those who are paid a fixed
amount for performing work irrespective of the time consumed in the
performance thereof.
Source: Book 3, Rule IV, Section 1, Omnibus Rules to Implement the Labor Code
of the Philippines
Holiday pay of certain employees
 Private school teachers, including faculty members of colleges and

universities, may not be paid for the regular holidays during semestral
vacations. They shall, however, be paid for the regular holidays during
Christmas vacation;
 Where a covered employee is paid by results or output, such as payment

on piece work, his holiday pay shall not be less than his average daily
earnings for the last seven (7) actual working days preceding the regular
holiday; Provided, however, that in no case shall the holiday pay be less than
the applicable statutory minimum wage rate;
 Seasonal workers may not be paid the required holiday pay during off-
season when they are not at work;
 Workers who have no regular working days shall be entitled to the benefits
provided in this Rule.
Source: Book 3, Rule IV, Section 8, Omnibus Rules to Implement the Labor Code
of the Philippines
9. Offsetting of holiday pay with regular workday; rule

Offsetting of holiday pay with regular workday is not allowed. Following the
prohibition that overtime cannot be offset by undertime, to allow offsetting would
prejudice the worker. He would be deprived of the additional pay for the holiday
work he has rendered and which is utilized to offset his equivalent time off on
regular workdays. To allow employers to do so would be to circumvent the law on
payment of premiums for holiday work. (PAGE 445-446)
10.Rationale of SIL; exceptions
Rationale:To afford an employee the chance to get much-needed rest to replenish
his worn-out energies and acquire new vitality to enable him to efficiently perform
his duties and not merely to give him additional salary or bounty. An employee, as
a matter of public policy, is entitled to this leave benefit in order to improve his
health and physical well-being.
This benefit applies to all employees except:
1. Government employees, whether employed by the National Government or any
of its political subdivisions, including those employed in government-owned
and/or controlled corporations with original charters or created under special laws;
2. Persons in the personal service of another;
3. Managerial employees, if they meet all the following conditions:
a. Their primary duty is to manage the establishment in which they are employed
or of a department or subdivision thereof;
b. They customarily and regularly direct the work of two or more employees
therein; and
c. They have the authority to hire or fire other employees of lower rank; or their
suggestions and recommendations as to hiring, firing and promotion, or any other
change of status of other employees are given particular weight.
4. Officers or members of a managerial staff, if they perform the following duties
and responsibilities:
a. Primarily perform work directly related to management policies of their
employer;
b. Customarily and regularly exercise discretion and independent judgment
c. (i)Regularly and directly assist a proprietor or managerial employee in the
management of the establishment or subdivision thereof in which he or she is
employed; or (ii) execute, under general supervision, work along specialized or
technical lines requiring special training, experience, or knowledge; or (iii)
execute, under general supervision, special assignments and tasks and
d. Do not devote more than 20 % of their hours worked in a workweek to activities
which are not directly and closely related to the performance of the work described
in paragraphs 4.1, 4.2 and 4.3 above;
5. Field personnel and those whose time and performance are 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;
6. Those already enjoying this benefit;
7. Those enjoying vacation leave with pay of at least 5 days; and
8. Those employed in establishments regularly employing less than 10 employees.
11.Meaning of one-year service
It means service within twelve (12) months, whether continuous or broken,
reckoned from the date the employee started working, including authorized
absences and paid regular holidays, unless the number of working days in the
establishment as a matter of practice or policy, or that provided in the employment
contract, is less than twelve (12) months, in which case, said period shall be
considered as one (1) year for the purpose of determining entitlement to the service
incentive leave.
12.SIL as part of retirement pay; explain
SIL is included as part of the retirement benefits that an employee who is
retiring optionally or compulsorily in entitled to.
However, it bears stressing that the inclusion of the SIL benefit as part of
the retirement benefits presupposes that during the employment of the retiring
employee, he was entitled to such benefit. If not so entitled, then the SIL should
not be excluded in the computation of the retirement benefits.
For instance, a taxi driver, while entitled to retirement benefits, was entitled
to SIL during his employment, he being field personnel. Consequently, the SIL
component of his retirement benefits should not be included in the computation
thereof.
13. New rule on Service charge; explain
Article 96 of the Labor Code of the Philippines provides that 85% of the total
service charge collected by the establishments would be distributed to covered
employees, while 15% would account for losses and breakages and be given to
managerial employees, at the discretion of management in the latter case.
The enactment of Republic Act No. 11360 — or “An Act Providing that Service
Charges Collected by Hotels, Restaurants and other Similar Establishments be
Distributed in Full to All Covered Employees” — amends Article 96 of the Labor
Code of the Philippines. It provides that rank-and-file employees of restaurants,
hotels and similar establishments are now entitled to 100% of the service charges
collected from customers.
14. Who (What) are included in the term agriculture? Significance.
For purposes of wages, the term “agriculture” includes farming in all its branches
and, among other things, includes:
a. Cultivation and tillage of soil;
b. Dairying;
c. Production, cultivation, growing, and harvesting of any agricultural
and horticultural commodities;
d. Raising of livestock or poultry; and
e. Any practices performed by a farmer on a farm as an incident to or in
conjunction with such farming operations.
The term does not include the manufacturing or processing of sugar, coconuts,
abaca, tobacco, pineapples, or other farm products. Its significance is in the light of
the classification of workers into agricultural and non-agricultural in the grant of
minimum wages. It is the nature of work which determines the classification of
workers.
The significance in the distinction lies in the fact that the rates of wages of
agricultural workers are often fixed by law lower than those of non-agricultural
workers.
15. Facilities v. Supplement, distinguish
Facilities include articles or services for the benefit of the employee or his family,
but shall not include tools of the trade or articles or services for the benefit of the
employer or necessary to the conduct of the employer’s business.
Supplement means extra remuneration or special privileges or benefits given to or

received by the laborers over and above their ordinary earnings or wages.
16. Explain “equal pay for equal work”
It is a principle requiring an employer to pay its employees, regardless of race,

ethnicity, or gender, equal pay for equal work. It serves as a prohibition against
discrimination with respect to pay.
It enshrines the notion of equal remuneration for the same class of workers doing
the same kind of work.
17. Discuss Philex & School Alliance case

Doctrine of “equal pay for equal work” G.R. No. 149758 August 25, 2005
PHILEX GOLD PHILIPPINES, INC., GERARDO H. BRIMO, LEONARD P.
JOSEF, and JOSE B. ANIEVAS, Petitioners, vs. PHILEX BULAWAN
SUPERVISORS UNION, represented by its President, JOSE D. PAMPLIEGA,
Respondent.
Facts:
Philex Gold (PG) and Philex Bulawan Supervisors Union (Mining site in Negros
Occidental) entered into a CBA. PG assigned its Padcal, Benguet employees as
Supervisors in its mining site in Negros Occidental. It was discovered that Padcal
Supervisors has a higher salaries and benefits than that of the Bulawan
Supervisors.
Issue:
Whether the doctrine of "equal pay for equal work" should not remove
management prerogative to institute difference in salary within
the same supervisory level.
Held:
No, because petitioners failed to adduce evidence to show that an ex-Padcal

supervisor and a locally hired supervisor of the same rank are initially paid the
same basic salary for doing the same kind of work. They failed to differentiate this
basic salary from any kind of salary increase or additional benefit that may have
been given to the ex-Padcal supervisors due to their seniority, experience and other
factors. It is noteworthy to state that an employer is free to manage and regulate,
according to his own discretion and judgment, all phases of employment, which
includes hiring, work assignments, working methods, time, place and manner of
work, supervision of workers, working regulations, transfer of employees, lay-off
of workers, and the discipline, dismissal and recall of work. While the law
recognizes and safeguards this right of an employer to exercise what are clearly
management prerogatives, such right should not be abused and used as a tool of
oppression against labor. The company’s prerogative must be exercised in good
faith and with due regard to the rights of labor. A priori, they are not absolute
prerogatives but are subject to legal limits, collective bargaining agreements and
the general principles of fair play and justice
International School Alliance of Educators vs Quisumbing (2000) 333 SCRA 13
Facts:
International School, Inc., pursuant to PD 732, is a domestic educational institution

established primarily for dependents of foreign diplomatic personnel and other
temporary residents. To enable the School to continue carrying out its educational
program and improve its standard of instruction, Section 2(c) of the same decree
authorizes the School to employ its own teaching and management personnel
selected by it either locally or abroad, from Philippine or other nationalities, such
personnel being exempt from otherwise applicable laws and regulations attending
their employment, except laws that have been or will be enacted for the protection
of employees.
The School hires both foreign and local teachers as members of its faculty,
classifying the same into two: (1) foreign-hires and (2) local-hires. The School
employs four tests to determine whether a faculty member should be classified as a
foreign-hire or a local hire: (a) What is one's domicile? (b) Where is one's home
economy? (c) To which country does one owe economic allegiance? (d) Was the
individual hired abroad specifically to work in the School and was the School
responsible for bringing that individual to the Philippines? Should the answer to
any of these queries point to the Philippines, the faculty member is classified as a
local hire; otherwise, he or she is deemed a foreign-hire.
The School grants foreign-hires certain benefits not accorded local- hires. These
include housing, transportation, shipping costs, taxes, and home leave travel
allowance. Foreign-hires are also paid a salary rate twenty-five percent (25%)
more than local-hires. The School justifies the difference on two "significant
economic disadvantages" foreign-hires have to endure, namely: (a) the "dislocation
factor" and (b) limited tenure. The compensation scheme is simply the School's
adaptive measure to remain competitive on an international level in terms of
attracting competent professionals in the field of international education.
Issue:
WON local hire teachers shall enjoy same salary as foreign hire teachers where
they perform the same work.
Held:
Employees are entitled to same salary for performance of equal work.
Notably, the International Covenant on Economic, Social, and Cultural Rights,

supra, in Article 7 thereof, provides: The States Parties to the present Covenant
recognize the right of everyone to the enjoyment of just and favorable conditions
of work, which ensure, in particular: ( a) Remuneration which provides all
workers, as a minimum, with: (i) Fair wages and equal remuneration for work of
equal value without distinction of any kind, in particular women being guaranteed
conditions of work not inferior to those enjoyed by men, with equal pay for equal
work; 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.
The School contends that petitioner has not adduced evidence that local-hires
perform work equal to that of foreign-hires. The Court finds this argument a little
inconsiderate. If an employer accords employee the same position and rank, the
presumption is that these employees perform equal work. If the employer pays one
employee less than the rest, it is not for that employee to explain why he receives
less or why the others receive more. The employer has discriminated against that
employee; it is for the employer to explain why the employee is treated unfairly.
In this case, the employer has failed to discharge this burden. 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.
18. Distinguish monthly paid v. daily paid
DIFFERENCE BETWEEN MONTHLY AND DAILY-PAID EMPLOYEES

MONTHLY-PAID EMPLOYEES are those who are paid every day of the month,
including unworked rest days, special days, and regular holidays. Factor 365 days
in a year is used in determining the equivalent monthly salary of monthly-paid
employees.
DAILY-PAID EMPLOYEES are those who are paid on the days they actually
worked and on unworked regular holidays.
19. Factors/divisors in the computation of benefits & wages, explain.
The use of factors or divisors in the computation of estimated monthly rates of

employees pursuant to Republic Act No. 9492, or an “Act Rationalizing the
Celebration of National Holidays.”
Section 9. Suggested Formulae in Determining the Equivalent Monthly Regional
Minimum Wage Rates. Without prejudice to existing company practices,
agreements or policies, the following computation of the Estimated Equivalent
Monthly Rate (EEMR) of employees in the private sector because of the National
Heroes’ Day which is now observed on the Last Monday of August, shall
accordingly use the following formulae in the determining the EEMR of the
employees:
a. For those who are required to work every day including Sundays or rest days,
special days and regular holidays, the previous factor of 392.8 will now be 392.5,
thus:
Applicable Daily Wage Rate (ADR) X 392.5/12 months = EEMR; where 392.5
days/year is equal to:
299 -Ordinary working days

22 -Regular holidays
67.6 52 -rest days X 130%
3.9 3 -special days X 130%
392.5-Total number of days/year.
b. For those who do not work and are not considered paid on Sundays or rest days,
the previous factor of 314 will now be 313, thus:
Applicable Daily Wage Rate (ADR) X 313/12 months = EEMR; where 313
299 ordinary working days

11 regular holidays
3 special days
313 Total number of days/year.
c. For those who do not work and are not considered paid on Saturdays and
Sundays or rest days, the previous factor of 262 will now be
261, thus:
Applicable Daily Wage Rate (ADR) X 261/12 months = EEMR; where 261

11 regular holidays
3 special days
As to 365 days/year factor, although there is no effect as to the payment in the

monthly salary of employees as they are paid all days of the year, its breakdown
will be modified as follows:
Applicable Daily Wage Rate (ADR) X 365/12 months = EEMR where 365
52 Sundays/rest days
11 regular holidays
3 special days
20. Significance of divisor
The "divisor" is the factor or number of days used by an employer in determining

the daily rate of monthly-paid employees. Depending on the divisor used, the
presumption that the unworked regular holidays are paid off-days may arise or not.
While the holiday pay provisions are easy to implement as to daily paid
employees, questions arise on whether the compensation of monthly-paid
employees already includes payment for holidays occurring within the month.
For purposes of this study, the term "divisor test" signifies the method of
computing the daily wage rate of monthly-paid employees.
It is well to note that the "divisor" forms an integral element of the "divisor test."
The conversion of the monthly wage into a daily rate is of utmost importance to the
employees considering that the benefits due them are denominated in terms of
daily compensation. A peso difference in the daily rate owing to the use of a
different divisor could add up to a substantial amount depending on the
circumstances involved in the case.
More than just an arithmetical process, the very nature of employment is brought
to the fore via the divisor test. Thus, the divisor test is an invaluable tool in
resolving the legal issues with respect to the application of the holiday pay
provisions of the law to monthly-paid employees.
More importantly, only monthly-paid employees are entitled to be paid unworked

rest days and unworked special days. The monthly-paid employee can demand
payment for such days because his nature of employment is such that he is paid for
all the days of the month, whether he worked on those days or not. On the other
hand, a daily-paid employee cannot demand payment for unworked rest days and
special days since as to him, the principle of "no-work, no-pay" applies.
However, by express mandate of the law, all workers are entitled to receive their
regular wage for regular holidays irrespective of whether they worked on those
days or not.
The following benefits are computed on the basis of the daily rate:
a. Overtime pay;
b. Night differential pay;
c. Vacation leave;
d. Sick leave pay;
e. Service incentive leave;
f. Holiday premium pay; and
g. Bonus.
For purposes of computation of the salary deductions due to the absences of the
employee, the daily rate is also relevant.
21. Wage Rules affecting HEIs, explain
Under PD 451, it prescribes that the 60% of increases in tuition shall be allocated
for increase of salaries and wages of teaching and non-teaching personnel and the
balance be allocated to institutional development, student assistance and extension
services.
Under BP 232, each private school shall determine its rate of tuition and other
school fees and charges. The rates and charges adopted by the schools pursuant to
this provision shall be collectible, and their application or use authorized, subject
to the rules and regulations promulgated by DepEd.
RA 6728 allows increase in school tuition fees on the condition that 70% of the
increase shall go to the payment of salaries, wages, allowances and other benefits
of teaching and non-teaching personnel.
22. Explain the 70% Chargeability
The law allows increase in school tuition fees on the condition that 70% of the
increase shall go to the payment of salaries, wages, allowances and other benefits
of teaching and non-teaching personnel.
23. Explain the 2 Principles enunciated in Art. 100
Under the Principle of Non-diminution and Principle of Non-elimination, the

reduction, elimination, or withdrawal by employers of any benefits, supplements or
payments as provided in existing laws, individual agreements, or collective
bargaining agreements between workers and employers or voluntary employer
practice or policy, is not allowed.
24. Applicability of Art. 100
Albeit Article 100 is clear that the principle of non-elimination and non-diminution
of benefits apply only to the benefits being enjoyed “at the time of promulgation”
of the Labor Code, the SC has consistently cited Article 100 as being applicable
even to benefits granted after said promulgation. It has, in fact, been treated as the
legal anchor for the declaration of the invalidity of so many acts of employers
deemed to have eliminated or diminished the benefits of employees.
25. Proper legal bases of non-elimination & non-diminution
This principle mandates that the reduction or diminution or withdrawal by

employers of any benefits, supplements or payments as provided in existing laws,
individual agreements or collective bargaining agreements between workers and
employers or voluntary employer practice or policy, is not allowed.
26. When it constitutes constructive dismissal
Constructive dismissal is an involuntary resignation resorted to when continued

employment becomes impossible, unreasonable, or unlikely, due to any of the
following:
a. demotion in rank or a diminution in pay; or
b. when a clear discrimination, insensibility, or disdain by an employer
becomes unbearable to an employee.
Constructive dismissal is illegal and usually occurs when an employee resigns as a

result of unfavorable work conditions instigated by the employer. It is typically
resorted to by employers who do not want to undergo the procedural due process
involved in legally terminating an employee.
27. Explain company practice in non-diminution of benefits (A-E)
A. The grant of benefit has founded on a policy or has ripened into a practice over
a long period
B. The practice is consistent and deliberate
C. The practice is not due to error in the construction or application of a doubtful
or difficult question of law
D. The diminution or discontinuance is done unilaterally by the employer
E. The grant of benefits has ripened into company practice or policy which cannot
be peremptorily withdrawn
28. Bonus, rule ….; when demandable and enforceable
On the basis of equitable considerations, long practice, agreement (e.g., CBA) and
other peculiar circumstances, bonus may become demandable and enforceable.
Consequently, if bonus is given as an additional compensation which the employer
agreed to give without any condition such as success of business or more efficient
or more productive operation, it is deemed part of wage or salary, hence,
demandable.
Unlike 13th month pay, bonus may be forfeited in case employee is found guilty of
an administrative charge.
29. Bonus, when company practice, when not company practice
To constitute as company practice, it must be shown that the giving of benefits by

the employers to employees:
a) Has been done for a considerable long period of time;
b) Has been consistently and intentionally done; and
c) Has not been a product of erroneous interpretation or construction of a
doubt or difficult question of law.
30. 13th month pay no pay exempted employer
The following are not covered by the 13th month pay law:
1. The government and any of its political subdivisions, including
government-owned and controlled corporations, except those
corporations operating essentially as private subsidiaries of the
government;
2. Employers already paying their employees 13th month pay or more in a
calendar year or its equivalent at the time of the issuance of the Revised
Guidelines;
3. Employers of those who are paid on purely commission, boundary, or
task basis, and those who are paid a fixed amount for performing a
specific work, irrespective of the time consumed in the performance
thereof, except when the workers are paid on piece-rate basis, in which
case, the employer shall be covered by the Revised Guidelines insofar as
such workers are concerned. Workers paid on piece-rate basis shall refer
to those who are paid a standard amount for every piece or unit of work
produced that is more or less regularly replicated without regard to the
time spent in producing the same.
31. Meaning of basic salary
Basic salary or basic wage means all the remuneration or earnings paid by an
employer to a worker for services rendered on normal working days and hours,
which is 8 hours, but does not include cost of living allowances, profit-sharing
payments, premium payments, 13th month pay or other monetary benefits which
are not considered as part of or integrated into the basic salary of the workers.
32. Creditability issues 1-11
a) Deductions for loss or damage under Article 114 of the Labor Code;
b) Deductions made for agency fees from non-union member who accept the
benefits under the CBA negotiated by the bargaining union. This form of
deduction does not require the written authorization of the non-bargaining
union member concerned;
c) Union service fees;
d) When the deductions are with the written authorization of the employee for
payment to a third person and the employer agrees to do so, provided that
the latter does not receive any pecuniary benefit, directly or indirectly from
the transaction;
e) Deductions for value of meal and other facilities;
f) Deductions for premiums for SSS, PhilHealth, employee’s compensation
and Pag-IBIG;
g) Withholding tax mandated under the National Internal Revenue Code
(NIRC);
h) Withholding of wages because of the employee’s debt to the employer
which is already due;
i) Deductions made pursuant to a court judgment against the worker under
circumstances where the wages may be the subject if attachment or
execution but only for debt incurred for food, clothing, shelter and medical
attendance;
j) When deductions from wages are ordered by the court;
k) Salary deductions of a member of a cooperative.
33. 13th month pay as part of retirement
13th-month pay of resigned or separated employee.
An employee who has resigned or whose services were terminated at any time
before the time for payment of the 13th-month pay is entitled to this monetary
benefit in proportion to the length of time he worked during the year, reckoned
from the time he started working during the calendar year up to the time of his
resignation or termination from service. Thus, if he worked only from January up
to September, his proportionate 13th-month pay should be the equivalent of 1/12 of
his total basic salary which he earned during that period. (No. 6, Revised
Guidelines on the Implementation of the 13th-Month Pay Law; No. X [G], DOLE
Handbook on Workers Statutory Monetary Benefits; International School of
Speech vs. NLRC, et al., G. R. No. 112658, March 18, 1995; Villarama vs. NLRC,
et al., G. R. No. 106341, Sept. 2, 1994, 236 SCRA 280).
In the 2005 case of Clarion Printing House, Inc. vs. NLRC, [G. R. No. 148372,
June 27, 2005], an employee who was receiving P6,500.00 in monthly salary and
who had worked for at least six (6) months at the time of her retrenchment, was
held to be entitled to her proportionate 13th month pay computed as follows:
(Monthly Salary x 6 ) / 12 = Proportionate 13th month pay
(P6,500.00 x 6) / 12 = P3,250.00
The payment of the 13th-month pay may be demanded by the employee upon the
cessation of employer-employee relationship. This is consistent with the principle
of equity that as the employer can require the employee to clear himself of all
liabilities and property accountability, so can the employee demand the payment of
all benefits due him upon the termination of the relationship. (No. 6, Revised
Guidelines on the Implementation of the 13th-Month Pay Law).
Regarding pro-ration of the 13th month pay, the Supreme Court in Honda Phils.,
Inc. vs. Samahan ng Malayang Manggagawa sa Honda, [G. R. No. 145561, June
15, 2005], took cognizance of the fact that the said Revised Guidelines on the
Implementation of the 13th Month Pay Law provided for a pro-ration of this
benefit only in cases of resignation or separation from work. As the rules state,
under these circumstances, an employee is entitled to a pay in proportion to the
length of time he worked during the year, reckoned from the time he started
working during the calendar year. (Section 6 thereof). The Court of Appeals thus
held that:
“Considering the foregoing, the computation of the 13th month pay should
be based on the length of service and not on the actual wage earned by the
worker. In the present case, there being no gap in the service of the workers
during the calendar year in question, the computation of the 13th month pay
should not be pro-rated but should be given in full.” (Emphasis supplied)
More importantly, it has not been refuted that Honda has not implemented any pro-
rating of the 13th month pay before the instant case. Honda did not adduce
evidence to show that the 13th month, 14th month and financial assistance benefits
were previously subject to deductions or pro-rating or that these were dependent
upon the company’s financial standing. As held by the Voluntary Arbitrator:
“The Company (Honda) explicitly accepted that it was the strike held that
prompt[ed] them to adopt a pro-rata computation, aside [from] being in [a]
state of rehabilitation due to 227M substantial losses in 1997, 114M in 1998
and 215M lost of sales in 1999 due to strike. This is an implicit acceptance
that prior to the strike, a full month basic pay computation was the “present
practice” intended to be maintained in the CBA.”
The memorandum dated November 22, 1999 which Honda issued shows that it
was the first time a pro-rating scheme was to be implemented in the company. It
was a convenient coincidence for the company that the work stoppage held by the
employees lasted for thirty-one (31) days or exactly one month. This enabled them
to devise a formula using 11/12 of the total annual salary as base amount for
computation instead of the entire amount for a 12-month period.
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 vs. Associated Labor Unions, et al. [G.R.
No. 85073, August 24, 1993, 225 SCRA 562] presented an example of a 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. It was
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 vs. Semana, [G.R. No. 152456, 28 April 2004, 428 SCRA 239], it was
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.” (Emphasis supplied)
Lastly, the foregoing interpretation of law and jurisprudence is more in keeping

with the underlying principle for the grant of this benefit. It is primarily given to
alleviate the plight of workers and to help them cope with the exorbitant increases
in the cost of living. To allow the pro-ration of the 13th month pay in this case is to
undermine the wisdom behind the law and the mandate that the workingman’s
welfare should be the primordial and paramount consideration. [Citing Santos vs.
Velarde, 450 Phil. 381, 390-391 [2003]). What is more, the factual milieu of this
case is such that to rule otherwise inevitably results to dissuasion, if not a deterrent,
for workers from the free exercise of their constitutional rights to self-organization
and to strike in accordance with law. (Section 3, Article XIII-Social Justice and
Human Rights, Philippine Constitution; Honda Phils., Inc. vs. Samahan ng
Malayang Manggagawa sa Honda, G. R. No. 145561, June 15, 2005).
But the rule is different if an employee was never paid his 13th month pay during
his employment. A case in point is JPL Marketing Promotions vs. CA, [G. R. No.
151966, July 8, 2005], where the Supreme Court ruled that, in such a case, the
computation for the 13th month pay should properly begin from the first day of
employment up to the last day of work of the employee. This benefit is given by
law on the basis of the service actually rendered by the employee.
34. 14th month and 15th month pay, explain
There is no law mandating the payment of 14th-month pay. It is, therefore, in the
nature of a bonus which may not be imposed upon the employer. It is a gratuity to
which the recipient has no right to make a demand. (Kamaya Point Hotel vs.
NLRC, et al., G. R. No. 75289, August 31, 1989, 177 SCRA 160).
The 15th month pay operates the same as that of the 14th-month pay.
35. Distinguish supervised & unsupervised workers
Supervised Workers
They are those workers whose time and performance are supervised by the
employer. There is an essential element of control and supervision over the manner
as how to work is to be performed
Unsupervised Workers
They are those workers whose time and performance are unsupervised by the
employer. The employer's control is over the result of the work. 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.
36. Manner & form of payment of wages; exceptions
Forms of payment of wages?
Under the Civil Code, it is mandated that the laborer’s wages shall be paid in legal
currency. Under the Labor Code and its implementing rules, as a general rule,
wages shall be paid in legal tender and the use of tokens, promissory notes,
vouchers, coupons or any other form alleged to represent legal tender is prohibited
even when expressly requested by the employee.
Exceptions:
A. 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 n 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).
B. Payment by check or money order, (the foregoing conditions on existence of

bank facility and other factors should also concur).
Manner as to:
The time of payment of wages
1. Time of payment; exception. - The general rule is, wages shall be paid not less
often than once every two (2) weeks or twice a month at intervals not exceeding
sixteen (16) days. No employer shall make payment with less frequency than once
a month. The exception to above rule is when payment cannot be made with such
regularity due to force majeure or circumstances beyond the employer’s control, in
which case, the employer shall pay the wages immediately after such force majeure
or circumstances have ceased.
The place of payment of wages
1. As a general rule, the place of payment shall be at or near the place of

undertaking.
2. Exceptions:
a. When payment cannot be effected at or near the place of work by reason
of the deterioration of peace and order conditions, or by reason of actual or
impending emergencies caused by fire, flood, epidemic or other calamity
rendering payment thereat impossible;
b. When the employer provides free transportation to the employees back

and forth; and
c. Under any other analogous circumstances, provided that the time spent by
the employees in collecting their wages shall be considered as compensable
hours worked.
3. Payment of wages in bars, massage clinics or nightclubs is prohibited except in

the case of employees thereof.
4. Payment through banks - allowed in businesses and other entities with twenty
five (25) or more employees and located within one (1) kilometer radius to a
commercial, savings or rural bank.
Whom should wages be paid
1. General rule: payment of wages shall be made directly to the employee entitled
thereto and to nobody else.
2. Exceptions.
a. Where the employer is authorized in writing by the employee to pay his

wages to a member of his family;
b. Where payment to another person of any part of the employee’s wages is

authorized by existing law, including payments for the insurance premiums
of the employee and union dues where the right to check-off has been
recognized by the employer in accordance with a collective agreement or
authorized in writing by the individual employees concerned; or
c. In case of death of the employee, in which case, the same shall be paid to
his heirs without necessity of intestate proceedings.
37. Time of Payment of Wages V. paid by result
IRR, RULE VIII, Section 3

GR: Wages shall be paid not less than once every two (2) weeks or twice a month
at intervals not exceeding sixteen (16) days. No employer shall make payment with
less frequency than once a month.
XPT: When payment cannot be made with such regularity due to force majeure or
circumstances beyond the employer’s control, in which case, the employer shall
pay the wages immediately after such force majeure or circumstances have ceased.
PAID BY RESULT
In case of payment of wages by results involving work which cannot be finished in
two (2) weeks, payment shall be made at intervals not exceeding sixteen (16) days
in proportion to the amount of work completed. Final settlement shall be made
immediately upon completion of the work.
38. Place of payment; prohibition

GR: Place of payment shall be at or near the place of undertaking.
XPT:
a. When payment cannot be effected at or near the place of work by reason of
the deterioration of peace and order conditions, or by reason of actual or
impending emergencies caused by fire, flood, epidemic or other calamity
rendering payment thereat impossible;
b. When the employer provides free transportation to the employees back and
forth; and
c. Under any other analogous circumstances, provided that the time spent by
the employees in collecting their wages shall be considered as compensable
hours worked.
PROHIBITION: No employer shall pay his employees in any bar, night or day
club, drinking establishment, massage clinic, dance hall, or other similar places or
in places where games are played with stakes of money or things representing
money, except in the case of employees thereof.
39. Payment through banks/ ATM
Payment through banks – allowed in business and other entities with 25 or more
employees. Provided the following conditions are met:
1. The ATM system of payment is with 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 allows 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.
40. Direct payment of wages, rule & exceptions

Direct payment of wages – payment of wages shall be made direct to the employee
entitled thereto except in the following cases:
a. Where the employer is authorized in writing by the employee to pay his
wages to a member of his family;
b. Where payment to another person of any part of the employee’s wages is
authorized by the existing law, including payments for the insurance
premiums of the employee and union dues where the right to check-off has
been recognized by the employer in accordance with a collective agreement
or authorized in writing by the individual employees concerned; or
c. In case of death of the employee, in which case, the same shall be made to
his heirs without the necessity of intestate proceedings. (IRR, Rule VIII,
Section 6)
41. Explain the Trilateral in contracting
Trilateral relationship refers to the relationship in a contracting or subcontracting

arrangement where there is a contract for a specific job, work or service between
the principal and the contractor, and a contract of employment between the
contractor and its workers. There are three parties involved in these arrangement:
(a) the principal who decides to farm out a job, work or service to a, (b) contractor
who has the capacity to independently undertake the performance of the job, work
or service and (c) the contractual workers engaged by the contractor to accomplish
the work, service or job.
42. Requisites of a permissible contracting
Contracting or subcontracting shall be permissible if the following circumstances

concur:
I. The contractor or subcontractor carries on a distinct and independent

business and undertakes to perform a job, work or service on its own
account under its own responsibility, according to its own manner and
method, and free from the control and directions of the principal in all
matters connected with the performance of the work except as to the results
thereof;
II. The contractor or subcontractor has substantial capital or investment; and
III. The agreement between the principal and the contractor or subcontractor
assures the contractual employees’ entitlement to all labor and occupational
safety and health standards, free exercise of right to self-organization,
security of tenure and social and welfare benefits.
43. Bases in prohibiting labor-contracting
The basis in prohibiting labor-only contracting are:

The Constitution, which mandates that the State shall protect labor and promote its
welfare, and shall guarantee basic labor rights including just and humane terms and
conditions of employment and the right to self-organization.
Article 106 of the Labor Code, which allows the Secretary of Labor to distinguish
between labor-only contracting and job contracting to prevent any violation or
circumvent of the Labor Code.
44. Elements of labor-only contracting
Labor-only contracting shall refer to an arrangement where the contractor or

subcontractor merely recruits, supplies or places workers to perform a job, work or
service for a principal and any of the following elements are present:
(a) The contractor or subcontractor does not have substantial investment which
relates to the job, work or service to be performed and the employees recruited,
supplied or placed by such contractor or subcontractor are performing activities
which are directly related to the main business of the principal, or
(b) The contractor does not exercise the right to control over the performance of
the work of the contractual employee
45. Explain the 3 tests to determine existence of legitimate contracting
I. The contractor or subcontractor carries on a distinct and independent

business and undertakes to perform the job, work or service on its
own account and under its own responsibility, according to its own
manner and method, and free from the control and directions of the
principal in all matters connected with the performance of the work
except as to the results thereof;
II. The contractor or subcontractor has substantial capital or investment;
“Substantial capital or investment” refers to capital stocks and subscribed

capitalization in the case of corporations, tools, equipment, implements,
machineries and work premises, actually and directly used by the contractor
or subcontractor in the performance or completion of the job, work or
service contracted out.
III. The agreement between the principal and the contractor or

subcontractor assures the contractual employees' entitlement to all
labor and occupational safety and health standards, free exercise of
the right to self-organization, security of tenure, and social and
welfare benefits.
46. Principal distinctions between contracting & labor only contracting
and TV hose v. news anchor/ columnist v. reporter, explain
legitimate job contracting labor-only contracting.

permissible Prohibited by law
no employer-employee relationship an employer-employee relationship
exists between the employees of the is created by law between the
job contractor and the principal principal employer and the
employer (indirect employer); employees of the labor-only
contractor
the principal employer is considered the principal employer is considered
only an “indirect employer the “direct employer” of the
employees
the joint and several obligation of the principal employer becomes
the principal employer and the solidarily liable with the labor-only
legitimate job contractor is only for contractor for all the rightful claims
a limited purpose, that is, to ensure of the employees
that the employees are paid their
wages (the principal employer is not
responsible for any claim made by
the employees)
the legitimate job contractor the labor-only contractor provides
provides specific services only manpower
the legitimate job contractor the labor-only contractor merely
undertakes to perform a specific job provides the personnel to work for
for the principal employer the principal employer.
TV Host v News Anchor

TV Host News Anchor
no employer-employee There is an employer-employee
relationship exists relationship
As to Hiring
Independent contractors: possess Regular hiring and selection
unique skills, expertise or talent to process/ regular qualifications are
distinguish them from ordinary set by the company
employees;
As to Payment of Wages
All the talent fees and benefits All benefits arose from an
were the result of negotiations / employer-employee relationship.
Agreement/stipulations/contract
Power of Dismissal
could not be terminated on Termination is based on just and
grounds other than breach of authorized causes as provided in
contract, such as retrenchment to the Labor laws (ie. Retrenchment)
prevent losses as provided under
labor laws
Power of Control
The company is not exercising The company/management has
control over the means and full control and supervision over
methods of the work the means and methods of the
work (ie. Lines are
(TV/Radio Program Lines, scripted/prepared/rehearsed)
appearance and sound on
TV/Radio is set by the worker
/host himself)
47. Floating status beyond 6 months, explain
A specific period that employees may remain temporarily laid-off or in floating

status. The temporary lay-off or bona fide suspension of operations of a business
or undertaking wherein the employees likewise cease to work should not last
longer than 6 months. After 6 months, the employees should either be recalled to
work or permanently entrenched following the requirements of the law, and that
failing to comply with this would be tantamount to dismissing the employees and
the employer would thus be liable for such dismissal. [International Hardware v.
NLRC,
1989]
48. Direct v. indirect employers, explain
Direct Employer Indirect Employer

There is an employer-employee There is an employer-employee
relationship relationship
It directly hires employees Hires employees through
agencies/subcontractors
The direct employer is As to extent of civil liability for
responsible/ liable for all the the payment of wages and other
rightful claims of the employees as benefits, the indirect employer is
provided for in the labor laws be considered as direct employer.
(Article 109, Labor Code).
49. Reconcile Art. 110 of Labor Code with Article 2241 and 2242 of New Civil
Code and RA 6715
Art. 110. Worker preference in case of bankruptcy. In the event of bankruptcy or

liquidation of an employer’s business, his workers shall enjoy first preference as
regards their wages and other monetary claims, any provisions of law to the
contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in
full before claims of the government and other creditors may be paid. (As amended
by Section 1, Republic Act No. 6715, March 21, 1989)
Art. 2241. With reference to specific movable property of the debtor, the following
claims or liens shall be preferred:
(1) Duties, taxes and fees due thereon to the State or any subdivision thereof;
(2) Claims arising from misappropriation, breach of trust, or malfeasance by public
officials committed in the performance of their duties, on the movables, money or
securities obtained by them;
(3) Claims for the unpaid price of movables sold, on said movables, so long as they
are in the possession of the debtor, up to the value of the same; and if the movable
has been resold by the debtor and the price is still unpaid, the lien may be enforced
on the price; this right is not lost by the immobilization of the thing by destination,
provided it has not lost its form, substance and identity; neither is the right lost by
the sale of the thing together with other property for a lump sum, when the price
thereof can be determined proportionally;
(4) Credits guaranteed with a pledge so long as the things pledged are in the hands
of the creditor, or those guaranteed by a chattel mortgage, upon the things pledged
or mortgaged, up to the value thereof;
(5) Credits for the making, repair, safekeeping or preservation of personal
property, on the movable thus made, repaired, kept or possessed;
(6) Claims for laborers' wages, on the goods manufactured or the work done;
(7) For expenses of salvage, upon the goods salvaged;
(8) Credits between the landlord and the tenant, arising from the contract of
tenancy on shares, on the share of each in the fruits or harvest;
(9) Credits for transportation, upon the goods carried, for the price of the contract
and incidental expenses, until their delivery and for thirty days thereafter;
(10) Credits for lodging and supplies usually furnished to travellers by hotel
keepers, on the movables belonging to the guest as long as such movables are in
the hotel, but not for money loaned to the guests;
(11) Credits for seeds and expenses for cultivation and harvest advanced to the
debtor, upon the fruits harvested;
(12) Credits for rent for one year, upon the personal property of the lessee existing
on the immovable leased and on the fruits of the same, but not on money or
instruments of credit;
(13) Claims in favor of the depositor if the depositary has wrongfully sold the thing
deposited, upon the price of the sale.
In the foregoing cases, if the movables to which the lien or preference attaches
have been wrongfully taken, the creditor may demand them from any possessor,
within thirty days from the unlawful seizure. (1922a)
Art. 2242. With reference to specific immovable property and real rights of the
debtor, the following claims, mortgages and liens shall be preferred, and shall
constitute an encumbrance on the immovable or real right:
(1) Taxes due upon the land or building;
(2) For the unpaid price of real property sold, upon the immovable sold;
(3) Claims of laborers, masons, mechanics and other workmen, as well as of
architects, engineers and contractors, engaged in the construction, reconstruction or
repair of buildings, canals or other works, upon said buildings, canals or other
works;
(4) Claims of furnishers of materials used in the construction, reconstruction, or
repair of buildings, canals or other works, upon said buildings, canals or other
works;
(5) Mortgage credits recorded in the Registry of Property, upon the real estate
mortgaged;
(6) Expenses for the preservation or improvement of real property when the law
authorizes reimbursement, upon the immovable preserved or improved;
(7) Credits annotated in the Registry of Property, in virtue of a judicial order, by
attachments or executions, upon the property affected, and only as to later credits;
(8) Claims of co-heirs for warranty in the partition of an immovable among them,
upon the real property thus divided;
(9) Claims of donors or real property for pecuniary charges or other conditions
imposed upon the donee, upon the immovable donated;
(10) Credits of insurers, upon the property insured, for the insurance premium for
two years. (1923a)
Republic Act No. 6715 SECTION 1. Article 110 of Presidential Decree No. 442, as
amended, otherwise known as the Labor Code of the Philippines, is hereby further
amended to read as follows:
“ART. 110. Worker preference in case of bankruptcy. — In the event of
bankruptcy or liquidation of an employer’s business, his workers shall enjoy first
preference as regards their unpaid wages and other monetary claims, any provision
of law to the contrary notwithstanding. Such unpaid wages and monetary claims
shall be paid in full before the claims of the Government and other creditors may
be paid.”
SUMMARY/SUGGESTED ANSWER:
Article 110 of the Labor Code does not purport to create a lien in favor of
workers or employees for unpaid wages either upon all of the properties or upon
any particular property owned by their employer. Claims for unpaid wages do not,
therefore, fall at all within the category of specially preferred claims established
under Articles 2241 and 2242 of the Civil Code, except to the extent that such
claims for unpaid wages are already covered by Article 2241, number 6: “claims
for laborer’s wages, on the goods manufactured or the work done;” or by Article
2242, number 3: “claims of laborers and other workers engaged in the
construction, reconstruction or repair of buildings, canals and other works, upon
said buildings, canals or other works.” To the extent that claims for unpaid wages
fall outside the scope of Article 2241, number 6 and 2242, number 3, they would
come within the ambit of the category of ordinary preferred credits under Article
2244.
RA. NO. 6715 covers the unpaid wages and other monetary claims of workers
in the event of bankruptcy or liquidation of an employer’s business. Worker’s shall
enjoy first preference and Such unpaid wages and monetary claims shall be paid in
full before the claims of the Government and other creditors may be paid.
50. Ordinary vs Extra-Ordinary Attorney’s Fees. Explain.
There are two commonly accepted concepts of attorney’s fees, the so-called
ordinary and extraordinary. In its ordinary concept, an attorney’s fee is the
reasonable compensation paid to a lawyer by his client for the legal services he
has rendered to the latter. The basis of this compensation is the fact of his
employment by and his agreement with the client.
In its extraordinary concept, an attorney’s fee is an indemnity for damages ordered

by the court to be paid by the losing party in a litigation. The basis of this is any of
the cases provided by law where such award can be made, such as those authorized
in Article 2208, Civil Code, and is payable not to the lawyer but to the client,
unless they have agreed that the award shall pertain to the lawyer as additional
compensation or as part thereof.
Source: http://attylaserna.blogspot.com/2009/02/fees.html
There are two commonly accepted concepts of attorney’s fees – the ordinary and

extraordinary. In its ordinary concept, an attorney’s fee is the reasonable
compensation paid to a lawyer by his client for the legal services the former
renders; compensation is paid for the cost and/or results of legal services per
agreement or as may be assessed. In its extraordinary concept, attorney’s fees are
deemed indemnity for damages ordered by the court to be paid by the losing party
to the winning party. The instances when these may be awarded are enumerated in
Article 2208 of the Civil Code, specifically in its paragraph 7 on actions for
recovery of wages, and is payable not to the lawyer but to the client, unless the
client and his lawyer have agreed that the award shall accrue to the lawyer as
additional or part of compensation.
Source: http://attylaserna.blogspot.com/2011/11/attorneys-fees-ordinary-vs.html
PHILIPPINE NATIONAL CONSTRUCTION CORPORATION

vs.
APAC MARKETING CORPORATION
It is settled that the award of attorney's fees is the exception rather than the general
rule; counsel's fees are not awarded every time a party prevails in a suit because of
the policy that no premium should be placed on the right to litigate. Attorney's
fees, as part of damages, are not necessarily equated to the amount paid by a
litigant to a lawyer. In the ordinary sense, attorney's fees represent the reasonable
compensation paid to a lawyer by his client for the legal services he has rendered
to the latter; while in its extraordinary concept, they may be awarded by the court
as indemnity for damages to be paid by the losing party to the prevailing party.
Attorney's fees as part of damages are awarded only in the instances specified in
Article 2208 of the Civil Code. As such, it is necessary for the court to make
findings of fact and law that would bring the case within the ambit of these
enumerated instances to justify the grant of such award, and in all cases it must be
reasonable.
Source: https://lawphil.net/judjuris/juri2013/jun2013/gr_190957_2013.html
51. Explain the non-interference of wages.
SUGGESTED ANSWER: Employers are not allowed to interfere in the disposal of

wages of employees.
52. What are permissible(allowable) deductions.

SUGGESTED ANSWER:
Deductions from the wages of the employees may be made by the employer in any
of the following cases:
a. When the deductions are authorized by law, (e.g., SSS, Pag-IBIG),

including deductions for the insurance premiums advanced by the employer
in behalf of the employee as well as union dues where the right to check-off
has been recognized by the employer or authorized in writing by the
individual employee himself;
b. When the deductions are with the written authorization of the employees
for payment to a third person and the employer agrees to do so, provided
that the latter does not receive any pecuniary benefit, directly or indirectly,
from the transaction;
c. Withholding tax mandated under the National Internal Revenue Code;
d. Withholding of wages because of employee’s debt to the employer which

is already due;
e. Deductions made pursuant to a judgment against the worker under

circumstances where the wages may be the subject of attachment or
execution but only for debts incurred for food, clothing, shelter and medical
attendance.
f. When deductions from wages are ordered by the court;
g. Deductions made for agency fee from non-union members who accept the
benefits under the CBA negotiated by the bargaining union. This form of
deduction does not require the written authorization of the non-union
member.
53. Permissible deductions for loss or damages, explain.
Where the employer is engaged in trade, occupation, or business where the practice
of making deductions or requiring deposits is recognized, to answer for the
reimbursement of loss of or damage to tools, materials or equipment supplied by
the employer to the employee, the employer may make wage deductions or require
the employees to make deposits form which deductions shall be made (Article 114,
Section 14).
54. Pre-requisites before deduction, explain
Before an employer may legally and validly deduct from the deposits made by the
employee for the actual amount of the loss or damage he incurs, the following
conditions should first be met:
a) That the employee concerned is clearly shown to be responsible for
the loss or damage;
b) That the employee is given reasonable opportunity to show cause why
deduction should not be made;
c) That the amount of the deduction is fair and reasonable and does not
exceed the actual loss or damage; and
d) That the deduction from the wages of the employee does not exceed
20% of the employee’s wages in a week.
55. Prohibition on withholding of wages

Art. 116 of the Labor code categorically prohibits and considers it unlawful for any
person, whether employer or not, directly or indirectly, to withhold any amount
from the wages of a worker.
In article 1706 of the Civil Code, withholding of wages, except for a debt
due, is not allowed to be made by the employer.
In article 1709 of the Civil Code, the employer is not allowed to seize or
retain any tool or other articles belonging to the laborer.
Thus, an employer cannot simply refuse to pay the wages or benefits of its
employees because he has either defaulted in paying a loan guaranteed by
his employer; or violated heir memorandum of agreement; or failed to render
an accounting of his employer’s property.
56. Explain Art. 117, 118 and 119 of LC.
Article 117 (Deduction to ensure employment)- prohibits and considers it

unlawful for any person, whether the employer himself or his representative or an
intermediary, to require that a deduction be made or to actually make any
deduction from the wages of any employee or worker, for the benefit of such
employer or his representative or an intermediary, as consideration of a promise of
employment or, when already employed, for the continuation of such employment
or retention therein.
Article 118 (Retaliatory measure) – It is unlawful for the employer to:

e) Refuse to pay the wages and benefits of an employer; or
f) Reduce his wages and benefits; or
g) Discharge him from employment; or
h) Discriminate against him in any manner;
on account and by reason of said employee’s:

1. Act of filing any complaint or institution of any proceeding under
Title II (Wages), Book III of LC; or
2. Act of testifying in said proceedings or when he is about to testify
therein.
*** These retaliatory acts are considered unfair labor practice under Art. 248
(f) of the LC
Art. 248. Unfair labor practices of employers. It shall be unlawful for an
employer to commit any of the following unfair labor practice:
(f) To dismiss, discharge or otherwise prejudice or discriminate against an

employee for having given or being about to give testimony under this Code
Article 119 (False Reporting)- prohibits and considers it unlawful for any person,
whether employer or not, to make any false statement, report or record required to
be filed or kept in accordance with and pursuant to the provision of Labor Code,
knowing such statement, report, or record to be false in any material respect (Sec.
13, Book III).
57. What is wage order?
“Wage order” refers to the Order promulgated by the Regional Tripartite Wages
and Productivity Board (RTWPB) pursuant to its wage fixing authority.
58. Standards/ criteria in wage fixing
In the determination of regional minimum wages, the Regional Board shall, among
other relevant factors, consider the following:
(a) The demand for living wages;

(b) Wage adjustment vis-à-vis the consumer price index;
(c) The cost of living and changes or increases therein;
(d) The needs of workers and their families;
(e) The need to induce industries to invest in the countryside;
(f) Improvements in standards of living;
(g) The prevailing wage levels;
(h) Fair return of the capital invested and capacity to pay of employers;
(i) Effects on employment generation and family income; and
(j) The equitable distribution of income and wealth along the imperatives of
economic and social development.
59. 2 methods of fixing minimum wage order; distinguish
(a) Motu Proprio by the Board.
Whenever conditions in the region, province or industry so warrant, the Board

may, motu proprio or as directed by the Commission mandate action or inquiry to
determine whether a wage order should be issued. The Board shall conduct public
hearings/consultations in the manner prescribed herein.
(b) Wage Fixing by Virtue of a Petition Filed.
1. Form and Content of Petition. Any party may file a verified petition for wage
increase with the appropriate Board in ten (10) typewritten legible copies which
shall contain the following:
(a) name/s, and address/es of petitioner/s and signature/s of authorized

official/s;
(b) grounds relied upon to justify the increase being sought;

(c) amount of wage increase being sought;
(d) area and/or industry covered.
2. Board Action.
If the petition conforms with the requirements prescribed in the preceding sub-
section b.1, the Board shall conduct public hearings/consultations in the manner
prescribed herein, to determine whether a wage order should be issued.
3. Publication of Notice of Petition/Public Hearing.
A notice of the petition and/or public hearing shall be published in a newspaper of

general circulation in the region, and/or posted in public places as determined by
the Board. The notice shall include the name/s and address/es of the petitioner/s,
the subject of the petition and the date/s, place/s and time of the hearings. The
publication or posting shall be made at least fifteen (15) days before the date of
initial hearing and shall be in accordance with the suggested form herein attached
as Annex "A".
4. Opposition.
Any party may file his opposition to the petition on or before the initial hearing,
copy furnished the petitioner/s. The opposition shall be filed with the appropriate
Board in ten (10) typewritten legible copies which shall contain the
following:chanroblesvirtuallawlibrary
(a) name/s and address/es of the oppositor/s and signature/s of authorized

official/s;
(b) reasons or grounds for the opposition; and
(c) relief sought.
5. Consolidation of Petitions.
If there is more than one petition filed, the Board may, motu proprio or on motion
of any party, consolidate these for purposes of conducting joint hearings or
proceedings to expedite resolutions of petitions. Petitions received after publication
of an earlier petition need not go through the publication/posting requirement.
6. Assistance of Other Government and Private Organizations.
The Board may enlist the assistance and cooperation of any government agency or
private person or organization to furnish information in aid of its wage fixing
function.
60. What is wage distortion? What are the elements?

"Wage distortion" is a situation where an increase in prescribed wage rates results
in the elimination or severe contraction of intentional quantitative differences in
wage or salary rates between and among employee groups in an establishment as to
effectively obliterate the distinctions embodied in such wage structure based on
skills, length of service, or other logical bases of differentiation.
The issue of whether or not a wage distortion exists is a question of fact that is
within the jurisdiction of the quasi-judicial tribunals.
61.How to rectify wage distortion?

In correcting wage distortion, the law does not require that the difference which
had previously existed between and among the employees of different classes be
restored in exactly the same amount. What is required is substantial difference in
such wage rates.
Formula:
MinimumWage= % × Prescribed Increase = Distortion Adjustment
ActualSalary
62.Explain the Francisco doctrine; 2-tiered test of EE-ER relationship

Involves the inquiry into the following:
The putative employer's power to control the employee with respect to the means
and methods by which the work is to be accomplished (control test); and
The underlying economic realities of the activity or relationship (economic reality
test, also known as "multi-factor test").
63.5 Kinds of employment; explain each
a. Regular/Permanent Employment
Regular or Permanent Employment is when an employee performs activities that
are necessary or desirable to the business/trade of the employer. Regular
employees enjoy the benefit of tenure and cannot be terminated for causes other
than those provided by law and only after due process.
Most companies in the Philippines require their new employees to undergo
probationary employment for a maximum of six (6) months to evaluate their skills
and performance and determine if they are able to meet the reasonable standards to
become permanent employees.
b. Casual Employment
Casual Employment is when an employee performs work that is usually not
necessary or primarily related to the employer’s business/trade. The period of
employment must be made clear to the employee at the time they started rendering
service.
However, employees that have rendered service for at least one (1) year in the
same company, whether continuous or not, shall be considered regular employees
with respect to the activities they perform and will continue rendering service
while such activities exist in the company.
c. Term/Fixed-Term Employment
Term or Fixed-Term Employment is a type of employment that is not determined
by the activities that employees are required to perform but by the commencement
and termination of the employment contract. A fixed-term employee can only
render services within the set period of time stipulated in the employment contract
and the employer must terminate his/her employment after such period expires.
Fixed-term employment in the Philippines is highly regulated and subject to the

following guidelines:
a. be voluntarily agreed upon by the parties without coercion or improper
pressure to the employee
b.mployer and employee dealt with each other on more or less equal terms
with no dominance exercised by the former over the latter
d. Project Employment
Project Employment is when an employee is hired for a specific project and the
duration of employment is defined by the scope of work and/or length of the
project. A project employee can acquire the status of a permanent employee if they
are continuously rehired to undertake other projects for the company or the tasks
they perform are necessary and indispensable to the usual operations of the
company.
e. Seasonal Employment
Seasonal Employment is defined when an employment contract is only for a
certain time or season of the year. This is common practice in service industries,
such as Retail, Food and Beverage, and Hospitality to increase manpower and
cover labor demand during peak seasons.
Many companies hire “regular seasonal employees” who are only called to work
during peak seasons (e.g. Christmas season) and are temporary suspended during
off-seasons. These employees are not separated from service but are only on Leave
of Absence (LOA) without pay until re-employed.
64.Designation of voluntary v. involuntary, explain &distinguish
Voluntary resignation is defined as a voluntary act committed by employees who
knowingly dissociate themselves from their employment for personal reasons. It
does not cover instances where employees are forced to resign with the use of
threats, intimidation, coercion, manipulation, or where dismissal is imposed as a
penalty for an offense. Forced or coerced resignation is illegal and considered
constructivedismissal – a dismissal in disguise.
following:
demotion in rank or a diminution in pay; or
when a clear discrimination, insensibility, or disdain by an employer becomes
unbearable to an employee.
involved in legally terminating an employee
65. Requisite of Voluntary Resignation
An employee may file a voluntary resignation without just cause or with just cause.
The just causes for filing a resignation are as follows:
1. serious insult to the honor and person of the employee;

2. inhuman and unbearable treatment given by the employer;
3. crime committed against the employee or his/her family; or
4. other related causes.
If the resignation is without just cause, the employee must give a one (1) month
advance written notice for resignation (referred to as a resignation letter) to the
employer to enable them to look for a replacement and prevent work delay. Failure
to file a resignation letter can make the employee incur liability for damages.
66. Significance of acceptance of resignation
The employee must give a one (1) month advance written notice for resignation
(commonly referred to as a “resignation letter”) to the employer to enable them
(employer) to look for a replacement and prevent work disruption. If the
employee fails to provide a resignation letter, he or she runs the risk of incurring
liability for damages.
67. Grounds for involuntary resignation
When “continued employment is rendered impossible, unreasonable or unlikely, as

an offer involving a demotion in rank and a diminution in pay” and other benefits.
(Globe Telecom, Inc. v. Florendo-Flores, [G.R. No. 150092, September 27, 2002,
390 SCRA 201]
68. What is Constructive Dismissal?

following:
1. demotion in rank or a diminution in pay; or

2. when a clear discrimination, insensibility, or disdain by an employer

69. Distinguish voluntary resignation & constructive dismissal
Voluntary resignation is defined as a voluntary act committed by employees who

knowingly dissociate themselves from their employment for personal reasons. It
does not cover instances where employees are forced to resign with the use of
threats, intimidation, coercion, manipulation, or where dismissal is imposed as a
penalty for an offense. Forced or coerced resignation is illegal and considered
“constructive” dismissal – a dismissal in disguise.

following:
 demotion in rank or a diminution in pay; or

 when a clear discrimination, insensibility, or disdain by an employer

70. Illegal v. constructive dismissal
Illegal dismissal results if due process is not accorded to the employee before
termination of the employment or the termination itself is declared illegal, the
employee is entitled to receive reinstatement and full backwages (Art. 279, Labor
Code). If reinstatement is no longer possible where the dismissal was unjust,
separation pay may be granted.
An employee who is dismissed without just cause is entitled to any or all of the
following:
 reinstatement without loss of seniority rights;

 separation pay equivalent to the employee’s one-month salary for every year
of service if reinstatement cannot be provided;
 full backwages, inclusive of allowances and other benefits or their monetary
equivalent from the time compensation was withheld up to the time of
reinstatement; and
 payment of damages and/or attorney’s fees if the dismissal was done in bad
faith.
71. 3 conditions when transfer constitutes constructive dismissal
Constructive dismissal contemplates any of the following situations:
1) An involuntary resignation resorted to when continued employment is

rendered impossible, unreasonable or unlikely;
2) A demotion in rank and/or a diminution in pay; or
3) A clear discrimination, insensibility or disdain by an employer which
becomes unbearable to the employee that it could foreclose any choice
by him except to forego his continued employment.
72. Explain the 2-fold due process requirement (S & P)
Dismissal of employees requires the observance of the two-fold due process

requisites, namely:
1. Substantive aspect which means that the dismissal must be for any of
the (1) just causes provided under Article 282 of the Labor Code or
the company rules and regulations promulgated by the employer; or
(2) authorized causes under Articles 283 and 284 thereof; and
2. Procedural aspect which means that the employee must be accorded
due process, the elements of which are notice and the opportunity to
be heard and to defend himself.
73. What are the just causes for dismissal? How about authorized causes?
Explain each J & A.
The just causes in the Labor Code are found in the following provisions thereof:
(1) Article 282 - (Termination by the Employer) which provides for the
following grounds:
(a) Serious misconduct or willful disobedience by the employee of the
lawful orders of his employer or representative in connection with his
work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by
his employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of
his employer or any immediate member of his family or his duly
authorized representatives; and
(e) Other causes analogous to the foregoing.
(2) Article 264(a) - (Prohibited Activities) which provides for the termination
of the following:
(a) Union officers who knowingly participate in an illegal strike and
therefore deemed to have lost their employment status.
(b) Any employee, union officer or ordinary member who knowingly
participates in the commission of illegal acts during a strike
(irrespective of whether the strike is legal or illegal), is also deemed to
have lost his employment status.
(3) Article 263(g) - (National Interest Cases) where strikers who violate orders,
prohibitions and/or injunctions as are issued by the DOLE Secretary or the
NLRC may be imposed immediate disciplinary action, including dismissal
or loss of employment status.
(4) Article 248(e) - (Union Security Clause) where violation of the union
security agreement in the CBA may result in termination of employment.
Under this clause, the bargaining union can demand from the employer the
dismissal of an employee who commits a breach of union security
arrangement, such as failure to join the union or to maintain his
membership in good standing therein. The same union can also demand the
dismissal of a member who commits an act of disloyalty against it, such as
when the member organizes a rival union.
In addition to the just causes mentioned in the Labor Code, just causes are also
found in prevailing jurisprudence. The following may be cited as just causes in
accordance with prevailing jurisprudence:
1. Violation of company rules and regulations.

2. Theft of property owned by a co-employee as distinguished from
company-owned property which is considered serious misconduct.
3. Incompetence, inefficiency or ineptitude.
4. Failure to attain work quota.
5. Failure to comply with weight standards of employer.
6. Attitude problem.
Under the Labor Code, authorized causes are classified into two (2) classes,
namely:
1. Business-related causes. – Referring to the grounds specifically mentioned

in Article 283, to wit:
a. Installation of labor-saving device;
b. Redundancy;
c. Retrenchment;
d. Closure or cessation of business operations NOT due to serious
business losses or financial reverses; and
e. Closure or cessation of business operations due to serious business
losses and financial reverses.
2. Health-related causes. – Referring to disease covered by Article 284 of
the Labor Code.
74. Substantial, procedural due process of disease, explain and requisites

REQUISITES.
Disease is one of the authorized causes to terminate employment. The following

requisites must be complied with before termination of employment due to disease
may be justified:
1. The employee is suffering from a disease;

2. His continued employment is either:
a) prohibited by law; or
b) prejudicial to his health; or
c) prejudicial to the health of his co-employees;
3. There is a certification by a competent public health authority that the
disease is of such nature or at such stage that it cannot be cured within a
period of six (6) months even with proper medical treatment;
4. Notice of termination based on this ground should be separately served both
to the employee and the Department of Labor and Employment at least one
(1) month prior to the effectively of the termination; and
5. Separation pay should be paid to the employee in an amount equivalent to at
least one (1) month salary or to one-half (½) month salary for every year of
service, whichever is greater, a fraction of at least six (6) months being
considered as one (1) whole year.
What are some salient points to consider under this ground?
 If the disease or ailment can be cured within the period of six (6) months
with proper medical treatment, the employer should not terminate the
employee but merely ask him to take a leave of absence. The employer
should reinstate him to his former position immediately upon the restoration
of his normal health.
 In case the employee unreasonably refuses to submit to medical examination
or treatment upon being requested to do so, the employer may terminate his
services on the ground of insubordination or willful disobedience of
lawful order.
 A medical certificate issued by a company’s own physician is not an
acceptable certificate for purposes of terminating an employment based on
Article 284, it having been issued not by a “competent public health
authority,” the person referred to in the law.
 A “competent public health authority” refers to a government doctor
whose medical specialization pertains to the disease being suffered by
the employee. For instance, if the employee suffers from tuberculosis, the
medical certificate should be issued by a government-employed
pulmonologist who is competent to make an opinion thereon. If the
employee has cardiac symptoms, the competent physician in this case would
be a cardiologist.
 The medical certificate should be procured by the employer and not by
the employee.
75.Agabon & King of Kings cases doctrine, explain
Agabon Doctrine: Due process in termination of employment refers to statutory,

and not constitutional, due process.
It is now the prevailing rule that it is not the due process provided in the
Constitution that is required in termination of employment but the statutory due
process provided under Article 292(b) (2779b))of the Labor Code
“Constitutional due process” protects the individual from the
government and assures him his rights in criminal, civil or administrative
proceedings; while “statutory due process” protects employees from being
unjustly terminated without just cause after notice and hearing. Put
differently the Bill of Rights is not meant to be invoked against acts of
private individuals like employers. Private actions, no matter how egregious,
cannot violate the constitutional guarantees.
Article. 277(b) As amended by Section 33, Republic Act No. 6715, March 21,
1989).
Subject to the constitutional right of workers to security of tenure and their right to
be protected against dismissal except for a just and authorized cause and without
prejudice to the requirement of notice under Article 283 of this Code, the employer
shall furnish the worker whose employment is sought to be terminated a written
notice containing a statement of the causes for termination and shall afford the
latter ample opportunity to be heard and to defend himself with the assistance of
his representative if he so desires in accordance with company rules and
regulations promulgated pursuant to guidelines set by the Department of Labor and
Employment. Any decision taken by the employer shall be without prejudice to the
right of the worker to contest the validity or legality of his dismissal by filing a
complaint with the regional branch of the National Labor Relations Commission.
The burden of proving that the termination was for a valid or authorized cause
shall rest on the employer. The Secretary of the Department of Labor and
Employment may suspend the effects of the termination pending resolution of the
dispute in the event of a prima facie finding by the appropriate official of the
Department of Labor and Employment before whom such dispute is pending that
the termination may cause a serious labor dispute or is in implementation of a mass
lay-off.
Procedural due process in just cause termination: It was enunciated in the King of
Kings Transport v Mamac case, the following requirements should be complied
with:
1. First written Notice:

A. contains the specific causes or grounds for termination against him;
B. contain a directive that employee is given the opportunity to submit his written
explanation within the reasonable period of five (5) calendar days from receipt of
the notice:
a. to enable him to prepare adequately for his defense;
b. to study the accusation against him;
c. to consult a union official or lawyer;
d.to gather data and evidence; and
e. to decide on the defenses he will raise against the complaint
C. Contain a detailed narration of the facts and circumstances that will serve as
basis for the charge against the employee. This is required in order to enable him to
intelligently prepare his explanation and defense. A general description of the
charge will not suffice.
D. Specifically mention which company rules, if any, are violated and/or which
among the grounds under Article 297 (282) is being charged against the employee.
2. Hearing required,
After the first notice employer should schedule and conduct a hearing or
conference wherein the employee will be given the opportunity to:
a. Explain and clarify his defenses to the charges against him;
b. Present evidence in support of his defenses; and
c. Rebut the evidence presented against him by the management
Employee is given chance to defense himself personally, with the assistance
of a representative or counsel of his choice.
3. Second written notice: after determining that termination of employment is

justified, indicating that:
a. all circumstances involving the charges against the employee have been
considered
b. grounds have been established to justify the severance of his employment.
76. 7 Situations in termination cases
The rules on termination of employment in the Labor Code and pertinent

jurisprudence are applicable to seven (7) different situations, namely:
a. The dismissal was for a just cause under Article 297 (282), for an
authorized cause under Article 298 (283), or for health reasons under
Article 299 (284), and due process was observed- This termination is
LEGAL.
b. The dismissal was without a just or authorized cause but due process was
observed- This termination is ILLEGAL.
c. The dismissal was without a just or authorized cause and due process was
not observed- This termination is ILLEGAL
d. The dismissal was for a just or authorized cause but due process was not
observed- This termination is LEGAL.
e. The dismissal was for a non-existent cause- This termination is
ILLEGAL.
f. The dismissal was not supported by any evidence of termination- This
termination is NEITHER LEGAL OR ILLEGAL as there is no
dismissal to speak of. Reinstatement is ordered not as a relief for illegal
dismissal but on equitable ground.
g. The dismissal was brought about by the implementation of a law- This
termination is LEGAL
77. Reliefs for illegal dismissal; explain each
Art. 279. Security of tenure. In cases of regular employment, the employer shall
not terminate the services of an employee except for a just cause or when
authorized by this Title. An employee who is unjustly dismissed from work shall
be entitled to reinstatement without loss of seniority rights and other privileges and
to his full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from
him up to the time of his actual reinstatement. (As amended by Section 34,
Republic Act No. 6715, March 21, 1989).

Reinstatement
Reinstatement means restoration of the employee to the position from which

he or she has been unjustly removed.
Reinstatement without loss of seniority rights means that the employee, upon
reinstatement, should be treated in matter involving seniority and continuity of
employment as though he or she had not been dismissed from work.
When a Labor Arbiter rules for an illegal dismissal, reinstatement is
immediately executory even pending appeal by the employer (Article 223 of
the Labor Code, as amended).

Full backwages
Full backwages refer to all compensations, including allowances and other

benefits with monetary equivalent that should have been earned by the
employee but was not collected by him or her because of unjust dismissal. It
includes all the amounts he or she could have earned starting from the date of
dismissal up to the time of reinstatement.
78. Jaca v. Agabon
Facts:
Private respondent Riviera Home Improvements, Inc. is engaged in the business of

selling and installing ornamental and construction materials. It employed
petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice
installers on January 2, 1992 until February 23, 1999 when they were dismissed for
abandonment of work. Thus, Petitioners then filed a complaint for illegal dismissal
and payment of money claims
Petitioners also claim that private respondent did not comply with the twin
requirements of notice and hearing. Private respondent, on the other hand,
maintained that petitioners were not dismissed but had abandoned their work
Issue:
WON petitioners were illegally dismissed.
Held:
Accordingly, petitioners’ dismissal was for a just cause. They had abandoned their
employment and were already working for another employer.
To dismiss an employee, the law requires not only the existence of a just and valid
cause but also enjoins the employer to give the employee the opportunity to be
heard and to defend himself.
Abandonment is the deliberate and unjustified refusal of an employee to resume
his employment. It is a form of neglect of duty, hence, a just cause for termination
of employment by the employer.
After establishing that the terminations were for a just and valid cause, we now
determine if the procedures for dismissal were observed.
Standards of due process: requirements of notice. – In all cases of termination of

employment, the following standards of due process shall be substantially
observed:
For termination of employment based on just causes as defined in Article 282 of
the Code:
(a). A written notice served on the employee specifying the ground or
grounds for termination, and giving to said employee reasonable opportunity
within which to explain his side;
(b) A hearing or conference during which the employee concerned, with the
assistance of counsel if the employee so desires, is given opportunity to
respond to the charge, present his evidence or rebut the evidence presented
against him; and
(c) A written notice of termination served on the employee indicating that
upon due consideration of all the circumstances, grounds have been
established to justify his termination.
In case of termination, the foregoing notices shall be served on the employee’s last
known address.
Procedurally, (1) if the dismissal is based on a just cause under Article 282, the
employer must give the employee two written notices and a hearing or opportunity
to be heard if requested by the employee before terminating the employment: a
notice specifying the grounds for which dismissal is sought a hearing or an
opportunity to be heard and after hearing or opportunity to be heard, a notice of the
decision to dismiss; and (2) if the dismissal is based on authorized causes under
Articles 283 and 284, the employer must give the employee and the Department of
Labor and Employment written notices 30 days prior to the effectivity of his
separation.
From the foregoing rules four possible situations may be derived: (1) the dismissal
is for a just cause under Article 282 of the Labor Code, for an authorized cause
under Article 283, or for health reasons under Article 284, and due process was
observed; (2) the dismissal is without just or authorized cause but due process was
observed; (3) the dismissal is without just or authorized cause and there was no due
process; and (4) the dismissal is for just or authorized cause but due process was
not observed.
The present case squarely falls under the fourth situation. The dismissal should be
upheld because it was established that the petitioners abandoned their jobs to work
for another company. Private respondent, however, did not follow the notice
requirements and instead argued that sending notices to the last known addresses
would have been useless because they did not reside there anymore. Unfortunately
for the private respondent, this is not a valid excuse because the law mandates the
twin notice requirements to the employee’s last known address. Thus, it should be
held liable for non-compliance with the procedural requirements of due process.
79. Strained relations rule
Where reinstatement is not feasible, expedient, or practical, as where reinstatement

would only exacerbate the tension and strained relations between the parties, or
where the relationship between the employer and employee has been unduly
strained by reason of their irreconcilable differences, particularly where the
illegally dismissed employee held a managerial or key position in the company, it
would be more prudent to order payment of separation pay instead of
reinstatement. ( Johnson & Johnson (Phils), Inc., et al. vs Johnson Office &
Sales Union- Federation of Free Workers, et al., G.R. No. 172799, July 6,2007)
The Principle of “strained relations” cannot be applied indiscriminately.

Otherwise, reinstatement can never be possible simply because some hostility is
invariably engendered between the parties because of litigation. That is human
nature. (Gabriel vs Bilon, G.R No. 146989, February 7, 2007). Straine relations,
to warrant separation pay in lieu of reinstatement, “must be demonstrated as a
matter of fact” (Tower Industrial Sales vs CA, G.R No. 165727, April 19, 2006)
80. Bustamante doctrine; explain
Under this doctrine, all grounds for just causes stated in Article 282 of the Labor
Code must be considered for before terminating an employee except for analogous
causes.
Grounds: (just causes)
a.) serious misconduct or willful disobedience by the employee of the lawful orders
of his employer or representative in connection with his work;
b.) Gross and habitual neglect by the employee of his duties;
c.) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representatives;
d.) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized
representatives; and
e.) Other similar causes.
81. Preventive suspension v. suspension as penalty
A preventive suspension is a reasonable and justifiable legal remedy given to an

employer for the purpose of investigating and/or resolving workplace-related
incidents that affect his company’s operations. It is important to note that
preventive suspension is not a penalty, but a part of a process to investigate a
questioned action of an employee. And when it is determined that there is no
sufficient basis to justify an employee’s preventive suspension, the latter is entitled
to the payment of salaries during the time of preventive suspension.
Whereas, a suspension as a penalty is imposed as an administrative penalty for

infractions committed. The employee is not entitled to the payment of salaries
during the suspension because of the infractions committed.
82. Retirement; who are eligible?
RA 7641 Art. 287 provides, “Any employee may be retired upon reaching the
retirement age established in the collective bargaining agreement or other
applicable employment contract.
In the absence of a retirement plan or agreement providing for retirement benefits

of employees in the establishment, an employee upon reaching the age of sixty
(60) years or more, but not beyond sixty-five (65) years which is hereby declared
the compulsory retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay equivalent to at
least one-half (1/2) month salary for every year of service, a fraction of at least six
(6) months being considered as one whole year.”
83. Optional v. compulsory
Employees who are at least 60 years old or prior to the mandatory age of 65 and
who have worked for at least five years in a company may optionally retire and
receive pay equivalent to at least half of their highest monthly salary for every year
of service.
While compulsory retirement is where an employee shall be retired upon reaching

the compulsory retirement age of sixty-five (65) years.
84. Minimum years of service
The minimum length of service in an establishment or with an employer of at least

five (5) years required for entitlement to retirement pay shall include authorized
absences and vacations, regular holidays and mandatory fulfillment of a military or
civic duty.
85. Explain ½ month salary
½ month shall mean 15 days plus 1/12 of the 13th month pay and the cash
equivalent of not more than 5 days of service incentive leaves.
This is used in the computation of retirement benefits stated in Article 287 of the
Labor Code.
"Art. 287. Retirement. – Any employee may be retired upon reaching the
retirement age established in the collective bargaining agreement or other
applicable employment contract.
"In case of retirement, the employee shall be entitled to receive such retirement
benefits as he may have earned under existing laws and any collective bargaining
agreement and other agreements: Provided, however, That an employee's
retirement benefits under any collective bargaining and other agreements shall not
be less than those provided herein.
"In the absence of a retirement plan or agreement providing for retirement benefits
of employees in the establishment, an employee upon reaching the age of sixty
(60) years or more, but not beyond sixty-five (65) years which is hereby declared
the compulsory retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay equivalent to at
least one-half (1/2) month salary for every year of service, a fraction of at least six
(6) months being considered as one whole year. "Unless the parties provide for
broader inclusions, the term one-half (1/2) month salary shall mean fifteen (15)
days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not
more than five (5) days of service incentive leaves.
(Section 1, RA 7641, AN ACT AMENDING ARTICLE 287 OF PRESIDENTIAL

DECREE NO. 442)
86. What are the Limitations of exercise of management prerogative?
1. Limitations imposed by:
a) law;
b) CBA;
c) employment contract;
d) employer policy;
e) employer practice; and
f) general principles of fair play and justice.
2. It is subject to police power.
3. Its exercise should be without abuse of discretion.

4. It should be done in good faith and with due regard to the rights of labor.
Ineluctably, the exercise of management prerogatives is not absolute. The
prerogatives accorded to management cannot defeat the very purpose for which
labor laws exist – to balance the conflicting interests of labor and management, not
to tilt the scale in favor of one over the other, but to guarantee that labor and
management stand on equal footing when bargaining in good faith with each other.
87. What is management prerogative?
Under the doctrine of management prerogative, every employer has the inherent
right to regulate, according to his own discretion and judgment, all aspects of
employment, including hiring, work assignments, working methods, the time,
place and manner of work, work supervision, transfer of employees, lay-off of
workers, and discipline, dismissal, and recall of employees. The only limitations to
the exercise of this prerogative are those imposed by labor laws and the principles
of equity and substantial justice.
88. What are included in the prerogative? Explain each.
MANAGEMENT PREROGATIVES
A. Discipline
The employer’s right to conduct the affairs of his business according
to its own discretion and judgment includes the prerogative to instil
discipline among its employees and to impose reasonable penalties,
including dismissal, upon erring employees. This is a management
prerogative where the free will of management to conduct its own affairs to
achieve its purpose takes form. The employer cannot be compelled to
maintain in his employ the undeserving, if not undesirable, employees. The
only criterion to guide the exercise of its management prerogative to
discipline or dismiss erring employees is that the policies, rules and
regulations on work‐related activities of the employees must always be fair
and reasonable and the corresponding penalties, when prescribed, should be
commensurate to the offense involved and to the degree of the infraction.
B. Transfer of employees
The exercise of the prerogative to transfer or assign employees from
one office or area of operation to another is valid provided there is no
demotion in rank or diminution of salary, benefits, and other privileges, and
the action is not motivated by discrimination, made in bad faith, or effected
as a form of punishment or demotion without sufficient cause
C. Productivity standard
The employer has the prerogative to prescribe the standards of
productivity which the employees should comply. The productivity
standards may be used by the employer as: a. an incentive scheme; and/or b.
a disciplinary scheme. As an incentive scheme, employees who surpass the
productivity standards or quota are usually given additional benefits. As a
disciplinary scheme, employees may be sanctioned for failure to meet the
productivity standards or quota.
D. Grant of Bonus
Bonus, as a general rule, is an amount granted and paid ex gratia to
the employee. Its payment constitutes an act of enlightened generosity and
self‐interest on the part of the employer rather than as a demandable or
enforceable obligation. It is an amount granted and paid to an employee for
his industry and loyalty which contributed to the success of the employer’s
business and made possible the realization of profits. Its grant is a
management prerogative. It cannot be forced upon the employer who may
not be obliged to assume the onerous burden of granting bonuses or other
benefits aside from the employees’ basic salaries or wages.
E. Change of working hours

Employers have the freedom and prerogative, according to their
discretion and best judgment, to regulate and control the time when workers
should report for work and perform their respective functions.
F. Marital discrimination Prerogative to prescribe rule on marriage.

The employer has the prerogative to establish a policy on marriage.
Jurisprudence has ruled on the validity/invalidity of certain policies on
marriage.
G. Post-employment ban
The employer, in the exercise of its prerogative, may insist on an
agreement with the employee for certain prohibitions to take effect after the
termination of their employer‐employee relationship.
H. The exercise of management prerogative is subject to the following:
1. Limitations imposed by:

a. law;
b. CBA;
c. employment contract;
d. employer policy;
e. employer practice; and
f. general principles of fair play and justice.
2. It is subject to police power.
3. Its exercise should be without abuse of discretion.
4. It should be done in good faith and with due regard to the right of labor.
Ineluctably, the exercise of management prerogatives is not absolute. The
prerogatives accorded management cannot defeat the very purpose for which labor
laws exist ‐ to balance the conflicting interests of labor and management, not to tilt
the scale in favor of one over the other, but to guarantee that labor and
management stand on equal footing when bargaining in good faith with each other.
89. What are the other post-employment prohibition?
Non-disclosure of Company Information and/or Documents
A mandatory obligation that all the records and documents and all information
pertaining to employer’s business or affairs or any of its affiliated companies are
confidential and no unauthorized disclosure or reproduction shall be made by an
employee any time during or after employment. To enforce such confidentiality
clause and in order to ensure strict compliance of the confidentiality clause, the
employer may insert a provision allowing the latter to enforce liability for damages
and forfeiture of forms of compensation including commissions and incentives,
against the erring employee in the event of breach.
 Reasonable Restraint of Trade

Another allowable post-employment ban is a “non-compete clause”.
A non-compete clause provides that an employee shall not work or engage
in work for whatsoever capacity, either as an employee, agent or consultant
with any person whose business is in direct competition with the company
for a reasonable period from date of resignation or termination. Most of the
employment contracts or agreements, has non-compete clause mandatory to
resigned or terminated employees for a period of one (1) to two (2) years
from separation.
Such clause may also come with it a penalty for its strict enforcement which
involves acknowledgement of the erring employee that he or she will be
liable for damages, and in case damages may not be an adequate remedy, in
addition to any other remedies available to the employer at law or in equity,
the employer may file a legal suit to enforce its rights by way of injunction,
restraining order or other relief to enjoin any breach or default of the
contract
90. Explain Duncan v PT & T.
(G.R. No. 162994 September 17, 2004)
No Spouse Employment Policy

This policy maybe valid if it is based on a bona fide occupational qualification
(BFQQ)
In other words, the no-spouse policy could be a valid exercise of management

prerogative provided it reflects an inherent quality reasonably necessary for
satisfactory job performance and the employer has the burden to prove the
existence of this reasonable business necessity
To justify BFOQ the employer must prove two factors:

(1) that the employment qualification is reasonably related to the essential
operation of the job involved; and
(2) that there is a factual basis for believing that all or substantially all
persons meeting the qualification would be unable to properly perform the
duties of the job.
(2) In the case of Duncan Association of Detailman-PTGWO and Pedro Tecson

v. Glaxo Wellcome Philippines, it was held that Glaxo has a right to guard
its trade secrets, manufacturing formulas, marketing strategies and other
confidential programs and information from competitors. So the prohibition
against personal or marital relationships with employees of competitor
companies upon Glaxo’s employees was considered valid and reasonable
under the circumstances because relationships of that nature might
compromise the interests of Glaxo.
(G.R. No. 118978 May 23, 1997)
In the 1997 case of Philippine Telegraph and Telephone Company vs. NLRC
In said case, the employee was dismissed in violation of PT&T’s policy of
disqualifying from work any woman worker who contracts marriage. It was held
there that the company policy violates the right against discrimination afforded all
women workers under Article 136 of the Labor Code. A requirement that a
woman employee must remain unmarried could be justified as a "bona fide
occupational qualification," or BFOQ, if it reflects an inherent quality
reasonably necessary for satisfactory job performance.

Labor Law Final Exam Suggested Answers 2C

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Labor Law Final Exam Suggested Answers 2C

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LABOR LAW 1

FINAL EXAM REVIEWER

1. Enumerate Special and Regular Holidays

New year’s Day-January 1

Nationwide Special Holidays:

Ninoy Aquino Day-Monday nearest August 21

2. Holiday pay meaning and purpose

Regular wage per hour = P100

a. Regular holiday pay on regular workday (200%)

If the employee worked = 200% of regular wage

If the employee did not work (100%)

800 X 200% = 1600 Regular holiday pay

(Let’s say 2 hours OT)

4. Distinctions between regular and special holidays

5. Effect of absence on entitlement of holiday pay?

a. Employees on leave of absence with pay - entitled to regular holiday pay.

b. Employees on leave of absence without pay on the day immediately preceding a

c. Employees on leave while on SSS or employee's compensation benefits-

6. Successive holiday; holidays falling on the same day

Holidays falling on the same day

DOLE Explanatory Bulletin on Workers’ Entitlement to Holiday Pay on 9 April

1. If employee did not work: 200% of basic pay;

2. If employee worked: 300% of basic pay.

7. Explain the case of April 9, 2004

On April 9, 2004 , Araw ng Kagitingan coincides with Good Friday. This is a

DOLE Explanatory Bulletin on Workers’ Entitlement to Holiday Pay on 9 April

1. If employee did not work: 200% of basic pay;

2. If employee worked: 300% of basic pay.

Unlike a bonus, which is a management prerogative, holiday pay is a statutory

Rule IV: Holiday with pay

Section 1. This rule shall apply to all employees except:

 Those of the government and any of the political subdivision, including

 Domestic helpers and persons in the personal service of another;

 Managerial employees as defined in Book Three of the Omnibus Rules to

 Field personnel and other employees whose time and performance is

Holiday pay of certain employees

 Private school teachers, including faculty members of colleges and

 Where a covered employee is paid by results or output, such as payment

9. Offsetting of holiday pay with regular workday; rule

14. Who (What) are included in the term agriculture? Significance.

15. Facilities v. Supplement, distinguish

Supplement means extra remuneration or special privileges or benefits given to or

16. Explain “equal pay for equal work”

It is a principle requiring an employer to pay its employees, regardless of race,

17. Discuss Philex & School Alliance case

No, because petitioners failed to adduce evidence to show that an ex-Padcal

International School Alliance of Educators vs Quisumbing (2000) 333 SCRA 13

International School, Inc., pursuant to PD 732, is a domestic educational institution

Employees are entitled to same salary for performance of equal work.

Notably, the International Covenant on Economic, Social, and Cultural Rights,

18. Distinguish monthly paid v. daily paid

DIFFERENCE BETWEEN MONTHLY AND DAILY-PAID EMPLOYEES

19. Factors/divisors in the computation of benefits & wages, explain.

The use of factors or divisors in the computation of estimated monthly rates of

299 -Ordinary working days

392.5-Total number of days/year.

299 ordinary working days

313 Total number of days/year.

247 ordinary working days

261 Total number of days/year.

As to 365 days/year factor, although there is no effect as to the payment in the

365 Total number of days/year.

20. Significance of divisor