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1. Art. II, Sec.5, Const. : The maintenance of
Part I
Introductory Materials
Section 1. Labor Law in General
1.1 Labor Law Defined [S, R, J]
1. Labor Legislation – Consists of statutes,
regulations and jurisprudence governing the
relations between capital and labor by:
a. providing for certain terms and
conditions of employment or
b. providing a legal framework within
which these terms and conditions
and the employment relationships
may be
 negotiated
 adjusted and
 administered.
2. Social Legislation – Includes all laws that
provide particular kinds of protection or
benefits to society or segments thereof in
furtherance of social justice. In that sense,
labor laws are necessarily social legislation.
 promote public welfare
1.2 Law Classification
1. Labor Standards Law – That which sets out
the minimum terms, conditions and benefits
of employment that ER’s must provide or
comply with and to which EE’s are entitled
as a matter of legal right.
Ex. 8-hour labor law
2. Labor Relations Law – That which defines
[S R D & IM]
 the Status, Rights and
Duties
 and the Institutional
Mechanisms
that govern the individual and collective
interaction of ER’s and EE’s or their
representatives.
Ex. Book V of Labor Code
3. Welfare Legislation – designed to take care
of contingencies which may affect workers,
e.g. where there is loss of income for
research beyond the worker’s control. –
BENEFITS
* Social Security Law.
1.3 History and Origin
1.4 Basis for Enactment
peace and order, the protection of life,
liberty, and property, and the promotion of
general welfare are essential for the
enjoyment by all the people of the blessing
of democracy.
2. Art. II, Sec. 18, Const. : The State affirms
labor as a primary social economic force. It
shall protect the rights of workers and
promote their welfare.
3. Art. XIII, Sec. I, Const. : The Congress
shall give highest priority to the enactment
of measures that protect and enhance the
right of all the people to human dignity,
reduce social, economic and political
inequalities, and remove cultural inequities
by equitably diffusing wealth and political
power for the common good.
To this end, the State shall regulate the
acquisition, ownership, use, and disposition
of property and its increments.
* Labor and social legislation are enacted
pursuant to the police power of the State.
This is its inherent power to enact
wholesome and reasonable laws to promote
order, safety, health, morals and general
welfare of society. In its exercise the state
may interfere with personal liberty, with
property and with business and occupation.
(Calalang vs. Williams).
* No longer may the due process clause and
the freedom of contract be invoked to
challenge labor and social legislation. This
has long been discarded since the 1937 case
of West Coast Hotel vs. Parish (US) and
the 1924 case of Pp. vs. Pomar (RP).
* Labor relation laws enable workers to
obtain from their employers more than the
minimum benefits set by labor standard laws
1.5 Law and Worker
The SC reaffirms its concern for the lowly
worker who, often at the mercy of his ER, must
look up to the law for protection. Fittingly, the
law regards him with tenderness and even favor
and always with hope in his capacity to help in
shaping the nation’s future. It is an error to take
him for granted. (Cebu Royal Plant vs. Deputy
Minister of Labor)
Section 2. Labor and the Constitution

2.1 Constitutional Provisions
1. Art. II, Sec. 9, Const. : The State shall
promote a just and dynamic social order that
will ensure the prosperity and independence
of the nation and free the people from
poverty through policies that provide
adequate social services, promote full
employment, a rising standard of living, and
an improved quality of life for all.
2. Art. II, Sec. 10, Const. : The State shall
promote social justice in all phases of
national development.
2.2
3. Art. II, Sec. 13, Const. : The State
recognized the role of the youth in nation-
building and shall promote and protect their
physical, moral, spiritual, intellectual, and
social well-being. . .
4. Art. II, Sec. 14, Const. : The State
recognizes the role of women in nation-
building, and shall ensure their fundamental
equality before the law of women and men.
5. Art. II, Sec. 18, Const. : The State affirms
labor as a primary social economic force. It
shall protect the rights of workers and
promote their welfare.
6. Art. XIII, Sec. 1, Const. : The Congress
shall give highest priority to the enactment
of measures that protect and enhance the
right of all the people to human dignity,
reduce social, economic, and political
inequalities, and remove cultural inequities
by equitably diffusing wealth and political
power for the common good.
To this end, the State shall regulate the
acquisition, ownership, use, and disposition
of property and its increments.
7. Art. XIII, Sec. 3 (1st par), Const. : The
State shall
*afford full protection to labor, local and
overseas, organized and unorganized, and
*promote full employment and equality of
employment opportunities for all . . .
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approach to health development which shall
endeavor to make essential goods, health
and other social services available to all the
people at affordable cost . . .
10. The present Constitution has gone further
than the 1973 Constitution in guaranteeing
vital social and economic rights to
marginalized groups of society, including
labor. The framers of the Constitution
intended to give primacy to the rights of
labor and afford the sector “full protection”
regardless of the geographical location of
the workers and whether they are organized
or not (Globe Mackay vs. NLRC).
Protection to Labor
1. Art. XIII, Sec. 3, Const. : The State shall
afford full protection to labor, local and
overseas, organized and unorganized, and
promote full employment and equality of
employment opportunities for all.
It shall guarantee the rights of all
workers to 1) self organization, 2) collective
bargaining and negotiations, and 3) peaceful
and concerted activities including the right to
strike in accordance with law.
They shall also participate in policy and
decision-making processes affecting their rights
and benefits as may be provided by law.
The State shall promote the principle
of shared responsibility between workers and
ER’s and the preferential use of voluntary
modes in settling disputes, including
conciliation, and shall enforce mutual
compliance therewith to foster industrial peace.
The State shall regulate the relations
between worker’s and ER’s, recognizing the
right of labor to its just share in the fruits of
production and the right of enterprises to
reasonable returns in investment, expansion and
growth.
1935 Const. : The State shall afford protection
to labor, especially to working women and
minors, and shall regulate the relation between
landowner and tenant, and between labor and
capital in industry and in agriculture. The State
may provide for compulsory arbitration.

8. Art. XIII, Sec. 4, Const. : The State shall,
by law, undertake an agrarian reform
program founded on the right of farmers and
regular farmworkers, who are landless, to
win collectively or collectively the lands
they till or, in the case of other farmworkers,
to receive a just share of the fruits
thereof . . .
9. Art. XIII, Sec. 11, Const. : The State shall
adopt an integrated and comprehensive
Three aggregates of power against which the
individual employee needs protection
1. collective labor - Union
2. collective capital - management
3. collective bargaining relationship
* The law, while protecting the rights of laborers,
does not authorize the oppression or destruction of
the employer

Laissez Faire
1. Laissez faire or the principle of free enterprise
never found full acceptance in this jurisdiction . . .
(ACCFA vs. CUGCO)
2.3 Labor Sector
1. Art. II, Sec. 18, Const. : The State affirms labor
as a primary social economic force. It shall protect
the rights of workers and promote their welfare.
2.4 Policy Considerations – Social Justice
1. Art. II, Sec. 10, Const. : The State shall
promote social justice in all phases of national
development.
2. What does social justice envision? It envisions
[E, R, C]
a. Equitable diffusion of wealth and
political power for the common
good;
b. Regulation of the acquisition,
ownership, use and disposition of
property and its increments;
c. and Creation of economic
opportunities based on freedom of
initiative and self-reliance. (Art.
XIII, Sec. 1 & 2, Const. ; Alcantara)
Definition [H, E, P, A]
1. Social justice is neither communism nor
despotism, nor atomism, nor anarchy, but
the Humanization of laws and the
Equalization of social and economic
forces so that justice in its rational and
objectively secular conception may at
least be approximated. It means the
Promotion of the welfare of the people, the
Adoption of measures by the government
to ensure economic stability of all the
competent elements of society, through the
exercise of powers underlying the existence
of all governments on the time-honored
principle of salus populi est suprema lex.
(Calalang vs. Williams)
2. What does social justice guarantee?
Social justice does not champion division of
property of economic status; what it
guarantees are equality of opportunity,
equality of political rights, equality before
the law, equality between values given and
received, and equitable sharing of the social
and material goods on the basis of efforts
exerted in their production. (Guido vs. RPA)
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 “Those who have less in
life should have more in
law”
 “Equal pay for equal wok”
Limits of Use
* The policy of social justice is not intended to
countenance wrongdoing simply because it is
committed by the underprivileged. At best it may
mitigate the penalty but it certainly will not condone
the offense. Those who invoke social justice may do
so only if their hands are clean and their motives
blameless and not simply because they happen to be
poor. (PLDT vs. NLRC)
2.5 Specific Labor Rights
* Art. XIII, Sec. 3, Const. : [In the relation between
workers and ER’s the following rights shall be
assured by the State:
a. Rights to self-organization
b. Right to collective bargaining
c. Right to collective negotiations
d. Right to peaceful and concerted
Activities including the right to
strike
e. Right to security of Tenure
f. Right to just and humane Conditions
of work
g. Right to a living Wage
h. Right to participate in policy and
Decision-making processes (WACT
BOND)
* Only to those that affect the rights of employees
and have repercussions on their right to security of
tenure.
Protection to Labor
1. The law must protect labor, at least to the
extent of raising him to equal footing in
bargaining relations with capital and to
shield him from abuses brought about by the
necessity for survival. It is safe to presume,
therefore, that an EE or laborer who waives
in advance any benefit granted him by law
does so, certainly not in his interest or
through generosity but under the forceful
intimidation of urgent need; and hence, he
could not have so acted, freely and
voluntarily. (Sanchez vs. Harry Lyons)
2.6 Other Rights
1. Art. II, Sec. 10, Const. : No law impairing
the obligation of contracts shall be passed.
*** Compassionate Justice
- disregarding rigid rules and giving
due weight to all the equities of the
case

- years of service without derogatory
record taken into account
- harshness of penalty also taken into
account
2. Art. III, Sec. 16, Const. : All persons shall
have the right to a speedy disposition of
their cases before all judicial, quasi-judicial
or administrative bodies.
3. Art. III, Sec. 18 (2), Const. : No
involuntary servitude in any form shall exist
except as a punishment for a crime whereof
the party shall have been duly convicted.
Labor as Property
* The right of a person to his labor is deemed
property within the meaning of the Constitutional
guarantees. That is his means of livelihood. He
cannot be deprived of his labor or work without due
process of law. (Phil. Movieworkers Assn. Vs.
Premiere Productions)
Due Process Requirements
* The twin requirements of notice and hearing
constitutes essential elements of due process in
cases of EE dismissal: the requirement of notice is
intended to inform the EE of the ER’s intent to
dismiss and the reason for the proposed dismissal;
upon the other hand, the requirement of hearing
affords the EE an opportunity to answer his ER’s
charges against him and accordingly to defend
himself therefrom before dismissal is effected.
Neither of these 2 requirements can be dispensed
with without running afoul of the Constitution.
(Century Textile vs. NLRC)
Liberty of Contract and State Interference
* Legislation appropriate to safeguard to people’s
vital interests may modify or abrogate contracts
already in effect. Reservation of essential attributes
of sovereign power is read into contracts as a
postulate of the legal order. All contracts made with
reference to any matter that is subject to regulation
under the police power must be understood as made
in reference to the possible exercise of that power.
(Abella/Had. Danao vs. NLRC) such was the case
when Art. 283 of the Labor Code granted severance
pay to workers who at the time of their employment
were not entitled under the law to receive such pay.
(Id.)
** Employees have a vested and demandable right
over existing benefits voluntarily granted to them
by their employer.
MGT. Rights [C P S T]
1. Right to conduct business
2. Right to prescribe rules
3. Right to select employees
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4. Right to transfer and discharge employees
Waiver and Compromise
* Not all waivers and quitclaims are invalid as
against public policy
1. It is only when there is clear proof that the
waiver was wangled an unsuspecting person,
or the terms of settlement are
unconscionable on its face, that the law will
step in to annul the questionable transaction.
2. But where it is shown that the person
making the waiver did so voluntarily, with
full understanding of what he was doing,
and the consideration for the quitclaim is
credible and reasonable, the transaction must
be recognized as a valid and binding
undertaking. (Sicangco vs. NLRC)
3. Should a party fail or refuse to comply with
the terms of a valid compromise or amicable
settlement, the other party could either
enforce the compromise by a writ of
execution, or regard it as rescinded and to
insist upon his original demand. (Morales
vs. NLRC)
- Voluntary consideration – not
unconscionable
- Waiver of future benefits is not valid
and binding
- The law does not consider as valid
any agreement
a. to receive less
compensation on what a
worker is entitled to
recover
b. to prevent him from
demanding benefits to
which he is entitled
* Instances when quitclaim, waiver or
compromise is valid:
1. C, a national promoter salesman, with high
educational attainment, tendered his
resignation after a spot audit found out that
he had a tentative shortage of Php49,005.59.
It is unbelievable that C, occupying a
responsible position, and with high
education attainment, can be rattled and
confused into signing a resignation letter,
on account of a mere spot audit. (Callanta
vs. NLRC)
2. Bank and EE’s association, entered into a
CBA providing for the withdrawal of the
pending case of the association against the
bank for non-payment of Php60.00 ECOLA.
There is nothing in the compromise which
contravenes the law, morals, good customs,
public order, or public policy. (Monte de
Piedad vs. MOLE)

3. During pendency of appeal before the
NLRC, workers executed a voluntary
affidavit before the Labor Arbiter declaring
intention to withdraw appeal in lieu of
payment of severance pay. The affidavits
executed voluntarily and knowingly in the
presence of the Labor Arbiter has the effect
and authority of res judicata. (Olaybar vs.
NLRC)
4. A number of EE’s made quitclaims in
exchange for the dropping of charges of
embezzlement of P25 million which the
EE’s allegedly embezzled. The
consideration for the waiver is adequate.
(PBC vs. Echiveri)
Instances when quitclaim, waiver or
compromise invalid:
1. A worker hospitalized for several times for
work-related accidents was told by an
immediate supervisor and a personnel
officer to retire and execute a quitclaim or
else would be dismissed and got nothing.
The retirement and quitclaim was made
under threat of dismissal. (Alcantara)
2. A messenger with 5 years employment
resigned and executed a quitclaim after
being told by his manager to resign or else
charges will be filed against him. The threat
was unjust since the messenger did not
commit any unlawful act. There was
intimidation, which vitiated consent.
(Guatson Tours vs. NLRC)
3. A quitclaim of future benefits made by an
EE at the time of employment (Alcantara)
4. After the CIR rendered a decision ordering
the ER to pay wage differentials, the EE’s
executed a quitclaim waiving their rights
under the decision. The quitclaim
contravenes public policy since after a civil
action is filed in court, the cause of action
may not be subject of compromise unless the
same is with leave of court. ( Pampanga
Sugar Devt. Vs. Sugar Workers Assn.)
5. A quitclaim executed by an OFW repatriated
to the Philippines because of an illness
requiring surgical treatment in consideration
of the return travel fund. There was no
consideration since the EE regularly
contributed to the fund. Besides, the
quitclaim is negotiable and in congruous to
the declared policy of the State to afford
protection to labor and to assure the right of
workers to security of tenure. (Cuales vs.
NLRC)
5
6. ER appealed the decision of the POEA
awarding $3,800.00 disability benefits to
worker. During pendency of appeal, the
worker executed a quitclaim in exchange for
Php18,000.00 since at the time the worker
needed money for medical treatment. The
law does not consider valid any agreement
to receive less compensation than what the
workers should receive. It was clear that the
worker was forced to accept the payment
out of necessity.(PISC vs. NLRC)
7. After the finality of judgment awarding
them severance pay, the workers executed a
quitclaim before labor arbiter who had no
participation in the case. Such settlements
must be approved by the labor arbiter
before whom the case is being heard. (St.
Gothard Pub vs. NLRC)
 Quitclaims are ineffective
to bar recovery of the full
measure of the worker’s
rights
 Dire Necessity is not an
acceptable ground to annul
releases unless there is
showing that
a. workers were forced to execute them
b. the considerations for the quitclaims
where unconscionably low
Management Prerogatives
1. Right to select and discharge employees –
with valid cause
2. promulgate reasonable employment rules
and regulation
3. designation of work to employees
4. transfer and promote employees
5. control company operations
6. install money-saving devices
7. re-clarify or abolish positions
8. sell or close business
Drug Testing
G. R. : cannot – right to privacy
Exception:
- if job or occupation involve public
safety
Ex.ample:
a. bus drivers
b. security guards
Participation in Decision-making Process
Only if it affects his [R, D, W]:
c. rights
d. duties
e. welfare
- not management prerogatives
regarding business operation
- must at least be informed

1. The law explicitly considers it a State
Policy “to ensure the participation of
workers in decision and policy-making
processes affecting their rights, duties and
welfare. However, a line must be drawn
between management prerogatives
regarding business operations per se and
those which affect the rights of EE’s. in
treating the latter, management should see
to it that EE’s are at least properly
informed of its decisions or modes of
action. (PAL vs. NLRC) In this respect, a
legislation providing a worker’s
representation in the Board of Directors of
corporations is not valid since the
constitutional guaranty does not include
the worker’s right to participate in the
management of the enterprise. (Alcantara)
2. May the ER be compelled to share with its
EE’s the prerogative of formulating a code
of discipline? I a code of discipline
unilaterally formulated by the ER
enforceable? Yes, the ER has the
obligation to share with its EE’s its
prerogative of formulating a code of
discipline since this will be affecting their
rights and benefits. A code of discipline
unilaterally formulated and promulgated
by the ER would be unenforceable. (Id.)
Section 3. Labor and the Civil Code
3. 1 Role of Law
1. Art. 1700, NCC : The relation between
capital and labor are not merely contractual.
They are so impressed with public interest
that labor contracts must yield to common
good. Therefore, such contracts are subject
to special laws on labor unions, collective
bargaining, strikes, lockouts, closed shops,
wages, working conditions, hours of labor
and similar subjects.
3.2 ER-EE Standard of Conduct
* Art. 1701 : Neither capital nor labor shall act
oppressively against the other, or impair the
convenience of the public.
Fair Treatment
* The NCC states that every person must in the
exercise of his rights, and in the performance of his
duties, act with justice, give everyone his due, and
observe honesty and good faith. (AHS Phils. vs.
NLRC)
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Law Compliance
* The return-to-work order in this case not so much
confers a right as it imposes a duty and while as a
right it may be waived, it must be discharged as a
duty even against a worker’s will. Thus, it does not
constitute a violation of the right against
involuntary servitude. (Sarmiento vs. Tuico) This is
differentiated from the instance where there is a
mere breach of contractual stipulation. While the
EE may be held liable for damages by virtue of the
breach of contract, he may not be compelled to
work against his will because this will be
involuntary servitude. (Alcantara)
EE Obedience and Complaince ER Orders
* It is a recognized principle that company policies
and regulations are, unless shown to be grossly
oppressive or contrary to law, generally binding and
valid on the parties and must be complied with until
finally revised or amended unilaterally or preferable
through negotiation or by a competent authority.
(SMC vs. Ubaldo) Deliberate disregard or
disobedience of rules, defiance of management
authority by the EE’s cannot be countenance. Until
and unless the rules or orders imposed by the ER
are declared to be illegal or improper by competent
authority, the EE’s ignore or disobey them at their
own peril. (GTE Directories vs. Sanchez)
ER Obligation
* An EE must be treated as a disdained subordinate
but with respect and fairness, if not affection and
gratitude due to an equal partner. (Lagniton vs.
NLRC)
Section 4. The Labor Code of the Philippines
4.1 Decree Title * Art. 1 : “Labor Code of the
Philippines”
4.2 Effectivity * Art. 2 : 6 months after its
promulgation.
4. 3 Applicability
1. Art. 6: All rights and benefits granted under
this Code shall, except as many otherwise be
provided, apply alike to all workers, whether
agricultural, or non-agricultural.
2. Art. 276: The terms and conditions of
employment of all government of all
government EE’s, including EE’s of
GOCC’s shall be governed by the Civil
Service Law.
3. Art. IX-B, Sec. 2(1), Const. :The Civil
Service embraces all branches of

Government, including GOCC’s with
original charters.
Test-GOCC
1. The rule now is that only the GOCC’s with
original charters come under the Civil
Service Law. (Cabrera vs. NLRC)
4.4 Implementing Rules
1. Art. 5: Implementing rules and regulations
of the DOLE and other government agencies
of the Code shall become effective
* 15 days after announcement of their adoption
in newspapers of general circulation.
Limitation –Rule Making Power
1. * This power is limited to the promulgation of
rules and regulations to effectuate policies of the
Code. Such rules and regulations must conform to
the terms and standard prescribed in the statute.
They cannot supplant its plain and explicit
command. (Alcantara)
* A rule or regulation promulgated by an
administrative body, such as the DOLE, to
implement a law, in excess of its rule-making
authority is void. (Azucena)
2. Examples of void IRR’s:
* IRR providing the 10-day period specified in Art.
223 refers to working days as stated in the article.
* An IRR providing that EE’s paid by the month
shall be presumed to be paid for all days in the
month, whether worked or not. In effect, will except
EE’s paid by the month from the enjoyment of the
holiday pay benefit. (Insular Bank EE Union vs.
Inciong)
* IRR of RA 6715 excluding security guards from
those allowed to join unions. (MERALCO vs.
SOLE)
* IRR including commission in the computation of
13th month pay. Unduly expanded the concept of
“basic salary”. (Boie-Takeda vs. De La Serna)
4.5 Policy Declaration
* Art. 3: The State shall (APERA)
1. Afford protection to labor
2. Promote full employment
3. Ensure equal work opportunities regardless
of sex, race or creed
4. Regulate the relations between workers and
ER’s.
7
5. Assure the rights of workers to self-
organization, collective bargaining, security
of tenure, and just humane conditions of
work.
4.6 Law Interpretation
1. Art. 4 : All doubts in the implementation
and interpretation of the provisions of this
Code, including its implementing rules and
regulations, shall be resolved in favor of
labor.
2. Art. 1702, NCC : In case of doubt, all labor
legislation and labor contracts shall be
construed in favor of the safety and decent
living of the laborer.
In Favor Labor-Rationale
* This kind of interpretation gives meaning and
substance to the liberal and compassionate spirit
of the law. The policy is to extend the decree’s
applicability to a greater number of EE’s to
enable them to avail of the benefits under the
law, in consonance with the State’s avowed
policy to give maximum aid and protection to
labor. (Abella vs. NLRC)
Liberal Construction
* Are the provisions violative of the equal
protection clause? No. The ER and the laborer
do not stand on equal footing; to ensure
equality, the latter must, be afforded protection.
Insofar as labor contracts are concerned, the
same are usually drafted and prepared by the
ER. All doubts in their provisions should
therefore be resolved against it. (Alcantara)
Doubt
* When these are 2 or more possible explanations
regarding an issue affecting worker’s rights, that
which favors the worker must be chosen. (Clemente
vs. GSIS)
No doubt
* The provision in case of doubt does not apply
where the pertinent provisions of the Labor Code
leave no room for doubt either in their interpretation
or application. (Bonifacio vs. GSIS)
Sweeping Interpretation
* The Supreme Court cannot also adopt a sweeping
interpretation of the law, lest it engages itself in
judicial legislation. (Bravo vs. EEC)
Factual Consideration and Rationality

* The care and solitude in the protection and
vindication of the right of workingmen cannot
justify disregard of relevant facts or schewal of
rationality in the construction of the text of
applicable rules in order to arrive at disposition in
favor of an EE. (PAL vs. NLRC)
Equity and Moral Consideration
* Considerations of equity and social justice cannot
prevail against the expressed provisions of labor
laws. (Manning vs. NLRC)
Balancing Conflicting Claims
* The basic policy of the law is to balance or to
coordinate the rights and interests of both workers
and ER’s. It should not be deduced that the basic
policy is to favor labor to prejudice capital.
(Azucena)
4.7 Enforcement and Sanctions
1. Art. 217 (a) (2), (3), (4), (6): Jurisdiction of
Labor Arbiters and the Commission
1. The Labor Arbiters shall have exclusive and
original jurisdiction, except as otherwise
provided, the following cases involving all
workers: (unfair labor practice)
2. Termination disputes (qualified by Art. 261
which grant voluntary arbitrators original
and exclusive jurisdiction over all
unresolved grievances arising from CBAs
and company personnel policies);
3. Cases involving terms and conditions of
employment, if accompanied with a claim
for reinstatement (including claims of
OFW’s arising out of an ER-EE
relationship, including claims for actual,
moral and exemplary damages, as provided
in Sec. 10, Migrant Workers Act);
4. Claims for actual, moral, exemplary and
other damages arising from the ER-EE
relations;
5. Except claims for EE’s Compensation,
Social Security, Medicare and maternity
benefits, all other claims, arising from the
ER-EE relations; including
- those of persons in domestic or
household service, involving an
amount exceeding Php5,000,
regardless of whether of whether
accompanied with a claim for
reinstatement.
6. Disputes arising from Art. 264 including
legality of strikes and lockouts
2. Art. 128 : Visitorial and Enforcement Power of
the Secretary of Labor or his duly authorized
representative.
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1. Accesss to ER’s records and premises at
anytime of the day or night whenever work
is being undertaken therein and copy
thereform;
2. Question any EE; and
3. Investigate any fact, condition or matter
which may be necessary to determine
violations of this Code of any labor law,
wage order or rules and regulations issued
pursuant thereto.
* In cases where the relationship of ER-EE still
exists, the power to issue Compliance Orders to
give effect to the labor standard provisions of this
Code and other social legislation.
 Writs of execution to the appropriate
authority shall be issued for the
enforcement of the said orders,
except in cases:
a. where the ER contests the
findings of the labor
employment and
enforcement officer; and
b. raises issues supported by
documentary profits which
were not considered in the
course of inspection.
* Order Stoppage of work or suspension of
operations of any unit or department of an
establishment when non-compliance poses grave
and imminent danger to the health and safety of
workers in the workplace.
 Within 24 hours, a hearing shall be
conducted to determine whether an
order for the stoppage of work and
suspension of operations shall be
lifted or not.
 In case the violation is attributable to
the fault of the ER, he shall pay EE’s
their EE’s their salaries or wages
during said period.
* It shall be unlawful for any person to Obstruct,
impede, delay or otherwise render ineffective the
order of the Secretary of Labor.
* No inferior court shall issue a temporary or
permanent injunction or restraining order or
otherwise assume jurisdiction over any case
involving the enforcement orders in accordance
with this Article.
* Any government EE found guilty of violation,
after appropriate administrative investigation, be
subject to Summary dismissal from the service.
* The Secretary of Labor may require ER’s to keep
and maintain Employment records as may be
necessary. (AS CONES)
3. Art. 129. Recovery of wages, simple money and
other benefits.

* The Regional Director of the DOLE or any of the
duly authorized hearing officers of the Department
is empowered, through summary proceedings and
after due notice, to hear and decide any matter
involving the recovery of wages and other monetary
claims and benefits, including legal interest owing
to a person employed in domestic or household
service: Provided
 such complain does not include
claim for reinstatement
 aggregate money claims of each
househelper does not exceed
P5,000.00
* The complaint shall be resolved within 30 days
from the date of the filing of the same.
4. Art. 288 : Penalties and Jurisdiction -
a. Except, as otherwise provided in the
Code, or unless the acts complained
of hinges in a question or
interpretation or implementation of
ambiguous provisions of an existing
CBA, any violation of this Code
declared to be unlawful or penal in
nature shall be punished with:
 a fine not less than P1,000.00 nor
more than P10,000.00.
 or imprisonment of not less than 3
months nor more than 3 years.
 Or both such fine and imprisonment
at the discretion of the court.
In addition to such penalty any alien
found guilty shall be
 summarily deported upon
completion of service of service.
b. Any criminal offense punished
under this Code shall be under the
concurrent jurisdiction of the MTC
and the RTC.
5. Art. 289 : The penalty (of the offenses listed in
the Labor Code) shall be imposed upon the guilty
officer of officers of a corporation, trust, firm,
partnership, association pr entity which committed
said offenses.
6. Art. 290. Prescription of Offensses -
* Offenses penalized under this Code and the IRR’s
– 3 years.
* Unfair labor practice – 1 year from accrual of
such unfair labor practice.
7. Art. 291 : Prescription of Money Claims- All
money claims arising from ER-EE relations
accruing during the effectivity of this Code – 3
years from the time the cause of action is accrued.
8. Art. 292 : Money claims specified in Art.
291shall be filed before the appropriate entity
independently of the criminal action that may be
instituted in the proper courts.
9
Pending the final determination of the merit
of money claims filed with the appropriate entity,
no civil action shall be filed with any court.
 This provision shall not apply to
EE’s compensation cases which shall
be processed and determined strictly
in accordance with the pertinent
provisions of this Code.
Section 5. Work Relationship
5. 1 Work Relationship
ER and EE
1. Art. 97 (a) and (b) : “Person” means
individual, partnership, association,
corporation, business trust, legal
representative, or any organized group of
persons.
(b) “ER” includes any person acting directly
or indirectly in the interest of the ER in
relation to an EE and shall include the
Government and all its branches,
subdivisions and instrumentalities, all
GOCC’s and institutions, as well as non-
profit private institutions, or organizations.
2. Art. 167 (f) and (g) : (f) “ER” means any
person, natural or juridical, employing the
services of the EE.
(g) “EE” means any person compulsory
covered by the GSIS . . ., including
members of the AFP, and any person
employed as casual, emergency,
temporary, substitute or contractual, or
any person compulsory covered by the
SSS. . .
3. Art. 212 (e) and (f) : “ER” includes any
person acting in the interest of the ER
directly or indirectly. The term shall not
include any labor organization or any of its
officers except when acting as an ER.
(f) “EE” includes any person in the employ
of an ER. The term shall not be limited to
the EE’s of a particular ER, unless this Code
explicitly states. It shall include any
individual whose work has ceased as a result
or in connection with any current labor
dispute or because of unfair labor practice if
he has not obtained any other substantially
equivalent or regular employment.
CLASSIFICATION
1. casual
2. regular
3. emergency
4. temporary
5. substitute

6. contractual
4. Is the purchaser of the assets of an ER
corporation considered a successor ER of
the latter’s EE? No. Labor contracts are not
enforceable against a transferee of an
enterprise, labor contracts being in
personam, thus binding only between
parties.
ER-EE Relationship – Independent Contractor
and Labor Contractor
1. Art. 106 : Contractor or subcontractor –
a. Whenever an ER enters into a
contract with another person for the
performance of the former’s work,
the EE’s of the contractor and of the
latter’s subcontractor, if any shall be
paid in accordance with the
provisions of this Code.
In the event that the contractor or the
subcontractor fails to pay the wages of his EE in
accordance with this Code, the ER shall be jointly
and severally be liable with his contractor or
subcontractor to such EE’s to the extent of the work
performed under the contract, in the same manner
and extent that he is liable to EE’s directly
employed by him.
b. There is “labor-only” contracting
where:
1. the person supplying in workers to an ER
does not have [C,I]
 substantial capital
 [substantial] investment in the form
of tools, equipment, machineries,
work premises, among others
2. and the workers recruited and placed by
such persons are performing activities which
are directly related to the principal business
of such ER.
In such cases, the person or intermediary shall
be considered merely as an agent of the ER who
shall be responsible to the workers in the same
manner and extent as if the latter were directly
employed by him.
2. Sec. 9, Rule VIII, Book III, IRR’s : (a)
Any person who undertakes to supply
workers to an ER shall be deemed to be
engaged in labor-only contracting where
such person :
* Does not have
 substantial capital
 [substantial] investment in the form
of tools, equipment, machineries,
10
work premises and other materials;
and
* The workers recruited and placed by such person
are performing activities which are directly related
to the principal business or operations of the ER in
which the workers are habitually employed.
Labor-only contracting as defined herein is hereby
prohibited and the person acting as contractor shall
be considered merely as an agent or intermediary of
the ER who shall be responsible to the workers in
the same manner and extent as if the latter were
directly employed by him.
(c) For cases not falling under this Article, the
Secretary of Labor shall determine through whether
or not the contracting out is permissible in the light
of the circumstances of each case and after
considering the operating needs of the ER and the
rights of the workers involved.
3. Art. 107 : Indirect ER – The provisions of
the immediately preceding Article shall
likewise apply in any person, partnership,
association or corporation which, not being
an ER, contracts with an independent
contractor for the performance of any work,
job or project.
4. Art. 109 : Every ER or indirect ER shall be
held responsible with his contractor or
subcontractor for any violation of the
provisions of this Code. For purposes of
determining the extent of their civil liability
under this Chapter, they shall be considered
direct ER’s.
5. Sec. 8, Rule VIII, Book III, IRR’s : Job
Contracting – There is job contracting
permissible under the Code if the following
conditions are met:
1. The contractor carries on an independent
business and undertakes the contract work
[A R M - F]
a. on his own account
b. under his own responsibility
c. according to his own manner and
method
d. free from the control and direction of
his ER or principal in all matters
connected with the performance of
the work except as to the results
thereof; and
2. The contractor has
a. substantial capital or
b. [substantial] investment in the form
of tools, machineries, work premises,
and other materials which are
necessary in the conduct of his
business.

*Where the ER-EE relationship has become
ascertained, the ER becomes bound by statutory
requirements pertaining, though not limited, to
terms and conditions of employment, labor relations
and post employment. (Phone-Poulenc vs. NLRC)
Nonetheless, when a contractor fails to pay the
wages of his EE’s, the ER who contracted out the
job to the contractor becomes jointly and severally
liable with his contractor to the EE’s of the latter “to
the extent of the work performed under the
contract” as if such ER were the ER of the
contractor’s EE’s. The law itself, establishes an ER-
EE relationship between the ER and the job
contractor’s EE’s for a limited purpose i.e. in order
to ensure that the latter get paid the wages due
them. A similar situation obtains where there is a
“labor-only” contracting. This time, however, for a
comprehensive purpose: “ER for purposes of this
Code, to prevent any violation or circumvention of
any provision of this Code.” The law in effect holds
both the ER and the “labor only” contractor
responsible to the latter’s EE’s for more effective
safeguarding of the EE’s rights under the Labor
Code. (PBC vs. NLRC)
A. DETERMINATION
* In determining whether the relationship is that of
ER and EE or one of independent contractor, each
case must be determined on its own facts and all the
features of the relationship must be considered.
(Villaluga vs. NLRC)
** the existence of an ER-EE relationship is a
question of law and cannot be made the subject of
agreement
* the nature of ones business is not determined by
self-serving appellations one attaches thereto but by
the tests provided by statute and prevailing case law
B. FACTORS
1. The existence of ER-EE relationship is
determined by the following elements namely:
a. the Selection and engagement of the
EE’s
b. the payment of Wages
c. the power of Dismissal; and
d. the power to control the EE’s
conduct
(WEDS) although the latter is the most important
element. (Rosario Brothers vs. Ople) No particular
form of evidence is required to prove the existence
of an ER-EE relationship. Any competent and
relevant evidence to prove the relationship may be
admitted (Opulencia vs. NLRC)
2. Is there an ER-EE relationship?
* Workers under a pakiao agreement arranged by G
whom PRC considered as an independent
contractor. ER gives orders to G, on where to store
11
the copra, when to bring out, how much to load and
where, and what class of copra to handle. The
equipment used is owned by PRC. Yes. PRC has
direct control over the handling of the copra. The
control test is satisfactorily met.
* Piece workers subject to specifications. Yes. The
fact that the making of the basket is subject to Dy’s
specifications indicates the existence of control.
(Dy Koh Beng vs. ILMU)
* Tailors, pressers, stitchers and similar workers
employed by COD on a piece-work basis. The EE’s
are governed by the company’s regulations i.e. 8-
hour workday, recording of attendance etc…
Furthermore, a master cutter distributes job orders
equally, supervises the work and sees to it that they
were finished as soon as possible. Yes. The
worker’s conduct in the performance of their work
was controlled by the company (Rosario vs. Ople)
* Cargadores and pahinantes recruited by SMC
through a labor contractor who are governed by the
regulations of the SMC whose work consisted of
loading, unloading, pilling or palleting empty
bottles and wooden shells from company trucks and
warehouses. Yes. The evidence firmly establishes
the control exercised by the SMC. (BLUM vs.
Zamora)
* Shoe shiners who had their own customers but
shared proceeds with company. No. The company
does not exercise any degree of control or
supervision over his work. The shoe shiner is a
partner in trade. (Besa vs. Trajano)
* Vendees of cigarettes who are governed by the
regulations of the vendor company i.e. definite sales
territory, requirement to submit daily, weekly and
monthly reports, etc. Yes. Vendor company had
control over the vendee. (SSS vs. CA)
*I. S, a prominent social figure, had an agreement
with TWS to act as “branch manager; The
agreement provided that she would be entitled to a
part of the commission on sale of tickets; and that
she would share in the expenses of maintaining the
office. She was also a signatory to a lease
agreement covering the branch’s premises, holding
herself solidarily liable for the prompt payment of
rentals. No. I. S was not subject to the control by
TWS. The services rendered by I.S must have been
done by her pursuant to a contract of agency.
(Sevilla vs. CA)
* A plant manager hired by a marble company
which was about to close in a few month’s time due
to business losses. The company had no control
over the former, either as to hours of work or
method of accomplishing the work. The former was
entitled to a percentage of the net profits of the

company for that period. No. Manager was merely
a party to a joint venture. (CMC vs. NLRC)
* Fishermen-crew of a trawl fishing vessel subject
to control and supervision of the owner of the vessel
i.e. conduct of fishing operations; time to report to
fishing port, etc… Yes. (Ruga vs. NLRC)
* Tailors, seamstresses and other workers of a
haberdashery who were paid on a piece-rate basis.
They were directed by the proprietor of the
establishment as specified by the customers. They
were required to finish jobs orders in one day before
due date. Yes. They did not exercise independence
in their own methods, but on the contrary were
subject to the control of the establishment from the
beginning of their task to their completion. They
also had to rely on the tools and equipment
supplied by the haberdashery. (Makati
Haberdashery vs. NLRC)
* The power of control refers merely to the
existence of the power and not the actual exercise
thereof.
* Caddles who are not under the control and
supervision of the golf club as to working hours,
manner of carrying out their services, etc. No. The
club did not have the measure of control over the
incidents of the caddy’s work and compensation
that the ER would possess. (Manila vs. IAC)
* College teachers. Yes. The Court takes judicial
notice that a university controls the work of the
members of its faculty; that it prescribes the
courses or subjects that they teach and the time and
place for teaching. (Feati vs. Bautista)
* Jeepney drivers working under the boundary
system. Yes. The driver does not have any interest
in the business because he did not invest anything
in the acquisition of jeeps and did not participate in
the management thereof. (Citizen’s League of Free
Workers vs. Abbas)
C. CONTROL TEST
*** There is an ER-EE relationship where the ER
controls or has reserved the right to control the EE
not only as the result of the work but also as to the
means by which said work is to be accomplished
(Paradise vs. Ng). The test merely calls for the
existence of the right to control the manner of doing
the work not the actual exercise of the right. (Ruga
vs. NLRC) The line should be drawn between rules
that merely serve as guidelines towards the
achievement of the mutually desired results without
dictating the means or methods employed in
attaining it, and those that control or fix the
methodology and bind or restrict the party hired to
the use of such means. The first , which aim only to
12
promote the result, create no ER-EE relationship
unlike the second, which addresses both the result
and the means to achieve it. (Insular Life vs.
NLRC) The control test calls merely for the
existence of the right to control and manner of
doing work, not the actual exercise of the right. (Dy
Keh Beng)
D. ECONOMIC TEST
1. The absence of ER-EE relationship may be
determined through economic tests like the
inclusion of the EE in the payrolls, having
irregular compensation and having a
personal stake in the business. (Sevilla vs.
NLRC)
E. AGREEMENT
* The existence of an ER-EE relationship is a
question of law and being such, it cannot be made
the subject of an agreement. (Tabas vs. CMC)
5.2 Independent Contractor and Labor
Contractor Only
1. Art. 106 : Contractor or subcontractor
a. Whenever an ER enters into a
contract with another person for the
performance of the former’s work,
the EE’s of the contractor and of the
latter’s subcontractor, if any shall be
paid in accordance with the
provisions of this Code.
In the event that the contractor or the
subcontractor fails to pay the wages of his EE in
accordance with this Code, the ER shall be jointly
and severally liable with his contractor or
subcontractor to such EE’s to the extent of the work
performed under the contract, in the same manner
and extent that he is liable to EE’s directly
employed by him.
b. There “labor-only” [considered as
agent] contracting where:
* the person supplying workers to an ER does not
have
 substantial capital
 [substantial] investment in the form
of tools, equipment, machineries,
work premises, among others
With respect to the first requirement, the law
does not require both substantial capital and
investment in the form of tools, equipment,
machineries, etc. This is clear from the use of the
conjunction “or”. (Neri vs. NLRC)
2. and the workers recruited and placed by
such persons are performing activities which

are directly related to the principal business
of such ER.
With respect to the second requirement, the
service provided by janitors, firemen, mechanics,
hired helpers and similar workers are considered
directly related to the operations of a company since
this is necessary to the proper maintenance of the
premises and machineries as well as the protection
of the company premises against fires. (Guarin vs.
NLRC)
In such cases, the person intermediary shall be
considered merely as an agent of the ER who shall
be responsible to the workers in the same manner
and extent as if the latter were directly employed by
him.
*** Factors to Determine existence of
Independent Contractor Relationship:
1. whether the contractor is carrying on an
independent business;
2. whether the work is part of the ER’s general
business;
3. the nature and extent of the work;
4. the skill required;
5. the terms and duration of the relationship;
6. the right to assign the performance of the
work to another;
7. the control and supervision of the work and
the ER’s powers with respect to the hiring,
firing and payment of salaries;
8. the duty to supply premises, tools and
appliances. (Mafinco vs. Ople)
** Examples of Independent Contractor:
* Commission agent : IPC Company entered into
agreement with registered representatives who
worked on a commission basis. While the agents
were subject to a set of rules and regulations
governing the performance bond; the termination
for certain causes, however, the agents were not
required to report to work; to devote their time
exclusively for the company; to account for their
time nor submit a record of their activities; and that
they were paid on a commission based on a certain
percentage of sales. The fact that for a certain
specified causes (failure to meet annual quota) the
relationship may be terminated does not mean such
control exists, for the causes of termination have no
relation to the means and methods of work. (IPC
vs. SSS)
* Dealership : A contract whereby one engages to
purchase and sell soft drinks on trucks supplied by
the manufacturer but providing that the other party
(peddler) shall have the right to employ his own
workers, shall post a bond to protect the
manufacturer against losses shall be responsible for
damages caused to third person, shall obtain the
13
necessary licenses and permits and bear the
expenses incurred in the sale of the soft drinks.
(Mafinco vs. NLRC)
Another dealership agreement wherein the
dealer: handles the products in accordance with
existing laws and regulations; sends his orders to
the factory plant; is supplied by the factory with a
delivery truck and all expenses for repairs are borne
by the factory; receives no commission but given a
discount for all sales; is responsible alone for any
violation of the law, sells the product at the price
agreed upon between the parties; and posts a surety
bond of not less than P10,000.00. (La Suerte vs.
Director of Labor Relations)
* Security Agency : Shipping company entered
into an agreement with a security agency wherein
the security agency was responsible for the hiring
and assignment of the guards, the guards were not
known to the shipping company for it dealt directly
with the agency, and a payment of a lump sum to
the agency who in turn paid the compensation of the
individual watchmen. Under the circumstances, the
guards cannot be considered EE’s of the shipping
company. It is the security agency that recruits,
hires and assigns the work of the watchmen. It is
the wages to which the watchman is entitled. The
powers to dismiss lies with the agency. Lastly, since
the company has to deal with the agency, and not
with the individual watchmen, on matters,
pertaining to the contracted task, it stands to
reason that the company does not exercise any
power or control over the watchmen’s conduct.
(APL vs. Clave)
* Stevedoring Services : SHIPSIDE entered into a
“Contract for Services” with La Union providing
among others that the latter would furnish all labor
needed for stevedoring work in piers controlled by
the former. The net balance of the stevedoring
charges will be divided equally among the parties.
The records do not show any participation on the
part of SHIPSIDE with respect to the selection and
engagement of the individual stevedores. The terms
and conditions of their services are matters
determined not by SHIPSIDE but by La Union. It is
also sufficiently established that La Union
exercised supervision and control over its labor
force. While SHIPSIDE occasionally issued
instructions to the stevedores, such instructions, in
legal contemplation are mere requests since the
privity of contract lies between the workers and La
Union. (SHIPSIDE vs. NLRC)
* Collection Agency : Singer entered into a
“collection agency agreement” with collectors
providing among others that the collector is to be
considered at all times to be an independent
contactor; he was required to comply with certain
rules and regulations (i.e. use of authorized receipts,

monthly collection quota, cash bond, and
submission of report of all collections at least once
a week); and his services can be terminated in case
of failure to satisfy these regulations. However, the
agent was not required to observe office hours or to
report to Singer except for remitting his collections.
He did not have to devote his time exclusively for
Singer and the manner and method of collection
were left solely to the discretion of the agent, and he
shouldered his transaction services.
* Messengerial/Janitorial Services : Janitors were
hired by CSI and assigned to La Union Carbide.
They drew their salaries from CSI. CSI exercised
control over them through a SCI EE who gave
orders and instructions. Moreover, CSI had the
power to assign its janitors to various clients and
pull them out. CSI was a registered service
contractor and did business with a number of known
companies in the country. It maintains its own
office and had its own office equipment. It furnishes
its janitors the cleaning equipment. (Rhone-
Poulene vs. NLRC)
BCC, capitalized at P1 million fully
subscribed and paid for provided janitorial and
other services to various firms. It hired A and B and
assigned them to work for FEBTC. The two
reported for work wearing the prescribed uniform of
the BCC; their leave of absences were filed directly
with BCC; and their salaries drawn only from BCC.
FEBTC however issued a job description which
detailed the functions of two. Applying the control
test, BCC is the ER of the two. Furthermore, it had
substantial capital. The guidelines in the job
description were laid down merely to ensure the
desired result was achieved. It did not, however,
tell how the work should be performed. (Neri vs.
NLRC)
* Repair and Maintenance Service : F doing
business, was hired by Shell to conduct a hydro-
pressure test. He was paid a lump sum for the work
he and his men accomplished. He utilized his own
tools and equipment. He accepted business from
other companies. He was not controlled by Shell
with regard to the manner in which he conducted
the test. (Pilipinas Shell vs. CA)
** Instances of Labor-Only Contracting
* Agency hiring : PBC and CESI entered into an
agreement under which the latter undertook to
supply the former with 11 messengers. The
agreement provided that the messengers would
remain EE’s of CESI; PBC remitted to CESI
amount equivalent to the wages of the messengers;
CESI in turn paid them and their names are not
included in the PBC’s payroll; the bank, in cases of
dismissal would request CESI, and CESI would in
fact withdraw such messenger, and the messengers
14
performed their functions within the bank’s
premises. CESI cannot be considered a job
contractor because its undertaking is not the
performance of a specific job; it merely undertook
to provide the bank with a certain number of
persons able to carry out the work of messengers.
(PBC vs. NLRC)
Under the Work Contract between A and a
motorshop, A undertook to supply labor and
supervision in the performance of automotive body
painting work. A and his men were paid lump sum,
the company supplied the tools, equipment,
machineries and materials and moreover, the jobs
were done in the premises of the motor shop. Aside
from the fact that the company exercised control
and direction over the work done by A and his men,
the line of work-automobile painting – was directly
related to, if not an integral part of the regular
business of the motor shop. (Broadway Motors vs.
NLRC)
LS provided helpers, janitors, mechanics to
NP, a corporation engaged in garment
manufacturing. The agreement between the two
provided that LS shall provide NP with workers, NP
shall pay LS a fee based on rates fixed by the
agreement, there is no ER-EE relationship between
the two and LS shall have exclusive direction in the
selection, engagement and discharge of its
personnel and the latter shall be within is full
control. LS is a “labor-only” contractor since it is
merely an agent to procure workers for the real ER.
(Guarin)
* Security Guard Hiring : Hyatt and VSS entered
into a contract of services wherein VSS agreed to
protect the properties and premises of Hyatt by
providing security guards. The security guards filled
up Hyatt employment application forms and
submitted the forms to the Security Department of
the hotel. Their wages were paid directly by Hyatt
and their assignments, promotions, supervisions and
dismissal were approved by the Chief Security
Officer of Hyatt. (Vallum Security vs. NLRC)
Section 6. Employment Policies, Recruitment and
Placement of Workers, and Agencies
6. 1 Employment Policies
1. Art. 12 : Statement of Objectives – It is the
policy of the State:
a. To promote and maintain a state of Full
employment through improved manpower training,
allocation and utilization;
b. To protect every citizen desiring to work locally
or overseas by securing for him the best possible
terms and conditions of employment;

c. To facilitate a free choice of Available
employment by persons seeking work in conformity
with national interest;
d. To facilitate and regulate the Movement of
workers in conformity with national interest;
e. To regulate the employment of Aliens, including
the establishment of a registration and/or work
permit system;
f. To strengthen the network of public employment
offices and rationalize the participation of the
private sector in the Recruitment and placement of
workers, locally and overseas, to serve national
development objectives;
g. To issue careful selection of Filipino workers for
overseas employment in order to protect the good
name of the Philippines abroad. (AFP MARC)
6.2 Employment Agencies
Private Sector-Agencies and Entities
A. PARTIES
A.1. Worker
* Art. 13 (a) “Worker” – any member of the labor
force, whether employed or unemployed
A.2 Agency
* Art. 13 (c) : “Private fee-charging employment
agency” – any person or entity engaged in the
recruitment or placement of workers for a fee which
is charged directly or indirectly, from the workers
or ER’s or both.
A.3 Entity
* Art. 13 (e) : “Private recruitment entity” – any
person or association engaged in the recruitment
and placement of workers, locally or overseas,
without charging, directly or indirectly, any fee
from the workers or the ER’s or both.
B. ALLOWED ENTITIES
B.1 Allowed Private Agencies and Entities
* Art. 16 : Except as provided in Chapter II of this
Title, no person or entity, other than the public
employment offices, shall engage in the recruitment
and placement of workers.
Sec. 1, Rule III, Book I, IRR’s – No person or
entity shall engage in the recruitment and placement
of workers either for local or overseas employment
except the following: [allowed agencies]
1. public employment agencies
2. POEA
15
3. private recruitment entities
4. private employment agencies
5. shipping or manning agents or
representatives; and
6. such other persons or entities as may be
authorized by the Secretary.
*Art. 25 : . . . the private employment sector shall
participate in the recruitment and placement of
workers, locally and overseas, under such
guidelines, rules and regulations as may be issued
by the Secretary of Labor.
B.2 Prohibited Business Agencies and Entities
1. Art. 18 : Ban on Direct Hiring – No ER may hire
a Filipino worker for overseas employment except
through the Boards and entities authorized by the
Secretary of Labor.
a. Direct hiring by members of the diplomatic
corps;
b. International organizations and such other ER’s
as may be;
c. allowed by the Secretary of Labor is exempted
from this provision.
2. Art. 26 : Travel agencies and sales agencies of
airline companies are prohibited from engaging in
the business of recruitment and placement of
workers for overseas employment, whether for
profit or not.
C. GOVERNMENT TECHNIQUES OF
REGULATION – PRIVATE RECRUITMENT
AND PLACEMENT BUSINESS
C.1 Licensing, Citizenship, Capitalization,
Duration, Transferability and Fees
1. Art. 27 : Citizenship Requirement:
a. Only Filipino citizens or
b. Only corporations, partnerships or
entities at least 75% of the
authorized and voting capital stock
of which is owned and controlled by
Filipino citizens shall be permitted to
participate in the recruitment and
placement of workers, locally or
overseas.
2. Art. 28 : Capitalization – Substantial
capitalization as determined by the Secretary
of Labor. (P1 M)
Sec. 1, Rule V, Book I, IRR’s : Qualification
of Applicants for Private employment agencies
– All applicants for licenses to operate private
employment agencies either for local or
overseas recruitment and placement shall
possess the following qualifications. . .

3. Art. 29 : Non-tranferability of License or
Authority
* No license or authority shall be used directly
or indirectly by any other person other than the
one in whose favor it was issued; or
* at any place other than that stated in the
license of authority
* nor such license or authority be transferred,
conveyed or assigned to any other person or
entity.
* Any transfer of business address, appointment
or designation of any agent or representative
including the establishment of additional offices
everywhere shall be subject to the prior
approval of the DOLE.
4. Art. 15 (a) 2 : (a) The Bureau of
Employment Services shall be primarily
responsible for developing and monitoring a
comprehensive employment program. It
shall have the power and duty:
2) To establish and maintain a registration
and/or licensing system to regulate private
sector participation in the recruitment and
placement of workers, locally or overseas, and
to secure the best possible terms and conditions
of employment for Filipino contract workers
and compliance therewith under such rules and
regulations as may be issued by the Minister of
Labor.
5. Distinguish authority from license?
“Authority” means a document issued by
the Secretary of Labor and Employment
authorizing a person or association to
engage in recruitment and placement
activities as a private recruitment entity;
while a “license” is the document issued to
a person or entity to operate a private
employment agency. (Art. 13)
6. What is the duration of a license recruit? A
license is valid for a period of 2 years from
the date of issuance unless sooner cancelled,
revoked or suspended for violation of the
Labor Code or its IRR’s.
* non-tranferrable
C.2 Bonds
1. Art. 31 : All applicants for license or
authority shall post such cash and surety
bonds as determined by the Secretary of
Labor to guarantee compliance with
prescribed recruitment procedures, rules and
regulations, and terms and conditions of
employment as appropriate.
2. The purpose of bonds is to insure that if the
rights of these overseas workers are violated
by their ER’s recourse would still be
available to them against the local
16
companies that recruited them for the
foreign principal. (Stronghold vs. CA)
C.3 Workers Fees
* Art. 32 : Any person applying with a private
fee-charging employment agency for
employment assistance shall not be charged any
fee until
1. he has obtained employment through its
efforts; or
2. he has actually commenced employment.
Such fee shall be always covered with the
appropriate receipt clearly showing the
amount paid. The Secretary of Labor shall
promulgate the schedule of allowable fees.
C.4 Reports Submission
* Art. 33 : Whenever the public interest requires,
the Secretary of Labor may direct all persons or
entities within the coverage of this Title to submit a
report on the status of employment, including job
vacancies, details of job requisitions, separation
from job, wages, other terms and conditions, and
other employment data.
Percentage of salary remittance
1. seaman – 80%
2. construction worker – 70%
3. professional workers with free board and
lodging – 70%
4. professional without board and lodging –
50%
5. domestic helpers – 50%
6. other workers – 50%
C.5 Prohibited Practices [IF FAITS CHOW]
1. Art. 34 : Prohibited Practices – It shall be
unlawful for any individual, entity license or holder
of authority:
1. To charge or accept; directly or indirectly,
any amount greater than that specified in the
schedule of allowable fees, or make a
worker pay any amount greater than that
actually received by him as a loan or
advance;
2. To furnish or publish any false notice or
information or document in relation to
recruitment or employment; [includes the
act of furnishing fake employment
documents to a worker. (Azucena)
3. To give any false notice, testimony,
information or document or commit any Act
of misrepresentation for the purpose of
securing a license of authority under this
Code;

4. To induce or attempt to induce a worker
already employed to quit his employment in
order to offer him to another unless the
transfer is so designed to liberate the worker
from oppressive terms and conditions of
employment;
5. To influence or attempt to influence any
person or entity not to employ any worker
who has not applied for employment
through his agency;
6. To engage in the recruitment or placement
of workers in jobs Harmful to public health
or morality or to the dignity of the Republic
of the Philippines;
7. To obstruct or attempt to obstruct inspection
by the secretary of Labor or by his duly
authorized representatives;
8. To Fail to file reports on the status of
employment, placement vacancies,
remittance of foreign exchange earnings,
separation from jobs, departures and such
other matters of information as may be
required by the Secretary of Labor;
9. To substitute or alter employment contracts
approved and verified by the DOLE from
the time of actual signing thereof by the
parties up to and including the period of
expiration of the same without the approval
of the Secretary of Labor Unless it is to
improve the terms and conditions of
employment. (Vir-Jen vs. NLRC);
10. To become an officer or member of any
corporation engaged in Travel agency or to
be engaged directly or indirectly in the
management of a travel agency;
11. To Withhold or deny travel documents from
applicant workers before departure for
monetary or financial consideration other
than those authorized under this Code and
its implementing rules and regulations.
2. A, Filipina, was recruited by a local private
employment agency for a tutoring job abroad.
Upon arrival in the place of employment, she
was made to work as a housemaid. What advice
will you give her? I will advice the Filipina to
commence a criminal action against the
employment agency for violation of Art. 34 of
the Labor Code. She was recruited under false
pretense. (Alcantara)
3. STC, a travel agency, advertised for young
women to work as domestic helpers in
Hongkong. Five women who left for Hongkong
were later brought to prostitution houses. Have
the officers of STC committed any unlawful
acts? Yes. Violation of Art. 26 and Art. 34 (d)
and (f) of the Labor Code. (Alcantara)
C.6 Illegal Recruitment
17
1. Art. 13 (b) : “Recruitment and Placement”
- Act of [CEC-TUHPI]
a. Canvassing
b. Enlisting
c. Contracting
d. Transporting
e. Utilizing
f. Hiring or
g. Procuring workers and
h. Includes referrals, contracts services,
promising or advertising for
employment, locally or abroad,
whether for profit or not.
Provided
That any person or entity which, in any manner,
offers or promises for a fee employment to 2 or
more persons shall be deemed engaged in
recruitment or placement. [The number of persons
dealt with is not, an essential ingredient of the act of
recruitment or placement. The provision merely
lays down a rule of evidence that where a fee is
collected in consideration of a promise or offer of
employment to 2 or more prospective workers, the
individual or entity dealing with them shall be
deemed to be engaged in the act of recruitment or
placement. (Pp vs. Panis)
** Illegal termination
- full reimbursement fees + 12%
- salaries for unexpired portion or 3
mos. For every year of unexpired
term – whichever is lower
** Liability of private employment agency –
employment contract
- joint and solidary with employer
- all claims and liabilities that may
arise in connection with the
implementation of the contracts
2. Any recruitment activities, including the
prohibited practices, enumerated under Art.
34 of this Code, to be undertaken by non-
licensees or non-holders of authority shall be
deemed illegal and punishable under Art. 39
of this Code.
* Illegal recruitment when committed by a:
 syndicate
 or in large scale
shall be considered an offense involving economic
sabotage and shall be penalized in accordance with
Art. 39 hereof.
- non-bailable
- life imprisonment
** Illegal recruitment by a syndicate – Carried
out by a group of 3 or more persons conspiring
and/or confederating with one another in carrying

out any unlawful or illegal transaction, enterprise or
scheme defined under the first paragraph hereof.
** Illegal recruitment in large scale – Committed
against 3 or more persons individually or as a
group.
[When the Labor Code speaks of illegal
recruitment, “committed against 3 or more
persons”, it must be understood as referring to the
number of complainants therein, otherwise,
prosecutions for single crimes of illegal recruitment
can be cumulated to make out a case of large scale
illegal recruitment. In other words, a conviction for
large-scale illegal recruitment must be based on a
finding in each case if illegal recruitment of 3 or
more persons whether individually or as a group.
(Pp vs. Reyes)
3. Sec. 8, Migrant Workers Act : A criminal
action arising from illegal recruitment as defined
herein shall be filed with the RTC of the province or
city where the offense was committed or where the
offended party actually resides at the time of the
commission of the offense: provided, That the court
where the criminal action is first filed shall acquire
jurisdiction to the exclusion of other courts.
4. The crime of illegal recruitment has 2
elements:
a. That the offender is a non-license or
non-holder of authority to lawfully
engage in the recruitment and
placement of workers; and
b. That the offender undertakes any of
the recruitment activities defined
under Art. 13 (b) of the Labor Code
or any of the prohibited practices
enumerated under Art. 34 of the
same Code.
5. G convinced F and S, that they could be
employed for France for a fee. G was also able to
persuade A that he could give A a working visa.
Nothing happened to F, S and A. G did not have
any license to recruit or authority to recruit? A may
be charged and convicted of a large-scale illegal
recruitment since he did not have the license or
authority to recruit, and yet recruit at least 3
persons. (Pp vs. Turda) Furthermore, he can also be
convicted and charged of estafa since the latter is a
malum in se while the former is a malum prohibium
(Id.)
6. NATO, a national union of teachers was able to
find jobs abroad for its member by directly
contacting other teachers organizations in foreign
countries, without charging additional fees. Is this
legal? No. Only persons or entities with appropriate
license or authority can engage in recruitment and
placement of workers. Contact services are
activities that fall within the scope of recruitment
and placement of workers. (Alcantara)
18
7. A paper manufacturing company in Cainta would
like to know if it needs to obtain a license authority
before it can recruit workers for its plant. No license
or authority is necessary. The company is not
engaged in the business of recruitment and
placement of workers, it is not recruiting workers to
be employed by others. It does not represent a
principal. It is recruiting its own workers.
(Alcantara)
C.7 Rule Making
* The Secretary of Labor and Employment has the
power and authority not only to restrict and regulate
the recruitment and placement activities of all
agencies but also promulgate rules and regulations
to carry out the objectives and implement the
provisions governing said activities. (Eastern
Assurance vs. Secretary of Labor)
C. 8 Enforcement
1. Art. 36 : The Secretary of Labor shall have
the power to restrict and regulate the
recruitment and placement activities of all
agencies within the coverage of this Title
and is hereby authorized to issue orders and
promulgate rules and regulations to carry out
the objectives and implement the provisions
of this Title.
Sec. 2, Rule VI, Book I, IRR’s : Pending
investigation of the complaint or report, the
Secretary may suspend the license of the private
employment agency concerned. . .
2. Art. 37 : The Secretary or his duly
authorized representatives may, at any time,
inspect the premises, books of account and
records of any person or entity covered by
this Title, require it to submit records
regularly on prescribed forms, and act on
violations of any provisions of any
provisions of this Title.
Public Sector Agencies
A. EMPLOYMENT OFFICES AND THE POEA
1. Art. 14 (a) : The Secretary of Labor shall
have the power and authority: (a) To
organize and establish new employment
agencies in addition to the existing
employment offices under the DOLE as the
need arises.
2. Sec. 3, EO 247 : POEA functions
a. Regulate private sector participation
in the recruitment and overseas
placement of workers by setting up
a licensing and registration system;

b. Formulate and implement in
coordination with appropriate
entities concerned, a system for
promoting and monitoring the
overseas employment of Filipino
workers taking into consideration
their welfare and the domestic
manpower requirements;
c. Protect the rights of Filipino
workers to fair and equitable
recruitment and employment
practices and ensure their welfare;
d. Exercise original and exclusive
jurisdiction to hear and decide all
pre-employment cases which are
administrative in character involving
or arising out of violation of
recruitment laws, rules and
regulations, or violation of the
conditions for issuance of license or
authority to recruit workers. The
POEA has no jurisdiction to hear
and decide a claim for enforcement
of a foreign judgment. Such a claim
must be brought before the regular
courts. (Pacific Asia vs. NLRC)
B. Definition of Terms
Sec. 1 (j), (w), (z), (ff), and (qq), Rule II, Book I,
Rules and regulations on Overseas Employment
– 4. If the offender is a corporation, partnership,
1. “Contract Worker” - Any person working
or who has worked overseas under a valid
employment contract.
2. “Manning agency” – Any person or entity
recruiting seamen for vessels plying
international waters and fore related
maritime activities.
3. “Name Hire” – Worker who is able to
secure employment overseas on his own
without the assistance or participation of an
agency.
4. “Overseas employment” – Employment of a
worker outside the Philippines, including
employment on hoard vessels plying
international waters covered by a valid
employment contract.
5. “Placement fee” – Amount charged by a
private employment agency from a worker
for its services in securing employment.
6. “Service fee” – Amount charged by a
license from its foreign ER as payment for
actual services rendered in relation to the
19
recruitment and employment of workers for
said principal.
6. 3 Sanctions
1. Art. 35 : Suspension and/or Cancellation of
License or Authority – The Secretary of
Labor shall have the power to suspend or
cancel any license or authority to recruit
EE’s for overseas employment for violations
of rules and regulations by the DOLE, the
POEA, or for violation of the provisions of
this, and other applicable laws . .
2. Art. 39 : Penalties – Violations of any
provisions of this Tile or IRR’s by license or
holder of authority :
a. imprisonment of not less than 2 years
nor more than 5 years
b. or a fine of not less than P10,000.00
nor more than P50,000.00
c. or both such imprisonment and fine,
at the discretion of the court.
3. Violation of any of the provisions thereof or
its implementing rules and regulations by a
non-license or non-holder of authority
a. imprisonment of not less than 4 years
nor more than 8 years
b. or a fine of not less than P20,000.00
nor more than P100,000.00
c. or both such imprisonment and fine,
at the discretion of the court.
association or entity, the penalty shall be
imposed upon the officer or officers of the
corporation, partnership, association or
entity responsible for violation; and if such
officer is an alien, he shall in addition to the
penalties herein prescribed, be deported
without further proceedings:
* Illegal recruitment:
a. imprisonment of not less than 6 years
and 1 day but not more than 12 years
and
b. a fine of not less than P200,000.00
nor more than P500,000.00.
* Illegal recruitment constituting Economic
Sabotage:
c. life imprisonment; and
d. a fine of not less than P500,000.00
nor more than P1,000,000.00.
* The maximum penalty shall be imposed if:
a . the person illegally recruited is less
than 18 years of age; or
b. committed by a non-license or non-
holder of authority.

* The Secretary of Labor or his duly authorized
representative may order the closure of illegal
recruitment establishments.
5. Art. 38 (c) of the Labor Code granting the
Secretary of Labor the power to issue search
or arrest warrants is declared
unconstitutional and null and void. (Salazar
vs. Achacoso)
- money claims arising from ER-EE
relationship prescribes in 3 years
- strict rules of evidence are not
applicable in claims for
compensation and disability benefits
5. In case of breach of the employment contract by
a foreign-based ER, may the private employment
agency or recruitment entity be held liable? What is
the nature of the liability of the recruitment and
placement agency and its principal? Yes. The
agency or entity undertakes under oath to assume
full and complete responsibility for all claims and
liabilities which may arise in connection with the
use of the license or authority. The agency is jointly
severally liable with the principal or foreign-based
ER for any of the violations of recruitment
agreement contract of employment. (Ambraque vs.
NLRC; Pp vs. Catan)
Section 7. Alien Employment
7. 1 Technique of Regulation-Employment
Permit
1. Art. 40 : Employment Permit of Non-
resident Aliens – Any alien seeking
admission to the Philippines for employment
purposes and any domestic or foreign ER
who desires to engage an alien for
employment in the Philippines shall obtain
an employment permit from the DOLE . . .
For an enterprise registered in preferred areas of
investments, said employment permit must be
issued upon recommendation of the government
agency charged with the supervision of the
registered enterprise.
Sec. 7, Rule XIV, Book I, IRR’s : The
employment permit shall be valid for a
minimum period of 1 year.
2. Art. 41 : Prohibition Against Transfer of
Employment – (a) After the issuance of an
employment permit, the alien shall not
transfer to another job or change his ER
without prior approval of the Secretary of
Labor.
20
Art. 288 : Any alien found guilty shall be
summarily deported upon completion of service
of sentence.
3. May an ER in the Philippines employ a
worker who is not a Filipino citizen? Yes,
except to nationalized activities such as:
a. public utility to develop, exploit and
utilize natural resources – 60%
Filipino;
b. Mass media – 100% owned by
Filipino citizens
c. Advertising – 70% Filipino owned
d. Retail Business – 100% Filipino
owned
e. Financing business – 60% Filipino
owned
4. Are there exceptions to the prohibition
against employment of aliens in entities
engaged in nationalized activities? Yes,
when (a) the Secretary of Justice specifically
authorizes the employment of technical
personnel; or (b) where aliens are elected
members of Board of Directors in proportion
to their allowable participation in the capital;
or (c) when allowed under certain special
laws. (Alcantara)
Coverage
* A resident alien need not obtain an employment
permit in order to be employed in the Philippines.
(Almodiel vs. NLRC)
Employment Permit – Conditions for Grant
1. Art. 40 : The employment permit may be
issued to a non-resident alien or to the
applicant ER after a determination of: [W A
C]
a. competent
b. able and
c. willing
at the time of the application to perform the services
for which the alien is desired. [The DOLE is the
agency vested with jurisdiction to determine the
question of availability of the local workers.
(General Milling vs. Torres)
2. Sec. 5, Rule XIV, Book I, IRR’s :
Requirements for Employment Permit
Applicants – The applicant for an
employment permit shall be accompanied by
the following:
a. Curriculum vitae signed by the
applicant indicating the educational
background, his work experience and
other data showing that he possesses
technical skills in his trade or
profession.

b. Contract of employment between the
ER and the principal, which shall
embody the following, among
others:
 That the non-resident alien shall
comply with all applicable laws and
rules and regulations;
 That the non-resident alien worker
and ER shall bind themselves to train
at least 2 Filipino understudies; and
 A designation by the ER of at least 2
understudies which must be the most
ranking regular EE’s in the section or
department for which the expatriates
are being hired to ensure actual
transfer of technology.
Section 8. Development of Human Resources
8.1 Objectives - Definitions
1. Art. 43 : It is the objectives of this [F E D]
a. Title to Develop human resources
b. Establish training institutions, and
c. Formulate such plans and programs
as will ensure efficient allocation,
development and utilization of the
nation’s manpower and thereby
promote employment and accelerate
economic and social growth.
2. What is human resources development?
Process by which the actual and potential
labor force is made systematically to acquire
greater knowledge, skills and capabilities for
the nation’s sustained economic and social
growth. (Sec. 1, Rule I, Book II, IRR’s)
3. Define manpower? Is the portion of the
population which has actual or potential
capability to contribute to the production of
goods and services. (Sec. 1 (c), Rule I, Book
II, IRR’s)
4. Is human resources development intended
solely to train workers? No. Manpower
development also means training for self-
employment. This is known as
“entrepreneurship” (Art. 44 (b).
5. What is dual system/training? It refers to a
delivery system of quality technical and
vocational education which requires training
to be carried out alternatively in 2 venues:
a. in school and
b. in the production plant.
In school, training provides the trainee the
theoretical foundation, basic training, develops his
skill and proficiency in actual working conditions as
it continues personal discipline and work value.
(Sec. 4 (p), RA 7796)
21
8.2 Program Incentive
* Art. 52 : Deduction from taxable income of ½ of
the value of labor training but not to exceed 10%
direct labor wage: Provided, That in the case of
apprenticeship programs, the program is recognized
by DOLE.
8.3 Training and Employment of Special
Workers – Apprentices, Learners and
Handicapped Workers
Policy Objectives
* What is the policy of the State on apprenticeship?
1. To help meet the demand of the economy
for trained manpower;
2. To establish a national apprenticeship
program through participation of ER’s
workers, and government and non-
government agencies; and
3. To establish apprenticeship standards for the
protection of apprentices. (Art. 57)
Definition
1. Art. 58 : “Apprenticeship” – Practical
training on the job supplemented by related
theoretical instruction.
2. Art. 73 : “Learners” – Persons hired as
trainees in semi-skilled and other industrial
occupations which are non-apprenticeable
and which may be learned through practical
training on the job in a relatively short
period of time which shall not exceed 3
months.
3. Art. 78 : “Handicapped workers” – Those
whose earning capacity is impaired by age
or physical or mental deficiency or injury
Who Can Employ and When
A. APPRENTICES –must be approved by TESDA
1. Art. 60 : Only ER’s in highly technical
industries and only in apprenticeable
occupations may employ apprentices.
Sec. 1, Rule IV, Book II, IRR’s : “Highly
Technical Industries” – Trade, business,
enterprise, industry or other activity which is
engaged in the application of advanced
technology.
Art. 58 : “Apprenticeship Occupation” –
Requires more than 3 months of practical
training supplemented by related theoretical
instruction.

- 1 month probation
- prior approval by TESDA of the
proposed apprenticeship program is a
condition sine qua non before an
apprenticeship can be validly entered
into
- employer is not obliged to employ
the apprentice after the completion
of his training
2. Art. 70 : Apprenticeship programs shall be
primarily voluntary except:
a. When national security or particular
requirements of economic
development so demand, the
President may require compulsory
training where the shortage of
trained manpower is deemed critical
by the Secretary of Labor.
b. Where services of foreign
technicians are utilized by private
companies in apprenticeable trades.
B. LEARNERS
- Learnership programs must be approved by
TESDA
* Art. 74 : Learners may be employed when:
1. no experienced worker is available
2. the employment of learners is necessary to
prevent curtailment of employment
opportunities
3. and the employment does not create unfair
competition in terms of labor costs or impair
or lower working standards.
C. HANDICAPPED WORKERS
* Art. 79 : Handicapped workers may be employed
when their employment
1. is necessary to prevent curtailment of
employment opportunities; and
2. when it not create unfair competition in
labor costs or lower working standards.
Conditions of Employment
- not exceed 8 hours
- allowed overtime
* Art. 61 :
1. Period of apprenticeship shall not exceed 6
months.
2. Wages shall not start below 75% of the
minimum wage.
3. Apprenticeship program must be duly
approved by TESDA or apprentices
becomes regular EE. This must be
evidenced by an apprenticeship agreement.
(Nitto Enterprises vs. NLRC)
22
Ratio of theoretical vs. on the job training > 100:
2000
- may work overtime – duly credited as his training
time
* Art. 72 : The Secretary of Labor may authorize
the:
1. hiring of apprentices without compensation
whose training on the job is required by the
school or training program curriculum as a
requisite for graduation or board
examination. There is no ER-EE relationship
between students on one hand, and schools,
where there is written agreement between
them under which the former agree to work
for the latter in exchange for the privilege to
study free of charge. (Sec. 14, Rule X, Book
III, IRR’s)
2. A clerk in the College of Law of a
University worked without pay but was
allowed to take up no more than 3 units per
semester free of charge. The clerk resigned
and demanded payment of unpaid wages. Is
the clerk entitled to unpaid wages? Yes. Sec.
14, Rule X, Book III, IRR’s : only applies in
instances where the students are given real
opportunity, including such facilities as may
be reasonably necessary to finish their
chosen courses under such arrangement. In
this problem, the clerk was not given any
real opportunity to finish law as he was
allowed to take up no more than 3 units per
semester. There is therefore an ER-EE
relationship between the clerk and the
university. (Alcantara)
3. Qualifications of an Apprentice:
a. At least 15 years of age: provided,
those below 18 years of age shall
not work in hazardous occupations;
b. Be physically fit for the occupation.
c. Possess vocational aptitude and
capacity.
d. Possess the ability to comprehend,
and follow oral and written
instructions. (Sec. 11, Rule VI,
Book III, IRR’s)
4. A 5-star hotel would like to have an
apprentice program dishwashers? No. This
is not an apprenticeable program occupation
because proficiency can be attained within a
very short period. Besides, the hotel industry
is not highly technical. (Alcantara)
5. After working for 1 month may an
apprentice be dismissed without cause? No.
After the probationary period of 1 month,
the apprenticeship agreement may be
terminated only for cause.

6. Causes for termination of apprenticeship
agreement by apprentice:
a. Repeated violation by ER of
agreement
b. Cruel or inhuman treatment
c. Personal problems which prevents a
satisfactory performance (bad health)
d. Substandard working conditions
EMPLOYER
a. habitual absentism
b. willful disobedience e.g. rules
c. insubordination – lawful order
d. poor physical conditions – apprentice
e. theft or malicious destruction
f. poor efficiency of performance
g. engaging in violence
h. gross misconduct
i. bad health or continuing illness.
(Sec. 25, Rule VI, Book II, IRR’s)
* employer must make a commitment to employ the
business
B. LEARNERS
- learnership must be approved by TESDA
1. Art. 75 :
1. Duration of the learnership period shall be 3
months;
2. Wages and salary rates begin at not less than
75% minimum wage; and
3. A commitment to employ learners if they so
desire, as regular EE’s upon completion of
the learnership.
 All learners who have been allowed
or suffered work during the first 2nd
months to be deemed EE’s training is
terminated by the ER before the end
of the stipulated period though no
fault of the learner.
2. Art. 76 : Learners employed in piece or
incentive-rate jobs during training shall be paid in
full for the work done.
3. J entered into a learnership agreement with
employer A. Before the end of 2 months, A
terminated the agreement. When J requested for a
chance to let him finish the 3 months period. At the
end of 3 months, A refused to hire J. Is the stand of
A sustainable? No. A has a commitment under the
learnership agreement to employ J as a regular
worker upon the completion of the learnership.
C. HANDICAPPED WORKERS [A P M I]
1. Art. 80 :
 Rates to be paid to handicapped
workers shall not be less than 75%
of the applicable minimum wage.
23
 Employment agreement must state
the duration of the employment
period and the work to be performed.
2. Art. 81 : Handicapped workers may be hired
as apprentices or learners if their handicap is
not such as to effectively impede the
performance of job operations in the
particular occupations for which they are
hired.
Enforcement
1. Art. 66 : Appeal to the Secretary of Labor -
The decision of the authorized agency of the
DOLE may be appealed to the Secretary of
Labor within 5 days from receipt of the
decision. The decision of the Secretary of
Labor shall be final and executory.
2. Art. 67 : Exhaustion of Administative
Remedies – No person shall institute any
action for the enforcement of any
apprenticeship agreement or damages for
breach of any such agreement, unless he has
exhausted all available administrative
remedies.
Section 9. Conditions of Employment – Hours of
Work
9. 1 Hours Regulation
Rationale and Enforcement
* The 8-hour labor law was designed not only to
safeguard the health and welfare of the laborer but
in a way to minimize unemployment by forcing
ER’s, in cases, where more than an 8-hour
operations is necessary, to utilize different shifts of
laborers working only for 8 hours each. (Manila
Terminal vs. CIR)
9.2 Coverage
I. Art. 82 : The provisions of this Title shall apply
to EE’s in all establishments and undertakings
whether for profit or not but to [GMS- FMDP]
1. Government EE’s [whether employed by the
National Government or any of its political
subdivisions, including those employed in
GOCC’s with original charters. (Sec. 2, Rule
I, Book III, IRR’s]
2. Managerial EE’s [refer to those who meet
all of the following conditions, namely:
a. Their primary duty consists of the
management of the establishment in
which they are employed or of a
department or sub-division thereof;
b. Customarily or regularly direct the
work of 2 or more EE’s
c. Has the authority to hire or fire other
EE’s of lower rank; or their
suggestions and recommendations as
to the hiring and firing and as to the

promotion or any change of status of
other EE’s are given, particular
weight. (d.)]
 Mere designation to a position with a
high-sounding title, does not make
an EE a managerial EE where the
exercise of the independent judgment
is not present. (Sierra vs. NLRC)
3. Other officers or members of the managerial
staff if they perform the following duties
and responsibilities:
a. Primary duty consists of the
performance of work directly related
to management policies of the ER;
b. Customarily and regularly, exercise
discretion and independent
judgment;
c. Regularly directly assist a proprietor
or managerial EE or execute under
general supervision work along
specialized or technical lines
requiring special training, experience
or knowledge; or execute under
general supervision special
assignment and tasks; and
d. Do not devote more than 20% of
their hours worked to activities
which are not directly and closely
related to the performance of the
work described in the preceding
paragraphs. (Id.)
4. Field personnel [Non-agricultural EE’s who
regularly perform their duties away from the
principal place of business or branch office
of the ER and whose actual hours of work in
the field cannot be determined with
reasonable certainty. (Art. 82)
5. Members of the family of the ER who are
dependent on him for support domestic
helpers and persons in the personal service
of another. Perform such service:
a. In the ER’s home which are usually
necessary or desirable for the
maintenance or enjoyment thereof;
b. Or minister to the personal comfort,
convenience or safety of the ER as
well as the members of his ER’s
household. (sec. 2, Rule I, Book III,
IRR’s)
 However, house personnel hired by a
ranking company official, but paid
for the company itself, to maintain a
staff house provided for the official,
are not the latter’s domestic helpers
but regular EE’s of the company.
(Cadiz vs. Philippine Sinter)
24
 The function of a managerial
employee requires the use of
discretion and independent judgment
– (nature of his functions)
6. And workers who are paid by results.
[Including those who are paid on piece-
work, “takay”, “pakiao”, or task basis if
their output rates are in accordance with the
standards prescribed.]
II. Give the reason for the exceptions?
1. Government EE’s – Terms and conditions of
employment are governed by the Civil
Service Law
2. Managerial EE’s – Employed by reason of
their special training, expertise or
knowledge and for positions requiring the
exercise of discretion and independent
judgment. Value of work cannot be
measured in terms of hours.
3. Non-agricultural field personnel – These
regularly perform their duties away from the
principal or branch office or place of
business of the ER; they are on their own in
the field and the number of hours of actual
work they render cannot be reasonably
ascertained.
4. Members of the family dependent upon him
for support – Amounts given by way of
support may far exceed the benefits to which
the EE’s are entitled under the laws on
overtime.
5. Domestic helpers and persons in the
personal service of another – They minister
to the personal needs and comfort their ER
and his family and terms and conditions of
employment are governed in other parts of
the Labor Code.
6. Workers paid by results – Compensation
computed on the basis of work
accomplished and not on time spent in
accomplishing the work. (Alcantara)
III. Determine whether exempted EE or not?
1. Foremen, inspectors and supervisors given
the power to recommend hiring and firing of
EE’s but where ultimate power to hire or fire
rested with personnel manager? No. Where
such recommendatory powers are subject to
evaluation and review, the same are not
effective and not an exercise of independent
judgment as required by law. ( Franklin
Baker Company vs. Trajano)

2. Supervisory EE’s are given the following
duties and functions assist the department
superintendent in various aspects of
management such as in the planning of
systems and procedures, recommends
disciplinary action against erring
subordinates or promotion of deserving
personnel, train and guide subordinates;
communicate and coordinate with other
supervisors; recommend measures to
improve work method; and other related
tasks as may be assigned by his immediate
superior. Yes. They discharge duties and
responsibilities which qualify them as
members of the managerial staff.
(Alcantara)
3. Cutter in tailoring shop was assigned chore
of distributing work to shop’s tailors when
the shop’s manager were absent. He saw to
it that work conformed with pattern he had
prepared and if not, had them redone,
repaired or sewn. No. He did not participate
in policy-making. It is true that in the
absence of the manager and assistant
manager, he distributes and assigns work to
EE’s but such duty though involving
discretion is occasional and not regular and
customary. (Villuga vs. NLRC)
9.3 Normal Hours
* Art. 83 : The normal of hours of work of any EE
shall not exceed 8 hours a day.
** Health personnel in cities and municipalities
with a population of at least 1,000,000 or in
hospitals and clinics with a bed capacity of at least
100 shall hold regular office hours for 8 hours a
day, for 5 days a week, exclusive of time of meals,
except where the exigencies of the service require
that such personnel work for 6 days or 48 hours in
which case they shall be entitled to an additional
compensation at least 30% of their regular wage for
work on the 6th day. [“Health personnel” – Includes
resident physicians, nurses, nutritionists, dieticians,
pharmacists, social workers, laboratory technicians,
paramedical technicians, psychologists, midwives,
attendants and all other hospital or clinic
personnel…]
* The 40-hour work week would not be applicable
if there is a training agreement between the resident
physician and the hospital and the training program
is duly accredited or approved by appropriate
government agency. (Azucena)
9.4 Hours Worked
1. Art. 84 : Hours worked shall include:
A. all time during which an EE is
required
 to be on duty
 to be at a prescribed workplace and
25
B. all time during which an EE is
suffered or permitted to work.
Rest periods of short duration during working hours
shall be counted as hours worked.
2. Sec. 4, Rule III, Book III, IRR’s :
Principles in Determining Hours Worked
1. All hours are hours worked which the EE is
required to give to his ER regardless of
whether or not such hours are spent in
productive labor or involve physical or
mental exertion;
2. An EE need not leave the premises of the
workplace in order that his rest period shall
not be counted, it being enough that
a. he stops working,
b. may rest completely and
c. may leave his workplace, to go
elsewhere, whether within or outside
the premises of the workplace;
3. If the work performed was necessary or it
benefited the ER or the EE could not
abandon his work at the end of the normal
working hours because he had no
replacement, all the time spent for such
work shall be considered as hours worked, if
the work was with the knowledge of his ER
or immediate supervisor;
4. The time during which an EE is inactive by
reasons of interruptions in his work beyond
his control shall be considered working time
either if the imminence of the resumption of
the work requires the EE’s presence at the
place of work or if the interval is too brief to
be utilized effectively and gainfully in the
EE’s own interest.
3. Jose works as a janitor. He continues sweeping
the floors after 5:00 p.m… The manager is aware of
this, but he does not stop Jose from doing work
after 5:00 p.m. Is this hours of work? Yes. Although
Jose was not instructed expressly to render work, he
was impliedly allowed to do so by failure of the ER
to warn him against rendering such work. Besides
the work rendered by Jose benefited the ER.
Waiting Time
1. Sec. 5, Rule I, Book III, IRR’s : Waiting
time spent by an EE shall be considered as
working time if waiting is an
a. integral part of his work, or
b. the EE is required to engage by an
ER to wait
The controlling factor is whether waiting
time spent in idleness is so spent

predominantly for the ER’s benefit or for
the EE’s. (Azucena)
2. S, a company driver has the following work
schedule: 8:30 a.m. - fetches G.M.; 9:00
a.m. – 12:00 noon – does nothing on call for
G.M. at the company premises ; 12 noon –
1:00 p.m. – lunch; 1:00 p.m. – 5:00 p.m.
drives the G.M. to conferences; 5:00 p.m.
goes home. The company refuses to pay him
for the 9:00 a.m. to 12:00 noon period. Is
this valid? No. S is not free to make use of
the period effectively and gainfully for his
own purposes. He must remain in the
premises as at any time he may be called to
drive for the G.M. (Alcantara)
3. 30 minutes prior to the start of the scheduled
working hours, the workers of an enterprise
assembled at a designated area to answer
roll call. As their houses are situated right
where the farms are located, the workers can
go back in their houses after roll call to do
some chores. Is the assembly time working
time? No. The works are not subject to the
absolute control of the company during the
period. The workers were not deprived of
the time to attend to other personal pursuits.
(Aria vs. NLRC)
Idle Time
1. A laborer need not leave the premises of the
factory, shop or boat in order that his period
of rest shall not be counted, it being enough
that he “cease to work”, may rest completely
and leave or may leave at his will the spot
where he actually stays while working, or go
somewhere else, whether within or without
the factory, shop or boat. (Luzon
Stevedoring vs. Luzon Marine Dept.
Union)
2. A, an accountant in the manufacturing firm,
has idle time in her work schedule, “waiting
for company papers to work on. She dovotes
this time working on papers of other firms
for which she receives remuneration. Is the
firm obligated to pay her for this time? Yes.
Although she is working on the papers of
other companies, she has no absolute control
over her time. Her ER may at any time
require her to do some work. She cannot
furthermore leave the place of work during
her work schedule. (Alcantara)
3. T, a machine operator was forced to stop
operating his machine for 1 hour during a
brownout. Is this working time? Yes. The
interruption was not due to the fault of T.
Besides 1 hour is too brief to be utilized
26
effectively and gainfully for his own
interest.
Meal Time
1. Sec. 7, Rule I, Book III, IRR’s : Every ER
shall give his EE’s not less than 1 hour time-
off for regular meals, except in the following
cases where a meal period of not less than
20 minutes may be given by the ER
provided
*(That such shorter meal period is credited as
compensable hours worked hours worked of the EE
But if it is the EE who requested for the shorter
meal time, then such shortened meal period is not
compensable. (Azucena):
[N O P E]
 Where work is Non-manual in nature
or does not involve strenuous
physical exertion;
 Where the establishment regularly
Operates less than 16 hours a day;
 In cases of actual or impending
Emergency or there is urgent work to
be performed on machineries and
equipment to avoid serious loss
which the ER would otherwise
suffer; and
 Where the work is necessary to
Prevent serious loss of perishable
goods.
* Rest periods or coffee breaks running from 5 to 20
minutes shall be considered as compensable
working time.
2. Where during the so-called meal period, the
laborers are required to stand by for
emergency work, or where said meal hour is
not one of complete rest, such period is
considered overtime. (Pan Am vs. Pan Am
EE’s Association)
Working While Sleeping
* Sleeping time may be considered working time if
it is subject to serious interruption or takes place
under conditions substantially less desirable than
would be likely to exist at the EE home i.e. firemen
permitted to sleep a portion of the time they are so
on duty at the fire station. (Azucena)
On Call
1. Sec. 5, Rule I, Book III, IRR’s : An EE
while he is required to remain on call in the
ER’s premises or so close thereto that he

cannot use the time effectively and gainfully
for his own purpose shall be considered as
working hours while on call. An EE who is
not required to leave word at his own or
with company officials where he may be
reached is not working while on call.
2. If an EE is kept within reach through a
cellular phone. Is it on call? No. (Azucena)
Travel Time
***Principles which determine whether or not time
spent in travel is working time:
 Travel from Home to Work –
Normal travel from home to work is
no work time but an emergency call
outside of regular working hours
requiring him to go to his regular
place of business is working time.
 Travel that is all in the day’s work –
Time spent by an EE in traveling
from one job site to another, during
the workday, must be counted as
hours worked.
 Travel away from home – Travel
away from home is clearly worktime
when it cuts across the EE’s
workday, except during meal period
or when EE is permitted to sleep in
adequate facilities furnished by the
ER. The time is not only hours
worked on regular workdays but also
during corresponding working hours
on non-working days. Outside of
these regular working hours, travel
away from home is not considered
working time. (Azucena)
Lectures, Meetings, Training Programs
* Sec. 6, Rule I, Book III, IRR’s : Attendance at
lectures, meetings, training programs and other
similar activities shall not be counted as working
time if all of the following conditions are met:
1. Attendance is outside of the ER’s regular
working hours;
2. Attendance is in fact voluntary; and
3. The EE does not perform any productive
work during such attendance.
Semestral Break
* Regular full-time teachers are entitled to salary
and COLA during semestral break. (U.Pang.
Faculty Union vs. U. Pang.)
9.5 Overtime Work and Offsetting Prohibition
27
1. Art. 87 : Overtime Work –
 regular work day – plus 25% basic
hourly rate
 Special days, holiday or rest day –
plus 30% of the regular hourly rate
on said days.
2. Art. 89 : Emergency Overtime Work - Any
EE may be required by the ER to perform
overtime work in any of the following cases:
[WED-UPS]
a. When the country is at war
b. When any other national or local
emergency has been declared
c. When it is necessary to prevent loss
of life or property or in case of
imminent danger to the public safety
due to an actual or impending
emergency in the locality caused by
serious accidents, fire, flood,
typhoon, earthquake, epidemic or
other Disaster or calamity.
d. When there is Urgent work to be
performed on machines and
installations in order to avoid serious
loss or damage to the ER or some
other cause of similar nature.
e. When the work is necessary to
prevent loss or damage to Perishable
goods.
f. Where the completion or
continuation of the work started
before the 8th hour is necessary to
prevent Serious obstruction or
prejudice to the business operations
of the ER.
The EE’s refusal to obey the order of the
EE constitutes insubordination for which
he may be subjected to disciplinary
action. (Alcantara)
3. Art. 88 : Undertime work in any particular
day shall not be offset by overtime work on
another day BUT not on someday.
 Permission given to the EE to go on
leave on some other day of the week
shall not exempt the ER from paying
the additional compensation
required.
4. Art. 90 : For purposes of computing
overtime and other additional remuneration
as required by this Chapter the “regular
wage” of an EE shall include the cash wage
only, without deduction on account of
facilities provided by the ER.
5. Y, corporation, as a company policy,
required its EE’s to render only 6 hours of

work daily but pays them the minimum
wage corresponding to 8 hours work. Later,
the full 8-hours was required without any
increase in wages. Are the EE’s entitled to
overtime pay? Yes. Though voluntary
practice or policy, the company has fixed the
normal workday at 6 hours. It now constitute
part of the terms and conditions of
employment and cannot be unilaterally
withdrawn by the ER. (Alcantara)
6. Distinguish overtime pay from premium pay
: Overtime pay is additional compensation
for work done beyond the normal work
hours on ordinary working days. Premium
pay is additional compensation for work
rendered by the EE on days normally he
should not be working. But additional
compensation for work rendered in excess of
8 hours during these days is also considered
overtime pay.
7. A was late for work on a particular day. To
offset for the time he was late, A worked on
additional period equivalent to the period he
was late for work. The period was offset
against A’ undertime. Is this valid? Yes. The
prohibition to offset overtime against
undertime applies to undertime incurred and
overtime rendered on different days.
 Provisions for overtime covers both
profit and non-profit establishment
or undertaking
 For purposes of computing overtime
 REGULAR WAGE – includes the
cash wage only; without deduction
of facilities provided.
8. May the right to overtime pay be waived?
As a general rule, the right cannot be
waived. (Cruz vs. Yes Sing) However, when
the waiver is exchange for certain benefits
and privileges, which may be more than
what will accrue to them in overtime pay,
the waiver may be permitted. (MERALCO
Workers Union vs. MERALCO)
Rationale – Overtime Pay
* The reasons for overtime pay is that the worker is
made to work longer than what is commensurate
with the agreed compensation for the statutorily
fixed or voluntary agreed hours of labor he is
supposed to do. When he thus spends additional
time to his work, the effect upon him is multi-
faceted; he puts in more effort, physical or mental;
he is delayed in going home to his family to enjoy
the comforts thereof; he might have no time for
relaxation, amusement or sports; he might miss
28
important pre-arranged arrangements. (PNB vs.
PEMA)
Compressed Week – voluntary basis
* While as a general rule, the right to overtime pay
cannot be waived under existing laws, the EE’s and
ER can agree to a compressed workweek of 5 days
of 9 hours each with no payment of overtime if this
will redound to the benefit of the workers i.e. if the
original workweek is reduced from Monday –
Saturday to Monday – Friday. (Azuzena) However,
Alcantara answered in a 1984 problem differently
when he answered that overtime pay should be paid.
In that problem, the workers were required to render
9.5 hours of work for 5 days. (What is the answer, I
really do not know, ask the reviewer)
Conditions for “Compressed Work Week”
1. voluntary – agreed upon
2. not to exceed 48 hours/ week
3. no diminution on take home pay or fringe
benefits
4. waivers must be made
5. all hours exceeding 48 hours/week –
considered overtime
6. must submit report to DOLE
Retail Establishment
- sale of goods for personal or
household use
ex. grocery
Service Establishment
- sale of services to individuals for
their own or household use
ex. T.V. repair shop
No Formula Basic Contract
* When the contract of employment requires work
for more than 8 hours at specific wages per day,
without providing for a fixed hourly rate or that the
daily wages include overtime pay, said wages
cannot be considered as including overtime
compensation. (Manila Terminal vs. CIR)
Built-In Compensation
* The employment contract may provide for a
“built-in” overtime pay. Because of this, non-
payment of overtime pay by the ER is valid.
(Engineering equipment vs. Minister of Labor)
9.6 Night Work
1. Art. 86 : Every EE shall be paid night shift
differential of not less than 10% of his
regular wage for each hour of work
performed between 10:00 p.m. and 6:00 a.m.

2. Sec. 1, Rule II, Book III, IRR’s : This rule
shall apply to all EE’s except:
[G R S D M F]
a. Those of the government and any of
its political subdivisions, including
GOCC’s.
b. Retail and service establishments
regularly employing not more than 5
workers.
c. Domestic helpers and persons in the
personal service of another.
d. Managerial EE’s.
e. Field personnel and other EE’s
whose time and performance is
unsupervised by the ER.
f. Includes task and contract basis
3. X works at a gasoline station which has only
5 EE’s. Is he entitled to night shift
differential? No. He works in a retail
establishment employing not more than 5
workers. (Alcantara)
4. What if X works at King’s Minimarts, a
retail store chain with 10 outlets of 2 EE’s
each outlet. Is he entitled to night shift
differential? Yes. The total number of EE’s
of the ER exceeds 5. It is at least 20. (Id)
Rationale – Prohibition
* First, there are remotely injurious effects of
permanent nightwork manifested in the later years
of worker’s life. Of the more immediate importance
is the disarrangement of his social life, including the
recreational activities of his leisure hours and the
ordinary associations of normal family relations.
From an economic point of view, it is to be
discouraged because of its adverse effect upon
efficiency and output. A moral argument in the case
of workers is that they go to and from the factory in
the darkness. (Shell vs. NLU)
 Exercise of a profession is neither a
retail nor service
Section 10 : Weekly Rest Periods
* Art. 82 : The provisions of this Title shall apply
to EE’s in all establishments and undertakings
whether for profit or not, but not to [G M S F I – F
D R]
1. Government EE’s [whether employed by
the National Government or any of its
political subdivisions, including those
employed in GOCC’s with original charters.
(Sec. 2, Rule I, Book III, IRR’s]
2. Managerial EE’s [refer to those who meet
all of the following conditions, namely:
29
a. Their primary duty consists of the
management of the establishment in
which they are employed or of a
department or subdivision thereof;
b. Customarily and regularly direct the
work of 2 or more EE’s;
c. Has the authority to hire or fire other
EE’s of lower rank; or their
suggestions and recommendations as
to the promotion or any other change
of status of other EE’s are given
particular weight. (Id)
> Mere designation to a position with a high-
sounding title, does not make an EE where the
exercise of independent judgment is not present.
(Sierra vs. NLRC)
3. Other officers or members of the
managerial staff [if they perform the
following duties and responsibilities:
a. Primary duty consists of the
performance of work directly related
to management policies of the ER;
b. Customarily and regularly exercise
discretion and independent
judgment;
c. Regularly directly assist a proprietor
or managerial EE or execute under
general supervision work along
specialized or technical lines
requiring special training, experience
or knowledge, or execute under
general supervision special
assignment and tasks; and
d. Do not devote more than 20% of
their hours worked to activities
which are not directly and closely
related to the performance of the
work described in the preceding
paragraphs. (Id)
4. Field personnel [Non-agricultural EE’s who
regularly perform their duties away from the
principal place of business or branch office
of the ER whose actual hours of work in the
field cannot be determined with reasonable
certainty (Art. 82)]
5. Members of the family of the ER who are
dependent on him for support
6. Domestic helpers and persons in the
personal service of another. [Perform such
services:
a. In the ER’s home which are usually
necessary or desirable for the
maintenance or enjoyment thereof;
b. Or minister to the personal comfort,
convenience, or safety of the ER as
well as the members of his ER’s

household (Sec. 2, Rule I, Book III,
IRR’s)
 However, house personnel hired by a
ranking company official, but paid
for by the company itself, to
maintain a staff house provided for
the official, are not the latter’s
domestic helpers but regular EE’s of
the company. (Cadiz vs. Philippine
Sinter)
7. And workers who are paid by results.
[Including those who are paid on piece-
work, “takay”, “pakiao”, or task basis if
their output rates are in accordance with the
standards prescribed.]
Sec. 1, Rule III, Book III, IRR’s : This rule
shall apply to all ER’s whether operating for
profit pr not, including public utilities operated
by private persons.
10.2 Scheduling of Rest Day; When Compulsory
Work Allowed; and Compensation
1. Art. 91 : It shall be for the duty of every ER,
whether operating for profit or not, to
provide EE a rest period of not less than 24
consecutive hours after every 6 consecutive
normal working days.
* The ER shall determine and schedule the
weekly rest day of his EE’s
 However, the ER shall respect the
preference of EE’s as to their weekly
rest day when such preference is
based on religion grounds.
Sec. 4, Rule III, Book III, IRR’s : Where however
the choice of the EE’s as to their rest day based on
religious grounds will inevitably result in serious
prejudice or obstruction to the operation of the
undertaking, the ER may so schedule the weekday
rest day of their choice at least 2 days in a month.
2. Art. 92 : “When ER may require Work on
rest day” – [D U A - P N A]
a. In case of actual or impending
emergency caused by serious
accident, fire, flood, typhoon,
earthquake, epidemic, or other
Disaster or calamity to prevent loss
of life, or imminent danger to public
safety.
b. In case of Urgent work, to avoid
serious loss which the ER would
otherwise suffer;
c. In the event of Abnormal pressure of
work due to special circumstances,
where the ER cannot ordinarily be
expected to resort to other measures;
d. To prevent or damage to Perishable
goods;
30
e. Where the Nature of work requires
continuous operations and stoppage
of the work may result in irreparable
injury or loss to the ER; and
f. Analogous (avail of favorable
weather) or similar circumstances
[PANADU]
3. How much is a worker entitled if he
works on a rest day?
 Scheduled rest day – additional
compensation of at least 30% of his
regular wage.
 Scheduled rest day which is a non-
working holiday – entitled to
additional compensation of at least
50% of his regular wage.
 Scheduled rest day which is a
regular holiday – entitled to
additional compensation of at least
30% of his regular holiday rate of
200% based on his regular wage rate.
(Sec. 4, Rule III, Book I, IRR’s)
4. V works on board the M/V Starfish.
Sometimes, the boat remains at sea for 2
weeks, while at other times, especially
during bad weather, the vessel returns to
port only after a few days. While the vessel
is in port, V stays home with his family. Can
V claim the additional compensation for
work on rest day? V’s work is such that no
regular workdays and no rest days can be
scheduled. In such cases, the law provides
that if he performs work on Sundays and
holidays, he shall be paid an additional
compensation of at least 30 % of his regular
wage. [Art. 39 (b)]
Rationale – Rest day
* Ordinarily, Sundays and legal holidays are
dedicated to reading and instruction so as to fill the
mind with culture or some sort of advancement. On
these days, the laborer spends longer hours in the
company of his family. The deprivation of that
opportunity to satisfy mental, moral and spiritual
needs should not be ignored, and should be properly
compensated. (MERALCO vs. Public Utilities
EE’s Association)
Section 11 : Conditions of Employment Holidays
11.1 Coverage
1. * Art. 94 : Every worker shall be paid his regular
daily wage during holidays, except: [RSIO, G, DH,
M, FP]

a. in retail and service establishments regularly
employing less than 10 workers;
Sec. 1, Rule IV, Book III, IRR’s :
b. Those of the government and any of its political
subdivisions, including GOCC’s.
c. Domestic helpers and persons in the personal
service of another.
d. Managerial EE’s.
e. Field personnel and other EE’s whose time and
performance is supervised by the ER.
* If required to work on regular holidays,
 regular rate x 2
Regular Holidays
1. New Years day
2. Maundy Thursday
3. Good Friday
4. Bataan Day
5. Labor day
6. Independence day
7. National heroes day
8. Bonifacio day
9. X-mas day
10. Rizal day
Nationwide Special Holidays
1. Nov. 1
2. Dec. 31
2. Monthly paid EE’s are not excluded from the
benefits of holiday pay. (Mantrade vs. Bacungan)
3. X is a manicurist in the D’Style Barbershop
which has 20 barbers and manicurists. Is she
entitled to holiday pay? Yes. X is an EE who is paid
by results ad she works in a service establishment
employing more than 10 persons. (Sec. 8, Rule IV,
Book III, IRR’s)
12.2 Holiday Pay
1. Art. 94 : The ER may require an EE to work
on a holiday but such EE shall be paid a
compensation equivalent to twice his regular
rate.
2. To receive holiday pay, the EE should not
have been absent without pay on the
working day preceding the regular holiday.
(Azucena)
3. A legal holiday falling on a Sunday creates
no legal obligation for the ER to pay extra to
the EE who does not work on that day, aside
from the usual holiday pay, to its monthly-
paid EE’s. (Wellington vs. Trajano)
4. X was told by ER to work during a legal
holiday which fell on a Sunday. How much
31
is he entitled to? X will get 200% of his
daily rate plus premium pay pf 30% of the
holiday pay = regular daily rate * 230%.
5. If X works overtime during that day, how
much will he earn? Holiday pay rate/8 plus
overtime pay of 30% of the holiday hourly
rate = holiday pay rate/8 * 130%.
6. R was absent without pay on December 24.
Is he entitled to holiday pay for Christmas
day? No. An EE may not be paid on holiday
pay if he was absent on the day preceding
holiday, or in the case of Maundy Thursday
and Good Friday, if he was absent on the
day preceding the first holiday. It would be
different if the day preceding the legal
holiday was the EE’s rest day. Then he is
entitled to holiday pay. (Alcantara)
 On leave with pay
7. Can monthly pay under employment
contract already include pay for any
unworked regular holiday within the month?
Yes. This is management prerogative
provided that the monthly pay comply with
the least minimum rates prescribed under
minimum wage laws.
 What an employer has voluntarily
given cannot be unilaterally
withdrawn
 If the employees are already paid for
all non-working days, the divisor
should be 365 and not 251
Vacation and sick leave – must be claimed
otherwise waived
- cannot be converted into cash unless
allowed by employer
Faculty Private School
* Regular holidays specified by law are known to
both school and faculty members as “no class
days”. Thus, hourly paid faculty members are not
entitled to their pay for unworked regular holidays.
On the other hand, hourly paid faculty members are
however entitled to their regular hourly rate on days
declared as special holidays or when classes are
called off or shortened since the faculty member,
although forced to take a rest, does not earn what he
should earn on that day. (JRC vs. NLRC)
Divisor as Factor
* The daily rate is a constant figure for the purpose
of computing overtime and night differential pay
and commutation of sick and vacation leave credits,
and this should also be the same basis for

computing unpaid holidays. (Union of Filipro vs.
Vivar)
Section 12. Conditions of Employment – Service
Incentive Leave
Vacation and Sick leave
- employer must still bind himself in
CBA or grant it unilaterally
- not granted by law
12.1 Coverage
Coverage
* Art. 95 : The provision on service
incentive leave shall not apply to:
[E,S, IO, E, G, D, M, F]
1. Those who are already enjoying the benefit.
2. Those enjoying vacation leave with pay of at
least 5 days.
3. Those employed in establishments regularly
employing less than 10 workers
4. Exempt establishments.
Sec. 1, Rule V, Book III, IRR’s :
5. Those of the government and any of its
political subdivisions including GOCC’s.
6. Domestic helpers and persons in the
personal services of another.
7. Managerial EE’s.
8. Field personnel and other EE’s whose
performance is unsupervised by the ER
including those who are engaged on task or
contract basis, purely commission basis, or
those who are paid in a fixed amount of
performing work irrespective of the time
consumed in the performance thereof.
* Teachers of private schools on contract basis are
entitled to service incentive leave. (Cebu Institute
of Technology vs. Ople)
12.2 Entitlement
- can be converted to cash
* Art. 95 : 5 days incentive leave with pay for at
least 1 year of service.
[The term ‘at least 1 year of service’ shall mean
service within 12 months, whether continuous or
broken, reckoned from the date the EE started
working, including authorized absences and paid
regular holidays unless the working days in the
establishment as a matter of practice or policy, or
that provided in the employment contract are less
than 12 months, in which case said period shall be
considered as 1 year. (Sec. 3, Rule V, Book III,
IRR’s)
VACATION AND SICK LEAVE
32
 employer must still bind himself in CBA or grant
it unilaterally
 not granted by law
Section 13. Minimum Wages and Wage Fixing
Machinery
13.1 Minimum Wages
1. Art. 99 : The minimum wages for
agricultural and non-agricultural EE’s and
workers in each and every region of the
country shall be those prescribed by the
Regional Tripartite Wages and Productivity
Boards.
2. Explain the rule “a fair day’s wage for a
fair day’s labor”? Unless specifically
required by law, contract or established
policy, the ER is not bound to pay wages to
a worker who has not actually rendered any
service.
3. Give 2 aspects of “agriculture” ? The
primary aspect covers cultivation and tillage
of the soil, growing and harvesting of any
agricultural and horticultural commodities
and raising of livestock and poultry. The
secondary aspect covers any practices
performed by a farmer on a farm as an
incident to or in conjunction with the
farming operations.
4. Farmers employed by B cultivate the soil
and plant and harvest tobacco and they also
cut big trees grown on the land which they
used for fencing and repair of the owner’s
house. They claim for minimum wages for
non-agricultural workers. Is the claim valid?
No. They are still agricultural workers. They
perform activities which fall under the primary
aspect of agriculture and the cutting of trees to
be used for fencing is incidental to the farming
operations and falls under the secondary aspect
of agriculture.
Coverage
* Art. 98 : This Title shall not apply
 to farm tenancy or leasehold
 domestic services and
 persons working in their respective
homes in needle or in any cottage
industry duly registered in
accordance with law.
Section 3, Rule VII, Book III, IRR’s :
* Workers in duly registered cooperatives when so
recommended by the bureau of Cooperative

Development and upon approval of the Secretary of
Labor . . .
Minimum Wage
1. Art. 97 (1) : “Wage” paid to
* The remuneration or earnings, however
designated, (LEGAL TENDER)
 capable of being expressed in terms
of money, whether fixed or
ascertained on a time, task, piece, or
commission basis, or other method
of calculating the same,
 which is payable by an ER to an EE
under a written or unwritten contract
of employment for work done or to
be done, or for services rendered or
to be rendered
* and includes the fair and reasonable value, as
determined by the Secretary of Labor, of board,
lodging or other facilities customarily furnished by
the ER to EE. [“Fair and reasonable value” shall
not include any profit to the ER or to any person
affiliated with the ER.
2. Art. 61 : Apprentices : Wage rates shall in
no case fall below 75 % of the applicable
minimum wage.
3. Art. 75 : Learners : Wage rates shall begin
at not less than 75% of the applicable
minimum wage.
4. Art. 80 : Handicapped Workers : Wage
rates shall not be less than 75% of the
applicable minimum wage.
5. Art. 124 : All recognized learnership and
apprentice agreements shall be considered
automatically modified insofar as their wage
clauses are concerned to reflect the
prescribed wage rates [set by the Regional
tripartite and Wages Productivity Board].
A. FACILITIES AND SUPPLEMENTS
* The law guarantees the laborer a fair and just
wage. The “minimum wage” can by no means
imply only the actual minimum. Some margin or
leeway must be provided, over and above the
minimum, to take care of contingencies, such as
increase in wants, and to provide means for a
desirable improvement in his mode of living. (Atok-
Big Wedge vs. Atok-Big-Wedge Mutual Benefit
Association)
B. SUPPLEMENTAL FACILITY
33
1. Distinguish between supplements and
facilities?
Supplements – Extra remuneration or special
privileges or benefits given to or received by
the worker over and above his ordinary earnings
or wages.
- granted for the convenience of the
ER
Facilities – Items of expense necessary for the
laborer’s and his family’s existence and
subsistence. They form part of the wage and
when furnished by the ER are deductible
therefrom since if they are not furnished, the
laborer would spend and pay for them just the
same i.e. meals; housing for dwelling purposes;
fuel including electricity, gas, water for the non-
commercial personal use of the EE; and other
articles and services given primarily for the
benefit of the worker or his family.
- for the benefit of the worker and his
family
2. The criterion in determining whether an item
is a supplement or facility is not so much
with the kind of benefit or item given, but its
purpose. (State Marine vs. Cebu Seamen’s
Association)
3. CMC has 3 buses used to transport its
workers, free of charge from Makati to its
plat in Muntinlupa. The buses became
dilapidated and the service was discontinued
by the company. The EE’s demanded for
their replacement. Decide with reasons.
The company may be compelled to continue
providing the transportation free of charge. This
is considered a supplement given over and
above the ordinary earnings or wages of the
workers. Once given, a supplement cannot be
eliminated or diminished. (Alcantara)
- Test on whether or not items are
facilities [C F, V A, F R]
a. Are these items
automatically furnished by
the trade?
b. Did the employee
voluntarily accepted the
same in writing?
c. Is the value thereof fair and
reasonable?
- If the employer fails to prove this:
a. Then it is a supplement not
a facility.
b. Once given, a supplement
cannot be eliminated or
diminished.

c. Grant of bonus may be
unilaterally be reduced by
the employer if it depends
on profits acquired.
4. Because he lived 50 kilometers from its
work, X requested his ER if he can sleep in
the company premises. The latter agreed
with the condition that he will deduct P5.00
per day as board charges from X. Is the
deduction legal?
No. Lodging is not customarily finished by the
ER to his EE’s. The deduction, furthermore, is
not with the written consent of X.
C. CASH WAGE – legal tender
1. What is basic salary? In its common,
generally accepted meaning, it is the rate of
pay for a standard work period, exclusive of
such additional payment as bonuses and
overtime. (Boic-Takeda vs. Dela Serna)
2. Are emergency cost of living allowances
considered part of regular wage?
Yes. This is taken into account in determining
overtime and premium pay , premium
contributions, social security, maternity pay, etc.
(EO 178)
D. EFFECT - INABILITY TO PAY
* If a company cannot pay a living wage, it has no
business operating at the expense of the lives of the
workers. (Phil. Apparel vs. NLRC)
E. GRATUITY and WAGES
* Gratuity – That paid to the beneficiary for past
services rendered purely out of the generosity of the
giver or grantor. While it may be enforced once it
forms part of a contractual undertaking, the grant of
such benefit is not mandatory so as to be considered
a part of labor standard law. (Plastic Town vs.
NLRC)
F. BENEFICIARY OF THE MINIMUM WAGE
LAW
* The minimum wage law directly benefits the
lowly paid EE’s who receive inadequate wages on
which they support themselves and their families. It
benefits all wage earners indirectly by setting a
floor below which their remuneration cannot fall. It
increases the standard of competition among ER’s
since it would protect the fair-minded ER who
operates at lower costs by reason of paying his
34
workers a wage below subsistence. (Pp vs.
Gatchalian)
G. BENEFITS
1. Art. 100 : Nothing in this Book shall be
construed to eliminate or in any way
diminish supplements, or other EE benefits
being enjoyed at the time of promulgation of
this Code.
2. Unless agreed otherwise, statutory benefits
are apart from contractual benefits.
(Meycauayan College vs. Drilon) Thus,
EE’s are entitled to the full amounts of both
a wage increase under a CBA and an
increase in living allowances prescribed by
law during the period when both increases
are concurrently effective, for want of an
agreement between the parties to treat the
increase in living allowances as applicable
to the wage increases. (Filipinas Golf vs.
NLRC)
3. The work of batillos, cargadores of fish
catch, were limited to days of arrival of
fishing vessels. From 1976 to 1980,
operators paid them a fixed monthly
emergency allowance which included non-
working days. Can the operators now
discontinue the practice and pay the batillos
only for actual days worked, following the
principle of “no work, no pay” ?
No. Benefits voluntarily given cannot be
unilaterally withdrawn by the ER. Art. 100
prohibits the elimination or diminution of
existing benefits.
4. Workers in a plastic manufacturing
company are able to clean and inspect only
250 containers of 8 hours despite repeated
appeals from management. They were paid a
daily rate of P150.00. Through time and
motion studies set by the DOLE, the ER was
able to ascertain that an ordinary worker can
clean and inspect 450 containers for 8 hours.
The company then changed its mode of
payment from time basis to piecework at
P0.40 per container. Is this valid?
Yes. The company has the right to change the
basis of the payment of the wages of the
workers. The workers would not suffer since it
is within their capability to clean and inspect the
number of containers to enable them to at least
earn the rate they were receiving at the time the
change was effected. They cannot however be
deprived of benefits they were already enjoying
at the time of such change. (Alcantara)

** While normally discretionary, the grant of a
gratuity or bonus, by reason of its long and regular
concession, may become part of a regular
compensation.
* OR employer agreed to give its regularly without
any condition imposed for its payment
13.2 Rationale for Wage Rationalization
* Section 2, Wage Rationalization Act : It is
hereby declared the policy of the State to
rationalize the fixing of minimum wages and to
promote productivity-improvement and gain-
sharing measures: [J A D E]
1. To ensure Decent standard of living for the
workers and their families;
2. To guarantee the rights to its Just share in
the fruits of production;
3. To enhance Employment generation in the
countryside through industry dispersal; and
4. To Allow business and industry reasonable
returns on investment, expansion and
growth.
13.3 Agencies for Wage Fixing Machinery
Advisory agency – National Wages and
Productivity Commission
1. Art. 120 : National Wages and
Productivity Commission – attached to the
DOLE the policy and program coordination.
2. Give at least 5 major powers and
functions of the National Wages and
Productivity Commission :
a. To act as the national consultative
and advisory body to the President
and Congress on matters relating to
wages, incomes and productivity.
b. To formulate policies and guidelines
on wages, incomes and productivity
improvement at the enterprise,
industry and national levels.
c. To prescribe rules and guidelines for
the determination of appropriate
minimum wage and productivity
measures at the regional, provincial
or industry levels.
d. To review regional wage levels set
by the Regional Tripartite Wages
and Productivity Boards .
3. Art. 126 : No preliminary or permanent
injunction or temporary restraining order
may be issued by any court, tribunal or any
entity against any proceedings before the
Commission or the regional Boards.
35
Wage Fixing Agency
1. Art. 122 : Regional Tripartite Wages and
Productivity Boards – In all regions,
including autonomous regions.
2. Give at least 3 major powers and
functions of the Regional Tripartite and
Productivity Boards within their
territorial jurisdiction:
a. To develop plans, programs and
projects relative to wages, incomes
and productivity improvement for
their respective regions.
b. To determine and fix minimum wage
rates applicable in their region,
provinces or industries therein and to
issue the corresponding wage orders,
subject to guidelines by the
Commission.
c. To receive, process and act on
applications for exemption from
prescribed wage rates as may be
provided by law or any Wage Order.
[Implementation of the plans shall be
through the respective offices of the
DOLE but the Regional Boards shall
have technical supervision over the
said DOLE offices.]
3. Art. 126 : No preliminary or permanent
injunction or temporary restraining order
may be issued by any court, tribunal or other
entity against any proceedings before the
Commission or the regional Boards.
 The ECOLA now forms part regular
wage
 Employees paid by results should
receive not less than the applicable
wage rates provided for 8 hours
workday
13.4 Area Minimum Wages and Criteria
* Art. 124 : Standards/Criteria for Minimum
Wage Fixing – Regional minimum wages shall be
nearly as adequate as is economically feasible to
maintain the minimum standards of living necessary
for the health, efficiency and general well-being of
the EE’s within the framework of the national
economic and social development program. In the
determination of such regional minimum wages, the
Regional Board shall, among other relevant factors,
consider the following:
1. The demand of living wages;
2. Wage adjustment vis-à-vis the consumer
price index;
3. The cost of living and changes and their
families;
4. The need to induce industries to invest in the
countryside;

5. Improvements in the standard of living
6. The prevailing wage levels
7. Fair return of the capital invested and
capacity to pay of ER’s
8. Effects on employment generation and
family income; and
9. The equitable distribution of income and
wealth along the imperatives of economic
and social development.
These wages shall include wages varying within
industries, provinces or localities if in the judgment
of the Regional Board conditions make such local
differentiation proper and necessary to effectuate
the purpose of this Title.
13.5 Wage Order
* Art. 123 : Whenever conditions in the region so
warrant, the Regional Board shall investigate and
study pertinent facts and, based on the standards
and criteria herein prescribed, shall proceed to
determine whether a Wage Order should be issued.
In the performance of its wage-determining
functions, the Regional Board shall conduct public
hearings, consultations, giving notices to EE’s and
ER’s groups, provincial, city and municipal officials
and other interested parties.
Any party aggrieved by the Wage Order
issued by the Regional Board may appeal such
order to the Commission within 10 calendar days
from the publication of such order. It shall be
mandatory for the Commission to decide such
appeal within 60 calendar days from the filing
thereof.
Methods of Fixing
*The determination of wages has generally involved
two methods, the “floor-wage” method and the
“salary-ceiling” method. The 1st method involves
the fixing of determinate amount that would be
added to the prevailing statutory minimum wage. In
the 2nd method, the wage adjustment is applied to
EE’s receiving a certain denominated salary ceiling.
(ECOP vs. NWPC)
Wage Distortion
* A severe contraction of the wage or salary
differences is enough
1. Art. 24 : Wage Distortion - Distortion
where an increase in the prescribed wage
rates results in the elimination or severe
contraction of intentional quantitative
differences in wage salary rates between and
among EE 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.
36
2. How is a wage distortion corrected? Any
dispute arising from wage distortions shall
be resolved through the grievance
procedures under their CBA, and if it
remains unresolved, through arbitrary
arbitration. If there is no recognized labor
union or there are no collective bargaining
agreements, the dispute shall be settled
through the National Conciliation and
Mediation Board, or if unresolved after 10
days of conciliation, through the NLRC
which shall decide the dispute within 20
calendar days. (Art. 24) The law recognizes
the validity of negotiated wage increases to
correct wage distortions. The legislative
intent is to encourage the parties to seek
solution to the problems of wage distortions
through voluntary negotiation or arbitration,
rather than strikes, lockouts, or other
concerted activities of the EE’s or
management. (ALU-TUCP vs. NLRC) In a
case where a union went on strike over a
salary distortion dispute, the Court held the
strike illegal. (Ilaw at Buklod ng
Manggagawa vs. NLRC)
13. 6 Wages and Productivity Measures
Wage/Salary
Differentiate wages from salary?
* “Wages” – Compensation for manual labor,
skilled or unskilled paid at stated times, and
measured by the day, week, month, or season. It
indicates considerable pay for a lower and less
responsive character of employment.
* “Salary” – Denotes a higher degree of
employment, or a superior grade of services, and
implies a position of office; by contrast, the term
“wages”, while “salary” is suggestive of a larger
and more important service. (Gaa vs. CA)
Wage Payment
1. Art. 102 : Forms of Payment : No ER shall
pay the wages of an EE by means of
promissory notes, vouchers, coupons,
tokens, tickets, chits or any object other than
legal tender, even when expressly requested
by the EE. [The laborer’s wage shall be paid
in legal currency. (Art. 1705, NCC)]
- Payment of wages by check or
money order shall be allowed
when :
a. such manner of payment is
customary on the date of
the effectivity of this Code,
or

b. is necessary because of
special circumstances as
specified in appropriate
regulations to be issued by
the Secretary of Labor or as
stipulated in a CBA.
- CONDITIONS
a. bank – 1 km
b. written consent of EE
c. ER does not receive any
pecuniary benefit
d. EE given time to withdraw
from the bank – considered
as compensable his work
2. Art. 103 : Time of Payment –
* Generally : Once every two weeks or twice a
month at intervals not exceeding 16 days. No
ER shall make payment with less frequency
than once a month.
* Force Majeure : Immediately after the force
majeure or the circumstances have ceased.
* Task cannot be completed in 2 weeks in the
absence of a CBA or arbitration award:
a. The payments are made at intervals
not exceeding 16 days, in proportion
to the amount of work completed;
b. That final settlement is made upon
completion of work;
3. Art. 104 : Place of Payment : Payment of
wages shall be made at or near the place of
undertaking, except as otherwise provided
by such regulations as the Secretary of
Labor may prescribe under conditions to
ensure greater protection of wages.
1. deterioration of peace and order
conditions
2. actual or impending emergencies –
calamity
- ER must provide or reimburse
transportation back and forth
- Time spent collecting wages
considered compensable his work
4. Art. 105 : Direct Payment of Wages –
* General Rule : Wages paid directly to
workers.
* Exceptions:
1. Force majeure rendering such payment
impossible or under the special
circumstances, in which case the worker
may be paid through another person under
written authority given by the worker for the
purpose.
2. Where the worker has died, in case the ER
may pay the wages of the deceased worker
to the heirs of the latter without the necessity
of intestate proceedings.
37
A. DIRECT PAYMENT
Payment of wages to leader of group not
violation of direct payment since the contract to
perform the services was made by the leader of the
group, for and in behalf of the latter, not for each
and everyone of them individually. (Bermiso vs.
Escano)
Wage Prohibition
1. Art. 112 : Non-Interference in Disposal of
Wages –
- No ER shall limit or otherwise
interfere with the freedom of any EE
to dispose of his wages.
- He shall not in any manner force,
compel or oblige his EE’s to
purchase merchandise, commodities
or other property from the ER or
from any other person, or otherwise
make use of any store or services of
such ER or any other person.
2. A meat processing company gives a 25%
discount to EE’s for purchase on credit of its
product. However, said purchases on credit
will be considered payment of his wages. An
EE purchases 10 cans of the product but
objects to the application of his purchases as
part of his wages. Is the objections valid?
Yes. The application of his purchases on credit
as part of his wages the products in lieu of legal
tender. (Alcantara)
3. May an ER make any deductions from the
wages of EE’s?
General Rule : No. His own behalf or in behalf
of any person.
Exceptions: [Allowable Deductions]
1. Deductions of SSS, Medicare and Pag-ibig
Premiums (Alcantara)
2. Withholding tax (NLRC)
3. Deductions for reimbursement of insurance
premium advanced by the ER where the
worker is insured with his consent by the
former. (Art. 113)
4. Deductions for unions dues where the right
to check-off has been recognized by the ER
or individual EE himself. (Id)
5. Deductions made with the written
authorization of the EE for payment to a 3rd
person and the ER agrees to do so, provided
that the latter does not receive any pecuniary
benefit, directly or indirectly, from the
transaction. (Alcantara)
6. Deductions for reimbursement of loss or
damage to tools, materials or equipment
supplied by the ER to the EE, in trades,

occupations or business where the practice
of making such deductions is recognized.
(Art. 114)
7. Deductions as a disciplinary measure for
habitual tardiness (Alcantara)
8. Agency fees under Art. 248 (e) of the Code.
9. Deductions for debts due the ER from the
EE, when such debts become due and
demandable. (Art. 1706, NCC)
10. In court awards, wages may be the subject
of execution or attachment, but only for
debts incurred for food, shelter, clothing and
medical attendance. (Art. 1708)
11. Deductions for value of meals and others.
(Alcantara)
3. Art. 114 : Deposits for Loss or Damage : No ER
shall require his worker to make deposits from
which deductions shall be made for the
reimbursement for loss or damage to tools,
materials or equipment supplied by the ER except:
a. When the ER is engaged in such trades,
occupations or business where the practice of
making deductions or requiring deposits is a
recognized one, or
b. is necessary or desirable as determined by the
Secretary of Labor in appropriate rules and
regulations.
4. J works as a dishwasher in a big restaurant. At
the time of his employment, he was told that it was
an industry practice that the value of plates broken
by him while in the performance of his work will be
deducted from his wages. May management deduct
the said value from J’s wages?
Yes, provided the following conditions are met:
[PRO-F20]
1. The practice of making deductions is a
recognized one or is necessary and desirable
in the business of the ER.
2. J is clearly shown to be responsible
3. He is given reasonable opportunity to show
cause why the deduction should not be
made.
4. The amount of deductions is fair and
reasonable and does not exceed the actual
loss or damage.
5. The deduction does not exceed 20% of J’s
wages in a week. (Sec. 14, Rule VIII, Book
III, IRR’s)
5. Art. 116 : Withholding of Wages and kickbacks
prohibited – It shall be unlawful for any person,
directly or indirectly,
 To withhold any amount from the
wages of a worker or
 Induce him to give up any part of his
wages by force, stealth, intimidation,
threat or by any other means
38
whatsoever without the workers
consent.
6. Art. 117 : Deduction to ensure employment - It
shall be unlawful to make any deduction from
wages of any EE for the benefit of the ER or his life
representative or intermediary as consideration of a
promise of employment or retention in employment.
7. Art. 222 - No attorneys fees, negotiation fees or
similar charges of any kind arising from any
collective bargaining negotiations or conclusions of
the CBA shall be imposed on any individual
member of the contracting union: Provided,
however that attorneys fees may be charged against
union funds in an amount agreed upon by the
parties. Any contract, agreement or arrangement of
any sort to the contrary shall be null and void.
8. Art. 1708 : The laborer’s wages shall not be
subject to execution or attachment except for debts
incurred for food, shelter, clothing and medical
attendance.
A. WAGE DEDUCTION
1. An obligation arising from non-payment of
stock subscriptions to a corporation cannot
be offset against a money claim of an EE
against an ER. (Apodaca vs. NLRC)
2. The wife of an EE tells the manager that her
husband has not been giving her support.
Taking pity, the manager instructs the
cashier to deduct 1/3 of the EE’s pay and
give the same to the wife. Is this valid?
No. The EE concerned did not give his written
authorization for the deduction. (Alcantara)
3. Z borrowed P500.00 from his ER. When the
loan became due and demandable, Z did not
pay his ER. May the ER, without the written
authorization of Z, deduct the loan from the
latter’s wages?
Yes. Compensation can take place under Art.
1706 of the NCC. (Alcantara)
B. CHECK-OFF
* An ER may be compelled to “check-off” union
dues from the wages of his EE when the ER has
been authorized to do so by the EE. This is upon the
theory that it is necessary to promote the welfare
and integrity of the union to which he belongs.
(Manila Trading vs. Manila Trading Labor
Association)
C. GARNISHMENT/ATTACHMENT

1. Under Art. 1708 of the NCC, “laborers’
wages shall not be subject to execution or
attachment, except for debts incurred for
food, shelter, clothing and medical
attendance” (Pacific Customs vs. Inter-
Island Dockmen and Labor Union)
2. Art 1708 which exempts laborers’ wage
from attachment or execution does not apply
to a responsibly placed EE, supervisory or
managerial EE, but only to the rank-and-file.
(Gaa vs. CA)
D. DEPOSIT
1. A marketing firm retains 5% of the weekly
salary of its collectors as a deposit to answer
for any shortage in their collections. These
are refunded at the end of the month, if no
shortages are incurred. Is the practice legal?
It depends. If it is a recognized practice of ER’s
to require such deposits, then such is legal, since
the sum retained is not excessive and is kept by
the ER only for a reasonable period.
(Alcantara)
2. A taxicab company requires its drivers to
make deposits to defray boundaries and to
cover car wash payments. Is this legal?
Art. 114 does not permit deposits for deficiency
in the remittances of drivers’ “boundary” but
the requirement for deposit for car wash
payments is lawfull. (5-J Taxi vs. NLRC)
Prohibited Acts
1. Art. 118 : It shall be unlawful for an ER to
reuse to pay or reduce the wages and
benefits, discharge or in any manner
discriminate against any EE who has filed
any complaint or instituted any proceedings
under this Title or has testified or is about to
testify in such proceedings.
2. Art. 119 : It shall be unlawful for any
person to make any material false statement,
report or record filed or kept pursuant to the
provisions of this Code.
A. RECORD KEEPING
* The records shall be kept and maintained in or
about the premises of workplace or in the branch
where the EE is regularly assigned, the keeping of
the records in any other place is prohibited. (South
Motorists vs. Tosoc)
14. 7 Liability of ER and other Parties
39
ER, Independent Contractor and Subcontractor
and Labor-Only Contracting
1. The rules on the liability of Job contractors,
Indirect ER’s and “Labor-only” contractors are
the following:
1. General Rule : An ER who enters into a
contract with a contractor to perform work
for the ER, does not thereby create an ER-
EE relationship between himself and the
EE’s of the contractor. Thus the EE’s of the
contractor remain the contractor’s EE’s and
his alone. (PBC vs. NLRC)
2. Nonetheless : When a contractor fails to pay
the wages of his EE’s in accordance with the
Labor Code, the ER who contracted out the
job to the contractor becomes jointly and
severally liable with the contractor to the
EE’s of the latter “to the extent of the work
performed under the contract” as if such ER
were the ER of the contractor’s EE. (Id)
The law itself, established an ER-EE
relationship between the ER and the job
contractor’s EE’s for a limited purpose i.e. in order
to ensure that the latter get paid for wages due them.
3. Indirect ER : These provisions shall
likewise apply to any person, partnership ,
association or corporation which, not being
an ER, contracts with an independent
contractor for the performance of any work,
task, job or project. (Art. 107)
4. Labor-Only Contractor : The conclusion is
different where there is “labor-only”
contracting. The “labor-only” contractor i.e.
person or intermediary, is considered
“merely as an agent of the ER.” The statute
makes the ER directly responsible to the
EE’s of the “labor-only” contractor as if
such EE’s had been directly employed by
the ER. The statute establishes an ER-EE
relationship between the ER and the EE’s of
the “labor-only” contractor, this time for a
comprehensive purpose, to prevent any
violation of this Code. (Broadway Motors
vs. NLRC)
 The legitimate job contractor
provides services while the labor-
only contractor only provides
manpower.
 Job contractor undertakes to perform
a specific job while labor-only
contractor merely provides personnel
to work for the employer.

2. Art. 108 : An ER or indirect ER may require the
contractor or subcontractor to furnish a bond equal
to the cost of labor under contract, on condition that
the bond will answer for the wages due the EE’s
should the contractor or subcontractor, as the case
may be fail to pay the same.
3. C, a former EE of ABC entered into an
agreement with the company wherein C will
hire person to work in the painting
department and the company will reimburse
him for whatever wages he will pay plus
10% of this amount. If C fails to pay the
wages, can the workers claim from the
company?
Yes. C is merely a “labor-only” contractor and
is considered merely an agent of the ER who
shall be responsible to the workers in the same
manner and extent as if the latter were directly
employed by him. (Alcantara)
4. X entered into a contract with R for the
construction of X’s house. Some workers of
R were not paid their wages. Is X liable?
Yes. Under Art. 107, the person, though not an
ER, who contracts with the independent
contractor for the damages employed by the
latter are indirect ER’s. (Alcantara)
5. A entered into a verbal agreement with S
wherein A would be paid a commission for
milled rice she sold or palay for the farmer.
A would spend her own money for the
undertaking, but to enable her to carry out
the agreement more effectively, she was
authorized to borrow from other persons,
subject to reimbursement from S and either
of them may terminate the business
arrangement at will, with or without cause.
May A be considered an independent
contractor?
Yes. A was contracted to do a piece of work
according to her own method and without being
subject to the control of the ER except as to the
result of the work. (Sara vs. Agarrado)
Extent of Liability
1. The direct ER and the indirect ER are jointly
and severally liable to petitioners for the
monetary claims. (Deferia vs. NLRC) For
purposes of determining the extent of their
civil liability, they shall be considered as
direct ER’s. (Art. 109)
 In legitimate job contracting, no ER-
EE relationship exist between the
principal and the job contractors
employees.
40
 Insolvency or unwillingness to pay
by the contractor or direct ER is not
a prerequisite for the joint and
solidary liability of the principal or
indirect ER. (DBP vs. NLRC)

2. If an independent service contractor fails to
pay the wages of the janitors its supplies to
XYZ, is XYZ liable for the unpaid wages?
Yes. According to Art. 106, the ER shall be
jointly and severally liable to the EE’s of the
contractor or subcontractor to the extent of the
work performed under the contract. (Alcantara)
3. Would your answer change if XYZ already
paid the independent contractor the contract
price?
No, XYZ will still be liable for the unpaid
wages of the janitor since the obligation is
imposed by law. (Id)
4. PTS, a government agency, entered into a
service agreement with ABC or the supply
of janitors to PTS. ABS failed to pay the
wages of the janitors. PTS refused to pay on
the ground that it is a government agency. Is
this claim valid?
No. The janitors employed by ABC are
considered indirect EE’s and not to indirect
EE’s coming from the private sector. (Rabago
vs. NLRC)
14. 8 Worker Preference-Bankruptcy
1. Art. 110. In the event of bankruptcy or
liquidation of an ER’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.
* The right or preference has to be asserted in
distribution proceedings such as insolvency
where all the creditors convened, their claims
ascertained and inventories and the preferences
determined.
2. A declaration of bankruptcy or a judicial
liquidation must be present before the
worker’s preference may be enforced. The
said article cannot be viewed in isolation; it
must always be read in relation to the
provisions of the Civil Code concerning the
classification, concurrence and preference of
the credits. (DBP vs. Santos) The aforesaid

provisions of the Civil Code, including Art.
110 requires judicial proceedings in rem in
adjudication of creditor’s claims against the
debtor’s assets to become operative.
(Alcantara)
3. TUCP obtained a judgment from the NLRC
in an unfair labor case. Two days before the
judgment, the PCIB, mortgage creditors of
the company, foreclosed all mortgages in
their favor. The union sought to garnish in
its favor a portion of the purchase price. Is
the bank subject to the claims of the union?
Yes, under Art. 110 workers enjoy first
preference as regards wages owed them for
services rendered during the period prior to the
bankruptcy or liquidation. (PCIB vs. National
Mines and Allied Union)
4. Atlas Textile mortgaged its assets to DBP.
DBP foreclosed the asset. The EE’s filed a
complaint against Atlas and DBP for the
wage differentials. The labor arbiter and the
NLRC held that the worker’s preference
under Art. 110 does not create a lien?
No. Art. 110 does not create a lien in favor of
the workers. (Alcantara)
Art. 110
 establishes merely a rule of
preference and does not create a lien
in favor of the workers
 workers claim for unpaid wages and
other monetary benefits cannot
prevail over a mortgages lien
14. 9 Wage Recovery
1. Art. 217 (a) (2), (3), (4), (6) : Jurisdiction
of Labor Arbiters and the Commission –
The Labor Arbiters shall have exclusive and
original jurisdiction, except as otherwise
provided, the following cases involving all
workers:
a. Termination Disputes
(qualified by Art. 261which
grant voluntary arbitrators
original and exclusive
jurisdiction over all
unresolved grievances
arising from CBAS and
company personnel
policies);
b. Cases involving terms and
conditions and
employment, if
accompanied with a claim
for reinstatement (including
41
claims of an ER-EE
relationship, including
claims for actual, moral and
exemplary damages, as
provided in Sec. 10,
Migrant Workers Act)
c. Claims for actual, moral,
exemplary and other
damages arising from the
ER-EE relations;
d. Except claims for EE’s
Compensation, Social
Security, Medicare and
maternity benefits, all other
claims, arising from the
ER- EE relations, including
 those of persons in domestic or
household service, involving an
amount exceeding P5,000.00
regardless of whether accompanied
with a claim for reinstatement.
2. Art. 128 : Visitorial and Enforcement
Power oft the Secretary of Labor or his
duly authorized representative
 Access to ER’s records and premises
at anytime of the day or night
whenever work is being undertaken
therein and copy therefrom; question
any EE; and investigate any fact,
condition or matter which may be
necessary to determine violations of
this Code and of any labor law, wage
order or rules and regulations issued
pursuant thereto.
 In cases where the relationship or
ER-EE still exists, the power to issue
Compliance Orders to give effect to
the labor standard provisions of this
Code and other social legislation.
 Writ of execution to the
appropriate authority shall
be issued for the
enforcement of the said
orders, except in cases
where the ER contests the
findings of the labor
employment and
enforcement officer and
raises issues supported by
documentary proofs which
were not considered in the
course of inspection.
 Order stoppage of work or
suspension of operations of any unit
of or department of an establishment
when non-compliance poses grave
and imminent danger to the health

and safety of workers in the
workplace.
 Within 24 hours, a hearing
shall be conducted to
determine whether an order
for the stoppage of work or
suspension of operations
shall be lifted or not.
 In case the violation is
attributable to the fault of
the ER, he shall pay EE’s
their salaries or wages
during the said period.
 It shall be unlawful for any person to
Obstruct, impede, delay or otherwise
render ineffective the order of the
Secretary of Labor.
* No inferior court shall issue a temporary or
permanent injunction or restraining order or
otherwise assume jurisdiction over any case
involving the enforcement orders in accordance
with this Article.
 Any government EE found guilty of
violation, after appropriate
administrative investigation, be
subject to Summary dismissal from
the service.
 The Secretary of labor may require
ER’s to keep and maintain
employment records as may be
necessary. (AS CONES)
* Under what circumstances may the Regional
Director be divested of his jurisdiction to issue
compliance orders under Art. 128 (b)?
a. ER contests the findings of the labor
regulations officer and raises issue
thereon;
b. In order to resolve such issue, there
is need to examine evidentiary
matters;
c. Such matters are not verifiable in the
normal course of inspection. (Red V.
Coconut vs. Leogrado)
3. Art. 129 : Recovery of wages, simple
money claims and other benefits –
 The Regional Director of the DOLE
or any of the duly authorized hearing
officers of the Department is
empowered, through summary
proceedings and after due notice, to
hear and decide any monetary claims
and benefits, including legal interest
to a person employed in domestic or
household service; Provided
42
a. Such complaint does not include
claim for reinstatement
b. Aggregate money claims of each
househelper does not exceed P5,000
 The complaint shall be resolved
within 30 days from the date of filing
of the same.
4. Art. 111 :
 In cases of unlawful withholding of
wages the culpable party may be
assessed attorney’s fees equivalent to
10% of the amount of wages
recovered.
 It shall be unlawful for any person to
demand or accept, in any judicial or
administrative proceedings for the
recovery of the wages, attorney’s
fees, which exceed 10% of the
amount of wage recovered.
Section 14: Service Charges
14. 1 Coverage
1. Section 1, Rule V, Book III, IRR’s : This
rule shall apply only to establishments
collecting service charges such as hotels,
restaurants, lodging houses, night clubs,
cocktail lounge, massage clinics, bars,
casinos and gambling houses, and similar
enterprises, including those entities
operating primarily as private subsidiaries of
the Government.
2. Section 2, Rule VI, Book III : This rule
shall apply to all EE’s of covered ER’s
except to managerial EE’s.
Managerial EE –
a. powers of prerogatives to lay down,
and execute management to lay don
and execute management policies
and/or
b. hire, transfer, suspend, lay-off,
recall, discharge, assign, or
discipline EE’s or to effectively
recommend such managerial actions.
 Collection of service charges is a
management decision and not a
requirement of law
14. 2 Service Charges
* Art. 96 : To be distributed at the rate of 85% for
covered EE’s [distributed equally among them] and
15% for management.

X a waiter at DC Diner was receiving a share in the
restaurant’s service charges. Later, the restaurant
discontinued the collection of service charges. The
take-home pay of X was reduced by the value of the
discontinued service charges. May X ask his ER to
continue paying the service charges?
Yes. In case the service charge is abolished, the
share or the covered EE’s shall be considered
integrated in their wages. (Art. 96)
 The employees share in the service
charges is part of the other benefits
to which he is entitled, in addition to
full backwages
Section 15: Thirteenth Month Pay
15.1 Law – Coverage
Coverage
1. Section 2, Revised Guidelines on the 13th
Month Pay Law : The following ER’s are
still not covered by PD 851:
 The government and any of its
political subdivisions, including
GOCC’s, except those corporations
operating essentially as private
subsidiaries of the government.
 ER’s already paying their EE’s a 13 th
month pay or more in a calendar year
or its equivalent at the time of this
issuance.
 [The term “its equivalent” … shall
include Christmas bonus, mid-year
bonus, cash bonuses and other
payments but shall not include cash
and stock dividends, cost of living
allowances and other allowances
regularly enjoyed by the EE, as well
as non-monetary benefits. Where an
ER pays less than required 1/12th of
the EE’s basic salary, the ER shall
pay the differences.]
 ER’s of household helpers and
persons in the personal service of
another in relation to such workers,
and
 ER’s of those who are paid on purely
commission, boundary, or task basis,
and those who are paid a fixed
amount for performing specific
work, irrespective of the time
consumed in the performance
thereof, except where the workers
are paid on piece-rate basis in which
43
case the ER shall grant the required
13th month pay to such workers.
 A distressed ER may qualify for
exemption for the 13th month pay if
there is prior authorization from the
DOLE. (Dentech vs. NLRC)
2. The CBA provides for the payment of
Christmas bonuses to all regular EE’s in the
bargaining unit with of at least 1 year of
continuous service. Is this equivalent to the
13th month pay?
No. The Christmas bonuses provided in the
CBA accords a reward for loyalty to certain
EE’s. This is evident from the stipulation
granting the bonus in question to workers with
at least 1 year of continuous service. The bonus
therefore is to be in addition to the legal
requirement. (UCP vs. NLRC)
15.2 Amount and Payment Date
1. Sec 4 Revised Guidelines on the 13th Month
Pay Law:
 Amount : ½ of the total basic salary
earned by an EE within a calendar
year.
 The 13th month pay is to be paid only
to rank-and file employees regardless
of the amount of their basic salary.
 Time of Payment: Not later than
December 24.
2. Define basic salary: For purposes of computing
the 13th month pay, basic salary”
 include remuneration or earnings
paid by this ER for services rendered
 but does not include allowances and
monetary benefits which are not
considered or integrated as part of
the regular or basic salary, such as
the cash equivalent or unused
vacation and sick leave credits,
overtime, premium, night-differential
and holiday pay, and cost-of-living
allowances.
 However, these salary-
related benefits should be
included as part of the basic
salary in the computation of
the 13th month pay if the
individual or collective
agreement, company
practice or policy, the same
are treated as part of the
basic salary of the EE’s.

3. From 191 to 1997, DFC included in the
computation of this 13th month pay, the EE’s
sick, vacation and maternity leaves, In 1998,
the company discontinued the inclusion of
the aforementioned items in the 13th month
pay. Is this valid?
The considerable length of time the questioned
items had been included by the company
indicates a unilateral and voluntary action on its
part, sufficient in itself to negate any claim of
mistake. A company practice favorable to the
EE’s had been established, and the payments
made pursuant thereto ripened into benefits
enjoyed by them. Any benefit and supplement
being enjoyed by the EE’s cannot be reduced,
diminished, discontinued or eliminated by the
ER. (Alcantara)
Basic Wage
1. Are the sales commission of a salesman paid
a guaranteed wage plus commissions
included in the computation of this 13th
month pay?
It depends on what kind of commissions may
properly be considered part of the basic salary,
they should be included in computing the 13th
month pay. If the commission are not an integral
part of the basic salary, then they should be
excluded. (Azucena) Sales commissions which
comprised an automatic increment to the
monetary value assigned to each unit of work
rendered by the salesman, or that of the wages-
or sales-percentage type should be included in
the 13th month pay computation. On the other
hand, commission in the form of productivity
bonuses which closely resembles profit-sharing
payments and have no clear direct or necessary
relation to the amount of work actually done by
each individual EE, or the profit-sharing or
bonus-type, should be excluded from the
computation of the 13th month pay. (Philippine
Duplicators vs. NLRC)
Substitute Payment
1. Benefits in the form of food or free electricity not
proper substitute for the 13th month pay.
(Framanlis vs. Minister of Labor)
14th Month Pay
1. The grant of the 14th month pay is a management
prerogative, gratuitous in nature and therefore it
cannot be forced. (Kamaya Hotel vs. NLRC)
44
15. 3 Non-inclusion
1. Sec. 7, Revised Guidelines on the 13th
Month Pay Law: The mandated 13th month
pay need not be credited as part of the
regular wage of EE’s for purposes of
determining overtime and premium pays,
fringe benefits as well as contributions to the
state insurance fund, Social Security,
Medicare and private retirement plans.
Section 16 : Bonus
16. 1 Definition
1. A bonus is an amount is an amount granted
and paid to an EE for his industry and
loyalty which contributed to the success of
the ER’s business and made possible the
realization of profits. (Azucena)
16.2 When Demandable
1. From the legal point of view, a bonus is not
a demandable and enforceable obligation.
But it is so when it is made part of the wage
or salary or compensation. In such case, the
latter would be a fixed amount and the
former would be a contingent one dependent
upon the realization of profit. (Azucena)
Furthermore, while normally discretionary,
the grant if gratuity or bonus by reason of its
long and regular concession, may become
regarded as part of the regular
compensation. (Liberation Steamship vs.
CIR)
Section 17. Working Conditions for Special
Groups of Workers – Women
17.1 Women and the Constitution
1. Art. II, Sec. 14, Const. : The State
recognizes the role of women in nation-
building, and shall ensure the fundamental
equality before the law of women and men.
17.2 Coverage
1. Section 1, Rule XII, Book III, IRR’s : This
rule shall apply to all ER’s except to:
a. government and GOCC’s and
b. to ER’s of household helpers and
persons in their personal service
insofar as such workers are
concerned
17.3 Prohibited Acts
NIGHT WORK AND EXCEPTION
1. Art. 130 : No woman shall be employed or
permitted or suffered to work, with or
without compensation:

a. Industrial undertaking : Between
10:00 pm and 6:00 am of the
following day.
b. Commercial undertaking : Between
midnight and 6:00 am of the
following day.
c. Agricultural undertaking : value.
Nighttime unless she is given a
period of rest of not less than 9
consecutive hours.
2. Art. 131 : Exceptions to Nightwork
prohibition
[A, F, U, P – M, H, M, - FA]
a. In cases of actual or impending
emergencies caused by a serious
accident, fire, flood, earthquake,
epidemic or other Disasters or
calamity, to prevent loss of life or
property.
b. Cases of force majeure or imminent
danger to public safety.
c. Cases of urgent work to be
performed on machineries,
equipment or installation, to avoid
serious loss which the ER would
otherwise suffer.
d. Work is necessary to prevent serious
loss of perishable goods
e. Woman EE holds a responsible
position of managerial or technical
in nature.
f. Woman EE has been engaged to
provide health and welfare service.
g. Where the nature of the work
requires the manual skill and
dexterity of women workers;
h. Where the women EE’s are
immediate members of the family
operating the establishment or
undertaking; and
i. Analogous cases. (HUMMPS FAD)
3. LG, a manufacturer and exporter of jeans,
has a 3-shift work schedule but maintains a
policy of not assigning women in the 3rd
shift from 10:00 pm to 6:00 am. Is this
policy discriminatory to women?
Yes. The women sewers, by reason of their sex,
are denied the opportunity to earn additional
pay. The nature of the work requires the manual
skill and dexterity of women workers and
cannot be performed with equal efficiency to
male workers. This is one of the exceptions to
the night work prohibition. (Art. 131)
B. DISCRIMINATION
1. Art. 135: It shall be unlawful for any ER to
discriminate against woman EE with respect
45
to terms and conditions of employment
solely on account of her sex.
The following are acts of discrimination [P, F]
a. Payment of lesser compensation, as
against a male EE, for work of equal
b. Favoring a male EE over a female
EE with respect to the promotion,
training opportunities, study and
scholarship grants solely on account
of their sexes.
Criminal liability for violations shall be
penalized as provided in Art. 288 and 289 of
this Code. The institution of any criminal
action under this provision shall not bar the
aggrieved EE from filing an entirely
separate and distinct action for money
claims, which may include claims for
damages and other affirmative reliefs. The
actions hereby authorized shall proceed
independently of each other.
2. C, a 45-year old teacher was dismissed by
the school after she got married to Q, her 18-
year old 4th year high school student. Is the
dismissal lawful?
No, in the absence of substantial evidence to
show that C took advantage of her position to
court her student. There is nothing wrong if the
two fell in love despite the disparity in their
ages. (Chua-Qua vs. Clave)
C. MARRIAGE
1. Art. 136 : Stipulation against marriage – It
shall be unlawful for an ER to : [C, S, D]
a. Require as a condition of
employment or continuation of
employment that a woman EE shall
not get married;
b. Stipulate expressly or tacitly that
upon getting married a woman shall
be deemed resigned or separated;
c. Actually dismiss, discharge,
discriminate or otherwise prejudice
a woman EE merely by reason of
her marriage.
D. GENERAL
1. Art. 137 : It shall be unlawful for any ER
to : [DB, DP, RA]
a. Deny any woman EE the benefits
provided for in this Chapter or to
discharge any woman employed by
him for the purpose of preventing her

from enjoying any of the benefits
provided under this Code;
b. Discharge such woman on account
of her pregnancy, or while on leave
or in confinement due to her
pregnancy;
c. Discharge or refuse the admission of
such woman upon returning to her
work for fear that she may again be
pregnant.
2. In L’s contract of employment with Club E,
it was stipulated that her employment as a
dancer would cease once she gets pregnant.
When L got pregnant, L was no longer
allowed to dance and since there were no
other work available for which her talents
were suitable, her employment was
terminated. Is the action legal?
Yes. It is both awkward and dangerous for her
to dance during her pregnancy. Of course the
ER has the obligation to give her another job,
but as stated in the problem there is no other
work for which her talents are suited. It is not
fair to require the ER to continue employing
her. (Alcantara)
3. A pharmaceutical company rejected the
applications of 5 pregnant women as sales
representatives for contraceptive pills and
family planning devices. Is this valid?
Yes. The company has the prerogative to select
its EE’s. What is unlawful is for the ER to
discriminate against or dismiss a woman by
reason of their pregnancy. (Alcantara)
17. 4 Facilities
1. Art. 132 : The Secretary of Labor shall
establish standards that will ensure the
safety and health of women EE’s. In
appropriate cases, he shall, by regulations,
require ER to:
a. Provide seats proper for women and
permit them to use seats when they
are free from work and during
working hours, provided they can
perform their duties in the position
without detriment to efficiency.
b. To establish a nursery in a
workplace.
c. To determine appropriate minimum
age and other standards for
retirement or termination in special
occupations such as those of flight
attendants and the like.
46
2. Art. 134 : (a) Establishments which are
required by law to maintain clinic or
infirmary shall provide free family planning
services to their EE’s.
3. Is the ER required by law to give maternity
benefits to its female workers?
No. Maternity benefits are to be paid in
appropriate instances by the SSS. The only
obligation of the ER is to advance the benefit
subject to reimbursement by the SSS.
(Alcantara)
17.5 Special classification Special Women
Workers
1. X works as a hostess in a nightclub, she is
paid a percentage of the lady’s drink ordered
by customers. There are nights when she
does not earn anything because there are no
customers. Is X an EE of the nightclub?
Yes. Any woman who is permitted or suffered
to work, with or without compensation, in any
nightclub, cocktail lounge, massage clinic, bar,
or similar establishment, under the effective
control or supervision of the ER for a substantial
period of time as determined by the Secretary of
Labor shall be considered an EE of such
establishment for purposes of labor and social
legislation. (Art. 138)
Section 18. Working Conditions for Special
group of Workers – Minors
18.1 Minors and the Constitution
Art. II, Sec. 13, Const. : The State recognized the
role of the youth in nation-building and shall
promote and protect their physical, moral spiritual,
intellectual, and social well-being. It shall inculcate
in the youth patriotism and nationalism, and
encourage their involvement in public and civic
affairs.
18.2 Coverage
Section 1, Rule XII, Book III, IRR’s : This Rule
shall apply to all ER’s except
[G H]
1. to the Government and GOCC’s and
2. to ER’s of household helpers and persons in
their personal service insofar as such
workers are concerned.
18.3 Employable Age
Section 12, RA 7610 as amended by RA 7658 :

* General rule: Children below 15 years of age
shall not be employed.
* Exceptions: [P, E]
1. Child works directly under the sole
responsibility of his parents or legal
guardian and where only members of the ER
family are employed, provided:
a. his employment neither endangers
his life, safety, health and morals,
nor impairs his normal development:
b. the parent or legal guardian shall
provide the said minor child with the
prescribed primary and/or secondary
education.
2. Child is employed in entertainment or
information through cinema, theater, radio or
television, provided:
c. Employment contract is concluded
by the child’s parents or legal
guardian, with the expressed
agreement of the child concerned, if
possible, and the approval of the
DOLE.
d. The ER shall ensure the protection,
health, safety and morals of the
child;
e. The ER shall institute measures to
prevent the child’s exploitation or
discrimination.
f. The ER shall formulate and
implement, subject to the approval
and supervision of competent
authorities, a continuing program for
training and skills acquisition of the
child.
g. The ER shall first secure, a work
permit from the DOLE which shall
ensure observance of the above
requirements.
2. Art. 139 : Any person, between 15 and 18
may be employed in any non-hazardous
work. In any hazardous work, the
employable age is 18 and up.
3. What are considered hazardous work
places? [D C M P]
a. Where the nature of work exposes
the worker to Dangerous
environmental elements,
contaminations or work conditions.
b. Stevedoring, construction work,
logging, firefighting, mechanized
farming and similar work.
c. Manufacture or handling of
Explosives and other pyrotechnic
products.
d. Where the workers are exposed to
heavy or power-driven machinery or
equipment or tools.
47
4. L, 10 years old, was hired as a singer in a
carnival which stages shows wherever there
is a town fiesta. She is paid P5,000.00 a
month. L is therefore always on the road,
traveling to different parts of the country. Is
her employment lawful?
No. Such employment will endanger her health
and impair her normal development. She is also
deprived of the opportunity to get primary
education as she is always traveling to different
parts of the country. (Alcantara)
18.4 Discrimination
1. Art. 140 : Prohibition against child
discrimination – No ER shall discriminate
against any person in respect to terms and
conditions of employment on account of his
age.
2. Would a company rule providing for lower
wages for workers below 18 years who are
inexperienced violate the prohibition?
No. The payment of lower wages is by reason of
the worker’s inexperience, not his age. There is
no discrimination on account of the worker’s
minority. (Alcantara)
Section 19. Working Conditions for Special
group of Workers – Househelpers
19.1 Coverage
Art. 141 : This chapter shall apply to all persons
rendering services in households for compensation
19.2 Househelpers
1. Define domestic or household service :
Service in the ER’s home which is usually
necessary or desirable for the maintenance
and enjoyment thereof and includes
ministering to the personal comfort and
convenience of the member’s of the ER’s
household, including services of family
drivers. (Art. 141)
2. C was employed by A company to work as
a maid in the cottages of its Baguio mining
site to attend to the needs of its executives or
guests who now and then visit the site. Is S a
househelper or domestic servant?
No. The services of a househelper is rendered
exclusively for the personal comfort and
enjoyment of the family of the ER and are
performed in the latter’s home. Services
rendered in an executive cottage cannot be

considered domestic. S must be considered a
regular EE of the mining company. (Apex
Mining vs. NLRC)
19.3 Non-Household Work Assignment
T lives in a compound where he operates a modest
candy business. Sometimes, when there is no work
in his house, his maids help in the packing of the
candies and his family driver delivers the candies to
the outlets. How should the work rendered in
connection with the candy business be
compensated?
For work rendered by the maids and the family
driver, they should be paid at the rate prescribed by
law for non-agricultural workers. (Alcantara) No
household helper shall be assigned to work in a
commercial industrial or agricultural enterprise at a
wage or salary rates lower than that provided for
agricultural or non-agricultural workers as
prescribed therein. (Art. 145)
19. 4 Conditions for Employment
1. M, 15 years old, worked as a maid in the
house of L. She was paid in advance for 3
years and she agreed that she will work for
L for the said period. Is there any legal
infirmity in the said agreement?
Yes. The period contract exceeds the maximum
set by the law. Art. 142 provides that the
original contract of domestic service shall not
last for more than 2 years, although it may be
renewed for such periods as may be agreed upon
by the parties. M’s contract will therefore be
good for only 2 years. (Alcantara)
2. What are the minimum wages for
househelpers?
a. Metro Manila and highly urbanized
cities : P800.00
b. Chartered cities and 1st class
municipalities : P650.00
c. Other municipalities : P550
 Househelpers receiving P1,000.00
shall be covered by the SSS.
3. Aside from the rights to minimum wage,
what other rights are enjoyed by a
househelper? [E J B - I F]
a. Opportunity for elementary
education if a househelper is less
than 18 years old (Art. 146)
b. Just and human treatment (Art. 147)
48
c. Board, lodging and medical
attendance (Art. 148)
d. Indemnity for unjust termination of
services of 15 days plus the
compensation already earned.
e. Funeral benefits if the househelper
has no relatives with sufficient
means in the place where the head of
the family lives. (Art. 1696, NCC) [F
I B E J]
f. If househelper is unjustly dismissed,
 pay wages already earned + 15 days
wages (Indemnity)
g. If househelper leaves without
justifiable cause,
 forfeits any unpaid salary not
exceeding 15 days
4. M works as a live-in labandera in the house
of T somewhere in Quezon City. She works
for 11 hours a day. Based on their contract,
she is paid P800.00. Is she entitled to
additional compensation?
Yes. Although she is merely a househelper, she
should not be allowed to work more than 10
hours a day. (Art. 1695, NCC) Since she worked
for 11 hours daily, she should be paid an
additional compensation beyond the minimum
wage of P800.00 set by the law. (Alcantara)
5. Art. 150 : If the duration of the household
service is not determined either in the
stipulation or by the nature of the service,
the ER or the househelper may give notice
to put an end to the relationship of the
service.
Section 20. Working Conditions for Special
group of Workers – Homeworkers
20.1 ER
1. Art. 155 : “ER” of homeworkers – includes
any person, natural or artificial, who for his
account or benefit, or on behalf of any
person residing outside the country, directly
or indirectly or though any EE, agent,
contractor, sub-contractor or any other
person:
a. Delivers or causes to be delivered,
any goods, fabricated in or about a
home and thereafter to be returned or
to be disposed of or distributed in
accordance with his directions; or
b. Sells any goods, articles or materials
to be processed or fabricated in or

about a home then rebuys them after
such processing or fabrication, either
himself or through some other
person.
20.2 ER Liability
1. Section 8, Rule XIV, Book III, IRR’s : The
ER shall be jointly and severally liable to the
EE’s or homeworkers of the contractor or
sub-contractor, in the same manner as if the
EE’s or homeworkers were directly engaged
by the ER.
2. S represents in the Philippines the Sears
chain of department stores in the US. She
sells wood and leather to housewives who
makes these into wooden clogs according to
the patterns and specifications of S. Is there
an ER-EE relationship between S and the
housewives?
Yes. The housewives are considered
homeweorkers and S is their ER. (Alcantara)
3. What is the liability of Sears?
Sears is jointly and severally liable if S is not
able to pay the wages of the homeworkers.
(Sec. 8, Rule XIV, Book III, IRR’s)
4. Terms and conditions of employment
involving money claims of homeworker
shall be heard by the Regional Director of
the DOLE. Beyond that, the case falls under
the jurisdiction of the Labor Arbiter.
(Azucena)
Section 21, Medical, Dental and Conditional
Safety
21.1 First Aid Treatment and ER Assistance
1. Art. 156. Every ER shall keep in his
establishment such first-aid medicines and
equipment as the nature and conditions of
work may require, in accordance with such
regulations as the DOLE shall prescribe.
Section 1, Rule I, Book IV, IRR’s “ This rule
shall apply to all ER’s whether operating for
profit or not, including the Government ant
GOCC’s, which employ in any workplace 1 or
more workers.
2. Art. 161 : It shall be the duty of an ER to
provide all the necessary assistance to
ensure the adequate and immediate medical
and dental attendance and treatment to an
injured or sick EE in cases of emergency.
49
3. The ER is not obliged to provide and spend
for the continued or follow-up treatment of
the EE unless it has bound itself to do so by
contract or established practice or policy.
(Alcantara)
21.2 Emergency Medical and Dental Services
When and What is Required
1. Describe briefly these free emergency medical,
dental services and facilities required to be
furnished by the ER?
 10 to 50 workers : The services of a
first-aider shall be provided who
may be one of the workers in the
workplace and who has immediate
access to the first-aid medicines.
 51 to 200 workers: Services of a
full-time registered nurse shall be
provided. However, if the work is
non-hazardous, the services of a full-
time first-aider may be provided if a
nurse is not available.
 201 to 300 workers : Services of a
full-time registered nurse, a part-time
emergency clinic shall be provided
regardless of the nature of the
undertaking therein. The physician
and dentist engaged for such workers
shall stay in the premises for at least
2 hours a day.
 Where the establishment
has more than 1 workshift a
day, the required 2 hour
stay shall be devoted to the
workshift which has the
biggest number of workers
and they shall, in addition
to the requirements under
this Rule, be subject to call
at anytime during the other
workshifts to attend to
emergency cases.
 301 or more workers : Services of a
full-time nurse, a full-time physician,
a full-time dentist, a dental clinic,
and an infirmary or emergency
hospital with one bed capacity for
every 100 workers shall be provided.
The physician and dentist shall stay
in the premises of the workplace for
at least 8 hours a day.
 Where the workplace has
more than 1 shift per day,
they shall be at the
workplace during the work-

shift which has the biggest
number of workers and
they shall be subject to call
at anytime during the other
workshifts to attend to
emergency cases.
 Where the undertaking in such
workplace is non-hazardous, the ER
may engage the services of a part-
time physician and part-time dentist
who shall have the same
responsibilities ass those of the part-
time physician and the part-time
dentist in the preceding paragraph,
and shall engage the services of a
full-time nurse.
 In all workplaces where there are
more than 1 workshift in a day, the
ER shall in addition to the
requirements under this rule, provide
the services of a full-time first-aider
for teach workshift. (Sec. 4, Rule I,
Book IV, IRR’s)
What are considered hazardous work
places? [D C M P]
 Where the nature of the work
exposes the worker to Dangerous
environmental elements,
contaminations or work conditions.
 Stevedoring, construction work,
logging, firefighting, mechanized
farming and similar work.
 Manufacture or handling of
explosives and other pyrotechnic
products
 Where the workers are exposed to
heavy or power-driven machinery or
equipment or tools.
 An auto repair shop has 8 EE’s.
What medical and dental services or
facilities must be furnished by the
owner of the latter?
Since the establishment employs less
than 10 workers, the owner is only
obliged to keep in the workplace first aid
medicines.
When not Required
Art. 158 : The requirement for an emergency
hospital or dental clinic shall not be applicable in
case there is a hospital or dental clinic which is
accessible from the ER’s establishment and he
makes arrangement for the reservation therein of the
necessary beds and dental facilities for the use of
his EE’s
5 km – urban
25 min – rural
50
21.3 Administration
Art. 165 : (a) The DOLE shall be solely responsible
for the administration and enforcement of
occupational safety and health laws, regulations and
standards in all establishments and workplaces
wherever they may be located.
 Chartered cities may be allowed to
conduct industrial safety inspections
of establishments within their
respective jurisdictions where they
have adequate facilities and
competent personnel for the purpose
as determined by the DOLE and
subject to national standards
established by the latter.
(b) The Secretary of Labor may, through
appropriate regulations, collect
reasonable fees for the inspection of
steam boilers, pressure vessels and
pipings and electrical installations, the
test and approval for safe use of
materials, equipment and other safety
devices and the approval of plans for
such materials, equipment and devices.
The fee so collected expended
exclusively for the administration and
enforcement of safety and other labor
laws administered by the DOLE.
Section 22. EE Classification
22.1 Coverage
Section 1, Rule I, Book VI, IRR’s : This Rule shall
apply to all establishments and undertakings,
whether operated for profit or not, including
educational, medical, charitable and religious
institutions and organizations, in cases of regular
employment with the exception of the Government
and its political subdivisions including GOCC’s.
22.2 EE Classification
1. Art. 280
a. Regular EE’s
b. Project EE’s
c. Casual EE’s
d. Seasonal EE’s
2. Art. 281
 Probationary EE
3. Others
 Contract-fixed period
ER Determination
1. What determines whether a certain
employment is regular or casual is not the
will and words of the ER, much less the
procedure of hiring the EE or the manner of
paying his salary. It is the nature of the

activities performed in relation to the
particular business or trade considering all
circumstances, and in some cases the length
of time of its performance and its continued
existence. (De Leon vs. NLRC)
2. Tucor Industries, a company engaged in
moving and storage of foods hired packers
and drivers pursuant to employment
contracts which provided that the workers
were employed on “as-needed” basis and
considered “daily-hired”. Are they
considered regular EE’s?
Yes. Packing and driving activities are usually
necessary and desirable in Tucor’s usual
business. They are entitled to security of tenure,
the provisions of the written agreement to the
contrary notwithstanding. (Tucor vs. NLRC)
22.3 Regular EE’s
1. Who are considered regular EE’s?
a. Those who have been engaged to
perform activities which are usually
necessary or desirable in the usual
business or trade of the ER, their
employment not being fixed for a
specific project or undertaking the
completion or termination of which
has been determined at the time of
the engagement, or seasonal nature
and the employment is for the
duration of the season. (Art. 280)
b. Casual EE’s who have rendered at
least 1 year of service is continuous
or broken; they are considered
regular EE’s with respect to the
activities in which they are
employed; their employment shall
continue while such activity exists.
(Id.)
Nature of Work
c. A probationary EE who is allowed to
work after the probationary period.
(Art. 281)
d. Learners who have been allowed or
suffered work during the first 2
months if training is terminated by
the ER before the end of the
stipulated period through no fault of
the learner. (Art. 75)
2. H applied for employment with Holiday Inn
and was accepted for “On-the-job training”
as telephone operator for 3 weeks. After the
completion of the training she was employed
on a “probationary basis” for 6 months. Four
days before the said period, she was
51
dismissed by the hotel on the ground that
she failed to meet the standards of the hotel.
Is the dismissal valid?
No. At the time of her dismissal, she was
already a regular EE since the “on-the-job
training” was already her “probationary period.”
She was not dropped after that period. Even
granting that the probation did not end with the
training, there is no reason why that period
should not be included in the stipulated 6-month
period probation. (Holiday Inn vs. NLRC)
3. L was hired as a component mechanic by a
manufacturing firm for a probationary
period for 6 months. Management decided
not to hire her after the probationary period.
After a month, the company again hired L
for another 6-month probationary period.
After the 2nd 6-month probationary period,
she was dismissed. Is L a regular EE?
Yes. The nature of her job required her to
perform activities which are necessary and
desirable in the usual business of her ER. She
was also rehired after the probationary
employment extended to her. This fact of
rehiring negates any claim that she failed to
qualify as a regular EE. Successive hirings and
firings cannot be resorted to by the ER to avoid
obligations imposed by law for the protection
and benefit of probationary EE’s. (Octaviano
vs. NLRC)
4. J is employed on a probationary period for 3
months. Although the ER was not satisfied
with his performance, he is allowed to work
after the end of the 3-month period. Has J
become a regular EE?
Yes. An EE is allowed to work after a
probationary period shall be considered a
regular EE. (Alcantara)
1. What is the primary standard of
determining regular employment? The
primary standard to determine a regular
employment is the reasonable connection
between the particular activity performed by
the EE in relation to the usual business or
trade of the ER. (De Leon vs. NLRC) The
connection can be determined by
considering the nature of the work
performed and its relation to the scheme of a
particular business or trade in its entirety.
Also, if the EE has been performing the job
for at least one year, even if the performance
is not continuous or merely intermittent, the
law deems the repeated and continuing need
for its performance as sufficient evidence of

the necessity if not indispensability of that
activity to the business. Hence, the
employment is also considered regular, but
only with respect to such activity and while
such activity exists. (Id.)
2. B, was hired by a Buddhist Temple as
secretary and interpreter. She also attended
personally to some needs of the Head Monk.
Is B a regular EE or a domestic helper?
B is a regular EE. Her functions were essential
and important to the operation and religious
function of the temple; they could not be
categorized as mere domestic work.
3. Stevedores were employed by corporation
engaged in deep-sea fishing to unload the
tuna fish catch from latter’s vessels into
refrigerated vans. Their work was
intermittent depending on the arrival of
fishing vessels. There were also times when
the stevedores worked on vessels belonging
to other companies. Are the stevedores
regular EE’s?
Yes. They were engaged to perform activities
usually necessary or desirable in the usual
business or trade of their ER’s. The activity of
catching fish is a continuous process; it cannot
be considered as a specific project or a seasonal
activity. Their working on other vessels does not
militate against the existence of the ER-EE
relationship since it is but natural for the worker
to seek other employment during the periods of
temporary la-off. (RJL Martinez vs. NLRC)
4. An electric cooperative only extended
permanent appointments to linemen,
secretaries, clerks and electricians after 6
months from the date of their hiring. May
the ER treat these workers as regular EE’s
only from the date they were extended
permanent appointments?
No. Their services are usually necessary or
desirable in the usual trade or business of the
cooperative. (Central Negros Electric vs.
NLRC)
Hiring Extended Period
1. A company engaged in construction hired
carpenters and issued them some notices of
employment that they were hired for specific
projects and their employment shall be
deemed automatically terminated at the
completion of the project. However, when
the project to which they were assigned
were completed, they would be immediately
assigned to the next project. Considering
that they have been working for a number of
years, are they regular EE’s?
52
Yes. They perform activities usually necessary
or desirable in the usual business of the
company. They are considered “non-project
EE’s” of the construction company. (Fegurin
vs. NLRC)
2. F, a skilled welder was hired by DM
Consunji for several projects wherein he was
assigned. There was also evidence that the
worker was under obligations to be always
available on call by the company and that he
could not offer his services to other ER’s. Is
he a regular EE?
No. F is a project EE. (Fernandez vs. NLRC)
Contract to Contract
1. P was hired by a textile firm as a machine
operator. P’s employment contract stipulates
that the company shall make an annual
assessment of his performance and his
continued employment shall depend on said
evaluation. Is the stipulation valid?
No. It determines the security of tenure enjoyed
by P who is a regular EE. His continued
employment is made to depend upon the whims
of the ER. (Alcantara)
2. M Co., is engaged in the manufacture of
furniture for export. It has regular customers
but also receives special orders. It hires
“temporary workers” for special orders.
These are made to sign temporary contracts.
Are these workers considered regular
workers? Yes. They are engaged in activities
which are usually necessary of desirable in
the usual business or trade of the ER.
Significantly, the special orders are not
seasonal but more or less regular, requiring
the continuous services of the “temporary
workers.” The temporary employment
contracts have little probative value.
(Mehitabel Furniture vs. NLRC)
3. M was employed as a carpenter by a
company engaged in the concrete structural
business. His work involved the making of
moulds for bridges. He was never assigned
to work outside the plant of the ER. Every 3
months, he was made to fill up and sign an
employment contract relating to a particular
phase of a work in a specific project. Is M a
regular EE?
Yes. He was assigned to perform tasks which
are usually necessary or desirable in the usual
trade or business of the ER. Despite the signing

of employment contracts, the work did not end
on a project to project basis. He continued to
perform the same kind of work throughout his
period of employment. (Magante vs. NLRC)
22.4 Project EE’s
Who are considered project EE’s?
 A project EE is one whose
employment has been fixed for a
specific project or undertaking, the
completion or termination of which
has been determined at the time of
the engagement of the EE or where
the work or service to be performed
is seasonal in nature and the
employment is for the duration of the
season. (Art. 280)
Test of Project EE’s
 What is the principal test to
determine whether EE’s are “project
EE’s” as distinguished from “regular
EE’s”? The test is whether or not the
project EE’s are assigned to carry out
a specific project or undertaking the
duration and scope of which are
specified at the time the EE’s are
engaged for that project. (ALU-
TUCP vs. NLRC)
Project EE’s
1. PPI, a company providing construction
supervision of the Manila Expressway hired
R for a term of 24 months. After the
expiration of the period, he was hired for
another term of 10 months, and then for 19
months. All these were entered during
various stages prior to the completion of the
construction project. Was R a regular EE of
PPI?
No. He was hired in a specific project or
undertaking as a driver. He was a project EE
whose employment terminated upon the
expiration of his employment contract or upon
the completion of the project. (Rada vs. NLRC)
2. A company engaged in the building and
repair of vessels hired welders to work in the
repair of a specified vessel. Is the
employment of the workers considered
regular?
No. They are project EE’s whose work is co-
terminus with the project for which they are
hired. (Sandoval Shipyards vs. Leogardo)
53
3. Consumer Pulse hired field interviewers on
specified project basis for a definite period
of time. Many of the interviewers worked
for several projects. Generally, the
contractual employment is not continuous
but intermittent, sporadic with long intervals
of idle periods in between projects due to
lack of work or job contracts. Are the filed
interviewers considered regular EE’s?
No. The interviewers were hired for specific
projects the completion or termination of which
are determined at the start of their employment.
(Manansag vs. NLRC)
4. A construction firm hired as project EE’s
several workers. Instead of being assigned
solely to the job sites, they were also made
to work as inventory clerk or warehouseman
in the company’s central shop. Are they
project EE’s?
No. Their work did not end upon the
completion of a project. They perform their jobs
even after a job had been finished. Since they
performed tasks vital and indispensable to the
efficient administration and completion of the
company’s various projects, they are considered
regular EE’s. (Capitol Industrial vs. NLRC)
Rationale
1. The rationale for this rule is that if a project
has already been completed, it would be
unjust to require the ER to maintain them in
the payroll while they are doing absolutely
nothing except waiting until another
program begun, if at all. In effect, these
stand-by workers would be enjoying the
status of a privileged retainers, collecting
payments for work not done, to be disbursed
by the ER from profits not earned. This is
not fair by any standards and can only be
lead to a coddling of labor at the expense of
management. (De Ocampo vs. NLRC)
Implication
Project EE’s are not entitled to separation pay as
their work was coterminous with the completion of
the project. (Sandoval Shipyards vs. Leogardo)
22.5 Casual EE’s
1. What is casual employment? An
employment is casual when the EE is
engaged to perform tasks or activities which
are not usually necessary or desirable in the
usual business or trade of the ER. (Art. 280)
2. Jai Alai Manila hired a mason and plumber
to do renovation work on its building. The

work lasted for 11 months. Are the mason
and plumbers regular EE’s?
No. They were engaged for a specific project or
undertaking. They are casual EE’s and as such
do not enjoy the security of tenure since they
work for only 11 months. (Philippine Jai Alai
vs. Clave)
22.6 Seasonal EE’s
1. Agricultural workers were hired by the
owners of a rice and sugar land to perform
particular phases of agricultural work
necessary in rice production, after which
they were free to render services.
Considering that they rendered services for
many years, in their employment, though
seasonal, deemed regular?
No. They are considered project or seasonal
EE’s .their employment legally ends upon the
completion of the project or the season.
(Mercado vs. NLRC)
22.7 Contract-Fixed Period
1. A was engaged as athletic director by Brent
School for a fixed term of 5 years. She was
not rehired after that term. Is she a regular
EE?
No. A’s employment was for a fixed period, her
employment ended. It does not necessarily
follow that where the duties of the EE’s entail
activities which are usually necessary or
desirable in the usual trade or business of the
ER, the parties should not be forbidden to
stipulate any period of time for these activities.
There is nothing essentially contradictory
between a definite period of employment and
the nature of the EE’s duties. (Brent vs.
Zamora)
2. Give the criteria under the fixed period
contracts of employment cannot be said to
be in circumvention of the worker’s
security of tenure.
 The fixed period of employment was
knowingly and voluntarily agreed
upon by the parties, without any
force, duress or improper pressure
being brought to bear upon the EE
and absent any other circumstances
vitiating his consent; or
 It satisfactorily appears that the ER
and EE dealt with each other on
more or less equal terms with no
moral dominance whatever being
exercised by the former on the latter.
(Pantranco vs. NLRC)
54
 When such stipulations were not
designed to circumvent the laws on
security of tenure. (Brent vs.
Zamora)
3. C was engaged by a trucking company to
work as a truck driver for a period of six
months. It appears that all drivers of the
company were hired on fixed contract basis.
The company merely filled in the blanks in a
mimeographed form with the corresponding
driver’s data. After the 6-month period, C’s
services were terminated. Was this a valid
termination?
No. The contract for a fixed period was a clever
scheme to prevent its EE’s from becoming
regular EE’s. he should be considered a regular
EE. (Cielo vs. NLRC)
4. 15 years after his dismissal for cause. A was
re-hired as a driver for 1 month. Did such re-
hiring result in his reacquisition of his
former regular status?
No. The contract specifically provided for a
fixed term. (Pantranco vs. NLRC)
22.8 Probationary EE’s
1. What is a probationary employment? It is
employment for a specified period generally
no exceeding 6 months for the purpose of
determining whether the EE can qualify for
regular employment in accordance with
reasonable standards prescribed by the ER.
(Alcantara)
2. What is the probationary period for
apprentices and learners?
 Apprentices : The probationary
period in the apprenticeship may not
be under probationary employment
in the company where he trained. In
another company, however, the
probationary period for him would
be 6 months.
 Learners : If the job is learnable –
can be learned within 3 months –
then the probationary period is 3
months or less. (Policy Instructions
No.1)
Purpose
Justify the rights of the ER to fix a probationary
period of employment? The ER has the right to
select his EE’s that the ER may set or fix a
probationary period within which the latter may test
and observe the conduct of the former before hiring
him permanently. (Grand Motors vs. Minister of
Labor) A probationary appointment is made to

afford the ER the opportunity to observe the fitness
of a probationer while at work, and to ascertain
whether he will become a proper and efficient EE.
(International Catholic Migration Commission vs.
NLRC) It is necessary for the probationary EE to
undergo a period of probation to test his
qualifications, skills and experience. (Grand
Motors)
Duration/Exception
May a company impose a longer probationary
period than 6 months? Yes. Generally, the
probationary period of employment is limited to 6
months. The exception to this general rule is when
the parties to an employment contract may agree
otherwise, such as when the same is established by
company policy or when the same is required by the
nature of the work to be performed by the EE i.e.
where a probationary period was set for 18 months,
especially where the EE must learn a particular kind
of work such as selling or when the job requires
certain qualifications, skills, experience or training.
(Buiser or Leogardo)
Extension Contract Effect EE’s
D was hired on probation by Mariwasa. Upon
expiration of the probationary period, he was
informed by the ER that his work proved
unsatisfactory. To give him a chance to improve his
performance and to qualify for her regular
employment, Mariwasa extended, with his written
conformity, his probationary period for another 3
months. His performance did not improve, and his
services was terminated. Did he become a regular
EE?
NO. By voluntary agreeing to the extension of the
original probationary period, D, in effect, waived
any benefit attaching to the completion of the said
period. (Mariwasa vs. Leogardo)
Absorbed EE’s
Private respondents could not be considered
probationary EE’s because they were already well-
trained in their respective positions. (Cebu
Stevedoring vs. Regional Director)
Termination and Salary
Award to the private respondent of the salary for the
unexpired 3-month portion of her 6-month
probationary employment who was validly
terminated during her probationary employment is
unjust and oppressive to the ER. (International
Catholic Immigration Commission vs. NLRC)
Rule Private School Teacher
1. Give the legal requisites for a private
school teacher to acquire permanent
employment and security of tenure? These
requisites are:
55
a. The teacher is a full time teacher.
b. The teacher must have rendered 3
consecutive years of service.
c. Such service must have been
satisfactory. (Cagayan Capitol
College vs. NLRC)
2. At the time of her retirement, A has been
employed as school teacher for 22 years.
After 3 years from her retirement, she was
rehired by the school teacher under contract
which was renewable yearly. After 2 years
of continuous satisfactory performance, her
contract was not renewed. Was the non-
renewal violative of her security of tenure?
Yes. When she was rehired, she did not have to
undergo a probationary employment as her
teaching competence had already been tried and
tested during her 22 years of service. she could
not be discharged solely on account of the
expiration of her 2nd annual contract. She could
not only be dismissed for cause and with due
process. (St. Theresita’s Academy vs. NLRC)
3. A teacher was hired by a private school on a
yearly basis. Before the expiration of the 2 nd
yearly contract, the school refused to renew
her contract on the ground that her teaching
performance was not satisfactory. Is the
refusal justified?
Yes. The positions were temporary in nature
and her employment was for a definite period.
Even assuming that she was on probationary
employment, the probationary period for
teachers is 3 years. (Biboso vs. Victoria
Milling)
Section 23: Termination and Employment
23.1 Introduction: EE’s Security of Tenure
Coverage
1. Art. 278 : The provisions of this Title shall
apply to all establishments or undertakings,
whether for profit or not.
2. Confidential and managerial are also entitled
to security of tenure, fair standards of
employment and the protection of labor
laws. (Inter-Orient Maritime vs. NLRC)
Probationary and contractual EE’s enjoy
security of tenure but only to a limited
extent. That is, they remained secure in their
employment during the period of time their
respective contracts remained in effect.
(Labajo vs. Alejandro)

3. Pakiao workers who by the nature of their
work are considered regular workers enjoy
security of tenure. (Dy Keh Beng vs. ILMU)
However, if the circumstances indicate that
they are in reality independent contractors,
then they do not enjoy security of tenure.
(Alcantara)
Security of Tenure
1. What is meant by the “security of tenure’?
of an EE? Security of tenure of an EE is his
right against unjust and arbitrary dismissal.
He cannot be deprived of his work, which is
property in the constitutional sense, without
a just cause and without the benefit of
hearing. (Alcantara)
2. Is there an express constitutional guarantee
of the security of tenure of an EE? Yes. Art.
XIII, Sec. 3, Const. (Rance vs. NLRC)
Nature of Rights
Termination of employment is not anymore a mere
cessation or severance of contractual relationship
but an economic phenomenon affecting members of
the family. This explains why under the board
principles of social justice the dismissal of EE’s is
adequately protected by the laws of the state.
(Alhambra vs. NLRC) However, the worker’s right
to security of tenure is not an absolute right for the
law provides that he may be dismissed for cause.
The law in protecting the rights of the laborers,
authorizes neither oppression nor self-destruction of
the ER. (MERALCO vs. NLRC)
Rationale Regulation
The right of ER to freely select or discharge his
EE’s is regulated by the State, because the
preservation of the lives of citizens is a basic duty
of the State, more vital than the preservation of the
corporate profit. (Llosa-Tan vs. Silahis)
23.2 Management Rights and the Just Cause of
Termination
Art. 282 : An ER may terminate an employment
for any of the following casues:
1. Serious misconduct or willful disobedience
by the ER of the lawful orders of his ER or
representative in connection with his work;
2. Gross and habitual Neglect by the EE of his
duties;
3. Fraud or willful breach by the EE of the
Trust reposed in him by his ER or duly
authorized representative;
56
4. Commission of a crime or offense by the EE
against
a. the person of his ER or
b. any immediate member of his family
or
c. his duly authorized representative
and
5. Analogous cases.
Management Rights
 The following are management
rights with respect to EE”s:
1. Right to manage people in general : Except
as limited by special laws, an ER is free to
regulate, according to his own discretion and
judgment, all aspects of employment. (San
Miguel vs. Ople)
2. Right to just share in the fruits of production
: Every business enterprise endeavors to
increase its profits. In the process it may
adopt or devise means designed toward the
goal. The free will of management to
conduct its own business affairs to achieve
its purpose cannot be denied. (Id.)
3. Right to discipline : The ER has the
prerogative to instill discipline in his EE’s
and to impose reasonable penalties,
including dismissal, on erring EE’s pursuant
to company rules and regulations. (San
Miguel vs. NLRC)
4. Right to transfer EE’s : It is management
prerogative to transfer an EE from one
office to another within the business
establishment, provided there is no demotion
in rank or diminution of his salary, benefits
and other privileges. (Yuco Chemical vs.
Minisrty of Labor) An EE’s right to security
of tenure does not give him such a vested
right in his position as would deprive the
company of its prerogative to change his
assignment or transfer him where he will be
most useful. (PTTC vs. NLRC) The
managerial prerogative, however, to transfer
personnel, must be exercised without grave
abuse of discretion and putting to mind the
basic elements of justice and fair play. It
cannot be used as a subterfuge by the ER to
rid himself of an undesirable worker. Nor
where the real reason is to penalize an EE
for his union activities and thereby defeat
his right to self-organization. (Id.)
5. The right to demote : It is management
prerogative to tranfer, demote, discipline
and even dismiss an EE to protect its
business, provided it is not tainted with
unfair labor practice (Petrophil vs. NLRC)

6. Right to dismiss : The right of the company
to dismiss its EE’s is a measure of self-
protection. (Reyes vs. Minister of Labor) An
ER cannot legally be compelled to continue
with the employment of a person who
admittedly was guilty of malfeasance
towards his ER, and whose continuance in
the service of the latter is patently inimical
to his interests. (Manila Trading vs.
Zulueta)
Just Causes of Termination
May an ER dismiss an EE who enjoys security of
tenure? Yes. Security of tenure does not guarantee
perpetual employment. If there is a just or
authorized cause the ER may terminate the services
of an EE; the former cannot be legally compelled to
have in its employ s person whose continued
employment is patently inimical to its interest.
(Alcantara)
A. JUST CAUSE : SERIOUS MISCONDUCT
1. What is serious misconduct? Misconduct is
improper or wrong conduct/ it is the
transgression of some established and
definitive rule of action, a forbidden act, a
dereliction of duty, willful in character, and
implies wrongful intent and not mere error
in judgment. The misconduct to be serious
must be of such a grave and aggravated
character and not merely trivial or
unimportant. Such misconduct, however
serious, must, nevertheless, be in connection
with the EE’s work to constitute just cause
for its separation.
2. Examples of serious misconduct :
a. EE utters obscene, insulting or
offensive words against a superior
(Asian Design vs. Deputy Minister
of Labor) or challenging a superior
officer to a fistfight. (Luzon
Stevedoring vs. CIR) However, 2
other later cases ruled that the
penalty of termination is extreme and
excessive and is not commensurate
with the acts committed. (Maranao
Hotel vs. CA and Mary Johnston
Hospital vs. NLRC) The controlling
factor is the circumstances
surrounding the willful misconduct.
(Alcantara)
b. Serious breach of company rules by
allowing 2 security guards to come
inside the Security Office, drinking
and having sex with one of the
57
guards, although both of them are
married. (Stanford vs. NLRC)
c. As a general rule, immorality does
not justify a discharge. But when the
EE holds a responsible position and
has under him a good number of
men, the EE must set a good
example for his men to follow. Thus,
when he got a young concubine and
drove away the members of his
family from the conjugal home, such
dismissal is justified. (Sanchez vs.
Ang Tibay)
d. Sleeping in post, gross
insubordination, dereliction of duty
and challenging superior officers to a
fight committed by a security guard.
(Luzon Stevedoring vs. CIR)
e. Seaman’s assault with a knife of a
member of the ship’s crew.
(Haverton vs. NLRC)
f. Intoxication is such a misconduct as
will justify separation from
employment, where such
intoxication interferes with the
employment. (Azucena)
g. Sexual harassment by a managerial
EE of one of his subordinates.
(Villarama vs. NLRC)
h. Authorship of a manifesto which
ridiculed the officers of a school and
demanded their removal, and which
disrupted the good order and
decorum in the school, when such
charges in the manifesto are found to
be not true. (St. Mary’s College vs.
NLRC)
i. Cheating a customer. (PLDT vs.
NLRC)
3. What are examples of misconduct which
does not warrant dismissal?
a. Fistcuffs between two EE’s as a
result of mere private matter
between them. (Aris vs. NLRC)
b. Vending, soliciting, and engaging in
usurious activities. (Pacific
Products)
c. Borrowing money from a patient
which the EE later paid back.
(Makati Medical Center vs. NLRC)
However, when there is use for a

trust relationship as leverage for
borrowing money, the act becomes
serious misconduct. (Pearl S. Buck
Foundation vs. NLRC)
d. Teacher falling in love with student
provided the teacher did not take
advantage of her position to court
her student. (Chua-Qua vs. Clave)
B. JUST CAUSE : WILLFUL DISOBEDIENCE
1. What are the requisites in order that willful
disobedience may constitute a just cause
for terminating employment?
 The orders, regulations, instructions
of the ER or his representative must
be:
a. Reasonable and
lawful – has reference
not only to the kind
and character of
directions, but also
the manner in which
they are made.
b. Sufficiently known to
the EE.
c. In connection with the
duties which the EE
has been engaged to
discharge.
 The ER’s conduct must have been
willful or intentional, willfulness
being characterized by a wrongful
and perverse mental attitude
rendering the EE’s act inconsistent
with proper subordination.
(Azucena)
2. Not every case of insubordination or willful
disobedience by an EE of a lawful work-
connected order of the ER or its
representatives is reasonably penalized with
dismissal. There must be a reasonable
proportionality between the offense and the
penalty imposed therefor. (Gold City vs.
NLRC) Past infractions, to which the EE
was already meted out disciplinary measures
cannot be used as a justification for EE’s
dismissal from service of the current
infraction does not suffice as a ground for
just termination. (Filipino vs. Ople)
3. M, an EE of Tritran was told by the
personnel manager to see right away the
president to apologize for his past misdeeds.
He was dismissed because he failed to see
the company president. Is the dismissal
justified?
58
No. The directive to see the company president
was neither reasonable nor one connected with
his duties. (Mancho vs. NLRC)
4. Examples of willful disobedience :
 Violation of a rule which prohibits
EE’s from using company vehicles
for private purposes without
authority from management and
stubborn refusal to attend a
grievance conference to discuss the
violation. (Soco vs. Mercantile
Corp.)
 Willful violation of rules and
regulations designed for the safety of
laborers i. e. smoking by a painter in
the painting booth. (Northern
Motors vs. NLU)
 Allowing a customer to pass thru the
exit gate without paying for the work
done on his car, despite clear
instructions to the contrary, (Manila
Trading vs. Zulueta)
 Act of gambling if it is penalized
under company rules with dismissal.
(Dimalanta vs. Secretary of Labor)
 Failure to comply with reportorial
requirements in the sales policies.
(GTE vs. Sanchez)
 N, driver refused to drive EE’s to
Makati head office to collect their
profit shares despite repeated orders
made by the vehicle supervisor and
the officer-in-charge. (Nuez vs.
NLRC) In this case, even if he was
employed for 19 years, and this was
his 1st offense, no separation pay, on
the basis of compassion was given to
the EE.
 B was employed as Chief Dietician
of a hospital. She refused to follow
the instructions of the Board of
Trustees of the hospital to buy from
a food supplier who was willing to
give a discount on food purchases.
Because of this, B was dismissed. Is
the dismissal justified?
Yes. Her acts constitute serious defiance
of the lawful orders of her superiors with
respect to matters involving her duties.
They are also sufficient basis for her
superiors to lose their trust and
confidence in her. (St. Luke’s vs.
Minister of Labor)

5. D, an EE of Northwest Airlines refused a
promotion. Does such refusal constitute
insubordination warranting dismissal?
No. There is no law which compels an EE to
accept a promotion. He was exercising a right
and he cannot be punished for it as quijure suo
utitor neminem laedit. He who uses his own
legal right injures no one. (Dosch vs. NLRC)
6. G, a press-helper of a printing company
drank beer outside company premises after
his tour of duty. He later went to the
company’s canteen to eat lunch. He was
dismissed based on the company policy
prohibiting “drinking in the company
premises or coming to work under the
influence of alcohol.” Is the dismissal
justified?
No. He did not drink beer in the company
premises; neither did he report for work under
the influence of liquor because it was not their
tour of duty then. (Catalan vs. Genilo)
C. JUST CAUSE : NEGLECT OF DUTIES
1. What is the rule on neglect of duties to
constitute a just cause for termination? In
order to constitute a just cause for EE’s
dismissal, the neglect of duties must not
only be gross but also habitual . Gross
neglect means an absence of that diligence
that an ordinarily prudent man would use in
his own affairs, unless the contract of
employment requires a higher degree of
care. It is sufficient that the gross and
habitual neglect by the EE tends to prejudice
the ER’s interest since it would be
unreasonable to require the ER to wait until
he is materially injured before removing the
cause of the impending evil. (DOLE
Manual)
2. Examples of gross negligence :
 Failure to properly estimate the fair
market value of a property to be used
for a loan by an appraiser.
(Associated Bank vs. NLRC)
 Abandonment. To constitute
abandonment, two elements must
concur:
a. The failure to report
for work or absence
without valid or
justifiable reason, and
b. A clear intention to
sever the ER-EE
relationship, with the
second element as the
more determinative
59
factor and being
manifested by overt
acts. (Labor vs.
NLRC)
 Habitual tardiness and absenteeism
(Sajonas vs. NLRC)
 Numerous unauthorized absences.
(Cando vs. NLRC)
3. S, working as a lobby boy of a movie
theater, was pursuant to standard
management practice transferred from the
day shift where he had been for quite some
time to the night shift. He asked that the
change be recalled but his request was
denied. As he disliked the new assignment,
he did not report for work. The company
dismissed him due to abandonment. Is the
dismissal jusitified?
Yes. There was nothing unusual or
discriminatory in his change of assignment
because the rotation was standard company
practice. (Castillo vs. CIR)
4. Due to unauthorized absences, M, employed
with the company for 18 years, was
transferred from the Fire Tender Section to
the Pan Grinding Section. He however did
not report to his new section, on the ground
that the transfer was unreasonable and
amounted to demotion. The company
contends that his failure to work despite
repeated notices constitutes abandonment
and a ground for his dismissal. Is this valid?
The penalty of dismissal is out of proportion to
the offense committed considering the number
of years of M’s employment. A 1 year
suspension would be sufficient. (Meracap vs.
International Ceramics)
5. A, met a work-connected accident. When he
was completely recovered, he failed to
report to work despite the certification of 5
doctors that he could resume his normal
work. He was dismissed pursuant to
company [policy that an EE who incurs
without valid reason 6 or more absences is
subject to dismissal. Is the dismissal valid?
Yes. He was guilty of serious neglect of his
duties. (Phil. Geothermal vs. NLRC)
D. JUST CAUSE : DISHONESTY, LOSS OF
CONFIDENCE
1. What kind of fraud justifies as just
termination? Fraud has been defined as any

act, omission, or concealment which
involves a breach of a legal duty, trust or
confidence justly reposed and is injurious to
another. To constitute a just cause for
terminating the EE’s services, the fraud
must be committed against the ER, or
representative and in connection with the
EE’s work. Thus, fraud committed by an EE
against 3rd persons not in connection with
his work and which does not in any way
involve his ER not a ground for the
dismissal of the EE. (DOLE, Manual)
2. Example of Dishonesty
 Falsification of time cards. (SMC vs.
NLRC)
 Theft of company property.
(Firestone vs. Lariosa) However, the
penalty must be proportional to the
offense committed i.e. EE should not
be dismissed for theft of used motor
oil of minimal quantity if the EE has
no previous record. (Gelmart vs.
NLRC); EE should not be dismissed
for theft of lead pipe to be used for
personal use if the EE has no
previous record. (PAL vs. PALEA);
president of union should not be
dismissed for leading an “unexpected
strike” which lasted for 2 days and
which resulted in a loss to the
company of only P3,000.00
(Sampang vs. Inciong); counter –
clerk of PLDT should not be
dismissed for tampering with a
phone bill where the worth of the
tampering only amounted to P30.00
and it was the first offense in 7 years
(PTTC vs. NLRC). Note that the
length of time the EE is employed
and the fact that it was the EE’s 1st
offense is an important factor in
many of these cases wherein the
penalty of dismissal was deemed to
harsh. Where a penalty less punitive
would suffice, whatever missteps
may be committed by the worker
should not be visited with the
supreme penalty of dismissal.
(Almira vs. BF Goodrich)
 Circulating fake tickets. (Ibarrientos
vs. NLRC)
3. Explain loss of confidence as a ground for
just termination : The basic premise for
dismissal on the ground of loss of
confidence is that the EE concerned holds a
position of trust and confidence. (Quezon
Electric vs. NLRC) Mere existence of basis
60
for believing that the EE has breached the
trust of ER is sufficient and does not require
proof beyond reasonable doubt. (Kwikway
vs. NLRC) However, to constitute as valid
ground, it must be substantial and not
arbitrary, and must be founded on clearly
established facts sufficient to warrant the
EE’s separation from work. (Labor vs.
NLRC)
4. Examples of loss of confidence as ground
for just termination :
 GM of hotel found to have anti-
Filipino tendencies, who did not
perform his functions properly and
who requisitioned wines for personal
use. (Riker vs. Ople)
 Director who represented to the
company that machinery brought
were brand-new when in fact they
were second-hand. (Pepsico vs.
NLRC)
 Bank teller’s act allowing
encashment of checks over the
counter without verification of
drawer’s signature. (Allied Bank vs.
Castro)
 Violation of the company sales
policy of distributing its goods to as
many customers as possible by a
salesman who made it appear that
they were sold to many customers.
(Filipro vs. NLRC)
 Engaging in business other than that
of ER, if the activities tend to injure
or endanger the business of the ER
or the EE is unable to give time and
attention to the discharge of his
duties. (Azucena)
 Competing with ER’s business.
(Azucena)
 Repeated shortages incurred by a bill
collector, although resulting in no
material damage as the amounts
were returned. (Piedad vs. Lanao
del Norte Electric Cooperative)
5. 5 EE’s of an electric cooperative were
dismissed for loss of confidence when they
were caught pilfering electric current
through tampered meters in their houses.
Considering that the EE’s held no position
involving trust and confidence, is loss of
confidence a ground to dismiss them?
No. The offense they committed is not work-
related. The pilferage could have been effected

even if they were not EE’s of the cooperative.
(Quezon Electric Cooperative vs. NLRC)
Compare this with the case of Flores vs. NLRC,
where the same act constituted a ground of
serious misconduct and breach of trust.
6. J, a checker, was dismissed by San Miguel
for breach of trust due to possible
involvement in a burglary incident. The
dismissal was effected despite J’s acquittal
in a criminal case for the said offense. Is the
dismissal lawful?
No. The termination of rank and file EE’s due
to breach of trust requires proof of actual
involvement in the acts constituting the offense.
(SMC vs. NLRC)
E. JUST CAUSE : COMMISSION OF A
CRIME OR OFFENSE
1. Another just cause of terminating an
employment is the EE’s commission of a
crime or offense against the person of his
ER or against any immediate member of the
ER’s family. The immediate members of the
family referred to are limited to the spouse,
ascendants, descendants, or legitimate,
natural, or adopted brothers or sisters of the
ER or of his relative by infinity in the same
degrees, and those by consanguinity within
the 4th degree. (Azucena)
2. Conviction or prosecution is not required, to
warrant his dismissal by his ER and the fact
that a criminal complaint against the EE has
been dropped by the city fiscal as not
binding and conclusive upon the tribunal.
(Starlite vs. NLRC)
F. ANALOGOUS CASES
1. To be considered analogous to the just cases
enumerated, the cause must be due to the
voluntary and/or willful act or omission of
the EE. (Nedura vs. Benguet Consolidated)
2. Examples of Analogous Cases :
 Unreasonable behavior and
unpleasant deportment in dealing
with the people she closely works
with in the course of her
employment, is analogous to the
other “just causes” enumerated under
the Labor Code. (Cathedral School
vs. NLRC)
G. OTHERS
1. Other examples of just termination:
61
 Courtesy resignation (Batongbacal
vs. Associated Bank)
 Faculty members of a school whose
appointments as department heads
are terminated. (La Sallette vs.
NLRC)
23.3 Authorized Cases of Termination
Art. 283 : The ER may also terminate the
employment of the EE due to:
1. the Installation of labor saving device.
2. redundancy
3. retrenchment to prevent losses.
4. closing or cessation of operation of the
establishment or undertaking.
Art. 284: EE who has been found to be suffering
from and Disease and whose continued employment
is prohibited by law or is prejudicial to his health as
well as to the health of his co-EE’s.
Introduction of Labor saving Devices
Redundancy
Redundancy exists where the services of an EE are
in excess of what is reasonably demanded by the
actual requirements of the enterprise; a position is
redundant when it is superfluous, and superfluity of
a position or positions may be the outcome of a
number of factors such as:
1. the overthrowing of workers
2. decreased volume of business or
3. the dropping of a particular product line or
4. service activity previously manufactured or
undertaken by the enterprise.
Redundancy is an ER’s personnel force, however
does not necessarily or even ordinarily refer to
duplication of work. That no other person was
holding the same position which the dismissed EE
held prior to the termination of his services does not
show that his position had not become redundant.
(Escareal vs. NLRC)
Retrenchment
What are the general standards to determine
whether the retrenchment is valid? The general
standards are the following:
1. The losses expected should be substantial
and not merely de minimis in extent.
2. The substantial loss apprehended must be
reasonably imminent, as such imminence
can be perceived objectively and in good
faith by the ER.
3. It must be reasonably necessary and likely to
prevent the expected losses.
4. The ER should have taken other measures
prior or parallel to the retrenchment to

forestall losses. I. e. ; cut other costs other
than labor costs.
5. Alleged losses if already realized, and the
expected minimum losses sought to be
forestalled, must be proved by sufficient and
convincing evidence. (Lopez Sugar vs.
FFW)
Distinguish redundancy from retrenchment?
Redundancy means that the position of the EE has
become superfluous, an excess over what is actually
needed, even if the business reduction or reverses.
(Azucena)
Closure of Business
1. The burden of proving that the termination
was for a valid or authorized cause shall rest
on the ER. (Indino vs. NLRC)
2. Is the ER required to pay separation pay for
closure of business due to the serious
business losses?
No. The cases of State Investment House vs.
CA, Mendoza vs. NLRC, and the Mindanao
Terminal vs. Minister of Labor provide that the
rule in Article 283 with respect to separation
pay applies only to closure not due to business
reverses. (Azucena)
3. What are the requirements for a valid
cessation of business not due to business
reverses?
 Service of a written notice to the
EE’s and to the DOLE at least 1
month before the intended date
thereof.
 Cessation or withdrawal from
business operations must be bona
fide in character.
 Payment to the EE’s termination pay
amounting to at least ½ month pay,
for every year of service, or 1 month
pay, whichever is higher. (ALU vs.
NLRC)
Ailment or Disease
If the EE suffers from a disease and his continued
employment is prohibited by law or prejudicial to
his health or to the health of his co-EE’s, the ER
shall not terminate his employment unless there is a
certification by a competent public health authority
that the disease is of such nature or at such a stage
that it cannot be cured within a period of 6 months
even with proper medical treatment. (Sec. 8, Rule
1, Book VI, IRR’s) A medical certificate issued by
the company’s own physician, is not a “competent
public health authority.”
62
23.4 Procedure to Terminate Employment
Two Facets of Valid Termination
1. The legality of the act of dismissal which
constitutes discharge with just cause; and
2. The legality in the manner of dismissal with
due process. (Shoemart vs. NLRC)
Due Process : Notice
The law requires that the ER must furnish the
worker sought to be dismissed with two written
notices before termination of employment can be
legally effected:
1. Notice which apprises the EE of the
particular acts or omissions for which his
dismissal is sought; and
2. Subsequent notice which informs the EE of
the ER’s decision to dismiss him. Failure to
comply with the requirements taints the
dismissal with illegality. (Pepsi-Cola vs.
NLRC)
Opportunity to be Heard
1. An EE must be given ample opportunity
prior to his dismissal to adequately prepare
for his defense. By “ample opportunity” is
meant every kind of assistance that
management must be accord to the EE to
enable him to prepare adequately for his
defense. Under the rules, indeed workers
may be provided with a representative.
(Ruffy vs. NLRC) The requirement of
hearing affords the EE the opportunity to
answer his ER’s charges against him and
accordingly to defend himself therefrom
before dismissal is effected. (Salaw vs.
NLRC)
2. No hearing is required if the grounds for
dismissal or termination of service does not
relate to blameworthy act or omission on the
part of the EE i.e. retrenchment or
redundancy. (Witshire vs. NLRC).
3. W was called to the Office of the General
Manager and was told that she was being
charged with discourtesy and
insubordination. During that time, she was
also called to explain her side. As she could
not give an explanation, she was dismissed.
Is the dismissal valid?
No. She was denied procedural due process.
She was not given ample opportunity to be
heard and to defend herself.
4. 36 conductors of a bus were dismissed after
investigations conducted by the Jago and the
fiscal found out that they defrauded the

company. Is the dismissal violative of due
process?
No. For the company to conduct its own
investigation is a duplication of the JAGO and
the city fiscal’s investigation. (BLTB vs.
NLRC)
5. D was dismissed by his ER based on the
preliminary investigation of the city fiscal
which relied on an affidavit of an accused-
turned state witness. Is this violative of due
process?
Yes. As compared to the BLTB case, the
findings of the city fiscal were based solely on
the affidavit of the accused-turned state witness.
The substantial evidence requirement is not
present. (China City Restaurant vs. NLRC)
6. S was dismissed by his ER due to his well
documented involvement in pilferage. Prior
to dismissal, he was called to a meeting of
all delivery personnel to discuss pilferage
incidents. He denied involvement therein.
Later he was dismissed. Is the dismissal
violative of due process?
Yes. The meeting called by the ER does not
qualify as the hearing required by law.
(Segismundo vs. Montalvo)
Right to Counsel
The right to counsel is a basic requirement of
substantive due process. The right to counsel cannot
be waived except in writing and in the presence of
counsel. (Salaw vs. NLRC)
Burden of Proof
Art. 277 : The burden of proving that the
termination was for a valid or authorized cause shall
rest on the ER.
Degree of Proof
In administrative or quasi-judicial proceedings,
proof beyond reasonable doubt is not required as
basis for a judgment of the legality of an ER’s
dismissal of an EE, nor even preponderance of
evidenced, substantial evidence being sufficient.
(MERALCO vs. NLRC)
Condonation
Having condoned the misconduct of the EE and
pardoned the latter, he is deemed to have lost or
waived his right to insist on the ER’s acts as a
ground for dismissal. (Azucena)
Dismissal for Cause but Without Due Process
63
A sanction, in the form of damages, must be
imposed upon the ER for failure to give a formal
notice and conduct an investigation as required by
law before dismissing the EE from employment.
(Wenphil vs. NLRC)
Rules – Managerial EE’s and Rank and File
EE’s
As a general rule, ER’s are allowed a wider
latitude of discretion in terminating the employment
of managerial personnel or those who, while not of
similar rank, perform functions which by their
nature require the ER’s full trust and confidence.
This must be distinguished from the case of
ordinary rank-and-file EE’s whose termination on
the basis of these same grounds require a higher
proof of involvement in the events in question; mere
uncorroborated assertions and accusations by the
ER will not suffice. (Coca-Cola vs. NLRC)
Offer to Reinstate
The fact that his ER latter made an offer to re-
employ him did not cure the vice of his earlier
arbitrary dismissal. (Ranara vs. NLRC)
Prescription
A complaint founded on illegal dismissal is not an
ordinary money claim but for reinstatement. The
action may be brought within 4 years from
dismissal pursuant to Art. 1146 of the NCC. (New
Imus Lumber vs. NLRC)
23.5 Consequences of Termination
Separation Pay
A. General Rule
If there is valid cause to terminate an employment,
no separation pay need be paid. (Sec. 7, Rule I,
Book VI, IRR’s)
B. Exceptions
1. Art. 283 :
 Installation of labor saving devices
and redundancy : 1 month or 1
month pay for every year of service,
whichever is higher.
 Retrenchment to prevent losses and
closure or cessation of operation or
establishment or undertaking not
due to serious business losses or
financial reverses : 1 month pay or
½ month pay for every year of
service, which ever is higher.
2. Art. 284 :

 Disease : 1 month salary or ½ month
salary for every year of service,
whichever is higher.
3. Even if an EE resigns, he shall be given a
separation pay if there is a company policy
to that effect. (Philoil vs. Ministry of
Labor)
4. Discerning compassion Doctrine:
Separation pay shall be allowed as a
measure of social justice for instances where
the EE is validly dismissed for causes other
than serious misconduct or those reflecting
on his moral character i.e. A was found to
have demanded and received money in
consideration for promise to facilitate
approval of telephone line application.
(Nasipit Lumber vs. NLRC)
5. Antipathy and Antagonism Reinstatement
is no Longer Possible : Strained relations in
order that it may justify award of separation
pay in lieu of reinstatement with backwages,
should be such, that they are so compelling
and so serious in character, that the
continued employment has become
inconsistent with peace and tranquility
which is an ideal atmosphere in every
workplace. (Sibal vs. Notre Dame) This is
particularly true when the position the EE is
occupying is a position involving trust and
confidence. (Alcantara)
C. COMPUTATION of SEPARATION PAY
Includes not just the basic salary but also the regular
allowances the EE has been receiving. (Planters
Products vs. NLRC) However, commissions are not
included in such base figure. (Soriano vs. NLRC)
D. EFFECT- RECEIPT
EE’s who received their separation pay are not
barred from contesting the legality of their
dismissal. The acceptance of those would not
amount to estoppel. (San Miguel vs. Javate)
Backwages
1. Backwages in general are granted on
grounds of equity which a worker has lost
due to his illegal dismissal. (Torillo vs.
Leogrardo) As a general rule, an EE is
entitled to backwages only where his
dismissal is due to the unlawful act of the
ER or to the latter’s bad faith. (Reyes vs.
Minister of Labor) While generally an order
of reinstatement carries with it an award of
backwages, the court may not only mitigate,
but also absolve the ER from liability fro
64
backwages where good faith is evident.
(Durabilt vs. NLRC)
2. Differentiate backwages from separation
pay? Separation pay is the amount that an
EE receives at the time of his severance
from the service and is designed to provide
the EE with the “wherewithal during the
period that he is looking for another
employment.” (Torillo vs. Leogardo)
Backwages represent compensation that
should be earned but not controlled because
of the unjust dismissal. (Lim vs. NLRC) The
basis of computing the two are different, the
1st being usually the length of the EE’s
service and the 2nd the actual period when he
was lawfully prevented from working. (Id.)
A. COMPUTATION OF BACKWAGES
1. Art. 279 : An EE who is unjustly dismissed
from work shall be entitled to full
backwages, inclusive of allowances, and to
his other benefits or their monetary
equivalents computed from the time his
compensation was withheld from him up to
the time of his actual reinstatement.
2. The effects of extraordinary inflation are not
to be applied without an agreement between
the parties and without an official
declaration thereof by competent authorities.
(Lantion vs. GAUF)
Reinstatement
1. Reinstatement is a restoration to a state
which one has been removed or separated. It
is the turn to the position from which he was
removed and assuming again the functions
of the office already held. Reinstatement
presupposes that the previous position from
which one had been removed still exists, or
that there is an unfilled position more or less
of a similar nature as the one previously
occupied by EE’ (NATU vs. Secretary of
Labor)
2. An ER has 2 options in order for him to
comply with an order of reinstatement,
which is immediately executory, even
pending appeal, firstly, he can admit the
dismissed EE back worth under the same
terms and conditions prevailing prior to his
dismissal or separation or to a substantially
equivalent position if the former position is
already filled up. Secondly, he can reinstate
the EE merely in the payroll. (Medina vs.
CBS)
3. The decision of the labor arbiter reinstating
a dismissed EE is immediately executory

even while the case is brought up on appeal.
(Art. 223) In authorizing this, the law itself
has laid down a compassionate policy which
once more vivifies and enhances the
provisions of the Constitution. (Aria vs.
NLRC)
4. Reinstatement is not self-executing. Payroll
reinstatement or actual reinstatement needs
the issuance of a writ of execution.
(Maranao Hotel vs. NLRC)
5. What if reinstatement is not prayed for in the
case before the labor arbiter. Is the labor
arbiter allowed to grant reinstatement?
No. The EE will not be reinstated if he did not
pray for reinstatement. (Labor vs. NLRC) But
an earlier case, (General Baptist Colloge vs.
NLRC) says that EE is entitled to reinstatement
although he failed to specifically pray for the
same. The Labor case is a later case.
6. After a finding that the dismissal of G, the
manager of Dunkin Donuts violated
procedural due process. G asked that he be
reinstated. The company refused on the
ground of loss of confidence of G. Is the
refusal valid?
Yes. G held a sensitive position. The case left
both parties with less than full trust and faith in
each other. He should be paid severance
compensation in lieu of reinstatement. (Golden
Donuts vs. NLRC)
23.6 Termination by EE and Suspension of
Operation
Termination by EE – Just Causes
Art. 285 : An EE may put an end to the relationship
without serving any notice on the ER for any of the
following just causes:
1. Serious insults by the ER and or his
representative on the honor and person of
the EE;
2. Ihuman and unbreakable Treatment
accorded the EE by the ER or his
representative;
3. Commission of a crime or offense or his
representative against
 the person of the EE
 or any immediate members
of his family, and
 Analogous cases.
Without Just Cause – Requisites
Art. 285(a) : An EE may terminate without just
cause the ER-EE relationship by serving a written
notice on the ER at least 1 month in advance. The
65
ER upon whom no such notice has been served may
hold the EE liable for damages.
A. RESIGNATION
Resignation is a voluntary act of an EE who “finds
himself in a situation where he believes that
personal reasons cannot be sacrificed in favor of the
exigency of the service, then he has no other choice
but to disassociate himself from his employment.”
The ER has no control over resignation and so, in
order to ensure that no disruption of work would be
involved by reason of resignation. This practice has
been recognized because “every business enterprise
endeavors to increase its profits by adopting a
device or means designed towards that goal.
Resignation once accepted and being the sole act of
the EE may not be withdrawn without the consent
of the ER. ( Intertrod Maritime vs. NLRC)
B. CONSTRUCTIVE DISCHARGE
1. A constructive discharge is a quitting
because continued employment is rendered
impossible, unreasonable or unlikely; as, an
offer involving a demotion in rank and
diminution in pay. (Philippine Japan Active
Carbon vs. NLRC) This is not a case of
voluntary resignation. It is in the nature of a
contrivance to effect to dismissal without
cause. (Rizal Memorial vs. NLRC)
2. Z was hired as a production recorder by a
tobacco company. After 14 years of
occupying the position, she was demoted to
picker by reason of inefficiency due to
alleged frequent mistakes in her report. Z
refused to report for work and filed a
complaint for illegal dismissal. Was the
dismissal justified?
No. The management based its action merely
on communications between officers of the
company. She was not notified in advance of the
company’s actions. The demotion done in bad
faith constitute constructive dismissal.
Suspension of Operations
1. Art. 286 : The bona fide suspension of the
operation of a business or undertaking for a
period not exceeding 6 months, or the
fulfillment by the EE of a military or civic
duty shall not terminate employment. In all
such cases, the ER shall reinstate the EE to
his former position without loss of seniority
rights if he indicates his desire to resume his
work not later than 1 month from the
resumption of operations of his ER or from
his relief from the military or civic duty.

2. It is settled that when the bona fide
suspension of operations of a business
undertaking exceed 6 months, then the
worker’s employment shall be deemed
terminated. (Lucky Textile vs. NLRC)
Section 24. Retirement
Art. 287 : Any EE may be retired upon reaching the
retirement age established in the CBA or other
applicable employment contract.
In case of retirement, the EE shall be entitled
to receive such retirement benefits as he may have
earned under existing laws and any CBA agreement
and other agreements: Provided, however, That an
EE’s retirement benefits under any CBA and other
agreements shall not be less than those provided
therein.
In the absence of a retirement plan or
agreement providing for retirement benefits of EE’s
in the establishment, an EE upon reaching the age
of 60 years or more, but not beyond 65 years which
is hereby declared the compulsory retirement age,
who has served at least 5 years in the said
establishment, may retire and shall be entitled to
retirement pay equivalent to at least ½ month salary
for every year of service, a fraction of at least 6
months being considered as 1 whole year.
Unless the parties provide for broader
inclusions, the term ½ month salary shall mean 15
days plus 1/12th of the 13th month pay and the cash
equivalent of not more than 5 days of service
incentive leaves.
Retail, service and agricultural establishments
or operations employing not more than 10 EE’s or
workers are exempted from the coverage of this
provision.
Violation of this provision is hereby declared
unlawful and subject to the penal provisions under
Art. 288 of this Code.
Obligation
1. The law does not impose any obligation
upon ER’s to set up a retirement scheme for
their EE’s over and above that already
established under existing laws. (Llora
Motors vs. Drilon)
2. Entitlement of EE’s to retirement benefits
must be specifically granted under existing
laws, a CBA or employment contract or an
established EE policy. (GVM vs. NLRC)
Benefit
1. Retirement benefits are intended to help the
EE enjoy the remaining years of his life,
66
lessening the burden of worrying for his
financial support, and are a form of reward
for his loyalty and service to the ER.
(Aquino vs. NLRC)
2. The CBA between a university and its
faculty members provided that in case of
unusual circumstances, faculty members
whose services are terminated shall be
granted retirement benefits. Are faculty
members affected by an unusual
circumstance, such a phase-out, and who are
given separation pay pursuant to law also
entitled to retirement benefits?
Yes. There is no provision in the CBA to the
effect that termination benefits received under
the law shall preclude the EE from receiving
other benefits under the agreement. Separation
arising from a forced termination of
employment and benefits given as a contractual
right due to many years of faithful service and
are not necessarily antagonistic to each other.
(UE vs. Minister of Labor)
PART II
SOCIAL SECURITY
25. 1 Social Security Law (SSL) RA 1161 (as
amended by RA 8282)
Section 1, SSL : The Act shall be known as the
Social Security Act of 1997.
25.2 Policy of the State
1. Section 2, SSL : It is a policy of the State to
establish, develop, promote and perfect a
 promote social justice and
 provide meaningful protection to
members and their beneficiaries
against the hazardous of disability,
sickness, maternity, old age, death,
and other contingencies resulting in
loss of income or financial burden.
2. The law imposes upon ER’s and EE’s the
obligation to become members of and make
contributions to the Social Security System.
Is such a legal imposition valid and
constitutional?
Membership in the SSS is not the result of a
bilateral, consensual agreement where the rights
and obligations of the parties are defined by and
the subject to their will. The law requires
compulsory coverage of ER’s and EE’s,
designed to provide security to the working
men. Membership in the SSS is, therefore, in

compliance with a lawful exercise of the police
power of the State, to which the principle of
non-impairment of the obligation of contract is
not a proper defense. (PBM vs. SSS)
25.3 Definitions
ER
1. Section 8, SSL : “ER” – any person, natural
or juridical, domestic or foreign, who carries
on in the Philippines any trade, business
industry, undertaking or activity of any kind
and uses the services of another person who
is under his orders as regards the
employment.
Self –employed – is both ER and EE at the same
time.
2. What ER’s are exempted from the SSS
Law? Government and any of its political
subdivisions, branches or instrumentalities,
including GOCC’s controlled by the
government.
EE
Section 8, SSL : “EE” – Any person who performs
services for an ER – where either mental and
physical efforts are used and who receives
compensation for such services and where there is
an ER-EE relationship.
67
A. PRIMARY
1. Sec. 8, SSL :
 Dependent spouse – until remarriage
 Dependent legitimate, legitimated or
legally adopted and illegitimate
children – provided that the
illegitimate children shall be entitled
to 50% of the share of the legitimate,
legitimated and legally adopted
children.
2. After 4 years of marriage, the spouses
Salmonte broke up. The wife left the
conjugal home. Thereafter, the husband V
lived with another woman. When V died,
who is entitled to his death benefits?
Any legitimate children of V and illegitimate
children (50% of the share of the legitimate
children). The wife of V is not entitled since she
does not qualify anymore as beneficiary since
she is not dependent upon the husband.
(Salmonte vs. Salmonte)
B. SECONDARY
Sec. 8
 Dependent parents
C. OTHERS

Dependent 1. Sec. 8 : Absent primary and secondary

1. Section 8, SSL : Legal spouse entitled by beneficiaries any other person designated be
law to from member to receive support. members as secondary beneficiary.
Child :
 legitimate 2. S, a bachelor dies. His death benefits are
 legitimated claimed by L, his girlfriend whom he
 legally adopted designated as beneficiary. The claim is
 illegitimate contested by V, S’ brother. Who is
 who is preferred?
unmarried,
and not L, V is not among the primary and secondary
gainfully beneficiaries provided under the law. Thus, L,
employed and the designated beneficiary is preferred.
not reached (Alcantara)
21 or over 21
is congenitally 3. E. a widower, designated M as his
or while still beneficiary. The unemployed married
minor children of E contests the payment of death
permanently benefits to M. Is the contention valid?
incapacitated
and incapable No. Eddie’s legitimate children are not
of self- considered dependents since they are already
support, married. (Alcantara)
physically or
mentally. 25.4 Coverage
Parent: Who is receiving regular support from
member. A. COMPULSORY

Beneficiaries

I. Enumerate the kinds of employment under
compulsory coverage under the SSL:
1. All EE’s not over 60 years of age on date of
employment and ER’s on 1st day of
operation. (Sec. 9 and 10, SSL)
2. Self-employed as determined by the
commission but not limited to self-employed
professionals; partners and single proprietors
of businesses, actors, actresses, directors,
scriptwriters, news correspondents who are
not EE’s; professional athletes, coaches,
trainers, and jockeys and individual farmers
and fisherman. (Sec. 9, SSL)
II. Enumerate the kinds of employment which are
excepted from compulsory coverage under the
SSL?
1. Employment purely casual and not for the
purpose of occupation or business of the ER.
(Sec. 8, SSL)
2. Service performed on or in connection with
alien vessel if EE employed when such
vessel is outside of the Philippines. (Id.)
3. EE’s of the Philippine government,
instrumentality or agency thereof. (Id.)
4. Service performed in the employ of a
foreign government, or international
organizations or wholly-owned
instrumentality. (Id.)
5. Services performed by temporary EE’s
excluded by SSS regulation. (Id.)
6. Domestic helpers who are 60 years of age
and below with a monthly income of not less
than P1,000.00 on the date of their
employment. (Sec. 9)
7. Individual farmers and fishermen under SSS
rules and regulations. (Id.)
III. As sacristan in the Catholic Church, B cleaned
the premises of the church, tolled its bells, and
assisted the priests in the masses and other church
services. In consideration of these services, he
received 5% of the monthly income of the church.
Is B subject to compulsory coverage?
Yes. He is considered an EE. The Archbishop as
corporation sole, to whom a share of the income or
collection is sent, is considered his ER. (Bascuna
vs. Roman Catholic Archbishop)
B. VOLUNTARY
Enumerate the kinds of employment under the
SSL?
68
1. Filipinos recruited by foreign ER’s for
employment abroad. (Section 9, SSL)
2. EE separated from employment (Sec. 11,
SSL)
3. Spouse who devote full time managing
household and family affairs unless
specifically mandatorily covered. (Sec. 9,
SSL)
C. BY ARRANGEMENT
When can coverage be by arrangement? Any
foreign government, international organization or
wholly owned instrumentality employing workers
in the Philippines or employing Filipinos outside of
the Philippines may enter into an agreement with
the Philippines for the inclusion of such EE’s in the
SSS except those already covered by their
respective civil service retirement system. (Sec. 8,
SSL)
25.5 Effect of Separation from Employment or
Interruption of Business of Professional Income
I. What are the effects of separation from
employment of an EE compulsorily covered?
1. ER contribution shall cease at the end of the
month of separation an EE not required to
pay contributions.
2. EE credited with all contributions paid and
entitled benefits according to SSL.
3. EE may continue to pay total contribution to
maintain right to full benefit. (Sec. 11, SSL)
II. What are the effects if self-employed realizes no
professional or business income?
1. He shall not be required to pay
contributions.
2. He may be allowed to continue to pay
contributions under the same rules as a
separated EE. (Sec. 11, SSL)
III. After working for 5 years, J was fired without
cause. His dismissal effected him so much that 2
months after he suffered a stroke. Is he entitled to
disability benefits at the time of his stroke?
Yes. Although an EE is separated from service and
has ceased to pay premiums, he shall be entitled to
contributions and to benefits available under the
law. As J was a member of SSS, he remained an
SSS member. (Alcantara)
25.6 Reporting Requirements
1. Sec. 24, SSL : Each ER shall immediately
report EE’s names, ages, civil status,
occupations, salaries and dependents.

2. Sec. 24-A : Each covered self-employed
shall within 30 days from the 1st day he
started practice register and report to the
SSS his name, age, civil status, occupation,
average monthly net income and his
dependents.
25.7 Funding
I. What are the different sources of funding for
the SSS?
1. EE’ s contribution : The ER shall deduct
and withhold from such EE’s monthly
salary, wage, compensation or earnings, the
EE’s contribution. (Sec. 18)
[“Compensation” – an actual remuneration
as well as cash value of any remuneration
paid in any medium other than cash. (Sec.
8)]
2. ER’s contribution : ER shall pay, with
respect to such covered EE, the ER’s
contribution in accordance with the schedule
indicated in Section 18 of this Act.
3. Government contributions : Appropriation
of necessary sums to meet the estimated
expenses of the SSS for each ensuing year.
4. Contributions from those voluntarily
covered by the SSS.
II. The funds contributed to the System belong to
the members who will receive benefits, as a matter
of right, whenever the hazards provided by the law
occur. (CMS Estate vs. SSS)
Effects of Non-remittance
Sec. 22, SSL : Failure of refusal of the ER to pay or
remit contributions shall not prejudice the right of
the covered EE to the benefits of coverage.
25. 8 Benefits
I. What are the different types of benefits under
the SSL?
1. Monthly pension. (Sec. 12, SSL)
 Minimum pension of P1,200.00 for
members with at least 10 credited
years of service and P2,400.00 for
those with 20 credited years of
service.
2. Dependents pension (Sec. 12-A, SSL)
3. Retirement (Sec. 12-B, SSL)
 paid at least 120 monthly
contributions
 monthly pension for as long as he
lives
69
4. Death (Sec. 13, SSL)
 paid at least 36 monthly
contributions
 lump sum of 36 monthly pensions
5. Permanent disability (Sec. 13-A, SSL)
6. Funeral (Sec. 13-B, SSL)
7. Sickness (Sec. 14, SSL)
 payment of at least 3 monthly
contributions in the 12-month period
immediately preceding the sickness.
 Confinement for more than 3 days
 Notice to ER within 5 calendar days
of sickness
 Exhaustion of sick leaves with full
pay.
8. Maternity (Sec. 14-A, SSL)
 A female member who has paid at
least 3 monthly contributions in the
12-month period immediately preceding
the semester of her childbirth or
miscarriage shall be paid a daily
maternity benefit equivalent to 100%
of her average daily salary credited
for 60 days or 78 in case of caesarian
delivery for the 1st 4 deliveries or
miscarriages.
 These are all tax-exempt.
II. Section 2, Paternity Leave Act of 1995:
Notwithstanding any law, rules and regulations on
the contrary, every male EE in the private and
public sectors shall be entitled to a paternity leave
of 7 days with a full pay for the 1 st four deliveries of
the legitimate spouse with whom he is cohabiting.
The male EE applying for paternity leave shall
notify his ER of the pregnancy of his legitimate
spouse and the expected date of such delivery.
III. On his way home from work, R went to a movie
house to watch. He is stabbed by an unknown
assailant while watching. The SSS denied his claims
on the ground that the injury is not work-connected.
Is the denial valid?
No. It is not necessary for the enjoyment of
benefits that there be casual connection between the
injury and the work of the EE. What is required is
membership in the SSS.
Prescription Periods
Art. 1144 : 10 years from the time the right of
action accrues since this is an obligation created by
law.
Benefit Protection

1. Sec. 15, SSL : Benefits are not transferable.
No power of attorney or other documents
executed as beneficiary in favor of any
agent, attorney or other person for the
collection of their behalf shall be recognized
except which beneficiary is physically
unable to collect.
2. Sec. 15, SSL : When Beneficiary is a
national of a foreign country which does not
extend benefits to Filipino beneficiary
residing in the Philippines or which is not
recognized by the Philippines.
 General Rule : He is not entitled to
benefit.
 Exception: Social Security
Commission may authorize payment
where the best interest of the SSS
will be served.
3. Sec. 16, SSL : All benefit payments made
by SSS shall be exempt from all kinds of
taxes, fees or charges and shall not be liable
to attachment, garnishments, levy or
seizures by or under any legal or equitable
process whatsoever, either before or after
receipt except to pay any debt of member to
SSS.
4. Sec. 17, SSL : No fees shall be payable to
agent, attorney, other person-in-charge of
preparation, filing or pursuing any claim and
any stipulation to the contrary is void.
Members of the Bar who appear as counsel
in any case heard by the Commission shall
be entitled to attorney’s fees not exceeding
10% of the amount collected, any stipulation
of the contrary shall be null and void.
25.9 Dispute Settlement
Jurisdiction and Period of Dispute Settlement
Sec. 5 : Disputes involving coverage, benefits,
contribution, penalties and any related matter shall
be decided by the Social Security Commission or
duly designated member, or duly authorized hearing
officers and should be decided within the
mandatory period of 20 calendar days from
submission. Decision shall be final 15 days after
date of notification.
Execution of Decisions
Sec. 5, : The Commission motu proprio or on
motion of any interest party may issue order of
execution of decision after same is final and
executory.
Appeal
70
Sec. 5 : Appeal to CA on law and facts. Appeal to
the SC on pure questions of law.
Section 26. Workmen’s Compensation – EE’s
Compensation and State Insurance Fund
(ECSIF)
26.1 Law
Policy Objective
Art. 166 : To promote and develop a tax exempt
EE’s compensation program whereby EE’s and
their dependents, in the event of work-connected
disability or death, may secure adequate income
benefit, and medical or related benefit.
Rationale
The primary purpose of a workmen’s compensation
act is to provide compensation for disability or
death resulting from occupational injuries or
diseases or accidental injury; the statute is a
remedial one, to compensate reasonably those who
are injured while in the employment of others, as
part of the natural, necessary cost of production.
(Azucena)
Nature of the State Insurance Fund
1. The law establishes a state insurance fund
built by the contribution of ER’s based on
the salaries of their EE’s. The injured
worker does not have to litigate his right to
compensation. The worker simply files a
claim with the ECC. The payment of
benefits is more prompt. The cost of
administration low. (Sarmiento vs. ECC)
2. Give the characteristics of the EE’s
Compensation Program
 Tax exempt.
 Designed to ensure promptitude in
cases of work-connected disability or
death in the award of benefits.
 Funded by monthly contributions of
all covered ER’s.
 Compulsory on all ER’s and their
EE’s not over 60 years of age.
 Benefits are exclusive and in place of
all other liabilities of the ER to the
EE.
 Has its own adjudicative machinery
with original exclusive jurisdiction
on any matter related thereto,
independent of other tribunals except
the SC. (SMC vs. NLRC)
Interpretation
As agent charged by the law to implement social
justice guaranteed and secured by the Constitution,
the ECC should adopt a liberal attitude in favor of

the EE in deciding claims for compensability,
especially where there is some basis in the facts
inferring a work connection to the accident. (Lazo
vs. ECC)
26.2 Definitions
ER
Art. 266 : Any person, natural or juridical,
employing the services of an EE.
Dependent
What are the dependents under the ECSIF?
1. Legitimate
2. Legitimated
3. Acknowledged natural child
 who is unmarried, and not gainfully
employed, and not over 21 years of
age, or over 21 provided he is
incapable of self-support due to
physical or mental defect which is
congenital or acquired during
minority.
4. Spouse : Legitimate and living with the EE.
5. Parents : of EE wholly dependent upon EE
for regular support. (Art. 166)
Beneficiaries
Who are the beneficiaries under the ECSIF?
1. Primary
a. Spouse – dependent spouse until
remarriage
b. Children – dependent; provided
dependent acknowledged natural
children shall be considered as
primary beneficiary when there are
no other dependent children who are
not eligible and qualified for
monthly income benefit.
2. Secondary
a. Parents – dependent subject to
restrictions imposed on dependent
children.
b. Children – illegitimate subject to
restrictions imposed on dependent
children
c. Legitimate descendants.
26.3 Compensability
1. What is an injury? Harmful change in the
human organism from any accident arising
out of and in the course of the employment.
(Art. 167)
2. If a soldier is killed by an accidental
discharge of his companion’s rifle while an
overnight pass to a rebel infested area, is the
death of a soldier compensable?
71
Yes. The death arose out of and in the course of
the employment since the soldier was not on
vacation leave and he had lawful permission to
go to the place and the other soldier was
authorized to carry a firearm. (Hinoguin vs.
ECC)
3. What are the requisites for an injury to be
considered as work-related?
The injury must be the result of an employment
accident satisfying all of the following grounds:
a. The EE must have been injured at
the place where his work requires
him to be.
b. The EE must have been performing
his official functions.
c. If the injury is sustained elsewhere,
the EE must have been executing an
order for the ER. (Sec. 1, Rule III,
Book I, IRR’s)
Proximate Cause
The right to compensation extends to disability
due to disease supervening upon and proximately
and naturally resulting from a compensable injury.
Where the primary injury is shown to have arisen in
the course of employment, unless it is the result of
an independent intervening cause attributable to
claimant’s own negligence or misconduct i.e.
condition of classroom floor caused Belarmino to
slip and fall and suffer injury as a result, hence all
medical consequences flowing from it, the
premature delivery of her baby, and her death are
compensable. (Belarmino vs. ECC)
Going to or Coming from Work Rule
1. What is the “going and coming rule”?
In the absence of special circumstances, an EE
injured while going to or coming from his place
of work is excluded from the benefits of
workmen’s compensation acts, except:
a. Where the EE is proceeding to or
from his work on the premises of the
ER.
b. Where the EE is about to enter or
about to leave the premises of his ER
by way of the exclusive or customary
means of ingress and egress.
c. Where the EE is charged, while on
his way to or from his place of
employment or at his home, or
during his employment with some

duty or special errand connected
with his employment.
d. Where the ER as an incident of the
employment provides the means of
transportation to and from the place
of employment.
2. What is the ingress or egress/proximity
rule?
Employment includes not only the actual doing
of the work, but a reasonable margin of time and
space necessary to be used in passing to and
from the place where the work is to be done. As
a general rule, employment may be said to begin
when the EE reaches the entrance to the ER’s
premises where the work is to be done; but it is
clear that in some cases the rule extends to
include adjacent premises used by the EE as a
means of ingress and egress with the express or
implied consent of the ER. (Iloilo Dock vs.
WCC)
Incidents of Employment
It is settled that injuries sustained in connection
with acts which are reasonably incidental to the
employment are deemed arising out of such
employment. Generally, such incidents of work
include:
1. Acts of personal ministration for the comfort
and convenience of the EE i.e. answering a
call of nature.
2. Acts for the personal benefit of the ER i.e.
special errand rule.
3. Acts done to further the goodwill of the
business.
4. Slight deviations from work, from curiosity
or otherwise.
5. Acts in emergencies i.e. death of an EE
while attempting to rescue a co-EE
(Azucena)
Living, Boarding, Lodging on Premises of ER, or
at Working Place
Compensable if living on the ER’s premises or at
the place of work is an express or implied
requirement of the contract of hiring and when the
injury results from a risk or danger which is
reasonably incidental to the employment.
(Azucena)
While Travelling
72
Compensation depends upon whether the injury
results from a risk inherent in the nature of the
employment, or reasonably incidental incidental
thereto, and upon whether the EE was engaged in
the exercise of some functions or duties reasonably
necessary or incidental in the performance of the
contract of employment, or whether he was
authorized or required by such contract to be.
(Azucena)
Assault
If there is a causal relation between the assault and
the employment, the assault is compensable. (Iloilo
Dock vs. WCC)
Sickness Defined; Occupation or Compensable
Disease
1. Define sickness?
Any illness
a. definitely accepted as an
occupational disease listed by the
Commission, or
b. any illness caused by employment
subject to proof that the risk of
contracting the same is increased by
working conditions. (Art. 167)
If the illness are not occupational
diseases, the claimant must present proof
that he contracted them in the course of
his employment. (Galanida vs. ECC)
2. What is occupational disease?
Disease due wholly to causes and conditions
which are normal and constantly present and
characteristic of the particular conditions which
are normal and constantly present and
characteristic of the particular occupation.
(Menez vs. ECC)
A. THEORY OF THE INCREASED RISK
If an ailment is not included in the list of
occupational diseases as drawn up by the
Commission, the claimant has the burden of proving
that the nature of the work increased the risk of
contracting the disease. (Dabatian vs. GSIS) To
establish compensability under the increased risk
theory, the claimant must show proof of reasonable
work-connection, not necessarily direct causal
relation. The degree of proof is merely substantial
evidence as will support a decision, or clear and
convincing evidence. (Narazo vs. ECC)
A.1 Specific Illnesses

Give examples of diseases which are not listed as
occupational diseases:
1. Peptic ulcer
2. Cancer. But in some cases, it is
3. Bangungot
4. Incomplete abortion
5. Schistomiasis
6. Rheumatoid Arthritis
7. Adenocarcinoma
8. Cirrhosis of the liver
9. Prolapsed uterus.
26.4 Coverage and Liability
Compulsory Coverage
Art. 168 : All ER’s and their EE’s not over 60 years
of age, provided, an EE who is over 60 and paying
contribution to qualify for retirement or life
insurance benefits shall be subject to compulsory
coverage.
Foreign Employment
Art. 170 : The Commission shall ensure adequate
coverage of Filipino EE’s employed abroad.
Compulsory coverage of the ER shall take effect on
the 1st day of operation, and that of the EE on the
date of employment.
Exclusions
1. Art. 172 : The State Insurance Fund shall be
liable for compensation to the EE or his
dependents, except when the disability or
death was occasioned by the:
a. EE’s intoxication,
b. Willful intention to injure or kill
himself or another,
c. Notorious negligence, or
d. Otherwise provided under this Title.
2. What defenses may be interposed by the
ECSIF against a claim for compensation
made by a covered EE?
a. The injury is not work-connected or
the sickness is not occupational.
b. The disability or death was
occasioned by the EE’s intoxication,
willful intention to injure or kill
himself or another, or his notorious
negligence. (Art. 172)
c. No notice of sickness, injury or death
was given by ER. (Art. 206)
d. The claim was filed beyond 3 years
from time of cause of action. (Art.
201)
73
A. INTOXICATION OR DRUNKENNESS
It has been held that even if it could be
shown that a person drank intoxicating liquor it is
incumbent upon the person invoking drunkenness as
a defense to show that said person was extremely
drunk. Thus, intoxication which does not
incapacitate the EE from following his occupation
is not sufficient to defeat the recovery of
compensation, although intoxication may be a
contributory cause to his injury. It must be shown
that the intoxication was the proximate cause of
death or injury and the burden of proof lies on him
who raises drunkenness as a defense. (Nitura vs.
ECC)
B. SELF-INFLICTED INJURIES
According to American authorities, suicide is
compensable in the following cases:
1. When it results from insanity from
compensable work injury or disease.
2. When it occurs during a delirium resulting
from compensable disease. (NAESS
Shipping vs. NLRC)
C. NOTORIOUS NEGLIGENCE
Notorious negligence has been defined as
something more than mere or simple negligence or
contributory negligence; it signifies a deliberate act
of the EE to disregard his own personal safety.
Disobedience to rules, orders, and/or prohibition
does not in itself constitute notorious negligence, if
no intention can be attributed to the injured to end
his life. (Nitura vs. ECC)
26.5 Funding
What are the sources of funding of the ECSIF?
Contribution shall be paid in their entirety by the
ER and any contract or device for the deductions of
any portion thereof from the wages or salaries of the
EE’s shall be null and void. (Art. 183) EE’s do not
have any contribution. The government accepts
general responsibility for the solvency of the
ECSIF. Any deficiency will be covered by the
supplemental appropriations from the National
Government. (Art. 184)
Effects of Non-Remittance
Art. 196 : Failure or refusal of the ER to pay or
remit the contributions shall not prejudice the right
of the EE or dependent to benefits.
26.6 Benefits
What are the different types of benefits under
the ECSIF?

1. Medical benefits – consisting of medical
services and rehabilitation services. (Art.
185)
2. Disability –
a. Temporary total (Art. 191)
b. Temporary permanent (Art. 192)
c. Partial permanent (Art. 193)
3. Death and Funeral – minimum death
benefit shall be P15, 000.00 and funeral
benefit shall be P8,000.00 (Art. 194)
All the benefits are tax-exempt.
Benefit Protection
Art. 175 : Except as otherwise provided under this
Title, no contract ,regulation or device whatsoever
shall operate to deprive the EE or his dependents of
any part of the income benefits and medical or
related services granted under this Title. Existing
medical services being provided by the ER shall be
maintained and continued to be enjoyed by their
EE’s.
Prescriptive Periods
Art. 201 : 3 years from the time the cause of action
accrued.
Exclusivity of Benefits
1. Art. 173 : Liability of the ECSIF shall be
exclusive and in place of other liabilities of
ER to EE, dependents or anyone otherwise
entitled to receive damages on their behalf.
The payment of compensation shall not bar
the recovery of benefit provided in other
laws i.e. payment bars recovery for damages
arising from the death of the member.
2. As a result of a cave-in, several miners were
buried alive. The heirs filed an action with
the RTC for damages against the company
on grounds of breach of contract. The
company moved to dismiss the suit on
grounds of exclusive liability of the ECSIF.
Is the motion meritorious?
No. The EE or his heirs has the right of
selection or choice of action. He cannot
however pursue both courses of action
simultaneously. (Floresca vs. Philex)
Liability of Third Parties
Art. 174 : When disability or death is caused by
circumstances creating a legal liability against a 3rd
party, the system shall still pay for the benefits.
However, the system shall be subrogated to the
rights of the disabled EE or dependents in case of
death in accordance with the general law. Where the
74
system recovers damages in excess shall be
delivered to the disabled EE or other persons
entitled, after deducting the costs of the proceedings
and expenses of the system.
Benefit Protection
1. Art. 198 : As a general rule, no claim for
compensation is transferable or liable to tax,
attachment, garnishment, levy or seizure by
or under any process whatsoever, either
before or after receipt, except if it is to pay
any debt of the EE to the system.
2. Art. 203 : No agent, attorney, or other
person pursuing or in-charge of preparation
of filing any claim shall demand or charge
any fee and any stipulation to the contrary
shall be null and void. The retention or
deduction of any amount from any benefit
for the payment of such fee or such services
is prohibited.
26.7 Dispute Settlement
Art. 180 : Government service insurance system or
the social security system shall have original and
exclusive jurisdiction to settle any dispute with
respect to coverage, entitlement of benefits,
collection of contributions and penalties and other
related matters.
Appeal
Art. 181 : Decisions or orders shall be reviewable
by the SC on question of law.
Section 27: Government Service Insurance
System
27. 1 Revised Government Service Insurance Act
of 1997
27.2 Definitions
ER
Sec. 2, GSIS Act of 1997 : The ER includes :
1. The national government, its political
subdivisions, branches, agencies or
instrumentalities.
2. GOCC’s.
3. Financial institutions with original charters.
4. Constitutional commissions and the
judiciary.
EE
Sec. 2, GSIS Act of 1997 : EE shall include :
1. Any person receiving compensation while in
the service of ER whether by election, or
appointment, irrespective of the status of
appointment.
 75
2. Barangay officials.
3. Sanggunian officials. What are the different sources of funding of the
GSIS?
Dependents 1. ER and member contributions. (Sec. 5, GSIS
Act of 1997)
Who are considered dependents under the GSIS 2. Government guarantees the fulfillment of
Law? the obligations of the GSIS to members.
1. Child (Sec. 8, GSIS Act of 1997)
a. Legitimate.
b. Legitimated. 27.7 Benefits
c. Legally adopted.
d. Illegitimate. What are the benefits provided by the GSIS?
 who is unmarried, not 1. All members
gainfully employed, and a. Lifetime insurance.
not over the age of b. Retirement – at least 60 years of age,
majority, or is over the age and 15 years of service.
of majority but is  however, EE is allowed to
incapacitated and incapable continue to work to
of self-support due to complete the 15-year
mental or physical defect, service requirement.
acquired prior to age of (Cana vs. CSC)
majority. 2. Disability – Provided :
2. Spouse – legitimate and dependent for  he has paid at least 36
support upon member or pensioner. monthly contributions
3. Parents – legitimate parent dependent upon within the 5-year period
member for support. (Sec. 2, GSIS Act of immediately preceding his
1997) disability, or he has paid a
total of at least 180
Beneficiaries monthly contributions prior
Who are the beneficiaries under the GSIS Law? to his disability; and his
1. Primary : disability is not
a. Legal dependent spouse until compensable under any
remarriage. other law.
b. Dependent children.
2. Secondary : a. Survivorship - dependent spouse
a. Dependent parents. shall be entitled to survivorship
b. Legitimate descendants subject to benefits for life or until she
restrictions of dependent children. remarries. Dependent children
27.3 Compulsory Coverage are entitled to benefit while still
minors and unmarried.
Sec. 3, GSIS Act of 1997 : Coverage shall be
compulsory for all EE’s receiving compensation b. Separation
who have not reached compulsory retirement age,
irrespective of the employment status. c. Unemployment.

27.4 Effect of Separation of Employment 3. Judiciary – Life insurance only. (Sec. 3,

GSIS Act of 1997)
Sec. 4, GSIS Act of 1997 : A member separated
from the service shall continue to be a member and *** All are tax exempt.
entitled to whatever benefits he has qualified, in
event of any contingency compensable under this Prescriptive Period
Act.
Sec. 28, GSIS Act of 1997 : All claims, except
27.5 Reporting Requirements for life and retirement benefits shall prescribed
within 4 years from date of contingency.
Sec. 6, GSIS Act of 1997 : The ER shall report to
the GSIS the names of all EE’s, corresponding Benefit Protection
employment status, positions, salaries and other
pertinent information. Sec. 39, GSIS Act of 1997 :
1. All benefits paid shall be exempt from taxes.
27.6 Funding

2. All benefits shall be exempt from
attachment, garnishment, executions, levy or
other processes, issued by courts, quasi-
judicial agencies or administrative bodies
including COA disallowances and all forms
of financial obligations of members,
including pecuniary accountability arising
from or caused or occasioned by exercise of
performance or official functions or duties,
or incurred relative to or in connection with
his position or work except when monetary
liability, contractual or otherwise, is in favor
of the GSIS.
27.8 Dispute Settlement
Sec. 30, GSIS Act of 1997 : Government Service
Insurance System shall have original and exclusive
jurisdiction to settle any dispute arising under act or
any laws administered by the GSIS. The Board may
designate any member of the Board or official of
the GSIS who is a lawyer as hearing officer to
receive evidence, make findings of fact and submit
recommendations.
Appeals
Sec. 31, GSIS Act of 1997 : Appeals of
decisions/awards of the Board shall be governed by
Rules 43 and 45 of the 1997 Rules of Civil
Procedure. Appeal shall not stay orders unless
stayed by orders of the Board, CA or the SC.
Section 28. National Health Insurance Act of
1995
28.1 Law – National Health Insurance Act of
1995 – RA 7875
28.2 Purposes/Objectives
1. Section 2, National Health Insurance Act :
The State shall adopt an integrated and
comprehensive approach to health
development which shall endeavor to make
essential goods, health and other social
services available to all the people at
affordable cost.
(b) Universality – The National Health
Insurance Program shall give the highest
priority to achieving coverage of the entire
population with at least at a basic minimum
package of health insurance benefits.
2. Section 3, National Health Insurance Act :
This Act seeks to :
76
a. Provide all citizens of the Philippines
with the mechanism to gain financial
access to health services;
b. Create the National Health Insurance
Program, hereinafter referred to as
the Program to serve as the means to
help the people pay for health care
services; and
c. Establish the Philippine Health
Insurance Corporation, that will
administer the Program at central
and local levels.
3. Section 5, National Health Insurance Act :
There is hereby created the National Health
Insurance Program which shall provide
health insurance coverage and ensure
affordable, acceptable, available and
accessible health care services for all the
citizens of the Philippines, in accordance
with the policies and specific provisions of
this Act. This social insurance program shall
serve as the means for the healthy to pay for
the care of the sick and those who can afford
medical care to subsidize those who cannot.
It shall initially consist of Programs I and II
of Medicare and be expanded progressively
to constitute one universal health insurance
program for the entire population. The
Program shall include a sustainable system
of the funds constitution, collection,
management and disbursement for financing
of the availment of a basic minimum
package and other supplementary packages
of health insurance benefits by a
progressively expanding proportion of the
population.
4. The Program shall be limited to:
a. paying for the utilization of health
services by covered beneficiaries or
b. to purchasing health services in
behalf of such beneficiaries.
It shall be prohibited from:
c. providing health care directly
d. from buying and dispensing drugs
and pharmaceuticals,
e. from employing physicians and other
professionals for the purpose of
directly rendering care, and from
f. owning or investing in health care
facilities.
28.3 Coverage
1. Section 7, National Health Insurance Act :
All citizens of the Philippines shall be
covered, provided, the Program shall not be
made compulsory in certain provinces and
cites until the Corporation shall be able to
ensure the members in such localities shall

have reasonable access to adequate and
acceptable health care services.
2. Who are the legal dependents of a
member?
a. Legitimate spouse who is not a
member.
b. Unmarried and unemployed
legitimate, legitimated, illegitimate,
acknowledged children, legally
adopted or stepchildren
 below 21 years of age or 2 years old
and above but suffering from
congenital disability, either physical
or mental, or any disability acquired
that renders them totally dependent
on member for support.
c. Parents who are over 60 years of age
whose monthly income is below an
amount to be determined by the
Corporation. (Sec. 4, National
Health Insurance Act)
28.4 Funding
What are the sources of funding of the NHIF?
1. Members contributions.
2. Current balance of the Health Insurance
Funds of the SSS and the GSIS
3. Other appropriations earmarked by the
national and local governments purposely
for the implementation of the Program.
4. Subsequent appropriations.
5. Donations and grant-in-aid.
6. Accruals.
7. Contributions by LGU’s for indigent
members.
28.5 Health Care Providers
I. What are the minimum accreditation
requirements of health care providers
1. Human resource, equipment and physical
structure in conformity with the standards of
the relevant facility, as determined by the
Dept. of Health.
2. Acceptance of formal program of quality
assurance and utilization review.
3. Acceptance of the payment mechanisms
specified in the following section.
4. Adoption of referral protocols and health
resources sharing arrangements.
5. Recognition of the right of patients.
6. Acceptance of information system
requirements and regular transfer of
information.
II. Give the categories of personal health services
to be granted under the NHIP :
1. Inpatient hospital care i.e. room and board
services of health care professionals.
77
2. Outpatient care i.e. diagnostic, laboratory
and other medical examinations services and
personal preventive services.
3. Emergency and transfer services.
4. Such other health services – that the
Corporation shall determine to be
appropriate and cost-effective.
III. Give the services that are excluded :
1. Non-prescription drugs and devices.
2. Outpatient psychotherapy and counseling for
mental disorders.
3. Drug and alcohol abuse or dependency
treatment.
4. Cosmetic surgery.
5. Home and rehabilitation services.
6. Optometric Services.
7. Normal Obstetrical delivery. (Sec. 11,
National Health Insurance Act)
28.6 Grievance and Appeal
I. Section 40, National Health Insurance Act :
The following acts shall constitute valid grounds for
grievance action:
1. Violation of the rights of patients.
2. Willful Neglect of duties of program
implementers that results in the loss or non-
enjoyment of benefits by members or their
dependents.
3. Unjustifiable delay in actions or claims.
4. Delay in the processing of claims that
extends beyond the period agreed upon.
5. Any other Act or neglect that tends to
undermine or defeat the purposes of this
Act. (VANUD)
II. Section 41, National Health Insurance Act : A
member, his dependent, or a health care provider
may file a complaint for grievance based on any of
the above grounds, in accordance with the following
procedure :
1. A complaint for grievance must be filed
with the Office which shall rule on the
complaint within 90 calendar days from
receipt thereof.
2. Appeals from Office decisions must be filed
with the Board within 30 days from receipt
of notice of dismissal or disallowance by the
Office.
3. The Office shall have no jurisdiction over
any issue involving the suspension or
revocation of accreditation, the imposition
of fines, or the imposition of charges on
members or their dependents in case of
revocation of their entitlement.
4. All decisions by the Board as to entitlement
of benefits of members or to payments of
 78
health care providers shall be considered determined by law, the specific
final and executory. limits of the public domain.

Section 29. CARL, RA 6657  All lands of the public domain in

excess of the specific limits as
1. Give the provisions of the 1987 determined by Congress in the
Constitution of agrarian reform? preceding paragraphs.
 The State shall promote
comprehensive rural development  All other lands owned by the
and agrarian reform. (Sec. 21, Art. Government devoted to or suitable
II, Const.) for agriculture; and
 The State shall by law, undertake an
agrarian reform program founded on  All private lands devoted to or
the right of farmers and regular suitable for agriculture regardless of
farmworkers, who are landless, to the agricultural products raised or
own directly or collectively the lands that can be raised thereon. (Sec. 4,
they till or, in the case of other CARL)
farmworkers, to receive a just share
of the fruits thereof. To this end, the >9/30/02<
State shall encourage and undertake
the just distribution of all agricultural
lands, subject to such priorities and
reasonable retention limits as the
Congress may prescribe, taking into
account ecological, developmental
and equity considerations, and
subject to the payment of just
compensation. In determining
retention limits, the State shall
respect the right of small
landowners. The State shall provide
incentives of voluntary land-sharing.
(Sec. 4, Art. XIII, Const.)

2. Define agrarian reform.

Agrarian reform means the redistribution of

lands regardless of crops or fruits produced to
farmers and regular farmworkers who are
landless, irrespective of tenurial arrangement, to
include the totality of factors and support
services designed to life the economic status of
the beneficiaries and all other arrangements
alternative to the physical redistribution of
lands, such as production or profit sharing, labor
administration and distribution of shares of
stock, which will allow the beneficiaries to
receive a just share of the fruits of the lands they
work. (Sec. 3, CARL)

3. Lands covered by the CARL.

 All alienable and disposable lands of
the public domain devoted to or
suitable for agriculture. No
reclassification of forest or mineral
lands to agriculture lands shall be
undertaken after the approval of this
Act until Congress, taking into
account ecological, developmental
and equity considerations, shall have