BOOK 1 conditions of work could be obtained
through collective bargaining or other
CHAPTER 1
GENERAL PROVISIONS
I. ARTICLE 1: NAME OF THE
DECREE (PD 442)
This decree shall be known as the “Labor
Code of the Philippines.”
II. ARTICLE 2: DATE OF
EFFECTIVITY
This Code shall take effect six (6) months
after its promulgation.
o Signed: May 1, 1974
o Effective: November 1, 1974
III. FUNDAMENTAL CONCEPTS
1. The Concept of Labor
In its broadest sense, labor includes every
possible human exertion, mental or physical,
and even spiritual. In a more limited sense, it
refers to any bodily or intellectual exertion
done wholly or partly for a purpose other
than the pleasure derived from its
performance.
In Philippine law, labor is sometimes used
to embrace all work without reference to
whether it is done by an employee for an
employer or not. In this sense, the work of
agricultural tenants has been included within
the general term. This is because they
physically toil for their livelihood, and work
to some extent for their landowners.
In general, as used in Philippine law, the
concept of labor includes it its broad sense
physical and mental work performed by an
employee, and physical work performed by
anyone, whether employed or not.
2. Labor Law Defined
Updated concept of labor law within the
purview of the Philippine Constitution and
Labor Code since it also embodies the
definitions of the elements of labor law and
assumes a utilitarian character:
“Labor law is that body of statutes, rules and
doctrines that defines State policies on labor
and employment, and governs the rights of
and duties of workers and employers
respecting terms and conditions of
employment by prescribing certain standards
therefor, or by establishing a legal
framework within which better terms and
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concerted activity”.
3. Elements of Labor Law
a. Labor Policies: These are principles or
guidelines that define State policies
regarding labor and employment.
Although these policies do not govern the
relations per se between workers and
employers, they represent a new dimension
that is an integral part of labor law.
Examples: Labor policies may be classified
into Constitutional policies (e.g. Article 13,
sec. 3 of the Constitution) and statutory
policies (e.g. Books I and II of the Labor
Code)
b. Labor Standards Law: “It is that body
of statutes, rules and doctrines that governs
the rights and duties of the workers and
employers respecting terms and conditions
of employment by prescribing certain
standards therefor”.
These standards, whether maximum or
minimum, serve as bases of the rights and
duties of workers and employers.
Examples: Book III-Conditions of
Employment, Labor Code; Cost of Living
Allowance (COLA); 13th month pay;
minimum wage law
c. Labor Relations Law: It is that body of
statutes, rules and doctrines that governs the
rights and duties of the workers and
employers by establishing a legal
framework within which better terms and
conditions of work could be obtained
through collective bargaining or other
concerted activity.
It sets the legal parameters whereby
workers may undertake concerted activities
to secure better conditions of employment
other than those prescribed by labor
standards law.
Examples: Book V-Labor Relations, Labor
Code and its amendatory laws
4. Relationship & Distinctions
The elements of labor law are interrelated in
that each is complementary to each other:

Labor Policies set the guidelines to be
implemented by the other two (i.e. labor
standards and labor relations).
Labor Standards laws prescribe the
demarcations in terms and conditions of
employment, and are essentially substantive.
Their purpose is either protective (e.g. law
on hours of work, law on weekly rest
periods) or ameliorative (e.g. minimum
wage laws, law on holiday pay) 
Substantive
Labor Relations law provide the procedures
that govern the methods by which terms and
conditions of work over and above the
demarcations as set by labor standards laws
may be obtained; hence, they are largely
procedural in character (e.g. law on labor
organizations, law on collective bargaining)
 Procedural
Note: Labor standards, being fixed by law,
may be found in the law itself; whereas
terms and conditions beyond these standards
obtained under labor relations laws are not
found in the law itself (not fixed), but in
collective bargaining agreements, arbitration
awards and decisions.
5. Labor Law and Social Law (or Social
Legislation) Compared
While they both share the same objective
which is the promotion of social justice,
there are some differences:
LABOR LAW SOCIAL LAW
As to Object
It seeks to improve It aims to promote
the well-being of the welfare of
labor in particular society in general
As to Subject Matter
It deals on subject of It treats of matters of
proximate and direct remote or indirect
interest to workers interest to workers
(e.g. wages, hours of (e.g. employee
work, etc.) compensation, social
security, etc.)
As to Application
It provides benefits It is concerned with
to workers actively those whose
employed employment is
interrupted by
sickness, disability,
death, retirement or
other causes.
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Note: Labor law seeks to improve the well-
being of labor while social law seeks to
improve the general welfare of the society;
hence, it may be said that labor law is a part
of social law, and it is by nature a social law.
6. Social Justice Definition
Social Justice is the aim/reason/justification
of labor laws.
In essence, social justice is both a juridical
principle and societal goals. They are
inseparable because one is the cause while
the other is the effect.
As a juridical principle, it prescribes the
equality of the people, rich or poor, before
the law.
As a goal, it means the attainment of decent
quality of life of the masses through humane
productive efforts.
Note: The pursuit of social justice does not
require making the rich poor but, by lawful
process, making the rich share with the
government the aim to realize social justice.
a. Calalang v. Williams
In this case, the petitioner challenged the
prohibition of animal-drawn vehicles from
passing along a certain street. He said that it
infringes the constitutional right of social
justice to insure the well-being and
economic security of all. The SC, through
Justice Jose Laurel, said that the promotion
of social justice is to be achieved not
through a mistaken sympathy towards any
given group.
“It is neither communism, nor despotism,
nor atomism, nor anarchy but the
humanization of laws and the equalization
of social and economic forces by the state so
that justice in its rational and objectively
secular conception may at least be
approximated.  Social justice means the
promotion of the welfare of all the people, the
adoption by the Government of measures
calculated to insure economic stability of all the
competent elements of society, through the
maintenance of a proper economic and social
equilibrium in the interrelations of the members of
the community, constitutionally, through the
adoption of measures legally justifiable, or extra-
constitutionally, through the exercise of powers
underlying the existence of all governments on the
time-honored principle of salus populi
suprema lex”.
b. Definition of the late former President
Ramon Magsaysay – “Those who have
less in life should have more in law”:
There is no doubt that the employer stands
on a higher footing than the employee;
hence, they must be protected.
Q: What is the difference of qualitative and
quantitative social justice (equality) in
labor?
Quantitative refers to the “greatest good for
the greatest number”.
On the other hand, qualitative refers to the
inherent unequal footing of the employer
and the employee.
7. Sources of the Power to Enact Labor
Laws
a. Constitution: The Constitution lays
down as a State policy that “The State
affirms labor as a primary social economic
force. It shall protect the right of workers
and promote their welfare” (article 2, section
18).
In its protection to Labor clause, article 13,
section 3, also provides that “The State shall
afford full protection to labor, local and
overseas, organized or unorganized, and
promote full employment and equality of
employment opportunities for all”.
b. Police Power: It is the power of the State
to enact laws and prescribe regulations that
will promote the health, morals, education,
good order, safety, and general welfare of
the people.
Recent jurisprudence has formulated a
newer definition of Police Power as “the
inherent power of the State to enact
legislation that may interfere with personal
liberty and property in order to promote the
general welfare (PASEI v. Drilon).
In the said case, the SC said that the
temporary prohibition against female
domestic overseas workers to go abroad by
virtue of Department Order No. 1 under then
Secretary Franklin Drilon is constitutional.
First, it is not a violation of equal protection
clause because (i) such classification rests
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est on substantial distinction because female
workers are more vulnerable abroad, (ii) it is
germane to the purpose of the law because
the objective of the DO is to “enhance the
protection for Filipino female overseas
workers”, (iii) they are not confined to
existing conditions because it is intended to
apply so long as the conditions of abuse
exist and (iv) they apply equally to all
members of the same class particularly the
female domestic overseas workers only.
Second, it is not impair the right to travel.
The right to travel is subject, among other
things, to the requirements of “public
safety” as may be provided by law.
Lastly, there is no merit in the contention
that Department Order No. 1 constitutes an
invalid exercise of legislative power as the
labor code vest the DOLE with rule making
powers.
Ultimately, deployment ban of female
domestic helper is a valid exercise of police
power. Police power has been defined as the
state authority to enact legislation that may
interfere with personal liberty or property in
order to promote general welfare.
Q: Can the State still enact labor laws even
if there were no provisions in the
Constitution concerning labor?
Yes. The State would still have the power to
enact labor laws by virtue of its police
power which underlies the Constitution, and
is as enduring as the State itself (PASEI v.
Drilon).
8. The Rationale of Labor Laws
Although the rights and duties arising from
labor relationships are basically contractual
in nature, such are not governed by the
general law on obligations and contracts:
“The relations between capital and labor are
not merely contractual. They are so
impressed with public interest that labor
contracts must yield to the common good.
Therefore, such contracts are subject to the
special laws on labor unions, collective
bargaining, strikes and lockouts, closed
shop, wages, working conditions, hours of
labor and similar subjects” (article 1700,
NCC).
Note: The special laws referred to in the
article are known collectively as “labor
laws”.
9. Significance of the Constitution
Aside from being one of the 2 sources of the
State’s authority to enact the labor laws, the
Constitution is of fundamental significance
in this field of law.
The 1987 Constitution embodies new
provisions directly affecting the rights and
welfare of labor: (a) it defines new State
policies on labor, (b) it guarantees individual
and collective right of workers and (c) it
contains nationalistic provisions protecting
Filipino labor:
a. “The State affirms labor as a primary
social economic force. It shall protect the
rights of workers and promote their
welfare”e (art. 2, sec. 18). The Constitution
gives recognition to the role of labor in
social and economic development. It also
states a protection for the rights and welfare
of the Filipinos.
b. “The State shall promote the preferential
use of Filipino labor, domestic materials and
locally produced goods, and adopt measures
that help make them competitive” (art. 12,
sec.12). This is a strongly nationalistic
policy favoring Filipino labor, raw materials
and finished products which the State seeks
to promote and strengthen.
c. “The State shall promote the principle of
shared responsibility between workers and
employers and the preferential use of
voluntary modes in settling disputes,
including conciliation, and shall enforce
their mutual compliance therewith to foster
industrial peace” (art. 13, sec. 3). The
Constitution expresses a preference in the
voluntary method of resolving industrial
disputes (less frictional and entail less social
costs to the parties, to government and to
society as a whole).
o Conciliation: 3rd party
(“conciliator”) does not issue a
resolution.
o Mediation: 3rd party (“mediator”)
issues a resolution. It is not binding
to both parties.
o Voluntary arbitration: Parties select
the arbitrator that will issue a
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resolution. It is binding to both
parties.
Opposite: Compulsory arbitration – The
parties cannot select an arbitrator that will
issue a resolution. It is binding to both
parties.
d. “The State shall protect working women
by providing safe and healthful working
conditions, taking into account their
maternal functions, and such facilities and
opportunities that will enhance their welfare
and enable them to realize their full potential
in the service of the nation” (art. 13, sec.
14). This is the protection of working
women which the previous Constitution
mentioned only incidentally, is now given a
separate title in view of the important role
of women in society.
10. Restatement of Other Constitutional
Policies
The Constitution also restates and rephrases
policies established in the previous
Constitution, and re-adopts them for further
implementation:
“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” (article 13, section 3).
This is a more positive and comprehensive
restatement of the protection to labor clause.
The policy precludes the State from
adopting a laissez-faire policy on labor
relations due to the public interest involved
therein. It also provides guidelines by which
the State’s regulatory power shall be
exercised.
11. Constitutional Rights of Labor
a. Individual rights of workers: They are
found in article 3 (Bill of Rights) of the
Constitution.
b. Collective rights of labor: They are
found in article 13, sec. 3 of the Labor
Code.
Note: These two sets of rights are not
identical. In fact, they may possibly conflict
with each other, as will be noted later.
A. Individual Rights of Workers
a. Right to Due Process:
“No person shall be deprived of life, liberty,
or property without due process of law, nor
shall any person be denied the equal
protection of the laws” (art.3, sec.1 of the
Constitution).
A worker cannot be deprived of his job or
his wages without due process law (twin
requirements of notice and hearing). The
right is considered a property which is
within the protection of the due process
clause.
Q: What are the just causes and authorized
causes?
Just causes (art. 282) are (i) serious
misconduct or willful disobedience, (ii)
gross and habitual neglect of duties such as
absenteeism, (iii) Fraud or willful breach,
(iv) commission of a crime or offense and
(v) other causes analogous to the foregoing.
Authorized causes (arts. 283 and 284) are (i)
installation of labor-saving devices, (ii)
redundancy, (iii) reorganization, (iv)
retrenchment to prevent losses, (iv) closing
or cessation of operation of the
establishment or undertaking and (v)
disease. These are not exclusive.
“Just causes” are always based on acts
attributable to the employee’s own fault or
negligence. On the other hand, “authorized
causes” for dismissal of employee refer to
those lawful grounds for termination which
in general do not arise from fault or
negligence of the employee.
Q: What are the 2 aspects of due process?
It is (a) substantive – a prohibition against
arbitrary laws and (b) procedural – mode of
procedure which government agencies must
follow in the enforcement and application of
laws.
In Ang Tibay v. CIR, Teodoro Toribio owns
and operates “Ang Tibay”, a leather
company which supplies the Philippine
Army. Due to alleged shortage of leather,
Toribio caused the layoff of members of
National Labor Union (NLU). NLU said that
the layoff is not valid because no members
from their rival union were laid off. The CIR
decided the case and decided in favor of
Ang Tibay. The case was eventually
elevated to SC, but a motion for new trial in
the Court of Industrial Relations (CIR) was
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raised by the NLU because of newly
discovered evidence. Ang Tibay opposed the
motion; hence, the case.
Since there are cases which are decided not
by the courts but by administrative agencies
(such as CIR), the SC enumerated the
following “cardinal primary requirements”
of procedural due process in administrative
proceedings:
1. The right to a hearing, which includes the
right to present one’s case and submit
evidence in support thereof;
2. The tribunal must consider the evidence
presented;
3. The decision must have something to
support itself;
4. The evidence must be substantial.
Substantial evidence means such reasonable
evidence as a reasonable mind accepts as
adequate to support a conclusion;
5. The decision must be based on the
evidence presented at the hearing, or at least
contained in the record and disclosed to the
parties affected;
6. The tribunal or body or any of its judges
must act on its own independent
consideration of the law and facts of the
controversy, and not simply accept the
views of a subordinate;
7. The Board or body should, in all
controversial questions, render its decision
in such manner that the parties to the
proceeding can know the various issues
involved, and the reason for the decision
rendered.
Q: What if the labor arbiter who decided a
case was promoted. The case was later
appealed and was assigned to the same
labor arbiter. How should it be decided?
It shall be decided with legal basis
(following the procedure laid down in Ang
Tibay).
b. Freedom of Expression
“No law shall be passed abridging the
freedom of speech, of expression, or of the
press, or the right of the people peaceably
to assemble and petition the government for
redress of grievances” (article 3, section 4
of the Constitution).
Q: How is labor related to freedom of
expression?
It is through the statements in the placards,
tarpaulins, etc. while workers are picketing.

What is being protected is the element of
communication, not the act of patrolling or
marching which may be subject to
reasonable regulations.
Q: Is it an absolute rule?
No. In Liwayway Publications v.
Permanent Concrete Workers Union, the
picket held by defendant union against their
employer prevented the petitioner’s truck
from loading and unloading of its products
inside the premises of Permanent Concrete
Products, Hence, the latter sought to enjoin
the picket.
The SC said that a picket may be enjoined at
the instance of a 3rd party. While freedom of
expression is guaranteed by the Constitution,
it is not absolute. The courts have power to
“localize” the sphere of demonstration,
whose interest is foreign to the context of
the dispute.
Note: A limitation of freedom of expression
is when it tends to malign, a person can be
charged with libel.
c. Freedom of Association (“Right to Self
Organization”)
“The right of the people, including those
employed in the public and private sectors,
to form unions, associations, or societies for
purposes not contrary to law shall not be
abridged” (article 3, section 8 of the
Constitution).
Q: Why is freedom of association
considered both a right and a privilege?
It is because it implies not only the right to
join a labor union, but also the privilege of
not joining one, of selecting which union to
join, and of disaffiliating from a union
(Victoriano v. Elizalde Rope Workers
Union).
In the case, Victoriano was a member of the
Iglesia Ni Cristo and was an employee of the
Elizalde Rope Factory which has a union
named Elizalde Rope Workers Union.
According to the collective bargaining
agreement, membership to the union is
mandatory.
However, upon the enactment of a law (RA
3350) that does not cover members of
religious sect in unions which prohibit
affiliation of their members in any labor
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organizations, Victoriano decided to resign
from the union.
The company union said that the law is
unconstitutional; hence, the decision
aforementioned.
Note: The case has connection with (i) non-
impairment clause as discussed below, (ii)
freedom of religion because religion is over
and above than other constitutional
provisions and (iii) equal protection clause
because a person can be hired no matter
what religious sect he belongs.
Note: A person has a right to believe;
however, his right to practice his belief is
subject to regulation.
Q: What if the employer ignored the
association?
It will amount to “unfair labor practice”
subject to CBA procedures.
Q: Is there an exception to the right of
association?
Yes when it runs into conflict with the
collective right of labor to self-organization
as expressed in the “union security clause”
of collective bargaining agreements.
This may pertain to “closed shop” (when
membership to a union is a condition for
being hired – including those old workers
who were not members of any union);
“union shop agreement” (when all regular
employees are required to join the union
within a certain period as a condition for
their continued employment); “maintenance
of membership shop” (when union members
must maintain union membership as a
condition for continued employment until
the collective bargaining agreement is
terminated) or any other agreement which
imposes upon the employees the obligation
to acquire or retain union membership as a
condition affecting employment.
Q: Can a person be dismissed for violating
union security clause?
Yes provided that (a) it is not done with
arbitrariness and (b) sanction must be
explicitly stated.
.
Q: What is the relation of labor law and
conscientious objectors?
In Imbong v. Ochoa, the SC said that public
workers (“conscientious objectors”) can
refuse to provide medical assistance even if
there is a law penalizing them as long as
their religious beliefs do not allow them to
provide RH assistance except for emergency
situations (i.e. danger of life of the mother
and the unborn child).
Note: A child is conceived upon the meeting
of the spermatozoa and ovum.
d. Non-Impairment Clause (“Right to
Sanctity of Employment Contracts”)
“No law impairing the obligation of
contracts shall be passed” (article 3, section
10 of the Constitution).
Q: Which contract is protected here?
It is the employment contract. The
obligation of such contracts refers to the
duty of performing the contracts according
to their terms and intent; thus, a subsequent
law or ordinance which destroys or
diminishes the value of these contracts or
deviates from their terms impairs their
obligation.
Q: Is there a limitation to this clause?
Yes. It is the police power of the State
because it is superior to non-impairment
clause (e.g. issuance of a wage order from
time-to-time).
In Victoriano v. Elizalde Rope Workers
Union, RA 3350 is an exercise of police
power so that the workers may not lose their
job because of religious beliefs.
e. Free Access to Courts and Quasi-
Judicial Bodies
“Free access to the courts and quasi-
judicial bodies and adequate legal
assistance shall not be denied to any person
by reason of poverty” (article 3, section 11
of the Constitution).
Q: What are the guarantees of such right?
First, it affords the worker a double
protection which could otherwise be negated
on account of poverty.
Second, it seeks to offset the disadvantage
that a worker, due to limited resources, may
not be able to afford competent legal
services.
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Q: How can an employee get free legal
assistance?
Through PAO (Public Attorney’s Office –
10% of award goes to them), MABINI
(Movement of Attorneys for Brotherhood,
Integrity and Nationalism), FLAG (Free
Legal Assistance Group), IBP (Integrated
Bar of the Philippines) legal aid, Law
Student Practice Rule, Pro-bono lawyers,
etc.
Q: Distinguish complaints before
arbitration branch versus regular courts?
In regular courts, payment of docket fee is
needed.
On the other hand, in arbitration branches,
docket fee is not needed. A lawyer is not
even required. It is also convenient – a
person may just walk-in to their office and
someone can readily assist them.
f. Right to Speedy Disposition of Cases
“All persons shall have the right to a speedy
disposition of their cases before all judicial,
quasi-judicial, or administrative bodies”
(article 3, section 16 of the Constitution).
Q: Why?
It is because justice delay is justice denied.
For example, if litigant is always absent the
case may be dismissed on the ground of
“failure to prosecute”.
Moreover, a case that took too long is
prejudicial to both employer and employee.
It is prejudicial to the employer because he
needs to pay the back wages from the time
of actual reinstatement in case of illegal
dismissal, and it is prejudicial to the
employee because of the stress the litigation
will cause him while he is still finding a job
to support his family.
Note: However, this does not mean undue
haste in the proceedings; it means that these
are to be conducted with “reasonable
promptness” consistent with the due
administration of justice.
g. Right against Involuntary Servitude
“No involuntary servitude in any form shall
exist except as a punishment for a crime
whereof the party shall have been duly
convicted” (article 3, section 18,
paragraph 2 of the Constitution).
It covers the following practices:
i. Slavery: The state of entire subjection of
one person to the will of another (e.g. when
one is working against his will to secure
payment of a loan).
ii. Involuntary Servitude: The condition of
enforced compulsory service of one to
another (e.g. If the EE tenders resignation
and ER does not accept).
Q: Is a “return to work order” (or else they
will be dismissed) in a labor dispute
involving hospitals, airlines, etc. issued
under Sec. 19 of CA 103 a ground for
involuntary servitude?
No. An employee entering into a contract of
employment voluntarily accepts, among
other conditions, those prescribed by law.
Such voluntariness negates the possibility of
involuntary servitude.
Moreover, the said provision of the law was
meant to promote social justice to insure the
well-being and economic security of all
people especially when what is involve are
industries vital to national interest
(Kaisahan v. Gotamco Sawmills).
Q: Is a contract prohibiting a resigned
employee from affiliating himself with
competitors for 2 years valid?
Yes. In the case of Yusen Air and Sea
Service Philippines, Inc. v. Villamor, SC
said that the contract is valid and any
violation thereof will amount to “breach of
contract”.
B. Collective Rights of Workers
Q: What is the constitutional basis?
Article 13, sec. 3: “It (State) shall guarantee
the rights of all workers to (a) self-
organization, (b) collective bargaining
and negotiations, and (c) peaceful
concerted activities, including the right to
strike in accordance with law. They shall be
entitled to (d) security of tenure, (e)
humane conditions of work, and a (f)
living wage. They shall also (g) participate
in policy and decision-making processes
affecting their rights and benefits as may be
provided by law”.
a. Right to Self-Organization (e.g. right to
form trade or labor unions and
organizations): It is because the workers and
their employer are placed in a position of
inequality (because the employer may hide
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his actions under the guise of management
prerogative).
Only a well-organized, high-minded labor
union (unionism) speaking with a single, yet
potent, voice can hope to deal with a
powerful employer with some semblance of
equality.
A. Coverage of “all workers”
GR: All rank-and-file employees in public
(employees in the civil service and in
GOCCs without original charters) and
private sector
XPNs: In the interest of national security
and public order
1. Managerial employees with policy-
making and highly confidential functions
(due to conflict of interest)
2. Supervisors (for carrying out policies)
3. Uniformed personnel (members of the
AFP, PNP, BFP and BJMP)
4. Members of cooperatives (as they are the
owners)
5. Members of religious sect
6. Members of subversive organizations
7. Rank-and-file employees who are the
confidential staff of the managers or
supervisors (by Doctrine of Necessary
Implication)
Q: Is the prohibition for supervisor
absolute?
No. They can form their own organization;
however, they cannot join the organization
of the rank-and-file employees.
b. Right to Collective Bargaining
Negotiation: Workers are able to negotiate
with the employer on the same level and
with more persuasiveness than if they were
to bargain individually.
It infers the existence of a labor
organization (corollary to right to self-
organization) and indicates its role in
fostering industrial peace.
Note: The agreement resulting from
collective bargaining is called as “collective
bargaining agreement”.
Q: What is the difference between
“collective bargaining” and “negotiation”?
While they are often used interchangeably,
there is a difference.

Collective bargaining normally takes the
form of (a) negotiation or (b) grievance
committee meetings and arbitration.
It is in the form of negotiation when major
conditions of employment (such as wages,
hours and other terms and conditions of
employment) to be written under an
agreement are under consideration.
On the other hand, it is in the form of
grievance committee meetings and
arbitration when the administration of an
agreement is at stake.
Q: Is this applicable to government
employees?
Yes but with certain restrictions such as
those fixed by law (i.e. terms and conditions
of employment).
Q: How can government employees
negotiate?
They should lobby to the Congress
c. Right to Peaceful Concerted Activities:
It affords the labor union the potential for
actions to enforce their demands.
Q: What is meant by “concerted activities”
in the Constitution?
It is the activity of 2 or more employees for
the purpose of: (a) securing benefits or (b)
changes in terms and conditions of
employment, or (c) for mutual aid or
protection with respect to their collective
interests as employees.
Q: How does the Constitution qualifies
concerted activities?
It should be (a) peaceful and (b) in
accordance with law
Q: Are government employees in the civil
service (who are granted the right to self-
organization and collective bargaining)
also have the right to strike?
No. The SC in SSSEA v. CA said that while
the Constitution recognizes the right of
government employees to organize, it is
silent as to whether such recognition
includes the right to strike.
Moreover, based on the intent of the
Constitutional Commission, the right given
to government employees is limited to
9|Page
formations of unions and organizations only
since it is contrary to law (i.e. Industrial
Peace Act – a precursor to the Labor Code –
which does not allow strikes among
government employees) as provided under
Bill of Rights.
Furthemore, section 14 of EO 180 provides
guidelines for the exercise of the right to
organize of government employees, subject
to any legislation that may be enacted by
Congress. This legislation refers to
Memorandum Circular No. 6 of the Civil
Service Commission which states that
Government employees are enjoined to
strike under pain of administrative sanction
since it will result to temporary stoppage or
disruption of public service. Therefore in the
absence of any legislation allowing
government employees to strike they are
prohibited from doing so.
Q: Which entity had jurisdiction over claim
for issuance of a writ of injunction – to
prohibit the act of striking (DOLE, NLRC
or RTC)?
While generally labor disputes involving
government employees is given to the Public
Sector Labor-Management Council, it has
no power to issue writ of injunction; thus, it
is the RTC in the exercise of its general
jurisdiction under BP 129 which has
jurisdiction over the government’s claim for
damages and for the issuance of a writ of
injunction to stop the strike since the Labor
Code does not apply to government
employees (id).
Q: If there is no Memorandum Circular
no. 6, will the employees be allowed to
strike already?
No. The SC said in another case that the
right of the government to prohibit strikes or
work stoppage is recognized in common
law. To allow them, there must be a clear
and direct legislative intent.
d. Right to Security of Tenure: It is the
right to continue in employment until the
same is terminated with just cause –
attributable to the fault or negligence of the
employee (as compared before when an
employee can be terminated with or without
just causes and authorized causes).
d.1. Classification of Employees
i. Probationary: When an employee, upon
his engagement, is (i) made to undergo a
period (ii) where the employer determines
his fitness to qualify for regular employment
(iii) based on reasonable standards made
known to him at the time of engagement
(Rule 1, sec. 1, book 6, IRR of the Labor
Code).
Where no standards are made known to the
employee at that time, he shall be deemed as
a regular employee.
Q: When terminated?
He may be terminated only for (a)
just/authorized causes and (b) when he
failed to qualify for regular employment.
Note: He shall not exceed 6 months from the
employee started working except on certain
circumstances (e.g. apprenticeship,
nd
agreement, 2 chances, required by law or
company policy); otherwise, regular
employee (art. 281).
For teachers, however, the period of
probation is 3 years.
ii. Casual/Temporary (art. 281): It is an
employment where the employee is engaged
in an activity which is not necessary or
desirable in the usual business or trade of the
employer (not regular) provided that he is
not a project nor seasonal (i.e. for the
duration of such season only – even if off-
season only considered as LOA without pay
but shall be considered regular if hired
season-to-season) employee.
Example: Cutting of cogon grasses in the
premises of Yakult Philippine whose usual
trade is to manufacture cultured milk.
Q: When terminated?
They can be terminated before 1 year period
has elapsed; otherwise, they become regular
employee and their termination will be
deemed illegal.
Note: This is the only employment where
there is no contract.
iii. Regular (art. 280):
i. When employee has been engaged to
perform activities which are usually
necessary or desirable in the usual business
or trade (NDU) of the employer; or
10 | P a g e
ii. It is any employee who has rendered at
least 1 year of service, whether such service
is continuous or broken, with respect to the
activity in which he is employed and his
employment shall continue while such
activity exists.
Q: When terminated?
He may only be terminated for just
causes/authorized causes.
Note: Article 280 does not apply to OFWs.
They are governed by the contracts they
entered.
iv. Contractual/Fixed/Term: It is an
employment when a fixed period was agreed
upon (a) knowingly and voluntarily by the
parties, (b) without any force from the
employer, (c) without any circumstances
vitiating consent and (d) no moral pressure
from the employer (Brent School v.
Zamora).
Q: When terminated?
It terminates on a “day certain” (i.e.
resolutory period) as agreed by the parties.
Note: Even if employee is employed
indefinitely, he is still contractual because a
day certain is a period which must
necessarily come although it may not be
known (art. 1193 of the NCC).
Q: Is the 5-month scheme allowed?
No. In the case of Purefoods v. NLRC, the
SC said that where the purpose is to
preclude tenurial status of employee and to
circumvent the law, it is against public
policy and public morals.
v. Project (art. 280): It is when an
employment has been fixed for a specific
project or undertaking whose completion or
termination has been determined at the time
of the engagement of the employee.
Q: When terminated?
Since the employee’s services are
coterminous with the project, the services of
the project employees are legally and
automatically terminated upon the end or
completion of the project.
Note: When service is extended after the
project has ended, he is considered a regular
employee. Moreover, hiring on a project-to-
project basis is considered desirable in the
business of the employer which is
considered a regular employment too.
Q: Who are the per piece workers?
They are workers paid by results or output
of their work.
Q: What is apprenticeship?
It is practical training on the job
supplemented by related theoretical
instruction.
Q: What is learnership?
It is employment of persons hired as trainees
in semi-skilled and other industrial
occupations which are non-apprenticible and
which may be learned through practical
training on the job in a relatively short
period of time which shall not exceed 3
months whether or not such practical
training is supplemented by theoretical
instructions.
Q: What are the 4-fold tests to know if
there is EER relationship? (SPDC)
The following are the 4-fold tests:
i. Right to hire or to the selection and
engagement of the employee;
ii. Payment of wages and salaries for
services;
iii. Power of dismissal or the power to
impose disciplinary actions;
iv. Power to control the employee with
respect to the means and methods by which
the work is to be accomplished. This is
known as the right-of-control test (most
important).
e. Right to Humane Conditions of Work:
It ensures that the working conditions are
taken into account such as health, safety and
welfare of the workers.
Examples:
a. Book 4 on Health, Safety and Social
Welfare benefits relates to medical and
dental services, occupational health and
safety and a compensation program for
employees and their dependents in the event
of work-connected disability or death.
b. Title 3 of Book III regulates the working
conditions for special groups of employees:
women, minors, house helpers and
homeworkers.
11 | P a g e
c. Article 128-c empowers the Secretary of
Labor to order stoppage of work or
suspension of operations of an establishment
when non-compliance with the law poses
grave and imminent danger to the health and
safety of workers in the workplace.
f. Right to a Living Wage: It refers not
only to the worker but to his family as well.
The intent is to provide the means whereby a
worker can secure the health, decency well-
being and improved quality of life for his
family; hence, imbued with social justice.
Q: What is the difference of minimum
wage and living wage?
A minimum wage is a quantitative concept.
Moreover, it is the least wage on which an
individual can be self-sustaining and obtain
the ordinary requirements of life (life, food
and shelter).
On the other hand, a living wage is a
qualitative concept that takes into
consideration not only the worker but his
family as well. Moreover, it is
concerned not only with the ordinary
requirements of life but all the additional
requirements of his family (education,
clothing, health care, entertainment, etc);
hence, providing an improved quality of life.
g. Right to Participate in Policy and
Decision-Making (“Principle of co-
determination”): As worded, it does not
automatically establish a right unless there is
a law.
The law was supplemented on March 21,
1989, RA 6715 was made effective. Section
22 of such allows the formation of a “labor-
management councils” where the
representatives of the workers are elected by
at least the majority of all employees in said
establishment provided that it directly
affects the rights and benefits of the workers
(e.g. minimum wages, maximum hours of
work, working conditions, social security,
self-organization, etc.).
Q: If you are unilaterally dismissed, can
you question it?
Yes especially if there is no union.
Q: Can the union demand that their
representative be seated as the board of
director?
No for they do not have management
prerogative.
13. Other Features of Protecting Filipino
Labor
New measures provided by the Constitution
1. Article 12, sec. 12: “The State shall
promote the preferential use of Filipino
labor, domestic materials and locally
produced goods, and adopt measures that
help make them competitive”.
2. Article 12, sec. 14: “The practice of all
professions in the Philippines shall be
limited to Filipino citizens, save in cases
prescribed by law” (e.g. lawyer shall be a
natural-born citizen).
3. Article 14, sec. 4 (2): “Educational
institutions, other than those established by
religious groups and mission boards, shall
be owned solely by citizens of the
Philippines or corporations or associations at
least sixty per centum of the capital of which
is owned by such citizens. The Congress
may, however, require increased Filipino
equity participation in all educational
institutions”.
Note: In the media, however, the ownership
shall be 100% to avoid foreign propaganda.
14. Birth of the Labor Code
1. Writing of Labor Code began in 1968
under the leadership of then Minister of
Labor, Blas B. Ople (“Father of the Labor
Code”).
Note: He is not a lawyer. He is the longest-
serving minister of the Ministry of Labor.
2. The aims are (a) to consolidate the 60
scattered pieces of labor legislation and (b)
to re-orient them to the needs of economic
development and justice.
3. The road to approval of the Code was
long and tortuous – gathering contributions
from different bureaus (Department of
Labor, UP Law Center, IBP, NEDA, etc.).
After about 70 times of drafting and re-
drafting, the Code was ratified by the
National Tripartite Congress on April 28,
12 | P a g e
1973 and was submitted to the Dictator-
President on May 1, 1973.
4. In between Labor Days, it underwent
further revisions. On May 1, 1974, Labor
Day, it was signed into law as PD 442 to
take effect after 6 months (November 1,
1974).
5. Some extensive changes were made on
the same day by then President Marcos
through PD 570-A with no prior
announcement and publication.
15. Principles Underlying the Code
According to Blas B. Ople, the seven
innovative principles permeated the Labor
Code which is the following:
1. Labor relations must be made both
responsive and responsible to the national
development (e.g. with the proliferation of
those who worked in a call center, night-
time prohibition was abolished).
2. Labor laws or labor relations during a
period of national emergency must
substitute rationality for confrontation;
therefore, strikes or lockouts (i.e. temporary
work stoppage initiated by employer) give
away to a rational process which is
arbitration.
3. Laggard justice in the labor field is
injurious to the workers, the employers and
the public; labor justice can be made
expeditious without sacrificing due process.
4. Manpower development and employment
must be regarded as a major dimension of
labor policy, for there can be no real
equality of bargaining power under
conditions of severe mass unemployment.
5. There is a global labor market available
to qualified Filipinos, especially those who
are unemployed or whose employment is
tantamount to unemployment because of
their very little earnings (e.g. OFWs).
6. Labor law must command adequate
resources and acquire capable machinery
for effective and sustained implementation;
otherwise, they merely breed resentment not
only of the workers but also of the
employers. When labor laws cannot be
enforced, both the employers and the
workers are penalized, and only a corrupt
few – those who are in charge of
implementation – may get the reward they
do not deserve (e.g. funding for visitorial
and enforcement powers).
7. There should be popular participation in
national policy-making through what is now
called as tripartism.
15. Preliminary Title and the Seven (7)
Books of the Labor Code
 Book I- Pre-Employment;
 Book II- Human Resources &
Development Program;
 Book III- Conditions of
Employment;
 Book IV- Medical, Dental &
Occupational Safety;
 Book V- Labor Relations Law;
 Book VI- Post Employment;
 Book VII- Penal, Transitory, Final
Provisions, Prescription
Note: Not all books simultaneously took
effect. Book 4 took effect on a different date
which as on January 11, 1975.
16. Distinctive Feature of the Labor Code
The Labor Code of the Philippines is
distinguished from other Labor Codes and
Laws because it is oriented towards
national development, partaking the
character of a developmental law; hence, it
does not merely regulate employer-
employee relationship but is also a tool of
national development evident by Books 1 &
2.
According to the Secretary of Labor, the
code can be described in one sentence: “It
represents the updating of all labor laws to
make them more responsive to the priorities
of development and employment, as well as
social justice”.
17. Basic Approach in the Enactment of
the Labor Code: Tripartism
Tripartism
It is the participation and cooperation among
government, labor and management (3
sectors) in the evolvement and formulation
of labor policies and standards (the Labor
Code itself is a product of tripartism).
13 | P a g e
18. Some Labor Laws before the Passage
of the Code
There were some 60 pieces of labor
legislation before. Although some are
abrogated, some are still relevant because
the rationale/policy behind them has been
carried over to the Code and many court
rulings about them remain controlling to this
day.
1. Act 1874 (Employer’s Liability Act)
2. Act 2549: Prohibited Payment of wages in
non-cash form (because it will take too long
to get it)  Article 102 except when it is
customary or necessary
3. Act 2071: Prohibiting slavery or
involuntary servitude  Discussed under
the Constitution
4. RA 1054: Requiring emergency medical
treatment for employees  Book 4
5. CA 444: 8-hour Labor Law  Article 83
as normal hour of work
6. CA 103: Created the court of Industrial
Relations (CIR), precursor of National
Labor Commission under PD 21 (passed in
the early days of martial law regime) and the
present NLRC. Its task is to investigate,
decide and settle and disputes between
employer and employee.
7. RA 875 (Industrial Peace Act): It was the
law governing labor-management relations.
Hailed as the Magna Carta of Labor, it was
modeled after the US Labor-Management
Relations Act of 1947. Most of the basic
principles of Labor-Management Relations
Act of US have been carried out to the
Industrial Peace Act and now, indirectly, to
the Labor Code (e.g. unfair labor practices,
bargaining unit, duty to bargain and strikes
and lockouts).
8. Blue Sunday Law (RA 946): Forbids
commercial, industrial or agricultural
enterprises to open on any Sunday,
Christmas Day, New Year’s Day, Holy
Thursday and Good Friday since they are
“days of rest”. Yet the Labor Code has made
Sunday an ordinary working day  Article
191?
9. Termination Pay Law (RA 1052 as
amended by RA 1787): It enumerated the
“just causes” for terminating an employment
without a definite period and allowed
employers to separate an employee by
simply serving a 15-day notice per year of
service or, instead of notice, by paying an
equivalent separation pay. Security of tenure
was non-existent.

19. Significance of Foreign Decisions
Since the Industrial Peace Act was patterned
after US laws, American court decision has
influence in our court rulings (in the absence
of law).
It must be remembered in this regard that
“judicial decisions applying or interpreting
the laws or the Constitution form part of the
legal system of the Philippines” (merely
establishes contemporaneous legislative
intent).
20. Related Laws
1. The Civil Code
Q: What are the damages that can be
awarded in Labor Law?
It includes (i) actual damage which is
damage from actual reinstatement, (ii)
exemplary damage in order to teach the
person a lesson, (iii) moral damage for the
moral suffering caused, (iv) nominal
damage for recognizing that the contract has
been violated and (v) temperate damage
when complainant suffered actual damage
but he cannot ascertain how much
a. The Civil Code, not the Labor Code,
describes basically the nature of labor-
management relations
 Article 1700: “The relations between
capital and labor are not merely
contractual. They are so impressed
with public interest that labor
contracts must yield to the common
good. Therefore, such contracts are
subject to the special laws on labor
unions, collective bargaining, strikes
and lockouts, closed shop, wages,
working conditions, hours of labor
and similar subjects”.
 Article 1701: “Neither capital nor
labor shall act oppressively against
the other, or impair the interest or
convenience of the public” (e.g. if
the ER requested EE to work even at
loss of the government, that is
oppression).
b. It also proscribed involuntary servitude
which is also provided in the Bill of Rights
 Article 1703: “No contract which
practically amounts to involuntary
14 | P a g e
servitude, under any guise
whatsoever, shall be valid”.
c. The Civil Code further contains
provisions regarding wages, househelpers,
and injuries sustained by employees.
d. Other labor-related issues call for
application of the Civil Code such as those
relating to damages, interpretation of a
collective bargaining agreement, validity of
a waiver, preference of workers’ claim and
fixed-period employment.
2. RPC
a. The crimes against public order, against
persons, against property, or against honor
come into play, alongside labor laws,
especially in case of labor disputes.
b. Punishes the use of violence or threats by
either employer or employee:
 Article 289: “Formation,
maintenance and prohibition of
combination of capital or labor
through violence or threats — The
penalty of arresto mayor and a fine
not exceeding 300 pesos shall be
imposed upon any person who, for
the purpose of organizing,
maintaining or preventing coalitions
or capital or labor, strike of laborers
or lock-out of employees, shall
employ violence or threats in such a
degree as to compel or force the
laborers or employers in the free and
legal exercise of their industry or
work, if the act shall not constitute a
more serious offense in accordance
with the provisions of this Code”.
Q: What if during strike, it was marked by
violence?
It is light to serious physical injuries.
Q: What if during strike, EEs destroyed the
property of ER?
It is malicious mischief
3. Special Laws: It includes SSS law, GSIS
law, the Agrarian Reform Law, the 13 th-
month pay law, the Magna Carta for Public
Health Workers, and so forth.
21. International Aspect
The Philippines is a member of International
Labour Organization (ILO) which is a UN
specialized agency which seeks the
promotion of social justice and
internationally recognized human and labor
rights.
It was created in 1919 at the end of the 1st
World War. The need for such an
organization had been advocated by two
industrialists, Robert Owen of Wales and
Daniel Legrand of Frances.
The ILO is the only surviving major creation
of the Treaty of Versailles which created the
League of Nations. It became the first
specialized agency of UN in 1946.
The ILO formulates international labor
standards in the form of conventions and
recommendations setting minimum
standards of basic labor rights.
An essential characteristic of ILO is
tripartism – composed of government
representatives, employers’ and workers’
organizations.
The Philippines started its membership in
the ILO on June 26, 1945. On March 19,
1948, the Philippine Senate passed
Resolution 44 concurring to the country’s
acceptance of obligations under the ILO
Constitution and by-laws. Succeeding
President Roxas, President Qurino formally
accepted such obligation by signing
Proclamation 67 on May 19, 1948. Finally,
during the ILO Conference in San
Francisco, the Philippines signed in as a
member of the ILO on June 15, 1948.
Note: We usually observe the Labor Code of
the Philippines.
A. International Commitments
Being an ILO member, the Philippines
subscribes to the fundamental principles on
which the ILO is based, and in particular,
that –
a. labor is not a commodity;
b. freedom of expression and of association
are essential to sustained progress;
c. that poverty anywhere constitutes a
danger to prosperity everywhere;
d. the war against want requires to be carried
on with unrelenting vigor within each
nation, and by continuous and concerted
international effort in which the
15 | P a g e
representative of workers and employers,
enjoying equal status with those of
governments, join with them in free
discussion and democratic decision with a
view to the promotion of the common
welfare.
Furthermore, as IL members, the Philippines
is committed to pursue programs that will
achieve certain objectives (recited in the
Declaration adopted by the General
Conference in Philadelphia on May 10,
1944), including:
a. full employment and raising of standards
of living;
b. policies in regards to wages and earnings,
hours and other conditions of work
calculated to ensure a just share of the fruits
of progress to all, and a minimum living
wage to all employed and in need of such
protection
c. the effective recognition of the right of
collective bargaining, the cooperation of
management and labor in the continuous
improvement of productive efficiency, and
the collaboration of workers and employers
in the preparation and application of social
and economic measures;
d. the extension of social security measures
to provide a basic income to all in need of
such protection.
B. ILO Core Conventions
These are fundamental to the right of human
beings at work, irrespective of the level of
development of member-states.
These rights are precondition to other rights.
It is deemed that member-states implement
such.
The 8 core conventions are as follows:
a. Forced Labor Convention, 1930 (No. 29)
b. Freedom of Association and Protection of
the Right to Organize Convention, 1948
(No. 87
c. Right to Organize and Collective
Bargaining Convention, 1949 (No. 98)
d. Equal Remuneration Convention, 1951
(No. 100)
e. Abolition of Forced Labour Convention,
1957 (No. 105)
f. Discrimination (Employment and
Occupation) Convention, 1958 (No. 111)
g. Minimum Age Convention, 1973 (No.
138); and
h. Worst Forms of Child Labour
Convention, 1999 (No. 182).

C. Ratification Generally Needed;
Exception
GR: It is binding only for those member-
states that ratify them.
XPN: In 1999, the ILO adopted the
Declaration on Fundamental Principles and
Rights at Work concerning an obligation of
all ILO members to respect and promote the
fundamental rights even if they have not
ratified the conventions.
Note: The Philippines has ratified more than 30
ILO conventions, including the 8 core
conventions.
III. ARTICLE 3: DECLARATION OF
BASIC POLICY
“The State shall afford protection to labor,
promote full employment, ensure equal
work opportunities regardless of sex, race
or creed and regulate the relations between
workers and employers. The State shall
assure the rights of workers to self-
organization, collective bargaining, security
of tenure, and just and humane conditions of
work”.
Note: This is a reverberation of article 13,
section 3 of the Philippine Constitution
except “regardless of sex, race or creed”.
IV. ARTICLE 4: CONSTRUCTION IN
FAVOR OF LABOR
“All doubts in the implementation and
interpretation of the provisions of this Code,
including its implementing rules and
regulations, shall be resolved in favor of
labor”.
1. Interpretation and Construction
If the evidence presented by both parties are
equipoise, i.e. evenly balanced
a. Laborer’s Welfare; Liberal Approach
The laborer’s welfare should be the
primordial and paramount consideration. It
is to tilt the scale of justice in favor of the
employee.
In interpreting the Constitution’s protection
to labor and social justice provisions and the
labor laws and rules and regulations
implementing the constitutional mandate, he
SC adopts the liberal approach which favors
the exercise of labor rights.
16 | P a g e
b. Concern for lowly worker
It reiterates it concern for the lowly worker
for his protection; however, the policy of
social justice is not intended to countenance
wrongdoing (PLDT v. NLRC where the SC
said that since the employee was dismissed
due to a cause, theft, she cannot claim
separation pay even if she worked in the
company for 10 years because she may
expect leniency if she again did it to another
company).
c. Reason for affording great protection
to employees
i. There is a greater supply than demand for
labor; and
ii. The need for employment by labor comes
from vital, and even desperate, necessity.
2. Management Rights (“Management
Prerogatives”)
It should not be supposed that every labor
dispute will be automatically decided in
favor of labor.
a. Right to Return of Investment (ROI):
Right to make profit
b. Right to Prescribe Rules: Right to make
reasonable rules and regulations unless
shown to be grossly oppressive or contrary
to law.
In St. Michael’s Institute v. Santos, the SC
said that the penalty of dismissal that was
meted out to the respondent by the petitioner
for striking is too harsh. It must be noted
that respondents are being held for a first
time offense and, in case of one respondent,
despite long years of unblemished service.
The SC said that while it is a management
prerogative to prescribe rules, they must be
fair and reasonable and the corresponding
penalties, when prescribe, should
commensurate to the offense involved and to
the degree of infraction.
c. Right to Select Employees: Right to
select employees and decide when to engage
them; however, once hired, the rule is not
absolute anymore.
d. Right to Transfer or Discharge
Employees: Right to transfer, reduce or
layoff personnel in order to minimize
expenses and insure the stability of the
business, and even to close the business
provided that it is done in good faith.

Q: What is constructive dismissal?
It is an employer’s act amounting to
dismissal but made to appear as if it were
not – a dismissal in disguise (e.g. sending
the EE away from his home causing
geographical dislocation).
V. ARTICLE 5: RULES AND
REGULATIONS
“The Department of Labor and other
government agencies charged with the
administration and enforcement of this
Code or any of its parts shall promulgate
the necessary implementing rules and
regulations. Such rules and regulations
shall become effective fifteen (15) days after
announcement of their adoption in
newspapers of general circulation”.
1. Rules and Regulations to Implement
the Code
Under article 5, the DOLE shall make rules
and regulations to implement the Code.
It has been ruled that administrative
regulations and policies enacted by
administrative bodies to interpret the law
have the force of law, and are entitled to
great respect (PASEI v. Drilon).
2. When Invalid
A rule or regulation (IRR) promulgated by
an administrative body, such as the DOLE,
to implement a law, in excess of its rule-
making authority or “ultra vires”, is void
(e.g. Limiting entitlement to holiday pay to
daily-pay employees when the law itself
states that “every worker” shall be entitled
to holiday pay as per article 94).
Rules and regulations are meant only to
expand and implement the Labor Code.
V. ARTICLE 6: APPLICABILITY
“All rights and benefits granted to workers
under this Code shall, except as may
otherwise be provided herein, apply alike to
all workers, whether agricultural or non-
agricultural”.
1. Applicability to Government
Corporations
Q: What are the 2 types of GOCCs?
These are the (a) GOCCs with original
charter (created by special law from
Congress) and (b) GOCCs without original
17 | P a g e
charter (created under the General
Corporation Code).
Q: What governs government corporations
without original charter?
The Labor Code applies to Government
Corporations incorporated under the
Corporation Code (without original charter)
(e.g. PNOC-EDC or Philippine National Oil
Corporation-Energy Development
Corporation; FTI or Food Terminal, Inc.;
NHA or National Housing Corp.).
The workers therein have the right to
unionize and strike and any disputes arising
from employment should be within the
DOLE.
Q: What governs government corporations
with original charter?
Government corporations created by special
law from Congress (with original charter)
are governed by Civil Service Rules and
Regulations.
2. Non-applicability to Government
Agencies
Government agencies or instrumentalities
are covered by the Civil Service Rules and
Regulations, not the Labor Law (e.g.
National Parks Development Committee,
SSS, etc.).
While they are allowed to form unions of
their choice, they are prohibited to strike.
Moreover, in case of labor disputes, the
Public Sector Labor-Management Council,
not the DOLE, shall hear the dispute.
Furthermore, when they went on strike, it is
the RTC, not the Labor Relations
Commission, which has the jurisdiction to
enjoin them to strike.
3. Applicability without employer-
employee relationship
Labor Code applies even if the parties are
not employers and employees of each other.
EER is not a pre-condition to the
applicability of the Labor Code (e.g. indirect
employer’s liability, illegal recruitment,
misuse of POEA license, etc.).
Q: Illustrate direct and indirect employers.
If X is engaged in restaurant business and
wants to put up a building, it concludes a
contract with a construction company, Y,
which in turn hires the services of Z to
handle certain phases of construction.
Y and Z needs to hire people to accomplish
X’s goals, but X does not necessarily
become their employer. The EER exists only
with respect to Y and his employees and Z
and his employees.
Y (contractor) and Z (sub-contractor) are the
direct employer while X (principal) is the
indirect employer.
However, in case of non-compliance of any
provisions of the Labor Code, they will be
solidarily liable (art. 109).
CHAPTER 2
EMANCIPATION OF TENANTS
Art. 7. Statement of objectives. Inasmuch
as the old concept of land ownership by a
few has spawned valid and legitimate
grievances that gave rise to violent conflict
and social tension and the redress of such
legitimate grievances being one of the
fundamental objectives of the New Society,
it has become imperative to start
reformation with the emancipation of the
tiller of the soil from his bondage.
Art. 8. Transfer of lands to tenant-
workers. Being a vital part of the labor
force, tenant-farmers on private
agricultural lands primarily devoted to rice
and corn under a system of share crop or
lease tenancy whether classified as landed
estate or not shall be deemed owner of a
portion constituting a family-size farm of
five (5) hectares, if not irrigated and three
(3) hectares, if irrigated.
In all cases, the land owner may retain an
area of not more than seven (7) hectares if
such landowner is cultivating such area or
will now cultivate it.
Art. 9. Determination of land value. For
the purpose of determining the cost of the
land to be transferred to the tenant-farmer,
the value of the land shall be equivalent to
two and one-half (2-1/2) times the average
harvest of three (3) normal crop years
immediately preceding the promulgation of
Presidential Decree No. 27 on October 21,
1972.
18 | P a g e
The total cost of the land, including interest
at the rate of six percent (6%) per annum,
shall be paid by the tenant in fifteen (15)
years of fifteen (15) equal annual
amortizations.
In case of default, the amortization due shall
be paid by the farmers’ cooperative in
which the defaulting tenant-farmer is a
member, with the cooperative having a right
of recourse against him.
The government shall guarantee such
amortizations with shares of stock in
government-owned and government-
controlled corporations.
Art. 10. Conditions of ownership. No title
to the land acquired by the tenant-farmer
under Presidential Decree No. 27 shall be
actually issued to him unless and until he
has become a full-fledged member of a duly
recognized farmers’ cooperative.
Title to the land acquired pursuant to
Presidential Decree No. 27 or the Land
Reform Program of the Government shall
not be transferable except by hereditary
succession or to the Government in
accordance with the provisions of
Presidential Decree No. 27, the Code of
Agrarian Reforms and other existing laws
and regulations.
Art. 11. Implementing agency. The
Department of Agrarian Reform shall
promulgate the necessary rules and
regulations to implement the provisions of
this Chapter.  RA 6657 (Comprehensive
Agrarian Reform Law of 1988)
BOOK 2
 HUMAN RESOURCES
DEVELOPMENT PROGRAM
(Articles 43-81)
TITLE 1
NATIONAL MANPOWER
DEVELOPMENT PROGRAM
CHAPTER 1
NATIONAL POLICIES AND
ADMINISTRATIVE MACHINERY FOR
THEIR IMPLEMENTATION
(Articles 43-56)
I. OBJECTIVES OF THE HUMAN
RESOURCES PROGRAM (Art. 43)
1. To develop human resources;
2. To establish training institutions; and
3. To 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.
Note: The NMYC (National Manpower and
Youth Council) has been replaced and
absorbed by TESDA (Technical Education
and Skills Development Authority) created
under RA 7796 (TESDA Act of 1994)
which was approved on August 25, 1994.
The fusion of the above offices was one of
the key recommendations of the 1991
Report of the Congressional Commission on
Education, which undertook a national
review of the state of Philippine education
and manpower development.
It was meant to reduce overlapping in skills
development activities initiated by various
public and private sector agencies, and to
provide national directions for the country's
technical-vocational education and training
(TVET) system.
TITLE 2
TRAINING AND EMPLOYMENT OF
SPECIAL WORKERS
(Articles 57-81)
Q: Who are the special workers?
This includes apprentices, learners and
handicapped workers
CHAPTER 1
APPRENTICES
(Articles 57-72)
19 | R O N B E R N A R D S . O R A Z A
I. OBJECTIVES (Art. 57)
1. To help meet the demand of the economy
for trained manpower;
2. To establish a national apprenticeship
program through the participation of ERs,
workers and government and non-
government agencies; and
3. To establish apprenticeship standards for
the protection of apprentices.
Note: Accordingly, this was done to remedy
the dearth of “skilled” workers in the
country.
II. DEFINITION OF TERMS (Art. 58)
1. Apprenticeship means practical training
on the job supplemented by related
theoretical instruction.
2. An apprentice is a worker who is covered
by a written apprenticeship agreement with
an individual ER or any of the entities
recognized under this chapter.
3. An apprenticeable occupation means any
trade, form of employment or occupation
which requires more than three (3) months
of practical training on the job supplemented
by related theoretical instruction.
4. Apprenticeship agreement is an
employment contract wherein the employer
binds himself to train the apprentice and the
apprentice in turn accepts the terms of
training.
Q: Which government agency implements
and administers the apprenticeship
program?
It is the TESDA as provided under Section
18 of the TESDA Act of 1994, not the
DOLE Secretary anymore (e.g. approval of
apprenticeship program).
.
III. NATURE OF APPRENTICESHIP
PROGRAM (Art. 70)
GR: It is voluntary undertaking between the
ER and the apprentices concerned.
XPNs:
1. When national security or particular
requirements of economic development so
demand; and
2. When services of foreign technicians are
utilized by private companies in
apprenticeable tasks
LABOR LAW I
Q: What is the employment status of
apprentices?
They are contractual workers whose length
of service depends on the term provided for
in the apprenticeship agreement. Thus, the
employer is not obliged to employ the
apprentice after the completion of his
training.
Q: What is the period of apprenticeship?
It does not exceed 6 months.
Q: What is the status of an apprentice
hired after such term?
He is deemed a regular EE. He cannot be
hired as a probationary EE since the
apprenticeship is deemed the probationary
period.
IV. QUALIFICATIONS OF
APPRENTICE (Art. 59)
To qualify as an apprentice, a person shall:
1. Be at least fourteen (14) years of age;
Note: This shall be 15 years old now in
relation with article 137 of the LCP which
expressly prohibits employment of children
below 15 years of age.
2. Possess vocational aptitude and capacity
for appropriate tests; and
Note: This is the most important
requirement. ERs or entities with duly
recognized apprenticeship programs have
the primary responsibility for providing
appropriate aptitude tests in the selection of
apprentices. If they do not have adequate
facilities for that purpose, the DOLE shall
perform this service fee free of charge (art.
68).
3. Possess the ability to comprehend and
follow oral and written instructions.
Q: What are the requisites for employment
of apprentices?
According to article 60:
a. The ER should be engaged in a business
that is considered a highly technical industry
(i.e. under the IRR, it is a trade, business,
enterprise, industry or other activity which
utilizes the application of advanced
technology).
b. The job which the apprentice will work
on should be an apprenticeable occupation
20 | R O N B E R N A R D S . O R A Z A
(i.e. under TESDA Act, it is one which is
officially endorsed by a tripartite body and
approved by TESDA).
Note: Prior approval by the TESDA is a sine
qua non before an apprenticeship program
can be validly entered into.
Q: Can it proceed without approval of
TESDA?
Yes provided that the ER gives minimum
wage if he will adopt his own apprenticeship
program.
V. CONTENTS OF APPRENTICESHIP
AGREEMENTS (Art. 61)
1. Wage rate which shall not be below 75%
of the applicable minimum wage
2. Nature of occupation
3. Applicable apprenticeship program being
implemented by sponsoring ER.
Q: What should be its form?
It should be in writing as provided under
article 58. This is necessary not only to
safeguard the rights of the apprentice but
also to protect the ER from charges of illegal
dismissal.
Consequently, if there is no agreement:
a. ER: He cannot be sued for illegal
dismissal
b. EE: He should be considered as regular
EE (Nitto v. NLRC)
Q: Is there a need to sign the
apprenticeship agreement?
Yes. As provided under article 62, it shall be
signed by the parties.
If the apprentice is a minor, it shall be
signed in his behalf by parent or guardian. If
the parent or guardian is not available, it
shall be signed by an authorized
representative of the DOLE.
VI. VENUE OF APPRENTICESHIP
PROGRAM
As regards to venue of apprenticeship
program, the law allows any ER or entity to
choose from any of the following training
venues:
a. Entirely by and within the sponsoring
firm, establishment or entity;
b. Entirely within a DOLE training center or
other public training institution; or
LABOR LAW I
c. Initial training in trade fundamentals in a
training center or other institution, with
subsequent actual work participation within
the sponsoring firm or entity during the final
stage of training (art. 63).
Apprenticeship program may be sponsored
by a single ER or firm, or by a group or
association thereof, or by a civil
organization. Actual training of apprentices
may be undertaken:
a. In the premises of the sponsoring ER in
the case of individual apprenticeship
programs;
b. In the premises of one or several
designated firms in the case of programs
sponsored by a group or association of ERs
or by a civil organization; or
c. In a DOLE training center or other public
training institution (art. 64).
Q: What is the incentive on the sponsoring
ER?
He can avail of the deduction from his taxes
which is ½ of the training expenses
provided (a) that such program is duly
recognized by the DOLE, (b) such deduction
shall not exceed 10% of direct labor wage
and (c) that the person or enterprise who
wishes to avail himself/itself of the incentive
should pay apprentices minimum wage (art.
71).
VII. VALID CAUSES TO TERMINATE
APPRENTICESHIP PROGRAM (Rule 6,
section 25, Omnibus Rules)
Either party to an apprenticeship agreement
may terminate the same after the
probationary period (probationary period:
when the party may summarily terminate the
agreement) only for a valid cause, such as
any of the following:
1. By the ER:
a. Habitual absenteeism in on-the-job
training and related theoretical instruction;
b. Willful disobedience of company rules or
insubordination to lawful orders of a
superior
c. Poor physical condition, permanent
disability or prolonged illness which
incapacitates the apprentice from working
d. Theft or malicious destruction of
company property and/or equipment
e. Poor efficiency of performance on the job
or in the classroom for a prolonged period
21 | R O N B E R N A R D S . O R A Z A
despite warnings duly given the apprentice;
and
f. Engaging in violence or other forms of
gross misconduct inside the ER’s premises.
2. By the Apprentice:
a. Substandard or deleterious working
conditions within the ER’s premises;
b. Repeated violation by the ER of the terms
of the apprenticeship agreement;
c. Cruel or inhuman treatment by the ER or
his subordinates;
d. Personal problems which in the opinion of
the apprentice shall prevent him from a
satisfactory performance of his job
e. Bad health or continuing illness
VIII. VIOLATION OF
APPRENTICESHIP AGREEMENTS
1. Investigation of violation of
apprenticeship agreement (art. 65): Upon
complaint of any interested person or upon
its own initiative, the appropriate agency of
the Department of Labor and Employment
or its authorized representative shall
investigate any violation of an
apprenticeship agreement.
2. Appeal to the Secretary of Labor (art.
66): The decision of such agency may be
appealed by any aggrieved person to the
SOLE within 5 days from receipt of the
decision. The decision of the SOLE shall be
final and executory.
3. Exhaustion of Administrative Remedies
(EAR) (art. 67): No person shall institute
any action for the enforcement of
apprenticeship agreement or damages for the
breach of such agreement unless he has
exhausted all available administrative
remedies.
Q: Who shall settle differences arising out
of apprenticeship agreement?
The plant apprenticeship committee shall
have the initial responsibility for settling
differences arising out of apprenticeship
agreement (DOLE IRR).
IX. APPRENTICES WITHOUT
COMPENSATION (Art. 72)
The Secretary of Labor and Employment
may authorize the hiring of apprentices
without compensation whose training on the
job is required by the school or training
program curriculum or as requisite for
LABOR LAW I
graduation or board examination. (e.g.
school-required OJTs).
Q: Suppose the student is working in the
school (i.e. working student), is there an
ER-EE relationship between the student
and the school?
None. According to IRR, there is no ER-EE
relationship between the student and the
school where the is written agreement
between them under which the former agree
to work for the latter in exchange of a
privilege to study free of charge provided
that the students are given “real
opportunities” such as facilities necessary
for him to finish their chosen courses under
such agreement (Rule X, IRR).
Q: If the said working student injures a 3 rd
person, does the school become liable?
Yes. In the case of Filamer v. IAC, the SC
said that the apprentice is under the control
of the ER. He is acting as an agent to the
ER; hence, damages should be attributed to
the ER.
CHAPTER 2
LEARNERS
(Articles 73-77)
I. LEARNERS
Learners are 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 three (3) months (art.
73).
They may be hired under the following
circumstances which must concur (art. 74):
1. When no experienced workers are
available;
2. When their employment is necessary to
prevent curtailment of employment
opportunities; and
3. Such employment will not create unfair
competition in terms of labor costs nor
impair working standards.
II. (CONTENTS OF) LEARNERSHIP
AGREEMENT (Art. 75):
1. The names and addresses of the learners;
2. The duration of the learnership period
which shall not exceed 3 months;
22 | R O N B E R N A R D S . O R A Z A
3. The wages or salary rates of the learners
which shall begin at not less than 75% of the
applicable minimum wage; and
4. A commitment to employ the learners if
they so desire, as regular employees upon
completion of the learnership. All learners
who have been allowed or suffered to work
during the first two (2) months shall be
deemed regular employees if training is
terminated by the employer before the end
of the stipulated period through no fault of
the learners.
Note: The learnership agreement shall be
subject to inspection by the Secretary of
Labor and Employment or his duly
authorized representative
Q: Shall pieceworker or incentive-rate
workers be paid in full during learnership
period?
Yes (art. 76).
CHAPTER 3
HANDICAPPED WORKERS
(Articles 78-81)
I. HANDICAPPED WORKERS
Handicapped workers are those whose
earning capacity is impaired by age or
physical or mental deficiency or injury (art.
78)  Not per se, e.g. if they still continue
to work.
Note: The Magna Carta for Disabled
Persons (RA 7277, approved on March 24,
1992) ensures equal opportunities for
disabled persons and prohibits
discrimination against them.
Q: What determines a handicapped
worker?
What determines a handicapped worker is
not his age or physical or mental disability
per se but how such disability impairs his
earning capacity (as opposed to the so-called
“disabled” or “differently abled”) , e.g. a
worker who has lost a forearm but continues
to work is not a handicapped worker nor is a
college professor who is retained to teach
his subject long beyond his retirement age.
They may be hired under the following
circumstances which must concur (art. 79):
LABOR LAW I
1. When their employment is necessary to
prevent curtailment of employment Q: What are the incentives provided for
opportunities; and employers in employing disabled workers?
2. When it does not create unfair 1. Entitled to an additional deduction from
competition in labor costs or impair or lower their gross income, equivalent to twenty ‐five
working standards. percent (25%) of the total amount paid as
salaries and wages to disabled persons
II. (CONTENTS OF) EMPLOYMENT provided that (a) ER present proof and (a)
AGREEMENT (Art. 80) that the disable EE is accredited with the
1. The names and addresses of the DOLE, DOH as to his disability, skills and
handicapped workers to be employed; qualifications.
2. The rate to be paid the handicapped
workers which shall not be less than seventy 2. Private entities that improve or modify
five (75%) percent of the applicable legal their physical facilities in order to provide
minimum wage; reasonable accommodation for disabled
3. The duration of employment period; and persons shall also be entitled to an additional
4. The work to be performed by deduction from their net taxable income,
handicapped workers. equivalent to fifty percent (50%) of the
direct costs of the improvements or
III. ELIGIBILITY FOR modifications
APPRENTICESHIP (Art. 81)
Subject to the appropriate provisions of this IV. APPRENTICESHIP v.
Code, handicapped workers may be hired as LEARNERSHIP v. HANDICAPPED
apprentices or learners if their handicap is APPRENTICESHIP LEARNERSHIP HANDICAPPED
Period of Training
not such as to effectively impede the It shall not exceed 6 It shall not exceed There is no
performance of job operations in the months 3 months minimum or
maximum duration
particular occupations for which they are It depends on the
hired. agreement.
Type of Work
Highly skilled job or Semi-skilled job ERs in all
Q: Can they be qualified as regular EEs as highly technical or industrial industries
industry occupations
well? Salary
Yes. In a recent case, the SC said that Not less than 75% of Not less than 75% Not less than 75%
the applicable of the applicable of the applicable
workers who worked for more than 6 minimum wage (25% minimum wage minimum wage
months and whose contracts are renewed are lower than the (25% lower than (25% lower than
applicable legal the applicable the applicable
deemed regular EEs since their work is minimum wage) legal minimum legal minimum
necessary or desirable to the business. wage) wage)
Qualifications
1. Be at least 15 years 1. Be at least 15 1. Be at least 15
Q: What is the wage rate of handicapped of age; years of age. He years of age. He
workers? 2. Possess vocational
may be hired
based on the
may be hired
based on the
Like the other special workers, it shall be aptitude and capacity following following
not less than 75% of the legal minimum for appropriate tests;
and
circumstances
which must
circumstances
which must
wage. concur: concur:
3. Possess the ability
to comprehend and a. When no a. When their
Q: What is the duration of the employment follow oral and experienced employment is
period of handicapped workers? written instructions. workers
available;
are necessary
prevent
to

There is no minimum or maximum duration. curtailment of

It depends on the agreement but it is b. When their
employment is
employment
opportunities; and
necessary that there is a specific duration necessary to
stated. prevent
curtailment of
b. Such
employment will
employment not create unfair
Q: Who may employ handicapped opportunities; and competition
terms of labor
in

workers? c. Such costs nor impair

Employers in all industries provided the employment will
not create unfair
working standards.

handicap is not such as to effectively impede competition in

the performance of job operations in the terms of labor
costs nor impair
particular occupations for which they are working
hired standards.

23 | R O N B E R N A R D S . O R A Z A LABOR LAW I
 Commitment to Employ the effectivity date of the new scale. He may
No commitment to There is a Not specified
hire commitment to even retroact its effectivity.
hire (because the
job is easier) if EE
so desires upon Q: What are the limitations on the
completion of employer’s power to regulate working
learnership.
In case of Pretermination of Contract conditions?
Worker not Considered a Not specified a. It must be done in good faith and not for
considered as regular regular EE if it
EE happens during the purpose of defeating or circumventing
the first 2 months the rights of the employees.
of training and the
dismissal is b. It must not be contrary to morals, good
without fault of customs, public order or public policy.
the learner (DOLE
IRR)
List Q: X Company introduced a new
There is no list There is a list of Not specified
learnable trades by marketing scheme by offering its product
TESDA for sale directly to wholesalers. The union,
Written Agreement
Requires Requires Requires
however, filed a complaint for unfair labor
Apprenticeship Learnership Employment practice because it was contrary to the
Agreement Agreement Agreeement
existing marketing scheme to assign the
sale first to salesman where wholesalers
Note: They are similar because they all should buy. X company, to compensate,
mean training periods for jobs requiring promised to pay them a so-called “back
skills that can be acquired through actual adjustment commission” to make up for
work experience. the commission they may lose as a result of
the new marketing scheme. Is this done in
Moreover, because they are not regular good faith?
workers, all of them may be paid wages Yes. It is done in good faith for the
25% lower than the applicable legal advancement of the ER’s interest and not for
minimum wage. the purpose of defeating or circumventing
the rights of the EEs.

BOOK 3 Q: When do the conditions of employment

CONDITIONS OF EMPLOYMENT
(Articles 82-96)
TITLE 1
WORKING CONDITIONS AND REST
PERIODS
CHAPTER 1
HOURS OF WORK
(Sections 82-90)
Q: What are the 2 kinds of employment
conditions or benefits?
They are statutory (provided by law) and
voluntary (initiated by the ER unilaterally or
by contractual stipulation).
Q: Who determines working conditions?
Generally, it is determined by the ER as he
is usually free to regulate, according to his
discretion, all aspects of employment.
For example, an ER, to make its salary rate
competitive, may lawfully devise and
implement a new salary scale applicable
only to future EEs. He may also determine
(labor standards) under the Labor Code
applies?
Only if there is an ER-EE relationship;
otherwise, the claim cannot be pursued
before the DOLE or its offices or agencies
(e.g. partnership, co-ownership or
independent contractorship).
Consequently, some businessmen try to
avoid the bringing of ER-EE relationship to
avoid the obligations under the Labor Code.
I. COVERAGE (Art. 82)
1. Coverage of articles 82-96 (Title 1:
Working Conditions and Rest Periods)
GR: It applies to employees in all
establishments and undertakings whether for
profit or not.
XPNs: It does not apply to the following
[GM-F2-DR]:
a. Government employees
GR: Government EEs are governed by Civil
Service Rules and Regulations

24 | R O N B E R N A R D S . O R A Z A LABOR LAW I
XPN: EEs of government agencies and
corporations that are incorporated under the
Corporation Code (or those without original
charters).
Note: As regards public health workers, RA
7305 applies (Magna Carta of Public Health
Workers)
b. Managerial employees:
GR: It refers to those whose primary duty
consists of the management of the
establishment in which they are employed,
and to other officers or managers of the
managerial staff, i.e. supervisors (art. 82,
par. 2)
XPN: In article 212 (Book 5) of the Labor
Code, “managerial employees” does not
include supervisors which, in effect, gives
them the right to form, join or assist a labor
union of fellow supervisors under Labor
Relations.
Note: If a supervisor is given the benefits, it
is not because of the law but the ER’s
voluntary act or contractual obligation.
c. Field personnel (or “outside personnel”):
It refers to non-agricultural EEs 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, par. 3); hence,
they are paid specific amount for rendering
services.
Q: Are bus drivers and conductors field
personnel?
No. While they are (a) non-agricultural EEs
(b) performing their duties away from the
principal place of business or branch office
of the ER, they did not satisfy the 3 rd
requirement because their actual hours of
work are monitored because there are
inspectors assigned at strategic places,
mandatory once-a-week check-up, specific
arrival and departure point at specific times,
etc.
Note: There should be a way to monitor the
EEs if they spend the hours in field work.
d. Members of the family of the employer
who are dependent on him for support
25 | R O N B E R N A R D S . O R A Z A
e. Domestic helpers and persons in the
personal service of another:
Q: When is this applicable?
This is only applicable if they perform such
services in the ER’s home.
Hence, a family cook who was later
assigned as watcher and cleaner of the ER’s
establishment becomes an industrial worker.
Moreover, a waiter of a hotel does not fall
under the qualification that they shall work
at the ER’s home.
Q: A house personnel was hired by a
ranking company official to maintain a
staff house provided for the official. The
personnel is being paid by the company
itself. Is the house personnel a domestic
servant of the company official?
No, the personnel is not a domestic helper
but a regular employee of the company.
f. Workers who are paid by results as
determined under DOLE regulations
This includes workers who are (i) paid per
piece and those (ii) paid per task. They are
both paid by results not on basis of time
they spent working such as those paid by the
hour, day, week or month.
Those paid per task is not reckoned in terms
of number of units produced but if terms of
completion of task (e.g. plowing a piece of
land, painting a barn, digging a ditch, etc.).
1.1. Questions of Law, Questions of Fact
There is a question of law when there is
doubt as to what the law is on a certain state
of facts.
On the other hand, there is a question of fact
when there is doubt as to the truth or falsity
of the alleged facts.
Q: Is ER-EE relationship a question of law
or a question of fact?
It depends.
The existence of an ER-EE relationship does
not depend upon the agreement/stipulation
of the parties. The law prevails over that in
the contract. In this sense, it is a question of
law (e.g. when there is an invalid contract).
On the other hand, the existence of ER-EE
relationship may depend on the facts of each
LABOR LAW I
case. In this sense, it is a question of fact
(e.g. when there is no contract).
1.2. “Futile Circumlocutory” Definitions
The Labor Code ironically does not explain
who is an ER and who is an EE. Although it
may offer definitions of an ER (i.e. includes
any person acting in the interest of an ER in
relation to an employee) and an EE (i.e.
includes any individual employed by an
employer) under articles 97 and 219, they do
not state any genus or differentia. In short,
they are just “futile” (pointless)
“circumlocutions” (wordy).
The SSS Law offers more substantive and
meaningful definition:
 Employer: Any person, natural or
juridical, domestic or foreign, who
carries on in the Philippines any
trade, business, industry, undertaking
or activity of any kind and uses the
service of another person who is
under his order as regards the
employment.
 Employee: Any person who performs
services for an employer in which
either or both mental and physical
efforts are used and who receives
compensation for such services,
where there is an ER-EE
relationship.
Note: It is NOT Labor Code but court
rulings that explain the elements or
indicators of an ER-EE relationship.
2. 3 Elements/Tests of Employment
Relationship
There has been no uniform test to determine
the existence of an ER-EE relation.
Generally, the court relies on the “control
test” under the four-fold test. In fact, the 4-
fold test may be regarded as the
traditional/conventional test of employment.
Q: Who has the burden of proof in alleging
that there is an ER-EE relationship?
It is the EE. In an illegal dismissal case, the
onus probandi rests on the employer to
prove that its dismissal of an employee was
for a valid cause. However, before a case for
illegal dismissal can prosper, an ER-EE
relationship must first be established by the
EE by substantial evidence (Lopez v.
Bodega City).
26 | R O N B E R N A R D S . O R A Z A
Q: May DOLE make a prima facie
determination of the existence of an ER-
EE relationship in the exercise of its
visitorial and enforcement power?
Yes as stated in Bombo Radyo v. NLRC
(2012).
Facts: Bombo Radyo contended that there
was no ER-EE relationship; hence, the
DOLE is has no jurisdiction over the case.
Issue: W/N DOLE has jurisdiction (i.e.
power to decide whether or not to issue
compliance orders).
Held: No. The “expanded power of DOLE”
provides that the DOLE (or DOLE’s
Regional Director) has the power to
determine the existence of an ER-EE
relationship in the exercise of its visitorial
and enforcement power. If there is ER-EE
relationship, the DOLE exercises
jurisdiction to the exclusion of NLRC. If
there is no ER-EE relationship, the
jurisdiction is with the NLRC. Howerver,
the findings of the DOLE may still be
questioned through a petition for certiorari
under Rule 65 of the Rules of Court.
Further, DOLE can determine ER-EE
relationship regardless of the amount of
monetary claim (i.e. if more or less than 5K)
according to article 128 (b) of the LCP as
amended by RA 7730.
In the case, it was proven that there was no
ER-EE relationship through a judicial
review made by the court.
Note: According to article 128 (b), par. 3, in
order for an appeal to be perfected in case
when order involves a monetary award, it is
necessary that the ER post cash or surety
bond issued by a bonding company
equivalent to the monetary award.
A. Four-fold Test
a. Selection and engagement of the
employee
b. Payment of wages (economic test)
c. Power of dismissal or the power to
impose disciplinary actions
d. Power to control the employee with
respect to the means and methods by which
the work is to be accomplished (control
test/right to control test/right-of-control test)
LABOR LAW I
In other words, there is a power to control
when the person for whom the services are
performed reserves the right to control not
only the end to be achieved but also the
manner and means used to achieve that end.
Hence, if the ER issues only guidelines
towards achieving results without dictating
means or methods to attain it, there is no
control, e.g. there is no ER-EE relationship
when the ER exercises control only with
respect to the amount of collection of agents
and not with the methods of collection
(Singer Sewing Machine Co., v. Drilon).
Q: Is there a need for concurrence?
No. The most decisive and important of
these tests, as declared in a long line of
decisions, is the control test.
Q: Are titles indicators of ER-EE
relationship?
No. Titles are weak indicators of the
existence of ER-EE relationship. For
example, when a person has been designated
to have the title of “branch manager”, it does
not make him an EE automatically.
Employment is determined by control test
and certain economic parameters.
Q: Does the control test refer to the
existence of a right and actual exercise
thereof by the ER?
No. Control test refers merely to the
existence of right to control the manner of
doing the work, and NOT the actual exercise
thereof.
In short, it is not essential for the ER to
actually supervise the EE. It is enough that
the ER has the right to wield such power.
For instance, while a college professor is
given the right to conduct his own class
work, he is still under the school’s
supervision in class in giving assignments,
schedules, etc.
B. Two-tiered Test (or approach): The
Economic Dependence Test
This two-tiered test involves the following
tests:
a. The putative ER’s power to control the
employee with respect to the means and
methods by which the work is to be
accomplished; and
27 | R O N B E R N A R D S . O R A Z A
b. The underlying economic realities of the
activity or relationship.
In 2006, the Supreme Court categorically
applied this test in a worker who performed
various functions for a corporation for many
years. When the corporation stopped paying
her, she complained of constructive
dismissal. The ER, on the other hand, said
that she was “not controlled”. The SC ruled
that in certain cases, the control test is not
sufficient and that the better approach is to
adopt a 2-tiered test. In the case, it was
found out that the EE was not only
economically dependent to the alleged ER
but also under the control of the latter.
Q: Is there a significant difference with
payment of wages or “economic test”
(under 4-fold test) and “economic
dependence test”?
None. They both refer to payment of wages
for the economic survival of the EE.
C. Evidence of Employment: ID,
Vouchers, SSS Registration,
Memorandum
In administrative and quasi-judicial
proceedings, substantial evidence (such as
ID, vouchers, SSS registration and
memorandum) is sufficient as a basis for
judgment on existence of ER-EE
relationship.
a. Identification card is usually provided not
only as a security measure but as a means to
identify the holder thereof as the bona fide
employee of that firm.
b. Cash vouchers cover the EE’s salaries for
the months stated therein.
c. SSS registration is also a proof because
the coverage of SSS Law is predicated on
the existence of ER-EE relationship.
d. Memorandum such as a letter made by an
officer who wrote to another about the
investigation against him “under the terms
and in accordance with the provisions of our
policy and procedure on employment
termination as well as policy on disciplinary
action” is a sufficient evidence of ER-EE
relationship.
Note: (a) Appointment letters or
employment contracts, (b) payrolls, (c)
LABOR LAW I
organizational charts, (d) personnel list as
well as (e) testimony of co-employees may
also serve as substantial evidence of EE
status.
Q: Supposed no name was provided in the
payroll, is it automatic that there is no ER-
EE relationship?
No. Substantial evidence is not the only way
to prove the existence of employment
relationship.
Q: Is mode of compensation (e.g.
commission, piece rate, boundary, pakyaw,
etc.) a test of employment status?
No. The presence of ER-EE is not
determined by the basis of the EEs’s
compensation (Mode of compensation ≠
ER-EE relationship).
It depends on whether the 4-fold test is
present or not.
For example, an ER tried to justify non-
payment of statutory benefits by arguing that
they were not EE’s because they were paid
on a per-piece basis. The Court ruled
otherwise and said that the status and nature
of EE’s employment was that of a regular
EE because the ER exercises control over
the means by which such workers are to
perform their work.
Note: Furthermore, ER-EE relationship ≠
Regular EE. In short, it does not depend on
employment status.
Q: Is the existence of employment
relationship determined by contract?
No. The existence of employment
relationship is determined by law and not by
contract (ER-EE relationship ≠ Contract).
For example, it cannot be called that a
worker is an “independent contractor” when
the terms of the agreement clearly shows
otherwise.
In Paguio v. NLRC, the SC stated that even
if the parties call their contract a “contract of
lease of services”, the factual existence of
ER-EE relationship will still prevail.
In the case, the petitioner was hired by the
respondent as an account executive whose
main function was to solicit advertisements
for The Manila Times which is being
28 | R O N B E R N A R D S . O R A Z A
published by respondent company. The
agreement stipulated that “You are not an
EE of Metromedia Times Corp. nor does
the company have any obligations towards
anyone you may employ…either party may
terminate this agreement at any time”. Later,
the petitioner was terminated for misconduct
for pirating clients from his co-executives
and failing to produce results. The SC ruled
that even if the parties call their contract a
“contract of lease of services” under the
NCC, the factual existence of ER-EE
relationship will still prevail – it exercised
control over the respondent because it
requires petitioner to submit a daily sales
activity report and also a monthly sales as
well.
3. Examples of Employment
Relationships
3.1. When Employment Relationship is
Present
A. School Teachers: In Feati University v.
Bautista, the SC said that control test refers
merely to the existence of right to control the
manner of doing the work, and NOT the
actual exercise thereof. In short, it is not
essential for the ER to actually supervise the
EE. It is enough that the ER has the right to
wield such power.
In the case, while a college professor is
given the right to conduct his own class
work, he is still under the school’s
supervision in class in giving assignments,
schedules, etc. Hence, there is an ER-EE
relationship here.
B. Jeepney Driver, Taxi Driver, Barber &
Boundary-hulog :
 Jeepney Drivers: SC said that the
fact that the drivers do not receive
fixed wages but get only that in
excess of the so-called “boundary”
they pay to the owner/operator is not
sufficient to withdraw ER-EE
relationship (not lessor-lessee). The
owners/operators exercise
supervision and control over their
drivers. They must see to it that the
driver follows the route prescribed
by the franchising authority and the
rules promulgated as regards its
operation; otherwise, they are liable
to the damages committed by its
drivers (Defense of owner: The
driver acted beyond the scope of his
LABOR LAW I
 authority and/or he exercised due
diligence of a good a father of a
family to prevent the damage as
provided under article 2180 of the
NCC).
Note: By analogy, this applies to bus
owners/drivers, auto-calesa owners/drivers
and taxi owners/drivers.
 Barbers: SC said that there is control
because barbers are performing work
that is necessary and desirable in the
business of the ER.
 Boundary-hulog: Paying boundary
+ “hulog” as means to gain
ownership over the a jeepney unit
does not negate ER-EE relationship;
First, the amount earned in excess of
the “boundary-hulog” is considered
as wages. Second, the fact that
dismissal was not mentioned in the
agreement (or kasunduan) does not
mean that there is no power to
dismiss. Third and more
importantly, there is control by
requiring the driver to drive the unit
for commercial use, to wear ID and
decent attire, to park the vehicle in a
certain area, to inform if they are
going out-of-town and to drive the
unit carefully.
Hence, if the operator will took back
the jeepney because the driver failed
to pay his “boundary-hulog”, the
latter can file a case for illegal
dismissal.
Q: Is a truck driver/helper considered as
partner?
No. In Sy v. CA, the SC said that a truck
helper/driver cannot be considered an
industrial partner. He is considered an EE
of the company from the time the petitioner
started working with the company (there is
ER-EE relationship); hence, the ER should
be penalized for not paying his SSS
premiums.
Moreover, the SC said that there was no
written agreement/proof that the petitioner
received any share in the profits nor was
there anything to show that he participated
29 | R O N B E R N A R D S . O R A Z A
with the running of the business as provided
under the Law on Partnership of the NCC.
C. Piece-Rate Workers: There is control
when the ER requires the piece-rate workers
(tailor, pattern maker, sewer or plantsadora)
supervises the manner and quality of cutting,
sewing and ironing. Moreover, the means
and methods were also controlled if they are
required to report regularly.
D. Street-hired Cargadores
E. Workers in Movie Projects: If there are
appointment slips, payment of salaries and
certain tasks given.
3.2. When Employment Relationship is
Absent
A. Salaried Insurance Agent: In Tongko
v. Manulife (2011), Tongko complained of
illegal dismissal alleging that he was an EE
of the insurance agency because he was
controlled by (a) requiring him to set
objectives and sales targets and (b) requiring
the code of conduct to govern his activities.
The SC said that there is no ER-EE
relationship between an insurance company
and an agent. The work schedule and
methods are not subject to the control of an
insurance company. They were made by the
insurance agency in keeping with the
provisions of the Insurance Code and Law
of Agency under the NCC so that their
license will not be revoked. It does not reach
the level of control as required under the
Labor Code.
Furthermore, the SC classified insurance
agents as (a) working in the premises of the
ER who are regular EEs since they are
subject to control and (b) working in the
field who are not EEs although they are
subject to company policies since it is a
matter of public policy.
Q: What is its difference with the ruling in
Great Pacific v. Judico?
In Great Pacific, there was labor control by
virtue of subsequent contracts. In such case,
there was a change in company-agent
relationship.
On the other hand, Tongko’s status never
changed except that he became a lead agent
(unit manager to sales manager to regional
LABOR LAW I
sales manager) who could use other agents
in selling insurance and share in the earnings
of these other agents. Indeed, the present
case is marked by absence of any
subsequent contracts that will substantially
change the company-agent relationship
(Note: Titles are weak indicators of ER-EE
relationship. It is determined by control test
and other economic parameters).
B. Television/Radio stations and their
talents, actors, actresses and show hosts:
TV and radio hosts need only their skills and
talent in performing their job. How they
perform is beyond the control of the stations
which could not control their script or their
performance (Sonza v. ABS-CBN).
3.3. When Employment Relationship May
or May Not be Present
A. Company Physician (e.g. school
physician): If resident physician, there is
ER-EE relationship.
If retained physician (which may be
denominated in the contract), there is no ER-
EE relationship although his job is necessary
or desirable and required by law because
there is no supervision and control over him,
e.g. if he can negotiate his time to be
extended and the amount of salary; if he can
go elsewhere, contract is renewable; etc.
(Philippine Global Communications, Inc.
v. De Vera).
Note: Hence, a job that is necessary and
desirable does not equate to an ER-EE
relationship (Necessary and desirable ≠ ER-
EE relationship). The kind of work is not a
test of employment relationship but the
applicability of the tests of employment.
B. Lawyers: If in-house counsel,
employment is already fixed. There is ER-
EE relationship.
If retained counsel, he becomes independent
job contractor because he can offer services
to other clients as well.
4. Labor Union and Unregistered
Association as Employer
A labor union and even unregistered
association are considered employers of the
persons who work for them.
30 | R O N B E R N A R D S . O R A Z A
In one case, the landowners who are
engaged in the production of export quality
bananas formed an unregistered association
and hired workers as to deal with the
company that buys their bananas with
respect to technical services, canal
maintenance, irrigation and pest control,
among others.
Since the association was unregistered, it
does not have any legal personality. Despite
of such, they issued IDs,
memoranda/circulars regarding the absence
of the workers.
Later, about 20 workers were dismissed.
They filed illegal dismissal with
reinstatement and money claims. On the
other hand, the association said that there
was no ER-EE relationship as they did not
have any legal personality. According to
them, the individual landowners should be
considered as the ERs.
The SC said that the law does not require
that the ER be registered in order to be
considered as an ER. Otherwise, it will
bring a stipulation where employees are
denied not only redress of their grievances
but also the protection and benefits accorded
to them by law. In the case, there was
control when the association issued
memoranda and circulars regarding EEs
conduct and their IDs. The association also
pays its EEs.
Note: Furthermore, the mere fact that tan
entity is a labor union does not mean that it
cannot be considered an ER of the persons
who work for it.
5. Job Contracting (or Independent
Contractorship)
Q: What is contracting or subcontracting?
There is contracting or subcontracting when
an employer, referred to as the principal,
farms out the performance of a part of its
business to another, referred to as the
contractor or subcontractor. For the purpose
of undertaking the principal's business that
is farmed out, the contractor or
subcontractor then employs its own
employees.
Contracting and subcontracting are
synonymous under Philippine labor law. The
LABOR LAW I
term that is more commonly used is
subcontracting.
Q: What is the trilateral relationship
provided in law?
It involves 3 parties:
(a) Principal (contratee/client);
(b) Contractor (subcontractor) – individual
businessman or firm; and
(c) Workers (EEs)
Example: X (principal), engaged in
restaurant services, needs to put up a
building. He needs the services of Y
(contractor) which, in turn, hires the services
of Z (subcontractor) to handle certain
aspects of the work. Y and Z needs to hire
people (workers) to accomplish X’s
objective.
Q: Where is the ER-EE relationship in the
trilateral relationship?
It is between the contractor and the workers;
however, if the contractor fails to pay wages
of the workers, the principal should be
jointly and severally liable.
Q: How about the relationship between the
principal and contractor?
There is no ER-EE relationship between
them. The contractor is self-employed and is
governed by the contract.
Q: What if the contractor is not a bona fide
individual businessman or firm?
There is no trilateral relationship.
Consequently, the supposed principal may
end up being the ER of other workers.
Likewise, if the arrangement is unlawful for
being against public policy, there is no
trilateral relationship.
Q: What if the 4-fold test is satisfied by the
principal and not the contractor?
The principal becomes the ER and what
exists is not subcontracting but the
relationship between ER-EE.
Q: What is labor-only contracting? Is it
valid?
If it supplies only labor and not to
accomplish a job or service, it is labor-only
contractor. In effect, he merely hires or
recruits people. He acts as an “agent” to the
true ER. Hence, the ER-EE relationship is
between the principal and the company. It is
31 | R O N B E R N A R D S . O R A Z A
prohibited because it is an attempt to evade
the obligations of an ER.
Q: Urbanes, who is doing business under
Catalina Security Agency, entered into an
agreement to provide security services to
SSS.
During the effectivity of the agreement,
there was a wage order issued by the
Regional Tripartite Wages and
Productivity Board. Urbanes, in turn,
requested that SSS adjust their contract
rate with them but was unheeded by the
latter. Consequently, Urbanes pulled out
his agency’s services from SSS.
Who should shoulder the wage increase?
Does civil courts have jurisdiction over the
case?
It is the agency. There is no ER-EE
relationship between the agency and the
principal. The remedy is for the agency to
pay first the wage differential before they
can claim adjustment from the principal to
cover the increases payable to the workers.
In case the agency failed to pay, the
principal should be held solidarily liable.
Furthermore, in view of the lack of ER-EE
relationship between the agency and
principal, the jurisdiction is within the
NLRC or labor courts (Urbanes v.
Secretary of Labor Employment).
Q: On June 27, 1974, Agro-Commercial
Security Services Agency Inc. (AGRO)
assigned Rogelio Espaola to work as a
janitor at the Iloilo Branch of petitioner
Traders Royal Bank (TRB). Sometime in
1982, the latter was informed that he would
be absorbed by a new agency named Royal
Protective and Janitorial Services Inc.
(ROYAL), and that he would perform the
same functions. However, since ROYAL
was also managed and owned by the same
people who previously handled AGRO, it
did not give him separation pay or any
other benefits.
When the service agreement expired on
March 16, 1994 (after 20 years of service),
ROYAL sent a notice to the respondent
that his services were no longer needed
since his job was co-terminus with the
contract.
LABOR LAW I
The respondent then filed a case against
ROYAL and TRB for illegal dismissal,
illegal deduction, underpayment of wages,
non-payment of overtime pay, premium
pay for rest day, service incentive leave
pay, 13th month pay and night shift
differentials with a prayer for
reinstatement and back wages. He also
claimed moral and exemplary damages as
well as attorney’s fees.
The LA ruled in favor of the petitioner
since there was no ER-EE relationship
between the respondent and the petitioner.
The NLRC, on the other hand, reversed the
ruling and ordered petitioner to reinstate
him and give him money claims; hence,
this motion for certiorari.
Is there is an ER-EE existing between
petitioner (principal) and private
respondent (worker)?
Yes. The respondent was assigned as a
janitor but based from the position paper of
the respondent, he was not only a janitor but
also as a driver:
“Complainant, as previously stated, was
required to work as a janitor and as a driver.
Moreover, he was required to do his
cleaning chores at night in order not to
disturb the transaction of business at the
bank during office hours. Thus, every night
from Sunday to Thursday he was required to
clean the bank premises of respondent TRB.
From Monday to Friday he was required to
drive TRBs armored car and pick up the
children of respondent TRBs manager, Mrs.
Erlinda Ocampo, then drive them to
Angelicum School in Jaro, Iloilo City.
Thereafter, he was required to stay in the
bank premises until 5:00 P.M., except for
lunch break, run errands and discharge other
tasks and chores assigned to him by
respondent TRBs employees. After 5:00
P.M. complainant was required to drive the
above named officers of respondent TRB
home. He usually got back to the bank
between 6:00 P.M. to 7:00 P.M. Upon his
arrival he would start cleaning the bank and,
since the premises was big, it usually took
about 2 hours or up to 9:00 P.M. to finish his
cleaning. Because he had to work late and
start working early and since his residence
was in Sta. Barbara, Iloilo, where there was
no public transportation at night, he had to
sleep in the bank. His day-to-day work was
32 | R O N B E R N A R D S . O R A Z A
monitored and supervised by respondent
TRB”.
Furthermore, according to the service
agreement, under paragraph 3: “That the
PARTY OF THE FIRST PART shall have
the direct control and supervision over
their janitors and janitress conduct and
performance in consonance with the
preceding paragraph, with minimum
interference by the PARTY OF THE
SECOND PART, provided however, that
discipline and administration of these
janitors and janitresses shall conform with
the standards and policies of the PARTY OF
THE FIRST PART”.
Based on the foregoing, it was TRB
(principal) which had control and
supervision over Espaolas (worker) work.
Consequently, the former should be
considered as his ER. Since Espaola was
illegally dismissed he is entitled to
reinstatement with full back wages (Traders
Royal Bank v. NLRC).
6. Other Cases
a. San Miguel Corporation v. Etcuban
 Jurisdiction (Reasonable Connection
Rule): For as long as there is
reasonable causal connection
between the claims asserted and the
ER-EE relationship, the jurisdiction
belongs to the NLRC.
 The retrenchment program is not
invalid per se. It was not void
(inexistent) from the beginning. It
was only voidable (annullable)
because the petitioners consent was
vitiated by fraud and deceit;
nonetheless, it has already
prescribed because it should be filed
within 4 years (not 3 years) from the
discovery of fraud or deceit.
 The Doctrine of Estoppel applies
because they have already received
benefits from the retrenchment
program.
Facts: In 1981, San Miguel Corporation
(SMC) informed its Mandaue City Brewery
EEs that it was suffering from heavy losses
and financial distress caused by poor sales
performance which could eventually lead to
its total closure. As such, SMC offered its
“Retrenchment to Prevent Loss Program” to
LABOR LAW I
its EEs. It was coupled with an unsolicited
advice that if they will not availed of it, they
will be having difficulty in following-up and
obtaining their separation pay from SMCs
main office in Manila.
Convinced, EEs (respondents herein)
availed of the program at various times in
1981, 1982 and 1983.
However, sometime in May of 1986,
respondents got hold of an SMC publication
allegedly revealing that SMC was never in
financial distress during the time they were
retrenched but was, in fact, enjoying a
growth in sales. They also learned that the
company was engaged in hiring new EEs;
hence, they concluded that the program was
only a scheme to get rid of regular EEs and
avoid payment of their actual benefits.
On October 17, 1988, respondents filed a
complaint before the Regional Arbitration
Branch for the declaration of the nullity of
the retrenchment program. They prayed for
reinstatement, backwages and damages. The
Labor Arbiter, however, dismissed the
complaint on the ground of prescription
under article 291 of the Labor Code which
provides that “money claims arising from
ER-EE relationship shall be filed within 3
years from the time the cause of action
accrued; otherwise, they shall be barred
forever”. Inferring from such, they only
have until 1986 to file the claim. The case
was appealed to the NLRC but it also
affirmed the decision of the LA.
They then filed a case before the RTC
captioned as “action for damages” for the
nullification of the contract of termination
between them and SMC. They prayed that
petitioners jointly and severally be ordered,
among others, to pay each of them the sum
of P650,000.00 as actual and compensatory
damages, P100,000.00 as moral damages,
P50,000.00 as exemplary damages, and 25%
of whatever may be awarded to them as
attorneys fees. However, the RTC dismissed
the case on (a) lack of jurisdiction and (b)
prescription.
The respondents then appealed to CA and
reversed the decision of RTC. CA stated that
since the cause of action is due to an
inexistent contract (and not labor dispute)
which is under Civil Code, the jurisdiction is
33 | R O N B E R N A R D S . O R A Z A
within civil courts. Secondly, CA said that
an inexistent contract does not prescribe.
Lastly, it provides that there was no
judgment on the merits in the earlier case
involving the same parties and the same
issues. Thus, the dismissal is not applicable
to the present case.
Issues:
a. W/N the court has jurisdiction - NO
b. W/N the retrenchment program is invalid
- NO
c. W/N the doctrine of estoppel applies -
YES
Held:
a. No. For as long as there is reasonable
causal connection between the claims
asserted and the ER-EE relationship, the
jurisdiction belongs to the NLRC
In the present case, while respondents insist
that their action is for the declaration of
nullity of their contract of termination, what
is inescapable is the fact that it is, in reality,
an action for damages emanates from ER-
EE relations. First, their claim for damages
is grounded on their having been deceived
into serving their employment due to SMCs
concocted financial distress and fraudulent
retrenchment program a clear case of illegal
dismissal. Second, a comparison of
respondents complaint for the declaration of
nullity of the retrenchment program before
the labor arbiter and the complaint for the
declaration of nullity of their contract of
termination before the RTC reveals that the
allegations and prayer of the former are
almost identical with those of the latter
except that the prayer for reinstatement was
no longer included and the claim for
backwages and other benefits was replaced
with a claim for actual damages. These are
telltale signs that respondents claim for
damages is intertwined with their having
been separated from their employment
without just cause and, consequently, has a
reasonable causal connection with their
employer-employee relations with SMC.
Accordingly, it cannot be denied that
respondents claim falls under the
jurisdiction of the labor arbiter as provided
in paragraph 4 of Article 217.
b. No. The retrenchment program is not
invalid per se. It was not void (inexistent)
from the beginning. It was only voidable
LABOR LAW I
(annullable) because the petitioners consent
was vitiated by fraud and deceit;
nonetheless, it has already prescribed
because it should be filed within 4 years (not
3 years) from the discovery of fraud or
deceit.
In the case, the workers discovered it in May
1986 but they only filed the case on June 14,
1993 or more than 6 years.
c. Yes. The Doctrine of Estoppel applies
because they have already received benefits
from the retrenchment program.
2. Filipinas Broadcasting Network, Inc. v.
NLRC
 Application of the 4-fold test:
-No selection (Petitioner did not act
on his own application as a radio
reporter);
-No payment of wages (as a
volunteer reporter, petitioner was
permitted to find sponsors whose
business establishments will be
advertised every time he goes on the
air but is never paid wages);
-No dismissal (he resigned because
his sponsors were no longer paying
him. It was not because he was
dismissed);
-No control (he was never given
such a program schedule but is
merely advised to inform the station
of the reports they would make from
time to time)
Facts: The case is a petition in connection
with the decision rendered in Mapa v.
DZRC Radio Station.
According to the private respondent, he
began working as a radio reporter to the
complainant on March 11, 1990. However,
he was not able to get his application for
employment as it was blocked by his
previous ER. He took his leave of absence.
He was asked to return by his EE as the
latter was assured that he will be paid;
hence, he continued working in the said
company. However, the company failed to
still pay his wages. He was reinstated from
January 16, 1992 and resigned on February
27, 1992 when he decided to run for an
elective post. According to him, prior to
January 16, 1992 (from his reinstatement),
he was never paid.
34 | R O N B E R N A R D S . O R A Z A
On the other hand, according to the
complainant, Mapa was indeed not allowed
to get his application for employment as it
was blocked by his former boss. Out of pity,
the radio station allowed the private
respondent to work as a “volunteer reporter”
on a part-time basis. As a volunteer reporter,
respondent was not to be paid wages as an
employee of DZRC but he was permitted to
find sponsors whose business establishments
will be advertised every time he goes on the
air. Most importantly, Mapa’s only work
consisted of occasional newsbits or on-the
spot reporting which was very seldom.
The respondent insists that there is an ER-
EE relationship because of his payroll, ID,
regular program with his name in it and
affidavit of his supervisor stating that he is a
regular reporter.
In the case, the LA believed that Mapa was
not an EE of the radio station as his
application for employment was not
accepted or approved; hence, he is not
entitled to any salaries, premium pay for
holiday and rest day, holiday pay and the
13th month pay against the respondent.
On the other hand, the NLRC set aside the
decision and declared that the complainant is
an employee and is entitled to money
claims. Basing from the 4-fold test, the
NLRC provides that: Firstly, the work of the
complainant is being supervised by the
program supervisor of the respondent;
secondly, the complainant uses the reporting
gadgets of the respondent. Thirdly, he has no
reporting gadgets of his own; Fourthly, the
program schedule is prepared by the
respondent; and Lastly, he was paid salary
for the period for the period from February
16 to 29, 1992 and covered under the Social
Security System. There is no showing in the
record that his work from February 16, 1992
was different from his work before the said
period.
Hence, the complainant elevated the case for
certiorari. It believed that the 4-fold test was
erroneously applied to the facts of the case.
Issue: W/N the private respondent is an EE
of the company during the period in
controversy
LABOR LAW I
Held: No. The following are generally
considered in the determination of the
existence of an employer-employee
relationship: (1) the manner of selection and
engagement, (2) the payment of wages, (3)
the presence or absence of the power of
dismissal, and (4) the presence or absence of
the power of control; of these four, the last
one is the most important.
In the first two, it is clear that private
respondent rendered services knowing that
he was not an employee. Aware that he
would not be paid wages, he described
himself as a “volunteer reporter” who was,
as evident from his letter, hoping for “the
chance to be recognized as a regular
reporter.” In fact, petitioner acted favorably
on this letter and accepted his application as
an employee effective on January 16, 1992.
Thirdly, there was also no power of
dismissal because it is clear from the
statement of the respondent in his affidavit
that he resigned because his sponsors were
no longer paying him. It was not because he
was dismissed.
Fourthly, he was also not subject to the
control of the petitioner. Unlike the regular
reporters, he was not subject to any
supervision by petitioner or its officials.
Regular reporters are required by the
petitioner to adhere to a program schedule
which delineates the time when they are to
render their reports, as well as the topic to be
reported upon. The substance of their reports
are [sic] oftentimes screened by the station
prior to [their] actual airing. In contrast,
volunteer reporters are never given such a
program schedule but are merely advised to
inform the station of the reports they would
make from time to time.
Apart from the 4-fold test, evidence found
by NLRC is not applicable. Other than the
items enumerated by them, no other
document was considered by the NLRC. In
other words, its conclusion was based solely
on these alleged pieces of evidence. It
clearly committed grave abuse of discretion
in its factual findings, because all the above
documents relate to the period January 16,
1992 to February 28, 1992 and not to the
period March 11, 1990 to January 15, 1992
which are inclusive dates in controversy.
35 | R O N B E R N A R D S . O R A Z A
In sum, the evidence, which Public
Respondent NLRC relies upon, does not
justify the reversal of the labor arbiter‟s
ruling which, in turn, we find amply
supported by the records. Clearly, private
respondent was not an employee during the
period in question.
3. Lopez v. Bodega City
 4-fold test: No payment of wages
(presented only petty cash voucher
despite long term of service); No
control (method not specified in the
agreement); No selection and
dismissal (governed by the
concessionaire agreement).
 Principle of estoppel: The fact that
she did not sign the document does
not negate the existence of
agreement; hence, no ER-EE
relationship exists because it is
governed by the agreement.
 Substantial evidence/Proof of
Employment: ID card alone is not a
sufficient proof of employment. No
showing that it is the same that is
used by the other EEs.
 Burden of Proof is on the EE: In an
illegal dismissal case, the onus
probandi rests on the employer to
prove that its dismissal of an
employee was for a valid cause.
However, before a case for illegal
dismissal can prosper, an ER-EE
relationship must first be established
by the EE by substantial evidence
(see above).
Facts: Under a concessionaire agreement,
Lopez was the "lady keeper" of Bodega City
tasked with manning its ladies' comfort
room. Yap (owner of Bodega) alleged that
Lopez have acted in a hostile manner against
a lady customer after the customer informed
the management that Lopez was sleeping
while on duty. Yap later informed Lopez of
the termination of the concessionaire
agreement between them.
Lopez sued for illegal dismissal.
Respondent, on the other hand, said that
there was no ER-EE relationship.
LABOR LAW I
The LA dismissed the complaint for lack of
merit but was reversed upon filing motion of
reconsideration. Respondent filed an appeal
in the NLRC which set aside the ruling of
the LA; hence, this certiorari filed by the
petitioner.
Issue: W/N Lopez an employee of Bodega
City.
Held: No.
Firstly, the proof for payment of wages was
insufficient because she only presented a
petty cash voucher. If she really was an EE
for 5 years, she should have presented salary
vouchers and pay slips for that length of
time. Moreover, she could have easily
shown other substantial evidences like SSS
registration, certificate of withholding tax,
etc.
Secondly, there was no control. While the
agreement provides that she should maintain
the cleanliness of the ladies CR, there is
nothing in the agreement which specified the
methods by which petitioner should achieve
these results.
Thirdly, the court does not find elements of
selection and dismissal in the case because
their relationship is governed by the
concessionaire agreement.
The fact that she did not sign the document
does not negate the existence of agreement;
hence, no ER-EE relationship exists because
it is governed by the agreement. The fact
that she performed the tasks indicated in the
said agreement for a period of three years
without any complaint or question only goes
to show that she has given her “implied
acceptance” of or consent to the said
agreement; hence, the principle of estoppel
applies.
Moreover, ID card alone is not a sufficient
proof of employment. It is true that the
words "EMPLOYEE'S NAME" appears
printed below petitioner's name. However,
she failed to dispute that the same ID cards
were issued to other EEs to enter the
premises of the company.
II. NORMAL HOURS OF WORK (Art.
83)
1. Purpose of the 8-hour Labor Law
36 | R O N B E R N A R D S . O R A Z A
a. To safeguard the health and welfare of
the laborer or employee; and
b. To minimize unemployment, by forcing
ERs in cases where more than 8-hour
operation is necessary, to utilize different
shift of laborers or employees working only
for 8 hours each.
The cardinal rule is that it shall not exceed 8
hours a day.
2. Part-Time Work
Q: Is “part-time work”/”day’s work” (i.e.
working less than 8 hours) prohibited?
No. It is not prohibited to have “normal
hours of work” of less than 8 hours a day.
What the article regulates are work hours
“exceeding” 8 hours. In short, it prescribes a
maximum but not a minimum.
Q: Does a part-time worker get the same
benefits as that of full-time workers (e.g.
service incentive leave, holiday pay)?
The wage and benefits of a part-timer are in
proportion to the number of hours worked.
Legend Hotel Manila v. Realuyo
Facts: The case is about the illegal dismissal
of respondent known by his stage name
“Joey Roa” who worked in the petitioner as
pianist since 1992. In 1999, he was notified
by the management that his service was no
longer required as a cost-cutting measure
due to economic crises.
Respondent then filed a complaint and
insisted that there was an ER-EE
relationship because he was subjected to the
control of the hotel: He could not choose the
time of performance which was fixed from
7pm to 10pm for 3-6 times/week; that he
was required to conform with the venue’s
motif; that he had been subjected to the rules
on employees’ representation.
Petitioner, on the other hand, denied the
existence of ER-EE relationship insisting
that he had only been a talent engaged to
provide live music for 3-hours per day on 2
days each week.
The LA ruled that there was no ER-EE
relationship which was affirmed by the
NLRC because he was just receiving talent
fee unlike regular EEs who are receiving
monthly compensation. Upon motion for
certiorari, the CA reversed the decision
LABOR LAW I
stating that there was control because he is
required only to perform only Tagalog songs
or music and wear only barong tagalog to
conform with the motif. Furthermore, his
time of performance is fixed and the
respondent could not choose the time of his
performance; hence, this petition.
Issues:
1. Procedural: W/N the petition for certiorari
filed in the CA is a proper recourse
2. Substantive:
a. W/N there is an ER-EE relationship
b. W/N the termination is valid
Held:
1. Yes. Petitioner is insisting that the
petitioner for certiorari to CA is proper only
if the NLRC was guilty of grave abuse of
discretion which was not demonstrated by
the NLRC. The contention is unwarranted.
The CA may review decisions of the NLRC
and review factual issues as per BP 129.
2.
a. Yes. Firstly, there was power of selection
when he was recommended expressly and in
writing by the petitioner’s manager as
pianist. Secondly, he was also given a fixed
wage based on his talent and skill and the
quality of music he played taking into
account the prevailing, and regardless of
how it was designated in the contract (in
this case as “talent fee”). Furthermore,
albeit working less than 8 hours a day, there
is still ER-EE relationship because article 83
only provides maximum number of hours as
“normal hours of work” but did not prohibit
work of less than 8 hours. Thirdly, he was
under the control of the ER as he could not
choose the time and place of his
performance. He was also required to wear
barong tagalog and was subjected to the
rules of employees’ representation check
and chits, a privilege granted to other EEs
(contrary to petitioner’s assertion that he can
excuse himself from nightly performances,
he has the prerogative to play whatever he
wished, beat or tempo was under his
discretion, he is not required to sing or
dance, etc.). Lastly, the memorandum
informing the respondent that his services
were no longer needed is an evidence of the
power to dismiss.
b. No. The retrenchment, as an authorized
cause, requires the following requirements:
37 | R O N B E R N A R D S . O R A Z A
(a) the expected losses should be substantial
and not merely de minimis in extent; (b) the
substantial losses apprehended must be
reasonably imminent; (c) the retrenchment
must be reasonably necessary and likely to
effectively prevent the expected losses; and
(d) the alleged losses, if already incurred,
and the expected imminent losses sought to
be forestalled must be proved by sufficient
and convincing evidence.
In the case, the ER failed to provide
sufficient and convincing evidence. It only
claimed that the termination was due to
present business/financial condition; hence,
respondent’s retrenchment is not allowed.
However, since it is no longer possible for
the respondent to be reinstated due to lapse
of time, he should be paid separation pay
and full backwages.
3. Work Hours of Health Personnel
Q: Who are considered as health
personnel?
It is provided under the 2nd paragraph of
article 83 (i.e. resident physicians, nurses,
nutritionists, dietitians, pharmacists, social
workers, laboratory technicians, paramedical
technicians, psychologists, midwives,
attendants, and all other hospital or clinic
personnel). This includes “medical
secretaries”.
Q: What are the work hours of health
personnel?
GR: 40-hours workweek
XPNs:
a. Where the exigencies of the work require
that such personnel work for 6 days (48
hours) in which case they shall be entitled to
additional compensation of at least 30% of
their regular wage.
b. If there is a training agreement between
the resident physician and the hospital, and
the training program is duly accredited or
approved by the appropriate government
agency. In which case, there is no ER-EE
relationship since the hospital does not hire
the services of resident physicians but rather
accredits them and grants them the privilege
of maintaining a clinic and admitting
patients upon a showing that they are
qualified.
Note: The customary practice of requiring
resident physicians to work for 24 hours a
LABOR LAW I
day violates the limitations prescribed by
article 83 and will not be permissible even if
the resident physicians were paid additional
compensation.
3.1. RA 5901 already repealed
RA 5901 otherwise known as an “Act
Prescribing Forty Hours a Week of Labor
for Government and Private Hospitals or
Clinic Personnel” has been repealed by the
Labor Code which was enacted on May 1,
1974.
Q: Are health personnel entitled to a full
weekly wage for 7 days (or with 2 days’ off)
if they have completed the 40-hour/5-day
workweek?
No. There is nothing in article 83 that
provides for such.
3.2. RA 7305
Q: Are health personnel in government
service included in the benefits provided
under article 82-96?
No. Health personnel in government service
are, as already stated, excluded from
coverage of articles 82 to 96. Their benefits
are governed by RA 7305 or “Magna Carta
of Public Health Workers”.
4. 12-Hour Workshift with Overtime
Workshift may exceed 8 hours with
corresponding overtime pay. Such
arrangement is valid and binding. It is
validated by consent which makes it a
“contractual commitment”; hence, boycott
of the 4-hour overtime is declared by the
Court as an illegal strike.
III. HOURS WORKED (Art. 84)
Hours worked refers to all compensable
period of work. Hours work includes:
a. All the time during which an employee is
required to be on duty or to be at a
prescribed workplace; and
b. All the time during which an employee is
suffered or permitted to work.
Rest period of short duration during
working hours shall be counted as hours
worked.
1. Hours Worked
The following principles shall govern in
determining whether the time spent by the
EE is considered hours worked:
38 | R O N B E R N A R D S . O R A Z A
a. All hours are hours worked which the
employee is required to give his employer,
regardless of whether or not such hours are
spent in productive labor or involve
physical or mental exertion.
b. An employee need not leave the premises
of the work place in order that his rest
period shall not be counted, it being enough
that he stops working, may rest completely
and may leave his work place, to go
elsewhere, whether within or outside the
premises of his work place.
Q: How about the work hours of seamen,
does that mean that they are at work all the
time since they are always in the vessel?
No. A worker is entitled to overtime pay
only for work in actual service beyond 8
hours; otherwise, it will be extremely unfair
and unreasonable.
c. If the work performed was necessary, or it
benefited the employer, or the employee
could not abandon his work at the end of his
normal working hours because he had no
replacement, all time spent for such work
shall be considered as hours worked, if the
work was with the knowledge of his
employer or immediate supervisor.
Note: “Preliminary” (before work) and
“postliminary” (after work) activities are
deemed performed during working hours
provided that such activities are required by
the ER and are pursued necessarily and
preliminary for the ER’s benefit.
d. The time during which an employee is
inactive by reason of interruptions in his
work beyond his control shall be considered
working time either if the imminence of the
resumption of work requires the employee’s
presence at the place of work or if the
interval is too brief to be utilized effectively
and gainfully in the employee’s own interest
(e.g. regular full-time monthly teachers are
entitled to salary and emergency cost-of-
living allowance during semestral breaks;
hence, the principle of “no work, no pay”
does not apply).
2. Rules applicable to various work
situations
2.1. Waiting Time
Waiting time spent by an employee shall be
considered as working time if:
LABOR LAW I
a. Waiting is an integral part of his work; or
b. The EE is engaged or required by the
employer to wait (not waiting to be
engaged).
Note: The controlling factor is whether
waiting time spent in idleness is so spent
predominantly for the ER’s benefit or for the
EE’s (if the former, he is working).
Examples:
a. A truck driver who has to wait for goods
to be loaded is working.
b. A driver who reaches his destination and
while waiting to return, he has to take care
of his ER’s property, is working.
c. The 4 hours spent by an EE waiting for
the start of his work due to unique
scheduling of the school system may be
considered an integral part of the work of
the EE; hence, his waiting is considered
compensable work time.
d. Workers in assembly-line type of
manufacture have to wait for the completion
of a previous stage before they can work on
their own stage.
However, a 30-minute assembly time
practiced by EEs of a company can be
considered an idle time and not an integral
part of the work; therefore, not
compensable.
2.2. Working while eating
GR: The meal time is not compensable if
EE is completely freed or relieved from
duties.
XPN: The meal time is compensable if EE
is not freed or relived from duties, e.g. an
office EE who is required to eat at his desk
is working while eating.
2.3. Working while sleeping
It will depend upon the express or implied
agreement of the parties.
In the absence of an agreement, it will
depend upon the nature of the service and its
relation to the working time.
Example: Firemen who are allowed to sleep
while on duty constitutes hours worked.
2.4. On Call
If the EE is required to be in the place of
work or so close thereto that he cannot use
the time effectively and gainfully for his
39 | R O N B E R N A R D S . O R A Z A
own purpose before or after the regular
working hours should be considered as
hours worked.
Examples:
a. Company driver who was required by the
ER to remain at the place of work before or
after working hours because he may be
required to drive truck shall be considered
working.
b. Where the EEs stay in office after work
hours because their ER required them, it
should be considered as hours worked.
Q: How about public health workers?
It is governed by a special law which
provides that an “on call status” refers to a
condition when public health workers are
called upon to respond to an urgent need for
medical assistance such that he cannot
devote the time for his/her own use. Their
pay is equivalent to 50% of the regular
wage.
Q: What if the EE is can be contacted
within reach through a mobile phone or
other contact device, is the EE at work
beyond his regular work hours?
No. A US court ruling provides that EEs
who were allowed to leave telephone
numbers or to carry electronic device for
purpose of being contacted is not considered
working.
Such is likewise provided under the DOLE
Manual which states that “an EE who is not
required to remain on the ER’s premises but
is merely required to leave words at his
home or with company officials where he
may be reached is not working while on
call”.
2.5. Travel Time
The DOLE Manual provides that travel time
may be considered as hours worked
depending upon the kind of travel involved:
a. Travel from home to work: Normal
travel from home to work is not
compensable except when an EE receives an
emergency call outside of his regular
working hours and is required to travel, all
of the time spent in such travel is work time.
b. Travel that is all in the day’s work:
Time spent by an EE in travel as part of his
principal activity (e.g. travel from jobsite to
LABOR LAW I
jobsite) during workday is considered as
hours worked.
Q: What if EE normally finishes his work
at 5pm and is sent to another job which he
finished at 8pm and is required to return at
the premises arriving at 9pm, is it still
considered as hours worked?
Yes except when he goes home instead of
returning to his ER’s premises, the travel
after 8pm is home-to-work travel; hence, not
hours worked.
c. Travel away from home: It is worktime
when it cuts across (or coincides with his
regular work hours) the EE’s workday, e.g.
time spent by a driver in getting the vehicle
from and returning it to the company bodega
is deemed time worked.
1.5. Lectures, meetings, training programs
Attendance at lectures, meetings, training
programs, and other similar activities shall
not be counted as working time if all of the
following conditions are met:
a. Attendance is outside of the employee’s
regular working hours;
b. Attendance is in fact voluntary; and
c. The employee does not perform any
productive work during such attendance.
Example: Security guards who were directed
to report for duty 1 hour in advance of the
usual time for guard work for briefing
purposes are considered working because it
is not voluntary.
2.6. Grievance Meeting
Time spent in grievance meeting is
considered as hours worked; however, when
a bona fide union is involved, the counting
of time should be left to the collective
bargaining agreement.
Q: How about brief rest periods such as
coffee breaks, going to the washroom, etc.?
They are considered as hours worked.
Q: How about brownouts or work
interruption?
Brownout of short duration (i.e. not
exceeding 20 minutes) is considered as
hours worked whether used productively or
not. Conversely, if it exceeds 20 minutes, it
may not be considered as hours worked
anymore. Consequently, the ER may extend
40 | R O N B E R N A R D S . O R A Z A
the working hours to compensate for the loss
of productivity (DOLE policy instruction).
3. Evidence of Hours Worked
Q: Who has the burden of proof?
It is the ER who bears the burden of proving
his allegation with clear and satisfactory
evidence.
Example: If the ER claimed that he worked
12 hours a day while the EE claimed that he
worked for 4 hours a day only, the ER shall
have the burden of proof. If the evidence
(e.g. time records) were refuted by the EE to
be a forged, the ER should present relevant
documents to controvert the EE’s assertion
such as employment contract, payroll, and
notice of assignment or posting, cash
voucher or any other convincing evidence
which may show the actual work hours of
the ER.
IV. MEAL PERIODS (art. 85)
It shall be the duty of the ER to give his EEs
not less than 60 minutes time-off for their
regular meals.
Q: Is meal period compensable?
GR: Meal periods are non-compensable
XPNs:
a. Where the lunch period is predominantly
spent for the ER’s benefit; or
b. Where it is less than 60 minutes
(“shortened meal period”)
Under exceptional circumstances, the
employer may give the employee a meal
period of not less than 20 minutes
(otherwise deemed as rest period), provided
that such shorter meal period (i.e. 30
minutes) is credited as compensable hours
worked of the employee.
Shortened meal period may be allowed
under the following cases:
i. Where the work is non-manual work in
nature or does not involve strenuous
physical exertion;
ii. Where the establishment regularly
operates not less than 16 hours a day;
iii. In case of actual or impending
emergencies or there is urgent work to be
performed on machineries, equipment or
installations to avoid serious loss; and
iv. Where the work is necessary to prevent
serious loss of perishable goods.
LABOR LAW I

XPN to the XPN: It is the “shortened meal
break upon employees request” so that he
can leave work earlier which is not
compensable, e.g. if the established work
hours are from 8am to 5pm with 12nn to
1pm meal period. So that the EE could quit
work early (i.e. at 430pm), he may request
to shorten the meal period from 12nn to
1230pm. This 30-minute meal time is not
compensable. However, from 1231pm to
430pm, he shall be paid already.
1. When Meal Time is Time Worked:
Continuous Shifts
When work is continuous for several shifts,
the meal time breaks should be counted as
working time for purposes of overtime
compensation.
Q: X Company required its workers to
continuously work until the next shift with
2-hour meal breaks. Instead of crediting
them with 16 hours of work, he has been
paying them with only 14 hours of work,
claiming that the 2 hours corresponding to
the meal time period should not be
included in computing compensation.
Decide.
Since there is no interruption in the work of
EEs, and that they cannot freely leave their
working places completely, the meal time
breaks should be computed as working time
for purposes of overtime compensation.
2. Changing Lunch Break from Paid to
Unpaid
Q: Where the practice has been to give EEs
only 30 minutes meal break with pay, can
the ER changed this to 1 hour without
pay?
Yes. The right to fix the work schedules of
the EEs rests principally on their ER as a
form of management prerogative without
depriving the EEs of the benefits thereof.
V. NIGHT SHIFT DIFFERENTIAL (art.
86): Not less than 10% of regular wage for
each hour of work between 10 in the
evening and 6 in the morning
Q: What is the rationale for night shift
differential?
Night work laws are valuable aid in
enforcing acts fixing the maximum period of
employment.
41 | R O N B E R N A R D S . O R A Z A
Q: Is it waivable?
No since it is based on public policy.
Q: Who has the burden of proof?
It is the ER
VII. OVERTIME PAY (art. 87)
It is an additional pay for service or work
rendered or performed in excess of 8 hours a
day by EEs or laborers in employment
covered by 8-hour Labor Law.
1. Rationale
Overtime pay is required because of the
longer work employed than that what is
agreed upon and the adverse effects (e.g.
delayed in going home, no time for
relaxation, missed events, etc.) caused by
longer stay in the place of work.
2. Night Differential and Overtime Pay
Q: When the duty of an EE falls at
nighttime (10pm-6am), does the receipt of
overtime pay precludes the right to night
differential?
No. The night differential is payment for
work done during the night while the
overtime pay is payment for the excess of
the regular 8-hour work.
3. Overtime Pay Based on Regular Wage
“OT Pay” = Compensation added to regular
wage
Q: What is as “regular base pay” or “basic
pay”?
It excludes money received by an EE in
different concepts (e.g. Christmas bonus and
other fringe benefits); hence, any stipulation
in the CBA which include Christmas bonus
and other benefits in the computation of the
overtime pay are void.
Note: “Regular wage” is more expansive
term because it includes fringe benefits
regularly received by EEs.
Q: How is regular wage computed?
Regular Wage = Cash wage + Value of
facilities (art. 90)
4. Overtime Pay Rates Computation
The LCP requires ERs to pay certain
employees an additional compensation
equivalent to their regular wage plus at least
twenty-five (25%) of their works beyond
eight hours. That rate is increased to thirty
LABOR LAW I
percent (30%) if the worker renders
overtime on a holiday or rest day (art. 87).
Q: What if the OT is on a “rest day” which
falls on a “holiday”?
The OT rate should be 50%
Formula: Hourly Work Rate + OT Rate
(25%, 30% or 50% of the regular wage) x
Hours of Overtime Work
Q: Can there be an agreement that the OT
rate be higher than that required by law?
Yes. The ER and EEs may stipulate higher
rate in the computation of OT. The basis of
computation of OT pay must be the CBA.
It is not for the court to impose upon the
parties anything beyond what they have
agreed upon which is not tainted with
illegality.
5. Conversion of Monthly to Daily Rate;
Actual Work Days as Divisor
Q: What should be the divisor in
computing an EE’s basic pay?
The divisor in computing an EE’s basic
daily rate should be the actual working days
in a year (not calendar years, i.e. 365 days)
because on off days, an EE is not required to
work; otherwise, the use of a bigger divisor
may show noncompliance with the
minimum wage law – it will not meet the
minimum wage requirement.
6. How “Work Day” is Computed
Regular Working Hours/Shift ≠ Work Day
(i.e. 24-hour period which commences from
the time the EE regularly starts to work).
Example: If an EE regularly works from
8am to 4pm, it is his “regular working
hours/shift”.
On the other hand, the “work day” of such
EE is 8am to 8am; hence, any work outside
of the 24-hour period is considered overtime
work (DOLE Manual).
a. Broken hours of work: The minimum
normal working hours need not be
continuous to constitute the “legal working
day” of 8 hours as long as the 8 hours is
within a work day, e.g. EE may be required
to work for 4 hours in the morning and
another 4 hours in the evening to complete
42 | R O N B E R N A R D S . O R A Z A
the 8-hour working period. The 4-hour work
is not overtime.
b. Work in Different Shifts in a Work Day:
Work in excess of 8 hours within a work day
is considered OT if it is performed in a work
shift other than at which the EE regularly
works, e.g. X whose regular duty is from
10pm-6am is asked to take the place of
another whose working hours is 2pm-10pm.
Even if this is within his work day (10pm-
10pm), it is still considered as OT.
7. Factual and Legal Basis of Claim
a. An expressed instruction from the ER to
the EE to render OT is not required for the
EE to be entitled to OT pay. It is sufficient
that the EE is permitted (implied).
b. A verbal instruction to render overtime
work prevails over a memorandum
prohibiting such work as long as he is
permitted.
Example: EE renders necessary or beneficial
work to the company that he could not
abandon work because there was no
substitute ready to take his place
notwithstanding the memorandum
prohibiting such
XPNs:
i. OT after office hours during Saturdays and
Sundays (and holidays) without written
authority is unjustified.
ii. OT where no work was required and no
work could be done by the EE is not
justified.
Q: Who has the burden of proof?
It is the ER
8. Action to Recover Compensation
The principles of estoppel and laches cannot
be invoked against EEs in an action for the
recovery of compensation for OT work for
the following reasons:
a. It will be contrary to the spirit of the 8-
hour Labor Law under which the laborers
cannot waive their right to extra
compensation;
b. The law obligates the ER to observe it, so
much so that it punishes the ER for its
violation and leaves the EE free and
blameless.
c. The EE is in a disadvantageous position
as to be naturally reluctant in asserting a
LABOR LAW I
claim which may cause the ER to terminate
him.
d. An EE who cannot expressly renounce the
right to extra-compensation under the 8-hour
Labor Law may be compelled to accomplish
the same thing by mere silence or lapse of
time.
Note: OT pay retroacts to the date when
services were actually rendered (otherwise
to allow him to be compensate as of the date
of filing would be to penalize him by
acquiescence or silence).
9. Waiver of Quitclaim (i.e. Waiver of
claim of ER against EE)
GR: The right to OT pay cannot be waived
because it is contrary to law (i.e. it exempts
the ER from any legal liability) and
contrary to public policy (i.e. by coming to
court and later on agreeing to compromise
without the knowledge and approval of the
court).
Hence, any contract stipulating otherwise is
null and void.
XPNs:
a. Waiver in exchange for certain
benefits: When the alleged waiver of OT
pay is in consideration of benefits and
privileges which may be more than what
will accrue to them in OT pay, e.g. Laborers
who are paid a monthly rate equivalent to 30
times their daily wage and privilege of
taking 4 days off with pay every month plus
time off with pay on such days when their
ER does not need their service.
b. OT pay integrated in basic salary
(“Composite or Package Pay/All-inclusive
salary”): When the ER and EE stipulate that
the latter’s regular or basic salary already
includes the OT pay provided:
i. That there is a clear written agreement
knowingly and freely entered into by the
EE; and
ii. The mathematical result showed that the
agreed wage rate and the OT pay, computed
separately, are equal to or higher than the
separate amounts legally due.
Example: X is an EE of Y. X worked with
1-hour overtime with a daily salary that is
more than enough to cover the 1 hour excess
work.
43 | R O N B E R N A R D S . O R A Z A
Note: This kind of arrangement is not
unusual for managerial EEs.
c. Built-in overtime pay in government-
approved contracts: When an OT pay is
already provided in the written contract.
d. Compressed Workweek (CWW): The
number of workdays is reduced but the
number of work hours is increased to more
than 8 provided:
i. The scheme is expressly and voluntary
supported by majority of the EEs affected.
ii. In firms operating in conditions that are
hazardous to health, a certification is needed
from an accredited safety organization.
iii. The DOLE regional office is duly
notified.
Example: Instead of working from 8-5 from
Mondays to Fridays, an EE may work only
8-7 from Mondays to Thursday.
VII. UNDERTIME NOT OFFSET BY
OVERTIME (Art. 88)
Examples:
a. An EE who reported late for work and
ended up working past his regular working
schedule is entitled to OT pay.
b. An EE who works from 8-5pm from
Monday-Friday requested that he will work
on a Monday from 12nn-5pm to be offset by
spreading 1 hour from Tuesday to Friday.
He is entitled to OT pay.
Note: Offsetting of undertime work by
overtime work, whether on the same (by
jurisprudence) or on another (by statute) day
is prohibited.
VIII. EMERGENCY OVERTIME
WORK (Art. 89)
The article describes the situation where the
ER may legally compel his worker to render
overtime work with corresponding overtime
pay:
1. When the country is at war or when any
other national or local emergency has been
declared by the National Assembly or the
Chief Executive;
2. When it is necessary to prevent loss of life
or property or in case of imminent danger to
public safety due to an actual or impending
emergency in the locality caused by serious
accidents, fire, flood, typhoon, earthquake,
epidemic, or other disaster or calamity;
LABOR LAW I
3. When there is urgent work to be
performed on machines, installations, or
equipment, in order to avoid serious loss or
damage to the employer or some other cause
of similar nature;
4. When the work is necessary to prevent
loss or damage to perishable goods; and
5. Where the completion or continuation of
the work started before the eighth hour is
necessary to prevent serious obstruction or
prejudice to the business or operations of
the employer.
Note: In addition, the IRR of the Labor
Code authorizes OT work when it is
necessary “to avail of favorable weather or
environmental conditions where
performance or quality of work is dependent
thereon”.
Q: Is the list exclusive?
Yes; otherwise, overtime work is optional
on the part of the EE.
CHAPTER 2
WEEKLY REST PERIOD
(Articles 91-93)
I. RIGHT TO WEEKLY REST DAY
(Art. 91)
“a. It shall be the duty of every employer,
whether operating for profit or not, to
provide each of his employees a rest period
of not less than twenty-four (24) consecutive
hours after every six (6) consecutive normal
work days.
b. The employer shall determine and
schedule the weekly rest day of his
employees subject to collective bargaining
agreement and to such rules and regulations
as the Secretary of Labor and Employment
may provide. However, the employer shall
respect the preference of employees as to
their weekly rest day when such preference
is based on religious grounds.”
Q: Is there a specific day designated as a
weekly rest day?
No as long as it is not less than 24
consecutive hours. This is in opposition to
its forerunner (i.e. Blue Sunday Law) which
provides that Sunday shall be considered as
rest day.
44 | R O N B E R N A R D S . O R A Z A
Q: How is rest day designated?
It is provided under the 2nd paragraph of art.
91: The ER shall determine the weekly rest
day of his EEs subject to CBA and to the
rules and regulations of the Secretary of
Labor; however, he shall respect the
preference of EEs as to their weekly rest
days when it is based on religious grounds.
II. WHEN EMPLOYER MAY
REQUIRE WORK ON A REST DAY
(Art. 92)
1. In case of actual or impending
emergencies caused by serious accident,
fire, flood, typhoon, earthquake, epidemic or
other disaster or calamity to prevent loss of
life and property, or imminent danger to
public safety;
2. In cases of urgent work to be performed
on the machinery, equipment, or installation,
to avoid serious loss which the employer
would otherwise suffer;
3. In the event of abnormal pressure of
work due to special circumstances, where
the employer cannot ordinarily be expected
to resort to other measures;
4. To prevent loss or damage to perishable
goods;
5. Where the nature of the work requires
continuous operations and the stoppage of
work may result in irreparable injury or loss
to the employer; and
6. Under other circumstances analogous or
similar to the foregoing as determined by
the Secretary of Labor and Employment.
III. COMPENSATION FOR REST DAY,
SUNDAY OR HOLIDAY WORK (Art.
93)
1. For work performed on rest days or on
special holidays: Plus 30% of EE’s regular
wage (daily basic rate)
2. For work performed on a rest day
which is also a special holiday: Plus 50%
of EE’s regular wage (daily basic rate)
3. For work whose nature is such that he
has no regular workdays and no regular
rest days and is performed on a Sunday or
holiday: Plus 30% of his daily basic rate of
EE’s regular wage (daily basic rate)
LABOR LAW I
Q: What are the 2 types of holidays? How June 12)
are EE’s paid therein?
It can be “special” or “regular” holiday. g. National Heroes’
Day (Last Monday
Special holiday currently consists of 3 of August)
holidays in a year as per EO 292 as amended
by RA 9849 which include Ninoy Aquino h. Eidl Fitr (Movable
Day (Monday nearest August 21), All Saints Date)
Day (November 1), Last Day of the Year
(December 31). Others may be declared by i. Eidl Adha
the President or the LGU as special which (Movable Date)
may or may not mean suspension of work
and/or classes. j. Bonifacio Day
(Monday nearest
Here if an EE does not work, he gets no pay November 30)
(“no work, no pay”). If he works, he gets his k. Christmas Day
daily basic rate plus 30 percent. (December 25)

Regular holiday currently consists of 12 l. Rizal Day

holidays in a year. (Monday nearest
December 30).
Here if an EE does not work, he gets 100%
of his usual pay. If he works, he gets his Note: Since there are
daily basic rate plus 200% percent. 12 legal holidays in a
year, there are only
12 occasions when
CHAPTER 3 holiday should be
HOLIDAYS, SERVICE INCENTIVE paid except on places
LEAVES AND SERVICE CHARGES where “Muslim
(Articles 94-96) holidays” (15) are to
be observed based
I. SPECIAL v. REGULAR/LEGAL on Muslim Lunar
HOLIDAY (EO 292 as amended by RA Calendar which
9849) include:
Regular/Legal (i) New Year,
Special Holiday Holiday (ii) Birthday of the
Consists of 3 Consists of 12 Prophet Muhammad,
holidays: holidays: (iii) Nocturnal
a. Ninoy Aquino a. New Year’s Day Journey and
Day (Monday (January 1) Ascension of the
nearest August 21) Prophet Muhammad,
b. Maundy Thursday (iv) Hari Raja Pausa
b. All Saints Day (Movable Date) and
(November 1) (v) Hari Raja Haji.
c. Good Friday
c. Last Day of the (Movable Date) Under Presidential
Year (December 31) Proclamation No.
d. Araw ng 1198, Christians
Note: A certain day Kagitingan (Monday working within the
may be declared by nearest April 9) specified Muslim
the President or the areas are included.
LGU as “special”. It e. Labor Day There must be a There is no need for
may or may not (Monday nearest declaration. a declaration.
mean suspension of May 1) If EE does not If EE does not
work and/or classes. work: He gets no work: He gets 100%
f. Independence Day pay (“no work, no of his usual pay
(Monday nearest pay” principle known as “holiday

45 | R O N B E R N A R D S . O R A Z A LABOR LAW I
applies) pay” under article Q: What then are the conditions for a
94. worker to lose his entitlement to holiday
If EE works: He pay?
gets his daily basic If EE works: He Firstly, he is on leave without pay on the
rate + 30% gets day immediately preceding the regular
200% (or “twice his holiday.
Where the special regular pay”).
holiday falls on the Secondly, he does not work on such regular
scheduled rest day Where the regular holiday.
of the EE: holiday falls on the
Additional 50% of scheduled rest day Both must concur; otherwise, the worker
the EE’s daily basic of the EE: would be entitled to holiday pay.
rate (on work Additional 30% of
performed on the the EE’s regular Q: Can the ER withdraw or reduce regular
said day). holiday rate of 200% pay through agreements, practice or
(on work performed policy?
on the said day). No. There is nothing in the law or rules that
justify such.
Where the regular
holiday falls on a 2. Holiday Pay; Entitlement of Monthly
Sunday: The Paid EEs
following Monday
shall not be a holiday CHAPTER 3
unless a PAYMENT OF WAGES
proclamation is (Arts. 102-111)
issued declaring it as
a special holiday.

II. HOLIDAY PAY (Art. 94)

1. Holiday Pay
1-day pay given by law to an EE if he does
not work on a regular holiday
Q: What is its purpose?
It is to prevent diminution of the monthly
income of the workers on account of work
interruptions declared by the State. In other
words, although the worker is forced by law
to take a rest, he is not deprived of what he
should earn.
Q: What is the condition of holiday pay?
The EE should not have been absent without
pay on the working day preceding the
regular holiday.
If he is absent without pay, the assumption
is that he would have been absent also on
the following day if it were not a holiday.
This is to discourage malingering (escape
from work) among workers who might view
the holiday pay as a compensating factor for
being absent.
Others are self-explanatory.
CHAPTER 4
(5) PROHIBITIONS REGARDING
WAGES
(Arts. 112-119)
Q: What are the related civil code
provisions on prohibitions regarding
wages?
a. Article 1705: The laborer’s wages shall be
paid in legal currency.
b. Article 1706: Withholding of wages,
except for a debt due, shall not be made by
the ER.
c. Article 1707: The laborer’s wages shall be
a lien on the goods manufactured or done.
d. Article 1708: The laborer’s wages shall
not be subject to execution or attachment
except for debts incurred for food, shelter,
clothing and medical attendance.
e. Article 1709: The ER shall neither seize
nor retain any tool or other articles
belonging to the labor.
Note: The provisions on the Labor Code
about prohibitions on wages are also known

46 | R O N B E R N A R D S . O R A Z A LABOR LAW I
as “Labor Code provision for wage
protection”.
I. INTERFERENCE IN THE DISPOSAL
OF WAGES (Art. 112)
Q: What is the most important element that
makes this act reprehensible?
It is the element of compulsion.
1. Penalty for Violation
a. Article 288 of the LCP (“penalties”):
i. Fine not less than 1,000 pesos nor more
than 10,000 pesos (1,000 pesos-10,000
pesos); or
i. Imprisonment for not less than 3 months
nor more than 3 years (3 months-3 years); or
iii. Both such fine and imprisonment at the
discretion of the court.
b. Article 288 of the RPC (“other similar
coercions”):
i. Arresto mayor; or
ii. Fine ranging from 200-500 pesos; or
iii. Both for compelling EEs to purchase
merchandise or commodities of any kind.
II. UNLAWFUL DEDUCTION ON
WAGES (Art. 113)
1. Rule on Deduction of Wages
GR: No ER, or in behalf of any person,
shall make any deduction from the wages of
his EEs.
XPNs:
a. In cases where the EE is insured by the
ER;
Yes. As provided under the rules, deduction
on wages for payment to 3rd persons is
allowed provided that (i) it is authorized in
writing by the EE and (ii) the ER will not
receive any benefits from the transaction.
Q: Are deduction for “unpaid absences”
allowed?
Yes.
Q: Can an ER deduct from wages due to
reduce workdays?
Yes based on the principle of “no work, no
pay” provided that it should be justified or
done in good faith, that is, the occurrence of
severe financial losses which must be shown
by evidence.
2. Other Provisions on Prohibition on
Unlawful Deduction
a. For the benefit of the ER or his
representative or intermediary as
consideration of a promise of employment
or retention in employment (art. 117); hence,
the practice of security agencies of
deducting from the salary of its security
guards for procuring job placement is a
violation of this provision. Even though the
guards agreed to the arrangement, it cannot
be given effect for being contrary to law
and public policy.
b. As a retaliation against any EE who has
filed a complaint or instituted any
proceeding to recover wages, or has testified
or is about to testify in such proceedings
(art. 118).

b. Check-off on union dues; and Q: Is a violation of article 118 strikeable?

No. This must be distinguished with article
c. In cases where the ER is authorized by 258 (f) of the LCP.
law or regulations issued by the Secretary of
Labor (e.g. SSS, PhilHealth, HDMF, Article 118 Article 258 (f)
withholding tax; in cases where the EE is The subject of The subject of
indebted to the ER where such indebtedness testimony is wages. testimony is
is due and demandable; court judgment for anything under the
support; salary deductions of a member of a code.
legally established cooperative). It is not ULP; hence, It is a ULP; hence,
non-strikeable. It strikeable.
Note: In the first 2 instances (a&b), it needs may be pursue
the EE’s written authorization to protect the through a money
EE against unwarranted practices that would claim.
diminish his compensation without his
knowledge and consent. Q: Will the article apply even if the EE
allegedly being discriminated against has
Q: Can the ER deduct wages when the EE not filed a complaint or has not testified
is obliged to make payment to 3rd persons?

47 | R O N B E R N A R D S . O R A Z A LABOR LAW I
(i.e. implicit, silent or unspoken
testimony)?
Yes according to Atty. Azucena. For
instance, an ER asks an EE to testify to a
labor inspector that the ER is complying
with the minimum wage law but the EE
refuses to make such a false statement and
because of such, the ER retaliates by
withholding certain employment benefits,
ER is liable under article 118.
In short, the violation of the article consists
in the ER’s retaliatory act against an EE who
testified or refused to testify.
III. DEPOSIT FOR LOSS OR DAMAGE
(Art. 114)
1. Rule on Prohibition on Deposit for Loss
or Damage
GR: ER is prohibited from requiring his
worker to make deposits from which
deduction shall be made for loss or damage
to tools, materials or equipment supplied by
the ER (i.e. Deposit now  If there are
damages, deduction shall be made there).
This is known as “illegal deposit”.
Examples:
a. It does not permit 15 pesos daily deposits
which taxi drivers are required to make to
defray any shortage in the boundary.
b. It does not allow an EE to post cash bond
at the start of their employment.
c. A kasambahay or domestic worker is not
required to make deposits from which
deduction shall be made for damages on
tools, materials, furniture or equipment in
the household.
XPNs: Where requiring deposits is a
recognized practice or it is necessary or
desirable as determined by the SOLE in
appropriate rules and regulations provided
(e.g. firearms deposit):
a. That the EE concerned is clearly shown to
be responsible for the loss or damage;
b. That the EE is given reasonable
opportunity to show cause why deduction
shall not be made;
c. That the amount of such deductions is fair
and reasonable, and shall not exceed the
actual loss or damage; and
d. That the deduction from the wages of the
EE does not exceed 20% of his weekly
wages (DOLE Implementing Rules).
48 | R O N B E R N A R D S . O R A Z A
IV. WITHHOLDING OF WAGES AND
KICKBACKS (Art. 116)
Examples: ER cannot refuse to pay wages
because the other:
a Defaulted in paying a loan guaranteed by
the ER;
b. Violated memorandum of agreement;
c. Failed to render an accounting of his ER’s
property; or
d. Is not doing his job.
Note: However, wages may be withheld for
attorney’s fee which is equivalent to 10%
(not more than) of the amount of wages
recovered from the ER.
V. FALSE REPORTING (Art. 119)
“It is unlawful for any person to make any
statement, report or record filed or kept
pursuant to the provisions of the Labor
Code, knowing such statement, report or
record to be false in any material aspect”.
Example: An ER must keep the record of his
worker’s payroll.
CHAPTER 5
WAGE STUDIES, WAGE
AGREEMENTS AND WAGE
DETERMINATION
(Articles 120-127)
AKA as “Minimum Wage Rates”
I. WAGE RATIONALIZATION ACT
(RA 6727)
Approval date: June 9, 1989
Effectivity date: July 1, 1989
The law amended pertinent provisions of the
Labor Code.
Q: What is a wage order?
It is an order issued by the Regional Board
whenever the conditions in the region so
warrant after investigating and studying all
the pertinent facts and based on the
standards and criteria prescribed by the LCP
(art. 123).
Q: Can the Boards provide for wage order
lower than the existing minimum wage?
No. A wage order by any Regional Boards
shall provide for wage rates higher than the
LABOR LAW I
statutory minimum wage rate prescribed by
Congress (art. 127).
1. Applicability of the Law
1. RA 6727 applies to all workers and EEs
in the private sector, whether agricultural or
non-agricultural.
2. In case of workers paid by result, they
should be paid not less than the prescribed
wage rates per 8-hour work a day, or
proportion thereof for working less than 8
hours.
3. In case of learners or apprentices, their
agreement shall be automatically modified.
4. In case of contracts for construction
projects and for security, janitorial and
similar services, the prescribed increases
shall be borne by the principal unless the
latter fails to pay the prescribed wage rates,
the contractor shall be jointly and severally
liable with the principal.
XPNs:
1. Household or domestic helpers and
persons employed in the personal service of
another (including family drivers)
2. Retail or service establishments regularly
employing not more than 10 workers may be
exempted upon application and
determination by the appropriate regional
board.
Note: Exemption from RA 6727 requires
application and determination by the
appropriate regional board.
Q: What if during application, there was
also a complaint that was filed also for
non-compliance?
The complaint for alleged non-compliance
shall be deferred.
Q: What if application is not granted?
The EEs shall receive the appropriate
compensation due them plus 1% interest per
month retroactive to the effectivity of the
law.
Q: What if there was a CBA for a wage
increase 3 months before the effectivity of
RA 6727 (i.e. April 1, 1989), is it an
enough compliance with the law?
49 | R O N B E R N A R D S . O R A Z A
Yes; however, if it is lower than that
prescribed by law, the ER shall pay the
difference.
Q: What are the penalties for violation of
RA 6727?
Any entities which refuses or fails to pay the
wage increase prescribed by law shall be
punished a:
a. Fine not exceeding 25K; and/or
b. Imprisonment of not less than 1 year nor
more than 2 years provided that any person
convicted under the law shall not be entitled
to the benefits provided for under the
Probation Law.
The ER concerned shall be ordered to pay an
amount equivalent to double the unpaid
benefits owing to the EE provided that
payment of indemnity shall not absolve the
ER from the criminal liability imposable
(double indemnity).
2. Significant Innovations of RA 6727
2.1 It changed the scheme of prescribing
minimum wages from the national level (i.e.
National Wages Council and National
Productivity Commission) to regional level
(i.e. Regional Tripartite Wages Productivity
Boards or RTWPB).
A. Purpose in Creating the RTWPB
The intention was to rationalize wages (a)
by providing for full-time boards to police
wages round-the-clock and (b) by giving the
boards enough powers to achieve this
objective.
The Court is of the opinion that Congress
meant the boards to be creative in resolving
the annual question of wages without labor
and management knocking on the
legislature’s door at every turn; otherwise,
there is no need for a board anymore but
only an accountant to keep track of the latest
consumer price index or Congress only as
the needs arises as what it was for years.
In short, the law sought a “thinking” group
of men and women bound by statutory
standards.
B. Mechanics of Fixing Minimum Wage
The law created 2 entities to undertake the
function of prescribing minimum wages:
LABOR LAW I
(a) National Wages and Productivity
Commission or NWPC (“Commission”)
created under article 120; and
(b) Regional Tripartite Wages and
Productivity Boards or RTWPB created
under article 122 (“Boards”)
Q: What is the NWPC? What is its
composition?
The Commission is a quasi-judicial agency
which:
a. Serves as a national consultative and
advisory body to the President and Congress
on matters relating to wages, incomes and
productivity;
b. Formulates policies and prescribes rules
and guidelines relative to these matters; and
c. Has appellate jurisdiction and
administrative supervision over the Boards.
The Commission is composed of:
a. Secretary of Labor (chairman)
b. Director-General of NEDA (vice-
chairman)
c. 2 members from the ER’s sector
d. 2 members from the worker’s sector; and
e. Executive Director
Q: What is the RTWPB? What is its
composition?
The Boards are also quasi-judicial as well as
fact-finding agencies created in all regions
which:
a. Develop plans and programs relative to
wages, incomes and productivity
improvement for their respective regions for
implementation through the regional offices
of the Department of Labor and
Employment;
b. Determine and fix minimum wage rates
applicable in their respective regions and
industries therein, and
c. Issue the corresponding wage orders,
subject to guidelines issued by the
Commission.
The Boards is composed of:
a. Regional Director of DOLE (chairman)
b. Regional Director of NEDA (vice
chairman)
c. Regional Director of DTI (vice chairman)
d. 2 members from the ER’s sector
e. 2 members from the worker’s sector; and
f. Secretariat
C. Procedures for Fixing Minimum Wage
50 | R O N B E R N A R D S . O R A Z A
This is based on the Rules of Procedure on
Minimum Wage Fixing (NWPC Guidelines
No. 001-95).
a. Issuance of Wage Order: Within 30
days after the conclusion of the last hearing,
the Board shall decide on the merits of the
petition (for wage order) and issue a wage
order establishing the regional minimum
wage rates paid by the ERs which shall be
not lower that the statutory minimum wage
rates.
b. Contents of Wage Order: It shall
specify the region, province or industry to
which the minimum wage rates shall apply
and provide exemptions, if any, subject to
guidelines issued by the Commission.
c. Frequency of Wage Order: It may not
be disturbed for 12 months from its
effectivity except in the event of
supervening conditions (e.g. extraordinary
increases in petroleum products and basic
goods or services).
d. Effectivity of Wage Order: It shall take
effect 15 days after its publication in at least
1 newspaper of general circulation in the
region.
e. Implementing Rules/Regulations of the
Wage Order: The Board shall prepare an
IRR upon recommendation of the
Commission, for approval by the SOLE, not
later 10 days from the issuance of a Wage
Order.
The SOLE shall act on it for 20 days from
receipt. Once approved, the Board shall
cause its publication in at least 1 newspaper
of GC in the region.
f. Review of Wage Order: The
Commission may review the Wage Order
issued by the Board motu propio or upon
appeal.
An appeal may be filed for the following
grounds:
i. Non-conformity with prescribed
guidelines and/or procedure;
ii. Questions of law
iii. GAD
The appeal does not stay the order unless
the appellant files adequate surety.
LABOR LAW I

(1) Public hearing or consultation  (2)
Issuance of wage order within 30 days after
public hearing or consultation  (3)
Preparation of IRR upon recommendation
by the Commission subject to SOLE’s
approval  (4) Publication  (5)
Effectivity 15 days after its publication in at
least 1 newspaper of GC in the region
Note: Any party aggrieved by a Wage Order
issued by a Regional Board may appeal such
order to the Commission within 10 calendar
days from the publication of such order. It is
mandatory for the Commission to decide on
appeal within 60 calendar days from the
filing thereof.
The appeal does not stay the order unless
the appellant files adequate surety
satisfactory to the Commission for payment
to the EEs affected by the order of the
corresponding increase, in the event such
order is affirmed (art. 123).
No preliminary or permanent injunction or
temporary restraining order may be issued
by any court, tribunal or other entity against
any proceeding before the Commission or
the Regional Boards (art. 126).
Public hearings and publications are
mandatory as provided under the law itself.
Q: Can wage order be waived?
No it being statutory and mandatory
Q: Which of the 2 entities approves a wage
order (or set a minimum wage)?
It is the RTWPB without need of approval
from the NWPC. However, it must conform
to the guidelines prescribed by the latter;
otherwise, they are ineffectual, void and
cannot be the source of rights and privileges.
Q: When is there a need for approval from
the NWPC?
There is a need for approval from the
Commission for IRRs which the Board has
to prepare within 10 days from the issuance
of the wage order. The SOLE, upon
recommendation of the Commission, may
approve the implementing rules.
51 | R O N B E R N A R D S . O R A Z A
2.2 The “floor wage method” which was
used in earlier minimum wage laws is
replaced with “salary ceiling method”.
A. Methods of Fixing Minimum Wage
a. Floor wage method which is fixing of a
determinate amount that will be added to the
prevailing statutory minimum wage (i.e.
regardless of how much one is receiving like
across-the-board increase).
b. Salary Ceiling Method whereby the wage
adjustment is applied to EEs receiving
certain denominated salary ceiling (i.e.
maximum amount earned on a specific job).
The second one is preferred because it
minimizes wage distortion.
Q: If the law prescribes a minimum wage
or “floor wage” to upgrade the wages of
EEs receiving minimum wage, does that
require an across-the-board pay increase?
No. The ER cannot be compelled to grant an
across-the-board increase to its EEs who, at
the time of the promulgation of the Wage
Order, were already paid more than the
existing minimum wage unless for correction
of wage distortions (Note: This is only for
rank-and-file EEs. If it is between the
manager and the EEs, it results to wage
distortion).
B. Standards/Criteria for Minimum
Wage Fixing (art. 124)
In the determination of such regional
minimum wages, the RTWPB shall, among
other relevant factors consider the
following:
a. The demand for living wages;
b. Wage adjustment vis‐a‐vis the consumer
price index
c. The cost of living and changes or
increases therein
d. The needs of workers and their families
e. The need to induce industries to invest in
the countryside
f. Improvements in standards of living
g. The prevailing wage levels
h. Fair return of the capital invested and
capacity to pay of employers
i. Effects on employment generation and
family income
j. The equitable distribution of income and
wealth along the imperatives of economic
and social development
LABOR LAW I
C. Wage Distortions
It is a situation where an increase in the
prescribed minimum wage rates results in
the elimination or severe contraction of
intentional quantitative differences in wage
or salary rates between and among EE
groups in an establishment as to effectively
obliterate the distinctions embodied in such
wage structure based on skill, length of
service, or other logical base of
differentiation (art. 124).
In short, it is the effect of increasing the pay
of an EE to such an amount that equals,
almost equals, or overtakes another EE’s
pay which has not been similarly increased
(e.g. the wage of X is 200 pesos higher than
that of Y who was holding a lower position,
but this pay difference became 100 pesos
because Y was given a 100 pesos increase in
compliance with a wage order).
XPNs: Cases decided by SC
a. Distortions arising from a revision of
salary sale initiated by the ER provided that
it is not done arbitrarily and illegally for the
purpose of circumventing the law: Article
124 only applies to wage distortion arising
from compliance with a wage order. What
the ER did is a management prerogative
(Salary restructuring ≠ Distortion)
b. Distortions among EEs who are employed
in the same company but in different
regions: This is because wage-fixing has
been regionalized by RA 6727; hence,
wage-distortion involves only comparison of
jobs located in the same region.
c. Distortion among EEs who were hired on
different dates with different salaries (hiring
rate)
Q: What are the ways to correct distortion?
The law itself (art. 124) recognizes the
validity of negotiated wage increases to
correct wage distortions.
The legislative intent is to encourage the
parties to seek solution to the problem of
wage distortions through involuntary
negotiation or arbitration rather than strikes,
lockouts or other concerted activities of the
EEs or management.
52 | R O N B E R N A R D S . O R A Z A
“Any dispute arising from wage distortion
shall be resolved through the grievance
procedure under the CBA, and if it remains
unresolved, through voluntary arbitration
which shall be resolved within 10 calendar
days from the time the said dispute was
referred to voluntary arbitration”.
“In cases where there are no CBA or
recognized labor unions, the ERs and
workers shall endeavor to correct such
distortions. Any dispute arising therefrom
shall be settled through the National
Conciliation and Mediation Board, and if it
remains unresolved, it shall be referred to
the arbitration branch of the NLRC which
shall conduct continuous hearings and
decide the dispute within 20 calendar days
from the time the dispute was submitted for
compulsory arbitration”.
“The pendency of a dispute arising from a
wage distortion shall not in any way delay
the applicability of any increase in
prescribed wage rates pursuant to the
provisions of a law or a Wage Order”.
Note: There are different formulas to adjust
wage distortion which the ER and the union
may adopt to rectify salary distortion.
Q: Is wage distortion strikeable?
No. Article 124 as amended provides that
the ER and then union shall negotiate to
correct the distortion.
Slowdown = Strike
2.3 The law also broadened the concept of
“minimum wage” to approximate the more
expansive meaning of a “living wage”.
CHAPTER 6
ADMINISTRATION AND
ENFORCEMENT
(Arts. 128-129
I. VISITORIAL AND ENFORCEMENT
POWER (art. 128)
Q: To whom are visitorial and enforcement
powers conferred?
These complementary powers are conferred
by law on the Secretary of Labor or his duly
authorized representatives (i.e. Regional
Directors or RD).
LABOR LAW I
Q: What is the scope of the visitorial and
enforcements powers of DOLE?
The visitorial power is broader in
application than the enforcement power. The
scope is extensive enough to include labor
relations as well.
On the other hand, the enforcement power
covers only labor standards.
Q: Are visitorial and enforcement powers
still limited by jurisdictional amounts?
No. The jurisdictional limitations under
article 128 (b) have been repealed already
by RA 7730 with the phrase
“notwithstanding the provisions of article
129 and 217 of this Code to the contrary”
(Guico v. Quisumbing).
Q: What if the RD commenced an
inspection way before the effectivity of RA
7730, will it apply retroactively?
Yes. It is considered as a curative statute
intended to do away with jurisdictional
limitations and to finally settle any doubts
on the visitorial and enforcement power;
hence, retroactive (Batong Buhay v. Dela
Serna). In the same case, the SC said as well
that if the employer refuses to attend the
inspection or conference or to submit any
record, such as payrolls and daily time
records, he will be deemed to have waived
his right to present evidence.
1. Visitorial Power (art. 128-A): It is the
power of Secretary of Labor or his duly
authorized representative to have access to
ER’s records and premises at any time of the
day or night whenever work is being
undertaken therein.
 It must be conducted in the
workplace while work is being
undertaken there.
2. Enforcement Power (art. 128-B): It is
the power of the Secretary of Labor to
compel ER to comply with Labor Standards
upon finding violations discovered in the
course of the exercise of visitorial power.
2.1 The ER-EE relationship still exists;
Q: What is the purpose?
The purpose is to assure the worker the
rights and benefits due him without going to
go through litigation (“by giving compliance
orders”).
53 | R O N B E R N A R D S . O R A Z A
Q: Is DOLE (Secretary/RD) divested of
authority to determine ER-EE
relationship?
No. In the case of Bombo Radyo v.
Secretary of DOLE, the SC said that the
DOLE (RD) “has the authority to determine
ER-EE relationship subject to judicial
review, not review by NLRC”.
Hence, the RD is not divested of its
jurisdiction to determination of ER-EE
relationship; however, if later found out that
there is no ER-EE relationship, it
presupposes an “illegal dismissal”; hence, it
should be given to NLRC/LA.
Moreover, the decision of RD may be
appealed to the SOLE (administrative
superior of the RD); however, if it involves
monetary awards, an appeal by the ER may
be perfected only upon posting of a cash or
surety bond equivalent to the monetary
award in the order appealed from.
Note: If the appeal is denied, a motion for
reconsideration of the Secretary’s decision
has to be filed for exhaustion of
administrative remedies. If the motion is
denied, a special action for certiorari may be
filed to CA.
2.2 The findings of labor regulation officers
or industrial safety engineers were made in
the course of inspections;
Hence, it is summary in nature.
2.3 The ER does not contest such findings
nor raises issues which cannot be resolved
without considering evidentiary matters that
are not verifiable in the normal course of
inspection;
Q: What happens if the findings cannot be
resolved in the normal course of
inspection?
A contest of this nature by the ER may
divest the Regional Director of jurisdiction
to exercise his enforcement power.
3. Suspension of Operations (art. 128-C)
It authorizes the SOLE to order stoppage of
work or suspension of the operations of an
establishment whose non-compliance with
law or regulations poses grave and imminent
danger to workers.
LABOR LAW I
II. RECOVERY OF WAGES, SIMPLE
MONEY CLAIMS (art. 129)
Article 129 treats of small money claims.
They ought to be disposed of quickly, free
from legal technicalities and with the least
expense to the claimants.

In order that an RD may have jurisdiction

over cases involving recovery of wages and
other monetary claims and benefits, all the
following requirements of section 2, RA
6715 must be present:
a. The claim is presented by an EE or person
employed in domestic/household service, or
househelper;

b. The claim arises from ER-EE

relationship;

It does not require that the complainant be

an EE at the time the complaint is filed. It is
enough that the claim “arises” from
employment.

Moreover, if there is an ER-EE relationship,

it becomes a money claim cognizable the
LA.

c. The claim does not include a claim for

reinstatement;

d. The aggregate money claim, including

legal interest, of each EE or househelper
does not exceed 5K.

If it does, the LA has exclusive jurisdiction.

Article 128 Article 129

III. COMPROMISE AGREEMENTS

54 | R O N B E R N A R D S . O R A Z A LABOR LAW I