I.
FUNDAMENTAL PRINCIPLES executed by a worker because of unconscionably low
A. LEGAL BASIS
1. 1987 Constitution
Under Article II (Declaration of Principles and State Policies):
a. Promote full employment, a rising standard of living, and
an improved quality of life for all [Sec. 9, Art. II]
b. Promote social justice [Sec. 10, Art. II]
c. Affirm labor as a primary social economic force [Sec. 18,
Art. II]
d. Protect rights of workers and promote their welfare [Sec.
18, Art. II]
e. Recognize the indispensable role of the private sector
[Sec. 20, Art. II.]
f. Encourage private enterprise [Sec. 20, Art. II.]
g. Provide incentives to needed investments [Sec. 20, Art.
II.]
h. “Section 18. The State affirms labor as a primary social
economic force. It shall protect the rights of workers and
promote their welfare.”
This provision is invoked by the Supreme Court when it
affirms the interest, rights and welfare of labor. Example:
When the SC nullifies a patently illegal provision in an
employment contract or when it invalidates a Quitclaim
consideration.
Under Article XIII, Section 3 of the Constitution:
a) Full protection to labor, local and overseas, organized and
unorganized;
b) Promotion of full employment and equality of
employment opportunities for all;
d) Guarantee of the rights of all workers to:
1. self-organization;
2. collective bargaining and negotiations;
3. peaceful concerted activities, including the right
to strike in accordance with law;
4. security of tenure;
5. humane conditions of work;
6. a living wage;
7. participate in policy and decision-making
processes affecting their rights and benefits as may
be provided by law.
e) Promotion of the principle of shared responsibility and
preferential use of voluntary modes in settling disputes,
including conciliation, and enforcement of mutual
compliance to foster industrial peace.
f) Regulation of relations between workers and employers,
recognizing the right of labor to just share and the right of
enterprises to reasonable returns to investments, and to
expansion and growth.
Labor as Protected Class/ Presumption of Inherent
Inequality
-ER & EE are on unequal footing
-State has responsibility to protect EE
-must be taken on case-to-case basis i.e. when special
qualifications are required for employment such as Master’s
degree -> less protection from the State
Balancing of Interests
-labor laws construed liberally in favor of employees but
balance with equally important right of ERs to due process
Due Process
-substantive and procedural due process for dismissal
Labor as Property Right
- Wrongful interference with employment as property
right is an actionable wrong
Right to Assemble
No law shall be passed abridging: 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.
Note: This freedom guaranteed under Art III, section 4 of the
constitution is relevant only in connection with picketing
and not in relation to strike which has a different
constitutional basis (Article XIII, Section 3).
Bascon v. CA: Wearing armbands and putting up placards to
express one’s views without violating the rights
of third parties, are legal per se and even
constitutionally protected
Right to Form Associations
Right of public and private sector employees to form unions,
associations, or societies for purposes not contrary to law
shall not be abridged.
This is known as “freedom of association.” This provision is
the basis for the employees’ right to self-organization.
Except: through valid exercise of police power
Non-Impairment of Obligations of Contracts
The prohibition to impair the obligation of contracts is not
absolute and unqualified. In spite of the constitutional
prohibition and the fact that both parties are of full age and
competent to contract, it does not necessarily deprive the
State of the power to interfere where the parties do not
stand upon an equality, or where the public health demands
that one party to the contract shall be protected against
himself.
Labor Rights and Protection
Right to speedy disposition of cases in judicial, quasi-judicial
or administrative bodies.
This can be invoked in labor cases at all levels, to wit:
(1)Before quasi-judicial or administrative bodies, such as:
a) Labor Arbiters, NLRC;
b) Med-Arbiters/BLR;
c) DOLE Regional Directors/DOLE Secretary; and
d) Voluntary Arbitrators.
(2) Before judicial bodies, such as:
a) Court of Appeals; and
b) Supreme Court,
when labor cases reach these higher level courts.
Prohibition against involuntary servitude
No involuntary servitude in any form shall exist.
[Sec. 18 (2), Art. III.]
This principle is relevant only in three (3) situations: namely:
(1) resignation and (2) return-to-work order in national
interest cases. This means that:
(1) an employee has the right to resign since he cannot be
forced to work against his will;
(2) the moment an assumption of jurisdiction order (ajo) is
issued by the dole secretary in national interest cases, a
striker can be ordered to return to work even against his will
in case at the time of such issuance of the ajo, there was
already an on-going strike; and
(3) when employees are called upon to render military or
civic duty.
2. Civil Code: Article 1700 of the Civil Code:
“Art. 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.”
In Davao Integrated Port Stevedoring Services v. Abarquez, Maynilad Water Supervisors Association v. Maynilad Water
March 19, 1993. It was held that a CBA, as a labor contract Services, Inc.
within the contemplation of Article 1700 of the Civil Code, is Courts cannot stipulate for the parties or amend the latter’s
not merely contractual in nature but impressed with public agreement, for to do so would be to alter the real intention
interest, thus, it must yield to the common good. Similarly, of the contracting parties when the contrary function
an employment contract or any other labor contract is of courts is to give force and effect to the intention of the
treated as not merely contractual in nature similar to an parties.
ordinary contract like a lease contract because it is
impressed with public interest. Consequently, all labor laws 3. Labor Code
are deemed read or incorporated therein even if not so Under Article 3 of Labor Code:
expressly provided or stipulated in its provisions. a) Full protection to labor;
b) Promotion of full employment;
Article 1701 of the Civil Code c) Promotion of equal work opportunities regardless of sex,
Neither capital nor labor shall race or creed;
a. Act oppressively against the other, or d) Regulation of the relations between workers and
b. Impair the interest or convenience of the public employers;
Under Article 1702 of the Civil Code. e) Protection of the rights of workers to:
“Article 1702. In case of doubt, all labor legislation and all 1. self-organization;
labor contracts shall be construed in favor of the safety and 2. collective bargaining;
decent living for the laborer.” 3. security of tenure; and
4. just and humane conditions of work.
Innodata Philippines, Inc. v. Quejada-Lopez
Provisions of applicable statutes are deemed written into
the contract
 B. STATE POLICY TOWARDS LABOR
1. SECURITY OF TENURE
ART 279. SECURITY OF TENURE
 SECURITY OF TENURE is the constitutional right granted
the employee, that the employer shall not terminate the
services of an employee except for just cause or when
authorized by law.
An employee that has been dismissed illegally is entitled to:
a. Reinstatement
b. Backwages
Police power allows the State to regulate the grant of the
right to security of tenure. [St. Luke’s Medical Center
Employee’s Association-AFW v. NLRC, G.R. No. 162053
(2007)]
● Purpose: to safeguard the general welfare of the public.
● Example: Persons who desire to engage in the learned
professions may be required to take an examination as a
prerequisite to engaging in the same.
2. SOCIAL JUSTICE
Sec. 9, Art. II, 1987 Constitution: The State shall promote a
just and dynamic social order that will:
a. Ensure the prosperity and independence of the
nation;
b. Free the people from poverty through policies
that provide adequate social services; and
c. Promote:
1. Full employment,
2. A rising standard of living
3. Improved quality of life for all Sec. 10, Art. II, 1987
Constitution: The State shall promote social justice
in all phases of national development. Social Justice
as justification [Calalang v. Williams, G.R. No. 47800
(1940)] Social justice is neither communism, nor
despotism, nor atomism, nor anarchy BUT:
a. The humanization of laws; and
b. 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: be a refuge of scoundrels any more than can equity be an
a. The promotion of the welfare of all the people, impediment to the punishment of the guilty. Those who
b. The adoption by the Government of measures invoke social justice may do so only if their hands are clean
calculated to insure economic stability of all the and their motives blameless and not simply because they
competent elements of society – happen to be poor. [Tirazona v. Phil EDS Techno-Service,
Inc., G.R. 169712 (2009)]. Tilting the scales [Rivera vs.
1. through the maintenance of a proper economic and social Genesis Transport Service, Inc., G.R. No. 215568 (2015)]
equilibrium in the interrelations of the members of the
community, constitutionally; Labor laws are meant to implement and effect social justice.
Thus, such considerations should be taken into account
2. through the adoption of measures legally justifiable, or when dealing with labor cases. The social justice
extraconstitutionally; and suppositions underlying labor laws require that the
statutory grounds justifying termination of employment
3. through the exercise of powers underlying the existence should not be read to justify the view that employees
of all governments on the time-honored principle of salus should, in all cases, be free from any kind of error.
populi est suprema lex.
Note: The welfare of the people should be the supreme law. Not every improper act should be taken to justify the
termination of employment. To infer from a single error that
Limits of Social Justice an employee committed serious misconduct or besmirched
Social justice should be used only to correct an his employer’s trust is grave abuse of discretion. It is an
injustice [Agabon v. NLRC, G.R. No. 158693 (2004)]. It is not inference that is arbitrary and capricious. It is contrary to
intended to countenance wrongdoing simply because it is the high regard for labor and social justice enshrined in our
committed by the underprivileged. It cannot be permitted to Constitution and our labor laws. Welfare State [Alalayan v.
National Power Corporation, G.R. No. L-24396 (1968)]
The welfare state concept is found in the constitutional Reason: Our Constitution is replete with positive commands
clause on the promotion of social justice. for the promotion of social justice, and particularly the
protection of the rights of the workers.
Purpose:
a. To ensure the well-being and economic security of all the 3. EQUAL WORK OPPORTUNITIES
people, and
b. In the pledge of protection to labor with specific authority Declaration of Basic Policy [Art. 4, LC]
to regulate the relations between landowners and tenants The State shall:
and between labor and capital. a. Afford protection to labor,
b. Promote full employment,
Separation pay as measure of social justice c. Ensure equal work opportunities regardless of:
[PLDT v. NLRC, G.R. No. 80609 (1988)] 1. Sex,
The rule embodied in the Labor Code is that a person 2. Race, or
dismissed for lawful cause is not entitled to separation pay. 3. Creed,
d. Regulate the relations between workers and employers.
Exception: Considerations of equity. Equity has been defined
as justice outside law, being ethical rather than jural and The State shall assure the rights of workers to:
belonging to the sphere of morals than of law. a. Self-organization,
b. Collective bargaining,
Strictly speaking, however, it is not correct to say that there c. Security of tenure, and
is no express justification for the grant of separation pay to d. Just and humane conditions of work.
lawfully dismissed employees other than the abstract
consideration of equity.
Note: Art. 4 of the Labor Code must be read in relation to
the 1987 Constitution since this is still based on the 1973
Constitution. Sec. 3, par. 1, Art. XIII, 1987 Constitution.
The State shall:
a. Afford full protection to labor -
1. Local and overseas,
2. Organized and unorganized, and
b. Promote full employment and equality of employment
opportunities for all. Sec. 2, R.A. No. 10911.
Declaration of Policies
The State shall promote equal opportunities in employment b. The rights of all workers to –
for everyone. To this end, it shall be the policy of the State
to:
a. Promote employment of individuals on the basis of their –
1. Abilities,
2. Knowledge,
3. Skills, and
4. Qualifications, rather than their age
b. Prohibit arbitrary age limitations in employment.
c. Promote the right of all employees and workers,
regardless of age, to be treated equally in terms of –
1. Compensation,
2. Benefits,
3. Promotion,
4. Training, and
5. Other employment opportunities.
4. RIGHT TO SELF-ORGANIZATION AND COLLECTIVE
BARGAINING
1987 Constitution The State shall guarantee:
a. 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. [Sec. 8, Art. III.]
1. Self-organization [Sec. 3, Art. XIII]
2. Collective bargaining and negotiations [Sec. 3, Art.
XIII]
3. Peaceful concerted activities [Sec. 3, Art. XIII]
4. Strike in accordance with law. [Sec. 3, Art. XIII]
Art. 253, Labor Code
All persons employed:
a. In commercial, industrial and agricultural enterprises, and
b. In religious, charitable, medical or educational workers in their exercise of the right to self-organization
institutions, whether operating for profit or not, shall have [Art. 257, LC]
the right to –
a. Self-organization, Scope of right to self-organization
b. Form, join, or assist labor organization of their 1. Right to form, join or assist labor organizations of their
own choosing for purposes of collective bargaining. own choosing for the purpose of collective bargaining
through representatives of their own choosing [Art. 257];
Ambulant, intermittent and itinerant workers, self- 2. Right to engage in lawful concerted activities for the same
employed people, rural workers and those without any purpose (collective bargaining) or for their mutual aid and
definite employers may form labor organizations for their protection [Art. 257]
mutual aid and protection. Art. 254, Labor Code Employees 3. The right of any person to join an organization also
of government corporations established under the includes the right to leave that organization and join
corporation code shall have the right to: another one. [Heritage Hotel Manila v. PIGLASHeritage, G.R.
a. Organize, and No. 177024 (2009)]
b. Bargain collectively with their respective 4. The right to form or join a labor organization necessarily
employers. includes the right to refuse or refrain from exercising said
right. It is self-evident that just as no one should be denied
All other employees in the civil service shall have the right to the exercise of a right granted by law, so also, no one should
form associations for purposes not contrary to law. be compelled to exercise such a conferred right. [Reyes v.
Trajano, G.R. No. 84433 (1992)]
Infringement of the right to self-organization 5. The right of the employees to selforganization is a
It shall be unlawful for any person to restrain, coerce, compelling reason why their withdrawal from the
discriminate against or unduly interfere with employees and cooperative must be allowed. As pointed out by the union,
the resignation of the memberemployees is an expression of
their preference for union membership over that of with the spirit of our Constitution and laws which lean over
membership in the cooperative. [Central Negros Electric backwards in favor of the working class, and mandate that
Cooperative v. SOLE, G.R. No. 94045 (1991)] every doubt must be resolved in their favor. [Hocheng
6. Their freedom to form organizations would be rendered Philippines Corporation v. Farrales, G.R. No. 211497 (2015)]
nugatory if they could not choose their own leaders to
speak on their behalf and to bargain for them. [Pan- Of labor contracts
American World Airways, Inc v. Pan- American Employees A CBA, as a labor contract within the contemplation of Art.
Association, G.R. No. L-25094 (1969)] 1700 of the Civil Code of the Philippines which governs the
relations between labor and capital, is not merely
5. CONSTRUCTION IN FAVOR OF LABOR contractual in nature but impressed with public interest,
thus, it must yield to the common good. As such, it must be
All doubts in the implementation and interpretation of the construed liberally rather than narrowly and technically, and
provisions of this Code, including its implementing rules and the courts must place a practical and realistic construction
regulations, shall be resolved in favor of labor. [Art. 4, Labor upon it, giving due consideration to the context in which it is
Code] negotiated and purpose which it is intended to serve. [Cirtek
Employees Labor Union-FFW v. Cirtek Electronics, G.R. No.
In case of doubt, all legislation and all labor contracts shall 190515 (2010)]
be construed in favor of the safety and decent living for the
laborer. [Art. 1702, Civil Code] Mutual obligation
The employer's obligation to give his workers just
Liberal Construction Of the laws compensation and treatment carries with it the corollary
Art. 4 of the Labor Code mandates that all doubts in the right to expect from the workers adequate work, diligence
implementation and interpretation of the provisions thereof and good conduct. [Judy Philippines, Inc. v NLRC, G.R. No.
shall be resolved in favor of labor. This is merely in keeping 111934 (1998)]
 6. BURDEN OF PROOF AND QUANTUM OF EVIDENCE
Summary on Burden of Proof
1. Existence of ER-EE Relationship: Employee
2. Fact of dismissal: Employee
3. Validity of Dismissal: Employer EE has burden of proving
fact of employment and of dismissal
Before a case for illegal dismissal can prosper, an employer-
employee relationship must first be established by the
employee. [Javier v. Fly Ace Corp., G.R. No. 192558 (2012)]
The employee must first establish by substantial evidence
the fact of his dismissal from service. If there is no dismissal,
then there can be no question as to the legality or illegality
thereof. [MZR Industries v. Colambot, G.R. No.
179001 (2013)]
ER has burden of proving valid dismissal Unsubstantiated
accusations or baseless conclusions of the employer are
insufficient legal justifications to dismiss an employee. The
unflinching rule in illegal dismissal cases is that the employer engaged in recruitment and placement. (CEC-TUCP) (RCPA)
bears the burden of proof. [Garza v. Coca-Cola Bottlers
Philippines, Inc., G.R. No. 180972 (2014)]
Penalty must be commensurate with gravity of offense Not
every case of insubordination or willful disobedience by an
employee reasonably deserves the penalty of dismissal. The
penalty to be imposed on an erring employee must be
commensurate with the gravity of his offense. [Joel
Montallana v. La Consolacion College Manila, G.R. No.
208890 (2014)]
II. RECRUITMENT AND PLACEMENT
A. DEFINITION OF RECRUITMENT AND PLACEMENT
RECRUITMENT AND PLACEMENT - any act of canvassing,
enlisting, contracting, transporting, utilizing, hiring or
procuring workers, and includes referrals, contract services,
promising or advertising for employment, locally or abroad,
whether for profit or not; PROVIDED, that any person or
entity which, in any manner, offers or promises for a fee
employment to two or more persons shall be deemed
 -The number of persons dealt with is not an 3. on an installation located offshore or on the high
essential ingredient of the act of recruitment and placement seas. [Sec. 2 (a), RA 8042, as amended]Number of
of workers. The proviso merely creates the presumption. persons: not essential

Number of persons: not essential The number of persons

dealt with is not an essential ingredient of the act of
recruitment and placement of workers. Any of the acts B. REGULATION OF RECRUITMENT AND PLACEMENT
mentioned in Art. 13(b) will constitute recruitment and ACTIVITIES
placement even if only one prospective worker is involved. 1. REGULATORY AUTHORITIES
[People v. Panis, supra.] a. PHILIPPINE OVERSEAS EMPLOYMENT
ADMINISTRATION

Worker – any member of the labor force, POEA supersedes OEDB and NSB Executive Order 797,
whether employed or unemployed. [Art.13 (a)] Reorganizing the Ministry of Labor and Employment,
Creating the Philippine Overseas Employment
Overseas Filipino Worker/Migrant Worker – a person who is Administration (POEA), and for other purposes, has
to be engaged, is engaged, or has been engaged in a superseded Art. 17 and 20, and provides for the POEA to
remunerated activity: take over the functions of the Overseas Employment
1. in a state of which he or she is not a citizen, Development Board (OEDB) and the National Seamen Board
or (NSB). POEA Powers and Functions
2. on board a vessel navigating the foreign seas
other than a government ship used for military or a. Regulate private sector participation in the recruitment
non-commercial purposes, or and overseas placement of workers by setting up a licensing
and registration system;

b. Formulate and implement, in coordination with
appropriate entities concerned, when necessary, a system
for promoting and monitoring the overseas employment of
Filipino workers taking into consideration their welfare and
the domestic manpower requirements;
c. Protect the rights of Filipino workers for overseas
employment to fair and equitable recruitment and
employment practices and ensure their welfare;
d. Exercise original and exclusive jurisdiction to hear and
decide all claims arising out of an employer-employee
relationship or by virtue of any law or contract involving
Filipino workers for overseas employment including the
disciplinary cases; and all pre employment cases which are
administrative in character involving or arising out of
violation or requirement laws, rules and regulations
including money claims arising therefrom, or violation of the
conditions for issuance of license or authority to recruit
workers. All prohibited recruitment activities and practices
which are penal in character as enumerated and defined
under and by virtue of existing laws, shall be prosecuted in
the regular courts in close coordination with the appropriate
Departments and agencies concerned;
e. Maintain a registry of skills for overseas placement;
f. Recruit and place workers to service the requirements for
trained and competent Filipino workers by foreign
governments and their instrumentalities and such other
employers as public interest may require;
g. Promote the development of skills and careful selection of
Filipino workers;
h. Undertake overseas market development activities for
placement of Filipino workers;
i. Secure the best terms and conditions of employment of
Filipino contract workers and ensure compliance therewith;
j. Promote and protect the well-being of Filipino workers
overseas;
k. Develop and implement programs for the effective
monitoring of returning contract workers, promoting their
re-training and reemployment or their smooth re-
integration into the mainstream of national economy in
coordination with other government agencies;
l. Institute a system for ensuring fair and speedy disposition
of cases involving violation or recruitment rules and
regulations as well as violation of terms and conditions of
overseas employment;
m. Establish a system for speedy and efficient enforcement
of decisions laid down through the exercise of its
adjudicatory function;
projects with private organizations, domestic or foreign, in
the
furtherance of its objectives. [Sec. 3, EO 247]
POEA Standard Contract Deemed Integrated in every
Employment Contract While the seafarers and their
employers are governed by their mutual agreements, the
POEA rules and regulations require that the POEA SEC,
which contains the standard terms and conditions of the
seafarers' employment in foreign ocean-going vessels, be
integrated in every seafarer's contract. [Wallem Maritime
Services, Inc. v. Tanawan, G.R. No. 160444, (2012)]

n. Establish and maintain close relationship and enter into

joint projects with the Department of Foreign Affairs,
Philippine Tourism Authority, Manila International Airport
Authority, Department of
Justice, Department of Budget
and Management and other
relevant government entities, in
the pursuit of its objectives The
Administration shall also
establish and maintain joint
 b. REGULATORY AND VISITORIAL POWERS of any person or entity covered by this Title, require it to
OF THE DEPARTMENT OF LABOR AND submit reports regularly on prescribed forms, and act on
EMPLOYMENT SECRETARY violation of any provisions of this Title. [Art. 37] SOLE’s
arrest and seizure power declared unconstitutional

Reports on Employment Status
Whenever the public interest requires, the Secretary of
Labor may direct all persons or entities within the coverage
of this Title to submit a report on the status of employment,
including job vacancies, details of job requisitions,
separation from jobs, wages, other terms and conditions
and other employment data. [Art. 33]
After the promulgation of the 1987 Constitution, only judges
may issue search and arrest warrants. The Secretary of
Labor, not being a judge, may no longer issue search of
arrest warrants. Article 38(c) of the Labor Code is declared
unconstitutional and of no force or effect. [Salazar v.
Achacoso, G.R. No. 81510, (1990)]

SOLE’s regulatory Power 2. BAN ON DIRECT HIRING

The SOLE shall have the power:
a. To restrict and regulate the recruitment and placement
activities of all agencies within the coverage of this Title.
[Title 1, Recruitment and Placement of Workers]
b. To issue orders and promulgate rules and regulations to
carry out the objectives and implement the provisions of
this Title. [Art. 36]
SOLE’s visitorial Power
The SOLE or his duly authorized representatives may, at any
time, inspect the premises, books of accounts and records
What is direct hiring?
“Direct Hiring” refers to the process of directly hiring
workers by employers for overseas employment as
authorized by the DOLE Secretary and processed by the
POEA, including:
1. Those hired by international organizations;
2. Those hired by members of the diplomatic corps;
3. Name hires or workers who are able to secure overseas
employment opportunity with an employer without the
assistance or participation of any agency.

Does the POEA Administrator or the DOLE Secretary or
DOLE Regional Director have the power to issue closure
order?
Yes. If upon preliminary examination or surveillance, the
DOLE Secretary, the POEA Administrator or DOLE Regional
Director is satisfied that such danger or exploitation exists, a
written order may be issued for the closure of the
establishment being used for illegal recruitment activity.
Does the DOLE Secretary have the power to issue warrant
of arrest and search and seizure orders?
No. Salazar v. Achacoso,2 declared that the exercise by the
DOLE Secretary of his twin powers to issue arrest warrant
and search and seizure orders provided under Article 38[c]
of the Labor Code is unconstitutional. Only regular courts
can issue such orders.
3. ENTITIES PROHIBITED FROM RECRUITING
1. Travel agencies and sales agencies of airline companies,
whether for profit or not. [Art. 26]
2. Those who are convicted of illegal recruitment, trafficking
in persons, antichild labor violation, or crimes involving
moral turpitude;
3. Those against whom probable cause or prima facie
finding of guilt for illegal recruitment or other related cases
exist particularly to owners or directors of agencies who
have committed illegal recruitment or other related cases.
4. Those agencies whose licenses have been previously
revoked or cancelled by the Department under Sec. 54 of
these rules.
5. Cooperatives whether registered or not under the
Cooperative Act of the Philippines.
6. Law enforcers and any official and employee of the
Department of Labor and Employment (DOLE).
7. Sole proprietors of duly licensed agencies
are prohibited from securing another license to engage in
recruitment and placement.
8. Sole proprietors, partnerships or corporations licensed to
engage in private recruitment and placement for local
employment are prohibited from engaging in job
contracting or subcontracting activities. [Sec. 5, DO 141-14,
Revised
Rules and Regulations Governing Recruitment and
Placement for Local Employment]
Entities disqualified from Engaging or Participating in the
Business of Recruitment and Placement of Workers for
Overseas Employment
1. Travel agencies and sales agencies of airline companies,
whether for profit or not.
[Art. 26]
2. Officers or members of the Board of any corporation or
partners in a partnership engaged in the business of a travel
agency;
3. Corporations and partnerships, where any of its officers,
members of the board or partners is also an officer, member
of the
board or partner of a corporation or partnership engaged in
the business of a travel agency;
4. Individuals, partners, officers, or directors of an insurance
company who make, propose or provide an insurance
contract under the compulsory insurance coverage for
agency-hired OFWs;
5. Sole proprietors, partners or officers and members of the
board with derogatory records, such as, but not limited to
the ff:
a. Those convicted or against whom probable cause
or prima facie finding of guilt is determined by a
competent authority for illegal recruitment or for
other related crimes or offenses committed in the
course of, related to, or resulting from, illegal
recruitment, or for crimes involving moral turpitude;
b. Those agencies whose licenses have been
revoked for violation of RA 8042, PD 442, RA 9208,
and their IRRs;
c. Those agencies whose licenses have been
cancelled, or those who, pursuant to the order of
the Administrator, were included in the list of
persons with derogatory record for violation of
recruitment laws and regulations;
6. Any official employee of the DOLE, POEA, OWWA, DFA,
DOJ, DOH, BI, IC, NLRC, TESDA, CFO, NBI, PNP, Civil Aviation
Authority of the Philippines, international airport
authorities, and other government agencies directly
involved in the implementation of RA 8042, as amended,
and/or any of his/her relatives within the fourth civil degree
of consanguinity or affinity. [Part II, Rule I, Sec. 3, 2016
Revised POEA Rules and Regulations]
 4. SUSPENSION OR CANCELLATION OF LICENSE
OR AUTHORITY
LICENSE VS. AUTHORITY
What is a “license” for overseas recruitment?
“License” refers to the document issued by the DOLE
Secretary authorizing a person, partnership or corporation
to operate a private recruitment or manning agency.
What is an “authority” for overseas employment?
“Authority” refers to the document issued by the DOLE
Secretary authorizing the officers, personnel, agents or
representatives of a licensed recruitment or manning
agency to conduct recruitment and placement activities in a
place stated in the license or in a specified place.
The Secretary of Labor shall have the power to suspend or
cancel any license or authority to recruit employees for
overseas employment for:
a. violation of rules and regulations issued by the
Department of Labor, the Overseas Employment
Development Board, and the National Seamen Board;
b. violation of the provisions of this and other applicable
laws, General Orders and
Letters of Instructions. [Art. 35]
Acts prohibited under Art. 34 are grounds for suspension or
cancellation of license. Note that these acts likewise
constitute illegal recruitment under RA 8042 as amended by
RA 10022.
Who can suspend or cancel the license?
1. DOLE Secretary
2. POEA Administrator
The power to suspend or cancel any license or authority to
recruit employees for overseas employment is concurrently
vested with the POEA and the Secretary of Labor.
5. PROHIBITED PRACTICES
Recruitment of Local Workers: Prohibited Practices under
Art. 34
a. To charge or accept, directly or indirectly, any amount
greater than that specified in the schedule of allowable fees
prescribed by the Secretary of Labor, or to make a worker
pay any amount greater than that actually received by him
as a loan or advance;
b. To furnish or publish any false notice or information or
document in relation to recruitment or employment;
c. To give any false notice, testimony, information or
document or commit any act of misrepresentation for the
purpose of securing a license or authority under this Code;
d. To induce or attempt to induce a worker already
employed to quit his employment in order to offer him to
another, unless the transfer is designed to liberate the
worker from oppressive terms and conditions of
employment;
e. To influence or to attempt to influence any person or
entity not to employ any worker who has not applied for
employment through his agency;
f. To engage in the recruitment or placement
of workers in jobs harmful to public health or morality or to
the dignity of the Republic of the Philippines;
g. To obstruct or attempt to obstruct inspection by the
Secretary of Labor or by his duly authorized representatives;
h. To fail to file reports on the status of employment,
placement vacancies, remittance of foreign exchange
earnings, separation from jobs, departures and such other
matters or information, as may be required by the Secretary
of Labor;
i. To substitute or alter employment contracts approved and
verified by the Department of Labor from the time of actual
signing thereof by the parties up to and including the
periods of expiration of the same without the approval of
the Secretary of Labor;
j. To become an officer or member of the Board of any
corporation engaged in travel agency or to be engaged
directly or indirectly in the management of a travel agency;
and
k. To withhold or deny travel documents from applicant
workers before departure for monetary or financial
considerations other than those authorized under this Code
and its implementing rules and regulations.
Recruitment of Migrant Workers: Prohibited Acts under Sec.
6, R.A. No. 8042
a. To charge or accept directly or indirectly any amount
greater than that specified in the schedule of allowable fees
prescribed by the Secretary of Labor and Employment, or to
make a worker pay or acknowledge any amount greater
than that actually received by him as a loan or advance;
b. To furnish or publish any false notice or information or
document in relation to recruitment or employment;
c. To give any false notice, testimony, information or
document or commit any act of misrepresentation for the
purpose of securing a license or authority under the Labor
Code, or for the purpose of documenting hired workers with
the POEA, which include the act of reprocessing workers
through a job order that pertains to nonexistent work, work
different from the actual overseas work, or work with a
different employer whether registered or not with the
POEA;
d. To include or attempt to induce a worker already
employed to quit his employment in order to offer him
another, unless the transfer is designed to liberate a worker
from oppressive terms and conditions of employment;
e. To influence or attempt to influence any person or entity
not to employ any worker who has not applied for
employment through his agency or who has formed, joined
or supported, or has contacted or is supported by any union
or workers' organization;
f. To engage in the recruitment or placement of workers in
jobs harmful to public health or morality or to the dignity of
the Republic of the Philippines;
g. To obstruct or attempt to obstruct inspection by the
Secretary of Labor and Employment or by his duly
authorized representative
h. To fail to submit reports on the status of employment,
placement vacancies, remittance of foreign exchange
earnings, separation from jobs, departures and such other
matters or information as may be required by the Secretary
of Labor and Employment;
i. To substitute or alter to the prejudice of the worker,
employment contracts approved and verified by the
Department of Labor and Employment from the time of
actual signing thereof by the parties up to and including the
period of the expiration of the same without the approval of
the Department of Labor and Employment;
j. For an officer or agent of a recruitment or placement
agency to become an officer or member of the Board of any
corporation engaged in travel agency or to be engaged
directly or indirectly in the management of travel agency;
k. To withhold or deny travel documents from applicant
workers before departure for monetary or financial
considerations, or for any other reasons, other than those
authorized under the Labor Code and its implementing rules
and regulations;
l. Failure to actually deploy a contracted worker without
valid reason as determined by the Department of Labor and
Employment;
m. Failure to reimburse expenses incurred by the worker in
connection with his documentation and processing for
purposes of deployment, in cases where the deployment
does not actually take place without the worker's fault.
Illegal recruitment when committed by a syndicate or in
large scale shall be considered an offense involving
economic sabotage; and
n. To allow a non-Filipino citizen to head or manage a
licensed recruitment/manning agency. [Sec. 6, R.A. No.
8042]
Note: Bold parts differ from those stated in the
prohibited practices under Art. 34.
Prohibited Acts Added by Amendment
a. Grant a loan to an overseas Filipino worker with interest
exceeding eight percent (8%) per annum, which will be used
for payment of legal and allowable placement fees and
make the migrant worker issue, either personally or through
a guarantor or accommodation party, postdated checks in
relation to the said loan;
b. Impose a compulsory and exclusive arrangement whereby
an overseas Filipino worker is required to avail of a loan only
from specifically designated institutions, entities or persons;
c. Refuse to condone or renegotiate a loan incurred by an
overseas Filipino worker after the latter's employment
contract has been prematurely terminated through no fault
of his or her own;
d. Impose a compulsory and exclusive arrangement
whereby an overseas Filipino worker is required to undergo
health examinations only from specifically designated
medical clinics, institutions, entities or persons, except in
the case of a seafarer whose medical examination cost is
shouldered by the principal/shipowner;
e. Impose a compulsory and exclusive arrangement whereby
an overseas Filipino worker is required to undergo training,
seminar, instruction or schooling of any kind only from
specifically designated
institutions, entities or persons, except for recommendatory
trainings mandated by principals/shipowners where the
latter shoulder the cost of such trainings;
f. For a suspended recruitment/manning agency to engage
in any kind of recruitment activity including the processing
of pending workers' applications; and
g. For a recruitment/manning agency or a foreign
principal/employer to pass on the overseas Filipino worker
or deduct from his or her salary the payment of the cost of
insurance fees, premium or other insurance related charges,
as provided under the compulsory worker's insurance
coverage. [Sec. 6, R.A. No. 8042 as amended by R.A. No.
10022]
C. ILLEGAL RECRUITMENT
 Who may commit illegal recruitment?
Illegal recruitment may be committed by any of the
following
(1) By Non-Licensee or Non-holder of authority; or
(2) By ANY PERSON, regardless of whether a non-licensee,
non-holder, licensee or holder of authority,
 What are illegal recruitment acts that can be committed
by No. 1 above (NON-LICENSEE or NON- HOLDER OF
AUTHORITY)?
When what is committed by such NON-LICENSEES or NON-
HOLDERS OF AUTHORITY is any of the acts of recruitment
allowed only to be done by licensees or holders of authority
such as the act of canvassing, enlisting, contracting,
transporting, utilizing, hiring, or procuring workers and
includes referring, contract services, promising or
advertising for employment abroad, whether for profit or
not.
In other words, had they possessed of license or authority,
their commission of any of the foregoing acts could have
been valid and not constitutive of illegal recruitment.
NOTE: The non-licensee or non-holder of authority is
presumed to be engaged in such recruitment if he, in any
manner, offers or promises for a fee employment abroad to
two or more persons
What are acts of illegal recruitment when committed by
ANY PERSON, whether a NON-LICENSEE, NON-HOLDER OF
AUTHORITY or even by a LICENSEE or HOLDER OF
AUTHORITY?
(a) To charge or accept, directly or indirectly, any amount
greater than that specified in the schedule of allowable
fees prescribed by the DOLE Secretary, or to make a worker
pay or acknowledge any amount greater than that actually
received by him as a loan or advance;
(b) To furnish or publish any false notice or information or
document in relation to recruitment or employment;
(c) To give any false notice, testimony, information or
document or commit any act of misrepresentation for the
purpose of securing a license or authority under the Labor
Code, or for the purpose of documenting hired workers with
the POEA, which include the act of reprocessing workers
through a job order that pertains to non-existent work, work
different from the actual overseas work, or work with a
different employer whether registered or not with the
POEA;
(d) To induce or attempt to induce a worker already
employed to quit his employment in order to offer him
another unless the transfer is designed to liberate a worker
from oppressive terms and conditions of employment;
(e) To influence or attempt to influence any person or entity
not to employ any worker who has not applied for
employment through his agency or who has formed, joined
or supported, or has contacted or is supported by any union
or workers' organization;
(f) To engage in the recruitment or placement of workers in
jobs harmful to public health or morality or to the dignity
of the Republic of the Philippines;
(g) To fail to submit reports on the status of employment,
placement vacancies, remittance of foreign exchange
earnings, separation from jobs, departures and such other
matters or information as may be required by the Secretary
of Labor and Employment;
(h) To substitute or alter to the prejudice of the worker,
employment contracts approved and verified by the DOLE
from the time of actual signing thereof by the parties up to
and including the period of the expiration of the same
without the approval of the DOLE;
(i) For an officer or agent of a recruitment or placement
agency to become an officer or member of the Board of any
corporation engaged in travel agency or to be engaged
directly or indirectly in the management of travel agency;
(j) To withhold or deny travel documents from applicant
workers before departure for monetary or financial
considerations, or for any other reasons, other than those
authorized under the Labor Code and its implementing rules
and regulations;
(k) Failure to actually deploy a contracted worker without
valid reason as determined by the Department of Labor and
Employment;
(l) Failure to reimburse expenses incurred by the worker in
connection with his documentation and processing for
purposes of deployment, in cases where the deployment
does not actually take place without the worker's fault.
Illegal recruitment when committed by a syndicate or in
large scale shall be considered an offense involving
economic sabotage; and
(m) To allow a non-Filipino citizen to head or manage a
licensed recruitment/manning agency.”
PROHIBITED ACTIVITIES
IN RELATION TO ILLEGAL RECRUITMENT
What are the PROHIBITED ACTIVITIES in connection with
recruitment for overseas employment?
Besides illegal recruitment, the law additionally provides
that it shall also be unlawful for any person or entity to
commit the following prohibited acts:
(1) Grant a LOAN to an overseas Filipino worker with
interest exceeding eight percent (8%) per annum, which
will be used for payment of legal and allowable placement
fees and make the migrant worker issue, either personally
or through a guarantor or accommodation party, post-dated
checks in relation to the said loan;
(2) Impose a compulsory and exclusive arrangement
whereby an overseas Filipino worker is required to avail of a
LOAN only from specifically designated institutions,
entities or persons;
(3) Refuse to condone or renegotiate a LOAN incurred by an
overseas Filipino worker after the latter's employment
contract has been prematurely terminated through no fault
of his or her own;
(4) Impose a compulsory and exclusive arrangement
whereby an overseas Filipino worker is required to undergo
HEALTH EXAMINATIONS only from specifically designated
medical clinics, institutions, entities or persons, except in
the case of a seafarer whose medical examination cost is
shouldered by the principal/shipowner;
(5) Impose a compulsory and exclusive arrangement
whereby an overseas Filipino worker is required to undergo
TRAINING, SEMINAR, INSTRUCTION OR SCHOOLING of any
kind only from specifically designated institutions, entities
or persons, except for recommendatory trainings
mandated by principals/shipowners where the latter
shoulder the cost of such trainings;
(6) For a SUSPENDED RECRUITMENT/MANNING AGENCY to
engage in any kind of recruitment activity including the
processing of pending workers' applications; and
(7) For a recruitment/manning agency or a foreign
principal/employer to pass on the overseas Filipino worker
or deduct from his or her salary the payment of the cost of
INSURANCE fees, premium or other insurance related
charges, as provided under the compulsory worker's
INSURANCE coverage
1. ELEMENTS
ELEMENTS OF ILLEGAL RECRUITMENT
What are the elements of illegal recruitment?
The essential elements of illegal recruitment vary in
accordance with the following classifications:
(1) Simple illegal recruitment;
(2) When committed by a syndicate; or
(3) When committed in large scale.
When illegal recruitment is committed under either Nos. 2
or 3 above or both, it is considered an offense involving
economic sabotage.
2. TYPES
SIMPLE ILLEGAL RECRUITMENT
What are the 2 elements of simple illegal recruitment?
(1) The offender has no valid license or authority required
by law to enable one to lawfully engage in recruitment and
placement of workers; and
(2) He undertakes either any activity within the meaning of If it is carried out by a group of three (3) or more persons
“recruitment and placement” defined under Article 13(b), conspiring or confederating with one another.
(see above enumeration) or any prohibited practices (see
above enumeration) under Article 34 of the Labor Code.

 Can a recruiter be a natural or juridical person?

Yes.

ILLEGAL RECRUITMENT AS A FORM OF ECONOMIC

SABOTAGE
When is illegal recruitment considered a crime involving
economic sabotage?
1. When committed by a syndicate; or
2. When committed in large scale.

NOTE: THE FIGURE THREE (3) MAKES THE DIFFERENCE,

THUS:
 3 OR MORE RECRUITERS REGARDLESS OF NO. OF
RECRUITEES = BY A SYNDICATE
 3 OR MORE RECRUITEES REGARDLESS OF NO. OF
RECRUITERS = IN LARGE SCALE

When is illegal recruitment committed by a syndicate?

 Elements of illegal recruitment by a syndicate.
The essential elements of the crime of illegal recruitment
committed by a syndicate are as follows:
1. There are at least three (3) persons who, conspiring
and/or confederating with one another, carried out any
unlawful or illegal recruitment and placement activities as
defined under Article 13(b) or committed any prohibited
activities under Article 34 of the Labor Code; and
2. Said persons are not licensed or authorized to do so,
either locally or overseas.
The law does not require that the syndicate should recruit
more than one (1) person in order to constitute the crime of
illegal recruitment by a syndicate. Recruitment of one (1)
person would suffice to qualify the illegal recruitment act as
having been committed by a syndicate.
When is illegal recruitment considered in large scale?
If committed against three (3) or more persons individually
or as a group.
 Elements of illegal recruitment in large scale.
follows:
The elements of illegal recruitment in large scale, as
distinguished from simple illegal recruitment, are as
1. The accused engages in the recruitment and placement of
workers as defined under Article 13(b) or committed any
prohibited activities under Article 34 of the Labor Code; and
2. The accused commits the same against three (3) or more
persons, individually or as a group.
 Distinguished from illegal recruitment by a syndicate.
As distinguished from illegal recruitment committed by a
syndicate, illegal recruitment in large scale may be
committed by only one (1) person. What is important as
qualifying element is that there should be at least three (3)
victims of such illegal recruitment, individually or as a group.
 Recruitment in large scale or by a syndicate is malum
prohibitum and not malum in se.
 What are some relevant principles on illegal recruitment?
1. Mere impression that a person could deploy workers
overseas is sufficient to constitute illegal recruitment. But if
no such impression is given, the accused should not be
convicted for illegal recruitment.
2. Mere promise or offer of employment abroad amounts to 13. Only one person recruited is sufficient to convict one for
recruitment. illegal recruitment.
3. There is no need to show that accused represented 14. Non-prosecution of another suspect is immaterial.
himself as a licensed recruiter. 15. Execution of affidavit of desistance affects only the civil
4. Referrals may constitute illegal recruitment. liability but has no effect on the criminal liability for illegal
5. It is illegal recruitment to induce applicants to part with recruitment.
their money upon false misrepresentations and promises in 16. Defense of denial cannot prevail over positive
assuring them that after they paid the placement fee, jobs identification. Positive identification where categorical and
abroad were waiting for them and that they would be consistent and not attended by any showing of ill motive on
deployed soon. the part of the eyewitnesses on the matter prevails over
6. Recruitment whether done for profit or not is immaterial. alibi and denial. Between the categorical statements of the
7. The act of receiving money far exceeding the amount as prosecution witnesses, on the one hand, and bare denials of
required by law is not considered as “recruitment and the accused, on the other hand, the former must prevail.
placement” as this phrase is contemplated under the law.
8. Actual receipt of fee is not an element of the crime of
illegal recruitment.
9. Conduct of interviews amounts to illegal recruitment.
10. Absence of receipt is not essential to hold a person
guilty of illegal recruitment.
11. Conviction for illegal recruitment may be made on the
strength of the testimonies of the complainants.
12. Absence of documents evidencing the recruitment
activities strengthens, not weakens, the case for illegal
recruitment.

3. Illegal recruitment as distinguished from estafa
 Can a person be charged and convicted separately for
illegal recruitment and estafa involving one and the same
act of recruitment?
Yes. It is clear that conviction under the Labor Code does
not preclude conviction for estafa or other crimes under
other laws.
Some relevant principles:
Same evidence to prove illegal recruitment may be used to
prove estafa. Conviction for both illegal recruitment and
estafa is not double jeopardy.
D. LIABILITY OF LOCAL RECRUITMENT AGENCY AND
FOREIGN EMPLOYER
1. SOLIDARY LIABILITY
NATURE OF LIABILITY OF LOCAL RECRUITMENT AGENCY
AND FOREIGN EMPLOYER
 What is the nature of the liability between local recruiter
and its foreign principal?
The nature of their liability is “solidary” or “joint and
several” for any and all claims arising out of the
employment contract of OFWs.
 Is the solidary liability of corporate officers with the
recruitment agency “automatic” in character?
No. In order to hold the officers of the agency solidarily
liable, it is required that there must be proof of their
culpability therefor. Thus, it was held in the 2013 case of
Gagui v. Dejero,1 that while it is true that R.A. 8042 and the
Corporation Code provide for solidary liability, this liability
must be so stated in the decision sought to be implemented.
Absent this express statement, a corporate officer may not
be impleaded and made to personally answer for the
liability of the corporation.
 What are some relevant principles on the persons liable
for illegal recruitment?
1. Employees of a licensed recruitment agency may be held
liable for illegal recruitment as principal by direct
participation, together with his employer, if it is shown that
he actively and consciously participated in illegal
recruitment.
2. Good faith and merely following orders of superiors are (Divina), a domestic helper in Taiwan, has extended her 12-
not valid defenses of an employee. month contract, after its expiration, for two (2) more years
3. A manager of a recruitment/manning agency is not a after which she returned to the Philippines. It was
mere employee. As such, he receives job applications, established by evidence that the extension was without the
interviews applicants and informs them of the agency’s knowledge of the local recruitment agency, petitioner
requirement of payment of performance or cash bond prior Sunace. The Court of Appeals, however, affirmed the Labor
to the applicant’s deployment. As the crewing manager, he Arbiter’s and NLRC’s finding that Sunace knew of and
was at the forefront of the company’s recruitment activities.impliedly consented to the extension of Divina’s 2-year
contract. It went on to state that “It is undisputed that
[Sunace] was continually communicating with [Divina’s]
2. Theory of imputed knowledge foreign employer.” It thus concluded that “[a]s agent of the
foreign principal, ‘petitioner cannot profess ignorance of
What is meant by this theory? such extension as obviously, the act of the principal
Knowledge of the agent is deemed knowledge of the extending complainant (sic) employment contract
principal but not the other way around. necessarily bound it.’”
The theory of imputed knowledge is a rule that any In finding that the application by the CA of this theory of
information material to the transaction, either possessed by imputed knowledge was misplaced, the High Court ruled
the agent at the time of the transaction or acquired by him that this theory ascribes the knowledge of the agent,
before its completion, is deemed to be the knowledge of the Sunace, to the principal, employer Xiong, not the other way
principal, at least insofar as the transaction is concerned, around. The knowledge of the principal-foreign employer
even though the knowledge, in fact, is not communicated to cannot, therefore, be imputed to its agent, Sunace. There
the principal at all. being no substantial proof that Sunace knew of and
Sunace International Management Services, Inc. v. NLRC2 - consented to be bound under the 2-year employment
The High Court here has the opportunity to discuss the contract extension, it cannot be said to be privy thereto. As
application of the theory of imputed knowledge. The OFW
such, Sunace and its owner cannot be held solidarily liable of the perfected employment contract. After all, the
for any of Divina’s claims arising from the 2-year decision to use the vessel for coastwise shipping was made
employment extension. As the New Civil Code provides: by petitioner only and did not bear the written conformity
“Contracts take effect only between the parties, their of private respondent. A contract cannot be novated by the
assigns, and heirs, except in case where the rights and will of only one party. The claim of petitioner that it
obligations arising from the contract are not transmissible processed the contract of private respondent with the POEA
by their nature, or by stipulation or by provision of law.” only after he had started working is also without merit.
Petitioner cannot use its own misfeasance to defeat his
claim.
E. TERMINATION OF CONTRACT OF MIGRANT
WORKER
What are some relevant principles?
TERMINATION OF CONTRACT OF MIGRANT WORKER 1. Indefinite period of employment of OFWs is not valid as it
WITHOUT JUST OR VALID CAUSE contravenes the explicit provision of the POEA Rules and
 Can an OFW acquire regularity of employment? Regulations on fixed-period employment.
No. The prevailing rule is that OFWs are contractual (fixed- 2. OFWs do not become regular employees by reason of
term only), not regular, employees. In fact, they can never nature of work, that is, that they are made to perform work
attain regularity of employment. The nature of their that is usually necessary and desirable in the usual business
employment is always fixed-term. or trade of the employer. The exigencies of their work
necessitate that they be employed on a contractual basis.
 What is the effect of hiring a seafarer for overseas This notwithstanding the fact that they have rendered more
employment but assigning him to local vessel? than twenty (20) years of service.
As held in OSM Shipping Philippines, Inc. v. NLRC,1 the non- 3. Regular employment does not result from the series of re-
deployment of the ship overseas did not affect the validity hiring of OFWs.
4. The fixed-period employment of OFWs is not
discriminatory against them nor does it favor foreign
employers. It is for the mutual interest of both the seafarer
and the employer why the employment status must be
contractual only or for a certain period of time.
5. The expiration of the employment contracts of OFWs
marks its ending.
 What is the effect of non-deployment of OFW to
overseas employment?
Petitioner-seafarer, in Santiago v. CF Sharp Crew
Management, Inc.2 was not deployed overseas despite the
signing of a POEA-approved employment contract. One of
his contentions is that such failure to deploy was an act
designed to prevent him from attaining the status of a
regular employee. The Supreme Court, however, disagreed
and ruled that “seafarers are considered contractual
employees and cannot be considered as regular employees
under the Labor Code. Their employment is governed by the
contracts they sign every time they are rehired and their
employment is terminated when the contract expires. The
exigencies of their work necessitate that they be employed
on a contractual basis.”
 What is the doctrine of processual presumption?
“Presumed-identity approach” or “processual presumption”
is an International Law doctrine which dictates that where a
foreign law is not pleaded or, even if pleaded, is not proved,
the presumption is that foreign law is the same as Philippine
law. Thus, under this situation, Philippine labor laws should
apply in determining the issues presented in a case.
 Is due process under Philippine law applicable to
termination of employment of OFWs?
Yes. In the absence of proof of applicable foreign law, OFWs
are entitled to due process in accordance with Philippine
laws.
Is the Agabon doctrine applicable to OFWs who are
dismissed for cause but without due process?
Yes. The Agabon doctrine of awarding indemnity in the form
of nominal damages in cases of valid termination for just or
authorized cause but without procedural due process also
applies to termination of OFWs.
 Who has the burden of proof to show that the dismissal
of the OFW is legal?
Burden of proof devolves on both recruitment agency and
its foreign principal.
 Are OFWs entitled to the reliefs under the Labor Code?
No. They are not entitled to such reliefs under Article 279 as
reinstatement or separation pay in lieu of reinstatement or full
backwages. REASON: Because their employment is fixed-term in
nature. The nature of their claim therefore is purely monetary,
such as the payment of the salary for the unexpired portion of the
employment contract in case their dismissal is declared illegal.
 What are the reliefs to which OFWs are entitled?
They are entitled to the reliefs provided under Section 10 of
R.A. No. 8042, as amended, to wit:
(1) All salaries for the unexpired portion of the contract;
(2) Full reimbursement of placement fees and deductions
made with interest at 12% per annum.
As pointed out above, all the reliefs available to an illegally
dismissed OFW are always monetary in nature.
It must be noted that under the 2009 Serrano doctrine,
(Serrano v. Gallant Maritime Services, Inc.,),3 an illegally
dismissed OFW is now entitled to all the salaries for the
entire unexpired portion of their employment contracts,
irrespective of the stipulated term or duration thereof. The
underlined phrase in Section 10 below has been declared
unconstitutional in this case:
“In case of termination of overseas employment without
just, valid or authorized cause as defined by law or contract,
or any unauthorized deductions from the migrant worker's
salary, the worker shall be entitled to the full
reimbursement of his placement fee and the deductions
made with interest at twelve percent (12%) per annum, plus
his salaries for the unexpired portion of his employment
contract or for three (3) months for every year of the
unexpired term, whichever is less.”
However, R.A. No. 10022 (March 8, 2010), which amended
R.A. No. 8042 (Migrant Workers and Overseas Filipinos Act
of 1995), has replicated and re-enacted the same
unconstitutional provision exactly as above quoted. The
question is: was the unconstitutionality of the above-
underlined part of the provision cured by such replication
or re-enactment in the amendatory law?
The 2014 en banc case of Sameer Overseas Placement
Agency, Inc. v. Joy C. Cabiles,1 answered this in the
negative. The said provision was thus declared still
unconstitutional and null and void despite its replication in
R.A. No. 10022.

 What are some principles in regard to monetary awards
to OFWs?
1. Monetary award to OFW is not in the nature of
separation pay or backwages but a form of indemnity.
2. Only salaries are to be included in the computation of the
amount due for the unexpired portion of the contract.
Overtime, holiday and leave pay and allowances are not
included. However, this rule on exclusion of allowance does
not apply in case it is encapsulated in the basic salary clause.
3. Entitlement to overtime pay of OFWs. - As far as
entitlement to overtime pay is concerned, the correct
criterion in determining whether or not sailors are entitled
to overtime pay is not whether they were on board and
cannot leave ship beyond the regular eight (8) working
hours a day, but whether they actually rendered service in
excess of said number of hours. An OFW is not entitled to
overtime pay, even if guaranteed, if he failed to present any
evidence to prove that he rendered service in excess of the
regular eight (8) working hours a day.
4. In case of unauthorized deductions from OFW’s salary,
he shall be entitled to the full reimbursement of the
deductions made with interest at 12% per annum. This is in
addition to the full reimbursement of his placement fee with
the same interest of 12% per annum plus his salaries for the
unexpired portion of his employment contract if he is
terminated without just, valid or authorized cause as
defined by law or contract.
F. EMPLOYMENT OF NON-RESIDENT ALIENS
What is an ALIEN EMPLOYMENT PERMIT (AEP)?
AEP - a document issued by the DOLE Secretary through the
DOLE-Regional Director who has jurisdiction over the
intended place of work of the foreign national, authorizing
the foreign national to work in the Philippines.
Who are required to procure AEP?
All foreign nationals who intend to engage in gainful
employment in the Philippines are required to apply for
AEP. “Gainful employment” refers to a state or condition
that creates an employer-employee relationship between
the Philippine-based company and the foreign national
where the former has the power to hire or dismiss the
foreign national from employment, pays the salaries or
wages thereof and has authority to control the performance
or conduct of the tasks and duties.
What is the period of validity of an AEP?
One (1) year is the validity of an AEP. Exception: When
employment contract provides otherwise but not to exceed
three (3) years. The AEP may be renewed subject to the
conditions imposed by law.
What are the categories of foreign nationals EXEMPTED
from securing AEP?
a. All members of the diplomatic service and foreign government
officials accredited by and with reciprocity arrangement with the
Philippine government;
b. Officers and staff of international organizations of which the
Philippine government is a member, and their legitimate spouses
desiring to work in the Philippines;
c. Owners and representatives of foreign principals whose
companies are accredited by the POEA, who come to the
Philippines for a limited period and solely for the purpose of
interviewing Filipino applicants for employment abroad;
d. Foreign nationals who come to the Philippines to teach, present Agreements and an employee of the foreign service supplier
and/or conduct research studies in universities and colleges as
visiting, exchange or adjunct professors under formal agreements deployment to a branch, subsidiary, affiliate or representative
between the universities or colleges in the Philippines and foreign office in the Philippines.
universities or colleges; or between the Philippine government
and foreign government, provided that the exemption is on a
reciprocal basis;
e. Permanent resident foreign nationals and probationary or
temporary resident visa holders under Section 13 (a-
f) of the Philippine Immigration Act of 1940 and Section 3 of the
Alien Social Integration Act of 1995 (R.A. 7917);
f. Refugees and Stateless Persons recognized by DOJ pursuant to
Article 17 of the UN Convention and Protocol Relating to status of
Refugees and Stateless Persons; and
g. All foreign nationals granted exemption by law.
What are the categories of foreign nationals EXCLUDED
from securing AEP?
a. Members of the governing board with voting rights only and
do not intervene in the management of the corporation or in
the day to day operation of the enterprise.
b. President and Treasurer, who are part-owners of the
company.
c. Those providing consultancy services who do not have
employers in the Philippines.
d. Intra-corporate transferee who is a manager, executive or
specialist as defined below in accordance with Trade
for at least one (1) year continuous employment prior to
i. an Executive: a natural person within the organisation who
primarily directs the management of the organisation and
exercises wide latitude in decision-making and receives only
general supervision or direction from higher level executives,
the board of directors, or stockholders of the business; an
executive would not directly perform tasks related to the
actual provision of the service or services of the organisation;
ii. a Manager: a natural person within the organisation who
primarily directs the organisation/department/subdivision and
exercises supervisory and control functions over other
supervisory, managerial or professional staff; does not include
first-line supervisors unless employees supervised are
professionals; does not include employees who primarily
perform tasks necessary for the provision of the service; or
iii. a Specialist: a natural person within the organisation who
possesses knowledge at an advanced level of expertise
essential to the establishment/provision of the service and/or
possesses proprietary knowledge of the organisation's service,
research equipment, techniques or management; may include,
but is not limited to, members of a licensed profession.
All other intra-corporate transferees not within these
categories as defined above are required to secure an AEP
prior to their employment in the Philippines.
e. Contractual service supplier who is a manager, executive or
specialist and an employee of a foreign service supplier which
has no commercial presence in the Philippines:
i. who enters the Philippines temporarily to supply a service
pursuant to a contract between his/her employer and a service
consumer in the Philippines;
ii. must possess the appropriate educational and professional
qualifications; and
iii. must be employed by the foreign service supplier for at least
one year prior to the supply of service in the Philippines.
f. Representative of the Foreign Principal/Employer assigned in
the Office of Licensed Manning Agency (OLMA) in accordance
with the POEA law, rules and regulations.
III. LABOR STANDARDS
A. CONDITIONS OF EMPLOYMENT
COVERAGE
Who are covered by the labor standards provisions of the
Labor Code?
Employees in ALL establishments, whether operated for
profit or not, are covered by the law on labor standards.
Who are excluded?
The following are excluded from the coverage of the law on
labor standards:
a. Government employees;
b. Managerial employees;
c. Other officers or members of a managerial staff;
d. Workers paid by results;
e. Non-agricultural field personnel; and
f. Members of the family of the employer.
 1. HOURS OF WORK What is overtime work?
a. PRINCIPLES IN DETERMINING HOURS Any work in excess of said eight (8) normal hours is
WORKED AND EMPLOYEES EXEMPTED OR considered overtime work.
NOT COVERED
May normal working hours be reduced?
What are compensable hours worked? Yes, provided that no corresponding reduction is made on
The following shall be considered as compensable hours the employee’s wage or salary equivalent to an 8- hour work
worked: day. In instances where the number of hours required by
a) All time during which an employee is required to be on the nature of work is less than 8 hours, such number of
duty or to be at the employer’s premises or to be at a hours should be regarded as the employee’s full working
prescribed workplace; and day.
b) All time during which an employee is suffered or
permitted to work. What are flexible working hours?
“Fair day’s wage for a fair day’s labor,” remains the basic “Flexible work arrangements” refer to alternative
factor in determining the employees’ wages and backwages. arrangements or schedules other than the traditional or
standard work hours, workdays and workweek. The
b. COMPENSABLE TIME effectivity and implementation of any of the flexible work
i. NORMAL HOURS OF WORK arrangements should be temporary in nature.
Under R.A. No. 8972, otherwise known as “The Solo Parents’
What is the total normal hours of work per day? Welfare Act of 2000,” solo parents are allowed to work on a
Eight (8) hours daily. flexible schedule. The phrase “flexible work schedule” is
defined in the same law as the right granted to a solo parent
employee to vary his/her arrival and departure time without
affecting the core work hours as defined by the employer.
 ii. NIGHT SHIFT DIFFERENTIAL
(Article 86, Labor Code)
How is it reckoned and computed?
Night shift differential is equivalent to 10% of employee's
regular wage for each hour of work performed between
10:00 p.m. and 6:00 a.m. of the following day.
What is the distinction between night shift differential pay
and overtime pay?
When the work of an employee falls at night time, the
receipt of overtime pay shall not preclude the right to
receive night differential pay. The reason is the payment of
the night differential pay is for the work done during the
night; while the payment of the overtime pay is for work in
excess of the regular eight (8) working hours.
How is Night Shift Differential Pay computed?
1. Where night shift (10 p.m. to 6 a.m.) work is regular
work.
a. On an ordinary day: Plus 10% of the basic hourly rate or a
total of 110% of the basic hourly rate.
b. On a rest day, special day or regular holiday: Plus 10% of OVERTIME
the regular hourly rate on a rest day, special day or regular (Article 87, Labor Code)
holiday or a total of 110% of the regular hourly rate.
2. Where night shift (10 p.m. to 6 a.m.) work is overtime
work.
a. On an ordinary day: Plus 10% of the overtime hourly rate
on an ordinary day or a total of 110% of the overtime hourly
rate on an ordinary day.
b. On a rest day or special day or regular holiday: Plus 10%
of the overtime hourly rate on a rest day or special day or
regular holiday.
3. For overtime work in the night shift. Since overtime work
is not usually eight (8) hours, the compensation for overtime
night shift work is also computed on the basis of the hourly
rate.
a. On an ordinary day. Plus 10% of 125% of basic hourly rate
or a total of 110% of 125% of basic hourly rate.
b. On a rest day or special day or regular holiday. Plus 10%
of 130% of regular hourly rate on said days or a total of
110% of 130% of the applicable regular hourly rate.
iii. OVERTIME WORK
What are some basic principles on overtime work?
1. Work rendered after normal eight (8) hours of work is
called “overtime work.”
2. In computing overtime work, "regular wage" or "basic
salary" means "cash" wage only without deduction for
facilities provided by the employer.
3. "Premium pay" means the additional compensation
required by law for work performed within eight (8) hours
on non-working days, such as regular holidays, special
holidays and rest days.
4. "Overtime pay" means the additional compensation for
work performed beyond eight (8) hours.
5. Illustrations on how overtime is computed:
a. For overtime work performed on an ORDINARY DAY, the
overtime pay is plus 25% of the basic hourly rate.
b. For overtime work performed on a REST DAY OR ON A
SPECIAL DAY, the overtime pay is plus 30% of the basic
hourly rate which includes 30% additional compensation as
provided in Article 93 [a] of the Labor Code.
c. For overtime work performed on a REST DAY WHICH
FALLS ON A SPECIAL DAY, the overtime pay is plus 30% of
the basic hourly rate which includes 50% additional
compensation as provided in Article 93 [c] of the Labor Code.
d. For overtime work performed on a REGULAR HOLIDAY,
the overtime pay is plus 30% of the basic hourly rate which
includes 100% additional compensation as provided in
Article 94 [b] of the Labor Code.
e. For overtime work performed on a REST DAY WHICH
FALLS ON A REGULAR HOLIDAY, the overtime pay is plus
30% of the basic hourly rate which includes 160% additional
compensation.
What is the distinction between PREMIUM PAY and
OVERTIME PAY?
“Premium pay” refers to the additional compensation
required by law for work performed within the eight (8)
normal hours of work on non-working days, such as rest
days and regular and special holidays.
“Overtime pay” refers to the additional compensation for
work performed beyond the eight (8) normal hours of work
on a given day. An employee is entitled to both premium
pay and overtime pay if he works on a non-working day and
renders overtime work on the same day.
What is emergency overtime work? (Article 89, Labor
Code).
a. General rule.
The general rule is that no employee may be compelled to
render overtime work against his will. The reason is that this
will constitute involuntary servitude.
b. Exceptions when employee may be compelled to render No. When an employee refuses to render emergency
overtime work: overtime work under any of the foregoing conditions, he
1. When the country is at war or when any other national or may be dismissed on the ground of insubordination or
local emergency has been declared by the National Assembly willful disobedience of the lawful order of the employer.
or the Chief Executive;
2. When overtime work is necessary to prevent loss of life or Can overtime pay be waived?
property or in case of imminent danger to public safety due to No. The right to claim overtime pay is not subject to a
actual or impending emergency in the locality caused by waiver. Such right is governed by law and not merely by the
serious accident, fire, floods, typhoons, earthquake, epidemic agreement of the parties.
or other disasters or calamities;
3. When there is urgent work to be performed on machines,
a) COMPRESSED WORK WEEK
installations or equipment, or in order to avoid serious loss or
A CWW refers to one where the normal workweek is
damage to the employer or some other causes of similar
reduced to less than 6 days but the total number of work
nature;
hours of 48 hours per week shall remain. Under the CWW
4. When the work is necessary to prevent loss or damage to
perishable goods; scheme, the normal workday goes beyond eight hours but
not exceed 12 hours, without the corresponding overtime
5. When the completion or continuation of work started before
premium. [DOLE Advisory No. 04, Series of 2010].
the 8th hour is necessary to prevent serious obstruction or
In excess of such, the employer is obliged to pay the worker
prejudice to the business or operations of the employer; and
6. When overtime work is necessary to avail of favorable the overtime premium.
weather or environmental conditions where performance or Conditions for CWW
quality of work is dependent thereon. 1. The CWW scheme is undertaken as a result of an express
and voluntary agreement of majority of the covered
 May an employee validly refuse to render overtime work employees or their duly authorized representatives. This
under any of the afore-said circumstances? agreement may be expressed through collective bargaining
or other legitimate workplace mechanisms of participation
such as labor management councils, employee assemblies
or referenda.
2. In firms using substances, chemicals and processes or
operating under conditions where there are airborne
contaminants, human carcinogens or noise prolonged
exposure to which may pose hazards to employees’ health
and safety, there must be a certification from an accredited
health and safety organization or practitioner from the
firm’s safety committee that work beyond eight hours is
within threshold limits or tolerable levels of exposure, as set
in the OSHS.
3. The employer shall notify DOLE, through the Regional
Office having jurisdiction over the workplace, of the
adoption of the CWW scheme. The notice shall be in DOLE
CWW Report Form attached to this Advisory. [DOLE
Advisory No. 02-04]
Effects of CWW
1. Unless there is a more favorable practice existing in the firm,
work beyond eight hours will not be compensable by
overtime premium provided the total number of hours worked
per day shall not exceed twelve (12) hours. In any case, any
work performed beyond 12 hours a day or
48 hours a week shall be subject to overtime premium.
2. Consistent with Art. 85, employees under a CWW scheme
are entitled to meal periods of not less than 60 minutes. There
shall be no impairment of the right of the employees
to rest days as well as to holiday pay, rest day pay or leaves in
accordance with law or applicable collective bargaining
agreement or company practice.
3. Adoption of the CWW scheme shall in no case result in
diminution of existing benefits. Reversion to the normal eight
hour workday shall not constitute a diminution of benefits.
Rationale: Although the right to overtime pay cannot be
waived as per Cruz v. Yee Sing [G.R. No. L-12046 (1959)], D.O.
No. 21
b) BUILT-IN OVERTIME
In case the employment contract stipulates that the
compensation includes built-in overtime pay and the same is
duly approved by the DOLE, the non-payment by the employer
of any overtime pay for overtime work is justified and valid.
c. NON-COMPENSABLE HOURS; WHEN
COMPENSABLE
i. MEAL BREAK
MEAL PERIODS
(Article 85, Labor Code)
What is the rule on time-off for regular meal?
Every employer is required to give his employees, regardless c. In each case, the employer may extend the working hours of
of sex, not less than one (1) hour (or 60 minutes) time-off
for regular meals.
Is meal break compensable?
Being time-off, it is not compensable hours worked. In this
case, the employee is free to do anything he wants, except
to work. If he is required, however, to work while eating, he dining which he may leave the spot or place of work though
should be compensated therefor.
ii. POWER INTERRUPTIONS OR
BROWNOUTS
 What are the effects of power interruptions/brownouts?
The following are the effects of work interruption due to
brownouts:
a. Brown-outs of short duration but not exceeding twenty
(20) minutes shall be treated as worked or compensable
hours whether used productively by the employees or not.
b. Brown-outs running for more than twenty (20) minutes
may not be treated as hours worked provided any of the
following conditions are present:
1. The employees can leave their workplace or go elsewhere
whether within or without the work premises; or
2. The employees can use the time effectively for their own
interest.
his employees outside the regular schedules to compensate for
the loss of productive man-hours without being liable for
overtime pay.
iii. IDLE TIME
The idle time that an employee may spend for resting and
not the premises of his employer, is not counted as working
time only where the work is broken or is not continuous.
A laborer need not leave the premises of the factory, shop or
boat in order that his period of rest shall not be counted, it
being enough that he "cease to work", may rest completely
and leave or may leave at his will the spot where he actually
stays while working, to go somewhere else, whether within or
outside the premises of said factory, shop or boat. If these
requisites are complied with, the period of such rest shall not
be counted.
iv. TRAVEL TIME
Travel from home to work – An employee who travels from
home before his regular workday and returns to his home at
the end of the workday is engaged in ordinary home-to
work travel which is NOT considered hours worked, EXCEPT:
a. When called to travel during emergency;
b. When travel is done through a conveyance furnished by Attendance at lectures, meetings, training programs, and
the employer; other similar activities shall NOT be counted as working time
c. Travel is done under vexing and dangerous circumstances; if ALL of the following conditions are met:
d. Travel is done under the supervision and control of the 1. Attendance is outside of the employee’s regular working
employer. hours;
2. Attendance is in fact voluntary; and
Travel that is all in the day’s work – Time spent by an 3. The employee does not perform any productive work
employee in travel from jobsite to jobsite during the during such attendance.
workday, must be counted as hours worked. Where an
employee is required to report at a meeting place to receive
Notes: 1. Attendance in lectures, meetings, and training
instructions or to perform other work there, the travel from
periods sanctioned or required by the employer are
the designated place to the workplace is part of the day’sconsidered hours worked.
work. 2. Attendance in CBA negotiations or grievance meeting is
compensable hours worked provided that such is stipulated
Travel away from home – Travel that keeps an employee in the CBA. [Department of Labor Manual, Sec. 4323.03]
away from home overnight is travel away from home. Travel 3. Attendance in hearings in cases filed by the employee is
away from home is worktime when it cuts across the NOT compensable hours worked.
employee’s workday. The time is hours worked not only on 4. Participation in strikes is NOT compensable working time.
regular working hours but also during the corresponding Attendance in lectures, meetings, and training periods must
hours on nonworking days. necessarily beneficial to the employer.
v. COMMUTING TIME
Lectures, meetings, trainings
Employees performing tasks during their commute which
are not merely incidental to the employee’s job, and are
primarily for the benefit of the employer (such as a
company
driver performing a carpool service for coworkers according
to an agreement with the company), are entitled to
overtime pay. [Hilario Rada v. NLRC, G.R. No. 96078 (1992)]
vi. WAITING TIME
Rest period – short duration or “coffee
break”
1. Rest periods of short duration during working hours shall be
counted as hours worked. [par. 2, Art. 84, par. 2]
2. Rest periods or coffee breaks running from five (5) to twenty
(20) minutes shall be considered as compensable working
REST PERIODS
time. [par. 2, Sec. 7, Rule I, Book III, IRR]
On call
Compensable work time, if employee is:
1. Required to remain on call in the employer’s premises or so
close thereto
2. That he cannot use the time effectively and gainfully for his
own purpose shall be considered as working while on call.
Note: An employee who is not required to leave word at his
home or with company officials where he may be reached is
NOT working while on call. [Sec. 5 (b), Rule I, Book III, IRR]
Inactive due to work interruptions
The time during which an employee is inactive by reason of
interruptions in his work beyond his control shall be
considered working time either:
1. If the imminence of the resumption of work requires the
employee's presence at the place of work OR
2. If the interval is too brief to be utilized effectively and
gainfully in the employee's own interest. [Sec. 4 (d), Rule I,
Book III, IRR
2. REST PERIODS
1. WEEKLY REST DAY
What is the duration of weekly rest period?
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.
Is the employer’s prerogative to determine the rest period
of its employees subject to limitations?
Yes. The employer shall determine and schedule the weekly
rest day of his employees subject to CBA and to such rules
and regulations as the DOLE Secretary 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.
2. EMERGENCY REST DAY WORK
When can an employer require work on a rest day?
The employer may require any of its employees to work on
their scheduled rest day for the duration of the following
emergency and exceptional conditions:
a. In case of actual or impending emergencies caused by
serious accident, fire, flood, typhoon, earthquake, epidemic
or other disaster or calamity, to prevent loss of life and
property, or in case of force majeure or imminent danger to
public safety;
b. In case of urgent work to be performed on machineries,
equipment, or installations, to avoid serious loss which the
employer would otherwise suffer;
c. In the event of abnormal pressure of work due to special
circumstances, where the employer cannot ordinarily be
expected to resort to other measures;
d. To prevent serious loss of perishable goods;
e. Where the nature of the work is such that the employees
have to work continuously for seven (7) days in a week or
more, as in the case of the crew members of a vessel to
complete a voyage and in other similar cases; and
f. When the work is necessary to avail of favorable weather
or environmental conditions where performance or quality
of work is dependent thereon.
3. SERVICE CHARGE
1. What is the newest law on service charges?
R.A. No. 11360 which was approved on August 07, 2019. It
amended Article 96 of the Labor Code. It thus now states:
"ART. 96. Service Charges. - All service charges collected by
hotels, restaurants and similar establishments shall be
DISTRIBUTED COMPLETELY AND EQUALLY AMONG THE
COVERED WORKERS EXCEPT MANAGERIAL EMPLOYEES.
"In the event that the minimum wage is increased by law
or wage order, service charges paid to the covered
employees shall not be considered in determining the
employer's compliance with the increased minimum wage.
"To facilitate resolution of any dispute between the
management and the employees on the distribution of
service charges, a grievance mechanism shall be
established. If no grievance mechanism is established or if
inadequate, the grievance shall be referred to the regional
office of the Department of Labor and Employment which
has jurisdiction over the workplace for conciliation.
"For purposes of this Article, managerial employees refer
to any person vested with powers or prerogatives to lay
down and execute management policies or hire, transfer,
suspend, lay-off, recall, discharge, assign or discipline
employees or to effectively recommend such managerial
actions."
2. What are the kinds of establishment covered by the law on
service charge?
The rules on service charge apply only to establishments
collecting service charges, such as hotels, restaurants, lodging
houses, night clubs, cocktail lounges, massage clinics, bars,
casinos and gambling houses, and similar enterprises, including
those entities operating primarily as private subsidiaries of the
government.
3. Who are the employees covered by this law?
With the latest amendatory law cited above, all service charges
collected by hotels, restaurants and similar establishments
shall be distributed completely and equally among the covered
workers except managerial employees.
4. Who are not covered?
Specifically excluded from coverage are managerial employees,
referring to any person vested with powers or prerogatives to
lay down and execute management policies or hire, transfer,
suspend, lay-off, recall, discharge, assign or discipline
employees or to effectively recommend such managerial
actions.
B. WAGES
1. DEFINITION, COMPONENTS, AND EXCLUSIONS
a. WAGE VS. SALARY
What is meant by “basic salary” or “basic wage”?
“Basic salary” or “basic wage” contemplates work within the
normal eight (8) working hours in a day. This means that the
basic salary of an employee for purposes of computing the
13th month pay should include all remunerations or
earnings paid by the employer for services rendered during
normal working hours.
For purposes of computing the 13th month pay, “basic
salary” should be interpreted to mean not the amount
actually received by an employee, but 1/12 of their standard “salary,” such compensation is not exempt from execution
monthly wage multiplied by their length of service within a or attachment or garnishment. Thus, the salary, commission
given calendar year. and other remuneration received by a managerial employee
(as distinguished from an ordinary worker or laborer) cannot
What is the basic distinction between wage and salary? be considered wages. Salary is understood to relate to a
position or office, or the compensation given for official or
The term “wage” is used to characterize the compensation other service; while wage is the compensation for labor.
paid for manual skilled or unskilled labor.
“Salary,” on the other hand, is used to describe the
compensation for higher or superior level of employment.

What is the distinction in respect to execution, attachment

or garnishment?

In cases of execution, attachment or garnishment of the

compensation of an employee received from work issued by
the court to satisfy a judicially-determined obligation, a
distinction should be made whether such compensation is
considered “wage” or “salary.” Under Article 1708 of the
Civil Code, if considered a “wage,” the employee’s
compensation shall not be subject to execution or
attachment or garnishment, except for debts incurred for
food, shelter, clothing and medical attendance. If deemed a
What are the attributes of wage? “Wage” has the following considered as part of or integrated into the regular salary of
attributes: the workers.
1) It is the remuneration or earnings, however designated, Further, as held in Honda Phils., Inc. v. Samahan ng
for work done or to be done or for services rendered or to Malayang Manggagawa sa Honda, the following should be
be rendered; excluded from the computation of “basic salary,” to wit:
2) It is capable of being expressed in terms of money, payments for sick, vacation and maternity leaves, night
whether fixed or ascertained on a time, task, piece or differentials, regular holiday pay and premiums for work
commission basis, or other method of calculating the same; done on rest days and special holidays.
3) It is payable by an employer to an employee under a
written or unwritten contract of employment for work done b. DISTINGUISH: FACILITIES AND
or to be done or for services rendered or to be rendered; SUPPLEMENTS
and
4) It includes the fair and reasonable value, as determinedWhat are facilities?
by the DOLE Secretary, of board, lodging, or other facilities
“Facilities” include articles or services for the benefit of the
customarily furnished by the employer to the employee. employee or his family but does not include tools of the
“Fair and reasonable value” shall not include any profit totrade or articles or services primarily for the benefit of the
the employer or to any person affiliated with the employer.employer or necessary to the conduct of the employer’s
business. They are items of expense necessary for the
What is basic wage? laborer’s and his family’s existence and subsistence which
“Basic wage” means all the remuneration or earnings paid form part of the wage and when furnished by the employer,
by an employer to a worker for services rendered on normal are deductible therefrom, since if they are not so furnished,
working days and hours but does not include cost-of-living the laborer would spend and pay for them just the same.
allowances, profit-sharing payments, premium payments,
13th month pay or other monetary benefits which are not
What are supplements?
The term “supplements” means extra remuneration or
special privileges or benefits given to or received by the
laborers over and above their ordinary earnings or wages.
What are the distinctions between facilities and
supplements?
The benefit or privilege given to the employee which
constitutes an extra remuneration over and above his basic
or ordinary earning or wage is supplement; and when said
benefit or privilege is made part of the laborer’s basic wage,
it is a facility. The criterion is not so much with the kind of
the benefit or item (food, lodging, bonus or sick leave) given
but its purpose. Thus, free meals supplied by the ship
operator to crew members, out of necessity, cannot be
considered as facilities but supplements which could not be
reduced having been given not as part of wages but as a
necessary matter in the maintenance of the health and
efficiency of the crew during the voyage.
What is the rule on deductibility of facilities and
supplements?
Facilities are deductible from wage but not supplements.
c. Bonus, 13th month pay
Who are covered by the 13th month pay law?
Only rank-and-file employees, regardless of their
designation or employment status and irrespective of the
method by which their wages are paid, are entitled to the
13th month pay benefit. Managerial employees are not
entitled to 13th month pay.
What is the minimum period of service required in a
calendar year to be entitled to 13th month pay?
To be entitled to the 13th month pay benefit, it is imposed
as a minimum service requirement that the employee
should have worked for at least one (1) month during a
calendar year.
When should 13th month pay be paid?
It must be paid not later than December 24 of every year.
Are domestic workers or Kasambahays covered?
Yes. They are now covered under the Kasambahay Law.
Who are excluded from its coverage?
The following employers are not covered by the 13th month
pay law:
1. The government and any of its political subdivisions,
including government-owned and controlled corporations,
except those corporations operating essentially as private
subsidiaries of the government.
2. Employers already paying their employees 13th month
pay or more in a calendar year or its equivalent at the time
of the issuance of the Revised Guidelines.
3. Employers of those who are paid on purely commission,
boundary, or task basis, and those who are paid a fixed
amount for performing a specific work, irrespective of the
time consumed in the performance thereof, except where
the workers are paid on piece-rate basis, in which case, the
employer shall be covered by the Revised Guidelines insofar
as such workers are concerned. Workers paid on piece- rate
basis shall refer to those who are paid a standard amount
for every piece or unit of work produced that is more or less
regularly replicated without regard to the time spent in
producing the same.
Are extras, casuals and seasonal employees entitled to
13th month pay?
Yes, they are entitled thereto.
Is 13th month pay part of wage?
13th month pay which is in the nature of additional income,
is based on wage but not part of wage.
What is the minimum amount of the 13th month pay?
The minimum 13th month pay should not be less than one-
twelfth (1/12) of the total basic salary earned by an
employee within a calendar year.
d. HOLIDAY PAY
What are the regular and special holidays?
(a) Regular Holidays
New Year's Day - January 1
Maundy Thursday - Movable Date
Good Friday - Movable Date
Eidul Fitr - Movable Date
Eidul Adha - Movable Date
Araw ng Kagitingan - Monday nearest April 9
Labor Day - Monday nearest May 1
Independence Day - Monday nearest June 12
National Heroes Day - Last Monday of August
Bonifacio Day - Monday nearest November 30
Christmas Day - December 25
Rizal Day - Monday nearest December 30
(b) Nationwide Special Holidays
Ninoy Aquino Day - Monday nearest August 21 All Saints’
Day - November 1
Feast of Immaculate
Conception of Mary - December 8 Last Day of the Year -
December 31
2. How many are the guaranteed paid regular holidays?
There are twelve (12) paid regular holidays in a year. This is As a general rule, the holiday pay benefit is applicable to all
important for purposes of reckoning certain divisors and
computation of employee benefits. The provision on holiday
pay is mandatory, regardless of whether an employee is
paid on a monthly or daily basis.1
3. What is the Holiday Pay Rule?
“Holiday pay” refers to the payment of the regular daily
wage for any unworked regular holiday.2 The Holiday Pay
Rule, therefore, applies to entitlement to holiday pay during 3. Kasambahay and persons in the personal service of another;
regular holidays and not during special non-working days.
Thus, every employee covered by the Holiday Pay Rule is
entitled to the minimum wage rate (Daily Basic Wage and
COLA). This means that the employee is entitled to at least
100% of his minimum wage rate even if he did not report for
work, provided he is present or is on leave of absence with
pay on the workday immediately preceding the holiday.
Should the worker work on that day, such work performed
on that day would merit at least twice or two hundred
percent (200%) of the wage rate of the employee.
4. What is the coverage of the Holiday Pay Rule? Who are
exempted employees?
employees. The following, however, are not covered by this
benefit as they are considered exempted employees:
1. Government employees, whether employed by the National
Government or any of its political subdivisions, including those
employed in government-owned and/or controlled
corporations with original charters or created under special
laws;
2. Those of retail and service establishments regularly
employing less than ten (10) workers;
4. Managerial employees, if they meet all of the following
conditions:
4.1. Their primary duty is to manage the establishment in
which they are employed or of a department or subdivision
thereof;
4.2. They customarily and regularly direct the work of two or
more employees therein; and
4.3. They have the authority to hire or fire other employees of
lower rank; or their suggestions and recommendations as to
hiring, firing, and promotion, or any other change of status of
other employees are given particular weight.
5. Officers or members of a managerial staff, if they perform
the following duties and responsibilities:
5.1. Primarily perform work directly related to management
policies of their employer;
5.2. Customarily and regularly exercise discretion and
independent judgment;
5.3. (a) Regularly and directly assist a proprietor or managerial
employee in the management of the establishment or
subdivision thereof in which he or she is employed; or (b)
execute, under general supervision, work along specialized or
technical lines requiring special training, experience, or
knowledge; or (c) execute, under general supervision, special
assignments and tasks; and
5.4. Do not devote more than twenty percent (20%) of their
hours worked in a workweek to activities which are not directly
and closely related to the performance of the work described
in paragraphs 5.1, 5.2, and 5.3 above.
6. Field personnel and other employees whose time and
performance are unsupervised by the employer, including
those who are engaged on task or contract basis, purely
commission basis or those who are paid a fixed amount for
performing work irrespective of the time consumed in the
performance thereof.
COMPUTATION OF ADDITIONAL COMPENSATION (RATES
ONLY)
1. How is premium pay for REGULAR HOLIDAYS computed?
If the employee did not work, he/she shall be paid 100
percent of his/her salary for that day. Computation: (Daily
rate + Cost of Living Allowance) x 100%. The COLA is
included in the computation of regular holiday pay.
If the employee worked, he/she shall be paid 200 percent
of his/her regular salary for that day for the first eight hours.
Computation: (Daily rate + COLA) x 200%. The COLA is also
included in computation of regular holiday pay.
If the employee worked in excess of eight hours (overtime
work), he/she shall be paid an additional 30 percent of
his/her hourly rate on said day. Computation: Hourly rate of
the basic daily wage x 200% x 130% x number of hours
worked.
If the employee worked during a regular holiday that also
falls on his/her rest day, he/she shall be paid an additional
30 percent of his/her daily rate of 200 percent.
Computation: (Daily rate + COLA) x 200%] + (30% [Daily rate
x 200%)].
If the employee worked in excess of eight hours (overtime
work) during a regular holiday that also falls on his/her
rest day, he/she shall be paid an additional 30 percent of
his/her hourly rate on said day. Computation: (Hourly rate
of the basic daily wage x 200% x 130% x 130% x number of
hours worked);
Simplified Computation:
a. If work is rendered on an employee’s regular workday -
 If unworked – 100%
 If worked – 1st 8 hours – 200%
 Work in excess of 8 hours – plus 30% of hourly rate on said
day
b. If it is an employee’s rest day -
 If unworked – 100%
 If worked – first 8 hours – plus 30% of 200%
 Work in excess of 8 hours – plus 30% of hourly rate on said
day
2. How is premium pay for SPECIAL (NON-WORKING) DAYS
OR SPECIAL HOLIDAYS computed?
If the employee did not work, the “no work, no pay”
principle shall apply, unless there is a favorable company
policy, practice, or CBA granting payment on a special day.
If the employee worked, he/she shall be paid an additional
30 percent of his/her daily rate on the first eight hours of
work. Computation: [(Daily rate x 130%) + COLA).
If the employee worked in excess of eight hours (overtime
work), he/she shall be paid an additional 30 percent of
his/her hourly rate on said day. Computation: (Hourly rate
of the basic daily wage x 130% x 130% x number of hours
worked).
If the employee worked during a special day that also falls
on his/her rest day, he/she shall be paid an additional fifty
percent of his/her daily rate on the first eight hours of work.
Computation: [(Daily rate x 150%) + COLA].
If the employee worked in excess of eight hours (overtime
work) during a special day that also falls on his/her rest
day, he/she shall be paid an additional 30 percent of his/her
hourly rate on said day. Computation: (Hourly rate of the
basic daily wage x 150% x 130% x number of hours worked).
Simplified Computation:
a. If unworked - No pay, except if there is a company policy,
practice, or collective bargaining agreement (CBA) which
grants payment of wages on special days even if unworked.
b. If worked - First 8 hours – plus 30% of the daily rate of
100%  Work in excess of 8 hours – plus 30% of hourly rate
on said day
c. If falling on the employee’s rest day and if worked - First
8 hours – plus 50% of the daily rate of 100%
 Work in excess of 8 hours – plus 30% of hourly rate on said
day
3. What are the effects of absences on the computation of
holiday pay?
1. Employees on leave of absence with pay - entitled to
holiday pay when they are on leave of absence with pay.
2. Employees on leave of absence without pay on the day
immediately preceding the regular holiday - may not be
paid the required holiday pay if they have not worked on
such regular holiday.
3. Employees on leave while on SSS or employee’s
compensation benefits - Employers should grant the same
percentage of the holiday pay as the benefit granted by
competent authority in the form of employee’s
compensation or social security payment, whichever is
higher, if they are not reporting for work while on such
benefits.
4. When day preceding regular holiday is a non-working
day or scheduled rest day - should not be deemed to be on
leave of absence on that day, in which case, employees are
entitled to the regular holiday pay if they worked on the day
immediately preceding the non-working day or rest day.
2. PRINCIPLES
a. NO WORK, NO PAY
What is the “NO WORK, NO PAY” principle?
The “no work, no pay” or “fair day’s wage for fair day’s
labor” means that if the worker does not work, he is
generally not entitled to any wage or pay. The exception is
when it was the employer who unduly prevented him from
working despite his ableness, willingness and readiness to
work; or in cases where he is illegally locked out or illegally
suspended or illegally dismissed, or otherwise illegally
prevented from working, in which event, he should be
entitled to his wage.
b. EQUAL PAY FOR EQUAL WORK
Employees working in the Philippines, if they are performing
similar functions and responsibilities under similar working
conditions, should be paid equally. If an employer accords
employees the same position and rank, the presumption is
that these employees perform equal work. [International
School Alliance of Educators v. Hon. Quisumbing, G.R. No.
128845 (2000)]
c. FAIR WAGE FOR FAIR WORK
General Rule: The age-old rule governing the relation
between labor and capital or management and employee is
that a "fair day's wage for a fair day's labor." It is hardly fair
or just for an employee or laborer to fight or litigate against
his employer on the employer's time.
Exception: When the laborer was able, willing and ready to
work but was illegally locked out, suspended or dismissed,
or otherwise illegally prevented from working.
d. NON-DIMINUTION OF BENEFITS
What is the applicability of the non-diminution rule in
Article 100 of the Labor Code?
Albeit Article 100 is clear that the principle of non-
elimination and non-diminution of benefits apply only to the
benefits being enjoyed “at the time of the promulgation” of
the Labor Code, the Supreme Court has consistently cited
Article 100 as being applicable even to benefits granted
after said promulgation. It has, in fact, been treated as the
legal anchor for the declaration of the invalidity of so many
acts of employers deemed to have eliminated or diminished
the benefits of employees.
The 2014 case of Wesleyan University-Philippines v.
Wesleyan University-Philippines Faculty and Staff
Association,1 succinctly pointed out that the Non-
Diminution Rule found in Article 100 of the Labor Code
explicitly prohibits employers from eliminating or reducing
the benefits received by their employees. This rule,
however, applies only if the benefit is based on any of the
following:
(1) An express policy;
(2) A written contract; or
(3) A company practice.
There is not much controversy if the benefit involved is
provided for under Nos. 1 and 2 above. Thus, if it is
expressly laid down in a written policy unilaterally
promulgated by the employer, the employer is duty-bound
to adhere and comply by its own policy. It cannot be
allowed to renege from its commitment as expressed in the
policy.
If the benefit is granted under a written contract such as an
employment contract or a collective bargaining agreement
(CBA), the employer is likewise under legal compulsion to so
comply therewith.
On No. 3 above, please see discussion below.
What is company practice?
Company practice is a custom or habit shown by an
employer’s repeated, habitual customary or succession of
acts of similar kind by reason of which, it gains the status of
a company policy that can no longer be disturbed or
withdrawn.
To ripen into a company practice that is demandable as a
matter of right, the giving of the benefit should not be by
reason of a strict legal or contractual obligation but by
reason of an act of liberality on the part of the employer.
What are the criteria that may be used to determine
existence of company practice?
Since there is no hard and fast rule which may be used and
applied in determining whether a certain act of the
employer may be considered as having ripened into a
practice, the following criteria may be used to determine
whether an act has ripened into a company practice:
(1) The act of the employer has been done for a
considerable period of time;
(2) The act should be done consistently and intentionally;
(3) The act should not be a product of erroneous
interpretation or construction of a doubtful or difficult
question of law or provision in the CBA. (See the 2013 case
of Vergara, Jr. v. Coca-Cola Bottlers Philippines, Inc.2)
1. THE ACT OF THE EMPLOYER HAS BEEN DONE FOR A
CONSIDERABLE PERIOD OF TIME.
If done only once as in the case of Philippine Appliance
Corporation (Philacor) v. CA,3 where the CBA signing bonus
was granted only once during the 1997 CBA negotiation, the
same cannot be considered as having ripened into a
company practice.
In the following cases, the act of the employer was declared
company practice because of the considerable period of
time it has been practiced:
(a) Davao Fruits Corporation v. Associated Labor Unions.4 -
The act of the company of freely and continuously including
in the computation of the 13th month pay, items that were
expressly excluded by law has lasted for six (6) years, hence,
was considered indicative of company practice.
(b) Sevilla Trading Company v. A. V. A. Semana.5 - The act
of including non-basic benefits such as paid leaves for
unused sick leave and vacation leave in the computation of
the employees’ 13th month pay for at least two (2) years
was considered a company practice.
(c) The 2010 case of Central Azucarera de Tarlac v. Central
Azucarera de Tarlac Labor Union-NLU,6 also ruled as
company practice the act of petitioner of granting for thirty
(30) years, its workers the mandatory 13th month pay
computed in accordance with the following formula: Total
Basic Annual Salary divided by twelve (12) and Including in
the computation of the Total Basic Annual Salary the
following: basic monthly salary; first eight (8) hours
overtime pay on Sunday and legal/special holiday; night
premium pay; and vacation and sick leaves for each year.
2. THE ACT SHOULD BE DONE CONSISTENTLY AND
INTENTIONALLY.
The following cases may be cited to illustrate this principle:
(a) Tiangco v. Leogardo, Jr.,1 where the employer has
consistently been granting fixed monthly emergency
allowance to the employees from November, 1976 but
discontinued this practice effective February, 1980 insofar
as non-working days are concerned based on the principle
of “no work, no pay.” The Supreme Court ruled that the
discontinuance of said benefit contravened Article 100 of
the Labor Code which prohibits the diminution of existing
benefits.
3. THE ACT SHOULD NOT BE A PRODUCT OF ERRONEOUS
INTERPRETATION OR CONSTRUCTION OF A DOUBTFUL OR
DIFFICULT QUESTION OF LAW OR PROVISION IN THE CBA.
The general rule is that if it is a past error that is being
corrected, no vested right may be said to have arisen
therefrom nor any diminution of benefit may have resulted
by virtue of the correction thereof. The error, however,
must be corrected immediately after its discovery;
otherwise, the rule on non-diminution of benefits would still
apply.
The following cases would illuminate this principle:
(a) Globe Mackay Cable and Radio Corporation v. NLRC,2
where the Supreme Court ruled on the proper computation
of the cost-of-living allowance (COLA) for monthly-paid
employees. Petitioner corporation, pursuant to Wage Order
No. 6 (effective October 30, 1984), increased the COLA of its
monthly-paid employees by multiplying the P3.00 daily
COLA by 22 days which is the number of working days in the
company. The union disagreed with the computation,
claiming that the daily COLA rate of P3.00 should be
multiplied by 30 days which has been the practice of the
company for several years. The Supreme Court, however,
upheld the contention of the petitioner corporation. It held
that the grant by the employer of benefits through an
erroneous application of the law due to absence of clear
administrative guidelines is not considered a voluntary act
which cannot be unilaterally discontinued.
(b) TSPIC Corp. v. TSPIC Employees Union [FFW],3 where
the Supreme Court reiterated the rule enunciated in Globe-
Mackay, that an erroneously granted benefit may be
withdrawn without violating the prohibition against non-
diminution of benefits. No vested right accrued to individual
respondents when TSPIC corrected its error by crediting the
salary increase for the year 2001 against the salary increase
granted under Wage Order No. 8, all in accordance with the
CBA. Hence, any amount given to the employees in excess of
what they were entitled to, as computed above, may be
legally deducted by TSPIC from the employees’ salaries.
But if the error does not proceed from the interpretation or
construction of a law or a provision in the CBA, the same
may ripen into a company practice.
Example:
(a) Hinatuan Mining Corporation and/or the Manager v.
NLRC,4 where the act of the employer in granting
separation pay to resigning employees, despite the fact that
the Labor Code does not grant it, was considered an
established employer practice.
3. MINIMUM WAGE
The minimum wage rates prescribed by law shall be the
basic cash wages without deduction therefrom of whatever
benefits, supplements or allowances which the employees
enjoy free of charge aside from the basic pay.
What is statutory minimum wage?
The term “statutory minimum wage” refers simply to the
lowest basic wage rate fixed by law that an employer can
pay his workers.
 What is regional minimum wage rate?
The term “regional minimum wage rates” refers to the
lowest basic wage rates that an employer can pay his
workers, as fixed by the Regional Tripartite Wages and
Productivity Boards (RTWPBs), and which shall not be lower
than the applicable statutory minimum wage rates.
What are included/excluded in the term “wage rate”?
The term "wage rate" includes cost-of-living allowances as
fixed by the RTWPB, but excludes other wage-related
benefits such as overtime pay, bonuses, night shift
differential pay, holiday pay, premium pay, 13th month pay,
premium pay, leave benefits, among others.
Can COLA be integrated into the minimum wage?
Yes. The cost-of-living allowance (COLA) may be ordered
integrated into the minimum wage by the Regional
Tripartite Wages and Productivity Board (“RTWPB” or
“Regional Board”).
What is COLA?
COLA is not in the nature of an allowance intended to
reimburse expenses incurred by employees in the
performance of their official functions. It is not payment in
consideration of the fulfillment of official duty. As defined,
“cost of living” refers to “the level of prices relating to a
range of everyday items” or “the cost of purchasing the
goods and services which are included in an accepted
standard level of consumption.” Based on this premise,
COLA is a benefit intended to cover increases in the cost of
living.
a. PAYMENT BY HOURS WORKED
The minimum wage rates for agricultural and non-
agricultural employees and workers in each and every
region of the country shall be those prescribed by the
Regional Tripartite Wages and Productivity Boards. [Art. 99]
b. PAYMENT BY RESULTS
The Secretary of Labor and Employment shall regulate the
payment of wages by results, including pakyao, piecework, and
other nontime work, in order to ensure the payment of
fair and reasonable wage rates, preferably through time and
motion studies or in consultation with representatives of
worker’s and employer’s organizations. [Art. 101]
Basis of output pay rate
a. On petition of any interested party, or upon its initiative, the
Department of Labor shall use all available devices, including
the use of time and motion studies and consultation with
representatives of employers’ and workers’ organizations, to
determine whether the employees in any industry or
enterprise are being compensated in accordance with the
minimum wage requirements of this Rule.
b. The basis for the establishment of rates for piece, output, or
contract work shall be the performance of an ordinary worker
of minimum skill or ability.
c. An ordinary worker of minimum skill or ability is the average
worker of the lowest producing group representing 50% of the
total number of employees engaged in similar employment in a
particular establishment, excluding learners, apprentices and
handicapped workers employed therein.
d. Where the output rates established by the employer do not
conform with the standards prescribed herein, or with the
rates prescribed by the DOLE in an appropriate order, the
employees shall be entitled to the difference between the
amount to which they are entitled to receive under such
prescribed standards or rates and that actually paid them by
the employer. [Sec. 8, Rule VII-A, Book III, IRR]
From the above rules, piece rate workers may be categorized into
two:
1. Those who are paid piece rates which are prescribed in Piece
Rate Orders issued by DOLE. Wages or earnings in this category
are determined by simply multiplying the number of pieces
produced by the rate per piece. [Azucena] These workers are not
covered by the Rule on Hours of Work which provides for
premium and overtime payments.
2. Those who are paid output rates which are prescribed by the
employer and are not yet approved by the DOLE.
The number of pieces produced is multiplied by the rate per piece
as determined by the employer.
1. If the resulting amount is equivalent to or more than the
applicable statutory minimum daily rate in relation to the
number of hours worked, the worker will receive that amount.
2. If the amount is less than the applicable legal rate, it is
possible that the rates per piece are not in accordance with the
standards prescribed by the rules implementing the Labor
Code. The employer is thus required by law to pay the
difference between the resulting amount and the applicable
4. PAYMENT OF WAGES
Form of Payment [Art. 102; Secs. 1-2, Rule VIII, Book III,
IRR]
General Rule: Legal Tender Only
Exception: Check/Money Order if customary OR necessary
because of special circumstances, as specified by the Secretary
of Labor or the CBA.
Not allowed:
1. Promissory Notes 2. Vouchers 3. Tokens
4. Tickets 5. Chits; or
6. Any other form alleged to represent a legal tender, even
when expressly requested by the employee. [Art. 102]
When payment through check, postal orders or money orders
is allowed:
a. When payment is customary (on the date of Code
effectivity);
b. Where it is so stipulated in a collective agreement;
c. Where all of the following conditions are met:
1. Bank/Facility for encashment is within 1-km radius from the
workplace
2. ER did not receive any pecuniary benefit because of said
arrangement
3. EEs are given reasonable time during banking hours to
withdraw their wages (compensable hours, if during working
hours)
4. The payment by check is with the written consent of the EEs
concerned, in the absence of a CBA. [Sec. 2, Rule VIII]
Place of Payment [Art. 104; Sec. 4, Rule VIII, Book III, IRR]
General Rule: Shall be made at or near the place of
undertaking (workplace).
Exceptions:
1. Deterioration of peace and order conditions, or by reason of protection provisions of law and regulations are not complied
actual or impending emergencies (fire, flood, epidemic);
2. Free transportation to the employees back and forth;
3. Under any other analogous circumstances provided, that the d. Person to Pay [Sec. 5, Rule VIII, Book III, IRR]
time spent by the employees in collecting their wages shall
be considered as compensable hours worked.
NO PAYMENT in any bar, night or day club, drinking
establishment, massage clinic, dance hall, or other similar
places or in places where games are played with stakes of
money or things representing money, except in the case
of persons employees in such places
Condition for ATM payment [Labor Advisory on Payment of
Salaries thru ATM (1996)]
1. ATM system of payment is with the written consent of EEs.
2. EEs are given reasonable time to withdraw their wages from
the banking facility (compensable hours, if during work hours).
3. System shall allow workers to receive their wages within the
period/frequency provided by law.
4. There is a bank/ATM facility within 1km radius from the
place of work.
5. Upon request of the concerned EEs, the ER shall issue a
record of payment of wages, benefits and deductions for a
particular period.
6. There shall be no additional expenses and no diminution of
benefits and privileges.
7. The ER shall assume responsibility in case the wage
with under the arrangement.
General Rule: Directly to EE
Exceptions:
1. Member of EE’s family → if ER is authorize in writing by the
EE.
2. A 3rd person → if authorized by law (e.g. insurance
companies for premiums, union dues where the right to check-
off has been recognized by ER in accordance with a
CBA or authorized in writing by EE concerned).
3. Heirs → in case of death of EE, without necessity of intestate
proceedings.
a. If heirs are of age → they shall execute an affidavit attesting
to their relationship to the deceased and the fact that they are
his heirs to the exclusion of others
b. If any of the heirs is a minor → such affidavit shall be
executed in his behalf by his natural guardian or next of kin.
When the employer engages the services of an organized
group of workers, payment to their leader cannot be
considered a violation of the rule on direct payment.

Time of Payment [Art. 103; Sec 3, Rule VIII, Book III, IRR]
5. PROHIBITIONS REGARDING WAGES
(See Articles 112 to 119 of the Labor Code)
(1) NON-INTERFERENCE BY EMPLOYER IN THE DISPOSAL BY
EMPLOYEES OF THEIR WAGES.
No employer is allowed to limit or otherwise interfere with
the freedom of any employee to dispose of his wages and
no employer shall in any manner oblige any of his
employees to patronize any store or avail of the services (c) In cases where the employer is authorized by law or
offered by any person. regulations issued by the DOLE Secretary.
(d) Deductions for loss or damage under Article 114 of the Labor
(2) WAGES NOT SUBJECT TO EXECUTION OR ATTACHMENT; Code;
(e) Deductions made for agency fees from non-union members
EXCEPTION.
who accept the benefits under the CBA. This form of deduction
The general rule is that laborer’s wages are not subject to does not require the written authorization of the non-bargaining
execution or attachment. The exception is when such union member concerned;
execution or attachment is made for debts incurred for (f) Deductions for value of meal and other facilities;
food, shelter, clothing and medical attendance. (g) Deductions for premiums for SSS, PhilHealth, employees’
compensation and Pag-IBIG;
(3) PROHIBITION ON DEDUCTIONS FROM WAGES. (h) Withholding tax mandated under the National Internal
May employer deduct from wage of employees? Revenue Code (NIRC);
The general rule is that an employer, by himself or through (i) Withholding of wages because of the employee’s debt to the
employer which is already due;
his representative, is PROHIBITED from making any
(j) Deductions made pursuant to a court judgment against the
deductions from the wages of his employees. The employer
worker under circumstances where the wages may be the subject
is not allowed to make unnecessary deductions without the of attachment or execution but only for debts incurred for food,
knowledge or authorization of the employees. clothing, shelter and medical attendance;
Are there EXCEPTIONS to this rule? Yes. (k) When deductions from wages are ordered by the court;
(a) In cases where the worker is insured with his consent by the (4) PROHIBITION AGAINST DEPOSIT REQUIREMENT.
employer, and the deduction is to recompense the employer for Article 114 of the Labor Code prohibits the employer to require
the amount paid by him as premium on the insurance; that workers should make a deposit from which deductions shall
(b) For union dues, in cases where the right of the worker or his be made for the reimbursement of loss of tools, materials or
union to check-off has been recognized by the employer or equipment supplied by him, or any damages thereto.
authorized in writing by the individual worker concerned; and PERMISSIBLE DEDUCTIONS FOR LOSS OR DAMAGES.
If the employer is engaged in a trade, occupation or business
where there is such practice of making deductions or requiring
deposits to answer for the reimbursement of loss of or damage to
tools, materials or equipment supplied by the employer to the
employee.
(5) PROHIBITION ON WITHHOLDING OF WAGES.
Article 116 of the Labor Code prohibits any person, whether
employer or not, directly or indirectly, to withhold any amount
from the wages of a worker. Under Article 1706 of the Civil Code,
withholding of the wages, except for a debt due, is not allowed to
be made by the employer. Moreover, under Article 1709 of the
same Code, the employer is not allowed to seize or retain any tool
or other articles belonging to the laborer.
(6) KICKBACKS.
Article 116 of the Labor Code also prohibits “kickback” which
consists in the act of any person, whether employer or not,
directly or indirectly, to induce a worker to give up any part of his
wages by force, stealth, intimidation, threat or by any other
means whatsoever, without the worker’s consent.
(7) PROHIBITION AGAINST DEDUCTION TO ENSURE
EMPLOYMENT. Article 117 of the Labor Code prohibits any
person, whether the employer himself or his representative or an
intermediary, to require that a deduction be made or to actually
make any deduction from the wages of any employee or worker,
for the benefit of such employer or his representative or an
intermediary, as consideration of a promise of employment or,
when already employed, for the continuation of such employment
or retention therein.
(8) RETALIATORY ACTIONS BY EMPLOYER. Article 118 of the Labor
Code prohibits the employer:
(a) to refuse to pay the wages and benefits of an employee;
(b) to reduce his wages and benefits; or
(c) to discharge him from employment; or
(d) to discriminate against him in any manner; on account and by
reason of said employee’s:
(1) act of filing any complaint or institution of any proceeding
under Title II [Wages], Book III of the Labor Code; or
(2) act of testifying in said proceedings or when he is about to
testify therein.
(9) FALSE STATEMENT, REPORT OR RECORD. Article 119 of the
Labor Code prohibits any person, whether employer or not, to
make any false statement, report or record required to be filed or
kept in accordance with and pursuant to the provisions of the
Labor Code, knowing such statement, report or record to be false
in any material respect. Examples: Payrolls, time records,
employment records and production records, among others.
6. WAGE DETERMINATION
a. WAGE ORDER
What is a Wage Order?
The term “Wage Order” refers to the order promulgated by
the Regional Tripartite Wages and Productivity Board
(Regional Board) pursuant to its wage fixing authority.

When is it proper to issue a Wage Order?
Whenever conditions in the region so warrant, the Regional
Board shall investigate and study all pertinent facts and
based on the prescribed standards and criteria, shall
proceed to determine whether a Wage Order should be
issued. Any such Wage Order shall take effect after fifteen
(15) days from its complete publication in at least one (1)
newspaper of general circulation in the region.
What are the standards/criteria for minimum wage fixing? determinate amount to be added to the prevailing statutory
In the determination of regional minimum wages, the
Regional Board shall, among other relevant factors, consider 2. “Salary-Cap” or “Salary-Ceiling” method where the wage
the following:
(1) Needs of workers and their families
1) Demand for living wages;
2) Wage adjustment vis-à-vis the consumer price index;
3) Cost of living and changes therein;
4) Needs of workers and their families;
5) Improvements in standards of living.
(2) Capacity to pay
1) Fair return on capital invested and capacity to pay of
employers;
2) Productivity.
(3) Comparable wages and incomes
1) Prevailing wage levels.
(4) Requirements of economic and social development
1) Need to induce industries to invest in the countryside;
2) Effects on employment generation and family income;
3) Equitable distribution of income and wealth along the
imperatives of economic and social development.
What are the methods of fixing the minimum wage rates?
1. “Floor-Wage” method which involves the fixing of a
minimum wage rates. applied in earlier wage orders; and
adjustment is to be applied to employees receiving a certain
denominated salary ceiling. In other words, workers already
being paid more than the existing minimum wage (up to a
certain amount stated in the Wage Order) are also to be
given a wage increase.
The “Salary-Cap” or “Salary-Ceiling” method is the preferred
mode.
The distinction between the two (2) methods is best shown
by way of an illustration. Under the “Floor Wage Method,” it
would be sufficient if the Wage Order simply set P15.00 as
the amount to be added to the prevailing statutory
minimum wage rates; while in the “Salary-Ceiling Method,”
it would be sufficient if the Wage Order states a specific
salary, such as P250.00, and only those earning below it
shall be entitled to the wage increase.
b. Wage distortion
What is wage distortion?
“Wage distortion” contemplates a situation where an
increase in prescribed wage rates results in either of the
following:
1. Elimination of the quantitative differences in the rates of
wages or salaries; or
2. Severe contraction of intentional quantitative differences
in wage or salary rates between and among employee
groups in an establishment as to effectively obliterate the
distinctions embodied in such wage structure based on the
following criteria:
a. Skills;
b. Length of service; or
c. Other logical bases of differentiation.
Wage distortion presupposes a classification of positions
and ranking of these positions at various levels. One
visualizes a hierarchy of positions with corresponding ranks
basically in terms of wages and other emoluments. Where a
significant change occurs at the lowest level of positions in
terms of basic wage without a corresponding change in the
other level in the hierarchy of positions, negating as a result
thereof the distinction between one level of position from
the next higher level, and resulting in a parity between the
lowest level and the next higher level or rank, between new
entrants and old hires, there exists a wage distortion. xxx.
The concept of wage distortion assumes an existing
grouping or classification of employees which establishes
distinctions among such employees on some relevant or
legitimate basis. This classification is reflected in a differing
wage rate for each of the existing classes of employees.
What are the elements of wage distortion?
The four (4) elements of wage distortion are as follows:
(1) An existing hierarchy of positions with corresponding
salary rates;
(2) A significant change in the salary rate of a lower pay
class without a concomitant increase in the salary rate of a
higher one;
(3) The elimination of the distinction between the two
levels; and
(4) The existence of the distortion in the same region of the
country.
Normally, a company has a wage structure or method of
determining the wages of its employees. In a problem
dealing with “wage distortion,” the basic assumption is that
there exists a grouping or classification of employees that
establishes distinctions among them on some relevant or
legitimate bases.
Involved in the classification of employees are various
factors such as the degrees of responsibility, the skills and
knowledge required, the complexity of the job, or other
logical basis of differentiation. The differing wage rate for
each of the existing classes of employees reflects this
classification.
What is the formula for rectifying or resolving wage
distortion?
Following is the formula for the correction of wage
distortion in the pay scale structures:
Minimum Wage = % x Prescribed Increase = Distortion
Adjustment Actual Salary
The above formula was held to be just and equitable.
C. LEAVES
1. LABOR CODE
a. SERVICE INCENTIVE LEAVE
1. What is service incentive leave?
Every covered employee who has rendered at least one (1)
year of service is entitled to a yearly service incentive leave
of five (5) days with pay.
The term “at least one year of service” should mean service
within twelve (12) months, whether continuous or broken,
reckoned from the date the employee started working,
including authorized absences and paid regular holidays,
unless the number of working days in the establishment as a
matter of practice or policy, or that provided in the to hiring, firing, and promotion, or any other change of
employment contract, is less than twelve (12) months, in status of other employees are given particular weight.
which case, said period should be considered as one (1) year 4. Officers or members of a managerial staff, if they perform
for the purpose of determining entitlement to the service the following duties and responsibilities:
incentive leave benefit. 4.1. Primarily perform work directly related to management
policies of their employer;
2. Who are excluded from its coverage? 4.2. Customarily and regularly exercise discretion and
All employees are covered by the rule on service incentive independent judgment;
leave except: 4.3. (a) Regularly and directly assist a proprietor or
1. Government employees, whether employed by the managerial employee in the management of the
National Government or any of its political subdivisions, establishment or subdivision thereof in which he or she is
including those employed in government-owned and/or employed; or (b) execute, under general supervision, work
controlled corporations with original charters or created along specialized or technical lines requiring special training,
under special laws; experience, or knowledge; or (c) execute, under general
2. Persons in the personal service of another; supervision, special assignments and tasks; and
3. Managerial employees, if they meet all of the following 4.4. Do not devote more than twenty percent (20%) of their
conditions: hours worked in a workweek to activities which are not
3.1. Their primary duty is to manage the establishment in directly and closely related to the performance of the work
which they are employed or of a department or subdivision described in paragraphs 4.1, 4.2, and 4.3 above;
thereof; 5. Field personnel and those whose time and performance
3.2. They customarily and regularly direct the work of two or are unsupervised by the employer,2 including those who are
more employees therein; and engaged on task or contract basis, purely commission basis,
3.3. They have the authority to hire or fire other employees or those who are paid a fixed amount for performing work
of lower rank; or their suggestions and recommendations as
irrespective of the time consumed in the performance
thereof;3
6. Those already enjoying this benefit;
7. Those enjoying vacation leave with pay of at least five (5)
days; and
8. Those employed in establishments regularly employing
less than ten (10) employees.4
3. Are KASAMBAHAYS entitled to SIL?
Yes, but the grant of 5-day SIL to domestic workers or
kasambahays is not based on Article 95 of the Labor Code
but on the following provision of R.A. 10361:5
“SEC. 29. Leave Benefits. – A domestic worker who has
rendered at least one (1) year of service shall be entitled to
an annual service incentive leave of five (5) days with pay:
Provided, That any unused portion of said annual leave shall
not be cumulative or carried over to the succeeding years.
Unused leaves shall not be convertible to cash.”6
4. Are unavailed service incentive leaves commutable to
cash?
Yes. The service incentive leave is commutable to its money
equivalent if not used or exhausted at the end of the year.
2. SPECIAL LAWS
a. PARENTAL LEAVE FOR SOLO PARENTS
SOLO PARENT LEAVE (R.A. No. 8972)
What is the solo parent leave?
This is the leave benefit granted to a male or female solo
parent to enable him/her to perform parental duties and
responsibilities where his/her physical presence is required.
How many days may be availed of as solo parent leave?
The solo parent leave shall not be more than seven (7)
WORKING days every year to a solo parent who has
rendered service of at least one (1) year, to enable him/her
to perform parental duties and responsibilities where
his/her physical presence is required. This leave shall be
non-cumulative.
It bears noting that this leave privilege is an additional leave
benefit which is separate and distinct from any other leave
benefits provided under existing laws or agreements.
Who is a solo parent?
The term "solo parent" refers to any individual who falls
under any of the following categories:
(1) A woman who gives birth as a result of rape and other
crimes against chastity even without a final conviction of the
offender: Provided, That the mother keeps and raises the
child;
(2) Parent left solo or alone with the responsibility of
parenthood due to death of spouse;
(3) Parent left solo or alone with the responsibility of
parenthood while the spouse is detained or is serving
sentence for a criminal conviction for at least one (1) year;
(4) Parent left solo or alone with the responsibility of
parenthood due to physical and/or mental incapacity of
spouse as certified by a public medical practitioner;
(5) Parent left solo or alone with the responsibility of
parenthood due to legal separation or de facto separation
from spouse for at least one (1) year, as long as he/she is
entrusted with the custody of the children;
(6) Parent left solo or alone with the responsibility of
parenthood due to declaration of nullity or annulment of
marriage as decreed by a court or by a church as long as
he/she is entrusted with the custody of the children;
(7) Parent left solo or alone with the responsibility of
parenthood due to abandonment of spouse for at least one
(1) year;
(8) Unmarried mother/father who has preferred to keep and
rear her/his child/children instead of having others care for
them or give them up to a welfare institution;
(9) Any other person who solely provides parental care and
support to a child or children;
(10) Any family member who assumes the responsibility of
head of family as a result of the death, abandonment,
disappearance or prolonged absence of the parents or solo
parent.
What is the effect of change of status of the solo parent?
A change in the status or circumstance of the parent
claiming benefits under the law, such that he/she is no
longer left alone with the responsibility of parenthood, shall
terminate his/her eligibility for these benefits.
Who are considered children under this law?
"Children" refer to those living with and dependent upon
the solo parent for support who are unmarried, unemployed
and not more than eighteen (18) years of age, or even over
eighteen (18) years but are incapable of self- support
because of mental and/or physical defect/disability.
Is an unavailed parental leave convertible to cash?
No. In the event that the parental leave is not availed of,
said leave shall not be convertible to cash unless specifically
agreed upon previously.
b. Expanded maternity leave
1. Paid leave benefit granted to a qualified female worker in
both the PUBLIC SECTOR and the PRIVATE SECTOR (which is
covered by the SSS, including those in the informal
economy), for the duration of:

MATERNITY LEAVE
What is the new 105-DAY EXPANDED MATERNITY LEAVE
LAW (R.A. NO. 11210)?
On February 20, 2019, President Rodrigo Duterte approved
R.A. No. 11210, otherwise known as the “105-Day Expanded
Maternity Leave Law.”5 This is the prevailing law on
maternity leave benefit.

Who are the women entitled to maternity leave?

All covered females, regardless of civil status, employment
status, and the legitimacy of her child, are entitled to
maternity leave.
What is the period of leave?
NOTE: This discussion on the 2019 new maternity benefits
law is being made here only for academic purposes. It is
Under the old law: 60 days – for normal delivery; and 78
highly unlikely that a question will be asked on this in the
days – for caesarian delivery
2019 bar exam because this law was passed way beyond
Under the new law:
the cut-off date of June 30, 2018.
What is the amount granted under the old law?
Daily maternity benefit equivalent to 100% of her average “Delivery” includes childbirth or any miscarriage.
daily salary credit for sixty (60) days or seventy- eight (78) “Spouse” refers to the lawful wife. For this purpose, “lawful
days in case of caesarian delivery/ wife” refers to a woman who is legally married to the male
employee concerned.
What is the number of delivery or miscarriage covered “Cohabiting” refers to the obligation of the husband and
under the old law? wife to live together.
The maternity benefits shall be paid only for the first four
(4) deliveries or miscarriages. What is the covered total number of deliveries?
Every married employee in the private and public sectors is
Is an unmarried woman entitled to maternity leave benefit entitled to a paternity leave of seven (7) calendar days with
under both old and new law? full pay for the first four (4) deliveries of the legitimate
Yes. For as long as a woman is pregnant, she is entitled to spouse with whom he is cohabiting.
maternity leave benefit regardless of whether she is married Paternity leave benefits are granted to the qualified
or unmarried. employee after the delivery by his wife, without prejudice to
an employer allowing an employee to avail of the benefit
c. PATERNITY LEAVE before or during the delivery, provided that the total
What is paternity leave benefit? number of days should not exceed seven (7) calendar days
“Paternity leave” covers a married male employee allowing for each delivery.
him not to report for work for seven (7) CALENDAR days but
continues to earn the compensation therefor, on the Is an unavailed paternity leave benefit convertible to
condition that his spouse has delivered a child or suffered cash?
miscarriage for purposes of enabling him to effectively lend No. In the event that the paternity leave benefit is not
support to his wife in her period of recovery and/or in the availed of, said leave shall not be convertible to cash.
nursing of the newly-born child.
 and pelvic floor, as certified by a competent physician.
d. GYNECOLOGICAL LEAVE Gynecological surgeries shall also include hysterectomy,
SPECIAL LEAVES FOR WOMEN WORKERS (R.A. No. 9710) ovariectomy, and mastectomy.
What is this special leave benefit?
A special leave benefit for women was granted under R.A. Is this leave similar to maternity leave?
No. 9710, otherwise known as “The Magna Carta of No. This leave should be distinguished from maternity leave
Women” [August 14, 2009]. Thus, any female employee in benefit, a separate and distinct benefit, which may be
the public and private sector regardless of age and civil availed of in case of childbirth, miscarriage, complete
status shall be entitled to a special leave of two (2) months abortion or emergency termination of pregnancy.
with full pay based on her gross monthly compensation A woman, therefore, may avail of this special leave benefit
subject to existing laws, rules and regulations due to surgery in case she undergoes surgery caused by gynecological
caused by gynecological disorders under the following disorder and at the same time maternity benefit as these
terms and conditions: two leaves are not mutually exclusive.
1. She has rendered at least six (6) months continuous
aggregate employment service for the last twelve (12) e. Battered woman leave
months prior to surgery; LEAVE FOR VICTIMS OF VIOLENCE AGAINST WOMEN AND
2. In the event that an extended leave is necessary, the CHILDREN (R.A. No. 9262)
female employee may use her earned leave credits; and What is this kind of leave?
3. This special leave shall be non-cumulative and non- This special leave is granted to a woman employee who is a
convertible to cash. victim under this law. It is for a total of ten (10)
days of paid leave of absence, in addition to other paid
“Gynecological disorders” refer to disorders that would require leaves under the law. It is extendible when the necessity
surgical procedures such as, but not limited to, dilatation and arises as specified in the protection order. Its purpose is to
curettage and those involving female reproductive organs such as enable the woman employee to attend to the medical and
the vagina, cervix, uterus, fallopian tubes, ovaries, breast, adnexa
legal concerns relative to said law. This leave is not
convertible to cash.
What is the requirement for its entitlement?
At any time during the application of any protection order,
investigation, prosecution and/or trial of the criminal case, a
victim of Violence Against Women and their Children
(VAWC) who is employed shall be entitled to said paid leave
of up to ten (10) days. The Punong Barangay/kagawad or
prosecutor or the Clerk of Court, as the case may be, shall
issue a certification at no cost to the woman that such an
action is pending, and this is all that is required for the
employer to comply with the 10-day paid leave.
D. SEXUAL HARASSMENT IN THE WORK
ENVIRONMENT
1. DEFINITION
SEXUAL HARASSMENT (ANTI-SEXUAL HARASSMENT ACT)
(R.A. No. 7877)
SEXUAL HARRASSMENT- Demanding, requesting or
otherwise requiring any sexual favor from the other,
regardless of whether these are accepted by the object of
said Act
What are the 3 situations contemplated under this law?
R.A. No. 7877 declares sexual harassment unlawful only in
three (3) situations, namely:
(1) employment;
(2) education; and
(3) training environment.
Can sexual harassment be committed also against a man?
Yes. Sexual harassment is not the sole domain of women as
men may also be subjected to the same despicable act. Said
law does not limit the victim of sexual harassment to
women.
Who are the persons who may be held liable for sexual
harassment?
Work, education or training-related sexual harassment is
committed by any employer, employee, manager,
supervisor, agent of the employer, teacher, instructor,
professor, coach, trainor, or any other person who, having
authority, influence or moral ascendancy over another in a
work or training or education environment, demands,
requests or otherwise requires any sexual favor from
another, regardless of whether the demand, request or
requirement for submission is accepted by the object of said 2. DUTIES AND LIABILITIES OF EMPLOYERS
act. What are the duties of the employer in regard to sexual
Further, any person who directs or induces another to harassment complaints?
commit any act of sexual harassment as defined in the law, It is the duty of the employer to prevent or deter the
or who cooperates in the commission thereof by another commission of acts of sexual harassment and to provide the
without which it would not have been committed, shall also procedures for the resolution or prosecution of acts of sexual
be held liable under the law. harassment.
The employer or head of office is required to:
How is sexual harassment committed in a work-related or 1. Promulgate appropriate rules and regulations, in
employment environment? consultation with and jointly approved by the employees or
In a work-related or employment environment, sexual students or trainees, through their duly designated
representatives, prescribing the procedure for the investigation
harassment is committed when:
of sexual harassment cases and the administrative sanctions
1. The sexual favor is made a condition in the hiring or in the
therefor. The said rules and regulations issued shall include,
employment, re-employment or continued employment of
among others, guidelines on proper decorum in the workplace
said individual or in granting said individual favorable and educational or training institutions.
compensation, terms, conditions, promotions, or privileges; 2. Create a committee on decorum and investigation of cases
or the refusal to grant the sexual favor results in limiting, on sexual harassment. The committee shall conduct meetings,
segregating or classifying the employee which in any way as the case may be, with officers and employees, teachers,
would discriminate, deprive or diminish employment instructors, professors, coaches, trainors and students or
opportunities or otherwise adversely affect said employee; trainees to increase understanding and prevent incidents of
2. The above acts would impair the employee’s rights or sexual harassment. It shall also conduct the investigation of
privileges under existing labor laws; or alleged cases constituting sexual harassment.
3. The above acts would result in an intimidating, hostile, or
offensive environment for the employee.
 3. APPLICABLE LAWS:
a. SEXUAL HARASSMENT ACT
b. SAFE SPACES ACT
Gender-based Sexual Harassment (GBSH) in the Workplace
The crime of GSBH in the workplace includes the following:
1. An act or series of acts:
a. involving any unwelcome sexual advances, requests
or demand for sexual favors or any act of sexual
nature;
b. whether done verbally, physically or through the
use of technology such as text messaging or electronic
mail or through any other forms of information and
communication systems;
c. that has or could have a detrimental effect on the
conditions of an individual's employment or education,
job performance or opportunities.
2. A conduct of sexual nature and other conduct based on sex:
a. affecting the dignity of a person, which is
unwelcome, unreasonable, and offensive to the
recipient;
b. whether done verbally, physically or through the
use of technology such as text messaging or electronic
mail or through any other forms of information and
communication systems.
3. A conduct that is unwelcome and pervasive and creates an
intimidating, hostile or humiliating environment for the
recipient.
Workplaces include all sites, locations, spaces, where work is
being undertaken by anemployee within or outside the
premises of the usual place of business of the employer. [Sec.
18, Rule VI, IRR of RA11313]
SAFE SPACES ACT
Anyone who commits any of the acts of GBSH may be held
liable. GBSH may even be committed between peers, and by a
subordinate to a superior officer. [Sec. 18, IRR of RA 11313]
Duties of employers
Employers, or other persons of authority, influence or moral
ascendancy have the following duties:
a. Disseminate or post a copy of the Safe Spaces Act to all
persons in the workplace;
b. Provide measures to prevent GBSH in the workplace;
c. Create an independent internal mechanism or a committee
on decorum and investigation to investigate and address
complaints of GBSH;
d. Provide and disseminate, in consultation with all persons in
the workplace, a code of conduct or workplace policy. [Sec. 17,
RA 11313]
In addition to liabilities for committing acts of GSBH, employers
may also be held responsible for:
a. Non-implementation of their duties under Sec. 17 of this Act
(see above), as provided n the penal provisions; or
b. Not taking action on reported acts of GBSH committed in the
workplace.
Any person who violates (a) shall, upon conviction, be
penalized with a fine of not less than P5,000, nor more than
P10,000.
Any person who violates (b) shall, upon conviction, be
penalized with a fine of not less than P10,000 nor more than
P15,000. [Sec. 19, RA 11310]
Independent action for damages
Nothing shall preclude the victim of workrelated GBSH from
instituting a separate and independent action for damages and
other affirmative relief.
E. WORKING CONDITIONS FOR SPECIAL GROUPS OF
EMPLOYEES
1. APPRENTICES AND LEARNERS
What are important apprenticeship-related terms?
“Apprenticeship” means practical training on the job
supplemented by related theoretical instructions involving
apprenticeable occupations and trades as may be approved
by the DOLE Secretary. It is a training within employment
with compulsory related theoretical instructions involving a
contract between an apprentice and an employer or an
enterprise on an approved apprenticeable occupation.
An “apprentice” is a worker who is covered by a written
apprenticeship agreement with an individual employer or
any of the entities recognized under the law. He is a person
undergoing training for an approved apprenticeable
occupation during an established period and covered by an
apprenticeship agreement.
An “apprenticeable occupation” means any trade, form of
employment or occupation approved for apprenticeship by
the DOLE Secretary, which requires for proficiency, more
than three (3) months of practical training on the job
supplemented by related theoretical instructions. It is an
occupation officially endorsed by a tripartite body and
approved for apprenticeship by TESDA.
An “apprenticeship agreement” is an employment contract
wherein the employer binds himself to train the apprentice
and the apprentice in turn accepts the terms of the training
and agrees to work for the employer for a recognized
apprenticeable occupation, emphasizing the rights, duties
and responsibilities of each party.

What are important learnership-related terms?

“Learnership” refers to any practical training on learnable
occupation which may or may not be supplemented by
related theoretical instructions.
“Learner” refers to a person hired as a trainee in semi-
skilled and other industrial occupations which are non-
apprenticeable and which may be learned through practical
training on the job for a period not exceeding three (3)
months, whether or not such practical training is
supplemented by theoretical instructions.
“Learnership agreement” refers to the employment and
training contract entered into between the employer and
the learner.
What are the distinctions between learnership and
apprenticeship?
The following are the distinctions:

How is the conflict in the age requirement for apprentices
resolved?
The age prescribed for apprentices under Article 59 is 14
years of age.
However, the Implementing Rules set the age requirement
at fifteen (15) years of age.
Notably, there is a difference in the age requirement
between the 14-year old prescribed in the law and the 15-
year old enunciated in the Implementing Rules. Generally,
the well-settled rule of legal hermeneutics dictates that if
there is a conflict between the law and its implementing
rule or regulation, the provision of the former should prevail
over the latter. The implementing rule cannot certainly
operate to amend the law. Consequently, the minimum age
requirement should have been fourteen (14) years of age
except for the fact that the age requirement in the said
Implementing Rules is based on and more congruent with
latest legislation, more particularly, the 2003 law, R.A. No.
9231,1 where it is provided that:
(1) All persons under eighteen (18) years of age shall be
considered as a “child”; and
(2) Children below fifteen (15) years of age shall not be
employed except if he/she falls under any of the exceptions
mentioned and enumerated in the law.
Apprenticeship is not one of the exceptions, therefore, this
prohibition on employing an apprentice below the age of
fifteen (15) years applies to apprentices. Consequently, the
proper age qualification is fifteen (15) years but not because
of the Implementing Rules’ provision as mentioned above
but by reason of R.A. No. 9231.
2. Disabled workers
What is the applicable law to PWDs?
R.A. No. 7277,4 otherwise known as the “Magna Carta for
Disabled Persons.” The provisions on handicapped workers opportunities to be able to participate fully in socio-
found in the Labor Code (Articles 78 to 81) are no longer
applicable.
What are important definitions related to PWDs?
1. “Persons with Disability” or “PWD” are those suffering
from restriction or different abilities, as a result of a mental,
physical or sensory impairment, to perform an activity in the
manner or within the range considered normal for a human
being.
2. “Impairment” refers to any loss, diminution or aberration
of psychological, physiological, or anatomical structure or
function.
3. “Disability” means (1) a physical or mental impairment
that substantially limits one or more psychological,
physiological or anatomical functions of an individual or
activities of such individual; (2) a record of such an
impairment; or (3) being regarded as having such an
impairment.
4. “Handicap” refers to a disadvantage for a given
individual, resulting from an impairment or a disability that
limits or prevents the function or activity that is considered
normal given the age and sex of the individual.
5. “Marginalized Persons with Disability” refer to persons
with disability who lack access to rehabilitative services and
economic activities and who have no means of livelihood
and whose incomes fall below the poverty threshold.
a. Equal opportunity
What is meant by EQUAL OPPORTUNITY FOR
EMPLOYMENT?
Under the law,5 PWDs are entitled to equal opportunity for
employment. Consequently, no PWD shall be denied access Under R.A. No. 7277, the wage rate of PWDs is 100% of the
to opportunities for suitable employment. A qualified
employee with disability shall be subject to the same terms
and conditions of employment and the same compensation,
privileges, benefits, fringe benefits, incentives or allowances
as a qualified able-bodied person.
Five percent (5%) of all casual emergency and contractual
positions in the Departments of Social Welfare and
Development, Health, Education and other government
agencies, offices or corporations engaged in social
development shall be reserved for PWDs.
Are PWDs eligible for apprenticeship and learnership?
Yes. Under R.A. No. 7277, it is provided that subject to the
provisions of the Labor Code, as amended, PWDs shall be
eligible as apprentices or learners; provided that their
handicap is not as much as to effectively impede the
performance of job operations in the particular occupation
for which they are hired and provided further that after the
lapse of the period of apprenticeship, if found satisfactory in
the job performance, they shall be eligible for employment.
What is the applicable wage rate to PWDs?
applicable minimum wage.
b. Discrimination on employment
What are the forms of prohibited discriminatory acts
against PWDs in terms of employment?
No entity, whether public or private, shall discriminate against
a qualified PWD by reason of disability in regard to job
application procedures, the hiring, promotion, or discharge of
employees, employee compensation, job training, and other
terms, conditions and privileges of employment. The following
constitute acts of discrimination:
(a) Limiting, segregating or classifying a job applicant with
disability in such a manner that adversely affects his work
opportunities;
(b) Using qualification standards, employment tests or other
selection criteria that screen out or tend to screen out a PWD
unless such standards, tests or other selection criteria are
shown to be job-related for the position in question and are
consistent with business necessity;
(c) Utilizing standards, criteria, or methods of administration
that:
(1) have the effect of discrimination on the basis of disability;
or
(2) perpetuate the discrimination of others who are subject to
common administrative control.
(d) Providing less compensation, such as salary, wage or other
forms of remuneration and fringe benefits, to a qualified
employee with disability, by reason of his disability, than the
amount to which a non-disabled person performing the same
work is entitled;
(e) Favoring a non-disabled employee over a qualified
employee with disability with respect to promotion, training
opportunities, and study and scholarship grants solely on
account of the latter’s disability;
(f) Re-assigning or transferring an employee with a disability to
a job or position he cannot perform by reason of his disability;
(g) Dismissing or terminating the services of an employee with
disability by reason of his disability unless the employer can
prove that he impairs the satisfactory performance of the work
involved to the prejudice of the business entity; provided,
however, that the employer first sought to provide reasonable
accommodations for persons with disability;
(h) Failing to select or administer in the most effective manner
employment tests which accurately reflect the skills, aptitude
or other factor of the applicant or employee with disability that
such tests purports to measure, rather than the impaired
sensory, manual or speaking skills of such applicant or
employee, if any; and
(i) Excluding PWD from membership in labor unions or similar
organizations.
c. Incentives for employers
What are the incentives for employers who employ PWDs?
To encourage the active participation of the private sector in
promoting the welfare of PWDs and to ensure gainful
employment for qualified persons with disability, adequate
incentives shall be provided to private entities which employ
PWDs.
Private entities that employ PWDs who meet the required
skills or qualifications, either as a regular employee,
apprentice or learner, shall be entitled to an additional
deduction from their gross income equivalent to twenty-
five percent (25%) of the total amount paid as salaries and
wages to persons with disability; provided, however, that
such entities could present proof as certified by the
Department of Labor and Employment (DOLE) that PWDs
are under their employ and provided further that the
employee with disability is accredited with the DOLE and the
Department of Health as to his disability, skills and
qualifications.
Private entities that improve or modify their physical
facilities in order to provide reasonable accommodation for
PWDs shall also be entitled to an additional deduction from
their net taxable income equivalent to fifty percent (50%) of
the direct costs of the improvements or modifications.
3. GENDER
a. DISCRIMINATION
WOMEN
a. DISCRIMINATION
What are acts of discrimination under the Labor Code?
(a) Payment of a lesser compensation, including wage, salary
or other form of remuneration and fringe benefits, to a
female employee as against a male employee, for work of
equal value; and
(b) Favoring a male employee over a female employee with
respect to promotion, training opportunities, study and
scholarship grants solely on account of their sexes.
What are acts of discrimination under the Magna Carta of
Women?
R.A. No. 9710, otherwise known as “The Magna Carta of
Women,” is a comprehensive women’s human rights law
that seeks to eliminate discrimination against women by
recognizing, protecting, fulfilling and promoting the rights of
Filipino women, especially those in marginalized sector.
Based on the definition of the term “Discrimination Against
Women” in R.A. No. 9710, the following are considered
discriminatory acts:
1. Any gender-based distinction, exclusion, or restriction
which has the effect or purpose of impairing or nullifying the
recognition, enjoyment, or exercise by women, irrespective
of their marital status, on a basis of equality of men and
women, of human rights and fundamental freedoms in the
political, economic, social, cultural, civil or any other field;
2. Any act or omission, including by law, policy,
administrative measure, or practice, that directly or
indirectly excludes or restricts women in the recognition and
promotion of their rights and their access to and enjoyment
of opportunities, benefits or privileges;
3. A measure or practice of general application that fails to
provide for mechanisms to offset or address sex or gender-
based disadvantages or limitations of women, as a result of
which women are denied or restricted in the recognition
and protection of their rights and in their access to and
enjoyment of opportunities, benefits, or privileges; or
women, more than men, are shown to have suffered the
greater adverse effects of those measures or practices; and
4. Discrimination compounded by or intersecting with other
grounds, status, or condition, such as ethnicity, age, poverty
or religion.
Additionally, women are guaranteed their right to decent
work. The State shall progressively realize and ensure
decent work standards for women that involve the creation
of jobs of acceptable quality in conditions of freedom,
equity, security and human dignity.
b. Stipulation against marriage
. STIPULATION AGAINST MARRIAGE
Is the prohibition against marriage valid?
Article 136 of the Labor Code considers as an unlawful act of
the employer to require as a condition for or continuation of
employment that a woman employee shall not get married
or to stipulate expressly or tacitly that upon getting married,
a woman employee shall be deemed resigned or separated.
It is likewise an unlawful act of the employer, to actually
dismiss, discharge, discriminate or otherwise prejudice a
woman employee merely by reason of her marriage.
What are the relevant jurisprudence on prohibition
against marriage?
1. Philippine Telegraph and Telephone Company (PT&T) v.
NLRC. - It was declared here that the company policy of not
accepting or considering as disqualified from work any
woman worker who contracts marriage runs afoul of the
test of, and the right against, discrimination afforded all
women workers by our labor laws and by no less than the
Constitution.
2. Star Paper Corp. v. Simbol.2 - The following policies were
struck down as invalid for violating the standard of
reasonableness which is being followed in our jurisdiction
otherwise called the “Reasonable Business Necessity Rule”:
“1. New applicants will not be allowed to be hired if in case
he/she has [a] relative, up to [the] 3rd degree of
relationship, already employed by the company.
“2. In case of two of our employees (both singles [sic], one
male and another female) developed a friendly relationship
during the course of their employment and then decided to
get married, one of them should resign to preserve the
policy stated above.”
3. Duncan Association of Detailman-PTGWO v. Glaxo
Welcome Philippines, Inc.3 In this case, the prohibition
against marriage embodied in the following stipulation in
the employment contract was held as valid:
“10. You agree to disclose to management any existing or
future relationship you may have, either by consanguinity or
affinity with co-employees or employees of competing drug
companies. Should it pose a possible conflict of interest in
management discretion, you agree to resign voluntarily
from the Company as a matter of Company policy.”
The Supreme Court ruled that the dismissal based on this
stipulation in the employment contract is a valid exercise of
management prerogative. The prohibition against personal
or marital relationships with employees of competitor
companies upon its employees was held reasonable under
the circumstances because relationships of that nature
might compromise the interests of the company. In laying
down the assailed company policy, the employer only aims
to protect its interests against the possibility that a
competitor company will gain access to its secrets and
procedures. Simply put, the reason behind the validity of
such a policy is the avoidance of CONFLICT OF INTEREST.
c. Prohibited acts
What are the prohibited acts against women under the
Labor Code?
Article 137 of the Labor Code and its implementing rule
consider unlawful the followings acts of the employer:
1. To discharge any woman employed by him for the
purpose of preventing such woman from enjoying
maternity leave, facilities and other benefits provided
under the Labor Code;
2. To discharge such woman on account of her pregnancy,
or while on leave or in confinement due to her pregnancy;
3. To discharge or refuse the admission of such woman
upon returning to her work for fear that she may again be
pregnant;
4. To discharge any woman or any other employee for
having filed a complaint or having testified or being about
to testify under the Labor Code; or
5. To require as a condition for or continuation of
employment that a woman employee shall not get married
or to stipulate expressly or tacitly that upon getting
married, a woman employee shall be deemed resigned or
separated, or to actually dismiss, discharge, discriminate or
otherwise prejudice a woman employee merely by reason
of marriage.
d. FACILITIES FOR WOMEN
The Secretary of Labor shall establish standards that will insure
the safety and health of women employees. In appropriate
cases, he shall by regulations, require employers to:
a. Provide seats proper for women and permit them to use
such seats when they are free from work and during working
hours, provided they can perform their duties in
this position without detriment to efficiency;
b. To establish separate toilet rooms and lavatories for men
and women and provide at least a dressing room for women;
c. To establish a nursery in a workplace for the benefit of the
woman employees therein; and
d. To determine appropriate minimum age and other standards
for retirement or termination in special occupations such as
those of flight attendants and the like. [Sec. 130]
Subject to the approval of the SOLE, the Bureau of Women and
Young Workers (The BWYW merged into the Bureau of
Workers with Special Concerns in 2010), shall, within 30 days
from the effective date of these Rules,
determine in an appropriate issuance:
1. The work situations for which the facilities enumerated in
Art. 130 of the Code shall be provided;
2. The appropriate minimum age and standards for retirement
or termination of employment in special occupation in which
women are employed. [Sec. 14, Rule XII, Book III, IRR]
e. WOMEN WORKING IN NIGHT CLUBS, ETC
Any woman who:
1. Is permitted or suffered to work, with or without
compensation;
 2. In any night club, cocktail lounge, massage clinic, bar
or similar establishments;
3. Under the effective control or supervision of the
employer for a substantial period of time as
determined by the SOLE;
shall be considered as an employee of such establishment
for purposes of labor and social legislation. [Art. 136]
4. MINORS
(R.A. 7610, as amended by R.A. 9231)
Who is a “child” or “working child”?
For legal purposes, the term “child” refers to any person
less than eighteen (18) years of age. A “working child”
refers to any child engaged as follows:
i. when the child is below eighteen (18) years of age, in work not be more than twenty (20) hours per week, provided that
or economic activity that is not “child labor;” and
ii. when the child below fifteen (15) years of age:
(a) in work where he/she is directly under the
responsibility of his/her parents or legal guardian
and where only members of the child’s family are
employed; or
(b) in “public entertainment or information” which
refers to artistic, literary, and cultural performances
for television show, radio program, cinema or film,
theater, commercial advertisement, public relations
activities or campaigns, print materials, internet,
and other media.
What are the working hours of a child?
The term “hours of work” includes (1) all time during which
a child is required to be at a prescribed workplace, and (2)
all time during which a child is suffered or permitted to
work. Rest periods of short duration during working hours
shall be counted as hours worked.
The following hours of work shall be observed for any child
allowed to work under R.A. No. 9231 and its Implementing
Rules:
(a) For a child below 15 years of age, the hours of work shall
the work shall not be more than four (4) hours at any given
day;
(b) For a child 15 years of age but below 18, the hours of
work shall not be more than eight (8) hours a day, and in no
case beyond forty (40) hours a week; and
(c) No child below 15 years of age shall be allowed to work
between eight (8) o’clock in the evening and six
(6) o’clock in the morning of the following day and no child
15 years of age but below 18 shall be allowed to work
between ten (10) o’clock in the evening and six (6) o’clock in
the morning of the following day.
What is the prohibition of employing minors in certain
undertakings and advertisements?
No child below 18 years of age is allowed to be employed as a
model in any advertisement directly or indirectly promoting
alcoholic beverages, intoxicating drinks, tobacco and its by-
products, gambling or any form of violence or pornography.
5. Kasambahays
(R.A. No. 10361, otherwise known as
“Domestic Workers Act” or “Batas Kasambahay” )
What is the coverage of the Kasambahay Law?
R.A. No. 10361 applies to all domestic workers employed
and working within the country. It shall cover all parties to
an employment contract for the services of the following
Kasambahay, whether on a live-in or live-out arrangement,
such as, but not limited to:
(a) General househelp;
(b) Yaya;
(c) Cook;
(d) Gardener;
(e) Laundry person; or
(f) Any person who regularly performs domestic work in one
household on an occupational basis.
Who are EXCLUDED from its coverage?
The following are not covered:
(a) Service providers;
(b) Family drivers;
(c) Children under foster family arrangement; and
(d) Any other person who performs work occasionally or
sporadically and not on an occupational basis.
Who is a domestic worker or kasambahay?
“Domestic worker” or “kasambahay” refers to any person
engaged in domestic work within an employment
relationship, whether on a live-in or live-out arrangement,
such as, but not limited to, general househelp, "yaya", cook,
gardener, or laundry person, but shall exclude service
providers, family drivers, children who are under foster
family arrangement, or any person who performs domestic
work only occasionally or sporadically and not on an
occupational basis.
This term shall not include children who are under foster
family arrangement which refers to children who are living
with a family or household of relative/s and are provided
access to education and given an allowance incidental to
education, I.e., "baon", transportation, school projects, and
school activities.
Because of these new terminologies prescribed in the law,
the use of the term “househelper” may no longer be legally
correct.
Is the employment contract required to be in writing?
Yes. The employment contract must be in writing and
should contain the conditions set by law.
What are the rights and privileges of a kasambahay?
The rights and privileges of the Kasambahay are as follows:
(a) Minimum wage;
(b) Other mandatory benefits, such as the daily and weekly
rest periods, service incentive leave, and 13th month pay;
(c) Freedom from employers' interference in the disposal of
wages;
(d) Coverage under the SSS, PhilHealth and Pag-IBIG laws;
(e) Standard of treatment;
(f) Board, lodging and medical attendance;
(g) Right to privacy;
(h) Access to outside communication;
(i) Access to education and training;
(j) Right to form, join, or assist labor organization;
(k) Right to be provided a copy of the employment contract;
(I) Right to certificate of employment;
(m) Right to terminate the employment; and
(n) Right to exercise their own religious beliefs and cultural
practices. The foregoing rights and privileges are discussed
below.
What is the minimum wage of kasambahay?
The minimum wage1 of the kasambahay as of December
2017 shall not be less than the following:
(a) ₱3,500 a month for those employed in the NCR;
(b) ₱2,500 to ₱4,000 a month for those employed in
chartered cities and first class municipalities; and
(c) ₱1,800 to ₱3,000 a month for those employed in other
municipalities.2
.
Are the minimum wages subject to review by the RTWPBs
or Regional Boards?
Yes. After one (1) year from the effectivity of the consent, shall make no deductions from the wages other
Kasambahay Law, and periodically thereafter, the Regional than that which is mandated by law such as for SSS,
Tripartite and Productivity Wage Boards (RTPWBs) shall PhilHealth or Pag-IBIG contributions.
review, and if proper, determine and adjust the minimum 3. Mode of payment. - It should be paid in cash and not by
wage rates of domestic workers.” means of promissory notes, vouchers, coupons, tokens,
tickets, chits, or any object other than the cash wage as
 What are some important principles on wage of provided for under this Act.
kasambahay? 4. Pay slip. – The employer shall at all times provide the
Frequency of payment of wages. - The wages of the Kasambahay with a copy of the pay slip containing the
Kasambahay shall be paid at least once a month. This is so amount paid in cash every pay day, and indicating all
because the minimum wage rates are on a monthly basis. deductions made, if any. The copies of the pay slip shall be
kept by the employer for a period of three (3) years.
The equivalent minimum daily wage rate of the 5. Prohibition on interference in the disposal of wages. – It
Kasambahay shall be determined by dividing the applicable shall be unlawful for the employer to interfere with the
minimum monthly rate by thirty (30) days. freedom of the Kasambahay in the disposition of his/her
wages, such as:
The amount of the minimum wage depends on the (a) Forcing, compelling, or obliging the Kasambahay to
geographical area where the Kasambahay works. purchase merchandise, commodities or other properties
Payment of wages: from the employer or from any other person; or
1. To whom paid. - It should be made on time directly to the (b) Making use of any store or services of such employer or
Kasambahay to whom they are due in cash at least once a any other person.
month. 6. Prohibition against withholding of wages. – It shall be
2. Deductions, prohibition; when allowed. - The employer, unlawful for an employer, directly or indirectly, to withhold
unless allowed by the Kasambahay through a written the wages of the Kasambahay. If the Kasambahay leaves
without any justifiable reason, any unpaid salary for a period Since R.A. No. 10361, a special law, is the most recent piece
not exceeding fifteen (15) days shall be forfeited. Likewise, of legislation, it should prevail over the general provision of
the employer shall not induce the Kasambahay to give up the Civil Code.
any part of the wages by force, stealth, intimidation, threat
or by any other means whatsoever.
What are important terms and conditions of employment c. Normal daily hours of work for working child-
of kasambahay? kasambahay is eight (8) hours per day.
The following is a rundown of the basic terms and d. 13th month pay. - The Kasambahay who has rendered at
conditions that should be observed in the employment of a least one (1) month of service is entitled to a 13th month
Kasambahay: pay which shall not be less than one-twelfth (1/12) of
a. Employable age. - Children whose age is below 15 years his/her total basic salary earned in a calendar year. The 13th
are absolutely prohibited to work as Kasambahay. month pay shall be paid not later than December 24 of
every year or upon separation from employment.
b. Normal daily hours of work. – Because R.A. No. 10361 e. Daily rest period. – The Kasambahay shall be entitled to
does not contain any provision on the number of normal an aggregate daily rest period of eight (8) hours.
hours of work that a Kasambahay should render in a day but F. Weekly rest period. - The Kasambahay shall be entitled to
merely prescribes said daily rest period of eight (8) hours at least twenty-four (24) consecutive hours of rest in a
per day, it may be concluded that the Kasambahay should week. The employer and the Kasambahay shall agree in
work for at least a total of sixteen (16) hours per day as writing on the schedule of the weekly rest day but the
normal hours of work. However, it must be noted that the preference of the Kasambahay, when based on religious
Labor Code does not contain any provision on the normal grounds, shall be respected.
hours of work of househelpers. Article 1695 of the Civil g. Service incentive leave. - A Kasambahay who has
Code, however, specifically provides that househelpers shall rendered at least one (1) year of service shall be entitled to
not be required to work for more than ten (10) hours a day. an annual service incentive leave of at least five (5) days
with pay. Any unused portion of said annual leave shall not household. He/she shall not be subjected to any kind of
be cumulative or carried over to the succeeding years. abuse, including repeated verbal or psychological, nor be
Unused leaves shall not be convertible to cash. inflicted with any form of physical violence or harassment or
any act tending to degrade his/her dignity, as defined under
h. Social security benefits. - A Kasambahay who has the Revised Penal Code, Violence Against Women and their
rendered at least one (1) month of service shall be covered Children Law (R.A. No. 9262), Special Protection of Children
by the Social Security System (SSS), Employees Against Child Abuse, Exploitation and Discrimination Act
Compensation Commission (ECC), Philippine Health (R.A. No. 7610) as amended by R.A. No. 9231, Anti-
Insurance Corporation (PhilHealth), and Home Development Trafficking in Persons Act of 2003 (R.A. No. 9208), and other
Mutual Fund or Pag-IBIG, and shall be entitled to all the applicable laws.
benefits in accordance with their respective policies, laws,
rules and regulations. l. Board, lodging and medical attendance. - The employer
i. Obligation of employer to register and enroll with SSS, shall provide for the basic necessities of the Kasambahay, to
PhilHealth, and Pag-IBIG. - As employer of the Kasambahay, include the following:
he/she shall register himself/herself with, and enroll the (1) At least three (3) adequate meals a day, taking into
latter as his/her employee to the SSS, PhilHealth, and Pag- consideration the Kasambahay's religious beliefs and
IBIG. cultural practices;
j. Deposits for loss or damage. - It shall be unlawful for the (2) Humane sleeping condition that respects the person's
employer or any other person to require a Kasambahay to privacy for live-in arrangement; and
make deposits from which deductions shall be made for the (3) Appropriate rest and medical assistance in the form of
reimbursement of loss or damage to tools, materials, first-aid medicines, in case of illnesses and injuries sustained
furniture and equipment in the household. during service without loss of benefits.
k. Standard of treatment. - The Kasambahay shall be m. Opportunities for education and training. - The
treated with respect by the employer or any member of the Kasambahay shall be afforded the opportunity to finish basic
education, which shall consist of elementary and secondary
education. He/she may be allowed access to alternative
learning systems and, as far as practicable, higher education
or technical vocational education and training.
n. Membership in labor organization. - The Kasambahay
shall have the right to join a labor organization of his/her
own choosing for purposes of mutual aid and collective
negotiation.
r. Health and safety. - The employer shall safeguard the
safety and health of the Kasambahay in accordance with the
standards which the DOLE shall develop through the Bureau
of Working Conditions (BWC) and the Occupational Safety
and Health Center (OSHC) within six (6) months from the
promulgation of this IRR. The said standards shall take into
account the peculiar nature of domestic work.
s. Prohibition on debt bondage. - It shall be unlawful for the
employer or any person acting on his/her behalf to place the
Kasambahay under debt bondage. “Debt bondage” refers to
the rendering of service by the Kasambahay as security or
payment for a debt where the length and nature of service
is not clearly defined or when the value of the service is not
reasonably applied in the payment of the debt.
t. Assignment to non-household work. - The employer shall
not assign the Kasambahay to work, whether in full or part-
time, in a commercial, industrial or agricultural enterprise at
a wage rate lower than that provided for agricultural or non-
agricultural workers.
If so assigned, the Kasambahay will no longer be treated as
such but as a regular employee of the establishment.
What are the rules on termination of Kasambahay?
a. Pre-termination of employment. – The following rules
shall be observed:
(1) In case the duration of employment is specified in the
contract, the Kasambahay and the employer may mutually
agree upon notice to terminate the contract of employment
before the expiration of its term.
(2) In case the duration is not determined by stipulation or
by nature of service, the employer or the Kasambahay may
give notice to end the employment relationship five (5) days
before the intended termination of employment.
b. Termination of employment initiated by the
Kasambahay. - The Kasambahay may terminate the
employment relationship at any time before the expiration
of the contract for any of the following causes:
(1) Verbal or emotional abuse of the Kasambahay by the
employer or any member of the household;
(2) Inhuman treatment including physical abuse of the
Kasambahay by the employer or any member of the
household;
(3) Commission of a crime or offense against the
Kasambahay by the employer or any member of the
household;
(4) Violation by the employer of the terms and conditions of
the employment contract and other standards set forth in
the law;
(5) Any disease prejudicial to the health of the Kasambahay,
the employer, or members of the household; and
(6) Other causes analogous to the foregoing.
If the Kasambahay leaves without cause, any unpaid salary
due, not exceeding the equivalent of 15 days’ work, shall be
forfeited. In addition, the employer may recover from the
Kasambahay deployment expenses, if any, if the services
have been terminated within six (6) months from
employment.
c. Termination of employment initiated by the employer. -
An employer may terminate the employment of the
Kasambahay at any time before the expiration of the
contract for any of the following causes:
(1) Misconduct or willful disobedience by the Kasambahay
of the lawful order of the employer in connection with the
former's work;
(2) Gross or habitual neglect or inefficiency by the
Kasambahay in the performance of duties;
(3) Fraud or willful breach of the trust reposed by the
employer on the Kasambahay;
(4) Commission of a crime or offense by the Kasambahay
against the person of the employer or any immediate
member of the employer's family;
(5) Violation by the Kasambahay of the terms and conditions
of the employment contract and other standards set forth
under the law;
(6) Any disease prejudicial to the health of the Kasambahay,
the employer, or members of the household; and
(7) Other causes analogous to the foregoing.
If the employer dismissed the Kasambahay for reasons other
than the above, he/she shall pay the Kasambahay the
earned compensation plus indemnity in the amount
equivalent to fifteen (15) days’ work.
d. Invalid ground for termination. - Pregnancy and marriage
of the Kasambahay are not valid grounds for termination of
employment.
e. Employment Certification. - Upon the termination of the work performed therein is under the active or personal
employment, the employer shall issue the Kasambahay, supervision by or for the latter.
within five (5) days from request, a certificate of d. “Field personnel” – It refers to a non-agricultural
employment indicating the nature, duration of the service employee who regularly performs his duties away from the
and work description. principal place of business or branch office of the employer
and whose actual hours of work in the field cannot be
determined with reasonable certainty.
6. HOMEWORKERS e. “Employer.” – It refers to any natural or artificial person
who, for his own account or benefit, or on behalf of any
What are important terms that should be noted in person residing outside the Philippines, directly or indirectly,
employment of homeworkers? or through any employee, agent, contractor, subcontractor
a. “Industrial homeworker” – It refers to a worker who is or any other person:
engaged in industrial homework. 1. delivers or causes to be delivered any goods, articles or
b. “Industrial homework” – It refers to a system of materials to be processed or fabricated in or about a home
production under which work for an employer or contractor and thereafter to be returned or to be disposed of or
is carried out by a homeworker at his/her home. Materials distributed in accordance with his direction; or
may or may not be furnished by the employer or contractor. 2. sells any goods, articles or materials for the purpose of
It differs from regular factory production principally in that, having such goods or articles processed in or about a home
it is a decentralized form of production where there is and then repurchases them himself or through another after
ordinarily very little supervision or regulation of methods of such processing.
work.
c. “Home” - It means any nook, house, apartment or other f. “Contractor” or “subcontractor” - It refers to any person
premises used regularly, in whole or in part, as a dwelling who, for the account or benefit of an employer, delivers or
place, except those situated within the premises or causes to be delivered to a homeworker, goods or articles to
compound of an employer, contractor/subcontractor and
be processed in or about his home and thereafter to be 3. Other articles, the processing of which requires exposure
returned, disposed of or distributed in accordance with the to toxic substances.
direction of the employer.
g. “Processing” - It refers to manufacturing, fabricating,
finishing, repairing, altering, packing, wrapping or handling
in any way connected with the production or preparation of 7. SOLO PARENTS
an article or material.
Flexible work schedule for solo parents
 How is homework paid? “Flexible work schedule” is the right granted to a solo
Immediately upon receipt of the finished goods or articles, parent to vary his/her arrival and departure time
the employer is required to pay the homeworker or the without affecting core work hours as defined by the
contractor or subcontractor, as the case may be, for the employer. [Sec. 3(e), RA 8972]
work performed less the corresponding homeworker’s share The employer shall provide a flexible work schedule
of SSS, PhilHealth and ECC premium contributions which for solo parents: Provided,
should be remitted by the contractor or subcontractor or 1. That the same shall not affect individual and
employer to the SSS with the employer’s share. However, company productivity:
where payment is made to a contractor or subcontractor, 2. That any employer may request exemption from
the homeworker should likewise be paid immediately after the above requirements from the DOLE on certain
the goods or articles have been collected from the workers. meritorious grounds. [Sec. 6, RA 8972]

What are prohibited homeworks? Work discrimination illegal

No homework shall be performed on the following: No employer shall discriminate against any solo
1. Explosives, fireworks and articles of like character; parent employee with respect to terms and
2. Drugs and poisons; and conditions of employment on account of his/her
status. [Sec. 7, RA 8972]
 after consulting the workers’ representatives/labor
organizations and employers.
8. NIGHT WORKERS c. Night worker, meaning.
"Night worker" means any employed person whose work
What is the new law on night work? R.A. No. 10151 covers the period from 10 o'clock in the evening to 6
[June 21, 2011]. o'clock the following morning provided that the worker
a. Significance of the law. performs no less than seven (7) consecutive hours of work.
R.A. No. 10151 has repealed Article 130 [Nightwork d. Mandatory facilities.
Prohibition] and Article 131 [Exceptions] of the Labor Code (1) Suitable first-aid and emergency facilities as provided for
and accordingly renumbered the same articles. Additionally, under Rule 1960 (Occupational Health Services) of the
it has inserted a new Chapter V of Title III of Book III of the Occupational Safety and Health Standards (OSHS);
Labor Code entitled “Employment of Night Workers” which (2) Lactation station in required companies pursuant to R.A.
addresses the issue on nightwork of all employees, including No. 10028 (The Expanded Breastfeeding Promotion Act of
women workers. Chapter V covers newly renumbered 2009);
Articles 154 up to 161 of the Labor Code. (3) Separate toilet facilities for men and women;
(4) Facility for eating with potable drinking water; and
b. Coverage of the law. (5) Facilities for transportation and/or properly ventilated
The law on nightwork applies not only to women but to all temporary sleeping or resting quarters, separate for male
persons, who shall be employed or permitted or suffered to and female workers, shall be provided except where any of
work at night, except those employed in agriculture, stock the following circumstances is present:
raising, fishing, maritime transport and inland navigation, i. Where there is an existing company guideline, practice or
during a period of not less than seven (7) consecutive policy, CBA or any similar agreement between management
hours, including the interval from midnight to five o'clock and workers providing for an equivalent or superior benefit;
in the morning, to be determined by the DOLE Secretary, or
ii. Where the start or end of the night work does not fall
within 12 midnight to 5 o'clock in the morning; or
iii. Where the workplace is located in an area that is
accessible 24 hours to public transportation;
iv. Where the number of employees does not exceed a
specified number as may be provided for by the DOLE
Secretary in subsequent issuances.
e. Maternity leave benefits under existing laws cannot be
diminished.
Women Night Workers
Employers shall ensure that measures shall be taken to ensure
that an alternative to night work for pregnant and nursing
employees who would otherwise be called upon to perform
such work. Such measures may include:
a. Transfer to day work – As far as practicable, pregnant or
nursing employees shall be assigned to day work, before and
after childbirth, for a period of at least sixteen (16) weeks,
which shall be divided between the time before and after
childbirth;
Medical certificate issued by competent physician
(OB/Gyne/Pedia) is necessary for the grant of:
1. additional periods of assignment to day work during
pregnancy or after childbirth, provided that such shall not
be more than 4 weeks or for a longer period as may be agreed
upon by employer and worker;
2. extension of maternity leave; and
3. clearance to render night work.
b. Provision of social security benefits – in accordance with
provisions of Act No 8282 (Social Security Act of 1997) and
other existing company policy or CBA.
c. Extension of maternity leave – where transfer to day work is
not possible, but requires recommendation by competent
physician; without pay or using earned leave credits, if any.
[Art. 158, , as amended by RA 10151; Sec. 6, Rule XV,
Book III, IRR, through D.O. No. 119-12]
Protection against dismissal and loss of benefits attached to
employment status, seniority, and access to promotion
Where no alternative work can be provided to a woman
employee who is not in a position to render night work, she
shall be allowed to go on leave or on extended maternity leave,
using her earned leave credits.
A woman employee shall NOT be dismissed for reasons of
pregnancy, childbirth and childcare responsibilities as defined
under this Rule. She shall NOT lose the benefits regarding her
employment status, seniority, and access to promotion which
may attach to her regular night work position.

9. MIGRANT WORKERS
Overseas Filipino Worker/Migrant Worker – A person who is
to be engaged, is engaged or has been engaged in a
remunerated activity:
1. In a state of which he or she is not a citizen or
2. On board a vessel navigating the foreign seas other than a
government ship used for military or non-commercial purposes
3. On an installation located offshore or on the high seas.
Principals and agencies have primary responsibility for
repatriation
The repatriation of the worker or his/her remains, and the
transport of his/her personal effects shall be the primary
responsibility of the principal, employer or agency that
recruited or deployed him/her abroad. All costs attendant
thereto shall be borne by the principal, employer or the agency
concerned.
Principals and agencies to advance repatriation costs
Principals and agencies have the obligation to advance the
costs of repatriation, and to immediately repatriate the
migrant worker without a prior determination of the worker’s
employment. However, after the worker has returned to the
country, the principal or agency may recover the cost of
repatriation from the worker if the termination of employment
was solely due to the worker’s fault.
Emergency repatriation
The OWWA, in coordination with DFA, and in appropriate
situations, with international agencies, shall undertake the
repatriation of workers in cases of war, epidemic, disasters or
calamities, natural or man-made, and other similar events,
without prejudice to reimbursement by the responsible
principal or agency within sixty (60) days from notice.
Underage migrant workers; repatriation is mandatory
Upon discovery or upon being informed of the presence of
migrant workers whose actual ages fall below the minimum
age requirement for overseas deployment, the responsible
officers in the Foreign Service shall without delay repatriate
said workers and advise the DFA through the fastest means of
communication available of such discovery and other relevant
information.
Prohibition on bonds and deposits
In no case shall a private recruitment/manning agency require
any bond or cash deposit from the worker to guarantee
performance under the contract for his/her repatriation
Compulsory insurance coverage for all migrant workers
Each migrant worker shall be covered by a compulsory
insurance policy which shall be secured at no cost to said
worker. Such insurance policy shall be effective for the
duration of the migrant worker’s employment.
The insurance policy shall cover:
a. Accidental death;
b. Natural death;
c. Permanent total disablement;
d. Repatriation cost of the worker when his/her employment is
terminated by the employer without any valid cause, or by the
employee with just cause, including the transport of his/her
personal belongings;
e. Subsistence allowance benefit for a migrant worker who
is involved in a case for litigation for the protection of
his/her rights in the receiving country;
f. Money claims arising from employer’s liability which may to consider this topic under “Kinds of Employment” alongside such
be awarded or given to the worker in a judgment or
settlement of his/her case in the NLRC;
g. Compassionate visit. When a migrant worker is
hospitalized and has been confined for at least seven (7)
consecutive days, he shall be entitled to a compassionate
visit by one (1) family member or a requested individual;
h. Medical evacuation. When an adequate medical facility is
not available proximate to the migrant worker, as
determined by the insurance company's physician and/or a
consulting physician, the insurance provider shall provide
for the worker’s evacuation; and
i. Medical repatriation. When medically necessary as
determined by the attending physician, repatriation under
medical supervision to the migrant worker's residence shall
be undertaken by the insurance provider at such time that
the migrant worker is medically cleared for travel by
commercial carrier.
10. SECURITY GUARDS
1. NEW TOPIC. The topic of Security Guards is newly introduced
in the 2019 Syllabus. There is no single provision in the Labor Code
on security guards; hence, it is a source of wonder for the Syllabus
topics as regular, casual, probationary, project, seasonal and fixed-
term employments. Perhaps, the reason for its inclusion therein is
for the bar candidate to be able to address the issue of the
employment status of security guards and other private security
personnel in relation to their employer, the security agency, and
to the principal/client, to whom they have been assigned or
farmed out.
2. DEPARTMENT ORDER NO. 150, SERIES OF 2016.
In any case, there is one issuance on security guards which
may be relevant for purposes of preparing for the bar exams
and that is, Department Order No. 150, Series of 2016,
entitled “Revised Guidelines Governing the Employment and
Working Conditions of Security Guards and other Private
Security Personnel in the Private Security Industry” issued by
the DOLE Secretary on February 09, 2016.
More specifically, this Department Order was issued for the
purpose of ensuring compliance with mandated
employment benefits and working conditions for security
guards and other private security personnel in the private
security industry. It applies to all private security, detective,
investigative agencies or operators, their principals or
clients, and all companies employing security guards and
other private security personnel.
3. EMPLOYMENT OF SECURITY GUARDS – PERFECT
EXAMPLE OF JOB CONTRACTING.
The employment of security guards is the perfect example
of job contracting or commonly known as
“contractualization” where the following trilateral
relationship between the following parties exists:
(1) “Principal” refers to any individual, company,
cooperative, or establishment, including government
agencies and government-owned and controlled-
corporations, who or which puts out or farms out a security
and/or detective job, service, or work to a private Security
Service Contractor (SSC).
(2) Contractor called “Security Service Contractor (SSC)” or
“Private Security Agency (PSA)” which
refers to any person, association, partnership, firm, or
private corporation engaged in contracting, recruitment,
training, furnishing, or posting of security guard and other
private security personnel to individuals, corporations,
offices and organizations, whether private or public, for
their security needs as the Philippine National Police (PNP)
may approve.
(3) Contractor’s employees supplied or farmed out to the
Principal called:
(a) "Security Guard" which refers to any person who offers
or renders personal service to watch or secure a residence,
business establishment, building, compound, any other area
or property; or inspects, monitors, or performs body checks
or searches of individuals or baggage and other forms of
security inspection.
(b) “Private Security Personnel” which refers to natural security service, job, or work being farmed out for a definite
persons, including private detectives, security consultants or predetermined period.
and security officers, employed by private security agency or
firm, to render security and/or detective services.

Consequently, the following terms of job contracting equally

apply to the employment of security guards:
(1) "Trilateral Relationship" which refers to the relationship
in contracting or subcontracting arrangement where there is
a contract for a specific security job, work, or service IV. POST-EMPLOYMENT
between the principal and the SSC/PSA, and a contract of A. EMPLOYER-EMPLOYEE RELATIONSHIP
employment between the latter and its security guards. 1. TESTS TO DETERMINE EXISTENCE
There are three (3) parties involved in these arrangements:
the principal who decides to farm out a security job, work, TESTS TO DETERMINE EXISTENCE OF EMPLOYER-EMPLOYEE
or service to a security service contractor; the SSC/PSA who RELATIONSHIP
has the capacity to independently undertake the Four-Fold Test
performance of the security job, work, or service; and the What is the 4-fold test of existence of employer-employee
security guards and other private security personnel relationship?
engaged by the SSC/PSA to accomplish the security job, 1. Selection and engagement of the employee;
work, or service. 2. Payment of wages or salaries;
(2) “Service Agreement” which refers to the contract 3. Exercise of the power of dismissal; or
between the principal and the SSC/PSA containing the terms 4. Exercise of the power to control the employee’s conduct.
and conditions governing the performance or completion of
What is the control test or also known as the MEANS AND
METHOD CONTROL TEST?
The 4th test above, the control test, is the controlling test
which means that the employer controls or has reserved the
right to control the employee not only as to the result of
the work to be done but also as to the means and methods
by which the same is to be accomplished.
The three (3) terms: (1) means, (2) methods and (3) results
are the critical elements of the control test, thus:
Situation 1: If the employer controls the means and
methods of performing the job, work or service, including
the results thereof, then the arrangement is one of
employer-employee relationship.
Situation 3: If the so-called employer does not control such
means and methods but is only interested in the results
thereof, then the arrangement is called “independent job
contracting” or “contractualization”, the party controlling
the means and methods is called the independent
contractor and the party interested only in the results is
called the principal/client/indirect employer/statutory
employer.
Two-Tiered Test
What is the 2-tiered test of employment relationship?
The two-tiered test enunciated in Francisco v. NLRC,1 is
composed of:
(1) The putative employer’s power to control the employee
with respect to the means and methods by which the work
is to be accomplished [control test]; and
(2) The underlying economic realities of the activity or
relationship [broader economic reality test].2
Employment relationship under the control test is
determined under the same concept as discussed above,
that is, by asking whether “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 to
be used in reaching such end.”3 Under the economic reality
test, the proper standard of economic dependence is
whether the worker is dependent on the alleged employer
for his continued employment in that line of business.4
These 2-tiered test applies to cases where there are several
parties alleged to be employers of one individual. The
determinant factor is economic dependency of such
individual. In other words, under the economic reality test,
the question to ask is - among the parties alleged to be the
employer, to whom is the individual economically
dependent?
Following the broader economic reality test, the Supreme
Court found petitioner in Orozco v. The Fifth Division of the
Hon. CA,5 who is a columnist in the Philippine Daily Inquirer
(PDI), not an employee of PDI but an independent
contractor. Thus:
“Petitioner’s main occupation is not as a columnist for
respondent but as a women’s rights advocate working in
various women’s organizations. Likewise, she herself admits
that she also contributes articles to other publications. Thus,
it cannot be said that petitioner was dependent on
respondent PDI for her continued employment in
respondent’s line of business.
“ (b) The contractor has substantial capital to carry out the
Is it necessary to have a written contract of employment
in order to establish employer-employee relationship?
No. It may be an oral or written contract. A written contract
is not necessary for the creation and validity of the
relationship.
The only exception is in the case of Kasambahay where,
under the Kasambahay Law, it is required that the contract
of employment should be in writing.
2. LEGITIMATE SUBCONTRACTING AS
DISTINGUISHED FROM LABOR-ONLY
CONTRACTING
a. ELEMENTS
a. LEGITIMATE JOB CONTRACTING
What are the elements of legitimate job contracting?
(NOTE: The following THREE (3) words are very important:
MANNER & METHOD and RESULT in determining the
elements of legitimate job contracting arrangement).
(a) The contractor is engaged in a distinct and independent
business and undertakes to perform the job or work on its
own responsibility, according to its own manner and
method;
job farmed out by the principal on his own account, manner
and method, investment in the form of tools, equipment,
machinery and supervision;
(c) In performing the work farmed out, the contractor is free
from the control and/or direction of the principal in all
matters connected with the performance of the work
EXCEPT as to the result thereto; and
(d) The Service Agreement ensures compliance with all the
rights and benefits for all the employees of the contractor
under labor laws.
Absence of any of the foregoing requisites makes it a
labor-only contracting arrangement.
Therefore:
 If the first party has control over the manner and method
of performing the job or work, including its result, and the
second party who supplied the workers to the first party to
perform the job or work has no such control over such
manner and method, then the first party is the direct
employer of the workers supplied by the second party to
perform the job or work and the second party shall not be
considered as a legitimate “contractor” but a “labor-only
contractor.”
 Contrarily, if the first party has NO control over the
manner and method of performing the job or work as such
control thereover is reposed on the second party, and the
first party’s interest pertains only to the result of the
performance of the job or work, then there exists here a
legitimate job contracting arrangement where the first
party is considered the principal and the second party, the
contractor.
Example:
Principal – ABC University Contractor – XYZ Security
Agency
Contractor’s Employees – Security Guards assigned by
Contractor to Principal
Scenario 1: If it is ABC University that controls the manner
and method of performing the job or work of XYZ Security
Agency’s security guards (such as when it is ABC University,
that (1) sets the schedule of the Security Guards; (2) makes
the assignments to their respective posts; (3) monitors their
attendance/absences; (3) supervises their every action and
performance of their duties, and the like), then, ABC
University is the direct employer of the guards and the XYZ
Security Agency is but a labor-only contractor.
Scenario 2: If it is XYZ Security Agency which controls such
manner and method of performing the job or work of the
Security Guards it assigned to ABC University, and ABC
University is interested only in the result of the
arrangement (such as the safety of the students, teachers
and employees, safeguard of school property and premises,
peace and tranquility inside its campus, etc.), then, there is
here legitimate job contracting arrangement where ABC
University is the principal, XYZ Security Agency is the
contractor, and the Security Guards, the contractor’s
employees.
What is the amount of SUBSTANTIAL CAPITAL required
under the new Rules?
According to Department Order No. 174, Series of 2017
(issued on March 16, 2017), the following consists of
substantial capital:
1. In the case of corporations, partnerships or cooperatives
– paid-up capital stocks/shares of at least P5 Million; or
2. In the case of single proprietorship - a net worth of at
least P5 Million.
NOTE: “Substantial capital” and “investment in tools, etc.”
are two separate requirements.
“Substantial capital” and “investment in tools, equipment,
implements, machineries and work premises” should be
treated as two (2) distinct and separate requirements in
determining whether there is legitimate job contracting
arrangement. It is enough that only one of these two
requisites is complied with to make the job contracting
arrangement legitimate and valid.
May individuals engage in legitimate job contracting?
Yes. Legitimate job contracting may not only be engaged by 1. Sonza v. ABS-CBN Broadcasting Corporation1 - TV and
corporations, partnerships or single proprietorships.
Individuals may become legitimate job contractors
themselves for as long as they have SPECIAL SKILLS,
TALENTS or EXPERTISE which are considered equivalent of
the requirement regarding “INVESTMENT IN TOOLS.”
Are individuals engaged as legitimate job contractors
required to fulfill the requisites of legitimate job
contracting as afore-described?
NO. They need not be registered as independent
contractors with DOLE; they need not have substantial
capital (such as the P5 Million stated above). All that they
are required is to have their tools consisting of SPECIAL
SKILLS, TALENT or EXPERTISE.
What are examples of individuals as independent
contractors?
radio talents and others with special talents and skills may
not be employees but legitimate independent contractors.
2. Orozco v. The Fifth Division of the Honorable Court of
Appeals2 - A newspaper columnist is not an employee but
an independent contractor of the newspaper publishing the
column.
3. Jose Mel Bernarte v. Philippine Basketball Association3 -
Basketball referee is an independent contractor.
4. Semblante and Pilar v. CA, Gallera de Mandaue, et al.4 - contractor is presumed to be a labor-only contractor.
Cockpit masiador and sentenciador are independent
contractors.
5. Escasinas v. Shangri-la’s Mactan Island Resort5 - A doctor What are OTHER ILLICIT FORMS OF EMPLOYMENT IN D.O.
may be engaged as an independent contractor.
b. LABOR-ONLY CONTRACTING
Is labor-only contracting allowed under the law?
NO, it is absolutely prohibited.
What are the elements of labor-only contracting?
(a) The contractor does not have either (i) SUBSTANTIAL
CAPITAL or (ii) INVESTMENTS in the form of tools,
equipment, machineries, supervision, work premises,
among others, AND the contractor's employees recruited
and placed are performing activities which are directly
related to the main business operation of the principal;
or
(b) The contractor does not exercise the right to control
over the performance of the work of the employee.
NOTE: There is labor-only contracting even if only one of the
two (2) elements above is present. Further, an unregistered
Registration as independent contractor should be made
with the DOLE.
174, Series of 2017, (IN ADDITION TO LABOR-ONLY
CONTRACTING)?
The following are considered as such (formerly called
“PROHIBITIONS” under previous Department Orders):
a) When the principal farms out work to a “Cabo” which
term refers to a person or group of persons or to a labor
group which, under the guise of a labor organization,
cooperative or any entity, supplies workers to an employer,
with or without any monetary or other consideration,
whether in the capacity of an agent of the employer or as an organization as provided in Article 259 [248] of the Labor
ostensible independent contractor. Code, as amended.

b) Contracting out of job or work through an “In-house f) Requiring the contractor's/subcontractor's employees to
Agency” which term refers to a contractor which is owned, perform functions which are currently being performed by
managed, or controlled, directly or indirectly, by the the regular employees of the principal.
principal or one where the principal owns/represents any
share of stock, and which operates solely or mainly for the
principal. g) Requiring the contractor's/subcontractor's employees to
sign, as a precondition to employment or continued
c) Contracting out of job or work through an “In-house employment, an antedated resignation letter; a blank
Cooperative” which merely supplies workers to the payroll; a waiver of labor standards including minimum
principal. An “In-house Cooperative” refers to a cooperative wages and social or welfare benefits; or a quitclaim
which is managed, or controlled directly or indirectly by the releasing the principal or contractor from liability as to
principal or one where the principal or any of its officers payment of future claims; or require the employee to
owns/represents any equity or interest, and which operates become member of a cooperative.
solely or mainly for the principal.
h) Repeated hiring by the contractor/subcontractor of
d) Contracting out of a job or work by reason of a strike or employees under an employment contract of short
lockout, whether actual or imminent. duration.

e) Contracting out of a job or work being performed by i) Requiring employees under a contracting/subcontracting
union members and such will interfere with, restrain or arrangement to sign a contract fixing the period of
coerce employees in the exercise of their rights to self- employment to a term shorter than the term of the Service
Agreement, unless the contract is divisible into phases for 2. In the former, the principal is considered only an “indirect
which substantially different skills are required and this is employer”; while in the latter, the principal is considered
made known to the employee at the time of engagement. the “direct employer” of the employees supplied by the
labor-only contractor.
j) Such other practices, schemes or employment 3. In the former, the solidary obligation of the principal and
arrangements designed to circumvent the right of workers the legitimate job contractor is only for a limited purpose,
to security of tenure. that is, to pay the wages of the contractor’s employees
supplied to the principal.. Other than this obligation of
SAME EFFECT AS LABOR-ONLY CONTRACTING. paying the wages, the principal is not responsible for any
The foregoing illicit acts do not constitute labor-only claim made by the contractor’s employees; while in the
contracting but the effect is similar to labor-only contracting latter, the principal becomes solidarily liable with the labor-
in that the principal is deemed the direct employer of the only contractor to the latter’s employees in the same
contractor's employees. manner and extent that the principal is liable to employees
directly hired by him/her.
What are the distinctions between legitimate job
contracting and labor-only contracting? b. TRILATERAL RELATIONSHIP
The chief distinctions between legitimate job contracting,
on the one hand, and the prohibited labor-only contracting, What is meant by trilateral relationship?
on the other, may be summed up as follows: As distinguished from employment relationship which is
1. In the former, no employer-employee relationship exists “bilateral” in nature, involving as it does only two
between the contractual employees of the job contractor (2) parties, namely: (1) the employer, and (2) the employee,
and the principal; while in the latter, an employer-employee in legitimate job contracting, it is “trilateral” in character,
relationship is created by law between the principal and the there being three (3) parties involved, to wit:
employees supplied by the labor-only contractor.
1. The principal who farms out a job, work or service to a
contractor;
2. The contractor who has the capacity to independently
undertake the performance of the job, work or service; and
3. The contractor’s workers engaged by the contractor and
farmed out to the principal to accomplish the job, work or
service.
What are the contracts involved in this trilateral
relationship?
Only two (2) contracts are involved, namely:
1) Service Agreement between the principal and the
contractor wherein the obligation arising therefrom is
civil in nature and thus cognizable by the regular courts.
2) Employment contract between the contractor and its
workers supplied to the principal.
Is there any employment relationship and/or contractual
relationship between the principal and the contractor’s
workers farmed out to the principal?
None. There is no employment relationship nor any form of
contractual relationship of whatsoever nature between the
principal and the workers supplied by the contractor. Hence,
the principal can ask the contractor to remove any of the
latter’s employees assigned or farmed out to it anytime
without need to observe due process.
c. LIABILITIES
What are the EFFECTS of labor-only contracting?
1. The labor-only contractor will be treated as the agent or
intermediary of the principal. Since the act of an agent is
the act of the principal, representations made by the labor-
only contractor to the employees will bind the principal.
2. The principal will become the direct employer as if it
directly employed the workers supplied by the labor- only
contractor to undertake the contracted job or service. The
principal will be responsible to them for all their
entitlements and benefits under labor laws.
3. The principal and the labor-only contractor will be
solidarily treated as the direct employer.

3. KINDS OF EMPLOYMENT
What is the general classification of employment?
There are five (5) classifications of employment:
(a) Regular employees referring to those who have been
“engaged to perform activities which are usually necessary
or desirable in the usual business or trade of the employer”;
(b) Project employees referring to those “whose
employment has been fixed for a specific project or
undertaking, the completion or termination of which has
been determined at the time of the engagement of the
employee”;
(c) Seasonal employees referring to those who work or
perform services which are seasonal in nature, and the
employment is for the duration of the season;
(d) Casual employees referring to those who are not regular,
project, or seasonal employees;
(e) Fixed-term employees whose term is freely and
voluntarily determined by the employer and the employee.
NOTE: This is not provided in the Labor Code.
But in the 2019 Syllabus, the following were added to the
enumeration of the Kinds of Employment:
1. Probationary
2. Security guards
3. Floating status
We shall therefore include a discussion on these three
below.
What is the default employment?
The default employment is regular employment. This means
that generally, in the absence of any specific agreement to
the contrary, the employer-employee relationship is
deemed to be regular in nature. Therefore, in order to make
the employment some other kind of employment, such as
project, seasonal, casual, fixed-term or probationary, there
must be a written contract of employment stipulating the
specific kind of employment.
a. REGULAR
How does one become a regular employee?
Under the Labor Code, regular employment may be attained
in either of three (3) ways, namely:
1. By nature of work. - The employment is deemed regular
when the employee has been engaged to perform activities b. CASUAL
which are usually necessary or desirable in the usual
business or trade of the employer. What is the most important distinguishing feature of
casual employment?
2. By period of service. - The employment is reckoned as The most important distinction is that the work or job for
regular when the employee has rendered at least one (1) which he was hired is merely incidental to the principal
year of service, whether such service is continuous or business of the employer and such work or job is for a
broken, with respect to the activity in which he is employed definite period made known to the employee at the time of
and his employment shall continue while such activity exists. engagement.
Capule v. NLRC, Yakult Philippines, Inc., G.R. No. 90653,
3. By probationary employment. - The employment is Nov. 12, 1990.
considered regular when the employee is allowed to work Private respondent company is engaged in the manufacture
after a probationary period. of cultured milk which is sold under the brand name
“Yakult.” Petitioners were hired to cut cogon grass and
Is the manner or method of paying wage material in weeds at the back of the factory building used by private
determining regularity of employment? respondents. They were not required to work on fixed
No. The manner and method of payment of wage or salary is schedule and they worked on any day of the week on their
immaterial to the issue of whether the employee is regular own discretion and convenience. They were held to be
or not. So, the fact that an employee is paid on a daily basis casual employees because cutting cogon grass and weeds is
or monthly basis is inconsequential on the regularity issue. but incidental to the principal business of the company.

When does a casual employee become regular?

Casual employee becomes regular after one year of service
by operation of law. The one (1) year period should be
reckoned from the hiring date. Repeated rehiring of a casual
employee makes him a regular employee.
c. CONTRACTUAL
See Discussion on Fixed-Term Employees
Contractual employees defined
Those who employment is governed by the contracts they sign
every time they are hired. Their employment is terminated
when the contract expires, which is usually fixed for a certain
period of time (e.g., seafarers).
No implied renewal upon expiration
Absent a mutually-agreed upon agreement, there is no renewal
or extension of an expired contract.
Termination of contract
The existence of a contract does not mean there can be no
illegal dismissal. Due process (substantial and procedural) must made clear to the employee at the time of hiring.
still be observed in termination and pre-termination of the
contract.
d. PROJECT
What is the litmus test of project employment?
The litmus test of project employment, as distinguished
from regular employment, is whether or not the project
employees were assigned to carry out a specific project or
undertaking, the duration and scope of which were
specified at the time the employees were engaged for that
project.
A true project employee should be assigned to a project
which begins and ends at determined or determinable times
and be informed thereof at the time of hiring.
What are the 6 indicators of project employment?
Either one or more of the following circumstances, among
others, may be considered as indicator/s that an employee
is a project employee:
1. The duration of the specific/identified undertaking for
which the worker is engaged is reasonably determinable.
2. Such duration, as well as the specific work/service to be
performed, are defined in an employment agreement and is
3. The work/service performed by the employee is in
connection with the particular project or undertaking for
which he is engaged.
4. The employee, while not employed and awaiting
engagement, is free to offer his services to any other
employer.
5. A report of the termination of employment in the
particular project/undertaking is submitted to the DOLE
Regional Office having jurisdiction over the workplace,
within thirty (30) days following the date of his separation
from work.
6. An undertaking in the employment contract by the
employer to pay completion bonus to the project employee
as practiced by most construction companies.
Is length of service material in determining validity of
project employment?
No. Length of service is not a controlling determinant of
employment tenure.
What are some principles on project employment?
1. Project employees should be informed of their status as
such at inception of the employment relationship.
2. There must be a written contract of project employment
stating the duration of the project employment as well as
the particular work or service to be performed. A written
project employment contract is an indispensable
requirement.
3. Intervals in employment contracts indicate project
employment.
4. Continuous, as opposed to intermittent, rehiring shows
that employee is regular.
5. “Project-to-project” basis of employment is valid.
On termination of project employment.
1. Project employees enjoy security of tenure only during
the term of their project employment.
2. Project employees have presumably become regular
employees if they are allowed to work beyond the
completion of the project or any phase thereof to which
they were assigned or after the “day certain” which they
and their employer have mutually agreed for its completion.
Having become regular employees, they can no longer be
terminated on the basis of the completion of the project or
any phase thereof to which they were deployed.
e. SEASONAL
Can a seasonal employee become a regular seasonal
employee?
Yes, provided the following requisites are complied with:
1. The seasonal employee should perform work or services
that are seasonal in nature; and
2. They must have also been employed for more than one
(1) season.
Can a regular seasonal worker file an illegal dismissal case
in the event he is not hired for the next season?
Yes. The reason is, being a regular seasonal employee, the
employer should re-hire him in the next season. During off-
season, his employment is deemed suspended and he is
considered as being on leave of absence without pay.
f. FIXED-TERM
What are the requisites in order for fixed-term
employment to be valid?
The two (2) requisites or criteria for the validity of a fixed-
term contract of employment are as follows:
1. The fixed period of employment was knowingly and
voluntarily agreed upon by the parties, without any force,
duress or improper pressure being brought to bear upon
the employee and absent any other circumstances vitiating
his consent; or
2. It satisfactorily appears that the employer and employee
dealt with each other on more or less equal terms with no
moral dominance whatever being exercised by the former
on the latter.
Is fixed-term employment valid if the job is directly related
to the principal business of the employer?
Yes. Fixed-term employment is the only exception to the rule
that one becomes regular if he is made to perform activities
directly related to the principal business of the employer
(Regularity by virtue of nature of work)
Thus, it was ruled in Philippine Village Hotel v. NLRC,1 that the
fact that private respondents were required to render services
necessary or desirable in the operation of petitioner’s business
for the duration of the one-month dry-run operation period,
did not in any way impair the validity of their contracts of
employment which specifically stipulated that their
employment was only for one (1) month.
When does a fixed-term employee become regular?
1. When he is allowed to work beyond the agreed fixed term.
2. When there are successive renewals of fixed-period
contracts.
 What is the 555 Doctrine?
The 555 Doctrine is a scheme of the employer in hiring
workers on a uniformly fixed 5-month basis and replacing
them upon the expiration of their contracts with other
workers with the same employment status circumvents
their right to security of tenure.
 g. PROBATIONARY; PRIVATE SCHOOL Yes, but only upon the mutual agreement in writing by the
TEACHERS employer and the probationary employee.
What is the effect of allowing a probationary employee to
Is the period of 6 months in the law on probationary work beyond the probationary period?
employment (Article 296 He is considered a regular employee.
[281], LC) the minimum or maximum period?
What is the effect if there is no written contract providing
The answer is it is neither the minimum nor the maximum for probationary employment?
period of probationary employment. The 6-month period is If there is no written contract, the employee is considered a
mentioned in the law for purposes of setting the standard regular employee from day one of his employment.
period. Proof that it is not the maximum is the case of And even if there is one, he is deemed regular if there is no
Buiser v. Leogardo where the probationary period of 18 stipulation on probationary period.
months was considered reasonable. In other words,
probationary period may be for a day, a week, a month or What is the distinction between probationary
several months, depending on the reasonable discretion ofemployment and fixed-term employment?
management. The distinction lies in the intention of the parties. If the
parties intend to make their relationship regular after the
How is probationary period, say, of 6 months computed? lapse of the period, say of 6 months, then what is
The 6-month probationary period should be reckoned “from contemplated is probationary employment; if there is no
the date of appointment up to the same calendar date of such intention of the parties, then, what they have entered
the 6th month following.” into is simply a fixed-term contract.

May probationary period be extended?


What are the grounds to terminate probationary
employment?
Under Article 281, a probationary employee may be
terminated only on three (3) grounds, to wit:
1. For a just cause; or
2. For authorized cause; or
3. When the probationary employee fails to qualify as a
regular employee in accordance with reasonable standards
made known by the employer to the employee at the start
of the employment.
Is procedural due process required in termination of
probationary employment?
Yes, but only in the case of Numbers 1 and 2 above.
Due process for Number 3 is different and unique in the
sense that it requires simply the service of a written notice
of termination, not verbal, informing the probationary
employee of the termination of his probationary
employment and attaching thereto the result of the
performance evaluation conducted on him. As clearly
pointed out above, it is a fundamental requirement that the
reasonable standards expected of the employee during his
probationary employment was made known to him at the
time of his engagement. Necessarily, at the termination
thereof, the supposed performance evaluation should be
presented to him. As a matter of due process, an employee
has the right to know whether he has met the standards for
which his performance was evaluated. Should he fail, he
also has the right to know the reasons therefor.
When should termination of probationary employment be
made?
Termination to be valid must be done prior to lapse of
probationary period. Termination a day or a few days after
the lapse of the probationary period cannot be done
without just or authorized cause as he has already become a
regular employee by that time
Private school teachers
A private school teacher’s entitlement to security of tenure
is governed by the Manual of Regulations for Private Schools
and not the Labor Code. Thus, for a private school teacher
to acquire permanent employment (security of tenure),
these must be present:
1. Must be a full-time teacher
2. Must have rendered 3 consecutive years of service
3. Service must have been satisfactory.
 devices, redundancy, retrenchment, closure or cessation of
business operations or disease.
B. TERMINATION BY EMPLOYER i. JUST CAUSES
1. REQUISITES FOR VALIDITY
What are the just causes under the Labor Code?
What is meant by TWO-FOLD DUE PROCESS requirement? The just causes in the Labor Code are found in the following
Dismissal of employees requires the observance of the two- provisions thereof:
fold due process requisites, namely: (1) Article 297 [282] - (Termination by the Employer) which
1. Substantive aspect which means that the dismissal must be provides for the following grounds:
for any of the (1) just causes provided under the Labor Code or
(a) Serious misconduct or willful disobedience by the
the company rules and regulations promulgated by the
employee of the lawful orders of his employer or
employer; or (2) authorized causes under the Labor Code; and
representative in connection with his work;
2. Procedural aspect which means that the employee must be
accorded both STATUTORY DUE PROCESS AND CONTRACTUAL
(b) Gross and habitual neglect by the employee of his duties;
DUE PROCESS. (c) Fraud or willful breach by the employee of the trust
reposed in him by his employer or duly authorized
a. SUBSTANTIVE DUE PROCESS representative;
What is the distinction between JUST CAUSES and (d) Commission of a crime or offense by the employee
AUTHORIZED CAUSES? against the person of his employer or any immediate
A dismissal based on a just cause means that the employee has member of his family or his duly authorized representatives;
committed a wrongful act or omission; while a dismissal based (e) Other causes analogous to the foregoing.
on an authorized cause means that there exists a ground which
the law itself allows or authorizes to be invoked to justify the (2) Article 279(a) [264(a)] - (Prohibited Activities) which
termination of an employee even if he has not committed any provides for the termination of the following:
wrongful act or omission, such as installation of labor-saving
(a) Union officers who knowingly participate in an illegal
strike and therefore deemed to have lost their employment
status.
(b) Any employee, union officer or ordinary member who
knowingly participates in the commission of illegal acts
during a strike (irrespective of whether the strike is legal or
illegal),
is also deemed to have lost his employment status.
(3) Article 278(g) [263(g)] - (National Interest Cases) where
strikers who violate orders, prohibitions and/or injunctions
as are issued by the DOLE Secretary or the NLRC, may be
imposed immediate disciplinary action, including dismissal
or loss of employment status.
(4) Article 259(e) [248(e)] - (Union Security Clause) where
violation of the union security agreement in the CBA may
result in termination of employment. Under this clause, the
bargaining union can demand from the employer the
dismissal of an employee who commits a breach of union
security arrangement, such as failure to join the union or to
maintain his membership in good standing therein. The
same union can also demand the dismissal of a member
who commits an act of disloyalty against it, such as when
the member organizes a rival union.
Is dismissal based on Company Code of Discipline or
Company Rules and Regulations illegal?
No.
In Sampaguita Auto Transport Corporation v. NLRC, the
Supreme Court pronounced that the Court of Appeals erred
in ruling that the dismissal of private respondent, a bus
driver of petitioner, was illegal because the “grounds upon
which petitioners based respondent’s termination from
employment, viz.: ‘hindi lahat ng schedule nailalabas,’
[‘]mababa ang revenue ng bus, laging kasama an[g] asawa
sa byahe’ and ‘maraming naririnig na kwento tungkol sa
kanya, nag-uutos ng conductor para kumita sa hindi
magandang paraan[,]’ xxx are not among those enumerated
under Article 297 [282] of the Labor Code as just causes for
termination of employment.” The irregularities or
infractions committed by private respondent in connection
with his work as a bus driver constitute serious misconduct
or, at the very least, conduct analogous to serious
misconduct, under the above-cited Article 297 [282] of the
Labor Code. The requirement in the company rules that: ‘3.
to obey traffic rules and regulations as well as the company
policies. 4. to ensure the safety of the riding public as well
as the other vehicles and motorist (sic)’ is so fundamental
and so universal that any bus driver is expected to satisfy
the requirement whether or not he has been so informed.
I. SERIOUS MISCONDUCT
1. REQUISITES.
For misconduct or improper behavior to be a just cause for
dismissal, the following requisites must concur:
1. It must be serious; and
2. It must relate to the performance of the employee’s
duties; and
3. It must show that he has become unfit to continue
working for the employer.
All the above three (3) requisites must concur.
2. SOME PRINCIPLES ON SERIOUS MISCONDUCT.
- Serious misconduct implies that it must be of such grave
and aggravated character and not merely trivial or
unimportant.
- Simple or minor misconduct would not justify the
termination of the services of an employee.
- Possession or use of shabu or other drugs is a valid ground
to terminate employment.
- Immorality, as a general rule, is not a just ground to
terminate employment. The exception is when such
immoral conduct is prejudicial or detrimental to the interest
of the employer.
- Immoral act committed beyond office hours is a valid
ground to terminate employment.
- Sexual intercourse inside company premises constitutes
serious misconduct.
- The act of a 30-year old lady teacher in falling in love with
a 16-year old student is not immoral.
- Fighting is a ground for termination but only the instigator
or aggressor and not the victim who was constrained to
defend himself should be dismissed.
- Challenging superiors to a fight is a just cause for
termination.
- Assaulting another employee is a just cause for
termination.
- Utterance of obscene, insulting or offensive words
constitutes serious misconduct.
- Gambling within company premises is a serious
misconduct.
- Rendering service to business rival is a just cause to
terminate employment.
- Selling products of a competitor is a just cause for
termination.
- Organizing a credit union by employees in a bank is a
serious misconduct.
- Deceiving a customer for personal gain is a just cause for
termination.
- Contracting work in competition with employer constitutes
serious misconduct.
- Intoxication which interferes with the employee’s work
constitutes serious misconduct.
- The act of a teacher in pressuring a colleague to change
the failing grade of a student is serious misconduct.
- Sexual harassment is a just ground to dismiss.
- Sleeping while on duty is a ground for termination.
- Dismissal is too harsh a penalty for eating while at work.
- Pilferage or theft of company-owned property is a just
cause to terminate.
- Theft of funds or property not owned by employer is not
a ground to terminate.
- Act of falsification is a valid ground to terminate
employment.
- Punching-in of time cards of other employees is a just
cause for termination.
II. INSUBORDINATION OR WILLFUL DISOBEDIENCE OF
LAWFUL ORDERS
1. REQUISITES.
One of the fundamental duties of an employee is to obey all
reasonable rules, orders and instructions of the employer. In
order to validly invoke this ground, the following requisites
must be complied with, to wit:
1. The employee’s assailed conduct must have been
willful or intentional, the willfulness being
characterized by a wrongful and perverse attitude; and
2. The order violated must be based on a reasonable
and lawful company rule, regulation or policy and
made known to the employee and must pertain to the
duties for which he has been engaged to discharge.
2. SOME PRINCIPLES ON INSUBORDINATION.
 Making false allegations in complaint does not constitute
insubordination.
 Failure to answer memo to explain constitutes willful
disobedience.
 Another notice is required in case of termination on the
ground of failure to answer memo to explain.
 Refusal to undergo random drug testing constitutes both
serious misconduct and insubordination.
 Refusal to render overtime to meet production deadline
constitutes insubordination.
 Refusal to comply with a lawful transfer constitutes
insubordination.
III. GROSS AND HABITUAL NEGLECT OF DUTIES
1. REQUISITES.
The following are the requisites:
(1) There must be negligence which is gross and/or
habitual in character; and
(2) It must be work-related as would make him unfit
to work for his employer.
2. SOME PRINCIPLES ON GROSS AND HABITUAL NEGLECT OF
DUTIES.
 Simple negligence is not sufficient to terminate
employment.
 The negligence must be gross in character which
means absence of that diligence that an ordinarily
prudent man would use in his own affairs.
 As a general rule, negligence must be both gross
and habitual to be a valid ground to dismiss.
 Habituality may be disregarded if negligence is
gross or the damage or loss is substantial. “Habitual
negligence” implies repeated failure to perform
one’s duties for a period of time, depending upon
the circumstances.
 Actual damage, loss or injury is not an essential
requisite.
 Gross negligence may result to loss of trust and
confidence.
 Absences, if authorized, cannot be cited as a
ground to terminate employment.
 Tardiness or absenteeism, if not habitual, cannot
be cited as a ground to terminate employment.
 Tardiness or absenteeism, if habitual, may be cited
as a ground to terminate employment.
 Tardiness or absenteeism, if habitual, may be
tantamount to serious misconduct.
 Absences or tardiness due to emergency, ailment
or fortuitous event are justified and may not be
cited as just cause to terminate employment.
 Unsatisfactory or poor performance, inefficiency
and incompetence are considered just causes for
dismissal only if they amount to gross and habitual
neglect of duties.
IV. ABANDONMENT OF WORK
1. CONCEPT.
IV. ABANDONMENT OF WORK
Abandonment is not provided for in the Labor Code but it is
jurisprudentially considered a form of neglect of duty;
hence, a just cause for termination of employment under
Article 297(b) [282(b)] of the Labor Code.
2. REQUISITES.
To constitute abandonment, two (2) elements must concur,
namely:
1) The employee must have failed to report for work or
must have been absent without valid or justifiable reason;
and
2) There must have been a clear intention on the part of the
employee to sever the employer-employee relationship
manifested by some overt act.
3. SOME PRINCIPLES ON ABANDONMENT.
 Mere absence is not enough to constitute abandonment.
 Clear intention to sever employment relationship is
necessary.
 Due process in abandonment cases consists only of the
service of 2 notices to the employee, viz.:
a. First notice directing the employee to explain why he
should not be declared as having abandoned his job; and
b. Second notice to inform him of the employer’s decision
to dismiss him on the ground of abandonment.
 No hearing is required to validly dismiss an
employee for abandonment.
 Notices in abandonment cases must be sent to
employee’s last known address per record of the
company. The employer need not look for the
employee’s current whereabouts.
 Immediate filing of a complaint for illegal dismissal
praying for reinstatement negates abandonment.
 Lapse of time between dismissal and filing of a
case is not a material indication of abandonment.
Hence, lapse of 2 years and 5 months or 20 months
or 9 months or 8 months before filing the complaint
for illegal dismissal is not an indication of
abandonment. Under the law, the employee has a
4-year prescriptive period within which to institute
his action for illegal dismissal.
 Filing of a case to pre-empt investigation of the
administrative case is tantamount to abandonment.
 When what is prayed for in the complaint is
separation pay and not reinstatement, the filing of
complaint does not negate abandonment.
 It is abandonment when what is prayed for in the
complaint is separation pay and it was only in the
position paper that reinstatement was prayed for.
 Employment in another firm coinciding with the
filing of complaint does not indicate abandonment.
 Offer of reinstatement by employer during
proceedings before Labor Arbiter and refusal by
employee does not indicate abandonment but more
of a symptom of strained relations between the
parties.
 An employee may be absolved from the charge of
abandonment of work but adjudged guilty of AWOL.
These two grounds are separate and distinct from
each other.
 An employee who failed to report for work after
the expiration of the duly approved leave of
absence is considered to have abandoned his job.
 An employee who failed to comply with the order
for his reinstatement is deemed to have abandoned
his work.
 An employee who, after being transferred to a
new assignment, did not report for work anymore is
deemed to have abandoned his job.
 An employee who deliberately absented from
work without leave or permission from his employer
for the purpose of looking for a job elsewhere is
deemed to have abandoned his work.
 Imprisonment or detention by military does not
constitute abandonment.
 Absence to evade arrest is not a valid justification.
To do so would be to place an imprimatur on the
employee’s attempt to derail the normal course of
the administration of justice.
V. FRAUD
1. REQUISITES.
The following are the requisites of this ground:
1. There must be an act, omission, or concealment;
2. The act, omission or concealment involves a breach of
legal duty, trust, or confidence justly reposed;
3. It must be committed against the employer or his/her
representative; and
4. It must be in connection with the employees' work.1
2. SOME PRINCIPLES ON FRAUD.
 Failure to deposit collection constitutes fraud.
 Lack of damage or losses is not necessary in fraud cases.
The fact that the employer did not suffer losses from the
dishonesty of the dismissed employee because of its timely
discovery does not excuse the latter from any culpability.
 Lack of misappropriation or shortage is immaterial in case
of unauthorized encashment of personal checks by teller
and cashier.
 Restitution does not have absolutory effect.
VI.WILLFUL BREACH OF TRUST AND CONFIDENCE
1. REQUISITES.
For the doctrine of loss of trust and confidence to apply, the
following requisites must be satisfied:
(1) The employee holds a position of trust and confidence;
(2) There exists an act justifying the loss of trust and
confidence, which means that the act that betrays the
employer’s trust must be real, i.e., founded on clearly
established facts;
(3) The employee’s breach of the trust must be willful, i.e., it
was done intentionally, knowingly and purposely, without
justifiable excuse; and
(4) The act must be in relation to his work which would
render him unfit to perform it.
2. GUIDELINES.
As a safeguard against employers who indiscriminately use
“loss of trust and confidence” to justify arbitrary dismissal of
employees, the Supreme Court, in addition to the above
elements, came up with the following guidelines for the
application of the doctrine:
(1) The loss of confidence must not be simulated;
(2) It should not be used as a subterfuge for causes which
are illegal, improper or unjustified;
(3) It may not be arbitrarily asserted in the face of
overwhelming evidence to the contrary; and
(4) It must be genuine, not a mere afterthought, to justify
earlier action taken in bad faith.
The foregoing guidelines have been prescribed by the
Supreme Court due to the subjective nature of this ground
which makes termination based on loss of trust and establishment in which they are employed or of a
confidence prone to abuse. department or a subdivision thereof.

3. SOME PRINCIPLES ON THE DOCTRINE OF LOSS OF TRUST The second class consists of fiduciary rank-and-file
AND CONFIDENCE. employees who, though rank-and-file, are routinely charged
 Employee’s position must be reposed with trust and with the custody, handling or care and protection of the
confidence. employer's money or property, or entrusted with
confidence on delicate matters, and are thus classified as
 “Position of trust and confidence” is one where a person is occupying positions of trust and confidence. Included under
entrusted with confidence on delicate matters, or with the this class are “cashiers, auditors, property custodians, or
custody, handling, or care and protection of the employer’s those who, in the normal and routine exercise of their
property. functions, regularly handle significant amounts of [the
employer’s] money or property.”
 Two (2) classes of positions of trust. The first class
consists of managerial employees or those who, by the
nature of their position, are entrusted with confidential and  Rules on termination of managerial and supervisory
delicate matters and from whom greater fidelity to duty is employees different from those applicable to rank- and-file
correspondingly expected. They refer to those vested with employees. Thus, with respect to rank-and-file personnel,
the powers or prerogatives to lay down and execute loss of trust and confidence as a ground for valid dismissal
management policies and/or to hire, transfer suspend, lay- requires proof of involvement in the alleged events in
off, recall, discharge, assign or discipline employees or to question and that mere uncorroborated assertions and
effectively recommend such managerial actions. Their accusations by the employer will not be sufficient. But as
primary duty consists of the management of the regards a managerial employee, the mere existence of a
basis for believing that he has breached the trust of his
employer would suffice for his dismissal.
 There must be “some basis” for the loss of trust and
confidence which means that there is reasonable ground to
believe, if not to entertain the moral conviction, that the
concerned employee is responsible for the misconduct and
that the nature of his participation therein rendered him
absolutely unworthy of trust and confidence demanded by
his position.
 Dismissal due to feng shui mismatch is not a valid ground
to lose trust and confidence.
 Command responsibility of managerial employees is a
ground to dismiss.
 Confidential employee may be dismissed for loss of trust 2. It was committed against any of the following persons:
and confidence.
 Grant of promotions and bonuses negates loss of trust and (c) His employer’s duly authorized representative.
confidence.
 Long years of service, absence of derogatory record and
small amount involved are deemed inconsequential insofar
as loss of trust and confidence is concerned.
 Dropping of criminal charges or acquittal in a criminal case
arising from the same act does not affect the validity of
dismissal based on loss of trust and confidence.
 Full restitution does not absolve employee of offense
which resulted in the loss of trust and confidence
VII. COMMISSION OF CRIME OR OFFENSE
1. REQUISITES.
The following are the requisites for the valid invocation of
this ground:
1. A crime or offense was committed by the employee;
(a) His employer;
(b) Any immediate member of his employer’s family; or
2. SOME PRINCIPLES ON THE COMMISSION OF CRIME OR
OFFENSE.
Because of its gravity, work-relation is not necessary.
Neither is it necessary to show that the commission of the
criminal act would render the employee unfit to perform his
work for the employer.
VIII. OTHER ANALOGOUS CAUSES
1. ANALOGOUS CAUSES UNDER ESTABLISHED
JURISPRUDENCE.
The following may be cited as analogous causes:
1) Violation of company rules and regulations.
2) Theft of property owned by a co-employee, as
distinguished from theft of property owned by the
employer.
3) Incompetence, inefficiency or ineptitude.
4) Failure to attain work quota.
5) Failure to comply with weight standards of employer.
6) “Attitude problem” is analogous to loss of trust and
confidence.
IX. TERMINATION DUE TO ENFORCEMENT OF UNION
SECURITY CLAUSE
- The “union security clause” is a stipulation in a CBA which
allows the parties thereto to enter into an agreement
requiring compulsory membership in the sole and exclusive
bargaining agent (SEBA) which successfully negotiated said
CBA as a condition for continued employment with the
exception of employees who are already members of other
union/s at the time of the signing of the CBA. Hence, they
cannot be compelled to resign from their minority union/s
to join the SEBA
What are the effects of application of this clause?
The following are the effects:
a. On members of the SEBA. They are not allowed to resign
or terminate their membership therefrom. Any member of
the SEBA who resigns or is expelled therefrom may be
recommended to the employer by the SEBA for termination
of his employment.
b. On non-members of the SEBA but members of the
minority union/s. They are not bound by the union security
clause if they are members of the minority or other unions
at the time of the signing of the CBA. Hence, they cannot be
compelled to resign from their union/s in order to join the
SEBA.
c. On non-members of the SEBA or of any minority union/s.
If not a member of the SEBA or any other unions in the
bargaining unit at the time of the signing of the CBA by
reason of the fact that he is excepted from the coverage of
the bargaining unit, the employee cannot be compelled to
join the SEBA. (E.g., Religious objectors and confidential
employees under the Confidential Employee Rule).
d. On new employees hired after the signing of the CBA
containing the union security clause. They can be
compelled to join the SEBA. If they refuse, they can be
recommended for termination by the SEBA to the employer
as such refusal is deemed a violation of this clause.
Is there an exception to this rule? Yes. An employee cannot All the foregoing requisites should be complied with to
be compelled to join any union based on religious ground
(Religious Objectors). For example: members of the Iglesia
ni Kristo (INK) cannot be compelled to join a union; hence,
they are not bound by the union security doctrine.
Can religious objectors be denied membership in a union
or be disallowed from participating in a certification
election?
No. Religious objectors, if they choose to, cannot be denied
membership in a union or prevented from participating in a
certification election.
What are the requisites in order to validly terminate
employees based on this clause?
(1) The union security clause is applicable;
(2) The bargaining union is requesting for the termination of
employment due to enforcement of the union security
provision in the CBA; and
3) There is sufficient evidence to support the union’s
decision to expel the employee from the union. (Alabang
Country Club, Inc. v. NLRC,1).
justify the termination of employment.
Is the employer required to observe due process before
terminating an employee who is recommended by the SEBA for
termination due to violation of the union security clause?
Yes, the employer should afford both substantive and procedural as long as they are certified by the company's accredited
due process to the employee. It cannot terminate his employment health provider as medically fit and shall be restored to
merely on the basis of the recommendation of the union. work as soon as his/her illness is controlled.7
 An employee may also be terminated based on the
grounds provided for under the CBA.
Can the employer adopt the due process afforded by the SEBA to
ii. AUTHORIZED CAUSES
the employee in expelling him from his membership in the SEBA?
No. The employer cannot adopt the due process afforded by the
SEBA as its own due process for the simple reason that such due What are the 2 classes of authorized cause termination?
process concerns the termination of membership of the employee
from the SEBA. The due process in above-cited Alabang Country Under the Labor Code, authorized causes are classified into
Club, Inc. v. NLRC,2 is required for a different purpose - to two (2) classes, namely:
terminate his employment. (1) Business-related causes. – Referring to the grounds
specifically mentioned in Article 298 [283], to wit:
OTHER PRINCIPLES `ON TERMINATION a. Installation of labor-saving device;
Per Department Order No. 147-15, Series Of 2015 (07 b. Redundancy;
September 2015) c. Retrenchment;
 An employee found positive for use of dangerous drugs d. Closure or cessation of business operations NOT
shall be dealt with administratively which shall be a ground due to serious business losses or financial reverses;
for suspension or termination.4 and
 An employee shall not be terminated from work based on e. Closure or cessation of business operations due to
actual, perceived or suspected HIV status.5 serious business losses and financial reverses.
 An employee shall not be terminated on basis of actual,
perceived or suspected Hepatitis B status.6 (2) Health-related causes. – Referring to disease covered by
 An employee who has or had tuberculosis shall not be Article 299 [284] of the Labor Code.
discriminated against. He/she shall be entitled to work for

What are the two (2) kinds of requisites in the case of
business-related causes?
1. COMMON requisites applicable to all the authorized
causes; and
2. UNIQUE requisites applicable to each of the authorized
causes.
What are the COMMON REQUISITES applicable to the
BUSINESS-RELATED causes under Article 298 [283]?
The following are the five (5) common requisites applicable
to the ALL the business-related causes:
1. There is good faith in effecting the termination;
2. The termination is a matter of last resort, there being no
other option available to the employer after resorting to
cost-cutting measures;
3. Two (2) separate written notices are served on both the
affected employees and the DOLE at least one
(1) month prior to the intended date of termination;
4. Separation pay is paid to the affected employees, to wit:
(a) If based on (1) installation of labor-saving
device, or (2) redundancy. - One (1) month pay or at
least one (1) month pay for every year of service,
whichever is higher, a fraction of at least six (6)
months shall be considered as one (1) whole year.
(b) If based on (1) retrenchment, or (2) closure NOT
due serious business losses or financial reverses. -
One (1) month pay or at least one-half (½) month
pay for every year of service, whichever is higher, a
fraction of at least six (6) months shall be
considered as one (1) whole year.
(c) If closure is due to serious business losses or
financial reverses, NO separation pay is required to
be paid.
(d) In case the CBA or company policy provides for a
higher separation pay, the same must be followed
instead of the one provided in Article 298 [283].
5. Fair and reasonable criteria in ascertaining what
positions are to be affected by the termination, such as, but
not limited to: nature of work; status of employment
(whether casual, temporary or regular); experience;
efficiency; seniority; dependability; adaptability; flexibility;
trainability; job performance; discipline; and attitude
towards work. Failure to follow fair and reasonable criteria
in selecting who to terminate would render the termination
invalid.
NOTE: SENIORITY is not the principal nor the only criterion.
The other criteria mentioned above which are lifted from
jurisprudence, are of equal importance.
What are the UNIQUE REQUISITES applicable to each of
the BUSINESS-RELATED causes under Article 298 [283]?
In addition to the COMMON REQUISITES above, the
following are the UNIQUE REQUISITES of each of the
authorized causes:
I. INSTALLATION OF LABOR-SAVING DEVICE
What are the additional requisites unique to this ground?
In addition to the five (5) common requisites above, the
unique requisites are as follows:
1. There must be introduction of machinery, equipment or
other devices; and
2. The purpose for such introduction must be valid such as
to save on cost, enhance efficiency and other justifiable
economic reasons.1
II. REDUNDANCY
What are the additional requisites unique to this ground?
The additional requisites are as follows:
1. There must be superfluous positions or services of
employees;
2. The positions or services are in excess of what is
reasonably demanded by the actual requirements of the
enterprise to operate in an economical and efficient
manner; and
3. There must be an adequate proof of redundancy such as
but not limited to the new staffing pattern, feasibility
studies/proposal, on the viability of the newly created
positions, job description and the approval by the
management of the restructuring.
III. RETRENCHMENT
What are the additional requisites unique to this ground?
Per latest issuance of the DOLE, the following are the
additional requisites:
1. The retrenchment must be reasonably necessary and
likely to prevent business losses;
2. The losses, if already incurred, are not merely de minimis,
but substantial, serious, actual and real, or if only expected,
are reasonably imminent;
3. The expected or actual losses must be proved by
sufficient and convincing evidence; and
4. The retrenchment must be in good faith for the
advancement of its interest and not to defeat or circumvent
the employees' right to security of tenure.
- Best evidence of losses - financial statements audited by
independent auditors (not by internal auditors).
- Best evidence of losses in a government-controlled
corporation - financial statements audited by COA.

This is the only business-related cause under Article 298 - Income tax returns, not valid since they are self-serving
[283] which requires proof of losses or imminent losses. The documents.
other grounds of closure or cessation of business operations
may be resorted to with or without losses. - Mere affidavit on alleged losses is not sufficient.
- Retrenchment effected long after the business losses is not valid.

- Profitable operations in the past do not affect the validity of

What are some relevant principles on retrenchment?
retrenchment.
- The fact that there has been economic or other crisis besetting a
particular sector or the country as a whole is not sufficient
- Retrenchment due to liquidity problem is not valid.
justification for retrenchment.
- Sharp drop in income is not a ground to justify retrenchment. A
- The phrase “retrenchment to prevent losses” means that
mere decline in gross income cannot in any manner be considered
retrenchment may be undertaken by the employer before the
as serious business losses. It should be substantial, sustained and
losses anticipated are actually sustained or realized. The employer
real.
need not keep all his employees until after his losses shall have
materialized. Otherwise, the law could be vulnerable to attack as
- Litany of woes, in the absence of any solid evidence that they
undue taking of property for the benefit of another. -
translated into specific and substantial losses that would
necessitate retrenchment, will not suffice to justify retrenchment.
- Rehiring of retrenched employees does not necessarily
indicate illegality of retrenchment.
- In an enterprise which has several branches nationwide,
profitable operations in some of them will not affect the
validity of the retrenchment if overall, the financial
condition thereof reflects losses.
IV. CLOSURE OR CESSATION OF BUSINESS OPERATIONS
Can an employer close its business even if it is not
suffering from business losses?
Yes. In fact, closure involves two (2) situations:
(a) When NOT due to serious business losses or financial
reverses; or
(b) When due to serious business losses or financial reverses
It is only in the first that payment of separation pay is
required. No such requirement is imposed in the
second.
What are some relevant principles on closure?
- Principle of closure under Article 283 applies in cases of
both total and partial closure or cessation of business
operations. Management may choose to close only a
branch, a department, a plant, or a shop.
- Closure of department or section and hiring of workers
supplied by independent contractor as replacements is
valid.
- Relocation of business may amount to cessation of
operations.
- Closure of business to merge or consolidate with another
or to sell or dispose all of its assets, held valid.
- Audited financial statements necessary only in closure
due to losses.
V. DISEASE
What are the newest doctrines on termination due to
disease?
The newest doctrines are the ones enunciated in Deoferio
and Fuji on the matter of due process as discussed below.
The due process applicable to disease, although an
authorized cause, is similar to the one applicable to just
cause termination and not to authorized cause termination.
1. THE DEOFERIO DOCTRINE ON THE REQUISITES.
Disease is one of the authorized causes to terminate
employment. In the 2014 case of Deoferio v. Intel
Technology Philippines, Inc., the Supreme Court divided
into two, the requisites that must be complied with before
termination of employment due to disease may be justified,
namely:
(1) Substantive requisites; and
(2) Procedural requisites.
1.1. THE DEOFERIO RULE ON SUBSTANTIVE REQUISITES.
The following are the three (3) substantive requisites:
(1) An employee has been found to be suffering from any
disease;
(2) His continued employment is prohibited by law or
prejudicial to his health, as well as to the health of his co-
employees; and
(3) A competent public health authority issues a medical
certificate that the disease is of such nature or at such a
stage that it cannot be cured within a period of six (6)
months even with proper medical treatment.2
1.2. THE DEOFERIO RULE ON PROCEDURAL REQUISITES.
Deoferio, finally pronounced the rule that the employer
must furnish the employee two (2) written notices in
terminations due to disease, namely:
(1) The notice to apprise the employee of the ground for
which his dismissal is sought; and
(2) The notice informing the employee of his dismissal, to be
issued after the employee has been given reasonable
opportunity to answer and to be heard on his defense.
 In other words, due process in termination due to
disease is similar to due process for just cause termination
but different from authorized cause termination under
Article 298 [283].
2. THE FUJI RULE – THE EMPLOYEE SHOULD BE GIVEN THE
CHANCE TO PRESENT COUNTERVAILING MEDICAL
CERTIFICATES.
Subsequent to Deoferio, another 2014 case, Fuji Television
Network, Inc. v. Arlene S. Espiritu,1 has further expounded
on the due process requirement in termination due to
disease, this time by categorically specifying the right of the
ailing employee to present countervailing evidence in the
form of medical certificates to prove that his dismissal due
to disease is not proper and therefore illegal.
Respondent Arlene was petitioner’s news she refused to sign. Arlene claimed that she was left with no
correspondent/producer “tasked to report Philippine news other recourse but to sign the non-renewal contract, and it
to Fuji through its Manila Bureau field office.” She was was only upon signing that she was given her salaries and
successively given yearly fixed-term employment contracts bonuses, in addition to separation pay equivalent to 4 years.
until she was diagnosed with lung cancer sometime in The Supreme Court declared respondent Arlene as having
January 2009 when the Chief of News Agency of Fuji been constructively dismissed. It was likewise held here that
informed her “that the company will have a problem respondent was not afforded due process, thus:
renewing her contract” since it would be difficult for her to
perform her job. She, however, “insisted that she was still fit“There is no evidence showing that Arlene was accorded
to work as certified by her attending physician.” due process. After informing her employer of her lung
cancer, she was not given the chance to present medical
Subsequently, Arlene and Fuji signed a non-renewal certificates. Fuji immediately concluded that Arlene could
contract where it was stipulated that her contract would no no longer perform her duties because of chemotherapy. It
longer be renewed after its expiration on May 31, 2009 and did not ask her how her condition would affect her work.
that the parties release each other from liabilities and Neither did it suggest for her to take a leave, even though
responsibilities under the employment contract. Arlene she was entitled to sick leaves. Worse, it did not present any
received her unpaid salaries and bonuses but she affixed her certificate from a competent public health authority. What
signature on the non-renewal contract with the initials Fuji did was to inform her that her contract would no longer
“U.P.” for “under protest.” The day after Arlene signed the be renewed, and when she did not agree, her salary was
non-renewal contract, she filed a complaint for illegal withheld. Thus, the Court of Appeals correctly upheld the
dismissal and attorney’s fees with the Labor Arbiter, alleging finding of the National Labor Relations Commission that for
that she was forced to sign the non-renewal contract when failure of Fuji to comply with due process, Arlene was
Fuji came to know of her illness and that Fuji withheld her illegally dismissed.”
salaries and other benefits for March and April 2009 when
 What are some salient points to consider under this
ground of disease?
- If the disease or ailment can be cured within the period of
six (6) months with proper medical treatment, the employer
should not terminate the employee but merely ask him to
take a leave of absence. The employer should reinstate him
to his former position immediately upon the restoration of
his normal health.
- In case the employee unreasonably refuses to submit to
medical examination or treatment upon being requested to
do so, the employer may terminate his services on the
ground of insubordination or willful disobedience of lawful
order.
- A medical certificate issued by a company’s own physician
is not an acceptable certificate for purposes of terminating
an employment based on Article 284, it having been issued
not by a “competent public health authority,” the person
referred to in the law.
- A “competent public health authority” refers to a
government doctor whose medical specialization pertains
to the disease being suffered by the employee. For
instance, if the employee suffers from tuberculosis, the
medical certificate should be issued by a government-
employed pulmonologist who is competent to make an
opinion thereon. If the employee has cardiac symptoms, the
competent physician in this case would be a cardiologist.
- The medical certificate should be procured by the
employer and not by the employee.
b. PROCEDURAL DUE PROCESS
(a) Twin-Notice Requirement
(b) Hearing
PRELIMINARY CLARIFICATORY STATEMENT ON DUE
PROCESS
At the outset, there is a need to point out the following
distinction:
(1) Due process required to be complied with by the
employer in terminating the employee’s employment
(COMPANY-LEVEL DUE PROCESS); and
(2) Due process required to be observed by the labor
authorities/tribunals/courts (Labor Arbiter/NLRC/CA) in
hearing and deciding labor cases brought before them for
adjudication and decision (COURT-LEVEL DUE PROCESS).
No. 1 above requires compliance with both the statutory
and contractual due process as discussed below; while
No. 2 above requires observance of the constitutional due
process.
It is No. 1 above that is prescribed in the Syllabus, hence,
discussion herein will focus thereon.
What is the latest rule on due process?
Due process means compliance with BOTH STATUTORY DUE only in case of just cause termination BUT NOT IN
PROCESS and CONTRACTUAL DUE PROCESS.
CONSTITUTIONAL DUE PROCESS is not applicable (Per
Agabon doctrine).
Statutory due process refers to the one prescribed in the
Labor Code (Article 292[b] 277[b]); while contractual due
process refers to the one prescribed in the Company Rules
and Regulations (Per Abbott Laboratories doctrine).
Contractual due process was enunciated in the 2013 en
banc ruling in Abbott Laboratories, Philippines v. Pearlie
Ann F. Alcaraz.1 Thus, it is now required that in addition to
compliance with the statutory due process, the employer
should still comply with the due process procedure
prescribed in its own company rules. The employer’s failure What is the King of Kings Transport doctrine on just cause
to observe its own company-prescribed due process will
make it liable to pay an indemnity in the form of nominal
damages, the amount of which is equivalent to the
P30,000.00 awarded under the Agabon doctrine.
Are the twin-notice requirement and hearing required in
all cases of termination?
No. The two-notice requirement and hearing are required
AUTHORIZED CAUSE TERMINATION (EXCEPT ON THE
GROUND OF DISEASE PER DEOFERIO
DOCTRINE as discussed above).
What is the order in which the twin-notice requirement
and hearing are implemented by the employer?
The requirement should be implemented in the following
order:
1. Service of first written notice;
2. Conduct of hearing; and
3. Service of second written notice.
procedural due process?
Based on this doctrine which was enunciated in the 2007
case of King of Kings Transport, Inc. v. Mamac, the
following requirements should be complied with in just
cause termination:
(1) First written notice.
The first written notice to be served on the employee
should:
a) Contain the specific causes or grounds for
termination against him;
b) Contain a directive that the employee is given the
opportunity to submit his written explanation within
the reasonable period of FIVE (5) CALENDAR DAYS
from receipt of the notice:
1) to enable him to prepare adequately for
his defense;
2) to study the accusation against him;
3) to consult a union official or lawyer;
4) to gather data and evidence; and
5) to decide on the defenses he will raise
against the complaint.
c) Contain a detailed narration of the facts and
circumstances that will serve as basis for the charge
against the employee. This is required in order to
enable him to intelligently prepare his explanation
and defenses. A general description of the charge
will not suffice.
d) Specifically mention which company rules, if any,
are violated and/or which among the grounds under
Article 282 is being charged against the employee.
(2) Hearing required,
After serving the first notice, the employer should schedule
and conduct a hearing or conference wherein the employee
will be given the opportunity to:
1) explain and clarify his defenses to the charge/s
against him;
2) present evidence in support of his defenses; and
3) rebut the evidence presented against him by the
management.
During the hearing or conference, the employee is given the
chance to defend himself personally, with the assistance of
a representative or counsel of his choice. Moreover, this
conference or hearing could be used by the parties as an
opportunity to come to an amicable settlement.
NOTE: See Lopez doctrine and Perez doctrine below
3) Second written notice.
After determining that termination of employment is
justified, the employer shall serve the employees a
written notice of termination indicating that:
1) all circumstances involving the charge/s against
the employee have been considered; and
2) grounds have been established to justify the
severance of his employment.
What is the LOPEZ doctrine on right to counsel?
Per the 2011 Lopez doctrine, which is the prevailing rule,
the right to counsel is neither indispensable nor
mandatory. It becomes mandatory only in two (2)
situations:
(1) When the employee himself requests for counsel; or
(2) When he manifests that he wants a formal hearing on
the charges against him, in which case, he should be
assisted by counsel. (See Lopez v. Alturas Group of
Companies).
What is the PEREZ doctrine on hearing?
The 2009 Perez doctrine enunciates the new guiding
principle on the hearing requirement. It has interpreted the
term “ample opportunity to be heard” as follows:
(a) “Ample opportunity to be heard” means any meaningful
opportunity (verbal or written) given to the employee to
answer the charges against him and submit evidence in
support of his defense, whether in a hearing, conference or
some other fair, just and reasonable way.
(b) A formal hearing or conference is no longer mandatory.
It becomes mandatory only under any of the following
circumstances:
(1) When requested by the employee in writing; or
(2) When substantial evidentiary disputes exist; or
(3) When a company rule or practice requires it; or
(4) When similar circumstances justify it.
(c) the “ample opportunity to be heard” standard in the
Labor Code prevails over the “hearing or conference”
requirement in its Implementing Rules and Regulations. This
is how the Supreme Court resolved the conflict in the
following provisions of the Labor Code and its implementing
rules:
The Perez doctrine is now the prevailing rule as shown by a
catena of cases which cited it after its promulgation.
 Are the twin-notice requirement and hearing applicable to
authorized cause termination?
No. Due process in authorized cause termination is deemed
complied with upon the separate and simultaneous service
of a written notice of the intended termination to both:
(1) the employee to be terminated; and
(2) the appropriate DOLE Regional Office, at least
one (1) month before the intended date of the
termination specifying the ground/s therefor and
the undertaking to pay the separation pay required
under Article 283 of the Labor Code.
For obvious reason, hearing is not required.
However, as earlier discussed above, the foregoing due
process is DIFFERENT from the authorized cause of
disease as held in Deoferio and Fuji which held that just
cause due process is the one that should be followed.
Are the twin-notice requirement and hearing applicable to ILLEGAL.
abandonment as a just cause to terminate employment?
No. Although considered as a just cause to terminate
employment, the procedural due process requirement for
abandonment is different. Obviously, no hearing is required
(since the employee has already abandoned his job) but the
following notices should be complied with:
1) First notice asking the employee to explain why he should
not be declared as having abandoned his job; and
2) Second notice informing him of the employer’s decision
to dismiss him on the ground of abandonment.
What are the seven (7) standard situations in termination
cases?
The rules on termination of employment in the Labor Code
and pertinent jurisprudence are applicable to seven (7)
different situations, namely:
1. The dismissal was for a just cause under Article 282, for
an authorized cause under Article 283, or for health reasons
under Article 284, and due process was observed – This
termination is LEGAL.
2. The dismissal was without a just or authorized cause but
due process was observed – This termination is
3. The dismissal was without a just or authorized cause and
due process was not observed – This termination is
ILLEGAL.
4. The dismissal was for a just or authorized cause but due imposition is thus justified only in cases where the
process was not observed – This termination is employee’s continued presence in the company premises
during the investigation poses a serious and imminent
LEGAL. threat to the life or property of the employer or of the
5. The dismissal was for a non-existent cause – This employee’s co-workers. Without this threat, preventive
termination is ILLEGAL. suspension is not proper.
6. The dismissal was not supported by any evidence of
termination – This termination is NEITHER LEGAL NOR What are some relevant principles in preventive
ILLEGAL as there is no dismissal to speak of. Reinstatement suspension?
is ordered not as a relief for illegal dismissal but on  Preventive suspension is not a penalty. This is different
equitable ground. from PUNITIVE SUSPENSION which is imposed as a penalty
7. The dismissal was brought about by the implementation less harsh than dismissal.
of a law – This termination is LEGAL.  Preventive suspension, by itself, does not signify that the
company has already adjudged the employee guilty of the
2. PREVENTIVE SUSPENSION charges for which she was asked to answer and explain.
 Preventive suspension is neither equivalent nor
When is preventive suspension proper to be imposed? tantamount to dismissal.
Preventive suspension may be legally imposed against an  If the basis of the preventive suspension is the employee’s
errant employee only while he is undergoing an absences and tardiness, the imposition of preventive
investigation for certain serious offenses. Consequently, its suspension on him is not justified as his presence in the
purpose is to prevent him from causing harm or injury to the company premises does not pose any such serious or
company as well as to his fellow employees, hence, his imminent threat to the life or property of the employer or of
actual presence in the workplace would not be desirable for the employee’s co-workers simply “by incurring repeated
the meaningful conduct of the investigation of his case. Its absences and tardiness.”
 Preventive suspension does not mean that due process  Preventive suspension lasting longer than 30 days, without
may be disregarded. the benefit of valid extension, amounts to constructive
 Preventive suspension should only be for a maximum dismissal.
period of thirty (30) days. After the lapse of the 30-day  Indefinite preventive suspension amounts to constructive
period, the employer is required to reinstate the worker to dismissal.
his former position or to a substantially equivalent position.
 During the 30-day preventive suspension, the worker is 3. ILLEGAL DISMISSAL
not entitled to his wages and other benefits. However, if the a. KINDS
employer decides, for a justifiable reason, to extend the i. NO JUST OR AUTHORIZED CAUSE
period of preventive suspension beyond said 30- day period,
he is obligated to pay the wages and other benefits due the For the dismissal of an employee to be valid, the dismissal
worker during said period of extension. In such a case, the must be for any of the causes provided for in Art. 297-299.
worker is not bound to reimburse the amount paid to him An employer who dismisses an employee without just or
during the extension if the employer decides to dismiss him authorized cause is liable for:
after the completion of the investigation. 1. Reinstatement or separation pay if reinstatement is not
 Extension of period must be justified. During the 30-day possible; and
period of preventive suspension, the employer is expected 2. Full backwages.
to conduct and finish the investigation of the employee’s
administrative case. The period of thirty (30) days may only
be extended if the employer failed to complete the hearing ii. CONSTRUCTIVE DISMISSAL
or investigation within said period due to justifiable
grounds. No extension thereof can be made based on When is there constructive dismissal?
whimsical, capricious or unreasonable grounds. Constructive dismissal contemplates any of the following
situations:
1) An involuntary resignation resorted to when continued
employment is rendered impossible, unreasonable or
unlikely;
2) A demotion in rank and/or a diminution in pay; or
3) A clear discrimination, insensibility or disdain by an
employer which becomes unbearable to the employee that
it could foreclose any choice by him except to forego his
continued employment.
What is the test of constructive dismissal?
The test of constructive dismissal is whether a reasonable
person in the employee’s position would have felt
compelled to give up his position under the circumstances.
It is an act amounting to dismissal but made to appear as if
it were not. In fact, the employee who is constructively
dismissed may be allowed to keep on coming to work.
Constructive dismissal is, therefore, a DISMISSAL IN
DISGUISE. The law recognizes and resolves this situation in
favor of the employees in order to protect their rights and
interests from the coercive acts of the employer.
What are examples of constructive dismissal or forced
resignation?
Denying to the workers entry to their work area and placing
them on shifts “not by weeks but almost by month” by
reducing their workweek to three days.
Barring the employees from entering the premises
whenever they would report for work in the morning
without any justifiable reason, and they were made to wait
for a certain employee who would arrive in the office at
around noon, after they had waited for a long time and had
left.
Sending to an employee a notice of indefinite suspension
which is tantamount to dismissal.
Imposing indefinite preventive suspension without actually
conducting any investigation.
Changing the employee’s status from regular to casual
constitutes constructive dismissal.
Preventing the employee from reporting for work by
ordering the guards not to let her in. This is clear notice of
dismissal.
What is the distinction between illegal dismissal and
constructive dismissal?
In illegal dismissal, the employer openly shows his intention
to dismiss the employee. In fact, the employer, in
compliance with due process, asks the employee to explain
why he should not be dismissed for committing a wrongful
act and he is given due process prior to terminating him.
In contrast, in constructive dismissal, the employer will
never indicate that he is terminating the employee. He will
even allow the employee to report to his work every day.
But he will do any of the three (3) acts mentioned above
that indicates his intention to get rid of the services of the
employee. This is the reason why it is called “dismissal in
disguise.”
support a conclusion. [Andrada v. Agemar Manning Agency,
GR No. 194758 (2012)]
Substantial evidence is necessary for an employer to
effectuate any dismissal. Uncorroborated assertions and
accusations by the employer do not suffice; otherwise the
constitutional guarantee of security of tenure of the
employee would be jeopardized.

BURDEN OF PROOF
The burden of proving that the termination was for a valid
or authorized cause shall rest on the employer. [Art. 292 (b)]
In illegal dismissal cases, the onus of proving that the
employee was not dismissed or, if dismissed, that the
dismissal was not illegal, rests on the employer, failure to
discharge which would mean that the dismissal is not
justified and, therefore, illegal

Degree of Proof
In labor cases, as in other administrative proceedings,
substantial evidence is required and it is such relevant
evidence as a reasonable mind might accept as adequate to
LIABILITY OF OFFICERS (1) Reinstatement without loss of seniority rights and other
Art. 219(e) defines “employer” as including any person privileges;
acting in the interest of an employer, directly or indirectly. (2) Full backwages, inclusive of regular allowances; and
Note that the provision does not expressly make a corporate (3) Other benefits or their monetary equivalent.
officer personally liable for the liabilities of a corporation. What are the other reliefs that are not provided in the
However, in Lozada vs Mendoza [GR No. 196134, 12 Labor Code but are granted in illegal dismissal cases?
October 2016], the Court ruled that, as a general rule,
officers are not personally liable for corporate obligation, The following reliefs that are awarded in illegal dismissal
with the exception that in order to hold a director or officer cases are missing in Article 279:
personally liable occurs when the following requisites are (1) Award of separation pay in lieu of reinstatement.
present: (2) Award of penalty in the form of nominal damages in
1. the complaint must allege that the director or officer case of termination due to just or authorized cause but
assented to the patently unlawful acts of the corporation, or without observance of procedural due process.
that the director or officer was guilty of gross negligence or (3) Reliefs to illegally dismissed employee whose
bad faith; and employment is for a fixed period. The proper relief is only
2. there must be proof that the director or officer acted in the payment of the employee’s salaries corresponding to
bad faith. the unexpired portion of the employment contract.
(4) Award of damages and attorney’s fees.
RELIEFS FROM ILLEGAL DISMISSAL (5) Award of financial assistance in cases where the
employee’s dismissal is declared legal but because of long
What are the reliefs under the Labor Code, particularly years of service, and other considerations, financial
under Article 294 [279] thereof? assistance is awarded.
Under this article, an illegally dismissed employee is entitled (6) Imposition of legal interest on separation pay,
to the following reliefs: backwages and other monetary awards.
1. REINSTATEMENT prima facie finding by the appropriate official of the DOLE
before whom such dispute is pending that the termination
What are the Labor Code’s provisions on reinstatement? may cause a serious labor dispute or is in implementation of
The Labor Code grants the remedy of reinstatement in a mass lay-off. Such suspension of the effects of termination
various forms and situations. Its provisions recognizing would necessarily results in the reinstatement of the
reinstatement as a relief are as follows: dismissed employee while the illegal dismissal case is being
1. Article 229 [223] which provides for reinstatement of an heard and litigated.
employee whose dismissal is declared illegal by the Labor 4. Article 294 [279] which grants reinstatement as a relief to
Arbiter. This form of reinstatement is self-executory and an employee whose dismissal is declared illegal in a final and
must be implemented even during the pendency of the executory judgment.
appeal that may be instituted by the employer. (NOTE: See 5. Article 301 [286] which involves bona-fide suspension of
discussion of this topic under Major Topic “VIII. Jurisdiction operation for a period not exceeding six (6) months or the
and Reliefs; A. Labor Arbiter”, infra). rendition by an employee of military or civic duty. It is
2. Article 278(g) [263(g)] which provides for automatic required under this provision that the employer should
return to work of all striking or locked-out employees, if a reinstate its employees upon resumption of its operation
strike or lockout has already taken place, upon the issuance which should be done before the lapse of said six-month
by the DOLE Secretary of an assumption or certification period of bona-fide suspension of operation or after the
order in national interest cases. The employer is required to rendition by the employees of military or civic duty.
immediately resume operation and readmit all workers
under the same terms and conditions prevailing before the
strike or lockout. b. SEPARATION PAY IN LIEU OF REINSTATEMENT
3. Article 292(b) [277(b)] which empowers the DOLE
Secretary to suspend the effects of termination pending the Is separation pay applicable only to reinstatement as an
resolution of the termination dispute in the event of a alternative remedy?
Yes. Separation pay, as a substitute remedy, is only proper
for reinstatement but not for backwages.
This remedy is not found in the Labor Code but is granted in
case reinstatement is no longer possible or feasible, such as
when any of the following circumstances exists:
(1) Where the continued relationship between the employer
and the employee is no longer viable due to the
strained relations and antagonism between them (Doctrine
of Strained Relations).
(2) When reinstatement proves impossible, impracticable,
not feasible or unwarranted for varied reasons and thus
hardly in the best interest of the parties such as:
(a) Where the employee has already been replaced
permanently as when his position has already been
taken over by a regular employee and there is no
substantially equivalent position to which he may be
reinstated.
(b) Where the dismissed employee’s position is no
longer available at the time of reinstatement for
reasons not attributable to the fault of the
employer.
(c) When there has been long lapse or passage of
time that the employee was out of employer’s
employ from the date of the dismissal to the final
resolution of the case or because of the realities of
the situation.
(d) By reason of the injury suffered by the
employee.
(e) The employee has already reached retirement
age under a Retirement Plan.
(f) When the illegally dismissed employees are over-
age or beyond the compulsory retirement age and
their reinstatement would unjustly prejudice their
employer.
(3) Where the employee decides not to be reinstated as
when he does not pray for reinstatement in his complaint or
position paper but asked for separation pay instead.
(4) When reinstatement is rendered moot and academic due
to supervening events, such as:
(a) Death of the illegally dismissed employee.
(b) Declaration of insolvency of the employer by the
court.
 (c) Fire which gutted the employer’s establishment
and resulted in its total destruction.
(d) In case the establishment where the employee is
to be reinstated has closed or ceased operations.
(5) To prevent further delay in the execution of the decision
to the prejudice of private respondent.
(6) Other circumstances such as
(a) when reinstatement is inimical to the employer’s
interest;
(b) reinstatement does not serve the best interests
of the parties involved;
(c) the employer is prejudiced by the workers’
continued employment; or
(d) that it will not serve any prudent purpose as
when supervening facts transpired which made
execution unjust or inequitable.
What is the amount of separation pay in lieu of
reinstatement?
Per prevailing jurisprudence, the following are the
components of separation pay in lieu of reinstatement>
(1) The amount equivalent to at least one (1) month salary
or to one (1) month salary for every year of service,
whichever is higher, a fraction of at least six (6) months
being considered as one (1) whole year.
(2) Allowances that the employee has been receiving on a
regular basis.
What is the period covered?
From start of employment up to the date of finality of
decision except when the employer has ceased its operation
earlier, in which case, the same should be computed up to
the date of closure.
What is the salary rate to be used in computing it?
The salary rate prevailing at the end of the period of
putative service should be the basis for computation which
refers to the period of imputed service for which the
employee is entitled to backwages.
What are some important principles on separation pay in
lieu of reinstatement?
1. Award of separation pay and backwages are not
inconsistent with each other. Hence, both may be awarded
to an illegally dismissed employee. The payment of
separation pay is in addition to payment of backwages.
2. Reinstatement cannot be granted when what is prayed 2. Allowances and other benefits regularly granted to and
for by employee is separation pay in lieu thereof. received by the employee should be made part of
backwages.
BACKWAGES: What is the Bustamante doctrine?
In 1996, the Supreme Court changed the rule on the
reckoning of backwages. It announced a new doctrine in the
case of Bustamante v. NLRC,1 which is now known as the
Bustamante doctrine. Under this rule, the term “full
backwages” should mean exactly that, i.e., without
deducting from backwages the earnings derived elsewhere
by the concerned employee during the period of his illegal
dismissal.

What are the components of backwages?

The components of backwages are as follows:
1. Salaries or wages computed on the basis of the wage
rate level at the time of the illegal dismissal and not
in accordance with the latest, current wage level of the
employee’s position.
What are some principles on backwages? contention of the employer that backwages should be
Salary increases during period of unemployment are not reckoned only up to age 60 cannot be sustained.
included as component in the computation of backwages. If employer has already ceased operations, full backwages
Dismissed employee’s ability to earn is irrelevant in the should be computed only up to the date of the closure. To
award of backwages. allow the computation of the backwages to be based on a
In case reinstatement is ordered, full backwages should be period beyond that would be an injustice to the employer.
reckoned from the time the compensation was withheld Any amount received during payroll reinstatement is
(which, as a rule, is from the time of illegal dismissal) up to deductible from backwages.
the time of reinstatement, whether actual or in the payroll.
If separation pay is ordered in lieu of reinstatement, full
backwages should be computed from the time of illegal LIMITED BACKWAGES
dismissal until the finality of the decision. The justification is When is the award of backwages limited?
that along with the finality of the Supreme Court’s decision, (1) When the dismissal is deemed too harsh a penalty;
the issue on the illegality of the dismissal is finally laid to (2) When the employer acted in good faith; or
rest. (3) Where there is no evidence that the employer dismissed
the employee.
If the illegally dismissed employee has reached the optional
retirement age of 60 years, his backwages should only cover Thus, the backwages will not be granted in full but limited to
the time when he was illegally dismissed up to the time 1 year, 2 years or 5 years [per jurisprudence].
when he reached 60 years. Under Article 287, 60 years is the
optional retirement age. 4. MONEY CLAIMS ARISING FROM EMPLOYER-
If the employee has reached 65 years of age or beyond, his EMPLOYEE RELATIONSHIP
full backwages should be computed only up to said age. The
What are the legal bases of employee’s money claims?
The monetary claims that may be asserted by employees
may be based on any of the following:
(1) Labor Code;
(2) Other special laws;
(3) Jurisprudence;
(4) Employment contracts;
(5) Voluntary employer policy or practice; or
(6) Collective bargaining agreements (CBAs).
Examples of No. 1 above are the labor standards benefits
provided therein, such as claims for overtime, night
differential, holidays, rest days, service incentive leave,
service charges, employees’ compensation benefits,
separation pay in case of termination due to authorized
causes, and retirement benefits.
Examples of No. 2 are the wage increases mandated under
R.A. No. 67271 and the regional wage orders issued
pursuant thereto, P.D. No. 851 [13th Month Pay Law], R.A.
No. 7641 [Retirement Pay Law],2 social security benefits
from R.A. No. 11199 [Social Security Act of 2018],3 R.A. No.
11223 [Universal Health Care Act],4 and R.A. No. 9679 [Pag-
IBIG Law].5
Examples of No. 3 are the monetary reliefs accorded illegally
dismissed employees that are not found in the Labor Code
nor in any other law, such as (1) separation pay in lieu of
reinstatement; (2) indemnity in the form of nominal
damages in case of termination due to just or authorized
cause but without affording the employee procedural due
process; (3) payment of salaries corresponding to the
unexpired portion of the employment contract in cases of
fixed-term employment; (4) financial assistance in cases
where the employee’s dismissal is declared legal but there
are circumstances justifying this award, such as long years of
service, unblemished record of service, compassionate
justice and other considerations; (5) legal interest on
separation pay, backwages and other monetary awards.
Nos. 4, 5 and 6 involve monetary claims arising from the
benefits granted by the employer to the employees, either
voluntarily or unilaterally in employment contracts or
company policies or practices, or through collective
negotiations and mutual agreements, such as those granted
under CBAs. These benefits are varied and too numerous to
enumerate them here; suffice it to state that the bottomline
policy of the law is that these benefits should not be below
the minimum standards and limits provided by law.

5. WHEN NOT DEEMED DISMISSED; EMPLOYEE
ON FLOATING STATUS
1. A NEW TOPIC.
The “Floating Status” Doctrine is a new topic prescribed in
the 2019 Syllabus. This topic is included in the enumeration
therein as one of the kinds of employment. This may bring
about confusion since this doctrine, in no way, has anything
to do with the main topic of “Kinds of Employment.”
2. LACK OF APPLICABLE PROVISION IN THE LABOR CODE.
At the outset, it bears reiterating that although placing an
employee like a security guard on “floating” status (or
sometimes called temporary “off-detail” status) is
considered a temporary retrenchment measure, the
Supreme Court, in Exocet v. Serrano,2 recognized the fact
that there is similarly no provision in the Labor Code which
treats of a temporary retrenchment or lay-off. Neither is
there any provision which provides for its requisites or its
duration. Nevertheless, since an employee cannot be laid-
off indefinitely, the Court has applied Article 301 [286] of
the Labor Code by analogy to set the specific period of
temporary lay-off to a maximum of six (6) months. This
provision states:
“Article 301 [286]. When Employment Not Deemed
Terminated. – The bona-fide suspension of the operation of
a business or undertaking for a period not exceeding six (6)
months, or the fulfillment by the employee of a military or
civic duty shall not terminate employment. In all such cases,
the employer shall reinstate the employee to his former
position without loss of seniority rights if he indicates his
desire to resume his work not later than one (1) month from
the resumption of operations of his employer or from his
relief from the military or civic duty.”
Clearly from the foregoing article, the concept of “floating
status” does not find any direct connection or relation,
except for the six (6)-month period provided therein which
has been held as the defining cut-off period that can be “Floating status” takes place under any of the following
used as a consonant basis in determining the circumstances:
reasonableness of the length of time when an employee (1) When the security agency’s clients decide not to renew
could be deprived of work under this doctrine. their contracts with the agency, resulting in a situation where
the available posts under its existing contracts are less than the
number of guards in its roster; or
3. “FLOATING” STATUS DOCTRINE AS APPLIED TO (2) When contracts for security services stipulate that the client
SECURITY GUARDS. may request the agency for the replacement of the guards
Applying Article 301 [286] by analogy, the Supreme Court assigned to it even for want of cause and there are no available
has consistently recognized that security guards may be posts under the agency’s existing contracts to which the
temporarily sidelined by their security agency as their replaced security guards may be placed.
As far as No. 2 above is concerned, the Supreme Court has
assignments primarily depend on the contracts entered into
recognized the fact that clients of the security agency have the
by the latter with third parties. This is called the “floating
right to request for the removal of any of the security guards
status” doctrine which is based on and justified under the
supplied by the latter to the former without need to justify the
said article. This status, as applied to security guards, is the same. The reason for this is the lack of any employment
period of time when security guards are in between relationship between the security guards and the client.
assignments or when they are made to wait after being Also, under No. 2 above, a relief and transfer order may be
relieved from a previous post until they are transferred to a issued by the security agency to the security guard concerned
new one. In security agency parlance, being placed “off- in order to effect it. This order in itself does not sever
detail” or on “floating” status means “waiting to be posted.” employment relationship between a security guard and his
agency. And the mere fact that the transfer would be
inconvenient for the former does not by itself make the
4. INSTANCES WHICH JUSTIFY APPLICATION OF DOCTRINE. transfer illegal.
5. APPLICABILITY TO OTHER EMPLOYEES.
While the “floating status” rule is traditionally applicable to
security guards who are temporarily sidelined from duty
while waiting to be transferred or assigned to a new post or
client,1 Article 301 [286] has been applied as well to other
industries when, as a consequence of the bona-fide
suspension of the operation of a business or undertaking, an
employer is constrained to put employees on “floating
status” for a period not exceeding six (6) months.2
Thus, it may also be applied to employees of legitimate
contractors or subcontractors under a valid independent
contracting or subcontracting arrangement under Article
106 of the Labor Code. The same form of dislocation and
displacement also affects their employees every time
contracts of services are terminated by their clients or
principals. In the meantime that the dislocated employees
are waiting for their next assignment, they may be placed
on “off detail” or “floating” status following the same
concept applicable to security guards.
For example, in JPL Marketing Promotions v. CA,3 this
principle was applied to merchandisers hired by petitioner
company which is engaged in the business of recruitment
and placement of workers. After they were notified of the
cancellation of the contract of petitioner with a client where
they were assigned and pending their reassignment to other
clients, the merchandisers are deemed to have been placed
under “floating status” for a period of not exceeding six (6)
months under Article 301 [286]. Such notice, according to
the Court, should not be treated as a notice of termination
but a mere note informing them of the termination of the
client’s service contract with petitioner company and their
reassignment to other clients. The 30-day notice rule under
Article 298 [283] does not therefore apply to this case.
This was likewise applied to the case of:
(1) A bus driver in Valdez v. NLRC4 who was placed on
floating status after the air-conditioning unit of the bus he
was driving suffered a mechanical breakdown; and
(2) A Property Manager in Nippon Housing Phil., Inc. v.
Leynes,5 pending her assignment to another project for the
same position.
6. SOME PRINCIPLES ON “FLOATING STATUS” DOCTRINE.
(1) When an employee like a security guard is placed on a
“floating” status, he is not entitled to any salary, financial
benefit or financial assistance provided by law during the 6-
month period thereof.
(2) As a general rule, “floating status” beyond 6 months
amounts to illegal/constructive dismissal. This is so because
“floating status” is not equivalent to dismissal so long as
such status does not continue beyond a reasonable time
which means six (6) months. After 6 months, the employee
should be recalled for work, or for a new assignment;
otherwise, he is deemed terminated.
(3) The security guard who refused to be re-assigned may be
dismissed for insubordination.
(4) Multiple “floating status” amount to constructive
dismissal.
(5) “Floating status” is distinct from preventive suspension.
In the case of “floating status,” the employee is out of work
because his employer has no available work or job to assign
him to. He is thus left with no choice but to wait for at least
six (6) months before he could claim having been
constructively dismissed, should his employer fail to assign
him to any work or job within said period. In the case of
preventive suspension, the employee is out of work because
he has committed a wrongful act and his continued
presence in the company premises poses a serious and
imminent threat to the life or property of the employer or of
his co-workers. Without this kind of threat, preventive
suspension is not proper. Further, the period of preventive
suspension under the said provisions of the Implementing
Rules should not exceed thirty (30) days.
(6) A complaint filed before the lapse of the 6-month period
of floating status is premature, the employee not having
been deemed constructively dismissed at that point. Thus, a
complaint filed twenty-nine (29) days after the security
guard was placed on floating status was declared as having
been prematurely filed.
(7) However, the filing of a complaint for constructive
dismissal prior to the lapse of the 6-month period of
“floating status” will not be held premature in cases where
the intent to terminate the employee is evident even prior
to the lapse of said period.
(8) No procedural due process is required before an
employee is placed under “floating status.” The reason is
that there is no termination of employment to speak of at
that point.
C. TERMINATION BY EMPLOYEE
1. WITH NOTICE TO THE EMPLOYER
2. WITHOUT NOTICE TO THE EMPLOYER
3. DISTINGUISH VOLUNTARY RESIGNATION AND
CONSTRUCTIVE DISMISSAL
RESIGNATION
 What are the two (2) kinds of resignation under the Labor
Code (Article 300 [285])?
(a) Voluntary resignation - without just cause; or
(b) Involuntary resignation - with just cause.
What are the distinctions between the two?
(a) On service of written notice (resignation letter).
Voluntary Resignation requires the submission of a written
resignation letter at least thirty (30) days before its
effectivity date; while in Involuntary Resignation, no such
written resignation letter is required since it is being made
by the employee for just cause (see just causes below).
(b) On the consequence of failure to serve a written notice.
In Voluntary Resignation, the failure to serve the written
resignation letter within the said 30-day period would make
the resigning employee liable for damages; while in
Involuntary Resignation, since there is no similar
requirement of service of prior written notice, hence, there
is no adverse consequence for such failure to the
involuntarily resigning employee.
(c) On whether there is illegal or constructive dismissal.
There can be no constructive dismissal in the case of
Voluntary Resignation, the same having been voluntarily
and freely tendered by the employee; however, it is
different in the case of Involuntary Resignation, since it
always amounts to constructive dismissal. (See discussion
below).
What are the requisites for resignation WITHOUT JUST
CAUSE?
(a) The resigning employee should tender a written (not
verbal) notice of the termination (commonly known as
“resignation letter”);
(b) Service of such notice to the employer at least one (1)
month in advance; and
(c) Written acceptance by the employer of the resignation.
What is involuntary resignation (WITH JUST CAUSE)?
The following are the just causes that may justify the
termination by the employee of the employment
relationship without need to comply with the 30-day prior
written notice requirement:
(a) Serious insult by the employer or his representative on
the honor and person of the employee;
(b) Inhuman and unbearable treatment accorded the
employee by the employer or his representative;
(c) Commission of a crime or offense by the employer or his
representative against the person of the employee or any of
the immediate members of his family; and
(d) Other causes analogous to any of the foregoing.

D. RETIREMENT

Who are covered under the retirement pay law?
The following employees are eligible to avail of retirement
benefits under Article 302 [287] of the Labor Code:
1) All employees in the private sector, regardless of their
position, designation or status and irrespective of the
method by which their wages are paid;
2) Part-time employees;
3) Employees of service and other job contractors;
4) Domestic workers/kasambahays or persons in the
personal service of another;
5) Underground mine workers;
6) Employees of government-owned and/or controlled
corporations organized under the Corporation Code
(without original charters).
 Who are excluded?
Article 302 [287], as amended, does not apply to the
following employees:
1. Employees of the national government and its political
subdivisions, including government-owned and/or
controlled corporations, if they are covered by the Civil
Service Law and its regulations.
2. Employees of retail, service and agricultural
establishments or operations regularly employing not more
than ten (10) employees. These terms are defined as
follows:
a) “Retail establishment” is one principally engaged in
the sale of goods to end-users for personal or household
use. It shall lose its retail character qualified for
exemption if it is engaged in both retail and wholesale of
goods.
b) “Service establishment” is one principally engaged in
the sale of service to individuals for their own or
household use and is generally recognized as such.
c) “Agricultural establishment/operation” refers to an
employer which is engaged in agriculture. This term
refers to all farming activities in all branches and includes,
among others, the cultivation and tillage of soil,
production, cultivation, growing and harvesting of any
agricultural or horticultural commodities, dairying, raising
of livestock or poultry, the culture of fish and other
aquatic products in farms or ponds, and any activities
performed by a farmer or on a farm as an incident to, or
in conjunction with, such farming operations, but does
not include the manufacture and/or processing of sugar,
coconut, abaca, tobacco, pineapple, aquatic or other
farm products.
What are the two (2) types of retirement under the law
(Article 302 [287] of the Labor Code)?
(1) Optional retirement upon reaching the age of sixty (60)
years.
(2) Compulsory retirement upon reaching the age of sixty-
five (65) years.
It is the employee who exercises the option under No. 1
above. At age 65, there is no more option of the employee
to speak of. He has to retire as this age is considered
compulsory retirement age.
May a different retirement age requirement be provided
in a Retirement Plan?
The optional and compulsory retirement schemes provided
under Article 302 [287] come into play only in the absence
of a retirement plan or agreement setting forth other forms
of optional or compulsory retirement schemes. Thus, if
there is a retirement plan or agreement in an establishment
providing for an earlier or older age of retirement (but not
beyond 65 which has been declared the compulsory
retirement age), the same shall be controlling.
What are the rules on retirement at an earlier age?
a. To be valid, retirement at an earlier age must be
voluntarily consented to by the employee.
In Alpha Jaculbe v. Silliman University,1 the Supreme Court
ruled that in order for retirement at an earlier age to be valid,
it must be shown that the employee’s participation in the plan
is voluntary. An employer is free to impose a retirement age of
less than 65 for as long as it has the employees’ consent.
Stated conversely, employees are free to accept the
employer’s offer to lower the retirement age if they feel they
can get a better deal with the retirement plan presented by the
employer.
Following Jaculbe, the retirement of petitioner in Lourdes
Cercado v. Uniprom, Inc.2 at the age of 47, after having served
respondent company for 22 years, pursuant to its Employees’
Non-Contributory Retirement Plan, which provides that
employees who have rendered at least 20 years of service may
be retired at the option of the company, was declared illegal
because it was not shown that she has given her consent
thereto. Not even an iota of voluntary acquiescence to
respondent’s early retirement age option is attributable to
petitioner. The assailed retirement plan was not embodied in a
CBA or in any employment contract or agreement assented to
by petitioner and her co-employees. On the contrary, it was
unilaterally and compulsorily imposed on them.
 agreement that the employee agrees to sever his employment
The same holding was made in the 2018 en banc case of upon reaching a certain age.4
Alfredo F. Laya, Jr. v. Philippine Veterans Bank,3 where
petitioner, who was hired by respondent bank as its Chief Legal That the petitioner might be well aware of the existence of the
Counsel with a rank of Vice President, was compulsorily retired retirement program at the time of his engagement did not
under the following retirement policy of the bank: suffice. His implied knowledge, regardless of duration, did not
equate to the voluntary acceptance required by law in granting
“Section 2. Early Retirement. A Member may, with the approval an early retirement age option to the employee. The law
of the Board of Directors, retire early on the first day of any demanded more than a passive acquiescence on the part of
month coincident with or following his attainment of age 50 the employee, considering that his early retirement age option
and completion of at least 10 years of Credited Service.” involved conceding the constitutional right to security of
tenure.
According to petitioner Laya, he was made aware of the
retirement plan of respondent bank only after he had long Having thus automatically become a member of the retirement
been employed and was shown a photocopy of the Retirement plan through his acceptance of employment as Chief Legal
Plan Rules and Regulations. His letter of appointment Officer of respondent bank, the petitioner could not withdraw
mentioned, among others, his “Membership in the Provident from the plan except upon his termination from
Fund Program/Retirement Program” but the Court considered employment.
the mere mention thereof not sufficient to inform him of the
contents or details of the retirement program. To construe Further, the retirement plan, having been established for
from the petitioner's acceptance of his appointment that he respondent bank and approved by its president more than
had acquiesced to be retired earlier than the compulsory age five years prior to petitioner's employment, was in the
of 65 years would, therefore, not be warranted. This is because nature of a contract of adhesion, in respect to which the
retirement should be the result of the bilateral act of both the
petitioner was reduced to mere submission by accepting his
employer and the employee based on their voluntary
employment, and automatically became a member of the
plan. With the plan being a contract of adhesion, to consider service as Assistant Credit and Collection Manager/Acting
him to have voluntarily and freely given his consent to the General Cashier. Besides holding that as managerial
terms thereof as to warrant his being compulsorily retired at employee, she is not covered by the CBA, the Court noted
the age of 60 years is factually unwarranted. that there was nothing in petitioner hotel’s submissions
To stress, company retirement plans must not only comply showing that respondent had assented to be covered by the
with the standards set by the prevailing labor laws but must CBA's retirement provisions. Thus, in the absence of an
also be accepted by the employees as commensurate to agreement to the contrary, managerial employees cannot
their faithful services to the employer within the requisite be allowed to share in the concessions obtained by the labor
period. Although the employer could be free to impose a union through collective negotiation.
retirement age lower than 65 years for as long its employees
consented, the retirement of the employee whose intent to Moreover, the rulings in Laya and Cercado were invoked in
retire was not clearly established, or whose retirement was holding that respondent De Leon was in effect, illegally
involuntary is to be treated as a discharge. dismissed. All told, an employee in the private sector who
did not expressly agree to an early retirement cannot be
In another 2018 case, Manila Hotel Corporation v. Rosita De retired from the service before he reaches the age of 65
Leon,1 the same ruling was made that an employee, in this years. "Acceptance by the employee of an early retirement
case a managerial employee, cannot be compulsorily retired age option must be explicit, voluntary, free and
at an earlier age without her express assent thereto. In this uncompelled." "The law demanded more than a passive
case, respondent was retired under the retirement provision acquiescence on the part of the employee, considering that
of the rank-and-file CBA which provides that an employee's his early retirement age option involved conceding the
retirement is compulsory when he or she reaches the age of constitutional right to security of tenure."
60 or has rendered 20 years of service, whichever comes
first. Respondent was only 57 at the time she was
compulsorily retired but had already rendered 34 years of
b. Retiring at an earlier age will amount to illegal dismissal
if employee did not consent thereto.
In accordance with Jaculbe, Cercado, Laya and De Leon, the
employee’s retirement at an earlier age based solely on a
provision of a retirement plan which was not freely assented
to by him would be tantamount to illegal dismissal.
c. By mutual agreement, employers may be granted the
sole and exclusive prerogative to retire employees at an
earlier age or after rendering a certain period of service.
Cainta Catholic School v. Cainta Catholic School Employees
Union [CCSEU],2 where the Supreme Court upheld the
exercise by the school of its option to retire employees
pursuant to the existing CBA where it is provided that the
school has the option to retire an employee upon reaching
the age limit of sixty (60) or after having rendered at least
twenty (20) years of service to the school, the last three (3)
years of which must be continuous. Hence, the termination
of employment of the employees, arising as it did from an
exercise of a management prerogative granted by the
mutually-negotiated CBA between the school and the union
is valid.
What is the minimum years of service required for
entitlement under the law?
Five (5) years is the minimum years of service that must be
rendered by the employee before he can avail of the
retirement benefits upon reaching optional or compulsory
retirement age under Article 287.
What is the retirement age of underground mine workers?
The rule is different. The optional retirement age of
underground mine workers is 50 years of age; while the
compulsory retirement age is 60 years old.
What is the minimum number of years of service required
of underground mine workers?
Minimum years of service is also 5 years.
Are the retirement benefits of underground mine workers
similar to ordinary retirees?
Yes. In fact, other than the retirement age, all other
requirements as well as benefits provided in the law are
applicable to underground mine workers.
. AMOUNT OF RETIREMENT PAY
What is the amount of retirement pay under the law?
a. One-half (½) month salary.
In the absence of a retirement plan or agreement providing
for retirement benefits of employees in the establishment,
an employee, upon reaching the optional or compulsory
retirement age specified in Article 287, shall be entitled to
retirement pay equivalent to at least one-half (½) month
salary for every year of service, a fraction of at least six (6)
months being considered as one (1) whole year.
b. Components of one-half (½) month salary.
For purposes of determining the minimum retirement pay
due an employee under Article 287, the term “one- half
month salary” shall include all of the following:
(1) Fifteen (15) days salary of the employee based on his
latest salary rate.
(2) The cash equivalent of five (5) days of service incentive
leave;
(3) One-twelfth (1/12) of the 13th month pay due the
employee; and
(4) All other benefits that the employer and employee may
agree upon that should be included in the computation of
the employee’s retirement pay.
c. “One-half (½) month salary” means 22.5 days.
“One-half [½] month salary” is equivalent to “22.5 days”
arrived at after adding 15 days plus 2.5 days representing
one-twelfth [1/12] of the 13th month pay plus 5 days of
service incentive leave.
What are some principles on retirement benefits?
1/12 of 13th month pay and 5 days of service incentive
leave (SIL) should not be included if the employee was not
entitled to 13th month pay and SIL during his employment.
Example: R & E Transport, Inc. v. Latag,1 where it was held
that employees who are not entitled to 13th month pay and
SIL pay while still working should not be paid the entire
“22.5 days” but only the fifteen (15) days salary. In other
words, the additional 2.5 days representing one-twelfth
[1/12] of the 13th month pay and the five (5) days of SIL
should not be included as part of the retirement benefits.
The employee in this case was a taxi driver who was being
paid on the “boundary” system basis. It was undisputed that
he was entitled to retirement benefits after working for
fourteen (14) years with R & E Transport, Inc. However, he
was not entitled to the 13th month pay since Section 3 of
the Rules and Regulations Implementing P.D. No. 851
exempts from its coverage employers of those who are paid
on purely boundary basis. He was also not entitled to the 5-
day service incentive leave pay pursuant to the Rules to
Implement the Labor Code which expressly excepts field
personnel and other employees whose performance is
unsupervised by the employer.
But in the 2010 case of Serrano v. Severino Santos Transit,2
which involves a bus conductor (petitioner) who worked for
14 years for respondent bus company which did not adopt
any retirement scheme. It was held herein that even if
petitioner as bus conductor was paid on commission basis,
he falls within the coverage of R.A. 7641 (Retirement Pay
Law, now Article 287 of Labor Code). This means that his
retirement pay should include the cash equivalent of the 5-
day SIL and 1/12 of the 13th month pay for a total of 22.5
days. The affirmance by the Court of Appeals of the reliance
by the NLRC on R & E Transport case was held erroneous.
For purposes of applying the law on SIL as well as on
retirement, there is a difference between drivers paid under
the “boundary system” and conductors paid on commission
basis. This is so because in practice, taxi drivers do not
receive fixed wages. They retain only those sums in excess
of the “boundary” or fee they pay to the owners or
operators of the vehicles. Conductors, on the other hand,
are paid a certain percentage of the bus’ earnings for the
day. It bears emphasis that under P.D. No. 851 and the SIL
Law, the exclusion from its coverage of workers who are
paid on a purely commission basis is only with respect to
field personnel.
b. RETIREMENT BENEFITS OF WORKERS PAID BY RESULTS
What are the retirement benefits of workers paid by
results?
For covered workers who are paid by results and do not
have a fixed monthly rate, the basis for the determination of
the salary for fifteen (15) days shall be their average daily
salary (ADS). The ADS is the average salary for the last
twelve (12) months reckoned from the date of their
retirement, divided by the number of actual working days in
that particular period.
RETIREMENT BENEFITS OF PART-TIME WORKERS
How should the retirement benefits of part-time workers
be computed?
Applying the principles under Article 287, as amended, the
components of retirement benefits of part-time workers
may also be computed at least in proportion to the salary
and related benefits due them.
c. ENTITLEMENT OF EMPLOYEES
DISMISSED FOR JUST CAUSE TO RETIREMENT BENEFITS
General rule – Entitled because employee has acquired
vested right over the retirement benefits.
Razon, Jr. v. NLRC, May 7, 1990.
Exception - Where just cause termination is cited in the
retirement plan as reason to validly deny claim for
retirement benefits.
 San Miguel Corporation v. Lao, July 11, 2002.
Here, the company’s retirement plan prohibits the award of the Labor Code, thus, the retirement fund may be validly
retirement benefits to an employee dismissed for just cause, used to pay such termination or separation pay because of
a proscription that binds the parties to it.
RETIREMENT BENEFITS VS. SEPARATION PAY
a. When both retirement pay and separation pay must be
paid.
Aquino v. NLRC, Feb. 11, 1992.
In this case, the Supreme Court ordered the payment to the
retrenched employees of both the separation pay for
retrenchment embodied in the CBA as well as the
retirement pay provided under a separate Retirement Plan.
The reason is that these two are not mutually exclusive.
There is nothing in the CBA nor in the Retirement Plan that
states that an employee who had received separation pay
would no longer be entitled to retirement benefits or that
collection of retirement benefits was prohibited if the
employee had already received separation pay
b. When separation pay may be charged to retirement pay.
 Ford Philippines Salaried Employees Association v. NLRC,
Dec. 11, 1987.
It is provided in the retirement plan that the retirement,
death and disability benefits paid in the plan are considered
integrated with and in lieu of termination benefits under
closure of business.
c. When employees are entitled to only one form of
benefit.
 Cipriano v. San Miguel Corporation, Aug. 21, 1968.
The retirement plan provides that the employee shall be
entitled to either the retirement benefit provided therein or
the separation pay provided by law, whichever is higher, the
employee cannot be entitled to both benefits.
 V. LABOR RELATIONS
A. Right to self-organization
1. Who may or may not exercise the right
a. PERSONS WHO CAN EXERCISE RIGHT TO SELF-
ORGANIZATION
Who are eligible to join, form or assist a labor organization
for purposes of collective bargaining?
In the private sector:
1. All persons employed in commercial, industrial and
agricultural enterprises;
2. Employees of government-owned and/or controlled
corporations without original charters established under the
Corporation Code;
3. Employees of religious, charitable, medical or educational
institutions, whether operating for profit or not;
4. Front-line managers, commonly known as supervisory
employees [See discussion below];
5. Alien employees [See discussion below];
6. Working children [See discussion below];
7. Homeworkers [See discussion below];
8. Employees of cooperatives [See discussion below]; and
9. Employees of legitimate contractors not with the
principals but with the contractors
In the public sector:
All rank-and-file employees of all branches, subdivisions,
instrumentalities, and agencies of government, including
government-owned and/or controlled corporations with
original charters, can form, join or assist employees’
organizations of their own choosing.
Are front-line managers or supervisors eligible to join,
form or assist a labor organization?
Yes, but only among themselves. They cannot join a rank-
and-file union.
Do alien employees have the right to join a labor
organization?
No, except if the following requisites are complied with:
(1) He should have a valid working permit issued by the
DOLE; and
(2) He is a national of a country which grants the same or
similar rights to Filipino workers OR which has ratified either
ILO Convention No. 87 or ILO Convention No. 98 (ON THE
RIGHT TO SELF- ORGANIZATION OF WORKERS) as certified
by the Philippine Department of Foreign Affairs (DFA).
Do members of cooperatives have the right to join, form or THEIR LABOR ORGANIZATION IS CALLED “WORKERS’
assist a labor organization? ASSOCIATION.”
No, because they are co-owners of the cooperative. This rule applies as well to ambulant, intermittent and other
workers, rural workers and those without any definite
What about employees of a cooperative? employers. The reason for this rule is that these persons
Yes, because they have employer-employee relationship have no employers with whom they can collectively bargain.
with the cooperative.
b. PERSONS WHO CANNOT EXERCISE RIGHT TO SELF-
What about members who are at the same time ORGANIZATION
employees of the cooperative? Who are the persons that are not allowed to form, join or
No, because the prohibition covers employees of the assist labor organizations?
cooperative who are at the same time members thereof. a. In the private sector.
1. Top and middle level managerial employees; and
Can employees of job contractors join, form or assist a 2. Confidential employees.
labor organization? b. In the public sector.
Yes, but not for the purpose of collective bargaining with the The following are not eligible to form employees’
principal but with their direct employer – the job contractor. organizations:
1. High-level employees whose functions are
Are self-employed persons allowed to join, form or assist a normally considered as policy-making or managerial
labor organization? or whose duties are of a highly confidential nature;
Yes, for their mutual aid and protection but not for 2. Members of the Armed Forces of the Philippines;
collective bargaining purposes since they have no employers 3. Police officers;
but themselves. BUT AS AND BY WAY OF DISTINCTION, 4. Policemen;
5. Firemen; and 6. Jail guards.
CONFIDENTIAL EMPLOYEE RULE
Who are confidential employees?
Within the context of labor relations, “confidential
employees” are those who meet the following criteria:
(1) They assist or act in a confidential capacity;
(2) To persons or officers who formulate, determine, and
effectuate management policies specifically in the field of
labor relations.
The two (2) criteria above are cumulative and both must be
met if an employee is to be considered a
“confidential employee” that would deprive him of his right
to form, join or assist a labor organization.
a. Doctrine of necessary implication
What is the doctrine of necessary implication?
Under the confidential employee rule, a rank-and-file
employee or a supervisory employee, is elevated to the
position of a managerial employee, under another doctrine
called the DOCTRINE OF NECESSARY IMPLICATION, hence,
he is treated as if he is a managerial employee because of
his access to confidential information related to labor
relations. THE DOCTRINE OF NECESSARY IMPLICATION IS
THEREFORE THE LEGAL BASIS FOR INELIGIBILITY OF
CONFIDENTIAL EMPLOYEE TO JOIN A UNION.
For example, not all secretaries to top officials of the
company may be considered as confidential employees,
unless they have access to confidential information related
to labor relations, such as when they transcribe or
type/encode the counter-proposals of management on the
proposals of the SEBA in a CBA negotiation. That access to
such counter-proposals is the type of access contemplated
under this rule.
2. Commingling or mixture of membership
EFFECT OF INCLUSION AS MEMBERS OF EMPLOYEES OUTSIDE
OF THE BARGAINING UNIT Is COMMINGLING or MIXED
MEMBERSHIP of supervisors and rank-and-file union in one
union allowed? Is it a ground to cancel its registration?
No. It is not allowed. However, it bears noting that in case
there is commingling or mixed membership of supervisors and
rank-and-file employees in one union, the new rule enunciated
in Article 256 [245-A] of the Labor Code, unlike in the old law,
is that it cannot be invoked as a ground for the cancellation of
the registration of the union. The employees so improperly
included are automatically deemed removed from the list of
members of said union. In other words, their removal from the
said list is by operation of law.
 3. Rights and conditions of membership
a. Nature of relationship
i. Member-Labor union
The nature of the relationship between the union and its
members is fiduciary in nature, which arises from the
dependence of the employee on the union, and from the
comprehensive power vested in the union with respect to
the individual. The union may be considered but the agent
of its members for the purpose of securing for them fair and
just wages and good working conditions. [Heirs of Cruz v.
CIR, G.R. No. L-23331-32 (1969)]
Admission and Discipline of Members
No arbitrary or excessive initiation fees or fines.
No arbitrary or excessive initiation fees shall be required of standing union member, who, owing to provocations of
the members of a legitimate labor organization nor shall
arbitrary, excessive or oppressive fine and forfeiture be
imposed. [Art. 250(e)]
Prohibition on subversive activities or membership
No labor organization shall knowingly admit as
members or continue in membership any
individual who:
1. Belongs to a subversive organization; or
2. Who is engaged directly or indirectly in any
subversive activity; Unions cannot arbitrarily
exclude qualified applicants Unions are not entitled
to arbitrarily exclude qualified applicants for
membership, and a closed shop provision would not
justify the employer in discharging, or a union in
insisting upon the discharge of, an employee whom
the union thus refuses to admit to membership,
without any reasonable ground therefor.
Needless to say, if said unions may be compelled to admit
new members, who have the requisite qualifications, with
more reason may the law and the courts exercise the
coercive power when the employee involved is a long-
union officers, was impelled to tender his resignation which
he forthwith withdrew or revoked. [Salunga v. CIR, G.R. No.
L-22456 (1967)] Members who seek destruction of union
lose right to remain as members Inherent in every labor
union, or any organization for that matter, is the right of self
preservation.
When members of a labor union, therefore, sow the seeds
of dissension and strife within the union; when they seek
the disintegration and destruction of the very union
to which they belong, they thereby forfeit their rights to
remain as members of the union which they seek to destroy.
[Villar v. Inciong, G.R. No. L-50283-84 (1983)]
ii. Labor union federation
Local unions do not owe their creation and existence to the
national federation to which they are affiliated but, instead,
to the will of their members, […] The local unions remain the
basic units of association, free to serve their own interests
subject to the restraints imposed by the constitution and by-
laws of the national federation, and free also to renounce
the affiliation upon the terms laid down in the agreement
which brought such affiliation into existence. [Philippine
Skylanders, Inc. v. NLRC, G.R. No. 127374 (2002)]
Union Chartering
Affiliate
An independent union affiliated with a federated, national
union or a chartered local which was subsequently granted
independent
registration but did not disaffiliate from its federation,
reported to the Regional Office and the Bureau in
accordance with Rule III, Secs. 6 and 7 [Sec. 1(b), Rule I,
Book V, IRR]
Independent Union
A labor organization operating at the enterprise level that
acquired legal personality through independent registration
under Art. 234 of the Labor Code and Rule III, Sec. 2-A [Sec.
1(x), Rule I, Book V]
National Union or Federation
A group of legitimate labor unions in a private establishment
organized for collective bargaining or for dealing with
employers concerning terms and conditions of
employment for their member union or for participating in
the formulation of social and employment policies,
standards and programs, registered with the BLR in
accordance with Rule III Sec. 2-B [Sec. 1(ll), Rule I, Book V,
IRR]
Chartered Local (Local Chapter)
A labor organization in the private sector operating at the
enterprise level that acquired legal personality through
registration with Regional Office [Sec. 1(j), Rule I, Book V,
IRR]
A duly registered federation or national union may directly
create a local chapter by issuing a charter certificate
indicating the establishment of the local chapter. The
chapter shall acquire legal personality only for purposes of
filing a petition for certification election from the date it was
issued a charter certificate.
The chapter shall be entitled to all other rights and
privileges of a legitimate labor organization only upon the
submission of the following documents in addition to its
charter certificate:
1. The names of the chapter's officers, their addresses, and
the principal office of the chapter; and
2. The chapter's constitution and by-laws: Provided, That
where the chapter's constitution and by-laws are the same
as that of the federation or the national union, this fact shall
be indicated accordingly.
The additional supporting requirements shall be:
1. Certified under oath by:
a. Secretary; or
b. Treasurer
2. Attested by: Its president [Art. 241]
Lesser requirements for Chartered locals
The intent of the law in imposing less requirements in the
case of a branch or local of a registered federation or
national union is to encourage the affiliation of a local union
with a federation or national union in order to increase the
local unions’ bargaining powers respecting terms and
conditions of labor. [SMCEUPTGWO v. SMPEU-PDMP, G.R.
No. 171153 (2007)]
Trade Union Centers cannot create locals or chapters Art.
241 mentions only “a duly registered federation or national
union.” The solemn power and duty of the Court to
interpret and apply the law does not include the power to
correct by reading into the law what is not written therein.
[SMCEU-PTGWO v. SMPEU-PDMP, G.R. No. 171153 (2007)]
 a) Disaffiliation 4. RIGHT TO DISAFFILIATE.
The right of the affiliate union to disaffiliate from its mother
1. UNIONVIS-À-VIS ITS MEMBERS. federation or national union is a constitutionally-
The relationship between the union and its members is that guaranteed right which may be invoked by the former at
of principal and agent, the former being the agent while the any time. It is axiomatic that an affiliate union is a separate
latter, the principal. and voluntary association free to serve the interest of all its
members - consistent with the freedom of association
2. MOTHER UNION VIS-À-VIS AFFILIATE OR LOCAL guaranteed in the Constitution.
CHAPTER/CHARTERED LOCAL
The federation or national union (also called “Mother 5. DISTINCTIONS AS TO AFFILIATION & DISAFFILIATION.
Union”), acting for and in behalf of its affiliate, has the
status of an agent while the affiliate or local The following are the distinctions between independently
chapter/chartered local remains the principal – the basic registered union and local chapter/chartered local, insofar
unit of the association. as their relationship with the federation or national union is
concerned:
3. PURPOSE OF AFFILIATION
The purpose of affiliation is to further strengthen the
collective bargaining leverage of the affiliate. No doubt, the
purpose of affiliation by a local union with a mother union is
to increase by collective action its bargaining power in
respect of the terms and conditions of labor.
6. SOME PRINCIPLES ON AFFILIATION.
Independent legal personality of an affiliate union is not
affected by affiliation.
The affiliate union is a separate and distinct voluntary
association owing its creation to the will of its members. It
does not give the mother union the license to act
independently of the affiliate union.
The fact that the affiliate union is not a legitimate labor
organization does not affect the principal-agent relationship.
Affiliate union becomes subject of the rules of the
federation or national union.
The appendage of the acronym of the federation or national
union after the name of the affiliate union in the registration
with the DOLE does not change the principal-agent
relationship between them. Such inclusion of the acronym is
merely to indicate that the local union is affiliated with the
federation or national union at the time of the registration.
It does not mean that the affiliate union cannot
independently stand on its own.
7. SOME PRINCIPLES ON DISAFFILIATION.
- Disaffiliation does not divest an affiliate union of its legal
personality.
- Disaffiliation of an affiliate union is not an act of disloyalty.
- Disaffiliation for purposes of forming a new union does not
terminate the status of the members thereof as employees
of the company. By said act of disaffiliation, the employees
who are members of the local union did not form a new
union but merely exercised their right to register their local
union. The local union is free to disaffiliate from its mother
union.
- Disaffiliation should be approved by the majority of the
union members.
- Disaffiliation terminates the right to check-off federation
dues.
b) Substitutionary doctrine
The “substitutionary” doctrine provides that the employees
cannot revoke the validly executed collective bargaining
contract with their employer by the simple expedient of
changing their bargaining agent.
It is in the light of this that the phrase “said new agent
would have to respect said contract” must be understood. It
only means that the employees, thru their new bargaining
agent,
cannot renege on their collective bargaining contract,
except of course to negotiate with management for the
shortening thereof.
[Benguet Consolidated v. BCI Employees and Workers
Union-PAFLU, G.R. No. L-24711 (1968)]
Conditions to apply the doctrine
1. Change of bargaining agent (through affiliation,
disaffiliation, or other means); and
2. Existing CBA with the previous bargaining agent [Benguet
Consolidated v. BCI Employees and Workers Union-PAFLU,
G.R. No. L-24711 (1998)]
Effects
1. New bargaining agent cannot revoke and must respect
the existing CBA; and
2. It may negotiate with management to shorten the
existing CBA’s lifetime.
B. Bargaining unit
What is a bargaining unit?
A “bargaining unit” refers to a group of employees sharing
mutual interests within a given employer unit, comprised of
all or less than all of the entire body of employees in the
employer unit or any specific occupational or geographical
grouping within such employer unit. It may also refer to the
group or cluster of jobs or positions within the employer’s
establishment that supports the labor organization which is
applying for registration.
(a) TEST TO DETERMINE
AN APPROPRIATE BARGAINING UNIT
What are the four tests to determine appropriate
bargaining unit?
Based on jurisprudence, there are certain tests which may
be used in determining the appropriate collective bargaining
unit, to wit:
(1) Community or mutuality of interest doctrine;
(2) Globe doctrine or will of the members;
(3) Collective bargaining history doctrine; and
(4) Employment status doctrine.
1. COMMUNITY OR MUTUALITY OF INTEREST DOCTRINE.
Under this doctrine, the employees sought to be
represented by the collective bargaining agent must have
community or mutuality of interest in terms of employment
and working conditions as evinced by the type of work they
perform. It is characterized by similarity of employment
status, same duties and responsibilities and substantially
similar compensation and working conditions.
St. James School of Quezon City v. Samahang Manggagawa
sa St. James School of Quezon City.1 - Respondent union
sought to represent the rank-and-file employees (consisting
of the motor pool, construction and transportation
employees) of petitioner-school’s Tandang Sora campus.
Petitioner-school opposed it by contending that the
bargaining unit should not only be composed of said
employees but must include administrative, teaching and
office personnel in its five (5) campuses. The Supreme Court
disagreed with said contention. The motor pool,
construction and transportation employees of the Tandang
Sora campus had 149 qualified voters at the time of the
certification election, hence, it was ruled that the 149
qualified voters should be used to determine the existence
of a quorum during the election. Since a majority or 84 out
of the 149 qualified voters cast their votes, a quorum
existed during the certification election. The computation of
the quorum should be based on the rank-and-file motor
pool, construction and transportation employees of the
Tandang Sora campus and not on all the employees in
petitioner’s five (5) campuses. Moreover, the administrative,
teaching and office personnel are not members of the
union. They do not belong to the bargaining unit that the
union seeks to represent.
Other cases:
(1) San Miguel Corporation v. Laguesma,2 involving a
petition of the union which seeks to represent the sales
personnel in the various Magnolia sales offices in Northern
Luzon. Petitioner company, however, opposed it by taking
the position that each sales office should constitute one
bargaining unit. In disagreeing with this proposition of
petitioner, the High Court said: “What greatly militates
against this position (of the company) is the meager number
of sales personnel in each of the Magnolia sales office in
Northern Luzon. Even the bargaining unit sought to be
represented by respondent union in the entire Northern
Luzon sales area consists only of approximately fifty-five (55)
employees. Surely, it would not be for the best interest of
these employees if they would further be fractionalized. The
adage ‘there is strength in number’ is the very rationale
underlying the formation of a labor union.”
(2) San Miguel Corporation Supervisors and Exempt
Employees Union v. Laguesma,3 involving the issue of
validity of constituting as one CBU of employees working in
San Miguel’s three (3) plants located in three (3) different
places, namely: (1) in Cabuyao, Laguna, (2) in Otis,
Pandacan, Metro Manila, and (3) in San Fernando,
Pampanga. It was declared that geographical location is
immaterial and therefore can be completely disregarded if
the communal or mutual interest of the employees are not
sacrificed. The distance among the 3 plants is not productive
of insurmountable difficulties in the administration of union
affairs. Neither are there regional differences that are likely
to impede the operations of a single bargaining
representative.
(3) Similar to this case is University of the Philippines v.
Ferrer-Calleja,4 where all non-academic rank-and- file
employees of the University of the Philippines in its various
campuses, to wit: (1) Diliman, Quezon City; (2) Padre Faura,
Manila; (3) Los Baños, Laguna; and (4) the Visayas, were
allowed to participate in a certification election as one
bargaining unit.
2. GLOBE DOCTRINE.
This principle is based on the will of the employees. It is
called Globe doctrine because this principle was first
enunciated in the United States case of Globe Machine and
Stamping Co.,5 where it was ruled, in defining the
appropriate bargaining unit, that in a case where the
company’s production workers can be considered either as
a single bargaining unit appropriate for purposes of
collective bargaining or as three (3) separate and distinct
bargaining units, the determining factor is the desire of the
workers themselves. Consequently, a certification election
should be held separately to choose which representative
union will be chosen by the workers.
International School Alliance of Educators [ISAE] v.
Quisumbing.6 - The Supreme Court ruled here that foreign-
hired teachers do not belong to the bargaining unit of the
local-hires because the former have not indicated their
intention to be grouped with the latter for purposes of
collective bargaining. Moreover, the collective bargaining
history of the school also shows that these groups were
always treated separately.
3. COLLECTIVE BARGAINING HISTORY DOCTRINE.
This principle puts premium to the prior collective
bargaining history and affinity of the employees in
determining the appropriate bargaining unit. However, the
existence of a prior collective bargaining history has been
held as neither decisive nor conclusive in the determination
of what constitutes an appropriate bargaining unit.
National Association of Free Trade Unions v. Mainit
Lumber Development Company Workers Union.7 - It was
ruled here that there is mutuality of interest among the
workers in the sawmill division and logging division as to
justify their formation of a single bargaining unit. This holds
true despite the history of said two divisions being treated
as separate units and notwithstanding their geographical
distance from each other.
 4. EMPLOYMENT STATUS DOCTRINE. C. Bargaining representative
The determination of the appropriate bargaining unit based 1. Determination of representation status
on the employment status of the employees is considered
an acceptable mode. For instance, casual employees and (A.K.A. SEBA OR BARGAINING AGENT)
those employed on a day-to-day basis, according to the What is a SEBA?
Supreme Court in Philippine Land-Air-Sea Labor Union v. A Sole and Exclusive Bargaining Agent (SEBA) or commonly
CIR, 1 do not have the mutuality or community of interest referred to as “exclusive bargaining representative” or
with regular and permanent employees. Hence, their “exclusive bargaining agent” refers to a legitimate labor
inclusion in the bargaining unit composed of the latter is not organization duly certified as the sole and exclusive
justified. Confidential employees, by the very nature of their bargaining representative or agent of all the employees in a
functions, assist and act in a confidential capacity to, or have bargaining unit.
access to confidential matters of, persons who exercise
managerial functions in the field of labor relations. As such, What are the modes of determining the sole and exclusive
the rationale behind the ineligibility of managerial bargaining agent?
employees to form, assist or join a labor union equally The following are the modes:
applies to them. Hence, they cannot be allowed to be 1. Request for SEBA Certification;
included in the rank-and-file employees’ bargaining unit. 2. Certification election;
The rationale for this inhibition is that if these managerial 3. Consent election;
employees would belong to or be affiliated with a union, the 4. Run-off election;
latter might not be assured of their loyalty to the union in 5. Re-run election.
view of evident conflict of interest. The union can also
become company- dominated with the presence of
managerial employees in its membership.
(a) REQUEST FOR SEBA CERTIFICATION
(Repealed and Replaced “VOLUNTARY RECOGNITION”)
Is voluntary recognition still a proper mode of selecting a
SEBA?
No more, because of its repeal and being replaced by the new
mode called “REQUEST FOR SEBA CERTIFICATION” per
Department Order No. 40-I-15, Series of 2015, (Sept. 7, 2015
What should the employer do if a request for recognition
or a demand for CBA negotiation is made by a union which
has not been certified as the SEBA?
The employer so requested cannot now extend voluntary
recognition but may still validly file a petition for certification
election (PCE) under Article 270 [258] of the Labor Code, in order
to determine if the requesting union has the majority support of
the employees in the bargaining unit which it seeks to represent
or where it intends to operate.
What are the situations involved in this new mode of
“REQUEST FOR SEBA CERTIFICATION”?
There are three (3) scenarios conceived under the Rules on
this mode, namely:
(1) Request for certification in unorganized establishment
with only one (1) legitimate union;
(2) Request for certification in unorganized establishment
with more than one (1) legitimate labor organization; and
(3) Request for certification in organized establishment. The
foregoing scenarios are discussed below.
FIRST SCENARIO: Request for certification in an
UNORGANIZED establishment with only one (1) legitimate
union.
a. Validation process.
If the DOLE Regional Director finds the establishment unorganized
with only one (1) legitimate labor organization in existence,
he/she should call a conference within five (5) working days for
the submission of the following:
1. The names of employees in the covered bargaining unit who
signify their support for the SEBA certification, provided that said
employees comprise at least majority of the number of employees
in the covered bargaining unit; and
2. Certification under oath by the president of the requesting
union or local that all documents submitted are true and correct
based on his/her personal knowledge.
The submission shall be presumed to be true and correct unless
contested under oath by any member of the bargaining unit
during the validation conference. For this purpose, the employer
or any representative of the employer shall not be deemed a
party-in-interest but only as a bystander to the process of
certification.
If the requesting union or local fails to complete the
requirements for SEBA certification during the conference,
the Request should be referred to the Election Officer for
the conduct of certification election.1
b. Action on the submission – when SEBA Certification
should be issued.
If the DOLE Regional Director finds the requirements
complete, he/she should issue, during the conference, a
Certification as SEBA enjoying the rights and privileges of an
exclusive bargaining agent of all the employees in the
covered bargaining unit.2
The DOLE Regional Director should cause the posting of the
SEBA Certification for 15 consecutive days in at least 2
conspicuous places in the establishment or covered
bargaining unit.
c. Effect of certification.
Upon the issuance of the Certification as SEBA, the certified
union or local shall enjoy all the rights and privileges of an
exclusive bargaining agent of all the employees in the
covered CBU.
SECOND SCENARIO: Request for certification in
unorganized establishment with more than one (1)
legitimate labor organization.
If the DOLE Regional Director finds the establishment
unorganized with more than one (1) legitimate labor
organization, he/she should refer the same to the Election
Officer for the conduct of certification election.3 The
certification election shall be conducted in accordance with
the Rules.
THIRD SCENARIO: Request for certification in organized
establishment.
If the Regional Director finds the establishment organized,
he/she should refer the same to the Mediator- Arbiter for
the determination of the propriety of conducting a
certification election.
(b) CERTIFICATION ELECTION
“Certification election” refers to the process of determining
through secret ballot the sole and exclusive bargaining
agent of the employees in an appropriate bargaining unit for
purposes of collective bargaining or negotiations.
Who may file a petition for certification election?
The petition may be filed by:
1. A legitimate labor organization which may be:
(a) an independent union; or
(b) a national union or federation which has already
issued a charter certificate to its local chapter
participating in the certification election; or
(c) a local chapter which has been issued a charter
certificate by the national union or federation.
2. An employer, when requested by a labor organization to
bargain collectively and its majority status is in doubt.
What are the rules prohibiting the filing of petition for
certification election (bar rules)?
a. General rule.
The general rule is that in the absence of a CBA duly
registered in accordance with Article 231 of the Labor Code,
a petition for certification election may be filed at any time.
b. Bar rules.
No certification election may be held under the following
rules:
1. Statutory bar rule;
2. Certification year bar rule;
3. Negotiations bar rule;
4. Bargaining deadlock bar rule; or
5. Contract bar rule.
2. CERTIFICATION YEAR BAR RULE.
Under this rule, a petition for certification election (PCE)
may not be filed within one (1) year:
1. From the date a union is certified as SEBA by virtue of a
REQUEST FOR SEBA CERTIFICATION; or
2. From the date a valid certification, consent, run-off or re-
run election has been conducted within the bargaining unit.
If after this one year period, the SEBA did not commence
collective bargaining with the employer, a PCE may be filed
by a rival union to challenge the majority status of the
certified SEBA.
3. NEGOTIATIONS BAR RULE.
Under this rule, no PCE should be entertained while the sole
and exclusive bargaining agent (SEBA) and the employer
have commenced and sustained negotiations in good faith
within the period of one (1) year from the date of a valid
certification, consent, run-off or re-run election or from the
date of voluntary recognition.
Once the CBA negotiations have commenced and while the
parties are in the process of negotiating the terms and
conditions of the CBA, no challenging union is allowed to file
a PCE that would disturb the process and unduly forestall
the early conclusion of the agreement.
4. BARGAINING DEADLOCK BAR RULE.
Under this rule, a PCE may not be entertained when a
bargaining deadlock to which an incumbent or certified
bargaining agent is a party has been submitted to
conciliation or arbitration or has become the subject of a
valid notice of strike or lockout.
Kaisahan ng Manggagawang Pilipino [KAMPIL-KATIPUNAN]
v. Trajano. - The bargaining deadlock- bar rule was not
applied here because for more than four (4) years after it
was certified as the exclusive bargaining agent of all the
rank-and-file employees, it did not take any action to legally
compel the employer to comply with its duty to bargain
collectively, hence, no CBA was executed. Neither did it file
any unfair labor practice suit against the employer nor did it
initiate a strike against the latter. Under the circumstances,
a certification election may be validly ordered and held.
5. CONTRACT BAR RULE.
Under this rule, a PCE cannot be filed when a CBA between
the employer and a duly recognized or certified bargaining
agent has been registered with the Bureau of Labor
Relations (BLR) in accordance with the Labor Code. Where
the CBA is duly registered, a petition for certification
election may be filed only within the 60-day freedom period
prior to its expiry. The purpose of this rule is to ensure
stability in the relationship of the workers and the employer
by preventing frequent modifications of any CBA earlier
entered into by them in good faith and for the stipulated
original period.
When contract bar rule does not apply.
The contract-bar rule does not apply in the following cases:
1. Where there is an automatic renewal provision in the CBA
but prior to the date when such automatic renewal became
effective, the employer seasonably filed a manifestation
with the Bureau of Labor Relations of its intention to
terminate the said agreement if and when it is established
that the bargaining agent does not represent anymore the
majority of the workers in the bargaining unit.
2. Where the CBA, despite its due registration, is found in
appropriate proceedings that: (a) it contains provisions
lower than the standards fixed by law; or (b) the documents
supporting its registration are falsified, fraudulent or tainted
with misrepresentation.
3. Where the CBA does not foster industrial stability, such as
contracts where the identity of the representative is in
doubt since the employer extended direct recognition to the
union and concluded a CBA therewith less than one (1) year
from the time a certification election was conducted where
the “no union” vote won. This situation obtains in a case
where the company entered into a CBA with the union
when its status as exclusive bargaining agent of the
employees has not been established yet.
4. Where the CBA was registered before or during the last
sixty (60) days of a subsisting agreement or during the
pendency of a representation case. It is well-settled that the
60-day freedom period based on the original CBA should not
be affected by any amendment, extension or renewal of the
CBA for purposes of certification election
What are the requisites for the validity of the petition for
certification election?
The following requisites should concur:
1. The union should be legitimate which means that it is
duly registered and listed in the registry of legitimate labor
unions of the BLR or that its legal personality has not been
revoked or cancelled with finality.
2. In case of organized establishments, the petition for
certification election is filed during (and not before or after)
the 60-day freedom period of a duly registered CBA.
3. In case of organized establishments, the petition
complied with the 25% written support of the members of
the bargaining unit.
4. The petition is filed not in violation of any of the four (4)
bar rules [See above discussion thereof].
What are the two (2) kinds of majorities (DOUBLE
MAJORITY RULE)?
The process of certification election requires two (2) kinds of
majority votes, viz.:
1. Number of votes required for the validity of the process
of certification election itself. In order to have a valid
certification election, at least a majority of all eligible voters
in the appropriate bargaining unit must have cast their
votes.
2. Number of votes required to be certified as the
collective bargaining agent. To be certified as the sole and
exclusive bargaining agent, the union should obtain a
majority of the valid votes cast.
What are some pertinent principles on certification
election?
The pendency of a petition to cancel the certificate of
registration of a union participating in a certification election
does not stay the conduct thereof.
The pendency of an unfair labor practice case filed against a
labor organization participating in the certification election
does not stay the holding thereof.
Direct certification as a method of selecting the exclusive
bargaining agent of the employees is not allowed. This is
because the conduct of a certification election is still
necessary in order to arrive in a manner definitive and
certain concerning the choice of the labor organization to
represent the workers in a collective bargaining unit.
The “No Union” vote is always one of the choices in a
certification election. Where majority of the valid votes cast
results in “No Union” obtaining the majority, the Med-
Arbiter shall declare such fact in the order.
Only persons who have direct employment relationship
with the employer may vote in the certification election,
regardless of their period of employment.
b.1. CERTIFICATION ELECTION IN AN UNORGANIZED
ESTABLISHMENT
What is meant by “unorganized establishment”?
As distinguished from “organized establishment,” an
“unorganized establishment” is an employer entity where
there is no recognized or certified collective bargaining
union or agent.
A company or an employer-entity, however, may still be
considered an unorganized establishment even if there are
unions in existence therein for as long as not one of them is
duly certified as the sole and exclusive bargaining
representative of the employees in the particular bargaining
unit it seeks to operate and represent.
Further, a company remains unorganized even if there is a
duly recognized or certified bargaining agent for rank-and-
file employees, for purposes of the petition for certification
election filed by supervisors. The reason is that the
bargaining unit composed of supervisors is separate and
distinct from the unionized bargaining unit of rank-and-file
employees. Hence, being unorganized, the 25% required
minimum support of employees within the bargaining unit
of the supervisors need not be complied with.
How should certification election be conducted in an
unorganized establishment?
In case of a petition filed by a legitimate organization
involving an unorganized establishment, the Med- Arbiter is
required to immediately order the conduct of a certification c. RUN-OFF ELECTION
election upon filing of a petition for certification election by A “run-off election” refers to an election between the labor
a legitimate labor organization.
b.2. CERTIFICATION ELECTION
IN AN ORGANIZED ESTABLISHMENT
What are the requisites for the conduct of a certification
election in an organized establishment?
The Med-Arbiter is required to automatically order the
conduct of a certification election by secret ballot in an
organized establishment as soon as the following requisites
are fully met:
1. That a petition questioning the majority status of the
incumbent bargaining agent is filed before the DOLE within
the 60-day freedom period;
2. That such petition is verified; and
3. That the petition is supported by the written consent of at
least twenty-five percent (25%) of all the employees in the
bargaining unit.
unions receiving the two (2) highest number of votes in a
certification election or consent election with three (3) or more
unions in contention, where such certification election or consent
election results in none of the contending unions receiving the
majority of the valid votes cast; provided, that the total number of
votes for all contending unions, if added, is at least fifty percent
(50%) of the number of valid votes cast.
When is it conducted?
If the above conditions that justify the conduct of a run-off
election are present and there are no objections or
challenges which, if sustained, can materially alter the
election results, the Election Officer should motu proprio
conduct a run-off election within ten (10) days from the
close of the election proceeding between the labor unions
receiving the two highest number of votes.
ILLUSTRATION.
To illustrate, in a certification election involving four (4)
unions, namely: Union A, Union B, Union C, and Union D,
where there are 100 eligible voters who validly cast their
votes, and the votes they each garnered are as follows:
Union A – 35; Union B – 25; Union C – 10; Union D - 15; and
No Union - 15, a run-off election may be conducted
between Union A and Union B because:
(1) Not one of the unions mustered the majority vote of 51
votes but Union A and Union B got the first two highest
number of votes;
(2) If all the votes for the contending unions are added up, it
will result in at least 50% of the valid votes cast (Union A –
35; Union B – 25; Union C – 10; Union D - 15 for a total of
85 or 85%); and
(3) There are no objections or challenges which, if sustained,
can materially alter the results of the election.
THE “NO UNION” CHOICE SHOULD NO LONGER BE
INCLUDED.
For obvious reason, the choice of “No Union” should no
longer be included in the run-off election.
d. RE-RUN ELECTION
1. MEANING OF RE-RUN ELECTION.
“‘Re-run election’ refers to an election conducted to break a
tie between contending unions, including between ‘no
union’ and one of the unions. It shall likewise refer to an
election conducted after a failure of election has been
declared by the Election Officer and/or affirmed by the
Mediator-Arbiter.”
2. GROUNDS CITED IN THE RULES FOR RE-RUN ELECTION.
Based on the above-quoted rule, there are 2 situations
contemplated thereunder that justify the conduct of a re-
run election, to wit:
(1) To break a tie; or
(2) To cure a failure of election.
3. RULE IN CASE OF FAILURE OF ELECTION.
In failure of election, the number of votes cast in the
certification or consent election is less than the majority of the
number of eligible voters and there are no challenged votes
that could materially change the results of the election. For
example, in a CBU composed of 100 employees, the majority of
100, which is 51, should validly cast their votes in the election;
otherwise, if less than 51 employees have validly cast their
votes, there is here a failure of election.
e. CONSENT ELECTION
What is consent election?
A “consent election” refers to the process of determining
through secret ballot the sole and exclusive bargaining agent
(SEBA) of the employees in an appropriate bargaining unit for
purposes of collective bargaining and negotiation. It is
voluntarily agreed upon by the parties, with or without the
intervention of the DOLE.
hat are the distinctions between consent election and
certification election?
Consent election is but a form of certification election. They may
be distinguished from each other in the following manner:
(1) The former is held upon the mutual agreement of the
contending unions; while the latter does not require the mutual
consent of the parties as it is conducted upon the order of the
Med-Arbiter (Mediator-Arbiter).
(2) The former may be conducted with or without the control and
supervision of the DOLE; while the latter is always conducted
under the control and supervision of the DOLE.
(3) The former is being conducted as a voluntary mode of resolving
labor dispute; while the latter, although non- adversarial, is a
compulsory method of adjudicating a labor dispute.
(4) The former is given the highest priority; while the latter is
resorted to only when the contending unions fail or refuse to
submit their representation dispute through the former. This is so
because under the Implementing Rules, as amended, even in cases
where a PCE is filed, the Med-Arbiter (Mediator-Arbiter), during
the preliminary conference and hearing thereon, is tasked to
determine the “possibility of a consent election.” It is only when
the contending unions fail to agree to the conduct of a consent
election during the preliminary conference that the Med-Arbiter
(Mediator-Arbiter) will proceed with the process of certification
election by conducting as many hearings as he may deem
necessary up to its actual holding. But in no case shall the conduct
of the certification election exceed 15 days from the date of the
scheduled preliminary conference/hearing after which time, the
PCE is considered submitted for decision.
(5) The former necessarily involves at least two (2) or more
contending unions; while the latter may only involve one
(1) petitioner union.
(6) The former may be conducted in the course of the proceeding
in the latter or during its pendency.
 D. Rights of labor organizations arrangement of any sort to the contrary is deemed null and
1. Check off, assessment, agency fees void. Clearly, what is prohibited is the payment of
attorney’s fees when it is effected through forced
1. REQUISITES FOR VALIDITY OF UNION DUES AND SPECIAL contributions from the workers from their own funds as
ASSESSMENTS. distinguished from the union funds.
The following requisites must concur in order for union dues
and special assessments for the union’s incidental expenses, 4. CHECK-OFF OF UNION DUES AND ASSESSMENTS.
attorney’s fees and representation expenses to be valid, “Check-off” means a method of deducting from the
namely: employee’s pay at prescribed periods, any amount due for
(a) Authorization by a written resolution of the majority of fees, fines or assessments. It is a process or device whereby
all the members at a general membership meeting duly the employer, on agreement with the union recognized as
called for the purpose; the proper bargaining representative, or on prior
(b) Secretary’s record of the minutes of said meeting; and authorization from its employees, deducts union dues and
(c) Individual written authorizations for check-off duly assessments from the latter’s wages and remits them
signed by the employees concerned. directly to the union.

3. ASSESSMENT FOR ATTORNEY’S FEES, NEGOTIATION FEES

AND SIMILAR CHARGES.
The rule is that no such attorney’s fees, negotiation fees or
similar charges of any kind arising from the negotiation or
conclusion of the CBA shall be imposed on any individual
member of the contracting union. Such fees may be
charged only against the UNION FUNDS in an amount to be
agreed upon by the parties. Any contract, agreement or
5. INDIVIDUAL WRITTEN AUTHORIZATION, WHEN REQUIRED.
The law strictly prohibits the check-off from any amount due an
employee who is a member of the union, of any union dues,
special assessment, attorney’s fees, negotiation fees or any other
extraordinary fees other than for mandatory activities under the
Labor Code, without the individual written authorization duly
signed by the employee. Such authorization must specifically state
the amount, purpose and beneficiary of the deduction. The
purpose of the individual written authorization is to protect the
employees from unwarranted practices that diminish their
compensation without their knowledge or consent.
6. INDIVIDUAL WRITTEN AUTHORIZATION, WHEN NOT
REQUIRED.
In the following cases, individual written authorization is not
required:
a. Assessment from non-members of the bargaining agent of
“agency fees” which should be equivalent to the dues and other
fees paid by members of the recognized bargaining agent, if such
non-members accept the benefits under the CBA.
b. Deductions for fees for mandatory activities such as labor
relations seminars and labor education activities.
c. Deductions for withholding tax mandated under the National
Internal Revenue Code.
e. Deductions for withholding of wages because of employee’s
debt to the employer which is already due.
f. Deductions made pursuant to a judgment against the worker
under circumstances where the wages may be the subject of
attachment or execution but only for debts incurred for food,
clothing, shelter and medical attendance.
g. Deductions from wages ordered by the court.
h. Deductions authorized by law such as for premiums for
PhilHealth, SSS, Pag-IBIG, employees’ compensation and the like.
AGENCY FEES
1. A NON-BARGAINING UNION MEMBER HAS THE RIGHT TO
ACCEPT OR NOT THE BENEFITS OF THE CBA.
There is no law that compels a non-bargaining union member to
accept the benefits provided in the CBA. He has the freedom to
choose between accepting and rejecting the CBA itself by not
accepting any of the benefits flowing therefrom. Consequently, if
a non-bargaining union member does not accept or refuses to
avail of the CBA-based benefits, he is not under any obligation to
pay the “agency fees” since, in effect, he does not give recognition
to the status of the bargaining union as his agent.
2. LIMITATION ON THE AMOUNT OF AGENCY FEE.
The bargaining union cannot capriciously fix the amount of
agency fees it may collect from its non-members.
Article 248(e) of the Labor Code expressly sets forth the limitation
in fixing the amount of the agency fees, thus:
(1) It should be reasonable in amount; and
(2) It should be equivalent to the dues and other fees paid by
members of the recognized collective bargaining agent.
Thus, any agency fee collected in excess of this limitation is a
nullity.
3. NON-MEMBERS OF THE SEBA NEED NOT BECOME MEMBERS
THEREOF.
The employees who are not members of the certified bargaining
agent which successfully concluded the CBA are not required to
become members of the latter. Their acceptance of the benefits
flowing from the CBA and their act of paying the agency fees do
not make them members thereof.
4. CHECK-OFF OF AGENCY FEES.
“Check-off” of agency fees is a process or device whereby the
employer, upon agreement with the bargaining union, deducts
agency fees from the wages of non-bargaining union members
who avail of the benefits from the CBA and remits them directly to
the bargaining union.
5. ACCRUAL OF RIGHT OF BARGAINING UNION TO DEMAND
CHECK-OFF OF AGENCY FEES.
The right of the bargaining union to demand check-off of agency
fees accrues from the moment the non- bargaining union member
accepts and receives the benefits from the CBA. This is the
operative fact that would trigger such liability.
6. NO INDIVIDUAL WRITTEN AUTHORIZATION BY NON-
BARGAINING UNION MEMBERS REQUIRED.
To effect the check-off of agency fees, no individual written
authorization from the non-bargaining union members who
accept the benefits resulting from the CBA is necessary.
7. EMPLOYER’S DUTY TO CHECK-OFF AGENCY FEES.
It is the duty of the employer to deduct or “check-off” the sum
equivalent to the amount of agency fees from the non-bargaining
union members' wages for direct remittance to the bargaining
union.”
8. MINORITY UNION CANNOT DEMAND FROM THE EMPLOYER
TO GRANT IT THE RIGHT TO CHECK-OFF OF UNION DUES AND
ASSESSMENTS FROM THEIR MEMBERS.
The obligation on the part of the employer to undertake the duty
to check-off union dues and special assessments holds and applies
only to the bargaining agent and not to any other union/s (called
“Minority Union/s”).
2. Collective bargaining
 a. Duty to bargain collectively
1. MEANING OF DUTY TO BARGAIN COLLECTIVELY.
The “duty to bargain collectively” means the performance
of a mutual obligation to meet and convene promptly and
expeditiously in good faith for the purpose of negotiating
an agreement with respect to wages, hours of work and all
other terms and conditions of employment, including
proposals for adjusting any grievances or questions arising
under such agreement and executing a contract
incorporating such agreements if requested by either party
but such duty does not compel any party to agree to a
proposal or to make any concession.
The duty does not compel any party to agree blindly to a
proposal nor to make concession. While the law imposes on
both the employer and the bargaining union the mutual
duty to bargain collectively, the employer is not under any
legal obligation to initiate collective bargaining negotiations.
2. TWO (2) SITUATIONS CONTEMPLATED.
The duty to bargain collectively involves two (2) situations,
namely:
1. Duty to bargain collectively in the absence of a CBA under
Article 251 of the Labor Code.
2. Duty to bargain collectively when there is an existing CBA
under Article 253 of the Labor Code.
DUTY TO BARGAIN COLLECTIVELY WHEN THERE IS
ABSENCE OF A CBA
1. HOW DUTY SHOULD BE DISCHARGED WHEN THERE IS
NO CBA YET.
The duty to bargain collectively when there has yet been no
CBA in the bargaining unit where the bargaining agent seeks
to operate should be complied with in the following order:
First, in accordance with any agreement or voluntary
arrangement between the employer and the bargaining
agent providing for a more expeditious manner of collective
bargaining; and
Secondly, in its absence, in accordance with the provisions
of the Labor Code, referring to Article 250 thereof which
lays down the procedure in collective bargaining.
DUTY TO BARGAIN COLLECTIVELY WHEN THERE IS A CBA
1. CONCEPT.
When there is a CBA, the duty to bargain collectively shall
mean that neither party shall terminate nor modify such
agreement during its lifetime. However, either party can
serve a written notice to terminate or modify the
2. FREEDOM PERIOD.
The last sixty (60) days of the 5-year lifetime of a CBA
immediately prior to its expiration is called the “freedom
period.” It is denominated as such because it is the only
time when the law allows the parties to freely serve a notice
to terminate, alter or modify the existing CBA. It is also the
time when the majority status of the bargaining agent may
be challenged by another union by filing the appropriate
petition for certification election.
negotiated and ultimately concluded and reached by the
parties. This principle is otherwise known as the “automatic
renewal clause” which is mandated by law and therefore
deemed incorporated in all CBAs.
For its part, the employer cannot discontinue the grant of
the benefits embodied in the CBA which just expired as it is
duty-bound to maintain the status quo by continuing to give
the same benefits until a renewal thereof is reached by the
parties. On the part of the union, it has to observe and
continue to abide by its undertakings and commitments
under the expired CBA until the same is renewed.

3. AUTOMATIC RENEWAL CLAUSE.

a. Automatic renewal clause deemed incorporated in all
CBAs.
Pending the renewal of the CBA, the parties are bound to
keep the status quo and to treat the terms and conditions
embodied therein still in full force and effect during the 60-
day freedom period and/or until a new agreement is
4. KIOK LOY DOCTRINE. OTHER CASES AFTER KIOK LOY.
This doctrine is based on the ruling In Kiok Loy v. NLRC, 1 Divine Word University of Tacloban v. Secretary of Labor
where the petitioner, Sweden Ice Cream Plant, refused to and Employment, Sept. 11, 1992.
submit any counter-proposal to the CBA proposed by its General Milling Corporation v. CA, Feb. 11, 2004.
employees’ certified bargaining agent. The High Court ruled
that the employer had thereby lost its right to bargain the b. Collective Bargaining Agreement
terms and conditions of the CBA. Thus, the CBA proposed by 1. CBA.
the union was imposed lock, stock and barrel on the erring A “Collective Bargaining Agreement” or “CBA” for short,
company. refers to the negotiated contract between a duly recognized
or certified exclusive bargaining agent of workers and their
The Kiok Loy case epitomizes the classic case of negotiating employer, concerning wages, hours of work and all other
a CBA in bad faith consisting of the employer’s refusal to terms and conditions of employment in the appropriate
bargain with the collective bargaining agent by ignoring all bargaining unit, including mandatory provisions for
notices for negotiations and requests for counter- proposals. grievances and arbitration machineries. It is executed not
Such refusal to send a counter-proposal to the union and to only upon the request of the exclusive bargaining
bargain on the economic terms of the CBA constitutes an representative but also by the employer.
unfair labor practice under Article 248(g) of the Labor Code.
2. ESSENTIAL REQUISITES OF COLLECTIVE BARGAINING. Workers are allowed to negotiate wage increases separately
Prior to any collective bargaining negotiations between the and distinctly from legislated wage increases. The parties
employer and the bargaining union, the following requisites may validly agree in the CBA to reduce wages and benefits
must first be satisfied: of employees provided such reduction does not go below
1. Employer-employee relationship must exist between the the minimum standards.
employer and the members of the bargaining unit being Ratification of the CBA by majority of all the workers in the
represented by the bargaining agent; bargaining unit makes the same binding on all
2. The bargaining agent must have the majority support of employees therein.
the members of the bargaining unit established through the Employees entitled to CBA benefits. The following are
modes sanctioned by law; and entitled to the benefits of the CBA:
3. A lawful demand to bargain is made in accordance with (1) Members of the bargaining union;
law. (2) Non-members of the bargaining union but are members
of the bargaining unit;
3. SOME PRINCIPLES ON CBA. (3) Members of the minority union/s who paid agency fees
CBA is the law between the parties during its lifetime and to the bargaining union; and
thus must be complied with in good faith. (4) Employees hired after the expiration of the CBA.
Being the law between the parties, any violation thereof can Pendency of a petition for cancellation of union
be subject of redress in court. registration is not a prejudicial question before CBA
CBA is not an ordinary contract as it is impressed with public negotiation may proceed.
interest. CBA should be construed liberally. If the terms of a CBA are
Automatic Incorporation Clause – law is presumed part of clear and there is no doubt as to the intention of the
the CBA. contracting parties, the literal meaning of its stipulation shall
The benefits derived from the CBA and the law are separate prevail.
and distinct from each other.
 i. Mandatory provisions in a
Collective Bargaining Agreement
The Syllabus mentions 4 provisions that are mandatorily
required to be stated in the CBA, to wit:
1. Grievance Procedure;
2. Voluntary Arbitration;
3. No Strike-No Lockout Clause; and
4. Labor-Management Council (LMC).
If these provisions are not reflected in the CBA, its
registration will be denied by the BLR.
E. Unfair labor practices
1. Nature, aspects
1. WHEN AN ACT CONSTITUTES ULP.
At the outset, it must be clarified that not all unfair acts
constitute ULPs. While an act or decision of an employer or
a union may be unfair, certainly not every unfair act or
decision thereof may constitute ULP as defined and
enumerated under the law.
The act complained of as ULP must have a proximate and
causal connection with any of the following 3
rights:
1. Exercise of the right to self-organization;
2. Exercise of the right to collective bargaining; or
3. Compliance with CBA.
Sans this connection, the unfair acts do not fall within the
technical signification of the term “unfair labor
practice.”
2. THE ONLY ULP WHICH MAY OR MAY NOT BE RELATED
TO THE EXERCISE OF THE RIGHT TO SELF-ORGANIZATION
AND COLLECTIVE BARGAINING.
The only ULP which is the exception as it may or may not
relate to the exercise of the right to self-organization and
collective bargaining is the act described under Article 248
[f], i.e., to dismiss, discharge or otherwise prejudice or
discriminate against an employee for having given or being
about to give testimony under the Labor Code.
3. LABOR CODE PROVISIONS ON ULP.
Under the Labor Code, there are only five (5) provisions
related to ULP, to wit:
1. Article 258 [247] which describes the concept of ULPs and
prescribes the procedure for their prosecution;
2. Article 259 [248] which enumerates the ULPs that may be
committed by employers;
3. Article 260 [249] which enumerates the ULPs that may be
committed by labor organizations;
4. Article 274 [261] which considers violations of the CBA as
no longer ULPs unless the same are gross in character which
means flagrant and/or malicious refusal to comply with the
economic provisions thereof.
5. Article 278(c) [263(c)] which refers to union-busting, a
form of ULP, involving the dismissal from employment of
union officers duly elected in accordance with the union
constitution and by-laws, where the existence of the union
is threatened thereby.
4. PARTIES WHO/WHICH MAY COMMIT ULP.
A ULP may be committed by an employer or by a labor
organization. Article 259 [248] describes the ULPs that may
be committed by an employer; while Article 260 [249]
enumerates those which may be committed by a labor
organization.
On the part of the employer, only the officers and agents of
corporations, associations or partnerships who have actually
participated in or authorized or ratified ULPs are criminally
liable.
On the part of the union, only the officers, members of
governing boards, representatives or agents or members of
labor associations or organizations who have actually
participated in or authorized or ratified the ULPs are
criminally liable.
6. ASPECTS OF ULP.
Under Article 258 [247], a ULP has two (2) aspects, namely:
1. Civil aspect; and
2. Criminal aspect.
The civil aspect of an unfair labor practice includes claims
for actual, moral and exemplary damages, attorney’s fees
and other affirmative reliefs. Generally, these civil claims
should be asserted in the labor case before the Labor
Arbiters who have original and exclusive jurisdiction over
unfair labor practices. The criminal aspect, on the other
hand, can only be asserted before the regular court.

5. ELEMENTS OF ULP.
1. There should exist an employer-employee relationship
between the offended party and the offender; and
2. The act complained of must be expressly mentioned and
defined in the Labor Code as an unfair labor practice.
Absent one of the elements aforementioned will not make
the act an unfair labor practice.
(IN WORD FILE)
VI. MANAGEMENT PREROGATIVE
What are management prerogatives?
Management prerogatives are granted to the employer to
regulate every aspect of their business, generally without
restraint in accordance with their own discretion and
judgment. This privilege is inherent in the right of
employers to control and manage their enterprise
effectively. Such aspects of employment include hiring,
work assignments, working methods, time, place and
manner of work, tools to be used, processes to be followed,
supervision of workers, working regulations, transfer of
employees, lay-off of workers and the discipline, dismissal
and recall of workers.
What are the limitations to the exercise of these
prerogatives?
1. Limitations imposed by:
a) law;
b) CBA;
c) employment contract;
d) employer policy;
e) employer practice; and
f) general principles of fair play and justice.
2. It is subject to police power.
3. Its exercise should be without abuse of discretion.
4. It should be done in good faith and with due regard to the
rights of labor.
For example, an employer cannot prescribe more than 8
hours as normal working hours in a day because there is a
law which limits it to 8 hours. In the same vein, the
employer cannot insist that an employee should observe 8
hours as the daily normal working hours if there is a
stipulation in the CBA, employment contract, or there is an
employer policy or practice that the normal working hours
is only 7 hours per day.
A. Discipline
What are the components of the right to discipline?
The right or prerogative to discipline covers the following:
1) Right to discipline;
2) Right to dismiss;
3) Right to determine who to punish;
4) Right to promulgate rules and regulations;
5) Right to impose penalty; proportionality rule;
6) Right to choose which penalty to impose; and
7) Right to impose heavier penalty than what the company
rules prescribe.
The proportionality rule simply means that the penalty to
be imposed should be commensurate to the offense
committed. For example, dismissal for committing tardiness
or absence for the first time is too harsh a penalty. A
warning, a reprimand would suffice for the first offense,
punitive suspension of a day or two, for the second offense,
a longer suspension for a third offense, and finally, dismissal
for a fourth offense.
For committing serious offenses, such as stealing a
company-owned property, or stabbing a co-employee,
because of their nature, would certainly deserve the
imposition of the supreme penalty of dismissal, and not just
a warning, a reprimand or punitive suspension.
B. TRANSFER OR EMPLOYEES
What are the various kinds of transfer?
a. Two (2) kinds of transfer. - A transfer means a
movement:
1. From one position to another of equivalent rank, level or
salary, without a break in the service; or
2. From one office to another within the same business
establishment.
What are the salient points to consider in transfer?
- The exercise of the prerogative to transfer or assign
employees from one office or area of operation to another
is valid provided there is no demotion in rank or diminution
of salary, benefits and other privileges. The transfer should
not be motivated by discrimination or made in bad faith or
effected as a form of punishment or demotion without
sufficient cause.
- Commitment made by the employee like a salesman in
the employment contract to be re-assigned anywhere in
the Philippines is binding on him.
- Even if the employee is performing well in his present
assignment, management may reassign him to a new post.
- The transfer of an employee may constitute constructive
dismissal when:
1) When the transfer is unreasonable, inconvenient
or prejudicial to the employee;
2) When the transfer involves a demotion in rank or
diminution of salaries, benefits and other privileges;
and
3) When the employer performs a clear act of
discrimination, insensibility, or disdain towards the
employee, which forecloses any choice by the latter
except to forego his continued employment.
- The refusal of an employee to be transferred may be held
justified if there is a showing that the transfer was directed
by the employer under questionable circumstances. For
instance, the transfer of employees during the height of
their union’s concerted activities in the company where
they were active participants is illegal.
- An employee who refuses to be transferred, when such
transfer is valid, is guilty of insubordination or willful
disobedience of a lawful order of an employer under
Article 282 of the Labor Code.
- Refusal to transfer due to parental obligations, additional
expenses, inconvenience, hardship and anguish is not
valid. An employee could not validly refuse lawful orders
to transfer based on these grounds.
- Refusal to transfer to overseas assignment is valid.
- Refusal to transfer consequent to promotion is valid.
- Transfer to avoid conflict of interest is valid.
- A transfer from one position to another occasioned by the
abolition of the position is valid.
C. PRODUCTIVITY STANDARDS
How may productivity standards be imposed?
The employer has the prerogative to prescribe the standards
of productivity which the employees should comply. The
productivity standards may be used by the employer as:
1. an incentive scheme; and/or
2. a disciplinary scheme. In Realda v. New Age Graphics, Inc.,3 petitioner, a machine
operator of respondent company, was dismissed on the
As an incentive scheme, employees who surpass the ground, among others, of inefficiency. In affirming the
productivity standards or quota are usually given additional validity of his dismissal, the Supreme Court reasoned:
benefits. “xxx (T)he petitioner’s failure to observe Graphics, Inc.’s
As a disciplinary scheme, employees may be sanctioned or work standards constitutes inefficiency that is a valid cause
dismissed for failure to meet the productivity standards or for dismissal. Failure to observe prescribed standards of
quota. work, or to fulfill reasonable work assignments due to
Illustrative cases: inefficiency may constitute just cause for dismissal. Such
In International School Manila v. International School inefficiency is understood to mean failure to attain work
Alliance of Educators (ISAE),1 the teacher was held guilty of goals or work quotas, either by failing to complete the same
gross inefficiency meriting her dismissal on the basis of the within the allotted reasonable period, or by producing
Court’s finding that she failed to measure up to the unsatisfactory results.”
standards set by the school in teaching Filipino classes.
In Reyes-Rayel v. Philippine Luen Thai Holdings Corp.,2 the
validity of the dismissal of petitioner who was the Corporate
Human Resources (CHR) Director for Manufacturing of D. BONUS
respondent company, on the ground of inefficiency and What is the rule on its demandability and enforceability?
ineptitude, was affirmed on the basis of the Court’s finding Bonus, as a general rule, is an amount granted and paid ex
that petitioner, on two occasions, gave wrong information gratia to the employee.
regarding issues on leave and holiday pay which generated It cannot be forced upon the employer who may not be
confusion among employees in the computation of salaries obliged to assume the onerous burden of granting bonuses
and wages. or other benefits aside from the employees’ basic salaries or
wages. If there is no profit, there should be no bonus. If
profit is reduced, bonus should likewise be reduced, absent
any agreement making such bonus part of the
compensation of the employees.
When is bonus demandable and enforceable?
It becomes demandable and enforceable:
(2) If it has ripened into a company practice;
(3) If it is granted as an additional compensation which the
employer agreed to give without any condition such as
success of business or more efficient or more productive
operation, hence, it is deemed part of wage or salary.
(4) When considered as part of the compensation and
therefore demandable and enforceable, the amount is
usually fixed. If the amount thereof is dependent upon the
realization of profits, the bonus is not demandable and
enforceable.
E. CHANGE OF WORKING HOURS
What is the extent of the exercise of this prerogative?
Employers have the freedom and prerogative, according to
their discretion and best judgment, to regulate and control
the time when workers should report for work and perform
their respective functions.
Manila Jockey Club Employees Labor Union – PTGWO, v.
Manila Jockey Club, Inc.1 - The validity of the exercise of
the same prerogative to change the working hours was
affirmed in this case. It was found that while Section 1,
Article IV of the CBA provides for a 7-hour work schedule
from 9:00 a.m. to 12:00 noon and from 1:00 p.m. to 5:00
p.m. from Mondays to Saturdays, Section 2, Article XI
thereof expressly reserves to respondent the prerogative to
change existing methods or facilities and to change the
schedules of work. Consequently, the hours of work of
regular monthly-paid employees were changed from the
original 9:00 a.m. to 5:00 p.m. schedule to 1:00 p.m. to 8:00
p.m. when horse races are held, that is, every Tuesday and
Thursday. The 9:00 a.m. to 5:00 p.m. schedule for non-race
days was, however, retained. Respondent, as employer,
cited the change in the program of horse races as reason for
the adjustment of the work schedule. It rationalized that
when the CBA was signed, the horse races started at 10:00
a.m. When the races were moved to 2:00 p.m., there was no
other choice for management but to change the work
schedule as there was no work to be done in the morning.
Evidently, the adjustment in the work schedule is justified.
 F. BONA FIDE OCCUPATIONAL QUALIFICATIONS
I. THE BFOQ RULE
I. THE BFOQ RULE
The employer has the prerogative to impose certain
qualifications based on such criteria as race, sex, age,
national origin, civil or marital status, physical appearance
(such as a requirement on “pleasing personality” or height
and weight) and the like.
2. MEIORIN TEST.
This three-step test is used to determine whether an
employment policy is justified. Under this test, an employer
can justify the impugned standard by establishing on the
balance of probabilities:
a. That the employer adopted the standard for a purpose
rationally connected to the performance of the job;
b. That the employer adopted the particular standard in an
HONEST AND GOOD FAITH BELIEF that it was necessary to
the fulfilment of that legitimate work-related purpose; and
c. That the standard was REASONABLY necessary to the
accomplishment of that legitimate work-related purpose.
3. STAR PAPER TEST.
Consequently, in Star Paper Corp. v. Simbol, April 12, 2006,
the Supreme Court held that in order to justify a BFOQ, the
employer must prove two (2) factors:
(1) The employment qualification is reasonably related to
the essential operation of the job involved; and
(2) There is factual basis for believing that all or substantially
all persons meeting the qualification would be unable to
properly perform the duties of the job.
In short, the test of reasonableness of the company policy
is used because it is parallel to BFOQ.2 BFOQ is valid
“provided it reflects an inherent quality reasonably
necessary for satisfactory job performance.”3 This is
otherwise known as the “Reasonable Business Necessity
Rule.”
4. SPECIFIC TOPICS.
I. CIVIL STATUS/MARITAL STATUS QUALIFICATION
II. PHYSICAL APPEARANCE QUALIFICATION
III. AGE QUALIFICATION
I. CIVIL STATUS/MARITAL STATUS QUALIFICATION
1. RELEVANT CASES.
I.
CIVIL STATUS/MARITAL STATUS QUALIFICATION
As far as the qualification of civil status or marital status is unmarried could be justified as a ‘bona fide occupational
concerned, the following cases are relevant:
(1) PT & T v. NLRC;4
(2) Duncan Association of Detailman-PTGWO v. Glaxo
Welcome Philippines, Inc.;1 and
(3) Star Paper Corp. v. Simbol.2
2. THE PT & T CASE.
 The employer invoked concealment of civil status as
ground to terminate the private respondent employee.
 In the job application form, she indicated in the portion for flight attendants.”
civil status that she was single although she had contracted
marriage a few months earlier.
 It appears that the employee had made the same
representation in the two successive reliever agreements
which she signed.
 The company has a policy of not accepting married
women for employment.
2.1. APPLICATION OF THE BFOQ RULE in the PT & T CASE.
The Supreme Court ruled that the company policy violates
the right against discrimination afforded all women workers
under Article 136 of the Labor Code.
“[A] requirement that a woman employee must remain
qualification,’ or BFOQ, where the particular requirements
of the job would justify the same, but not on the ground of a
general principle, such as the desirability of spreading work
in the workplace. A requirement of that nature would be
valid provided it reflects an inherent quality reasonably
necessary for satisfactory job performance. Thus, in one
case, a no-marriage rule applicable to both male and female
flight attendants, was regarded as unlawful since the
restriction was not related to the job performance of the
3. THE DUNCAN CASE. a competitor company will gain access to its secrets and
In Duncan, the contract of employment expressly prohibited procedures.
an employee from having a relationship with an employee
of a competitor company. It provides:
“10. You agree to disclose to management any existing or
future relationship you may have, either by consanguinity or
affinity with co-employees or employees of competing drug
companies. Should it pose a possible conflict of interest in
management discretion, you agree to resign voluntarily
from the Company as a matter of Company policy.”

3.1. APPLICATION OF THE BFOQ RULE in the DUNCAN

CASE.
The company (Glaxo) has a right to guard its trade secrets,
manufacturing formulas, marketing strategies and other
confidential programs and information from competitors. It
considered the prohibition against personal or marital
relationships with employees of competitor companies
upon Glaxo’s employees reasonable under the
circumstances because relationships of that nature might
compromise the interests of Glaxo. In laying down the
assailed company policy, the Court recognized that Glaxo
only aims to protect its interests against the possibility that
4. THE STAR PAPER CASE. could be detrimental to their business operations. The
The employees in Star Paper were terminated on various policy is premised on the mere fear that employees married
occasions, on the basis of the following company policy, viz.: to each other will be less efficient. If the questioned rule is
“1. New applicants will not be allowed to be hired if in case upheld without valid justification, the employer can create
he/she has [a] relative, up to [the] 3rd degree of policies based on an unproven presumption of a perceived
relationship, already employed by the company. danger at the expense of an employee’s right to security of
“2. In case two of our employees (both singles [sic], one tenure.
male and another female) developed a friendly relationship
during the course of their employment and then decided to II. PHYSICAL APPEARANCE QUALIFICATION
get married, one of them should resign to preserve the
policy stated above.” 1. THE YRASUEGUI CASE.
According to the employer, said rule is only intended to This case involves the physical appearance or attribute of an
carry out its no-employment-for-relatives-within-the- third- employee which, in this case, is petitioner’s weight. For
degree-policy which is within the ambit of the prerogatives several times spanning a total period of five (5) years,
of management. The Supreme Court, however, disagreed. It petitioner, an international flight steward of respondent
ruled that said policy failed to comply with the standard of PAL, was given the opportunity to reduce his weight to the
reasonableness which is being followed in our jurisdiction. acceptable level in accordance with the weight standards
but he failed to measure up therewith. He was thus
4.1. APPLICATION OF THE BFOQ RULE in the STAR PAPER terminated for his continued obesity. In his illegal dismissal
CASE. case, one of the issues raised is whether petitioner’s
The Court did not find a reasonable business necessity in the dismissal for obesity can be predicated on the BFOQ
policy. Respondents were hired after they were found fit for defense.
the job, but were asked to resign when they married a co-
employee. Petitioners failed to show how the marriage
1.1. APPLICATION OF THE BFOQ RULE in the YRASUEGUI
CASE.
Citing Star Paper Corp. and Duncan, the Court ruled that
BFOQ is a proper defense that justified petitioner’s dismissal
grounded on his obesity.
The business of PAL is air transportation. As such, it has
committed itself to safely transport its passengers. In order
to achieve this, it must necessarily rely on its employees,
most particularly the cabin flight deck crew who are on
board the aircraft. The weight standards of PAL should be
viewed as imposing strict norms of discipline upon its
employees. In other words, the primary objective of PAL in
the imposition of the weight standards for cabin crew is
flight safety. It cannot be gainsaid that cabin attendants
must maintain agility at all times in order to inspire
passenger confidence on their ability to care for the
passengers when something goes wrong.
III. AGE QUALIFICATION
1. ANTI-AGE DISCRIMINATION IN EMPLOYMENT ACT.
R.A. No. 10911 [July 21, 2016], otherwise known as the
“Anti-Age Discrimination in Employment Act” prohibits
discrimination against any individual in employment on
account of age. This law was lately implemented by DOLE
Department Order No. 170, Series of 2017 [February 02,
2017].
a. Coverage.
The law shall apply to all employers, publishers, labor
contractors or subcontractors, and labor organizations,
whether or not registered.
b. Prohibitions.
Under this law, the following are the prohibited
discriminatory acts related to employment on account of
age:
(a) It shall be unlawful for an employer to:
(1) Print or publish, or cause to be printed or
published, in any form of media, including the
internet, any notice of advertisement relating to
employment suggesting preferences, limitations,
specifications and discrimination based on age;
(2) Require the declaration of age or birth date
during the application process;
(3) Decline any employment application because of
the individual’s age;
(4) Discriminate against an individual in terms of
compensation, terms and conditions or privileges of
employment on account of such individual’s age;
(5) Deny any employee’s or worker’s promotion or
opportunity for training because of age;
(6) Forcibly layoff an employee or worker because of
old age; or
(7) Impose early retirement on the basis of such
employee’s or worker’s age.1
(b) It shall be unlawful for a labor contractor or
subcontractor, if any, to refuse to refer for employment or
otherwise discriminate against any individual because of
such person’s age.
(c) It shall be unlawful for a labor organization to:
(1) Deny membership to any individual because of
such individual’s age;
(2) Exclude from its membership any individual
because of such individual’s age; or
(3) Cause or attempt to cause an employer to
discriminate against an individual in violation of the
Rules.
(d) It shall be unlawful for a publisher to print or publish any
notice of advertisement relating to employment suggesting
preferences, limitations, specifications, and discrimination
based on age.2
c. Exceptions.
It shall be lawful for an employer to set age limitations in
employment if:
(a) Age is a bona fide occupational qualification (BFOQ)
reasonably necessary in the normal operation of a particular
business or where the differentiation is based on reasonable
factors other than age;
(b) The intent is to observe the terms of bona fide seniority d. Employment age of children.
system that is not intended to evade the purpose of the The age requirement in the employment of children shall be
Rules. governed by R.A. No. 9231 and its Implementing Rules and
(c) The intent is to observe the terms of a bona fide Regulations, Article 138 of the Labor Code as renumbered,
employee retirement or a voluntary early retirement plan and other applicable laws, rules and regulations.
consistent with the purpose of the Rules; Provided, That Upon hiring, the employer may require the child or the
such retirement or voluntary retirement plan is in guardian to show proof of the child's age for purposes of
accordance with the Labor Code, as renumbered, and other compliance with minimum employable age under existing
related laws; or laws.
(d) The action is duly certified by the DOLE Secretary after
consultation with the stakeholders in accordance with the G. POST-EMPLOYMENT RESTRICTIONS
purpose of the Rules. I. NON-COMPETE CLAUSE
Is a non-compete clause valid?
For purposes of the foregoing exceptions, an employer who Yes. The employer and the employee are free to stipulate in
invokes the qualifications as provided herein, shall submit a an employment contract prohibiting the employee within a
report prior to its implementation to the DOLE Regional certain period from and after the termination of his
Office which has jurisdiction over the workplace. The employment, from:
submission of the report shall be a presumption that the age (1) starting a similar business, profession or trade; or
limitation is in accordance with the Rules unless proven (2) working in an entity that is engaged in a similar business
otherwise by the court. that might compete with the employer.
Failure to submit said report shall give rise to the
presumption that the employer is not allowed to set age The non-compete clause is agreed upon to prevent the
limitation.3 possibility that upon an employee’s termination or
resignation, he might start a business or work for a
competitor with the full competitive advantage of knowing
and exploiting confidential and sensitive information, trade
secrets, marketing plans, customer/client lists, business
practices, upcoming products, etc., which he acquired and
gained from his employment with the former employer.
Contracts which prohibit an employee from engaging in
business in competition with the employer are not
necessarily void for being in restraint of trade.
What are the requisites in order for a non-compete clause operations under a 5-year contract of employment
to be valid?
A non-compete clause is not necessarily void for being in
restraint of trade as long as there are reasonable limitations she became the Vice-President for Sales of Professional
as to three (3) things: time, place and trade.
Example:
The non-compete clause (called “Non-Involvement
Provision”) in the 2007 case of Daisy B. Tiu v. Platinum
Plans Philippines, Inc., provides as follows:
“8. NON-INVOLVEMENT PROVISION – The EMPLOYEE
further undertakes that during his/her engagement with
EMPLOYER and in case of separation from the Company,
whether voluntary or for cause, he/she shall not, for the
next TWO (2) years thereafter, engage in or be involved with
any corporation, association or entity, whether directly or
indirectly, engaged in the same business or belonging to the
same pre-need industry as the EMPLOYER. Any breach of
the foregoing provision shall render the EMPLOYEE liable to
the EMPLOYER in the amount of One Hundred Thousand
Pesos (P100,000.00) for and as liquidated damages.”
Starting on January 1, 1993, petitioner worked for
respondent as Senior Assistant Vice-President and Territorial
Operations Head in charge of its Hongkong and Asean
containing the afore-quoted clause. On September 16, 1995,
petitioner stopped reporting for work. In November 1995,
Pension Plans, Inc., a corporation engaged also in the pre-
need industry. Consequently, respondent sued petitioner for
damages before the RTC of Pasig City. Respondent alleged,
among others, that petitioner’s employment with
Professional Pension Plans, Inc. violated the above-quoted
non-involvement clause in her contract of employment.
Respondent thus prayed for P100,000 as compensatory
damages; P200,000 as moral damages; P100,000 as
exemplary damages; and 25% of the total amount due plus
P1,000 per counsel’s court appearance, as attorney’s fees.
Petitioner countered that the non-involvement clause was
unenforceable for being against public order or public
policy: First, the restraint imposed was much greater than
what was necessary to afford respondent a fair and
reasonable protection. Petitioner contended that the
transfer to a rival company was an accepted practice in the
pre-need industry. Since the products sold by the companies
were more or less the same, there was nothing peculiar or
unique to protect. Second, respondent did not invest in
petitioner’s training or improvement. At the time petitioner
was recruited, she already possessed the knowledge and
expertise required in the pre-need industry and respondent
benefited tremendously from it. Third, a strict application of
the non-involvement clause would amount to a deprivation
of petitioner’s right to engage in the only work she knew.
In affirming the validity of the Non-Involvement Clause, the
Supreme Court ratiocinated as follows:
“xxx A non-involvement clause is not necessarily void for
being in restraint of trade as long as there are reasonable
limitations as to time, trade, and place.
“In this case, the non-involvement clause has a time limit:
two years from the time petitioner’s employment with
respondent ends. It is also limited as to trade, since it only
prohibits petitioner from engaging in any pre-need
business akin to respondent’s. It is limited as to place since
the prohibition covers only Hongkong and Asean
operations.
“More significantly, since petitioner was the Senior Assistant
Vice-President and Territorial Operations Head in charge of
respondent’s Hongkong and Asean operations, she had
been privy to confidential and highly sensitive marketing
strategies of respondent’s business. To allow her to engage
in a rival business soon after she leaves would make
respondent’s trade secrets vulnerable especially in a highly
competitive marketing environment. In sum, we find the
non-involvement clause not contrary to public welfare and
not greater than is necessary to afford a fair and
reasonable protection to respondent.
“Thus, as held by the trial court and the Court of Appeals,
petitioner is bound to pay respondent P100,000 as
liquidated damages. While we have equitably reduced
liquidated damages in certain cases, we cannot do so in this
case, since it appears that even from the start, petitioner
had not shown the least intention to fulfill the non-
involvement clause in good faith.”
 H. MARRIAGE BETWEEN EMPLOYEES OF a party or prospective party to an agreement with the
COMPETITOR-EMPLOYERS employer, or (c) a representative or agent of any client,
talent, producer, designer, programmer, distributor,
OTHER POST-EMPLOYMENT PROHIBITIONS merchandiser, or advertiser of the employer for the purpose
of offering to that person or entity goods or services
1. CONFIDENTIALITY AND NON-DISCLOSURE CLAUSE.
The confidentiality and non-disclosure clause reflects the
commitment of the employee that he shall not, either
during the period of his employment with the employer or
at any time thereafter, use or disclose to any person, firm or
corporation any information concerning the business or
affairs of his employment, for his own benefit or to the
detriment of the employer. This clause may also cover
Former Employer Information and Third Party Information.

2. NON-SOLICITATION CLAUSE.
To protect the legitimate business interests of the employer,
including its business relationships, the employee under this
clause, may, directly or indirectly, be prohibited from
soliciting or approaching, or accept any business from any
person or entity who shall, at any time within a fixed period
preceding the termination of his employment, have been
(a) a client, talent, producer, designer, programmer,
distributor, merchandiser, or advertiser of the Company, (b)
3. NON-RECRUITMENT OR ANTI-PIRACY CLAUSE.
This clause prohibits the recruitment by the employee of
personnel or employees of the employer for a certain period VII. SOCIAL LEGISLATION
after his termination of employment, either on his own A. SOCIAL SECURITY SYSTEM LAW
account or in conjunction with or on behalf of any other
person. SSS LAW
(R.A. No. 8282)
4. INVENTIONS ASSIGNMENT CLAUSE (INTELLECTUAL
PROPERTY CLAUSE). R.A. 8282, REPEALED BY R.A. 11199.
In industries engaged in research and development and The 2019 Labor Law Syllabus still prescribed R.A. No. 8282
related activities, this clause requires the employee, within a as the reference for the discussion of the SSS Law. However,
certain period, to disclose in confidence to the employer on February 07, 2019, President Duterte approved R.A. No.
and its subsidiaries and to assign all inventions, 11199,1 otherwise known as the “Social Security Act of
improvements, designs, original works of authorship, 2018,” which expressly repealed2 R.A. No. 8282.
formulas, processes, compositions of matter, computer This topic therefore will be discussed in accordance with
software programs, databases, mask works and trade R.A. No. 8282 since the RA No 11199 was passed way
secrets, whether or not patentable, copyrightable or beyond the cut-off date of June 30, 2019 by the Supreme
protectible as trade secrets (collectively, the “Inventions”), Court Bar Examinations Committee.
which the employee may solely or jointly conceive or
develop or reduce to practice, or cause to be conceived or 1. COVERAGE AND EXCLUSIONS
developed or reduced to practice, during the period of his
employment with the employer. Who are covered employers?
a. An employer or any person who uses the services of
another person in business, trade, industry or any
undertaking.
b. A social, civic, professional, charitable and other non-
profit organizations which hire the services of employees
are considered “employers.”
c. A foreign government, international organization or its
wholly-owned instrumentality such as an embassy in the
Philippines, may enter into an administrative agreement
with the SSS for the coverage of its Filipino employees.
Who are compulsorily covered employees?
a. A private employee, whether permanent, temporary or
provisional, who is not over 60 years old.
b. A domestic worker or kasambahay who has rendered at
least one (1) month of service.
c. A Filipino seafarer upon the signing of the standard
contract of employment between the seafarer and the
manning agency which, together with the foreign ship
owner, act as employers.
d. An employee of a foreign government, international
organization or their wholly-owned instrumentality based in
the Philippines, which entered into an administrative
agreement with the SSS for the coverage of its Filipino
workers.
e. The parent, spouse or child below 21 years old of the
owner of a single proprietorship business.
Are self-employed persons covered?
Yes. A self-employed person, regardless of trade, business or
occupation, with an income of at least P1,000 a month and
not over 60 years old, should register with the SSS. Included,
but not limited to, are the following self- employed persons:
a. Self-employed professionals;
b. Business partners, single proprietors and board directors;
c. Actors, actresses, directors, scriptwriters and news
reporters who are not under an employer-employee
relationship;
d. Professional athletes, coaches, trainers and jockeys;
e. Farmers and fisherfolks; and
f. Workers in the informal sector such as cigarette vendors,
watch-your-car boys, hospitality girls, among others.
Unless otherwise specified, all provisions of the law, R.A. No.
8282, applicable to covered employees shall also be
applicable to the covered self-employed persons.
A self-employed person shall be both employee and
employer at the same time.
 Who may be covered voluntarily?
1. Separated Members
A member who is separated from employment or ceased to
be self-employed/OFW/non-working spouse and would like
to continue contributing.
2. Overseas Filipino Workers (OFWs)

A Filipino recruited in the Philippines by a foreign-based

employer for employment abroad or one who legitimately
entered a foreign country (i.e., tourist, student) and is
eventually employed.
3. Non-working spouses of SSS members

A person legally married to a currently employed and

actively paying SSS member who devotes full time in the
management of household and family affairs may be
covered on a voluntary basis, provided there is the approval
of the working spouse. The person should never have been
a member of the SSS. The contributions will be based on 50
percent (50%) of the working spouse’s last posted monthly
salary credit but in no case shall it be lower than P1,000.
 What is the effective date of coverage? Who are excluded employers?
For compulsory coverage: Government and any of its political subdivisions, branches
1. For employer - Compulsory coverage of the employer or instrumentalities, including corporations owned or
shall take effect on the first day of his operation or on the controlled by the Government with original charters.
first day he hires employee/s. The employer is given only 30
days from the date of employment of employee to report Who are excluded employees?
the person for coverage to the SSS. Workers whose employment or service falls under any of
2. For employee - Compulsory coverage of the employee the following circumstances are not covered:
shall take effect on the first day of his employment. (1) Employment purely casual and not for the purpose of
3. For self-employed - The compulsory coverage of the self- occupation or business of the employer;
employed person shall take effect upon his registration with(2) Service performed on or in connection with an alien
the SSS or upon payment of the first valid contribution, in vessel by an employee if he is employed when such vessel is
case of initial coverage. outside the Philippines;
(3) Service performed in the employ of the Philippine
For voluntary coverage: Government or instrumentality or agency thereof;
1. For an OFW – upon first payment of contribution, in case (4) Service performed in the employ of a foreign
of initial coverage. government or international organization, or their wholly-
2. For a non-working spouse – upon first payment of owned instrumentality: Provided, however, That this
contribution. exemption notwithstanding, any foreign government,
3. For a separated member – on the month he/she resumed international organization or their wholly-owned
payment of contribution. instrumentality employing workers in the Philippines or
employing Filipinos outside of the Philippines, may enter
into an agreement with the Philippine Government for the
inclusion of such employees in the SSS except those already
covered by their respective civil service retirement systems: dependent illegitimate children shall be entitled to 100% of
Provided, further, That the terms of such agreement shall the benefits
conform with the provisions of R.A. No. 8282 on coverage
and amount of payment of contributions and benefits: Who are secondary beneficiaries?
Provided, finally, That the provisions of this Act shall be The following are secondary beneficiaries:
supplementary to any such agreement; and 1. The dependent parents, in the absence of the primary
(5) Such other services performed by temporary and other beneficiaries.
employees which may be excluded by regulation of the 2. Any other person designated by the member as his/her
Social Security Commission. Employees of bona-fide secondary beneficiary, in the absence of all the foregoing
independent contractors shall not be deemed employees of primary beneficiaries and dependent parents.
the employer engaging the service of said contractors.
3. BENEFITS
2. DEPENDENTS AND BENEFICIARIES
Who are primary beneficiaries? What are the classifications of benefits?
The following are primary beneficiaries: The SSS benefits may be classified into two (2) as follows:
1. The dependent spouse until he or she remarries; (a) Social security benefits:
2. The dependent legitimate, legitimated or legally 1) Sickness
adopted, and illegitimate children who are not yet 21 years 2) Maternity
of age. 3) Retirement
The dependent illegitimate children shall be entitled to 50% 4) Disability
of the share of the legitimate, legitimated or legally adopted 5) Death and funeral.
children. However, in the absence of the dependent (b) Employees’ compensation benefits.
legitimate, legitimated children of the member, his/her

B. GOVERNMENT SERVICE INSURANCE SYSTEM LAW

 1. COVERAGE AND EXCLUSIONS b. Appointive officials who, before reaching the mandatory
age of 65, are appointed to government position by the
GSIS LAW President of the Republic of the Philippines and shall remain
(R.A. No. 8291) in government service at age beyond 65.
Who are compulsorily required to become members of the c. Contractual employees including casuals and other
GSIS? employees with an employee-government agency
1. All government personnel, whether elective or relationship are also compulsorily covered, provided they
appointive, irrespective of status of appointment, provided are receiving fixed monthly compensation and rendering the
they are receiving fixed monthly compensation and have not required number of working hours for the month.
reached the mandatory retirement age of 65 years, are
compulsorily covered as members of the GSIS and shall be What are the classes of membership in the GSIS?
required to pay contributions. Membership in the GSIS is classified either by type or status
2. However, employees who have reached the retirement of membership.
age of 65 or more shall also be covered, subject to the - As to type of members, there are regular and special
following rules: members:
An employee who is already beyond the mandatory (a) Regular Members – are those employed by the
retirement age of 65 shall be compulsorily covered and be government of the Republic of the Philippines, national or
required to pay both the life and retirement premiums local, legislative bodies, government-owned and controlled
under the following situations: corporations (GOCC) with original charters, government
a. An elective official who at the time of election to public financial institutions (GFIs), except uniformed personnel of
office is below 65 years of age and will be 65 years or more the Armed Forces of the Philippines, the Philippine National
at the end of his term of office, including the period/s of his Police, Bureau of Jail Management and Penology (BJMP) and
re-election to public office thereafter without interruption. Bureau of Fire Protection (BFP), who are required by law to
remit regular monthly contributions to the GSIS.
(b) Special Members – are constitutional commissioners, What is the effect of separation from the service?
members of the judiciary, including those with equivalent A member separated from the service shall continue to be a
ranks, who are required by law to remit regular monthly member, and shall be entitled to whatever benefits he has
contributions for life insurance policies to the GSIS in order qualified to in the event of any contingency compensable
to answer for their life insurance benefits defined under RA under the GSIS Law.
8291.
Who are excluded from the compulsory coverage of the
- As to status of membership, there are active and inactive GSIS Law?
members. The following employees are excluded from compulsory
(a) Active member – refers to a member of the GSIS, coverage:
whether regular or special, who is still in the government (a) Uniformed personnel of the Armed Forces of the
service and together with the government agency to which Philippines (AFP), Philippine National Police (PNP), Bureau of
he belongs, is required to pay the monthly contribution. Fire Protection (BFP) and Bureau of Jail Management and
(b) Inactive member – a member who is separated from the Penology (BJMP);
service either by resignation, retirement, disability, dismissal (b) Barangay and Sanggunian Officials who are not receiving
from the service, retrenchment or, who is deemed retired fixed monthly compensation;
from the service under this Act. (c) Contractual Employees who are not receiving fixed
monthly compensation; and
When does membership become effective? (d) Employees who do not have monthly regular hours of
The effective date of membership shall be the date of the work and are not receiving fixed monthly compensation.
member’s assumption to duty on his original appointment
or election to public office.
 2. DEPENDENTS AND BENEFICIARIES 3. BENEFITS
Who are beneficiaries under the GSIS Law?
There are two (2) kinds of beneficiaries under the GSIS Law What are the kinds of benefits under the GSIS Law?
as follows: The following are the benefits under the GSIS Law:
1. Primary beneficiaries — The legal dependent spouse until (a) Compulsory Life Insurance Benefits under the Life
he/she remarries and the dependent children. Endowment Policy (LEP)
2. Secondary beneficiaries — The dependent parents and, (b) Compulsory Life Insurance Benefits under the Enhanced
subject to the restrictions on dependent children, the Life Policy (ELP)
legitimate descendants. (c) Retirement Benefits
Who are dependents under the GSIS Law? (d) Separation Benefit
(e) Unemployment Benefit
Dependents shall be the following: (f) Disability Benefits
(a) the legitimate spouse dependent for support upon the (g) Survivorship Benefits
member or pensioner; (h) Funeral Benefits
(b) the legitimate, legitimated, legally adopted child,
including the illegitimate child, who is unmarried, not C. Limited Portability Law
gainfully employed, not over the age of majority, or is over
the age of majority but incapacitated and incapable of self- [RA 7699: “An Act Instituting Limited Portability Scheme in
support due to a mental or physical defect acquired prior to the Social Security Insurance Systems by Totalizing the
age of majority; and Workersʹ Creditable Services or Contributions in each of the
(c) the parents who are dependent upon the member for Systems”]
support. Policy declaration
To promote the welfare of our workers by recognizing their
Gainful Occupation — Any productive activity efforts in productive endeavors and to further improve their
conditions by providing benefits for their long years of
contribution to the national economy. Towards this end, the
State shall institute a scheme for totalization and portability
of social security benefits, with the view of establishing
within a reasonable period a unitary socialsecurity system
[Section 1, RA 7699].
Coverage
All worker‐members of the Government Service Insurance
System (GSIS) and/or Social Security System (SSS) who
transfer from one sector to another, and who wish to
retain their membership in both Systems.
Portability
Refers to the transfer of funds for the account and benefit
of a worker who transfers from one system to the other
[Section 2(b), RA 7699].
Provisions of any general or special law or rules and
regulations to the contrary notwithstanding, a covered
worker shall have his credible services or contributions in
both Systems credited to his service or contribution
record in each of the Systems and shall be totalized for
purposes of old-age, disability, survivorship and other
benefits in case the covered member does not qualify for
such benefits in either or both Systems without
totalization.
Provided: That overlapping periods of membership shall be
credited only once for purposes of totalization [Section 4, RA
7699].
Totalization
Refers to the process of adding up the period of creditable
services or contributions under each of the Systems, for
purposes of eligibility and computation of benefits [Section
2(e), RA 7699].
Totalization of service credits is only resorted to when the
retiree does not qualify for benefits in either or both of the
System. In this case, since the petitioner may be entitled to
some benefits from the GSIS, he cannot avail of the benefits
under RA 7699 [Gamogamo v. PNOC Shipping and Transport
Corp, G.R. No. 141707 (2002)].
All contributions paid by such member personally, and those
that were paid by his employers to both Systems shall be
considered in the processing of benefits which he can
claim from either or both Systems:
Provided, however, that the amount of benefits to be paid
by one System shall be in proportion to the number of
contributions actually remitted to that System. [Section 4,
RA 7699].
All creditable services or periods of contributions made
continuously or in the aggregate of a worker under either of
the Sectors shall be added up and considered for purposes
of eligibility and computation of benefits [Rule V, Sec. 1, RA
7699 Rules and Regulations].
Totalization shall apply in the following instances:
a. If a worker is not qualified for any benefits from both
Systems;
b. If a worker in the public sector is not qualified for any
benefits in the GSIS; or c. If a worker in the private sector is
not qualified for any benefits from the SSS.
For the purpose of computation of benefits, totalization
shall apply in all cases so that the contributions made by the
worker‐member in both Systems shall provide maximum
benefits which otherwise will not be available. In no case
shall the contribution be lost or forfeited [Rule V, Sec. 3, RA Labor Code
7699 Rules and Regulations].
If after totalization the worker‐member still does not qualify
for any benefit listed in Rule III, Section 1 (j), the member
will then get whatever benefits correspond to his/her
contributions in either or both Systems [Rule V, Sec. 4, RA
7699 Rules and Regulations].
If a worker qualifies for benefits in both Systems,
totalization shall not apply [Rule V, Sec. 5, RA 7699 Rules
and Regulations]. The process of totalization of creditable
services or periods of contributions and computation of
benefits provided for under the Act shall be the joint
responsibility of the GSIS and the SSS [Rule V, Sec. 6, RA
7699 Rules and Regulations].
Overlapping periods of creditable services or contributions
in both Systems shall be credited only once for purposes of
totalization
D. Disability and death benefits
1. Labor Code
Under the Labor Code, employees' compensation (EC)
benefits are granted to employees or their dependents for
work connected disability or death, or those resulting from
accident arising out of and in the course of employment.
[Art. 166, LC in rel. to Sec. 1, Rule III, IRR]
Types of disability
1. Temporary Total Disability [Art. 197]
2. Permanent Total Disability [Art. 198]
3. Permanent Partial Disability [Art. 199]
a. Disability Benefits
Disability does not refer to the injury nor to the pain and
suffering it has occasioned, but to the loss and impairment
of earning capacity. There is disability when there is a loss or nor more than Ninety (90)pesos, nor paid for a continuous
diminution of earning power because of actual absence
from work due to injury or illness arising out of and in the
course of employment. The basis of compensation is
reduction of earning power. [Azucena, p. 525]
TEMPORARY TOTAL DISABILITY
A total disability is temporary if as a result of the injury or
sickness, the employee is unable to perform any gainful
occupation for a continuous period not exceeding 120 days
[Art. 197 in rel. to Sec. 2(a), Rule VII, Amended Rules on
Employees’ Compensation].
The object of the law in allowing compensation during
temporary disability is to compensate the laborer or
employee for what he might have earned during the period
of the treatment of his injury. [Cañete v. Insular Lumber Co.,
61 Phil. 592 (1935)]
Amount of benefit
An employee suffering from temporary total disability shall
be paid by the System an equivalent of ninety percent (90%)
of the average salary credit, provided:
1. The daily income benefit is not less than Ten (10) pesos
period longer than 120 days. [Art. 197]
2. The monthly income benefit shall be suspended if the
employee fails to submit a monthly medical report certified
by its attending physician [Art.194]
Period of Entitlement
The employee is entitled to the benefit from the day of the
start of the disability. It shall not be paid longer than 120
consecutive days except where such injury or sickness still
requires medical attendance beyond 120 days but not to
exceed 240 days from onset of disability. When after the
period of temporary total disability had ceased, an
employee was found to be suffering from a permanent
partial disability, he was entitled to an award based upon
partial disability permanent in character. [Cañete v. Insular
Lumber Co., 61 Phil. 592 (1935)]
PERMANENT TOTAL DISABILITY
A disability is total and permanent if as a result of the injury
or sickness the employee is unable to perform any gainful
occupation for a continuous period exceeding 120 days.
[Art. 198 in rel. to Sec. 2(b), Rule VII]
The test of whether or not an employee suffers from
‘permanent total disability’ is a showing of the capacity of
the employee to continue performing his work
notwithstanding the disability he incurred. It does not mean
an absolute helplessness but rather an incapacity to perform
gainful work which is expected to be permanent.
The Labor Code enumerates six instances considered to be a
permanent total disability:
1. Temporary total disability lasting continuously for more
than one hundred twenty days, except as otherwise
provided for in the Rules;
2. Complete loss of sight of both eyes;
3. Loss of two limbs at or above the ankle or wrist.
4. Permanent complete paralysis of two limbs;
5. Brain injury resulting in incurable imbecility or insanity;
6. Such cases as determined by the Medical Director of the
System and approved by the Commission. [Art. 197(c)]
Rules for the determination of disability
(120-day or 240-day)
Initially, there was confusion as to the application of the
120-day period found in Article 192 (c) (1) of the Labor Code
vis-à-vis the application of the 240-day period found in
Section 2, Rule X of the Amended Rules on Employees'
Compensation Implementing Title II, Book IV of the Labor
Code.
Permanent disability:
Article 192(c)(1): Temporary total disability lasting
continuously for more than one hundred twenty days,
except as otherwise provided in the Rules.
Section 2, Rule X: …where such injury or sickness still
requires medical attendance beyond 120 days but not to
exceed 240 days from onset of disability.
To reconcile these provisions, the Supreme Court laid down
the following rules in the case of Dagasdas v. Grand
Placement and General Services Corporation. [G.R. No.
205727, (2017)]
1. The company-designated physician must issue a final
medical assessment on the seafarer's disability grading
within a period of 120 days from the time the seafarer
reported to him;
2. If the company-designated physician fails to give his
assessment within the period of 120 days, without any
justifiable reason, then the seafarer's disability becomes
permanent and total;
3. If the company-designated physician fails to give his
assessment within the period of 120 days with a sufficient
justification (e.g. seafarer required further medical
treatment or seafarer was uncooperative), then the
period of diagnosis and treatment shall be extended to 240
days. The employer has the burden to prove that the
company designated physician has sufficient justification to
extend the period; and
4. If the company-designated physician stillfails to give his
assessment within the extended period of 240 days, then
the seafarer's disability becomes permanent and total,
regardless of any justification. It must be emphasized that
the company designated physician must:
1. ISSUE a final medical assessment of the seafarer's
medical condition; AND
2. GIVE his assessment to the seafarer concerned.
That is to say that the seafarer must be fully and properly
informed of his medical condition.
The results of his/her medical examinations, the treatments
extended to him/her, the diagnosis and prognosis, his/her
disability grading must be fully explained to him/her by
no less than the company-designated physician.
The company-designated physician is mandated to issue a
medical certificate, which should be personally received by
the seafarer, or, if not practicable, sent to him/her by any
other means sanctioned by present rules.
To require the seafarer to seek the decision of a neutral
third-party physician without primarily being informed of
the assessment of the company-designated physician is a
clear violation of the tenets of due process.
Amount of Benefit
The employee suffering from a permanent total disability
shall be entitled to an amount equivalent to the monthly
income benefit, plus ten percent thereof for each
dependent child, but not exceeding five, beginning with the
youngest and without substitution: Provided, That the
monthly income benefit shall be the new amount of the
monthly benefit for all covered pensioners. [Art. 198]
Period of Entitlement An employee with permanent total
disability shall be entitled to receive benefits monthly for
five (5) years.
However, Art. 198(b) provides that the benefits may be
suspended if the employee is gainfully employed, or
recovers from his permanent total disability, or fails to
present himself for examination at least once a year.
PERMANENT PARTIAL DISABILITY
A disability is partial and permanent if as a result of the
injury or sickness the employee suffers a permanent partial
loss of the use of any part of his body. [Art. 199 in rel. to
Sec. 2(c), Rule VII, Amended Rules on Employees’
Compensation].
The object of the law in granting compensation for a
permanent partial disability is to compensate the injured
laborer or employee for the actual and permanent loss of a
member of the body, or the use thereof. [Cañete v. Insular
Lumber Co., 61 Phil. 592 (1935)]
Amount of benefits
For an employee who has suffered a permanent partial
disability, the amount of benefits, as well as the period of
entitlement to receive such benefits is based upon the
degree of disability, as well as the lost body part. The
body parts and the corresponding period of equivalent
disability are specified in Art 199.
b. Death Benefits
Monthly Income Benefit
Under such regulations as the Commission may approve, the dependents’ pension: Provided, That –
System shall pay to the primary beneficiaries:
1. Upon the death of the covered employee under this Title:
a. An amount equivalent to his monthly income
benefit;
b. Plus 10% thereof for each dependent child, but
not exceeding five, beginning with the youngest and
without substitution, except as provided for in par.
(j) of Article 167 hereof: Provided, That –
i. The monthly income benefit shall be
guaranteed for five years;
ii. If he has no primary beneficiary, the
System shall pay to his secondary
beneficiaries the monthly income benefit
but not to exceed sixty months; and
iii. The minimum death benefit shall not be (c)]
less than fifteen thousand pesos. (As
amended by Section 4, Presidential Decree
No. 1921).
2. Upon the death of a covered employee who is under
permanent total disability under this Title: 80% of the
monthly income benefit and his dependents to the
a. The marriage must have been validly subsisting at
the time of disability
b. If he has no primary beneficiary, the System shall
pay to his secondary beneficiaries the monthly
pension excluding the dependents’ pension, of the
remaining balance of the five-year guaranteed
period; and
c. The minimum death benefit shall not beless than
fifteen thousand pesos. (As amended by Section 4,
Presidential Decree No. 1921).
Note: The monthly income benefit provided herein shall be the
new amount of the monthly income benefit for the surviving
beneficiaries upon the approval of this decree. [Art. 200 (a)-
Condition to entitlement
The beneficiaries of a deceased employee shall be entitled to
an income benefit if all of the following conditions are satisfied:
1. The employee has been duly reported to the System;
2. He died as a result of an injury or sickness; and
3. The System has been duly notified of his death, as well as
the injury or sickness which caused his death. His employer
shall
be liable for the benefit if such death occurred before the
employee is duly reported for coverage to the System. [Sec.
1(a), Rule XIII, IRR]
Notes:
1. If the employee has been receiving monthly income benefit
for permanent total disability at the time of his death, the
surviving spouse must show that the marriage has been validly
subsisting at the time of his disability.
2. In addition, the cause of death must be a complication or
natural consequence of the compensated Permanent Total
Disability. [Sec. 1(b), Rule XIII, IRR]
Beneficiaries
The beneficiaries are:
1. Primary beneficiaries:
a. Dependent spouse until he/she remarries;
b. Dependent children (legitimate, legitimated,
natural-born, or legally adopted).
2. Secondary beneficiaries:
1. Illegitimate children and legitimate descendants;
2. Parents, grandparents, grandchildren. [Azucena, p.
541]
Dependents
"Dependent" means:
1. The legitimate, legitimated or legally adopted or
acknowledged natural child who is:
a. Unmarried,
b. Not gainfully employed, and
c. Not over twenty-one (21) years of age or over
twenty-one (21) years of age provided he is
incapacitated and incapable of self-support due to a
physical or mental defect which is congenital or
acquired during minority;
2. The legitimate spouse living with the employee and the
parents of said employee wholly dependent upon him for
regular support. [Art. 173(i)]
The test of dependency is not merely whether the
contributions were necessary to bare subsistence. Dependency
may exist if such contributions were relied on by claimant for
his/her means of living as determined by his/her position in
life. [Malate Taxicab v. Del Villar, G.R. No. L-7489 (1956)]
Period of entitlement
For primary beneficiaries
The income benefit shall be paid beginning at the month of
death and shall continue to be paid for as long as the
beneficiaries are entitled thereto. [Sec. 2, Rule XII, IRR]
For secondary beneficiaries
The income benefit shall be sixty (60) times the monthly
income benefit of a primary beneficiary which in no case be
less than P 15,000.00, which shall likewise be paid in monthly
pension. [Sec. 2(a), Rule XII, IRR]
Manner of payment
Death benefits are paid in the form of cash monthly pension:
1. For life to the primary beneficiaries, guaranteed for five
years;
2. For not more than 60 months to the secondary beneficiaries
in case there are no primary beneficiaries;
3. In no case shall the total benefit be less than P15,000. [Art.
200]
Amount of benefits
For primary beneficiaries
Monthly income benefit shall be equivalent to the monthly
income benefit for permanent total disability, which shall be
guaranteed for five years, increased by ten percent for each
dependent child but not exceeding 5, beginning with the
youngest and without substitution. [Sec. 3, Rule XII, IRR]
Notes:
1. The aggregate monthly benefit payable in the case of the
GSIS shall in no case exceed the monthly wage or salary
actually received by the employee at the time of his death;
2. The minimum income benefit shall not be less than Fifteen
Thousand Pesos (P15,000.00). [Sec. 3, Rule XII, IRR]
For secondary beneficiaries
Income benefit is payable in monthly pension which shall not
exceed the period of 60 months and the aggregate income
benefit shall not be less than P15, 000.00. [Sec. 3, Rule XII, IRR]
Death benefits after retirement are allowed
Generally, the term “covered employees” refers to an
employee who, at the time of his death, is still covered by the
GSIS. However, the implementing rules and regulations of the
Employees’ Compensation Commission allows death benefits
to those retired employees whose retirement was brought
about by permanent disability.
The Court is aware that death benefits must be granted to the
primary beneficiaries of the decedent to help the family of a
permanent and totally disabled person who was so disabled
because of causes that are work-oriented. The rule applies all
the more when the disabled person later dies because of the
same cause or related cause. [Manuzon v. ECC, G.R. No. 88573,
(1990)]
Death of a person receiving permanent total disability
benefits
Under Art. 200(b), death benefit shall be paid to the
beneficiaries if an employee, while receiving permanent total
disability benefit, dies.
Prescription of claims
All money claims arising from employer employee relations
shall be filed within three (3) years from the time the cause of
action accrued; otherwise they shall forever be barred. [Art.
306 ]
2. Employees Compensation and State Insurance
Fund
What is the State Insurance Fund [SIF]?
The State Insurance Fund (SIF) is built up by the
contributions of employers based on the salaries of their
employees as provided under the Labor Code.
There are two (2) separate and distinct State Insurance
Funds: one established under the SSS for private sector
employees; and the other, under the GSIS for public sector
employees. The management and investment of the Funds
are done separately and distinctly by the SSS and the GSIS. It
is used exclusively for payment of the employees’
compensation benefits and no amount thereof is authorized
to be used for any other purpose.
What are the agencies involved in the implementation of b. Sectors of employees covered by the ECP. - The following
the Employees Compensation Program (ECP)? sectors are covered under the ECP:
There are three (3) agencies involved in the implementation 1. All public sector employees including those of
of the Employees’ Compensation Program (ECP). These are: government-owned and/or controlled corporations and
(1) The Employees’ Compensation Commission (ECC) which local government units covered by the GSIS;
is mandated to initiate, rationalize and coordinate policies 2. All private sector employees covered by the SSS; and
of the ECP and to review appealed cases from (2) the 3. Overseas Filipino workers (OFWs), namely:
Government Service Insurance System (GSIS) and (3) the a. Filipino seafarers compulsorily covered under the
Social Security System (SSS), the administering agencies of SSS.
the ECP. b. Land-based contract workers provided that their
employer, natural or juridical, is engaged in any
Who are covered by the ECP? trade, industry or business undertaking in the
a. General coverage. – The following shall be covered by the Philippines; otherwise, they shall not be covered by
Employees’ Compensation Program (ECP): the ECP.
1. All employers;
2. Every employee not over sixty (60) years of age; When is the start of coverage of employees under the
3. An employee over 60 years of age who had been ECP?
paying contributions to the System (GSIS/SSS) prior The coverage under the ECP of employees in the private and
to age sixty (60) and has not been compulsorily public sectors starts on the first day of their employment.
retired; and
4. Any employee who is coverable by both the GSIS
and SSS and should be compulsorily covered by both
Systems.
What are the benefits under the ECP? or in connection therewith, including the annexes thereof,
The following are the benefits provided under the Labor shall be governed by the laws of the Republic of the
Code: Philippines, international conventions, treaties and
a. Medical Benefits covenants to which the Philippines is a signatory.” This
b. Disability Benefits provision signifies that the terms agreed upon by the parties
1. Temporary total disability pursuant to the POEA-SEC are to be read and understood in
2. Permanent total disability accordance with Philippine laws, particularly, Articles 197
3. Permanent partial disability [191],1 198 [192]2 and 199 [193]3 of the Labor Code and
c. Death Benefit the applicable implementing rules and regulations in case of
d. Funeral Benefit any dispute, claim or grievance.

3. Philippine Overseas Employment 2. OFW’S BENEFIT CLAIMS VIS-À-VIS BENEFITS IN THE

Administration-Standard Employment
Contract
POEA-STANDARD EMPLOYMENT CONTRACT (POEA-SEC)
I. MONETARY CLAIMS OF SEAFARERS FOR SICKNESS AND
DISABILITY BENEFITS
1. APPLICABLE LAW IN CASES INVOLVING THE POEA-SEC.
LABOR CODE.
It must be underscored that the claims for disability, death
and burial benefits involving OFWs over which the Labor
Arbiters of the NLRC have jurisdiction, are not the same as
the claims against the State Insurance Fund under Title II,
Book IV of the Labor Code for the same benefits, over which
the Employees’ Compensation Commission (ECC) has
jurisdiction.

By express provision of Section 31 of the 2010 POEA-SEC,

“[a]ny unresolved dispute, claim or grievance arising out of
3. THE LABOR CODE’S CONCEPT OF PTD APPLIES TO
CLAIMS OF SEAFARERS.
Permanent total disability (PTD) means the inability to do
substantially all material acts necessary to the prosecution
of a gainful occupation without serious discomfort or pain
and without material injury or danger to life. In disability
compensation, it is not the injury per se which is
compensated but the incapacity to work. The concept of this
kind of disability under Article 198 [192] of the Labor Code is
applicable to the permanent total disability of seafarers.
Consequently, was ruled in Kestrel Shipping,4 that it is now
well-settled that the provisions of the Labor Code and
Amended Rules on Employees’ Compensation (AREC)
implementing Title II, Book IV of the Labor Code on
disabilities are applicable to the case of seafarers such that
the POEA-SEC is not the sole issuance that governs their
rights in the event of work-related death, injury or illness
4. REQUISITES FOR COMPENSABILITY OF INJURY OR
ILLNESS.
For disability to be compensable under Section 20 (A) of the 2010
POEA-SEC, two elements must concur:
(1) The injury or illness must be work-related; and
(2) The work-related injury or illness must have existed during the
term of the seafarer's employment contract.
The same provision defines a work-related illness as "any sickness
as a result of an occupational disease listed under Section 32-A of
[the POEA-SEC] with the conditions set therein satisfied." There
should be a "reasonable linkage between the disease suffered by
the employee and his work." Meanwhile, illnesses not mentioned
under Section 32 of the 2010 POEA-SEC are disputably presumed
as work-related. Notwithstanding the presumption of work-
relatedness of an illness under Section 20 (A) (4), the seafarer
must still prove by substantial evidence that his work conditions
caused or, at least, increased the risk of contracting the disease.
This is because awards of compensation cannot rest entirely on
bare assertions and presumptions. In order to establish
compensability of a non-occupational disease, reasonable proof of
work-connection is sufficient - direct causal relation is not
required. It is thus this probability of connection, and not the
ultimate degree of certainty, that is the test of proof of
compensation proceedings.
5. REQUISITES FOR COMPENSABILITY OF OCCUPATIONAL 6. SEAFARER HAS BURDEN OF PROOF IN DISABILITY
DISEASE. CLAIMS.

In order for an occupational disease and the resulting The seafarer must still prove his entitlement to disability
disability or death to be compensable, Section 32-A of the benefits by substantial evidence of his illness' work-
2010 POEA-SEC requires that all of the following conditions, relatedness and that the ailment was acquired during the
as supported by substantial evidence, must be established: term of his contract. He must show that he experienced
1. The seafarer's work must involve the risks described in health problems while at sea, the circumstances under
the POEA-SEC; which he developed the illness, as well as the symptoms
2. The disease was contracted as a result of the seafarer's associated with it.
exposure to the described risks;
3. The disease was contracted within a period of exposure
and under such other factors necessary to contract it; and
4. There was no notorious negligence on the part of the
seafarer.
7. PRINCIPLE OF WORK-RELATEDNESS.
The principle of work-relatedness of an injury or illness means
that the seafarer's injury or illness has a possible connection to
one's work, and thus, allows the seafarer to claim disability
benefits therefor.
The 2010 POEA-SEC defines a work-related injury as an "injury
resulting in disability or death arising out of and in the course of
employment," and a work-related illness as "any sickness
resulting to disability or death as a result of an occupational
disease listed under Section 32-A of this Contract with the
conditions set therein satisfied.”
For illnesses not mentioned under Section 32, the 2010 POEA-SEC
creates a disputable presumption in favor of the seafarer that
these illnesses are work-related. However, the presumption does
not necessarily result in an automatic grant of disability
compensation. The claimant, on due process grounds, still has the
burden to present substantial evidence that his work conditions
caused or at least increased the risk of contracting the illness. This
is because awards of compensation cannot rest entirely on bare
assertions and presumptions. In order to establish compensability
of a non-occupational disease, reasonable proof of work-
connection is sufficient – direct causal relation is not required.
Thus, probability, not the ultimate degree of certainty, is the test
of proof in compensation proceedings.
8. INJURY OR ILLNESS MUST OCCUR DURING TERM OF
CONTRACT.
As earlier quoted, Section 20 (A) of the 2010 POEA-SEC
categorically reads:
“The liabilities of the employer when the seafarer suffers work-
related injury or illness during the term of his contract are as
follows: xxx”
Based on this provision, an injury or illness is compensable when,
first, it is work-related and, second, the injury or illness existed
during the term of the seafarer’s employment contract. The
correct approach in adjudging claims of seafarers for death and
disability benefits is to determine whether the claimants have
proven the requisites of compensability under Section 32-A of the
2010 POEA-SEC. This provision states that for an occupational
disease and the resulting disability or death to be compensable,
all of the following conditions need to be satisfied:
(1) The seafarer's work must involve the risks described therein;
(2) The disease was contracted as a result of the seafarer's
exposure to the described risks;
(3) The disease was contracted within a period of exposure and
under such other factors necessary to contract it; and
(4) There was no notorious negligence on the part of the seafarer.
9. DISABILITY ARISING FROM ACCIDENT.
Raised as issue in NFD International,1 is whether or not the
incident where respondent figured should be classified as
accident or an injury. On May 16, 2003, when respondent
had been on board the vessel M/V Shinrei for seven months
as Third Officer, the Captain and Chief Officer ordered him
to carry 25 fire hydrant caps from the deck to the engine
workshop, then back to the deck to refit the caps. The next
day, while carrying a heavy basketful of fire hydrant caps,
respondent felt a sudden snap on his back, with pain that
radiated down to the left side of his hips. He immediately
informed the ship captain about his condition, and he was
advised to take pain relievers. As the pain was initially
tolerable, he continued with his work. After a few days, the
pain became severe, and respondent had difficulty walking.
The Court held that the snap on the back of respondent was
not an accident, but an injury sustained by respondent from
carrying the heavy basketful of fire hydrant caps, which
injury resulted in his disability. The injury cannot be said to
be the result of an accident, that is, an unlooked for mishap,
occurrence, or fortuitous event, because the injury resulted
from the performance of a duty. Although respondent may
not have expected the injury, yet, it is common knowledge
that carrying heavy objects can cause back injury, as what
happened in this case. Hence, the injury cannot be viewed
as unusual under the circumstances, and is not synonymous
with the term “accident” as defined above.
10. NON-COMPENSABILITY OF SELF-INFLICTED INJURY.
Section 20 (D) of the 2010 POEA-SEC is clear, viz.:
“SECTION 20. COMPENSATION AND BENEFITS
xxx
“D. No compensation and benefits shall be payable in
respect of any injury, incapacity, disability or death of the
seafarer resulting from his willful or criminal act or
intentional breach of his duties; Provided, however, that the
employer can prove that such injury, incapacity, disability
or death is directly attributable to the seafarer.”
From the above provision, the onus probandi falls on the
employer to establish or substantiate its claim that the
seafarer's injury was caused by his willful or intentional act
with the requisite quantum of evidence.
II. EXISTENCE AND EXTENT OF SEAFARER’S DISABILITY, absolved from liability when a seafarer suffers a work-
HOW DETERMINED AND DECLARED related injury or illness on account of the latter's willful
concealment or misrepresentation of a pre-existing
condition or illness. Thus, the burden is on the employer to
1. PRE-EMPLOYMENT MEDICAL EXAMINATION (PEME); prove such concealment of a pre-existing illness or condition
NON-COMPENSABILITY OF DISABILITY FROM PRE-EXISTING on the part of the seafarer to be discharged from any
ILLNESS. liability. In this regard, an illness shall be considered as pre-
Pursuant to Section 20 (A) of the 2010 POEA-SEC, the existing if prior to the processing of the POEA contract, any
employer is liable for disability benefits when the seafarer of the following conditions is present, namely:
suffers from a work-related injury or illness during the term (a) The advice of a medical doctor on treatment was given
of his contract. In this regard, Section 20 (E) thereof for such continuing illness or condition; or
mandates the seafarer to disclose all his pre-existing (b) The seafarer had been diagnosed and has knowledge of
illnesses or conditions in his PEME; failing which shall such illness or condition but failed to disclose the same
disqualify him from receiving disability compensation,2 viz.: during the PEME, and such cannot be diagnosed during the
“SECTION 20. COMPENSATION AND BENEFITS “E. A seafarer PEME.
who knowingly conceals a pre-existing illness or condition in
the Pre-Employment Medical Examination (PEME) shall be
liable for misrepresentation and shall be disqualified from
any compensation and benefits. This is likewise a just cause
for termination of employment and imposition of
appropriate administrative sanctions.”

At the outset, it bears to point out that Section 20 (E) of the

2010 POEA-SEC speaks of an instance where an employer is
2. THE 120-DAY/240-DAY TREATMENT PERIOD RULE.
a. Significance of the period.
Pursuant to Section 20 (A) of the 2010 POEA-SEC, when a
seafarer suffers a work-related injury or illness in the course
of employment, the company-designated physician is
obligated to arrive at a definite assessment of the former's
fitness or degree of disability within a period of 120 days
from repatriation. During the said period, the seafarer shall
be deemed on TEMPORARY TOTAL DISABILITY and shall
receive his basic wage until he is declared fit to work or his
temporary disability is acknowledged by the company to be
permanent, either partially or totally, as his condition is
defined under the POEA-SEC and by applicable Philippine
laws. However, if the 120-day period is exceeded and no
definitive declaration is made because the seafarer requires
further medical attention, then the temporary total
disability period may be extended up to a maximum of 240
days, subject to the right of the employer to declare within
this period that a permanent partial or total disability
already exists.
But before the company-designated physician may avail of
the allowable 240-day extended treatment period, he must
perform some significant act to justify the extension of the
original 120-day period. Otherwise, the law grants the
seafarer the relief of permanent total disability benefits
due to such non-compliance.
Case law thus states that without a valid final and definitive
assessment from the company-designated physician within
the 120-day/240-day period, the law already steps in to
consider petitioner's disability as total and permanent.
Thus, a temporary total disability becomes total and
permanent by operation of law. Consequently, in a case
where it was only after the lapse of more than six (6)
months that the company-designated physician issued a
certification declaring the seafarer to be entitled to a
disability rating of Grade 10, going beyond the period of 120
days, without justifiable reason, the Court held that his
disability was correctly adjudged to be permanent and total.
b. Summary of Rules on the periods to assess the seafarer.
The 2015 case of Elburg,1 and later reiterated in a number
of cases,2 summarized the rules on the periods when the
company-designated physician must, as a duty, assess the
seafarer and issue a final medical assessment, as follows:
1. The company-designated physician must issue a final
medical assessment on the seafarer’s disability grading
within a period of 120 days from the time the seafarer
reported to him;
2. If the company-designated physician fails to give his
assessment within the period of 120 days without any
justifiable reason, then the seafarer’s disability becomes
permanent and total;
3. If the company-designated physician fails to give his
assessment within the period of 120 days with a sufficient
justification (e.g., seafarer required further medical
treatment or seafarer was uncooperative3), then the period
of diagnosis and treatment shall be extended to 240 days.
The employer has the burden to prove that the company-
designated physician has sufficient justification to extend
the period; and
4. If the company-designated physician still fails to give his
assessment within the extended period of 240 days, then
the seafarer’s disability becomes permanent and total,
regardless of any justification.
The above rule was further refined in the 2015 case of
Marlow Navigation Philippines, Inc. v. Osias,4 where the
Court declared – and this is the current rule - as follows:
(1) that mere inability to work for a period of 120 days does
not entitle a seafarer to permanent and total disability
benefits;
(2) that the determination of the fitness of a seafarer for sea
duty is within the province of the company- designated
physician, subject to the periods prescribed by law;
(3) that the company-designated physician has an initial 120
days to determine the fitness or disability of the seafarer;
and
(4) that the period of treatment may only be extended to
240 days if a sufficient justification exists such as when
further medical treatment is required or when the seafarer
is uncooperative.
For as long as the 120-day period under the Labor Code and
the POEA-SEC and the 240-day period under the IRR co-
exist, the Court must bend over backwards to harmoniously
interpret and give life to both of the stated periods.
Ultimately, the intent of our labor laws and regulations is to
strive for social justice over the diverging interests of the
employer and the employee.
c. Conditions required for the claim for total and
permanent disability benefits to prosper.
In sum, according to the 2019 case of Torillos,1 in order for a
seafarer’s claim for total and permanent disability benefits
to prosper, any of the following conditions should be
present:
(a) The company-designated physician failed to issue a
declaration as to his fitness to engage in sea duty or
disability even after the lapse of the 120-day period and
there is no indication that further medical treatment would
address his temporary total disability, hence, justify an
extension of the period to 240 days;
(b) 240 days had lapsed without any certification issued by
the company designated physician;
(c) The company-designated physician declared that he is fit
for sea duty within the 120-day or 240-day period, as the
case may be, but his physician of choice and the doctor
chosen under Section 20 (B) (3) of the POEA-SEC are of a
contrary opinion;
(d) The company-designated physician acknowledged that
he is partially permanently disabled but other doctors who
he consulted, on his own and jointly with his employer,
believed that his disability is not only permanent but total as
well;
(e) The company-designated physician recognized that he is
totally and permanently disabled but there is a dispute on
the disability grading;
(f) The company-designated physician determined that his
medical condition is not compensable or work- related
under the POEA-SEC but his doctor-of-choice and the third
doctor selected under Section 20 (B) (3)2 of the POEA-SEC
found otherwise and declared him unfit to work;
(g) The company-designated physician declared him totally
and permanently disabled but the employer refuses to pay
him the corresponding benefits; and
(h) The company-designated physician declared him
partially and permanently disabled within the 120-day or
240-day period but he remains incapacitated to perform his
usual sea duties after the lapse of said periods.
3. POST-EMPLOYMENT MEDICAL EXAMINATION.
a. Mandatory submission for post-employment medical
examination by a company-designated physician.
Section 20 (A) (3) of the 2010 POEA-SEC, reads:
“COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS
“The liabilities of the employer when the seafarer suffers
work-related injury or illness during the term of his contract
are as follows:
xxx
“For this purpose, the seafarer shall submit himself to a
post-employment medical examination by a company-
designated physician within three working days upon his
return except when he is physically incapacitated to do so,
in which case, a written notice to the agency within the
same period is deemed as compliance. In the course of the
treatment, the seafarer shall also report regularly to the
company-designated physician specifically on the dates as
prescribed by the company-designated physician and agreed
to by the seafarer. Failure of the seafarer to comply with the
mandatory reporting requirement shall result in his
forfeiture of the right to claim the above benefits.”
It is clear from the foregoing that for a seafarer’s claim for
disability to prosper, it is mandatory and must be strictly
observed that within three (3) working days from his
repatriation, he is examined by a company- designated
physician. Non-compliance with this mandatory
requirement results in the forfeiture of the right to claim for
compensation and disability benefits. Consequently, the
complaint filed by a non-compliant seafarer should be
dismissed outright.
b. Exceptions.
This rule is not absolute, however. It admits of exception as
(1) when the seafarer is incapacitated to report to the
employer upon his repatriation; and (2) when the employer
inadvertently or deliberately refused to submit the seafarer
to a post-employment medical examination by a company-
designated physician.
4. RIGHT OF SEAFARER TO SEEK A SECOND OPINION.
a. When right to seek second opinion accrues.
The seafarer has the right to seek a second opinion once the
company-designated physician makes a definitive and final
assessment within the 120-day period; otherwise, no such
obligation devolves on the seafarer to consult his own
doctor.
5. THE THIRD DOCTOR RULE - MANDATORY PROCEDURE IN
JOINTLY ENGAGING A THIRD DOCTOR.
a. Referral to a third-party doctor, when required.
The conflicting findings of the company's doctor and the
seafarer's physician often stir suits for disability
compensation. As an extrajudicial measure of settling their In other words, the referral to a third doctor is mandatory
differences, the POEA-SEC gives the parties the option of when:
agreeing jointly on a third doctor whose assessment shall (1) there is a valid and timely assessment by the company-
break the impasse and shall be the final and binding designated physician; and
diagnosis.3 (2) the appointed doctor of the seafarer refuted such
While it is the company-designated doctor who is given the assessment.
responsibility to make a conclusive assessment on the
degree of the seafarer's disability and his capacity to resume
work within 120/240 days, the parties, however, are free to
disregard the findings of the company doctor as well as the
chosen doctor of the seafarer, in case they cannot agree on
the disability gradings issued and jointly seek the opinion of
a third-party doctor pursuant to Section 20 (A) (3) of the
2010 POEA-SEC which states:
“SECTION 20. COMPENSATION AND BENEFITS
“COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS
“The liabilities of the employer when the seafarer suffers
work-related injury or illness during the term of his contract
are as follows: 6. MEDICAL ABANDONMENT AND PREMATURE FILING OF
3. xxx COMPLAINT FOR DISABILITY CLAIM.
“If a doctor appointed by the seafarer disagrees with the The act of a seafarer in refusing to undergo medical
assessment, a third doctor may be agreed jointly between treatment or in refusing to continue his medical treatment
the Employer and the seafarer. The third doctor's decision with the company-designated physician is called “medical
shall be final and binding on both parties.” abandonment” which would result in the denial of his
disability claim. Moreover, the filing of a complaint for show, the existence of Ayungo’s hypertension was only
disability claim before the lapse of the 120-day/240-day revealed after his repatriation, as reflected in the Medical
treatment period will result in its dismissal on the ground of Report dated March 26, 2008 and reinforced by subsequent
prematurity as at that point, the cause of action may be said medical reports issued by Metropolitan Medical Center. To
to have not yet accrued as a matter of right. the Court’s mind, Ayungo’s non-disclosure constitutes
fraudulent misrepresentation which, pursuant to Section 20
7. RULE IN CASE OF CONFLICT OF OPINIONS. (E) of the 2000 POEA-SEC, disqualifies him from claiming any
In any case, the Supreme Court underscored in Nazareno1 disability benefits from his employer.
that “the bottomline is this: In a situation where the
certification of the company-designated physician would
defeat the OFW’s claim while the opinion of the
independent physicians would uphold such claim, the Court
adopts the findings favorable to the OFW. The law looks
tenderly on the laborer. Where the evidence may be
reasonably interpreted in two divergent ways, one
prejudicial and the other favorable to him, the balance must
be tilted in his favor consistent with the principle of social
justice.” III. MONETARY CLAIMS OF SEAFARERS FOR DEATH
8. EFFECT OF MISREPRESENTATION ON DISABILITY CLAIMS. BENEFITS
Misrepresentation on the part of the claimant would defeat
the claim for total permanent disability. In Ayungo,2 1. REQUISITES.
petitioner did not disclose that he had been suffering from To be entitled to death compensation benefits from the
hypertension and/or had been actually taking medications employer, the death of the seafarer:
therefor (i.e., Lifezar) during his PEME. As the records would (1) must be work-related; and
(2) must happen during the term of the employment
contract.
1.1. 1ST REQUISITE: DEATH MUST BE WORK-RELATED.
a. Meaning of work-related death.
While the 2010 and the earlier 2000 POEA-SEC do not
expressly define what a “work-related death” means, it is
evident from Part B (4) as above-quoted that the said term
refers to the seafarer’s death resulting from a work- related
injury or illness. This denotation complements the
definitions accorded to the terms “work-related injury” and
“work-related illness” under the 2010 POEA-SEC as follows:
“Definition of Terms:
“For purposes of this contract, the following terms are
defined as follows:
xxx
“16. Work-Related Illness - any sickness as a result of an
occupational disease listed under Section 32~A of this
Contract with the conditions set therein satisfied.
“17. Work-Related Injury - injury arising out of and in the
course of employment.
What is clear from the foregoing is that work-related injury
is one resulting in disability or death arising out of and in
the course of employment. Thus, there is a need to show
that the injury resulting to disability or death must arise (1)
out of employment; and (2) in the course of employment.
1.2. 2ND REQUISITE: DEATH MUST OCCUR DURING TERM
OF EMPLOYMENT.
a. The death should happen during employment.
b. If death happens after termination of employment, no
death benefits should, as a general rule, be paid.
c. Exception when death after termination of employment
is compensable.
Section 32-A of the POEA-SEC considers the possibility of
compensation for the death of the seafarer occurring after
the termination of the employment contract on account of a
work-related illness. But for death under this provision to be
compensable, the claimant must satisfy all of the following
conditions:
(1) The seafarer's work must involve the risks described in
the POEA-SEC;
(2) The disease was contracted as a result of the seafarer's
exposure to the described risks;
(3) The disease was contracted within a period of exposure
and under such other factors necessary to contract it; and
(4) There was no notorious negligence on the part of the
seafarer.
In fulfilling these requisites, substantial evidence must be
presented which is more than a mere scintilla; it must reach
the level of relevant evidence as a reasonable mind might
accept as sufficient to support a conclusion.
d. Medical repatriation as an exception.
The Supreme Court clarified in Canuel,1 that while the
general rule is that the seafarer’s death should occur
during the term of his employment, the seafarer’s death
occurring after the termination of his employment due to
his medical repatriation on account of a work-related injury
or illness constitutes an exception thereto. This is based on
a liberal construction of the 2000 POEA-SEC2 as impelled by
the plight of the bereaved heirs who stand to be deprived of
a just and reasonable compensation for the seafarer’s
death, notwithstanding its evident work-connection.
e. Non-medical repatriation cases where death occurred
after repatriation, hence, death benefits denied.
2. DEATH CAUSED BY THE SEAFARER HIMSELF, NOT
COMPENSABLE.
a. Death by suicide.
In the following cases, the death by suicide was likewise
held not compensable:
(1) TSM Shipping (Phils.), Inc. v. De Chavez,3 where the
seafarer was found dead inside his cabin bathroom hanging
by the shower cord and covered with blood.
(2) Wallem Maritime Services, Inc. v. Pedrajas,4 where the
seafarer hanged himself on the Upper Deck B of the vessel
with a rope tied to his neck.
(3) Great Southern Maritime Services Corp. v. Surigao,5
where the seafarer was found dead inside the bathroom of
his hospital room with a belt tied around his neck.
(4) Maritime Factors, Inc. v. Hindang,6 where the seafarer’s
body was found hanging by a strap on his neck in a kneeling
position inside the locker (wardrobe) of his cabin.
E. Solo Parents
[RA 8972: Solo Parents’ Welfare Act]
See also III. C. 2. a. and III. E. 7. for work entitlements of solo a. Livelihood development services, which include training
parents on livelihood skills, basic business management, value
Non work-related support for solo parents orientation and the provision of seed capital or job
1. Comprehensive Package of Social Development and placement;
Welfare Services [Sec. 5] b. Counseling services, which include individual, peer group
2. Educational Benefits [Sec. 9] or family counseling. These will focus on the resolution of
3. Housing Benefits [Sec. 10] personal relationship and role conflicts;
4. Medical Assistance [Sec. 11] c. Parent effectiveness services which include the provision
and expansion of knowledge and skills of the solo parent on
Criteria for Support early childhood development, behavior management,
1. Solo parent, health care and proper nutrition, rights and duties of
2. Income in the place of domicile falls below the parents and children;
poverty threshold as set by the NEDA, and d. Critical incidence stress debriefing, which includes
3. Assessed by the DSWD. preventive stress management strategy designed to assist
Note: If the solo parent’s income is above the poverty solo parents in coping with crisis situations and cases of
threshold, he shall still enjoy the benefits of Flexible Work abuse;
Schedule, Protection against Work Discrimination, and e. Special projects for individuals in need of protection
Parental Leave [Sec. 4]. which include temporary shelter, counseling, legal
assistance, medical care, self-concept or ego-building, crisis
Comprehensive Package of Social Development and management and spiritual enrichment.
Welfare Services [Sec. 15, IRR]
The package will initially include:
Educational benefits
The DepEd, CHED, and TESDA shall provide the following
benefits and privileges:
1. Scholarship programs for qualified solo parents and their
children in institutions of basic, tertiary, and technical/skills
education;
2. Non-formal education programs appropriate for solo
parents and their children. [Sec. 22, IRR]
Housing benefits
Solo parents who meet the eligibility criteria for housing
assistance under R.A. No. 7279 (Urban Development and
Housing Act of 1992) and other related rules and regulations
of participating housing agencies shall be provided with
liberal terms of payment on government low-cost housing
projects, in accordance with housing law provisions,
prioritizing applicants below the poverty line as declared by Declaration of Policy
the NSCB. [Sec. 23, IRR]
The National Housing Authority shall make available housing
units to solo parents in its housing projects, subject to
existing disposition policies, or may refer them to other
housing projects, as appropriate, provided:
a. The identified solo parent must be eligible for assistance
under the provisions of this Act;
b. Solo parents applying for housing benefits must meet the
qualification criteria for housing assistance under Republic
Act 7279, or the Urban Development and Housing Act
(UDHA) and other NHA eligibility criteria under existing
policies, rules and regulations; and
F. Kasambahay
RA 10361: Batas Kasambahay or Domestic
Workers Act]
G. Agrarian Relations
1. Concept of agrarian reform
The agrarian reform program is founded on the right of
farmers and regular farmworkers, who are landless,
to own directly or collectively the lands they till or, in the
case of other farm workers, to receive a just share of the
fruits
thereof.
To this end, the State shall encourage and undertake the
just distribution of all agricultural lands, subject to the
payment of just compensation. [Sec. 2, RA 6657,
Comprehensive Agrarian Reform Law]
Definition
Agrarian Reform – The redistribution of lands, regardless of
crops or fruits produced to farmers and regular farmworkers
who are landless, irrespective of tenurial arrangement,
including:
1. The totality of factors and support services designed to lift Tenancy relationship defined [Sec. 6, RA1199]
the economic status of the beneficiaries; and
2. All other arrangements alternative to the physical
redistribution of lands, such as:
a. Production or profit-sharing,
b. Labor administration, and
c. The distribution of shares of stocks, which will
allow beneficiaries to receive a just share of the
fruits of the lands
2. Existence and concept of agricultural tenancy
Agricultural tenancy – The physicalpossession by a person of
land devoted to agriculture belonging to, or legally
possessed by another:
1. For the purpose of production through the
labor of the former and of the members of
his immediate farm household
2. In consideration of which the former agrees
to:
a. Share the harvest with the latter; OR
b. Pay a price certain, either in produce or in
money, or both. [Sec. 3, RA 1199,
Agricultural Tenancy Act]
Tenancy relationship is a juridical tie which arises between a
landholder and a tenant, wherein:
a. They agree, expressly or impliedly, to
undertake jointly the cultivation of land
belonging to the former, either under the
share tenancy or leasehold tenancy
system;
b. The tenant acquires the right to continue
working on and cultivating the land, until
and unless he is dispossessed of his
holdings for any of the just causes, or the
relationship is terminated in accordance
with [the Agricultural Tenancy Act].
Requisites for the existence of agricultural
tenancy relationship
 1. The parties are landowner and the tenant
or agricultural lessee;
2. The subject of the relationship is agricultural land;
3. There is mutual consent to the tenancy between the
parties;
4. The purpose of the relationship is agricultural production;
5. There is personal cultivation by the tenant or agricultural
lessee; and
6. There is a sharing of harvests between the parties.
[Fuentes v. Caguimbal, G.R. No. 150305 (2007)]
Establishment of tenancy relationship [Sec. 7, RA 1199]
Tenancy relationships may be established either verbally or
in writing, expressly or impliedly. Once such relationship is
established, the tenant shall be entitled to security of
tenure.
Types of agricultural tenancy [Sec. 4, RA 1199, as amended
by RA 2263]
1. Share tenancy exists when
a. Two persons agree on a joint undertaking for
agricultural production;
b. Wherein one party furnishes land and the other
his labor;
c. With either or both contributing any one or
several of the items of production;
d. The tenant cultivating the land personally with
the aid of labor available to members of his
immediate farm household;
e. And the produce thereof to be divided between
the landholder and the tenant in proportion to their
respective contributions.
2. Leasehold tenancy exists when
a. A person, who either personally or with the aid of labor
available from the members of his immediate farm
household;
b. Undertakes to cultivate a piece of agricultural land
susceptible of cultivation by a single person, together
with members of his immediate farm household;
c. Belonging to or legally possessed by, another, in
consideration of a fixed amount in money or in produce
or in both.
3. Rights of agricultural tenants
Rights common to both share and leasehold tenants [Sec. 22, RA
1199, as amended by RA 2263]
The tenant shall:
1. Be free to work elsewhere whenever the nature of his
farm obligation;
2. Have the right to provide any of the contributions for
production, aside from his labor, whenever he can do so
adequately and on time subject to the provisions of Sec.
14 of this Act
3. Have the right to demand for a home lot suitable for
dwelling with an area:
a. not more than 3% of the area of his
landholding; provided
b. it does not exceed 1000 sq. m.; and that
c. it shall be located at a convenient and suitable
place within the land of the landholder to be
designated by the latter where the tenant shall
construct his dwelling and may raise vegetables,
poultry, pigs and other animals and engage in
minor industries, the products of which shall
accrue to the tenant exclusively.
d. The tenant’s dwelling shall not be removed
from the lot already assigned to him by the
landholder, except:
i. If the landholder designates another
site for the tenant’s home lot and the
tenant agrees to the transfer [Sec. 26,
RA1199, as amended by RA2263]
ii. There is a severance of the tenancy
relationship
iii. The tenant is ejected for cause In any
case, the tenant shall only be removed
after the expiration of 45 days following
such severance of relationship or
dismissal for cause.
Specific rights of rice share tenants [Sec. 36, RA 1199]
The rice share tenant shall have the right to:
1. Determine when to scatter the seeds, to transplant the
seedlings, and to reap the harvest, provided they shall be in
accordance with proven farm practices and after due notice
to the landholder.
2. Choose the thresher which shall thresh the harvest
whenever it is the best available in the locality and the best
suited to the landholder’s and tenant’s needs and provided
that the rate charged by the owner of other threshers under 2. Work the land according to his best judgment, provided
similar circumstances. this manner and method of cultivation and harvest are in
accordance with proven farm practices. Upon termination of
If there are multiple tenants, the choice of the majority of the relationship, have ½ of the value of the improvements
the tenants shall prevail. made by him, provided they are reasonable and adequate to
the purposes of the lease.
If the landholder is the owner of a thresher and is ready and
willing to grant equal or lower rates under the same 4. Concept of farmworkers
conditions, the use of the landholder’s thresher shall be
given preference. A farmworker is a natural person who renders services for
value as an employee or laborer in an agricultural enterprise
3. Apply appropriate pest, insect, disease and rodent control or farm regardless of whether his compensation is paid on a
measures whenever in his judgment such action is daily, weekly, monthly or “pakyaw” basis.
necessary. The term includes an individual whose work
has ceased as a consequence of, or in connection with, a
4. Apply fertilizer of the kind or kinds shown by proven farm pending agrarian dispute and who has not obtained a
practices to be adapted to the requirements of the land, substantially equivalent and regular farm employment. [Sec.
provided the landholder has not exercised his right to 3(g), RA 6657, Comprehensive Agrarian Reform Law]
require the use of such fertilizer.
Types of farmworkers
Specific rights of leasehold tenants [Sec. 43, RA 1199] 1. Regular Farmworker - a natural person who is employed
The tenant-lessee shall have the right to: on a permanent basis by an agricultural enterprise or farm.
1. Enter the premises of the land, and to the adequate and [Sec. 3(h), RA 6657]
peaceful enjoyment thereof;
2. Seasonal Farmworker - a natural person who is employed
on a recurrent, periodic or intermittent basis by an
agricultural enterprise or farm, whether as a permanent or a
non-permanent laborer, such as “dumaan,” “sacada,” and
the like. [Sec. 3(i), RA 6657]
3. Other Farmworker - a farmworker who does not fall
under Sec. 3(g) (farmworker), Sec. 3(h) (regular
farmworker), and Sec. 3(i) (seasonal farmworker). [Sec. 3(j),
RA 6657]
H. Universal Health Care- rA11223
1. Policy
It is the policy of the State to promote and protect the right
to health of all Filipinos and instill health consciousness
among them. Towards this end, the State shall adopt:
a. An integrated and comprehensive approach to ensure
that all Filipinos are health literate, provided with healthy
living
conditions, and protected from hazards and risks that could
affect their health;
b. A health care model that provides all Filipinos access to a
comprehensive set of quality and cost-effective, promotive,
preventive, curative, rehabilitative and palliative health
services without causing financial hardship, and prioritizes
the needs of the population who cannot afford such
services;
c. A framework that fosters a whole-ofsystem, whole-of-
government, and wholeof- society approach in the
development, implementation, monitoring, and
evaluation of health policies, programs and plans; and
d. A people-oriented approach for the delivery of health
services that is centered on people's needs and well-being,
and cognizant of the differences in culture, values, and
beliefs. [Sec. 2]
The Universal Health Care Act seeks to:
a. Progressively realize universal health care in the country
through a systemic approach and clear delineation of roles
of key agencies and stakeholders towards better
performance in the health system; and
b. Ensure that all Filipinos are guaranteed equitable access
to quality and affordable health care goods and services,
and
2. Coverage
Population coverage [Sec. 5]
Every Filipino citizen shall be automatically included into the
National Health Insurance Program.
Service coverage [Sec. 6]
Every Filipino shall be granted immediate eligibility and
access to preventive, promotive, curative, rehabilitative, and Population-based health service - interventions such as
palliative care for medical, dental, mental and emergency
health services, delivered either as population-based
or individual-based health services.
Provided, That the goods and services to be included shall
be determined through a fair and transparent Health
Technology Assessment (HTA) Process. [Sec. 6(a)]
HTA - The systematic evaluation of properties, effects, or
impact of health-related technologies, devices, medicines,
vaccines, procedures and all other health-related
systems developed to solve a health problem and improve
quality of lives and health outcomes. [Sec. 4(n)]
Every Filipino shall register with a public or private primary
care provider of choice. The DOH shall promulgate the
guidelines on the licensing of primary care providers and the
registration of every Filipino to a primary care provider.
[Sec. 6(d)]
Financial coverage [Sec. 7]
Population-based health services shall be financed by the
National Government through the DOH and provided free of
charge at point of service for all Filipinos. [Sec. 7(a)]
health promotion, disease surveillance, and vector control,
which have population groups as recipients. [Sec.
4(p)] Individual-based health services shall be
financed primarily through prepayment mechanisms such as
social health insurance, private health insurance, and HMO
plans to ensure predictability of health expenditures. [Sec.
7(b)]
Individual-based health services - services which can be
accessed within a health facility or remotely that can be
definitively traced back to 1 recipient, has limited effect at a
population level and does not alter the underlying cause of
illness such as ambulatory and inpatient care, medicines,
laboratory tests and procedures.
3. National Health Insurance Program
Membership into the NHIP falls under 2 categories [Sec. 8]
1. Direct contributors - Those who have the capacity to pay
premiums, are gainfully employed and are bound by an
employeremployee relationship, or are self-earning,
professional practitioners, migrant workers, including their
qualified dependents, and lifetime members [Sec. 4(f)]
2. Indirect contributors - All others not included as direct
contributors, as well as their qualified dependents, whose
premium shall be subsidized by the national
government including those who are subsidized as a result
of special laws [Sec. 4(o)]
whose premium contribution payments are equally shared by the
employee and the employer;
2. Kasambahays, as defined in the Kasambahay Law;
3. All other workers who are not covered by formal contracts or
agreements or who have no employee-employer relationship and
whose premium contributions are selfpaid,
and with capacity to pay premiums, such as the following:
a. Self-earning individuals; and
b. Professional practitioners;
4. Overseas Filipino Workers
5. Filipinos living abroad;
6. Filipinos with dual citizenship;
7. Lifetime members as defined in RA 10606 (National Health
Insurance Act); and
8. All Filipinos aged 21 years and above who have the capacity to
pay premiums. [Sec. 8, IRR]

Direct contributors
1. Employees with formal employment characterized by the
existence of an employer-employee relationship, which
include workers in the government and private sector, whether
regular, casual, or contractual, are occupying either an elective or
appointive position, regardless of the status of appointment,
Indirect contributors
1. Indigents identified by the DSWD;
2. Beneficiaries of Pantawid Pamilyang Pilipino Program/Modified
Conditional Cash Transfer (4Ps/MCCT);
3. Senior citizens who are not currently covered by the Program;
4. Persons with disability, as defined in RA 10754 (An Act
Expanding the Benefits and Privileges of Persons with Disability);
5. All Filipinos aged 21 years old and above without the capacity to
pay premiums;
6. Sangguniang Kabataan officials, as defined in RA 10742
(Sangguniang Kabataan Reform Act); and
7. Those previously identified at point-ofservice
(POS) or during registration, members previously sponsored by
LGUsand those who are not yet in the PhilHealth database and are
financially incapable to pay premiums. [Sec. 8, IRR]
Dependents
1. Legal spouse/s who is/are not an active member;
2. Unmarried and unemployed legitimate, illegitimate children,
and legally adopted or stepchildren below twenty-one (21) years
of age;
3. Foster children as defined in RA 10165 (Foster Care Act of
2012); and
4. Parents who are sixty (60) years old and above, not otherwise
an enrolled member. [Sec. 8, IRR] Benefits [Sec. 9]
Every member shall be granted immediate eligibility for health
benefit package under the NHIP under the following rules:
1. The PhilHealth ID Card shall not be required in the availing of
any health service.
2. No co-payment shall be charged for services rendered in basic
or ward accommodation.
3. Co-payments and co-insurance for amenities in public hospitals
shall be regulated by the DOH and PhilHealth
Co-payment - a flat fee or predetermined rate paid at point of
service [Sec. 4(e)]
Co-insurance - a percentage of a medical charge that is paid by the
insured, with the rest paid by the health insurance plan [Sec. 4(d)]
4. The current PhilHealth package for members shall not be
reduced. PhilHealth shall provide additional NHIP
benefits for direct contributors, where applicable: Provided,
1. Failure to pay premiums shall not prevent the
enjoyment of NHIP benefits.
2. Employers and self-employed direct contributors shall
be required to pay all missed contributions with an
interest, compounded monthly, of at least 3% for
employers and not exceeding 1.5% for selfearning,
professional practitioners, and migrant workers.
VIII. JURISDICTION AND REMEDIES H. Department of Labor and Employment Secretary
A. Labor Arbiter 1. Jurisdiction
1. Jurisdiction of the Labor Arbiter as 2. Visitorial and enforcement powers
distinguished from the Regional Director 3. Power to suspend effects of termination
2. Requirements to perfect appeal to National 4. Remedies
Labor Relations Commission I. Voluntary Arbitrator
3. Reinstatement and/or execution pending appeal 1. Jurisdiction
B. National Labor Relations Commission 2. Remedies
C. Court of Appeals J. Prescription of actions
D. Supreme Court 1. Money claims
E. Bureau of Labor Relations 2. Illegal dismissal
F. National Conciliation and Mediation Board ' 3. Unfair labor practice
1. Jurisdiction 4. Offenses under the Labor Code
2. Conciliation as distinguished from mediation 5. Illegal recruitment
3. Preventive mediation
G. Department of Labor and Employment Regional
Directors
1. Jurisdiction
2. Recovery and adjudicatory power