A.

THE LAW PERTAINING TO THE STATE AND ITS RELATIONSHIP WITH ITS CITIZENS (18
QUESTIONS)

a. Constitutional Law (11 Questions)

i. Basic principles of political law (e.g., separation of powers, sovereignty, judicial review,
fundamental powers of the State, i.e., police power, eminent domain, and taxation)

a. Separation of Powers

- Purpose: To prevent concentration of authority in 1 person or group of persons that  might

lead to an irreversible error or abuse in the exercise of such power, to the detriment of
republican institutions. 

- Application: Interdependence.

- not absolute due to the principle of checks and balances;

b. Sovereignty

- The supreme and uncontrollable power inherent in a State by which that State is governed.

- Characteristics: Permanent, exclusive, comprehensive, absolute, indivisible, inalienable,

imprescriptible

- Kinds: 

Legal – power to issue final commands; 

Political – sum total of all influences which lie behind the law. 

Internal – supreme power over everything within its territory; 

External – aka independence, freedom from external control. 

- Doctrine of Auto-Limitation 

- It is to be admitted that any state may, by its consent, express or implied, submit to
a restriction of its sovereign rights. There may thus be a curtailment of what otherwise
is a power plenary in character (Reagan v. CIR, G.R. No. L26379, December 27,
1969). 

- Effect of TRANSFER or CHANGE of sovereignty (Spain to US) – Political laws are

automatically abrogated, but municipal laws (penal, civil, commercial laws) remain in
force unless repealed, modified, or amended by the new sovereign. 

- Effect of belligerent occupation (Japanese) – There is no change in sovereignty.

However, political laws (except laws on treason) are suspended. Municipal laws remain
in force unless repealed, modified, or amended by the belligerent occupant.

c. Judicial Review – see iv. Judicial Review

d. Fundamental powers of the State

- Inherent in the State, exercised even without need of express constitutional grant. The
Constitutional provisions are more of limitations.

1. Police power – The power of promoting public welfare by restraining and

regulating the use and enjoyment of liberty and property. It is the most pervasive, the
least limitable, and the most demanding of the three powers. The justification if found
in the maxims: salus populi est suprema lex (welfare of the people is the supreme
law), and sic utere tuo ut alienum non laedas (use your own property in such a
manner as not to injure that of another).

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- It is the imposition of restraint upon liberty or property in order to foster common
good. It only regulates, but does not prohibit.

- Elements:

1. Lawful subject – the interests of the public generally;

2. Lawful means – means employed are reasonably necessary for the

accomplishment of the purpose, and not unduly oppressive upon individuals.

2. Eminent Domain – The inherent right of the State to condemn private property to
public use upon payment of just compensation.

- Requisites: 

1. Necessity – there must be genuine necessity of public character for the

taking of the private property. 

2. Taking of private property – all private property capable of ownership may

be expropriated, except money. 

3. Taking in the constitutional sense, which may either be— 

i. material impairment of the value of the property or prevention of the

ordinary uses of the property for which it was intended; or 

ii. imposition of a burden upon the owner of the property without loss
of title or possession (see example below)

4. For public use. 

5. Just compensation: 

i. The full and fair equivalent of the property taken—it is the FMV of
the property. 

1. FMV determined by the land’s character and nature at

the time of taking. 

ii. Consequential damages – paid by the expropriator if only a portion

of a certain property is expropriated and if remaining property of the
owner suffers from impairment or decrease in value. 

iii. Can only be determined by the court; legislative and executive

pronouncements fixing or providing the method of computing just
compensation is unconstitutional and an encroachment of judicial
prerogative. 

iv. Commissioners – trial before commissioners is indispensable for the

determination of the amount of just compensation; but
its recommendation or ruling is not binding with the court. 

v. Form of compensation – money only. In agrarian reform, bonds

are allowed as payment.

- Taking (Republic v. Castelvi) requisites:

1. enter a private property;

2. entry must be for more than a momentary period;

3. entry must be under warrant or color of authority;

4. must be devoted for public use, or informally appropriated, or injuriously

affected;

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 5. utilization of the property must be in such a way to oust the owner and
deprive him of beneficial enjoyment of the property.

- Necessity of public use is to be determined by Congress, but it may be delegated to

LGUs.

- Just compensation is determined by the court, as it is always a judicial

determination. It is determined either as of the date of taking or the filing of the
complaint, whichever comes first.

- XPN: if taken without knowledge or consent of landowner, just compensation

is determined or reckoned from the time the landowners initiated the inverse
condemnation.

- Entitlement of owner to interest – part of payment of just compensation is that it

also be paid within reasonable time from the time of taking; if not, the State must pay
the landowner interest, by way of damages, from the time the land is taken until full
payment or deposit of the just compensation. 

- The final compensation must include the 12% per annum interest on the just
value computed from the time of taking until full payment or deposit.

- Interest of forbearance is 12% per annum prior to June 30, 2013. 6% per
annum effective July 1, 2013.

3. Taxation

a. Who may exercise: 

GR: Legislature. 

But also given to the: local legislative bodies and the President through
delegated tariff powers. 

b. Limitations to the exercise of the power of taxation: 

i. Due process of law that tax must not be confiscatory. 

ii. Should be uniform and equitable. 

iii. And for a public purpose. 

c. Double taxation – additional taxes are paid on the same subject by the same taxing
jurisdiction, during the same period and for the same purpose. (This is direct double
taxation, it is prohibited.) 

d. Tax exemptions – No law granting tax exemption shall be passed without the
concurrence of a majority of all the members of Congress. 

a. Sec. 28 (3), Art. VI: “Charitable institutions, churches and parsonages or

convents appurtenant thereto, mosques, non-profit cemeteries and all lands,
buildings and improvements, actually, directly and exclusively used for
religious, charitable or educational purposes shall be exempt from taxation.” 

b. Sec. 4 (3) Art. XIV: “All revenues and assets of non-stock, non-profit
educational institutions used actually, directly and exclusively for educational
purposes shall be exempt from taxes and duties. x x x”

ii. Bill of Rights (due process, equal protection, freedom of expression, rights during
expropriation, searches and seizures)

a. Due process – Sec. 1, Art III: “No person shall be deprived of life, liberty or property
without due process of law x x x”

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 1. Substantive – this serves as a restriction on government’s law- and rule-making powers

- Requisites: lawful subject and lawful means

- It requires that the law itself is fair, reasonable, and just; the intrinsic validity of the
law in interfering with the rights of the person to his life, liberty, and property.

2. Procedural – this refers to the method or manner by which the law is enforced.

- Requisites:

1. Court which has jurisdiction;

2. Jurisdiction must be lawfully acquired;

3. Defendant must be given opportunity to be heard;

4. Judgment be rendered upon lawful hearing.

- Notice and hearing, and guarantee of being heard by an impartial and competent
tribunal. It serves as a restriction on actions of judicial or quasi-judicial agencies of the
government.

3. Administrative – Ang Tibay v. CIR: cardinal rights for due process in administrative
proceedings:

1. The right to a hearing, which includes the right to present one's case and submit
evidence in support thereof.

2. The tribunal must consider the evidence presented.

3. The decision must have something to support itself.

4. The evidence must be substantial.

5. The decision must be rendered on the evidence presented at the hearing, or at least
contained in the record and disclosed to the parties affected.

6. The tribunal or body or any of its judges must act on its or his own independent
consideration of the law and facts of the controversy and not simply accept the view of
a subordinate in arriving at a decision.

7. The board or body should, in all controversial questions, render its decision in such
a manner that the parties to the proceeding can know the various issues involved, and
the reason for the decision rendered.

b. Equal protection – Sec 1., Art. III: “x x x nor shall any person be denied the equal
protection of laws.”

i. Concept – All persons or things similarly situated should be treated alike, both as to rights
conferred and responsibilities imposed. Natural and juridical persons are entitled to this
guarantee, but with respect to artificial persons, they enjoy the protection only insofar as their
property is concerned.

ii. Requisites:

1. Substantial distinctions which make for real differences;

2. Germane to the purpose of law;

3. It is not limited to existing conditions only;

4. Applies equally to all members of the same class.

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 iii. Levels of scrutiny to determine propriety of the classification under the equal protection
clause

a. rational basis scrutiny or rational relations test – demands that the classification
reasonably relate to the legislative purpose

b. intermediate scrutiny – the law must not only further an important governmental
interest and be substantially related to that interest, but that justification for the
classification must be genuine and must not depend on broad generalizations

c. strict scrutiny – applies when a legislative classification impermissibly interferes with

the exercise of a fundamental right or operates to the peculiar class disadvantage of a
suspect class. Government carries the burden to prove that the classification is
necessary to achieve a compelling state interest, and that it is the least restrictive
means to protect such interest.

c. Freedom of expression – Sec. 4, Art. III: “No law shall be passed abridging the freedom
of speech, of expression or of the press, or the right of the people peaceably assemble and
petition the government for redress of grievances.”

i. Aspects, freedoms, or guarantees of the right

a. freedom from censorship or prior restraint

b. freedom from punishment subsequent to publication

c. freedom of access to information

d. freedom of circulation

ii. Content based restriction – a restriction imposed because of the contents of the speech. It
bears a heavy presumption of unconstitutionality as it amounts to censorship. It is subjected
to the “clear and present danger test.”

iii. Content neutral restriction – a restriction only as to the time, place, manner of the speech.
It is constitutional.

iv. O’Brien Test – a government regulation is valid if:

1. It is within the constitutional power of the government;

2. it furthers an important or substantial governmental interest;

3. the governmental interest is unrelated to the suppression of free expression; and

4. the incidental restriction on the freedom is no greater than is essential to the

furtherance of that interest.

v. Tests of valid governmental interference

a. clear and present danger rule – whether the words are used in such circumstances
and of such a nature as to create a clear and present danger that they will bring about
the substantive evils that the State has the right to prevent. “The substantive evil
must be extremely serious and the degree of imminence extremely high before
utterances can be punished.”

b. dangerous tendency rule – if the word uttered create a dangerous tendency of an

evil which the State has the right to prevent, then such words are punishable. It is
sufficient if the natural tendency and the probable effect of the utterances were to
bring about the substantive evil that the legislative body seeks to prevent.

c. balancing of interest test – when a particular conduct is regulated in the interest of

public order, and the regulation results in an indirect, conditional, or partial
abridgment of speech, the duty of the courts is to determine which of the two

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 conflicting interests demands the greater protection under the particular circumstances
presented.

vi. Assembly and petition

i. B.P. 880 (Public Assembly Act of 1985) – a permit to hold a public assembly shall
not be necessary where the meeting is to be held in a private place, in the campus of
a government-owned or -operated educational institution, or in a freedom park. Where
a permit is required, the written application shall be filed with the mayor’s office at
least 5 days before the scheduled meeting and shall be acted upon within 2 days,
otherwise the permit shall be deemed granted. Denial of the permit may be justified
only upon a clear and convincing evidence that the public assembly will create a clear
and present danger to the public order, safety, convenience, morals, or health.

d. Rights during expropriation

i. Right of landowner in case of non-payment of just compensation

a. Inverse condemnation or expropriation – as a rule non-payment of just

compensation in an expropriation proceeding does not entitle the private landowners
to recover possession of the expropriated lots, but only to demand payment of the fair
market value of the property. Inverse expropriation is imprescriptible.

- In one case, the Court construed the State’s failure to pay the just
compensation as a deliberate refusal on its part. Under the circumstances of
the case, recovery of possession is in order. It was then held that where the
government fails to pay just compensation within five years from the finality of
judgment in the expropriation proceedings, the owners concerned shall have
the right to recover possession of their property.

b. If property was not devoted for public use, owner may buy-back the property

c. If land is expropriated for a particular purpose with the condition that when that
purpose is ended, abandoned, or not attained, the property shall revert to the former
owner, then the former owner can re-acquire the property.

e. Searches and seizure – Sec. 2, Art III: “The right of the people to be secure in their
persons, houses, papers, and effects against unreasonable searches and seizures of whatever
nature and for any purpose shall be inviolable, and no search warrant or warrant of arrest
shall issue except upon probable cause to be determined personally by the judge after
examination under oath or affirmation of the complainant and the witnesses he may produce,
and particularly describing the place to be searched and the persons or things to be seized.”

i. Requisites of a valid warrant:

a. probable cause;

b. to be determined personally by a judge;

c. after examination, under oath or examination, of the complainant and the witnesses
he may produce; and

d. particularly describing the places to be searched and the things to be seized.

ii. Warrantless searches

1. When the right is voluntarily waived;

a. airport searches – the intrusion into the privacy is very minimal as

compared to the danger to which the passenger is exposing other passengers
of the aircraft.

2. stop and frisk search – the search precedes the arrest;

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 3. search incidental to a lawful arrest – the arrest must precede the search and such
arrest must be lawful or valid;

4. vessels and aircraft;

5. moving vehicles;

a. checkpoint search which can be a) routinary inspection which is limited to a

visual search, or b) extensive search if the officers conducting the search had
reasonable or probable cause to believe, before the search, that either the
motorist is a law offender or they will find the instrumentality or evidence
pertaining to a crime in the vehicle to be searched, e.g., over-
apprehensiveness of the passengers to be searched.

6. buildings and other premises for the enforcement of fire, sanitary, and building
regulations; and

7. plain view – the discovery of the objects must be inadvertent and are open to the
eye and hand.

- requisites:

1. prior valid intrusion based on the valid warrantless arrest in which the police
are legally present in the pursuit of their official duties;

2. the evidence was inadvertently discovered by the police who have the right
to be where they are; and

3. the evidence must be immediately apparent;

4. “plain view’ justified the seizure of the evidence without any further search.

iii. Warrantless arrests and detention – Sec. 5, Rule 113, Rules of Court: A peace officer, or
even a private person may effect an arrest without a warrant:

a. when the person to be arrested has committed, is actually committing, or is

attempting to commit an offense in his presence.

Requisites:

i. the person to be arrested must execute an overt act indicating that

he had just committed, is actually committing, or is attempting to
commit a crime;

ii. such overt act is done in the presence or within the view of the
arresting officer.

b. when an offense had just been committed and there is probable cause to believe,
based on his personal knowledge of facts or of other circumstances, that the person to
be arrested has committed the offense.

c. when the person to be arrested is a prisoner who has escaped from a penal
established or place where he is serving final judgment or temporarily confined while
his case is pending, or has escaped while being transferred from one confinement to
another.

d. When the right is voluntarily waived, then the illegality of the arrest may no longer
be invoked to effect the release of the person arrested.

iv. Exclusionary rule – confession or admission obtained in violation of Secs. 12 and 17, Art.
III, shall be inadmissible in evidence.

- NB: Fruit of a poisonous tree applies to object evidence; while the exclusionary rule
applies to testamentary evidence.

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iii. Composition and powers of the government organs

iv. Judicial Review

A. Judicial Review – Sec. 1, Art. VIII: “x x x Judicial power includes the duty of the courts of
justice to settle actual controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the
Government.”

- It is the power of the courts to test the validity of executive or legislative acts in light of their
conformity with the Constitution. It is inherent in the Judicial Department, by virtue of the
doctrine of separation of powers.

i. Requisites:

1. Actual case or controversy;

a. Moot and academic principle – a moot and academic case is one that ceases
to present a justiciable controversy by virtue of supervening events, so that a
declaration thereon would be of no practical use of value, or that no useful
purpose can be served passing upon the merits. However, the principle is not
a magical formula that can automatically dissuade the courts from resolving
the case.

- XPNs:

a. grave violation of the Constitution;

b. exceptional character of the situation and paramount public interest

is involved;

c. when issues raised require formulation of controlling principle to

guide the bar, bench, and public; and

d. case is capable of repetition yet evasive review.

2. Raised by the proper party;

a. Liberalization of the rules on legal standing/locus standi in the case of Oposa v.

Factoran, wherein the minors were REPRESENTED by their parents, following the
principle of intergenerational responsibility. In the case of Resident Marine Mammals
v. Reyes, under citizen suit, the petitioners (dolphins, cetaceans, marine mammals,
etc.) were JOINED or ACCOMPANIED by human beings as stewards of nature.

b. In David v. Macapagal Arroyo, petitioners may be accorded standing to sue,

provided that the following requirements are met:

i. case involves constitutional issues;

ii. for taxpayers, there must be a claim of illegal disbursement of public funds
or the tax measure is unconstitutional;

iii. for voters, there must be a showing of obvious interest in the validity of
election law in question;

iv. for concerned citizens, there must be showing that the issues raised are of
transcendental importance which must be settled early;

v. for legislators, there must be a claim that the official action complained of
encroaches on their prerogatives as legislators.

3. Raised at the earliest opportune time; and

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 4. The constitutional issue must be the very lis mota of the case.

- The Court, in Belgica v. Ochoa said that the first two requisites are the most
important.

ii. Operative fact doctrine –

GR: Nullification of an unconstitutional law carries with it the illegality of

effects.

XPN: If it will result to inequity or injustice, effects will have to be recognized.

- The legal effects of a void law shall still be recognized; nullifies the void law
or executive act, but sustains its effects.

iv. Political Question Doctrine – refers to those questions which, under the
Constitution are to be decided by the people in their sovereign capacity, or in regard
to which full discretionary authority has been delegated to the political branches
(legislative or executive branch) of the government.

- A question of policy. It is concerned with issues dependent upon the wisdom,

not the legality, of a particular measure

- The scope of the political question doctrine has been limited by the 2 nd
paragraph, Sec. 1, Art VIII, which vests in the judiciary the power “to
determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government.”

v. Supervision of courts

I. Administrative Supervision Over Lower Courts 

Administrative Powers of the Supreme Court: 

1. Assign temporarily judges of lower courts to other stations as public interest may
require; 

2. Shall not exceed 6 months without the consent of the judge concerned; 

3. Order a change of venue or place of trial to avoid a miscarriage of justice; 

4. Appoint all officials and employees of the Judiciary in accordance with the Civil
Service Law; 

5. Supervision over all courts and the personnel thereof; 

6. Discipline judges of lower courts or order their dismissal. 

Period for Deciding Cases: 

1. SC- 24 months 

2. Lower Collegiate Courts- 12 months

3. Other Lower Courts- 90 days 

- Period counted from date of submission. • Case deemed submitted upon filing of the last
pleading, brief or memorandum required by the Rules or the court [Sec.  15(2), Art. VIII]. 

- The Sandiganbayan, while of the same level as the Court of Appeals, functions as a trial
court. Therefore, the period for deciding cases which applies to the Sandiganbayan is the three
(3) month period, not the twelve (12) month period [In Re: Problems of Delays in Cases
before the Sandiganbayan, A. M.  No. 00-8-05- SC (2001)].

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vi. Powers of the Supreme Court

a. Rule-making power – Sec. 5 (5), Art. VIII: Promulgate rules concerning the protection and
enforcement of constitutional rights, pleading, practice, and procedure in all courts, the
admission to the practice of law, the integrated bar, and legal assistance to the under-
privileged. Such rules shall provide a simplified and inexpensive procedure for the speedy
disposition of cases, shall be uniform for all courts of the same grade, and shall not diminish,
increase, or modify substantive rights. Rules of procedure of special courts and quasi-judicial
bodies shall remain effective unless disapproved by the Supreme Court.

- Summary of rule-making power, promulgate rules concerning:

1. protection and enforcement of constitutional rights;

2. pleading;

3. practice;

4. procedure in all courts;

5. admission to the practice of law;

6. admission to the integrated bar;

7. legal assistance to the under-privileged.

vii. Qualifications, disqualification, and selection of the president, senators, member of the
House of Representatives, justice and judges, the ombudsman, and constitutional
commissioners

viii. Immunity of the president, privileges of senators and members of the House of
Representatives.

ix. Structure of government (composition, functions, powers and privileges, separation of

powers, and system of checks and balances)

I. Legislative Department 

A. Legislative power -The power to propose, enact, amend or repeal laws. (PEAR) 

1. Scope - legislative power shall be vested in the Congress of the Philippines, which
shall consist of a Senate and a House of Representatives. 

2. Limitations: 

a. Substantive limitations— 

- Express: 

1. Bill of rights – i.e., prohibitions against bill of attainder, ex

post facto law etc. 

2. On appropriations; 

3. On taxation; 

4. On the constitutional appellate jurisdiction of the SC

(appellate jurisdiction of the SC is stated in the constitution and cannot
be PEAR’d by the legislature); 

5. No law granting a title of royalty or nobility shall be enacted. 

- Implied: 

1. Congress cannot legislate irrepealable laws; 

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 2. Congress cannot delegate legislative powers;  

3. non-encroachment on powers of other departments. 

b. Procedural limitations— 

1. Must only have 1 subject; 

2. Must be read on 3 readings on separate days; 

3. Printed copies in final form 3 days before passage of the bill. 

c. Summary of limitations

- bill of rights, non-delegation of powers, prohibition on against the

passage of irrepealable laws, no rider clause, three readings on
separate days

3. Principle of non-delegability; exceptions 

- GR: The rule is delegata potestas non potest delagari—what has been delegated
cannot be delegated.  

- A delegated power constitutes not only a right but duty to be performed by

the delegate, by the instrumentality of his own judgment, and not through the
intervening mind of another.

- Must not DIM (diminish, increase, modify) substantial rights 

- XPNs: 

1. Delegation of tariff powers to the President; 

2. Delegation of emergency powers to the President; and 

3. Delegation of legislative power the LGU. 

- Delegation of rule-making power to administrative bodies – what is

delegated is rule-making power and not legislative power. 

- Meaning: Administrative bodies fill up the details on otherwise

complete statue, or ascertain the facts necessary to bring a
“contingent” law or provision into actual operation. 

B. Chambers of Congress; composition; qualifications 

I. Senate 

a. Qualifications: 

1. Natural born citizen; 

2. At least 35 y/o on the day of election; 

3. Able to read and write; 

4. Registered voter; 

5. Resident of the Philippines for not less than 2 years immediately

preceding the day of election. 

b. Composition: 24 senators, elected at large by the qualified voters of the

PH. 

c. Term of office: 6 years, commencing at noon on the 30th day of June next
following their election. 

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 a. Limitation—no senator shall serve or cannot serve for more than 2
consecutive terms. 

b. Voluntary renunciation of office for any length of time shall not be

considered as an interruption in the continuity of his service for the full
term for which elected. 

II. House of Representatives 

a. Qualification: (Congressman or district representative) 

a. Natural born citizen; 

b. At least 25 y/o on the day of election; 

c. Able to read and write; 

d. Except party-list representatives, must be a registered voter in the

district where he/she wishes to be elected; and

e. Resident for at least 1 year of the district where he/she wishes to be

elected immediately preceding the day of election.

b. Composition: Not more than 250 members, unless otherwise provided by

law, consisting of: 

a. District representatives – elected from legislative districts

apportioned among provinces, cities, and Metropolitan Manila area. 

b. Party-list representatives – shall constitute 20 per centum of the

total number of representatives, elected through a party-list system of
registered national, regional and sectoral parties or organizations. 

c. Sectoral representatives – for 3 consecutive terms after the

ratification of the Constitution, ½ of the seats allocated to party-list
reps shall be filled, as provided by law, by selection or election from
the labor, peasant, urban poor, indigenous cultural communities,
women, youth and such other sectors as may be provided by law,
except religious sector. 

c. Term: 3 years, commencing at noon on the 30th day of June next following
the election.

d. Sec. 24, Art. VI: Doctrine of origination – All appropriation, private bills,
revenue or tariff bills, bills authorizing increase of the public debt, and bills of
local application (APRIL) shall originate exclusively in the House of
Representatives. But the Senate may propose or concur with amendments.

II.a. District representatives and questions of apportionment 

a. Qualifications of a District Representative: 

i. Natural born citizen; 

ii. At least 25 y/o on the day of election; 

iii. Able to read and write; 

iv. Registered voter in the district where he/she wishes to be elected;

and

v. Resident for at least 1 year of the district where he/she wishes to be

elected immediately preceding the day of election. (Not applicable to
party-list rep) 

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 b. Apportionment of legislative districts: 

- Basis: Apportionment shall be made in accordance with— 

i. The number of inhabitants (among provinces, cities, Metro

Manila area); and 

ii. Based on a uniform and progressive ratio. 

- Who has the power to make reapportionment of legislative districts—

Congress, through a special law. 

i. not general law; reason—if made through a general law, it

would create an inequitable situation where a new city or
province created by Congress will be denied legislative
representation for an indeterminate period of time, the
inhabitants will be deprived a part of their sovereignty. 

- Each legislative district shall comprise, as far as practicable, a

contiguous, compact and adjacent (CCA) territory. (To prevent
gerrymandering) 

- For cities – a population of at least 250k is entitled to a legislative

district; in the immediately following election; in short, a city must first
attain a population of at least 250k to have a district representative. 

- For provinces – irrespective of the number of inhabitants, a province

is entitled to at least 1 district representative,

II.b. Party-list system 

- A mechanism of proportional representation in the election of representatives in the

HOR from national, regional and sectoral parties or organizations or coalitions thereof
registered with the COMELEC. 

a. Registration; manifestation to participate in the Party-list System:

Registration is done by filing a petition, verified by its president or secretary,
stating its desire to participate in the party-list system as a national, regional
or sectoral party with the COMELEC not later than 90 days before the election.

- Those already registered, need not register anew, but if wishes to participate
in the party-list system must file with the COMELEC not later than 90 days
before the election - a manifestation of its desire to participate. 

- Atong Paglaum v. COMELEC – the SC formulated new parameters which

guide the COMELEC in determining who may participate in the subsequent
elections: 

i. Three different groups may participate in the party-list system (1)

national parties or organizations: (2) regional parties or organizations,
and (3) sectoral parties or organizations. 

ii. National and regional parties or organizations do not need to

organize along sectoral lines and do not need to represent any
“marginalized or underrepresented” sector. 

iii. Political parties can participate in party-list elections provided they: 

1. register under the party-list system and  

2. do not field candidates in legislative district elections.  

a. XPN—A political party, whether major or not, that

fields candidates in legislative district elections can

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 participate in party-list elections only through its
sectoral wing that can separately register under the
party-list system. The sectoral wing is by itself an
independent sectoral party, and is linked to a political
party through a coalition. 

iv. Sectoral parties or organizations may either be marginalized and

underrepresented" or lacking in "well-defined political constituencies.” 

- It is enough that their principal advocacy pertains to the

special interest and concerns of their sector.  

v. A majority of the members of sectoral parties or organizations that

represent the "marginalized and underrepresented" must belong to the
marginalized and underrepresented" sector they represent.  

vi. Similarly, a majority of the members of sectoral parties or

organizations that lack well-defined political constituencies, either
must belong to their respective sectors, or must have a track record of
advocacy for their respective sectors. 

vii. The nominees of national and regional parties or organizations

must be bona fide members of such parties or organizations. 

viii. National, regional and sectoral parties or organizations shall not be

disqualified if some of their nominees are disqualified, provided that
they have at least 1 nominee who remains qualified.

b. Cancellation/refusal of registration:

- the COMELEC may motu proprio or upon verified complaint on any interested

party, refuse or cancel, after due notice and hearing, the registration of any
national, regional or sector party, organization or coalition on any of the ff
grounds: 

1. It is a religious sect or denomination/org or association organized

for religious purposes; 

2. Advocates violence or unlawful means to seek its goal; 

3. Foreign party or organization; 

4. Receives support from any foreign government, foreign political

party, foundation, organization, whether directly or through its officers
or members, or indirectly through third parties, for partisan election
purposes; 

5. Violates or fails to comply with laws, rules, regulations relating to

elections—i.e., failure submit names of at least 5 nominees, failure to
submit documentary evidence that member or nominees belong to a
marginalized or underrepresented sector. 

6. Declares untruthful statements in its petition; 

7. Ceased to exist for at least 1 year; 

8. Fails to participate in the last 2 preceding elections, or fails to obtain

at least 2% of the votes cast under the party-list system in the last 2
preceding elections for the constituency in which it was registered. 

- Ang Ladlad LGBT Party v. COMELEC: 

- Moral disapproval, without more, is not a sufficient governmental

interest or ground to justify the exclusion of homosexuals from

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 participating in the party-list system. The LGBT is a sector that can be
represented in the party-list system even if it is not specifically
enumerated in the law.  

- The crucial element is not whether a sector is specifically

enumerated but whether a particular organization complies
with the requirements on the Constitution and RA 7941. 

- It is enough that their principal advocacy pertains to the special

interest and concerns of their sector. 

c. Nomination/nominees of party-list representatives: 

- Qualification of nominees: 

1. Natural born citizen; 

2. At least 25 y/o on the day of election; 

3. Registered voter; 

4. Able to read and write; 

5. Resident of the PH for at least 1 year immediately preceding

the election; 

6. A bona fide member of the party or organization which he

seeks to represent for at least 90 days immediately preceding
the day of election. 

7. For the youth sector – must be at least 25 y/o but not more
than 30 y/o on the day of the election. 

- Each registered party/organization/coalition shall submit before the

election a list of not less than 5 names, from which party-list
representatives shall be chosen in case it obtains the required number
of votes. 

- Nominee must give consent in writing and must be

nominated only in 1 list. 

- List shall not include any candidate for any elective post or a
person who lost his bid/candidacy in the immediately
preceding election. 

- No change in the list shall be allowed—except in death,

incapacity or withdrawal in writing. 

- Incumbent sectoral rep who is nominated shall not be

considered resigned. 

- Failure to submit list of names is a ground for cancellation or

registration of the party as it is a statutory requirement for the
registration. 

d. Manner of voting – every voter is entitled to 2 votes: 1 for a candidate for

member of the HOR or his legislative district representative, and 1 for a
party/org/coalition which he wants to be represented in the HOR. 

e. Term of office; rights: 

- 3 years. 

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 - Entitled to the same salary and emoluments as regular members of
the HOR. 

f. Number; Representation in the HOR: 

- Party-list representatives shall constitute 20% of the total number of

members of the HOR. 

- Procedure in the allocation for seats for party-list reps: 

1. P/O/C shall be ranked from highest to lowest based on the

number of votes they garnered during the election. 

2. Those who obtained at least 2 percentum of the total votes

cast in the party-list system shall be entitled 1 guaranteed
seat each. 

3. Those garnering sufficient number of votes in the ranking

shall be entitled to additional seats in proportion to their total
number of votes until additional seats are allocated. 

4. Each P/O/C shall be entitled to not more than 3 seats. 

g. Effect of change of affiliation: 

- Change in affiliation of political or sectoral party during his term of

office – seat shall be forfeited. 

- if nominee changes his political party or sectoral affiliation within 6

months before election – he shall not be eligible for nomination as
party-list representative under his new party or organization. 

h. Vacancy: 

- Shall be automatically filled by the next representative from the list

of nominees in the order submitted to the COMELEC. 

- Shall serve only the unexpired term. 

- If list is exhausted, P/O/C shall submit additional names. 

III. Legislative privileges, inhibitions, and disqualifications 

I. Privileges: 

1. Freedom from arrest - A Senator or Member of the HOR, in all

offenses punishable by not more than 6 years of imprisonment, shall
be privileged from arrest while the Congress is in session. 

2. Privilege of speech and debate - No member shall be questioned nor

be held liable in any other place for any speech or debate in Congress
or in any Committee thereof.

- NB: Member of Congress may be held to account for such

speech or debate by the House to which he belongs. 

II. Inhibitions: 

1. No member of Congress may personally appear as counsel before

any court of justice or before electoral tribunals, or quasi-judicial or
other administrative bodies.  

2. Neither shall he, directly or indirectly, be interested financially in

any contract with, franchise or special privilege granted by the

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 Government or any of its subdivisions, agency, or instrumentality
thereof, including GOCCs and its subsidiary, during his term. 

3. He shall not intervene in any matter before any office of the

government for his pecuniary benefit or where he may be called upon
to act on account of his office. 

III. Disqualifications: 

1. Incompatible office: 

- No senator or member of the HOR may hold any other office

or employment in the government or any subdivision, agency
or instrumentality thereof, including GOCCs or their
subsidiaries, during his term, without forfeiture of his office. 

- Forfeiture of seat is automatic. 

- Except no forfeiture if he holds the other government office

in ex officio capacity—i.e., board of regents in UP, Committee
on Education in senate etc. 

- Dante Liban v. Gordon – there is no violation on the holding

of an incompatible office as the PH red cross is not a
government agency or instrumentality 

2. Forbidden office: 

- Neither shall he be appointed to any office which may have

been created or the emoluments thereof increased during his
term for which he was elected. 

- Lasts only during the duration of his term.

IV. Quorum and voting majorities 

I. Quorum: 

- A majority of each house – shall constitute a quorum to do business.

- But a smaller number may adjourn from day to day and may
compel the attendance of absent members in such a manner
as such House may provide. 

- Basis of determining a quorum – total number of Senators who are in

the country and within the coercive jurisdiction of the Senate. 

- Adjournment – neither house during sessions of the Congress shall,

without the consent of the other, adjourn for more than 3 days, nor to
any other place than that in which the 2 houses shall be sitting. 

II. Joint sessions:  

a. Voting separately: 

1. Choosing the President – in case where there are 2 or more

candidates having equal and highest number of votes, 1 of
them will be chosen by the vote of the Majority of all the
members of the both houses, voting separately. 

2. Determination of the President’s disability – by a vote of 2/3

of both houses, voting separately. 

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 3. Confirmation of the nomination of the Vice President when
the post becomes vacant – here, the President shall nominate
from the members of senate and shall be confirmed by a
majority vote of all members of both houses, voting
separately. 

4. Declaring the existence of a state of war – vote of 2/3 of

both Houses. 

5. Proposing constitutional amendments – ¾ vote of all its

members. 

b. Voting jointly 

1. To revoke or extend the proclamation suspending the

privilege of the writ of habeas corpus; or 

2. Placing the Philippines under martial law. 

V. Discipline of members  

- House may punish its members for disorderly behavior; 

- With the concurrence of 2/3 of all its members, suspend for not more than
60 days, or expel a member. 

- Osmeña v. Pendatun – determination of acts which constitute disorderly

behavior is within the full discretion of the House concerned, and the courts
will not review such determination as it is a political question. 

VI. Electoral tribunals and the Commission on Appointments 

1. Electoral Tribunals; Composition and Nature 

a. Electoral tribunals: HRET and SET. 

- It is a non-partisan court; Must be independent of Congress and

devoid of partisan influence and consideration. 

b. Composition: 

1. 3 SC justices, designated by the CJ; the Senior Justice shall

be the Chairman; and 

2. 6 members of the House concerned – chosen on the basis of

proportional representation from the political parties under the
party-list system represented therein. 

c. Rights: 

a. Enjoys security of tenure – meaning, can only be removed

except for just cause such as expiration of term, death,
resignation from political party, formal affiliation with another
political party or removal for other valid causes. 

i. Primary recourse in an issue regarding the nominees

to the HRET rests on the HOR and not in the Court.
Only if the HOR fails to comply with the directive of the
Constitution on proportional representation of political
parties in the HRET and COA can the party-list
representatives seek recourse from the Court through
judicial review. 

2. Powers of the Electoral Tribunals 

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 - The HRET and SET shall be the sole judge of all contests relating to the:
(ERQ)

1. Election, 

2. Returns, and 

3. Qualifications of their respective members. 

- “members” meaning already proclaimed, took an oath and

assumed office (POA). 

- Once the winning candidate has already been proclaimed, took an

oath and has assumed office (POA), the COMELEC is divested of
jurisdiction. The jurisdiction is transferred with the HRET or the SET. 

- Decisions of the HRET/SET may be reviewed by the SC – only upon

showing of grave abuse of discretion in a petition for certiorari under
Rule 45. 

3. Commission on Appointments; Composition and Nature 

1. Senate president, as ex officio Chairman, 

- Chairman shall only vote in case of a tie.

2. 12 senators and 12 members of the HOR. 

- Elected by each House through proportional representation

based on the political parties registered under the party-list
system representation. Any issue regarding the composition of
the COA – recourse must first be made in the appropriate
House (following the doctrine of primary jurisdiction) before
recourse is made to the Courts. 

4. Powers of the CoA 

- The Commission shall act on all appointments submitted to it within

30 session days of Congress from their submission. 

- Must rule by a majority vote of its members.

- Meeting; when conducted—meets only while Congress is in session,

at the call of the Chairman or by a majority of all its members.

VII. Powers of Congress 

I. Power of legislative investigation/inquiry: 

1. Legislative inquiry (inquiry in aid of legislation) – Sec. 21, Art. VI:

The Senate of the HOR or any of its respective committees may
conduct inquiries in aid of legislation in accordance with its duly
published rules of procedure. The rights of persons appearing in or
affected by such inquiries shall be respected. 

- This power of congress to conduct inquiries in aid of

legislation encompasses everything that concerns the
administration of existing laws, as well as proposed or possibly
needed statutes. 

- Appearance is mandatory – XPN: Department heads may

validly claim executive privilege. 

- Limitations: 

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 1. In aid of legislation – there must be an intended
legislation involved in the conduct of such legislative
inquiry; the filing of a criminal charge or an
administrative case complaint does not automatically
bar the conduct of a legislative inquiry. (Standard
Chartered v. Senate) 

2. In accordance with duly published rules of

procedure – Neri v. Senate Committee, every Senate
must enact a different set of rules of procedure in
inquiries in aid of legislation as they may deem fit and
publish it. Otherwise, if no rules of procedure are
published, the inquiries in aid of legislation are
procedurally infirm. 

3. Rights of persons appearing in or affected by the

inquiry shall be respected – legislative inquiries do not
violate the individual’s right against self-incrimination
because they are not being indicted as an accused in a
criminal proceeding; they are merely being summoned
as witnesses, as resource persons. Likewise, they will
not be subject to any penalty by their testimony. 

- Power to punish in contempt – it comes under all the powers

necessary and proper for its effective discharge; includes
power of imprisonment for the duration of the session, subject
to due process and equal protection. 

- in Balag v. Senate, the imprisonment is until the

inquiry is terminated. The inquiry is terminated: 1.
Upon approval/disapproval of the committee or inquiry
report; or 2. Upon final adjournment of the congress

2. Oversight function / Question hour: 

- Done to obtain information in pursuit of their oversight

functions. The heads of departments may—upon their own
initiative, with the consent of the President, or upon the
request of either House—appear before and be heard by such
House on any matter pertaining to their departments. 

3. Difference between legislative inquiry/inquiry in aid of legislation

and question hour/oversight functions:

- In inquiry in aid of legislation, the aim is to elicit information

that may be used for legislation, while in question hour, the
aim is to elicit information in pursuit of Congress’ oversight
function.

- In inquiry in aid of legislation, the appearance is mandatory

with the exceptions of department heads upon valid claim of
executive privilege, while in question hour, the appearance
requires consent of the President. The ff are those who may
validly refuse appearance: 1. SC due to separation of powers;
2. President; and 3. Executive Secretary acting for the
President.

II. Non-legislative 

a. Informing function 

b. Power of impeachment 

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a. Who may be impeached: 

1. President; 

2. Vice President; 

3. Members of the SC; 

4. Ombudsman; and 

5.Members of the Constitutional Commissions.

b. Grounds; conviction of the ff: (GBT-COB) 

1. Culpable violation of the Constitution; 

2. Treason; 

3. Bribery; 

4. Graft and corruption; 

5. Other high crimes; and 

6. Betrayal of public trust. 

c. Who initiates impeachment cases: The HOR has the

exclusive power to initiate all cases of impeachment. 

d. Frequency: No impeachment proceedings shall be initiated

against the same official more than once within a period of 1
year. 

e. Process:  

1. Filing of a verified complaint for impeachment by:  

a. Any member of the HOR; or  

b. any citizen upon a resolution or

endorsement of any member of the HOR. 

2. The verified complaint shall be included in the Order

of Business within 10 session days and referred to the
proper community within 3 session days thereafter. 

3. The Committee, after hearing and by a majority

vote of all its members, shall submit its report with its
corresponding resolution to the HOR within 60 session
days from such referral. 

4. The resolution of the Committee shall be calendared

for resolution by the HOR within 10 session days from
receipt. 

5. A vote of at least 1/3 of all the members of the HOR

shall be necessary to either:  

a. Affirm a favorable resolution with the

Articles of Impeachment of the Committee or  

b. Override the resolution. 

c. If the verified complaint or resolution is filed

by at least 1/3 of all the members of the HOR,

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 the same shall constitute the Articles of
Impeachment. And the trial by the senate shall
proceed. 

6. The Senate shall try and decide the case of

impeachment. When the President is on trial, the CJ of
the SC shall preside, but shall not vote. 

7. To be convicted, a vote of 2/3 of all members of

Senate is required.

8. Judgment in cases of impeachment shall not extend

further than removal from office and disqualification to
hold any office under the Republic of the Philippines.
But the party convicted shall nevertheless be liable and
subject to prosecution, trial and punishment, according
to law. 

II. Executive Department

I. President and Vice President: 

a. Qualifications: 

1. Natural born citizen; 

2. At least 40 y/o on the day of the elections; 

3. Registered voter; 

4. Able to read and write; and 

5. Resident of the PH for at least 10 years immediately preceding the election. 

b. Re-Election:

President - Not eligible for re-election.

Vice President - Allowed; limited only to 2 successive terms. Cannot serve for
more than 2 successive terms.

c. Term: 6 years, 

- NB: No person who has succeeded as President and served for more than 4
years shall be qualified for election to the same office. 

d. PET: SC sitting en banc – shall be the sole judge for all contests relating to election,
returns and qualifications of the President and Vice President. 

e. In case of tie or 2 or more persons shall have equal and highest number of votes –
Congress shall, in a joint session, by a majority vote of all Members voting separately,
shall choose. 

f. Role of Congress:  

i. Acts as canvassing board for all returns for President and Vice President;
and 

ii. Has the authority to proclaim the winning candidates for the position of
President and Vice President. (Not with the COMELEC as it is repugnant to the
express provision of the Constitution) 

II. Qualifications similar to the President, Vice-President, Senators, and Congressmen:

1. Natural-born citizen;

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 2. Able to read and write;

3. Residency:

i. President/Vice-President – 10 years

ii. Senators – 2 years

iii. Congressmen – 1 year

4. Age

i. President/Vice-President – 40 years old

ii. Senators – 35 years old

ii, Congressmen – 25 years old

III. Privileges 

1. Presidential immunity 

- Privilege is enjoyed only during the tenure of the President. 

- President may not be prevented from instituting suit

- After tenure, the he cannot invoke immunity from suit for civil damages
arising out of acts done by him while he was President which were not
performed in the exercise of official duties. 

2. Presidential privilege 

- The right of the President and high-level executive officials to withhold

information from Congress, the courts and the public. 

- In case of high-level executive officials, blanket assertion of the

privilege is not valid. It must be asserted, claimed, invoked, and
cannot be implied. Reasons for non-disclosure of information must be
given therefore in order for the assertion of privilege to be valid.

- “closed-door” meetings – recognized as confidential and cannot be pried

open by co-equal branches of the Government. 

- However, the privilege being an exception to the obligation to disclose

information to Congress, the necessity of withholding the information must be
of such degree as to outweigh the public interest in enforcing that particular
obligation in a particular case—limited only to the President and to the
Executive Secretary, by order of the President, the power to invoke the
privilege. 

IV. Prohibitions/Inhibitions 

1. Shall not receive any other emoluments from the government or any other source.

2. Shall not hold any other office or employment, unless otherwise provided in the
Constitution. 

a. XPNs: VP allowed by the Constitution to be appointed as a member of the

Cabinet without need of confirmation by the CoA; and the Secretary of Justice
as an ex officio member of the JBC. 

b. XPN to XPN: posts occupied by executive officials in ex officio capacity

without additional compensation is allowed.  

Page 23 of 151
 i. The ex officio position, being in legal contemplation a part of the
principal office and does not constitute “any other office”. 

3. Shall not directly or indirectly, practice any other profession, participate in any
business, or be financially interested in any contract with, or in any franchise or
special privilege granted by the government or any of its subdivision xxx. 

4. Must strictly avoid conflict of interest in the conduct of their office.

5. Anti-nepotism: May not appoint spouse or relatives by consanguinity or affinity

within the 4th civil degree as: 

a. Members of the Constitutional Commission, 

b. Office of the Ombudsman, 

c. Secretaries, undersecretaries, chairmen, heads of bureaus or offices,

including GOCCs and their subsidiaries.

V. Powers of the President 

1. General executive and administrative powers 

- Faithful execution clause - the power to enforce and administer the laws, 

- Power to execute, administer and carry out laws into practical operation.

- President cannot determine the validity of a law since it is a question

addressed to the judiciary. 

- Thus, unless and until a law is declared unconstitutional, the P has

the duty to execute it regardless of his doubts on its validity. 

2. Power of appointment – Sec. 16, Art VII: The President shall nominate and, with
the consent of the Commission on Appointments, appoint the heads of the executive
departments, ambassadors, other public ministers and consuls, or officers of the
armed forces from the rank of colonel to naval captain, and other officers whose
appointment is vested in him in the Constitution. He shall also appoint all other
officers of the Government whose appointments are not otherwise provided by law,
and those whom he may be authorized by law to appoint. The Congress, may by law,
vest the appointment of other officers lower in rank to the President alone, in the
courts, or in the heads of departments, agencies, commissions or boards.

a. Officials to be appointed by the President: 

i. Heads of executive departments (does not include appointment of

heads of Customs, CHR, because not an executive department and not
mentioned in the Constitution) 

ii. Ambassadors or other public ministers and consuls. 

iii. Officers of the AFP from the rank of colonel or naval captain. 

iv. Those other officers whose appointment is vested in him. (Members

of the CSC, COMELEC, COA, and the 4 regular members of the SC)

v. other officers he may appoint: 1. All other officers of the Gov’t

whose appointments are not otherwise provided by law; 2. Those
whom he may be authorized by law to appoint

b. Steps in appointing process: (NCIA) 

a. Nomination by the President; 

Page 24 of 151
 b. Confirmation by the CoA; (does not include appointment of heads of
Customs, CHR, because not an executive department and not
mentioned in the Constitution) 

c. Issuance of the commission; and 

d. Acceptance by the appointee.  

i. Pending acceptance, appointment may still be validly

withdrawn.

ii. Appointment to a public office cannot be forced upon a

citizen, except for purposes of defense of state (violative of
constitutional right against involuntary servitude) 

c. Discretion of the President 

- Discretion includes the determination of the nature of the

appointment whether temporary or permanent. 

- If permanent – appointee must possess the minimum qualifications

required of the position, including the Civil service eligibility prescribed
by law for the position. 

d. Limitations on the exercise/power 

1. President may not appoint his spouse or any relative by

consanguinity or affinity within the 4th civil degree as Members of the
Constitutional Commissions, as Ombudsman, or as Secretaries,
Undersecretaries, or Chairmen or heads of agencies, bureaus or
offices, including GOCCs (Anti nepotism). 

2. Appointments extended or made by an Acting President shall remain

effective unless revoked by the elected President within 90 days from
his assumption of office.

3. Midnight appointments - 2 months immediately before the next

preceding elections and up to the end of his term, a President or
Acting President shall not make appointments—except temporary
appointments to executive positions when continued vacancies therein
will prejudice public service or endanger public safety. 

a. Prohibits only the President from making appointments—

local executive officials are not prohibited from making
appointments during the last days of their tenure. 

b. Prohibition does not apply to the appointment of members

of the SC. 

e. Types of appointment 

i. Permanent or temporary: 

a. Permanent appointment – extended to persons possessing

the requisite eligibility and are thus protected by the
Constitutional guarantee of security of tenure. 

b. Temporary appointment – given to persons: 

i. not possessing the required eligibility;  

ii. revocable at will and without the necessity of just

cause or valid investigation;  

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 iii. made on the understanding that the appointing
power has not yet decided on a permanent appointee
and  

iv. that the temporary appointee may be replaced at

any time when the permanent choice has been made. 

- Not subject to confirmation of the CoA –

Note: if given confirmation by the CoA
erroneously, does not make the temporary
appointee a permanent one. 

- If designated only, understood as only

holding the office in a temporary capacity. 

ii. Regular or ad interim: 

a. Regular appointment – one made by the President while

Congress is in session, takes effect only after confirmation by
the CoA, and once approved, continues until the end of the
term of the appointee. 

b. Ad interim appointment – one made by the President while

the Congress is NOT in session; takes effect immediately; but
ceases to be valid when disapproved by the CoA or upon the
next adjournment of Congress (by-passed). 

- By-passed – one whose appointment was not acted

upon the merits by the CoA at the close of the session
of Congress. May be re-appointed or renewed. 

- Ad interim appointment is permanent appointment –

because it takes effect immediately and can no longer
be withdrawn by the P once the appointee has qualified
into office. The fact that it is subject to confirmation by
the CoA does not alter its permanent character. 

- Can be terminated for 2 causes: 

1. Disapproval of appointment by the CoA (if

disapproved, cannot be re-appointed or term
cannot be extended); or 

2. By adjournment of Congress, without the

CoA acting on the appointment (By-passed;
can be re-appointed or term can be extended)

3. Power of control and supervision – Sec. 17, Art. VII: The President shall have
control of all executive departments,  bureaus, and offices xxx. 

a. Doctrine of qualified political agency AKA alter ego principle 

- All executives and administrative organizations are adjuncts of the Executive

Department, the heads of the executive departments are assistants and
agents of the Chief executive, the multifarious executive administrative
functions of the Chief Executive are performed by and through the department
heads and the acts of the Secretaries of such departments, performed and
promulgated in the regular course of business are, presumptively acts of the
Chief Executive. 

- all the actions performed and promulgated by the heads of executive

departments in the regular course of business are presumed to be acts
of the Chief Executive, unless disapproved or reprobated by the latter. 

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 - Control over the act, but not over the person.

- XPN: Cases where the Constitution or law requires the Chief Executive to act
in person or the exigencies of the situation demand that he acts personally,
e.g., in Resident Marine Mammals v. Reyes, Sec. 2, Art. XII: The President
may enter into agreements with foreign-owned corporations involving either
technical or financial assistance for large-scale exploration, development, and
utilization of minerals, petroleum, and other mineral oils according to the
general terms and conditions provided by law, based on real contributions to
the economic growth and general welfare of the country. In such agreements,
the State shall promote the development and use of local scientific and
technical resources. The President shall notify the Congress of every contract
entered into in accordance with this provision, within thirty days from its
execution.”

4. Emergency powers 

a. Emergency power - Sec.23 (2), Art VI: In times of war or other national
emergency, the Congress may, by law, authorize the President, for a limited
period and subject to restrictions as it may prescribe, to exercise powers
necessary and proper to carry out a declared national policy. Unless sooner
withdrawn by the resolution of the Congress, such powers shall cease upon
the next adjournment thereof. 

5. Commander-in-chief powers – Sec. 18, Art VI: The President shall be the
Commander-in-Chief of the all armed forces of the Philippines and whenever it
becomes necessary, he may call out such armed forces to prevent or suppress lawless
violence, invasion or rebellion. In cases of invasion or rebellion, when public safety
requires it, President may, for a period of not more than 60 days, suspend the
privilege of the writ of habeas corpus or place the Philippines or any part thereof
under martial law. 

- Commander-in-Chief clause/power of the President. Granted to him and no

one else, as the President is the sole repository of executive power. 

- Different from executive privilege or executive control 

- The ability of the P to require a military official to first secure prior consent
from the former before appearing in Congress. 

- NB: Command responsibility – the doctrine pertains to the responsibility of

the commanders for crimes committed by subordinate members of the armed
forces or other persons subject to their control in international wars or
domestic conflict.

a. Calling out powers - “x x x and whenever it becomes necessary, he may call

out such armed forces to prevent or suppress lawless violence, invasion or
rebellion. x x x” 

- Exclusively vested with the President

- Here, President may summon the armed forces to aid in suppressing

lawless violence, invasion or rebellion; this involves ordinary police
power. 

- President has the discretion to declare a state of rebellion from

his/her power as Chief Executive and Commander-in-Chief, and the
court may only look into the sufficiency of the factual basis for the
exercise of such power. 

- thus, it is subject to judicial review upon showing of GADALEJ

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 b. Declaration of martial law and suspension of the privilege of the writ of
habeas corpus; extension 

i. Suspension of the privilege of writ of habeas corpus: 

a. Grounds: When public safety requires it— 

i. Invasion; or 

ii. Rebellion. 

b. Duration: Not exceeding 60 days. 

c. How revoked or extended: By Congress, by a vote of

majority of all its members voting jointly. 

d. Duty of the President: To inform Congress of such action of

suspending the privilege of the writ of habeas corpus within 48
hrs.—personally or in writing. 

e. Application of suspension: Suspension of the writ of habeas

corpus applies only to persons judicially charged for rebellion
or offenses inherent in or directly connected with invasion. 

f. Review if the SC: The political question of the proclamation

of martial law or the suspension of the privilege of the writ of
habeas corpus must first go through the hands of Congress.
Thereafter, the SC may review the sufficiency of the factual
basis of the suspension of the writ of habeas corpus or the
proclamation of martial law. SC must promulgate its decision
within 30 days from its filing. 

g. NB: Suspension of the privilege does not impair the right to

bail. 

ii. Declaration of martial law: 

a. Grounds: When public safety requires it— 

1. Invasion; or 

2. Rebellion. 

b. Duration: Not exceeding 60 days. 

c. How revoked/extended: By Congress, by a majority vote of

all its members voting jointly. 

d. Review if the SC: The political question of the proclamation

of martial law or the suspension of the privilege of the writ of
habeas corpus must first go through the hands of Congress.
Thereafter, the SC may review the sufficiency of the factual
basis of the suspension of the writ of habeas corpus or the
proclamation or extension of martial law. SC must promulgate
its decision within 30 days from its filing.

6. Executive clemency – Sec. 19, Art. VII: Except in cases of impeachment, or as

otherwise provided in the Constitution, the President may grant reprieves,
commutations, and pardons, and remit fines and forfeitures, after conviction by final
judgment. He shall also have the power to grant amnesty with the concurrence of a
majority of all the members of Congress. 

a. Nature and limitations 

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 - Discretionary power by the President; 

- May not be controlled by the legislature nor reversed by the courts,

unless there is a constitutional violation. 

- Limitations: 

1. Granted only after conviction by final judgment. 

2. Cannot be granted in cases of impeachment. 

3. Cannot be granted in cases of violation of election laws

without the favorable recommendation of the COMELEC. 

4. Cannot be granted in cases of legislative contempt (violative

of separation of powers) or civil contempt (as the State is
without interest to the same).

5. Does not absolve the convict of his/her civil liability. 

6. Does not restore public offices forfeited.

b. Forms of executive clemency – reprieves, commutation, pardon, remit fines

and forfeitures, amnesty

a. Pardon – An act of grace which exempts the individual on whom it is

bestowed from the punishment that the law inflicts for the crime he
has committed. 

- Acceptance of the pardon by the pardonee is necessary.

- Kinds: 

a. Plenary or partial 

b. Absolute or conditional: 

- Conditional – in the nature of a contract

between the Chief Executive and the convicted
criminal; by the consent of the person to be
granted pardon to the terms stipulated in the
contract, the latter placed himself under the
supervision of the Chief Executive or
his delegate who is duty bound to see to it that
the pardonee complies with the conditions of
the pardon. 

b. Amnesty – act of grace, with the concurrence of the majority of the

members of Congress, usually extended to groups of persons who
committed political offenses, which puts the offense into oblivion;  

- Granted to a group of persons or person who has committed

political offenses; 

- stated otherwise, a person granted amnesty stands before

the law as if he had committed no offense at all. 

- Here, the criminal liability is totally extinguished, hence, the

penalty and all its effects are also extinguished. 

c. Commutation – reduction or mitigation of penalty. 

d. Reprieve – postponement of a sentence or stay of execution. 

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 e. Parole – release from imprisonment, but without full restoration of
liberty, as a parolee is still in custody of the court although not in
confinement.

7. Diplomatic power – Sec. 21, Article VII: No treaty or international agreement shall
be valid and effective unless concurred in by at least 2/3 of the members of Senate. 

- The power to ratify treaty: 2/3 vote of all the members of the Senate.
Senate only concurs to the ratification or withhold its consent.

- Executive agreements are equally binding as a treaty, thus it does not

require Senate concurrence; its validity and effectivity are not affected by lack
of Senate concurrence.

- EDCA is not a treaty but only an executive agreement; it only seeks

to implement past treaties

- Under International Law, treaties and executive agreements have no

difference.

- Commissioner of Customs v. Eastern Sea Trading: SC distinguished treaties

from executive agreements

- Treaties are international agreements which involve political issues or

changes o national policy and those involving international
arrangements of permanent character, while executive agreements are
international agreements involving adjustments of details carrying out
well established national policies and traditions involving arrangement
of a more or less temporary nature.

- Treaties require ratification of the Senate by 2/3 vote of all its

members, while executive agreements become binding through
executive actions.

8. Powers relative to appropriation measures – Sec. 22, Art. VII: The President shall
submit to Congress, within 30 days from the opening of every regular session, as the
basis of the GAA, a budget of expenditures and sources of financing, including receipts
from existing and proposed revenue measures. 

9. Delegated powers  

i. Power to legislate in times of war or national emergency (Emergency power)

- Sec. 23 (2), Art. VI: In times of war or other national emergency, the
Congress may, by law, authorize the President, for a limited period and
subject to restrictions as it may prescribe, to exercise powers necessary and
proper to carry out a declared national policy. Unless sooner withdrawn by the
resolution of the Congress, such powers shall cease upon the next
adjournment thereof. 

ii. Power to fix tariff rates, import and export quotas, tonnage and wharfage
dues, and other duties or imports (Tariff power) – Sec. 28 (2), Art. VI: The
Congress may, by law, authorize the President to fix within specified limits,
and subject to such limitations and restrictions as it may impose, tariff rates,
import and export quotas, tonnage and wharfage dues, and other duties or
imposts within the framework of the national development program of the
Government.

11. Veto powers – Sec. 27, Art. VI 

- The President may veto any particular item in an appropriation, revenue or

tariff bill. 

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 - The veto shall not affect the other item/s to which the President does not
object.

- Only item veto is allowed – an allocation of a specified singular

amount for a specified singular purpose. 

- No pocket veto and no partial veto – Sc held declared as

unconstitutional the veto made by President Aquino of appropriations
intended for the adjustment of the pension of retired justices as it is
not an item veto. The President cannot veto a part of an item while
approving the remaining portion of the item. 

VI. Rules of succession 

a. Vacancy at the beginning of term 

1. Death or disability of President – Vice President shall become President.

2. If President-elect fails to qualify – Vice President-elect shall act as

President, until the President-elect shall have qualified;

3. If President shall not have been chosen – Vice President-elect shall act as
President, until a President have been chosen and qualified;

4. If no President and Vice President was chosen nor qualified, or both died
and become permanently disabled – Senate President shall act as President
until a President or Vice President shall have been chosen and qualified.

- If Senate President becomes disabled – Speaker of the House shall

act as President or Vice President until the latter has been chosen and
qualified.

b. Vacancy during the term:

1. Death, permanent disability, removal, resignation (DDRR) of the President –

Vice President shall become President

2. Death, permanent disability, removal, resignation (DDRR) of the President

or Vice President – Senate President shall act as President until a President
and Vice President shall have been elected and qualified.

- if Senate President becomes disabled – Speaker of the House shall

act as President or Vice President until the latter has been chosen and
qualified.

c. Temporary disability

1. Vice President shall be acting President:

i. when the President himself transmits to the Senate and the Speaker
of the House his written declaration that he is unable to discharge the
powers and functions, and until he transmits to them a declaration the
contrary;

ii. when majority of the members of the Cabinet transmits to the

Senate President and the Speaker of the House their written
declaration that the President is unable to discharge the duties and
powers of his office – here, Congress shall determine by a 2/3 vote of
both Houses in a joint session, voting separately, whether the P is
unable to discharge his duties

d. Vacancy in the Vice President

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 - President shall nominate a Vice President from the members of the both
Houses of the Congress;

- Confirmed by a majority vote of all Members of both houses in Congress in a

joint session, voting separately.

III. Judicial Department

I. Judicial power 

- Definition:  

1. Duty of courts of justice to settle actual controversies involving rights which

are legally demandable and enforceable; and 

2. To determine whether or not there has been grave abuse of discretion

amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the government.

- the expanded power of judicial review; it has adversely affected the political
question doctrine 

- Where vested: In the SC and in such lower courts as may be established by law.
(Article 8, Section 1) 

- Jurisdiction: The power to hear and decide a case. 

- Congress shall have the power to define, prescribe and apportion the jurisdiction of
various courts;

- however, it may not deprive nor increase (without the advice and consent of
the SC) the SC of its jurisdiction over cases enumerated in Article 8, Section 5
of the Constitution, which are the ff:

1. Original Jurisdiction over cases affecting: (APMC-CPMQH) 

1. ambassadors, other public ministers, consuls, and 

2. petitions for certiorari, prohibition, mandamus, quo

warranto, habeas corpus. 

2. Appellate Jurisdiction – review, revise, reverse, modify or affirm on

appeal or certiorari, final judgments and orders of lower courts in: 

1. Constitutionality or validity of any treaty, international or

executive agreement, law, PD, proclamation,
order, instruction, ordinance or regulation. (heard en banc) 

2. Legality of any tax, impost, assessment or toll, or

any penalty imposed in relation thereto. 

3. Jurisdiction of any lower court is in issue. 

4. Criminal cases where the penalty imposed is reclusion

perpetua or higher. 

5. Where error or question of law is involved. 

3. Assignment temporarily judges of lower courts to other stations as

public interest may require. Temporary assignment shall not exceed 6
months without the consent of the judge. 

4. Order a change of venue or place of trial to avoid miscarriage of

justice. 

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 5. Promulgate rules concerning the ff: 

1. protection and enforcement of constitutional rights, 

2. pleading, practice and procedure in all courts, 

3. admission to the practice of law, integrated bar and the

legal assistance to the underprivileged xxx 

6. appointment of all officials and employees of the judiciary

in accordance with the Civil Service Law.

II. Judicial independence and autonomy - the ff are Constitutional safeguards to insure the
independence of the Judiciary:

1. the SC is a Constitutional body and therefore, cannot be abolished by the

legislature. 

2. Members of the SC may be removed through impeachment. (CJ Sereno removed

through quo warranto) 

3. The SC may not be deprived of its minimum OJ and AJ; the AJ of the SC may not be
increased without its advise and concurrence. 

4. The SC has administrative supervision over all inferior courts and personnel. 5) The
SC has exclusive power to discipline judges or justices of inferior courts. 6) Members
of the judiciary have Security of tenure. 

7. Members of the Judiciary may not be designated to any agency performing quasi-
judicial or administrative functions. 

8. Salaries of Judges may not be reduced; the Judiciary shall enjoy fiscal autonomy. 

- Fiscal autonomy guarantees full flexibility to allocate and utilize their

resources with the wisdom and dispatch that their needs require. 

- Under this, the CJ and the Court en Banc determine and decide
who/what/where/when/how the privileges and benefits may extend to justices,
judges, court officials and court personnel within the parameters of the Court’s
granted power. 

9. The SC alone, may initiate and promulgate the Rules of Court. 

10. The SC alone, may order temporary detail of judges. 

11. The SC can appoint all officials and employees of the Judiciary.

III. Appointments to the Judiciary

I. Qualifications of members

a) SC: 

1. Natural born citizen; 

2. At least 40 y/o;  

3. Engaged in the practice of law for at least 15 years; and 

4. Of proven competence, integrity, probity and independence. (CIPI) 

b) Lower collegiate courts: Congress may prescribe other qualifications

1. Natural born citizen; 

2. Member of the PH bar; and 

Page 33 of 151
 3. Of proven competence, integrity, probity and independence. (CIPI) 

c) Lower courts: Congress may prescribe other qualifications 

1. Citizen of the PH; 

2. Member of the PH bar; and 

3. Of proven competence, integrity, probity and independence. (CIPI) 

d) Procedure for appointment: 

a. Appointed by the President from a list of at least 3 nominees

prepared by the JBC for every vacancy; appointment shall need no
confirmation. 

i. The date of the commission has been signed by the

President (date appearing on the face of the document) is the
date of appointment. 

b. Any vacancy in the SC shall be filled within 90 days from the

occurrence.  c. For lower courts, the P shall issue the appointment
within 90 days from the submission of the JBC of such list. 

i. Prohibition on midnight appointments does not apply

to appointments in the SC. 

-Midnight appointments – 2 months

immediately preceding the next presidential elections
and up to the end of his term, President or acting
President shall not make appointments except
temporary appointments when continued vacancies
therein will prejudice public service or endanger public
safety.

II. Judicial and Bar Council 

a. Composition; 7 members; appointment with consent of COA 

1) Ex-officio members: 

1. CJ, as chairman; 

2. SOJ; and 

3. Representative of Congress – internal matter/arrangement

on whether a Senator or a Congressman. 

2) Regular members – appointed by the President; 4 year-term; with

consent of the CoA; receive emoluments as determined by the SC. 

1. Representative of the IBP; 

2. Professor of law; 

3. Retired justice of the SC; and 

4. Representative of the private sector. 

b. Powers 

- Principal function: Recommendatory powers - recommending

appointees to the Judiciary. 

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 - However, may exercise functions and duties as the SC may assign to
it.

- Unanimous vote of the JBC members is required in order to be

included in the shortlist of nominees to be submitted to the President
whenever a question of integrity is raised against him. 

III. The Supreme Court 

1. Composition 

1. Chief Justice and 14 associate Justices. 

- May sit en Banc or in divisions of 3/5/7 members. 

- Any vacancy shall be filled within 90 days from occurrence. 

2. en banc cases—decided by a majority of the members who actually

took part in the deliberation and voted thereon: 

i. Cases involving the constitutionality of a treaty, international

or executive agreement, or law; 

ii. Those involving the constitutionality, application or

operation of Presidential Decrees, proclamations, orders,
instructions, ordinances, and other regulations.

iii. All other cases which under the ROC, are to be decided en
banc. 

3. Division cases: 

- Other cases or matters may be heard in division; 

- Decided or resolved with the concurrence of a majority of the

members who actually took part in the deliberations and voted
thereon. 

- BUT in no case without the concurrence of at least 3

members. 

- When the required number of votes is not obtained—case shall be

decided en banc. 

- No doctrine or principle of law laid down by the SC in a decision

rendered en banc or in division may be modified or reversed—except
by the court sitting en banc. 

2. Powers and functions 

1. Original Jurisdiction over cases affecting: (APMC-CPMQH) 

1. ambassadors, other public ministers, consuls, and 

2. petitions for certiorari, prohibition, mandamus, quo

warranto, habeas corpus. 

2. Appellate Jurisdiction – review, revise, reverse, modify or affirm on

appeal or certiorari, final judgments and orders of lower courts in: 

1. Constitutionality or validity of any treaty, international or

executive agreement, law, PD, proclamation, order,
instruction, ordinance or regulation. (heard en banc) 

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 2. Legality of any tax, impost, assessment or toll, or any
penalty imposed in relation thereto. 

3. Jurisdiction of any lower court is in issue. 

4. Criminal cases where the penalty imposed is reclusion

perpetua or higher. 5. Where error or question of law is
involved. 

3. Assignment temporarily judges of lower courts to other stations as

public interest may require. Temporary assignment shall not exceed 6
months without the consent of the judge. 

4. Order a change of venue or place of trial to avoid miscarriage of

justice.

5. Promulgate rules concerning the ff: 

1. protection and enforcement of constitutional rights, 

2. pleading, practice and procedure in all courts, 

3. admission to the practice of law, integrated bar and the

legal assistance to the underprivileged.

6. Appointment of all officials and employees of the judiciary in

accordance with the Civil Service Law. 

7. Innate authority of the en banc to modify or reverse a doctrine or

principle of law laid down un any decision rendered en banc or in
division.

IV. Constitutional Commissions

I. Composition and qualifications of members. 

A. Civil Service Commission (CSC) 

a. Composition: 1 chairman & 2 commissioners 

b. Qualifications of members:  

1. Natural born citizen; 

2. At least 35 y/o at the time of appointment; 

3. With proven capacity for public administration; 

4. Must not have been a candidate for any elective office in the
election immediately preceding their appointment; 

5. Cannot be re-appointed even in a temporary or acting

capacity.  

B. Commission on Audit (COA) 

a. Composition:1 chairman and 2 commissioners. 

b. Qualifications of members: 

1. Natural born citizen; 

2. At least 35 y/o at the time of appointment; 

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 3. CPA with no less than or at least 10 years of auditing
experience OR a member of the Philippine bar with at least 10
years of experience. 

4. Must not have been a candidate in the election immediately

preceding the appointment. 

5. NB: At no time shall all members belong to the same

profession.

6. Cannot be reappointed.  

C. Commission on Elections (COMELEC): 

a. Composition: 1 chairman and 6 commissioners. 

b. Qualifications of members: 

1. Natural born citizen; 

2. At least 35 y/o at the time of appointment; 

3. Holder of a college degree; 

4. Must not have been a candidate in the immediately

preceding election; 

5. Majority, including the Chairman, must be members of the

Bar who has been in the practice of law for at least 10 years. 

6. NB: No member shall be appointed or designated in a

temporary or acting capacity.

II. Disqualifications

1. No candidate who lost in the immediately preceding election shall, within 1

year after such elections, be appointed to any office in the Government or any
GOCC or in any of their subsidiaries. 

2. No elective official shall be eligible for appointment or designation in any

capacity to any public office or position during his tenure. 

3. Unless otherwise allowed by law or by the primary functions of his position,

no appointive official shall hold any office or employment in the Government or
any subdivision, agency, or instrumentality thereof including GOCCs and their
subsidiaries. 

4. No elective or appointive public officer in an ex-officio capacity shall receive

additional, double or indirect compensation, unless specifically authorized by
law nor accept without the consent of Congress, any present, emoluments,
office or title of any kind from any foreign government. Pensions and gratuities
shall not be considered as additional, double or indirect compensation.

III. Inhibitions/Disqualifications

1. Shall not, during tenure, hold any other office or employment.

2. Shall not engage in the practice of any profession.

3. Shall not engage in the active management or control of any business which
in any way may be affected by the functions of his office.

4. Shall not be financially interested, directly or indirectly, in any contract

with, or in any franchise or privilege granted by the Government, any of its

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 subdivisions, agencies or instrumentalities, including GOCCs or their
subsidiaries.

V. Office of the Ombudsman

I. Composition: 

- 1 overall Deputy and 

- At least 1 deputy for Luzon, Visayas, and Mindanao. 

II. Qualifications; Ombudsman and his Deputies: 

a. At least 40 y/o; 

b. Natural born citizen; 

c. Of recognized probity and independence; 

d. Members of the Philippine Bar; 

e. A judge or engaged in the practice of law for at least 10 years or more;

f. Must not have been a candidate for any elective office in the immediate
preceding election.

III. Disqualifications/Inhibitions: 

a. Shall not hold any other office or employment. 

b. Shall not engage in the practice of any profession. 

c. Shall not engage in the active management or control of any business which
in any way may be affected by the functions of his office.

IV. Powers (IPIs)

i. Investigatory;

ii. Prosecutory;

iii. Impose sanctions

- NB: Ombudsman may impose preventive suspension:

1. Charge against the officer or employee involves dishonesty,

oppression, grave misconduct, neglect in the performance of duty
(DOGN);

2. Charges would warrant removal from service; and

3. His continued stay in office may prejudice the case filed against
him. 

x. Process of legislation

1. Starts with a bill. 

- Only 1 subject is to be expressed in the title. 

- Doctrine of origination – appropriation, private bills, revenue or tariff bills, bills

authorizing increase of the public debt, and bills of local application (APRIL) shall
originate exclusively in the House of Representatives. But the Senate may propose or
concur with amendments.

- It is the bill, not the law, which must originate from the HOR. 

Page 38 of 151
 - However, the Senate may file a substitute bill in anticipation of its receipt of the bill
from the HOR – here, the Constitutional requirement that a bill must originate from
the HOR is not violated so long as the Senate does not act upon the substitute bill until
it receives the bill from the HOR. 

2. Bill must pass 3 readings on separate days; and printed copies of the bill in its final form
have been distributed to its members 3 days before its passage.

- Except when the President certifies to the necessity of its immediate passage.

- No bill passed by either House shall become a law unless it has passed 3 readings
on separate days and copies thereof given to the members xxx

i. Arroyo v. De Venecia – in this case there was a violation of the internal rules
of procedure in the HOR in the passage of a bill. The SC held that the
legislative act will not be declared invalid for non-compliance with the internal
rules of the House. 

- Reason: the rules adopted by deliberative bodies are subject to

revocation, change, modification and waiver of the same body
adopting them.  

3. The bill becomes a law in any of the ff cases: 

1. Approval and signature of the President. 

2. When Congress overrides the Presidential Veto – here, initially the P disapproves
the bill and returns the same to the House of origin with his veto message. The veto is
overridden by the 2/3 vote of the House of origin and the other House. 

i. Only item veto is allowed – an allocation of a specified singular amount for a

specified singular purpose. 

ii. No pocket veto and no partial veto – Sc held declared as unconstitutional

the veto made by President Aquino of appropriations intended for the
adjustment of the pension of retired justices as it is not an item veto. The P
cannot veto a part of an item while approving the remaining portion of the
item. 

iii. A law which requires prior approval of the Congress for the release of funds
or its implementation is unconstitutional. SC held that it is not an issue of
legislative veto, but instead ruled that no provision blocking an administrative
action in implementing a law or requiring legislative approval for executive
acts must be incorporated in a separate and substantive bill.  

3. When the P fails to act upon the bill for thirty days from receipt thereof, the bill
shall become a law as if he had signed it.

xi. Natural resources (nationalization principle for natural resources and economic
activities)

Sec. 2, Art. XII. All lands of the public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and
fauna, and other natural resources are owned by the State. With the exception of agricultural
lands, all other natural resources shall not be alienated. The exploration, development, and
utilization of natural resources shall be under the full control and supervision of the State. The
State may directly undertake such activities, or it may enter into co-production, joint venture,
or production-sharing agreements with Filipino citizens, or corporations or associations at least
sixty per centum of whose capital is owned by such citizens. Such agreements may be for a
period not exceeding twenty-five years, renewable for not more than twenty-five years, and
under such terms and conditions as may be provided by law. In cases of water rights for

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 irrigation, water supply, fisheries, or industrial uses other than the development of water
power, beneficial use may be the measure and limit of the grant.

The State shall protect the nation’s marine wealth in its archipelagic waters, territorial sea,
and exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino
citizens.

The Congress may, by law, allow small-scale utilization of natural resources by Filipino
citizens, as well as cooperative fish farming, with priority to subsistence fishermen and
fishworkers in rivers, lakes, bays, and lagoons.

The President may enter into agreements with foreign-owned corporations involving either
technical or financial assistance for large-scale exploration, development, and utilization of
minerals, petroleum, and other mineral oils according to the general terms and conditions
provided by law, based on real contributions to the economic growth and general welfare of
the country. In such agreements, the State shall promote the development and use of local
scientific and technical resources.

The President shall notify the Congress of every contract entered into in accordance with this
provision, within thirty days from its execution.

Sec. 11, Art. XII. No franchise, certificate, or any other form of authorization for the
operation of a public utility shall be granted except to citizens of the Philippines or to
corporations or associations organized under the laws of the Philippines, at least sixty  per
centum of whose capital is owned by such citizens; nor shall such franchise, certificate, or
authorization be exclusive in character or for a longer period than fifty years. Neither shall any
such franchise or right be granted except under the condition that it shall be subject to
amendment, alteration, or repeal by the Congress when the common good so requires. The
State shall encourage equity participation in public utilities by the general public. The
participation of foreign investors in the governing body of any public utility enterprise shall be
limited to their proportionate share in its capital, and all the executive and managing officers
of such corporation or association must be citizens of the Philippines.

xii. Amendment and revision of the Constitution

a. Amendment v. Revision

i. In Lambino v. COMELEC, Revision broadly implies a change that alters a basic

principle in the Constitution e.g., altering the principle of separation of powers or the
system of checks and balances. There is also revision if the change alters the
substantial entirety of the Constitution. On the other hand, amendment broadly refers
to a change that adds, reduces, deletes, without altering the basic principle involved.

ii. Revision generally affects several provisions of the Constitution, while amendment
generally affects only the specific provision being changed.

ii. Revision is an overhaul of the entire Constitution or its major provision, while
amendment is a piece-meal changes in the Constitution.

b. Tests to determine if proposal involves an amendment or revision

i. Quantitative test – whether the proposed change is so extensive as to

change directly the substantial entirety of the Constitution by deleting or
altering numerous provisions.

- It concerns only the number of provisions affected and does not consider the
degree of change.

ii. Qualitative test – whether the change will “accomplish such far-reaching changes in
the nature of our basic government plan as to amount to a revision.”

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 c. Steps in the amendatory process: Proposal and Ratification

i. Proposal – Secs. 1-3, Art. XVII: The adoption of the suggested change in the
Constitution. A proposed amendment may come from:

1. Congress (Constituent Assembly or Con-Ass), by a vote of ¾ of all its

members;

- The Constitution has simply given Congress a constituent function.

2. Constitutional Convention, which may be called into existence either by:

a. a 2/3 vote of all members of Congress, or

b. (if such vote is not obtained) by a majority vote of all members of

Congress with the question of whether or not to call a Convention to
be resolved by the people in a plebiscite (Sec. 3, Art. XVII);

- a body separate and distinct from the Congress itself, members shall
be voted upon by the people.

3. People, through the power of initiative - Sec. 2, Art XVII.

- Requisite: A petition of at least 12% of the total number of

registered voters, of which every legislative district must be
represented by at least 3% of the registered voters therein.

- Limitation: No amendment in this manner shall be authorized within

five years following the ratification of this Constitution nor more than
once every five years thereafter.

- NB: People’s Initiative applies only to an amendment, not a revision

of the Constitution.

ii. Ratification – Sec. 4, Art. XVII:

- The proposed amendment shall become a part of the Constitution when

ratified by a majority of the votes cast in a plebiscite

- held not earlier than 60 nor later than 90 days after the approval of the
proposal by

a. Congress, or

b. the Constitutional Convention, or

c. after the certification by the Commission on Elections of the

sufficiency of the petition for initiative under Sec. 2, Art XVII.

d. Judicial Review of Amendments – the issue is whether or not the Constitutional provisions
on amendment had been followed.

b. International Law (1 Question)

i. Sources of international law

I. Article 38, International Court of Justice Statute

a. Primary sources:

i. International treaties and conventions;

- refers to reties, whether general or particular

ii. International customs law;

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 - that evolved from the practice of States

- Elements:

a. State practice which must be consistent general, and

existing for a period of time;

b. Opinio juris sive necessitates/opinion juris – refers to the

belief of States that a certain norm of behavior or practice is
obligatory (or the feeling that you are bound of the custom).
Hence, they follow the practice, out of a sense of obligation
and not just out of convenience or comity.

iii. General principles of law

- refer to principles that are common to the major legal systems of the
world, such as res judicata and entitlement to compensation for
proven injury. They include general principles that are directly
applicable to the International Law (e.g., good faith, equity,
proportionality and due diligence.)

b. Secondary sources:

i. Decisions of courts;

- refers to the decisions of the ICJ and other international tribunals,

e.g., ICC, and the International Tribunal for the Law of the Sea
(ITLOS). They include decisions of arbitral tribunals and national courts
when they apply International Law (or if it involves an international
element).

- ICJ decisions are considered only as subsidiary sources of

International Law and are subject to Article 594 of the ICJ Statute,
which provides that there is no stare decisis in International Law.
However, ICJ decisions are highly authoritative and is considered law
for all practical purposes until overturned by States via a treaty or
custom.

- Decision ex aequo et bono - a decision made not according to

points of law, but according to the judges' sense of abstract justice
and fairness (a decision based on justice and equity not bound by
technical rules). The ICJ may decide a case ex aequo et bono, if the
parties agree thereto. (Art. 38(2) of the ICJ Statute).

ii. Teachings of most highly qualified publicists

- refer to the writings of the most respected International Law writers

and institutions which write on International Law (e.g., International
Law Commission and the Institut de Droit International) Like judicial
decisions, they are considered only as subsidiary means for the
determination of rules of International Law

c. In case of conflict among the sources of International Law, which should prevail? 

- Treaties prevail over customs because of pacta sunt servanda

("agreements must be kept”, “every treaty in force is binding upon the parties
to it and must be performed by it in good faith”, “despite supervening
hardships, the parties must comply with their commitments and perform their
obligations in good faith”), except if the said customs are considered jus
cogens ("compelling law"). 

- Jus cogens - refers to norms accepted and recognized by the

international community of States as a whole from which no

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 derogation is permitted and can be modified only by subsequent
norms of general international law having the same character (Art 53,
Vienna Convention on the Law of Treaties) Examples include the
prohibition on the use of force prohibition against genocide, right of
self-determination, sovereign equality of States, and the freedom of
the high seas. 

- Treaties and custom prevail over general principles of law. These principles
are meant only to complement treaties and custom as sources of International
Law, especially in situations where a particular issue is not regulated by treaty
or custom 

- Judicial decisions and writings of publicists are subordinate to treaties,

customs and general principles of law. 

II. Effect of UN Declarations, Security Council Resolutions

- UN General Assembly Resolutions - By themselves, they do not create binding

law, even if they are adopted unanimously. However, although they are not binding,
they have impact on the formation of customary law by providing crucial evidence of
opinio juris.

- Security Council Resolutions - Under Chapter VII of the UN Charter, The Security
Council make decisions on measures to be taken for the maintenance of international
peace and security, which are binding on Member States. They do not pass resolutions
dealing with abstract points of law, as their resolutions are concerned more with
mandatory enforcement actions against delinquent States.

- Soft Law- refers to rules of international law that do not stipulate concrete rights or
obligations for the legal persons to whom they are addressed the rules are flexible or
vague in order to avoid international responsibility, e.g., non-binding plans of actions
it can also refer to guidelines, ideas and proposals that may later on develop into rules
of international law by the action of treaty or custom. Soft law is usually contained in a
variety of non-treaty instruments such as Declarations and Memoranda of
Understanding".

III. Effect of actions of organs of international organizations created by treaty

ii. Relationship with domestic law

I. Doctrine of Incorporation – Sec. 2, Art. II: The Philippines renounces war as an instrument
of national policy, adopts the generally accepted principles of international law as part of the
law of the land and adheres to the policy of peace, equality, justice, freedom, cooperation,
and amity with all nations.

-  a rule of International Law automatically becomes part of national legal system

without need of express adoption by the legislature or local courts. 

- The Philippines adopts the incorporation approach for rules of customary

international law e.g.  Hague rules and customs of war in Kuroda v. Jalandoni and
human night principles under the Universal Declaration of Human Rights in Mejoff v.
Director of Prisons.

II. Doctrine of Transformation – a rule of International Law only becomes part of the national
legal system if it has been expressly adopted by the State, as by legislation. International law
is transformed into a domestic law through legislation.

- The Philippine adopts the transformation approach for International Law derived from
treaties e.g., 1968 Vienna Convention on Road Signs and Signals in Agustin v. Edu.

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 III. In case of conflict – it is a matter of tribunal on which will prevail; depends on where the
case is filed

- International Rule - In International Law, a treaty takes precedence over the

Constitution or the municipal laws; the country cannot use its Constitution in order to
renege on an international obligation.

- Municipal Rule - In domestic law, the Constitution or municipal laws will prevail.

- if the case is filed before a domestic court and the conflict is between a
treaty and the Constitution, the Constitution always prevails. If the conflict is
between a treaty and a statute, since neither is superior to the other,
whichever is later in time prevails (lex posterior derogat priori)

c. Labor Law (3 Questions)

i. Basic principles

A. Legal Basis

1. 1987 Constitution

i. Under Art II (Declaration of Principles and State Policies) - Sec. 18. The State
affirms labor as a primary social economic force. It shall protect the rights of the
worker and promote their welfare.

ii. Under Art III (Bill of Rights):

a. Freedom of speech, of expression, or of the press, or the right of the people

to peaceably assemble and petition the government for redress of grievances.

- This is only relevant in connection with PICKETING, not in relation to

STRIKE which is covered by Sec.3, Art.XIII.

b. Right of public and private sector employees to form unions, associations,

or societies for purposes not contrary to law shall not be abridged.

- known as “freedom of association.” This provision is the basis for the

ees’ right to self-organization

c. Non-impairment of obligations of contracts.

- The concept of this right in political law is similar in labor law

d. 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.

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 e. Prohibition against involuntary servitude.

- This principle is relevant only in two (2) 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.

iii. Under Article XIII, Section 3 (Social Justice and Human Rights):

a) Full protection to labor, local and overseas, organized and unorganized;

b) Promotion of full employment;

c) Promotion of 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 between workers and

employers and the preferential use of voluntary modes in settling disputes,
including conciliation, and shall enforce their mutual compliance therewith to
foster industrial peace.

f) Regulation of the relations between workers and employers, recognizing the

right of labor to its just share in the fruits of production and the right of
enterprises to reasonable returns to investments, and to expansion and
growth.

2. Civil Code

i. Under 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.”

Page 45 of 151
 - In Davao Integrated Port Stevedoring Services v. Abarquez (March 19, 1993).
It was held that a CBA, as a labor contract within the contemplation of Article 1700 of
the Civil Code, is not merely contractual in nature but impressed with public interest,
thus, it must yield to the common good.

Similarly, an employment contract or any other labor contract is treated as not

merely contractual in nature similar to an ordinary contract like a lease contract
because it is impressed with public interest. Consequently, all labor laws are deemed
read or incorporated therein even if not so expressly provided or stipulated in its
provisions.

ii. Article 1702 of the Civil Code.

- (See discussion below of Article 1702 of the Civil Code, in relation to Article 4
of the Labor Code regarding the rule on interpretation and construction
provisions of law and labor contracts).

3. Labor Code

i. Under Article 3 of Labor Code:

a) Full protection to labor;

b) Promotion of full employment;

c) Promotion of equal work opportunities regardless of sex, race or creed;

d) Regulation of the relations between workers and employers;

e) Protection of the rights of workers to:

1. self-organization;

2. collective bargaining;

3. security of tenure; and

4. just and humane conditions of work.

B. State Policy towards Labor

1. Security of tenure

- Refer to Article 3 of the Labor Code and Article XIII, Section 3 of the 1987
Constitution, as discussed above.

2. Social justice

i. R.A. No. 6657, (“Comprehensive Agrarian Reform Law”) Section 2: “It is the policy
of the State to pursue a Comprehensive Agrarian Reform Program (CARP). The welfare
of the landless farmers and farmworkers will receive the highest consideration to
promote social justice and to move the nation toward sound rural development and
industrialization, and the establishment of owner cultivatorship of economic-size farms
as the basis of Philippine agriculture.”

ii. Article II, Section 9 of the 1987 Constitution: “The State shall promote a just and
dynamic social order that will ensure the prosperity and independence of the nation
and free the people from poverty through policies that provide adequate social
services, promote full employment, a rising standard of living, and an improved
quality of life for all.”

iii. Article II, Section 10 of the 1987 Constitution: “The State shall promote social
justice in all phases of national development.”

iv. See also Article XIII, Section 3 of the 1987 Constitution, as discussed above.

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3. Equal work opportunities

i. Article XIII, Section 14 of the 1987 Constitution: “The State shall protect working
women by providing safe and healthful working conditions, taking into account their
maternal functions, and such facilities and opportunities that will enhance their welfare
and enable them to realize their full potential in the service of the nation”

ii. See also Article II, Section 9 of the 1987 Constitution as discussed above.

4. Right to self-organization and collective bargaining

i. Article III, Section 8 of the 1987 Constitution: “The right of the people, including
those employed in the public and private sectors, to form unions, associations, or
societies for purposes not contrary to law, shall not be abridged.”

ii. Article 257 [246] speaks of the principle of non-abridgment of the right to self-
organization as follows: “Article 257 [246]. Non-Abridgment of Right to Self-
Organization. – It shall be unlawful for any person to restrain, coerce, discriminate
against or unduly interfere with employees and workers in their exercise of the right to
self-organization. Such right shall include the right to form, join, or assist labor
organizations for the purpose of collective bargaining through representatives of their
own choosing and to engage in lawful concerted activities for the same purpose or for
their mutual aid and protection, subject to the provisions of Article 279 [264] of this
Code.”

iii. See also Article 3 of the Labor Code and Article XIII, Section 3 of the 1987
Constitution, as discussed above.

5. Construction in favor of labor

i. Under Article 1702 of the Civil Code.: “Article 1702. In case of doubt, all labor
legislation and all labor contracts shall be construed in favor of the safety and decent
living for the laborer.”

ii. Article 4 of the Labor Code.: “Article 4. Construction in Favor of Labor. – All doubts
in the implementation and interpretation of the provisions of this Code, including its
implementing rules and regulations, shall be resolved in favor of labor.”

iii. Follow this rule in interpreting and construing the following:

a. DOUBTS OR AMBIGUITIES IN LABOR CONTRACTS such as employment

contract and collective bargaining agreement (CBA); or

b. DOUBTS OR AMBIGUITIES IN EVIDENCE in labor cases.

Thus, where contracts, evidence, or provisions of the law leave no room for
doubt either in their interpretation or application, Article 4 of the Labor Code and
Article 1702 of the Civil Code does not apply

6. Burden of proof and quantum of evidence

i. Burden of Proof in Illegal Dismissal Cases

- Generally, the burden rests on the employer to prove that the dismissal of an
employee is for a just or authorized cause (Article 292(b) [277(b)] of the
Labor Code).

- When burden of proof is on the employee: The rule does not apply if the
facts and the evidence do not establish a prima facie case that the employee
was dismissed from employment. Before the employer must bear the burden
of proving that the dismissal was legal, the employee must first establish by
substantial evidence the fact of his dismissal from service.

ii. Burden of Proof in Monetary Claims Cases

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 - As a general rule, in monetary claims cases, a party who alleges payment as
a defense has the burden of proving it. (Our Haus Realty Development
Corporation v. Parian, G.R. No. 204651, Aug. 06, 2014)

- Particularly, the burden rests on the employer to prove payment, rather than
on the employees to prove non-payment. (Heirs of Manuel H. Ridad v.
Gregorio Araneta University Foundation, G.R. No. 188659, Feb. 13, 2013).

iii. Quantum of Evidence: Substantial Evidence

- Section 5, Rule 133 of the Rules of Court provides that “in cases filed before
administrative or quasi-judicial bodies, a fact may be deemed established if it
is supported by substantial evidence, or that amount of relevant evidence
which a reasonable mind might accept as adequate to justify a conclusion.”

- Substantial evidence is defined as Evidence that a reasonable mind might

accept as adequate to support a conclusion. (China City Restaurant v. NLRC,
G.R. No. 97196, Jan. 22, 1993, 217 SCRA 451.) It does not necessarily import
preponderant evidence, as is required in an ordinary civil case. It has been
defined to be such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion. (Spouses Giron v. Obiacoro, CV-331l5,
Sept. 28,1994)

iv. Important principles to remember:

- All administrative determinations require only substantial proof and not clear
and convincing evidence. However, this should not be construed to mean just
like any form or kind of evidence; it must be relevant evidence as a reasonable
mind might accept as adequate to support a conclusion.

- Remember that in the hierarchy of evidentiary values, proof beyond

reasonable doubt is at the highest level and substantial evidence is the least
demanding in the hierarchy of evidence.

- If doubts exist between the evidence presented by the employer and the
employee, the scales of justice must be tilted in favor of the latter

ii. Existence of Employer-Employee Relationship; tests

A. Four-Fold Test

- What is the 4-fold test of existence of employer-employee relationship?

1. Selection and engagement of the employee;

2. Payment of wages or salaries;

3. Exercise of the power of dismissal; or

4. Exercise of the power to control the employee’s conduct.

These tests, however, are not fool-proof as they admit of exceptions.

- 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:

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 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.

B. Two-tiered test

- What is the 2-tiered test of employment relationship?

- The two-tiered test enunciated in Francisco v. NLRC, 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].

- 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.”

- 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.

- 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, 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.”

“The inevitable conclusion is that petitioner was not respondent PDI’s

employee but an independent contractor, engaged to do independent work.”

- 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.

iii. Termination of employment

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A. Termination by Employer

What is meant by TWO-FOLD DUE PROCESS requirement?

Dismissal of employees requires the observance of the two-fold due process

requisites, namely:

1. Substantive aspect which means that the dismissal must be for any
of the (1) just causes provided under the Labor Code or the company
rules and regulations promulgated by the employer; or (2) authorized
causes under the Labor Code; and

2. Procedural aspect which means that the employee must be

accorded both STATUTORY DUE PROCESS AND CONTRACTUAL DUE
PROCESS.

What is the distinction between JUST CAUSES and AUTHORIZED CAUSES?

A dismissal based on a just cause means that the employee has committed a
wrongful act or omission; while a dismissal based on an authorized cause
means that there exists a ground which the law itself allows or authorizes to
be invoked to justify the termination of an employee even if he has not
committed any wrongful act or omission, such as installation of labor-saving
devices, redundancy, retrenchment, closure or cessation of business
operations or disease.

1. Requisites for validity

a. Substantive due process

i. Just causes

What are the just causes under the Labor Code?

The just causes in the Labor Code are found in the following provisions
thereof:

(1) Article 297 [282] - (Termination by the Employer) which provides

for the following grounds:

(a) Serious misconduct or willful disobedience by the employee

of the lawful orders of his employer or representative in
connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust

reposed in him by his employer or duly authorized
representative;

(d) Commission of a crime or offense by the employee against

the person of his employer or any immediate member of his
family or his duly authorized representatives; and

(e) Other causes analogous to the foregoing.

(2) Article 279(a) [264(a)] - (Prohibited Activities) which provides for

the termination of the following:

(a) Union officers who knowingly participate in an illegal strike

and therefore deemed to have lost their employment status.

(b) Any employee, union officer or ordinary member who

knowingly participates in the commission of illegal acts during

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 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.

(1) SERIOUS MISCONDUCT

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.

Some principles on serious misconduct

o Serious misconduct implies that it must be of such grave and

aggravated character and not merely trivial or unimportant.

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o Simple or minor misconduct would not justify the termination of the
services of an employee.

o Possession or use of shabu or other drugs is a valid ground to

terminate employment.

o 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.

o Immoral act committed beyond office hours is a valid ground to

terminate employment.

o Sexual intercourse inside company premises constitutes serious

misconduct.

o The act of a 30-year old lady teacher in falling in love with a 16-year
old student is not immoral.

o 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.

o Challenging superiors to a fight is a just cause for termination.

o Assaulting another employee is a just cause for termination.

o Utterance of obscene, insulting or offensive words constitutes serious

misconduct.

o Gambling within company premises is a serious misconduct.

o Rendering service to business rival is a just cause to terminate

employment.

o Selling products of a competitor is a just cause for termination.

o Organizing a credit union by employees in a bank is a serious

misconduct.

o Deceiving a customer for personal gain is a just cause for

termination.

o Contracting work in competition with employer constitutes serious

misconduct.

o Intoxication which interferes with the employee’s work constitutes

serious misconduct.

o The act of a teacher in pressuring a colleague to change the failing

grade of a student is serious misconduct.

o Sexual harassment is a just ground to dismiss.

o Sleeping while on duty is a ground for termination. o Dismissal is too

harsh a penalty for eating while at work.

o Pilferage or theft of company-owned property is a just cause to

terminate.

o Theft of funds or property not owned by employer is not a ground to

terminate.

o Act of falsification is a valid ground to terminate employment.

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 o Punching-in of time cards of other employees is a just cause for
termination.

(2) INSUBORDINATION OR WILLFUL DISOBEDIENCE OF LAWFUL ORDERS

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.

Some principles on insubordination.

o Making false allegations in complaint does not constitute

insubordination.

o Failure to answer memo to explain constitutes willful disobedience. o

Another notice is required in case of termination on the ground of
failure to answer memo to explain.

o Refusal to undergo random drug testing constitutes both serious

misconduct and insubordination.

o Refusal to render overtime to meet production deadline constitutes

insubordination.

o Refusal to comply with a lawful transfer constitutes insubordination.

(3) GROSS AND HABITUAL NEGLECT OF DUTIES

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.

Some principles on gross and habitual neglect of duties.

o Simple negligence is not sufficient to terminate employment.

o The negligence must be gross in character which means absence of

that diligence that an ordinarily prudent man would use in his own
affairs.

o As a general rule, negligence must be both gross and habitual to be

a valid ground to dismiss.

o Habituality may be disregarded if negligence is gross or the damage

or loss is substantial. “Habitual negligence” implies repeated failure to

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 perform one’s duties for a period of time, depending upon the
circumstances.

o Actual damage, loss or injury is not an essential requisite.

o Gross negligence may result to loss of trust and confidence

o Absences, if authorized, cannot be cited as a ground to terminate

employment.

o Tardiness or absenteeism, if not habitual, cannot be cited as a

ground to terminate employment.

o Tardiness or absenteeism, if habitual, may be cited as a ground to

terminate employment.

o Tardiness or absenteeism, if habitual, may be tantamount to serious

misconduct.

o Absences or tardiness due to emergency, ailment or fortuitous event

are justified and may not be cited as just cause to terminate
employment.

o Unsatisfactory or poor performance, inefficiency and incompetence

are considered just causes for dismissal only if they amount to gross
and habitual neglect of duties.

(4) ABANDONMENT OF WORK

Concept.

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.

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.

Some principles on abandonment.

o Mere absence is not enough to constitute abandonment.

o Clear intention to sever employment relationship is necessary.

o 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.

o No hearing is required to validly dismiss an employee for

abandonment.

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 o 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.

o Immediate filing of a complaint for illegal dismissal praying for

reinstatement negates abandonment.

o 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.

o Filing of a case to pre-empt investigation of the administrative case

is tantamount to abandonment.

o When what is prayed for in the complaint is separation pay and not
reinstatement, the filing of complaint does not negate abandonment.

o 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.

o Employment in another firm coinciding with the filing of complaint

does not indicate abandonment.

o 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.

o 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.

o 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.

o An employee who failed to comply with the order for his

reinstatement is deemed to have abandoned his work.

o An employee who, after being transferred to a new assignment, did

not report for work anymore is deemed to have abandoned his job.

o 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.

o Imprisonment or detention by military does not constitute

abandonment.

o 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.

(5) FRAUD

Requisites.

The following are the requisites of this ground:

1. There must be an act, omission, or concealment;

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 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.

Some principles on fraud.

o Failure to deposit collection constitutes fraud.

o 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.

o Lack of misappropriation or shortage is immaterial in case of

unauthorized encashment of personal checks by teller and cashier.

o Restitution does not have absolutory effect.

(6) WILLFUL BREACH OF TRUST AND CONFIDENCE

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.

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 confidence prone to abuse.

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Some principles on the doctrine of loss of trust and confidence.

o Employee’s position must be reposed with trust and confidence.

o “Position of trust and confidence” is one where a person is entrusted

with confidence on delicate matters, or with the custody, handling, or
care and protection of the employer’s property.

o 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 delicate matters and from whom greater fidelity to duty is
correspondingly expected. They refer to those vested with the
powers or prerogatives to lay down and execute management
policies and/or to hire, transfer suspend, lay-off, recall,
discharge, assign or discipline employees or to effectively
recommend such managerial actions. Their primary duty
consists of the management of the establishment in which they
are employed or of a department or a subdivision thereof.

The second class consists of fiduciary rank-and-file employees

who, though rank-and-file, are routinely charged with the
custody, handling or care and protection of the employer's
money or property, or entrusted with confidence on delicate
matters, and are thus classified as occupying positions of trust
and confidence. Included under this class are “cashiers,
auditors, property custodians, or those who, in the normal and
routine exercise of their functions, regularly handle significant
amounts of [the employer’s] money or property.”

o Rules on termination of managerial and supervisory employees

different from those applicable to rank-and-file employees. Thus, with
respect to rank-and-file personnel, loss of trust and confidence as a
ground for valid dismissal requires proof of involvement in the alleged
events in question and that mere uncorroborated assertions and
accusations by the employer will not be sufficient. But as 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.

o 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.

o Dismissal due to feng shui mismatch is not a valid ground to lose

trust and confidence.

o Command responsibility of managerial employees is a ground to

dismiss.

o Confidential employee may be dismissed for loss of trust and

confidence.

o Grant of promotions and bonuses negates loss of trust and

confidence.

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 o Long years of service, absence of derogatory record and small
amount involved are deemed inconsequential insofar as loss of trust
and confidence is concerned.

o 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.

o Full restitution does not absolve employee of offense which resulted

in the loss of trust and confidence.

(7) COMMISSION OF CRIME OR OFFENSE

Requisites.

The following are the requisites for the valid invocation of this ground:

1. A crime or offense was committed by the employee;

2. It was committed against any of the following persons:

(a) His employer;

(b) Any immediate member of his employer’s family;

or

(c) His employer’s duly authorized representative.

Some principles on the commission of crime or offense.

o 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.

(8) OTHER ANALOGOUS CAUSES

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.

(9) TERMINATION DUE TO ENFORCEMENT OF UNION SECURITY CLAUSE

What is a 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.

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 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 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,).

All the foregoing requisites should be complied with to justify

the termination of employment.

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 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 due process to the employee. It cannot terminate
his employment merely on the basis of the recommendation of
the union.

Can the employer adopt the due process afforded by the SEBA to 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 process concerns the termination of membership of
the employee from the SEBA. The due process in above-cited
Alabang Country Club, Inc. v. NLRC, is required for a different
purpose - to terminate his employment.

(10) OTHER PRINCIPLES `ON TERMINATION Per Department Order No. 147-
15, Series Of 2015

An employee found positive for use of dangerous drugs shall be dealt

with administratively which shall be a ground for suspension or
termination.

An employee shall not be terminated from work based on actual,

perceived or suspected HIV status.

An employee shall not be terminated on basis of actual, perceived or

suspected Hepatitis B status.

An employee who has or had tuberculosis shall not be discriminated

against. He/she shall be entitled to work for as long as they are
certified by the company's accredited health provider as medically fit
and shall be restored to work as soon as his/her illness is controlled.

An employee may also be terminated based on the grounds provided

for under the CBA.

ii. Authorized causes

What are the 2 classes of authorized cause termination?

Under the Labor Code, authorized causes are classified into two (2)
classes, namely:

(1) Business-related causes. – Referring to the grounds

specifically mentioned in Article 298 [283], to wit:

a. Installation of labor-saving device;

b. Redundancy;

c. Retrenchment;

d. Closure or cessation of business operations NOT due

to serious business losses or financial reverses; and

e. Closure or cessation of business operations due to

serious business losses and financial reverses.

(2) Health-related causes. – Referring to disease covered by

Article 299 [284] of the Labor Code.

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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]?

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 In addition to the COMMON REQUISITES above, the following are the
UNIQUE REQUISITES of each of the authorized causes:

(1) 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

(2) 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.

(3) 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. This is the only
business-related cause under Article 298 [283] which requires
proof of losses or imminent losses. The other grounds of
closure or cessation of business operations may be resorted to
with or without losses.

What are some relevant principles on retrenchment?

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 o The fact that there has been economic or other crisis besetting a
particular sector or the country as a whole is not sufficient justification
for retrenchment.

o The phrase “retrenchment to prevent losses” means that

retrenchment may be undertaken by the employer before the losses
anticipated are actually sustained or realized. The employer need not
keep all his employees until after his losses shall have materialized.
Otherwise, the law could be vulnerable to attack as undue taking of
property for the benefit of another.

o Best evidence of losses - financial statements audited by

independent auditors (not by internal auditors).

o Best evidence of losses in a government-controlled corporation -

financial statements audited by COA.

o Income tax returns, not valid since they are self-serving documents.
o Mere affidavit on alleged losses is not sufficient.

o Retrenchment effected long after the business losses is not valid.

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

retrenchment.

o Retrenchment due to liquidity problem is not valid.

o Sharp drop in income is not a ground to justify retrenchment. A

mere decline in gross income cannot in any manner be considered as
serious business losses. It should be substantial, sustained and real.

o Litany of woes, in the absence of any solid evidence that they

translated into specific and substantial losses that would necessitate
retrenchment, will not suffice to justify retrenchment.

o Rehiring of retrenched employees does not necessarily indicate

illegality of retrenchment.

o 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.

(4) 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?

o 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.

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 o Closure of department or section and hiring of workers supplied by
independent contractor as replacements is valid.

o Relocation of business may amount to cessation of operations. o

Closure of business to merge or consolidate with another or to sell or
dispose all of its assets, held valid.

o Audited financial statements necessary only in closure due to losses.

(5) DISEASE

What are the newest doctrines on termination due to disease?

o 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.

The DEOFERIO doctrine on the requisites

o 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.

o 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.

o 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].

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The FUJI rule – the employee should be given the chance to present
countervailing medical certificates.

o Subsequent to Deoferio, another 2014 case, Fuji Television Network,

Inc. v. Arlene S. Espiritu, 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.

o Respondent Arlene was petitioner’s news correspondent/producer

“tasked to report Philippine news to Fuji through its Manila Bureau field
office.” She was successively given yearly fixed-term employment
contracts until she was diagnosed with lung cancer sometime in
January 2009 when the Chief of News Agency of Fuji informed her
“that the company will have a problem renewing her contract” since it
would be difficult for her to perform her job. She, however, “insisted
that she was still fit to work as certified by her attending physician.”
Subsequently, Arlene and Fuji signed a non-renewal contract where it
was stipulated that her contract would no longer be renewed after its
expiration on May 31, 2009 and that the parties release each other
from liabilities and responsibilities under the employment contract.
Arlene received her unpaid salaries and bonuses but she affixed her
signature on the non-renewal contract with the initials “U.P.” for
“under protest.” The day after Arlene signed the non-renewal contract,
she filed a complaint for illegal dismissal and attorney’s fees with the
Labor Arbiter, alleging that she was forced to sign the non-renewal
contract when Fuji came to know of her illness and that Fuji withheld
her salaries and other benefits for March and April 2009 when she
refused to sign. Arlene claimed that she was left with no other
recourse but to sign the non-renewal contract, and it was only upon
signing that she was given her salaries and bonuses, in addition to
separation pay equivalent to 4 years.

o The Supreme Court declared respondent Arlene as having been

constructively dismissed. It was likewise held here that respondent
was not afforded due process, thus:

“There is no evidence showing that Arlene was accorded due

process. After informing her employer of her lung cancer, she
was not given the chance to present medical certificates. Fuji
immediately concluded that Arlene could no longer perform her
duties because of chemotherapy. It did not ask her how her
condition would affect her work. Neither did it suggest for her
to take a leave, even though she was entitled to sick leaves.
Worse, it did not present any certificate from a competent
public health authority. What Fuji did was to inform her that
her contract would no longer be renewed, and when she did
not agree, her salary was withheld. Thus, the Court of Appeals
correctly upheld the finding of the National Labor Relations
Commission that for failure of Fuji to comply with due process,
Arlene was illegally dismissed.”

What are some salient points to consider under this ground of disease?

o 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.

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 o 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.

o 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.

o 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.

o The medical certificate should be procured by the employer and not

by the employee.

b. Procedural due process

(1) Twin-Notice Requirement

(2) 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?

o Due process means compliance with BOTH STATUTORY DUE

PROCESS and CONTRACTUAL DUE PROCESS.

o CONSTITUTIONAL DUE PROCESS is not applicable (Per Agabon

doctrine).

o 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).

o Contractual due process was enunciated in the 2013 en banc ruling

in Abbott Laboratories, Philippines v. Pearlie Ann F. Alcaraz. Thus, it is
now required that in addition to compliance with the statutory due

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 process, the employer should still comply with the due process
procedure prescribed in its own company rules. The employer’s failure
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 only in case
of just cause termination BUT NOT IN 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.

What is the King of Kings Transport doctrine on just cause 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.

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 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:

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 (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 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 ILLEGAL.

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 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 process
was not observed – This termination is LEGAL.

5. The dismissal was for a non-existent cause – This termination is

ILLEGAL.

6. The dismissal was not supported by any evidence of termination –

This termination is NEITHER LEGAL NOR ILLEGAL as there is no
dismissal to speak of. Reinstatement is ordered not as a relief for
illegal dismissal but on equitable ground.

7. The dismissal was brought about by the implementation of a law –

This termination is LEGAL.

2. Preventive suspension

When is preventive suspension proper to be imposed?

Preventive suspension may be legally imposed against an errant employee

only while he is undergoing an investigation for certain serious offenses.
Consequently, its purpose is to prevent him from causing harm or injury to the
company as well as to his fellow employees, hence, his actual presence in the
workplace would not be desirable for the meaningful conduct of the
investigation of his case. Its imposition is thus justified only in cases where the
employee’s continued presence in the company premises during the
investigation poses a serious and imminent threat to the life or property of the
employer or of the employee’s co-workers. Without this threat, preventive
suspension is not proper.

What are some relevant principles in preventive suspension?

o Preventive suspension is not a penalty. This is different from PUNITIVE

SUSPENSION which is imposed as a penalty less harsh than dismissal.

o Preventive suspension, by itself, does not signify that the company has
already adjudged the employee guilty of the charges for which she was asked
to answer and explain.

o Preventive suspension is neither equivalent nor tantamount to dismissal.

o If the basis of the preventive suspension is the employee’s absences and

tardiness, the imposition of preventive suspension on him is not justified as his
presence in the company premises does not pose any such serious or
imminent threat to the life or property of the employer or of the employee’s
co-workers simply “by incurring repeated absences and tardiness.”

o Preventive suspension does not mean that due process may be disregarded.

o Preventive suspension should only be for a maximum period of thirty (30)

days. After the lapse of the 30- day period, the employer is required to
reinstate the worker to his former position or to a substantially equivalent
position.

o During the 30-day preventive suspension, the worker is not entitled to his
wages and other benefits. However, if the employer decides, for a justifiable
reason, to extend the period of preventive suspension beyond said 30-day
period, he is obligated to pay the wages and other benefits due the worker
during said period of extension. In such a case, the worker is not bound to
reimburse the amount paid to him during the extension if the employer
decides to dismiss him after the completion of the investigation.

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 o Extension of period must be justified. During the 30-day period of preventive
suspension, the employer is expected 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 or investigation within
said period due to justifiable grounds. No extension thereof can be made
based on whimsical, capricious or unreasonable grounds.

o Preventive suspension lasting longer than 30 days, without the benefit of

valid extension, amounts to constructive dismissal.

o Indefinite preventive suspension amounts to constructive dismissal.

3. Illegal dismissal

a. Kinds

i. No just or authorized cause If dismissal was done without substantive due

process (just or authorized causes under Article 297 [282] - 299 [284] of the
Labor Code), then it is considered illegal. (ACD Investigation Security Agency,
Inc. v. Daquera, G.R. No. 147473, March 30, 2004.)

See further discussion of just and authorized causes under “B. TERMINATION
BY EMPLOYER”.

ii. Constructive dismissal

When is there constructive dismissal?

Constructive dismissal contemplates any of the following situations:

1) An involuntary resignation resorted to when continued

employment is rendered impossible, unreasonable or unlikely;

2) A demotion in rank and/or a diminution in pay; or

3) A clear discrimination, insensibility or disdain by an

employer which becomes unbearable to the employee that it
could foreclose any choice by him except to forego his
continued employment.

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?

o 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.

o 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.

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 o Sending to an employee a notice of indefinite suspension which is
tantamount to dismissal.

o Imposing indefinite preventive suspension without actually

conducting any investigation.

o Changing the employee’s status from regular to casual constitutes

constructive dismissal.

o 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.”

(a) Burden of proof

Burden of Proof in Illegal Dismissal Cases

o Generally, the burden rests on the employer to prove that the

dismissal of an employee is for a just or authorized cause (Article
292(b) [277(b)] of the Labor Code).

o When burden of proof is on the employee: While it is the recognized

rule in illegal dismissal cases that the employer bears the burden of
proving that the termination was for a valid or authorized cause, this
rule does not apply if the facts and the evidence do not establish a
prima facie case that the employee was dismissed from employment.
Before the employer must bear the burden of proving that the
dismissal was legal, the employee must first establish by substantial
evidence the fact of his dismissal from service.

Quantum of Evidence: Substantial Evidence

o Section 5, Rule 133 of the Rules of Court provides that “in cases filed
before administrative or quasi-judicial bodies, a fact may be deemed
established if it is supported by substantial evidence, or that amount of
relevant evidence which a reasonable mind might accept as adequate
to justify a conclusion.”

o Substantial evidence is defined as Evidence that a reasonable mind

might accept as adequate to support a conclusion. (China City
Restaurant v. NLRC, G.R. No. 97196, Jan. 22, 1993, 217 SCRA 451.)
It does not necessarily import preponderant evidence, as is required in
an ordinary civil case. It has been defined to be such relevant evidence
as a reasonable mind might accept as adequate to support a
conclusion. (Spouses Giron v. Obiacoro, CV-331l5, Sept. 28,1994)

(b) Liability of officers

Who are considered officers?

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 o Article 219(e) [212(e)] of the Labor Code defines “employer”
as including any person acting in the interest of an employer,
directly or indirectly. The term shall not include any labor
organization or any of its officers or agents except when acting
as employer

o Thus, a person involved in a case or controversy, whether he

be a director, trustee, corporate officer or merely a responsible
employee, may rightfully be considered as being embraced in
the term “employer.”

o As a general rule, only the juridical employer, whether it be

a corporation, partnership, association or any other entity
which may be held liable for monetary claims of employees or
for all the consequences of the illegality of their dismissal or
for other wrongful acts. Directors, trustees or officers cannot
be held liable

B. Termination of Contract Migrant Worker

Can an OFW acquire regularity of employment?

No. The prevailing rule is that OFWs are contractual (fixed-term only), not
regular, employees. In fact, they can never attain regularity of employment.
The nature of their employment is always fixed-term.

What are some relevant principles?

o Indefinite period of employment of OFWs is not valid as it contravenes the

explicit provision of the POEA Rules and Regulations on fixed-period
employment.

o OFWs do not become regular employees by reason of nature of work, that is,
that they are made to perform work that is usually necessary and desirable in
the usual business or trade of the employer. The exigencies of their work
necessitate that they be employed on a contractual basis. This notwithstanding
the fact that they have rendered more than twenty (20) years of service.

o Regular employment does not result from the series of re-hiring of OFWs.

o 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.

o The expiration of the employment contracts of OFWs marks its ending.

What is the effect of hiring a seafarer for overseas employment but assigning him to
local vessel?

As held in OSM Shipping Philippines, Inc. v. NLRC, the non-deployment of the

ship overseas did not affect the validity of the perfected employment contract.
After all, the decision to use the vessel for coastwise shipping was made by
petitioner only and did not bear the written conformity of private respondent.
A contract cannot be novated by the will of only one party. The claim of
petitioner that it processed the contract of private respondent with the POEA
only after he had started working is also without merit. Petitioner cannot use
its own misfeasance to defeat his claim.

What is the effect of non-deployment of OFW to overseas employment?

Petitioner-seafarer, in Santiago v. CF Sharp Crew Management, Inc. was not

deployed overseas despite the signing of a POEA-approved employment

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 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.,), 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

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 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, 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.

C. Termination by Employee

1. With notice to the employer (voluntary resignation)

See discussion below.

2. Without notice to the employer (involuntary 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

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 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.

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.

3. Distinguish voluntary resignation and constructive dismissal

Voluntary resignation

Valid resignation must be unconditional and with intent to operate as such.

In case of termination effected by the employee without just cause, the

following requisites must concur:

1. The resigning employee should tender a written (not verbal) notice

of the termination (commonly known as “resignation letter”);

2. Service of such notice to the employer at least one (1) month in

advance; and

3. Written acceptance by the employer of the resignation.

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 The 3rd requisite above is not expressly provided in Article 300 [285]
but is given such character of a mandatory requirement under well-
established jurisprudence.

Burden of Proof in voluntary resignation cases

o If the employer alleges the employee’s voluntary resignation as the

cause of his separation from work, the employer has the burden to
prove the same.

o When burden shifts to employee: In case he/she alleges that

harassment, force, threat, coercion or intimidation has attended
his/her resignation, it is the employee who has the burden to prove
the same.

Constructive Dismissal

See discussion on “Constructive dismissal”

Constructive Dismissal vs. Voluntary Resignation

Constructive dismissal is involuntary resignation and is due to harsh, hostile,

or unfavorable conditions in his/her employment that renders his/her
continued employment impossible, unreasonable, or unlikely. o

Voluntary resignation, aside from being voluntary, is a formal

pronouncement or relinquishment of an office, accompanied by an
intent to relinquish the office and an overt act of relinquishing the
same.

Constructive dismissal is considered an illegal dismissal.

Voluntary resignation is a valid mode of terminating employment by the

employee.

iv. Requirements for labor-only contracting

- NB: There is no such thing as “valid” labor-only contracting as it is prohibited. What is valid
is job contracting or subcontracting

i. Legitimate subcontracting as distinguished from labor-only contracting

a. Elements

(1) 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;

(b) The contractor has substantial capital to carry out the 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

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 (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

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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 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?

1. Sonza v. ABS-CBN Broadcasting Corporation - TV and 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 Appeals - A

newspaper columnist is not an employee but an independent contractor of the
newspaper publishing the column.

3. Jose Mel Bernarte v. Philippine Basketball Association - Basketball referee is

an independent contractor.

4. Semblante and Pilar v. CA, Gallera de Mandaue, et al. - Cockpit masiador

and sentenciador are independent contractors.

5. Escasinas v. Shangri-la’s Mactan Island Resort - A doctor may be engaged

as an independent contractor.

(2) 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 contractor is presumed to be a

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 labor-only contractor. Registration as independent contractor should be made
with the DOLE.

- 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

- What are the distinctions between legitimate job contracting and labor-only
contracting?

The chief distinctions between legitimate job contracting, on the one hand, and
the prohibited labor-only contracting, on the other, may be summed up as
follows:

1. In the former, no employer-employee relationship exists between

the contractual employees of the job contractor and the principal;
while in the latter, an employer-employee relationship is created by
law between the principal and the employees supplied by the labor-
only contractor.

2. In the former, the principal is considered only an “indirect

employer”; while in the latter, the principal is considered the “direct
employer” of the employees supplied by the labor-only contractor.

3. In the former, the solidary obligation of the principal and the

legitimate job contractor is only for a limited purpose, that is, to pay
the wages of the contractor’s employees supplied to the principal.
Other than this obligation of paying the wages, the principal is not
responsible for any claim made by the contractor’s employees; while in
the latter, the principal becomes solidarily liable with the labor-only
contractor to the latter’s employees in the same manner and extent
that the principal is liable to employees directly hired by him/her

v. Rights of employees and of labor organizations; membership in unions

I. Rights of Employees (Conditions of Employment)

A. LABOR STANDARDS

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;

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 d. Workers paid by results;

e. Non-agricultural field personnel; and f. Members of the

family of the employer.

B. CONDITIONS OF EMPLOYMENT

1. Hours of work

a. Principles in determining hours worked and employees exempted or not

covered

The following shall be considered as compensable hours worked:

a) All time during which an employee is required to be on duty

or to be at the employer’s premises or to be at a prescribed
workplace; and

b) All time during which an employee is suffered or permitted

to work. “

Fair day’s wage for a fair day’s labor,” remains the basic factor in
determining the employees’ wages and backwages.

b. Compensable time

i. Normal hours of work

What is the total normal hours of work per day?

Eight (8) hours daily.

What is overtime work?

Any work in excess of said eight (8) normal hours is

considered overtime work.

May normal working hours be reduced?

Yes, provided that no corresponding reduction is made

on the employee’s wage or salary equivalent to an 8-
hour work day. In instances where the number of
hours required by the nature of work is less than 8
hours, such number of hours should be regarded as
the employee’s full working day.

What are flexible working hours?

“Flexible work arrangements” refer to alternative

arrangements or schedules other than the traditional
or standard work hours, workdays and workweek. The
effectivity and implementation of any of the flexible
work arrangements should be temporary in nature.

Under R.A. No. 8972, otherwise known as “The Solo

Parents’ Welfare Act of 2000,” solo parents are allowed
to work on a 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)

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 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 the regular hourly rate on
a rest day, special day or regular 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 (Article 87, Labor Code)

What are some basic principles on overtime work?

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 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.

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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 overtime work:

1. When the country is at war or when any

other national or local emergency has been
declared by the National Assembly or the Chief
Executive;

2. When overtime work is necessary to prevent

loss of life or property or in case of imminent
danger to public safety due to actual or
impending emergency in the locality caused by
serious accident, fire, floods, typhoons,
earthquake, epidemic or other disasters or
calamities;

3. When there is urgent work to be performed

on machines, installations or equipment, or in
order to avoid serious loss or damage to the
employer or some other causes of similar
nature;

4. When the work is necessary to prevent loss

or damage to perishable goods;

5. When the completion or continuation of

work started before the 8th hour is necessary
to prevent serious obstruction or prejudice to
the business or operations of the employer;
and

6. When overtime work is necessary to avail of

favorable weather or environmental conditions
where performance or quality of work is
dependent thereon.

o May an employee validly refuse to render overtime

work under any of the afore-said circumstances?

No. When an employee refuses to render

emergency overtime work under any of the
foregoing conditions, he may be dismissed on
the ground of insubordination or willful
disobedience of the lawful order of the
employer.

Can overtime pay be waived?

No. The right to claim overtime pay is not subject to a

waiver. Such right is governed by law and not merely
by the agreement of the parties.

(a) Compressed work week

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The employer may compress the work days from six
(6) days (from Monday to Saturday) to five (5) days
(from Monday to Friday) under certain conditions
imposed by the DOLE.

The DOLE recognizes CWW schemes adopted in

accordance with the following:

1. The CWW scheme is undertaken as a result

of an express and voluntary agreement of
majority of the covered employees or their
duly authorized representatives. This
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 the employees’
health and safety, there must be a certification
from an accredited health and safety
organization or practitioner or from the firm’s
safety committee that work beyond eight (8)
hours is within threshold limits or tolerable
levels of exposure, as set in the OSHS.

3. The employer shall notify the DOLE, through

its Regional Office having jurisdiction over the
workplace, of the adoption of the CWW
scheme. The notice should be made in DOLE
CWW Report Form.

Effects. A CWW scheme which complies with the

foregoing conditions shall have the following effects:

1. Unless there is a more favorable practice

existing in the firm, work beyond eight (8)
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 twelve (12) hours a day or fortyeight
(48) hours a week shall be subject to overtime
premium.

2. Consistent with Article 85 of the Labor Code,

employees under a CWW scheme are entitled
to meal periods of not less than sixty (60)
minutes. Nothing, however, shall impair the
right of employees to rest days as well as to
holiday pay, rest day pays or leaves in
accordance with law or applicable collective
bargaining agreement (CBA) or company
practice.

3. Adoption of the CWW scheme shall in no

case result in diminution of existing benefits.

Page 85 of 151
 Reversion to the normal eight-hour workday
shall not constitute a diminution of benefits.
The reversion shall be considered a legitimate
exercise of management prerogative provided
that the employer shall give the employees
prior notice of such reversion within a
reasonable period of time.

(b) Built-in overtime

What is built-in overtime pay?

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 (Article 85, Labor Code)

What is the rule on time-off for regular meal?

Every employer is required to give his employees,

regardless 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 should be compensated therefor.

Are short breaks compensable?

Rest periods of short duration during working hours

are considered and counted as hours worked. Rest
periods or coffee breaks running from five (5) to
twenty (20) minutes are considered compensable
working time.

ii. Power interruptions or 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.

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 c. In each case, the employer may extend the working
hours of 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 wherein
he may leave the work area should not be counted as working
time only when the work is not continuous. (National
Development Company v. Court of Industrial Relations, Nov.
30, 1962)

iv. Travel time

When is travel time not compensable?

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 a normal incident of employment and
therefore not considered as hours worked. This is true
whether he works at a fixed location or at different
jobsites.

When is travel time compensable?

o If an employee receives an emergency call outside of

his regular working hours and is required to travel to
his regular place of business or some other worksite,
all of the time spent in such travel is considered
working time.

o Time spent by an employee while on travel as part of

his principal activity, such as travel from jobsite to
jobsite during the workday, must be counted as hours
worked.

o Travel that keeps the employee away from home

overnight is travel away from home. Travel away from
home is clearly working time when it cuts across the
employee’s workday. The time is not only hours
worked on regular working days during normal working
hours but also during the corresponding hours on non-
working days.

v. Commuting time

See discussion on Travel time above.

vi. Waiting time

Waiting time spent by an employee shall be considered as

working time if waiting is an integral part of his work or the
employee is required or engaged by the employer to wait.

2. Rest periods

a. Weekly Rest Period

What is the duration of weekly rest period?

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 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.

b. 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

Under the newest law on service charges approved on August 7, 2019, All
service charges collected by hotels, restaurants and similar establishments
shall be distributed completely and equally among the covered workers except
managerial employees.

What is the frequency of distribution for service charges?

The share of the employees should be distributed and paid to them not
less often than (a) once every two (2) weeks OR (b) twice a month at
intervals not exceeding sixteen (16) days.

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 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.

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.

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 the basic distinction between wage and salary?

The term “wage” is used to characterize the compensation 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 “salary,” such compensation is not
exempt from execution or attachment or garnishment. Thus, the
salary, commission and other remuneration received by a managerial
employee (as distinguished from an ordinary worker or laborer) cannot
be considered wages. Salary is understood to relate to a position or
office, or the compensation given for official or other service; while
wage is the compensation for labor.

What are the attributes of wage? “Wage” has the following attributes:

1) It is the remuneration or earnings, however designated, for work

done or to be done or for services rendered or to be rendered;

2) It is capable of being expressed in terms of money, whether fixed

or ascertained on a time, task, piece or commission basis, or other
method of calculating the same;

Page 89 of 151
 3) It is payable by an employer to an employee under a written or
unwritten contract of employment for work done or to be done or for
services rendered or to be rendered; and

4) It includes the fair and reasonable value, as determined by the

DOLE Secretary, of board, lodging, or other facilities customarily
furnished by the employer to the employee. “Fair and reasonable
value” shall not include any profit to the employer or to any person
affiliated with the employer.

What is basic wage?

“Basic wage” means all the remuneration or earnings paid by an

employer to a worker for services rendered on normal working days
and hours but does not include cost-of-living allowances, profit-sharing
payments, premium payments, 13th month pay or other monetary
benefits which are not considered as part of or integrated into the
regular salary of the workers.

Further, as held in Honda Phils., Inc. v. Samahan ng Malayang

Manggagawa sa Honda, the following should be excluded from the
computation of “basic salary,” to wit: payments for sick, vacation and
maternity leaves, night differentials, regular holiday pay and premiums
for work done on rest days and special holidays.

b. Distinguish: facilities and supplements

What are facilities?

“Facilities” include articles or services for the benefit of the employee

or his family but does not include tools of the trade or articles or
services primarily for the benefit of the employer or necessary to the
conduct of the employer’s business. They are items of expense
necessary for the laborer’s and his family’s existence and subsistence
which form part of the wage and when furnished by the employer, are
deductible therefrom, since if they are not so furnished, the laborer
would spend and pay for them just the same.

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

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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.

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 domestic workers or Kasambahays covered?

Yes. They are now covered under the Kasambahay Law.

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.

What is meant by “basic salary” or “basic wage”?

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 “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 monthly wage multiplied by their
length of service within a given calendar year.

For a discussion on Bonus, refer to the discussion under Management

Prerogative infra.

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

Chinese New Year - Movable Date

EDSA People Power Revolution - February 25

Black Saturday - Movable Date

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

How many are the guaranteed paid regular holidays?

There are twelve (12) paid regular holidays in a year. This is 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.

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What is the Holiday Pay Rule?

“Holiday pay” refers to the payment of the regular daily wage for any
unworked regular holiday. The Holiday Pay Rule, therefore, applies to
entitlement to holiday pay during 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.

What is the coverage of the Holiday Pay Rule? Who are exempted employees?

As a general rule, the holiday pay benefit is applicable to all

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;

3. Kasambahay and persons in the personal service of another

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

Page 93 of 151
 (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.

How is premium pay for REGULAR HOLIDAYS computed?

o 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.

o 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.

o 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.

o 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%)].

o 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 -

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 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

How is premium pay for SPECIAL (NON-WORKING) DAYS OR SPECIAL

HOLIDAYS computed?

o 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.

o 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).

o 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).

o 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].

o 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

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.

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 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

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

This principle means persons who work with substantially equal

qualification, skill, effort and responsibility, under similar conditions,
should be paid similar salaries. This means that if an employer accords
employees the same position and rank, the presumption is that these
employees perform equal work as borne by logic and human
experience.

According to International School Alliance of Educators v. Quisimbing

(June 1, 2000), the effect of this principle is that "(i)f the employer
pays one employee less than the rest, it is not for that employee to
explain why he receives less or why the others receive more. That
would be adding insult to injury. The employer has discriminated
against that employee; it is for the employer to explain why the
employee is treated unfairly."

c. Fair wage for fair work

According to Sugue v. Triumph International, Phils. Inc. (June 30,

2009), the general 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." If there is no work performed by the employee there
can be no wage or pay, unless of course, the laborer was able, willing
and ready to work but was illegally locked out, dismissed or
suspended. It is hardly fair or just for an employee or laborer to fight
or litigate against his employer on the employer's time.”

d. Non-diminution of benefits

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

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 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.

There is diminution of benefits when the following requisites are

present:

1. The grant or benefit is founded on a policy or has ripened

into a practice over a long period of time;

2. The practice is consistent and deliberate;

3. The practice is not due to error in the construction or

application of a doubtful or difficult question of law; and

4. The diminution or discontinuance is done unilaterally by the

employer.

The 2014 case of Wesleyan University-Philippines v. Wesleyan

University-Philippines Faculty and Staff Association, 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.

As to No. 3 above: 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:

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 (1) The act of the employer has been done for a considerable
period of time;

(2) The act should be done consistently and intentionally; and

(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.

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, 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. - 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. - 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, 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., 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.

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 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, 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], 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,

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

What is 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?

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 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 An employee must be paid his or

her wages for all hours worked. Note that if the employee is
made to work between 10pm to 6am, he/she shall be entitled
to night shift differential pay. If he/she works for more than
eight (8) hours in a day, he/she shall be entitled to overtime
pay.

b. Payment by results All workers paid by results, including

homeworkers and those who are paid on piece rate, takay,
pakyaw (or pakyao) or task basis, shall receive not less than
the applicable minimum wage rates under the Regional Wage
Orders for normal working hours which shall not exceed eight
(8) hours a day, or a proportion thereof for work of less than
the normal working hours.

In cases of workers paid by results or on task basis involving

work which cannot be finished in two (2) weeks, payment of
their wages should be made at intervals not exceeding sixteen
(16) days in proportion to the amount of work completed. Final
settlement should be made immediately upon completion of
the work.

4. Payment of wages

What is the manner and form of payment of wages?

As a general rule, wages should be paid in legal tender and the use of
tokens, promissory notes, vouchers, coupons or any other form
alleged to represent legal tender is prohibited even when expressly
requested by the employee. A similar requirement that the laborer’s
wages be paid in legal currency is provided in the Civil Code.

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 As an exception, however, payment of wages by bank checks, postal
checks or money orders may be allowed only under any of the
following circumstances:

o Where such manner of wage payment is customary on the

date of the effectivity of the Labor Code; or

o Where it is stipulated in a collective bargaining agreement

(CBA); or

o Where all the following conditions are met:

a. There is a bank or other facility for encashment

within a radius of one (1) kilometer from the
workplace;

b. The employer or any of his agents or

representatives does not receive any pecuniary benefit
directly or indirectly from the arrangement;

c. The employees are given reasonable time during

banking hours to withdraw their wages from the bank
which time shall be considered as compensable hours
worked if done during working hours; and

d. The payment by check is with the written consent of

the employees concerned if there is no collective
agreement authorizing the payment of wages by bank
checks.

How often should wages be paid?

The general rule is that wages should be paid not less often than once
every two (2) weeks or twice a month at intervals not exceeding
sixteen (16) days.

The exception is when payment of wages cannot be made with such

regularity due to force majeure or circumstances beyond the
employer’s control, in which case, the employer should pay the wages
immediately after such force majeure or circumstances beyond his
control have ceased.

5. Prohibitions regarding wages (Articles 112 to 119 of the Labor Code)

a. 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 offered by any person.

b. WAGES NOT SUBJECT TO EXECUTION OR ATTACHMENT; EXCEPTION.

The general rule is that laborer’s wages are not subject to execution or
attachment. The exception is when such execution or attachment is
made for debts incurred for food, shelter, clothing and medical
attendance.

c. PROHIBITION ON DEDUCTIONS FROM WAGES

May employer deduct from wage of employees?

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 The general rule is that an employer, by himself or through his
representative, is PROHIBITED from making any deductions
from the wages of his employees. The employer is not allowed
to make unnecessary deductions without the knowledge or
authorization of the employees.

Are there EXCEPTIONS to this rule?

Yes.

(a) In cases where the worker is insured with his consent by

the employer, and the deduction is to recompense the
employer for the amount paid by him as premium on the
insurance;

(b) For union dues, in cases where the right of the worker or
his union to check-off has been recognized by the employer or
authorized in writing by the individual worker concerned; and

(c) In cases where the employer is authorized by law or

regulations issued by the DOLE Secretary.

(d) Deductions for loss or damage under Article 114 of the

Labor Code;

(e) Deductions made for agency fees from non-union members

who accept the benefits under the CBA negotiated by the
bargaining union. This form of deduction does not require the
written authorization of the non-bargaining union member
concerned;

(f) Deductions for value of meal and other facilities;

(g) Deductions for premiums for SSS, PhilHealth, employees’

compensation and Pag-IBIG;

(h) Withholding tax mandated under the National Internal

Revenue Code (NIRC);

(i) Withholding of wages because of the employee’s debt to the

employer which is already due;

(j) Deductions made pursuant to a court 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;

(k) When deductions from wages are ordered by the court;

d. PROHIBITION AGAINST DEPOSIT REQUIREMENT.

Article 114 of the Labor Code prohibits the employer to require that
workers should make a deposit from which deductions shall be made
for the reimbursement of loss of tools, materials or equipment supplied
by him, or any damages thereto.

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.

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 e. 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.

f. 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.

g. 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.

h. 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; or

(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.

i. 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

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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?

In the determination of regional minimum wages, the Regional

Board shall, among other relevant factors, consider 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?

o There are two (2) methods, to wit:

1. “Floor-Wage” method which involves the fixing of a

determinate amount to be added to the prevailing

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 statutory minimum wage rates. This was applied in
earlier wage orders; and

2. “Salary-Cap” or “Salary-Ceiling” method where the

wage 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.

o The “Salary-Cap” or “Salary-Ceiling” method is the preferred

mode.

o 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

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 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.

C. LEAVES

1. Labor Code

a. Service incentive leave (SIL)

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
employment contract, is less than twelve (12) months, in
which case, said period should be considered as one (1) year
for the purpose of determining entitlement to the service
incentive leave benefit.

Who are excluded from its coverage?

All employees are covered by the rule on service incentive

leave except:

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1. Government employees, whether employed by the National
Government or any of its political subdivisions, including those
employed in government-owned and/or controlled corporations
with original charters or created under special laws;

2. Persons in the personal service of another;

3. Managerial employees, if they meet all of the following

conditions:

3.1. Their primary duty is to manage the establishment

in which they are employed or of a department or
subdivision thereof;

3.2. They customarily and regularly direct the work of

two or more employees therein; and

3.3. 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.

4. Officers or members of a managerial staff, if they perform

the following duties and responsibilities:

4.1. Primarily perform work directly related to

management policies of their employer;

4.2. Customarily and regularly exercise discretion and

independent judgment;

4.3. (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

4.4. 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 4.1, 4.2, and 4.3
above;

5. Field personnel and those whose time and performance are

unsupervised by the employer, including those who are
engaged on task or contract basis, purely commission basis, or
those who are paid a fixed amount for performing work
irrespective of the time consumed in the performance thereof;

6. Those already enjoying this benefit;

7. Those enjoying vacation leave with pay of at least five (5)

days; and

8. Those employed in establishments regularly employing less

than ten (10) employees.

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 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:

“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.”

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

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

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 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.

Can a female worker avail of both solo parent leave and maternity leave?

Yes. Under R.A. No. 11210 (Expanded Maternity Leave Law), in case
the worker qualifies as a solo parent, the worker shall be granted an
additional fifteen (15) days maternity leave with full pay.

b. Expanded 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.” 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.

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 What is the period of 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:

- 105 days of paid leave in case of live childbirth, regardless of

mode of delivery; 60 days of paid leave in case of miscarriage
and emergency termination of pregnancy;

- Additional 15 days of paid leave in case of live childbirth,

regardless of mode of delivery for female worker qualified as a
solo parent.

An option to extend for an additional 30 days without pay is available

only in case of live childbirth.

Frequency of the grant – in every instance of childbirth, pregnancy,

miscarriage or emergency termination of pregnancy, regardless of
frequency.

A female worker entitled to maternity leave benefits may, at her

option, allocate up to 7 days of said benefits to the child’s father or
alternate caregiver.

Is an unmarried woman entitled to maternity leave benefit?

Yes. For as long as a woman is pregnant, she is entitled to maternity

leave benefit regardless of whether she is married or unmarried.

c. Paternity leave

What is paternity leave benefit?

o “Paternity leave” covers a married male employee allowing him not

to report for work for seven (7) CALENDAR days but continues to earn
the compensation therefor, on the condition that his spouse has
delivered a child or suffered miscarriage for purposes of enabling him
to effectively lend support to his wife in her period of recovery and/or
in the nursing of the newly-born child.

o “Delivery” includes childbirth or any miscarriage.

o “Spouse” refers to the lawful wife. For this purpose, “lawful wife”
refers to a woman who is legally married to the male employee
concerned.

o “Cohabiting” refers to the obligation of the husband and wife to live

together.

What is the covered total number of deliveries?

Every married employee in the private and public sectors is entitled to

a paternity leave of seven (7) calendar days with full pay for the first
four (4) deliveries of the legitimate spouse with whom he is cohabiting.

Paternity leave benefits are granted to the qualified employee after the
delivery by his wife, without prejudice to an employer allowing an
employee to avail of the benefit before or during the delivery, provided
that the total number of days should not exceed seven (7) calendar
days for each delivery.

Is an unavailed paternity leave benefit convertible to cash?

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 No. In the event that the paternity leave benefit is not availed of, said
leave shall not be convertible to cash.

Can the mother of the child allocate her leave benefits to the father of the
child?

Yes. Any female worker entitled to maternity leave benefits as

provided for herein may, at her option, allocate up to seven (7) days
of said benefits to the child’s father, whether or not the same is
married to the female worker. This benefit is over and above that
which the father is entitled to under the Paternity Leave Act.

d. Gynecological leave

What is this special leave benefit?

A special leave benefit for women was granted under R.A. No. 9710,
otherwise known as “The Magna Carta of Women” [August 14, 2009].
Thus, any female employee in the public and private sector regardless
of age and civil status shall be entitled to a special leave of two (2)
months with full pay based on her gross monthly compensation
subject to existing laws, rules and regulations due to surgery caused
by gynecological disorders under the following terms and conditions:

1. She has rendered at least six (6) months continuous

aggregate employment service for the last twelve (12) months
prior to surgery;

2. In the event that an extended leave is necessary, the

female employee may use her earned leave credits; and

3. This special leave shall be non-cumulative and non-

convertible to cash.

“Gynecological disorders” refer to disorders that would require surgical

procedures such as, but not limited to, dilatation and curettage and
those involving female reproductive organs such as the vagina, cervix,
uterus, fallopian tubes, ovaries, breast, adnexa and pelvic floor, as
certified by a competent physician. Gynecological surgeries shall also
include hysterectomy, ovariectomy, and mastectomy.

Is this leave similar to maternity leave?

No. This leave should be distinguished from maternity leave benefit, a

separate and distinct benefit, which may be availed of in case of
childbirth, miscarriage, complete abortion or emergency termination of
pregnancy.

A woman, therefore, may avail of this special leave benefit in case she
undergoes surgery caused by gynecological disorder and at the same
time maternity benefit as these two leaves are not mutually exclusive.

e. Battered woman leave (R.A. No. 9262)

What is this kind of leave?

This special leave is granted to a woman employee who is a victim

under this law. It is for a total of ten (10) days of paid leave of
absence, in addition to other paid leaves under the law. It is extendible
when the necessity arises as specified in the protection order. Its
purpose is to enable the woman employee to attend to the medical
and legal concerns relative to said law. This leave is not convertible to
cash.

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 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.

II. Rights of Labor Organizations

A. RIGHTS OF LABOR ORGANIZATIONS

1. Check off, assessment, agency fees

Requisites for validity of union dues and special assessments

The following requisites must concur in order for union dues and
special assessments for the union’s incidental expenses, attorney’s
fees and representation expenses to be valid, namely:

(a) Authorization by a written resolution of the majority of all

the members at a general membership meeting duly called for
the purpose;

(b) Secretary’s record of the minutes of said meeting; and

(c) Individual written authorizations for check-off duly signed

by the employees concerned.

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
arrangement of any sort to the contrary is deemed null and void.
Clearly, what is prohibited is the payment of attorney’s fees when it is
effected through forced contributions from the workers from their own
funds as distinguished from the union funds.

Check-off of union dues and assessments.

“Check-off” means a method of deducting from the employee’s pay at

prescribed periods, any amount due for fees, fines or assessments. It
is a process or device whereby the employer, on agreement with the
union recognized as the proper bargaining representative, or on prior
authorization from its employees, deducts union dues and
assessments from the latter’s wages and remits them directly to the
union.

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

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 written authorization is to protect the employees from unwarranted
practices that diminish their compensation without their knowledge or
consent.

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

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.

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.

Non-members of the SEBA need not become members thereof

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 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.

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.

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.

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.

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.”

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

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.

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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.

(1) Duty to bargain collectively when there is absence of a CBA

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.

(2) Duty to bargain collectively when there is a CBA

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 agreement at least sixty (60) days prior to its expiration
date. It shall be the duty of both parties to keep the status quo and to
continue in full force and effect the terms and conditions of the
existing agreement during the 60-day period and/or until a new
agreement is reached by the parties.

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.

Automatic renewal clause:

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 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

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 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.

Kiok Loy doctrine.

This doctrine is based on the ruling In Kiok Loy v. NLRC, where the
petitioner, Sweden Ice Cream Plant, refused to submit any counter-
proposal to the CBA proposed by its employees’ certified bargaining
agent. The High Court ruled that the employer had thereby lost its
right to bargain the terms and conditions of the CBA. Thus, the CBA
proposed by the union was imposed lock, stock and barrel on the
erring company.

The Kiok Loy case epitomizes the classic case of negotiating a CBA in
bad faith consisting of the employer’s refusal to bargain with the
collective bargaining agent by ignoring all notices for negotiations and
requests for counterproposals. Such refusal to send a counter-proposal
to the union and to bargain on the economic terms of the CBA
constitutes an unfair labor practice under Article 248(g) of the Labor
Code.

Other cases after Kiok Loy.

o Divine Word University of Tacloban v. Secretary of Labor and

Employment, Sept. 11, 1992.

o General Milling Corporation v. CA, Feb. 11, 2004.

b. Collective Bargaining Agreement (CBA)

A “Collective Bargaining Agreement” or “CBA” for short, refers to the

negotiated contract between a duly recognized or certified exclusive
bargaining agent of workers and their employer, concerning wages, hours of
work and all other terms and conditions of employment in the appropriate
bargaining unit, including mandatory provisions for grievances and arbitration
machineries. It is executed not only upon the request of the exclusive
bargaining representative but also by the employer.

Essential requisites of collective bargaining

Prior to any collective bargaining negotiations between the employer

and the bargaining union, the following requisites must first be
satisfied:

1. Employer-employee relationship must exist between the

employer and the members of the bargaining unit being
represented by the bargaining agent;

2. The bargaining agent must have the majority support of the

members of the bargaining unit established through the modes
sanctioned by law; and

3. A lawful demand to bargain is made in accordance with law.

Some principles on CBA.

o CBA is the law between the parties during its lifetime and thus must
be complied with in good faith.

o Being the law between the parties, any violation thereof can be
subject of redress in court.

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 o CBA is not an ordinary contract as it is impressed with public
interest.

o Automatic Incorporation Clause – law is presumed part of the CBA.

o The benefits derived from the CBA and the law are separate and
distinct from each other.

o Workers are allowed to negotiate wage increases separately and

distinctly from legislated wage increases. The parties may validly
agree in the CBA to reduce wages and benefits of employees provided
such reduction does not go below the minimum standards.

o Ratification of the CBA by majority of all the workers in the

bargaining unit makes the same binding on all employees therein.

o Employees entitled to CBA benefits. The following are entitled to the

benefits of the CBA:

(1) Members of the bargaining union;

(2) Non-members of the bargaining union but are members of

the bargaining unit;

(3) Members of the minority union/s who paid agency fees to

the bargaining union; and

(4) Employees hired after the expiration of the CBA.

o Pendency of a petition for cancellation of union registration is not a

prejudicial question before CBA negotiation may proceed.

o CBA should be construed liberally. If the terms of a CBA are clear

and there is no doubt as to the intention of the contracting parties, the
literal meaning of its stipulation shall prevail.

i. Mandatory provisions in a Collective Bargaining Agreement

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

III. Membership in Unions

A. RIGHT TO SELF ORGANIZATION

1. Who may or may not exercise the right

Who are eligible to join, form or assist a labor organization for purposes of
collective bargaining?

o 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;

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 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

o 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?

o 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 assist a labor

organization?

No, because they are co-owners of the cooperative.

What about employees of a cooperative?

Yes, because they have employer-employee relationship with the

cooperative.

What about members who are at the same time employees of the cooperative?

No, because the prohibition covers employees of the cooperative who

are at the same time members thereof.

Can employees of job contractors join, form or assist a labor organization?

Yes, but not for the purpose of collective bargaining with the principal
but with their direct employer – the job contractor.

Are self-employed persons allowed to join, form or assist a labor organization?

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 Yes, for their mutual aid and protection but not for collective
bargaining purposes since they have no employers but themselves.
BUT AS AND BY WAY OF DISTINCTION, THEIR LABOR ORGANIZATION
IS CALLED “WORKERS’ ASSOCIATION.”

This rule applies as well to ambulant, intermittent and other workers,

rural workers and those without any definite employers. The reason for
this rule is that these persons have no employers with whom they can
collectively bargain.

Who are the persons that are not allowed to form, join or assist labor
organizations?

o In the private sector:

Top and middle level managerial employees; and

Confidential employees.

o In the public sector

The following are not eligible to form employees’

organizations:

High-level employees whose functions are normally

considered as policy-making or managerial or whose
duties are of a highly confidential nature;

Members of the Armed Forces of the Philippines;

Police officers;

Policemen;

Firemen; and

Jail guards.

Ineligibility of managerial employees to unionize; right of supervisory

employees

There are 3 types of managerial employees:

1. Top Management

2. Middle Management

3. First-Line Management (also called supervisory level)

The first two above are absolutely prohibited; but the third, being
supervisors, are allowed but only among themselves

Are confidential employees allowed to join, form or assist a labor organization?

No, under the confidential employee rule. “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. If not related to labor relations, an employee can
never be considered as confidential employee as would deprive
him of his right to self-organization.

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 The two (2) criteria 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

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.

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

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 relationship between the union and its members is that of

principal and agent, the former being the agent while the
latter, the principal. Their relationship is fiduciary in character.
The union is but an agent of its members for the purpose of

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 securing for them fair and just wages and proper, good
working conditions.

ii. Labor union federation

In relation to an affiliate or local chapter/chartered local, the

federation or national union is commonly known as the
“mother union.” The mother union, acting for and in behalf of
its affiliate, has the status of an agent while the affiliate or
local chapter/chartered local remains the principal. 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.

(a) Disaffiliation

Mother union vis-à-vis affiliate or local chapter/chartered local

The federation or national union (also called “Mother

Union”), acting for and in behalf of its affiliate, has the
status of an agent while the affiliate or local
chapter/chartered local remains the principal – the
basic unit of the association.

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.

Right to disaffiliate.

The right of the affiliate union to disaffiliate from its

mother federation or national union is a
constitutionally guaranteed right which may be invoked
by the former at any time. It is axiomatic that an
affiliate union is a separate and voluntary association
free to serve the interest of all its members -
consistent with the freedom of association guaranteed
in the Constitution.

o Affiliate refers to:

(1) An independent union affiliated with a

federation or a national union; or

(2) A local chapter or chartered local which has

been subsequently granted independent
registration but did not disaffiliate from the
federation or national union which created it.

SOME PRINCIPLES ON AFFILIATION.

o Independent legal personality of an affiliate union is

not affected by affiliation.

o 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.

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 o The fact that the affiliate union is not a legitimate
labor organization does not affect the principal-agent
relationship.

o Affiliate union becomes subject of the rules of the

federation or national union.

o 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.

SOME PRINCIPLES ON DISAFFILIATION.

o Disaffiliation does not divest an affiliate union of its

legal personality.

o Disaffiliation of an affiliate union is not an act of

disloyalty.

o 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.

o Disaffiliation should be approved by the majority of

the union members.

o Disaffiliation terminates the right to check-off

federation dues.

(b) Substitutionary doctrine

Benguet Consolidated, Inc. v. BCI Employees &

Workers Union, (PAFLU) (G.R. No. L-24711, April 30,
1968): The ‘substitutionary’ doctrine only provides that
the employees cannot revoke the validly executed
collective bargaining contract with their employer by
the simple expedient of changing their bargaining
agent.

vi. Management prerogative

I. 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

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 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 OF EMPLOYEES

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 What are the various kinds of transfer?

o 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?

o 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.

o Commitment made by the employee like a salesman in the employment

contract to be re-assigned anywhere in the Philippines is binding on him. o
Even if the employee is performing well in his present assignment,
management may reassign him to a new post.

o 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.

o 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.

o 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.

o 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.

o Refusal to transfer to overseas assignment is valid.

o Refusal to transfer consequent to promotion is valid. o Transfer to avoid

conflict of interest is valid.

o 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?

o 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:

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 1. an incentive scheme; and/or

2. a disciplinary scheme.

o As an incentive scheme, employees who surpass the productivity standards

or quota are usually given additional benefits.

o As a disciplinary scheme, employees may be sanctioned or dismissed for

failure to meet the productivity standards or quota.

o Illustrative cases: In International School Manila v. International School

Alliance of Educators (ISAE), the teacher was held guilty of gross inefficiency
meriting her dismissal on the basis of the Court’s finding that she failed to
measure up to the standards set by the school in teaching Filipino classes.

o In Reyes-Rayel v. Philippine Luen Thai Holdings Corp., the validity of the

dismissal of petitioner who was the Corporate Human Resources (CHR)
Director for Manufacturing of respondent company, on the ground of
inefficiency and ineptitude, was affirmed on the basis of the Court’s finding
that petitioner, on two occasions, gave wrong information regarding issues on
leave and holiday pay which generated confusion among employees in the
computation of salaries and wages.

o In Realda v. New Age Graphics, Inc., petitioner, a machine operator of

respondent company, was dismissed on the ground, among others, of
inefficiency. In affirming the validity of his dismissal, the Supreme Court
reasoned: “(T)he petitioner’s failure to observe Graphics, Inc.’s work
standards constitutes inefficiency that is a valid cause for dismissal. Failure to
observe prescribed standards of work, or to fulfill reasonable work
assignments due to inefficiency may constitute just cause for dismissal. Such
inefficiency is understood to mean failure to attain work goals or work quotas,
either by failing to complete the same within the allotted reasonable period, or
by producing unsatisfactory results.”

D. BONUS

What is the rule on its demandability and enforceability?

o Bonus, as a general rule, is an amount granted and paid ex gratia to the

employee.

o It cannot be forced upon the employer who may not be obliged to assume
the onerous burden of granting bonuses or other benefits aside from the
employees’ basic salaries or wages. 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?

o It becomes demandable and enforceable:

(1) If it has ripened into a company practice;

(2) 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.

(3) 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.

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E. CHANGE OF WORKING HOURS

What is the extent of the exercise of this prerogative?

o 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.

o Manila Jockey Club Employees Labor Union – PTGWO, v. Manila Jockey Club,
Inc. - 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

The BFOQ Rule

Concept.

o 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.

Meiorin test.

o 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.

Star Paper test

o 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

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 (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. BFOQ is valid “provided it reflects an inherent quality
reasonably necessary for satisfactory job performance.” This is otherwise
known as the “Reasonable Business Necessity Rule.”

Specific topics

(a) Civil status/marital status qualification

(b) Physical appearance qualification

(c) Age qualification

(a) CIVIL STATUS/MARITAL STATUS QUALIFICATION

Relevant cases As far as the qualification of civil status or marital status is

concerned, the following cases are relevant:

(1) PT & T v. NLRC;

(2) Duncan Association of Detailman-PTGWO v. Glaxo Welcome

Philippines, Inc.; and

(3) Star Paper Corp. v. Simbol.

The PT&T case.

o The employer invoked concealment of civil status as ground to

terminate the private respondent employee.

o In the job application form, she indicated in the portion for civil
status that she was single although she had contracted marriage a few
months earlier.

o It appears that the employee had made the same representation in

the two successive reliever agreements which she signed.

o The company has a policy of not accepting married women for

employment.

o 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

unmarried could be justified as a ‘bona fide occupational
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 flight attendants.”

The Duncan case.

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 o In Duncan, the contract of employment expressly prohibited 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.”

o 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 a
competitor company will gain access to its secrets and procedures.

The Star Paper case.

o The employees in Star Paper were terminated on various occasions,

on the basis of the following company policy, viz.:

“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 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.”

o According to the employer, said rule is only intended to carry out its
no-employment-for-relatives-within-thethird-degree-policy which is
within the ambit of the prerogatives of management. The Supreme
Court, however, disagreed. It ruled that said policy failed to comply
with the standard of reasonableness which is being followed in our
jurisdiction.

o Application of the BFOQ rule in the Star Paper case.

The Court did not find a reasonable business necessity in the

policy. Respondents were hired after they were found fit for
the job, but were asked to resign when they married a co-
employee. Petitioners failed to show how the marriage could
be detrimental to their business operations. The policy is
premised on the mere fear that employees married to each
other will be less efficient. If the questioned rule is upheld
without valid justification, the employer can create policies
based on an unproven presumption of a perceived danger at
the expense of an employee’s right to security of tenure.

(b) PHYSICAL APPEARANCE QUALIFICATION

The Yrasuegui case.

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 o This case involves the physical appearance or attribute of an
employee which, in this case, is petitioner’s weight. For several times
spanning a total period of five (5) years, petitioner, an international
flight steward of respondent PAL, was given the opportunity to reduce
his weight to the acceptable level in accordance with the weight
standards but he failed to measure up therewith. He was thus
terminated for his continued obesity. In his illegal dismissal case, one
of the issues raised is whether petitioner’s dismissal for obesity can be
predicated on the BFOQ defense.

o 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.

(c) AGE QUALIFICATION

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].

o Coverage. The law shall apply to all employers, publishers,

labor contractors or subcontractors, and labor organizations,
whether or not registered.

o 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

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 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.

(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.

o 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

system that is not intended to evade the purpose of the Rules.

(c) The intent is to observe the terms of a bona fide employee

retirement or a voluntary early retirement plan consistent with
the purpose of the Rules; Provided, That such retirement or
voluntary retirement plan is in accordance with the Labor
Code, as renumbered, and other related laws; or

(d) The action is duly certified by the DOLE Secretary after

consultation with the stakeholders in accordance with the
purpose of the Rules.

For purposes of the foregoing exceptions, an employer who

invokes the qualifications as provided herein, shall submit a
report prior to its implementation to the DOLE Regional Office
which has jurisdiction over the workplace. The submission of
the report shall be a presumption that the age limitation is in
accordance with the Rules unless proven otherwise by the
court.

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 Failure to submit said report shall give rise to the presumption
that the employer is not allowed to set age limitation.

o Employment age of children. The age requirement in the

employment of children shall be governed by R.A. No. 9231 and its
Implementing Rules and Regulations, Article 138 of the Labor Code as
renumbered, and other applicable laws, rules and regulations.

Upon hiring, the employer may require the child or the guardian to
show proof of the child's age for purposes of compliance with minimum
employable age under existing laws.

G. POST-EMPLOYMENT RESTRICTIONS

(a) NON-COMPETE CLAUSE

Is a non-compete clause valid?

Yes. The employer and the employee are free to stipulate in an

employment contract prohibiting the employee within a certain period
from and after the termination of his employment, from:

(1) starting a similar business, profession or trade; or

(2) working in an entity that is engaged in a similar business

that might compete with the employer.

The non-compete clause is agreed upon to prevent the 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 to be valid?

A non-compete clause is not necessarily void for being in restraint of

trade as long as there are reasonable limitations 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 operations under a 5-year contract

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 of employment containing the afore-quoted clause. On September 16,
1995, petitioner stopped reporting for work. In November 1995, she
became the Vice-President for Sales of Professional 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;

vii. Illegal recruitment of overseas Filipino workers

A. DEFINITION OF RERUITMENT AND PLACEMENT

The Labor Code, in its Article 13(b), defines “recruitment and placement” activity as
referring to any act of: canvassing, enlisting, contracting, transporting, utilizing, or
hiring/procuring workers. It also includes: referrals, contract services, promising, or
advertising for employment, locally or abroad, whether for profit or not. This definition
is applicable for local and overseas employment.

B. REGULATION OF RECRUITMENT AND PLACEMENT ACTIVITIES

1. Regulatory Authorities

a. Philippine Overseas Employment Administration

Pursuant to the rule making power of DOLE, POEA is given the power to
regulate the recruitment and overseas placement of workers by setting up a
licensing and registration system.

It is also tasked to 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.

It is responsible for the regulation and management of overseas employment

from the pre-employment stage, securing the best possible employment terms
and conditions for overseas Filipino workers, and taking into consideration the
needs of vulnerable sectors and the peculiarities of sea-based and land-based
workers.

The POEA shall regulate private sector participation in the recruitment and
overseas placement of workers by setting up a licensing and registration
system.

b. Regulatory and visitorial powers of the Department of Labor and Employment

Secretary

Regulatory Power:

DOLE Secretary may validly issue rules and regulations restricting or otherwise
regulating the recruitment and placement activities of persons and entities
engaged in the recruitment and placement of workers locally or overseas.

Pursuant to this rule making power, POEA is given the power to regulate
private sector participation in the recruitment and overseas placement of
workers

Visitorial Power:

Pertains to the power of DOLE to conduct an inspection of the premises, books

of accounts and records of persons and entities engaged in the recruitment

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 and placement of workers for local or overseas employment. It also includes
the power to require the submission of reports regularly on certain prescribed
forms and to act on any violation of the pertinent provisions of the Labor Code

2. Ban on direct hiring

- 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, (March 14, 1990) 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

i. For overseas employment: o

Travel agencies and sales agencies of airline companies, whether the

recruitment and placement is for profit or not, including the following:

a. Officers or members of the Board of any corporation or partners in a

partnership engaged in the business of a travel agency; and

b. 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.

c. 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 or seafarers;

d. In case of sea-based OFWs, if the applicant is presently an

incorporator, director or key officer of at least five (5) licensed
manning agencies;

e. Sole proprietors, partners or officers and members of the board with

derogatory records, such as, but not limited to, the following:

1. Those convicted, or against whom probable cause or prima

facie finding of guilt is determined by a competent authority,

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 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;

2. Those agencies whose licenses have been revoked for

violation of R.A. 8042 (Migrant Workers and Overseas Filipinos
Act of 1995), as amended, P.D. 442 (Labor Code of the
Philippines), as amended, and R.A. 9208 (Trafficking in
Persons Act of 2003), as amended, and their implementing
rules and regulations;

3. 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; and

f. Any official or employee of the DOLE, POEA, OWWA, DFA, DOJ,

DOH, BI, IC, NLRC, TESDA, CFO, NBI, PNP, Civil Aviation Authority of
the Philippines (CAAP), MARINA, international airport authorities, and
other government agencies directly involved in the implementation of
R.A. 8042, as amended, and/or any of his/her relatives within the
fourth civil degree of consanguinity or affinity;

g. Immigration consultants. However, they may engage in recruitment

and placement activities if they obtain a license from the POEA.

ii. For local employment:

o Those who are convicted of illegal recruitment, trafficking in persons, anti-

child labor violation, or crimes involving moral turpitude;

o 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;

o Those agencies whose licenses have been previously revoked or cancelled by

the DOLE; o Cooperatives, whether registered or not under the Cooperative
Act of the Philippines; o Law enforcers and any official and employee of the
DOLE;

o Sole proprietors of duly licensed agencies are prohibited from securing

another license to engage in recruitment and placement; o Sole proprietors,
partnerships or corporations licensed to engage in private recruitment and
placement for local employment are prohibited from engaging in job
contracting or sub-contracting activities.

Note that there is a citizenship requirement for recruitment and placement of

Filipino workers:

o Local recruitment: applicant for a license to operate a private employment

agency for local recruitment must be Filipino citizens for single proprietorship
and seventy five percent (75%) of the authorized capital stock is owned and
controlled by Filipino citizens for partnerships or corporations

o Overseas recruitment: any Filipino citizen acting as a sole proprietor or a

partnership, or a corporation at least seventy-five percent (75%) of the
authorized and voting capital stock of which is owned and controlled by Filipino
citizens, may engage in the business of recruitment and placement of OFWs or
seafarers

4. Suspension or cancellation of license and authority

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License vs. Authority

o 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.

o 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.

Article 35 of the Labor Code grants the DOLE Secretary the power to suspend or
cancel any license or authority to recruit employees for overseas employment on the
general ground of violation of rules and regulations issued by the DOLE and the POEA,
or for violation of the Labor Code and other applicable laws.

Pursuant to the rule-making power of the DOLE Secretary, POEA was given authority
to conduct the necessary proceedings for the suspension or cancellation of the license
or authority of any agency or entity for certain enumerated offenses. This is also
reflected in the 2016 Revised POEA Rules and Regulations Governing the Recruitment
and Employment of Land-Based Overseas Filipino Workers of 2016 which provides that
POEA, in the exercise of its adjudicatory power, is granted the authority to impose the
penalty of reprimand, suspension, cancellation, or revocation of license for pre-
employment/recruitment violation cases. Where the penalty of suspension is imposed,
the POEA Administrator may impose disqualification from the overseas employment
program.

5. Prohibited practices

What are the PROHIBITED ACTIVITIES in connection with recruitment for overseas
employment?

The law provides that it shall 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

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 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.

C. ILLEGAL RECRUITMENT

Illegal recruitment may be committed by any of the following:

o By Non-Licensee or Non-holder of authority; or

o 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 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
NONLICENSEE, 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;

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 (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.”

1. Elements

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

a. Simple illegal Recruitment; and

b. Illegal Recruitment as a Form of Economic Sabotage

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 “recruitment and
placement” defined under Article 13(b), (see above enumeration) or any prohibited
practices (see above enumeration) under Article 34 of the Labor Code.

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Can a recruiter be a natural or juridical person?

Yes.

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 recruitment.

3. There is no need to show that accused represented himself as a licensed recruiter.

4. Referrals may constitute illegal recruitment.

5. It is illegal recruitment to induce applicants to part with their money upon false
misrepresentations and promises in assuring them that after they paid the placement
fee, jobs abroad were waiting for them and that they would be deployed soon.

6. Recruitment whether done for profit or not is immaterial.

7. The act of receiving money far exceeding the amount as required by law is not
considered as “recruitment and 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.

13. Only one person recruited is sufficient to convict one for illegal recruitment.

14. Non-prosecution of another suspect is immaterial.

15. Execution of affidavit of desistance affects only the civil liability but has no effect
on the criminal liability for illegal recruitment.

16. Defense of denial cannot prevail over positive identification. Positive identification
where categorical and consistent and not attended by any showing of ill motive on the
part of the eyewitnesses on the matter prevails over alibi and denial. Between the
categorical statements of the prosecution witnesses, on the one hand, and bare
denials of the accused, on the other hand, the former must prevail.

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?

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 If it is carried out by a group of three (3) or more persons conspiring or confederating
with one another.

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.

The elements of illegal recruitment in large scale, as distinguished from simple illegal
recruitment, are as follows:

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.

Illegal recruitment by large scale as 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.

3. Illegal recruitment as distinguished from estafa

It must be stressed that not all acts which constitute the felony of estafa under the
Revised Penal Code necessarily establish the crime of illegal recruitment under the
Labor Code. Estafa is wider in scope and covers deceits, whether related or not related
to recruitment activities.

Illegal recruitment is malum prohibitum while estafa is malum in se. Additionally, in

illegal recruitment, the criminal intent of the accused is not necessary for conviction;
the fact alone that the accused violated the law warrants his conviction. On the other
hand, intent is imperative for conviction of the crime of 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:

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 o Same evidence to prove illegal recruitment may be used to prove estafa. It is thus
enough to show that the recruiter and his cohort acted with unity of purpose in
defrauding the victims by misrepresenting that they had the power, influence, agency
and business to obtain overseas employment for them upon payment of a placement
fee, which they did pay and deliver to the recruiter.

o Conviction for both illegal recruitment and estafa is not double jeopardy

D. LIABILITY OF LOCAL RECRUITMENT AGENCY AND FOREIGN EMPLOYER

1. Solidary liability

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, 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?

o 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.

o Good faith and merely following orders of superiors are not valid defenses of an
employee.

o A manager of a recruitment/manning agency is not a mere employee. As such, he

receives job applications, interviews applicants and informs them of the agency’s
requirement of payment of performance or cash bond prior to the applicant’s
deployment. As the crewing manager, he was at the forefront of the company’s
recruitment activities.

2. Theory of imputed knowledge

Knowledge of the agent is deemed knowledge of the principal but not the other way
around.

The theory of imputed knowledge is a rule that any information material to the
transaction, either possessed by the agent at the time of the transaction or acquired
by him before its completion, is deemed to be the knowledge of the principal, at least
insofar as the transaction is concerned, even though the knowledge, in fact, is not
communicated to the principal at all.

Sunace International Management Services, Inc. v. NLRC- The High Court here has the
opportunity to discuss the application of the theory of imputed knowledge. The OFW
(Divina), a domestic helper in Taiwan, has extended her 12-month contract, after its
expiration, for two (2) more years after which she returned to the Philippines. It was
established by evidence that the extension was without the knowledge of the local
recruitment agency, petitioner Sunace. The Court of Appeals, however, affirmed the
Labor Arbiter’s and NLRC’s finding that Sunace knew of and 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] foreign employer.” It thus
concluded that “[a]s agent of the foreign principal, ‘petitioner cannot profess ignorance

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 of such extension as obviously, the act of the principal extending complainant (sic)
employment contract necessarily bound it.”

In finding that the application by the CA of this theory of imputed knowledge was
misplaced, the High Court ruled that this theory ascribes the knowledge of the agent,
Sunace, to the principal, employer Xiong, not the other way around. The knowledge of
the principal-foreign employer cannot, therefore, be imputed to its agent, Sunace.
There being no substantial proof that Sunace knew of and consented to be bound
under the 2-year employment contract extension, it cannot be said to be privy
thereto. As such, Sunace and its owner cannot be held solidarily liable for any of
Divina’s claims arising from the 2-year employment extension. As the New Civil Code
provides: “Contracts take effect only between the parties, their assigns, and heirs,
except in case where the rights and obligations arising from the contract are not
transmissible by their nature, or by stipulation or by provision of law.”

viii. Remedies (labor standard violations)

A. Jurisdiction and Remedies - See Jurisdiction in Chan 2021 Pre-Week

B. Relief from illegal dismissal

What are the reliefs under the Labor Code, particularly under Article 294 [279] thereof?

Under this article, an illegally dismissed employee is entitled to the following reliefs:

(1) Reinstatement without loss of seniority rights and other privileges;

(2) Full backwages, inclusive of regular allowances; and

(3) Other benefits or their monetary equivalent.

What are the other reliefs that are not provided in the Labor Code but are granted in illegal
dismissal cases?

The following reliefs that are awarded in illegal dismissal cases are missing in Article
279:

(1) Award of separation pay in lieu of reinstatement.

(2) Award of penalty in the form of nominal damages in case of termination

due to just or authorized cause but without observance of procedural due
process.

(3) Reliefs to illegally dismissed employee whose employment is for a fixed

period. The proper relief is only the payment of the employee’s salaries
corresponding to the unexpired portion of the employment contract.

(4) Award of damages and attorney’s fees.

(5) Award of financial assistance in cases where the employee’s dismissal is

declared legal but because of long years of service, and other considerations,
financial assistance is awarded.

(6) Imposition of legal interest on separation pay, backwages and other

monetary awards.

(1) REINSTATEMENT

What are the Labor Code’s provisions on reinstatement?

The Labor Code grants the remedy of reinstatement in various forms and situations.
Its provisions recognizing reinstatement as a relief are as follows:

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 1. Article 229 [223] which provides for reinstatement of an employee whose
dismissal is declared illegal by the Labor Arbiter. This form of reinstatement is
self-executory and must be implemented even during the pendency of the
appeal that may be instituted by the employer. (NOTE: See discussion of this
topic under Major Topic “VIII. Jurisdiction and Reliefs; A. Labor Arbiter”, infra)

2. Article 278(g) [263(g)] which provides for automatic return to work of all
striking or locked-out employees, if a strike or lockout has already taken place,
upon the issuance by the DOLE Secretary of an assumption or certification
order in national interest cases. The employer is required to immediately
resume operation and readmit all workers under the same terms and
conditions prevailing before the strike or lockout.

3. Article 292(b) [277(b)] which empowers the DOLE Secretary to suspend the
effects of termination pending the resolution of the termination dispute in the
event of a prima facie finding by the appropriate official of the DOLE before
whom such dispute is pending that the termination may cause a serious labor
dispute or is in implementation of a mass lay-off. Such suspension of the
effects of termination would necessarily results in the reinstatement of the
dismissed employee while the illegal dismissal case is being heard and
litigated.

4. Article 294 [279] which grants reinstatement as a relief to an employee

whose dismissal is declared illegal in a final and executory judgment.

5. Article 301 [286] which involves bona-fide suspension of operation for a

period not exceeding six (6) months or the rendition by an employee of
military or civic duty. It is required under this provision that the employer
should reinstate its employees upon resumption of its operation which should
be done before the lapse of said six-month period of bona-fide suspension of
operation or after the rendition by the employees of military or civic duty.

(2) SEPARATION PAY IN LIEU OF REINSTATEMENT

Is separation pay applicable only to reinstatement as an 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

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 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?

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 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 for by employee is

separation pay in lieu thereof.

(3) 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, 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.

2. Allowances and other benefits regularly granted to and received by the

employee should be made part of backwages.

What are some principles on backwages?

o Salary increases during period of unemployment are not included as component in

the computation of backwages.

o Dismissed employee’s ability to earn is irrelevant in the award of backwages.

o In case reinstatement is ordered, full backwages should be reckoned from the time
the compensation was withheld (which, as a rule, is from the time of illegal dismissal)
up to the time of reinstatement, whether actual or in the payroll.

o If separation pay is ordered in lieu of reinstatement, full backwages should be

computed from the time of illegal dismissal until the finality of the decision. The
justification is that along with the finality of the Supreme Court’s decision, the issue on
the illegality of the dismissal is finally laid to rest.

o If the illegally dismissed employee has reached the optional retirement age of 60
years, his backwages should only cover the time when he was illegally dismissed up to
the time when he reached 60 years. Under Article 287, 60 years is the optional
retirement age.

o If the employee has reached 65 years of age or beyond, his full backwages should
be computed only up to said age. The contention of the employer that backwages
should be reckoned only up to age 60 cannot be sustained.

o If employer has already ceased operations, full backwages should be computed only
up to the date of the closure. To allow the computation of the backwages to be based
on a period beyond that would be an injustice to the employer.

o Any amount received during payroll reinstatement is deductible from backwages.

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(4) LIMITED BACKWAGES

When is the award of backwages limited?

(1) When the dismissal is deemed too harsh a penalty;

(2) When the employer acted in good faith; or

(3) Where there is no evidence that the employer dismissed the employee.

Thus, the backwages will not be granted in full but limited to 1 year, 2 years or 5
years [per jurisprudence].

4. Money claims arising from employer-employee relationship

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. 6727 and the
regional wage orders issued pursuant thereto, P.D. No. 851 [13th Month Pay Law],
R.A. No. 7641 [Retirement Pay Law], social security benefits from R.A. No. 11199
[Social Security Act of 2018], R.A. No. 11223 [Universal Health Care Act], and R.A.
No. 9679 [Pag-IBIG Law].

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 fixedterm 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

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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, 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 used as a consonant
basis in determining the reasonableness of the length of time when an employee could
be deprived of work under this doctrine.

“Floating” status doctrine as applied to security guards.

Applying Article 301 [286] by analogy, the Supreme Court has consistently recognized
that security guards may be temporarily sidelined by their security agency as their
assignments primarily depend on the contracts entered into by the latter with third
parties. This is called the “floating status” doctrine which is based on and justified
under the said article. This status, as applied to security guards, is the period of time
when security guards are in between assignments or when they are made to wait after
being relieved from a previous post until they are transferred to a new one. In security
agency parlance, being placed “off-detail” or on “floating” status means “waiting to be
posted.”

Instances which justify application of doctrine. “Floating status” takes place under any of the
following circumstances:

(1) When the security agency’s clients decide not to renew 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

(2) When contracts for security services stipulate that the client may request the
agency for the replacement of the guards assigned to it even for want of cause and
there are no available posts under the agency’s existing contracts to which the
replaced security guards may be placed.

As far as No. 2 above is concerned, the Supreme Court has recognized the fact that
clients of the security agency have the right to request for the removal of any of the
security guards supplied by the latter to the former without need to justify the same.
The reason for this is the lack of any employment relationship between the security
guards and the client.

Also, under No. 2 above, a relief and transfer order may be issued by the security
agency to the security guard concerned in order to effect it. This order in itself does
not sever employment relationship between a security guard and his agency. And the

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 mere fact that the transfer would be inconvenient for the former does not by itself
make the transfer illegal.

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, 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.

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, 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. NLRC 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, pending her
assignment to another project for the same position.

Some principles on “Floating Status” Doctrine.

o 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.

o 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.

o The security guard who refused to be re-assigned may be dismissed for

insubordination.

o Multiple “floating status” amount to constructive dismissal.

o “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

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 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.

o 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.

o 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.

o 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.

d. Taxation Law (3 Questions)

i. Basic principles of taxation in the Constitution

A. Due Process – Sec. 1, Art. III: “No person shall be deprived of life, liberty, or property
without due process of law, nor shall any person be denied the equal protection of the laws.”

- Tax laws and their enforcement must comply with substantive and procedural due
process

- Substantive: the law must be reasonable and for a public purpose; no law,
no tax

- Procedural: there must be no arbitrariness in the assessment and collection;

the prescribed rules must be followed before assessment and collection

B. Equal Protection Clause

- There is valid distinction when the classification:

1. Rests on substantial distinctions which make for real differences;

2. Is germane to the purpose of law;

3. It is not limited to existing conditions only;

4. Applies equally to all members of the same class.

- Rational basis scrutiny or rational relations test – demands that the classification
reasonably relate to the legislative purpose

- Equality among equals. Persons similarly situated shall be similar to

responsibility conferred and liabilities imposed.

- Tax exemptions have never violated the equal protection clause, as the legislature
has the inherent power not only to select the subjects of taxation but to grant
exemptions. (CIR v. Lingayen Gulf Electric Power Co., Inc.)

C. Religious Freedom – Sec. 5, Art. III: “No law shall be made respecting an establishment
of religion, or prohibiting the free exercise thereof. The free exercise and enjoyment of
religious profession and worship, without discrimination or preference, shall forever be
allowed. No religious test shall be required for the exercise of civil or political rights.”

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 - The constitutional guarantee of the free exercise and enjoyment of religious
profession and worship carries with it the right to disseminate religious information.

- Any restraints of such rights can only be justified like other restraints to
freedom of expression on t he grounds that there is a clear and present danger
of any substantive evil which the State has the right to prevent.

- Hence, a tax imposed on the distribution and sale of bibles and other
religious literature is invalid as it amounts to a prior restraint. (American Bible
Society v. City of Manila)

- Note, however, that under Sec 30, NIRC as amended, income of religious
organizations from activities conducted for profit or from their property, regardless of
disposition of such income, is subject to income.

D. Non-Impairment of Contracts – Sec. 10, Art. III: “No law impairing the obligation of
contracts.”

E. Prohibition against Imprisonment for Non-Payment of Poll Tax – Sec. 20, Art. III:”
No person shall be imprisoned for debt or non-payment of poll tax.”

F. Uniformity and Equality of Taxation and Progressive System of Taxation – Sec.

28(1), Art. VI: “The rule of taxation shall be uniform and equitable. The Congress shall evolve
a progressive system of taxation.”

- Equality and uniformity in taxation means that all taxable articles or kinds of
property of the same class shall be taxed at the same rate. (City of Baguio v. de Leon)

- Uniformity does not call for perfect uniformity or perfect equality; reasonable
classifications do not violate the uniformity and equality of taxation. (Sison v.
Ancheta)

- Congress is free to determine the subjects of taxation; hence, the tax is still
valid when some classes are subject to tax while some are not subject to tax

- However, the classification must still be valid and reasonable according to

the rules on equal protection. If the classification is unreasonable then the rule
on uniformity will be violated. (Pepsi-Cola Bottling v. City of Butuan)

- Taxation is progressive when its rate goes up depending on the resources of the
person affected.

G. Delegated Authority of the President to Impose Tariff Rates – Sec. 28(2), Art. VI:”
The Congress may, by law, authorize the President to fix within specified limits, and subject to
such limitations and restrictions as it may impose, tariff rates, import and export quotas,
tonnage and wharfage dues, and other duties or imposts within the framework of the national
development program of the Government.”

H. Prohibition against Taxation of Real Property of Charitable Institutions, Churches,

Personages or Convents, Mosques and Non-profit Cemeteries – Sec. 28(3), Art. VI:”
Charitable institutions, churches and parsonages or convents appurtenant thereto, mosques,
non-profit cemeteries, and all lands, buildings, and improvements, actually, directly, and
exclusively used for religious, charitable, or educational purposes shall be exempt from
taxation.”

- The exemption only applies to real property tax (property tax on general or any tax
that can be considered a tax on property.)

- “Actual, direct, and exclusive (ADE) USE of the property” is the direct and immediate
and actual application of the property itself to the purposes for which the institution is
organized. (Lung Center v. QC)

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 - The law does not care who the owner is, as long as it is USED ADE for REC
purposes. Ownership determines liability, usage determines exemption.

I. Prohibition against Taxation of Non-Stock, Non-Profit Educational Institution –

Sec. 4(3), Art. XIV:” All revenues and assets of non-stock, non-profit educational institutions
used actually, directly, and exclusively for educational purposes shall be exempt from taxes
and duties. Upon the dissolution or cessation of the corporate existence of such institutions,
their assets shall be disposed of in the manner provided by law.

Proprietary educational institutions, including those cooperatively owned, may likewise be

entitled to such exemptions subject to the limitations provided by law including restrictions on
dividends and provisions for reinvestment.”

- The constitutional provision covers non-stock non-profit educational institutions and

exempts them from income, real property, donor’s tax and customs duties, because
the provisions peaks of “all revenues and assets”. (Omnibus type of exemption)

- The revenues and the assets must be ADE USED for educational purposes.

- Usage determines exemption

J. Majority Vote of Congress for Grants of Tax Exemptions – Sec. 28(4), Art. VI: “No law
granting any tax exemption shall be passed without the concurrence of a majority of all the
Members of the Congress.”

- This includes the grant of tax amnesties

- tax amnesty: partakes of an absolute forgiveness or waiver by the

Government of its right to collect what otherwise would be due it. There must
be a law granting it.

- v. tax exemption: looks at the future, from the moment of exemption

onward.

- Revocation of the tax exemption can be done by ordinary legislation.

K. Prohibition on Use of Tax Levied for Special Purpose – Sec. 29(3), Art. VI: “All money
collected on any tax levied for a special purpose shall be treated as a special fund and paid
out for such purpose only. If the purpose for which a special fund was created has been
fulfilled or abandoned, the balance, if any, shall be transferred to the general funds of the
Government.”

L. Tax Bills Should Originate Exclusively in the House of Representatives: Doctrine of

Origination – Sec. 24, Art. VI: “All appropriation, revenue or tariff bills, bills authorizing
increase of the public debt, bills of local application, and private bills shall originate exclusively
in the House of Representatives. But the Senate may propose or concur with amendments.”

M. President’s Veto Power on Appropriation, Revenue, Tariff (ART) Bills – Sec. 27(2),
Art. VI: “The President shall have the power to veto any particular item or items in an
appropriation, revenue, or tariff bill, but the veto shall not affect the item or items to which he
does not object.”

N. Judicial Power to Review Legality of Tax – Sec. 5, Art. VIII: “The Supreme Court shall
have the following powers: x x x (2) Review, revise, reverse, modify, or affirm on appeal or
certiorari, as the law or the Rules of Court may provide, final judgments and orders of lower
courts in: x x x (b) All cases involving the legality of any tax, impost, assessment, or toll, or
any penalty imposed in relation thereto. x x x”

O. Grant of Power to the LGUs to Create its Own Sources of Revenue – Sec. 5, Art. X:
“Each local government unit shall have the power to create its own sources of revenues and to

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 levy taxes, fees, and charges subject to such guidelines and limitations as the Congress may
provide, consistent with the basic policy of local autonomy. Such taxes, fees, and charges
shall accrue exclusively to the local governments.”

ii. Income Tax

iii. Value Added Tax

iv. Donor’s Tax

v. Remedies (jurisdiction of courts, prescription, remedies against assessment notices)

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