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Labor Law Review

University of Southern Philippines Foundation

PART ONE
(LABOR STANDARDS)

Introductory Concepts

A. LABOR LAWS, SOCIAL LEGISLATION AND SOCIAL JUSTICE

1. Definition

 Labor legislation – consists of statutes, regulations and jurisprudence governing the relations
between capital and labor, by providing for employment standards and a legal framework for
negotiating, adjusting and administering those standards and other standards and other incidents of
employment.

 Labor Law - It is the law that governs the rights and duties of employers and employees, first with
respect to the terms and conditions of employment, and second, with respect to the labor disputes
arising from collective bargaining respecting such terms and conditions.

 Social Legislation – refers to that body of laws, state policies, fundamental principles and decisions
that seek to provide protection to workers and other marginalized sectors of society. Wherein it seek
to address specific concerns on health and life insurance, to help the labor secure housing and basic
commodities.

2. Principle of Social Justice

It is the Humanization of Laws and the Equalization of social and economic forces by the State so that
Justice is in its rational and objectively secular conception may at least be approximated.
(Sec. 10, Art. II, 1987 Constitution)

3. Labor Legislation vs Social Legislation

Labor Legislation Social Legislation

1. Directly affects employment (eg. Wages) 1. Govern the effects of employment (eg.
Compensation for injuries)
2. Designed to meet the daily needs of workers. 2. Involves long term benefits.
3. Covers employment for profit or gain. 3. Covers employment for profit or non-profit.
4. Affects WORK of employee. 4. Affects LIFE of employee.
5. Benefits are paid by the workers employer. 5. Benefits are paid by Government Agencies (eg.
Employee’s Compensation Commission)

B. INTERPRETATION AND CONSTRUCTION OF LABOR STANDARDS

- ART. 4 Labor Code. 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.
- ART. 1700,NCC. The relation between capital and labor are not merely contractual. They are so
impressed with public interest that labor contracts must yield to the common good. Therefore, such
contracts are subject to the special Lawson labor unions, collective bargaining, strikes and lockouts,
closed shop, wages, working conditions, hours of labor, and similar subjects.

- ART. 1701, NCC. Neither capital nor labor shall act oppressively against the other, or impair the
interest or convenience of the public.

- ART. 1702, NCC. In case of doubt, all labor legislations and all labor contracts shall be construed in
favor of the safety and decent living of the laborer.

NOTE:

Under Art. 1700 of the Civil Code, there are 4 Parties to an employment contract;
1. Employer
2. Employee
3. State
4. Public

Q: What should be resolved in favor of Labor?


A: The interpretation and implementation of:
1. Provisions of the Labor Code
2. Provisions of the Implementing Rules of the Labor Code
3. Provisions of other Laws (Civil Code, Special Laws, etc.)
4. Evidence
5. Agreements
6. Writing

- Acuna vs CA (GR# 159832 - 05/05/06)

It is a time-honored rule that in controversies between a worker and his employer, doubts reasonably arising
from the evidence, or in the interpretation of agreements and writing should be resolved in the worker’s
favor. The policy is to extend the applicability of the decree to a greater number of employees who can avail
of the benefits under the law, which is in consonance with the avowed policy of the State to give maximum
aid and protection to labor. Accordingly, we rule that private respondents are solidarily liable with the
foreign principal for the overtime pay claims of petitioners.

- G&M Phils. Inc. vs Cuambot (GR# 162308 - 11/22/06)

Indeed, the rule is that all doubts in the implementation and the interpretation of the Labor Code shall be
resolved in favor of labor, in order to give effect to the policy of the State to “afford protection to labor,
promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the
relations between workers and employers,” and to “assure the rights of workers to self-organization,
collective bargaining, security of tenure, and just and humane conditions of work.”

It is a well-settled doctrine, that 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. It is a time-honored rule that in
controversies between a laborer and his master, doubts reasonably arising from the evidence, or in the
interpretation of agreements and writing should be resolved in the former’s favor. The policy is to extend the
doctrine to a greater number of employees who can avail of the benefits under the law, which is in
consonance with the avowed policy of the State to give maximum aid and protection of labor.

- Eureka vs NLRC (GR# 163013 - 04/30/08)

- Continental Steel Mfg. vs Montano (GR# 182836 - 10/13/09)

The issue of civil personality is not relevant herein. Articles 40, 41 and 42 of the Civil Code on natural
persons, must be applied in relation to Article 37 of the same Code, which states that Juridical Personality is
inherent in every natural person.
There is no need to determine whether or not the fetus had civil personality since it is not her civil rights
which are in question but rather that of her father. It is sufficient that she is recognized as having been born
and having died, which is affirmed by Art. 37, for her father to receive the benefits sought.

When conflicting interests of labor and capital are to be weighed on the scales of social justice, the heavier
influence of the latter should be counter-balanced by sympathy and compassion the law must accord the
underprivileged worker.

- Penaflor vs Outdoor Clothing Mfg. Corp. (GR# 177114 - 01/21/10)

In our view, it is more consistent with human experience that Peñaflor indeed learned of the appointment of
Buenaobra only on March 13, 2000 and reacted to this development through his resignation letter after
realizing that he would only face hostility and frustration in his working environment. Three very basic labor
law principles support this conclusion and militate against the company’s case.

The first is the settled rule that in employee termination disputes, the employer bears the burden of proving
that the employee’s dismissal was for just and valid cause. That Peñaflor did indeed file a letter of
resignation does not help the company’s case as, other than the fact of resignation, the company must still
prove that the employee voluntarily resigned. There can be no valid resignation where the act was made
under compulsion or under circumstances approximating compulsion, such as when an employee’s act of
handing in his resignation was a reaction to circumstances leaving him no alternative but to resign. In sum,
the evidence does not support the existence of voluntariness in Peñaflor’s resignation

Another basic principle is that expressed in Article 4 of the Labor Code – that all doubts in the interpretation
and implementation of the Labor Code should be interpreted in favor of the workingman.

For the Employer’s Side:

- Cebu Metal Corp. vs Saliling (GR# 154463 - 09/05/06)

It should be remembered that The Philippine Constitution, while inexorably committed towards the
protection of the working class from exploitation and unfair treatment, nevertheless mandates the policy of
social justice so as to strike a balance between an avowed predilection for labor, on the one hand, and the
maintenance of the legal rights of capital, the proverbial hen that lays the golden egg, on the other. Indeed,
we should not be unmindful of the legal norm that justice is in every case for the deserving, to be dispensed
with in the light of established facts, the applicable law, and existing jurisprudence.

- Saracom vs Interorient Maritime Ent., Inc. (GR# 167813 - 06/27/06)

As a final note, let it be emphasized that the constitutional policy to provide full protection to labor is not
meant to be a sword to oppress employers. The commitment of this Court to the cause of labor does not
prevent us from sustaining the employer when it is in the right.

- NS Transportation Employees Assoc. vs NSTS Inc. (GR# 164049 - 10/30/06)

The law, in protecting the rights of the employee, authorizes neither oppression nor self-destruction of the
employer. Contrary to petitioners’ claim, remand of the case to the NLRC is proper since the company has
yet to present its evidence during the formal hearing. It is true that both parties have been provided the
opportunity to prove their cases through the pleadings submitted before the NLRC; however, only
petitioners were given the chance to present its side in the formal hearing. The factual issues raised in the
consolidated cases could still be affected by the additional evidence to be presented by the company. Equity
demands that the company must be equally allowed to adduce its evidence, if the NLRC is to come up with a
rational and impartial decision.

C. MANAGEMENT PREROGATIVE VS LABOR RIGHTS

1. Management Prerogatives

Inherent Nature of Management Prerogatives


Management prerogatives are not expressly provided for under the Labor Code being inherent in nature.
But they are guaranteed under Sec. 1, Art 3, of the Constitution which states:

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.

Basically, management has the right to control his business (a form of property) in any way he sees fit to
ensure better performance.

Every employer has the inherent right to regulate, according to his own discretion
and judgment, all aspects of employment (since after all, it is HIS company, HE owns
it), including hiring, work assignments, working methods, the time, place, and
manner of work, work supervision, transfer of employees, lay-off of workers, and
discipline, dismissal, and recall of employees.
(Rural Bank of Cantilan vs Julve, GR# 169750 – 02/27/07)

But it must be remembered that like all rights, Management Prerogatives


have limitations, and these are: LCF

1. Those provided by Law


2. Those provided under a Contract or a Collective Bargaining Agreement
(CBA)
3. The General Principles of Fair Play and Justice
(Mendoza vs Rural Bank of Lucban, GR# 155421 – 07/07/04)

BASIC RIGHTS OF EMPLOYER (CPSTR) BASIC RIGHTS OF THE EMPLOYEE UNDER THE
CONSTITUTION (Sec. 3(par. 2), Art. XIII) TReSH
A. Under Labor Standards
1. Conduct of Business 1. Right to Security of Tenure
2. Prescribe Rules 2. Right to Receive a Living Wage
3. Select and Hire Employees 3. Right to Share in the fruits of production
4. Transfer or Discharge Employees 4. Right to Humane Conditions of Work
5. Return of Investment and Expansion of
Business
B. Under Labor Relations OCEP
1. Right to Organize themselves
2. Right to Conduct collective bargaining or
negotiation with management
3. Right to Engage in peaceful concerted
activities
4. Right to Participate in policy and decision-
making process

- Phil. Industrial Security Agency Corp. vs Aguinaldo

- Mendoza vs Rural Bank of Lucban (GR# 155421 - 07/07/04)

- Placido Urbanes vs CA

- Phil. Am Life & Gen Insurance Co. vs Gramaje (GR# 156963 - 11/11/04)
Respondent's transfer was not a legitimate exercise of management prerogative. It may be true that in
the transfer of respondent from the Pensions Department to the Legal Department, there was no
demotion in rank nor diminution of the salaries, benefits and privileges. But this is not the only
standard that must be satisfied in order to substantiate the transfer. In the pursuit of its legitimate
business interests, management has the prerogative to transfer or assign employees from one office or
area of operation to another – provided there is no demotion in rank or diminution of salary, benefits,
and other privileges; and the action is not motivated by discrimination, made in bad faith, or effected as
a form of punishment or demotion without sufficient cause. Bad faith and discrimination on the part of
petitioner are profusely perceived from its actions. Discrimination is the failure to treat all persons
equally when no reasonable distinction can be found between those favored and those not favored Art.
248 (e) of the Labor Code. Bad faith implies a conscious and intentional design to do a wrongful act for a
dishonest purpose or moral obliquity.

- St. Michael’s Institute vs Santos (GR# 145280 - 12/04/01)

The management prerogative was unfair and unreasonable. The employer’s right to conduct the affairs
of his business, according to its own discretion and judgment, is well-recognized. An employer has a free
reign and enjoys wide latitude of discretion to regulate all aspects of employment, including the
prerogative to instill discipline in its employees and to impose penalties, including dismissal, upon erring
employees. This is a management prerogative, where the free will of management to conduct its own
affairs to achieve its purpose takes form. The only criterion to guide the exercise of its management
prerogative is that the policies, rules and regulations on work-related activities of the employees must
always be fair and reasonable and the corresponding penalties, when prescribed, commensurate to the
offense involved and to the degree of the infraction. The dismissal meted out on the respondents for
dereliction of duty for one school day and denouncing school authority, appears to be too harsh a
penalty. Even when an employee is found to have transgressed the employer’s rules, in the actual
imposition of penalties upon the erring employee, due consideration must still be given to his length of
service and the number of violations committed during his employment. Where a penalty less punitive
would suffice, whatever missteps may have been committed by the employee ought not to be visited
with a consequence so severe such as dismissal from employment.

- Industrial Timber Corp. vs Ababon (GR# 164518 - 01/25/06)

Ababon, et. al were legally dismissed. Work is a necessity that has economic significance deserving legal
protection. The social justice and protection to labor provisions in the Constitution dictate so. On the
other hand, employers are also accorded rights and privileges to assure their self-determination and
independence, and reasonable return of capital. This mass of privileges comprises the so-called
management prerogatives. Although they may be broad and unlimited in scope, the State has the right
to determine whether an employer's privilege is exercised in a manner that complies with the legal
requirements and does not offend the protected rights of labor. One of the rights accorded an employer
is the right to close an establishment or undertaking. The right to close the operation of an
establishment or undertaking is one of the authorized causes in terminating employment of workers,
the only limitation being that the closure must not be for the purpose of circumventing the provisions
on termination of employment embodied in the Labor Code. ITC’s closure or cessation of business was
done in good faith and for valid reasons. The records reveal that the decision to permanently close
business operations was arrived at after a suspension of operation for several months precipitated by
lack of raw materials used for milling operations, the expiration of the anti-pollution permit in April
1990, and the termination of the lease contract with IPGC in August 1990 over the plywood plant.

Although the closure was done in good faith and for valid reasons, ITC did not comply with the notice
requirement. While an employer is under no obligation to conduct hearings before effecting
termination of employment due to authorized cause, however, the law requires that it must notify the
DOLE and its employees at least one month before the intended date of closure. The unfairness of
declaring illegal or ineffectual dismissals for valid or authorized causes but not complying with statutory
due process may have far-reaching consequences. Where the dismissal is based on an authorized cause
under Article 283 of the Labor Code but the employer failed to comply with the notice requirement, the
sanction should be stiff as the dismissal process was initiated by the employer’s exercise of his
management prerogative, as opposed to a dismissal based on a just cause under Article 282 with the
same procedural infirmity where the sanction to be imposed upon the employer should be tempered as
the dismissal process was, in effect, initiated by an act imputable to the employee.

- First Dominion Resources Corp. vs Penaranda (GR# 166616 - 01/27/06)


Under Article 282 of the Labor Code, willful disobedience of a lawful order of the employer is a valid
cause for dismissal. Management has the right to formulate reasonable rules to regulate the conduct of
its employees for the protection of its interests. These reasonable house rules are considered by the
Court as lawful orders and therefore violations thereof will justify dismissal under Article 282(a) of the
Labor Code. Company Rule 8 is a valid exercise of management prerogative and thus a lawful order.
Respondents were expected to abide by them and their transgression, despite clear warnings, provided
just cause for the termination of their employment.

2. Limitations on Exercise of Management Prerogatives

MANAGEMENT PREROGATIVE LIMITATIONS


Power to Hire  No Child below 15 shall be employed
 Obligation to prevent/deter acts of sexual harassment
 No stipulation against marriage
 Nightwork prohibition for women
 Equal opportunity for disabled persons
 Yellow Dog Contract
 Prohibition against Human Trafficking
 Employment of Handicapped Workers

Power to Promote  Right of the Employee to Refuse

Power to Demote
Power to Transfer  Transfer must be reasonable or with a sound purpose
 There must be consideration for the convenience and welfare
of the employee
 It must not be prejudicial to the employee
 It must not involve a Demotion in Rank or Status, or a
diminution of the employee’s salary

Power to Discipline
Power to Manage
Power to Fire

1. Hire

 R.A. 7610

AN ACT PROVIDING FOR STRONGER DETERRENCE AND SPECIAL PROTECTION AGAINST CHILD
ABUSE, EXPLOITATION AND DISCRIMINATION, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress


assembled::

ARTICLE I
Title, Policy, Principles and Definitions of Terms

Section 1. Title. – This Act shall be known as the "Special Protection of Children Against Abuse,
Exploitation and Discrimination Act."

Section 2. Declaration of State Policy and Principles. – It is hereby declared to be the policy of
the State to provide special protection to children from all firms of abuse, neglect, cruelty
exploitation and discrimination and other conditions, prejudicial their development; provide
sanctions for their commission and carry out a program for prevention and deterrence of and
crisis intervention in situations of child abuse, exploitation and discrimination. The State shall
intervene on behalf of the child when the parent, guardian, teacher or person having care or
custody of the child fails or is unable to protect the child against abuse, exploitation and
discrimination or when such acts against the child are committed by the said parent, guardian,
teacher or person having care and custody of the same
It shall be the policy of the State to protect and rehabilitate children gravely threatened or
endangered by circumstances which affect or will affect their survival and normal development
and over which they have no control.

The best interests of children shall be the paramount consideration in all actions concerning
them, whether undertaken by public or private social welfare institutions, courts of law,
administrative authorities, and legislative bodies, consistent with the principle of First Call for
Children as enunciated in the United Nations Convention of the Rights of the Child. Every effort
shall be exerted to promote the welfare of children and enhance their opportunities for a useful
and happy life.

Section 3. Definition of Terms. –

(a) "Children" refers to person below eighteen (18) years of age or those over but are unable to
fully take care of themselves or protect themselves from abuse, neglect, cruelty, exploitation or
discrimination because of a physical or mental disability or condition;

(b) "Child abuse" refers to the maltreatment, whether habitual or not, of the child which includes
any of the following:

(1) Psychological and physical abuse, neglect, cruelty, sexual abuse and emotional maltreatment;

(2) Any act by deeds or words which debases, degrades or demeans the intrinsic worth and
dignity of a child as a human being;

(3) Unreasonable deprivation of his basic needs for survival, such as food and shelter; or

(4) Failure to immediately give medical treatment to an injured child resulting in serious
impairment of his growth and development or in his permanent incapacity or death.

(c) "Circumstances which gravely threaten or endanger the survival and normal development of
children" include, but are not limited to, the following;

(1) Being in a community where there is armed conflict or being affected by armed conflict-
related activities;

(2) Working under conditions hazardous to life, safety and normal which unduly interfere with
their normal development;

(3) Living in or fending for themselves in the streets of urban or rural areas without the care of
parents or a guardian or basic services needed for a good quality of life;

(4) Being a member of a indigenous cultural community and/or living under conditions of
extreme poverty or in an area which is underdeveloped and/or lacks or has inadequate access to
basic services needed for a good quality of life;

(5) Being a victim of a man-made or natural disaster or calamity; or

(6) Circumstances analogous to those abovestated which endanger the life, safety or normal
development of children.

(d) "Comprehensive program against child abuse, exploitation and discrimination" refers to the
coordinated program of services and facilities to protected children against:

(1) Child Prostitution and other sexual abuse;

(2) Child trafficking;

(3) Obscene publications and indecent shows;

(4) Other acts of abuses; and


(5) Circumstances which threaten or endanger the survival and normal development of
children.1awphi1Ÿ

ARTICLE II
Program on Child Abuse, Exploitation and Discrimination

Section 4. Formulation of the Program. – There shall be a comprehensive program to be


formulated, by the Department of Justice and the Department of Social Welfare and
Development in coordination with other government agencies and private sector concerned,
within one (1) year from the effectivity of this Act, to protect children against child prostitution
and other sexual abuse; child trafficking, obscene publications and indecent shows; other acts of
abuse; and circumstances which endanger child survival and normal development.

ARTICLE III
Child Prostitution and Other Sexual Abuse

Section 5. Child Prostitution and Other Sexual Abuse. – Children, whether male or female, who
for money, profit, or any other consideration or due to the coercion or influence of any adult,
syndicate or group, indulge in sexual intercourse or lascivious conduct, are deemed to be children
exploited in prostitution and other sexual abuse.

The penalty of reclusion temporal in its medium period to reclusion perpetua shall be imposed
upon the following:

(a) Those who engage in or promote, facilitate or induce child prostitution which include, but are
not limited to, the following:

(1) Acting as a procurer of a child prostitute;

(2) Inducing a person to be a client of a child prostitute by means of written or oral


advertisements or other similar means;

(3) Taking advantage of influence or relationship to procure a child as prostitute;

(4) Threatening or using violence towards a child to engage him as a prostitute; or

(5) Giving monetary consideration goods or other pecuniary benefit to a child with intent to
engage such child in prostitution.

(b) Those who commit the act of sexual intercourse of lascivious conduct with a child exploited in
prostitution or subject to other sexual abuse; Provided, That when the victims is under twelve
(12) years of age, the perpetrators shall be prosecuted under Article 335, paragraph 3, for rape
and Article 336 of Act No. 3815, as amended, the Revised Penal Code, for rape or lascivious
conduct, as the case may be: Provided, That the penalty for lascivious conduct when the victim is
under twelve (12) years of age shall be reclusion temporal in its medium period; and

(c) Those who derive profit or advantage therefrom, whether as manager or owner of the
establishment where the prostitution takes place, or of the sauna, disco, bar, resort, place of
entertainment or establishment serving as a cover or which engages in prostitution in addition to
the activity for which the license has been issued to said establishment.

Section 6. Attempt To Commit Child Prostitution. – There is an attempt to commit child


prostitution under Section 5, paragraph (a) hereof when any person who, not being a relative of a
child, is found alone with the said child inside the room or cubicle of a house, an inn, hotel,
motel, pension house, apartelle or other similar establishments, vessel, vehicle or any other
hidden or secluded area under circumstances which would lead a reasonable person to believe
that the child is about to be exploited in prostitution and other sexual abuse.

There is also an attempt to commit child prostitution, under paragraph (b) of Section 5 hereof
when any person is receiving services from a child in a sauna parlor or bath, massage clinic,
health club and other similar establishments. A penalty lower by two (2) degrees than that
prescribed for the consummated felony under Section 5 hereof shall be imposed upon the
principals of the attempt to commit the crime of child prostitution under this Act, or, in the
proper case, under the Revised Penal Code.

ARTICLE IV
Child Trafficking

Section 7. Child Trafficking. – Any person who shall engage in trading and dealing with children
including, but not limited to, the act of buying and selling of a child for money, or for any other
consideration, or barter, shall suffer the penalty of reclusion temporal to reclusion perpetua. The
penalty shall be imposed in its maximum period when the victim is under twelve (12) years of
age.

Section 8. Attempt to Commit Child Trafficking. – There is an attempt to commit child trafficking
under Section 7 of this Act:1awphi1@alf

(a) When a child travels alone to a foreign country without valid reason therefor and without
clearance issued by the Department of Social Welfare and Development or written permit or
justification from the child's parents or legal guardian;

(c) When a person, agency, establishment or child-caring institution recruits women or couples to
bear children for the purpose of child trafficking; or

(d) When a doctor, hospital or clinic official or employee, nurse, midwife, local civil registrar or
any other person simulates birth for the purpose of child trafficking; or

(e) When a person engages in the act of finding children among low-income families, hospitals,
clinics, nurseries, day-care centers, or other child-during institutions who can be offered for the
purpose of child trafficking.

A penalty lower two (2) degrees than that prescribed for the consummated felony under Section
7 hereof shall be imposed upon the principals of the attempt to commit child trafficking under
this Act.

ARTICLE V
Obscene Publications and Indecent Shows

Section 9. Obscene Publications and Indecent Shows. – Any person who shall hire, employ, use,
persuade, induce or coerce a child to perform in obscene exhibitions and indecent shows,
whether live or in video, or model in obscene publications or pornographic materials or to sell or
distribute the said materials shall suffer the penalty of prision mayor in its medium period.

If the child used as a performer, subject or seller/distributor is below twelve (12) years of age, the
penalty shall be imposed in its maximum period.

Any ascendant, guardian, or person entrusted in any capacity with the care of a child who shall
cause and/or allow such child to be employed or to participate in an obscene play, scene, act,
movie or show or in any other acts covered by this section shall suffer the penalty of prision
mayor in its medium period.

ARTICLE VI
Other Acts of Abuse

Section 10. Other Acts of Neglect, Abuse, Cruelty or Exploitation and Other Conditions
Prejudicial to the Child's Development. –

(a) Any person who shall commit any other acts of child abuse, cruelty or exploitation or to be
responsible for other conditions prejudicial to the child's development including those covered by
Article 59 of Presidential Decree No. 603, as amended, but not covered by the Revised Penal
Code, as amended, shall suffer the penalty of prision mayor in its minimum period.

(b) Any person who shall keep or have in his company a minor, twelve (12) years or under or who
in ten (10) years or more his junior in any public or private place, hotel, motel, beer joint,
discotheque, cabaret, pension house, sauna or massage parlor, beach and/or other tourist resort
or similar places shall suffer the penalty of prision mayor in its maximum period and a fine of not
less than Fifty thousand pesos (P50,000): Provided, That this provision shall not apply to any
person who is related within the fourth degree of consanguinity or affinity or any bond
recognized by law, local custom and tradition or acts in the performance of a social, moral or legal
duty.

(c) Any person who shall induce, deliver or offer a minor to any one prohibited by this Act to keep
or have in his company a minor as provided in the preceding paragraph shall suffer the penalty of
prision mayor in its medium period and a fine of not less than Forty thousand pesos (P40,000);
Provided, however, That should the perpetrator be an ascendant, stepparent or guardian of the
minor, the penalty to be imposed shall be prision mayor in its maximum period, a fine of not less
than Fifty thousand pesos (P50,000), and the loss of parental authority over the minor.

(d) Any person, owner, manager or one entrusted with the operation of any public or private
place of accommodation, whether for occupancy, food, drink or otherwise, including residential
places, who allows any person to take along with him to such place or places any minor herein
described shall be imposed a penalty of prision mayor in its medium period and a fine of not less
than Fifty thousand pesos (P50,000), and the loss of the license to operate such a place or
establishment.

(e) Any person who shall use, coerce, force or intimidate a street child or any other child to;

(1) Beg or use begging as a means of living;

(2) Act as conduit or middlemen in drug trafficking or pushing; or

(3) Conduct any illegal activities, shall suffer the penalty of prision correccional in its medium
period to reclusion perpetua.

For purposes of this Act, the penalty for the commission of acts punishable under Articles 248,
249, 262, paragraph 2, and 263, paragraph 1 of Act No. 3815, as amended, the Revised Penal
Code, for the crimes of murder, homicide, other intentional mutilation, and serious physical
injuries, respectively, shall be reclusion perpetua when the victim is under twelve (12) years of
age. The penalty for the commission of acts punishable under Article 337, 339, 340 and 341 of
Act No. 3815, as amended, the Revised Penal Code, for the crimes of qualified seduction, acts of
lasciviousness with the consent of the offended party, corruption of minors, and white slave
trade, respectively, shall be one (1) degree higher than that imposed by law when the victim is
under twelve (12) years age.

The victim of the acts committed under this section shall be entrusted to the care of the
Department of Social Welfare and Development.

ARTICLE VII
Sanctions for Establishments or Enterprises

Section 11. Sanctions of Establishments or Enterprises which Promote, Facilitate, or Conduct


Activities Constituting Child Prostitution and Other Sexual Abuse, Child Trafficking, Obscene
Publications and Indecent Shows, and Other Acts of Abuse. – All establishments and enterprises
which promote or facilitate child prostitution and other sexual abuse, child trafficking, obscene
publications and indecent shows, and other acts of abuse shall be immediately closed and their
authority or license to operate cancelled, without prejudice to the owner or manager thereof
being prosecuted under this Act and/or the Revised Penal Code, as amended, or special laws. A
sign with the words "off limits" shall be conspicuously displayed outside the establishments or
enterprises by the Department of Social Welfare and Development for such period which shall
not be less than one (1) year, as the Department may determine. The unauthorized removal of
such sign shall be punishable by prision correccional.

An establishment shall be deemed to promote or facilitate child prostitution and other sexual
abuse, child trafficking, obscene publications and indecent shows, and other acts of abuse if the
acts constituting the same occur in the premises of said establishment under this Act or in
violation of the Revised Penal Code, as amended. An enterprise such as a sauna, travel agency, or
recruitment agency which: promotes the aforementioned acts as part of a tour for foreign
tourists; exhibits children in a lewd or indecent show; provides child masseurs for adults of the
same or opposite sex and said services include any lascivious conduct with the customers; or
solicits children or activities constituting the aforementioned acts shall be deemed to have
committed the acts penalized herein.

ARTICLE VIII
Working Children

Section 12. Employment of Children. – Children below fifteen (15) years of age may be employed
except:

(1) When a child works directly under the sole responsibility of his parents or legal guardian and
where only members of the employer's family are employed: Provided, however, That his
employment neither endangers his life, safety and health and morals, nor impairs his normal
development: Provided, further, That the parent or legal guardian shall provide the said minor
child with the prescribed primary and/or secondary education; or

(2) When a child's employment or participation in public & entertainment or information through
cinema, theater, radio or television is essential: Provided, The employment contract concluded by
the child's parent or guardian, with the express agreement of the child concerned, if possible, and
the approval of the Department of Labor and Employment: Provided, That the following
requirements in all instances are strictly complied with:

(a) The employer shall ensure the protection, health, safety and morals of the child;

(b) the employer shall institute measures to prevent the child's exploitation or discrimination
taking into account the system and level of remuneration, and the duration and arrangement of
working time; and;

(c) The employer shall formulate and implement, subject to the approval and supervision of
competent authorities, a continuing program for training and skill acquisition of the child.

In the above exceptional cases where any such child may be employed, the employer shall first
secure, before engaging such child, a work permit from the Department of Labor and
Employment which shall ensure observance of the above requirement.

The Department of Labor Employment shall promulgate rules and regulations necessary for the
effective implementation of this Section.

Section 13. Non-formal Education for Working Children. – The Department of Education, Culture
and Sports shall promulgate a course design under its non-formal education program aimed at
promoting the intellectual, moral and vocational efficiency of working children who have not
undergone or finished elementary or secondary education. Such course design shall integrate the
learning process deemed most effective under given circumstances.

Section 14. Prohibition on the Employment of Children in Certain Advertisements. – No person


shall employ child models in all commercials or advertisements promoting alcoholic beverages,
intoxicating drinks, tobacco and its byproducts and violence.

Section 15. Duty of Employer. – Every employer shall comply with the duties provided for in
Articles 108 and 109 of Presidential Decree No. 603.

Section 16. Penalties. – Any person who shall violate any provision of this Article shall suffer the
penalty of a fine of not less than One thousand pesos (P1,000) but not more than Ten thousand
pesos (P10,000) or imprisonment of not less than three (3) months but not more than three (3)
years, or both at the discretion of the court; Provided, That, in case of repeated violations of the
provisions of this Article, the offender's license to operate shall be revoked.

ARTICLE IX
Children of Indigenous Cultural Communities
Section 17. Survival, Protection and Development. – In addition to the rights guaranteed to
children under this Act and other existing laws, children of indigenous cultural communities shall
be entitled to protection, survival and development consistent with the customs and traditions of
their respective communities.

Section 18. System of and Access to Education. – The Department of Education, Culture and
Sports shall develop and institute an alternative system of education for children of indigenous
cultural communities which culture-specific and relevant to the needs of and the existing
situation in their communities. The Department of Education, Culture and Sports shall also
accredit and support non-formal but functional indigenous educational programs conducted by
non-government organizations in said communities.

Section 19. Health and Nutrition. – The delivery of basic social services in health and nutrition to
children of indigenous cultural communities shall be given priority by all government agencies
concerned. Hospitals and other health institution shall ensure that children of indigenous cultural
communities are given equal attention. In the provision of health and nutrition services to
children of indigenous cultural communities, indigenous health practices shall be respected and
recognized.

Section 20. Discrimination. – Children of indigenous cultural communities shall not be subjected
to any and all forms of discrimination.

Any person who discriminate against children of indigenous cultural communities shall suffer a
penalty of arresto mayor in its maximum period and a fine of not less than Five thousand pesos
(P5,000) more than Ten thousand pesos (P10,000).

Section 21. Participation. – Indigenous cultural communities, through their duly-designated or


appointed representatives shall be involved in planning, decision-making implementation, and
evaluation of all government programs affecting children of indigenous cultural communities.
Indigenous institution shall also be recognized and respected.

ARTICLE X
Children in Situations of Armed Conflict

Section 22. Children as Zones of Peace. – Children are hereby declared as Zones of Peace. It shall
be the responsibility of the State and all other sectors concerned to resolve armed conflicts in
order to promote the goal of children as zones of peace. To attain this objective, the following
policies shall be observed.

(a) Children shall not be the object of attack and shall be entitled to special respect. They shall be
protected from any form of threat, assault, torture or other cruel, inhumane or degrading
treatment;

(b) Children shall not be recruited to become members of the Armed Forces of the Philippines of
its civilian units or other armed groups, nor be allowed to take part in the fighting, or used as
guides, couriers, or spies;

(c) Delivery of basic social services such as education, primary health and emergency relief
services shall be kept unhampered;

(d) The safety and protection of those who provide services including those involved in fact-
finding missions from both government and non-government institutions shall be ensured. They
shall not be subjected to undue harassment in the performance of their work;

(e) Public infrastructure such as schools, hospitals and rural health units shall not be utilized for
military purposes such as command posts, barracks, detachments, and supply depots; and

(f) All appropriate steps shall be taken to facilitate the reunion of families temporarily separated
due to armed conflict.

Section 23. Evacuation of Children During Armed Conflict. – Children shall be given priority
during evacuation as a result of armed conflict. Existing community organizations shall be tapped
to look after the safety and well-being of children during evacuation operations. Measures shall
be taken to ensure that children evacuated are accompanied by persons responsible for their
safety and well-being.

Section 24. Family Life and Temporary Shelter. – Whenever possible, members of the same
family shall be housed in the same premises and given separate accommodation from other
evacuees and provided with facilities to lead a normal family life. In places of temporary shelter,
expectant and nursing mothers and children shall be given additional food in proportion to their
physiological needs. Whenever feasible, children shall be given opportunities for physical
exercise, sports and outdoor games.

Section 25. Rights of Children Arrested for Reasons Related to Armed Conflict. – Any child who
has been arrested for reasons related to armed conflict, either as combatant, courier, guide or spy
is entitled to the following rights;

(a) Separate detention from adults except where families are accommodated as family units;

(b) Immediate free legal assistance;

(c) Immediate notice of such arrest to the parents or guardians of the child; and

(d) Release of the child on recognizance within twenty-four (24) hours to the custody of the
Department of Social Welfare and Development or any responsible member of the community as
determined by the court.

If after hearing the evidence in the proper proceedings the court should find that the aforesaid
child committed the acts charged against him, the court shall determine the imposable penalty,
including any civil liability chargeable against him. However, instead of pronouncing judgment of
conviction, the court shall suspend all further proceedings and shall commit such child to the
custody or care of the Department of Social Welfare and Development or to any training
institution operated by the Government, or duly-licensed agencies or any other responsible
person, until he has had reached eighteen (18) years of age or, for a shorter period as the court
may deem proper, after considering the reports and recommendations of the Department of
Social Welfare and Development or the agency or responsible individual under whose care he has
been committed.

The aforesaid child shall subject to visitation and supervision by a representative of the
Department of Social Welfare and Development or any duly-licensed agency or such other officer
as the court may designate subject to such conditions as it may prescribe.

The aforesaid child whose sentence is suspended can appeal from the order of the court in the
same manner as appeals in criminal cases.

Section 26. Monitoring and Reporting of Children in Situations of Armed Conflict. – The
chairman of the barangay affected by the armed conflict shall submit the names of children
residing in said barangay to the municipal social welfare and development officer within twenty-
four (24) hours from the occurrence of the armed conflict.

ARTICLE XI
Remedial Procedures

Section 27. Who May File a Complaint. – Complaints on cases of unlawful acts committed
against the children as enumerated herein may be filed by the following:

(a) Offended party;

(b) Parents or guardians;

(c) Ascendant or collateral relative within the third degree of consanguinity;1awphi1@ITC

(d) Officer, social worker or representative of a licensed child-caring institution;


(e) Officer or social worker of the Department of Social Welfare and Development;

(f) Barangay chairman; or

(g) At least three (3) concerned responsible citizens where the violation occurred.

Section 28. Protective Custody of the Child. – The offended party shall be immediately placed
under the protective custody of the Department of Social Welfare and Development pursuant to
Executive Order No. 56, series of 1986. In the regular performance of this function, the officer of
the Department of Social Welfare and Development shall be free from any administrative, civil or
criminal liability. Custody proceedings shall be in accordance with the provisions of Presidential
Decree No. 603.

Section 29. Confidentiality. – At the instance of the offended party, his name may be withheld
from the public until the court acquires jurisdiction over the case.

It shall be unlawful for any editor, publisher, and reporter or columnist in case of printed
materials, announcer or producer in case of television and radio broadcasting, producer and
director of the film in case of the movie industry, to cause undue and sensationalized publicity of
any case of violation of this Act which results in the moral degradation and suffering of the
offended party.

Section 30. Special Court Proceedings. – Cases involving violations of this Act shall be heard in
the chambers of the judge of the Regional Trial Court duly designated as Juvenile and Domestic
Court.

Any provision of existing law to the contrary notwithstanding and with the exception of habeas
corpus, election cases, and cases involving detention prisoners and persons covered by Republic
Act No. 4908, all courts shall give preference to the hearing or disposition of cases involving
violations of this Act.

ARTICLE XII
Common Penal Provisions

Section 31. Common Penal Provisions. –

(a) The penalty provided under this Act shall be imposed in its maximum period if the offender
has been previously convicted under this Act;

(b) When the offender is a corporation, partnership or association, the officer or employee
thereof who is responsible for the violation of this Act shall suffer the penalty imposed in its
maximum period;

(c) The penalty provided herein shall be imposed in its maximum period when the perpetrator is
an ascendant, parent guardian, stepparent or collateral relative within the second degree of
consanguinity or affinity, or a manager or owner of an establishment which has no license to
operate or its license has expired or has been revoked;

(d) When the offender is a foreigner, he shall be deported immediately after service of sentence
and forever barred from entry to the country;

(e) The penalty provided for in this Act shall be imposed in its maximum period if the offender is a
public officer or employee: Provided, however, That if the penalty imposed is reclusion perpetua
or reclusion temporal, then the penalty of perpetual or temporary absolute disqualification shall
also be imposed: Provided, finally, That if the penalty imposed is prision correccional or arresto
mayor, the penalty of suspension shall also be imposed; and

(f) A fine to be determined by the court shall be imposed and administered as a cash fund by the
Department of Social Welfare and Development and disbursed for the rehabilitation of each child
victim, or any immediate member of his family if the latter is the perpetrator of the offense.
ARTICLE XIII
Final Provisions

Section 32. Rules and Regulations. – Unless otherwise provided in this Act, the Department of
Justice, in coordination with the Department of Social Welfare and Development, shall
promulgate rules and regulations of the effective implementation of this Act.

Such rules and regulations shall take effect upon their publication in two (2) national newspapers
of general circulation.

Section 33. Appropriations. – The amount necessary to carry out the provisions of this Act is
hereby authorized to be appropriated in the General Appropriations Act of the year following its
enactment into law and thereafter.

Section 34. Separability Clause. – If any provision of this Act is declared invalid or
unconstitutional, the remaining provisions not affected thereby shall continue in full force and
effect.

Section 35. Repealing Clause. – All laws, decrees, or rules inconsistent with the provisions of this
Acts are hereby repealed or modified accordingly.

Section 36. Effectivity Clause. – This Act shall take effect upon completion of its publication in at
least two (2) national newspapers of general circulation.

Approved: June 17, 1992.lawphi1Ÿ

 R.A. 9231

AN ACT PROVIDING FOR THE ELIMINATION OF THE WORST FORMS OF CHILD LABOR AND
AFFORDING STRONGER PROTECTION FOR THE WORKING CHILD, AMENDING FOR THIS
PURPOSE REPUBLIC ACTNO. 7610, AS AMENDED, OTHERWISE KNOWN AS THE "SPECIAL
PROTECTION OF CHILDREN AGAINST CHILD ABUSE, EXPLOITATION AND DISCRIMINATION ACT"

Be it enacted by the Senate and the House of Representatives of the Philippines in Congress
assembled:

Section 1. Section 2 of Republic Act No. 7610, as amended, otherwise known as the "Special
Protection of Children Against Child Abuse, Exploitation and Discrimination Act", is hereby
amended to read as follows:

"Sec. 2. Declaration of State Policy and Principles. - It is hereby declared to be the policy of the
State to provide special protection to children from all forms of abuse, neglect, cruelty,
exploitation and discrimination, and other conditions prejudicial to their development including
child labor and its worst forms; provide sanctions for their commission and carry out a program
for prevention and deterrence of and crisis intervention in situations of child abuse, exploitation
and discrimination. The State shall intervene on behalf of the child when the parent, guardian,
teacher or person having care or custody of the child fails or is unable to protect the child against
abuse, exploitation and discrimination or when such acts against the child are committed by the
said parent, guardian, teacher or person having care and custody of the same.

"It shall be the policy of the State to protect and rehabilitate children gravely threatened or
endangered by circumstances which affect or will affect their survival and normal development
and over which they have no control.

"The best interests of children shall be the paramount consideration in all actions concerning
them, whether undertaken by public or private social welfare institutions, courts of law,
administrative authorities, and legislative bodies, consistent with the principle of First Call for
Children as enunciated in the United Nations Convention on the Rights of the Child. Every effort
shall be exerted to promote the welfare of children and enhance their opportunities for a useful
and happy life."
Section 2. Section 12 of the same Act, as amended, is hereby further amended to read as follows:

"Sec. 2. Employment of Children - Children below fifteen (15) years of age shall not be employed
except:

"1) When a child works directly under the sole responsibility of his/her parents or legal guardian
and where only members of his/her family are employed: Provided, however, That his/her
employment neither endangers his/her life, safety, health, and morals, nor impairs his/her
normal development:Provided, further, That the parent or legal guardian shall provide the said
child with the prescribed primary and/or secondary education; or

"2) Where a child's employment or participation in public entertainment or information through


cinema, theater, radio, television or other forms of media is essential: Provided, That the
employment contract is concluded by the child's parents or legal guardian, with the express
agreement of the child concerned, if possible, and the approval of the Department of Labor and
Employment: Provided, further, That the following requirements in all instances are strictly
complied with:

"(a) The employer shall ensure the protection, health, safety, morals and normal development of
the child;

"(b) The employer shall institute measures to prevent the child's exploitation or discrimination
taking into account the system and level of remuneration, and the duration and arrangement of
working time; and

"(c) The employer shall formulate and implement, subject to the approval and supervision of
competent authorities, a continuing program for training and skills acquisition of the child.

"In the above-exceptional cases where any such child may be employed, the employer shall first
secure, before engaging such child, a work permit from the Department of Labor and
Employment which shall ensure observance of the above requirements.

"For purposes of this Article, the term "child" shall apply to all persons under eighteen (18) years
of age."

Section 3. The same Act, as amended, is hereby further amended by adding new sections to be
denominated as Sections 12-A, 12-B, 12-C, and 12-D to read as follows:

"Sec. 2-A. Hours of Work of a Working Child. - Under the exceptions provided in Section 12 of this
Act, as amended:

"(1) A child below fifteen (15) years of age may be allowed to work for not more than twenty (20)
hours a week: Provided, That the work shall not be more than four (4) hours at any given day;

"(2) A child fifteen (15) years of age but below eighteen (18) shall not be allowed to work for
more than eight (8) hours a day, and in no case beyond forty (40) hours a week;

"(3) No child below fifteen (15) years of age shall be allowed to work between eight o'clock in the
evening and six o'clock in the morning of the following day and no child fifteen (15) years of age
but below eighteen (18) shall be allowed to work between ten o'clock in the evening and six
o'clock in the morning of the following day."

"Sec. 12-B. Ownership, Usage and Administration of the Working Child's Income. - The wages,
salaries, earnings and other income of the working child shall belong to him/her in ownership
and shall be set aside primarily for his/her support, education or skills acquisition and secondarily
to the collective needs of the family: Provided, That not more than twenty percent (20%) of the
child's income may be used for the collective needs of the family.

"The income of the working child and/or the property acquired through the work of the child
shall be administered by both parents. In the absence or incapacity of either of the parents, the
other parent shall administer the same. In case both parents are absent or incapacitated, the
order of preference on parental authority as provided for under the Family Code shall apply.
"Sec. 12-C. Trust Fund to Preserve Part of the Working Child's Income. - The parent or legal
guardian of a working child below eighteen (18) years of age shall set up a trust fund for at least
thirty percent (30%) of the earnings of the child whose wages and salaries from work and other
income amount to at least two hundred thousand pesos (P200,000.00) annually, for which he/she
shall render a semi-annual accounting of the fund to the Department of Labor and Employment,
in compliance with the provisions of this Act. The child shall have full control over the trust fund
upon reaching the age of majority.

"Sec. 12-D. Prohibition Against Worst Forms of Child Labor. - No child shall be engaged in the
worst forms of child labor. The phrase "worst forms of child labor" shall refer to any of the
following:

"(1) All forms of slavery, as defined under the "Anti-trafficking in Persons Act of 2003", or
practices similar to slavery such as sale and trafficking of children, debt bondage and serfdom and
forced or compulsory labor, including recruitment of children for use in armed conflict; or

"(2) The use, procuring, offering or exposing of a child for prostitution, for the production of
pornography or for pornographic performances; or

"(3) The use, procuring or offering of a child for illegal or illicit activities, including the production
and trafficking of dangerous drugs and volatile substances prohibited under existing laws; or

"(4) Work which, by its nature or the circumstances in which it is carried out, is hazardous or likely
to be harmful to the health, safety or morals of children, such that it:

"a) Debases, degrades or demeans the intrinsic worth and dignity of a child as a human being; or

"b) Exposes the child to physical, emotional or sexual abuse, or is found to be highly stressful
psychologically or may prejudice morals; or

"c) Is performed underground, underwater or at dangerous heights; or

"d) Involves the use of dangerous machinery, equipment and tools such as power-driven or
explosive power-actuated tools; or

"e) Exposes the child to physical danger such as, but not limited to the dangerous feats of
balancing, physical strength or contortion, or which requires the manual transport of heavy loads;
or

"f) Is performed in an unhealthy environment exposing the child to hazardous working


conditions, elements, substances, co-agents or processes involving ionizing, radiation, fire,
flammable substances, noxious components and the like, or to extreme temperatures, noise
levels, or vibrations; or

"g) Is performed under particularly difficult conditions; or

"h) Exposes the child to biological agents such as bacteria, fungi, viruses, protozoans, nematodes
and other parasites; or

"i) Involves the manufacture or handling of explosives and other pyrotechnic products."

Section 4. Section 13 of the same Act is hereby amended to read as follows:

"Sec. 13. Access to Education and Training for Working Children - "a) No child shall be deprived of
formal or non-formal education. In all cases of employment allowed in this Act, the employer
shall provide a working child with access to at least primary and secondary education.

"b) To ensure and guarantee the access of the working child to education and training, the
Department of Education (DEPED) shall: (1) formulate, promulgate, and implement relevant and
effective course designs and educational programs; (2) conduct the necessary training for the
implementation of the appropriate curriculum for the purpose; (3) ensure the availability of the
needed educational facilities and materials; and (4) conduct continuing research and
development program for the necessary and relevant alternative education of the working child.

"c) The DEPED shall promulgate a course design under its non-formal education program aimed
at promoting the intellectual, moral and vocational efficiency of working children who have not
undergone or finished elementary or secondary education. Such course design shall integrate the
learning process deemed most effective under given circumstances."

Section 5. Section 14 of the same Act is hereby amended to read as follows:

"Sec. 14. Prohibition on the Employment of Children in Certain Advertisements. - No child shall be
employed as a model in any advertisement directly or indirectly promoting alcoholic beverages,
intoxicating drinks, tobacco and its byproducts, gambling or any form of violence or
pornography."

Section 6. Section 16 of the same Act, is hereby amended to read as follows:

"Sec. 16. Penal Provisions -

"a) Any employer who violates Sections 12, 12-A, and Section 14 of this act, as amended, shall be
penalized by imprisonment of six (6) months and one (1) day to six (6) years or a fine of not less
than Fifty thousand pesos (P50,000.00) but not more than Three hundred thousand pesos
(P300,000.00) or both at the discretion of the court.

"b) Any person who violates the provision of Section 12-D of this act or the employer of the
subcontractor who employs, or the one who facilitates the employment of a child in hazardous
work, shall suffer the penalty of a fine of not less than One hundred thousand pesos
(P100,000.00) but not more than One million pesos (P1,000,000.00), or imprisonment of not less
than twelve (12) years and one (1) day to twenty (20) years, or both such fine and imprisonment
at the discretion of the court.

"c) Any person who violates Sections 12-D(1) and 12-D(2) shall be prosecuted and penalized in
accordance with the penalty provided for by R. A. 9208 otherwise known as the "Anti-trafficking
in Persons Act of 2003":Provided, That Such penalty shall be imposed in its maximum period.

"d) Any person who violates Section 12-D (3) shall be prosecuted and penalized in accordance
with R.A. 9165, otherwise known as the "Comprehensive Dangerous Drugs Act of
2002"; Provided, That such penalty shall be imposed in its maximum period.

"e) If a corporation commits any of the violations aforecited, the board of directors/trustees and
officers, which include the president, treasurer and secretary of the said corporation who
participated in or knowingly allowed the violation, shall be penalized accordingly as provided for
under this Section.

"f) Parents, biological or by legal fiction, and legal guardians found to be violating Sections 12, 12-
A, 12-B and 12-C of this Act shall pay a fine of not less than Ten thousand pesos (P10,000.00) but
not more than One hundred thousand pesos (P100,000.00), or be required to render community
service for not less than thirty (30) days but not more than one (1) year, or both such fine and
community service at the discretion of the court: Provided, That the maximum length of
community service shall be imposed on parents or legal guardians who have violated the
provisions of this Act three (3) times; Provided, further, That in addition to the community
service, the penalty of imprisonment of thirty (30) days but not more than one (1) year or both at
the discretion of the court, shall be imposed on the parents or legal guardians who have violated
the provisions of this Act more than three (3) times.

"g) The Secretary, of Labor and Employment or his/her duly authorized representative may, after
due notice and hearing, order the closure of any business firm or establishment found to have
violated any of the provisions of this Act more than three (3) times. He/she shall likewise order
the immediate closure of such firm or establishment if:

"(1) The violation of any provision of this Act has resulted in the death, insanity or serious
physical injury of a child employed in such establishment; or
"(2) Such firm or establishment is engaged or employed in prostitution or in obscene or lewd
shows.

"h) In case of such closure, the employer shall be required to pay the employee(s) the separation
pay and other monetary benefits provided for by law."

Section 7. The same Act is hereby further amended by adding a new section to be denominated
as Section 16-A, to read as follows:

"Sec. 16-A. Trust Fund from Fines and Penalties - The fine imposed by the court shall be treated as
a Trust Fund, administered by the Department of Labor and Employment and disbursed
exclusively for the needs, including the costs of rehabilitation and reintegration into the
mainstream of society of the working children who are victims of the violations of this Act, and
for the programs and projects that will prevent acts of child labor."

Section 8. Section 27 of the same Act is hereby amended to read as follows:

"Sec. 27. Who May File a Complaint - Complaints on cases of unlawful acts committed against
children as enumerated herein may be filed by the following:

"(a) Offended party;

"(b) Parents or guardians;

"(c) Ascendant or collateral relative within the third degree of consanguinity;

"(d) Officer, social worker or representative of a licensed child-caring institution;

"(e) Officer or social worker of the Department of Social Welfare and Development;

"(f) Barangay chairman of the place where the violation occurred, where the child is residing or
employed; or

"(g) At least three (3) concerned, responsible citizens where the violation occurred."

Section 9. The same Act is hereby further amended by adding new sections to Section 16 to be
denominated as Sections 16-A, 16-B and 16-C to read as follows:

"Sec. 16-A. Jurisdiction - The family courts shall have original jurisdiction over all cases involving
offenses punishable under this Act: Provided, That in cities or provinces where there are no family
courts yet, the regional trial courts and the municipal trial courts shall have concurrent
jurisdiction depending on the penalties prescribed for the offense charged.

"The preliminary investigation of cases filed under this Act shall be terminated within a period of
thirty (30) days from the date of filing.

"If the preliminary investigation establishes a prima facie case, then the corresponding
information shall be filed in court within forty eight (48) hours from the termination of the
investigation.

"Trial of cases under this Act shall be terminated by the court not later than ninety (90) days from
the date of filing of information. Decision on said cases shall be rendered within a period of
fifteen (15) days from the date of submission of the case.

"Sec. 15. Exemptions from Filing Fees. - When the victim of child labor institutes a separate civil
action for the recovery of civil damages, he/she shall be exempt from payment of filing fees.

"Sec. 16-C. Access to Immediate Legal, Medical and Psycho-Social Services - The working child
shall have the right to free legal, medical and psycho-social services to be provided by the State."
Section 10. Implementing Rules and Regulations - The Secretary of Labor and Employment, in
coordination with the Committees on Labor and Employment of both Houses of Congress, shall
issue the necessary Implementing Rules and Regulations (IRR) to effectively implement the
provisions of this Act, in consultation with concerned public and private sectors, within sixty (60)
days from the effectivity of this Act.

Such rules and regulations shall take effect upon their publication in two (2) national newspapers
of general circulation.

Section 11. Separability Clause. - If any provision of this Act is declared invalid or
unconstitutional, the validity of the remaining provisions hereof shall remain in full force and
effect.

Section 12. Repealing Clause. - All laws, decrees, or rules inconsistent with the provisions of this
Act are hereby repealed or modified accordingly.

Section 13. Effectivity. - This Act shall take effect fifteen (15) days from the date of its complete
publication in the Official Gazette or in at least two (2) national newspapers of general circulation.

 R.A. 7877 (applicability to MP’s)

AN ACT DECLARING SEXUAL HARASSMENT UNLAWFUL IN THE EMPLOYMENT, EDUCATION OR


TRAINING ENVIRONMENT, AND FOR OTHER PURPOSES.

Be it enacted by the Senate and House of Representatives of the Philippines in Congress


assembled:

SECTION 1. Title. - This Act shall be known as the "Anti-Sexual Harassment Act of 1995."

SECTION 2. Declaration of Policy. - The State shall value the dignity of every individual, enhance
the development of its human resources, guarantee full respect for human rights, and uphold the
dignity of workers, employees, applicants for employment, students or those undergoing training,
instruction or education. Towards this end, all forms of sexual harassment in the employment,
education or training environment are hereby declared unlawful.

SECTION 3. Work, Education or Training -Related, Sexual Harassment Defined. - Work, education
or training-related sexual harassment is committed by an employer, employee, manager,
supervisor, agent of the employer, teacher, instructor, professor, coach, trainor, or any
other person who, having authority, influence or moral ascendancy over another in a work or
training or education environment, demands, requests or otherwise requires any sexual
favor from the other, regardless of whether the demand, request or requirement for submission
is accepted by the object of said Act.

(a) In a work-related or employment environment, sexual harassment is committed when:

1. The sexual favor is made as a condition in the hiring or in the employment, re-
employment or continued employment of said individual, or in granting said individual
favorable compensation, terms of conditions, promotions, or privileges; or the refusal to
grant the sexual favor results in limiting, segregating or classifying the employee which in
any way would discriminate, deprive or diminish employment opportunities or
otherwise adversely affect said employee;

2. The above acts would impair the employee's rights or privileges under existing labor
laws; or

3. The above acts would result in an intimidating, hostile, or offensive environment for the
employee.

(b) In an education or training environment, sexual harassment is committed:

1. Against one who is under the care, custody or supervision of the offender;
2. Against one whose education, training, apprenticeship or tutorship is entrusted to the
offender;
3. When the sexual favor is made a condition to the giving of a passing grade, or the
granting of honors and scholarships, or the payment of a stipend, allowance or other
benefits, privileges, or consideration; or

4. When the sexual advances result in an intimidating, hostile or offensive environment for
the student, trainee or apprentice.

Any person who directs or induces another to commit any act of sexual harassment as herein
defined, or who cooperates in the commission thereof by another without which it would not
have been committed, shall also be held liable under this Act.

SECTION 4. Duty of the Employer or Head of Office in a Work-related, Education or Training


Environment. - It shall be the duty of the employer or the head of the work-related, educational
or training environment or institution, to prevent or deter the commission of acts of
sexual harassment and to provide the procedures for the resolution, settlement or prosecution
of acts of sexual harassment. Towards this end, the employer or head of office shall:

(a) Promulgate appropriate rules and regulations in consultation with and joint1y approved by
the employees or students or trainees, through their duly designated representatives, prescribing
the procedure for the investigation of sexual harassment cases and the administrative
sanctions therefor.

Administrative sanctions shall not be a bar to prosecution in the proper courts for unlawful acts
of sexual harassment.

The said rules and regulations issued pursuant to this subsection (a) shall include, among others,
guidelines on proper decorum in the workplace and educational or training institutions.

(b) Create a committee on decorum and investigation of cases on sexual harassment. The
committee shall conduct meetings, as the case may be, with officers and employees, teachers,
instructors, professors, coaches, trainors, and students or trainees to increase understanding and
prevent incidents of sexual harassment. It shall also conduct the investigation of alleged cases
constituting sexual harassment.

In the case of a work-related environment, the committee shall be composed of at least one (1)
representative each from the management, the union, if any, the employees from the supervisory
rank, and from the rank and file employees.

In the case of the educational or training institution, the committee shall be composed of at least
one (1) representative from the administration, the trainors, instructors, professors or coaches
and students or trainees, as the case may be.

The employer or head of office, educational or training institution shall disseminate or post a
copy of this Act for the information of all concerned.

SECTION 5. Liability of the Employer, Head of Office, Educational or Training Institution. - The
employer or head of office, educational or training institution shall be solidarily liable for
damages arising from the acts of sexual harassment committed in the employment,
education or training environment if the employer or head of office, educational or training
institution is informed of such acts by the offended party and no immediate action is taken.

SECTION 6. Independent Action for Damages. - Nothing in this Act shall preclude the victim of
work, education or training-related sexual harassment from instituting a separate and
independent action for damages and other affirmative relief.

SECTION 7. Penalties. - Any person who violates the provisions of this Act shall, upon conviction,
be penalized by imprisonment of not less than one (1) month nor more than six (6) months, or a
fine of not less than Ten thousand pesos (P10,000) nor more than Twenty thousand pesos
(P20,000), or both such fine and imprisonment at the discretion of the court.
Any action arising from the violation of the provisions of this Act shall prescribe in three (3)
years.

SECTION 8. Separability Clause. - If any portion or provision of this Act is declared void or
unconstitutional, the remaining portions or provisions hereof shall not be affected by such
declaration.

SECTION 9. Repealing Clause. - All laws, decrees, orders, rules and regulations, other issuances, or
parts thereof inconsistent with the provisions of this Act are hereby repealed or modified
accordingly.

SECTION 10. Effectivity Clause.- This Act shall take effect fifteen (15) days after its complete
publication in at least two (2) national newspapers of general circulation.

 Art. 136(a) Labor Code

Stipulation against marriage. - It shall be unlawful for an employer to require as a condition of


employment or continuation of employment that a woman employee shall not get married, or to
stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed
resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a
woman employee merely by reason of her marriage.

 Art. 130 Labor Code

Nightwork prohibition. - No woman, regardless of age, shall be employed or permitted or


suffered to work, with or without compensation:

(a) In any industrial undertaking or branch thereof between ten o’clock at night and six o’clock in
the morning of the following day; or

(b) In any commercial or non-industrial undertaking or branch thereof, other than agricultural,
between midnight and six o’clock in the morning of the following day; or

(c) In any agricultural undertaking at nighttime unless she is given a period of rest of not less than
nine (9) consecutive hours.

 R.A. 7277

AN ACT PROVIDING FOR THE REHABILITATION, SELF-DEVELOPMENT AND SELF-RELIANCE OF


DISABLED PERSONS AND THEIR INTEGRATION INTO THE MAINSTREAM OF SOCIETY AND FOR
OTHER PURPOSES.

TITLE I
GENERAL PROVISIONS

CHAPTER I
BASIC PRINCIPLE

Section 1. Title. — This Act shall be known and cited as the "Magna Carta for Disabled Persons."

Sec. 2. Declaration of Policy — The grant of the rights and privileges for disabled persons shall be
guided by the following principles:
(a) Disabled persons are part of Philippine society, thus the State shall give full support to the
improvement of the total well-being of disabled persons and their integration into the
mainstream of society. Toward this end, the State shall adopt policies ensuring the rehabilitation,
self-development and self-reliance of disabled persons. It shall develop their skills and potentials
to enable them to compete favorably for available opportunities.

(b) Disabled persons have the same rights as other people to take their proper place in society.
They should be able to live freely and as independently as possible. This must be the concern of
everyone — the family, community and all government and nongovernment organizations.
Disabled persons' rights must never be perceived as welfare services by the Government.

(c) The rehabilitation of the disabled persons shall be the concern of the Government in order to
foster their capacity to attain a more meaningful, productive and satisfying life. To reach out to a
greater number of disabled persons, the rehabilitation services and benefits shall be expanded
beyond the traditional urban-based centers to community based programs, that will ensure full
participation of different sectors as supported by national and local government agencies.

(d) The State also recognizes the role of the private sector in promoting the welfare of disabled
persons and shall encourage partnership in programs that address their needs and concerns.

(e) To facilitate integration of disabled persons into the mainstream of society, the State shall
advocate for and encourage respect for disabled persons. The State shall exert all efforts to
remove all social, cultural, economic, environmental and attitudinal barriers that are prejudicial
to disabled persons.

Sec. 3. Coverage. — This Act shall cover all disabled persons and, to the extent herein provided,
departments, offices and agencies of the National Government or nongovernment organizations
involved in the attainment of the objectives of this Act.
Sec. 4. Definition of Terms. — For purposes of this Act, these terms are defined as follows:
(a) Disabled persons are those suffering from restriction or different abilities, as a result of a
mental, physical or sensory impairment, to perform an activity in the manner or within the range
considered normal for a human being;

(b) Impairment is any loss, diminution or aberration of psychological, physiological, or anatomical


structure or function;

(c) Disability shall mean 1) a physical or mental impairment that substantially limits one or more
psychological, physiological or anatomical function of an individual or activities of such individual;
2) a record of such an impairment; or 3) being regarded as having such an impairment;

(d) Handicap refers to a disadvantage for a given individual, resulting from an impairment or a
disability, that limits or prevents the function or activity, that is considered normal given the age
and sex of the individual;

(e) Rehabilitation is an integrated approach to physical, social, cultural, spiritual, educational and
vocational measures that create conditions for the individual to attain the highest possible level
of functional ability;

(f) Social Barriers refer to the characteristics of institutions, whether legal, economic, cultural,
recreational or other, any human group, community, or society which limit the fullest possible
participation of disabled persons in the life of the group. Social barriers include negative attitudes
which tend to single out and exclude disabled persons and which distort roles and inter-personal
relationships;

(g) Auxiliary Aids and Services include:

(1) qualified interpreters or other effective methods of delivering materials to individuals with
hearing impairments;

(2) qualified readers, taped tests, or other effective methods of delivering materials to individuals
with visual impairments;

(3) acquisition or modification of equipment or devices; and

(4) other similar services and actions or all types of aids and services that facilitate the learning
process of people with mental disability.

(h) Reasonable Accommodation include 1) improvement of existing facilities used by employees


in order to render these readily accessible to and usable by disabled persons; and 2) modification
of work schedules, reassignment to a vacant position, acquisition or modification of equipment or
devices, appropriate adjustments or modifications of examinations, training materials or
company policies, rules and regulations, the provision of auxiliary aids and services, and other
similar accommodations for disabled persons;

(i) Sheltered Employment refers to the provision of productive work for disabled persons through
workshops providing special facilities, income-producing projects or homework schemes with a
view to giving them the opportunity to earn a living thus enabling them to acquire a working
capacity required in open industry;

(j) Auxiliary Social Services are the supportive activities in the delivery of social services to the
marginalized sectors of society;

(k) Marginalized Disabled Persons refer to disabled persons who lack access to rehabilitative
services and opportunities to be able to participate fully in socioeconomic activities and who
have no means of livelihood and whose incomes fall below the poverty threshold; chan robles
virtual law library

(l) Qualified Individual with a Disability shall mean an individual with a disability who, with or
without reasonable accommodations, can perform the essential functions of the employment
position that such individual holds or desires. However, consideration shall be given to the
employer's judgment as to what functions of a job are essential, and if an employer has prepared
a written description before advertising or interviewing applicants for the job, this description
shall be considered evidence of the essential functions of the job;

(m) Readily Achievable means a goal can be easily attained and carried out without much
difficulty or expense. In determining whether an action is readily achievable, factors to be
considered include —

(1) the nature and cost of the action;

(2) the overall financial resources of the facility or facilities involved in the action; the number of
persons employed at such facility; the effect on expenses and resources, or the impact otherwise
of such action upon the operation of the facility;

(3) the overall financial resources of the covered entity with respect to the number of its
employees; the number, type and location of its facilities; and

(4) the type of operation or operations of the covered entity, including the composition, structure
and functions of the work force of such entity; the geographic separateness, administrative or
fiscal relationship of the facility or facilities in question to the covered entity.

(n) Public Transportation means transportation by air, land and sea that provides the public with
general or special service on a regular and continuing basis;

(o) Covered Entity means an employer, employment agency, labor organization or joint-labor
management committee; and

(p) Commerce shall be taken to mean as travel, trade, traffic, commerce, transportation, or
communication among the provinces or between any foreign country or any territory or
possession and any province.

TITLE II
RIGHTS AND PRIVILEGES OF DISABLED PERSONS

CHAPTER I
EMPLOYMENT

Sec. 5. Equal Opportunity for Employment. — No disable person shall be denied access to
opportunities for suitable employment. A qualified disabled employee shall be subject to the
same terms and conditions of employment and the same compensation, privileges, benefits,
fringe benefits, incentives or allowances as a qualified able bodied person.

Five percent (5%) of all casual emergency and contractual positions in the Departments of Social
Welfare and Development; Health; Education, Culture and Sports; and other government
agencies, offices or corporations engaged in social development shall be reserved for disabled
persons.

Sec. 6. Sheltered Employment — If suitable employment for disabled persons cannot be found
through open employment as provided in the immediately preceding Section, the State shall
endeavor to provide it by means of sheltered employment. In the placement of disabled persons
in sheltered employment, it shall accord due regard to the individual qualities, vocational goals
and inclinations to ensure a good working atmosphere and efficient production.

Sec. 7. Apprenticeship. — Subject to the provisions of the Labor Code as amended, disabled
persons shall be eligible as apprentices or learners: Provided, That their handicap is not as much
as to effectively impede the performance of job operations in the particular occupation for which
they are hired; Provided, further, That after the lapse of the period of apprenticeship, if found
satisfactory in the job performance, they shall be eligible for employment.

Sec. 8. Incentives for Employers. — (a) To encourage the active participation of the private sector
in promoting the welfare of disabled persons and to ensure gainful employment for qualified
disabled persons, adequate incentives shall be provided to private entities which employ disabled
persons.

(b) Private entities that employ disabled persons who meet the required skills or qualifications,
either as regular employee, apprentice or learner, shall be entitled to an additional deduction,
from their gross income, equivalent to twenty-five percent (25%) of the total amount paid as
salaries and wages to disabled persons: Provided, however, That such entities present proof as
certified by the Department of Labor and Employment that disabled persons are under their
employ: Provided, further, That the disabled employee is accredited with the Department of
Labor and Employment and the Department of Health as to his disability, skills and qualifications.

(c) Private entities that improve or modify their physical facilities in order to provide reasonable
accommodation for disabled persons shall also be entitled to an additional deduction from their
net taxable income, equivalent to fifty percent (50%) of the direct costs of the improvements or
modifications. This Section, however, does not apply to improvements or modifications of
facilities required under Batas Pambansa Bilang 344.

Sec. 9. Vocational Rehabilitation. — Consistent with the principle of equal opportunity for
disabled workers and workers in general, the State shall take appropriate vocational rehabilitation
measures that shall serve to develop the skills and potentials of disabled persons and enable
them to compete favorably for available productive and remunerative employment opportunities
in the labor market.

The State shall also take measures to ensure the provision of vocational rehabilitation and
livelihood services for disabled persons in the rural areas. In addition, it shall promote
cooperation and coordination between the government and nongovernmental organizations and
other private entities engaged in vocational rehabilitation activities.

The Department of Social Welfare and Development shall design and implement training
programs that will provide disabled persons with vocational skills to enable them to engage in
livelihood activities or obtain gainful employment. The Department of Labor and Employment
shall likewise design and conduct training programs geared towards providing disabled persons
with skills for livelihood.

Sec. 10. Vocational Guidance and Counseling. — The Department of Social and Welfare and
Development, shall implement measures providing and evaluating vocational guidance and
counseling to enable disabled persons to secure, retain and advance in employment. It shall
ensure the availability and training of counselors and other suitably qualified staff responsible for
the vocational guidance and counseling of disabled persons.

Sec. 11. Implementing Rules and Regulations. — The Department of Labor and Employment shall
in coordination with the Department of Social Welfare and Development (DSWD) and National
Council for the Welfare of the Disabled Persons (NCWDP) shall promulgate the rules and
regulations necessary to implement the provisions under this Chapter.
CHAPTER II
EDUCATION

Sec. 12. Access to Quality Education. — The State shall ensure that disabled persons are provided
with access to quality education and ample opportunities to develop their skills. It shall take
appropriate steps to make such education accessible to all disabled persons. It shall be unlawful
for any learning institution to deny a disabled person admission to any course it offers by reason
of handicap or disability.
The State shall take into consideration the special requirements of disabled persons in the
formulation of educational policies and programs. It shall encourage learning institutions to take
into account the special needs of disabled persons with respect to the use of school facilities,
class schedules, physical education requirements, and other pertinent consideration.

The State shall also promote the provision by learning institutions, especially higher learning
institutions of auxiliary services that will facilitate the learning process for disabled persons.

Sec. 13. Assistance to Disabled Students. — The State shall provide financial assistance to
economically marginalized but deserving disabled students pursuing post secondary or tertiary
education. Such assistance may be in the form of scholarship grants, student loan programs,
subsidies, and other incentives to qualified disabled students in both public and private schools.
At least five percent (5%) of the allocation for the Private Education Student Financial Assistance
Program created by virtue of R.A. 6725 shall be set aside for disabled students pursuing
vocational or technical and degree courses.

Sec. 14. Special Education. — The State shall establish, maintain and support complete, adequate
and integrated system of special education for the visually impaired, hearing impaired, mentally
retarded persons and other types of exceptional children in all regions of the country. Toward this
end, the Department of Education, Culture and Sports shall establish, special education classes in
public schools in cities, or municipalities. It shall also establish, where viable, Braille and Record
Libraries in provinces, cities or municipalities.

The National Government shall allocate funds necessary for the effective implementation of the
special education program nationwide. Local government units may likewise appropriate
counterpart funds to supplement national funds.

Sec. 15. Vocational or Technical and Other Training Programs. — The State shall provide disabled
persons with training in civics, vocational efficiency, sports and physical fitness, and other skills.
The Department of Education, Culture and Sports shall establish in at least one government-
owned vocational and technical school in every province a special vocational and technical
training program for disabled persons. It shall develop and implement sports and physical fitness
programs specifically designed for disabled persons taking into consideration the nature of their
handicap.

Sec. 16. Non-Formal Education. — The State shall develop non-formal education programs
intended for the total human development of disabled persons. It shall provide adequate
resources for non-formal education programs and projects that cater to the special needs of
disabled persons.

Sec. 17. State Universities and Colleges. — If viable and needed, the State University or State
College in each region or province shall be responsible for (a) the development of material
appliances and technical aids for disabled persons; (b) the development of training materials for
vocational rehabilitation and special education instructions; (c) the research on special problems,
particularly of the visually-impaired, hearing-impaired, speech-impaired, and orthopedically-
impaired students, mentally retarded, and multi-handicapped and others, and the elimination of
social barriers and discrimination against disabled persons; and (d) inclusion of the Special
Education for Disabled (SPED) course in the curriculum.

The National Government shall provide these state universities and colleges with necessary
special facilities for visually-impaired, hearing-impaired, speech-impaired, and orthopedically-
impaired students. It shall likewise allocate the necessary funds in support of the above.

CHAPTER III
HEALTH
Sec. 18. National Health Program. — The Department of Health in coordination with the National
Council for the Welfare of Disabled Persons, shall institute a national health program which shall
aim to attain the following:
(a) prevention of disability, whether occurring prenatally or postnatally;

(b) recognition and early diagnosis of disability; and

(c) early rehabilitation of the disabled.

Sec. 19. Rehabilitation Centers. — The Department of Health shall establish medical
rehabilitation centers in government provincial hospitals, and shall include in its annual
appropriation the necessary funds for the operation of such centers.

The Department of Health shall formulate and implement a program to enable marginalized
disabled persons to avail of free rehabilitation services in government hospitals.

Sec. 20. Health Services. — The State shall protect and promote the right to health of disabled
persons and shall adopt an integrated and comprehensive approach to their health development
which shall make essential health services available to them at affordable cost.

The National Government shall provide an integrated health service for disabled persons which
shall include, but not limited to, the following:

(a) prevention of disability through immunization, nutrition, environmental protection and


preservation, and genetic counseling; and early detection of disability and timely intervention to
arrest disabling condition; and

(b) medical treatment and rehabilitation.


The Department of Health shall field medical personnel specializing in the treatment and
rehabilitation of disabled persons to provincial hospitals and, when viable, to municipal health
centers. It shall also train its field health personnel in the provision of medical attention to
disabled persons. It shall further ensure that its field health units have the necessary capabilities
to fit prosthetic and orthotic appliances on disabled persons.

CHAPTER IV
AUXILIARY SOCIAL SERVICES

Sec. 21. Auxiliary Social Services. — The State shall ensure that marginalized persons are
provided with the necessary auxiliary services that will restore their social functioning and
participation in community affairs. Towards this end, the Department of Social Welfare and
Development shall develop and implement programs on auxiliary social services that respond to
the needs of marginalized disabled persons. The components of such a program shall be as
follows:
(a) assistance in the acquisition of prosthetic devices and medical intervention of specialty
services;

(b) provision of specialized training activities designed to improve functional limitations of


disabled persons related to communication skills;

(c) development among disabled persons of a positive self-image through the provision of
counseling, orientation and mobility and strengthening daily living capability;

(d) provision of family care services geared towards developing the capability of families to
respond to the needs of the disabled members of the family;

(e) provision of substitute family care services and the facilities therefor for abandoned,
neglected, abused and unattached disabled persons who need custodial care;

(f) provision of after care and follow-up services for the continued rehabilitation in a community-
based setting of disabled persons who were released from residential care or rehabilitation
centers; and
(g) provision of day care services for disabled children of pre-school age.

CHAPTER V
TELECOMMUNICATIONS

Sec. 22. Broadcast Media. — Television stations shall be encouraged to provide a sign—language
inset or subtitles in at least one (1) newscast program a day and special programs covering events
of national significance.

Sec. 23. Telephone Services. — All telephone companies shall be encouraged to install special
telephone devices or units for the hearing-impaired and ensure that they are commercially
available to enable them to communicate through the telephone system.

Sec. 24. Free Postal Charges for the Disabled. — Postal charges shall be free on the following:

(a) articles and literatures like books and periodicals, orthopedic and other devices, and teaching
aids for the use of the disabled sent by mail within the Philippines and abroad; and

(b) aids and orthopedic devices for the disabled sent by abroad by mail for repair:
Provided, That the aforesaid items are for personal purposes only: Provided, further, That the
disabled person is a marginalized disabled as certified by the Social Welfare and Development
Office of the local government unit concerned or the Department of Social Welfare and
Development.

CHAPTER VI
ACCESSIBILITY

Sec. 25. Barrier-Free Environment. — The State shall ensure the attainment of a barrier-free
environment that will enable disabled persons to have access in public and private buildings and
establishments and such other places mentioned in Batas Pambansa Bilang 344, otherwise
known as the "Accessibility Law".

The national and local governments shall allocate funds for the provision of architectural facilities
or structural features for disabled persons in government buildings and facilities.

Sec. 26. Mobility. — The State shall promote the mobility of disabled persons. Disabled persons
shall be allowed to drive motor vehicles, subject to the rules and regulations issued by the Land
Transportation Office pertinent to the nature of their disability and the appropriate adaptations
or modifications made on such vehicles.

Sec. 27. Access to Public Transport Facilities. — The Department of Social Welfare and
Development shall develop a program to assist marginalized disabled persons gain access in the
use of public transport facilities. Such assistance may be in the form of subsidized transportation
fare.

The said department shall also allocate such funds as may be necessary for the effective
implementation of the public transport program for the disabled persons.

The "Accessibility Law", as amended, shall be made suppletory to this Act.

Sec. 28. Implementing Rules and Regulations. — The Department of Transportation and
Communications shall formulate the rules and regulations necessary to implement the provisions
of this Chapter.

CHAPTER VII
POLITICAL AND CIVIL RIGHTS

Sec. 29. System of Voting. — Disabled persons shall be allowed to be assisted by a person of his
choice in voting in the national or local elections. The person thus chosen shall prepare the ballot
for the disabled voter inside the voting booth. The person assisting shall bind himself in a formal
document under oath to fill out the ballot strictly in accordance with the instructions of the voter
and not to reveal the contents of the ballot prepared by him. Violation of this provision shall
constitute an election offense.
Polling places should be made accessible to disabled persons during national or local elections.

Sec. 30. Right to Assemble. — Consistent with the provisions of the Constitution, the State shall
recognize the right of disabled persons to participate in processions, rallies, parades,
demonstrations, public meetings, and assemblages or other forms of mass or concerned action
held in public.

Sec. 31. Right to Organize. — The State recognizes the right of disabled persons to form
organizations or associations that promote their welfare and advance or safeguard their interests.
The National Government, through its agencies, instrumentalities and subdivisions, shall assist
disabled persons in establishing self-help organizations by providing them with necessary
technical and financial assistance.

Concerned government agencies and offices shall establish close linkages with organizations of
the disabled persons in order to respond expeditiously to the needs of disabled persons. National
line agencies and local government units shall assist disabled persons in setting up specific
projects that will be managed like business propositions.

To ensure the active participation of disabled persons in the social and economic development of
the country, their organizations shall be encouraged to participate in the planning, organization
and management of government programs and projects for disabled persons.

Organizations of disabled persons shall participate in the identification and preparation of


programs that shall serve to develop employment opportunities for the disabled persons.

TITLE III
PROHIBITION ON DISCRIMINATION AGAINST DISABLED PERSONS

CHAPTER I
DISCRIMINATION ON EMPLOYMENT

Sec. 32. Discrimination on Employment. — No entity, whether public or private, shall


discriminate against a qualified disabled person by reason of disability in regard to job application
procedures, the hiring, promotion, or discharge of employees, employee compensation, job
training, and other terms, conditions, and privileges of employment. The following constitute acts
of discrimination:
(a) Limiting, segregating or classifying a disabled job applicant in such a manner that adversely
affects his work opportunities;

(b) Using qualification standards, employment tests or other selection criteria that screen out or
tend to screen out a disabled person unless such standards, tests or other selection criteria are
shown to be job-related for the position in question and are consistent with business necessity;

(c) Utilizing standards, criteria, or methods of administration that:

(1) have the effect of discrimination on the basis of disability; or

(2) perpetuate the discrimination of others who are subject to common administrative control.
(d) Providing less compensation, such as salary, wage or other forms of remuneration and fringe
benefits, to a qualified disabled employee, by reason of his disability, than the amount to which a
non-disabled person performing the same work is entitled;

(e) Favoring a non-disabled employee over a qualified disabled employee with respect to
promotion, training opportunities, study and scholarship grants, solely on account of the latter's
disability;

(f) Re-assigning or transferring a disabled employee to a job or position he cannot perform by


reason of his disability;
(g) Dismissing or terminating the services of a disabled employee by reason of his disability unless
the employer can prove that he impairs the satisfactory performance of the work involved to the
prejudice of the business entity: Provided, however, That the employer first sought to provide
reasonable accommodations for disabled persons;

(h) Failing to select or administer in the most effective manner employment tests which
accurately reflect the skills, aptitude or other factor of the disabled applicant or employee that
such tests purports to measure, rather than the impaired sensory, manual or speaking skills of
such applicant or employee, if any; and

(i) Excluding disabled persons from membership in labor unions or similar organizations.

Sec. 33. Employment Entrance Examination. — Upon an offer of employment, a disabled


applicant may be subjected to medical examination, on the following occasions:
(a) all entering employees are subjected to such an examination regardless of disability;

(b) information obtained during the medical condition or history of the applicant is collected and
maintained on separate forms and in separate medical files and is treated as a confidential
medical record; Provided, however, That:
(1) supervisors and managers may be informed regarding necessary restrictions on the work or
duties of the employees and necessary accommodations;

(2) first aid and safety personnel may be informed, when appropriate, if the disability may require
emergency treatment;

(3) government officials investigating compliance with this Act shall be provided relevant
information on request; and

(4) the results of such examination are used only in accordance with this Act.

CHAPTER II
DISCRIMINATION ON TRANSPORTATION

Sec. 34. Public Transportation. — It shall be considered discrimination for the franchisees or
operators and personnel of sea, land, and air transportation facilities to charge higher fare or to
refuse to convey a passenger, his orthopedic devices, personal effects, and merchandise by
reason of his disability.

CHAPTER III
DISCRIMINATION ON THE USE OF PUBLIC ACCOMMODATIONS AND SERVICES

Sec. 35. Public Accommodations and Services. — For purposes of this Chapter, public
accommodations and services shall include the following:
(a) an inn, hotel, motel, or other place of lodging, except for an establishment located within a
building that contains not more than five (5) rooms for rent or hire and that is actually occupied
by the proprietor of such establishment as the residence of such proprietor;

(b) a restaurant, bar, or other establishment serving food or drink;

(c) a motion picture, theater, concert hall, stadium, or other place of exhibition or entertainment;

(d) an auditorium, convention center, lecture hall, or other place of public gathering;

(e) a bakery, grocery store, hardware store, shopping center, or other sales or rental
establishment;

(f) a bank, barber shop, beauty shop, travel service, funeral parlor, gas station, office of a lawyer,
pharmacy, insurance office, professional office of a health care provider, hospital or other service
establishment;
(g) a terminal, depot, or other station used for specified public transportation;

(h) a museum, gallery, library or other place of public display or collection;

(i) a park, zoo, amusement park, or other place of recreation;

(j) a nursery, elementary, secondary, undergraduate, or post-graduate private school, or other


place of education;

(k) a gymnasium, health spa, bowling alley, golf course; or

(l) other place of exercise or recreation.

Sec. 36. Discrimination on the Use of Public Accommodations. — (a) No disabled person shall be
discriminated on the basis of disability in the full and equal enjoyment of the goods, services,
facilities, privileges, advantages or accommodations of any place of public accommodation by any
person who owns, leases, or operates a place of public accommodation. The following constitute
acts of discrimination:
(1) denying a disabled person, directly or through contractual, licensing, or other arrangement,
the opportunity to participate in or benefit from the goods, services, facilities, privileges,
advantages, or accommodations of an entity by reason of his disability;

(2) affording a disabled person, on the basis of his disability, directly or through contractual,
licensing, or other arrangement, with the opportunity to participate in or benefit from a good
service, facility, privilege, advantage, or accommodation that is not equal to that afforded to
other able-bodied persons; and

(3) providing a disabled person, on the basis of his disability, directly or through contractual,
licensing, or other arrangement, with a good, service, facility, advantage, privilege, or
accommodation that is different or separate form that provided to other able-bodied persons
unless such action is necessary to provide the disabled person with a good, service, facility,
advantage, privilege, or accommodation, or other opportunity that is as effective as that provided
to others;

For purposes of this Section, the term "individuals or class of individuals" refers to the clients or
customers of the covered public accommodation that enters into the contractual, licensing or
other arrangement.

(b) Integrated Settings — Goods, services, facilities, privileges, advantages, and accommodations
shall be afforded to individual with a disability in the most integrated setting appropriate to the
needs of the individual.

(c) Opportunity to Participate — Notwithstanding the existence of separate or different programs


or activities provided in accordance with this Section, an individual with a disability shall not be
denied the opportunity to participate in such programs or activities that are not separate or
different.

(d) Association — It shall be discriminatory to exclude or otherwise deny equal goods, services,
facilities, advantages, privileges, accommodations or other opportunities to an individual or
entity because of the known disability of an individual with whom the individual or entity is
known to have a relationship or association.

(e) Prohibitions — For purposes of this Section, the following shall be considered as
discriminatory:

(1) the imposition or application of eligibility criteria that screen out or tend to screen out an
individual with a disability or any class or individuals with disabilities from fully and equally
enjoying any goods, services, facilities, privileges, advantages, or accommodations, unless such
criteria can be shown to be necessary for the provision of the goods, services, facilities, privileges,
or accommodations being offered;

(2) a failure to make reasonable modifications in policies, practices, or procedures, when such
modifications are necessary to afford such goods, services, facilities, privileges, advantages, or
accommodations to individuals with disabilities, unless the entity can demonstrate that making
such modifications would fundamentally alter the nature of the goods, facilities, services,
privileges, advantages, or accommodations;

(3) failure to take such steps as may be necessary to ensure that no individual with a disability is
excluded, denied services, segregated or otherwise treated differently than other individuals
because of the absence of auxiliary aids and services, unless the entity can demonstrate that
taking such steps would fundamentally alter the nature of the good, service, facility, privilege,
advantage or accommodation being offered or would result in undue burden;

(4) a failure to remove architectural barriers, and communication barriers that are structural in
nature, in existing facilities, where such removal is readily achievable; and

(5) where an entity can demonstrate that the removal of a barrier under clause (4) is not readily
achievable, a failure to make such goods, services, facilities, privileges, advantages, or
accommodations available through alternative methods if such methods are readily achievable.

Sec. 37. Use of Government Recreational or Sports Centers Free of Charge. — Recreational or
sports centers owned or operated by the Government shall be used, free of charge, by
marginalized disabled persons during their social, sports or recreational activities.

Sec. 38. Implementing Rules and Regulations. — The Department of Public Works and Highways
shall formulate the rules and regulations necessary to implement the provisions of this Chapter.

TITLE IV
FINAL PROVISIONS

Sec. 39. Housing Program. — The National Government shall take into consideration in its
national shelter program the special housing requirements of disabled persons.

Sec. 40. Role of National Agencies and Local Government Units. — Local government units shall
promote the establishment of organizations of disabled persons in their respective territorial
jurisdictions. National agencies and local government units may enter into joint ventures with
organizations or associations of disabled persons to explore livelihood opportunities and other
undertakings that shall enhance the health, physical fitness and the economic and social well-
being of disabled persons.

Sec. 41. Support From Nongovernment Organizations. — Nongovernment organizations or


private volunteer organizations dedicated to the purpose of promoting and enhancing the
welfare of disabled persons shall, as they, are hereby encouraged, become partners of the
Government in the implementation of vocational rehabilitation measures and other related
programs and projects. Accordingly, their participation in the implementation of said measures,
programs and projects is to be extended all possible support by the Government.

The Government shall sponsor a volunteer service program which shall harness the involvement
of private individuals in the provision of assistance to disabled persons.

Sec. 42. Tax Incentives. — (a) Any donation, bequest, subsidy or financial aid which may be made
to government agencies engaged in the rehabilitation of disabled persons and organizations of
disabled persons shall be exempt from the donor's tax subject to the provisions of Section 94 of
the National Internal Revenue Code (NIRC), as amended and shall be allowed as deductions from
the donor's gross income for purposes of computing the taxable income subject to the provisions
of Section 29 (h) of the Code.

(b) Donations from foreign countries shall be exempt from taxes and duties on importation
subject to the provisions of Section 105 of the Tariff and Customs Code of the Philippines, as
amended, Section 103 of the NIRC, as amended and other relevant laws and international
agreements.

(c) Local manufacturing or technical aids and appliances used by disabled persons shall be
considered as a preferred area of investment subject to the provisions of Executive Order No. 226
otherwise known as the "Omnibus Investments Code of 1987" and, as such, shall enjoy the rights,
privileges and incentives as provided in said Code such as, but not limited, to the following:
(1) repatriation of investments;

(2) remittance of earnings;

(3) remittance of payments on foreign contracts;

(4) freedom from expropriations;

(5) freedom from requisition of investment;

(6) income tax holiday;

(7) additional deduction for labor expense;

(8) tax and duty exemption on imported capital equipment;

(9) tax credit on domestic capital equipment;

(10) exemption from contractor's tax;

(11) simplification of customs procedures;

(12) unrestricted use of consigned equipment;

(13) employment of foreign nationals;

(14) tax credit for taxes and duties on raw materials;

(15) access to bonded manufacturing/traded warehouse system;

(16) exemption from taxes and duties on imported spare parts; and

(17) exemption from wharfage dues and any export tax, duty, impost and fee.

Sec. 43. Continuity Clause. — Should any department or agency tasked with the enforcement or
formulation of rules and regulations and guidelines for implementation of any provision of this
Act is abolished, merged with another department or agency or modified, such shall not affect
the enforcement or formulation of rules, regulations and guidelines for implementation of this
Act to the effect that —
(a) In case of abolition, the department or agency established to replace the abolished
department or agency shall take-over the functions under this Act of the abolished department
or agency.

(b) In case the department or agency tasked with the enforcement or formulation of rules,
regulations and guidelines for implementation of this Act is merged with another department or
agency, the former shall continue the functions under this Act of the merged department or
agency.

(c) In case of modification, the department or agency modified shall continue the functions under
this Act of the department or agency that has undergone the modification.

Sec. 44. Enforcement by the Secretary of Justice. —


(a) Denial of Right
(1) Duty to Investigate — the Secretary of Justice shall investigate alleged violations of this Act,
and shall undertake periodic reviews of compliance of covered entities under this Act.
(b) Potential Violations — If the Secretary of Justice has reasonable cause to believe that —
(1) any person or group of persons is engaged in a pattern or practice of discrimination under this
Act; or
(2) any person or group or persons has been discriminated against under this Act and such
discrimination raises an issue of general public importance, the Secretary of Justice may
commence a legal action in any appropriate court.
Sec. 45. Authority of Court. — The court may grant any equitable relief that such court considers
to be appropriate, including, to the extent required by this Act:
(a) granting temporary, preliminary or permanent relief;

(b) providing an auxiliary aid or service, modification of policy, practice or procedure, or


alternative method; and

(c) making facilities readily accessible to and usable by individuals with disabilities.

Sec. 46. Penal Clause. — (a) Any person who violates any provision of this Act shall suffer the
following penalties:
(1) for the first violation, a fine of not less than Fifty thousand pesos (P50,000.00) but not
exceeding One hundred thousand pesos (P100,000.00) or imprisonment of not less than six (6)
months but not more than two (2) years, or both at the discretion of the court; and

(2) for any subsequent violation, a fine of not less than One hundred thousand pesos
(P100,000.00) but not exceeding Two hundred thousand pesos (P200,000.00) or imprisonment
for not less than two (2) years but not more than six (6) years, or both at the discretion of the
court.
(b) Any person who abuses the privileges granted herein shall be punished with imprisonment of
not less than six (6) months or a fine of not less than Five thousand pesos (P5,000.00), but not
more than Fifty thousand pesos (P50,000.00), or both, at the discretion of the court.

(c) If the violator is a corporation, organization or any similar entity, the officials thereof directly
involved shall be liable therefor.

(d) If the violator is an alien or a foreigner, he shall be deported immediately after service of
sentence without further deportation proceedings.

Sec. 47. Appropriations. — The amount necessary to carry out the provisions of this Act shall be
included in the General Appropriations Act of the year following its enactment into law and
thereafter.

Sec. 48. Separability Clause. — Should any provisions of this Act be found unconstitutional by a
court of law, such provisions shall be severed from the remainder of the Act, and such action shall
not affect the enforceability of the remaining provisions of this Act.

Sec. 49. Repealing Clause. — All laws, presidential decrees, executive orders and rules and
regulations inconsistent with the provisions of this Act are hereby repealed or modified
accordingly.

Sec. 50. Effectivity. — This Act shall take effect fifteen (15) days after its publication in any two (2)
newspapers of general circulation.

Approved: March 24, 1992

 “Yellow Dog” Contract

ART. 248. Labor Code. Unfair labor practices of employers. - It shall be unlawful for an employer
to commit any of the following unfair labor practice:
xx (b) To require as a condition of employment that a person or an employee shall not join a labor
organization or shall withdraw from one to which he belongs;

 R.A. 9208
AN ACT TO INSTITUTE POLICIES TO ELIMINATE TRAFFICKING IN PERSONS ESPECIALLY WOMEN
AND CHILDREN, ESTABLISHING THE NECESSARY INSTITUTIONAL MECHANISMS FOR THE
PROTECTION AND SUPPORT OF TRAFFICKED PERSONS, PROVIDING PENALTIES FOR ITS
VIOLATIONS, AND FOR OTHER

Be it enacted by the Senate and the House of Representatives of the Philippines in Congress
assembled:

Section 1. Title. This Act shall be known as the "Anti-Trafficking in Persons Act of 2003".

Section 2. Declaration of Policy. – It is hereby declared that the State values the dignity of every
human person and guarantees the respect of individual rights. In pursuit of this policy, the State
shall give highest priority to the enactment of measures and development of programs that will
promote human dignity, protect the people from any threat of violence and exploitation,
eliminate trafficking in persons, and mitigate pressures for involuntary migration and servitude of
persons, not only to support trafficked persons but more importantly, to ensure their recovery,
rehabilitation and reintegration into the mainstream of society.

It shall be a State policy to recognize the equal rights and inherent human dignity of women and
men as enshrined in the United Nations Universal Declaration on Human Rights, United Nations
Convention on the Rights of the Child, United Nations Convention on the Protection of Migrant
Workers and their Families. United Nations Convention Against Transnational Organized Crime
Including its Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women
and Children and all other relevant and universally accepted human rights instruments and other
international conventions to which the Philippines is a signatory.

Section 3. Definition of Terms. - As used in this Act:

(a) Trafficking in Persons - refers to the recruitment, transportation, transfer or harboring, or


receipt of persons with or without the victim's consent or knowledge, within or across national
borders by means of threat or use of force, or other forms of coercion, abduction, fraud,
deception, abuse of power or of position, taking advantage of the vulnerability of the person, or,
the giving or receiving of payments or benefits to achieve the consent of a person having control
over another person for the purpose of exploitation which includes at a minimum, the
exploitation or the prostitution of others or other forms of sexual exploitation, forced labor or
services, slavery, servitude or the removal or sale of organs.

The recruitment, transportation, transfer, harboring or receipt of a child for the purpose of
exploitation shall also be considered as "trafficking in persons" even if it does not involve any of
the means set forth in the preceding paragraph.

(b) Child - refers to a person below eighteen (18) years of age or one who is over eighteen (18)
but is unable to fully take care of or protect himself/herself from abuse, neglect, cruelty,
exploitation, or discrimination because of a physical or mental disability or condition.

(c) Prostitution - refers to any act, transaction, scheme or design involving the use of a person by
another, for sexual intercourse or lascivious conduct in exchange for money, profit or any other
consideration.

(d) Forced Labor and Slavery - refer to the extraction of work or services from any person by
means of enticement, violence, intimidation or threat, use of force or coercion, including
deprivation of freedom, abuse of authority or moral ascendancy, debt-bondage or deception.

(e) Sex Tourism - refers to a program organized by travel and tourism-related establishments and
individuals which consists of tourism packages or activities, utilizing and offering escort and
sexual services as enticement for tourists. This includes sexual services and practices offered
during rest and recreation periods for members of the military.

(f) Sexual Exploitation - refers to participation by a person in prostitution or the production of


pornographic materials as a result of being subjected to a threat, deception, coercion, abduction,
force, abuse of authority, debt bondage, fraud or through abuse of a victim's vulnerability.
(g) Debt Bondage - refers to the pledging by the debtor of his/her personal services or labor or
those of a person under his/her control as security or payment for a debt, when the length and
nature of services is not clearly defined or when the value of the services as reasonably assessed
is not applied toward the liquidation of the debt.

(h) Pornography - refers to any representation, through publication, exhibition, cinematography,


indecent shows, information technology, or by whatever means, of a person engaged in real or
simulated explicit sexual activities or any representation of the sexual parts of a person for
primarily sexual purposes.

(i) Council - shall mean the Inter-Agency Council Against Trafficking created under Section 20 of
this Act.

Section 4. Acts of Trafficking in Persons. - It shall be unlawful for any person, natural or juridical,
to commit any of the following acts:

(a) To recruit, transport, transfer; harbor, provide, or receive a person by any means, including
those done under the pretext of domestic or overseas employment or training or apprenticeship,
for the purpose of prostitution, pornography, sexual exploitation, forced labor, slavery,
involuntary servitude or debt bondage;

(b) To introduce or match for money, profit, or material, economic or other consideration, any
person or, as provided for under Republic Act No. 6955, any Filipino woman to a foreign national,
for marriage for the purpose of acquiring, buying, offering, selling or trading him/her to engage in
prostitution, pornography, sexual exploitation, forced labor, slavery, involuntary servitude or debt
bondage;

(c) To offer or contract marriage, real or simulated, for the purpose of acquiring, buying, offering,
selling, or trading them to engage in prostitution, pornography, sexual exploitation, forced labor
or slavery, involuntary servitude or debt bondage;

(d) To undertake or organize tours and travel plans consisting of tourism packages or activities for
the purpose of utilizing and offering persons for prostitution, pornography or sexual exploitation;

(e) To maintain or hire a person to engage in prostitution or pornography;

(f) To adopt or facilitate the adoption of persons for the purpose of prostitution, pornography,
sexual exploitation, forced labor, slavery, involuntary servitude or debt bondage;

(g) To recruit, hire, adopt, transport or abduct a person, by means of threat or use of force, fraud,
deceit, violence, coercion, or intimidation for the purpose of removal or sale of organs of said
person; and

(h) To recruit, transport or adopt a child to engage in armed activities in the Philippines or abroad.

Section 5. Acts that Promote Trafficking in Persons. - The following acts which promote or
facilitate trafficking in persons, shall be unlawful:

(a) To knowingly lease or sublease, use or allow to be used any house, building or establishment
for the purpose of promoting trafficking in persons;

(b) To produce, print and issue or distribute unissued, tampered or fake counseling certificates,
registration stickers and certificates of any government agency which issues these certificates and
stickers as proof of compliance with government regulatory and pre-departure requirements for
the purpose of promoting trafficking in persons;

(c) To advertise, publish, print, broadcast or distribute, or cause the advertisement, publication,
printing, broadcasting or distribution by any means, including the use of information technology
and the internet, of any brochure, flyer, or any propaganda material that promotes trafficking in
persons;
(d) To assist in the conduct of misrepresentation or fraud for purposes of facilitating the
acquisition of clearances and necessary exit documents from government agencies that are
mandated to provide pre-departure registration and services for departing persons for the
purpose of promoting trafficking in persons;

(e) To facilitate, assist or help in the exit and entry of persons from/to the country at international
and local airports, territorial boundaries and seaports who are in possession of unissued,
tampered or fraudulent travel documents for the purpose of promoting trafficking in persons;

(f) To confiscate, conceal, or destroy the passport, travel documents, or personal documents or
belongings of trafficked persons in furtherance of trafficking or to prevent them from leaving the
country or seeking redress from the government or appropriate agencies; and

(g) To knowingly benefit from, financial or otherwise, or make use of, the labor or services of a
person held to a condition of involuntary servitude, forced labor, or slavery.

Section 6. Qualified Trafficking in Persons. - The following are considered as qualified trafficking:

(a) When the trafficked person is a child;

(b) When the adoption is effected through Republic Act No. 8043, otherwise known as the "Inter-
Country Adoption Act of 1995" and said adoption is for the purpose of prostitution, pornography,
sexual exploitation, forced labor, slavery, involuntary servitude or debt bondage;

(c) When the crime is committed by a syndicate, or in large scale. Trafficking is deemed
committed by a syndicate if carried out by a group of three (3) or more persons conspiring or
confederating with one another. It is deemed committed in large scale if committed against three
(3) or more persons, individually or as a group;

(d) When the offender is an ascendant, parent, sibling, guardian or a person who exercises
authority over the trafficked person or when the offense is committed by a public officer or
employee;

(e) When the trafficked person is recruited to engage in prostitution with any member of the
military or law enforcement agencies;

(f) When the offender is a member of the military or law enforcement agencies; and

(g) When by reason or on occasion of the act of trafficking in persons, the offended party dies,
becomes insane, suffers mutilation or is afflicted with Human Immunodeficiency Virus (HIV) or
the Acquired Immune Deficiency Syndrome (AIDS).

Section 6. Confidentiality. - At any stage of the investigation, prosecution and trial of an offense
under this Act, law enforcement officers, prosecutors, judges, court personnel and medical
practitioners, as well as parties to the case, shall recognize the right to privacy of the trafficked
person and the accused. Towards this end, law enforcement officers, prosecutors and judges to
whom the complaint has been referred may, whenever necessary to ensure a fair and impartial
proceeding, and after considering all circumstances for the best interest of the parties, order a
closed-door investigation, prosecution or trial. The name and personal circumstances of the
trafficked person or of the accused, or any other information tending to establish their identities
and such circumstances or information shall not be disclosed to the public.

In cases when prosecution or trial is conducted behind closed-doors, it shall be unlawful for any
editor, publisher, and reporter or columnist in case of printed materials, announcer or producer in
case of television and radio, producer and director of a film in case of the movie industry, or any
person utilizing tri-media facilities or information technology to cause publicity of any case of
trafficking in persons.

Section 8. Prosecution of Cases. - Any person who has personal knowledge of the commission of
any offense under this Act, the trafficked person, the parents, spouse, siblings, children or legal
guardian may file a complaint for trafficking.
Section 9. Venue. - A criminal action arising from violation of this Act shall be filed where the
offense was committed, or where any of its elements occurred, or where the trafficked person
actually resides at the time of the commission of the offense: Provided, That the court where the
criminal action is first filed shall acquire jurisdiction to the exclusion of other courts.

Section 10. Penalties and Sanctions. - The following penalties and sanctions are hereby
established for the offenses enumerated in this Act:

(a) Any person found guilty of committing any of the acts enumerated in Section 4 shall suffer the
penalty of imprisonment of twenty (20) years and a fine of not less than One million pesos
(P1,000,000.00) but not more than Two million pesos (P2,000,000.00);

(b) Any person found guilty of committing any of the acts enumerated in Section 5 shall suffer the
penalty of imprisonment of fifteen (15) years and a fine of not less than Five hundred thousand
pesos (P500,000.00) but not more than One million pesos (P1,000,000.00);

(c) Any person found guilty of qualified trafficking under Section 6 shall suffer the penalty of life
imprisonment and a fine of not less than Two million pesos (P2,000,000.00) but not more than
Five million pesos (P5,000,000.00);

(d) Any person who violates Section 7 hereof shall suffer the penalty of imprisonment of six (6)
years and a fine of not less than Five hundred thousand pesos (P500,000.00) but not more than
One million pesos (P1,000,000.00);

(e) If the offender is a corporation, partnership, association, club, establishment or any juridical
person, the penalty shall be imposed upon the owner, president, partner, manager, and/or any
responsible officer who participated in the commission of the crime or who shall have knowingly
permitted or failed to prevent its commission;

(f) The registration with the Securities and Exchange Commission (SEC) and license to operate of
the erring agency, corporation, association, religious group, tour or travel agent, club or
establishment, or any place of entertainment shall be cancelled and revoked permanently. The
owner, president, partner or manager thereof shall not be allowed to operate similar
establishments in a different name;

(g) If the offender is a foreigner, he shall be immediately deported after serving his sentence and
be barred permanently from entering the country;

(h) Any employee or official of government agencies who shall issue or approve the issuance of
travel exit clearances, passports, registration certificates, counseling certificates, marriage license,
and other similar documents to persons, whether juridical or natural, recruitment agencies,
establishments or other individuals or groups, who fail to observe the prescribed procedures and
the requirement as provided for by laws, rules and regulations, shall be held administratively
liable, without prejudice to criminal liability under this Act. The concerned government official or
employee shall, upon conviction, be dismissed from the service and be barred permanently to
hold public office. His/her retirement and other benefits shall likewise be forfeited; and

(i) Conviction by final judgment of the adopter for any offense under this Act shall result in the
immediate rescission of the decree of adoption.

Section 11. Use of Trafficked Persons. - Any person who buys or engages the services of trafficked
persons for prostitution shall be penalized as follows:

(a) First offense - six (6) months of community service as may be determined by the court and a
fine of Fifty thousand pesos (P50,000.00); and

(b) Second and subsequent offenses - imprisonment of one (1) year and a fine of One hundred
thousand pesos (P100,000.00).

Section 12. Prescriptive Period. - Trafficking cases under this Act shall prescribe in ten (10)
years: Provided, however, That trafficking cases committed by a syndicate or in a large scale as
defined under Section 6 shall prescribe in twenty (20) years.
The prescriptive period shall commence to run from the day on which the trafficked person is
delivered or released from the conditions of bondage and shall be interrupted by the filing of the
complaint or information and shall commence to run again when such proceedings terminate
without the accused being convicted or acquitted or are unjustifiably stopped for any reason not
imputable to the accused.

Section 13. Exemption from Filing Fees. - When the trafficked person institutes a separate civil
action for the recovery of civil damages, he/she shall be exempt from the payment of filing fees.

Section 14. Confiscation and Forfeiture of the Proceeds and Instruments Derived from Trafficking
in Persons. - In addition to the penalty imposed for the violation of this Act, the court shall order
the confiscation and forfeiture, in favor of the government, of all the proceeds and properties
derived from the commission of the crime, unless they are the property of a third person not
liable for the unlawful act; Provided, however, That all awards for damages shall be taken from
the personal and separate properties of the offender; Provided, further, That if such properties
are insufficient, the balance shall be taken from the confiscated and forfeited properties.

When the proceeds, properties and instruments of the offense have been destroyed, diminished
in value or otherwise rendered worthless by any act or omission, directly or indirectly, of the
offender, or it has been concealed, removed, converted or transferred to prevent the same from
being found or to avoid forfeiture or confiscation, the offender shall be ordered to pay the
amount equal to the value of the proceeds, property or instruments of the offense.

Section 15. Trust Fund. - All fines imposed under this Act and the proceeds and properties
forfeited and confiscated pursuant to Section 14 hereof shall accrue to a Trust Fund to be
administered and managed by the Council to be used exclusively for programs that will prevent
acts of trafficking and protect, rehabilitate, reintegrate trafficked persons into the mainstream of
society. Such programs shall include, but not limited to, the following:

(a) Provision for mandatory services set forth in Section 23 of this Act;

(b) Sponsorship of a national research program on trafficking and establishment of a data


collection system for monitoring and evaluation purposes;

(c) Provision of necessary technical and material support services to appropriate government
agencies and non-government organizations (NGOs);

(d) Sponsorship of conferences and seminars to provide venue for consensus building amongst
the public, the academe, government, NGOs and international organizations; and

(e) Promotion of information and education campaign on trafficking.

Section 16. Programs that Address Trafficking in Persons. - The government shall establish and
implement preventive, protective and rehabilitative programs for trafficked persons. For this
purpose, the following agencies are hereby mandated to implement the following programs;

(a) Department of Foreign Affairs (DFA) - shall make available its resources and facilities overseas
for trafficked persons regardless of their manner of entry to the receiving country, and explore
means to further enhance its assistance in eliminating trafficking activities through closer
networking with government agencies in the country and overseas, particularly in the
formulation of policies and implementation of relevant programs.

The DFA shall take necessary measures for the efficient implementation of the Machine Readable
Passports to protect the integrity of Philippine passports, visas and other travel documents to
reduce the incidence of trafficking through the use of fraudulent identification documents.

It shall establish and implement a pre-marriage, on-site and pre-departure counseling program
on intermarriages.

(b) Department of Social Welfare and Development (DSWD) - shall implement rehabilitative and
protective programs for trafficked persons. It shall provide counseling and temporary shelter to
trafficked persons and develop a system for accreditation among NGOs for purposes of
establishing centers and programs for intervention in various levels of the community.

(c) Department of Labor and Employment (DOLE) - shall ensure the strict implementation and
compliance with the rules and guidelines relative to the employment of persons locally and
overseas. It shall likewise monitor, document and report cases of trafficking in persons involving
employers and labor recruiters.

(d) Department of Justice (DOJ) - shall ensure the prosecution of persons accused of trafficking
and designate and train special prosecutors who shall handle and prosecute cases of trafficking. It
shall also establish a mechanism for free legal assistance for trafficked persons, in coordination
with the DSWD, Integrated Bar of the Philippines (IBP) and other NGOs and volunteer groups.

(e) National Commission on the Role of Filipino Women (NCRFW) - shall actively participate and
coordinate in the formulation and monitoring of policies addressing the issue of trafficking in
persons in coordination with relevant government agencies. It shall likewise advocate for the
inclusion of the issue of trafficking in persons in both its local and international advocacy for
women's issues.

(f) Bureau of Immigration (BI) - shall strictly administer and enforce immigration and alien
administration laws. It shall adopt measures for the apprehension of suspected traffickers both at
the place of arrival and departure and shall ensure compliance by the Filipino fiancés/fiancées
and spouses of foreign nationals with the guidance and counseling requirement as provided for in
this Act.

(g) Philippine National Police (PNP) - shall be the primary law enforcement agency to undertake
surveillance, investigation and arrest of individuals or persons suspected to be engaged in
trafficking. It shall closely coordinate with various law enforcement agencies to secure concerted
efforts for effective investigation and apprehension of suspected traffickers. It shall also establish
a system to receive complaints and calls to assist trafficked persons and conduct rescue
operations.

(h) Philippine Overseas Employment Administration (POEA) - shall implement an effective pre-
employment orientation seminars and pre-departure counseling programs to applicants for
overseas employment. It shall likewise formulate a system of providing free legal assistance to
trafficked persons.

(i) Department of the Interior and Local Government (DILG) - shall institute a systematic
information and prevention campaign and likewise maintain a databank for the effective
monitoring, documentation and prosecution of cases on trafficking in persons.

(j) Local government units (LGUs) - shall monitor and document cases of trafficking in persons in
their areas of jurisdiction, effect the cancellation of licenses of establishments which violate the
provisions of this Act and ensure effective prosecution of such cases. They shall also undertake an
information campaign against trafficking in persons through the establishment of the Migrants
Advisory and Information Network (MAIN) desks in municipalities or provinces in coordination
with DILG, Philippine Information Agency (PIA), Commission on Filipinos Overseas (CFO), NGOs
and other concerned agencies. They shall encourage and support community based initiatives
which address the trafficking in persons.

In implementing this Act, the agencies concerned may seek and enlist the assistance of NGOs,
people's organizations (Pos), civic organizations and other volunteer groups.

Section 17. Legal Protection to Trafficked Persons. - Trafficked persons shall be recognized as
victims of the act or acts of trafficking and as such shall not be penalized for crimes directly
related to the acts of trafficking enumerated in this Act or in obedience to the order made by the
trafficker in relation thereto. In this regard, the consent of a trafficked person to the intended
exploitation set forth in this Act shall be irrelevant.

Section 18. Preferential Entitlement Under the Witness Protection Program. - Any provision of
Republic Act No. 6981 to the contrary notwithstanding, any trafficked person shall be entitled to
the witness protection program provided therein.
Section 19. Trafficked Persons Who are Foreign Nationals. - Subject to the guidelines issued by
the Council, trafficked persons in the Philippines who are nationals of a foreign country shall also
be entitled to appropriate protection, assistance and services available to trafficked persons
under this Act: Provided, That they shall be permitted continued presence in the Philippines for a
length of time prescribed by the Council as necessary to effect the prosecution of offenders.

Section 20. Inter-Agency Council Against Trafficking. - There is hereby established an Inter-Agency
Council Against Trafficking, to be composed of the Secretary of the Department of Justice as
Chairperson and the Secretary of the Department of Social Welfare and Development as Co-
Chairperson and shall have the following as members:

(a) Secretary, Department of Foreign Affairs;

(b) Secretary, Department of Labor and Employment;

(c) Administrator, Philippine Overseas Employment Administration;

(d) Commissioner, Bureau of Immigration;

(e) Director-General, Philippine National Police;

(f) Chairperson, National Commission on the Role of Filipino Women; and

(g) Three (3) representatives from NGOs, who shall be composed of one (1) representative each
from among the sectors representing women, overseas Filipino workers (OFWs) and children,
with a proven record of involvement in the prevention and suppression of trafficking in persons.
These representatives shall be nominated by the government agency representatives of the
Council, for appointment by the President for a term of three (3) years.

The members of the Council may designate their permanent representatives who shall have a
rank not lower than an assistant secretary or its equivalent to meetings, and shall receive
emoluments as may be determined by the Council in accordance with existing budget and
accounting, rules and regulations.

Section 21. Functions of the Council. - The Council shall have the following powers and functions:

(a) Formulate a comprehensive and integrated program to prevent and suppress the trafficking in
persons;

(b) Promulgate rules and regulations as may be necessary for the effective implementation of this
Act;

(c) Monitor and oversee the strict implementation of this Act;

(d) Coordinate the programs and projects of the various member agencies to effectively address
the issues and problems attendant to trafficking in persons;

(e) Coordinate the conduct of massive information dissemination and campaign on the existence
of the law and the various issues and problems attendant to trafficking through the LGUs,
concerned agencies, and NGOs;

(f) Direct other agencies to immediately respond to the problems brought to their attention and
report to the Council on action taken;

(g) Assist in filing of cases against individuals, agencies, institutions or establishments that violate
the provisions of this Act;

(h) Formulate a program for the reintegration of trafficked persons in cooperation with DOLE,
DSWD, Technical Education and Skills Development Authority (TESDA), Commission on Higher
Education (CHED), LGUs and NGOs;
(i) Secure from any department, bureau, office, agency, or instrumentality of the government or
from NGOs and other civic organizations such assistance as may be needed to effectively
implement this Act;

(j) Complement the shared government information system for migration established under
Republic Act No. 8042, otherwise known as the "Migrant Workers and Overseas Filipinos Act of
1995" with data on cases of trafficking in persons, and ensure that the proper agencies conduct a
continuing research and study on the patterns and scheme of trafficking in persons which shall
form the basis for policy formulation and program direction;

(k) Develop the mechanism to ensure the timely, coordinated, and effective response to cases of
trafficking in persons;

(l) Recommend measures to enhance cooperative efforts and mutual assistance among foreign
countries through bilateral and/or multilateral arrangements to prevent and suppress
international trafficking in persons;

(m) Coordinate with the Department of Transportation and Communications (DOTC), Department
of Trade and Industry (DTI), and other NGOs in monitoring the promotion of advertisement of
trafficking in the internet;

(n) Adopt measures and policies to protect the rights and needs of trafficked persons who are
foreign nationals in the Philippines;

(o) Initiate training programs in identifying and providing the necessary intervention or assistance
to trafficked persons; and

(p) Exercise all the powers and perform such other functions necessary to attain the purposes and
objectives of this Act.

Section 22. Secretariat to the Council. - The Department of Justice shall establish the necessary
Secretariat for the Council.

Section 23. Mandatory Services to Trafficked Persons. - To ensure recovery, rehabilitation and
reintegration into the mainstream of society, concerned government agencies shall make
available the following services to trafficked persons:

(a) Emergency shelter or appropriate housing;

(b) Counseling;

(c) Free legal services which shall include information about the victims' rights and the procedure
for filing complaints, claiming compensation and such other legal remedies available to them, in a
language understood by the trafficked person;

(d) Medical or psychological services;

(e) Livelihood and skills training; and

(f) Educational assistance to a trafficked child.

Sustained supervision and follow through mechanism that will track the progress of recovery,
rehabilitation and reintegration of the trafficked persons shall be adopted and carried out.

Section 24. Other Services for Trafficked Persons. -

(a) Legal Assistance. - Trafficked persons shall be considered under the category "Overseas
Filipino in Distress" and may avail of the legal assistance created by Republic Act No. 8042,
subject to the guidelines as provided by law.
(b) Overseas Filipino Resource Centers. - The services available to overseas Filipinos as provided
for by Republic Act No. 8042 shall also be extended to trafficked persons regardless of their
immigration status in the host country.

(c) The Country Team Approach. - The country team approach under Executive Order No. 74 of
1993, shall be the operational scheme under which Philippine embassies abroad shall provide
protection to trafficked persons insofar as the promotion of their welfare, dignity and
fundamental rights are concerned.

Section 25. Repatriation of Trafficked Persons. - The DFA, in coordination with DOLE and other
appropriate agencies, shall have the primary responsibility for the repatriation of trafficked
persons, regardless of whether they are documented or undocumented.

If, however, the repatriation of the trafficked persons shall expose the victims to greater risks, the
DFA shall make representation with the host government for the extension of appropriate
residency permits and protection, as may be legally permissible in the host country.

Section 26. Extradition. - The DOJ, in consultation with DFA, shall endeavor to include offenses of
trafficking in persons among extraditable offenses.

Section 27. Reporting Requirements. - The Council shall submit to the President of the Philippines
and to Congress an annual report of the policies, programs and activities relative to the
implementation of this Act.

Section 28. Funding. - The heads of the departments and agencies concerned shall immediately
include in their programs and issue such rules and regulations to implement the provisions of this
Act, the funding of which shall be included in the annual General Appropriations Act.

Section 29. Implementing Rules and Regulations. - The Council shall promulgate the necessary
implementing rules and regulations within sixty (60) days from the effectivity of this Act.

Section 30. Non-restriction of Freedom of Speech and of Association, Religion and the Right to
Travel. - Nothing in this Act shall be interpreted as a restriction of the freedom of speech and of
association, religion and the right to travel for purposes not contrary to law as guaranteed by the
Constitution.

Section 31. Separability Clause. - If, for any reason, any section or provision of this Act is held
unconstitutional or invalid, the other sections or provisions hereof shall not be affected thereby.

Section 32. Repealing clause. - All laws, presidential decrees, executive orders and rules and
regulations, or parts thereof, inconsistent with the provisions of this Act are hereby repealed or
modified accordingly: Provided, That this Act shall not in any way amend or repeal the provision
of Republic Act No. 7610, otherwise known as the "Special Protection of Children Against Child
Abuse, Exploitation and Discrimination Act".

Section 33. Effectivity. - This Act shall take effect fifteen (15) days from the date of its complete
publication in at least two (2) newspapers of general circulation.

 D.O. 64-04 Series of 2004

DEPARTMENT ORDER NO. 65-04


.
Rules and Regulations Implementing
Republic Act No. 9231, Amending R.A. 7610, as Amended

SECTION 3. Definition of Terms – As used in these Rules, the term:

(a) “Child” refers to any person under 18 years of age.


(b) “Child labor” refers to any work or economic activity performed by a child that
subjects him/her to any form of exploitation or is harmful to his/her health and safety or
physical, mental or psychosocial development.

(c) “Working Child” refers to any child engaged as follows:

i. when the child is below eighteen (18) years of age, in work or economic activity that is
not child labor as defined in the immediately preceding sub-paragraph, and

ii. when the child below fifteen (15) years of age, (i) in work where he/she is directly
under the responsibility of his/her parents or legal guardian and where only members of
the child’s family are employed; or (ii)in public entertainment or information.

(f) “Members of the family” refers to the child’s parents, guardian, brothers or sisters
whether of full or half blood, and other ascendants and descendants or collateral
relatives within the fourth civil degree of consanguinity.

(g) “Employer” refers to any person, whether natural or juridical who, whether for
valuable consideration or not, directly or indirectly procures, uses, avails itself of,
contracts out or otherwise derives benefit from the work or services of a child in any
occupation, undertaking, project or activity, whether for profit or not. It includes any
person acting in the interest of the employer.

(j) “Work permit” refers to the permit secured by the employer, parent or guardian
from the Department for any child below 15 years of age in any work allowed under
Republic Act No. 9231.

(k) “Hours of work” include (1) all time during which a child is required to be at a
prescribed workplace, and (2) all time during which a child is suffered or permitted to
work. Rest periods of short duration during working hours shall be counted as hours
worked.

(l) “Workplace” refers to the office, premises or worksite where a child is temporarily or
habitually assigned. Where there is no fixed or definite workplace, the term shall
include the place where the child actually performs work to render service or to take an
assignment, to include households employing children.

(q) “Forced labor and slavery” refers to the extraction of work or services from any
person by means of enticement, violence, intimidation or threat, use of force or
coercion, including deprivation of freedom, abuse of authority or moral ascendancy,
debt bondage or deception.

(r) “Child pornography” refers to any representation of a child engaged in real or


simulated explicit sexual activities or any representation of the sexual parts of a child for
primarily sexual purposes.

Chapter 2 – Prohibition on the Employment of Children

SECTION 4. General Prohibition – Except as otherwise provided in these Rules, no child


below 15 years of age shall be employed, permitted or suffered to work, in any public or
private establishment.

SECTION 5. Prohibition on the Employment of Children in Worst Forms of Child Labor –


No child shall be engaged in the worst forms of child labor. The phrase “worst forms of
child labor” shall refer to any of the following:

(a) All forms of slavery, as defined under the “Anti-trafficking in Persons Act of 2003”, or
practices similar to slavery such as sale and trafficking of children, debt bondage and
serfdom and forced or compulsory labor, including recruitment children for use in armed
conflict.
(b) The use, procuring, offering or exposing of a child for prostitution, for the production
of pornography or for pornographic performances;

(c) The use, procuring or offering of a child for illegal or illicit activities, including the
production or trafficking of dangerous drugs or volatile substances prohibited under
existing laws; or

(d) Work which, by its nature or the circumstances in which it is carried out, is
hazardous or likely to be harmful to the health, safety or morals of children, such that it:

i. Debases, degrades or demeans the intrinsic worth and dignity of a child as a human
being; or

ii. Exposes the child to physical, emotional or sexual abuse, or is found to be highly
stressful psychologically or may prejudice morals; or
iii. Is performed underground, underwater or at dangerous heights; or
iv. Involves the use of dangerous machinery, equipment and tools such as power-driven
or explosive power-actuated tools; or
v. Exposes the child to physical danger such as, but not limited to the dangerous feats of
balancing, physical strength or contortion, or which requires the manual transport of
heavy loads; or
vi. Is performed in an unhealthy environment exposing the child to hazardous working
conditions, elements, substances, co-agents or processes involving ionizing, radiation,
fire, flammable substances, noxious components and the like, or to extreme
temperatures, noise levels or vibrations; or
vii. Is performed under particularly difficult conditions; or

viii. Exposes the child to biological agents such as bacteria, fungi, viruses, protozoa,
nematodes and other parasites; or

ix. Involves the manufacture or handling of explosives and other pyrotechnic products.

SECTION 6. Prohibition on the Employment of Children in Certain Advertisements – No


child below 18 years of age shall be employed as a model in any advertisement directly
or indirectly promoting alcoholic beverages, intoxicating drinks, tobacco and its
byproducts, gambling or any form of violence or pornography.

Chapter 3 – Exceptions to the Prohibition

SECTION 7. Exceptions and Conditions – The following shall be the only exceptions to the
prohibition on the employment of a child below 15 year of age:

(a) When the child works under the sole responsibility of his/her parents or guardian,
provided that only members of the child’s family are employed.

(b) When the child’s employment or participation in public entertainment or


information is essential, regardless of the extent of the child’s role.

Such employment shall be strictly under the following conditions:

i. The total number of hours worked shall be in accordance with Section 15 of these
Rules;

ii. The employment does not endanger the child’s life, safety, health and morals, nor
impair the child’s normal development;
iii. The child is provided with at least the mandatory elementary or secondary
education; and
iv. The employer secures a work permit for the child in accordance with Section 8-12 of
these Rules.
Chapter 4 – Requirements to Avail of Exception To Employment Prohibition

SECTION 8. Work Permit – Except as provided is Section 13, no child below 15 years of
age shall be allowed to commence work without a work permit. An employer must first
secure a work permit from the Regional Office of the Department having jurisdiction
over the workplace of the child. In cases where the work is done in more than one
workplace falling under the jurisdiction of more than one Regional Office, the
application shall be made with the Regional Office having jurisdiction over the principal
office of the employer. However, at least two days prior to the performance of the work,
the employer shall inform the Regional Office having jurisdiction over the workplace of
the activities to be under taken involving the child.

SECTION 9. Requirements for the Issuance of Work Permit – The employer shall submit
to the appropriate Regional Office the Following:

(a) A duly accomplished and verified application for work permit containing the
following information:

i. Terms and conditions of employment including hours of work, number of working


days, remuneration, and rest period, which shall be in accordance with law;

ii. Measures to ensure the protection, health, safety, morals, and normal development
of the child, including but not limited to the following:

1. comfortable workplace and adequate quarters;


2. break or rest periods in comfortable day beds or couches;

3. clean and separate dressing rooms and toilet facilities for boys and girls;

4. provision for adequate meals and snacks and sanitary eating facility;

5. provision of all the necessary assistance to ensure the adequate and immediate
medical and dental attendance and treatment to an injured or sick child in case of
emergency.

(b) Except when the child is below seven years old,

i. Proof that the child is enrolled and regularly attending elementary or secondary
school classes, consisting of certificate of enrolment for the current year or current
school identification or report card; or

ii. If the child is not enrolled, a brief description of the program for education, training
and skills acquisition for the child, in accordance with Section 19 (b) of these Rules.

(c) An authenticated copy of the child’s Birth Certificate or a Certificate of late


Registration of Birth issued by the NSO or the city/municipal registrar;

(d) A medical certificate issued by a licensed physician stating that he/she has personally
examined the child for whom a work permit is being secured, and that the child is fit to
undertake the work in which he/she is to be engaged. Such certificate must bear in print
the certifying physician’s full name and his/her license number;

(e) Two passport size photographs of the child;

(f) When the employer is the parent, guardian, or a family member other than the
parent of the child, he/she shall present any valid document such as latest passport,
latest postal/company identification card, and driver’s license establishing his/her
identity. A legal guardian is likewise required to present a duly authenticated proof of
legal guardianship while a family member shall present any proof of relationship to the
child;
(g) When the employer is in public entertainment or information, he/she shall submit a
certified true copy of the employer’s business permit or certificate of registration and a
written employment contract to be approved by the Department. An express
agreement of the child to the provisions of the contract is needed when such child is
between seven and below 15 years of age.

SECTION 12. Validity of Work Permit – The work permit shall state the period of its
validity based on the employment contract of the application for work permit, as the
case may be. However, the period of validity shall in no case exceed one year.

SECTION 13. Employment of Spot Extras – In public entertainment or information, the


requirements for the issuance of work permit stated in Section 8-12 shall not be
applicable to the employment of spot extras or those being cast outright on the day of
the filming or taping. Instead, the employer shall file a notice with the Regional Office
where the work is to be performed that it will undertake activities involving child work.
The notice shall be in the form prescribed by the Department and shall state the
approximate number of child workers to be employed, the date, place and time the work
is to be performed, and an undertaking that the employment shall be in conformity with
Republic Act No. 9231 and these Rules.

Chapter 5 – Hours of Work

SECTION 15. Hours of Work of a Working Child – The following hours of work shall be
observed for any child allowed to work under Republic Act No. 9231 and these Rules:

(a) For a child below 15 years of age, the hours of work shall not be more than twenty
(20) hours as week, provided that the work shall not be more than four hours at any
given day;

(b) For a child 15 years of age, but below 18, the hours of work shall not be more than
eight hours a day, and in no case beyond 40 hours a week; and

(c) No child below 15 year of age shall be allowed to work between eight o’clock in the
evening and six o’clock in the morning of the following day and no child 15 years of age
but below 18 shall be allowed to work between ten o’clock in the evening and six o’clock
in the morning of the following day.

Sleeping time as well travel time of a child engaged in public entertainment or


information from his/her residence to his/her workplace shall not be included as hours
worked without prejudice to the application of existing rules on employees
compensation.

Chapter 6 – Working Child’s Income

SECTION 16. Ownership and Use of the Working Child’s Income – The wages, salaries,
earnings and other income of the working child belong to him/her in ownership and
shall be set aside primarily for his/her support, education, or skills acquisition and
secondarily to the collective needs of the family: Provided, That not more than twenty
percent (20%) of the child’s income may be used for the collective needs of the family.

SECTION 22. Grounds for Suspension and Cancellation of Work Permit – The Regional
Director shall suspend or cancel the work permit issued to a working child under the
following instances:

(a) If there is fraud or misrepresentation in the application for work permit or any of its
supporting documents;

(b) If the terms and conditions set forth in the child’s employment contract and/or
employer’s undertaking have been violated;
(c) If the employer fails to institute measures to ensure the protection, health, safety,
morals, and normal development of the child as required in Section 7 (b)ii;

(d) If the employer fails to formulate and implement a program for the education,
training and skills acquisition of the child; or

(e) If a child has been deprived access to formal, non-formal or alternative learning
systems of education.

 D.O. 04 Series of 1999

2. Promote

 Defined

- Millares vs Subido (GR# L-23281 - 08/10/67)

The transfer was in violation of the Civil Service Rules. A transfer is a "movement from one
position to another which is of equivalent rank, level or salary, without break in service."
Promotion, on the other hand, is the "advancement from one position to another with an
increase in duties and responsibilities as authorized by law, and usually accompanied by an
increase in salary. Under the Civil Service rules, promotion and transfer connote two different
personnel movements which cannot take place, in a single instance, at the same time. Whereas
the first denotes a scalar ascent of a senior officer or employee to another position, higher
either in rank or salary, the second refers to a lateral movement from one position to another,
of equivalent rank, level or salary. This rule prohibiting an immediate increase of compensation
in cases of transfers was intended to safeguard the rule on seniority. The latest appointment of
Millares, insofar as it involves an immediate increase of compensation, is violative of Civil
Service rules and, therefore, invalid. To comply strictly with the Civil Service policy regulations
in force at the time of petitioner-appellee's transfer, the same should not have included any
immediate increase in salary, but without prejudice to a subsequent promotional appointment
after a minimum service of three months in the new position.

 Does not mean salary increase

- PTT Corp. vs CA

 Employee’s refusal to be promoted

- Erasmo vs HIG Corp. (GR# 139251 - 08/29/02)

Petitioner’s promotional appointment as VP of TS/GCIG is merely temporary in nature. As such,


being temporary in character, her promotion was terminable at the pleasure of the appointing
power with or without a cause and such promotion does not enjoy security of tenure. The
mere fact that a position belongs to the Career Service does not automatically confer security
of tenure on its occupant even if such person does not possess the required qualifications. The
right to security of tenure will have to depend on the nature of a person's appointment, which
in turn depends on his eligibility or lack of it. A person who does not have the requisite
qualifications for the position cannot be appointed to it in the first place, or as an exception to
the rule, may be appointed to it merely in an acting capacity in the absence of appropriate
eligibles. When petitioner accepted the temporary appointment, in effect, she had abandoned
her right to security of tenure. The power of appointment is essentially discretionary and
cannot be controlled, not even by the Court, as long as it is exercised properly by the
appointing authority.
3. Demote

 Nature

- Leonardo vs NLRC (GR# 125303, 126937 - 06/16/00)

The demotion of petitioner FUERTE was pursuant to a company policy intended to foster
competition among its employees, therefore, valid. Under this scheme, the employees are
required to comply with a monthly sales quota. Should a supervisor such as FUERTE fail to
meet his quota for a certain number of consecutive months, he will be demoted, whereupon
his supervisor’s allowance will be withdrawn and be given to the individual who takes his place.
When the employee concerned succeeds in meeting the quota again, he is re-appointed
supervisor and his allowance is restored. The right to demote an employee falls within the
category of management prerogatives. This arrangement appears to us to be an allowable
exercise of company rights. An employer is entitled to impose productivity standards for its
workers, and in fact, non-compliance may be visited with a penalty even more severe than
demotion. Thus, the practice of a company in laying off workers because they failed to make
the work quota has been recognized. Moreover, the right to demote employees requires due
process, as required by law, as it has the same effect on dismissals. The employee being
demoted should as in cases of dismissals, be given a chance to contest the same. In this case,
due process was observed by the respondent company.

With regard to LEONARDO, the evidence shows that he abandoned his work with the
respondents after being pressed to present the customer regarding his unauthorized
solicitation of sideline work from the latter, he never reported back to work anymore. For
abandonment to constitute a valid cause for termination of employment there must be a
deliberate unjustified refusal of the employee to resume his employment. Such element is
present in this case.

- Fuerte vs Aquino

 Due Process

- Floren Hotel vs NLRC (GR# 155264 - 05/06/05)

Due process was not observed as CALIMLIM and RICO were not given the chance to be heard.
The employer’s right to demote an employee requires the observance of the twin-notice
requirement. Furthermore, the transfer of the employees to be considered a valid exercise of
management prerogatives, the employer must show that the transfer is not unreasonable,
inconvenient or prejudicial to the former; neither would it involve a demotion in rank or a
diminution of employees' salaries, privileges and other benefits. In this case, Calimlim and Rico
were being forced to accept alternate work periods in their new jobs as janitors, otherwise
they would be unemployed—not only did this new schedule entail a diminution of wages,
because they would only be allowed to work every other week, the new schedule was also
clearly for an undefined period and could continue for as long as the management so desires.
Under these circumstances, the temporary transfer could not be a valid exercise of
management prerogatives.

4. Transfer

- Sentinel Security Agency vs NLRC (GR# 122466 - 09/03/98)

The transfer did not constitute a management prerogative, therefore, the transfer is invalid. The
transfer of an employee involves a lateral movement within the business or operation of the
employer, without demotion in rank, diminution of benefits or, worse, suspension of employment
even if temporary. The recall and transfer of security guards require reassignment to another post
and are not equivalent to their placement on "floating status." Off-detailing security guards for a
reasonable period of six months is justified only in bona fide cases of suspension of operation,
business or undertaking. In this case, the agency hired new security guards to replace the
complainants, resulting in a lack of posts to which the complainants could have been reassigned. If
indeed they were merely transferred, there would have been no need to make them wait for six
months.

- OSS Security & Allied Services Inc. vs NLRC (GR# 112752 - 02/09/00)

In the case, nowhere in the record does it show that the transfer of private respondent was
anything but done in good faith, without grave abuse of discretion, and in the best interest of the
business enterprise.

Petitioner proved that the transfer was effected in good faith to comply with reasonable request of
its client, for a more disciplined service of the security guards on detail. The renewal of the contract
of petitioner hinged on the action taken by the former on the latter’s request. Most contracts for
security services stipulate that the client may request the replacement of the guards assigned to it.
A relief and transfer order does not sever employment.

An employee has the right to security of tenure, but this does not give her such vested right in her
position as would deprive petitioner of its prerogative to change her assignment a transfer where
her service, as security guard, will be most beneficial to the client.

- Mendoza vs Rural Bank of Lucban (GR# 155421 - 07/07/04)

The test for determining the validity of the transfer of employees is explained as follows;

1. The managerial prerogative to transfer personnel must be exercised without grave abuse of
discretion, bearing in mind the basic elements of justice and fair play. Having the right should
not be confused with the manner in which that right is exercised. Thus, it cannot be used as a
subterfuge by the employer to rid himself of an undesirable worker.

2. The employer must be able to show that the transfer is not reasonable, inconvenient or
prejudicial to the employee; nor does it involve a demotion in rank or diminution of his
salaries, privileges and other benefits. Should the employer fail to overcome this burden of
proof, the employee’s transfer shall be tantamount to constructive dismissal.

- Benguet Electric Cooperative vs Fianza (GR# 158606 - 03/09/04)

The abolition of a position deemed no longer necessary is a management prerogative and absent
any findings of malice and arbitrariness on the part of management, will no efface such privilege if
only to protect the person holding that office. In cases, when an employee’s position is established
due to corporate restructuring, the law, in general, permits the severance of the employer-
employee relationship, provided that certain requirements are met. In the case, Fianza was not
terminated from employment, but was transferred to another department.

Management’s prerogative of transferring and reassigning employees from one operation to


another in order to meet the requirements of the business is generally does not constitute
constructive dismissal.

- Tecson vs Glaxxo Wellcom Phils. Inc. (GR# 162994 - 09/17/04)

- SMC vs Pontillas (GR# 155178 - 05/07/08)

- Norkis Trading vs Gnillo (GR# 159730 - 02/11/08)

Well-settled is the rule that it is the prerogative of the employer to transfer and reassign employees
for valid reasons and according to the requirement of its business. An owner of a business
enterprise is given considerable leeway in managing his business. Our law recognizes certain rights,
collectively called management prerogative as inherent in the management of business enterprises.
We have consistently recognized and upheld the prerogative of management to transfer an
employee from one office to another within the business establishment, provided that there is no
demotion in rank or diminution of his salary, benefits and other privileges and the action is not
motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion
without sufficient cause. This privilege is inherent in the right of employers to control and manage
their enterprises effectively.

The right of employees to security of tenure does not give them vested rights to their positions to
the extent of depriving management of its prerogative to change their assignments or to transfer
them. Managerial prerogatives, however, are subject to limitations provided by law, collective
bargaining agreements, and general principles of fair play and justice.

The employer bears the burden of showing that the transfer is not unreasonable, inconvenient or
prejudicial to the employee; and does not involve a demotion in rank or a diminution of his salaries,
privileges and other benefits.18Should the employer fail to overcome this burden of proof, the
employee’s transfer shall be tantamount to constructive dismissal.

Constructive dismissal is defined as a quitting because continued employment is rendered


impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution of pay.20
Likewise, constructive dismissal exists when an act of clear discrimination, insensibility or disdain by
an employer becomes unbearable to the employee, leaving him with no option but to forego his
continued employment.

A transfer is defined as a "movement from one position to another which is of equivalent rank, level
or salary, without break in service." Promotion, on the other hand, is the "advancement from one
position to another with an increase in duties and responsibilities as authorized by law, and usually
accompanied by an increase in salary." Conversely, demotion involves a situation in which an
employee is relegated to a subordinate or less important position constituting a reduction to a
lower grade or rank, with a corresponding decrease in duties and responsibilities, and usually
accompanied by a decrease in salary.

In this case, while the transfer of respondent from Credit and Collection Manager to Marketing
Assistant did not result in the reduction of his salary, there was a reduction in his duties and
responsibilities which amounted to a demotion tantamount to a constructive dismissal as correctly
held by the NLRC and the CA.

- Aguanza vs Asian Terminal Inc. (GR# 163505 - 08/14/09)

ATI’s transfer of Bismark IV’s base from Manila to Bataan was, contrary to Aguanza’s assertions, a
valid exercise of management prerogative. The transfer of employees has been traditionally among
the acts identified as a management prerogative subject only to limitations found in law, collective
bargaining agreement, and general principles of fair play and justice. Even as the law is solicitous of
the welfare of employees, it must also protect the right of an employer to exercise what are clearly
management prerogatives. The free will of management to conduct its own business affairs to
achieve its purpose cannot be denied.

On the other hand, the transfer of an employee may constitute constructive dismissal "when
continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion
in rank and/or a diminution in pay; or when a clear discrimination, insensibility or disdain by an
employer becomes unbearable to the employee."

Aguanza’s continued employment was not impossible, unreasonable or unlikely; neither was there
a clear discrimination against him. Among the employees assigned to Bismark IV, it was only
Aguanza who did not report for work in Bataan. Aguanza’s assertion that he was not allowed to
"time in" in Manila should be taken on its face: Aguanza reported for work in Manila, where he
wanted to work, and not in Bataan, where he was supposed to work. There was no demotion in
rank, as Aguanza would continue his work as Crane Operator. Furthermore, despite Aguanza’s
assertions, there was no diminution in pay.

- Endico vs Quantum Food Distribution Center (GR# 161615 - 01/30/09)

There was no constructive dismissal. Reassignments made by management pending investigation of


violations of company policies and procedures allegedly committed by an employee fall within the
ambit of management prerogative. The decision of the Quantum Foods to transfer Endico pending
investigation was a valid exercise of management prerogative to discipline its employees. The
transfer while incidental to the changes against Endico was not meant as penalty but rather as
preventive measure to avoid further loss of sales and destruction of Quantum Food’s image and
goodwill.

Limits

- Mendoza vs Rural Bank of Lucban

- Benguet Electric Cooperative vs Fianza

- Dusit Hotel Nikko vs NUWHRAIN (GR# 160391 - 08/09/05)

We agree with the contention of the petitioners that it is the prerogative of management to transfer
an employee from one office to another within the business establishment based on its assessment
and perception of the employee’s qualification, aptitude and competence, and in order to ascertain
where he can function with the maximum benefit to the company. However, this Court emphasized
that:

But, like other rights, there are limits thereto. The managerial prerogative to transfer personnel
must be exercised without grave abuse of discretion, bearing in mind the basic elements of justice
and fair play. Having the right should not be confused with the manner in which that right is
exercised. Thus, it cannot be used as a subterfuge by the employer to rid himself of an undesirable
worker. In particular, the employer must be able to show that the transfer is not unreasonable,
inconvenient or prejudicial to the employee; nor does it involve a demotion in rank or a diminution
of his salaries, privileges and other benefits. Should the employer fail to overcome this burden of
proof, the employee’s transfer shall be tantamount to constructive dismissal, which has been
defined as a quitting because continued employment is rendered impossible, unreasonable or
unlikely; as an offer involving a demotion in rank and diminution in pay.

- Allied Banking Corp. vs CA (GR# 144412 - 11/18/03)

The rule is that the transfer of an employee ordinarily lies within the ambit of the employer’s
prerogatives. The employer exercises the prerogative to transfer an employee for valid reasons and
according to the requirement of its business, provided the transfer does not result in demotion in
rank or diminution of the employee’s salary, benefits and other privileges. In illegal dismissal cases,
the employer has the burden of showing that the transfer is not unnecessary, inconvenient and
prejudicial to the displaced employee.

“Certainly the Court cannot accept the proposition that when an employee opposes his employer’s
decision to transfer him to another work place, there being no bad faith or underhanded motives
on the part of either party, it is the employee’s wishes that should be made to prevail.”

- Floren Hotel vs NLRC

Effects of Refusal by Emplyee

- Benguet Electric Cooperative vs Fianza

- Allied Banking Corp. vs CA (GR# 144412 - 11/18/03)

The refusal to obey a valid transfer order constitutes willful disobedience of a lawful order of an
employer. Employees may object to, negotiate and seek redress against employers for rules or
orders that they regard as unjust or illegal. However, until and unless these rules or orders are
declared illegal or improper by competent authority, the employees ignore or disobey them at their
peril. For Galanida’s continued refusal to obey Allied Bank’s transfer orders, we hold that the bank
dismissed Galanida for just cause in accordance with Article 282 (a) of the Labor Code. Galanida is
thus not entitled to reinstatement or to separation pay.

Related Cases

- Phil-Singapore Transport Services Inc. vs NLRC (GR# 95449 - 08/18/97)

It is noteworthy to state that an employer is free to manage and regulate, according to his own
discretion and judgment, all phases of employment, which includes hiring, work assignments,
working methods, time, place and manner of work, supervision of workers, working regulations,
transfer of employees, lay-off of workers, and the discipline, dismissal and recall of work. While the
law recognizes and safeguards this right of an employer to exercise what are clearly management
prerogatives, such right should not be abused and used as a tool of oppression against labor. The
company's prerogatives must be exercised in good faith and with due regard to the rights of labor. A
priori, they are not absolute prerogatives but are subject to legal limits, collective bargaining
agreements and the general principles of fair play and justice.

- Palomares vs NLRC (GR# 120064 - 08/15/97)

Regulation of manpower by the company clearly falls within management prerogative. Even as the
law is solicitous of the welfare of employees, it must also protect the right of an employer to
exercise what are clearly management prerogatives, subject to the constitutional requirement for
the protection of labor and the promotion of social justice which tilts the scales of justice,
whenever there is doubt, in favor of the worker. In the case at bar, we conclude that NSC acted
within the parameters of a valid exercise of management prerogative.

- Arellano, Jr. vs NLRC (GR# 127896 - 08/21/97)

- Sobrepena, Jr. vs CA

- Brew Master Intl. vs NAFLU (GR# 119243 - 04/17/97)

- Isabelo vs NLRC (GR# 113366-68 - 07/24/97)

It is the employer's prerogative, based on its assessment and perception of its employees'
qualifications, aptitudes, and competence, to move them around in the various areas of its business
operations in order to ascertain where they will function with maximum benefits to the company.
An employee's right to security of tenure does not give them such a vested right in his position as
would deprive the company of its prerogative to change his assignment or transfer him where he
will be most useful.

- Phimco Industries Inc. vs NLRC (GR# 118041 - 06/11/97)

- Benguet Electric Cooperative vs Fianza (GR# 158606 - 03/09/04)

The abolition of a position deemed no longer necessary is a management prerogative and absent
any findings of malice and arbitrariness on the part of management, will no efface such privilege if
only to protect the person holding that office. In cases, when an employee’s position is established
due to corporate restructuring, the law, in general, permits the severance of the employer-
employee relationship, provided that certain requirements are met. In the case, Fianza was not
terminated from employment, but was transferred to another department.
Management’s prerogative of transferring and reassigning employees from one operation to
another in order to meet the requirements of the business is generally does not constitute
constructive dismissal.

- PAL vs NLRC (04/04/00)

5. Discipline
6. Management
7. Dismiss

D. PRESIDENTIAL DECREE NO. 442 (BRIEF HISTORICAL BACKGROUND)

1. Significance

- P.D. 442 (11/01/74)

“A DECREE INSTITUTING A LABOR CODE, THERBY REVISING AND CONSOLIDATING LABOR AND
SOCIAL LAWS TO AFFORD PROTECTION TO LABOR, PROMOTE EMPLOYMENT AND HUMAN
RESOURCES DEVELOPMENT AND ENSURE INDUSTRIAL PEACE BASED ON SOCIAL JUSTICE.”

 Article 1. This Decree shall be known as the Labor Code of the Philippines
 May 1, 1974 – PD 442 was signed into law
 Took effect Nov. 1, 1974

 Article 2. This Code shall take effect Six months after its promulgation
 RA 6715- Herrera-Veloso Law
 Sen. Blas Ople – Father of Labor Code

NOTE: Before the effectivity of the Labor code, there was no provision on the terms and conditions of
employment. This is the significance of the effectivity of the Labor Code.

- R.A. 6715 (03/21/98)

“AN ACT TO EXTEND PROTECTION TO LABOR, STRENGTHEN THE CONSTITUTIONAL RIGHTS OF WORKERS
TO SELF-ORGANIZATION, COLLECTIVE BARGAINING AND PEACEFUL CONCERTED ACTIVITIES, FOSTER
INDUSTRIAL PEACE AND HARMONY, PROMOTE THE PREFERENTIAL USE OF VOLUNTARY MODES OF
SETTLING LABOR DISPUTES, AND REORGANIZE THE NATIONAL LABOR RELATIONS COMMISSION,
AMENDING FOR THESE PURPOSES CERTAIN PROVISIONS OF PRESIDENTIAL DECREE NO. 442, AS
AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES, APPROPRIATING FUNDS
THEREFORE AND FOR OTHER PURPOSES”

 Computation of Backwages – after RA 6715 took effect, the award of backwages from the time
compensation was withheld up to the actual reinstatement.

E. BASIS FOR THE ENACTMENT OF LABOR LAWS

1. Police Power

- PASEI vs Drillon (GR# 81958 - 06/30/88)

The concept of Police Power is well-established in this jurisdiction. It has been defined as the "State
Authority to enact legislation that may interfere with personal liberty or property in order to promote
the general welfare." As defined, it consists of (1) an imposition of restraint upon liberty or property, (2)
in order to foster the common good.
Police Power is an implied limitation on the Bill of Rights, since it is subject of the far more overriding
demands and requirements of the greater number. It is the state’s authority to enact legislation that
may interfere with personal liberty or property in order to promote the general welfare.

2. Social Justice and Human Rights Provision

- Sec. 16, Art. II, 1987 Constitution

The State affirms labor as a primary social economic force. It shall protect the rights of workers and
promote their welfare.

3. Doctrine of Incorporation

- Sec. 2, Art. II, 1987 Constitution

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.

F. LIMITATIONS IN THE ENACTMENT OF LABOR LAWS (REFER TO 1987 CONSTITUTION)

1. Equal Protection Clause


(Sec. 1, Art. III, Constitution)

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.

2. Due Process Clause


(Sec. 1, Art. III, Constitution)

3. Prohibition Against Involuntary Servitude


(Sec. 18(2), Art. III, Constitution)

No involuntary servitude in any form shall exist except as a punishment for a crime whereof the party shall
have been duly convicted.

4. Non-Impairment Clause
(Sec. 10, Art. III, Constitution)

No law impairing the obligation of contracts shall be passed.

5. Requirement of Publication

- Art. 2, Civil Code

Laws shall take effect after fifteen days following the completion of their publication in the Official
Gazette, unless it is otherwise provided. This Code shall take effect one year after such publication.

G. CONSTITUTIONAL RIGHTS OF WORKERS IN LABOR STANDARDS

Sec. 3, Art. XIII, 1987 Constitution

The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and
peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to
security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and
decision-making processes affecting their rights and benefits as may be provided by law.

The State shall promote the principle of shared responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual
compliance therewith to foster industrial peace.

The State shall regulate 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.

1. Security of Tenure
2. Humane Conditions of Work
3. Living Wage

What is guaranteed is LIVING WAGE, and not MINIMUM WAGE.

Q: What is the difference between LIVING WAGE vs MINIMUM WAGE?


A:
Minimum Wage Living Wage
1. It is a definite amount 1. It is an ideal amount with no fixed
2. It is set by the RTWPB value
2. It is mandated by the Constitution
(Sec. 3, Art. XIII)

4. Just Share in the Fruits of Production


5. Co-determination

NOTE:

BASIC RIGHTS OF EMPLOYER BASIC RIGHTS OF THE EMPLOYEE UNDER THE


(CPSTR) CONSTITUTION (Sec. 3(par. 2), Art. XIII) TReSH

A. Under Labor Standards


1. Conduct of Business 1. Right to Security of Tenure
2. Prescribe Rules 2. Right to Receive a Living Wage
3. Select and Hire Employees 3. Right to Share in the fruits of production
4. Transfer or Discharge Employees 4. Right to Humane Conditions of Work
5. Return of Investment and Expansion
of Business
B. Under Labor Relations
1. Right to Organize themselves
2. Right to Conduct collective bargaining or
negotiation with management
3. Right to Engage in peaceful concerted activities
4. Right to Participate in policy and decision-
making process

 Specific Rights of Workers

 Security of tenure
 Workers cannot be dismissed without just and authorized causes
 Workers shall be made regular after 6 months probation unless a different period is agreed upon
by the worker and the employee

 Hours of work
 Normal working hours of eight hours a day
 Meal and rest period: meal break of less than one hour shall be considered compensable working
time

 Wage and wage related benefits


(a) minimum wage
(b) holiday pay – one day for every regular holiday even if unworked subject to certain
conditions
(c) premium pay for work within 8 hours on:

 special rest day; 30% of the basic daily rate


 rest day falling on a special day: plus 50%
 rest day falling on a regular holiday: plus 30% of the 200% of the basic daily
rate

 Overtime pay
 Ordinary days: 25% of the basic hourly rate
 Special/rest/holiday: 30% of the regular hourly rate on said days

 Night shift differential pay


 10% of the basic or regular rate between 10pm and 6am

 Service incentive leave


 5 days with pay per year after one year of service

 Service charges
 85 % (distribution to rank and file employees); 15% (losses, breakages, distribution to managerial
employees)

 Separation pay
 ½ month pay for every year of service for authorized causes of separation

 13th month pay


 1/12 of the total basic salary earned within the calendar year

 Payment of wages
 Shall be paid in cash, legal tender, at or near the place of work
 May be made through a bank upon written petition of majority of the workers in establishments
with 25 or more employees and within one kilometer radius to a bank
 Shall be made direct to the employees
 Shall be given not less than once every 2 weeks or twice within a month at intervals not
exceeding 16 days
 Labor-only contracting is prohibited and the person acting as contractor is merely an agent of the
employer
 Preference of workers money claims over government and other creditors in case of bankruptcy
or liquidation of business

 Safe and healthful conditions of work and welfare services


 Proper illumination and ventilation, fire exits and extinguishers, occupational health personnel
services, family welfare or family planning services at the workplace)

 Employment of Young Workers


 Minimum employable age is 15 age
 A worker below 15 should be directly under the sole responsibility of parents or guardians; work
does not interfere with child’s schooling and normal development
 No person below eighteen can be employed in hazardous or deleterious undertaking

 Employment of women
 Nightwork prohibition unless allowed by the rules:
 Industrial undertaking – from 10 pm to 6 am
 Commercial – from 12 mn to 6 am
 Agricultural – at nighttime unless given not less than 9 consecutive hours of rest
 Welfare facilities must be provided in the workplace
 Prohibition against discrimination with respect to pay, promotion, training
opportunities, study, and scholarship grants
 Self-organization and collective bargaining
 Employees can form organizations such as union and welfare committees
 An employee can join a union on the very first day of his employment
 Collective Bargaining– a contract between workers and employers on terms and conditions of
employment which are OVER and ABOVE those mandated by law

 Labor education through seminars, dialogues, and information,


education and communication materials

 Peaceful concerted activities in accordance with law

 Participation an policy and decision-making processes affecting their


rights and benefits

 Free access to the courts and quasi-judicial bodies and speedy


disposition of their cases

 ECC benefits for work-related contingencies


 medical benefits for sickness and injuries
 disability benefits
 rehabilitation
 death and funeral

 SSS Benefits
 maternity
 sickness
 disability
 retirement
 death

H. LABOR CONTRACTS AND INTERPRETATION

- Gonzales vs NLRC (GR# 125735 - 08/26/99)

Employment is no merely a contractual relationship, it has assumed the nature of a property right. It may
spell the difference whether or not a family will have food on their table, a roof over their heads, and
education for their children. It is for this reason that the state has taken up measures to protect employees
from unjustified dismissals. It is also because of this that the right to security of tenure is not only a statutory
right, but more so, a constitutional right.

- Servidad vs NLRC (GR# 28682 - 03/18/99)

The private respondent sought to alternatively avail of probationary employment and employment for a
fixed term so as to preclude the regularization of the status of petitioner. The utter disregard of public policy
by the contract in question negates the ruling of the NLRC that said contract is the Law between the parties.

GENERAL RULE: A Contract of Employment is the Law between the Parties (Employer - Employee)
EXCEPTION: If the contract is contrary to Law or Public Policy, it becomes void. (Art. 1700 NCC)

- Grandteq Industrial Steel Products Inc. vs Margallo

I. LABOR CODE APPLICABILITY

- J.V. Angeles Construction vs NLRC (04/14/99)

R.A. 7641 is undoubtedly, a social legislation. The law has been enacted as a labor protection measure and
as a curative statue that - absent a retirement plan devised by, an agreement with, or a voluntary grant from
an employer – can respond, in part at least to the financial well-being of workers during their twilight years
soon following their life of labor. There should be little doubt about the fact that the law can apply to labor
contracts still existing at the time the statute has taken effect, and that its benefits can be reckoned not only
from the date of the law’s enactment but retroactively to the time said employment contracts have started.

- Austria vs NLRC (08/16/99)

The case at bar does not concern an ecclesiastical or purely religious affair as to bar the State from taking
cognizance of the same. An ecclesiastical affair is “one that concerns doctrine, creed, or form or worship of
the church, or the adoption and enforcement within a religious association of needful laws and regulations
for the government of the membership, and the power of excluding from such associations those deemed
unworthy of membership. Based on this definition, an ecclesiastical affair involves the relationship between
the church and its members and relate to matters of faith, religious doctrines, worship and governance of
the congregation. To be concrete, examples of this so-called ecclesiastical affairs to which the State cannot
meddle are proceedings for excommunication, ordinations of religious ministers, administration of
sacraments and other activities with which attached religious significance. The case at bar does not even
remotely concern any of the above cited examples. While the matter at hand relates to the church and its
religious minister it does not ipso facto give the case a religious significance. Simply stated, what is involved
here is the relationship of the church as an employer and the minister as an employee. It is purely secular
and has no relation whatsoever with the practice of faith, worship or doctrines of the church. In this case,
petitioner was not excommunicated or expelled from the membership of the SDA but was terminated from
employment. Indeed, the matter of terminating an employee, which is purely secular in nature, is different
from the ecclesiastical act of expelling a member from the religious congregation.

J. DEFINITION

1. Employer (Art. 212(e) Labor Code)

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.

2. Employee (Art. 212(f) Labor Code)

Any person in the employ of an employer. The term shall not be limited to the employees of a particular
employer, unless the Code so explicitly states. It shall include any individual whose work has ceased as a
result of or in connection with any current labor dispute or because of any unfair labor practice if he has
not obtained any other substantially equivalent and regular employment.

3. Test to Determine the Existence of Employer-Employee Relationship

FOUR-FOLD TEST
1. Right To Hire
2. Payment of Wages
3. Power of Dismissal
4. Control over the conduct of work

- CRC Agricultural Trading vs NLRC (GR# 177664 – 12/23/09)

Finally, a careful review of the record shows that the worker performed his work as driver under the
petitioners’ supervision and control. The company determined how, where, and when the worker
performed his task. They, in fact, requested the worker to live inside their compound so he (the
worker) could be readily available when the company needed his services. Undoubtedly, the
company exercised control over the means and methods by which the worker accomplished his
work as a driver.

- Dealco Farms Inc. vs NLRC (GR# 153192 – 01/30/09)

It is shown by jurisprudence that the element of Control is the most important determining factor.
The Control Test merely calls for the existence of the right to control, and not necessarily the
exercise thereof.

- WPP Mtg. Comm. Inc. vs Galera (GR# 169207/169239 – 03/25/10)


Additionally, the following provisions in her employment contract are convincing indicators that
Galera was an employee and not a corporate officer:

(1) it mandates where and how often she is to perform her work;
(2) the wages she receives are completely controlled by WPP;
(3) she is subject to the regular disciplinary procedures of WPP;
(4) section 14 thereof clearly states that she is a permanent employee — not a Vice-President or a
member of the Board of Directors;
(5) the intellectual property rights created or discovered by petitioner during her employment
shall automatically belong to private respondent WPP [Under the Intellectual Property Code,
this condition prevails if the creator of the work subject to the laws of patent or copyright is an
employee of the one entitled to the patent or copyright]; and
(6) the disciplinary procedure states that her right of redress is through Mindshare’s Chief
Executive Officer for the Asia-Pacific.

This last circumstance implies that she was not even under the disciplinary control of WPP’s Board
of Directors, and therefore, she could not have been a WPP corporate officer as only the WPP Board
of Directors could appoint and terminate its own corporate officer.

- Gomez vs PDMC (GR# 174044 – 11/27/09)

- Tomaquin vs PLDT (GR# 185251 – 10/02/09)

To reiterate, while respondent and SSCP no longer had any legal relationship with the termination
of the Agreement, petitioners remained at their post securing the premises of respondent while
receiving their salaries, allegedly from SSCP. Clearly, such a situation makes no sense, and the
denials proffered by respondent do not shed any light to the situation. It is but reasonable to
conclude that, with the behest and, presumably, directive of respondent, petitioners continued with
their services. Evidently, such are indicia of control that respondent exercised over petitioners.

Such power of control has been explained as the “right to control not only the end to be achieved
but also the means to be used in reaching such end.” With the conclusion that respondent directed
petitioners to remain at their posts and continue with their duties, it is clear that respondent
exercised the power of control over them; thus, the existence of an employer-employee
relationship.

- Masonic Contractor Inc. vs Madjos (GR# 185094 – 11/25/09)

TWO-TIERED APPROACH

- Angelina Francisco vs NLRC (GR# 170087 – 08/31/06)

There are instances when, aside from the employers power to control the employee with respect to the
means and methods by which the work is to be accomplished, economic realities of the employment
relationship help provide a comprehensive analysis of the true classification of the individual, whether
as employee, independent contractor, corporate officer, or some other capacity.

The better approach would therefore be to adopt a two-tiered test involving: (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; (2) the underlying economic realities of the activity of relationship. Thus,
the determination of the relationship between employer and employee depends upon the
circumstances of the whole economic activity. 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.

By applying the control test, there is no doubt that petitioner is an employee of the Company because
she was under the control and supervision of the latter. Under the broader economic reality test, the
petitioner can likewise be said to be an employee of respondent corporation because she had served
the company for six years before her dismissal, receiving check vouchers indicating her salaries/
benefits, 13th month pay, bonuses and allowances as well as deductions and SSS contributions. It is
therefore apparent that petitioner is economically dependent on respondent for her continued
employment in the latter’s line of business (test).

POWER OF CONTROL TEST

ECONOMIC REALITY TEST


 Determine the underlying economic realities of the activity or relationships.
 The determination of the relationship between employer and employee depends
upon the circumstances of the whole economic activity

A. The (broad) extent to which the services performed are an integral part of the employer’s
business.
B. The (limited) extent of the worker’s investment in the equipment and facilities
C. The nature (close supervision) and (high) degree of control exercised by the employer
D. The workers (limited) opportunities for profit and loss
E. The (small) amount of initiative, skill, judgment or foresight required for the success of the
claimed independent enterprise
F. The (high degree of) permanency and duration of the relationship between the worker and
the employer
G. The degree of dependency of the worker upon the employer for his continued employment
in that line of business.

 The benchmark of economic reality in analyzing possible employment relationships for purposes of
applying the Labor Code ought to be the ECONOMIC DEPENDENCE of the worker on his employee.
(Orozco vs CA – 562 SCRA 36, 2008)

Note: Unlike employee, independent contractor does not solely depend on the company for continued
work as they can pursue other jobs. Independent Contractors are not governed by the Labor Code but
by the Civil Code on Obligations and Contracts.

Main Concepts

A. RECRUITMENT AND PLACEMENT OF WORKERS

1. Migrant Workers and Overseas Filipinos Act of 1995 (R.A. 8042)

AN ACT TO INSTITUTE THE POLICIES OF OVERSEAS EMPLOYMENT AND ESTABLISH A HIGHER STANDARD OF
PROTECTION AND PROMOTION OF THE WELFARE OF MIGRANT WORKERS, THEIR FAMILIES AND OVERSEAS
FILIPINOS IN DISTRESS, AND FOR OTHER PURPOSES.

Section 1. Short Title. - This Act shall be known and cited as the "Migrant Workers and Overseas Filipinos
Act of 1995".

Sec. 2. Declaration of Policies.

(a) In the pursuit of an independent foreign policy and while considering national sovereignty, territorial
integrity, national interest and the right to self- determination paramount in its relations with other states,
the State shall, at all times, uphold the dignity of its citizens whether in country or overseas, in general,
and Filipino migrant workers, in particular.

(b) The State shall afford full protection to labor, local and overseas, organized and unorganized, and
promote full employment and equality of employment opportunities for all. Towards this end, the State
shall provide adequate and timely social, economic and legal services to Filipino migrant workers.

(c) While recognizing the significant contribution of Filipino migrant workers to the national economy
through their foreign exchange remittances, the State does not promote overseas employment as a means
to sustain economic growth an achieve national development. The existence of the overseas employment
program rests solely on the assurance that the dignity and fundamental human rights and freedoms of the
Filipino citizen shall not, at any time, be compromised or violated. The State, therefore, shall continuously
create local employment opportunities and promote the equitable distribution of wealth and the benefits
of development.

(d) The State affirms the fundamental equality before the law of women and men and the significant role
of women in nation-building. Recognizing the contribution of overseas migrant women workers and their
particular vulnerabilities, the State shall apply gender sensitive criteria in the formulation and
implementation of policies and programs affecting migrant workers and the composition of bodies tasked
for the welfare of migrant workers.

(e) Free access to the courts and quasi-judicial bodies and adequate legal assistance shall not be denied to
any person by reason of poverty. In this regard, it is imperative that an effective mechanism be instituted
to ensure that the rights and interest of distressed overseas Filipinos, in general, and Filipino migrant
workers, in particular, documented or undocumented, are adequately protected and safeguarded.

(f) The right of Filipino migrant workers and all overseas Filipinos to participate in the democratic decision-
making processes of the State and to be represented in institutions relevant to overseas employment is
recognized and guaranteed.

(g) The State recognizes that the ultimate protection to all migrant workers is the possession of skills.
Pursuant to this and as soon as practicable, the government shall deploy and/or allow the deployment
only of skilled Filipino workers.

(h) Non-governmental organizations, duly recognized as legitimate, are partners of the State in the
protection of Filipino migrant workers and in the promotion of their welfare. The State shall cooperate
with them in a spirit of trust and mutual respect.

(i) Government fees and other administrative costs of recruitment, introduction, placement and assistance
to migrant workers shall be rendered free without prejudice to the provision of Sec. 36 hereof.

Nonetheless, the deployment of Filipino overseas workers, whether land- based or sea-based, by local
service contractors and manning agencies employing them shall be encouraged. Appropriate incentives
may be extended to them.

Sec. 3. Definitions. - For purposes of this Act:

(a) Migrant worker refers to a person who is to be engaged, is engaged or has been engaged in a
remunerated activity in a state of which he or she is not a legal resident; to be used interchangeably with
overseas Filipino worker.

(b) Gender-sensitivity shall mean cognizance of the inequalities and inequities prevalent in society
between women and men and a commitment to address issues with concern for the respective interests
of the sexes.

(c) Overseas Filipinos refers to dependents of migrant workers and other Filipino nationals abroad who are
in distress as mentioned in Sec.s 24 and 26 of this Act.

I. DEPLOYMENT
Sec. 4. Deployment of Migrant Workers. - The State shall deploy overseas Filipino workers only in countries
where the rights of Filipino migrant workers are protected. The government recognizes any of the
following as a guarantee on the part of the receiving country for the protection and the rights of overseas
Filipino workers:
(a) It has existing labor and social laws protecting the rights of migrant workers;

(b) It is a signatory to multilateral conventions, declarations or resolutions relating to the protection of


migrant workers;

(c) It has concluded a bilateral agreement or arrangement with the government protecting the rights of
overseas Filipino workers; and

(d) It is taking positive, concrete measures to protect the rights of migrant workers.

Sec. 5. Termination or Ban on Deployment. - Notwithstanding the provisions of Sec. hereof, the
government, in pursuit of the national interest or when public welfare so requires, may, at any time,
terminate or impose a ban on the deployment of migrant workers.

II. ILLEGAL RECRUITMENT


Sec. 6. Definition. - For purposes of this Act, illegal recruitment shall mean any 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, when undertaken by a non-
licensee or non-holder of authority contemplated under Article 13(f) of Presidential Decree No. 442, as
amended, otherwise known as the Labor Code of the Philippines: Provided, That any such non-licensee or
non-holder who, in any manner, offers or promises for a fee employment abroad to two or more persons
shall be deemed so engaged. It shall likewise include the following acts, whether committed by any
person, whether a non-licensee, non-holder, 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 Secretary of Labor and Employment, or to make a worker pay any
amount greater than that actually received by him as a loan or advance;

(b) To furnish or publish any false notice or information or document in relation to recruitment or
employment;

(c) To give any false notice, testimony, information or document or commit any act of misrepresentation
for the purpose of securing a license or authority under the Labor Code;

(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;

(f) To engage in the recruitment or placement of workers in jobs harmful to public health or morality or to
the dignity of the Republic of the Philippines;

(g) To obstruct or attempt to obstruct inspection by the Secretary of Labor and Employment or by his duly
authorized representative;
(h) To fail to submit reports on the status of employment, placement vacancies, remittance of foreign
exchange earnings, separation from jobs, departures and such other matters or information as may be
required by the Secretary of Labor and Employment;

(i) To substitute or alter to the prejudice of the worker, employment contracts approved and verified by
the Department of Labor and Employment from the time of actual signing thereof by the parties up to and
including the period of the expiration of the same without the approval of the Department of Labor and
Employment;

(j) For an officer or agent of a recruitment or placement agency to become an officer or member of the
Board of any corporation engaged in travel agency or to be engaged directly or indirectly in the
management of a travel agency;

(k) To withhold or deny travel documents from applicant workers before departure for monetary or
financial considerations other than those authorized under the Labor Code and its implementing rules and
regulations;

(l) Failure to actually deploy without valid reason as determined by the Department of Labor and
Employment ; and

(m) Failure to reimburse expenses incurred by the worker in connection with his documentation and
processing for purposes of deployment, in cases where the deployment does not actually take place
without the worker's fault. Illegal recruitment when committed by a syndicate or in large scale shall be
considered an offense involving economic sabotage. Illegal recruitment is deemed committed by a
syndicate if carried out by a group of three (3) or more persons conspiring or confederating with one
another. It is deemed committed in large scale if committed against three (3) or more persons individually
or as a group.

The persons criminally liable for the above offenses are the principals, accomplices and accessories. In
case of juridical persons, the officers having control, management or direction of their business shall be
liable.

Sec. 7. Penalties. -

(a) Any person found guilty of illegal recruitment shall suffer the penalty of imprisonment of not less than
six (6) years and one (1) day but not more than twelve (12) years and a fine of not less than Two hundred
thousand pesos (P200,000.00) nor more than Five hundred thousand pesos (P500,000.00).

(b) The penalty of life imprisonment and a fine of not less than Five hundred thousand pesos
(P500,000.00) nor more than One million pesos (P1,000,000.00) shall be imposed if illegal recruitment
constitutes economic sabotage as defined herein. Provided, however, That the maximum penalty shall be
imposed if the person illegally recruited is less than eighteen (18) years of age or committed by a non-
licensee or non-holder of authority.

Sec. 8. Prohibition on Officials and Employees. - It shall be unlawful for any official or employee of the
Department of Labor and Employment, the Philippine Overseas Employment Administration (POEA), or
the Overseas Workers Welfare Administration (OWWA), or the Department of Foreign Affairs, or other
government agencies involved in the implementation of this Act, or their relatives within the fourth civil
degree of consanguinity or affinity, to engage, directly or indirectly in the business of recruiting migrant
workers as defined in this Act. The penalties provided in the immediate preceding paragraph shall be
imposed upon them.

Sec. 9. Venue. - A criminal action arising from illegal recruitment as defined herein shall be filed with the
Regional Trial Court of the province or city where the offense was committed or where the offended party
actually resides at the time of the commission of the offense: Provided, That the court where the criminal
action is first filed shall acquire jurisdiction to the exclusion of other courts: Provided, however, That the
aforestated provisions shall also apply to those criminal actions that have already been filed in court at the
time of the effectivity of this Act.

Sec. 10. Money Claims. - Notwithstanding any provision of law to the contrary, the Labor Arbiters of the
National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and
decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an
employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas
deployment including claims for actual, moral, exemplary and other forms of damages.

The liability of the principal/employer and the recruitment/placement agency for any and all claims under
this Sec. shall be joint and several. This provision shall be incorporated in the contract for overseas
employment and shall be a condition precedent for its approval. The performance bond to be filed by the
recruitment/placement agency, as provided by law, shall be answerable for all money claims or damages
that may be awarded to the workers. If the recruitment/placement agency is a juridical being, the
corporate officers and directors and partners as the case may be, shall themselves be jointly and solidarily
liable with the corporation or partnership for the aforesaid claims and damages.

Such liabilities shall continue during the entire period or duration of the employment contract and shall
not be affected by any substitution, amendment or modification made locally or in a foreign country of the
said contract.

Any compromise/amicable settlement or voluntary agreement on money claims inclusive of damages


under this Sec. shall be paid within four (4) months from the approval of the settlement by the
appropriate authority.

In case of termination of overseas employment without just, valid or authorized cause as defined by law or
contract, the worker shall be entitled to the full reimbursement of his placement fee 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.

Noncompliance with the mandatory periods for resolutions of cases provided under this Sec. shall subject
the responsible officials to any or all of the following penalties:

(a) The salary of any such official who fails to render his decision or resolution within the prescribed period
shall be, or caused to be, withheld until the said official complies therewith;

(b) Suspension for not more than ninety (90) days; or

(c) Dismissal from the service with disqualification to hold any appointive public office for five (5) years.
Provided, however, That the penalties herein provided shall be without prejudice to any liability which any
such official may have incurred under other existing laws or rules and regulations as a consequence of
violating the provisions of this paragraph.

Sec. 11. Mandatory Periods for Resolution of Illegal Recruitment Cases. - The preliminary investigations of
cases under this Act shall be terminated within a period of thirty (30) calendar days from the date of their
filing. Where the preliminary investigation is conducted by a prosecution officer and a prima facie case is
established, the corresponding information shall be filed in court within twenty-four (24) hours from the
termination of the investigation. If the preliminary investigation is conducted by a judge and a prima facie
case is found to exist, the corresponding information shall be filed by the proper prosecution officer within
forty-eight (48) hours from the date of receipt of the records of the case.

Sec. 12. Prescriptive Periods. - Illegal recruitment cases under this Act shall prescribe in five (5) years:
Provided, however, That illegal recruitment cases involving economic sabotage as defined herein shall
prescribe in twenty (20) years.

Sec. 13. Free Legal Assistance; Preferential Entitlement Under the Witness Protection Program. - A
mechanism for free legal assistance for victims of illegal recruitment shall be established within the
Department of Labor and Employment including its regional offices. Such mechanism must include
coordination and cooperation with the Department of Justice, the Integrated Bar of the Philippines, and
other non-governmental organizations and volunteer groups.

The provisions of Republic Act No. 6981 to the contrary notwithstanding, any person who is a victim of
illegal recruitment shall be entitled to the Witness Protection Program provided thereunder.

III. SERVICES
Sec. 14. Travel Advisory/Information Dissemination. - To give utmost priority to the establishment of
programs and services to prevent illegal recruitment, fraud and exploitation or abuse of Filipino migrant
workers, all embassies and consular offices, through the Philippine Overseas Employment Administration
(POEA), shall issue travel advisories or disseminate information on labor and employment conditions,
migration realities and other facts; and adherence of particular countries to international standards on
human and workers' rights which will adequately prepare individuals into making informed and intelligent
decisions about overseas employment. Such advisory or information shall be published in a newspaper of
general circulation at least three (3) times in every quarter.
Sec. 15. Repatriation of Workers; Emergency Repatriation Fund. - The repatriation of the worker and the
transport of his personal belongings shall be the primary responsibility of the agency which recruited or
deployed the worker overseas. All costs attendant to repatriation shall be borne by or charged to the
agency concerned and/or its principal. Likewise, the repatriation of remains and transport of the personal
belongings of a deceased worker and all costs attendant thereto shall be borne by the principal and/or the
local agency. However, in cases where the termination of employment in due solely to the fault of the
worker, the principal/employer or agency shall not in any manner be responsible for the repatriation of
the former and/or his belongings.

The Overseas Workers Welfare Administration (OWWA), in coordination with appropriate international
agencies, shall undertake the repatriation of workers in cases of war, epidemic, disaster or calamities,
natural or man-made, and other similar events without prejudice to reimbursement by the responsible
principal or agency. However, in cases where the principal or recruitment agency cannot be identified, all
costs attendant to repatriation shall be borne by the OWWA.

For this purpose, there is hereby created and established an emergency repatriation fund under the
administration, control and supervision of the OWWA, initially to consist of One hundred million pesos
(P100,000,000.00), which shall be taken from the existing fund controlled and administered by the
OWWA. Thereafter, such fund shall be provided for in the General Appropriations Act from year to year:
Provided, That the amount appropriated shall in no case be less than One hundred million pesos
(P100,000,000.00), inclusive of outstanding balances.

Sec. 16. Mandatory Repatriation of Underage Migrant Workers. - Upon discovery or being informed of the
presence of migrant workers whose actual ages fall below the minimum age requirement for overseas
deployment, the responsible officers in the foreign service shall without delay repatriate said workers and
advise the Department of Foreign Affairs through the fastest means of communication available of such
discovery and other relevant information.

Sec. 17. Establishment of Re-placement and Monitoring Center. - A re- placement and monitoring center is
hereby created in the Department of Labor and Employment for returning Filipino migrant workers which
shall provide a mechanism for their reintegration into the Philippine society, serve as a promotion house
for their local employment, and tap their skills and potentials for national development.

The Department of Labor and Employment, the Overseas Workers Welfare Administration, and the
Philippine Overseas Employment Administration shall, within ninety (90) days from the effectivity of this
Act, formulate a program that would motivate migrant workers to plan for productive options such as
entry into highly technical jobs or undertakings, livelihood and entrepreneurial development, better wage
employment, and investment of savings.

For this purpose, the Technical Education and Skills Development Authority (TESDA), the Technology
Livelihood Resource Center (TLRC), and other government agencies involved in training and livelihood
development shall give priority to returnees who had been employed as domestic helpers and
entertainers.

Sec. 18. Functions of the Re-placement and Monitoring Center. - The Center shall provide the following
services:

(a) Develop livelihood programs and projects for returning Filipino migrant workers in coordination with
the private sector;

(b) Coordinate with appropriate private and government agencies in the promotion, development, re-
placement and the full utilization of their potentials;

(c) Institute, in cooperation with other government agencies concerned, a computer-based information
system on skilled Filipino migrant workers which shall be accessible to all local recruitment agencies and
employers, both public and private;

(d) Provide a periodic study and assessment of job opportunities for returning Filipino migrant workers;
and
(e) Develop and implement other appropriate programs to promote the welfare of returning Filipino
migrant workers.

Sec. 19. Establishment of a Migrant Workers and other Overseas Filipinos Resource Center. - Within the
premises and under the administrative jurisdiction of the Philippine Embassy in countries where there are
large concentrations of Filipino migrant workers, there shall be established a Migrant Workers and Other
Overseas Filipinos Resource Center with the following services:

(a) Counselling and legal services;

(b) Welfare assistance including the procurement of medical and hospitalization services;

(c) Information, advisory and programs to promote social integration such as post-arrival orientation,
settlement and community networking services and activities for social interaction;

(d) Institute a scheme of registration of undocumented workers to bring them within the purview of this
Act. For this purpose, the Center is enjoined to compel existing undocumented workers to registered with
it within six (6) months from the effectivity of this Act, under pain of having his/her passport cancelled;

(e) Human resource development, such as training and skills upgrading;

(f) Gender sensitive program and activities to assist particular needs of women migrant workers;

(g) Orientation program for returning worker and other migrants; and

(h) Monitoring of daily situations, circumstances and activities affecting migrant workers and other
overseas Filipinos.

The establishment and operations of the Center shall be a joint undertaking of the various government
agencies. The Center shall be open for twenty-four (24) hours daily including Saturdays, Sunday and
holidays, and shall be staffed by Foreign Service personnel, service attaches or officers who represent
other Philippine government agencies abroad and, if available, individual volunteers and bona fide non-
government organizations from the host countries. In countries categorized as highly problematic by the
Department of Foreign Affairs and the Department of Labor and Employment and where there is a
concentration of Filipino migrant workers, the government must provide a lawyer and a social worker for
the Center. The Labor Attache shall coordinate the operation of the Center and shall keep the Chief of
Mission informed and updated on all matters affecting it.

The Center shall have a counterpart 24-hour information and assistance center at the Department of
Foreign Affairs to ensure a continuous network and coordinative mechanism at the home office.

Sec. 20. Establishment of a Shared Government Information System for Migration. - An inter-agency
committee composed of the Department of Foreign Affairs and its attached agency, the Commission on
Filipinos Overseas, the Department of Labor and Employment, the Philippine Overseas Employment
Administration, the Overseas Workers Welfare Administration, the Department of Tourism, the
Department of Justice, the Bureau of Immigration, the National Bureau of Investigation, and the National
Statistics Office shall be established to implement a shared government information system for migration.
The inter- agency committee shall initially make available to itself the information contained in existing
data bases/files. The second phase shall involve linkaging of computer facilities in order to allow free flow
data changes and sharing among concerned agencies.

The inter-agency committee shall convene to identify existing data bases which shall be declassified and
shared among member agencies. These shared data bases shall initially include, but not be limited to, the
following information:

(a) Masterlists of Filipino migrant workers/overseas Filipinos classified according to occupation/job


category, civil status, by country/state of destination including visa classification;

(b) Inventory of pending legal cases involving Filipino migrant workers and other Filipino nationals,
including those serving prison terms;

(c) Masterlist of departing/arriving Filipinos;

(d) Statistical profile on Filipino migrant workers/overseas Filipinos/tourists;

(e) Blacklisted foreigners/undesirable aliens;

(f) Basic data on legal systems, immigration policies, marriage laws and civil and criminal codes in receiving
countries particularly those with large numbers of Filipinos;

(g) List of labor and other human rights instruments where receiving countries are signatories;

(h) A tracking system of past and present gender disaggregated cases involving male and female migrant
workers; and

(i) Listing of overseas posts which may render assistance to overseas Filipinos, in general, and migrant
workers, in particular.

Sec. 21. Migrant Workers Loan Guarantee Fund. - In order to further prevent unscrupulous illegal
recruiters from taking advantage of workers seeking employment abroad, the OWWA, in coordination with
government financial institutions, shall institute financing schemes that will expand the grant of pre-
departure loan and family assistance loan. For this purpose, a Migrant Workers Loan Guarantee Fund is
hereby created and the revolving amount of One hundred million pesos (P100,000,000.00) from the
OWWA is set aside as a guarantee fund in favor of participating government financial institutions.

Sec. 22. Rights and Enforcement Mechanism Under International and Regional Human Rights Systems. -
The Department of Foreign Affairs is mandated to undertake the necessary initiative such as promotions,
acceptance or adherence of countries receiving Filipino workers to multilateral convention, declaration or
resolutions pertaining to the protection of migrant workers' rights. The Department of Foreign Affairs is
also mandated to make an assessment of rights and avenues of redress under international and regional
human rights systems that are available to Filipino migrant workers who are victims of abuse and violation
and, as far as practicable and through the Legal Assistant for Migrant Workers Affairs created under this
Act, pursue the same on behalf of the victim if it is legally impossible to file individual complaints. If a
complaints machinery is available under international or regional systems, the Department of Foreign
Affairs shall fully apprise the Filipino migrant workers of the existence and effectiveness of such legal
options.

IV. GOVERNMENT AGENCIES


Sec. 23. Role of Government Agencies. - The following government agencies shall perform the following to
promote the welfare and protect the rights of migrant workers and, as far as applicable, all overseas
Filipinos:

(a) Department of Foreign Affairs - The Department, through its home office or foreign posts, shall take
priority action or make representation with the foreign authority concerned to protect the rights of
migrant workers and other overseas Filipinos and extend immediate assistance including the repatriation
of distressed or beleaguered migrant workers and other overseas Filipinos;

(b) Department of Labor and Employment - The Department of Labor and Employment shall see to it that
labor and social welfare laws in the foreign countries are fairly applied to migrant workers and whenever
applicable, to other overseas Filipinos including the grant of legal assistance and the referral to proper
medical centers or hospitals:

(b.1) Philippine Overseas Employment Administration - Subject to deregulation and phase-out as provided
under Sec.s 29 and 30 herein, the Administration shall regulate private sector participation in the
recruitment and overseas placement of workers by setting up a licensing and registration system. It shall
also 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.

(b.2) Overseas Workers Welfare Administration - The Welfare officer or in his absence, the coordinating
officer shall provide the Filipino migrant worker and his family all the assistance they may need in the
enforcement of contractual obligations by agencies or entities and/or by their principals. In the
performance of this function, he shall make representation and may call on the agencies or entities
concerned to conferences or conciliation meetings for the purpose of settling the complaints or problems
brought to his attention.

V. THE LEGAL ASSISTANT FOR MIGRANT WORKERS AFFAIRS


Sec. 24. Legal Assistant for Migrant Workers Affairs. - There is hereby created the position of Legal
Assistant for Migrant Workers Affairs under the Department of Foreign Affairs who shall be primarily
responsible for the provision and overall coordination of all legal assistance services to be provided to
Filipino migrant workers as well as overseas Filipinos in distress. He shall have the rank, salary and
privileges equal to that of an undersecretary of said Department.

The said Legal Assistant for Migrant Workers Affairs, shall be appointed by the President and must be of
proven competence in the field of law with at least ten (10) years of experience as a legal practitioner and
must not have been a candidate to an elective office in the last local or national elections.

Among the functions and responsibilities of the aforesaid Legal Assistant are:

(a) To issue the guidelines, procedures and criteria for the provision of legal assistance services to Filipino
migrant workers;

(b) To establish close linkages with the Department of Labor and Employment, the POEA, the OWWA and
other government agencies concerned, as well as with non-governmental organizations assisting migrant
workers, to ensure effective coordination and cooperation in the provision of legal assistance to migrant
workers;

(c) To tap the assistance of reputable law firms and the Integrated Bar of the Philippines and other bar
associations to complement the government's efforts to provide legal assistance to our migrant workers;

(d) To administer the legal assistance fund for migrant workers established under Sec. 25 thereof and to
authorize disbursements therefrom in accordance with the purposes for which the fund was set up; and

(e) To keep and maintain the information system as provided in Sec. 20.

The Legal Assistant for Migrant Workers Affairs shall have authority to hire private lawyers, domestic or
foreign, in order to assist him in the effective discharge of the above functions.

Sec. 25. Legal Assistance Fund. - There is hereby established a legal assistance fund for migrant workers,
hereinafter referred to as the Legal Assistance Fund, in the amount of One hundred million pesos
(P100,000,000.00) to be constituted from the following sources:

Fifty million pesos (P50,000,000.00) from the Contingency Fund of the President;

Thirty million pesos (P30,000,000.00) from the Presidential Social Fund; and

Twenty million pesos (P20,000,000.00) from the Welfare Fund for Overseas Workers established under
Letter of Instruction No. 537, as amended by Presidential Decrees Nos. 1694 and 1809.

Any balances of existing funds which have been set aside by the government specifically as legal assistance
or defense fund to help migrant workers shall, upon effectivity of this Act, be turned over to, and form part
of, the Fund created under this Act.
Sec. 26. Uses of the Legal Assistance Fund. - The Legal Assistance Fund created under the preceding Sec.
shall be used exclusively to provide legal services to migrant workers and overseas Filipinos in distress in
accordance with the guidelines, criteria and procedures promulgated in accordance with Sec. 24(a) hereof.
The expenditures to be charged against the Fund shall include the fees for the foreign lawyers to be hired
by the Legal Assistant for Migrant Workers Affairs to represent migrant workers facing charges abroad, bail
bonds to secure the temporary release of workers under detention, court fees and charges and other
litigation expenses.

VI. COUNTRY-TEAM APPROACH

Sec. 27. Priority Concerns of Philippine Foreign Service Posts. - The country-team approach, as enunciated
under Executive Order No. 74, series of 1993, shall be the mode under which Philippine embassies or their
personnel will operate in the protection of the Filipino migrant workers as well as in the promotion of their
welfare. The protection of the Filipino migrant workers and the promotion of their welfare, in particular,
and the protection of the dignity and fundamental rights and freedoms of the Filipino citizen abroad, in
general, shall be the highest priority concerns of the Secretary of Foreign Affairs and the Philippine Foreign
Service Posts.

Sec. 28. Country-Team Approach. - Under the country-team approach, all officers, representatives and
personnel of the Philippine government posted abroad regardless of their mother agencies shall, on a per
country basis, act as one country-team with a mission under the leadership of the ambassador. In this
regard the ambassador may recommend to the Secretary of the Department of Foreign Affairs the recall of
officers, representatives and personnel of the Philippine government posted abroad for acts inimical to the
national interest such as, but not limited to, failure to provide the necessary services to protect the rights
of overseas Filipinos.

Upon receipt of the recommendation of the ambassador, the Secretary of the Department of Foreign
Affairs shall, in the case of officers, representatives and personnel of other departments, endorse such
recommendation to the department secretary concerned for appropriate action. Pending investigation by
an appropriate body in the Philippines, the person recommended for recall may be placed under
preventive suspension by the ambassador.

In host countries where there are Philippine consulates, such consulates shall also constitute part of the
country-team under the leadership of the ambassador.

In the implementation of the country-team approach, visiting Philippine delegations shall be provided full
support and information.

VII. DEREGULATION AND PHASE-OUT

Sec. 29. Comprehensive Deregulation Plan on Recruitment Activities. - Pursuant to a progressive policy of
deregulation whereby the migration of workers becomes strictly a matter between the worker and his
foreign employer, the DOLE, within one (1) year from the effectivity of this Act, is hereby mandated to
formulate a five-year comprehensive deregulation plan on recruitment activities taking into account labor
market trends, economic conditions of the country and emerging circumstances which may affect the
welfare of migrant workers.

Sec. 30. Gradual Phase-out of Regulatory Functions. - Within a period of five (5) years from the effectivity
of this Act, the DOLE shall phase-out the regulatory functions of the POEA pursuant to the objectives of
deregulation.

VIII. PROFESSIONAL AND OTHER HIGHLY-SKILLED FILIPINOS ABROAD


Sec. 31. Incentives to Professionals and Other Highly-Skilled Filipinos Abroad. - Pursuant to the objective of
encouraging professionals and other highly-skilled Filipinos abroad especially in the field of science and
technology to participate in, and contribute to national development, the government shall provide
proper and adequate incentives and programs so as to secure their services in priority development areas
of the public and private sectors.

IX. MISCELLANEOUS PROVISIONS


Sec. 32. POEA and OWWA Board; Additional Memberships. - Notwithstanding any provision of law to the
contrary, the respective Boards of the POEA and the OWWA shall, in addition to their present composition,
have three (3) members each who shall come from the women, sea-based and land-based sectors
respectively, to be appointed by the President in the same manner as the other members.

Sec. 33. Report to Congress. - In order to inform the Philippine Congress on the implementation of the
policy enunciated in Sec. 4 hereof, the Department of Foreign Affairs and the Department of Labor and
Employment shall submit to the said body a semi- annual report of Philippine foreign posts located in
countries hosting Filipino migrant workers. The report shall include, but shall not be limited to, the
following information:

(a) Masterlist of Filipino migrant workers, and inventory of pending legal cases involving them and other
Filipino nationals including those serving prison terms;

(b) Working conditions of Filipino migrant workers;

(c) Problems encountered by the migrant workers, specifically violations of their rights;

(d) Initiatives/actions taken by the Philippine foreign posts to address the problems of Filipino migrant
workers;

(e) Changes in the laws and policies of host countries; and

(f) Status of negotiations on bilateral labor agreements between the Philippines and the host country.

Any officer of the government who fails to report as stated in the preceding Sec. shall be subject to
administrative penalty.

Sec. 34. Representation in Congress. - Pursuant to Sec. 5(2), Article VI of the Constitution and in line with
the objective of empowering overseas Filipinos to participate in the policy making process to address
Filipino migrant concerns, two (2) sectoral representatives for migrant workers in the House of
Representatives shall be appointed by the President from the ranks of migrant workers: Provided, That at
least one (1) of the two (2) sectoral representatives shall come from the women migrant workers sector:
Provided, further, That all nominees must have at least two (2) years experience as a migrant worker.

Sec. 35. Exemption from Travel Tax and Airport Fee. - All laws to the contrary notwithstanding, the migrant
worker shall be exempt from the payment of travel tax and airport fee upon proper showing of proof of
entitlement by the POEA.

Sec. 36. Non-increase of Fees; Abolition of Repatriation Bond. - Upon approval of this Act, all fees being
charged by any government office on migrant workers shall remain at their present levels and the
repatriation bond shall be abolished.

Sec. 37. The Congressional Migrant Workers Scholarship Fund. - There is hereby created a Congressional
Migrant Workers Scholarship Fund which shall benefit deserving migrant workers and/or their immediate
descendants below twenty-one (21) years of age who intend to pursue courses or training primarily in the
field of science and technology. The initial seed fund of Two hundred million pesos (P200,000,000.00) shall
be constituted from the following sources:

(a) Fifty million pesos (P50,000,000.00) from the unexpended Countrywide Development Fund for 1995 in
equal sharing by all Members of Congress; and

(b) The remaining One hundred fifty million pesos (P150,000,000.00) shall be funded from the proceeds of
Lotto draws.

The Congressional Migrant Workers Scholarship Fund as herein created shall be administered by the DOLE
in coordination with the Department of Science and Technology (DOST). To carry out the objectives of this
Sec., the DOLE and the DOST shall formulate the necessary rules and regulations.
Sec. 38. Appropriation and Other Sources of Funding. - The amount necessary to carry out the provisions
of this Act shall be provided for in the General Appropriations Act of the year following its enactment into
law and thereafter.

Sec. 39. Migrant Workers Day. - The day of signing by the President of this Act shall be designated as the
Migrant Workers Day and shall henceforth be commemorated as such annually.

Sec. 40. Implementing Rules and Regulations. - The departments and agencies charged with carrying out
the provisions of this Act shall, within ninety (90) days after the effectivity of this Act, formulate the
necessary rules and regulations for its effective implementation.

Sec. 41. Repealing Clause. - All laws, decrees, executive orders, rules and regulations, or parts thereof
inconsistent with the provisions of this Act are hereby repealed or modified accordingly.

Sec. 42. Separability Clause. - If, for any reason, any Sec. or provision of this Act is held unconstitutional or
invalid, the other Sec.s or provisions hereof shall not be affected thereby.

Sec. 43. Effectivity Clause. - This Act shall take effect after fifteen (15) days from its publication in the
Official Gazette or in at least two (2) national newspapers of general circulation whichever comes earlier

 Constitutionality

- Executive Secretary vs CA (GR# 131719 – 05/25/04)

A profession, trade or calling is a property right within the meaning of our constitutional
guarantees. One cannot be deprived of the right to work and the right to make a living because
these rights are property rights, the arbitrary and unwarranted deprivation of which normally
constitutes an actionable wrong.

Nevertheless, no right is absolute, and the proper regulation of a profession, calling, business or
trade has always been upheld as a legitimate subject of a valid exercise of the police power by the
state particularly when their conduct affects either the execution of legitimate governmental
functions, the preservation of the State, the public health and welfare and public morals.

The equal protection clause is directed principally against undue favor and individual or class
privilege. It is not intended to prohibit legislation which is limited to the object to which it is
directed or by the territory in which it is to operate. It does not require absolute equality, but
merely that all persons be treated alike under like conditions both as to privileges conferred and
liabilities imposed.

- People vs Chowdury (01/15/00)

The elements of illegal recruitment in large scale are:

1. The accused undertook any recruitment activity defined under Art. 13(b) or any prohibited
practice enumerated under Art. 34 of the Labor Code;

2. He did not have a license or authority to lawfully engage in the recruitment and placement of
workers;

3. He committed the same against three (3) or more persons, individually or as a group.

Q: Who are principals, accomplices and accessories described in Sec. 6 or R.A. 8042?
A: They are the same as those in Art. 17, 18, and 19 of the Revised Penal Code.

Q: Art. 20 of the RPC provides for Accessories who are exempt from Criminal Liability, will this also
apply here in R.A. 8042?
A:
 Jurisdiction of Money Claims, Death Benefits, and other Benefits

SEC. 10. MONEY CLAIMS. – Both withstanding any provision of law to the contrary, the Labor Arbiters
of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction
to hear and decide, within ninety (90) calendar days after filing of the complaint, the claims arising
out of an employer-employee relationship or by virtue of any law or contract involving Filipino
workers for overseas deployment (prior to R.A. 8042, jurisdiction was with the POEA and covered only
Filipinos employed overseas) including claims for actual, moral, exemplary and other forms of
damages.

The liability of the principal/employer and the recruitment/placement agency for any and all
claims under this section shall be joint and several. This provisions shall be incorporated in the
contract for overseas employment and shall be a condition precedent for its approval. The
performance bond to be filed by the recruitment/placement agency, as provided by law, shall be
answerable for all money claims or damages that may be awarded to the workers. If the
recruitment/placement agency is a juridical being, the corporate officers and directors and partners as
the case may be, shall themselves be jointly and solidarily liable with the corporation or partnership
for the aforesaid claims and damages.

Such liabilities shall continue during the entire period or duration of the employment
contract and shall not be affected by any substitution, amendment or modification made locally or in
a foreign country of the said contract.

Any compromise/amicable settlement or voluntary agreement on money claims inclusive of


damages under this section shall be paid within four (4) months from the approval of the settlement
by the appropriate authority.

In case of termination of overseas employment without just, valid or authorized cause as


defined by law or contract, the workers shall be entitled to the full reimbursement of his placement
fee with interest of 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.

Non-compliance with the mandatory periods for resolutions of cases provided under this
section shall subject the responsible officials to any or all of the following penalties:

a. The salary of any such official who fails to render his decision or resolutions within the
prescribed period shall be, or caused to be, withheld until the said official complies
therewith;
b. Suspension for not more than ninety (90) days; or

c. Dismissal from the service with disqualifications to hold any appointive public office for
five (5) years.

Provided, however, that the penalties herein provided shall be without prejudice to any
liability which any such official may have incurred under other existing laws or rules and regulations as
a consequence of violating the provisions of this paragraph.

 Jurisdiction over Disciplinary Actions of OFW’s


(Sec. 1, Rule VII, Book VII, POEA Rules and Regulations - Old)

R.A. 8042 has transferred from the POEA to the NLRC the jurisdiction over OFW’s claims arising from
employer-employee relationship. But POEA retains original and exclusive jurisdiction over cases
involving violations of POEA Rules and Regulations, disciplinary cases and other cases that are
administrative in character involving OFW’s.

Thus, POEA performs regulatory, enforcement, and limited or special adjudicatory functions.

What are grounds for disciplinary actions? (PUG is VVEC’s TO GOD)


(Sec. 2, Rule VII, Book VII, POEA Rules and Regulations - Old)

1) Prostitution;
2) Unjust refusal to depart for the worksite;
3) Gunruning or possession of deadly weapons;
4) Vandalism or destroying company property;
5) Violation of the laws and sacred practices of the host country and unjustified breach of
employment contract;
6) Embezzlement of funds of the company or fellow worker entrusted for delivery to relatives in the
Philippines;
7) Creating trouble at the worksite or in the vessel;
8) Gambling;
9) Initiating or joining a strike or work stoppage where the laws of the host country prohibit strikes
or similar actions;
10) Commission of Felony punishable by Philippine Laws or by the host country;
11) Theft or robbery;
12) Drunkenness;
13) Drug Addiction or possession or trafficking of prohibited drugs; and
14) Desertion or abandonment

What are beyond the jurisdiction of the POEA?

 No jurisdiction to enforce Foreign Judgment (RTC’s have jurisdiction – Art. 221 Labor Code)
 No jurisdiction over Torts (McKenzie vs Cui – GR# 48831 – 02/06/89)

 Liability of Local Recruitment Agency and Foreign Principal

 Liability of recruitment agency


(Sec. 10, Rule V, Book I, Implementing Regulations of the Labor Code)

The recruitment agency is solidarily liable with the foreign principal for unpaid salaries of worker
it recruited. Before recruiting, the agency is required to submit a document containing its power
to sue and to be sued jointly and solidarily with the principal or foreign-based employer for any of
the violations of the recruitment agreement, and the contracts of employment.

(Sec. 10(par.2) of R.A. 8042)


The liability of the principal/employer and the recruitment/placement agency for any and all
claims under this section shall be joint and several.

Nota Bene:

The recruitment agency may still be sued even if the agency agreement between recruitment
agency and the principal is already severed if no notice of the termination was given to the
employee based on Article 1921 of the New Civil Code. (Catan vs. NLRC)

 Contract by Principal
Even if it was the principal of the manning agency who entered into contract with the employee,
the manning agent in the Philippines is jointly and severally liable with the principal. (Seagull
Maritime Corp. vs. Balatongan)

 Suability of Foreign Corporation


A foreign corporation that, through unlicensed agents, recruits, workers in the country may be
sued in and found liable by Philippine courts. (Facilities Management Corp. vs. De La Osa)

 Entities Authorized to Engage in Recruitment and Placement

General Rule: No person or entity shall engage in the recruitment and placement of workers, locally
and overseas.

Exceptions:

1. Public employment offices;


2. Private recruitment entities;
3. Private employment agencies;
4. Shipping or manning agents or representative;
5. POEA;
6. Construction contractors if authorized by the DOLE and the Construction Industry Authority;
7. Members of the diplomatic corps (but hiring must also go through POEA);
8. Other persons or entities as may be authorized by the DOLE Secretary; and
9. Name hirees

 Country Team Approach


(Sec. 27-28 of R.A. 8042)

SEC. 27. PRIORITY CONCERNS OF PHILIPPINE FOREIGN SERVICE POSTS. - The country team approach,
as enunciated under Executive Order No. 74, series of 1993, shall be the mode under which Philippine
embassies or their personnel will operate in the protection of the Filipino migrant workers as well as
in the promotion of their welfare. The protection of the Filipino migrant workers and the promotion
of their welfare, in particular, and the protection of the dignity and fundamental rights and freedoms
of the Filipino citizen abroad, in general, shall be the highest priority concerns of the Secretary of
Foreign Affairs and the Philippine Foreign Service Posts.

SEC. 28. COUNTRY-TEAM APPROACH. - Under the country-team approach, all officers, representatives
and personnel of the Philippine government posted abroad regardless of their mother agencies shall,
on a per country basis, act as one country-team with a mission under the leadership of the
ambassador. In this regard, the ambassador may recommend to the Secretary of the Department of
Foreign Affairs the recall of officers, representatives and personnel of the Philippine government
posted abroad for acts inimical to the national interest such as, but not limited to, failure to provide
the necessary services to protect the rights of overseas Filipinos.

Upon receipt of the recommendation of the ambassador, the Secretary of the Department of Foreign
Affairs shall, in the case of officers, representatives and personnel of other departments, endorse such
recommendation to the department secretary concerned for appropriate action. Pending
investigation by an appropriate body in the Philippines, the person recommended for recall may be
placed under preventive suspension by the ambassador.

In host countries where there are Philippine consulates, such consulates shall also constitute part of
the country-team under the leadership of the ambassador.

In the implementation of the country-team approach, visiting Philippine delegations shall be provided
full support and information.

2. Effect of Absence of Consideration

- People vs Piedra (01/24/00)

The fact that appellant did not receive any payment for the promised or offered employment is f no
moment. From the language of the statute, the act of recruitment may be "for profit or not"; it suffices
that the accused "promises or offers for a fee employment" to warrant conviction for illegal recruitment.
(Sec. 6 of R.A. 8042)

3. Illegal Recruitment

 Definition
(Sec. 6 of R.A. 8042)

DEFINITIONS. - For purposes of this Act, illegal recruitment shall mean any act of canvassing, enlisting,
contracting, transporting, utilizing, hiring, procuring workers and includes referring, contact services,
promising or advertising for employment abroad, whether for profit or not, when undertaken by a
non-license or non-holder of authority contemplated under Article 13(f) of Presidential Decree No.
442, as amended, otherwise known as the Labor Code of the Philippines. Provided, that such non-
license or non-holder, who, in any manner, offers or promises for a fee employment abroad to two or
more persons shall be deemed so engaged. It shall likewise include the following acts, whether
committed by any persons, whether a non-licensee, non-holder, licensee or holder of authority.

a. To charge or accept directly or indirectly any amount greater than the specified in the schedule of
allowable fees prescribed by the Secretary of Labor and Employment, or to make a worker pay
any amount greater than that actually received by him as a loan or advance;
b. To furnish or publish any false notice or information or document in relation to recruitment or
employment;

c. To give any false notice, testimony, information or document or commit any act of
misrepresentation for the purpose of securing a license or authority under the Labor Code;

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 persons or entity not to employ any worker who has not
applied for employment through his agency;

f. To engage in the recruitment of placement of workers in jobs harmful to public health or morality
or to dignity of the Republic of the Philippines;

g. To obstruct or attempt to obstruct inspection by the Secretary of Labor and Employment or by his
duly authorized representative;

h. To fail to submit reports on the status of employment, placement vacancies, remittances of


foreign exchange earnings, separations from jobs, departures and such other matters or
information as may be required by the Secretary of Labor and Employment;

i. To substitute or alter to the prejudice of the worker, employment contracts approved and verified
by the Department of Labor and Employment from the time of actual signing thereof by the
parties up to and including the period of the expiration of the same without the approval of the
Department of Labor and Employment;

j. For an officer or agent of a recruitment or placement agency to become an officer or member of


the Board of any corporation engaged in travel agency or to be engaged directly on indirectly in
the management of a travel agency;

k. To withhold or deny travel documents from applicant workers before departure for monetary or
financial considerations other than those authorized under the Labor Code and its implementing
rules and regulations;

l. Failure to actually deploy without valid reasons as determined by the Department of Labor and
Employment; and

m. Failure to reimburse expenses incurred by the workers 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 as offense involving economic sabotage.

Illegal recruitment is deemed committed by a syndicate carried out by a group of three (3) or more
persons conspiring or confederating with one another. It is deemed committed in large scale if
committed against three (3) or more persons individually or as a group.

The persons criminally liable for the above offenses are the principals, accomplices and accessories. In
case of juridical persons, the officers having control, management or direction of their business shall
be liable.

 Elements of Illegal Recruitment


(Sec. 6 of R.A. 8042)

A. The offender has no valid license or authority required by law to enable one to engage lawfully in
recruitment and placement of workers.
B. He or she undertakes either any activity within the meaning of "recruitment and placement"
defined under Art. 13(b), or any prohibited practices enumerated under Art. 34 of the Labor
Code. In case of illegal recruitment in large scale, a third element is added: that the accused
commits the acts against three(3) or more persons, individually or as a group.

(ART. 13(b) Labor Code)


"Recruitment and placement" refers to any act of canvassing, enlisting, contracting, transporting,
utilizing, hiring or procuring workers, and includes referrals, contract services, promising or
advertising for employment, locally or abroad, whether for profit or not: Provided, That any person or
entity which, in any manner, offers or promises for a fee, employment to two or more persons shall be
deemed engaged in recruitment and placement.

(ART. 34, Labor Code)


Prohibited practices. - It shall be unlawful for any individual, entity, 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 Secretary of Labor, or to make a worker pay any amount
greater than that actually received by him as a loan or advance;

(b) To furnish or publish any false notice or information or document in relation to recruitment or
employment;

(c) To give any false notice, testimony, information or document or commit any act of
misrepresentation for the purpose of securing a license or authority under this Code.

(d) To induce or attempt to induce a worker already employed to quit his employment in order to
offer him to another unless the transfer is designed to liberate the worker from oppressive terms
and conditions of employment;

(e) To influence or to attempt to influence any person or entity not to employ any worker who has
not applied for employment through his agency;

(f) To engage in the recruitment or placement of workers in jobs harmful to public health or morality
or to the dignity of the Republic of the Philippines;

(g) To obstruct or attempt to obstruct inspection by the Secretary of Labor or by his duly authorized
representatives;

(h) To fail to file reports on the status of employment, placement vacancies, remittance of foreign
exchange earnings, separation from jobs, departures and such other matters or information as
may be required by the Secretary of Labor.

(i) To substitute or alter employment contracts approved and verified by the Department of Labor
from the time of actual signing thereof by the parties up to and including the periods of
expiration of the same without the approval of the Secretary of Labor;

(j) To become an officer or member of the Board of any corporation engaged in travel agency or to
be engaged directly or indirectly in the management of a travel agency; and

(k) To withhold or deny travel documents from applicant workers before departure for monetary or
financial considerations other than those authorized under this Code and its implementing rules
and regulations.

 Economic Sabotage
(People vs Buli-E)

When illegal recruitment is committed in large scale or when it is committed by a syndicate, i.e., if it is
carried out by a group of three or more persons conspiring and/or confederating with one another, it
is considered as an offense involving economic sabotage.

Q: What is meant by Large Scale Illegal Recruitment?


A: The elements of illegal recruitment in large scale are:

1. The accused undertook any recruitment activity defined under Art. 13(b) or any prohibited
practice enumerated under Art. 34 of the Labor Code;
2. He did not have a license or authority to lawfully engage in the recruitment and placement of
workers;
3. He committed the same against three (3) or more persons, individually or as a group.

Q: What is meant by a “Syndicate”?


A: Carried out by a group of three or more persons conspiring and/or confederating with one another.

ILLEGAL RECRUITMENT ECONOMIC SABOTAGE


HOW
WHO

 Prescriptive Period for Illegal Recruitment and Economic Sabotage (R.A. 8042)

Illegal Recruitment Economic Sabotage


Prescriptive Period 5 Years (Sec. 12) 20 Years (Sec. 12)
Imprisonment Prison Mayor – 6yrs 1 day to 12 Life Imprisonment (Sec.7)
yrs (Sec.7)
Fine 200,000 to 500,000 (Sec.7) 500,001 to 1,000,000 (Sec.7)

 Liabilities (Civil, Criminal, and Administrative)

- People vs BULI-E (404 SCRA 105)

Under Art. 13(b) of the Labor Code, recruitment and placement refer to any act of canvassing,
enlisting, contracting, transporting, utilizing hiring, or procuring of workers, and includes referrals,
contract services, promising or advertising for employment, locally or abroad, whether for profit or
not; provided that any person or entity which, in any manner, offers or promises or a fee
employment to two or more persons shall be deemed engaged in recruitment or placement.

The elements of illegal recruitment in large scale are:

1. The accused undertook any recruitment activity defined under Art. 13(b) or any prohibited
practice enumerated under Art. 34 of the Labor Code;
2. He did not have a license or authority to lawfully engage in the recruitment and placement of
workers;
3. He committed the same against three (3) or more persons, individually or as a group.

When illegal recruitment is committed in large scale or when it is committed by a syndicate, i.e., if it
is carried out by a group of three or more persons conspiring and/or confederating with one
another, it is considered as an offense involving economic sabotage.

- People vs Baytic (398 SCRA 18)

Illegal recruitment is committed when two (2) elements concur.

First, the offender has no valid license or authority required by law to enable one to engage lawfully
in recruitment and placement of workers.

Second, he or she undertakes either any activity within the meaning of "recruitment and
placement" defined under Art. 13(b), or any prohibited practices enumerated under Art. 34 of the
Labor Code. In case of illegal recruitment in large scale, a third element is added: that the accused
commits the acts against three (3) or more persons, individually or as a group.

- People vs Corpus (412 SCRA 479)

An employee of a company or corp. engaged in illegal recruitment may be held liable as principal,
together with his employer, if it is shown that he actively and consciously participated in illegal
recruitment. Settled is the rule that the existence of the corporate entity does not shield from
prosecution the corporate agent who knowingly and intentionally causes the corp. to commit a
crime.

The corp. obviously acts, and can act, only by and through its human agents, and it is their conduct
which the law must deter. The employee or agent of a corp. engaged in unlawful business naturally
aids and abets in the carrying on of such business and will be prosecuted as principal if, with
knowledge of the business, its purpose and effect, he consciously contributes his efforts to its
conduct and promotion, however slight his contribution may be.

The law of Agency, as applied in civil cases, has no application in criminal cases, and no man can
escape punishment when he participates in the commission of a crime upon the ground that he
simply acted as an agent of any party. The culpability of the employee therefore hinges on his
knowledge of the offense and his active participation in its commission.

Where it is shown that the employee was merely acting under the direction of his superiors and
was unaware that his acts constituted a crime, he may not be held criminally liable for an act done
for and in behalf of his employer.

- CRIMINAL CASE NOT A BAR TO CIVIL CASE

The estafa cases pending before the courts will not bar a prosecution for illegal recruitment, since
they are entirely different offenses and neither one necessarily includes or is necessarily included in
the other.

A person who is convicted of illegal recruitment may, in addition be convicted of Estafa under Art.
315(a) or the Revised Penal Code. There is no problem of jeopardy because illegal recruitment is
malum prohibitum, in which criminal intent is not necessary, whereas estafa is malum in se in which
criminal intent of the accused is necessary.
(People vs Crispin Billaber, GR# 114967-68 – 01/26/04)

- ADMINISTRATIVE LIABILITY

Sec. 1, Rule X, Book II of the Rules and Regulations Governing Overseas Employment provides that
"recruitment and placement activities of agents or representatives appointed by a licensee, whose
appointments were not authorized by the Administration shall likewise constitute illegal
recruitment."
(People vs Flor Gutierrez, GR# 124439 – 02/05/04)

- CRIMINAL LIABILITY

The following elements of Estafa under Art. 315(2-a) are also present in this case for Illegal
Recruitment, to wit:

1. The accused has defrauded the offended party my means of abuse of confidence or by deceit;
2. As a result, damage or prejudice, which is capable of pecuniary estimation, is caused to the
offended party or third person.

Appelant misrepresented himself to Jaime Cabus and Roberto Perlas as one who can make
arrangements for job placements in Taiwan and Japan and, by reason of such misrepresentations,
the two complainants were induced to part with their money, causing them damage.
(People vs Ramon Dujua, GR# 149014-16 – 02/05/04)

- People vs Leticia Sagayaga (GR# 143726 – 02/23/04)

- People vs Mario Alzona (GR# 132029 – 07/30/04)

- Rodolfo vs People (498 SCRA 377)

The act of referral, which is included in recruitment, is "the act of passing along or forwarding of an
applicant for employment after an initial interview of a selected applicant for employment to a
selected employer, placement officer or bureau." Petitioner's admission that she brought private
complainants to the agency whose owner she knows and her acceptance of fees including those for
the processing betrays her guilt.

Q: Where is the Venue for Criminal Cases involving Illegal Recruitment?


A: The complainant may, at his option, file at the RTC of the province or city;

1. Where the offense was committed; or


2. Where the offended party; resides at the time of the commission of the offense
()

C. WAGES

1. Basic Concept and Principles

 Characteristics of Wages
(Art. 97(f) Labor Code)

"Wage" paid to any employee shall mean the remuneration or earnings, however designated, capable
of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the same, which is payable by an 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 includes the fair and reasonable value, as determined by the
Secretary of Labor and Employment, 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.

NOTE: The last sentence of Art. 97 is the basis for the concept of FACILITIES.

FAIR DAY’S WAGE FOR A FAIR DAY’S LABOR


(Aklan Electric Coop vs NLRC)

If there is no work performed by the employee, there can be no wage or pay UNLESS the laborer was
able, willing, and ready to work but was illegally lock out, suspended or dismissed otherwise illegally
prevented from working.

 Wage vs Salary

WAGE SALARY
Compensation for skilled or unskilled manual Paid to white collar workers or PROFESSIONALS
labor; refers to WORKERS and denote a higher grade of employment
Under Art. 1708 Civil Code, it is not subject to It is not exempt from execution, garnishment or
execution, garnishment or attachment. attachment.

EXCEPT:
For debts related to food, clothing, shelter,
medicines.

NOTE:

General Rule: Title 2 (Wages) applies to all employees.

Exceptions:
1. Farm tenancy or leasehold
2. Household or domestic helpers
3. Homeworkers engaged in needlework
4. Workers employed in any establishment duly registered with the National Cottage Industry
Development Authority (NCIDA)
5. Workers in duly registered cooperatives when so recommended by the Bureau of Cooperative
Development upon approval by the Sec. of Labor.
(Art. 98 Labor Code)
6. Workers of a Barangay Micro Business Enterprise (R.A. 9178 – 11/13/02)
7. Retail/Service establishments with less than ten(10) workers upon application with the
appropriate Regional Board. (Sec. 4 R.A. 6727)

 Non-Diminution of Benefits

ART. 100 (Labor Code) Prohibition against elimination or diminution of benefits. - Nothing in this Book
shall be construed to eliminate or in any way diminish supplements, or other employee benefits being
enjoyed at the time of promulgation of this Code.

Concept
The principle of non-diminution of benefits states that: “any benefit and supplement being enjoyed by
employees cannot be reduced, diminished, discontinued or eliminated by the employer.”

This principle is founded on the Constitutional mandate to “protect the rights of workers and promote
their welfare,” and “to afford labor full protection.” Said mandate in turn is the basis of Article 4 of the
Labor Code which states that “all doubts in the implementation and interpretation of this Code,
including its implementing rules and regulations shall be rendered in favor of labor.”

Benefit and supplement definition


Employee benefits are compensations given to employees in addition to regular salaries or
wages. Some benefits are legally required, e.g., social security benefits, medicare, retirement benefits,
maternity benefits, service incentive leave, etc. Other benefits are offered by the employer as an
incentive to attract and retain employees as well as increase employee morale and improve job
performance.
Supplements include those benefits or privileges granted to an employee for the convenience of the
employer, e.g., board and lodging within the company premises.

Common application
In employment setting, the principle of non-diminution of benefits finds application when a change
initiated by the employer to existing company policies, specially matters concerning employee
benefits, results in reduction, diminution or withdrawal of some or all of the the benefits already
enjoyed by the employees. For example, if the employees of a certain company is traditionally granted
14th month pay, and the employer subsequently withdrew such benefit, or reduced its amount, the
reduction or withdrawal is objectionable on the ground that it would result to diminution of benefits.

Requirements
The application of the principle presupposes that a company practice, policy and tradition favorable to
the employees has been clearly established; and that the payments made by the company pursuant
to it have ripened into benefits enjoyed by them.
To ripen into benefits, the following requisites must concur:
1. It should have been practiced over a long period of time; and
2. It must be shown to have been consistent and deliberate.

With regard to the length of time the company practice should have been exercised to constitute
voluntary employer practice which cannot be unilaterally withdrawn by the employer, the Court has
not laid down any rule requiring a specific minimum number of years.

1. In the case of Davao Fruits Corporation vs Associated Labor Unions (G.R. No. 85073, August 24,
1993), the company practice lasted for six years.
2. In Davao Integrated Port Stevedoring Services vs. Abarquez (G.R. No. 102132, March 19, 1993),
the employer, for three years and nine months, approved the commutation to cash of the
unenjoyed portion of the sick leave with pay benefits of its Intermittent workers.
3. In Tiangco vs Leogardo, Jr. (G.R. No. L-57636, May 16, 1983), the employer carried on the practice
of giving a fixed monthly emergency allowance from November 1976 to February 1980, or three
years and four months.
4. In the case of Sevilla Trading Company vs Semana, ibid., the employer kept the practice of
including non-basic benefits such as paid leaves for unused sick leave and vacation in the
computation of their 13th-month pay for at least two (2) years.

In all these cases, the grant of benefits has been held to have ripened into company practice or policy
which cannot be peremptorily withdrawn.

- CONDITIONS TO DETEMINE WHEN THERE IS DIMINUTION OF BENEFITS

Diminution of benefits is a unilateral withdrawal by the employer of benefits already enjoyed by the
employee. There is diminution if:

a) The grant is founded on policy or ripened into practice.


b) The practice is consistent and deliberate.
c) The practice is not due to error in construction or application of a doubtful or difficult
question of law.
d) The diminution or discontinuation is unilaterally done by the employer.

In this case, the overpayment of the employees was a result of an error, hence there is no
diminution.
(TSPIC Corp. vs TSPIC Employees Union, GR# 163419 – 02/13/08)

- WHAT IS MEANT BY CUSTOMARY OR RIPENED INTO PRACTICE?

"Customary" is founded on long-established and constant practice connoting regularity.

The receipt of an allowance on a monthly basis does not ispo facto characterize it as regular and
forming part of salary because the nature of the grant is a factor worth considering. We agree with
the observation of the Office of the Solicitor General that the subject allowances were temporarily,
not regularly received by petitioners because - in the case of housing allowance, once a vacancy
occurs in the company provided housing accommodations, the employee concerned transfers to
the company premises and his housing allowance is discontinued.

On the other hand, the transportation allowance is in the form of advances for actual
transportation expenses subject to liquidation given only to employees who have personal cars. The
Bislig allowance is given to Division Managers and corporate officers assigned in Bislig, Surigao del
Norte. Once the officer is transferred outside of Bislig, the allowance stops.

When the conditions for the availment of the allowances ceased to exist, the allowance likewise
ceased. Petitioners continuous enjoyment of the disputed allowances was based on contingencies,
and hence are not part of wages and may be eliminates.
(Millares vs NLRC - 03/29/99)

- DIMINUTION MAY MEAN THAT ONE GROUP IS GIVEN MORE THAN ANOTHER EVEN THOUGH
BOTH PERFORM THE SAME FUNCTION

Q: A school employs both local-hire and foreign-hire teachers. The foreign-hire teachers were given
an added 25% in their salary and some benefits like transportation and housing, shipping costs etc.
These were given based on two things: dislocation and limited tenure. The added compensation
was the school’s way of remaining competitive on an international level in terms of attracting
competent teachers. The local-hire teachers, part of the union contested the difference, a deadlock
resulted so the teachers went on strike. Is there discrimination in terms of wages?

A: Yes, there is discrimination. The principle “equal pay for equal work” should apply in this case.
Persons who work with substantially equal qualifications, skill, effort and responsibility, under
similar conditions, should be paid similar salaries. If an employee is paid less it is upon the
employer to explain why the employee is treated differently. Dislocation and limited tenure cannot
serve as adequate or valid bases for the difference in the salary rates. The other benefits are
enough to make up for these two factors. There is no reasonable distinction between the work of a
local-hire and a foreign-hire that will justify the difference.
(Int’l School Alliance of Educators vs Quisumbing - 06/01/00)
- Aklan Electric Cooperative vs NLRC (01/25/99)

 Methods of Fixing Compensation


(Art. 97 Labor Code)

a. Time Spent (Daily and Monthly paid workers)


b. Commission - Direct remuneration received by an agent, salesman, executor, broker, or trustee
calculated as a percentage on the amount of his transactions or on the profit to the principal.
c. Task basis (Art. 101 Labor Code)
d. Piece-rate basis (Art. 101 Labor Code)

ART. 101. Payment by results. - (a) The Secretary of Labor and Employment shall regulate the
payment of wages by results, including pakyao, piecework, and other non-time work, in order to
ensure the payment of fair and reasonable wage rates, preferably through time and motion
studies or in consultation with representatives of workers’ and employers’ organizations.

2. Facilities and Supplements

 FACILITIES – shall include all articles or services for the benefit of the employee or his family but shall
not include tools of the trade or articles or services primarily for the benefit of the employer or
necessary to the conduct of the employers business. These are DEDUCTIBLE from wages.
(Sec. 5, Rule VII, Book III, IRR)

Requirements for Deducting Amount of Facilities (Mabeza vs NLRC):

 Proof must be shown that such facilities are customarily furnished by the trade.
 The provision of deductible facilities must be voluntarily accepted in writing by the employee.
 The facilities must be charged at a fair and reasonable value.

 SUPPLEMENTS - constitute extra remuneration or special privileges or benefits given to or received by


the laborers over and above their ordinary earnings. These are NOT DEDUCTIBLE from wages.

- REQUISITES FOR VALID DEDUCTION OF FACILITIES

Granting that meals and lodging were provided and indeed constituted facilities, such facilities could not
be deducted without the employer complying first with certain legal requirements:

1. Proof must be shown that such facilities are customarily furnished by the trade
2. The provision of deductible facilities must be voluntarily accepted in writing by the employee
3. Facilities must be charged at fair and reasonable value
(Mabeza vs NLRC, GR# 118506 – 04/18/97)

- Cebu Autobus Co. vs United Cebu Autobus Employees Assoc. (GR# 9742 – 10/27/55)

- HOW TO DETERMINE WHETHER IT IS A SUPPLEMENT OF A FACILITY

In determining whether a benefit or privilege is a supplement or a facility, the criterion is not the kind of
benefit or item but its purpose. The benefit given to employees which constitutes an extra
remuneration above and over his basic or ordinary wage is a supplement; and if it forms part of the
employees basic wage, it is a facility.

Therefore, no deduction should be made from the wages of the members of a commercial ship for
meals freely given them by their employer, not as part of their wages but as a necessary matter in the
maintenance of their health and efficiency, such benefit being in the nature of a supplement.
(States Marine Corp. vs Cebu Seamen’s Assn. Inc., GR# 12444 – 02/28/63)
Foods or snacks or other convenience provided by the employers are deemed as supplements if they
are granted for the convenience of the employer - the criterion in making a distinction between a
supplement and a facility does not so much lie in the kind, but the purpose.

Considering therefore that hotel workers are required to work different shifts and are expected to be
available at various odd hours, their ready availability is a necessary matter in the operations of a small
hotel such as petitioners business. The deduction of the cost of meals from respondents wages,
therefore, should be removed.
(Mayon Hotel & Restaurant vs Adana, GR# 157634 – 05/16/05)

3. Procedure in Fixing the Minimum Wage

ART. 122. Labor Code. Creation of Regional Tripartite Wages and Productivity Boards. - There is
hereby created Regional Tripartite Wages and Productivity Boards, hereinafter referred to as Regional
Boards, in all regions, including autonomous regions as may be established by law. The Commission
shall determine the offices/headquarters of the respective Regional Boards.

The Regional Boards shall have the following powers and functions in their respective territorial
jurisdictions:

a. To develop plans, programs and projects relative to wages, incomes and productivity
improvement for their respective regions;

b. To determine and fix minimum wage rates applicable in their regions, provinces or industries
therein and to issue the corresponding wage orders, subject to guidelines issued by the
Commission;

c. To undertake studies, researches, and surveys necessary for the attainment of their functions,
objectives and programs, and to collect and compile data on wages, incomes, productivity and
other related information and periodically disseminate the same;

d. To coordinate with the other Regional Boards as may be necessary to attain the policy and
intention of this Code;

e. To receive, process and act on applications for exemption from prescribed wage rates as may be
provided by law or any Wage Order; and

f. To exercise such other powers and functions as may be necessary to carry out their mandate
under this Code.

Implementation of the plans, programs, and projects of the Regional Boards referred to in the second
paragraph, letter (a) of this Article, shall be through the respective regional offices of the Department
of Labor and Employment within their territorial jurisdiction; Provided, however, That the Regional
Boards shall have technical supervision over the regional office of the Department of Labor and
Employment with respect to the implementation of said plans, programs and projects.

(Composition)
Each Regional Board shall be composed of the Regional Director of the Department of Labor and
Employment as chairman, the Regional Directors of the National Economic and Development
Authority and the Department of Trade and Industry as vice-chairmen and two (2) members each
from workers’ and employers’ sectors who shall be appointed by the President of the Philippines,
upon the recommendation of the Secretary of Labor and Employment, to be made on the basis of the
list of nominees submitted by the workers’ and employers’ sectors, respectively, and who shall serve
for a term of five (5) years.

Each Regional Board to be headed by its chairman shall be assisted by a Secretariat. (As amended by
Republic Act No. 6727, June 9, 1989).

Q: Who shall comprise the RTWPB?


A: Regional Director of DOLE
Regional Director of NEDA
Regional Director of DTI
2 Members from the Employee’s Sector
2 Members from the Employer’s Sector
Secretariat

Q: Who determines the Minimum Wage?


A: RTWPB – Regional Tripartite Wages & Productivity Board in conjunction with the NWPC – National
Wages & Productivity Board. Also CONGRESS may enact legislation to set the minimum wage.

Q: How is an increase in the minimum wage initiated?


A: By a PETITION or Moto Proprio by the Board.

Q: Who can Petition the RTWPB?


A: Labor Groups, or Employer with substantial business interests in the affected region

a) Issuance of Wage Order

 Within 30 days after the conclusion of the last hearing, the RTWPB shall decide on the merits of
the petition, and where appropriate, issue a wage order establishing the regional minimum wage
rates to be paid by employers, which shall in no case be lower than the applicable statutory
minimum wage rates. The Wage Order may include wages by industry, province or locality as may
be deemed necessary by the Board.
 The RTWPB shall furnish the NWPC a copy of the decision on the petition or the Wage Order.

b) Contents of Wage Order

 A Wage Order shall specify the region, province, or industry to which the minimum wage rates
prescribed under the Order shall apply and provide exemptions, if any, subject to guidelines
issued by the NWPC.

c) Frequency of Wage Order

 Any Wage Order issued by the RTWPB may not be disturbed for a period of 12 months from its
Effectivity, and no petition for wage increase shall be entertained within said period.
 Except:
 Supervening conditions (i.e., increase in price of gas, basic commodities, etc.)
 Congress itself issues a law increasing wages.

d) Effectivity of Wage Order

 The Wage Order shall take effect 15 days after its publication in at least 1 newspaper of general
circulation in the Region.

e) Implementing Rules/Regulations of the Wage Order

 The RTWPB shall prepare, for approval of the Sec. of Labor, upon recommendation of the
Commissioner, the necessary Implementing Rules and Regulations, not later than 10 days from
the issuance of the Wage Order.
 The Sec. of Labor shall act on the Rules within 20 days from his receipt thereof.
 Once approve, it shall be published in at least 1 newspaper of general circulation.

f) Review of Wage Order

 The NWPC may review the Wage Order upon APPEAL or MOTO PROPRIO.
 Grounds for filing an appeal:
a) Non-conformity with prescribed guidelines and/or procedure
b) Questions of law
c) Grave abuse of discretion
(Rule V, Revised Rules of Procedure on Minimum Wage Fixing – 11/29/95)
 An appeal will not stay the order unless the appellant files adequate surety.
 Regionalized (through RTWPB – Regional Tripartite Wages & Productivity Board) vs Legislated Wage
Fixing

 Factors in Determination of Minimum Wage Fixing


(Art. 124 Labor Code)

Art. 124 Standards/Criteria for minimum wage fixing. - The regional minimum wages to be established
by the Regional Board shall be as nearly adequate as is economically feasible to maintain the
minimum standards of living necessary for the health, efficiency and general well-being of the
employees within the framework of the national economic and social development program. In the
determination of such regional minimum wages, the Regional Board shall, among other relevant
factors, consider the following:

a. The demand for living wages;


b. Wage adjustment vis-à-vis the consumer price index;
c. The cost of living and changes or increases therein;
d. The needs of workers and their families;
e. The need to induce industries to invest in the countryside;
f. Improvements in standards of living;
g. The prevailing wage levels;
h. Fair return of the capital invested and capacity to pay of employers;
i. Effects on employment generation and family income; and
j. The equitable distribution of income and wealth along the imperatives of economic and social
development.

The wages prescribed in accordance with the provisions of this Title shall be the standard prevailing
minimum wages in every region. These wages shall include wages varying with industries, provinces
or localities if in the judgment of the Regional Board, conditions make such local differentiation
proper and necessary to effectuate the purpose of this Title.

Any person, company, corporation, partnership or any other entity engaged in business shall file and
register annually with the appropriate Regional Board, Commission and the National Statistics Office,
an itemized listing of their labor component, specifying the names of their workers and employees
below the managerial level, including learners, apprentices and disabled/handicapped workers who
were hired under the terms prescribed in the employment contracts, and their corresponding salaries
and wages.

Where the application of any prescribed wage increase by virtue of a law or wage order issued by any
Regional Board results in distortions of the wage structure within an establishment, the employer and
the union shall negotiate to correct the distortions. Any dispute arising from wage distortions shall be
resolved through the grievance procedure under their collective bargaining agreement and, if it
remains unresolved, through voluntary arbitration. Unless otherwise agreed by the parties in writing,
such dispute shall be decided by the voluntary arbitrators within ten (10) calendar days from the time
said dispute was referred to voluntary arbitration.

In cases where there are no collective agreements or recognized labor unions, the employers and
workers shall endeavor to correct such distortions. Any dispute arising therefrom shall be settled
through the National Conciliation and Mediation Board and, if it remains unresolved after ten (10)
calendar days of conciliation, shall be referred to the appropriate branch of the National Labor
Relations Commission (NLRC). It shall be mandatory for the NLRC to conduct continuous hearings and
decide the dispute within twenty (20) calendar days from the time said dispute is submitted for
compulsory arbitration.

The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of
any increase in prescribed wage rates pursuant to the provisions of law or wage order.

As used herein, a wage distortion shall mean a situation where an increase in prescribed wage rates
results in the elimination or severe contraction of intentional quantitative differences in wage or
salary rates between and among employee groups in an establishment as to effectively obliterate the
distinctions embodied in such wage structure based on skills, length of service, or other logical bases
of differentiation.
All workers paid by result, including those who are paid on piecework, takay, pakyaw or task basis,
shall receive not less than the prescribed wage rates per eight (8) hours of work a day, or a proportion
thereof for working less than eight (8) hours.

All recognized learnership and apprenticeship agreements shall be considered automatically modified
insofar as their wage clauses are concerned to reflect the prescribed wage rates. (As amended by
Republic Act No. 6727, June 9, 1989).

 Wage Order and Appeal


(Art. 123 Labor Code)

ART. 123. Wage Order. - Whenever conditions in the region so warrant, the Regional Board shall
investigate and study all pertinent facts; and based on the standards and criteria herein prescribed,
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.

In the performance of its wage-determining functions, the Regional Board shall conduct public
hearings/consultations, giving notices to employees’ and employers’ groups, provincial, city and
municipal officials and other interested parties.

Any party aggrieved by the Wage Order issued by the Regional Board may appeal such order to the
Commission within ten (10) calendar days from the publication of such order. It shall be mandatory
for the Commission to decide such appeal within sixty (60) calendar days from the filing thereof.

The filing of the appeal does not stay the order unless the person appealing such order shall file with
the Commission, an undertaking with a surety or sureties satisfactory to the Commission for the
payment to the employees affected by the order of the corresponding increase, in the event such
order is affirmed. (As amended by Republic Act No. 6727, June 9, 1989).

 Effectivity of Wage Order

A Wage Order shall take effect fifteen (15) days after its publication in at least 1 newspaper of general
circulation in the Region.

- Jaguar Security & Investigation Agency vs Sales (GR# 162420 – 04/22/08)

4. Wage Distortion

 Definition

ART. 124 Labor Code - Where the application of any prescribed wage increase by virtue of a law or
wage order issued by any Regional Board results in distortions of the wage structure within an
establishment, the employer and the union shall negotiate to correct the distortions. Any dispute
arising from wage distortions shall be resolved through the grievance procedure under their collective
bargaining agreement and, if it remains unresolved, through voluntary arbitration. Unless otherwise
agreed by the parties in writing, such dispute shall be decided by the voluntary arbitrators within ten
(10) calendar days from the time said dispute was referred to voluntary arbitration.

It is a situation where an increase in prescribed wage rates results in the elimination or


severe contraction of intentional quantitative differences in wage or salary rates
between and among employee groups in an establishment as to effectively obliterate the
distinctions embodied in such wage structure based on skills, length of service or other
logical bases of differentiation.

 Elements of Wage Distortion


a) An existing hierarchy of positions with corresponding salary rates.
b) A significant change or increase in the salary rate of a lower pay class without a corresponding
increase in the salary rate of a higher class.
c) The elimination of the distinction between the two groups or classes.
d) The distortion exists in the same region of the country.

 How to Resolve Wage Distortion (Organized and Unorganized Establishments)


(Sec. 7, R.A. 6727)

Wage Distortions. — Where the application of any wage increase resulting from a Wage Order issued
by any Board results in distortions in the wage structure within an establishment, the employer and
the union shall negotiate to correct the distortions using the grievance procedure under the collective
bargaining agreement. If it remains unresolved, it shall be decided through voluntary arbitration
within ten calendar days from the time the dispute was referred for voluntary arbitration, unless
otherwise agreed by the parties in writing.

Where there are no collective agreements or recognized labor unions, the employer and workers shall
endeavor to correct the wage distortion. Any dispute arising therefrom shall be settled through the
National Conciliation and Mediation Board and if it remains unresolved after ten calendar days of
conciliation, it shall be referred to the appropriate branch of the National Labor Relations Commission
(NLRC). The NLRC shall conduct continuous hearings and decide the dispute within twenty calendar
days from the time said dispute is submitted for compulsory arbitration.

The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of
any wage increase prescribed pursuant to the provisions of law or Wage Order.

ORGANIZED ESTABLISHEMENTS: (Sec. 7(par. 1), R.A. 6727)


 Employer and Union shall negotiate to correct the distortion.
 Any dispute arising therefrom should be resolved through a grievance procedure in the CBA.
 If the dispute remains unresolved, it shall be resolved through VOLUNTARY ARBITRATION.

UNORGANIZED ESTABLISHMENTS: (Sec. 7(par. 2), R.A. 6727)


 The employers and workers shall endeavor to correct the distortion.
 Any dispute arising therefrom shall be settled through the NCMB.
 If it remains unresolved after 10 days, it shall be referred to the NLRC.

- ELEMENTS OF WAGE DISTORTION

Wage distortion presupposes a classification of positions and ranking of these 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 positions 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 is exists a wage distortion.

Wage Distortion involves 4 Elements:


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 2 levels.
4. The existence of the distortion in the same region of the country.

In the present case, it is clear that no wage distortion resulted when respondent implemented the
subject Wage Orders in the covered branches. In the said branches, there was an increase in the
salary rates of all pay classes. Furthermore, the hierarchy of positions based on skills, length of
service, and other logical bases of differentiation was preserved. In other words, the quantitative
difference in compensation between different pay classes remained the same in all branches in the
affected region.

A wage disparity between employees in different rungs is not at issue here, but a wage disparity
between employees in the same rung but located in different regions of the country. Contrary to
petitioners postulation, a disparity in wages between employees holding similar positions but in
different regions does not constitute wage distortion as contemplated by law. As previously
enunciated, it is the hierarchy of positions and the disparity of their corresponding wages and other
emoluments that are sought to be preserved by the concept of wage distortion. Put differently, a
wage distortion arises when a wage order engenders wage parity between employees in different
rungs of the organizational ladder of the same establishment. It bears emphasis that wage
distortion involves a parity in the salary rates of different pay classes which, as a result, eliminates
the distinction between the different ranks in the same region.
(Prubankers Assoc. vs Prudential Bank, 01/25/99)

- REQUIREMENT TO RECTIFY WAGE DISTORTION

Normally, a company has a wage structure or method of determining 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.

For purposes of determining the existence of wage distortion, employees cannot create their own
independent classification and use it as a basis to demand an across-the-board increase in salary.

The formulation of a wage structure through the classification of employees is a matter of


management judgment and discretion.

The mere factual existence of wage distortion does not, however, ipso facto result in an obligation
to rectify it, absent a law or other source of obligation which requires its rectification. Unlike in
Metro Transit(case) where there existed a "company practice", no such management practice is
herein alleged to obligate Bankard to provide an across-the-board increase to all its regular
employees.
(Bankard Employees Union vs NLRC, GR# 140689 – 02/17/04)

- MANNER OF RESOLVING WAGE DISTORTION

The re-establishment of a significant gap or differential between regular employees and casual
employees by operation of the CBA was more than substantial compliance with the requirements of
the several Wage Orders and of Art. 124 of the Labor Code.

The fact that the re-establishment was the result of collective bargaining negotiations, instead of
through a special grievance procedure, is not sufficient legal basis for rejecting such re-
establishment.
(P.I. Mfg. Inc. vs PIMSFA, GR# 167217 – 02/04/08)

- TSPIC Corp. vs TSPIC-EU (GR# 163419 – 02/13/08)

- TWO METHODS FOR FIXING WAGE DISTORTION

Workers already being paid more than the existing minimum wage (up to a certain amount stated in
the Wage Order) are also to be given a wage increase.
The Court said that there are 2 ways to fix minimum wage:
1. The "floor-wage" method, which involves the fixing of a determinate amount to be added to
the prevailing statutory minimum wage rates, and
2. The "salary-ceiling" method, where the wage adjustment was to be applied to employees
receiving a certain denominated salary ceiling.

In line with its declared policy, R.A. 6727 created the NWPC, vested with the power to prescribe
rules and guidelines for the determination of appropriate minimum wage and productivity
measures at the Regional, Provincial, or Industry levels; and authorized the RTWPB to determine
and fix the minimum wage rates applicable in their respective Regions, Province, or Industries
therein and issue the corresponding Wage Orders, subject to the guidelines issued by the NWPC.

The RTWPB, pursuant to its wage fixing authority, may issue Wage Orders which set the daily
minimum wage rates, based on the standards of criteria set by Art. 124 of the Labor Code.
(Metrobank Inc. vs NWPC, GR# 144322 – 02/06/07)

- Norkis Free & Independent Workers Union vs Norkis Trading Co. (GR# 157098 – 06/30/05)

Notably, the RTWPB was interpreting only its own issuance, not a statutory provision. The best
authority to construe a rule or an issuance is the very source, in this case the RTWPB. Without a
doubt, the RTWPB, like any other executive agency, has the authority to interpret its own rules and
issuances; any phrase contained in its interpretation becomes a part of those rules or issuances
themselves.

Therefore, it was proper for the CA to consider the letter written by the RTWPB to explain the scope
and import of the latter’s own Order, as such interpretation is deemed part of the Order itself.

5. Exemption from Minimum Wage Law

 Art. 98 Labor Code

Application of Title. - This Title shall not apply to farm tenancy or leasehold, domestic service and
persons working in their respective homes in needle work or in any cottage industry duly registered in
accordance with law.

General Rule: Title 2 (Wages) applies to all employees.

Exceptions:
1. Farm tenancy or leasehold
2. Household or domestic helpers
3. Homeworkers engaged in needlework
4. Workers employed in any establishment duly registered with the National Cottage Industry
Development Authority (NCIDA)
5. Workers in duly registered cooperatives when so recommended by the Bureau of Cooperative
Development upon approval by the Sec. of Labor.
(Art. 98 Labor Code)
6. Workers of a Barangay Micro Business Enterprise (R.A. 9178 – 11/13/02)
7. Retail/Service establishments with less than ten (10) workers upon application with the
appropriate Regional Board. (Sec. 4, R.A. 6727)

 NWPC Guidelines No. 01 Series of 1996

NWPC Guidelines No. 001-95


REVISED RULES OF PROCEDURE ON MINIMUM WAGE FIXING
Pursuant to Article 121(c) of the Labor Code as amended by Section 3 of R.A. 6727, the National
Wages and Productivity Commission hereby adopts and promulgates the following revised rules
of procedure governing the proceedings in the Commission and the Regional Tripartite Wages
and Productivity Boards in the fixing of minimum wage rates by region, province, or industry.

RULE I
GENERAL PROVISIONS
Section 3. Scope. This Rules shall govern proceedings in the National Wages and Productivity
Commission and the Regional Tripartite Wages and Productivity Boards in the fixing of minimum
wage rates.
Section 4. Definition of Terms. As used in this Rules:

a) "Act means Republic No. 6727;

b) "Board" means the Regional Tripartite Wages and Productivity Board;

c) "Commission" means the National Wages and Productivity Commission;

d) "Chairman" means Chairman of the Commission;

e) "Member" refers to the members of the Commission or Board, including its Chairman;

f) "Regional Chairman" means the Chairman of the Board;

g) "Party" means any legitimate organization of workers or employers with substantial


interest in the region, province or industry therein as determined by the Board,
and who stands to be directly affected by the Commission/Board proceedings,
order, decision or resolutions;

h) "Industry" refers to a trade, business or a sector thereof, or group of businesses in


similar or allied activities in which individuals are gainfully employed;

i) "Locality" refers to a geographical area smaller than a province and includes industrial
estates/export processing zones;

j) "Region" refers to a geographical area composed of a group provinces and/or cities


as defined under Presidential Decree No. 1, as amended, including those that may
be subsequently established by law;

k) "Regional Minimum Wage Rates" refer to the lowest basic wage rates that an employer
can pay his workers, as fixed by the Board which shall not be lower than the applicable
statutory minimum wage rates;

l) "Statutory Minimum Wages" refer to the lowest basic wages as provided by law;

m) "Wage Distortion" shall mean a situation where an increase in prescribed wage rates
results in the elimination or severe contraction of intentional quantitative differences in
wage or salary rates between and among employee groups in an establishment as to
effectively obliterate the distinctions embodied in such wage structure based on skills,
length of service, or other logical bases of differentiation;

n) "Wage Order" refers to the Order promulgated by the Board pursuant to its wage
fixing authority.

RULE II

MINIMUM WAGE FIXING


Section 1. Conduct of Wage and Productivity Studies. The Board shall, subject to guidelines issued
by the Commission, conduct continuing studies of wage rates, productivity and other conditions
in the region, provinces or industries therein. The Board shall investigate and study all pertinent
facts, and based on standards and criteria prescribed under Section 2 of this Rule, shall determine
whether a wage order should be issued.
Section 2. Standards/Criteria for Minimum Wage Fixing. The minimum wage rates to be
established by the Board shall be as nearly adequate as is economically feasible to maintain the
minimum standards of living necessary for the health, efficiency and general well-being of the
workers within the framework of national economic and social development goals. In the
determination of regional minimum wages, the Board shall, among other relevant factors,
consider the following:

(a) Needs for 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
(b) Capacity to Pay
1) Fair return on capital invested and capacity to pay of
employers
2) Productivity
(c) Comparable wages and incomes
1) Prevailing wage levels
(d) 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
Section 3. Procedures in Minimum Wage Fixing.
(a) Motu Proprio by the Board
Whenever conditions in the region, province or industry so warrant, the Board may, motu
propio or as directed by the Commission, initiate action or inquiry to determine whether a
wage order should be issued. The Board shall conduct public hearings in the manner
prescribed under this Rule and Rule III. The Board may also conduct consultations with
concerned sectors/ industries.
(b) By Virtue of a Petition Filed
1) FORM AND CONTENT OF PETITION.
Any party may file a verified petition for wage increase with the appropriate Board in ten (10)
typewritten legible copies which shall contain the following:

(a) name/s, and address/es of petitioner/s and signature/s of authorized official/s;


(b) grounds relied upon to justify the increase being sought;
(c) amount of increase being sought;
(d) area and/or industry covered.

2) BOARD ACTION.
If the petition conforms with the requirements prescribed in the preceding sub-section b.1., the
Board shall conduct public hearings in the manner prescribed under this Rule and Rule III, to
determine whether a wage order should be issued. The Board may also conduct consultations
with concerned sectors/industries.
3) PUBLICATION OF NOTICE OF PETITION/PUBLIC HEARING.
A notice of the petition and/or public hearing shall be published in a newspaper of general
circulation in the region and/or posted in public places as determined by the Board. The notice
shall include the name/s and address/es of the petitioner/s, the subject of the petition and the
date/s, place/s and time of the hearings. The publication or posting shall be made at least fifteen
(15) days before the date of initial hearing and shall be in accordance with the suggested form
attached as Annex "A".
4) OPPOSITION.
Any party may file his opposition to the petition on or before the initial hearing, copy furnished
the petitioner/s. The opposition shall be filed with the appropriate Board in ten (10) typewritten
legible copies which shall contain the following:
(a) name/s and address/es of the oppositor/s and signature/s of authorized official/s;
(b) reasons or grounds for the opposition; and
(c) relief sought.

5) CONSOLIDATION OF PETITIONS.
If there is more than one petition filed, the Board may, motu proprio or on motion of any party,
consolidate these for purposes of conducting joint hearings or proceedings to expedite
resolutions of petitions. Petitions received after publication of an earlier petition need not go
through the publication/posting requirement.
6) ASSISTANCE OF OTHER GOVERNMENT AND PRIVATE ORGANIZATIONS.
The Board may enlist the assistance and cooperation of any government agency or private person
or organization to furnish information in aid of its wage fixing function.

RULE III

CONDUCT OF HEARINGS
Section 1. Public Hearings. Prior to the issuance of a wage order, public hearings shall be
conducted giving notices to employees' and employers' groups, provincial, city and municipal
officials and other interested parties.
Section 2. Who May Conduct. Hearings may be conducted by the Board en banc or by a duly
authorized committee thereof wherein each sector shall be represented. The presence of the
Regional Chairman or any of the Vice Chairmen shall be required. If unable to attend, Board
Members may send observers. The Board shall determine the date/s, place/s, and time of the
hearings which shall open to the public except as otherwise requested by a party and so
determined by the Board.
Section 3. Order of Hearing. As much as practicable, the petitioner/s shall present his/their
evidence first, followed by the oppositor/s. The Board may then call on other persons to present
their views and submit position papers and other supporting documents.
Section 4. Manner and Duration of Hearings. Public hearings shall be conducted in a manner that
shall ensure that all sectors and parties who stand to be directly affected by the decisions and
orders of the Board are given the widest opportunity to be heard. Pursuant to this, the hearings
shall be conducted in each province in the region as far as practicable.
Hearings shall be conducted within forty five (45) days from the date of initial hearing except
when conditions in the region warrant otherwise.
Section 5. Records of Proceedings. The Board Secretariat shall keep records/minutes of all Board
proceedings, duly noted by the Members of the Board.
Section 6. Non-applicability of Technical Rules. The Board shall not be bound strictly by technical
rules evidence and procedures.
Section 7. Prohibition Against Injunction. No preliminary or permanent injunction or temporary
restraining order may be issued by any court, tribunal or any other entity against any proceeding
before the Commission or Board.

RULE IV

WAGE ORDER
Section 1. Issuance of Wage Order. Within thirty (30) days after conclusion of the last hearing, the
Board shall decide on the merits of the petition, and where appropriate, issue a wage order
establishing the regional minimum wage rates to be paid by employers which shall in no case be
lower than the applicable statutory minimum wage rates. The Wage Order may include wages by
industry, province or locality as may be deemed necessary by the Board provided, however, that
such wage rates shall not be lower than the regional minimum wage rates unless expressly
specified in the Wage Order.
The Board shall furnish the Commission a copy of the decision on the petition or the Wage Order.
Section 2. Contents of Wage Order. A Wage Order shall specify the region, province, or industry
to which the minimum wage rates prescribed under the Order shall apply and provide
exemptions, if any, subject to guidelines issued by the Commission.
Section 3. Frequency of Wage Order. Any Wage Order issued by the Board may not be disturbed
for a period of twelve (12) months from its effectivity, and no petition for wage increase shall be
entertained within the said period. In the event, however, that supervening conditions, such as
extraordinary increase in prices of petroleum products and basic goods/services, demand a
review of the minimum wage rates as determined by the Board and confirmed by the
Commission, the Board shall proceed to exercise its wage fixing function even before the
expiration of the said period.
Section 4. Effectivity. A Wage Order shall take effect fifteen (15) days after its publication in at
least one (1) newspaper of general circulation in the region.
Section 5. Implementing Rules/ Regulations. The Board shall prepare, for approval of the
Secretary of Labor and Employment upon recommendation of the Commission, the necessary
Implementing Rules and Regulations not later than ten (10) days from the issuance of a Wage
Order.
The Secretary of Labor and Employment shall act on the Implementing Rules within a period of
twenty (20) days from receipt of the said Implementing Rules by the Commission. Once
approved, the Board shall cause the publication of the Implementing Rules and Regulations in at
least one (1) newspaper of general circulation in the region.
Section 6. Review of Wage Order. The Commission may review the Wage Order issued by the
Board motu propio or upon appeal.
Section 7. Correction of Error. The Board may, motu propio or upon manifestation of any party,
proceed to correct any patent error, errors in computation or typographical errors in any Wage
Order.
Section 8. Amendments to Wage Order. In case of substantive changes in the Wage Order, the
Board must comply with the required procedures provided under Section 1 of Rule II and Section
4 of Rule IV.

RULE V

APPEAL
Section 1. Appeal to the Commission. Any party aggrieved by a Wage Order issued by the Board
may appeal such Order to the Commission by filing a verified appeal with the Board in three (3)
typewritten legible copies, not later than ten (10) days from the date of publication of the Order.
The appeal shall be accompanied by a memorandum of appeal which shall state the grounds
relied upon and the arguments in support of the appeal.
The Board shall serve notice of the appeal to concerned parties.
Failure to file an appeal within the reglementary period fixed under this section or to submit the
required documents shall be a ground for dismissal of the appeal.
Section 2. Grounds for Appeal. An appeal may be filed on the following grounds:
(a) non-conformity with prescribed guidelines and/or procedures;

(b) questions of law;

(c) grave abuse of discretion.

Section 3. Transmittal of Records. Immediately upon receipt of the appeal, the Board Secretariat
shall transmit to the Commission Secretariat the appeal and a copy of the subject Wage Order
together with the complete records of the case and all relevant documents.
Section 4. Period to Act on Appeal. The Commission shall decide on the appeal within sixty (60)
days from the filing of said appeal.
Section 5. Effect of Appeal. The filing of the appeal does not operate to stay the Order unless the
party appealing such Order shall file with the Commission an undertaking with a surety or
sureties satisfactory to the Commission for payment to employees affected by the Order of the
corresponding increase, in the event such Order is affirmed.

RULE VI

QUORUM
Section 1. Quorum. Four (4) members of the Commission or Board shall constitute a quorum to
transact business, provided that the Chairman or the Vice Chairman is present and each sector is
represented. The Commission or Board may dispense with the proviso requiring sectoral
representation if the two (2) representatives of any sector fail to attend, without justifiable
reason, two (2) consecutive scheduled meetings with proper notice.
Section 2. Votes Required. Any decision of the Commission or Board shall require the affirmative
of not less than four (4) of its members.

RULE VII

WAGE DISTORTION
Section 1. Correction of Wage Distortion. Where the application of any prescribed wage increase
by virtue of a Wage Order issued by the Board results in distortions of the wage structure within
an establishment, the employer and the union shall negotiate to correct the distortions. Any
dispute arising from wage distortions shall be resolved through the grievance procedure under
their collective bargaining agreement and, if it remains unresolved, through voluntary arbitration.
Unless otherwise agreed by the parties in writing, such dispute shall be decided by the voluntary
arbitrator or panel of voluntary arbitrators within ten (10) days from the time said dispute was
referred to voluntary arbitration.
In cases where there are no collective agreements or recognized labor unions, the employers and
workers shall endeavor to correct such distortions. Any dispute arising therefrom shall be settled
through the National Conciliation and Mediation Board and, if it remains unresolved after ten
(10) days of conciliation, shall be referred to the appropriate branch of the National Labor
Relations Commission (NLRC). It shall be mandatory for the NLRC to conduct continuous hearings
and decide the dispute within twenty (20) days from the time said dispute is submitted for
compulsory arbitration.
The pendency of a dispute arising from a wage distortion shall not in any way delay the
applicability of any increase in prescribed wage rates pursuant to the provisions of the Wage
Order.

RULE VIII

EXEMPTIONS
Section 1. Application for Exemption. Whenever a wage order provides for exemption,
applications for exemption shall be filed with the appropriate Board which shall process these
applications, subject to guidelines issued by the Commission.

RULE IX

ENFORCEMENT
Section 1. Enforcement of Wage Orders. Compliance with the Wage Order issued by the Board
shall be enforced by the appropriate Regional Office of the Department of Labor and Employment
in accordance with enforcement procedures under Articles 128 and 129 of the Labor Code as
amended.

 NWPC Guidelines No. 01 Series of 1996

NWPC GUIDELINES NO. 01


Series of 1996
RULES ON EXEMPTION FROM COMPLIANCE WITH THE PRESCRIBED
WAGE INCREASES/COST OF LIVING ALLOWANCES GRANTED BY
THE REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY BOARDS
Pursuant to Section 3, Article 121 b of RA 6727 and Section 1, Rule VIII of the Revised Rules of
Procedure on Minimum Wage Fixing, the following rules on exemption are hereby issued for
strict compliance by all concerned:

SECTION 1. DEFINITION OF TERMS


A. Commission - refers to the National Wages and Productivity Commission.
B. Board - refers to the Regional Tripartite Wages and Productivity Board.
C. Order - refers to the Wage Order promulgated by the Board pursuant to its wage- fixing
authority.
D. Establishment - refers to an economic unit which engages in one or predominantly one kind
of economic activity at a single fixed location.

For purposes of determining eligibility for exemption, establishments under the same
owner/s but separately registered with the Securities and Exchange Commission (SEC),
Department of Trade and Industry (DTI) or Cooperative Development Authority (CDA) as the
case may be, irrespective of their location, shall be treated as individual and distinct
establishments.
E. Retail Establishment - refers to one principally engaged in the sale of goods to end users for
personal or household use.
A retail establishment that regularly engages in wholesale activities loses its retail character.
F. Service Establishment - refers to one principally engaged in the sale of services to individuals
for their own or household use and is generally recognized as such.
G. Distressed Establishment - refers to an establishment which meets the criteria enumerated in
Section 3 A of these Guidelines.
H. Capital - refers to paid-up capital at the end of the last full accounting period, in the case of
corporations or total invested capital at the beginning of the period under review, in the case
of partnerships and single proprietorships.
I. Full Accounting Period - refers to a period of twelve (12) months or one year of business
operations.
J. Deficit - refers to the negative balance of the retained earnings account of a corporation.
Retained earnings represent the cumulative balance of periodic earnings, dividend
distributions, prior period adjustments and other capital adjustments.
K. Stock Corporation - refers to one organized for profit and issues shares of stock to its
members.
L. Non-stock Non-profit Organization - refers to one organized principally for public purposes
such as charitable, educational, cultural or similar purposes and does not issue shares of
stock to its members.
M. Partnership - refers to an association of two or more persons who bind themselves to
contribute money, property or industry to a common fund with the intention of dividing the
profits among themselves or for the exercise of a profession.
N. Single Proprietorship - refers to a business unit owned and controlled by only one person.
O. Cooperative - refers to a duly registered association of persons who voluntarily join together
to form a business establishment which they themselves own, control and patronize and
which may fall under any of the following types: credit, consumers, producers, marketing,
service or multi-purpose.
P. New Business Enterprises - refer to establishments, including non-profit institutions,
established within two (2) years from effectivity of the Wage Order based on the latest
registration with the appropriate government agency such as SEC, DTI, CDA and Mayor's
Office.
Q. Quasi-banks - refer to institutions such as investment houses and financing companies
performing quasi-banking functions as defined by the Bangko Sentral ng Pilipinas.

SECTION 2. CATEGORIES OF EXEMPTIBLE ESTABLISHMENTS


Exemption of establishments from compliance with the wage increases and cost of living
allowances prescribed by the Boards may be granted in order to (1) assist establishments
experiencing temporary difficulties due to losses maintain the financial viability of their
businesses and continued employment of their workers; (2) encourage the establishment of new
businesses and the creation of more jobs, particularly in areas outside the National Capital Region
and Export Processing Zones, in line with the policy on industry dispersal; and (3) ease the burden
of micro establishments, particularly in the retail and service sector, that have a limited capacity
to pay.
Pursuant to the above, the following categories of establishments may be exempted upon
application with and as determined by the Board, in accordance with applicable criteria on
exemption as provided in these Guidelines; provided further that such categories are expressly
specified in the Order.

1. Distressed establishments
2. New business enterprises (NBEs)
3. Retail/Service establishments employing not more than ten (10) workers
4. Establishments adversely affected by natural calamities

Exemptible categories outside of the abovementioned list may be allowed only if they are in
accord with the rationale for exemption reflected in the first paragraph of this section. The
concerned Regional Board shall submit strong and justifiable reason/s for the inclusion of such
categories which shall be subject to review/approval by the Commission.

SECTION 3. CRITERIA FOR EXEMPTION


The following criteria shall be used to determine whether the applicant-establishment is
qualified for exemption:

A. Distressed Establishments
 For Stock Corporations/Cooperatives
 When deficit as of the last full accounting period or interim period, if any, immediately
preceding the effectivity of the Order amounts to 20% or more of the paid-up capital for the
same period; or
 When an establishment registers capital deficiency i.e., negative stockholders' equity as of
the last full accounting period or interim period, if any, immediately preceding the effectivity
of the Order.

 For Single Proprietorships/Partnerships


 Single proprietorships/partnerships operating for at least two (2) years may be granted
exemption:
 When the net accumulated losses for the last two (2) full accounting periods and
interim period, if any, preceding the effectivity of the Order amounts to 20% or more of
the total invested capital at the beginning of the period under review; or
 When an establishment registers capital deficiency i.e., negative net worth as of the last
full accounting period or interim period, if any, immediately preceding the effectivity of
the Order.

 Single proprietorships/partnerships operating for less than two (2) years may be granted
exemption when the net accumulated losses for the period immediately preceding the
effectivity of the Order amounts to 20% or more of the total invested capital at the beginning
of the period under review.

 For Non-stock Non-profit Organizations


 Non-stock Non-profit organizations operating for at least two (2) years may be granted
exemption:
 When the net accumulated losses for the last two (2) full accounting periods and interim
period, if any, immediately preceding the effectivity of the Order amounts to 20% or
more of the fund balance/members' contribution at the beginning of the period under
review; or
 When an establishment registers capital deficiency i.e., negative fund balance/members'
contribution as of the last full accounting period or interim period, if any, immediately
preceding the effectivity of the Order.

 Non-stock non-profit organizations operating for less than two (2) years may be granted
exemption when the net accumulated losses for the period immediately preceding
the effectivity of the Order amounts to 20% or more of the fund balance/members'
contribution at the beginning of the period under review.

 For Banks and Quasi-banks


 Under receivership/liquidation
 Exemption may be granted to a bank or quasi-bank under receivership or liquidation
when there is a certification from the Bangko Sentral ng Pilipinas that it is under
receivership or liquidation as provided in Section 30 of RA 7653, otherwise known as the
New Central Bank Act.

 Under controllership/conservatorship
 A bank or quasi-bank under controllership/conservatorship may apply for exemption as a
distressed establishment under Section 3 A of this Guidelines.

B. New Business Enterprises


Exemption may be granted to New Business Enterprises established outside the National Capital
Region (NCR) and Export Processing Zones within two (2) years from effectivity of the Order, classified
under any of the following:
 Agricultural establishments whether plantation or non-plantation.
 Establishments with total assets after financing of five million pesos (P5,000,000.00) and below.

C. Retail/Service Establishments Regularly Employing Not More Than Ten (10) Workers
Exemption may be granted to a retail/service establishment when:
 It is engaged in the retail sale of goods and/or services to end users for personal or household
use; and
 It is regularly employing not more than ten (10) workers regardless of status, except the owner/s,
for at least six (6) months in any calendar year.

D. Establishments Adversely Affected by Natural Calamities


 The establishment must be located in an area declared by a competent authority as under a state
of calamity.
 The natural calamities, such as earthquakes, lahar flow, typhoons, volcanic eruptions, fire, floods
and similar occurrences, must have occurred within 6 months prior to the effectivity of the Wage
Order.
 Losses suffered by the establishment as a result of the calamity that exceed the insurance
coverage should amount to 20% or more of the stockholders' equity as of the last full accounting
period in the case of corporations and cooperatives, total invested capital in the case of
partnerships and single proprietorships and fund balance/members' contribution in the case of
non-stock non-profit organizations.
Only losses or damage to properties directly resulting from the calamity and not incurred as a
result of normal business operations shall be considered.
 Where necessary, the Board or its duly-authorized representative shall conduct an ocular
inspection of the establishment or engage the services of experts to validate the extent of
damages suffered

SECTION 4. DOCUMENTS REQUIRED


The following supporting documents shall be submitted together with the application:
A. For All Categories of Exemption
 Proof of notice of filing of the application to the President of the union/contracting party
if one is organized in the establishment, or if there is no union, a copy of a circular giving
general notice of the filing of the application to all the workers in the establishment. The
proof of notice, which may be translated in the vernacular, shall state that the workers'
representative was furnished a copy of the application with all the supporting
documents. The notice shall be posted in a conspicuous place in the establishment.

B. For Distressed Establishments


 For Corporations
 Audited financial statements (together with the Auditor's opinion and the notes
thereto) for the last two (2) full accounting periods preceding the effectivity of the
Order filed with and stamped "received" by the appropriate government agency.
 Audited interim quarterly financial statements (together with the Auditor's opinion and the
notes thereto) for the period immediately preceding the effectivity of the Order.

Submission of audited interim financial statements shall be in accordance with the following schedule:

EFFECTIVITY DATE OF WAGE INTERIM STATEMENTS REQUIRED


ORDER
First Quarter of the Year No interim statements required; only the audited statement for
the last two full accounting periods
Second Quarter of the Year
 Month 1 - None; same as first quarter
 Month 2 - None; same as first quarter
 Month 3 - First quarter audited statement
Third Quarter of the Year
 Month 1 - First quarter audited statement
 Month 2 - First quarter audited statement
 Month 3 - First & second quarters audited statements
Fourth Quarter of the Year
 Month 1 - Second quarter audited statement
 Month 2 - Second quarter audited statement
 Month 3 - First, second & third quarters audited statements
 For Banks and Quasi Banks
 Certification from Bangko Sentral ng Pilipinas that it is under receivership/liquidation.

C. For New Business Enterprises

 Affidavit from employer regarding the following:


a) Principal Economic Activity
b) Date of Registration with Appropriate Government Agency
c) Amount of Total Assets
 Certificate of registration from the appropriate government agency.

D. For Retail/Service Establishments Employing not more than Ten (10) Employees

 Affidavit from employer stating the following:


a) It is a retail/service establishment.
b) It is regularly employing not more than ten (10) workers for at least six months in
any calendar year
 Business Permit for the current year from the appropriate government agency.

E. For Establishments Adversely Affected by Natural Calamities

 Affidavit from the General Manager or Chief Executive Officer of the establishment regarding the
following:
a) Date and type of calamity
b) Amount of losses/damages suffered as a direct result of the calamity
c) List of properties damaged/lost together with estimated valuation
d) For properties that are not insured, a statement that the same are not covered by insurance.
 Copies of insurance policy contracts covering the properties damaged, if any.
 Adjuster's report for insured properties.
 Audited financial statements for the last full accounting period preceding the effectivity of the
Order stamped received by the appropriate government agency.

The Board may require the submission of other pertinent documents to support the application for
exemption.

SECTION 5. ACTION ON APPLICATION FOR EXEMPTION


Upon receipt of an application with complete documents, the Board shall take the
following steps:
a) Notify the DOLE Regional Office having jurisdiction over the workplace of the pendency
of the application requesting that action on any complaint for non-compliance with the
Order be deferred pending resolution of the application by the Board.
b) Request the DOLE Regional Office to conduct ocular inspection, if necessary, of
establishments applying for exemption to verify number of workers, nature of business
and other relevant information.
c) Act and decide on the application for exemption with complete documents, as much as
practicable, within 45 days from the date of filing. In case of contested application, the
Board may conduct conciliation or call hearings thereon.
d) Transmit the decision of the Board to the applicant establishment, the workers or
president of the union, if any, and the Commission, for their information; and the DOLE
Regional Office concerned, for their implementation/enforcement.
The Board may create a Special Committee with one representative from each sector to
expedite processing of applications for exemption.

SECTION 6. APPLICATION FOR PROJECTS/BRANCHES/DIVISIONS


Where the exemption being sought is for a particular project/branch/division not separately
registered and licensed, the consolidated audited financial statements of the establishment shall
be used as basis for determining its distressed condition.
SECTION 7. DISTRESSED PRINCIPAL
Exemption granted to a distressed principal shall not extend to its contractor in case of
contract(s) for construction, security, janitorial and/or similar services with respect to the
employees of the latter assigned to the former.

SECTION 8. EXTENT AND DURATION OF EXEMPTION


A full exemption of one (1) year shall be granted to all categories of establishments that meet
the applicable criteria for exemption under Section 3 of this Guidelines.
However, a partial exemption of 50% with respect to the amount or period of exemption shall
be granted only in the case of distressed establishments as follows:
a) For corporations/cooperatives
When deficit as of the last full accounting period or interim period, if any, immediately
preceding the effectivity of the Order amounts to less than 20% of the paid-up capital of
the same period.
b) For single proprietorships/partnerships
When the net accumulated losses for the period under review amounts to at least 15%
but less than 20% of the total invested capital at the beginning of the period under
review.
c) Non-stock non-profit organizations
When the net accumulated losses for the period under review preceding the effectivity
of the Order amounts to at least 15% but less than 20% of the fund balance/members'
contribution at the beginning of the period under review.

SECTION 9. PROCEDURES ON EXEMPTION


A. For Filing of Application
1. An application, in three (3) legible copies may be filed with the appropriate Board by
the owner/manager or duly authorized representative of an establishment, in person
or by registered mail.
The date of mailing shall be deemed as the date of filing.
2. Applications for all categories shall be filed not later than sixty (60) days from
publication of the approved implementing rules of the Order.
In the case of NBEs, applications shall be filed not later than sixty (60) days from date
of registration.
3. The application shall be under oath and accompanied by complete supporting
documents as enumerated under Section 4 of this Guidelines. In the case of an
application with incomplete supporting documents, the applicant shall be notified to
complete the same within ten (10) days from receipt of the notice; otherwise, the
application shall be dismissed.
B. For Filing of Opposition
Any worker or, if unionized, the union in the applicant establishment, may file with the
appropriate Board within fifteen (15) days from receipt of the notice of the filing of the
application, an opposition to the application for exemption stating the reasons why the same
should not be approved, furnishing the applicant a copy thereof. The fifteen (15) day period
shall run only upon receipt of complete supporting documents. The opposition shall be in
three (3) legible copies, under oath and accompanied by pertinent documents, if any.
C. For Filing of Motion for Reconsideration
The aggrieved party may file with the Board a motion for reconsideration of the decision on
the application for exemption within ten (10) days from its receipt and shall state the
particular grounds upon which the motion is based, copy furnished the other party and the
DOLE Regional Office concerned.
No second motion for reconsideration shall be entertained in any case. The decision of the
Board shall be final and executory unless appealed to the Commission.
D. For Filing of Appeal to the Commission

1. Appeal - Any party aggrieved by the decision of the Board may file an appeal to the
Commission, through the Board, in two (2) legible copies, not later than ten (10) days
from date of receipt of the decision.
2. The appeal, with proof of service to the other party, shall be accompanied with a
memorandum of appeal which shall state the date appellant received the decision, the
grounds relied upon and the arguments in support thereof.
3. The appeal shall not be deemed perfected if it is filed with any office or entity other than
the Board.
4. Grounds for Appeal - An appeal may be filed on the following grounds:
a) Non-conformity with the prescribed guidelines and/or procedures on exemption;

b) Prima facie evidence of grave abuse of discretion on the part of the Board; or

c) Questions of law.
I. Opposition - The appellee may file with the Board his reply or opposition to the
appeal within ten (10) days from receipt of the appeal. Failure of the appellee
to file his reply or opposition shall be construed as waiver on his part to file the
same.
II. Transmittal of records - Within five (5) days upon receipt of the reply or
opposition of the appellee or after the expiration of the period to file the same,
the entire records of the case which shall be consecutively numbered, shall be
transmitted by the Board to the Commission.

SECTION 10. QUORUM AND VOTES REQUIRED


Four (4) members of the Commission or Board shall constitute a quorum to decide on the
applications for or on appeals on exemption, provided each sector is represented. The
Commission or Board may dispense with the latter proviso if the two (2) representatives of any
sector fail to attend two (2) consecutive scheduled meetings with proper notice. The affirmative
vote of the majority of the members constituting a quorum shall be necessary to carry a decision.

SECTION 11. EFFECT OF DISAPPROVED APPLICATION FOR EXEMPTION


In the event that the application for exemption is not approved, covered workers shall be paid
the mandated wage increase/allowance as provided for under the Order retroactive to the date
of effectivity of the Order plus simple interest of one percent (1%) per month.

SECTION 12. NON-DIMINUTION OF BENEFITS


Exemption granted under these Guidelines shall not be construed to reduce existing wages
and other benefits enjoyed by the workers under existing laws, decrees, issuances or under any
contract of agreement between the workers and employees.

SECTION 13. SUPPLEMENTARY GUIDELINES ON EXEMPTION


The Board may issue supplementary guidelines for exemption in accordance with this
Guidelines, subject to review/approval by the Commission.

SECTION 14. EFFECTIVITY


This Guidelines shall take effect fifteen (15) days after publication in a newspaper of general
circulation.

SECTION 15. REPEAL


All Commission Guidelines previously adopted and inconsistent herewith are hereby repealed.

SUMMARY OF EXEMPTIONS TO IMPLEMENTATION OF MINIMUM WAGE ORDER

Under the Labor Code (Art. 98 Labor Code) Under the NWPC Guidelines
1. Farm tenancy or leasehold 1. Distressed establishments
2. Household or domestic helpers
3. Homeworkers engaged in needlework 2. New business enterprises (NBEs)
4. Workers employed in any establishment duly 3. Retail/Service establishments
registered with the National Cottage Industry employing not more than ten (10)
Development Authority (NCIDA) workers
5. Workers in duly registered cooperatives when
so recommended by the Bureau of 4. Establishments adversely affected by
Cooperative Development upon approval by natural calamities
the Sec. of Labor.
6. Workers of a Barangay Micro Business
Enterprise (R.A. 9178 – 11/13/02)

Q: What is the difference between the exemptions under the labor code and those under the NWPC
Guidelines?
A: Under the NWPC Guidelines, the establishment must APPLY for an exemption (Sec. 2(par. 2) NWPC
Guidelines), whereas those under the Labor Code, the establishment NEED NOT APPLY.

- RCPI vs NLRC (207 SCRA 581)

Wage Order No. 6 was promulgated by the President of the Philippines to increase the statutory
minimum wage rates and cost of living allowances in the private sector. But it also provided for an
exemption to its application in favor of Distressed Enterprises for a period not exceeding 2 years.
The National Wages Council promulgated Policy Guidelines No. 8 to give the criteria for the
exemption under Sec. 5 thereof.

Since the purpose of the wage exemption is to assist financially beleaguered companies, the
distinction between real or actual income and theoretical earnings arising from accounting
principles becomes important.

Under the spirit of Wage Order No. 6, it is the actual ability of a firm to spend for its current needs
and costs and not how the assets and liabilities of a firm may appear in the technical jargon of
Higher Accounting Principles which is important.

- Joy Brothers Inc. vs NWPC (273 SCRA 622)

Sec. 8(a) of the Rules Implementing Wage Order No. NCR-03 provides that exemption from
compliance with the wage increase may be granted to distressed establishments.

"Distressed Establishments" are those whose paid-up capital has been impaired by at least 25% or
which registers capital deficiency or negative net worth.

2. Wages

 Form of Payment

PAYMENT SHOULD BE MADE IN LEGAL TENDER

- Art. 102 Labor Code


Forms of payment. - No employer shall pay the wages of an employee by means of promissory
notes, vouchers, coupons, tokens, tickets, chits, or any object other than legal tender, even when
expressly requested by the employee.

Payment of wages by check or money order shall be allowed when such manner of payment is
customary on the date of effectivity of this Code, or is necessary because of special circumstances
as specified in appropriate regulations to be issued by the Secretary of Labor and Employment or as
stipulated in a collective bargaining agreement.

- Art. 1705 (CC). The laborer's wages shall be paid in legal currency.

- Art. 288 (RPC). Other similar coercions; (Compulsory purchase of merchandise and payment of
wages by means of tokens.) — The penalty of arresto mayor or a fine ranging from 200 to 500
pesos, or both, shall be imposed upon any person, agent or officer, of any association or
corporation who shall force or compel, directly or indirectly, or shall knowingly permit any laborer
or employee employed by him or by such firm or corporation to be forced or compelled, to
purchase merchandise or commodities of any kind.

The same penalties shall be imposed upon any person who shall pay the wages due a laborer or
employee employed by him, by means of tokens or objects other than the legal tender currency of
the laborer or employee.
 ATM Guidelines
- Labor Advisory – Nov. 25, 1996

The following conditions must concur:


1. The ATM system of payment is within the written consent of the employees concerned;
2. The employees are given reasonable time to withdraw their wages from the bank facilities
which time, if done during working hours, shall be considered as compensable hours;
3. The system shall allow workers to receive their wages within the period or frequency and
in the amount prescribed under the Labor Code.
4. There is a bank or ATM facility within the radius of 1 kilometer to the place of work.
5. Upon the request of the concerned employee/s, the employer shall issue a record of
payment of wages, benefits, and deductions for a particular period.
6. There shall be no additional expenses and no diminution of benefits and privileges as a
result of the ATM system of payment.
7. The employer shall assume responsibility in case the wage protection provisions of law and
regulations are not complied with under the arrangement.

 Payment by Check or Money Order


(Sec. 2, Rule VIII, Book III, IRR)

SECTION 2. Payment by check. — Payment of wages by bank checks, postal checks or money
orders is allowed where such manner of wage payment is customary on the date of the
effectivity of the Code, where it is so stipulated in a collective agreement, or where all of 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.

 Payment Through a Bank


(Sec. 19-20, Chapter 1, Book III, IRR)

SECTION 19. Payment of Wages. — Upon written petition of the majority of the workers and
employees concerned, all private establishments, companies, businesses and other entities with
at least twenty workers and located within one kilometer radius to a commercial, savings or rural
bank, shall pay the wages and other benefits of their workers through any of said banks, within
the period and in the manner and form prescribed under the Labor Code as amended.

SECTION 20. Duty of Bank. — Whenever applicable and upon request of concerned worker or
union, the bank through which wages and other benefits are paid issue a certification of the
record of payment of said wages and benefits of a particular worker or workers for a particular
payroll period.

(RA 6727-PAYMENT THRU BANKS)


SECTION 7. - Upon written permission of the majority of the employees or workers concerned, all
private establishments, companies, businesses, and other entities with twenty five (25) or more
employees and located within one (1) kilometer radius to a commercial, savings or rural bank
shall pay the wages and other benefits of their employees through any of said banks and within
the period of payment of wages fixed by Presidential Decree No. 422, as amended, otherwise
known as the Labor Code of the Philippines.
SO, the following conditions must concur for the valid payment of wages thru banks:
1. upon written permission of the majority of the employees or workers concerned;
2. all private establishments, companies, businesses, and other entities with at least 25 or more
employees;
3. located within 1 kilometer radius to a commercial, savings or rural banks shall pay wages or
benefits of their employees through any of the banks;
4. within the period of payment of wages fixed by PD 442, the Labor Code, as amended;

 Place of Payment

ART. 104. Labor Code. Place of payment. - Payment of wages shall be made at or near the place of
undertaking, except as otherwise provided by such regulations as the Secretary of Labor and
Employment may prescribe under conditions to ensure greater protection of wages.

EXCEPTIONS: (Sec. 4, Rule VII, Book III, IRR)

SECTION 4. Place of payment. — As a general rule, the place of payment shall be at or near the place
of undertaking. Payment in a place other than the work place shall be permissible only under the
following circumstances: (Any of the following)

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

c. Under any other analogous circumstances; Provided, That the time spent by the employees in
collecting their wages shall be considered as compensable hours worked;

d. No employer shall pay his employees in any bar, night or day club, drinking establishment,
massage clinic, dance hall, or other similar places or in places where games are played with stakes
of money or things representing money except in the case of persons employed in said places.

 Time of Payment

ART. 103. Labor Code. Time of payment. - Wages shall be paid at least once every two (2) weeks or
twice a month at intervals not exceeding sixteen (16) days. If on account of force majeure or
circumstances beyond the employer’s control, payment of wages on or within the time herein
provided cannot be made, the employer shall pay the wages immediately after such force majeure or
circumstances have ceased. No employer shall make payment with less frequency than once a month.

The payment of wages of employees engaged to perform a task which cannot be completed in two (2)
weeks shall be subject to the following conditions, in the absence of a collective bargaining agreement
or arbitration award:

1. That payments are made at intervals not exceeding sixteen (16) days, in proportion to the
amount of work completed;

2. That final settlement is made upon completion of the work.

 Whom to Pay?

ART. 105. Labor Code. Direct payment of wages. - Wages shall be paid directly to the workers to
whom they are due, except:

(a) In cases of force majeure rendering such payment impossible or under other special circumstances
to be determined by the Secretary of Labor and Employment in appropriate regulations, in which
case, the worker may be paid through another person under written authority given by the worker for
the purpose; or
(b) Where the worker has died, in which case, the employer may pay the wages of the deceased
worker to the heirs of the latter without the necessity of intestate proceedings. The claimants, if they
are all of age, shall execute an affidavit attesting to their relationship to the deceased and the fact that
they are his heirs, to the exclusion of all other persons. If any of the heirs is a minor, the affidavit shall
be executed on his behalf by his natural guardian or next-of-kin. The affidavit shall be presented to the
employer who shall make payment through the Secretary of Labor and Employment or his
representative. The representative of the Secretary of Labor and Employment shall act as referee in
dividing the amount paid among the heirs. The payment of wages under this Article shall absolve the
employer of any further liability with respect to the amount paid.

General Rule: Wages shall be made direct to the employee to whom they are due
Exceptions:

1. Payment through a member of worker’s family - Where the employer is authorized in writing by
the employee to pay his wages to a member of his family.

2. Payment through another person


(a) In cases of force majeure rendering such payment impossible or under other special
circumstances to be determined by the Secretary of Labor and Employment in appropriate
regulations, in which case, the worker may be paid through another person under written
authority given by the worker for the purpose;
(b) When authorized under existing law, including payments for insurance premiums of the
employee and union dues where the right check-off has been recognized by the employer in
accordance with a CBA or authorized in writing by the individual employees concerned.

3. Payment through heirs of worker - In case where the worker has died, employer may pay wages
of the deceased workers to the heirs of the latter without the necessity of intestate proceedings.

Procedure: (Sec. 6, Rule VIII, Book III, IRR)


1. Claimants shall execute an affidavit attesting their relationship to the deceased and the fact that
they are his heirs, to the exclusion of all others (Affidavit of Next kin);
2. In case of a minor heir, affidavit shall be executed on his behalf by his natural guardian or next of
kin;
3. Affidavit shall be presented to the employer who shall make payment through the Secretary of
Labor or his representative;
4. The representative shall act as referee in dividing the amount paid among the heirs; and
5. Payment of wages under this Article shall absolve the employer of any further liability with
respect to the amount paid.

RULES ON PAYMENT OF WAGES

What Must be paid? Gen. Rule – Legal Tender

Exception – ATM, Bank Deposit, Check

Who must be Paid? Gen. Rule – Employee Directly

Exception – Employees Family, Heirs, Third Persons

Where must it be Paid? Gen. Rule – At or Near the Place of Undertaking (work)

Exception – Other places under conditions in Sec. 4, Rule VII, Book III, IRR

When must it be Paid? Gen. Rule – Once every 2 weeks, or twice a month, but not beyond 16 days
per payment.

Exception – In cases where there is Force Majeure

 Valid Deductions
ART. 113. Labor Code. Wage deduction. - No employer, in his own behalf or in behalf of any person,
shall make any deduction from the wages of his employees, except:

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 Secretary of Labor
and Employment.

(Rule VIII, Book III, IRR)


SEC. 10. Wages deduction. — Deductions from the wages of the employees may be made by the
employer in any of the following cases:
a. When the deductions are authorized by law, including deductions for the insurance premiums
advanced by the employer in behalf of the employee as well as union dues where the right to
check-off has been recognized by the employer or authorized in writing by the individual
employee himself.
b. When the deductions are with the written authorization of the employees for payment to the
third person and the employer agrees to do so; Provided, That the latter does not receive any
pecuniary benefit, directly or indirectly, from the transaction.

GENERAL RULE:

Wage deduction is strictly prohibited.

EXEMPTIONS:

REQUIRING EMPLOYEE’S CONSENT NOT REQUIRING EMPLOYEE’S CONSENT

Summary on the rule regarding prohibition on wages:

GENERAL RULE: No employer shall limit or otherwise interfere with the freedom of any employee to
dispose of his wages. He shall not in any manner force, compel, or oblige his employees to purchase
merchandise, commodities, or other property from the employer or from any other person, or
otherwise make use of any services of such employer or any other person.

EXEMPTIONS:

1. By specific requirement of law:


a. Deduction for income tax (CTRP)
b. Deductions for social security premiums (RA 1161)
c. Deductions for medical premiums (PD 1519)
d. Deductions for employee’s compensation premium (PD 442)

2. By specific authorization of law:


a. SEE art. 113, LC on exceptions
b. Facilities [Art. 97(f)]
c. In cases where the employee is indebted to the employer, where such indebtedness has
become due and demandable (Art. 1706, NCC);
d. In court awards, wages may be the subject of execution or attachment, but only for debts
incurred for food, shelter, clothing and medical attendance (Art. 1703, NCC). Eg. Judgment
for support.
e. For loss or damage, provided the following requisites are met:
i. The employee concerned must clearly shown to be responsible for the loss or damage;
ii. The employee should be given reasonable opportunity to show cause why deduction
should not be made;
iii. The amount to be deducted should be fair and reasonable and should not exceed the
actual loss or damage; and
iv. The deduction should not exceed 20% of the employee’s wage in week.
v. When the employer is engaged in such trade where deposit is a recognized one or is
necessary or desirable as determined by the Secretary of Labor (Sec. 11, Rule VIII, Book
III, IRR).
f. Wage deduction, provided:
i. Authorized by law eg. Insurance premiums and check or authorized in writing by the
individual employee himself;
ii. With the written authorization of the employees for payment to a third person and the
employer agrees to do so, provided that the latter does not receive any pecuniary
benefit, directly or indirectly, from the transaction (Sec. 10, Rule VIII, Book III, IRR).

Penalty in case of violation:

ART. 288, RPC. Other similar coercions; (Compulsory purchase of merchandise and payment of wages
by means of tokens.) — The penalty of arresto mayor or a fine ranging from 200 to 500 pesos, or both,
shall be imposed upon any person, agent or officer, of any association or corporation who shall force
or compel, directly or indirectly, or shall knowingly permit any laborer or employee employed by him
or by such firm or corporation to be forced or compelled, to purchase merchandise or commodities of
any kind.
The same penalties shall be imposed upon any person who shall pay the wages due a laborer or
employee employed by him, by means of tokens or objects other than the legal tender currency of
the laborer or employee.

 Prohibitions Regarding Wages

ART. 112. Labor Code. Non-interference in disposal of wages. - No employer shall limit or otherwise
interfere with the freedom of any employee to dispose of his wages. He shall not in any manner force,
compel, or oblige his employees to purchase merchandise, commodities or other property from any
other person, or otherwise make use of any store or services of such employer or any other person.

ART. 118. Labor Code. Retaliatory measures. - It shall be unlawful for an employer to refuse to pay or
reduce the wages and benefits, discharge or in any manner discriminate against any employee who
has filed any complaint or instituted any proceeding under this Title or has testified or is about to
testify in such proceedings.

ART. 117. Labor Code. Deduction to ensure employment. - It shall be unlawful to make any deduction
from the wages of any employee for the benefit of the employer or his representative or intermediary
as consideration of a promise of employment or retention in employment.

ART. 116. Labor Code. Withholding of wages and kickbacks prohibited. - It shall be unlawful for any
person, directly or indirectly, to withhold any amount from the wages of a worker or induce him to
give up any part of his wages by force, stealth, intimidation, threat or by any other means whatsoever
without the worker’s consent.

ART. 114. Labor Code. Deposits for loss or damage. - No employer shall require his worker to make
deposits from which deductions shall be made for the reimbursement of loss of or damage to tools,
materials, or equipment supplied by the employer, EXCEPT when the employer is engaged in such
trades, occupations or business where the practice of making deductions or requiring deposits is a
recognized one, or is necessary or desirable as determined by the Secretary of Labor and Employment
in appropriate rules and regulations.

SEC. 9. (Rule VIII, Book III, IRR)


Non-interference in disposal of wages. — No employer shall 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.
 Penalty for Non-Compliance of Wage Order
(Sec. 10, Chapter III, IRR of R.A. 6727)

SECTION 10. Penal Provisions. — Any person, corporation, trust, firm, partnership, association or
entity which refuses or fails to pay any of the prescribed increases or adjustments in the wage rates,
made in accordance with the Act shall be punished by a fine not exceeding P25,000 and/or
imprisonment of not less than one year nor more than two years: Provided, that any person convicted
under the Act shall not be entitled to the benefits provided for under the Probation Law.

If the violation is committed by a corporation, trust or firm, partnership, association or any other
entity, the penalty of imprisonment shall be imposed upon the entity’s responsible officers, including,
but not limited to, the president, vice-president, chief executive officer, general manager, managing
director or partner.

 Allowances

- Millares vs NLRC (same)

 Tips

- DEFINITION; NATURE

It has been said that a TIP denotes a voluntary act, but it has also been said that from the very
beginning of the practice of tipping it was evident that, whether considered from the standpoint of
the giver or the recipient, a TIP lacked the essential element of a gift, namely, the free bestowing of
a gratuity without consideration, and that, despite its apparent voluntariness, there is an element
of compulsion in TIPPING.

It is more frequently used to indicate additional compensation, and in this sense TIP is defined as
meaning a gratuity; a gift; a present; a fee; money given, as to a servant, to ensure better or more
prompt service. A TIP may range from pure gift out of benevolence or friendship, to a compensation
for a service measured by its supposed value but not fixed by an agreement, although usually the
word is applied to what is paid to a servant in addition to the regular compensation for his service
in order to secure better service or in recognition of it.

Although a customer may give a TIP as a consideration for services rendered, its value still depends
on the giver, and it is given in addition to the compensation by the employer; A gratuity given by an
employer in order to inspire the employee to exert more effort in his work is more appropriately
called a bonus.

Since a tip is considered a pure gift out of benevolence or friendship, it cannot be demanded from
the customer. Whether or not TIPS will be given is dependent on the will and generosity of the
giver.

The contract of employment between petitioners and Orlando is categorical that the monthly salary
of Orlando is $450 flat rate. This already included his overtime pay which is integrated in his 12
hours of work. The words "plus tips of $2 per passenger per day" were written at the line for
overtime. Since payment for overtime was included in the monthly salary of Orlando, the supposed
TIPS mentioned in the contract should be deemed included thereat.
(Ace Navigation Co. Inc. vs CA, 08/15/00)

NOTE:

Tips come from the customers, not the Employer, hence they are generally not demandable.

 Bonus

- DEFINTION; NATURE
By definition, a "BONUS" is a gratuity or act of liberality of the giver. It is something given in
addition to what is ordinarily received by or strictly due the recipient. A bonus is granted and paid
to an employee for his industry and loyalty which contributed to the success of the employers
business and made possible the realization of profits.
(Protacio vs Laya Mananghaya & Co., GR# 168654 – 03/25/09)

- IS A BONUS DEMANDABLE?

By definition, a “bonus” is a gratuity or act of liberality of the giver. It is something given in addition
to what is ordinarily received by or strictly due the recipient. A bonus is granted and paid to an
employee for his industry and loyalty which contributed to the success of the employer’s business
and made possible the realization of profits. A bonus is also granted by an enlightened employer to
spur the employee to greater efforts for the success of the business and realization of bigger profits.

Generally, a bonus is not a demandable and enforceable obligation. For a bonus to be enforceable,
it must have been promised by the employer and expressly agreed upon by the parties. Given that
the bonus in this case is integrated in the CBA, the same partakes the nature of a demandable
obligation. Verily, by virtue of its incorporation in the CBA, the Christmas bonus due to respondent
Association has become more than just an act of generosity on the part of the petitioner but a
contractual obligation it has undertaken.

All given, business losses are a feeble ground for petitioner to repudiate its obligation under the
CBA. The rule is settled that any benefit and supplement being enjoyed by the employees cannot be
reduced, diminished, discontinued or eliminated by the employer. The principle of non-diminution
of benefits is founded on the constitutional mandate to protect the rights of workers and to
promote their welfare and to afford labor full protection. Hence, absent any proof that the
employer’s consent was vitiated by fraud, mistake or duress, it is presumed that it entered into the
CBA voluntarily and had full knowledge of the contents thereof and was aware of its commitments
under the contract.
(Lepanto Ceramics Inc. vs Lepanto Ceramics Employees Assoc., GR# 03/02/10)

GENERAL RULE:
A BONUS is not a demandable and enforceable obligation.

EXCEPTION:
When it is made part of the wage or salary or compensation. When
considered as part of the compensation and therefore demandable and
enforceable, the amount is usually fixed.

When it is included in the CBA.

EXCEPTION TO THE EXCEPTION:


If the amount would be a contingent one dependent upon the realization of
the profits, the bonus is also not demandable and enforceable.

- WAIVER OF BENEFITS

Going now to the question of whether respondent’s members’ individual acceptance of the award
and the resulting payments made by petitioner operate as a ratification of the DOLE Secretary’s
award which renders CA-G.R. SP No. 72965 moot, we find that such do not operate as a ratification
of the DOLE Secretary’s award; nor a waiver of their right to receive further benefits, or what they
may be entitled to under the law. The appellate court correctly ruled that the respondent’s
members were merely constrained to accept payment at the time. Christmas was then just around
the corner, and the union members were in no position to resist the temptation to accept much-
needed cash for use during the most auspicious occasion of the year. Time and again, we have held
that necessitous men are not, truly speaking, free men; but to answer a present emergency, will
submit to any terms that the crafty may impose upon them.
(UST vs SM – UST, GR# 169940 – 09/14/09)

3. Administration and Enforcement of Wage Orders (Art. 128-129 Labor Code)


Chapter VI
ADMINISTRATION AND ENFORCEMENT

ART. 128. Visitorial and enforcement power. –


(a) The Secretary of Labor and Employment or his duly authorized representatives, including labor
regulation officers, shall have access to employer’s records and premises at any time of the day or
night whenever work is being undertaken therein, and the right to copy therefrom, to question any
employee and investigate any fact, condition or matter which may be necessary to determine
violations or which may aid in the enforcement of this Code and of any labor law, wage order or rules
and regulations issued pursuant thereto.

(b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases
where the relationship of employer-employee still exists, the Secretary of Labor and Employment or
his duly authorized representatives shall have the power to issue compliance orders to give effect to
the labor standards provisions of this Code and other labor legislation based on the findings of labor
employment and enforcement officers or industrial safety engineers made in the course of inspection.
The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate
authority for the enforcement of their orders, except in cases where the employer contests the
findings of the labor employment and enforcement officer and raises issues supported by
documentary proofs which were not considered in the course of inspection. (As amended by Republic
Act No. 7730, June 2, 1994).

(c) An order issued by the duly authorized representative of the Secretary of Labor and Employment
under this Article may be appealed to the latter. In case said order involves a monetary award, an
appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a
reputable bonding company duly accredited by the Secretary of Labor and Employment in the amount
equivalent to the monetary award in the order appealed from. (As amended by Republic Act No.
7730, June 2, 1994).

(d) The Secretary of Labor and Employment may likewise order stoppage of work or suspension of
operations of any unit or department of an establishment when non-compliance with the law or
implementing rules and regulations poses grave and imminent danger to the health and safety of
workers in the workplace. Within twenty-four hours, a hearing shall be conducted to determine
whether an order for the stoppage of work or suspension of operations shall be lifted or not. In case
the violation is attributable to the fault of the employer, he shall pay the employees concerned their
salaries or wages during the period of such stoppage of work or suspension of operation.

(e) It shall be unlawful for any person or entity to obstruct, impede, delay or otherwise render ineffective
the orders of the Secretary of Labor and Employment or his duly authorized representatives issued
pursuant to the authority granted under this Article, and no inferior court or entity shall issue
temporary or permanent injunction or restraining order or otherwise assume jurisdiction over any
case involving the enforcement orders issued in accordance with this Article.

(f) Any government employee found guilty of violation of, or abuse of authority, under this Article shall,
after appropriate administrative investigation, be subject to summary dismissal from the service.

(g) The Secretary of Labor and Employment may, by appropriate regulations, require employers to keep
and maintain such employment records as may be necessary in aid of his visitorial and enforcement
powers under this Code.

ART. 129. Recovery of wages, simple money claims and other benefits. - Upon complaint of any interested
party, the Regional Director of the Department of Labor and Employment or any of the duly authorized
hearing officers of the Department is empowered, through summary proceeding and after due notice, to
hear and decide any matter involving the recovery of wages and other monetary claims and benefits,
including legal interest, owing to an employee or person employed in domestic or household service or
househelper under this Code, arising from employer-employee relations: Provided, That such complaint
does not include a claim for reinstatement: Provided further, That the aggregate money claims of each
employee or househelper does not exceed Five thousand pesos (P5,000.00). The Regional Director or
hearing officer shall decide or resolve the complaint within thirty (30) calendar days from the date of the
filing of the same. Any sum thus recovered on behalf of any employee or househelper pursuant to this
Article shall be held in a special deposit account by, and shall be paid on order of, the Secretary of Labor
and Employment or the Regional Director directly to the employee or househelper concerned. Any such
sum not paid to the employee or househelper because he cannot be located after diligent and reasonable
effort to locate him within a period of three (3) years, shall be held as a special fund of the Department of
Labor and Employment to be used exclusively for the amelioration and benefit of workers.

Any decision or resolution of the Regional Director or hearing officer pursuant to this provision may be
appealed on the same grounds provided in Article 223 of this Code, within five (5) calendar days from
receipt of a copy of said decision or resolution, to the National Labor Relations Commission which shall
resolve the appeal within ten (10) calendar days from the submission of the last pleading required or
allowed under its rules.

The Secretary of Labor and Employment or his duly authorized representative may supervise the payment
of unpaid wages and other monetary claims and benefits, including legal interest, found owing to any
employee or househelper under this Code. (As amended by Section 2, Republic Act No. 6715, March 21,
1989).

NOTES:

Article 128. Visitorial and Enforcement Power.

Visitorial Power – power of the Secretary of Labor or any of his duly authorized representative to have
access to employer’s records and premises at any time of the day or night whenever work is being
undertaken therein.

It includes the right to enjoy to copy therefrom, to question any employee and investigate any fact,
condition or matter which may aid in the enforcement of the Code and of any labor law, wage order, or
rules and regulations.

Enforcement Power (as amended by R.A 7730) - power of the Secretary of Labor to compel employer to
comply with labor standards upon finding of violations discovered in the course of the exercise of the
Visitorial power.

Only claims where employer-employee relations still exist can be covered

Includes the power to:

Issue Compliance Orders based on the findings of labor employment and enforcement officers or
industrial safety engineers made in the course of inspection, and must observe 7 cardinal
requirements of due process in administrative proceeding;

Issue Writs of Execution for the enforcement of orders except in cases where the employer
contests the findings of the said labor officers and raises issues supported by documentary proofs
which were not considered in the course of inspection;

Order Work Stoppage/Suspension of Operations when non-compliance with the law or


implementing rules and regulations poses grave and imminent danger to the health and safety of
the workers in the workplace; and

Conduct hearings within 24 hours to determine whether:


an order for stoppage of works/suspension of operations shall be lifted or not; and
employer shall pay the employees concerned their salaries in case the violation is attributable to
his fault.
Procedure

COMPLAINT or ROUTINE INSPECTION

ACTUAL INSPECTION

(inspection lists the violation in his checklist)

INSPECTOR’S FINDING OF VIOLATION

ISSUANCE OF COMPLIANCE ORDER

In case of non-compliance

ISSUANCE OF WRIT OF NON-COMPLIANCE

In case party disagrees with RD’s findings

HEARING

DECISION

MR APPEAL

(8-10 days with Secretary of Labor)

(certiorari
INSPECTOR’SwithFINDING
the CA within 60 days)
OF VIOLATION

WORK STOPPAGE

Instances when enforcement power may not be used:


 Case does not arise from the exercise of Visitorial power;
 When employer-employee relationship ceased to exist at the time of the inspection; and
 If employer contests the finding of the Labor Regulation Officer and such contestable issue is not
verifiable in the normal course of inspection.

Article 129. Recovery of wages, simple money claims and other benefits.

Requisites of regional director’s authority, under Art. 129:


(Rajah Humabon Hotel vs. Trajano)

 The claim is presented by an employee or a person employed in domestic or household service;


 The claimant does not seek reinstatement;
 The claim arises from employer employee relationship;
 The aggregate money claims of each employee or househelper does not exceed Php. 5,000

Adjudicatory power:
The Regional Director or any of his duly authorized hearing officer is empowered through summary
proceeding and after due notice, to hear and decide cases involving recovery of wages and other
monetary claims and benefits, including legal interests.

SUMMARY ON JURISDICTION:

 If all the requisites are present - Regional Director of DOLE


 If any of the requisites are absent, excluding - Labor Arbiter
employer-employee relationship
 If there is no employer employee-relationship - Regional Trial Court

Can be delegated:
Under Sec. 2(e) D.O. No. 57-04 the DOLE may delegate to local government units the conduct of technical
safety inspection required under Art. 165 of the Labor Code.

Comprises:
Self-assessment is a voluntary compliance mode applicable to and encouraged in establishments with at
least 200 workers and, regardless of number of workers, to unionized firms with CBAs.

Inspection is undertaken in workplaces with 10 to 199 workers by DOLE inspectors.

Advisory services provide services to establishment with less than 10 workers and those registered as
BMBEs (barangay micro-business enterprises). These small businesses are given assistance to improve
their productivity, thereby facilitating their eventual compliance with labor standards.

- AUTHORITY/JURISDICTION OF THE SECRITARY OF LABOR/REGIONAL DIRECTOR TO DETERMINE


EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP

The Secretary of Labor or his duly authorized representatives is empowered to hear and decide, in a
summary proceeding, any matter involving the recovery of any amount of wages and other monetary
claims arising out of employer-employee relations at the time of the inspection, even if the amount of
the money claim exceeds P5,000.00.

However, if the labor standards case is covered by the exception clause in Article 128(b) of the Labor
Code, then the Regional Director will have to endorse the case to the appropriate Arbitration Branch of
the NLRC. In order to divest the Regional Director or his representatives of jurisdiction, the following
elements must be present: (a) that the employer contests the findings of the labor regulations officer
and raises issues thereon; (b) that in order to resolve such issues, there is a need to examine evidentiary
matters; and (c) that such matters are not verifiable in the normal course of inspection. The rules also
provide that the employer shall raise such objections during the hearing of the case or at any time after
receipt of the notice of inspection results.
(Balladares vs Peak Ventures Corp., GR# 161794 – 06/16/09)

- Jethro Intelligence & Security Corp. vs Sec. of Labor (GR# 172537 – 08/14/09)

In the case at bar, the Secretary of Labor correctly assumed jurisdiction over the case as it does not
come under the exception clause in Art. 128(b) of the Labor Code. While petitioner Jethro appealed the
inspection results and there is a need to examine evidentiary matters to resolve the issues raised, the
payrolls presented by it were considered in the ordinary course of inspection. While the employment
records of the employees could not be expected to be found in Yakult’s premises in Calamba, as Jethro’s
offices are in Quezon City, the records show that Jethro was given ample opportunity to present its
payrolls and other pertinent documents during the hearings and to rectify the violations noted during
the ocular inspection. It, however, failed to do so, more particularly to submit competent proof that it
was giving its security guards the wages and benefits mandated by law.

Jethro’s failure to keep payrolls and daily time records in Yakult’s premises was not the only labor
standard violation found to have been committed by it; it likewise failed to register as a service
contractor with the DOLE, pursuant to Department Order No. 18-02 and, as earlier stated, to pay the
wages and benefits in accordance with the rates prescribed by law.

- People’s Broadcasting vs Sec. of Labor (GR# 179652 – 05/08/09)

The DOLE in the exercise of its visitorial and enforcement power somehow has to make a determination
of the existence of an employer-employee relationship. Such prerogatival determination, however,
cannot be coextensive with the visitorial and enforcement power itself. Indeed, such determination is
merely preliminary, incidental and collateral to the DOLE’s primary function of enforcing labor standards
provisions. The determination of the existence of employer-employee relationship is still primarily
lodged with the NLRC. This is the meaning of the clause “in cases where the relationship of employer-
employee still exists” in Art. 128 (b).
Thus, before the DOLE may exercise its powers under Article 128, two important questions must be
resolved: (1) Does the employer-employee relationship still exist, or alternatively, was there ever an
employer-employee relationship to speak of; and (2) Are there violations of the Labor Code or of any
labor law? The existence of an employer-employee relationship is a statutory prerequisite to and a
limitation on the power of the Secretary of Labor, one which the legislative branch is entitled to impose.

The rationale underlying this limitation is to eliminate the prospect of competing conclusions of the
Secretary of Labor and the NLRC, on a matter fraught with questions of fact and law, which is best
resolved by the quasi-judicial body, which is the NRLC, rather than an administrative official of the
executive branch of the government. If the Secretary of Labor proceeds to exercise his visitorial and
enforcement powers absent the first requisite, as the dissent proposes, his office confers jurisdiction on
itself which it cannot otherwise acquire.

- Phil. Hoteliers Inc. vs NUWHRAIN-APL-IUF (GR# 181972 – 08/25/09)

Since Dusit Hotel is explicitly mandated by the Article 96 of the Labor Code to pay its employees and
management their respective shares in the service charges collected, the hotel cannot claim that
payment thereof to its 82 employees constitute substantial compliance with the payment of ECOLA
under WO No. 9. Undoubtedly, the hotel employees’ right to their shares in the service charges
collected by Dusit Hotel is distinct and separate from their right to ECOLA; gratification by the hotel of
one does not result in the satisfaction of the other.

- Alberta Yanson vs Sec. of Labor (GR# 159026 – 02/11/09)

R. CLASSIFICATION OF EMPLOYEES

1. Regular vs Casual Employees

ART. 280. Labor Code. Regular and casual employment. - The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except where the employment has
been fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or service to be performed
is seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided,
That any employee who has rendered at least one year of service, whether such service is continuous or
broken, shall be considered a regular employee with respect to the activity in which he is employed and
his employment shall continue while such activity exists.

SEC. 5. (Rule I, Book VI, IRR)


Regular and casual employment. —
(a) The provisions of written agreements to the contrary notwithstanding and regardless of the oral
agreements of the parties, an employment shall be considered to be regular employment for
purposes of Book VI of the Labor Code where the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer except where
the employment has been fixed for a specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the employee or where the work or
service to be performed is seasonal in nature and the employment is for the duration of the season.
(b) Employment shall be deemed as casual in nature if it is not covered by the preceding paragraph;
Provided, That any employee who has rendered at least one year of service, whether such service is
continuous or not, shall be considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such activity exists.

(c) An employee who is allowed to work after a probationary period shall be considered
a regular employee.

REGULAR EMPLOYEE CASUAL EMPLOYEE


 Engaged to perform activities which are usually  Engaged to perform activities which are not
necessary or desirable in the usual business or necessary or desirable in the usual business or
trade of the employer. trade of the employer.
 Employee becomes a Regular Employee at the  An employee who is not seasonal, project, or
moment of employment if he performs regular.
activities which are usually necessary or  Employee becomes a Regular Employee after 1
desirable in the usual business or trade of the yr employment, whether continuous or broken,
employer. even if their function is not usually necessary or
desirable in the usual business or trade of the
employer.

- SMC vs Teodosio (GR# 163033 – 10/02/09)

There are two kinds of regular employees, namely:

(1) those who are engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer; and (regular employees – by nature of work)

(2) those who have rendered at least one year of service, whether continuous or broken, with respect
to the activity in which they are employed. (regular employees – by years of service)

The former (1) refers to those employees who perform a particular activity which is necessary or
desirable in the usual business or trade of the employer, regardless of their length of service;

While the latter (2) refers to those employees who have been performing the job, regardless of the
nature thereof, for at least a year.

If the employee has been performing the job for at least one year, even if the performance is not
continuous or merely intermittent, the law deems the repeated and continuing need for its performance
as sufficient evidence of the necessity, if not indispensability, of that activity to the business.

Based on the circumstances surrounding respondent’s employment by SMC, this Court is convinced that
he has attained the status of a regular employee long before he executed the employment contract with
a fixed period. Although respondent was initially hired by SMC as a casual employee, respondent has
attained the status of a regular employee. Respondent was initially hired by SMC on September 5, 1991
until March 1992. He was rehired for the same position in April 1992 which lasted for five to six months.
After three weeks, he was again rehired as a forklift operator and he continued to work as such until
August 1993. Thus, at the time he signed the Employment with a Fixed Period contract, respondent had
already been in the employ of SMC for at least twenty-three (23) months.

The Labor Code provides that a casual employee can be considered as a regular employee if said casual
employee has rendered at least one year of service regardless of the fact that such service may be
continuous or broken. Section 3, Rule V, Book II of the Implementing Rules and Regulations of the Labor
Code clearly defines the term “at least one year of service” to mean service within 12 months, whether
continuous or broken, reckoned from the date the employee started working, including authorized
absences and paid regular holidays, unless the working days in the establishment, as a matter of
practice or policy, or as provided in the employment contract, is less than 12 months, in which case said
period shall be considered one year. If the employee has been performing the job for at least one year,
even if the performance is not continuous or merely intermittent, the law deems the repeated and
continuing need for its performance as sufficient evidence of the necessity, if not indispensability, of
that activity to the business of the employer.

- PLDT vs Arceo (489 SCRA 617 – 2006)

Under the foregoing provision, a regular employee is:

1. One who is either engaged to perform activities that are necessary or desirable in the usual trade or
business of the employer, or;
2. A casual employee who has rendered at least 1 year of service, whether continuous or broken, with
respect to the activity in which he is employed.

- ABS-CBN vs Nazareno (503 SCRA 204 – 2006)


It is immaterial that petitioner hired respondents as "talents". The fact that respondents received pre-
agreed "talent fees" instead of salaries, that they did not observe the required office hours, and that
they were permitted to join other productions during their free time are not conclusive of the nature of
their employment. Respondents cannot be considered as "talents" because they are not actors or
actresses or radio specialists or mere clerks or utility employees. They are regular employees who
perform several different duties under the control and direction of ABS-CBN executives and supervisors.

The presumption is that when the work done is an integral part of the regular business of the employer
and when the worker, relative to the employer, does not furnish an independent business or
professional service, such work is a regular employment of such employee and not an independent
contractor.

Q: What is meant by “Talent”?


A:

- Poseidon Fishing vs NLRC (482 SCRA 717 – 2006)

As petitioners themselves admitted in their petition before this Court, private respondent was
repeatedly hired as part of the boat's crew and he acted in various capacities onboard the vessel.

The test to determine whether employment is regular or not is the reasonable connection between the
particular activity performed by the employee in relation to the usual business of trade of the employer;

If the employee has been performing the job for at least one year, even if the performance is not
continuous or merely intermittent, the law deems the repeated and continuing need for its performance
as sufficient evidence of the necessity, if not indispensability of that activity to the business.

The Court ruled that once a project or work pool employee has been:

1. Continuously re-hired by the same employer for the same tasks or nature of tasks; and
2. These tasks are vital, necessary and indispensable to the usual business or trade of the employer

Then the employee must be deemed to be a regular employee.

- Big AA Mfg. vs Antonio (484 SCRA 33 – 2006)

Considering the submission of the parties, we are constrained to agree with the unanimous ruling of the
Court of Appeals, NLRC and Labor Arbiter that respondents are petitioner’s regular employees.
Respondents were employed for more than one year and their work as carpenters was necessary or
desirable in petitioner’s usual trade or business of manufacturing office furniture. Under Article 280 of
the Labor Code, the applicable test to determine whether an employment should be considered regular
or non-regular is the reasonable connection between the particular activity performed by the employee
in relation to the usual business or trade of the employer.

True, certain forms of employment require the performance of usual or desirable functions and exceed
one year but do not necessarily result to regular employment under Article 280 of the Labor Code.
Some specific exceptions include project or seasonal employment. Yet, in this case, respondents cannot
be considered project employees. Petitioner had neither shown that respondents were hired for a
specific project the duration of which was determined at the time of their hiring nor identified the
specific project or phase thereof for which respondents were hired.

We also agree that Eutiquio was not an independent contractor for he does not carry a distinct and
independent business, and he does not possess substantial capital or investment in tools, equipment,
machinery or work premises. He works within petitioner’s premises using the latter’s tools and
materials, as admitted by petitioner. Eutiquio is also under petitioner’s control and supervision.
Attesting to this is petitioner’s admission that it allowed respondents to use its facilities for the “proper
implementation” of job orders. Moreover, the Implementing Guidelines regulating attendance,
overtime, deadlines, penalties; providing petitioner’s right to fire employees or “contractors”; requiring
the carpentry division to join petitioner’s exercise program; and providing rules on machine
maintenance, all reflect control and supervision over respondents.

- Paguio vs NLRC (GR# 147816 – 05/09/2003)


A "regular employment", whether it is one or not, is aptly gauged from the concurrence, or non-
concurrence, of the following factors;

1. The manner of selection and engagement of the putative employee,


2. The mode of payment of wages,
3. The presence or absence of the power of dismissal, and
4. The power to control the conduct of the putative employee or the power to control the employee
with respect to the means and methods by which his work is to be accomplished.

The "control test" assumes primacy in the overall consideration. Under this test, an employment
relation obtains where work is performed of services are rendered under the control and supervision of
the party contracting for the service, not only as to the result of the work but also as to the manner and
details of the performance desired.

2. Seasonal

- Hacienda Fatima vs NFSWF (396 SCRA 518)

The fact that respondents do not work continuously for 1 whole year but only for the duration of the
season does not detract from considering them in regular employment since this Court has already
settled that seasonal workers who are called to work from time to time and are temporarily laid off
during off-season are not separated from service in said period, but merely considered on leave until-
reopened.

Q: May Seasonal Employees be Regular Employees?


A: YES. For the duration of the Season, they are protected by the Right to Security of Tenure. Off-season,
they are considered on leave, but they are still employed such that if they are not made to work when
the season resumes, that is tantamount to illegal dismissal.

3. Project

GENERAL RULE:
Employment for at least 1 year, whether continuous or broken renders an employee as
REGULAR.

EXCEPTION:
When the employment is for a SPECIFIC PROJECT or UNDERTAKING.

EXCEPTION TO EXCEPTION:
Where from the circumstances it is apparent that periods have been imposed to preclude the
acquisition of tenurial security by the employee.

An employee is continuously, as opposed to intermittently, re-hired by the same employer for


the same tasks or nature of tasks, and, these tasks are vital, necessary and indispensable to the
usual business or trade of the employer.

If after the project, the employer fails to submit the required Statistical Report to the DOLE at
the end of the project, the employees therein may be considered as Regular Employees.

- Ronilo Sorreda vs Cambridge Electronics Corp. (GR# 172927 – 02/11/10)

The Court cannot countenance the employee’s claim that a contract of perpetual employment was ever
constituted. While the Constitution recognizes the primacy of labor, it also recognizes the critical role of
private enterprise in nation-building and the prerogatives of management. A contract of perpetual
employment deprives management of its prerogative to decide whom to hire, fire and promote, and
renders inutile the basic precepts of labor relations. While management may validly waive it
prerogatives, such waiver should not be contrary to law, public order, public policy, morals or good
customs. An absolute and unqualified employment for life in the mold of petitioner’s concept of
perpetual employment is contrary to public policy and good customs, as it unjustly forbids the employer
from terminating the services of an employee despite the existence of a just or valid cause. It likewise
compels the employer to retain an employee despite the attainment of the statutory retirement age,
even if the employee has became a “non-performing asset” or, worse, a liability to the employer.

- Willam Uy Construction Corp. vs Trinidad (GR# 183250 – 03/10/10)

The test for distinguishing a “project employee” from a “regular employee” is whether or not he has
been assigned to carry out a “specific project or undertaking,” with the duration and scope of his
engagement specified at the time his service is contracted. Here, it is not disputed that petitioner
company contracted respondent Trinidad’s service by specific projects with the duration of his work
clearly set out in his employment contracts. He remained a project employee regardless of the number
of years and the various projects he worked for the company.

Generally, length of service provides a fair yardstick for determining when an employee initially hired on
a temporary basis becomes a permanent one, entitled to the security and benefits of regularization. But
this standard will not be fair, if applied to the construction industry, simply because construction firms
cannot guarantee work and funding for its payrolls beyond the life of each project. And getting projects
is not a matter of course. Construction companies have no control over the decisions and resources of
project proponents or owners. There is no construction company that does not wish it has such control
but the reality, understood by construction workers, is that work depended on decisions and
developments over which construction companies have no say.

In this case, respondent Trinidad’s series of employments with petitioner company were co-terminous
with its projects. When its Boni Serrano-Katipunan Interchange Project was finished in December 2004,
Trinidad’s employment ended with it. He was not dismissed. His employment contract simply ended
with the project for which he had signed up. His employment history belies the claim that he
continuously worked for the company. Intervals or gaps separated one contract from another.

- Rosita Pangilinan vs GMC (GR# 149329 – 07/12/04)

Art. 280 of the Labor Code comprehends 3 kinds of employees;

A. Regular Employees or those whose work is necessary or indispensable to the usual business of the
employer,
B. Project Employees or those whose employment has been fixed for a specific project or undertaking,
the completion or termination of which has been determined at the time of the engagement of the
employee or where the work or services to be performed is seasonal in nature and the employment
is for the duration of the season, and
C. Casual Employee or those who are neither regular not project employees.

Stipulations in employment contracts providing for term employment or fixed period employment are
valid when the period were agreed upon knowingly and voluntarily by the parties without force, duress
or improper pressure, being brought to bear upon the employee and absent any other circumstances
vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each
other on more or less equal terms with no moral dominance whatever being exercised by the former
over the latter.

Lack of notice of termination is of no consequence, because when the contract specifies the period of
its duration, it terminates on the expiration of such period. A contract for employment for a definite
period terminates by its own term at the end of such period.

- C.E. Construction Corp. vs Cloco, Jr. (GR# 156896 – 09/08/04)

The Supreme Court held that the fact that the workers have been employed with the company for
several years on various projects, the longest being 9 years, did not automatically make them regular
employees considering that the definition of regular employment in Art. 280 of the Labor Code, makes
specific exception with respect to project employment.

The re-hiring of petitioners on a project-to-project basis did not confer upon them regular employment
status. The practice was dictated by the practical consideration that experienced construction workers
are more preferred. It did not change their status as project employees.

- Abesco vs Ramirez (487 SCRA 9)


Project employees who work under different project employment contracts for several years do not
automatically become regular employees. Employees who are members of a "work pool" from which a
company draws workers for deployment to its different projects do not become regular employees by
reason of that fact alone.

The principal test in determining whether employees are "Project employees" or "Regular employees" is
whether they are assigned to carry out a specific project or undertaking, the duration and scope of
which are specified at the time they are engaged for that project.

- Samson vs NLRC (GR# 113166 – 02/01/96)

Where from the circumstances it is apparent that periods have been imposed to preclude the
acquisition of tenurial security by the employee, they should be struck down as contrary to public policy,
morals, good customs, or public order.

As observed by the Solicitor General, the record of this case discloses, as part of petitioners position
paper, a certification duly issued by private respondent on a continuing basis since 1965. The
certification indubitably indicates that after a particular project has been accomplished, petitioner
would be re-hired immediately the following day, save for a gap of 1 day to 1 week from the last project
to the succeeding one. There can, therefore, be no escape from the conclusion that petitioner is a
regular employee of private respondent.

- ABS-CBN vs Nazareno (503 SCRA 204)

The presumption is that when the work done is an integral part of the regular business of the employer
and when the worker, relative to the employer, does not furnish an independent business or
professional service, such work is a regular employment of such employee and not an independent
contractor.

While length of time may not be a sole controlling test for project employment, it can be a strong factor
to determine whether the employee was hired for a specific undertaking or in fact tasked to perform
functions which are vital, necessary and indispensable to the usual trade or business of the employer.

- Poseidon Fishing vs NLRC (482 SCRA 717)

The acid test in considering fixed-term contracts as valid is; if from the circumstances it is apparent that
periods have been imposed to preclude acquisition of tenurial security by the employee, they should be
disregarded for being contrary to public policy.

- PLDT vs Ylagan (508 SCRA 31)

A project is a job or undertaking which is distinct, separate and identifiable from the undertakings of the
company, and a project employee is assigned to a project which begins and ends at determined or
determinable times.

Once someone claimed as a project employee has been;

1. Continuously, as opposed to intermittently, re-hired by the same employer for the same tasks or
nature of tasks, and,
2. These tasks are vital, necessary and indispensable to the usual business or trade of the employer,

Then the employee must be deemed a regular employee.

- Bahia Shipping Services vs Chua (GR# 162195 -04/08/08)

Although an overseas employment contract may guarantee the right to overtime pay, entitlement to
such benefit must first be established, otherwise the same cannot be allowed.

- Virgilio Sapio vs Castro (GR# 155034 – 05/22/08)

Absent any evidence to the contrary, good faith must be presumed in this case. Entries in the payroll,
being entries in the course of business, enjoy the presumption of regularity under Sec. 43, Rule 130.
Hence, while as a general rule, the burden of proving payment of monetary claims rests on the
employer, when fraud is alleged in the preparation of the payroll, the burden of evidence shifts to the
employee and it is incumbent upon him to adduce clear and convincing evidence in support of his claim.
Unfortunately, petitioners bare assertions of fraud do not suffice to overcome the disputable
presumption of regularity.

4. Piece Rate

- Labor Congress of the Phils vs NLRC (290 SCRA 509)

While petitioners mode of compensation was on a "per piece" basis, the status and nature of their
employment was that of regular employees.

As to the other benefits, namely, holiday pay, premium pay, 13th month pay, and service incentive leave
which the Labor Arbiter failed to rule on but which petitioners prayed for in their complaint, we hold
that petitioners are so entitled to these benefits.

Three (3) factors lead us to conclude that petitioners, although piece rate workers, were regular
employees of private respondents.

1. As to the nature of petitioners tasks, their job of repacking snack food was necessary or desirable in
the usual business of private respondents, who were engaged in the manufacture and selling of
such food products.
2. Petitioners worked for private respondents throughout the year, their employment not having been
dependent on a specific project or season.
3. The length of time that petitioners worked for private respondents.

- Lambo vs NLRC (10/26/99)

There are two categories of employees paid by results:

1. Those whose time and performance are supervised by the employer. (Here, there is an element of
control and supervision over the manner as to how the work is to be performed. A piece-rate worker
belongs to this category especially if he performs his work in the company premises.)

2. Those whose time and performance are unsupervised. (Here, the employers control is over the result
of the work. Workers on pakyao and takay basis belong to this group.)

Both classes of workers are paid per unit accomplished. In this case, petitioners belong to the first
category.

NOTES:

Why is fixed term employment allowed?


Because Art. 280, LC, enumerating instances of employment with a period, is NOT exclusive. It merely
enumerates the examples, it is not the sole and exclusive scope of employment.

“Art. 280 of the Labor Code, under a narrow and literal interpretation, not only fails to exhaust the gamut
of employment contracts to which the lack of a fixed period would be an anomaly, but would also appear
to restrict, without reasonable distinctions, the right of an employee to freely stipulate with his employer
the duration of his engagement, it logically follows that such literal interpretation should be eschewed or
avoided. (Brent School, Inc. vs. Zamora, Feb. 5, 1990)

The decisive determinant in term employment should not be the activities that the employee is called
upon to perform, BUT the day certain agreed upon by he parties for the commencement and termination
of their employment relationship, a day certain being understood to be that which must necessarily come,
although it may not be known when. The term period was further defined to be the length of existence;
duration (Phil. Village Hotel vs. NLRC, 230 SCRA 423)

GENERAL RULE:
Fixed term employment is valid

EXCEPTION:
When such agreement is entered into to circumvent the security of tenure. [that is, repetitive hiring with
proof of circumvention of the law; contract is void, hence employee is regular]

Two criteria used to test the validity of fixed term employment:


(a) The fixed period of employment was knowingly and voluntarily agreed upon by the parties without
any force, duress or improper pressure being brought to bear upon the employee and absent any
other circumstances vitiating his consent; or
(b) It satisfactorily appears that the employer and the employee dealt with each other on more or less
equal terms with no moral dominance whatever being exercised by the former on the latter.
[Pantranco North Express, Inc. vs. NLRC, 239 SCRA 272]

5. Probationary

ART. 281. Labor Code. Probationary employment. - Probationary employment shall not exceed six (6)
months from the date the employee started working, unless it is covered by an apprenticeship agreement
stipulating a longer period. The services of an employee who has been engaged on a probationary basis
may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the time of his engagement. An
employee who is allowed to work after a probationary period shall be considered a regular employee.

SEC. 6. (Rule I, Book VI, IRR)


Probationary employment. — (a) Where the work for which an employee has been engaged is learnable
or apprenticeable in accordance with the standards prescribed by the Department of Labor, the
probationary employment period of the employee shall be limited to the authorized learnership or
apprenticeship period, whichever is applicable.

(b) Where the work is neither learnable nor apprenticeable, the probationary employment period shall
not exceed six (6) months reckoned from the date the employee actually started working.

(c) The services of an employee who has been engaged on probationary basis may be terminated only for
a just cause or when authorized by existing laws, or when he fails to qualify as a regular employee in
accordance with reasonable standards prescribed by the employer.

(d) In all cases involving employees engaged on probationary basis, the employer shall make known to the
employee the standards under which he will qualify as a regular employee at the time of his engagement.

ART. 58. Labor Code. - Definition of Terms. - As used in this Title:


(a) "Apprenticeship" means practical training on the job supplemented by related theoretical instruction.

(b) An "apprentice" is a worker who is covered by a written apprenticeship agreement with an individual
employer or any of the entities recognized under this Chapter.

(c) An "apprenticeable occupation" means any trade, form of employment or occupation which requires
more than three (3) months of practical training on the job supplemented by related theoretical
instruction.

(d) "Apprenticeship agreement" is an employment contract wherein the employer binds himself to train
the apprentice and the apprentice in turn accepts the terms of training.

ART. 73. Labor Code. Learners defined. - Learners are persons hired as trainees in semi-skilled and other
industrial occupations which are non-apprenticeable and which may be learned through practical training
on the job in a relatively short period of time which shall not exceed three (3) months.

GENERAL RULE:
Probationary Period shall not Exceed 6 months.

EXCEPTIONS:
Apprenticeship - Not more than 6 months (Sec. 19, Rule II, Book VI, IRR)
Learners - Not more than 3 months (Art. 73, Labor Code)
- Cebu Marine Beach Resort vs NLRC (GR# 143252 – 10/23/03)

It is settled that while probationary employees do not enjoy permanent status, they are entitled to the
constitutional protection of security of tenure. Their employment may only be terminated for just cause
or when they fail to qualify as regular employees in accordance with reasonable standards made known
to them by their employer at the time of engagement, and after due process.

Being in the nature of a "trial period", the essence of a probationary period of employment
fundamentally lies in the purpose or objective sought to be attained by both the employer and the
employee during said period.

- Radin Alcira vs NLRC (GR# 149859 – 06/09/04)

It is settled that even if probationary employees do not enjoy permanent status, they are accorded the
constitutional protection of security of tenure. This means they may only be terminated for just cause or
when they fail to qualify as regular employees in accordance with reasonable standards made known to
them by the employer.

However, this constitutional protection ends on the expiration of the probationary period. On that date,
the parties are free to either renew or terminate their contract of employment.

- HOW LONG IS THE PROBATIONARY PERIOD?

Applying Art. 13 of the Civil Code, the probationary period of 6 months consists of 180 days. This is in
conformity with par. 1 of Art. 13 of the Civil Code, which provides that the months which are not
designated by their names shall be understood as consisting of 30 days each.

Under Art. 282 of the Labor Code, an unsatisfactory rating can be a just cause for dismissal only if it
amounts to gross and habitual neglect of duties. Gross negligence has been defined to be the want or
absence of even slight care or diligence as to amount to reckless disregard of the safety of person or
property. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them.
In this case, there is no such evidence of gross negligence on the part of Private Respondent.
(Mistubishi Motors vs Chrysler Phils. Labor Union, GR# 148738 – 06/29/04)

NOTE:
In Mariwasa Manufacturing, Inc. vs. Leogardo (G.R. No 74246 – 01/26/89), the Supreme Court stated
that the extension of the probationary period was ex gratia, an act of liberality on the part of the
employer affording the employee a second chance to make good after having initially failed to prove his
worth as an employee. Such an act cannot unjustly be turned against said employer’s account to compel
it to keep on its payroll one who could not perform according to its work standards. By voluntarily
agreeing to an extension of the probationary period, the employee in effect waived any benefit
attaching to the completion of said period if he still failed to make the grade during the period of
extension.

- GROUNDS FOR TERMINATING A PROBATIONARY EMPLOYEE

It is an elementary rule in the law on labor relations that a probationary employee engaged to work
beyond the probationary period of 6 months, as provided under Art. 281 of the Labor Code, or for any
length of time set forth by the employer (3 months in this case), shall be considered a regular employee.
Any circumvention of this provision would be violative of the State's avowed protection for labor.

As stated in Art. 281, a probationary employee can be legally terminated either;

1. For a just cause; or,


2. When the employee fails to qualify as a regular employee in accordance with the reasonable
standards made known to him by the employer at the start of the employment.

Nonetheless, the power of the employer to terminate an employee on probation is not without
limitations;

1. This power must be exercised on accordance with the specific requirements of the contract.
2. The dissatisfaction on the part of the employer must be real and in good faith, not feigned so as to
circumvent the contract of the law.
3. There must be no unlawful discrimination in the dismissal.

In termination cases, the burden of proving just or valid cause for dismissing an employee rests on the
employer.
(Dusit Hotel Nikko vs Gatbonton, GR# 161654 – 05/05/06)

- Mercado vs AMA Computer (GR# 183572 – 04/13/10)

If the school were to apply the probationary standards (as in fact it says it did in the present case), these
standards must not only be reasonable but must have also been communicated to the teachers at the
start of the probationary period, or at the very least, at the start of the period of application of the said
standards. These terms, in addition to those expressly provided by the Labor Code, would serve as the
just cause for the termination of the probationary contract. As explained above, the details of this
finding of just cause must be communicated to the affected teachers as a matter of due process.

AMACC, by its submissions, admits that it did not renew the petitioners’ contracts because they failed to
pass the Performance Appraisal System for Teachers (PAST) and other requirements for regularization
that the school implements to maintain its high academic standards. The evidence is unclear on the
exact terms of the standards, although the school also admits that these were standards under the
Guidelines on the Implementation of AMACC Faculty Plantilla put in place at the start of school year
2000-2001.

While the Court can grant that the standards were duly communicated to the petitioners and could be
applied beginning the 1st trimester of the school year 2000-2001, glaring and very basic gaps in the
school’s evidence still exist. The exact terms of the standards were never introduced as evidence;
neither does the evidence show how these standards were applied to the petitioners. Without these
pieces of evidence (effectively, the finding of just cause for the non-renewal of the petitioners’
contracts), the Court has nothing to consider and pass upon as valid or invalid for each of the
petitioners. Inevitably, the non-renewal (or effectively, the termination of employment of employees on
probationary status) lacks the supporting finding of just cause that the law requires and, hence, is illegal.

PROBATIONARY PERIOD FOR TEACHERS


(Sec. 96, Manual of Regulations for Private School)

 Elementary Teachers - 3 consecutive years of satisfactory service


 High-School Teachers - 3 consecutive years of satisfactory service
 College Teachers
 Semestral - 6 consecutive semesters of satisfactory service
 Trimestral - 9 consecutive semesters of satisfactory service

S. HOURS OF WORK

SUMMARY:

The Labor Code allows not more than 8 hrs work per day, and not more than 6 days per week, subject to
certain exemptions.

1. Hours of Work Defined

ART. 83. Labor Code. Normal hours of work. - The normal hours of work of any employee shall not exceed
eight (8) hours a day.

Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in
hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for
eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the exigencies of
the service require that such personnel work for six (6) days or forty-eight (48) hours, in which case, they
shall be entitled to an additional compensation of at least thirty percent (30%) of their regular wage for
work on the sixth day. For purposes of this Article, "health personnel" shall include resident physicians,
nurses, nutritionists, dietitians, pharmacists, social workers, laboratory technicians, paramedical
technicians, psychologists, midwives, attendants and all other hospital or clinic personnel.

ART. 84. Labor Code. Hours worked. - Hours worked shall include:
a. all time during which an employee is required to be on duty or to be at a prescribed workplace; and
b. all time during which an employee is suffered or permitted to work.

Rest periods of short duration during working hours shall be counted as hours worked.

(Rule I, Book III, IRR)


SECTION 3. Hours worked. — 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 work place; and
(b) All time during which an employee is suffered or permitted to work.

SECTION 4. Principles in determining hours worked. — The following general principles shall govern in
determining whether the time spent by an employee is considered hours worked for purposes of this Rule:

(a) All hours are hours worked which the employee is required to give his employer, regardless of
whether or not such hours are spent in productive labor or involve physical or mental exertion.
(b) An employee need not leave the premises of the work place in order that his rest period shall not be
counted, it being enough that he stops working, may rest completely and may leave his work place, to
go elsewhere, whether within or outside the premises of his work place.

(c) If the work performed was necessary, or it benefited the employer, or the employee could not
abandon his work at the end of his normal working hours because he had no replacement, all time
spent for such work shall be considered as hours worked, if the work was with the knowledge of his
employer or immediate supervisor.

(d) The time during which an employee is inactive by reason of interruptions in his work beyond his
control shall be considered working time either if the imminence of the resumption of work requires
the employee's presence at the place of work or if the interval is too brief to be utilized effectively and
gainfully in the employee's own interest.

NOTE:
Part-time workers are allowed because the Labor Code prescribes 8 hrs as the MAXIMUM not the
MINIMUM.

Principles and Concepts

- FAIR DAY’S WAGE FOR A FAIR DAY’S LABOR

The age-old rule governing the relation between labor and capital, or management and employee, of a
"Fair Day's Wage for a Fair Day's Labor" remains as the basic factor in determining employees wages. 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, suspended, or dismissed, or
otherwise illegally prevented from working. Such situation is not present here, so respondent should be
exempted from the burden of paying backwages.
(Navarro vs P.V. Pajarillo Liner Inc., GR# 164681 – 04/24/09)

2. Rest Period

(Art. 84, Labor Code)


Rest periods of short duration during working hours shall be counted as hours worked.

(Sec. 7, Rule I, Book III, IRR)


Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as
compensable working time.
3. Meal Break

ART. 85. Labor Code. Meal periods. - Subject to such regulations as the Secretary of Labor may prescribe,
it shall be the duty of every employer to give his employees not less than sixty (60) minutes time-off for
their regular meals.

(Rule I, Book III, IRR)


SECTION 7. Meal and Rest Periods. — Every employer shall give his employees, regardless of sex, not less
than one (1) hour time-off for regular meals, except in the following cases when a meal period of not less
than twenty (20) minutes may be given by the employer provided that such shorter meal period is
credited as compensable hours worked of the employee:
(a) Where the work is non-manual work in nature or does not involve strenuous physical exertion;
(b) Where the establishment regularly operates not less than sixteen (16) hours a day;

(c) In case of actual or impending emergencies or there is urgent work to be performed on machineries,
equipment or installations to avoid serious loss which the employer would otherwise suffer; and

(d) Where the work is necessary to prevent serious loss of perishable goods.

- PAL vs NLRC (GR# 132805 – 02/02/99)

The eight-hour work period does not include the meal break. Nowhere in the law may it be inferred that
employees must take their meals within the company premises. Employees are not prohibited from
going out of the premises as long as they return to their posts on time. Private respondents act,
therefore, of going home to take his dinner does not constitute abandonment.

4. Workweek (Case of Hospital Personnel, Art. 83)

ART. 91. Labor Code. Right to weekly rest day. - (a) It shall be the duty of every employer, whether
operating for profit or not, to provide each of his employees a rest period of not less than twenty-four (24)
consecutive hours after every six (6) consecutive normal work days.

(b) The employer shall determine and schedule the weekly rest day of his employees subject to collective
bargaining agreement and to such rules and regulations as the Secretary of Labor and Employment may
provide. However, the employer shall respect the preference of employees as to their weekly rest day
when such preference is based on religious grounds.

(Art. 83, Labor Code)


Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in
hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for
eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the exigencies of
the service require that such personnel work for six (6) days or forty-eight (48) hours, in which case, they
shall be entitled to an additional compensation of at least thirty percent (30%) of their regular wage for
work on the sixth day. For purposes of this Article, "health personnel" shall include resident physicians,
nurses, nutritionists, dietitians, pharmacists, social workers, laboratory technicians, paramedical
technicians, psychologists, midwives, attendants and all other hospital or clinic personnel.

NOTE:

Compressed Work Week (CWW)


CWW is resorted by the employer to prevent serious losses due to causes beyond his control, such as
when there is substantial slump in demand for his goods or services or when there is lack of raw materials.
To be an exception to the “eight-hour a day” requirement, the workers must agree to the temporary
change of work schedule and they do not suffer any loss of overtime pay, fringe benefits or their weekly or
monthly take-home pay. (DOLE Explanatory Bulletin, July 23, 1985)

Conditions of a valid CWW scheme


(DOLE Advisory No. 02, Series of 2004)
1. It is expressly and voluntarily supported by majority of the employees affected.
2. If work is hazardous, a certification is needed from an accredited safety organization or the firm’s
safety committee that work beyond 8 hours is within the limits or levels of exposure act by DOLE’S
occupational safety and health standards.
3. The DOLE is duly notified.

5. Overtime Pay

ART. 87. Labor Code. Overtime work. - Work may be performed beyond eight (8) hours a day provided that
the employee is paid for the overtime work, an additional compensation equivalent to his regular wage
plus at least twenty-five percent (25%) thereof. Work performed beyond eight hours on a holiday or rest
day shall be paid an additional compensation equivalent to the rate of the first eight hours on a holiday or
rest day plus at least thirty percent (30%) thereof.

ART. 88. Labor Code. Undertime not offset by overtime. - Undertime work on any particular day shall not
be offset by overtime work on any other day. Permission given to the employee to go on leave on some
other day of the week shall not exempt the employer from paying the additional compensation required in
this Chapter.

ART. 93. Labor Code. Compensation for rest day, Sunday or holiday work. –
(a) Where an employee is made or permitted to work on his scheduled rest day, he shall be paid an
additional compensation of at least thirty percent (30%) of his regular wage. An employee shall be entitled
to such additional compensation for work performed on Sunday only when it is his established rest day.

(b) When the nature of the work of the employee is such that he has no regular workdays and no regular
rest days can be scheduled, he shall be paid an additional compensation of at least thirty percent (30%) of
his regular wage for work performed on Sundays and holidays.

(c) Work performed on any special holiday shall be paid an additional compensation of at least thirty
percent (30%) of the regular wage of the employee. Where such holiday work falls on the employee’s
scheduled rest day, he shall be entitled to an additional compensation of at least fifty per cent (50%) of his
regular wage.

(d) Where the collective bargaining agreement or other applicable employment contract stipulates the
payment of a higher premium pay than that prescribed under this Article, the employer shall pay such
higher rate.

RULE I, BOOK III, IRR


SECTION 8. Overtime pay. — Any employee covered by this Rule who is permitted or required to work
beyond eight (8) hours on ordinary working days shall be paid an additional compensation for the
overtime work in the amount equivalent to his regular wage plus at least twenty-five percent (25%)
thereof.

SECTION 9. Premium and overtime pay for holiday and rest day work. —

(a) Except employees referred to under Section 2 of this Rule, an employee who is permitted or suffered to
work on special holidays or on his designated rest days not falling on regular holidays, shall be paid with an
additional compensation as premium pay of not less than thirty percent (30%) of his regular wage. For
work performed in excess of eight (8) hours on special holidays and rest days not falling on regular
holidays, an employee shall be paid an additional compensation for the overtime work equivalent to his
rate for the first eight hours on a special holiday or rest day plus at least thirty percent (30%) thereof.

(b) Employees of public utility enterprises as well as those employed in non-profit institutions and
organizations shall be entitled to the premium and overtime pay provided herein, unless they are
specifically excluded from the coverage of this Rule as provided in Section 2 hereof.

(c) The payment of additional compensation for work performed on regular holidays shall be governed by
Rule IV, Book Three, of these Rules.

 Performed in an Ordinary Day = + 25% per Hour over 8 hrs.


(Ar. 87, Labor Code)
 Performed on a Rest Day or on a Special Day = 130%
(Sec. 9, Rule I, Book III, IRR)
 Performed on a Rest Day which falls on a Special Day = 150%
(Art. 93(c), Labor Code)
 Performed overtime work on a Regular Holiday = 260%
(Art. 87, Labor Code)
 Performed on a Rest Day which falls on a Regular Holiday = 260%
(Sec. 9, Rule I, Book III, IRR)

- Damasco vs NLRC (GR# 115755 – 12/04/00)

 Circumstances when an employee will be compelled to render overtime and consequences of


refusal

GENERAL RULE:
Employees Cannot be COMPELLED to render Overtime Work.

EXCEPTIONS:

ART. 92. Labor Code. When employer may require work on a rest day. - The employer may require his
employees to work on any day: EMAPIS

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
imminent danger to public safety;

b. In cases of urgent work to be performed on the Machinery, equipment, or installation, 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 loss or damage to perishable goods;

e. Where the nature of the work requires continuous operations and the stoppage of work may
result in Irreparable injury or loss to the employer; and

f. Under other circumstances analogous or similar to the foregoing as determined by the Secretary
of Labor and Employment.

(Rule I, Book III, IRR)


SEC. 10 Compulsory overtime work. — In any of the following cases, an employer may require any of
his employees to work beyond eight (8) hours a day, provided that the employee required to render
overtime work is paid the additional compensation required by these regulations: WPMLSF

a. When the country is at War or when any other national or local emergency has been declared by
Congress or the Chief Executive;
b. 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 disaster or calamities;

c. When there is urgent work to be performed on Machines, installations, or equipment, in order to


avoid serious loss or damage to the employer or some other causes of similar nature;

d. When the work is necessary to prevent Loss or damage to perishable goods;

e. 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; or

f. When overtime work is necessary to avail of Favorable weather or environmental conditions


where performance or quality of work is dependent thereon.
In cases not falling within any of these enumerated in this Section, no employee may be made to work
beyond eight hours a day against his will.

6. Premium Pay

Refers to additional compensation for work performed within eight (8) hours on non-work days, such as
rest days, special days, holidays, etc.

 Premium pay on a Rest Day Work


 Premium on Sunday when it is the Employee’s Rest Day
 Premium Pay on Sunday’s and Holidays when Employee has no Regular Workdays and No
Scheduled Regular Rest Day
 Premium Pay for work performed on Special Holidays (now Special Days) which fall on an
Employee’s Scheduled Rest Day
 Premium Pay for work performed during Special Day

REGULAR HOLIDAY SPEICAL DAY


Compensable even if unworked, subject to Not compensable if unworked.
certain conditions.

Limited to 11 enumerated by the Administrative Not exclusive since a law or ordinance may
Code or the Labor Code. provide for other special days.

Rate is 200% of the regular rate if worked. Rate is 130% of regular rate if worked.

DAY RATE OF ADDITIONAL COMPENSATION


Premium pay on a Rest Day Work Entitled to 130% of the daily rate

Premium on Sunday when it is the Employee’s Entitled to 130% of the daily rate
Rest Day

Premium Pay on Sunday’s and Holidays when Entitled to 130% of the daily rate for worked
Employee has no Regular Workdays and No performed on Sundays and holidays
Scheduled Regular Rest Day

Premium Pay for work performed on Special Entitled to 150% of the daily rate
Holidays (now Special Days) which fall on an
Employee’s Scheduled Rest Day

Premium Pay for work performed during Special Entitled to 130% of the daily rate
Day

Premium Pay for work performed on a Regular Entitled to 230% of the daily rate
Holiday falling on a scheduled Rest Day.

7. Holiday Pay

 Definition

 Eleven(12) Regular Holidays and Two (3) Special Days under R.A. 9849 (12/11/09)

Section 2. Section 26, Chapter 7 of Executive Order No 292, otherwise known as the Revised
Administrative Code of 1987 is hereby amended to read as follows:
“Sec. 26. Regular Holidays and Nationwide Special Days (1) Unless otherwise modified by law, order
or proclamation, the following regular holidays and special days shall observed in the country.”

REGULAR HOLIDAYS

New Years 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
Christmans Day - December 25
Rizal Day - Monday nearest December 30

NATIONWIDE SPECIAL DAYS/HOLIDAYS

Ninoy Aquino Day - Monday nearest August 21


All Saints Day - November 1
Last Day of the Year - December 31

 Application of Principle of “No Work, No Pay”

 Effects of Absences during successive Regular Holidays

 Rule in case Two(2) Regular Holidays falling on the same day.


- Asian Transmission Corp. vs CA (GR# 144664 – 03/15/04)

Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that the State
shall afford protection to labor. Its purpose is not merely "to prevent diminution of the monthly
income of the workers on account of work interruptions. In other words, although the worker is
forced to take a rest, he earns what he should earn, that is, his holiday pay". It is also intended to
enable the worker to participate in that national celebrations held during the days identified as with
great historical and cultural significance.

Art. 94 of the Labor Code affords a worker the enjoyment of 10 paid regular holidays. The provision
is mandatory, regardless of whether an employee is paid on a monthly or daily basis. Unlike a
bonus, which is a management prerogative, holiday pay is a statutory benefit demandable under
the law. Since a worker is entitled to the enjoyment of 10 paid regular holidays, the fact that 2
holidays fall on the same date should not operate to reduce to 9 the 10 holiday pay benefits a
worker is entitled to receive.

Sec. 11, Rule IV, Book III of the IRR provides that "Nothing in the law or the rules shall justify an
employer in withdrawing or reducing any benefits, supplements or payments for unworked regular
holidays as provided in existing individual or collective agreement or employer practice or policy.

 Application of Muslim Holiday to Non-Muslims

- SMC vs CA (GR# 146775 – 01/30/02)

Muslim holidays are provided under Art. 169 and 170, Title I, Book V, of P.D. 1083, otherwise known
as the Code of Muslim Personal Laws.
P.D. 1083 provides that "the provisions of this Code shall be applicable only to Muslims". However,
there should be no distinction between Muslims and Non-Muslims as regards payment of benefits
for Muslims holidays. The CA did not err in sustaining Undersecretary Espanol who stated:
"Assuming arguendo that the respondents position is correct, then by the same token, Muslims
throughout the Philippines are also not entitled to holiday pays on Christian holidays declared by
law as regular holidays." We must remind the respondent-appellant that wages and other
emoluments granted by law to the working man are determined on the basis of the criteria laid
down by laws and certainly not on the basis of the workers faith or religion. At any rate, Art. 3(3) of
P.D. 1083 also declares that "nothing herein shall be construed to operate to the prejudice of a non-
Muslim."

- Trans-Asia Employees Assoc. vs NLRC (GR# 118289 – 12/13/99)

- Arellano Univ. EE’s and Workers Union vs CA (GR# 139940 – 09/19/06)

As for petitioners claim of substantial diminution of their salary on account of the divisor used by
the University in its computation - 314 days, instead of 365 days, - this Court finds nothing wrong
therewith. Sundays being un-worked and considered unpaid rest days, while regular holidays as well
as special holidays considered as paid days, the factor used by the University merely complies with
the basic rule in this jurisdiction of "no work, no pay". The right to be paid for unworked days is
generally limited to the ten legal holidays in a year.

8. Service Incentive Leave

- Imbuido vs NLRC (GR# 114734 – 03/31/00)

- Integrated Contractor & Plumbing Works Inc. vs NLRC (GR# 152427 – 08/09/05)

Art. 95(a) of the Labor Code governs the award of service incentive leave. It provides that every
employee who has rendered at least one year of service shall be entitled to a yearly service incentive
leave of 5 days with pay, and Sec. 3, Rule V, Book III, IRR, defines the term "at least 1 year f service" to
mean service within 12 months, whether continuous or broken reckoned from the date the employee
started working, including authorized absences and paid regular holidays, unless the working days in the
establishment as a matter of practice or policy, or that provided in the employment contract is less than
12 months, in which case said period shall be considered as 1 year.

Accordingly, private respondents service incentive leave credits of 5 days for every year of service, based
on the actual service rendered to the petitioner, in accordance with each contract of employment
should be computed up to the date of reinstatement pursuant to Art. 279 of the Labor Code.

- Auto Bus Transport System Inc. vs Bautista (GR# 156367 – 05/16/05)

In the case of service incentive leave, the employee may choose to either use his leave credits or
commute it to its monetary equivalent if not exhausted at the end of the year. Furthermore, if the
employee entitled to service incentive leave does not use or commute the same, he is entitled upon his
resignation or separation from work to the commutation of his accrued service incentive leave.

The clear policy of the Labor Code is to grant service incentive leave pay to workers in all
establishments, subject to a few exceptions. Sec. 2, Rule V, Book III, IRR provides that "every employee
who has rendered at least 1 year of service shall be entitled to a yearly service incentive leave of 5 days
with pay".

Service incentive leave is a right which accrues to every employee who has served "within 12 months,
whether continuous or broken reckoned from the date the employee started working, including
authorized absences and paid regular holidays unless the working days in the establishment as a matter
of practice or policy, or that provided in the employment contracts is less than 12 months, in which case
said period shall be considered as 1 year".
Applying Art. 291 of the Labor Code in light of this peculiarity of the service incentive leave, we can
conclude that the 3-year prescriptive period commences, not at the end of the year when the employee
becomes entitled to the commutation of his service incentive leave, but from the time when the
employer refuses to pay its monetary equivalent after demand of commutation or upon termination of
the employee's services, as the case may be.

- ARCO Metal Products vs Samahan ng Manggagawa sa ARCO (GR# 170734 – 05/14/08)

Service Incentive Leave Vacation Leave


Provided under the law (Article 95, Labor Is not provided under the law.
Code).
Matter of right. Not a matter of right.
Convertible to cash if not used. It is upon the employer to decide whether or not to
convert unused vacation leave of his employees to cash.
Once granted, the employer has absolute right to
regulate it with respect to forfeiture or convertibility to
cash.
Cannot be waived. It can be waived.
As a requirement, at least 1 year of service On the other hand, the requirements to be entitled to
is needed to be entitled to service incentive vacation leave may differ, depending upon the policy or
leave. practice of the company or the employer. Usually given
to employees who have become regular or permanently
employed.
Purposes: Purpose:

(a) For the benefit and welfare of the To afford to a laborer a chance to get a much needed rest
employee (working is always stressful, to replenish his worn out energies and acquire a new
hence the provision relieves the worker vitality to enable him to efficiently perform his duties and
from his job for a maximum of 5 days upon
not merely to give him additional salary or bounty.
the condition that he has worked for at
least 1 year).
(b) A way of showing, on the part of
the employer, to his workers his
appreciation for their loyalty to the
company (continued service).

9. Night-Shift Pay

 Where Night Shift (10pm to 6am) Work is Regular Work


 Where Night Shift (10pm to 6am) Work is Overtime Work

10. 13th Month Pay

 Who are entitled to 13th Month Pay?

- Clarion Printing House Inc. vs NLRC (GR# 148372 – 06/27/05)

- JPL Mktg. Promotions vs CA (GR# 151966 – 07/08/05)

JPL cannot escape the payment of 13th month pay and service incentive leave pay to private
respondents. Said benefits are mandated by law and should be given to employees as a matter of
right. P.D. 851 as amended, requires an employer to pay its rank and file employees a 13 th month
pay not later than December 24 of every year.

However, employers not paying their employees a 13th month pay or its equivalent are not covered
by said law. The term "its equivalent" was defined by the law's implementing guidelines as including
Christmas Bonus, Mid-Year Bonus, Cash Bonuses, and other payment amounting to not less than
1/2 of the basic salary but shall not include cash and stock dividends, cost-of-living allowances and
all other allowances regularly enjoyed by the employee, as well as non-monetary benefits.

The difference between the minimum wage and the actual salary received by the employees cannot
be deemed as their 13th Month Pay and Service Incentive Leave Pay as such difference is not
equivalent to or of the same import as the said benefits contemplated by law.

While computation for the 13th Month Pay should properly begin from the first day of employment,
the Service Incentive Leave Pay should start a year after commencement of service, for it is only
then that the employee is entitled to said benefit.

- PAL vs PALEA (GR# 142399 – 03/12/08)

P.D. 851 mandates that all employers must pay all their employees receiving a basic salary of not
more than P1,000 per month, regardless of the nature of the employment, a 13th month pay not
later than December 24 of every year.

Memorandum Order No. 28, dated August 18, 1986, removed the salary ceiling, generally making
all employees entitled to 13th month pay regardless of the amount of their basic salary,
designation, or employment status, and irrespective of the method by which their wages are paid,
provided that they have worked for at least 1 month during the calendar year.

P.D. 851, as amended, does not admit of certain exceptions or exclusions from its coverage, among
which is Sec. 3(c). Employers already paying their employees 13th month pay or more in a calendar
year or its equivalent at the time of this issuance.

 Employers exempted from 13th Month Pay Law


 Tax Exemption
 The phrase “Its Equivalent” in the 13th Month Pay Law

RELEVANT CASE:

- Sevilla Trading Co. vs A.V.A. Tomas E. Semana (GR# 152456 – 04/28/04)

11. Service Charges


12. Exemptions

- Penaranda vs Baganga Plywood Corp. (GR# 159577 – 05/03/06)

Art. 82 of the Labor Code exempts MANAGERIAL EMPLOYEES from the coverage of Labor Standards.
Labor Standards provide the working conditions of employees, including entitlement to overtime pay
and premium pay for working on rest days. Under this provision, managerial employees are "those
whose primary duty consists of the management of the establishment in which they are employed or of
a particular department or subdivision."

The Implementing Rules of the Labor Code state that managerial employees are those who meet the
following conditions:

1. Their primary duty consists of the management of the establishment in which they are employed or
of a department or subdivision thereof;

2. They customarily and regularly direct the work of two or more employees therein;
3. They have the authority to hire or fire other employees of lower rank; or their suggestions and
recommendations as to the hiring and firing and as to the promotion or any other change of status
of other employees are given particular weight.

The Court disagrees with the NLRC's finding that petitioner was a managerial employee. However,
petitioner was a member of the Managerial Staff, which also takes him out of the coverage of Labor
Standards. Like Managerial Employees, Officers, and Members of the Managerial Staff are not entitled
to the provisions of Labor Standards Law.

Noteworthy, even petitioner admitted that he was a supervisor. In his position paper, he stated that he
was the foreman responsible for the operation of the boiler. The term "foreman" implies that he was
the representative of management over the workers and the operation of the department.

T. JOB CONTRACTING AND LABOR-ONLY CONTRACTING

JOB CONTRACTING VS LABOR-ONLY CONTRACTING

JOB CONTRACTING LABOR-ONLY CONTRACTING


1) The employer or principal is merely an 1) The employer or principal is treated as direct
indirect employer, by operation of law, of his employer of his contractor’s employees in all
contractor’s employees; instances;
2) The law creates an employer-employee 2) The statute creates an employer-employee
relationship for a limited purpose, the ensure relationship for a comprehensive purpose to
that the workers are paid with their wages; prevent a circumvention of labor laws;
3) The principal becomes solidarily liable with 3) The principal becomes solidarily liable with
the contractor only when latter fails to pay the the contractor not only for unpaid wages but for
employees’ wages and for the violation of labor all the rightful claims of the employees under the
standard laws. The liability, however, is does not Labor Code and ancillary laws
extend to the payment of backwages or 4) Prohibited by law; and
separation pay of employees who are illegally 5) Absence of substantial capital or investment
dismissed;
4) Permissible
5) Presence of substantial capital or
investment.

JOB CONTRACTING
There is contracting or subcontracting when an employer, referred to as the principal, farms out the
performance of a part of its business to another, referred to as the contractor or subcontractor. For the
purpose of undertaking the principal's business that is farmed out, the contractor or subcontractor then
employs its own employees.

Contracting and subcontracting are synonymous under Philippine labor law. The term that is more commonly
used is subcontracting.

In subcontracting, there are three parties involved:


a. The principal which decides to farm out a job or service to a subcontractor;
b. The subcontractor which has the capacity to independently undertake the performance of the job or
service; and
c. The employees engaged by the subcontractor to accomplish the job or service.

In subcontracting, the four-fold test of employer-employee relationship should be satisfied by the


subcontractor in relation to the employees it engages to accomplish the subcontracted job or service. In such
cases, the subcontractor is also referred to as independent contractor.
If the four-fold test is satisfied not by the subcontractor but by the principal, the principal then becomes the
employer of the employees engaged to accomplish the job or service. What exists is not subcontracting but a
direct employer-employee relationship between the principal and the employees.

**The following are requisites of a LEGITIMATE contracting or subcontracting:


1. The contractor or subcontractor carries on a distinct and independent business and undertakes to perform
the job, work or service on its own account and under its own responsibility; according to its own manner
and method, and free from the control and directions of the principal in all matters connected with the
performance of the work, except as to the results thereof; (NO EE-ER relations exists)

2. The contractor or subcontractor has substantial capital or investment.


**shown by:
 Adequacy of resources actually and directly used
 May refer to subscribed capital stocks for corporations
 Tools, equipments, implements, machineries, uniforms, protective gear or
safety devises
 Operating costs such as training and overhead costs

3. The agreement between the principal and contractor or subcontractor assures the contractual employees
to entitlement to all labor and occupational safety standards, free exercise of the right to self-organization,
security of tenure, and social and welfare benefits.

LABOR-ONLY CONTRACTING

Refers to an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to
perform a job, work or service for a principal, and any of the following elements are present:
 The contractor or subcontractor does not have substantial capital or investment which relates to the job,
work or service to be performed and the employees recruited, supplied or placed by such contractor or
subcontractor are performing activities which are directly related to the main business of the principal; or
 The contractor does not exercise the right to control over the performance of the work of the contractual
employee.

It is a prohibited practice

--Scope and Nature of Liability of Principal and Contractor

In JOB CONTRACTING (first two paragraphs of Article 106)

 The contractor is the employer directly responsible to the employees


 The principal has limited liability. Should the contractor fail to pay the wages, the principal is liable only
to the extent of the work performed and only with respect to the payment of wages.
 the principal is jointly and severally liable with the subcontractor for payment of the employees' wages to
the extent of the work performed under the contract.
 The principal cannot be accused of illegal dismissal insofar as the contractual employees are concerned
because there is no employee-employer relationship.

In LABOR-ONLY CONTRACTING (3rd and 4th paragraphs of Art 106.)

 The contractor is merely an agent of the employer. The principal and contractor will be solidarily treated
as the employer.
 The principal’s liability is comprehensive. The liability pertains not only to unpaid wages but extends to
any and all liability under the Labor laws.
 The employer is deemed to have directly hired the contractual employees and is therefore liable for any
and all violations of the Labor Code.

--Duties and obligations of Principal and Contractor

UNDER A LABOR-ONLY CONTRACTING ARRANGEMENT

The following are the effects:


a. The subcontractor will be treated as the agent of the principal. Since the act of an agent is the act of the
principal, representations made by the subcontractor to the employees will bind the principal.
b. The principal will become the employer as if it directly employed the workers engaged to undertake the
subcontracted job or service. It will be responsible to them for all their entitlements and benefits under
the labor laws.
c. The principal and the subcontractor will be solidarily treated as the employer.
d. The employees will become employees of the principal, subject to the classifications of employees under
Article 28 of the Labor Code.

If the labor-only contracting activity is undertaken by a legitimate labor organization, a petition for cancellation
of union registration may be filed against it, pursuant to Article 239(e).

--Rights of Contractual Employees

The contractual employee shall be entitled to all the rights and privileges due a regular employee as provided
for in the Labor Code, as amended, to include the following:

(a) Safe and healthful working conditions;


(b) Labor standards such as service incentive leave, rest days, overtime pay, holiday pay, 13th month pay and
separation pay;
(c) Social security and welfare benefits;
(d) Self-organization, collective bargaining and peaceful concerted action; and
(e) Security of tenure.
The contractor’s employee’s tenure may end when the contract between the principal and the contractor
ends.

--INDIVIDUAL INDEPENDENT CONTRACTOR

Individuals with special skills, expertise or talent enjoy the freedom to offer their services as independent
contractors. The right to life and livelihood guarantees this freedom to contract as independent contractors.
The right of labor to security of tenure cannot operate to deprive an individual to contract as an independent
contractor.
Are those who exercise independent employment, contracting to do a piece of work according to their
own methods and without being subjected to the control of their employer except as to the result of their
work.

1. ART. 106. Labor Code.

Contractor or subcontractor. - Whenever an employer enters into a contract with another person for the
performance of the former’s work, the employees of the contractor and of the latter’s subcontractor, if
any, shall be paid in accordance with the provisions of this Code.

In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance
with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to
such employees to the extent of the work performed under the contract, in the same manner and extent
that he is liable to employees directly employed by him.

The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the
contracting-out of labor to protect the rights of workers established under this Code. In so prohibiting or
restricting, he may make appropriate distinctions between labor-only contracting and job contracting as
well as differentiations within these types of contracting and determine who among the parties involved
shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of
any provision of this Code.

There is "labor-only" contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such person are performing activities which are directly
related to the principal business of such employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him.
(Rule VIII-A, Book III, IRR)
SEC. 5 Prohibition against labor-only contracting. – Labor only contracting is hereby declared prohibited.
For this purpose, Labor-Only contracting shall refer to an arrangement where the contractor or
subcontractor merely recruits, supplies, or places workers to perform a job, work, or service for a
principal, and any of the following elements are present:

1. The contractor or subcontractor does not have substantial capital or investment which relates to the
job, work, or service to be performed and the employees recruited, supplied, or placed by such
contractor or subcontractor are performing activities which are directly related to the main business
of the principal.
2. The contractor does not exercise the right to control over the performance of the work of the
contractual employee.

The foregoing provisions shall be without prejudice to the application of Art. 248(c) of the Labor Code, as
amended.

“Substantial capital or investment” refers to capital stocks and subscribed capitalization in the case of
corporations, tools, equipments, implements, machineries, and work premises, actually and directly used
by the contractor or subcontractor in the performance or completion of the job, work, or service
contracted out.

“The right to control” shall refer to the right reserved to the person for whom the services of the
contractual workers are performed, to determine not only the end to be achieved, but also the manner
and means to be used in reaching that end.

SEC. 6 Prohibitions. – Not withstanding Sec. 5 of these Rules, the following are hereby declared prohibited
for being contrary to law or public policy:

a. Contracting out of a job, work, or service when not done in good faith and not justified by the
exigencies of the business and the same results in the termination of regular employees and
reduction of work hours or reduction or splitting of the bargaining unit;
b. Contracting out of work with a “cabo” as defined in Sec. 1(ii), Rule I, Book V of these Rules. “Cabo”
refers to a person or group of persons or to a labor group which, in the guise of a labor organization,
supplies workers to an employer, with or without any monetary or other consideration whether in the
capacity of an agent of the employer or as an ostensible independent contractor;
c. Taking undue advantage of the economic situation or lack of bargaining strength of the contractual
employee, or undermining his security of tenure or basic rights, or circumventing the provisions of
regular employment, in any of the following instances:

 In addition to his assigned functions, requiring the contractual employee to perform functions
which are currently being performed by the regular employees of the principal or the contractor
or subcontractor;
 Requiring him to sign, as a precondition to employment or continued employment, an antedated
resignation letter; a blank payroll; a waiver of labor standards including minimum wages and
social or welfare benefits; or a quitclaim releasing the principal, contractor or subcontractor from
any liability as to payment of future claims; and
 Requiring him to sign a contract fixing the period of employment to a term shorter than the term
of the contract between the principal and the contractor or subcontractor, unless the latter
contract is divisible into phases for which substantially different skills are required and this is
made known to the employee at the time of engagement;

d. Contracting out of a job, work, or service through an in-house agency which refers to a contractor or
subcontractor engaged in the supply of labor which is owned, managed, or controlled by the principal
and which operates solely for the principal;
e. Contracting out of a job, work, or service directly related to the business or operation of the principal
by reason of a strike or lockout whether actual or imminent;
f. Contracting out of a job, work, or service being performed by union members when such will interfere
with, restrain, or coerce employees in the exercise of their rights to self-organization as provided in
Art. 248(c) of the Labor Code as amended.

ART. 248 (C). Labor Code. Unfair labor practices of employers. - It shall be unlawful for an employer to
commit any of the following unfair labor practice:
(c) To contract out services or functions being performed by union members when such will interfere with,
restrain or coerce employees in the exercise of their rights to self-organization;

2. ART. 109. Labor Code.

Solidary liability. - The provisions of existing laws to the contrary notwithstanding, every employer or
indirect employer shall be held responsible with his contractor or subcontractor for any violation of any
provision of this Code. For purposes of determining the extent of their civil liability under this Chapter,
they shall be considered as direct employers.

 Legitimate Job Contracting

- Aliviado vs Procter & Gamble Phils., Inc. (GR# 160506 – 03/09/10)

In this case, even if the element of control was missing, an employer-employee relationship was still
considered to exist.

- ELEMENTS OF INDEPENDENT CONTRACTORS

The existence of an independent and permissible contractor relationship is generally established by


considering the following determinants:

1. Whether the contractor is carrying on an independent business;


2. The nature and extent of the work;
3. The skill required;
4. The term and duration of the relationship;
5. The right to assign the performance of a specified piece of work;
6. The control and supervision of the work to another;
7. The employers power with respect to the hiring, firing, payment of the contractors workers;
8. The control of the premises;
9. The duty to supply the premises, tools, appliances, materials, and labor;
10. And the mode, manner, and terms of payment.

On the other hand, the existence of an employer-employee relationship is established by the


presence of the following determinants:

1. The selection and engagement of the workers;


2. The power of dismissal;
3. The payment of wages by whatever means;
4. The power to control the workers conduct, with the latter assuming primacy in the overall
consideration.
(Singco vs Shangri-La’s Mactan Island Resort, GR# 178827 – 03/04/09)

 Labor-Only Contracting, Effects and DOLE D.O. No. 18-02 Series of 2002

RULES IMPLEMENTING ARTICLES 106 TO 109


OF THE LABOR CODE, AS AMENDED

By virtue of the power vested in the Secretary of Labor and Employment under Articles 5 (Rule-
making) and 106 (Contractor or Subcontractor) of the Labor Code of the Philippines, as amended, the
following regulations governing contracting and subcontracting arrangements are hereby issued:

Section 1. Guiding principles. - Contracting and subcontracting arrangements are expressly allowed
by law and are subject to regulation for the promotion of employment and the observance of the
rights of workers to just and humane conditions of work, security of tenure, self-organization, and
collective bargaining. Labor-only contracting as defined herein shall be prohibited.
Section 2 . Coverage. - These Rules shall apply to all parties of contracting and subcontracting
arrangements where employer-employee relationship exists. Placement activities through private
recruitment and placement agencies as governed by Articles 25 to 39 of the Labor Code are not
covered by these Rules.

Section 3. Trilateral Relationship in Contracting Arrangements. - In legitimate contracting, there


exists a trilateral relationship under which there is a contract for a specific job, work or service
between the principal and the contractor or subcontractor, and a contract of employment between
the contractor or subcontractor and its workers. Hence, there are three parties involved in these
arrangements, the principal which decides to farm out a job or service to a contractor or
subcontractor, the contractor or subcontractor which has the capacity to independently undertake the
performance of the job, work or service, and the contractual workers engaged by the contractor or
subcontractor to accomplish the job work or service.

Section 4. Definition of Basic Terms. - The following terms as used in these Rules, shall mean:

(a) "Contracting" or "subcontracting" refers to an arrangement whereby a principal agrees to put out
or farm out with a contractor or subcontractor the performance or completion of a specific job,
work or service within a definite or predetermined period, regardless of whether such job, work
or service is to be performed or completed within or outside the premises of the principal.
(b) "Contractor or subcontractor" refers to any person or entity engaged in a legitimate contracting
or subcontracting arrangement.

(c) "Contractual employee" includes one employed by a contractor or subcontractor to perform or


complete a job, work or service pursuant to an arrangement between the latter and a principal.

(d) "Principal" refers to any employer who puts out or farms out a job, service or work to a
contractor or subcontractor.

Section 5. Prohibition against labor-only contracting. - Labor-only contracting is hereby declared


prohibited. For this purpose, labor-only contracting shall refer to an arrangement where the
contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or
service for a principal, and any of the following ELEMENTS are present:

 The contractor or subcontractor does not have substantial capital or investment which relates to
the job, work or service to be performed and the employees recruited, supplied or placed by such
contractor or subcontractor are performing activities which are directly related to the main
business of the principal; or
 The contractor does not exercise the right to control over the performance of the work of the
contractual employee.

The foregoing provisions shall be without prejudice to the application of Article 248 (C ) of the Labor
Code, as amended.

"Substantial capital or investment" refers to capital stocks and subscribed capitalization in the case of
corporations, tools, equipment, implements, machineries and work premises, actually and directly
used by the contractor or subcontractor in the performance or completion of the job, work or service
contracted out.

The "right to control" shall refer to the right reserved to the person for whom the services of the
contractual workers are performed, to determine not only the end to be achieved, but also the
manner and means to be used in reaching that end.

Section 6. Prohibitions. - Notwithstanding Section 5 of these Rules, the following are hereby declared
prohibited for being contrary to law or public policy:

(a) Contracting out of a job, work or service when not done in good faith and not justified by the
exigencies of the business and the same results in the termination of regular employees and
reduction of work hours or reduction or splitting of the bargaining unit;
(b) Contracting out of work with a "cabo" as defined in Section 1 (ii), Rule I, Book V of these Rules.
"Cabo" refers to a person or group of persons or to a labor group which, in the guise of a labor
organization, supplies workers to an employer, with or without any monetary or other
consideration whether in the capacity of an agent of the employer or as an ostensible
independent contractor;

(c) Taking undue advantage of the economic situation or lack of bargaining strength of the
contractual employee, or undermining his security of tenure or basic rights, or circumventing the
provisions of regular employment, in any of the following instances:

1. In addition to his assigned functions, requiring the contractual employee to perform


functions which are currently being performed by the regular employees of the principal or
of the contractor or subcontractor;

2. Requiring him to sign, as a precondition to employment or continued employment, an


antedated resignation letter; a blank payroll; a waiver of labor standards including minimum
wages and social or welfare benefits; or a quitclaim releasing the principal, contractor or
subcontractor from any liability as to payment of future claims; and

3. Requiring him to sign a contract fixing the period of employment to a term shorter than the
term of the contract between the principal and the contractor or subcontractor, unless the
latter contract is divisible into phases for which substantially different skills are required and
this is made known to the employee at the time of engagement;

(d) Contracting out of a job, work or service through an in-house agency which refers to a contractor
or subcontractor engaged in the supply of labor which is owned, managed or controlled by the
principal and which operates solely for the principal;

(e) Contracting out of a job, work or service directly related to the business or operation of the
principal by reason of a strike or lockout whether actual or imminent;

(f) Contracting out of a job, work or service being performed by union members when such will
interfere with, restrain or coerce employees in the exercise of their rights to self organization as
provided in Art. 248 (c) of the Labor Code, as amended.

Section 7. Existence of an employer-employee relationship. - The contractor or subcontractor shall be


considered the employer of the contractual employee for purposes of enforcing the provisions of the
Labor Code and other social legislation. The principal, however, shall be solidarily liable with the
contractor in the event of any violation of any provision of the Labor Code, including the failure to pay
wages.

The principal shall be deemed the employer of the contractual employee in any of the following cases
as declared by a competent authority:

(a) where there is labor-only contracting; or


(b) where the contracting arrangement falls within the prohibitions provided in Section 6
(Prohibitions) hereof.

Section 8. Rights of Contractual Employees. - Consistent with Section 7 of these Rules, the
contractual employee shall be entitled to all the rights and privileges due a regular employee as
provided for in the Labor Code, as amended, to include the following:

(a) Safe and healthful working conditions;


(b) Labor standards such as service incentive leave, rest days, overtime pay, holiday pay, 13th month
pay and separation pay;

(c) Social security and welfare benefits;

(d) Self-organization, collective bargaining and peaceful concerted action; and

(e) Security of tenure.

Section 9. Contract between contractor or subcontractor and contractual employee. -


Notwithstanding oral or written stipulations to the contrary, the contract between the contractor or
subcontractor and the contractual employee, which shall be in writing, shall include the following
terms and conditions:
(a) The specific description of the job, work or service to be performed by the contractual employee;
(b) The place of work and terms and conditions of employment, including a statement of the wage
rate applicable to the individual contractual employee; and

(c) The term or duration of employment, which shall be coextensive with the contract of the
principal and subcontractor, or with the specific phase for which the contractual employee is
engaged, as the case may be.

The contractor or subcontractor shall inform the contractual employee of the foregoing terms and
conditions on or before the first day of his employment.

Section 10. Effect of Termination of Contractual Employment. - In cases of termination of


employment prior to the expiration of the contract between the principal and the contractor or
subcontractor, the right of the contractual employee to separation pay or other related benefits shall
be governed by the applicable laws and jurisprudence on termination of employment.

Where the termination results from the expiration of the contract between the principal and the
contractor or subcontractor, or from the completion of the phase of the job, work or service for which
the contractual employee is engaged, the latter shall not be entitled to separation pay. However, this
shall be without prejudice to completion bonuses or other emoluments, including retirement pay as
may be provided by law or in the contract between the principal and the contractor or subcontractor.

Section 11. Registration of Contractors or Subcontractors. - Consistent with the authority of the
Secretary of Labor and Employment to restrict or prohibit the contracting out of labor through
appropriate regulations, a registration system to govern contracting arrangements and to be
implemented by the Regional Offices is hereby established.

The registration of contractors and subcontractors shall be necessary for purposes of establishing an
effective labor market information and monitoring.

Failure to register shall give rise to the presumption that the contractor is engaged in labor-only
contracting. (Since it is only a presumption, it can still be rebutted by substantial evidence.)

Section 12. Requirements for registration. - A contractor or subcontractor shall be listed in the
registry of contractors and subcontractors upon completion of an application form to be provided by
the DOLE. The applicant contractor or subcontractor shall provide in the application form the
following information:

(a) The name and business address of the applicant and the area or areas where it seeks to operate;
(b) The names and addresses of officers, if the applicant is a corporation, partnership, cooperative or
union;

(c) The nature of the applicant's business and the industry or industries where the applicant seeks to
operate;

(d) The number of regular workers; the list of clients, if any; the number of personnel assigned to
each client, if any and the services provided to the client;

(e) The description of the phases of the contract and the number of employees covered in each
phase, where appropriate; and

(f) A copy of audited financial statements if the applicant is a corporation, partnership, cooperative
or a union, or copy of the latest ITR if the applicant is a sole proprietorship.

The application shall be supported by:

(a) A certified copy of a certificate of registration of firm or business name from the Securities and
Exchange Commission (SEC), Department of Trade and Industry (DTI), Cooperative Development
Authority (CDA), or from the DOLE if the applicant is a union; and
(b) A certified copy of the license or business permit issued by the local government unit or units
where the contractor or subcontractor operates.
The application shall be verified and shall include an undertaking that the contractor or subcontractor
shall abide by all applicable labor laws and regulations.

Section 13. Filing and processing of applications. - The application and its supporting documents
shall be filed in triplicate in the Regional Offices where the applicant principally operates. No
application for registration shall be accepted unless all the foregoing requirements are complied with.
The contractor or subcontractor shall be deemed registered upon payment of a registration fee of
P100.00 to the Regional Office.

Where all the supporting documents have been submitted, the Regional Office shall deny or approve
the application within seven (7) working days after its filing.

Upon registration, the Regional Office shall return one set of the duly-stamped application documents
to the applicant, retain one set for its file, and transmit the remaining set to the Bureau of Local
Employment. The Bureau shall devise the necessary forms for the expeditious processing of all
applications for registration.

Section 14. Duty to produce copy of contract between the principal and the contractor or
subcontractor. - The principal or the contractor or subcontractor shall be under an obligation to
produce a copy of the contract between the principal and the contractor in the ordinary course of
inspection. The contractor shall likewise be under an obligation to produce a copy of the contract of
employment of the contractual worker when directed to do so by the Regional Director or his
authorized representative.

A copy of the contract between the contractual employee and the contractor or subcontractor shall
be furnished the certified bargaining agent, if there is any.

Section 15. Annual Reporting of Registered Contractors. - The contractor or subcontractor shall
submit in triplicate its annual report using a prescribed form to the appropriate Regional Office not
later than the 15th of January of the following year. The report shall include:

(a) A list of contracts entered with the principal during the subject reporting period;
(b) The number of workers covered by each contract with the principal;

(c) A sworn undertaking that the benefits from the Social Security System (SSS), the Home
Development Mutual Fund (HDMF), PhilHealth, Employees Compensation Commission (ECC), and
remittances to the Bureau of Internal Revenue (BIR) due its contractual employees have been
made during the subject reporting period.

The Regional Office shall return one set of the duly-stamped report to the contractor or subcontractor,
retain one set for its file, and transmit the remaining set to the Bureau of Local Employment within
five (5) days from receipt thereof.

Section 16. Delisting of contractors or subcontractors. - Subject to due process, the Regional Director
shall cancel the registration of contractors or subcontractors based on any of the following grounds:

(a) Non-submission of contracts between the principal and the contractor or subcontractor when
required to do so;
(b) Non-submission of annual report;

(c) Findings through arbitration that the contractor or subcontractor has engaged in labor-only
contracting and the prohibited activities as provided in Section 6 (Prohibitions) hereof; and

(d) Non-compliance with labor standards and working conditions.

Section 17. Renewal of registration of contractors or subcontractors. - All registered contractors or


subcontractors may apply for renewal of registration every three years. For this purpose, the Tripartite
Industrial Peace Council (TIPC) as created under Executive Order No. 49, shall serve as the oversight
committee to verify and monitor the following:

(a) Engaging in allowable contracting activities; and


(b) Compliance with administrative reporting requirements.
Section 18. Enforcement of Labor Standards and Working Conditions. - Consistent with Article 128
(Visitorial and Enforcement Power) of the Labor Code, as amended, the Regional Director through his
duly authorized representatives, including labor regulation officers shall have the authority to conduct
routine inspection of establishments engaged in contracting or subcontracting and shall have access
to employer's records and premises at any time of the day or night whenever work is being
undertaken therein, and the right to copy therefrom, to question any employee and investigate any
fact, condition or matter which may be necessary to determine violations or which may aid in the
enforcement of the Labor Code and of any labor law, wage order, or rules and regulations issued
pursuant thereto.

The findings of the duly authorized representative shall be referred to the Regional Director for
appropriate action as provided for in Article 128, and shall be furnished the collective bargaining
agent, if any.

Based on the visitorial and enforcement power of the Secretary of Labor and Employment in Article
128 (a), (b), (c) and (d), the Regional Director shall issue compliance orders to give effect to the labor
standards provisions of the Labor Code, other labor legislation and these guidelines.

Section 19. Solidary liability. - The principal shall be deemed as the direct employer of the
contractual employees and therefore, solidarily liable with the contractor or subcontractor for
whatever monetary claims the contractual employees may have against the former in the case of
violations as provided for in Sections 5 (Labor-Only contracting), 6 (Prohibitions), 8 (Rights of
Contractual Employees) and 16 (Delisting) of these Rules. In addition, the principal shall also be
solidarily liable in case the contract between the principal and contractor or subcontractor is pre-
terminated for reasons not attributable to the fault of the contractor or subcontractor.

Section 20. Supersession. - All rules and regulations issued by the Secretary of Labor and Employment
inconsistent with the provisions of this Rule are hereby superseded. Contracting or subcontracting
arrangements in the construction industry, under the licensing coverage of the PCAB and shall not
include shipbuilding and ship repairing works, however, shall continue to be governed by Department
Order No. 19, series of 1993.

Section 21. Effectivity. - This Order shall be effective fifteen (15) days after completion of its
publication in two (2) newspapers of general circulation.

- EFFECT OF LABOR-ONLY CONTRACTING ON THE PRINCIPAL

In a legitimate job contract, an employer enters into a contract with a job contractor for the
performance of the former's work. In legitimate job contracting, the law creates an employer-
employee relationship between the employer and the contractors employees only for a limited
purpose, ie., to ensure that the employees are paid their wages.

Labor-only contracting is an arrangement wherein the contractor merely acts as an agent in


recruiting and supplying the principal employer with workers for the purpose of circumventing
labor law provisions setting down the rights of employees.

A finding by appropriate authorities that a contractor is a "labor-only" contractor establishes an


employer-employee relationship between the principal employer and the contractors employees
and the former becomes solidarily liable for all the rightful claims of the employees.
(Coca-Cola Bottlers vs Agito, GR# 179546 – 02/13/09)

- PURE SUPPLY OF MANPOWER TO ASSIST IN SALES AND DISTRIBUTION OF PRODUCTS IS


PROHIBITED AS LABOR-ONLY CONTRACTING

In plainer terms, the contracted personnel (acting as sales route helpers) were only engaged in the
marginal work of helping in the sale and distribution of company products; they only provided the
muscle work that sale and distribution required and were thus necessarily under the company’s
control and supervision in doing these tasks.

Still another way of putting it is that the contractors were not independently selling and distributing
company products, using their own equipment, means and methods of selling and distribution;
they only supplied the manpower that helped the company in the handing of products for sale and
distribution. In the context of D.O. 18-02, the contracting for sale and distribution as an
independent and self-contained operation is a legitimate contract, but the pure supply of
manpower with the task of assisting in sales and distribution controlled by a principal falls within
prohibited labor-only contracting.
(Coca-Cola Bottlers vs Dela Cruz, GR# 184977 – 12/07/09)

- (South Davao Dev’t. vs Gamo, GR# 171814 – 05/08/09)

- LABOR-ONLY CONTRACTOR IS THE AGENT OF THE PRINCIPAL

In a labor-only contract, there are 3 parties involved:

1. The "Labor-only" contractor;


2. The employees who are ostensibly under the employ of the "labor-only" contractor;
3. The principal who is deemed the real employer.

Under this scheme, the "labor-only" contractor is the agent of the principal. The law makes the
principal responsible to the employees of the "labor-only" contractor as if the principal itself
directly hired or employed the employees.
(Iligan Cement Corp. vs IEWU-SPFL, GR# 158956 – 04/24/09)

- AUTOMATIC DECLARATION OF EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP

A finding that a contractor is a "labor-only" contractor is equivalent to declaring that there is an


employer-employee relationship between the principal and the employees of the supposed
contractor and the "labor-only" contractor is considered as a mere agent of the principal, the real
employer.

The effect of this is the immediate application of Labor Standards, Security of Tenure, etc. between
the employees and the principal.
(Mandaue Galleon Trade Inc. vs Andales, GR# 159868 – 03/07/08)

3. In-House Agency (Sec. 6, DOLE D.O. No. 18-02 Series of 2002)

Section 6. Prohibitions. - Notwithstanding Section 5 of these Rules, the following are hereby declared
prohibited for being contrary to law or public policy:

(d) Contracting out of a job, work or service through an in-house agency which refers to a contractor
or subcontractor engaged in the supply of labor which is owned, managed or controlled by the
principal and which operates solely for the principal;

RELEVANT CASES:

- (Filipinas vs NLRC, 18 SCRA 404)

- LIABILITY OF PRINCIPAL AND CONTRACTOR

The principal and the contractor are jointly and severally liable to the employees for their wages.

The right of the contractor to recover from the principal arises only if he has paid the amounts for which
both of them are jointly and severally liable in-line with Art. 1217 of the Civil Code.
(Lapanday vs CA, 01/31/00)
ART. 1217 CC. Payment made by one of the solidary debtors extinguishes the obligation.
If two or more solidary debtors offer to pay, the creditor may choose which offer to
accept.

He who made the payment may claim from his co-debtors only the share which
corresponds to each, with the interest for the payment already made. If the payment is
made before the debt is due, no interest for the intervening period may be demanded.

When one of the solidary debtors cannot, because of his insolvency, reimburse his share
to the debtor paying the obligation, such share shall be borne by all his co-debtors, in
proportion to the debt of each. (1145a)
- (Security & Credit Investigation vs NLRC, 01/26/01)

- SOLIDARY LIABILITY FOR WAGE INCREASE

The security guard's immediate recourse for the payment of the increase of their minimum wage is with
their direct employer while the latter can claim reimbursement from the principal.

For the security guards, the actual source of the payment of their wage differentials and premium for
holiday and rest day work does not matter as long as they are paid. Solidary liability does not mean that,
as between themselves, two solidary debtors are liable for only half of the payment.
(Eparwa Security & Janitorial Services Inc. vs Liceo De Cagayan Univ., GR# 150402 – 11/28/06)

- NATURE OF RELATIONSHIP OF CONTRACTOR AND PRINCIPAL IS THAT OF AGENCY, WHERE THE


CONTRACTOR IS THE AGENT AND THE COMPANY IS HIS PRINCIPAL

The labor-only contractor is considered merely as an agent of the employer, the employer having been
made, by law, responsible to the employees of the labor-only contractor as if such employees had been
directly employed by it.
(Acevedo vs Advanstar Co. Inc., GR# 157656 – 11/11/05)

U. PREFERENCE OF WAGES

1. In case of Bankruptcy or in Judicial Proceedings (Art. 110 Labor Code)

ART. 110. Worker preference in case of bankruptcy. - In the event of bankruptcy or liquidation of an
employer’s business, his workers shall enjoy first preference as regards their wages and other monetary
claims, any provisions of law to the contrary notwithstanding. Such unpaid wages and monetary claims
shall be paid in full before claims of the government and other creditors may be paid. (As amended by
Section 1, Republic Act No. 6715, March 21, 1989).

(Rule VIII, Book III, IRR)


SECTION 7. Payment of wages in case of bankruptcy. — Unpaid wages earned by the employees before
the declaration of bankruptcy or judicial liquidation of the employer's business shall be given first
preference and shall be paid in full before other creditors may establish any claim to a share in the assets
of the employer.

- ART. 110 ONLY CREATES A PREFERENCE OF CREDIT, NOT A LIEN OVER THE PROPERTY OF THE
EMPLOYER

Preferential right of workers and employees under Art. 110 of the Labor Code may be invoked only
during bankruptcy or liquidation proceedings. The article establishes only a preference of credit, not a
lien.

This simply means that during bankruptcy, insolvency or liquidation proceedings involving existing
properties of the employer, the employees have the advantage of having their unpaid wages satisfied
ahead of certain claims which may be proved therein.
The preference of credits does not create a charge of proprietary interest upon the property of the
debtor.
(DBP vs Sec. of Labor, GR# 79351 – 11/28/89)

- ART. 110 APPLIES TO UNPAID WAGES AS WELL AS TO OTHER MONETARY CLAIMS

Art. 110 of the Labor Code should be applied in conjunction with the pertinent provisions of the Civil
Code and the Insolvency Law to the extent that piece-meal distribution of the assets of the debtor is
avoided.

The declaration of bankruptcy or a judicial liquidation must be present before the workers preference
may be enforced. It cannot apply to extrajudicial proceedings.

The amendment of Art. 110 expanded the concept of worker preference to cover not only unpaid wages
but also other monetary claims to which even claims by the Government must be deemed subordinate.
(DBP vs NLRC, GR# 108031 – 03/01/95)

- (DOLE vs Maceda, GR# 185112 – 01/18/10)

2. Rehabilitation, Receivership on Monetary Claims of Workers; Effects

- (DOLE vs Maceda, GR# 185112 – 01/18/10)

- (Tiangco vs Uniwide Sales Warehouse Club Inc., GR# 168697 – 12/14/09)

V. APPEARANCE OF LAWYERS AND NON-LAWYERS IN LABOR CASES

(Rule III, NLRC Rules of Procedure, as amended by NLRC Resolution No. 01-02 of 2002)
SECTION 8. APPEARANCES. - An attorney appearing for a party is presumed to be properly authorized for that
purpose. However, he shall be required to indicate in his pleadings his PTR and IBP numbers for the current
year.

A non-lawyer may appear before the Commission or any Labor Arbiter only if:

a. he represents himself as party to the case;


b. he represents a legitimate labor organization, as defined under Article 222 and 242 of the Labor Code, as
amended, or its members, provided, that he shall be made to present a verified certification from said
organization that he is properly authorized, or;
c. he is a duly-accredited member of any legal aid office duly recognized by the Department of Justice or
Integrated Bar of the Philippines.

Appearances may be made orally or in writing. In both cases, the complete name and office address of both
parties shall be made on record and the adverse party or his counsel/representative properly notified.

Any change in the address of counsel/representative should be filed with the records of the case and furnished
the adverse party or counsel.

Any change or withdrawal of counsel/representative shall be made in accordance with the Rules of Court.

SECTION 9. AUTHORITY TO BIND PARTY. -Attorneys and other representatives of parties shall have authority to
bind their clients in all matters of procedure; but they cannot, without a special power of attorney or express
consent, enter into a compromise agreement with the opposing party in full or partial discharge of a client's
claim.

GENERAL RULE:
Only lawyers can appear before the NLRC or a Labor Arbiter.
EXCEPTIONS:
Non-lawyers may appear before the NLRC or a Labor Aribiter:
1. If they represent themselves;
2. If they represent their organization or members thereof; or
3. If he is duly accredited member of the legal aid office of any college of law, school or university duly
recognized by the DOJ in cases referred thereto by the latter or by the IBP; he or she must be a 4 th year
student of any college of law, school or university and must be currently enrolled

W. SPECIAL TYPES OF WORKERS

1. Apprentices

 ART. 57. STATEMENT OF OBJECTIVES FOR THE TRAINING & EMPLOYMENT OF SPECIAL WORKERS

 The promotion, development, and maintenance of apprenticeship programs shall have the following
objectives:

(a) To help meet the needs or demands of the economy for trained manpower in the widest possible
range of employment;

(b) To establish a national apprenticeship program through the participation of employers, workers,
government, civic and other groups; and
(c) To establish apprenticeship standards for the protection of apprentices and upgrading of skills.

 ART. 58. DEFINITION OF TERMS

a. APPRENTICESHIP - practical training on the job supplemented by related theoretical instruction.


b. APPRENTICE - a worker who is covered by a written apprenticeship agreement with an individual
employer or any of the entities recognized under this chapter.
c. APPRENTICEABLE OCCUPATION - any trade, form of employment or occupation which requires more
than 3 months of practical training on the job supplemented by related theoretical instruction.
d. APPRENTICESHIP AGREEMENT - an employment contract wherein the employer binds himself to train
the apprentice and the apprentice in turn accepts the terms of training.
e. ON-THE-JOB TRAINING – practical work experience through actual participation in productive
activities given to or acquired by an apprentice.
f. HIGHLY TECHNICAL INDUSTRIES – a trade, business, enterprise, industry or other activity, which is
engaged in the application of advanced technology.

 ART. 59. QUALIFICATIONS OF APPRENTICES

 Qualifications of an Apprentice:
1. at least 15 years of age; [provided that those who are at least 15 years of age but less than eighteen
may be eligible for apprenticeship only in non-hazardous occupations and the apprenticeship
agreement shall be signed in his behalf by the parent or guardian or authorized representative of
DOLE]
2. possess vocational aptitude and capacity for appropriate tests; and
3. possess the ability to comprehend and follow oral and written instructions
4. The company must have an apprenticeship program duly approved by the DOLE.

[Note: The apprenticeable age under Art. 59 LC is 14 but it is 15 under the Implementing Rules. The
question of variance is rendered moot and academic by RA 7610 which explicitly prohibits employment of
children below 15 yrs. of age. RA 7610 recognizes certain exceptions, but being an apprentice is not one
of the exceptions.]

 Trade and industry associations may, recommend to the Secretary of Labor and Employment
appropriate educational qualifications for apprentices in certain occupations. Such qualifications, if
approved, shall be the educational requirements for apprenticeship in such occupations unless waived by
an employer in favor of an applicant who has demonstrated exceptional ability.
 ART. 60. EMPLOYMENT OF APPRENTICES

 Qualifications for an Employer:


- Only employers in highly technical industries may employ apprentices and only in apprenticeable
occupations as determined by the Secretary of Labor.

 REQUESITES FOR A VALID APPRENTICESHIP:


1. Qualifications of the apprentice
2. Qualifications of the employer
3. Apprenticeship agreement duly executed and signed which shall contain the ff: (art.61, LC )
a. the duration of apprenticeship which shall not exceed 6 months
b. the wage rates below the legal minimum wage which in no case shall start below 75% of the
applicable minimum wage in the place where he is working { i.e. compensation which must not
be less than 75% of the applicable minimum wage except on-the-job training (OJT)
4. Apprenticeship program duly approved by the DOLE ( Nitto Enterprises vs. NLRC. G.R.No. 114337.
Sept. 29,1995)
[otherwise, there’s a possibility that apprentice may become a regular employee]
5. Period of apprenticeship shall not exceed 6 months

 ART. 62. SIGNING OF APPRENTICESHIP AGREEMENT

 Who shall sign the Apprenticeship Agreement:


- Every apprenticeship agreement shall be signed by the employer or his duly authorized
representative and by the apprentice.
- An apprenticeship agreement with a minor shall be signed in his behalf by his parent or guardian,
or if the latter is not available, by an authorized representative of the DOLE.

 ART. 63. VENUE OF APPRENTICESHIP PROGRAMS

 ON-THE-JOB TRAINING OF APPRENTICES MAY BE UNDERTAKEN IN:


(a) the plant, shop or premises of the employer or firm concerned if the apprenticeship program is
organized by an individual employer or firm;
(b) the premises of one or several firms designated for the purpose by the organizer of the program if
such organizer is an association of employers, civic group and the like; and
(c) DOLE Training Center or other public training institutions with which the Bureau has made
appropriate arrangements.

 ARTS. 65-67. VIOLATION OF APPRENTICESHIP AGREEMENT

 INVESTIGATION OF VIOLATION OF APPRENTICESHIP AGREEMENT: (Art.65,LC)


- Either party to an agreement may terminate the same after the probationary period only for a valid
cause.
- Action may be initiated upon complaint of any interested person or upon DOLE’s own initiative.

 APPEAL (Art.66,LC)

decision of authorized agency of DOLE


Within 5 days fr. receipt of
decision

Secretary of DOLE
[Sec of DOLE’s decision is final & executory]

 EXHAUSTION OF ADMINISTRATIVE REMEDIES: (Art.67,LC)


- No person shall institute any action for the enforcement of any apprenticeship agreement or for
damages for breach thereof, unless he has exhausted all available administrative remedies.
- The plant apprenticeship committee shall have initial responsibility for settling differences arising
out of apprenticeship agreements.

 ART. 70. VOLUNTARY ORGANIZATION OF APPRENTICESHIP PROGRAM


 GENERAL RULE: The organization of apprenticeship program shall be primarily a voluntary
undertaking of employers.

 EXCEPTION: (Instances when organization of program is compulsory):


1. when national security or particular requirements of economic development so demand;
2. where services of foreign technicians are utilized by private companies in apprenticeable trades

 ART. 71. DEDUCTIBILITY OF TRAINING COSTS


- An additional deduction from taxable income of ½ of the value of labor training expenses incurred for
developing the productivity and efficiency of apprentices shall be granted to the person or enterprise
organizing an apprenticeship program. Provided, that such program is duly recognized by the
Department of Labor: Provided, further, that such deduction shall not exceed ten percent (10%) of
direct labor wage: And provided, finally, that the person or enterprise who wishes to avail himself or
itself of this incentive should pay his apprentices the minimum wage.

 REQUISITES FOR TAX DEDUCTIONS IN CASE EMPLOYERS HAVE APPRENTICESHIP PROGRAMS:


1. the program must be duly recognized by the Department of Labor;
2. the deduction shall not exceed 10% of direct labor wage; and
3. the employer must pay his apprentices the minimum wage.

APPRENTICESHIP LEARNERSHIP
DURATION
Not less than 3 months practical training on the job Practical training on the job not to exceed 3
but not more than 6months months.
CONCEPT
Practical training on the job supplemented by Hiring of persons as trainees in semi-skilled and
related theoretical instruction other industrial occupations which are non-
apprenticeable and which may be learned
through practical training on the job in a
relatively short period of time.
EMPLOYER’S COMMITMENT TO HIRE
No commitment to hire With a commitment to employ the learner as
regular employee if he desires upon completion
of learnership
EFFECT OF PRETERMINATION
Worker is not considered an employee Learner is considered regular employee after 2
months of training and dismissal is without fault
of learner
FOCUS OF TRAINING
Highly skilled or technical industries & in industrial Semi-skilled/industrial occupation (non-
occupation apprenticeable)
APPROVAL
Requires DOLE approval for validity Not required
EXHAUSTION OF ADM. REMEDIES IN CASE OF BREACH OF CONTRACT
Precondition for filing action Not required

 ART. 72. APPRENTICES WITHOUT COMPENSATION


 APPRENTICES MAY BE HIRED WITHOUT COMPENSATION WHERE TRAINING ON THE JOB IS:
1. required by the school;
2. required by the Training Program Curriculum;
3. a requisite for Graduation; or
4. a requisite for Board Examination

 LIABILITY OF A WORKING SCHOLAR


- Under this article the student is not considered an employee. But if he causes injury or damage to a third
person, the school may be held liable under the Civil Code.

- There is no employer-employee relationship between students on one hand, and schools, colleges or
universities agreement between them under which the former agree to work for the latter in exchange for
the privilege to study free of charge, provided the students are given real opportunities, including such
facilities as may be reasonable and necessary to finish their chosen courses under such agreement. (Rule
X. Sec. 14, Book III, Implementing Rules)

“Section 14, Rule X, Book III of the Rules implementing the Labor Code was promulgated by the Secretary
of Labor only for the purpose of administering and enforcing the provisions of the Labor Code on
conditions of employment. In other words, Rule X is merely a guide to the enforcement of the substantive
law on labor. The Court, thus, makes the distinction and so holds that Section 14, Rule X, Book III of the
Rules is not the decisive law in a CIVIL SUIT for damages instituted by an injured person during a vehicular
accident against a working student of a school and against the school itself. The present case does not
deal with a labor dispute on conditions of employment between an alleged employee and an alleged
employer. It invokes a claim brought by one for damages for injury caused by the patently negligent acts
of a person, against both doer-employee and his employer. Hence, the reliance on the implementing rule
on labor to disregard the primary liability of an employer under Article 2180 of the Civil Code is misplaced.
An implementing rule on labor cannot be used by an employer as a shield to void liability under the
substantive provisions of the Civil Code.”
(Filamer Christian Institute vs. IAC; [G.R. No. 75112; August 17, 1992.])

(Chapter I, Art. 57-72, Book II, Labor Code)


ART. 57. Statement of objectives. - This Title aims:

(1) To help meet the demand of the economy for trained manpower;
(2) To establish a national apprenticeship program through the participation of employers, workers and
government and non-government agencies; and
(3) To establish apprenticeship standards for the protection of apprentices.

ART. 58. Definition of Terms. - As used in this Title:

(a) "Apprenticeship" means practical training on the job supplemented by related theoretical instruction.
(b) An "apprentice" is a worker who is covered by a written apprenticeship agreement with an individual
employer or any of the entities recognized under this Chapter.
(c) An "apprenticeable occupation" means any trade, form of employment or occupation which requires
more than three (3) months of practical training on the job supplemented by related theoretical
instruction.
(d) "Apprenticeship agreement" is an employment contract wherein the employer binds himself to train
the apprentice and the apprentice in turn accepts the terms of training.

ART. 59. Qualifications of apprentice. - To qualify as an apprentice, a person shall:

(a) Be at least fourteen (14) years of age;


(b) Possess vocational aptitude and capacity for appropriate tests; and
(c) Possess the ability to comprehend and follow oral and written instructions.

Trade and industry associations may recommend to the Secretary of Labor appropriate educational
requirements for different occupations.

ART. 60. Employment of apprentices. - Only employers in the highly technical industries may employ
apprentices and only in apprenticeable occupations approved by the Secretary of Labor and Employment.
(As amended by Section 1, Executive Order No. 111, December 24, 1986).

ART. 61. Contents of apprenticeship agreements. - Apprenticeship agreements, including the wage rates of
apprentices, shall conform to the rules issued by the Secretary of Labor and Employment. The period of
apprenticeship shall not exceed six months. Apprenticeship agreements providing for wage rates below
the legal minimum wage, which in no case shall start below 75 percent of the applicable minimum wage,
may be entered into only in accordance with apprenticeship programs duly approved by the Secretary of
Labor and Employment. The Department shall develop standard model programs of apprenticeship. (As
amended by Section 1, Executive Order No. 111, December 24, 1986).

ART. 62. Signing of apprenticeship agreement. -Every apprenticeship agreement shall be signed by the
employer or his agent, or by an authorized representative of any of the recognized organizations,
associations or groups and by the apprentice.
An apprenticeship agreement with a minor shall be signed in his behalf by his parent or guardian, if the
latter is not available, by an authorized representative of the Department of Labor, and the same shall be
binding during its lifetime.

Every apprenticeship agreement entered into under this Title shall be ratified by the appropriate
apprenticeship committees, if any, and a copy thereof shall be furnished both the employer and the
apprentice.

ART. 63. Venue of apprenticeship programs. - Any firm, employer, group or association, industry
organization or civic group wishing to organize an apprenticeship program may choose from any of the
following apprenticeship schemes as the training venue for apprentice:

(a) Apprenticeship conducted entirely by and within the sponsoring firm, establishment or entity;

(b) Apprenticeship entirely within a Department of Labor and Employment training center or other public
training institution; or

(c) Initial training in trade fundamentals in a training center or other institution with subsequent actual
work participation within the sponsoring firm or entity during the final stage of training.

ART. 64. Sponsoring of apprenticeship program. - Any of the apprenticeship schemes recognized herein
may be undertaken or sponsored by a single employer or firm or by a group or association thereof or by a
civic organization. Actual training of apprentices may be undertaken:

(a) In the premises of the sponsoring employer in the case of individual apprenticeship programs;

(b) In the premises of one or several designated firms in the case of programs sponsored by a group or
association of employers or by a civic organization; or

(c) In a Department of Labor and Employment training center or other public training institution.

ART. 65. Investigation of violation of apprenticeship agreement. - Upon complaint of any interested person
or upon its own initiative, the appropriate agency of the Department of Labor and Employment or its
authorized representative shall investigate any violation of an apprenticeship agreement pursuant to such
rules and regulations as may be prescribed by the Secretary of Labor and Employment.

ART. 66. Appeal to the Secretary of Labor and Employment. - The decision of the authorized agency of the
Department of Labor and Employment may be appealed by any aggrieved person to the Secretary of
Labor and Employment within five (5) days from receipt of the decision. The decision of the Secretary of
Labor and Employment shall be final and executory.

ART. 67. Exhaustion of administrative remedies. - No person shall institute any action for the enforcement
of any apprenticeship agreement or damages for breach of any such agreement, unless he has exhausted
all available administrative remedies.

ART. 68. Aptitude testing of applicants. - Consonant with the minimum qualifications of apprentice-
applicants required under this Chapter, employers or entities with duly recognized apprenticeship
programs shall have primary responsibility for providing appropriate aptitude tests in the selection of
apprentices. If they do not have adequate facilities for the purpose, the Department of Labor and
Employment shall perform the service free of charge.

ART. 69. Responsibility for theoretical instruction. - Supplementary theoretical instruction to apprentices in
cases where the program is undertaken in the plant may be done by the employer. If the latter is not
prepared to assume the responsibility, the same may be delegated to an appropriate government agency.

ART. 70. Voluntary organization of apprenticeship programs; exemptions. –


(a) The organization of apprenticeship program shall be primarily a voluntary undertaking by employers;

(b) When national security or particular requirements of economic development so demand, the
President of the Philippines may require compulsory training of apprentices in certain trades,
occupations, jobs or employment levels where shortage of trained manpower is deemed critical as
determined by the Secretary of Labor and Employment. Appropriate rules in this connection shall be
promulgated by the Secretary of Labor and Employment as the need arises; and
(c) Where services of foreign technicians are utilized by private companies in apprenticeable trades, said
companies are required to set up appropriate apprenticeship programs.

ART. 71. Deductibility of training costs. - An additional deduction from taxable income of one-half (1/2) of
the value of labor training expenses incurred for developing the productivity and efficiency of apprentices
shall be granted to the person or enterprise organizing an apprenticeship program: Provided, That such
program is duly recognized by the Department of Labor and Employment: Provided, further, That such
deduction shall not exceed ten (10%) percent of direct labor wage: and Provided, finally, That the person
or enterprise who wishes to avail himself or itself of this incentive should pay his apprentices the
minimum wage.

ART. 72. Apprentices without compensation. - The Secretary of Labor and Employment may authorize the
hiring of apprentices without compensation whose training on the job is required by the school or training
program curriculum or as requisite for graduation or board examination.

(Rule VI, Book II, IRR)


SECTION 1. Objectives. — The promotion, development, and maintenance of apprenticeship programs
shall have the following objectives:
(a) To meet the needs of the economy for training manpower in the widest possible range of
employment;
(b) To establish a national apprenticeship program through the participation of employers, workers,
government, civic and other groups; and

(c) To establish apprenticeship standards for the protection of apprentices and upgrading of skills.

SECTION 2. Definition of terms. —


(a) "Apprenticeship" means any training on the job supplemented by related theoretical instructions
involving apprenticeable occupations and trades as may be approved by the Secretary of Labor and
Employment.
(b) "Apprentice" is a worker who is covered by a written apprenticeship agreement with an employer.

(c) "Apprenticeship agreement" is a written employment contract wherein the employer binds himself to
train the apprentice and the latter in turn agrees to work for the employer.

(d) "Apprenticeable occupation" means any trade, form of employment or occupation approved for
apprenticeship by the Secretary of Labor and Employment, which requires for proficiency more than
three months of practical training on the job supplemented by related theoretical instructions.

(e) "Apprenticeship standards" means the written implementing plans and conditions of an
apprenticeship program.

(f) "Bureau" means the Bureau of Apprenticeship.

(g) "Employer" means the individual firm or any other entity qualified to hire apprentice under the Code.

(h) "On the job training" is the practical work experience through actual participation in productive
activities given to or acquired by an apprentice.

(i) "Related theoretical instructions" means technical information based on apprenticeship standards
approved by the Bureau designed to provide the apprentice theoretical competence in his trade.

(j) "Highly Technical Industries" means trade, business, enterprise, industry, or other activity, which is
engaged in the application of advanced technology.

SECTION 3. Voluntary nature of apprenticeship program. — The organization of apprenticeship program


shall be primarily a voluntary undertaking of employers, except as otherwise provided.

SECTION 4. Venue of on-the-job training. — The practical aspect of on-the-job training of apprentices may
be undertaken:
(a) In the plant, shop or premises of the employer or firm concerned if the apprenticeship program is
organized by an individual employer or firm;
(b) In the premises of one or several firms designated for the purpose by the organizer of the program if
such organizer is an association of employers, civic group and the like; and
(c) In a Department of Labor and Employment Training Center or other public training institutions with
which the Bureau has made appropriate arrangements.

SECTION 5. On-the-job training to be explicitly described. — The manner in which practical or on-the-job
training shall be provided must be specifically described in the apprenticeship standards of a particular
program.

SECTION 6. Recognition of apprenticeship programs. — To enjoy the benefits which the Bureau or other
government agencies may extend to duly recognized apprenticeship programs, an employer shall submit
in quadruplicate to the Training Section of the appropriate Apprenticeship Division of the appropriate
Regional Office the apprenticeship standards of the proposed program prepared in accordance with
guidelines set by the Bureau.

If the apprenticeship standards are found in order, a certificate of recognition shall be issued by the
Apprenticeship Division concerned within five (5) days from receipt thereof.

SECTION 7. Benefits accruing to recognition. — An entity with a recognized apprenticeship program shall
be entitled to technical and other assistance from the Bureau and other government agencies and to the
corresponding training-expense deduction from its income tax. The rate of such tax deduction incentive
and the procedure of availment thereof are provided in Section 42 of this Rule.

SECTION 8. Trades to be included in apprenticeship programs. — Only trades and occupations declared
apprenticeable by the Secretary of Labor and Employment may be included in apprenticeship programs.

SECTION 9. Who may establish programs. — Any entity, whether or not organized for profit may establish
or sponsor apprenticeship programs and employ apprentices.

SECTION 10. Assistance by non-profit entities. — In lieu of organizing programs, non-profit entities may:
(a) Execute an agreement with firms of their choice with on-going apprenticeship programs, directly or
through the Department of Labor and Employment, assuming responsibility for training deserving
apprentices selected by an employer who shall pay the apprentices;
(b) Give financial and other contributions for the promotion of apprenticeship programs; or

(c) Provide other forms of assistance.

Apprentices who train under such programs shall be properly identified in apprenticeship agreements with
the employer. However, responsibility for compliance with employees' compensation, social security,
medicare and other labor laws shall remain with the employer who benefits from the productive efforts of
the apprentices.

SECTION 11. Qualifications of apprentices. — To qualify as apprentice, an applicant shall:


(a) Be at least fifteen years of age; provided those who are at least fifteen years of age but less than
eighteen may be eligible for apprenticeship only in non-hazardous occupations;
(b) Be physically fit for the occupation in which he desires to be trained;

(c) Possess vocational aptitude and capacity for the particular occupation as established through
appropriate tests; and

(d) Possess the ability to comprehend and follow oral and written instructions.

Trade and industry associations may, however, recommend to the Secretary of Labor and Employment
appropriate educational qualifications for apprentices in certain occupations. Such qualifications, if
approved, shall be the educational requirements for apprenticeship in such occupations unless waived by
an employer in favor of an applicant who has demonstrated exceptional ability. A certification explaining
briefly the ground for such waiver, and signed by the person in charge of the program, shall be attached to
the apprenticeship agreement of the applicant concerned.

SECTION 12. Aptitude tests. — An employer who has a recognized apprenticeship program shall provide
aptitude tests to apprentice-applicants. However, if the employer does not have adequate facilities, the
Department of Labor and Employment may provide the service free of charge.
SECTION 13. Physical fitness. — Total physical fitness need not be required of an apprentice-applicant
unless it is essential to the expeditious and effective learning of the occupation. Only physical defects
which constitute real impediments to effective performance as determined by the plant apprenticeship
committee may disqualify an applicant.

SECTION 14. Free physical examination. — Physical examination of apprentice-applicant preparatory to


employment shall be provided free of charge by the Department of Health or any government hospital. If
this is not feasible, the firm or entity screening the applicant shall extend such service free of charge.

Any entity with an apprenticeship program may elect to assume the responsibility for physical examination
provided its facilities are adequate and all expenses are borne exclusively by it.

SECTION 15. Apprenticeable trades. — The Bureau shall evaluate crafts and operative, technical, nautical,
commercial, clerical, technological, supervisory, service and managerial activities which may be declared
apprenticeable by the Secretary of Labor and Employment and shall have exclusive jurisdiction to
formulate model national apprenticeship standards therefor.

SECTION 16. Model standards. — Model apprenticeship standards to be set by the Bureau shall include
the following:
(a) Those affecting employment of apprentices under different occupational conditions;
(b) Those involving theoretical and proficiency tests for apprentices during their training;

(c) Areas and duration of work and study covered by on-the-job training and theoretical instructions of
apprenticeable trades and occupations; and

(d) Those referring to the qualifications of trainers of apprentices.

SECTION 17. Participation in standards setting. — The Bureau may request any legitimate worker's and
employer's organizations, civic and professional groups, and other entities whether public or private, to
assist in the formulation of national apprenticeship standards.

SECTION 18. Contents of agreement. — Every apprenticeship agreement shall include the following:
(a) The full names and addresses of the contracting parties;
(b) Date of birth of the apprentice;

(c) Name of the trade, occupation or job in which the apprentice will be trained and the dates on which
such training will begin and will approximately end;

(d) The approximate number of hours of on-the-job training as well as of supplementary theoretical
instructions which the apprentice shall undergo during his training;

(e) A schedule of the work processes of the trade/occupation in which the apprentice shall be trained
and the approximate time to be spent on the job in each process;

(f) The graduated scale of wages to be paid the apprentice;

(g) The probationary period of the apprentice during which either party may summarily terminate their
agreement; and

(h) A clause that if the employer is unable to fulfill his training obligation, he may transfer the agreement,
with the consent of the apprentice, to any other employer who is willing to assume such obligation.

SECTION 19. Apprenticeship period. — The period of apprenticeship shall not exceed six (6) months.
(a) Four hundred (400) hours or two (2) months for trades or occupations which normally require a year
or more for proficiency; and
(b) Two hundred (200) hours or one (1) month for occupations and jobs which require more than three
months but less than one year for proficiency.

At least five (5) working days before the actual date of termination, the party terminating shall serve a
written notice on the other, stating the reason for such decision and a copy of said notice shall be
furnished the Apprenticeship Division concerned.
SECTION 20. Hours of work. — Hours of work of the apprentice shall not exceed the maximum number of
hours of work prescribed by law, if any, for a worker of his age and sex. Time spent in related theoretical
instructions shall be considered as hours of work and shall be reckoned jointly with on-the-job training
time in computing in the agreement the appropriate periods for giving wage increases to the apprentice.

An apprentice not otherwise barred by law from working eight hours a day may be requested by his
employer to work overtime and paid accordingly, provided there are no available regular workers to do the
job, and the overtime work thus rendered is duly credited toward his training time.

SECTION 21. Previous training or experience. — A prospective apprentice who has completed or otherwise
attended a vocational course in a duly recognized trade or vocational school or training center or who has
had previous experience in the trade or occupation in which he desires to be apprenticed shall be given
due credit therefor.

Both practical and theoretical knowledge shall be evaluated and the credit shall appear in the
apprenticeship agreement which shall have the effect of shortening the training and servicing as a basis
for promoting him to a higher wage level. Such credit shall be expressed in terms of hours.

SECTION 22. Parties to agreement. — Every apprenticeship agreement shall be signed by the employer or
his duly authorized representative and by the apprentice.

An apprenticeship agreement with a minor shall be signed in his behalf by his parent or guardian, or if the
latter is not available, by an authorized representative of the Department of Labor and Employment.

SECTION 23. Bureau and Apprenticeship Division of Regional Office concerned to be furnished copy of
agreement. — The employer shall furnish a copy of the apprenticeship agreement to the Bureau and
Apprenticeship Division of Regional Office concerned and the agency which shall provide related
theoretical instructions if the employer is not the one who will give such instructions. The copies shall be
sent by the employer within five (5) working days from the date of execution thereof. If the agreement is
found defective and serious damage would be sustained by either party if such defect is not corrected, the
Apprenticeship Division shall advise the employer within five (5) working days not to implement the
agreement pending amendment thereof. Other defects may be correlated without suspending the
effectivity of the agreement.

SECTION 24. Enforcement of agreement. — No person shall institute any action for the enforcement of any
apprenticeship agreement or for damages for breach thereof, unless he has exhausted all available
administrative remedies. The plant apprenticeship committee shall have initial responsibility for settling
differences arising out of apprenticeship agreements.

SECTION 25. Valid cause to terminate agreement. — Either party to an agreement may terminate the
same after the probationary period only for a valid cause. The following are valid causes for termination:

By the employer —

(a) Habitual absenteeism in on-the-job training and related theoretical instructions;


(b) Willful disobedience of company rules or insubordination to lawful order of a superior;
(c) Poor physical condition, permanent disability or prolonged illness which incapacitates the apprentice
from working;
(d) Theft or malicious destruction of company property and/or equipment;
(e) Poor efficiency or performance on the job or in the classroom for a prolonged period despite warnings
duly given to the apprentice; and
(f) Engaging in violence or other forms of gross misconduct inside the employer's premises.

By the apprentice —

(a) Substandard or deleterious working conditions within the employer's premises:


(b) Repeated violations by the employer of the terms of the apprenticeship agreement;
(c) Cruel or inhuman treatment by the employer or his subordinates;
(d) Personal problems which in the opinion of the apprentice shall prevent him from a satisfactory
performance of his job; and
(e) Bad health or continuing illness.
SECTION 26. Procedure of termination. — The procedure for effecting termination shall be embodied in
appropriate instructions to be prepared by the Bureau and approved by the Secretary of Labor and
Employment.

SECTION 27. Theoretical instructions by employer. — Related theoretical instructions to apprentices may
be undertaken by the employer himself if he has adequate facilities and qualified instructors for the
purpose. He shall indicate his intention to assume such responsibility in the apprenticeship standard of his
program. The course outline and the bio-data of the instructors who will conduct the course shall conform
with the standards set by the Department.

SECTION 28. Ratio of theoretical instruction and on-the-job training. — The normal ratio is one hundred
(100) hours of theoretical instructions for every two thousand (2,000) hours of practical or on-the-job
training. Theoretical instructions time for occupations requiring less than two thousand hours for
proficiency shall be computed on the basis of such ratio.

SECTION 29. Wages. — The wage rate of the apprentice shall start at seventy five (75%) per cent of the
statutory minimum wage for the first six (6) months; thereafter, he shall be paid the full minimum wage,
including the full cost of living allowance.

SECTION 30. Tripartite apprenticeship committees. — The creation of a plant apprenticeship committee for
every apprenticeship program shall be necessary. The Department of Labor and Employment shall
encourage the organization of apprenticeship committees at trade, industry or other levels. As much as
possible these committees shall consist of management, labor and government representatives.

SECTION 31. Non-tripartite committees. — Where tripartism is not feasible, the apprenticeship committee
may be composed of:
(a) Technical personnel in the plant, trade or industry concerned;
(b) Labor and management representatives.

Representatives of cooperative, civic and other groups may also participate in such committees.

SECTION 32. Duties of apprenticeship committees. — An apprenticeship committee at any level shall be
responsible for the following duties:
(a) Act as liaison between the apprentice and the employees;
(b) Mediate and/or settle in the first instance differences between the employer and the apprentices
arising out of an apprenticeship agreement;

(c) Maintain a constant follow-up on the technical progress of the program and of the apprentices in
particular;

(d) Recommend to the Apprenticeship Division of the Regional Office concerned the issuance of
certificates of completion to apprentices.

SECTION 33. Creation of ad hoc advisory committees. — The Secretary of Labor and Employment may
create ad hoc committees consisting of representatives of management, labor and government on the
national, regional and local levels to advise and assist him in the formulation of policy, promotion of
apprenticeship and other matters he may deem appropriate to refer to them.

SECTION 34. Use of training centers. — The Department may utilize the facilities and services of the
National Manpower and Youth Council, the Department of Education, Culture and Sports and other public
training institutions for the training of apprentices.

SECTION 35. Coordination of training activities. — The apprenticeship Division shall coordinate with the
above training centers all activities relating to apprenticeship. The Bureau, through the Apprenticeship
Division, shall provide technical guidance and advice to the centers.

SECTION 36. Priority in use of training centers. — Priority in the use of training centers shall be given to
recognized apprenticeship programs in skills which are highly in demand in specific regions or localities as
determined through surveys. The Bureau shall recommend to the Secretary of Labor and Employment the
establishment of priorities based on data supplied by the Bureau of Local Employment, Labor Statistics
Service, the National Manpower and Youth Council, and its own fundings. The Secretary of Labor and
Employment may, however, also act on the basis of petitions presented by qualified entities which are
willing to bear the costs of training.

SECTION 37. Issuance of certificates. — Upon completion of his training, the apprentice shall be issued a
certificate of completion of apprenticeship by the Apprenticeship Division of the Regional Office
concerned.

SECTION 38. Certificate of meritorious service. — A certificate of meritorious service may be awarded by
the Secretary of Labor and Employment to apprenticeship committees or other entities which have
rendered outstanding service to the cause of apprenticeship.

SECTION 39. Certificate, evidence of skills. — A certificate of completion of apprenticeship shall be


evidence of the skills specified therein in accordance with national skills standards established by the
Department.

SECTION 40. Apprenticeship without compensation. — The Secretary of Labor and Employment through
the Apprenticeship Division, may authorize the hiring of apprentices without compensation whose training
on the job is required by the school curriculum as a prerequisite for graduation or for taking a government
board examination.

SECTION 41. Compulsory apprenticeship. —

(a) When grave national emergencies, particularly those involving the security of the state, arise or
particular requirements of economic development so demand, the Secretary of Labor and
Employment may recommend to the President of the Philippines the compulsory training of
apprentices required in a certain trades, occupations, jobs or employment levels where shortage of
trained manpower is deemed critical;
(b) Where services of foreign technicians are utilized by private companies in apprenticeable trades said
companies are required to set up appropriate apprenticeship programs.

SECTION 42. Certification from Apprenticeship Division. — An employer desiring to avail of the tax
deduction provided under the Code shall secure from the Apprenticeship Division a certification that his
apprenticeship program was operational during the taxable year concerned. Such certification shall be
attached to the employer's income tax returns for the particular year. Guidelines for the issuance of such
certification shall be prepared by the Bureau and approved by the Secretary of Labor and Employment.

 What is an apprenticeship agreement?


 Who is an apprentice?
 Wage of an apprentice
 Qualifications of an apprentice
 Limitations in hiring of an apprentice
 Regularization of an apprentice

2. Handicaps

ART. 78. DEFINITION

 HANDICAPPED WORKERS - those whose earning capacity is impaired by age or physical or mental
deficiency or injury, disease or illness.

- There must be a link between the deficiency and the work which entitles the employer to lessen the
worker’s wage.

HANDICAPPED WORKER HANDICAPPED PERSON


Art. 78. LC RA 7277
(Magna Carta for Disabled Persons)
Those whose earning capacity is Those suffering from restriction or
impaired by age or physical or mental different abilities, as a result of a
deficiency or injury. mental, physical or sensory impairment,
to perform an activity in the manner or
within the range considered normal for
a human being.

 ART. 79. WHEN EMPLOYABLE

 Handicapped workers may be employed when:

1. their employment is necessary to prevent curtailment of employment opportunities


2. it does not create unfair competition in labor costs or impair or lower working standards.

- Subject to the provisions of the Code, handicapped workers may be hired as regular workers,
apprentices or learners IF their handicap is not such as to effectively impede the performance of job
operations in the particular occupations for which they were hired.

 EQUAL OPPORTUNITY FOR EMPLOYMENT ( SEC.5 RA 7277)

- No disabled person shall be denied access to opportunities for suitable employment. Qualified disabled
employees shall be subject to the same terms and conditions of employment and the same
compensation, privileges, benefits, fringe benefits, incentives or allowances as a qualified able-bodied
person. Even a handicapped worker can acquire the status of a regular employee.
 Duration of employment - no minimum, no maximum duration. Dependent on agreement but it is
necessary that there is a specific duration.

 ART. 80. EMPLOYMENT AGREEMENT

CONTENTS OF EMPLOYMENT AGREEMENT

- An employer who hires a handicapped worker shall enter into an employment agreement with the
latter which shall include:

1. The names and addresses of the employer and the handicapped worker;
2. The rate of pay of the handicapped worker which shall not be less than seventy-five (75%) percent of
the legal minimum wage;
3. The nature of work to be performed by the handicapped worker; and
4. The duration of the employment.

 Subject to the appropriate provisions of this Code, handicapped workers may be hired as apprentices
or learners, if their handicap is not such as to effectively impede the performance of job operations in
the particular occupations for which they are hired.

(R.A. 7277)
AN ACT PROVIDING FOR THE REHABILITATION, SELF-DEVELOPMENT AND SELF-RELIANCE OF DISABLED
PERSONS AND THEIR INTEGRATION INTO THE MAINSTREAM OF SOCIETY AND FOR OTHER PURPOSES.

TITLE I
GENERAL PROVISIONS

CHAPTER I
BASIC PRINCIPLE

Section 1. Title. — This Act shall be known and cited as the "Magna Carta for Disabled Persons."

Sec. 2. Declaration of Policy — The grant of the rights and privileges for disabled persons shall be guided
by the following principles:
(a) Disabled persons are part of Philippine society, thus the State shall give full support to the
improvement of the total well-being of disabled persons and their integration into the mainstream of
society. Toward this end, the State shall adopt policies ensuring the rehabilitation, self-development
and self-reliance of disabled persons. It shall develop their skills and potentials to enable them to
compete favorably for available opportunities.

(b) Disabled persons have the same rights as other people to take their proper place in society. They
should be able to live freely and as independently as possible. This must be the concern of everyone
— the family, community and all government and nongovernment organizations. Disabled persons'
rights must never be perceived as welfare services by the Government.
(c) The rehabilitation of the disabled persons shall be the concern of the Government in order to foster
their capacity to attain a more meaningful, productive and satisfying life. To reach out to a greater
number of disabled persons, the rehabilitation services and benefits shall be expanded beyond the
traditional urban-based centers to community based programs, that will ensure full participation of
different sectors as supported by national and local government agencies.

(d) The State also recognizes the role of the private sector in promoting the welfare of disabled persons
and shall encourage partnership in programs that address their needs and concerns.

(e) To facilitate integration of disabled persons into the mainstream of society, the State shall advocate
for and encourage respect for disabled persons. The State shall exert all efforts to remove all social,
cultural, economic, environmental and attitudinal barriers that are prejudicial to disabled persons.

Sec. 3. Coverage. — This Act shall cover all disabled persons and, to the extent herein provided,
departments, offices and agencies of the National Government or nongovernment organizations involved
in the attainment of the objectives of this Act.

Sec. 4. Definition of Terms. — For purposes of this Act, these terms are defined as follows:
(a) Disabled persons are those suffering from restriction or different abilities, as a result of a mental,
physical or sensory impairment, to perform an activity in the manner or within the range considered
normal for a human being;

(b) Impairment is any loss, diminution or aberration of psychological, physiological, or anatomical


structure or function;
(c) Disability shall mean 1) a physical or mental impairment that substantially limits one or more
psychological, physiological or anatomical function of an individual or activities of such individual; 2) a
record of such an impairment; or 3) being regarded as having such an impairment;

(d) Handicap refers to a disadvantage for a given individual, resulting from an impairment or a disability,
that limits or prevents the function or activity, that is considered normal given the age and sex of the
individual;

(e) Rehabilitation is an integrated approach to physical, social, cultural, spiritual, educational and
vocational measures that create conditions for the individual to attain the highest possible level of
functional ability;

(f) Social Barriers refer to the characteristics of institutions, whether legal, economic, cultural,
recreational or other, any human group, community, or society which limit the fullest possible
participation of disabled persons in the life of the group. Social barriers include negative attitudes
which tend to single out and exclude disabled persons and which distort roles and inter-personal
relationships;

(g) Auxiliary Aids and Services include:

1. qualified interpreters or other effective methods of delivering materials to individuals with


hearing impairments;

2. qualified readers, taped tests, or other effective methods of delivering materials to individuals
with visual impairments;
3. acquisition or modification of equipment or devices; and

4. other similar services and actions or all types of aids and services that facilitate the learning
process of people with mental disability.

(h) Reasonable Accommodation include 1) improvement of existing facilities used by employees in order
to render these readily accessible to and usable by disabled persons; and 2) modification of work
schedules, reassignment to a vacant position, acquisition or modification of equipment or devices,
appropriate adjustments or modifications of examinations, training materials or company policies,
rules and regulations, the provision of auxiliary aids and services, and other similar accommodations
for disabled persons;

(i) Sheltered Employment refers to the provision of productive work for disabled persons through
workshops providing special facilities, income-producing projects or homework schemes with a view
to giving them the opportunity to earn a living thus enabling them to acquire a working capacity
required in open industry;
(j) Auxiliary Social Services are the supportive activities in the delivery of social services to the
marginalized sectors of society;

(k) Marginalized Disabled Persons refer to disabled persons who lack access to rehabilitative services and
opportunities to be able to participate fully in socioeconomic activities and who have no means of
livelihood and whose incomes fall below the poverty threshold; chan robles virtual law library

(l) Qualified Individual with a Disability shall mean an individual with a disability who, with or without
reasonable accommodations, can perform the essential functions of the employment position that
such individual holds or desires. However, consideration shall be given to the employer's judgment as
to what functions of a job are essential, and if an employer has prepared a written description before
advertising or interviewing applicants for the job, this description shall be considered evidence of the
essential functions of the job;

(m) Readily Achievable means a goal can be easily attained and carried out without much difficulty or
expense. In determining whether an action is readily achievable, factors to be considered include —

1. the nature and cost of the action;

2. the overall financial resources of the facility or facilities involved in the action; the number of
persons employed at such facility; the effect on expenses and resources, or the impact otherwise
of such action upon the operation of the facility;
3. the overall financial resources of the covered entity with respect to the number of its employees;
the number, type and location of its facilities; and

4. the type of operation or operations of the covered entity, including the composition, structure
and functions of the work force of such entity; the geographic separateness, administrative or
fiscal relationship of the facility or facilities in question to the covered entity.

(n) Public Transportation means transportation by air, land and sea that provides the public with general
or special service on a regular and continuing basis;

(o) Covered Entity means an employer, employment agency, labor organization or joint-labor
management committee; and
(p) Commerce shall be taken to mean as travel, trade, traffic, commerce, transportation, or
communication among the provinces or between any foreign country or any territory or possession
and any province.

TITLE II
RIGHTS AND PRIVILEGES OF DISABLED PERSONS

CHAPTER I
EMPLOYMENT

Sec. 5. Equal Opportunity for Employment. — No disable person shall be denied access to opportunities
for suitable employment. A qualified disabled employee shall be subject to the same terms and conditions
of employment and the same compensation, privileges, benefits, fringe benefits, incentives or allowances
as a qualified able bodied person.

Five percent (5%) of all casual emergency and contractual positions in the Departments of Social Welfare
and Development; Health; Education, Culture and Sports; and other government agencies, offices or
corporations engaged in social development shall be reserved for disabled persons.

Sec. 6. Sheltered Employment — If suitable employment for disabled persons cannot be found through
open employment as provided in the immediately preceding Section, the State shall endeavor to provide it
by means of sheltered employment. In the placement of disabled persons in sheltered employment, it
shall accord due regard to the individual qualities, vocational goals and inclinations to ensure a good
working atmosphere and efficient production.

Sec. 7. Apprenticeship. — Subject to the provisions of the Labor Code as amended, disabled persons shall
be eligible as apprentices or learners: Provided, That their handicap is not as much as to effectively
impede the performance of job operations in the particular occupation for which they are hired; Provided,
further, That after the lapse of the period of apprenticeship, if found satisfactory in the job performance,
they shall be eligible for employment.

Sec. 8. Incentives for Employers. —

(a) To encourage the active participation of the private sector in promoting the welfare of disabled
persons and to ensure gainful employment for qualified disabled persons, adequate incentives shall
be provided to private entities which employ disabled persons.
(b) Private entities that employ disabled persons who meet the required skills or qualifications, either as
regular employee, apprentice or learner, shall be entitled to an additional deduction, from their gross
income, equivalent to twenty-five percent (25%) of the total amount paid as salaries and wages to
disabled persons: Provided, however, That such entities present proof as certified by the Department
of Labor and Employment that disabled persons are under their employ: Provided, further, That the
disabled employee is accredited with the Department of Labor and Employment and the Department
of Health as to his disability, skills and qualifications.

(c) Private entities that improve or modify their physical facilities in order to provide reasonable
accommodation for disabled persons shall also be entitled to an additional deduction from their net
taxable income, equivalent to fifty percent (50%) of the direct costs of the improvements or
modifications. This Section, however, does not apply to improvements or modifications of facilities
required under Batas Pambansa Bilang 344.

Sec. 9. Vocational Rehabilitation. — Consistent with the principle of equal opportunity for disabled
workers and workers in general, the State shall take appropriate vocational rehabilitation measures that
shall serve to develop the skills and potentials of disabled persons and enable them to compete favorably
for available productive and remunerative employment opportunities in the labor market.

The State shall also take measures to ensure the provision of vocational rehabilitation and livelihood
services for disabled persons in the rural areas. In addition, it shall promote cooperation and coordination
between the government and nongovernmental organizations and other private entities engaged in
vocational rehabilitation activities.

The Department of Social Welfare and Development shall design and implement training programs that
will provide disabled persons with vocational skills to enable them to engage in livelihood activities or
obtain gainful employment. The Department of Labor and Employment shall likewise design and conduct
training programs geared towards providing disabled persons with skills for livelihood.

Sec. 10. Vocational Guidance and Counseling. — The Department of Social and Welfare and Development,
shall implement measures providing and evaluating vocational guidance and counseling to enable disabled
persons to secure, retain and advance in employment. It shall ensure the availability and training of
counselors and other suitably qualified staff responsible for the vocational guidance and counseling of
disabled persons.

Sec. 11. Implementing Rules and Regulations. — The Department of Labor and Employment shall in
coordination with the Department of Social Welfare and Development (DSWD) and National Council for
the Welfare of the Disabled Persons (NCWDP) shall promulgate the rules and regulations necessary to
implement the provisions under this Chapter.

CHAPTER II
EDUCATION

Sec. 12. Access to Quality Education. — The State shall ensure that disabled persons are provided with
access to quality education and ample opportunities to develop their skills. It shall take appropriate steps
to make such education accessible to all disabled persons. It shall be unlawful for any learning institution
to deny a disabled person admission to any course it offers by reason of handicap or disability.
The State shall take into consideration the special requirements of disabled persons in the formulation of
educational policies and programs. It shall encourage learning institutions to take into account the special
needs of disabled persons with respect to the use of school facilities, class schedules, physical education
requirements, and other pertinent consideration.

The State shall also promote the provision by learning institutions, especially higher learning institutions of
auxiliary services that will facilitate the learning process for disabled persons.

Sec. 13. Assistance to Disabled Students. — The State shall provide financial assistance to economically
marginalized but deserving disabled students pursuing post secondary or tertiary education. Such
assistance may be in the form of scholarship grants, student loan programs, subsidies, and other
incentives to qualified disabled students in both public and private schools. At least five percent (5%) of
the allocation for the Private Education Student Financial Assistance Program created by virtue of R.A.
6725 shall be set aside for disabled students pursuing vocational or technical and degree courses.

Sec. 14. Special Education. — The State shall establish, maintain and support complete, adequate and
integrated system of special education for the visually impaired, hearing impaired, mentally retarded
persons and other types of exceptional children in all regions of the country. Toward this end, the
Department of Education, Culture and Sports shall establish, special education classes in public schools in
cities, or municipalities. It shall also establish, where viable, Braille and Record Libraries in provinces, cities
or municipalities.

The National Government shall allocate funds necessary for the effective implementation of the special
education program nationwide. Local government units may likewise appropriate counterpart funds to
supplement national funds.

Sec. 15. Vocational or Technical and Other Training Programs. — The State shall provide disabled persons
with training in civics, vocational efficiency, sports and physical fitness, and other skills. The Department of
Education, Culture and Sports shall establish in at least one government-owned vocational and technical
school in every province a special vocational and technical training program for disabled persons. It shall
develop and implement sports and physical fitness programs specifically designed for disabled persons
taking into consideration the nature of their handicap.

Sec. 16. Non-Formal Education. — The State shall develop non-formal education programs intended for
the total human development of disabled persons. It shall provide adequate resources for non-formal
education programs and projects that cater to the special needs of disabled persons.

Sec. 17. State Universities and Colleges. — If viable and needed, the State University or State College in
each region or province shall be responsible for (a) the development of material appliances and technical
aids for disabled persons; (b) the development of training materials for vocational rehabilitation and
special education instructions; (c) the research on special problems, particularly of the visually-impaired,
hearing-impaired, speech-impaired, and orthopedically-impaired students, mentally retarded, and multi-
handicapped and others, and the elimination of social barriers and discrimination against disabled
persons; and (d) inclusion of the Special Education for Disabled (SPED) course in the curriculum.

The National Government shall provide these state universities and colleges with necessary special
facilities for visually-impaired, hearing-impaired, speech-impaired, and orthopedically-impaired students.
It shall likewise allocate the necessary funds in support of the above.

CHAPTER III
HEALTH

Sec. 18. National Health Program. — The Department of Health in coordination with the National Council
for the Welfare of Disabled Persons, shall institute a national health program which shall aim to attain the
following:
(a) prevention of disability, whether occurring prenatally or postnatally;

(b) recognition and early diagnosis of disability; and


(c) early rehabilitation of the disabled.
Sec. 19. Rehabilitation Centers. — The Department of Health shall establish medical rehabilitation centers
in government provincial hospitals, and shall include in its annual appropriation the necessary funds for
the operation of such centers.

The Department of Health shall formulate and implement a program to enable marginalized disabled
persons to avail of free rehabilitation services in government hospitals.

Sec. 20. Health Services. — The State shall protect and promote the right to health of disabled persons
and shall adopt an integrated and comprehensive approach to their health development which shall make
essential health services available to them at affordable cost.

The National Government shall provide an integrated health service for disabled persons which shall
include, but not limited to, the following:
(a) prevention of disability through immunization, nutrition, environmental protection and preservation,
and genetic counseling; and early detection of disability and timely intervention to arrest disabling
condition; and

(b) medical treatment and rehabilitation.


The Department of Health shall field medical personnel specializing in the treatment and rehabilitation of
disabled persons to provincial hospitals and, when viable, to municipal health centers. It shall also train its
field health personnel in the provision of medical attention to disabled persons. It shall further ensure that
its field health units have the necessary capabilities to fit prosthetic and orthotic appliances on disabled
persons.

CHAPTER IV
AUXILIARY SOCIAL SERVICES

Sec. 21. Auxiliary Social Services. — The State shall ensure that marginalized persons are provided with
the necessary auxiliary services that will restore their social functioning and participation in community
affairs. Towards this end, the Department of Social Welfare and Development shall develop and
implement programs on auxiliary social services that respond to the needs of marginalized disabled
persons. The components of such a program shall be as follows:
(a) assistance in the acquisition of prosthetic devices and medical intervention of specialty services;

(b) provision of specialized training activities designed to improve functional limitations of disabled
persons related to communication skills;
(c) development among disabled persons of a positive self-image through the provision of counseling,
orientation and mobility and strengthening daily living capability;

(d) provision of family care services geared towards developing the capability of families to respond to
the needs of the disabled members of the family;

(e) provision of substitute family care services and the facilities therefor for abandoned, neglected,
abused and unattached disabled persons who need custodial care;

(f) provision of after care and follow-up services for the continued rehabilitation in a community-based
setting of disabled persons who were released from residential care or rehabilitation centers; and

(g) provision of day care services for disabled children of pre-school age.

CHAPTER V
TELECOMMUNICATIONS

Sec. 22. Broadcast Media. — Television stations shall be encouraged to provide a sign—language inset or
subtitles in at least one (1) newscast program a day and special programs covering events of national
significance.

Sec. 23. Telephone Services. — All telephone companies shall be encouraged to install special telephone
devices or units for the hearing-impaired and ensure that they are commercially available to enable them
to communicate through the telephone system.

Sec. 24. Free Postal Charges for the Disabled. — Postal charges shall be free on the following:
(a) articles and literatures like books and periodicals, orthopedic and other devices, and teaching aids for
the use of the disabled sent by mail within the Philippines and abroad; and

(b) aids and orthopedic devices for the disabled sent by abroad by mail for repair:
Provided, That the aforesaid items are for personal purposes only: Provided, further, That the disabled
person is a marginalized disabled as certified by the Social Welfare and Development Office of the local
government unit concerned or the Department of Social Welfare and Development.

CHAPTER VI
ACCESSIBILITY

Sec. 25. Barrier-Free Environment. — The State shall ensure the attainment of a barrier-free environment
that will enable disabled persons to have access in public and private buildings and establishments and
such other places mentioned in Batas Pambansa Bilang 344, otherwise known as the "Accessibility Law".

The national and local governments shall allocate funds for the provision of architectural facilities or
structural features for disabled persons in government buildings and facilities.

Sec. 26. Mobility. — The State shall promote the mobility of disabled persons. Disabled persons shall be
allowed to drive motor vehicles, subject to the rules and regulations issued by the Land Transportation
Office pertinent to the nature of their disability and the appropriate adaptations or modifications made on
such vehicles.

Sec. 27. Access to Public Transport Facilities. — The Department of Social Welfare and Development shall
develop a program to assist marginalized disabled persons gain access in the use of public transport
facilities. Such assistance may be in the form of subsidized transportation fare.

The said department shall also allocate such funds as may be necessary for the effective implementation
of the public transport program for the disabled persons.

The "Accessibility Law", as amended, shall be made suppletory to this Act.

Sec. 28. Implementing Rules and Regulations. — The Department of Transportation and Communications
shall formulate the rules and regulations necessary to implement the provisions of this Chapter.

CHAPTER VII
POLITICAL AND CIVIL RIGHTS

Sec. 29. System of Voting. — Disabled persons shall be allowed to be assisted by a person of his choice in
voting in the national or local elections. The person thus chosen shall prepare the ballot for the disabled
voter inside the voting booth. The person assisting shall bind himself in a formal document under oath to
fill out the ballot strictly in accordance with the instructions of the voter and not to reveal the contents of
the ballot prepared by him. Violation of this provision shall constitute an election offense.
Polling places should be made accessible to disabled persons during national or local elections.

Sec. 30. Right to Assemble. — Consistent with the provisions of the Constitution, the State shall recognize
the right of disabled persons to participate in processions, rallies, parades, demonstrations, public
meetings, and assemblages or other forms of mass or concerned action held in public.

Sec. 31. Right to Organize. — The State recognizes the right of disabled persons to form organizations or
associations that promote their welfare and advance or safeguard their interests. The National
Government, through its agencies, instrumentalities and subdivisions, shall assist disabled persons in
establishing self-help organizations by providing them with necessary technical and financial assistance.

Concerned government agencies and offices shall establish close linkages with organizations of the
disabled persons in order to respond expeditiously to the needs of disabled persons. National line
agencies and local government units shall assist disabled persons in setting up specific projects that will be
managed like business propositions.

To ensure the active participation of disabled persons in the social and economic development of the
country, their organizations shall be encouraged to participate in the planning, organization and
management of government programs and projects for disabled persons.
Organizations of disabled persons shall participate in the identification and preparation of programs that
shall serve to develop employment opportunities for the disabled persons.

TITLE III
PROHIBITION ON DISCRIMINATION AGAINST DISABLED PERSONS

CHAPTER I
DISCRIMINATION ON EMPLOYMENT

Sec. 32. Discrimination on Employment. — No entity, whether public or private, shall discriminate against
a qualified disabled person by reason of disability in regard to job application procedures, the hiring,
promotion, or discharge of employees, employee compensation, job training, and other terms, conditions,
and privileges of employment. The following constitute acts of discrimination:
(a) Limiting, segregating or classifying a disabled job applicant in such a manner that adversely affects his
work opportunities;

(b) Using qualification standards, employment tests or other selection criteria that screen out or tend to
screen out a disabled person unless such standards, tests or other selection criteria are shown to be
job-related for the position in question and are consistent with business necessity;
(c) Utilizing standards, criteria, or methods of administration that:

1. have the effect of discrimination on the basis of disability; or

2. perpetuate the discrimination of others who are subject to common administrative control.
(d) Providing less compensation, such as salary, wage or other forms of remuneration and fringe benefits,
to a qualified disabled employee, by reason of his disability, than the amount to which a non-disabled
person performing the same work is entitled;

(e) Favoring a non-disabled employee over a qualified disabled employee with respect to promotion,
training opportunities, study and scholarship grants, solely on account of the latter's disability;
(f) Re-assigning or transferring a disabled employee to a job or position he cannot perform by reason of
his disability;

(g) Dismissing or terminating the services of a disabled employee by reason of his disability unless the
employer can prove that he impairs the satisfactory performance of the work involved to the
prejudice of the business entity: Provided, however, That the employer first sought to provide
reasonable accommodations for disabled persons;

(h) Failing to select or administer in the most effective manner employment tests which accurately reflect
the skills, aptitude or other factor of the disabled applicant or employee that such tests purports to
measure, rather than the impaired sensory, manual or speaking skills of such applicant or employee, if
any; and

(i) Excluding disabled persons from membership in labor unions or similar organizations.

Sec. 33. Employment Entrance Examination. — Upon an offer of employment, a disabled applicant may
be subjected to medical examination, on the following occasions:
(a) all entering employees are subjected to such an examination regardless of disability;

(b) information obtained during the medical condition or history of the applicant is collected and
maintained on separate forms and in separate medical files and is treated as a confidential medical
record; Provided, however, That:
1. supervisors and managers may be informed regarding necessary restrictions on the work or
duties of the employees and necessary accommodations;

2. first aid and safety personnel may be informed, when appropriate, if the disability may require
emergency treatment;
3. government officials investigating compliance with this Act shall be provided relevant information
on request; and

4. the results of such examination are used only in accordance with this Act.
CHAPTER II
DISCRIMINATION ON TRANSPORTATION

Sec. 34. Public Transportation. — It shall be considered discrimination for the franchisees or operators
and personnel of sea, land, and air transportation facilities to charge higher fare or to refuse to convey a
passenger, his orthopedic devices, personal effects, and merchandise by reason of his disability.

CHAPTER III
DISCRIMINATION ON THE USE OF PUBLIC ACCOMMODATIONS AND SERVICES

Sec. 35. Public Accommodations and Services. — For purposes of this Chapter, public accommodations
and services shall include the following:
(a) an inn, hotel, motel, or other place of lodging, except for an establishment located within a building
that contains not more than five (5) rooms for rent or hire and that is actually occupied by the
proprietor of such establishment as the residence of such proprietor;

(b) a restaurant, bar, or other establishment serving food or drink;


(c) a motion picture, theater, concert hall, stadium, or other place of exhibition or entertainment;

(d) an auditorium, convention center, lecture hall, or other place of public gathering;

(e) a bakery, grocery store, hardware store, shopping center, or other sales or rental establishment;

(f) a bank, barber shop, beauty shop, travel service, funeral parlor, gas station, office of a lawyer,
pharmacy, insurance office, professional office of a health care provider, hospital or other service
establishment;

(g) a terminal, depot, or other station used for specified public transportation;

(h) a museum, gallery, library or other place of public display or collection;

(i) a park, zoo, amusement park, or other place of recreation;

(j) a nursery, elementary, secondary, undergraduate, or post-graduate private school, or other place of
education;

(k) a gymnasium, health spa, bowling alley, golf course; or

(l) other place of exercise or recreation.

Sec. 36. Discrimination on the Use of Public Accommodations. —


(a) No disabled person shall be discriminated on the basis of disability in the full and equal enjoyment of
the goods, services, facilities, privileges, advantages or accommodations of any place of public
accommodation by any person who owns, leases, or operates a place of public accommodation. The
following constitute acts of discrimination:
1. denying a disabled person, directly or through contractual, licensing, or other arrangement, the
opportunity to participate in or benefit from the goods, services, facilities, privileges, advantages,
or accommodations of an entity by reason of his disability;

2. affording a disabled person, on the basis of his disability, directly or through contractual,
licensing, or other arrangement, with the opportunity to participate in or benefit from a good
service, facility, privilege, advantage, or accommodation that is not equal to that afforded to
other able-bodied persons; and
3. providing a disabled person, on the basis of his disability, directly or through contractual,
licensing, or other arrangement, with a good, service, facility, advantage, privilege, or
accommodation that is different or separate form that provided to other able-bodied persons
unless such action is necessary to provide the disabled person with a good, service, facility,
advantage, privilege, or accommodation, or other opportunity that is as effective as that provided
to others;

For purposes of this Section, the term "individuals or class of individuals" refers to the clients or
customers of the covered public accommodation that enters into the contractual, licensing or other
arrangement.
(b) Integrated Settings — Goods, services, facilities, privileges, advantages, and accommodations shall be
afforded to individual with a disability in the most integrated setting appropriate to the needs of the
individual.
(c) Opportunity to Participate — Notwithstanding the existence of separate or different programs or
activities provided in accordance with this Section, an individual with a disability shall not be denied
the opportunity to participate in such programs or activities that are not separate or different.

(d) Association — It shall be discriminatory to exclude or otherwise deny equal goods, services, facilities,
advantages, privileges, accommodations or other opportunities to an individual or entity because of
the known disability of an individual with whom the individual or entity is known to have a
relationship or association.

(e) Prohibitions — For purposes of this Section, the following shall be considered as discriminatory:

1. the imposition or application of eligibility criteria that screen out or tend to screen out an
individual with a disability or any class or individuals with disabilities from fully and equally
enjoying any goods, services, facilities, privileges, advantages, or accommodations, unless such
criteria can be shown to be necessary for the provision of the goods, services, facilities, privileges,
or accommodations being offered;

2. a failure to make reasonable modifications in policies, practices, or procedures, when such


modifications are necessary to afford such goods, services, facilities, privileges, advantages, or
accommodations to individuals with disabilities, unless the entity can demonstrate that making
such modifications would fundamentally alter the nature of the goods, facilities, services,
privileges, advantages, or accommodations;
3. failure to take such steps as may be necessary to ensure that no individual with a disability is
excluded, denied services, segregated or otherwise treated differently than other individuals
because of the absence of auxiliary aids and services, unless the entity can demonstrate that
taking such steps would fundamentally alter the nature of the good, service, facility, privilege,
advantage or accommodation being offered or would result in undue burden;

4. a failure to remove architectural barriers, and communication barriers that are structural in
nature, in existing facilities, where such removal is readily achievable; and

5. where an entity can demonstrate that the removal of a barrier under clause (4) is not readily
achievable, a failure to make such goods, services, facilities, privileges, advantages, or
accommodations available through alternative methods if such methods are readily achievable.

Sec. 37. Use of Government Recreational or Sports Centers Free of Charge. — Recreational or sports
centers owned or operated by the Government shall be used, free of charge, by marginalized disabled
persons during their social, sports or recreational activities.

Sec. 38. Implementing Rules and Regulations. — The Department of Public Works and Highways shall
formulate the rules and regulations necessary to implement the provisions of this Chapter.

TITLE IV
FINAL PROVISIONS

Sec. 39. Housing Program. — The National Government shall take into consideration in its national shelter
program the special housing requirements of disabled persons.

Sec. 40. Role of National Agencies and Local Government Units. — Local government units shall promote
the establishment of organizations of disabled persons in their respective territorial jurisdictions. National
agencies and local government units may enter into joint ventures with organizations or associations of
disabled persons to explore livelihood opportunities and other undertakings that shall enhance the health,
physical fitness and the economic and social well-being of disabled persons.

Sec. 41. Support From Nongovernment Organizations. — Nongovernment organizations or private


volunteer organizations dedicated to the purpose of promoting and enhancing the welfare of disabled
persons shall, as they, are hereby encouraged, become partners of the Government in the implementation
of vocational rehabilitation measures and other related programs and projects. Accordingly, their
participation in the implementation of said measures, programs and projects is to be extended all possible
support by the Government.
The Government shall sponsor a volunteer service program which shall harness the involvement of private
individuals in the provision of assistance to disabled persons.

Sec. 42. Tax Incentives. —

(a) Any donation, bequest, subsidy or financial aid which may be made to government agencies engaged
in the rehabilitation of disabled persons and organizations of disabled persons shall be exempt from
the donor's tax subject to the provisions of Section 94 of the National Internal Revenue Code (NIRC),
as amended and shall be allowed as deductions from the donor's gross income for purposes of
computing the taxable income subject to the provisions of Section 29 (h) of the Code.
(b) Donations from foreign countries shall be exempt from taxes and duties on importation subject to the
provisions of Section 105 of the Tariff and Customs Code of the Philippines, as amended, Section 103
of the NIRC, as amended and other relevant laws and international agreements.

(c) Local manufacturing or technical aids and appliances used by disabled persons shall be considered as
a preferred area of investment subject to the provisions of Executive Order No. 226 otherwise known
as the "Omnibus Investments Code of 1987" and, as such, shall enjoy the rights, privileges and
incentives as provided in said Code such as, but not limited, to the following:

(1) repatriation of investments;


(2) remittance of earnings;
(3) remittance of payments on foreign contracts;

(4) freedom from expropriations;

(5) freedom from requisition of investment;

(6) income tax holiday;

(7) additional deduction for labor expense;

(8) tax and duty exemption on imported capital equipment;

(9) tax credit on domestic capital equipment;

(10) exemption from contractor's tax;

(11) simplification of customs procedures;

(12) unrestricted use of consigned equipment;

(13) employment of foreign nationals;

(14) tax credit for taxes and duties on raw materials;

(15) access to bonded manufacturing/traded warehouse system;

(16) exemption from taxes and duties on imported spare parts; and

(17) exemption from wharfage dues and any export tax, duty, impost and fee.

Sec. 43. Continuity Clause. — Should any department or agency tasked with the enforcement or
formulation of rules and regulations and guidelines for implementation of any provision of this Act is
abolished, merged with another department or agency or modified, such shall not affect the enforcement
or formulation of rules, regulations and guidelines for implementation of this Act to the effect that —
(a) In case of abolition, the department or agency established to replace the abolished department or
agency shall take-over the functions under this Act of the abolished department or agency.

(b) In case the department or agency tasked with the enforcement or formulation of rules, regulations
and guidelines for implementation of this Act is merged with another department or agency, the
former shall continue the functions under this Act of the merged department or agency.
(c) In case of modification, the department or agency modified shall continue the functions under this
Act of the department or agency that has undergone the modification.
Sec. 44. Enforcement by the Secretary of Justice. —
(a) Denial of Right
1. Duty to Investigate — the Secretary of Justice shall investigate alleged violations of this Act, and
shall undertake periodic reviews of compliance of covered entities under this Act.
(b) Potential Violations — If the Secretary of Justice has reasonable cause to believe that —
1. any person or group of persons is engaged in a pattern or practice of discrimination under this
Act; or

2. any person or group or persons has been discriminated against under this Act and such
discrimination raises an issue of general public importance, the Secretary of Justice may
commence a legal action in any appropriate court.

Sec. 45. Authority of Court. — The court may grant any equitable relief that such court considers to be
appropriate, including, to the extent required by this Act:
(a) granting temporary, preliminary or permanent relief;

(b) providing an auxiliary aid or service, modification of policy, practice or procedure, or alternative
method; and
(c) making facilities readily accessible to and usable by individuals with disabilities.

Sec. 46. Penal Clause. —


(a) Any person who violates any provision of this Act shall suffer the following penalties:
1. for the first violation, a fine of not less than Fifty thousand pesos (P50,000.00) but not exceeding
One hundred thousand pesos (P100,000.00) or imprisonment of not less than six (6) months but
not more than two (2) years, or both at the discretion of the court; and

2. for any subsequent violation, a fine of not less than One hundred thousand pesos (P100,000.00)
but not exceeding Two hundred thousand pesos (P200,000.00) or imprisonment for not less than
two (2) years but not more than six (6) years, or both at the discretion of the court.
(b) Any person who abuses the privileges granted herein shall be punished with imprisonment of not less
than six (6) months or a fine of not less than Five thousand pesos (P5,000.00), but not more than Fifty
thousand pesos (P50,000.00), or both, at the discretion of the court.

(c) If the violator is a corporation, organization or any similar entity, the officials thereof directly involved
shall be liable therefor.
(d) If the violator is an alien or a foreigner, he shall be deported immediately after service of sentence
without further deportation proceedings.

Sec. 47. Appropriations. — The amount necessary to carry out the provisions of this Act shall be included
in the General Appropriations Act of the year following its enactment into law and thereafter.

Sec. 48. Separability Clause. — Should any provisions of this Act be found unconstitutional by a court of
law, such provisions shall be severed from the remainder of the Act, and such action shall not affect the
enforceability of the remaining provisions of this Act.

Sec. 49. Repealing Clause. — All laws, presidential decrees, executive orders and rules and regulations
inconsistent with the provisions of this Act are hereby repealed or modified accordingly.

Sec. 50. Effectivity. — This Act shall take effect fifteen (15) days after its publication in any two (2)
newspapers of general circulation.

Approved: March 24, 1992

READ ALSO B.P. 344 with its IMPLEMENTING RULES

(Chapter III, Art. 78-81, Book II, Labor Code)


ART. 78. Definition. - Handicapped workers are those whose earning capacity is impaired by age or
physical or mental deficiency or injury.

ART. 79. When employable. - Handicapped workers may be employed when their employment is
necessary to prevent curtailment of employment opportunities and when it does not create unfair
competition in labor costs or impair or lower working standards.

ART. 80. Employment agreement. - Any employer who employs handicapped workers shall enter into an
employment agreement with them, which agreement shall include:

1. The names and addresses of the handicapped workers to be employed;


2. The rate to be paid the handicapped workers which shall not be less than seventy five (75%) percent
of the applicable legal minimum wage;
3. The duration of employment period; and
4. The work to be performed by handicapped workers.

The employment agreement shall be subject to inspection by the Secretary of Labor or his duly authorized
representative.

ART. 81. Eligibility for apprenticeship. - Subject to the appropriate provisions of this Code, handicapped
workers may be hired as apprentices or learners if their handicap is not such as to effectively impede the
performance of job operations in the particular occupations for which they are hired.

(Rule VIII, Book II, IRR)


SECTION 1. Definition of terms. —
(a) "Handicapped workers" are those whose earning capacity is impaired by age or physical or mental
deficiency or injury.
(b) "Employment agreement" is the contract of employment entered into between the employer and the
handicapped worker.

SECTION 2. When handicapped workers may be employed. — Handicapped workers may be employed
when their employment is necessary to prevent curtailment of employment opportunities and when it
does not create unfair competition in labor costs or impair working standards.

SECTION 3. Contents of employment agreement. — An employer who hires a handicapped worker shall
enter into an employment agreement with the latter which shall include:

(a) The names and addresses of the employer and the handicapped worker;
(b) The rate of pay of the handicapped worker which shall not be less than seventy-five (75%) percent of
the legal minimum wage;

(c) The nature of work to be performed by the handicapped worker; and

(d) The duration of the employment.

SECTION 4. Copy of agreement to be furnished to Division. — A copy each of the employment agreement
shall be furnished by the employer to the handicapped worker and the Apprenticeship Division involved.
The Secretary of Labor and Employment or his duly authorized representative may inspect from time to
time the working conditions of handicapped workers to verify compliance by the parties with their
employment agreement.

SECTION 5. Eligibility for apprenticeship. — Handicapped workers shall not be precluded from
employment as apprentices or learners if their handicap is not such as to effectively impede the
performance of job operations in the particular trade or occupation which is the subject of the
apprenticeship or learnership program.

 Definition of Terms: Handicap, disabled and impaired


 Handicapped worker and His/Her rights (Art. 80 – 81 Labor Code)
 Handicapped vs Disabled Employees

3. Learners
 ART. 73. LEARNERS DEFINED

 LEARNERS - persons hired as trainees in semi-skilled and other industrial occupations which are non-
apprenticeable and which may be learned through practical training on the job in a relatively short period
of time which shall not exceed 3 months.

 LEARNERSHIP AGREEMENT - refers to the employment and training contract entered into between the
employer and the learner.

 ART. 74. WHEN LEARNERS MAY BE HIRED

 CONDITIONS FOR HIRING LEARNERS:


- Learners may be employed when:

1. no experienced workers are available,


2. the employment of learners being necessary to prevent curtailment of employment
opportunities, and
3. such employment will not create unfair competition in terms of labor costs nor impair working
standards.

 ART. 75. CONTENTS OF LEARNERSHIP AGREEMENT

 AGREEMENT SHALL INCLUDE :

1. The names and addresses of the employer and the learner;


2. The occupation to be learned and the duration of the training period which shall not exceed three (3)
months;
3. The wage of learner which shall be at least 75 percent of the applicable minimum wage; and
4. A commitment to employ the learner, if he so desires, as a regular employee upon completion of
training.

- A learner who has worked during the first two months shall be deemed a regular employee if training is
terminated by the employer before the end of the stipulated period through no fault of the learner.

 ART. 76. LEARNERS IN PIECEWORK


- Learners in piecework/incentive rate jobs are to be paid in full for the work done during the training
period.

(Chapter II, Art. 73-77, Book II, Labor Code)


ART. 73. Learners defined. - Learners are persons hired as trainees in semi-skilled and other industrial
occupations which are non-apprenticeable and which may be learned through practical training on the job
in a relatively short period of time which shall not exceed three (3) months.

ART. 74. When learners may be hired. - Learners may be employed when no experienced workers are
available, the employment of learners is necessary to prevent curtailment of employment opportunities,
and the employment does not create unfair competition in terms of labor costs or impair or lower working
standards.

ART. 75. Learnership agreement. - Any employer desiring to employ learners shall enter into a learnership
agreement with them, which agreement shall include:

(a) The names and addresses of the learners;


(b) The duration of the learnership period, which shall not exceed three (3) months;
(c) The wages or salary rates of the learners which shall begin at not less than seventy-five percent (75%)
of the applicable minimum wage; and
(d) A commitment to employ the learners if they so desire, as regular employees upon completion of the
learnership. All learners who have been allowed or suffered to work during the first two (2) months
shall be deemed regular employees if training is terminated by the employer before the end of the
stipulated period through no fault of the learners.
The learnership agreement shall be subject to inspection by the Secretary of Labor and Employment or his
duly authorized representative.

ART. 76. Learners in piecework. - Learners employed in piece or incentive-rate jobs during the training
period shall be paid in full for the work done.

ART. 77. Penalty clause. - Any violation of this Chapter or its implementing rules and regulations shall be
subject to the general penalty clause provided for in this Code.

(Rule VII, Book II, IRR)


SECTION 1. Definition of terms. —
(a) "Learner" is a person hired as a trainee in industrial occupations which are non-apprenticeable and
which may be learned through practical training on the job for a period not exceeding three (3)
months, whether or not such practical training is supplemented by theoretical instructions.
(b) "Learnership agreement" refers to the employment and training contract entered into between the
employer and the learner.

SECTION 2. When learners may be employed. — Learners may be employed when no experienced workers
are available, the employment of learners being necessary to prevent curtailment of employment
opportunities, and such employment will not create unfair competition in terms of labor costs nor impair
working standards.

SECTION 3. Approval of learnership program. — Any employer who intends to employ learners shall
submit in writing to the Apprenticeship Division of the Regional Office concerned, copy furnished the
Bureau, his learnership program, which the Division shall evaluate to determine if the occupation involved
is learnable and the program is sufficient for the purpose of training. Within five (5) working days from
receipt of the program, the Division shall make known its decision to the employer concerned. A
learnership program shall be subject to periodic inspection by the Secretary of Labor and Employment or
his duly authorized representative.

SECTION 4. Contents of learnership agreement. — A learnership agreement, shall include:

(a) The names and addresses of the employer and the learner;
(b) The occupation to be learned and the duration of the training period which shall not exceed three (3)
months;

(c) The wage of learner which shall be at least 75 percent of the applicable minimum wage; and

(d) A commitment to employ the learner, if he so desires, as a regular employee upon completion of
training.

A learner who has worked during the first two months shall be deemed a regular employee if training is
terminated by the employer before the end of the stipulated period through no fault of the learner.

SECTION 5. Parties to learnership agreement. — Every learnership agreement shall be signed by the
employer or his duly authorized agent and by the learner. A learnership agreement with a minor shall be
signed by the learner with the conformity of his parent or guardian.

The employer shall furnish a copy each of the learnership agreement to the learner, the Bureau, and the
Apprenticeship Division of the appropriate Regional Office within five (5) working days following its
execution by the parties.

SECTION 6. Employment of minors as learners. — A minor below fifteen (15) years of age shall not be
eligible for employment as a learner. Those below eighteen (18) years of age may only be employed in
non-hazardous occupations.

SECTION 7. Cancellation of learnership programs. — The Secretary of Labor and Employment may cancel
any learnership program if upon inquiry it is found that the justification for the program no longer exists.

 Who is a learner?
 Requisites in hiring a learner
 Wage of a learner

4. Women Workers

 ART. 130. Labor Code. (Nightwork Prohibition)


 Exceptions to Nightwork Prohibition
 Required facilities for women

Chapter I
EMPLOYMENT OF WOMEN

ART. 130. Nightwork prohibition. - No woman, regardless of age, shall be employed or permitted or
suffered to work, with or without compensation:

(a) In any industrial undertaking or branch thereof between ten o’clock at night and six o’clock in the
morning of the following day; or
(b) In any commercial or non-industrial undertaking or branch thereof, other than agricultural,
between midnight and six o’clock in the morning of the following day; or
(c) In any agricultural undertaking at nighttime unless she is given a period of rest of not less than
nine (9) consecutive hours.

(Rule XII, Book III, IRR)

SECTION 5. Night work of women employees. — Any woman employed in any industrial undertaking
may be allowed to work beyond 10:00 o'clock at night, or beyond 12:00 o'clock midnight in the case
of women employees of commercial or non-industrial enterprises, in any of the following cases:

(a) In cases of actual or impending emergencies caused by serious accident, fire, flood, typhoon,
earthquakes, epidemic or other disaster or calamity, to prevent loss of life or property or in cases
of force majeure or imminent danger to public safety;
(b) In case of urgent work to be performed on machineries, equipment or installation, to avoid
serious loss which the employer would otherwise suffer;
(c) Where the work is necessary to prevent serious loss of perishable goods;
(d) Where the woman employee holds a responsible position of a managerial or technical nature, or
where the woman employee has been engaged to provide health and welfare services;
(e) Where the nature of the work requires the manual skill and dexterity of women and the same
cannot be performed with equal efficiency by male workers or where the employment of women
is the established practice in the enterprises concerned on the date these Rules become effective;
and
(f) Where the women employees are immediate members of the family operating the establishment
or undertaking.
(g) The Secretary of Labor and Employment shall from time to time determine cases analogous to
the foregoing for purposes of this Section.

SECTION 6. Agricultural work. — No woman, regardless of age, shall be permitted or suffered to


work, with or without compensation, in any agricultural undertaking at night time unless she is given
a rest period of not less than nine (9) consecutive hours, subject to the provisions of Section 5 of this
Rule.

ART. 131. Exceptions. - The prohibitions prescribed by the preceding Article shall not apply in any of
the following cases:

(a) In cases of actual or impending emergencies caused by serious accident, fire, flood, typhoon,
earthquake, epidemic or other disasters or calamity, to prevent loss of life or property, or in cases
of force majeure or imminent danger to public safety;
(b) In case of urgent work to be performed on machineries, equipment or installation, to avoid
serious loss which the employer would otherwise suffer;
(c) Where the work is necessary to prevent serious loss of perishable goods;
(d) Where the woman employee holds a responsible position of managerial or technical nature, or
where the woman employee has been engaged to provide health and welfare services;
(e) Where the nature of the work requires the manual skill and dexterity of women workers and the
same cannot be performed with equal efficiency by male workers;
(f) Where the women employees are immediate members of the family operating the establishment
or undertaking; and
(g) Under other analogous cases exempted by the Secretary of Labor and Employment in appropriate
regulations.

ART. 132. Facilities for women. - The Secretary of Labor and Employment shall establish standards
that will ensure the safety and health of women employees. In appropriate cases, he shall, by
regulations, require any employer to:

(a) Provide seats proper for women and permit them to use such seats when they are free from
work and during working hours, provided they can perform their duties in this position without
detriment to efficiency;
(b) To establish separate toilet rooms and lavatories for men and women and provide at least a
dressing room for women;
(c) To establish a nursery in a workplace for the benefit of the women employees therein; and
(d) To determine appropriate minimum age and other standards for retirement or termination in
special occupations such as those of flight attendants and the like.

(Rule XII, Book III, IRR)

SECTION 14. Facilities for woman employees. — Subject to the approval of the Secretary of Labor
and Employment, the Bureau of Women and Young Workers shall, within thirty (30) days from the
effective date of these Rules, determine in an appropriate issuance the work situations for which the
facilities enumerated in Article 131 of the Code shall be provided, as well as the appropriate minimum
age and other standards for retirement or termination of employment in special occupations in which
women are employed.

ART. 133. Maternity leave benefits. –


(a) Every employer shall grant to any pregnant woman employee who has rendered an aggregate
service of at least six (6) months for the last twelve (12) months, maternity leave of at least two
(2) weeks prior to the expected date of delivery and another four (4) weeks after normal delivery
or abortion with full pay based on her regular or average weekly wages. The employer may
require from any woman employee applying for maternity leave the production of a medical
certificate stating that delivery will probably take place within two weeks.
(b) The maternity leave shall be extended without pay on account of illness medically certified to
arise out of the pregnancy, delivery, abortion or miscarriage, which renders the woman unfit for
work, unless she has earned unused leave credits from which such extended leave may be
charged.
(c) The maternity leave provided in this Article shall be paid by the employer only for the first four
(4) deliveries by a woman employee after the effectivity of this Code.

“AN ACT GRANTING PATERNITY LEAVE OF SEVEN (7) DAYS WITH FULLPAY TO ALL MARRIED
EMPLOYEES IN THE PRIVATE AND PUBLIC SECTORS FOR THE FIRST FOUR (4) DELIVERIES OF THE
LEGITIMATE SPOUSE WITH WHOM HE IS COHABITING AND FOR OTHER PURPOSES"

Also known as: Paternity Leave Act of 1996


Signed: June 11, 1996

This Act allows every married male employee in the private and public sectors not to work for seven
days but continues to earn his compensation on the condition that his legitimate spouse has delivered
a child or suffered a 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.
The period of seven days is too short a time to assist a wife and newborn child. Besides, the law grants
the benefit to married employees only. It somehow discriminates against unmarried fathers and
mothers, without impediment to marry each other, because their choice not to be married would
result to not being able to avail of this benefit.

ART. 134. Family planning services; incentives for family planning. –


(a) Establishments which are required by law to maintain a clinic or infirmary shall provide free
family planning services to their employees which shall include, but not be limited to, the
application or use of contraceptive pills and intrauterine devices.
(b) In coordination with other agencies of the government engaged in the promotion of family
planning, the Department of Labor and Employment shall develop and prescribe incentive bonus
schemes to encourage family planning among female workers in any establishment or enterprise.

ART. 135. Discrimination prohibited. - It shall be unlawful for any employer to discriminate against
any woman employee with respect to terms and conditions of employment solely on account of her
sex.

The following are acts of discrimination:

(a) Payment of a lesser compensation, including wage, salary or other form of remuneration and
fringe benefits, to a female employees as against a male employee, for work of equal value; and
(b) Favoring a male employee over a female employee with respect to promotion, training
opportunities, study and scholarship grants solely on account of their sexes.

Criminal liability for the willful commission of any unlawful act as provided in this Article or any
violation of the rules and regulations issued pursuant to Section 2 hereof shall be penalized as
provided in Articles 288 and 289 of this Code: Provided, That the institution of any criminal action
under this provision shall not bar the aggrieved employee from filing an entirely separate and distinct
action for money claims, which may include claims for damages and other affirmative reliefs. The
actions hereby authorized shall proceed independently of each other. (As amended by Republic Act
No. 6725, May 12, 1989).

ART. 136. Stipulation against marriage. - It shall be unlawful for an employer to require as a condition
of employment or continuation of employment that a woman employee shall not get married, or to
stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed resigned
or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman
employee merely by reason of her marriage.

ART. 137. Prohibited acts. - (a) It shall be unlawful for any employer:

(1) To deny any woman employee the benefits provided for in this Chapter or to discharge any
woman employed by him for the purpose of preventing her from enjoying any of the benefits
provided under this Code.
(2) To discharge such woman on account of her pregnancy, or while on leave or in confinement due
to her pregnancy;
(3) To discharge or refuse the admission of such woman upon returning to her work for fear that she
may again be pregnant.

ART. 138. Classification of certain women workers . - Any woman who is permitted or suffered to
work, with or without compensation, in any night club, cocktail lounge, massage clinic, bar or similar
establishments under the effective control or supervision of the employer for a substantial period of
time as determined by the Secretary of Labor and Employment, shall be considered as an employee of
such establishment for purposes of labor and social legislation.

 Acts of Discrimination against women prohibited under R.A. 6725

AN ACT STRENGTHENING THE PROHIBITION ON DISCRIMINATION AGAINST WOMEN WITH RESPECT


TO TERMS AND CONDITIONS OF EMPLOYMENT, AMENDING FOR THE PURPOSE ARTICLE ONE
HUNDRED THIRTY-FIVE OF THE LABOR CODE, AS AMENDED

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled::

SECTION 1. Article One hundred thirty-five of the Labor Code, as amended, is hereby further
amended to read as follows:

"Art. 135. Discrimination Prohibited. — It shall be unlawful for any employer to discriminate against
any woman employee with respect to terms and conditions of employment solely on account of her
sex.

"The following are acts of discrimination:


"(a) Payment of a lesser compensation, including wage, salary or other form of remuneration and
fringe benefits, to a female employee as against a male employee, for work of equal value; and

"(b) Favoring a male employee over a female employee with respect to promotion, training
opportunities, study and scholarship grants solely on account of their sexes.

"Criminal liability for the willful commission of any unlawful act as provided in this article or any
violation of the rules and regulations issued pursuant to Section 2 hereof shall be penalized as
provided in Articles 288 and 289 of this Code: Provided, That the institution of any criminal action
under this provision shall not bar the aggrieved employee from filing an entirely separate and distinct
action for money claims, which may include claims for damages and other affirmative reliefs. The
actions hereby authorized shall proceed independently of each other."

Section 2. The Secretary of Labor and Employment is hereby authorized to promulgate the necessary
guidelines to implement this Article in accordance with the generally accepted practices and
standards here and abroad.

Section 3. This Act shall take effect fifteen (15) days from the date of its publication in at least two (2)
national newspapers of general circulation.

Approved: May 12, 1989

5. Student Workers

 R.A. 7323

AN ACT TO HELP POOR BUT DESERVING STUDENTS PURSUE THEIR EDUCATION BY ENCOURAGING
THEIR EMPLOYMENT DURING SUMMER AND/OR CHRISTMAS VACATIONS, THROUGH INCENTIVES
GRANTED TO EMPLOYERS, ALLOWING THEM TO PAY ONLY SIXTY PER CENTUM OF THEIR SALARIES OR
WAGES AND THE FORTY PER CENTUM THROUGH EDUCATION VOUCHERS TO BE PAID BY THE
GOVERNMENT, PROHIBITING AND PENALIZING THE FILING OF FRAUDULENT OR FICTITIOUS CLAIMS,
AND FOR OTHER PURPOSES.

Section 1. Any provision of law to the contrary notwithstanding, any person or entity employing at
least fifty (50) persons may during the summer and/or Christmas vacation employ poor but deserving
students fifteen (15) years of age but not more than the minimum wage provided by law and other
applicable labor rules and regulations.

For purposes of this Act, poor but deserving students refer to those whose parent's combined
incomes, together with their income, if any, do not exceed Thirty six thousand pesos (P36,000) per
annum. Employment should be at the Labor Exchange Center of the Department of Labor and
Employment (DOLE).

Sec. 2. Sixty per centum (60%) of said salary or wage shall be paid by the employer in cash and forty
per centum (40%) by the Government in the form of a voucher which shall be applicable in the
payment for his tuition fees and books in any educational institution for secondary, tertiary, vocational
or technological education. The amount of the education voucher shall be paid by the Government to
the educational institution concerned within thirty (30) days from its presentation to the officer or
agency designated by the Secretary of Finance.
The voucher shall not be transferable except when the payee thereof dies or for a justifiable cause
stops in his duties in which case it can be transferred to his brothers or sisters. If there be none, the
amount thereof shall be paid his heirs or to the payee himself, as the case may be.

Sec. 3. The Secretary of Labor and Employment, the Secretary of Education, Culture and Sports and
the Secretary of Finance shall issue the corresponding rules and regulations to carry out the purposes
of this Act.
The Secretary of Labor and Employment shall be the Project Director of this program.

Sec. 4. Any person or entity who shall make any fraudulent of fictitious claim under this Act,
regardless of whether payment has been made, shall upon conviction be punished with imprisonment
of not less than six (6) months and not more than one (1) year and a fine of not less than Ten
thousand pesos (P10,000), without prejudice to their prosecution and punishment for any other
offenses punishable under the Revised Penal Code or any other penal statute.
In case of partnerships or corporations, the managing partner, general manager, or chief executive
officer, as the case may be, shall be criminally liable.

Sec. 5. The amount necessary to carry out the purposes of this Act is hereby authorized to be
appropriated in the General Appropriations Act for 1992 and the subsequent annual general
appropriations acts.

Sec. 6. This Act shall take effect after its publication in the Official Gazette or in at least two (2)
national newspapers of general circulation.

Approved: March 30, 1992

 Sec. 14, Rule X, Book 3, IRR

SECTION 14. Working scholars. — There is no employer-employee relationship between students on


one hand, and schools, colleges or universities on the other, where there is written agreement
between them under which the former agree to work for the latter in exchange for the privilege to
study free of charge, provided the students are given real opportunities, including such facilities as
may be reasonable and necessary to finish their chosen courses under such agreement.

6. Domestic or Household Service Workers

Chapter III
EMPLOYMENT OF HOUSEHELPERS

ART. 141. Coverage. - This Chapter shall apply to all persons rendering services in households for
compensation.

"Domestic or household service" shall mean service in the employer’s home which is usually necessary or
desirable for the maintenance and enjoyment thereof and includes ministering to the personal comfort
and convenience of the members of the employer’s household, including services of family drivers.

ART. 142. Contract of domestic service. - The original contract of domestic service shall not last for more
than two (2) years but it may be renewed for such periods as may be agreed upon by the parties.

ART. 143. Minimum wage. - (a) Househelpers shall be paid the following minimum wage rates:

(1) Eight hundred pesos (P800.00) a month for househelpers in Manila, Quezon, Pasay, and Caloocan
cities and municipalities of Makati, San Juan, Mandaluyong, Muntinlupa, Navotas, Malabon,
Parañaque, Las Piñas, Pasig, Marikina, Valenzuela, Taguig and Pateros in Metro Manila and in highly
urbanized cities;

(2) Six hundred fifty pesos (P650.00) a month for those in other chartered cities and first-class
municipalities; and

(3) Five hundred fifty pesos (P550.00) a month for those in other municipalities.

Provided, That the employers shall review the employment contracts of their househelpers every three (3)
years with the end in view of improving the terms and conditions thereof.

Provided, further, That those househelpers who are receiving at least One thousand pesos (P1,000.00)
shall be covered by the Social Security System (SSS) and be entitled to all the benefits provided
thereunder. (As amended by Republic Act No. 7655, August 19, 1993).

ART. 144. Minimum cash wage. - The minimum wage rates prescribed under this Chapter shall be the
basic cash wages which shall be paid to the househelpers in addition to lodging, food and medical
attendance.
ART. 145. Assignment to non-household work. - No househelper shall be assigned to work in a
commercial, industrial or agricultural enterprise at a wage or salary rate lower than that provided for
agricultural or non-agricultural workers as prescribed herein.

ART. 146. Opportunity for education. - If the househelper is under the age of eighteen (18) years, the
employer shall give him or her an opportunity for at least elementary education. The cost of education
shall be part of the househelper’s compensation, unless there is a stipulation to the contrary.

ART. 147. Treatment of househelpers. - The employer shall treat the househelper in a just and humane
manner. In no case shall physical violence be used upon the househelper.

ART. 148. Board, lodging, and medical attendance. - The employer shall furnish the househelper, free of
charge, suitable and sanitary living quarters as well as adequate food and medical attendance.

ART. 149. Indemnity for unjust termination of services. - If the period of household service is fixed,
neither the employer nor the househelper may terminate the contract before the expiration of the term,
except for a just cause. If the househelper is unjustly dismissed, he or she shall be paid the compensation
already earned plus that for fifteen (15) days by way of indemnity.

If the househelper leaves without justifiable reason, he or she shall forfeit any unpaid salary due him or
her not exceeding fifteen (15) days.

ART. 150. Service of termination notice. - If the duration of the household service is not determined
either in stipulation or by the nature of the service, the employer or the househelper may give notice to
put an end to the relationship five (5) days before the intended termination of the service.

ART. 151. Employment certification. - Upon the severance of the household service relation, the employer
shall give the househelper a written statement of the nature and duration of the service and his or her
efficiency and conduct as househelper.

ART. 152. Employment record. - The employer may keep such records as he may deem necessary to
reflect the actual terms and conditions of employment of his househelper, which the latter shall
authenticate by signature or thumb mark upon request of the employer.

(Rule XIII, Book III, IRR)


RULE XIII
Employment of Househelpers

SECTION 1. General statement on coverage. —


(a) The provisions of this Rule shall apply to all househelpers whether employed on full or part-time
basis.
(b) The term "househelper" as used herein is synonymous to the term "domestic servant" and shall refer
to any person, whether male or female, who renders services in and about the employer's home and
which services are usually necessary or desirable for the maintenance and enjoyment thereof, and
ministers exclusively to the personal comfort and enjoyment of the employer's family.

SECTION 2. Method of payment not determinant. — The provisions of this Rule shall apply irrespective of
the method of payment of wages agreed upon by the employer and househelper, whether it be hourly,
daily, weekly, or monthly, or by piece or output basis.

SECTION 3. Children of househelpers. — The children and relatives of a househelper who live under the
employer's roof and who share the accommodations provided for the househelpers by the employer shall
not be deemed as househelpers if they are not otherwise engaged as such and are not required to
perform any substantial household work.

SECTION 4. Employment contract. — The initial contract for household service shall not last for more than
two (2) years. However, such contract may be renewed from year to year.

SECTION 5. Minimum monthly wage. — The minimum compensation of househelpers shall not be less
than the following rates:
(a) Sixty pesos (P60.00) a month for those employed in the cities of Manila, Quezon, Pasay and Caloocan,
and in the municipalities of Makati, San Juan, Mandaluyong, Muntinlupa, Navotas, Malabon,
Parañaque, Las Piñas, Pasig and Marikina, in the Province of Rizal.
(b) Forty-five pesos (P45.00) a month for those employed in other chartered cities and first class
municipalities; and
(c) Thirty pesos (P30.00) a month for those in other municipalities.

SECTION 6. Equivalent daily rate. — The equivalent minimum daily wage rate of househelpers shall be
determined by dividing the applicable minimum monthly rate by thirty (30) days.

SECTION 7. Payment by results. — Where the method of payment of wages agreed upon by the employer
and the househelper is by piece or output basis, the piece or output rates shall be such as will assure the
househelper of the minimum monthly or the equivalent daily rate as provided in this issuance.

SECTION 8. Minimum cash wage. — The minimum wage rates prescribed under this Rule shall be basic
cash wages which shall be paid to the househelpers in addition to lodging, food and medical attendance.

SECTION 9. Time and manner of payment. — Wages shall be paid directly to the househelper to whom
they are due at least once a month. No deductions therefrom shall be made by the employer unless
authorized by the househelper himself or by existing laws.

SECTION 10. Assignment to non-household work. — No househelper shall be assigned to work in a


commercial, industrial or agricultural enterprise at a wage or salary rate lower than that provided for
agricultural and non-agricultural workers.

SECTION 11. Opportunity for education. — If the househelper is under the age of eighteen (18) years, the
employer shall give him or her an opportunity for at least elementary education. The cost of such
education shall be part of the househelper's compensation, unless there is a stipulation to the contrary.

SECTION 12. Treatment of househelpers. — The employer shall treat the househelper in a just and
humane manner. In no case shall physical violence be inflicted upon the househelper.

SECTION 13. Board, lodging and medical attendance. — The employer shall furnish the househelper free
suitable and sanitary living quarters as well as adequate food and medical attendance.

SECTION 14. Indemnity for unjust termination of service. — If the period for household service is fixed,
neither the employer nor the househelper may terminate the contract before the expiration of the term,
except for a just cause. If the househelper is unjustly dismissed, he or she shall be paid the compensation
already earned plus that for fifteen (15) days by way of indemnity.
If the househelper leaves without justifiable reason, he or she shall forfeit any unpaid salary due him or
her not exceeding fifteen (15) days.

SECTION 15. Employment certification. — Upon the severance of the household service relationship, the
househelper may demand from the employer a written statement of the nature and duration of the
service and his or her efficiency and conduct as househelper.

SECTION 16. Funeral expenses. — In case of death of the househelper, the employer shall bear the funeral
expenses commensurate to the standards of life of the deceased.

SECTION 17. Disposition of the househelper's body. — Unless so desired by the househelper or by his or
her guardian with court approval, the transfer or use of the body of the deceased househelper for
purposes other than burial is prohibited. When so authorized by the househelper, the transfer, use and
disposition of the body shall be in accordance with the provisions of Republic Act No. 349.

SECTION 18. Employment records. — The employer may keep such records as he may deem necessary to
reflect the actual terms and conditions of employment of his househelper which the latter shall
authenticate by signature or thumbmark upon request of the employer.

SECTION 19. Prohibited reduction of pay. — When the compensation of the househelper before the
promulgation of these regulations is higher than that prescribed in the Code and in this issuance, the same
shall not be reduced or diminished by the employer on or after said date.

SECTION 20. Relation to other laws and agreements. — Nothing in this Rule shall deprive a househelper
of the right to seek higher wages, shorter working hours and better working conditions than those
prescribed herein, nor justify an employer in reducing any benefit or privilege granted to the househelper
under existing laws, agreements or voluntary employer practices with terms more favorable to the
househelpers than those prescribed in this Rule.
 ART. 302 of the Civil Code

 R.A. 7655

AN ACT INCREASING THE MINIMUM WAGE OF HOUSEHELPERS, AMENDING FOR THE PURPOSE
ARTICLE 143 OF PRESIDENTIAL DEGREE NO. 442, AS AMENDED.

Section 1. Subparagraphs (1), (2) and (3), Article 143 of Presidential Decree No. 442, as amended,
otherwise known as the "Labor Code of the Philippines" are hereby amended to read as follows
"ART. 143. Minimum wage. — (a) Househelpers shall be paid the following minimum wage rates;

(1) Eight hundred pesos (P800.00) a month for househelpers in Manila, Quezon, Pasay and Caloocan
cities and municipalities of Makati, San Juan, Mandaluyong, Muntinlupa, Navotas, Malabon,
Parañaque, Las Piñas, Pasig, Marikina, Valenzuela, Taguig and Pateros in Metro Manila and in highly
urbanized cities;
(2) Six hundred fifty pesos (P650.00) a month for those in other chartered cities and first class
municipalities; and
(3) Five hundred fifty pesos (P550.00) a month for those in other municipalities;
Provided, That the employees shall review the employment contracts of their househelpers every
three (3) years with the end in view of improving the terms and conditions thereof.
Provided, further, That those househelpers who are receiving at least One thousand pesos (P1,000.00)
shall be covered by the Social Security System (SSS) and be entitled to all the benefits provided there
under."

Sec. 2. Any violation of any provision of this Act shall be punished with an imprisonment of not more
than three (3) months or a fine of not more than Two thousand pesos (P2,000.00) or both, at the
discretion of the court.

Sec. 3. Any law, executive order, letter of instruction, or any part thereof, which is inconsistent with
any of the provisions of this Act is hereby repealed or amended accordingly.

Sec. 4. This Act shall take effect fifteen (15) days after its publication in the Official Gazette or in at
least two (2) national newspapers of general circulation, whichever comes earlier.

Approved: August 19, 1993

 Rights of a Househelper (Wage, SSS, Art. 145, 147, 148, 150 Labor Code and Art. 1694, 1698 Civil
Code)

Social Security Law (R.A. 1161 as amended by R.A. 8282)


Sec. 9. Coverage. –

(a) Coverage in the SSS shall be compulsory upon all employees not over sixty (60)
years of age and their employers:

Provided, That in case of domestic helpers, their monthly income shall not be less than one
thousand pesos (Php.1000.00) a month:

Provided, further, That any benefit already earned by the employees under private benefit plans
existing at the time of the approval of this Act shall not be discontinued, reduced or otherwise
impaired:

Provided, further, That private plans which are existing and in force at the time of compulsory
coverage shall be integrated with the plan of the SSS in such a way where the employer’s
contribution to his private plan is more than that required of him in this Act, he shall pay to the
SSS only the contribution required of him and he shall continue his contribution to the SSS so that
the employer’s total contribution to his benefit plan and to the SSS shall be the same as his
contribution to his private benefit plan before the compulsory coverage:
Provided, further, That any changes, adjustments, modifications, eliminations or improvements in
the benefits to be available under the remaining private plan, which may be necessary to adopt
by reason of the reduced contribution thereto as a result of the integration, shall be subject to
agreements between the employers and employees concerned:

Provided, further, That the private benefit plan which the employer shall continue for his
employees shall remain under the employer’s management and control unless there is an existing
agreement to the contrary,

Provided, finally, That nothing in this Act shall be construed as a limitation on the right of
employers and employees to agree on and adopt benefits which are over and above those
provided under this Act.

(Labor Code)
ART. 144. Minimum cash wage. - The minimum wage rates prescribed under this Chapter shall be the
basic cash wages which shall be paid to the househelpers in addition to lodging, food and medical
attendance.

ART. 145. Assignment to non-household work. - No househelper shall be assigned to work in a


commercial, industrial or agricultural enterprise at a wage or salary rate lower than that provided for
agricultural or non-agricultural workers as prescribed herein.

ART. 147. Treatment of househelpers. - The employer shall treat the househelper in a just and
humane manner. In no case shall physical violence be used upon the househelper.

ART. 148. Board, lodging, and medical attendance. - The employer shall furnish the househelper, free
of charge, suitable and sanitary living quarters as well as adequate food and medical attendance.

ART. 150. Service of termination notice. - If the duration of the household service is not determined
either in stipulation or by the nature of the service, the employer or the househelper may give notice
to put an end to the relationship five (5) days before the intended termination of the service.

(Civil Code)
Art. 1689. Household service shall always be reasonably compensated. Any stipulation that household
service is without compensation shall be void. Such compensation shall be in addition to the house
helper's lodging, food, and medical attendance.

Art. 1690. The head of the family shall furnish, free of charge, to the house helper, suitable and
sanitary quarters as well as adequate food and medical attendance.

Art. 1694. The head of the family shall treat the house helper in a just and humane manner. In no case
shall physical violence be used upon the house helper.

Art. 1698. If the duration of the household service is not determined either by stipulation or by the
nature of the service, the head of the family or the house helper may give notice to put an end to the
service relation, according to the following rules:

(1) If the compensation is paid by the day, notice may be given on any day that the service shall end
at the close of the following day;

(2) If the compensation is paid by the week, notice may be given, at the latest on the first business
day of the week, that the service shall be terminated at the end of the seventh day from the
beginning of the week;

(3) If the compensation is paid by the month, notice may be given, at the latest, on the fifth day of
the month that the service shall cease at the end of the month.

 Employment of Minor as Househelper

(Rule XIII, Book III, IRR)


SECTION 3. Children of househelpers. — The children and relatives of a househelper who live under
the employer's roof and who share the accommodations provided for the househelpers by the
employer shall not be deemed as househelpers if they are not otherwise engaged as such and are not
required to perform any substantial household work.

SUMMARY OF RIGHTS OF HOUSEHELPERS

1. Non-Assignment to non-household work;


2. Reasonable compensation;
3. Just and humane treatment;
4. Board, lodging, and medical attendance;
5. Indemnity for unjust termination of services;
6. Contract for household service shall last for more than two years. However, such
contract may be renewed from year to year;
7. Not be required to work for more than ten hours a day;
8. Every house helper shall be allowed four days vacation each month, with pay;
9. Right to demand employment certification from the employer;
10. Funeral expenses must be paid by the employer if the househelper has no relatives
with sufficient means in the place where the head of the family lives;
11. termination only for just cause; and
12. If under 18 years of age, an opportunity to at least elementary education. The cost
of such education shall be a part of the house helper’s compensation, unless there is a stipulation to
the contrary.

7. Alien Employees

 ART. 40, 41, 42 of the Labor Code

Title II
EMPLOYMENT OF NON-RESIDENT
ALIENS

ART. 40. Employment permit of non-resident aliens. - Any alien seeking admission to the Philippines
for employment purposes and any domestic or foreign employer who desires to engage an alien for
employment in the Philippines shall obtain an employment permit from the Department of Labor.

The employment permit may be issued to a non-resident alien or to the applicant employer after a
determination of the non-availability of a person in the Philippines who is competent, able and willing
at the time of application to perform the services for which the alien is desired.

For an enterprise registered in preferred areas of investments, said employment permit may be issued
upon recommendation of the government agency charged with the supervision of said registered
enterprise.

ART. 41. Prohibition against transfer of employment. - (a) After the issuance of an employment
permit, the alien shall not transfer to another job or change his employer without prior approval of
the Secretary of Labor.

(b) Any non-resident alien who shall take up employment in violation of the provision of this Title and
its implementing rules and regulations shall be punished in accordance with the provisions of Articles
289 and 290 of the Labor Code.

In addition, the alien worker shall be subject to deportation after service of his sentence.

ART. 42. Submission of list. - Any employer employing non-resident foreign nationals on the effective
date of this Code shall submit a list of such nationals to the Secretary of Labor within thirty (30) days
after such date indicating their names, citizenship, foreign and local addresses, nature of employment
and status of stay in the country. The Secretary of Labor shall then determine if they are entitled to an
employment permit.

(Rule XIV, Book I, IRR)


RULE XIV
Employment of Aliens
SECTION 1. Coverage. — This Rule shall apply to all aliens employed or seeking employment in the
Philippines, and their present or prospective employers.

SECTION 2. Submission of list. — All employers employing foreign nationals, whether resident or non-
resident shall submit a list of such nationals to the Bureau indicating their names, citizenship, foreign
and local addresses; nature of employment and status of stay in the Philippines.

SECTION 3. Registration of resident aliens. — All employed resident aliens shall register with the
Bureau under such guidelines as may be issued by it.

SECTION 4. Employment permit required for entry. — No alien seeking employment, whether on
resident or non-resident status, may enter the Philippines without first securing an employment
permit from the Department of Labor and Employment. If an alien enters the country under a non-
working visa and wishes to be employed thereafter, he may only be allowed to be employed upon
presentation of a duly approved employment permit.

SECTION 5. Requirements for employment permit application. — The application for an employment
permit shall be accompanied by the following:
(a) Curriculum vitae duly signed by the applicant indicating his educational background, his work
experience and other data showing that he possesses high technical skills in his trade or
profession;
(b) Contract of employment between the employer and the principal which shall embody the
following, among others:
1. That the non-resident alien worker shall comply with all applicable laws and rules and
regulations of the Philippines;
2. That the non-resident alien worker and the employer shall bind themselves to train at least
two (2) Filipino understudies for a period to be determined by the Secretary of Labor and
Employment; and
3. That he shall not engage in any gainful employment other than that for which he was issued
a permit.
(c) A designation by the employer of at least two (2) understudies for every alien worker. Such
understudies must be the most ranking regular employees in the section or department for which
the expatriates are being hired to ensure the actual transfer of technology.

SECTION 6. Issuances of employment permit. — The Secretary of Labor and Employment may issue
an employment permit to the applicant based on:
(a) Compliance by the applicant and his employer with the requirements of Section 2 hereof;
(b) Report of the Bureau Director as to the availability or non-availability of any person in the
Philippines who is competent, able, and willing to do the job for which the services of the
applicant are desired;
(c) His assessment as to whether or not the employment of the applicant will redound to the
national interest;
(d) Admissibility of the alien as certified by the Commission on Immigration and Deportation;
(e) The recommendation of the Board of Investments or other appropriate government agencies if
the applicant will be employed in preferred areas of investments or in accordance with
imperatives of economic developments; and
(f) Payments of a P100.00 fee.

SECTION 7. Duration of employment permit. — Subject to renewal upon showing of good cause, the
employment permit shall be valid for a minimum period of one (1) year starting from the date of its
issuance unless sooner revoked by the Secretary of Labor and Employment for violation of any
provisions of the Code or of these Rules.

SECTION 8. Advice to Commission on Immigration and Deportation. — The Bureau shall advice the
Commission on Immigration and Deportation on the issuance of an employment permit to an
applicant.

SECTION 9. Understudy Training Program. — The employer shall submit a training program for his
understudies to the Bureau within thirty (30) days upon arrival of the alien workers. The supervision
of the training program shall be the responsibility of the Bureau and shall be in accordance with
standards established by the Secretary of Labor and Employment.
 Requisites in Hiring Alien Employees

DOLE Department Order No. 97-09 Series of 2009

Revised Rules for the Issuance of Employment Permits to Foreign Nationals

Pursuant to the provisions of Articles 5 and 40 of PD 442 as amended, the provisions of Rule XIV, Book
I of its Implementing Rules and Regulations, Sec. 17(5), Chapter 4, Title VII of the Administrative Code
of 1987, the following Rules are hereby promulgated:

Section 1. Coverage - All foreign nationals who intend to engage in gainful employment in the
Philippines shall apply for Alien Employment Permit (AEP).

Section 2. Exemption - The following categories of foreign nationals are exempt from securing an
employment permit:

a) All members of the diplomatic service and foreign government officials accredited by and
with reciprocity arrangement with the Philippine Government;

b) Officers and staff of international organizations of which the Philippine Government is a


member and their legitimate spouses desiring to work in the Philippines;

c) Foreign nationals elected as members of the Governing Board who do not occupy any other
position, but have only voting rights in the corporation;

d) All foreign nationals granted exemption by law;

e) Owners and representatives of foreign principals whose companies are accredited with the
POEA, who come to the Philippines for a limited period and solely for the purpose of
interviewing Filipino applicants for employment abroad;

f) Foreign nationals who come to the Philippines to teach, present and/or conduct research
studies in universities and colleges as visiting, exchange or adjunct professors under formal
agreements between universities or colleges in the Philippines and foreign universities or
colleges, or between the Philippine Government and foreign government; provided that the
exemption is on a reciprocal basis; and

g) Permanent resident foreign nationals, probationary or temporary resident visa holders.

Section 3. Procedure in the Processing of Applications for AEP -

a. Applications shall be filed with the Regional Office having jurisdiction over the intended place
of work.

Only applications with the following complete documentary requirements shall be received
and acted upon by the Regional Office:

- Duly accomplished Application Form;


- Photocopy of Passport, with Visa or Certificate of Recognition for Refugees;
- Contract of Employment/Appointment or Board Secretary's Certificate of Election;
- Photocopy of Mayor's Permit to operate business or in case of locators in economic
zones, Certification from the PEZA or the Ecozone Authority that the company is located
and operating within the ecozone; and
- Photocopy of current AEP (if for renewal)

b. In the case of foreign nationals to be assigned in related companies, they may file their
application with any of the Regional Offices having jurisdiction over any of the applicant's
intended places of work.
c. Additional position or change in position of the foreign national in the same company or
subsequent assignment in related companies during the validity or renewal of the AEP will be
subject for publication requirement and payment of publication fee. However, a change of
employer shall require an application for new AEP.
Section 4. Fee - Upon filing of application, the applicant shall pay a fee of P8,000 for each application
for AEP with a validity of 1 year. In case the period of employment is more than 1 year, an additional
P3,000 shall be charged for every additional year of validity or a fraction thereof. In case of renewal,
the applicant shall pay a fee of P3,000 for each year of validity or a fraction thereof.

Replacement of AEP card shall require a fee of P750. In case of loss of AEP card, request for
replacement shall be accompanied by an Affidavit of Loss.

Section 5. Publication – The Regional Office shall publish all applications for new AEP, change or
additional position in the same company or subsequent assignment in related companies within 2
working days upon receipt of application. Any objection or information against the employment of the
foreign national may be filed with the Regional Office anytime during the foreign national’s period of
employment.

Section 6. Processing Period – Upon receipt of application the authorized representative of the
Regional Office may conduct ocular inspection within 2 working days thereof, to verify legitimacy of
the employment of the foreign national. All applications shall be processed and an AEP shall be issued
within 24 hrs after publication and payment of required fees and fines, if any.

Section 7. Verification Inspection – The authorized representatives of the Regional Director may
conduct verification inspection of establishments employing foreign nationals within 30 days after the
issuance of the AEP to ensure that the foreign national is doing the job for which the AEP was issued.

Section 8. Effect of denial/cancellation or revocation of AEP - A foreign national whose application


for AEP has been denied/cancelled/revoked shall not be allowed to reapply in any of the DOLE
Regional Offices, unless said foreign national has provided proof that the ground for denial/
cancellation/ revocation has been corrected.

Section 9. Renewal of AEP - An application for renewal of AEP shall be filed on or before its
expiration. Application for foreign nationals with expired AEP's shall be considered as a new
application.

In case of corporate officers whose election or appointment takes place on or before expiration of
AEP, the application shall be filed not later than 10 working days after election or appointment and
before expiration of the AEP.

In case the election or appointment will take place after the expiration of the AEP, the application for
renewal shall be filed on or before the expiration of the AEP, and shall be renewed for 1 year. In case
the foreign national is not re-elected or re-appointed, the AEP shall be automatically revoked.

Section 10. Denial of application – An application for AEP may be denied by the Regional Director
based on any of the following grounds:

a. Misrepresentation of facts in the application;


b. Submission of falsified documents;
c. The foreign national has a derogatory record;
d. Availability of a Filipino who is competent, able, and willing to do the job intended for the
foreign national.

Section 11. Validity of Permit - The AEP shall be valid for a period of 1 year, unless the employment
contract, consultancy services, or other modes of engagement provides otherwise, which in no case
shall exceed 5 years.

Section 12. Suspension of AEP - The AEP may be suspended by the issuing Regional Office, based on
any of the following grounds, and after due process:

a. The continued stay of the foreign national may result in damage to the interest of the
industry or the country.
b. The employment of the foreign national is suspended by the employer or by order of the
Court.

Petitions for suspension of AEP issued shall be resolved within 30 calendar days from receipt thereof.
Section 13. Cancellation/Revocation of AEP - The Regional Director may cancel or revoke the AEP
based on any of the following grounds, and after due process:

a. Non-compliance with any of the requirements or conditions for which the AEP was issued;
b. Misrepresentation of facts in the application;
c. Submission of falsified or tampered documents;
d. Meritorious objection or information against the employment of the foreign national as
determined by the Regional Director;
e. Foreign national has a derogatory record; and
f. Employer terminated the employment of the foreign national.

Section 14. Appeal – Any aggrieved party may file an appeal with the Secretary within 10 days after
receipt of the copy of denial/suspension/cancellation/revocation order.

The decision of the Secretary shall be final and executor unless a Motion for Reconsideration is filed
within 10 days after receipt of the decision of the Secretary. No second motion for reconsideration
shall be entertained.

Section 15. Fines for Working without AEP - The Regional Director shall have the power to order and
impose a fine of P10,000 for every year or a fraction thereof on foreign nationals found working
without an AEP or with an expired AEP.

Newly hired, elected or appointed officers may file application for new AEP without penalty within 15
working days after signing of contract, election, or appointment, or before the start of the actual term
of office.

Section 16. Miscellaneous Provisions

a. Separability Clause - If any provision or part of this Department Order or the application
thereof to any person or circumstance is held invalid by the Courts, the remaining valid
provisions of this D.O. shall not be affected.

b. Repealing Clause - All guidelines, rules and regulations, procedures and agreements
inconsistent herewith are hereby repealed or modified accordingly.

c. Effectivity - These Rules shall take effect 15 days after its publication in 2 newspapers of
general circulation. The Records Officer of this Department is hereby directed to file 3
certified copies thereof with the University of the Philippines Law Center pursuant to Sec. 3,
Chapter 2, Book VII of the Administrative Code of 1987.

SUMMARY OF ALIEN EMPLOYMENT

1. What is an Alien Employment Permit (AEP)?


An Alien Employment Permit is a document issued by the Department of Labor and Employment
which authorizes a foreign national to work in the Philippines.

2. Who are the foreign nationals required to apply for an AEP?


 All foreign nationals who intend to engage in gainful employment in the Philippines.
 All foreign nationals who intend to engage in gainful employment in the Philippines;
 Foreign professionals who are allowed to practice their profession in the Philippines under
reciprocity and other international agreements and in consultancy services pursuant to
Section 7(j) of the PRC Modernization Act of 2000.
 Holders of Special Investors Resident Visa (SIRV), Special Retirees Resident Visa (SRRV), Treaty
Traders Visa (9d) or Special Non-Immigrant Visa (47(a)2) for as long as they occupy any
executive, advisory, supervisory, or technical position in any establishment.

3. Who are exempted from securing AEP?


The following categories of foreign nationals are exempt from securing AEP:
1) Members of the diplomatic services and foreign government officials accredited by the
Philippine government;
2) Officers and staff of international organizations of which the Philippine government is a
cooperating member, and their legitimate spouses desiring to work in the Philippines;
3) Foreign nationals elected as members of the Governing Board who do not occupy any other
position, but have only voting rights in the corporation;
4) All foreign nationals granted exemption by special laws and all other laws that may be
promulgated by the Congress;
5) Owners and representatives of foreign principals, whose companies are accredited by the
Philippine Overseas Employment Administration (POEA), who come to the Philippines for a
limited period solely for the purpose of interviewing Filipino applicants for employment
abroad;
6) Foreign nationals who come to the Philippines to teach, present and/or conduct research
studies in universities and colleges as visiting, exchange or adjunct professors under formal
agreements between the universities or colleges in the Philippines and foreign universities or
colleges; or between the Philippine government and foreign government; provided that the
exemption is on a reciprocal basis; and
7) Resident foreign nationals and temporary or probationary resident visa holders employed or
seeking employment in the Philippines.

1. Where shall an application for an AEP be filed?


An application for AEP shall be filed personally or through their respective employer with the
DOLE Regional Office or Field Office having jurisdiction over the intended place of work.
In case of foreign nationals to be assigned in subsidiaries, branch offices and joint ventures, and
those assigned in the headquarters with oversight functions in any of the branch offices,
operations or projects in the country, they may file their application in any of the DOLE
Regional/Field Offices nearest their place of work.

2. What are the requirements in the filing of application for AEP?


Documentary requirements
 Duly accomplished Application Form;
 Photocopy of Passport, with visa or Certificate of Recognition for refugees;
 Contract of Employment/ Appointment or Board Secretary’s Certificate of Election;
 Photocopy of Mayor’s Permit to operate business or in case of locators in economic zones,
Certification from the PEZA or the Ecozone Authority that the company is located and
operating within the ecozone; and
 Photocopy of current AEP (if for renewal)

Fees
 Permit fee is P8,000 for one year validity or fraction thereof plus P3,000.00 for every
additional year of validity or a fraction thereof, which shall not exceed five years, to be paid
upon submission of application.

Penalties
 If upon evaluation, a foreign national is found to have worked without or with expired AEP
prior to application, a penalty of Ten Thousand Pesos (P10,000.00) shall be imposed for
working without an AEP for one (1) year or fraction thereof.

1. Who authorizes the issuance of an AEP?


The Secretary of Labor and Employment, through the DOLE Regional Director, who has
jurisdiction over the intended place of work of the foreign national, authorizes the issuance of an
AEP.

2. Who are covered by the publication requirement?


An application for new AEP, for additional or change in position of the foreign national in the
same company or subsequent assignment in related companies during the validity or renewal of
the AEP will be subject for publication requirement and payment of publication fee.

3. If there is an objection/information filed with the Regional Office regarding the application for
AEP published, how will it be resolved?
The Regional Director shall determine as to whether or not an information/objection to the
application for AEP merits the denial of the application or cancellation of the AEP.

The Regional Director may require the appearance/s of either or both the foreign national and
the parties providing the information/objection. If the objection is meritorious, the Regional
Director will deny the application or cancel the AEP if it has been issued. If the objection is not
meritorious, the Regional Director will grant the AEP.
4. What is the period of validity of an AEP?
The AEP shall be valid for one (1) year or co-terminus with the duration of employment,
consultancy services or other modes of employment or term of office which in no case shall
exceed five years. Said AEP is valid for the position/s and company for which it was issued.

In case of assignment in the company’s subsidiaries, branch offices and joint ventures and those
assigned in the headquarters with oversight function in any of the branch offices, operation or
projects in the country, one (1) AEP shall be required and valid for all the said assignments
irrespective of their place/s.

5. How long is the processing period for the issuance of AEP?


If the application is filed at the Regional Office, issuance or denial of AEP shall be within 24 hours
after the publication. If the application is filed at the Field Office, issuance or denial of AEP shall
be within 5 working days from date of filing of application.

6. What are the grounds for the denial of AEP


An application for AEP may be denied for misrepresentation of facts in the application;
submission of falsified documents; the foreign national has a derogatory record; or availability of
a Filipino who is competent, able and willing to do the job intended for the foreign national.

7. What are the grounds for suspension of AEP?


The AEP may be suspended after due process based on the following:
 The continued stay of the foreign national may result in damage to the interest of the
industry or the country;
 The employment of the foreign national is suspended by the employer or by order of the
Court.

8. If an application has been denied or cancelled by the Regional Office, can the foreign national
apply for an AEP in other Regional Offices
No, foreign nationals whose applications have been denied or whose AEPs had been cancelled
shall not be allowed to re-apply in any of the DOLE Regional Offices, unless said foreign national
has provided proof that the ground for denial/ cancellation/ revocation has been corrected.

9. Is there a remedy for a denied/cancelled or revoked AEP?


Yes, an Appeal maybe filed by any aggrieved party with the Secretary of Labor and Employment
within 10 days after receipt of the Order of denial/cancellation or revocation.

10. Is the decision of the Secretary final and executory?


Yes, the decision of the Secretary shall be final and executory, unless a motion for reconsideration
is filed within ten (10) days after receipt of the decision of the Secretary. No second motion for
reconsideration shall be entertained.

11. When shall an application for renewal of AEP be filed?


An application for renewal of AEP must be filed before its expiration. For elective and appointive
positions, applications must be filed within 15 working days after election/appointment or before
expiration of AEP, if election or appointment will take place before expiration of AEP.

In case the election or appointment will take place after the expiration of the AEP, the application
shall be filed before the expiration of the AEP, and shall be renewed for one year.

12. What are the grounds for revocation/cancellation of AEP?


Any of the following is a ground for revocation/cancellation of an AEP:
1. Non-compliance with any of the requirements or conditions for which the AEP was issued;
2. Misrepresentation of facts in the application;
3. Submission of falsified or tampered documents;
4. Meritorious objection or information against the employment of the foreign national as
determined by the Regional Director;
5. Foreign national has a derogatory record; or
6. Employer terminated the employment of the foreign national.

18. Are there fines and penalties relative to the filing of an application for an AEP?
Yes, a fine of Ten Thousand Pesos (P10,000.00) for every year or a fraction thereof shall be
imposed on foreign nationals found working without an AEP or with an expired AEP.
19. Is there a grace period in the filing of application for new AEP?
Yes, newly hired, elected or appointed officers are allowed to file application for new AEP without
penalty within fifteen (15) working days after signing of contract, election or appointment.

However, if the appointment, election or signing of contract is more than 15 working days before
the start of contract or term of office, the application may be filed before the start of contract or
term of office.

20. What is required in the replacement of an AEP Card?


Replacement of AEP card shall require a fee of Seven Hundred Fifty Pesos (P750.00). In case of
loss of AEP card, request for replacement shall be supported by an Affidavit of loss.

 Limitations in hiring of alien employees

X. QUITCLAIMS

A QUITCLAIM is a written instrument signed by the employee wherein he makes a statement that he has
received the benefits of Labor Standards, he releases any claim against the employer, and other similar
statements. A quitclaim is usually prepared by the employer and only signed by the employee, making it a
contract of adhesion.

It is generally discouraged by law because of the inherent imbalance of power between the employer and the
employee.

Q: Are Quitclaims and Compromise Agreements the same?


A: It appears from the cases that a quitclaims partakes of the nature of a compromise. But a quitclaim is
generally entered into at the start of employment, while a compromise agreement is entered into during or
pending litigation, or when the dispute arises between the employer and the employee.

- NATURE OF QUITCLAIMS

In this jurisdiction, quitclaims, waivers, or releases are looked upon with disfavor. They are commonly
frowned upon as contrary to public policy and ineffective to bar claims for the full measure of the workers
legal rights.

"Pacta privata juri publico derogare non possunt" - Private agreements between parties cannot derogate
from public right.
(Rizada vs NLRC, GR# 96982 – 09/21/99)

- CONDITIONS FOR INVALID QUITCLAIMS

Not all quitclaims are per se invalid or against public policy, but those:

1. Where there is clear proof that the waver was wrangled from an unsuspecting or gullible person, or
2. Where the terms of settlement are unconscionable on their face, are invalid.

In these cases, the law will step in to annul the questionable transaction.
(Lambo vs NLRC, GR# 111042 – 10/26/99)

- APPROVAL OF LABOR ARBITER REQUIRED TO MAKE A QUITCLAIM VALID

While the Labor Code encourages all efforts towards the amicable settlement of a labor dispute, and a
quitclaim partakes the nature of a compromise, the implementing rules require that such a settlement shall
be approved by the Labor Arbiter, before whom the case is pending, the reason being that the latter would
be in a better position than just any labor arbiter to personally determine the voluntariness of the
agreement and certify its validity.
The court found no grave abuse of discretion in the Labor Arbiter's ruling rejecting the claim of the Company
that the amount of P15,000 was given to Lorna Pimentel after the death of her husband. The Labor Arbiter
upheld the version of Lorna that she said the amount was offered to the deceased Pimentel before his
death, and was angrily refused by him, and that she was constrained to accept the said amount on October
22, 1993 when her husband was already dead and lying in state as she needed money for his burial.
Moreover, the respondent NLRC correctly ruled that the waiver executed by the wife not having been
approved by the Labor Arbiter would not amount to estoppel and would not divest an employee of his right
to pursue his claim against the employer. In labor jurisprudence, it is well settled that quitclaims are against
public policy. This court held that while the Labor Code encourages all efforts towards the amicable
settlement of a labor dispute, and a quitclaim partakes the nature of a compromise, the implementing rules
require that such a settlement shall be approved by the Labor Arbiter, before whom the case is pending,
after being satisfied that it was voluntarily entered into by the parties and after having explained to them the
terms and consequences thereof. The reason for the rule is not hard to find. It is for the employee's
protection for the Labor Arbiter before whom the case is pending would be in a better position than just any
other labor arbiter to personally determine the voluntariness of the agreement and certify its veracity.
(C & A Construction Co., Inc. vs NLRC, GR# 122279 – 11/22/99)

- A COMPROMISE AGREEMENT/QUITCLAIM MUST NOT BE UNCONSCIONABLE TO THE MIND.

The compromise agreement/quitclaim purportedly entered into by the parties is unconscionable and
contrary to public policy. The settlement of P20,000 instead of the Labor Arbiter's award of P174,379.52 is
shocking to the mind. This court has ruled that "Pacta privata juri publico derogare non possunct" or private
agreements cannot derogate from public right.
(Malinaw vs NLRC, GR# 119492 – 11/24/99)

- ACCEPTANCE OF THE AMOUNT IN A QUITCLAIM DOES NOT ESTOPPE AN EMPLOYEE FROM RECOVERING
THE PROPER AWARD

There is no tenability in petitioners contention that the private respondent is estopped from claiming
separation benefits. In line with the policy of the state to promote welfare of workers, this court takes note
of the low regard for quitclaims executed by laborers which are often frowned upon as contrary to public
policy. This doctrine is consistent with Sec. 18, Art. II of the 1987 Constitution which states: "The State
affirms labor as the primary social economic force. It shall protect the rights of workers and promote their
welfare." Time honored is the precept that quitclaims are ineffective in barring recovery for the full measure
of the workers rights and that acceptance of benefits therefrom does not amount to estoppel.
(PNCC vs NLRC, GR# 100353 – 10/22/99)

- VALIDITY OF QUITCLAIMS

The validity of quitclaims executed by laborers has long been recognized in this jurisdiction. This court has
ruled that not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily
entered into and represents a reasonable settlement of the claims of the employee, it is binding on the
parties and may not later be disowned simply because of a change of mind. Such legitimate waivers resulting
from voluntary settlements of laborers claims should be treated and upheld as the law between the parties.
However, when in this case, the voluntariness of the execution of the quitclaim or release is put into issue,
then the claim of the employee may still be given due course. The law looks with disfavor upon quitclaims
and releases by employees pressured into signing the same by unscrupulous employers minded to evade
legal responsibilities.
(Phil. Carpet Exporters Assoc. vs PCMC, GR# 140269-70 – 09/14/00)

GENERAL RULE:
Quitclaims are presumed to be invalid

EXCEPT:
When the quitclaim;
1. Was voluntarily entered into
2. Represents a reasonable settlement of the claims of the employee
3. There is no proof that the consent of the employee was taken by fraud, intimidation, etc.

CONSENT IN QUITCLAIMS
Contrary to the assumption of both the CA and the VA, the mere fact that Barquin was not physically
coerced or intimidated does not necessarily imply that he freely or voluntarily consented to the terms of the
quitclaim. Under Art. 1330 of the Civil Code, consent may be vitiated not only through intimidation or
violence but also by mistake, undue influence, or fraud. Mistake may invalidate consent when it refers to the
substance of the thing which is the object of the contract or to those conditions which have principally
moved one or both parties to enter into a contract. There is fraud when, through insidious words or
machinations of one of the contracting parties, the other is induced to enter into a contract which, without
them, he would not have agreed to.
(Phil. Carpet Exporters Assoc. vs PCMC, GR# 140269-70 – 09/14/00)

BURDEN OF PROOF IN QUITCLAIMS

It is the employer and not the employee who has the burden of proving that the quitclaim was voluntarily
entered into by him.
(Phil. Carpet Exporters Assoc. vs PCMC, GR# 140269-70 – 09/14/00)

- (ACD Investigation Security Agency vs Daquera, GR# 147473 – 03/30/04)

- (R & E Transport Inc. vs Latag, GR# 155214 – 02/13/04)


Unconscionable on its face

- COMPROMISE AGREEMENTS

A compromise agreement is a contract whereby the parties make reciprocal concessions in order to resolve
their differences and thus avoid or put an end to a lawsuit. They adjust their difficulties in the manner they
have agreed upon, disregarding the possible gain in litigation and keeping in mind that such gain is balanced
by the danger of losing. Verily, the compromise may be either extrajudicial (to prevent litigation) or judicial
(to end litigation). A compromise must not be contrary to law, morals, good customs, and public policy; and
must have been freely and intelligently executed by and between the parties, it must comply with the
requisites and principles of contracts. Upon the parties, it has the effect and authority of res judicata, once
entered into.
(Magbanua vs UY, GR# 161003 – 05/06/05)

EFFECTIVITY OF A COMPROMISE AGREEMENT;

When a compromise agreement is given judicial approval, it becomes more than a contract binding upon the
parties. Having been sanctioned by the court, it is entered as a determination of a controversy and has the
force and effect of a judgment. It is immediately executory and not appealable, except for vices of consent or
forgery. The non-fulfillment of its terms and conditions justifies the issuance of a writ of execution; in such
an instance, execution becomes a ministerial duty of the court.
(Magbanua vs UY, GR# 161003 – 05/06/05)

COMPROMISE OF CASES PENDING TRIAL, APPEAL AND WITH FINAL JUDGMENT;

The court upheld a compromise agreement that covered cases pending trial, on appeal, and with final
judgments. The court noted that Art. 2040 of the Civil Code impliedly allowed such agreements. There was a
limitation as to when these should be entered into.

Palanca vs CIR sustained a compromise agreement, notwithstanding a final judgment in which only the
amount of back-wages was left to be determined. The court found no evidence of fraud or of any showing
that the agreement was contrary to law, morals, good customs, public order, or public policy.

Gatchalian vs Arlegui upheld the right to compromise prior to the execution of a final judgment. The Court
ruled that the final judgment had been novated and supreseded by a compromise agreement.

Also, Northern Lines vs CTA recognized the right to compromise final and executory judgments, as long as
such right was exercised by the proper party litigants.
(Magbanua vs UY, GR# 161003 – 05/06/05)

ELEMENTS OF A VALID COMPROMISE AGREEMENT;


There is no justification to disallow a compromise agreement solely because it was entered into after final
judgment. The validity of the agreement is determined by compliance with the requisites and principles of
contracts, not by when it was entered into. As provided by the law on contracts, a valid compromise must
have the following elements:

1. The consent of the parties to the compromise,


2. An object certain that is the subject matter of the compromise,
3. The cause of the obligation that is established.
(Magbanua vs UY, GR# 161003 – 05/06/05)

COMPROMISE AGREEMENTS ARE RECOGNIZED BY THE NLRC RULES OF PROCEDURE;

The advantages of a compromise agreement appear to be recognized by the NLRC in its Rules of Procedure.
As part of the proceedings in executing a final judgment, litigants are required to attend a pre-execution
conference to thresh out matters relevant to the execution. In the conference, any agreement that would
settle the final judgment in a particular manner is necessarily a compromise.

NLRC RULES OF PROCEDURE


RULE VIII
EXECUTION PROCEEDINGS

SECTION 1. PRE-EXECUTION CONFERENCE. - Within two (2) working days


from receipt of the motion for the issuance of a writ of execution and subject to
Section 2, paragraph b, the Labor Arbiter shall schedule a pre-execution
conference/hearing to thresh out matters relevant to execution.

(Magbanua vs UY, GR# 161003 – 05/06/05)

NOVATION;

The principle of novation supports the validity of a compromise after final judgment. Novation, a mode of
extinguishing an obligation, is done by changing the object or principal condition of an obligation,
substituting the person of the debtor, or surrogating a third person in the exercise of the rights of the
creditor.
(Magbanua vs UY, GR# 161003 – 05/06/05)

- (Catholic Vicariate vs Sto. Tomas, GR# 167334 – 03/07/08)


Even if witnessed by the DOLE, it may still be held invalid.

Y. SECURITY OF TENURE

(Art. XIII, 1987 Constitution)


Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and
promote full employment and equality of employment opportunities for all.

It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and
peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to
security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and
decision-making processes affecting their rights and benefits as may be provided by law.

The State shall promote the principle of shared responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual
compliance therewith to foster industrial peace.

The State shall regulate 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.
Security of tenure does not exclusively apply to regular employment only. It also applies to probationary,
seasonal, project and other forms of employment during the effectivity thereof.

(Labor Code)
ART. 279. Security of tenure. - In cases of regular employment, the employer shall not terminate the services
of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed
from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the time of his actual reinstatement. (As amended by
Section 34, Republic Act No. 6715, March 21, 1989).

(Sec. 2-4, Rule I, Book VI, IRR)

1. Scope

- SECURITY OF TENURE APPLIES TO MANAGERIAL EMPLOYEES AS WELL AS TO RANK AND FILE


EMPLOYEES

The right of the management to dismiss must be balanced against the managerial employee's right to
security of tenure which is not one of the guarantees he gives up. This court has consistently ruled that
managerial employees enjoy security of tenure and, although the standards for their dismissal are less
stringent, the loss of trust and confidence must be substantial and founded on clearly established facts
sufficient to warrant the managerial employee's separation from the company. Substantial evidence is of
critical importance and the burden rests on the employer to prove it. Due to its subjective nature, it can
easily be concocted by an abusive employer and used as a subterfuge for causes which are improper,
illegal or unjustified.
(PLDT vs Tolentino, GR# 143171 – 09/21/04)

- MANAGERIAL EMPLOYEES ARE PROTECTED BY SECURITY OF TENURE

The fact that one is a managerial employee does not by itself exclude him from the protection of the
constitutional guarantee of security of tenure.
(Fujitsu vs CA, GR# 158232 – 04/08/05)

- Condo Suite Club Travel Inc. vs NLRC

2. Constructive Dismissal vs Illegal Dismissal

Constructive Dismissal concept


Constructive dismissal is an employer’s act amounting to dismissal but made to appear as if it were not – a
dismissal in disguise. In most cases of constructive dismissal, the employee is allowed to continue to work,
but is simply reassigned, or demoted, or his pay diminished without a valid reason to do so.
Constructive dismissal does not always involve forthright dismissal or diminution in rank, compensation,
benefit and privileges. There may be constructive dismissal if an act of clear discrimination, insensibility or
disdain by an employer becomes so unbearable on the part or the employee that it could foreclose any
choice by him except to forego his continued employment. (See Hyatt Taxi Services case, G.R. No. 143204,
June 26, 2001.)

Constructive Dismissal and Involuntary Resignation


Constructive dismissal is an involuntary resignation resulting in cessation of work resorted to when
continued employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank
or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes
unbearable to an employee.

In Globe Telecom, Inc. v. Florendo-Flores, it was held that where an employee ceases to work due to a
demotion of rank or a diminution of pay, an unreasonable situation arises which creates an adverse
working environment rendering it impossible for such employee to continue working for her employer.
Hence, her severance from the company was not of her own making and therefore amounted to an illegal
termination of employment. (Cited in Francisco vs. NLRC, G.R. No. 170087, August 21, 2006.)
Cases
1. Diminution of pay. A diminution of pay is prejudicial to the employee and amounts to constructive
dismissal. (Francisco vs. NLRC)
2. Transfer of employee not amounting to constructive dismissal. Transfer of an employee from one area
of operation to another is a management prerogative and is not constitutive of constructive dismissal,
when the transfer is based on sound business judgment, unattended by a demotion in rank or a
diminution of pay or bad faith. (Tan vs. NLRC, G.R. No. 128290, November 24, 1998.)
3. Transfer of employee amounting to constructive dismissal. A transfer amounts to constructive
dismissal when the transfer is unreasonable, unlikely, inconvenient, impossible, or prejudicial to the
employee. (Phil. Industrial Security Agency Corp. vs. Aguinaldo, G.R. No. 149974, June 15, 2005.)

- WHEN IS THERE CONSTRUCTIVE DISMISSAL

Constructive dismissal exists where there is a cessation of work because continued employment is
rendered impossible, unreasonable, or unlikely. It is present when an employee's functions, which were
originally supervisory in nature, were reduced, and such reduction is not grounded on valid grounds
such as genuine business necessity.
(Fernando Go vs CA, GR# 158922 – 05/28/04)

CONSTRUCTIVE DISMISSAL; BARE ALLEGATIONS;

The failure of petitioner to fully substantiate his claim that the respondent stripped him of his duties and
functions is fatal to his present petition. Except for the sworn statements previously discussed, which we
have found to be lacking in probative value, petitioner did not present any other proof of the alleged
stripping of his functions by the respondent. Petitioners bare allegations of constructive dismissal, when
not corroborated by the evidence on record, cannot be given credence.
(Fernando Go vs CA, GR# 158922 – 05/28/04)

- OTHER INSTANCES OF CONSTRUCTIVE DISMISSAL

Constructive dismissal or a constructive discharge has been defined as quitting because continued
employment is rendered impossible, unreasonable, or unlikely, as an offer involving a demotion in rank
and a diminution in pay. Constructive dismissal, however, does not always take the form of a diminution.
In several cases, we have ruled that an act of clear discrimination, insensibility, or disdain by an
employer may become so unbearable on the part of the employee so as to foreclose any choice on his
part except to resign from such employment. This constitutes constructive dismissal.
(Unicorn Safety Glass Inc. vs Basarte, GR# 154689 – 11/25/04)

- (Artiaga vs Siliman University, GR# 178453 – 04/16/09)

- WHEN TRANSFER OF EMPLOYEE IS TANTAMOUNT TO CONSTRUCTIVE DISMISSAL

The employer must demonstrate that the transfer is not unreasonable, inconvenient, or prejudicial to
the employee and that the transfer does not involve a demotion in rank or a diminution of salary and
other benefits. If the employer fails to overcome this burden of proof, the employee’s transfer is
tantamount to unlawful constructive dismissal.
(Merck Sharp and Dohme vs Robles, GR# 176506 – 11/25/09)

- BURDEN OF PROOF

It is a settled rule that in employee termination disputes, the employer bears the burden of proving that
the employee’s dismissal was for just and valid cause. That petitioner did indeed file a letter of
resignation does not help the company’s case as, other than the fact of resignation, the company must
still prove that the employee voluntarily resigned. There can be no valid resignation where the act was
made under compulsion or under circumstances approximating compulsion, such as when an
employee’s act of handing in his resignation was a reaction to circumstances leaving him no alternative
but to resign. In this case, the Court held that petitioner had been constructively dismissed as his
resignation was a response to the unacceptable appointment of another person to a position he still
occupied. In sum, the evidence does not support the existence of voluntariness
in petitioner’s resignation.
(Penaflor vs Outdoor Clothing Mfg. Corp., GR# 177114 – 01/21/10)

3. Preventive Suspension

What is preventive suspension?

Preventive suspension may be defined as the temporary removal of an employee charged for violation of
company rules from his present status or position. Preventive suspension is usually imposed against
subject employee while the company is conducting an investigation for his alleged violation in order to
prevent him from causing further harm or damage to the company or his co-employees.
Preventive suspension is not a disciplinary measure, and should not be confused with suspension imposed
as a penalty.

a. Legal basis.

The right of employer to impose preventive suspension is not found in the Labor Code itself.
The oft-cited legal basis for imposition of preventive suspension is Section 8 and Section 9 of Rule XXIII,
Book V, of the Omnibus Rules Implementing the Labor Code, as amended by Department Order No. 9,
Series of 1997, which read as follows:

Section 8. Preventive suspension. The employer may place the worker concerned under preventive
suspension only if his continued employment poses a serious and imminent threat to the life or property
of the employer or of his co-workers.

Section 9. Period of suspension. No preventive suspension shall last longer than thirty (30) days. The
employer shall thereafter reinstate the worker in his former or in a substantially equivalent position or the
employer may extend the period of suspension provided that during the period of extension, he pays the
wages and other benefits due to the worker. In such case, the worker shall not be bound to reimburse the
amount paid to him during the extension if the employer decides, after completion of the hearing, to
dismiss the worker.

Interestingly, the above-quoted provisions are no longer reproduced in the present Omnibus Rules, as
amended by Department Order No. 40, Series of 2003, which supersedes Department Order 9-97.
It is opined, however, that the removal of said provisions from the omnibus rules did not diminish the right
of the employer to impose preventive suspension, considering that the justification for upholding the right
is necessity itself, i.e., when continued employment poses threats to the life of the employer or his co-
worker.

b. Justification for imposition of preventive suspension (not a penalty); period.

The employer may place the worker concerned under preventive suspension for a period of 30 days if his
continued employment poses a serious and imminent threat to the life or property of the employer or of
his co-workers. During the said period, the employee is not entitled to his wages. But if the 30-day period
is extended because the employer has not finished its investigation of the case, the employee should be
paid his wages during the period of extension.

 Period of preventive suspension must be definite.


 Extension of period must be justified.
 Preventive suspension of workers in the construction industry, only 15 days.

(Sec. 3-4, Rule 14, Book V, OLD IRR)


SECTION 3. Preventive suspension. — The employer may place the worker concerned under preventive
suspension if his continued employment poses a serious and imminent threat to the life or property of the
employer or of his co-workers.

SECTION 4. Period of suspension. — No preventive suspension shall last longer than 30 days. The
employer shall thereafter reinstate the worker in his former or in a substantially equivalent position or the
employer may extend the period of suspension provided that during the period of extension, he pays the
wages and other benefits due to the worker. In such case, the worker shall not be bound to reimburse the
amount paid to him during the extension if the employer decides, after completion of the hearing, to
dismiss the worker.

The right to impose preventive suspension is a management prerogative although it is not found in the LC.
It is found in its implementing and regulations.

 Grounds
Valid Suspension:
If the employees continued employment poses a serious and imminent threat to the life and or
property of the employer or of his co-workers. (Sec. 3, Rule 14, Book V, OLD IRR)

It is not a form of penalty; it is more of a protective measure undertaken by the employer. One cannot
impose a penalty because the employee cannot be punished without due process. In practice,
preventive suspension notice should be in writing.

 Duration and Extension


Maximum Period: 30 days
The employer shall thereafter: Reinstate the worker in his former or in a substantially equivalent
position; or The employer may extend the period of suspension, provided that during the period of
extension, he pays the wages and other benefits due to the worker concerned. In such a case, the
worker shall not be bound to reimburse the amount paid to him during the extension if the employer
decides, after completion of the hearing, to dismiss the worker.

Payment of Wages during Preventive Suspension


The employee placed under preventive suspension is not entitled to payment of wages. This rule,
however, presupposes that the suspension is valid. If the suspension is invalid or illegal, the employee shall
be entitled to payment of wages during the entire period of illegal suspension. (See Gatbonton vs. NLRC,
G.R. NO. 146779, January 23, 2006.)

Likewise, if the suspension is extended beyond the 30-day limit, the employee shall be entitled to wages
and other benefits for the period of the extension.

When Preventive Suspension amounts to Constructive Dismissal


When preventive suspension exceeds the maximum period allowed without reinstating the employee
either by actual or payroll reinstatement (see Hyatt Taxi Services Inc. vs. Rustom M. Catinoy, G.R. No.
143204, June 26, 2001), or when preventive suspension is for indefinite period (see Pido vs. National Labor
Relations Commission, G.R. No. 169812, Feb. 27, 2007), constructive dismissal will set in.

SUSPENSION OF BUSINESS OPERATIONS

BASIS
Article 286 Labor Code: Employment is deemed not terminated when there is:
Bona-fide suspension by the employer of the operation of his business or undertaking for a period not
exceeding six (6) months;
Fulfillment by the employee of a military duty; or
Fulfillment by the employee of a civic duty.

Sec .12, Rule, Book VI:


The employer-employee relationship shall be deemed suspended in case of suspension of operation of the
business or undertaking of the employer for a period not exceeding six (6) months, unless the suspension
is for the purpose of defeating the rights of the employees under the Code, and in case of mandatory
fulfillment by the employee of a military or civic duty.

The payment of wages of the employee as well as the grant of other benefits and privileges while he is on
a military or civic duty shall be subject to special laws and decrees and to the applicable individual or
collective bargaining agreement and voluntary employer practice or policy.

EFFECT ON EMPLOYMENT STATUS

Compensation of Employees during the Six-month Suspension


Employees are not entitled to their wages and benefits during the 6-month period. The reason is, within
the said period, the employer-employee relationship is deemed suspended. The employment relationship
being suspended, both the employer and the employees cease to be bound, at least temporarily, by the
basic terms and conditions of their employment contract - the employer regarding his obligation to
provide salary to his workers; and on the part of the workers, to provide their services to the former.

Effect of Suspension of Work Exceeding 6 Months


In the 2005 case of Mayon Hotel & Restaurant vs. Adana, [G. R. No. 157634, May 16, 2005], the High Court
declared that Article 286 is clear - there is termination of employment when an otherwise bona fide
suspension of work exceeds six (6) months. Moreover, even assuming arguendo that the cessation of
employment on April 1997 was merely temporary when hotel operations were suspended due to the
termination of the lease of the old premises, it became dismissal by operation of law when petitioners
failed to reinstate respondents after the lapse of six (6) months, pursuant to Article 286. And even
assuming that the closure was due to a reason beyond the control of the employer, it still has to accord its
employees some relief in the form of severance pay.

Effect of Employment of the Employee in Other Establishments during 6-Month Period


In the 2005 case of JPL Marketing Promotions vs. CA, [G. R. No. 151966, July 8, 2005], it was established
that private respondent-employees sought employment from other establishments even before the
expiration of the six (6)-month period provided by law. They admitted that all three of them applied for
and were employed by another establishment after they received the notice from JPL. Consequently, it
was held that petitioner JPL cannot be said to have terminated their employment for it was they
themselves who severed their relations with JPL. Thus, they are not entitled to separation pay, even on the
ground of compassionate justice. Clearly, the principle in the law which grants separation pay applies only
when the employee is dismissed by the employer, which is not the case in this instance. In seeking and
obtaining employment elsewhere, private respondents effectively terminated their employment with JPL.

ANALOGOUS SITUATION
There is no law on temporary retrenchment or lay-off, Article 286 applies only by analogy.
Suspension of operation may involve only a section or department of the company and not necessarily the
entire operations.
The burden to prove bona-fide suspension of operation is on the employer.

DISTINGUISH from STOPPAGE of WORK OR SUSPENSION of OPERATION


Art. 128(c) Labor Code:
The Secretary of Labor and Employment may likewise order stoppage of work or suspension of operations
of any unit or department of an establishment when there is non-compliance with the law or
implementing rules and regulations poses grave and imminent danger to the health and safety of workers
in the workplace.

Within twenty-four hours, a hearing shall be conducted to determine whether an order for the stoppage
of work or suspension of operations shall be lifted or not.

In case the violation is attributable to the fault of the employer, he shall pay the employees concerned
their salaries or wages during the period of such stoppage of work or suspension of operation.

- SANCTION FOR VIOLATING THE MAXIMUM PERIOD FOR PREVENTIVE SUSPENSION

Petitioner, having violated the maximum 30-day preventive suspension under Sec. 4, Rule XIV, Book
V of the Omnibus Rules Implementing the Labor Code, a sanction is imposed on him in, and he
must indemnify private respondent in the amount of P1,000.
(JRS Business Corp. vs NLRC, GR# 108891 – 07/17/95)

- PREVENTIVE SUSPENSION BEYOND THE PERIOD ALLOWED BY THE RULES MAY CONSTITUTE
CONSTRUCTIVE DISMISSAL

After a careful study, and a thorough examination of the pleadings and supporting documents, it
appears decisively clear that private respondent Silvestre Germano was illegally dismissed. While a
prolonged absence without leave may constitute a just cause for dismissal, its illegality stems from
the non-observance of due process. Applying the WenPhil Doctrine by analogy, where dismissal was
not preceded by the twin requirement of notice and hearing, the legality of the dismissal in
question, is under heavy clouds and therefore illegal. While it cannot be deduced unerringly from
the records on hand that private respondent was really dismissed, there is no clear indication that
the latter was to be reinstated. In fact, since the inception of the case, what petitioner merely
endeavored was to compromise for a measly sum of P5,000, and no mention of taking respondent
back his job was ever offered as part of the deal to end the controversy. What can be surmised from
petitioner's offer to re-admit the private respondent, was nothing but a polite gesture couched in
words intended to make the impact of his so-called suspension less severe. Invoking the plight of a
working man, where "no work, no pay" is the rule of thumb, the court cannot sanction an over
extended suspension. The Labor Code explicitly provides that:

"No preventive suspension shall last longer than 30 days. The employer shall thereafter reinstate
the worker to his former or substantially equivalent position of the employer may extend the period
of suspension provided that during the period of extension, he pays the wages and other benefits
due to the worker. In such case, the worker shall not be bound to reimburse the amount paid to
him during the extension if the employer decides after completion of the hearing to dismiss the
worker."

In this case, the supposed suspension was expected to last for more than the period allowed by law,
thus making the suspension constitutive of illegal dismissal.
(Gandara Supply vs NLRC, GR# 126703 – 12/29/98)

- SUSPENSION NEED NOT BE BASED ON SPECIFIC FINDINGS

Preventive suspension is a disciplinary measure for the protection of the company's property
pending investigation of any alleged malfeasance or misfeasance committed by the employee. Sec.
3, Rule XIV, Book V of the Omnibus Rules Implementing the Labor Code provides: "The employer
may place the worker concerned under preventive suspension if his continued employment poses a
serious threat to the life of property of the employer or of his co-workers.

Nothing in this rule requires that the report upon which the preventive suspension was based
should make a specific finding that the employee's continued employment poses an imminent
threat to the property of the employer. It is enough that such fact can be gleaned from the
circumstances of the case.

The private respondents preventive suspension was necessary for the protection of petitioners
assets and operations pending investigation of the alleged irregularities committed by them.
(Atlas Fertilizer Corp. vs NLRC, GR# 120030 – 06/17/97)

- (Chona Torres vs NLRC, GR#

Z. TERMINATION OF EMPLOYMENT

1. Requisites for a Valid Dismissal

THERE MUST BE DUE PROCESS

(Sec. 1, Art. III, Constitution)


Section 1. 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.

IT MUST BE BASED ON JUST OR AUTHORIZED CAUSE

(Art. 277(b) Labor Code)


ART. 277. Miscellaneous provisions. –
(b) Subject to the constitutional right of workers to security of tenure and their right to be protected
against dismissal except for a just and authorized cause and without prejudice to the requirement of
notice under Article 283 of this Code, the employer shall furnish the worker whose employment is
sought to be terminated a written notice containing a statement of the causes for termination and
shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his
representative if he so desires in accordance with company rules and regulations promulgated
pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by the
employer shall be without prejudice to the right of the worker to contest the validity or legality of his
dismissal by filing a complaint with the regional branch of the National Labor Relations Commission.
The burden of proving that the termination was for a valid or authorized cause shall rest on the
employer. The Secretary of the Department of Labor and Employment may suspend the effects of the
termination pending resolution of the dispute in the event of a prima facie finding by the appropriate
official of the Department of Labor and Employment before whom such dispute is pending that the
termination may cause a serious labor dispute or is in implementation of a mass lay-off. (As amended
by Section 33, Republic Act No. 6715, March 21, 1989).

a. Substantial Evidence

- WHAT IS SUBSTANTIAL EVIDENCE; QUANTUM OF PROOF NECESSARY IN LABOR CASES

Substantial evidence is that amount of relevant evidence which a reasonable mind might accept to
justify a conclusion.

It is basic that the findings of fact by the CA, when supported by substantial evidence, are
conclusive and binding upon the parties and are not reviewable by the SC, unless the case falls
under any of the exceptions to the rule, such as when the findings by the CA are not supported by
evidence.
(Philtread Tire & Rubber Corp. vs Alberto Vicente, GR# 142759 – 11/10/04)

- (Salvador vs Phil. Mining Services Corp., GR#

- HEARSAY DOCUMENTS MAY BE CONSIDERED IN LABOR CASES SINCE ONLY SUBSTANTIAL


EVIDENCE IS REQUIRED; BURDEN OF PROOF THAT THE DISMISSAL WAS VALID RESTS ON THE
EMPLOYER

The fact alone that most of the documents submitted in evidence by an employee were prepared
by him does not make them self-serving where they have been offered in the proceedings before
the Labor Arbiter and that ample opportunity was given to the employer to rebut their veracity and
authenticity. It is grave abuse of discretion on the part of the NLRC to ignore or simply sweep under
hte rug an employees complaint-affidavit and conclude that it is mere hearsay evidence without
finding that there was adequate reason not to beleive the allegations contained therein.

When the NLRC declared that the burden of proof in dismissal cases shifts to the employer only
when the latter admits such dismissal, the NLRC ruled erroneously in disregard of the law and
prevailing jurisprudence on the matter. As correctly articulated by the SolGen in his Comment to
this petition, thus - "Art. 277(b) of the Labor Code puts the burden of proving that the dismissal of
an employee was for a valid or authorized cause on the employer. It should be noted that the said
provision of law does not distinguish whether the employer admits or does not admit the
dismissal."

Time and again we have ruled that where there is no showing of a clear, valid and legal cause for
termination of employment, the law considers the case a matter of illegal dismissal. The burden is
on the employer to prove that the termination of employment was for a valid and legal cause. For
an employee's dismissal to be valid, (a) the dismissal must be for a valid cause and (b) the employee
must be afforded due process.

As a general rule, one who pleads payment has the burden of proving it, and even where the
plaintiff must allege non-payment, the general rule is that the burden rests on the defendant to
prove payment, rather than on the plaintiff to prove non-payment. The debtor has the burden of
showing with legal certainty that the obligation has been discharged by payment.
(Sevillana vs I.T. Int’s Corp, GR# 99047 – 04/16/01)

- SUBSTANTIAL PROOF MAY ALSO BE SUFFICIENT GROUND FOR DISCIPLINARY ACTION

Well-entrenched is the rule that substantial proof is sufficient as basis for the imposition of any
disciplinary action upon the employee. The standard of substantial evidence is satisfied where the
employer has reasonable ground to believe that the employee is responsible for the misconduct
and his participation therein renders him unworthy of trust and confidence demanded by his
position. That petitioner violated respondents rules and regulations and committed serious
misconduct in the performance of his duties, have been proved. Respondent thus lost its trust and
confidence in petitioner. Under Art. 282 of the Labor Code, as amended, these are just causes for
dismissing him from the service.
(Millares vs PLDT, GR# 154078 – 05/06/05)

b. Due Process (Notice Requirement)

- HEARING NOT REQUIRED TO SATISFY DUE PROCESS REQUIREMENT

Pursuant to Sec. 5, Rule V, of the New Rules of the NLRC, the Labor Arbiter has the authority to
determine whether or not there is a necessity to conduct formal hearings in cases brought before
him for adjudication. The holding of a formal hearing or trial is discretionary with the labor arbiter
and is something that the parties cannot demand as a matter of right. It is entirely within his
authority to decide a labor case before him, based on the position papers and supporting
documents of the parties, without trial or formal hearing. The requirements of due process are
satisfied when the parties are given the opportunity to submit position papers wherein they are
supposed to attach all the documents that would prove their claim in case it be decided that no
hearing should be conducted or was necessary.
(Shoppes Manila Inc. vs NLRC, GR# 147125 – 01/14/04)

(Rule V, NLRC Rules of Procedure, 2002)


SECTION 5. DETERMINATION OF NECESSITY OF HEARING. - Immediately after the
submission by the parties of their position papers/memoranda, the Labor Arbiter
shall, motu proprio, determine whether there is a need for a formal trial or hearing.
At this stage, he may, at his discretion and for the purpose of making such
determination, ask clarificatory questions to further elicit facts or information,
including but not limited to the subpoena of relevant documentary evidence, if any,
from any party or witness.

- OPPORTUNITY TO BE HEARD OR EXPLAIN IS ALL THAT IS NECESSARY IN DUE PROCESS, NOT THAT
THE PARTIES ARE ACTUALLY HEARD OR THEY EXPLAIN

At any rate, petitioner was given enough opportunity to be heard, and his dismissal was based on
valid grounds. The essence of due process is simply an opportunity to be heard, or as applied to
administrative proceedings, an opportunity to explain one's side or an opportunity to seek a
reconsideration of the action or ruling complained of. A formal or trial-type hearing is not at all
times and in all instances essential, as the due process requirements are satisfied where the parties
are afforded their fair and reasonable opportunity to explain their side of the controversy at hand.
What is frowned upon is the absolute lack of notice and hearing.
(Valiao vs CA, GR# 146621 – 07/30/04)

- 2 ASPECTS OF DUE PROCESS IN LABOR LAW

Due process under the Labor Code involves 2 aspects: first, SUBSTANTIVE - the valid and authorized
causes of termination of employment under the Labor Code; and second, PROCEDURAL - the
manner of dismissal.

In the present case, the CA affirmed the findings of the labor arbiter and the NLRC that the
termination of employment of respondent was based on a just cause. This ruling is not at issue in
this case. The question to be determined is whether the procedural requirements were complied
with.

5 days is given as ample opportunity to respond from the receipt of notice.


(King of Kings Transport vs Mamac, GR# 166208 – 06/29/07)

- ALLEGATIONS OF CONSTRUCTIVE DISMISSAL AS A REASON FOR NO GIVING AN EXPLANATION


WHEN AN OPPORTUNITY TO EXPLAIN IS INSUFFICIENT TO COUNTER THE FACT THAT NO
EXPLANATION WAS GIVEN DESPITE THE OPPORTUNITY TO BE HEARD
The essence of due process is simply an opportunity to be heard, or as applied to administrative
proceedings, a fair and reasonable opportunity to explain one's side. It is not the denial of the right
to be heard but denial of the opportunity to be heard that constitutes violation of due process law.
In the instant case, private respondent was again notified of the August 12, 1998 hearing through a
letter dated August 8, 1998 which was received by private respondent herself. Clearly, private
respondent chose not to attend the scheduled hearing because of her mistaken belief that she had
already been constructively dismissed.
(Uniwide Sales Warehouse Club vs NLRC, GR# 154503 – 02/29/08)

- (Placido vs NLRC, GR#

- PRE-EMPTING AN INVESTIGATION BY FILING A CASE FOR ILLEGAL DISMISSAL CONSTITUTES VALID


COMPLIANCE WITH DUE PROCESS

The records belie Amular’s claim of denial of procedural due process. He chose not to present his
side at the administrative hearing. In fact, he avoided the investigation into the charges against him
by filing his illegal dismissal complaint ahead of the scheduled investigation. These facts show that
the employee was given the opportunity to be heard and he cannot now come to the Court
protesting that he was denied this opportunity. To belabor a point the Court has repeatedly made
in employee dismissal cases, the essence of due process is simply an opportunity to be heard; it is
the denial of this opportunity that constitutes violation of due process of law.
(Technol Eight Phils. Corp. vs NLRC, GR# 187605 – 04/13/10)

- FAILING TO RECEIVE A COPY OF THE EVIDENCE WILL NOT AFFECT THE VALIDITY OF COMPLIANCE
WITH DUE PROCESS

Petitioners complain that they were denied due process when they were not furnished a copy of
the evidence against them or the minutes of the investigation. It is oft repeated that in
administrative proceedings, due process is served by the mere fact that each party is afforded an
opportunity to air its side, not necessarily through verbal argumentation, but also through
pleadings in which the parties may explain their side of the controversy. It is of record that
petitioners were informed of the charges against them and were given the opportunity to present
their defense, not just in the administrative investigation, but also in the proceedings before the
Labor Arbiter and NLRC. The requirements of due process were more than adequately satisfied.
(Oscar Garcia vs NLRC, GR# 160339 – 03/14/08)

- (Bacolod-Talisay Realty & Dev’t Corp. vs Dela Cruz, GR#

- DUE PROCESS CANNOT BE DISPENSED WITH DESPITE WIDER DISCRETION IN TERMINATING


MANAGERIAL AND CONFIDENTIAL EMPLOYEES.

Although employers have wider latitude of discretion in terminating a managerial employee, it is


nonetheless settled that confidential and managerial employees cannot be arbitrarily dismissed at
any time, and without cause as reasonably established in an appropriate investigation. Such
employees, too, are entitled to security of tenure, fair standards of employment and the protection
of labor laws. Managerial employees, no less than rank-and-file laborers are entitled to due
process.
Resignation; Definition. Resignation is “the voluntary act of employees who are compelled by
personal reasons to disassociate themselves from their employment. It must be done with the
intention of relinquishing an office, accompanied by the act of abandonment.”
(Casa Cebuana Incorporada, et al. vs. Leuterio, GR# 176040 – 09/0409)

c. Burden of Proof

- (Mantle Trading Services Inc. vs NLRC, GR#


- BURDEN OF PROOF IN DISMISSAL CASES IS WITH THE EMPLOYER

In constructive dismissal cases, the employer has the burden of proving that its conduct and action
or the transfer of an employee are for valid and legitimate grounds such as genuine business
necessity. Particularly, for a transfer not to be considered a constructive dismissal, the employer
must be able to show that such transfer is not unreasonable, inconvenient, or prejudicial to the
employee. Failure of the employer to overcome this burden of proof taints the employee’s transfer
as a constructive dismissal.

In the present case, the employer failed to discharge this burden. The combination of harsh actions
taken by the bank rendered the employment condition of the employee hostile and unbearable for
the following reasons:

First, there is no showing of any urgency or genuine business necessity to transfer the employee to
the Makati Head Office. The bank’s stated reason that the employee had to undergo branch head
training because of his gross inefficiency was not supported by any proof that the employee had a
record of gross inefficiency.

Second, the employee’s transfer from Dumaguete to Makati City is clearly unreasonable,
inconvenient and oppressive, since the respondent and his family are residents of Dumaguete City.

Third, the employer failed to present any valid reason why it had to require the employee to go to
the Makati Head Office to undergo branch head training when it could have just easily required the
latter to undertake the same training in the VISMIN area.

Finally, there was nothing in the order of transfer indicating the position which the employee would
occupy after his training; thus, the employee was effectively placed in a “floating” status. The
bank’s contention that the employee was assigned to a sensitive position in the DUHO Task Force is
suspect when considered with the fact that he was made to undergo branch head training which is
totally different from a position that entails reconciling book entries of all branches of the former.
Reconciling book entries is essentially an accounting task.
(Phil. Veterans Bank vs NLRC , GR# 188882 – 03/30/10)

d. Principle of Discretionary Justice

- WHAT IS DISCRETIONARY JUSTICE?

It would imply at the very least that where a penalty less punitive would suffice, whatever missteps
may be committed by labor ought not to be visited with a consequence so severe. It is not only
because of the law's concern for the workingman. There is, in addition, his family to consider.
(Almira vs BF Goodrich, GR# L-34974 – 07/25/74)

- NATURE OF DISCRETIONARY JUSTICE

Private respondent was employed in petitioner’s business of manufacturing liquefied petroleum gas
(LPG) cylinders. He served as a quality control inspector with the principal duty of inspecting LPG
cylinders for any possible defects and earning P155.00 a day. His service with the company was
abruptly interrupted on February 14, 1995, when he was served a notice of termination of his
employment.

The dismissal is invalid.

First. Basically, the reason cited for the dismissal of private respondent is sleeping on the job in
violation of Company Rule 15-b. Was the private respondent sleeping on the job or was he merely
idle and, as he claimed, waiting for the next cylinder to be checked? Evidence on this score is
material, for it is the be-all and end-all of petitioner’s cause, in view of the gravity of the penalty of
separation, as provided by the Company Rules and Regulation. In termination disputes, the burden
of proof is always on the employer to prove that the dismissal was for a just and valid cause. What
is at stake here is not only the job itself of the employee but also his regular income therefrom
which is the means of livelihood of his family.
A thorough review of the record discloses that, contrary to the findings of the Labor Arbiter,
petitioner’s claim that private respondent slept on the job on February 10, 1995 was not
substantiated by any convincing evidence other than the bare allegation of petitioner. The report of
Ronaldo M. Alvarez, Acting Quality Control Department Head of petitioner corporation, on the
circumstances which ultimately served as basis for the termination of private respondent’s
employment, did not confirm the alleged violation by private respondent of the pertinent Company
Rule 15-b. The report merely stated private respondent’s denial and response to petitioner’s
allegation which he reiterated in his written reply.

Second. Petitioner’s reliance on the authorities it cited that sleeping on the job is always a valid
ground for dismissal, is misplaced. The authorities cited involved security guards whose duty
necessitates that they be awake and watchful at all times inasmuch as their function, to use the
words in Luzon Stevedoring Corp. v. Court of Industrial Relations, is "to protect the company from
pilferage or loss." Accordingly, the doctrine laid down in those cases is not applicable to the case at
bar.

Third. While an employer enjoys a wide latitude of discretion in the promulgation of policies, rules
and regulations on work-related activities of the employees, those directives, however, must always
be fair and reasonable, and the corresponding penalties, when prescribed, must be commensurate
to the offense involved and to the degree of the infraction. In the case at bar, the dismissal meted
out on private respondent for allegedly sleeping on the job, under the attendant circumstances,
appears to be too harsh a penalty, considering that he was being held liable for first time, after nine
(9) long years of unblemished service, for an alleged offense which caused no prejudice to the
employer, aside from absence of substantiation of the alleged offense. The authorities cited by
petitioner are also irrelevant for the reason that there is no evidence on the depravity of conduct,
willfulness of the disobedience, or conclusiveness of guilt on the part of private respondent.
Neither was it shown that private respondent’s alleged negligence or neglect of duty, if any, was
gross and habitual. Thus, reinstatement is just and proper.
(VH Mfg. Inc. vs NLRC, 01/19/00)

- (Tipteo vs CA, GR# 156703 – 06/26/09)


Discretionary Justice was not applied here, where a teacher was terminated for selling test papers.
It was not applied despite the fact that it was the first time he committed the offense because
teachers are regarded as role models.

NOTE:

COMPASSIONATE JUSTICE DISCRETIONARY JUSTICE


Even if the dismissal is for just cause, financial Even if termination is a valid action based on the
assistance may still be awarded based on the act/fault of the employee, if a less severe penalty
merits of the case. can be imposed, such lesser penalty should be
imposed.

2. Just Causes for Termination of Employment (Art. 282 Labor Code)

ART. 282. Termination by employer. - An employer may terminate an employment for any of the following
causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;

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

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized 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.


(Rule I, Book VI, IRR)
SECTION 7. Termination of employment by employer. — The just causes for terminating the services of an
employee shall be those provided in Article 283 of the Code. The separation from work of an employee for
a just cause does not entitle him to the termination pay provided in the Code, without prejudice, however,
to whatever rights, benefits, and privileges he may have under the applicable individual or collective
agreement with the employer or voluntary employer policy or practice.

NOTE:

The “just causes” enumerated in this article are acts of omission or commission by the employee. Because
they are his faults, they justify certain action against him, possibly dismissal. But it does not always have to
be dismissal. The penalty has to be proportionate to the offense. Furthermore, discharge based on a just
cause does not entitle the employee to any separation pay. But court rulings have recognized some
exceptions, particularly if the employee’s offense does not amount to serious misconduct or does not
reflect on the employee’s moral character. In such situation, if the employee’s long years of service are
otherwise satisfactory, the court may grant “financial assistance”.

In every case of dismissal, the employee, under Art. 277(b), is entitled to ample opportunity to explain his
side. If this right is denied, the dismissal is defective. The Court calls it “ineffectual”. This means that the
dismissal will be upheld – because the employee by his act deserves to be dismissed – but the employer,
because he disregarded the proper procedure, will be ordered to pay the employee’s full backwages from
the time of his dismissal to the time the Court finds that the dismissal is for a just cause. In short, both the
employer and the employee are penalized: the employee loses his job, the employer pays full backwages.
(Serrano vs NLRC, GR# 117040 – 01/27/00)

Definition
Just causes for dismissal of employee may be defined as those lawful or valid grounds for termination of
employment which arise from causes directly attributable to the fault or negligence of the erring
employee.Just causes are usually serious or grave in nature and attended by willful or wrongful intent or
they reflected adversely on the moral character of the employees.
As opposed to authorized causes under Article 283 wherein the termination of employment is dictated by
necessity of the business, the dismissal under just causes is imposed by the employer to the erring
employee as a punishment for the latter’s acts or omission.

Just Causes Under the Labor Code


Just causes for termination under the Labor Code is found in Article 282 and enumerated here as follows:
1. Serious misconduct. Serious misconduct is an improper conduct willful in character and of such grave
nature that transgressed some established and definite rule of action in relation to the employee’s
work.
2. Willful disobedience to lawful orders. The employees are bound to follow reasonable and lawful
orders of the employer which are in connection with their work. Failure to do so may be a ground for
dismissal or other disciplinary action.
3. Gross and habitual neglect of duties. Gross negligence has been defined as the want or absence of or
failure to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless
disregard of consequences without exerting any effort to avoid them.
4. Fraud or willful breach of trust. Fraud is any act, omission, or concealment which involves a breach of
legal duty, trust, or confidence justly reposed and is injurious to another.
5. Commission of a crime or offense. Commission of a crime or offense by the employee against his
employer or any immediate member of his family or his duly authorized representative, is a just cause
for termination of employment.
6. Analogous causes. Other causes analogous to the above grounds may also be a just cause for
termination of employment.

Examples of Analogous Causes


1. Abandonment. Abandonment of job is a form of neglect of duty. There is abandonment when the
employee leave his job or position with a clear and deliberate intent to discontinue his employment
without any intention of returning back. (NOTE: Atty. Chezie Demegillo considers abandonment as
Gross and Habitual Neglect of duties.)
2. Gross inefficiency. Gross inefficiency is analogous to and closely related to gross neglect for both
involve acts or omissions on the part of the employee resulting in damage to the employer or to his
business. (See Lim vs. NLRC, G.R. No. 118434, July 26, 1996.)
3. Disloyalty/conflict of interest. Disloyalty exists when one asserts an interest, or performs acts adverse
to one’s employer, such as secretly engaging in a business which renders him a competitor and rival of
his employer. It constitutes a breach of an implied condition of the contract of employment.
(See Elizalde International vs. Court of Appeals, G.R. No. L40553 February 26, 1981.)
4. Dishonesty. Acts of dishonesty deemed to be patently inimical to the employer is analogous to breach
of trust and is a valid cause for termination of employment.

No Separation Pay
An employee who is terminated from employment for a just cause is not entitled to payment of separation
benefits. Section 7, Rule I, Book VI, of the Omnibus Rules Implementing the Labor Code provides:

“Sec. 7. Termination of employment by employer. – The just causes for terminating the services of an
employee shall be those provided in Article 282 of the Code. The separation from work of an employee for
a just cause does not entitle him to the termination pay provided in Code, without prejudice, however, to
whatever rights, benefits and privileges he may have under the applicable individual or collective
bargaining agreement with the employer or voluntary employer policy or practice.”

JUST CAUSES (TERMINATION PROCESS)

Procedural Due Process.


For termination of employment based on just causes, procedural due process requires that
the employee be given the benefit of the so-called twin-notice and hearing, as follows:

1. First notice: Notice to Explain (NTE) or order to show cause. A written notice served on the employee
specifying the ground or grounds for termination, and giving to said employee reasonable opportunity
within which to explain his side.
2. Hearing or formal investigation. A hearing or conference during which the employee concerned, with
the assistance of counsel if the employee so desires, is given opportunity to respond to the charge,
present his evidence or rebut the evidence presented against him.
3. Second notice: Notice of decision. A written notice of termination served on the employee indicating
that upon due consideration of all the circumstances, grounds have been established to justify his
termination. (See Art. 277[b] and Sec 2, Rule I, Book VI, IRR)

Service of Notices.
In case of termination, the employee must be personally served with notices (notice to show cause and
notice of termination). Ideally, this should be done by personally handing a copy of the notice to the
employee concerned. However, if this is not possible, the notices may be served on the employee’s last
known address either by ordinary or registered mail (from legal viewpoint, registered mail is preferred).
The mere posting of the notice on the bulletin board is not sufficient compliance. (Shoppers Gain
Supermart, 1996)
If the employee refused to receive notice, the employer must serve the same by registered mail at his last
known address. (See Nueva Ecija Electric Coop case, 2005)

Opportunity to Respond.
The very purpose of requiring the employer to observe proper termination process is to give the employee
ample opportunity to respond to the charges against him or to defend himself. What the law require
is ample opportunity.
Ample opportunity means every kind of assistance that management must accord the employee to enable
him to prepare adequately for his defense including legal representation.

Requirements for First Notice (NTE).


The first notice informing the employee of the charges against him should set out clearly what he is being
held liable for. It should neither be pro-forma nor vague. This is consistent with the requirement that the
employee should be afforded ample opportunity to be heard and not mere opportunity.
Moreover, the dismissal, if necessary, must be based on the same grounds cited in the NTE. If the dismissal
is based on grounds other than those specified in the notice, he is deemed to have been deprived of due
process. (Glaxo Wellcome vs. NEW-DFA, 2005.)

Effect of Refusal of Employee to Participate in Investigation.


By the refusal of employee to participate in the investigation, he is deemed to have waived his right to
defend himself. (Leonardo vs. NLRC, 2000.)

Effects or Consequences of Termination.


1. If dismissal is for just cause and with prior notice and hearing, the dismissal is valid.
2. If the dismissal is for just cause but without prior notice and hearing, the dismissal is valid but the
employer may be required to pay nominal damages to the dismissed employee.
3. If there is no just cause for dismissal, whether or not there is prior notice and hearing, the dismissal
is illegal. The employee is entitled to reinstatement, backwages and damages.

Cases
1. The employee refused to participate in the investigation being conducted by the personnel
management. The Court ruled that by refusing to participate, he cannot claim that he was denied due
process. (Leonardo vs. NLRC, 2000.)
2. The employment contract contains stipulation that the employment may be terminated by either
party after “one month notice” or “one month salary in lieu of notice.” The stipulation was held to be
illegal. The requirement of prior notice and opportunity to be heard cannot be substituted by mere
payment of salary. (PNB vs. Cabansag, 2005.)

a. Serious Misconduct or Willful Disobedience of a lawful order in connection with his work

Serious Misconduct concept


Serious misconduct is one of the just causes for termination of employee under Article 282 of the
Labor Code.

Misconduct has been defined as improper or wrong conduct. It is the transgression of some
established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and
implies wrongful intent and not mere error in judgment. (Austria vs. NLRC, G.R. No. 124382, August
16, 1999.)

Elements of Serious Misconduct


To be a valid ground for termination of employment, the following elements must be present:
1. The misconduct must be serious;
2. It must relate to the performance of the employee’s duties; and,
3. Must show that the employee has become unfit to continue working for the employer.

Mere Error in Judgment is not Misconduct


Misconduct is a transgression of some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment.
(Colegio de San Juan de Letran-Calamba vs. Villas, G.R. No. 137795, March 26, 2003)
Mere error in judgment cannot qualify as misconduct (much less a serious one) because of lack
wrongful intent. As held in NLRC vs. Salgarino, G.R. No. 164376, July 31, 2006, it is not sufficient that
the act or conduct complained of has violated some established rules or policies. It is equally
important and required that the act or conduct must have been performed with wrongful intent.

Misconduct must be Serious


The misconduct to be serious must be of such grave and aggravated character and not merely trivial
and unimportant.

Misconduct must be in Relation to Employee’s Work


Misconduct, however serious, must, nevertheless, be in connection with the employee’s work to
constitute just cause for his separation.

Cases
1. The employee’s (an accounting manager) act of willfully understating the company’s profits or
financial position, committed as it was in order to “save” costs, which to her warped mind, was
supposed to benefit her employer, partakes serious misconduct. It was not merely a violation of
company policy, but of the law itself, and put the employer at risk of being made legally liable.
The dismissal in this case is warranted. An employer cannot be compelled to retain in its employ
someone whose services is inimical to its interests. (Llamas vs. Ocean Gateway, G.R. No. 179293,
August 14, 2009.)
2. Two traffic operators who placed free long distance calls was dismissed by PLDT. The dismissal
was upheld as valid. The dishonesty committed by the erring employee qualifies as serious
misconduct especially that it goes to the very heart and essence of the company. Long distance
call is the lifeblood of PLDT. (PLDT vs. Montemayor, G.R. No. 88626, October 12, 1990.)
3. A ticket freight clerk was dismissed for dishonesty for charging to his VISA credit card some plane
tickets in spite of the cash payment made by passengers. The dismissal was for a just cause. (PAL
vs. NLRC, G.R. No. 117038. September 25, 1997.)
4. The case involved toll guards assigned at the North Luzon Tollway, Bulacan interchange, who were
caught accepting bribe in the form of cash and a dog from a motorist who was suspected of
illegally transporting dogs. The dismissal was upheld as for just cause. Bribery constitutes serious
misconduct. (Phil. National Construction vs. NLRC, G.R. No. 128345, May 18, 1999.)

DISOBEDIENCE AS A GROUND FOR DISMISSAL

Employee’s Duty of Obedience


The employees are bound to follow reasonable and lawful orders of the employer which are in
connection with their work. Failure to do so may be a ground for dismissal or other disciplinary
actions.
Under Article 282 of the Labor Code of the Philippines, willful disobedience to lawful orders by
the employeeis one of the just causes for termination of employment by employer.

Requirements of Willful Disobedience as a Ground for Termination


The Court has set the guidelines for the dismissal based on disobedience.
In Gold City Integrated Port Services, Inc. v. NLRC, G.R. No. 86000, 21 September 1990, the Court
explained that willful disobedience of the employer’s lawful orders, as a just cause for dismissal of an
employee, envisages the concurrence of at least two requisites:
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 have been reasonable, lawful, made known to the employee and must
pertain to the duties which he had been engaged to discharge.

In Mañebo v. NLRC, G.R. No. 107721, 10 January 1994, the court reiterated that in order that an
employer may terminate an employee on the ground of willful disobedience to the employer’s orders,
regulations or instructions, it must be established that the said orders, regulations or instructions are:
1. reasonable and lawful;
2. sufficiently known to the employee; and,
3. in connection with the duties which the employee has been engaged to discharge. (See
AHS/Philippines, Inc. vs. CA, G.R. No. 111807, June 14, 1996.)

Policy must be Strictly Adhered to


In addition to the above requirements, in Permex, Inc. vs. NLRC, G.R. No. 125031, January 24, 2000,
the Court held that where a violation of company policy or breach of company rules and regulations
was found to have been tolerated by management, then the same could not serve as a basis for
termination. (Citing Tide Water Associated Oil Co. vs. Victory Employees and Laborers’ Association, 85
Phil. 166 [1949].)
In Conti vs. NLRC, G.R. No. 119253, April 10, 1997, it was ruled that the dismissal of an employee due
to an alleged violation of a company policy, where it was found that the violation was acquiesced in by
said employee’s immediate superiors and the policy violated had not always been adhered to by the
management, is an act not amounting to a breach of trust. Therefore, it is not a justification for said
employee’s dismissal.

Damage to Employer is not Important


Damage to employer is not important in dismissal based on willful disobedience. (See Nuez vs. NLRC,
infra.)

Disobedience Need not be Habitual


Habituality is not an element of willful disobedience. The law warrants the dismissal of an employee
without making any distinction between a first offender and a habitual delinquent where the totality
of the evidence was sufficient to warrant his dismissal. In protecting the rights of the laborer, the law
authorizes neither oppression nor self-destruction of the employer. (See Aparente vs. NLRC, G.R. No.
117652, April 27, 2000.)
Cases
1. The formal challenge brought by employee of the reasonableness or the motives of a company’s
policy is not an excuse for the employee not to obey said policy. (GTE Directories Corp. vs.
Sanchez, May 27, 1991.)
2. Damage to employer is not important. Although there was no damage to the employer, the
dismissal of the driver for insubordination was upheld. The lack of resulting damage is
unimportant when the heart of the charge is the crooked and anarchic attitude of the employee
towards his employer. (Nuez vs. NLRC, G.R. No. 107574 December 28, 1994.)

What are the requisites to validly invoke willful disobedience of lawful orders as a just ground to
terminate employment?

In order that the willful disobedience by the employee of the orders, regulations or instructions of the
employer may constitute a just cause for terminating his employment, said orders, regulations, or
instructions must be:

1. lawful and reasonable;


2. sufficiently known to the employee; and
3. in connection with the duties which the employee has been engaged to discharge.

Requisites of lawful dismissal on the ground of willful disobedience. - For the ground of “willful
disobedience” to be considered a just cause for termination of employment, the following requisites
must concur, namely:

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 have been reasonable and lawful and made known to the employee and
must pertain to the duties which he had been engaged to discharge.

Rule where violation of the rules was tolerated by employer.

Where a violation of company policy or breach of company rules and regulations was found to have
been tolerated by management, the same could not serve as a basis for termination.

As held in the 2004 case of Coca-Cola Bottlers Philippines, Inc. vs. Vital, [G. R. No. 154384, Sept. 13,
2004], if an employee was merely following the instructions of his supervisor, his act should be
deemed in good faith. Clearly, his dismissal from the service on the ground of willful disobedience or
violation of company rules and regulations is not justified.

What is serious misconduct?

Requisites.- For misconduct or improper behavior to be a just cause for dismissal:

(a) it must be serious;

(b) it must relate to the performance of the employee’s duties; and

(c) it must show that the employee has become unfit to continue working for the employer.

In the 2005 case of Fujitsu Computer Products Corporation of the Philippines vs. CA, [G. R. No.
158232, April 8, 2005], the respondent’s act of sending an e-mail message as an expression of
sympathy for the plight of a superior can hardly be characterized as serious misconduct as to merit
the penalty of dismissal. There is no showing that the sending of such e-mail message had any
bearing or relation on respondent’s competence and proficiency in his job. To reiterate, in order to
consider it a serious misconduct that would justify dismissal under the law, the act must have been
done in relation to the performance of his duties as would show him to be unfit to continue working
for his employer.

Series of irregularities, when put together, may constitute serious misconduct.


An employee’s fitness for continued employment cannot be compartmentalized or taken in isolation
from one act to another. A series of irregularities, when considered together or in their entirety, may
constitute serious misconduct, a valid ground to terminate employment. (Piedad vs. Lanao del Norte
Electric Cooperative, Inc., G. R. No. 73735, Aug. 31, 1987, 153 SCRA 500).

In a 2004 case where the employee was shown to have committed various violations of the
company’s rules and regulations, the Supreme Court ruled that his dismissal from the service is in
order. Indeed, a series of irregularities when put together may constitute serious misconduct. (Gustilo
vs. Wyeth Phils., Inc., G. R. No. 149629, Oct. 4, 2004).

Throwing a stapler and uttering invectives against a plant manager.

Applying the foregoing standards, the Supreme Court ruled in a 2000 case that the act of the
employee in throwing a stapler and uttering abusive language upon the person of the plant manager
may be considered from a layman’s perspective as a serious misconduct. However, in order to
consider it a serious misconduct that would justify dismissal under the law, it must have been done in
relation to the performance of her duties as would show her to be unfit to continue working for her
employer. The acts complained of, under the circumstances they were done, did not in any way
pertain to her duties as a nurse. Her employment identification card discloses the nature of her
employment as a nurse and no other. Also, the memorandum informing her that she was being
preventively suspended pending investigation of her case was addressed to her as a nurse. Hence, she
cannot be held in violation therefor. (Philippine Aeolus Automotive United Corporation vs. NLRC, G. R.
No. 124617, April 28, 2000).

Use of shabu, valid ground to terminate employment.

There is no question that the possession and use by an employee of methampethamine hydrochloride
or shabu is a just cause to terminate employment as it constitutes serious misconduct under Article
282 of the Labor Code.

In the 2003 case of Roquero vs. Philippine Air Lines, Inc., [G. R. No. 152329, April 22, 2003], the
Supreme Court affirmed the validity of the dismissal of petitioner who was caught red-handed
possessing and using methampethamine hydrochloride or shabu in a raid conducted inside the
company premises by PAL security officers and NARCOM personnel. Said the Supreme Court: “It is of
public knowledge that drugs can damage the mental faculties of the user. Roquero was tasked with
the repair and maintenance of PAL’s airplanes. He cannot discharge that duty if he is a drug user. His
failure to do his job can mean great loss of lives and properties. Hence, even if he was instigated to
take drugs he has no right to be reinstated to his position. He took the drugs fully knowing that he
was on duty and more so that it is prohibited by company rules. Instigation is only a defense against
criminal liability. It cannot be used as a shield against dismissal from employment especially when the
position involves the safety of human lives.”

Immorality.

As a general rule, immorality 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.

The standard to be used to determine whether the immoral conduct adversely affects the interest of
the employer is whether the immoral act is of such nature which may be considered calculated to
undermine or injure such interest or which would make the worker incapable of performing his work.

For instance, in a case involving a teacher, immorality was defined as a course of conduct which
offends the morals of the community and is a bad example to the youth whose ideals a teacher is
supposed to foster and to elevate, the same including sexual misconduct. Thus, the gravity and
seriousness of the charges against the teacher stem from his being a married man and at the same
time a teacher. Therefore, when a teacher engages in extra-marital relationship, especially when the
parties are both married, such behavior amounts to immorality, justifying his termination from
employment. (Santos, Jr. vs. NLRC, G. R. No. 115795, March 6, 1998, 287 SCRA 117).

In another case, the dismissal of the supervisor who maintained a concubine and practically drove his
family away because of his illicit relationship was held legal. As supervisor, he failed to set a good
example to the several personnel under him. (Sanchez vs. Ang Tibay, 54 O. G. 4515). chanrobles
virtual law library
Immoral act committed beyond office hours.

The act of sexually harassing a co-employee within the company premises (ladies’ dormitory) even
after office hours is a work-related matter considering that the peace of the company is thereby
affected. The Code of Employee Discipline is very clear that immoral conduct “within the company
premises regardless of whether or not [it is] committed during working time” is punishable. (Navarro
III vs. Damasco, G. R. No. 101875, July 14, 1995).

Sexual intercourse inside company premises constitutes serious misconduct.

A security coordinator committed serious breaches of company rules when he caused the
introduction of intoxicating liquor into the premises which he drank with another guard on duty, and
allowed two female security guards to come inside the Security Office and had sexual intercourse with
one of them on top of the desk of the Security Head, while the other guard pretended to be asleep
during all the time that the lustful act was commenced until consummated. (Stanford Microsystems,
Inc. vs. NLRC, G. R. No. L-74187, Jan. 28, 1988).

The act of a lady teacher in falling in love with a student, not immoral.

The act of a 30-year old lady teacher, of falling in love with her student whose age is 16, is not an
immoral act which would justify the termination of her employment. The school utterly failed to show
that petitioner took advantage of her position to court her student. If the two eventually fell in love
despite the disparity of their ages and academic levels, this only lends substance to the truism that
the heart has reasons of its own which reason does not know. But, definitely, yielding to this gentle
and universal emotion is not to be so casually equated with immorality. The deviation of the
circumstances of their marriage from the usual societal pattern cannot be considered as a defiance of
contemporary social mores. (Chua-Qua vs. Clave, G. R. No. L-49549, Aug. 30, 1990).

Fighting as ground for termination.

Fighting within work premises may be deemed a valid ground for the dismissal of an employee. Such
act adversely affects the employer’s interests for it distracts employees, disrupts operations and
creates a hostile work atmosphere. (Solvic Industrial Corp. vs. NLRC, G. R. No. 125548, Sept. 25, 1998).

Not every fight, however, within company premises in which an employee is involved would warrant
his dismissal. This is especially true when the employee concerned did not instigate the fight and was
in fact the victim who was constrained to defend himself. (Garcia vs. NLRC, G. R. No. 116568, Sept. 3,
1999).

The fact that an employee filed a criminal case against the other employee involved in a fight while
the latter did not, does not necessarily mean that the former was the aggrieved party. (Flores vs.
NLRC, G. R. No. 109362, May 15, 1996, 256 SCRA 735).

In one case where the fisticuffs between an employee and a security guard occurred in a store within
the company auxiliary compound, about 15 meters from the gate, the Supreme Court ruled that the
penalty of dismissal was not commensurate with the misconduct, considering the length of service
and the surrounding circumstances of the incident. (North Camarines Lumber Co., Inc. vs. Barreda, G.
R. No. 75436, Aug. 21, 1987).

And in another case where the fight occurred outside the work premises and did not lead to any
disruption of work or any hostile environment in the work premises, the dismissal of the employee
who figured in the fight was considered too harsh a penalty. (Solvic Industrial Corp. vs. NLRC, G. R. No.
125548, Sept. 25, 1998; 296 SCRA 432, 441).

Utterance of obscene, insulting or offensive words constitutes serious misconduct.

The act of an employee in hurling obscene, insulting or offensive language against his superior is not
only destructive of the morale of his co-employees and a violation of the company rules and
regulations, but also constitutes gross misconduct which is one of the grounds provided for by law to
terminate the services of an employee. This attitude towards a supervisor amounted to
insubordination and conduct unbecoming of an employee which should merit the penalty of
dismissal. (Autobus Workers’ Union vs. NLRC, G. R. No. 117453, June 26, 1998, 291 SCRA 219, 228).
In Reynolds Philippine Corporation vs. Eslava, [137 SCRA 259 (1985)], the dismissed employee
circulated several letters to the members of the company’s board of directors calling the executive
vice-president and general manager a “big fool,” “anti-Filipino,” and accusing him of
“mismanagement, inefficiency, lack of planning and foresight, petty favoritism, dictatorial policies,
one-man rule, contemptuous attitude to labor, anti-Filipino utterances and activities.” As a result of
this, said employee’s dismissal was held legal in view of these utterances.

In Asian Design and Manufacturing Corporation vs. Deputy Minister of Labor, [142 SCRA 79 (1986)],
the dismissed employee made false and malicious statements against the foreman (his superior) by
telling his co-employees: “If you don’t give a goat to the foreman, you will be terminated. If you want
to remain in this company, you have to give a goat.” Further, the dismissed employee therein likewise
posted a notice in the comfort room of the company premises which read: “Notice to all Sander –
Those who want to remain in this company, you must give anything to your foreman. Failure to do so
will be terminated – Alice 80.” The Supreme Court declared the dismissal of said employee based on
these malicious statements valid and legal.

In De la Cruz vs. NLRC, [G. R. No. 82703, September 15, 1989, 177 SCRA 626], the act of an employee
in hurling invectives at a company physician such as “sayang ang pagka-professional mo” and “putang
ina mo,” was held to constitute insubordination and conduct unbecoming an employee which should
warrant his dismissal.

In Bondoc vs. NLRC, [G. R. No. 103209, July 28, 1997, 276 SCRA 288], utterances on different occasions
towards a co-employee of the following: -”Di bale bilang na naman ang araw mo.” – “Sige lang,
patawa tawa ka pa, eh bilang na bilang na ang araw mo.” – “Matakot ka sa Diyos, bilang na ang araw
mo; Mag-ingat ka sa paglabas mo sa Silahis Hotel. - Unggoy xxx ulol” were held unquestionably as
partaking the form of grave threat or coercion which justified the dismissal of the offender.

In Autobus Workers’ Union vs. NLRC, [G. R. No. 117453, June 26, 1998, 291 SCRA 219, 228], the act of
the employee in calling his supervisor “gago ka” and taunting the latter by saying “bakit anong gusto
mo, ‘tang ina mo” was held sufficient ground to dismiss the former.

But in Samson vs. NLRC, [G. R. No. 121035, April 12, 2000], the following utterances: “Si EDT (referring
to Epitacio D. Titong, General Manager and President of the company), bullshit yan,” “sabihin mo kay
EDT yan,” and “sabihin mo kay EDT, bullshit yan” while making the “dirty finger” gesture, were not
held to be sufficient to merit the dismissal of the employee. The Supreme Court justified said finding
by distinguishing this case from the De la Cruz, Autobus, Asian Design and Reynolds cases [supra], in
that the said offensive utterances were not made in the presence of the employee’s superior; that the
company’s rules and regulations merely provide for “verbal reminder” for first offenders; and that the
penalty of dismissal was unduly harsh considering his 11 years of service to the company.

Gambling within company premises, a serious misconduct.

In one case, an employee was validly terminated when he was caught gambling within the company
premises, it being a prohibited act carrying the penalty of termination under the Company Rules.
(Dimalanta vs. Secretary of Labor, G. R. No. 83854, May 24, 1989). chanrobles virtual law library

Intoxication as ground for termination.

As a general rule, intoxication of an employee which interferes with his work, constitutes serious
misconduct. It is well-settled by jurisprudence that serious misconduct in the form of drunkenness
and disorderly or violent behavior is a just cause for the dismissal of an employee. (Sanyo Travel
Corporation vs. NLRC, G. R. No. 121449, Oct. 2, 1997; Club Filipino, Inc. vs. Sebastian, G. R. No. 85490,
July 23, 1992, 211 SCRA 717).

However, the nature of the employee’s work, the dignity of his position and the surrounding
circumstances of the intoxication, must be taken into account.

For instance, the act of a managerial employee of reporting for work under the influence of liquor and
sleeping while on duty reflect his unworthiness of the trust and confidence reposed on him. (Del Val
vs. NLRC, G. R. No. 121806, Sept. 25, 1998, 296 SCRA 283).

The act of a pilot with the rank of captain, of forcing two co-pilots with the rank of First Officers, to
drink one evening at the coffee shop of a hotel in Cebu City, six bottles of beer each, within thirty
minutes, failing which, he ordered them to stand erect and were hit on the stomach, was held as
constitutive of serious misconduct. The incident occurred with his full knowledge that his co-pilots
have flight duties as early as 7:10 a.m. the next day and as late as 12:00 p.m. (Philippine Airlines, Inc.
vs. NLRC, G. R. No. L-62961, Sept. 2, 1983).

In another case involving two (2) security guards who, while off-duty, joined a drinking spree at a
birthday party of a co-guard in a sari-sari store near the FTI security office, the lesser penalty of 30-
day suspension, not dismissal, was the penalty held to be appropriate under the circumstances. The
reason cited was the fact that the company rules and regulations merely provided for suspension for
first offenders. (Quiňones vs. NLRC, G. R. No. 105763, July 14, 1995).

Pressure exerted by a teacher upon a colleague to change a failing grade of a student.

The pressure and influence exerted by a teacher on his colleague to change a failing grade of a
student to a passing one, as well as his misrepresentation that the student is his nephew, constitute
serious misconduct, which is a valid ground for dismissing an employee. (Padilla vs. NLRC, G. R. No.
114764, June 13, 1997, 273 SCRA 457).

Sleeping while on duty as a ground for termination.

In Luzon Stevedoring Corporation vs. CIR, [G. R. No. L-18683, Dec. 31, 1965], and A’ Prime Security
Services, Inc. vs. NLRC, [220 SCRA 142 (1993)], the act of an employee of sleeping in his post, coupled
with gross insubordination, dereliction of duty and challenging superiors to a fight, was held as
serious misconduct.

However, in the 2000 case of VH Manufacturing, Inc. vs. NLRC, [G. R. No. 130957, Jan. 19, 2000], it
was pronounced that to cite that sleeping on the job is always a valid ground for dismissal is
misplaced not only because the same was not substantiated by any convincing evidence other than
the bare allegation of the employer but most significantly, because the authorities cited, Luzon
Stevedoring [supra] and A’ Prime [supra], are not applicable in this case since the function involved in
said cases was “to protect the company from pilferage or loss.” Accordingly, the doctrine laid down in
those cases is not applicable to the case at bar.

In the 2004 case of Electruck Asia, Inc. vs. Meris, [G. R. No. 147031, July 27, 2004], where more than
fifty employees were alleged to have slept at the same time, the Supreme Court found it “highly
unlikely and contrary to human experience that all fifty-five employees including respondents were at
the same time sleeping.” If indeed the Night Manager chanced upon respondent-employees sleeping
on the job, why he did not at least rouse some or all of them to put them on notice that they were
caught in flagrante defies understanding.

Eating while at work.

Dismissal is too harsh a penalty for the offense of eating while at work, under the attendant
circumstances of the case. (Tanduay Distillery Labor Union vs. NLRC, G. R. No. 73352, Dec. 06, 1995).

Urinating in the workplace.

In a 2002 case, it was held that urinating in a workplace other than the one designated for the
purpose by the employer constitutes violation of reasonable regulations intended to promote a
healthy environment under Art. 282 [1] of the Labor Code for purposes of terminating employment,
but the same must be shown by evidence. An employee cannot be terminated based on this ground if
there is no evidence that he did urinate in a place other than a rest room in the premises of his work.
(Tan vs. Lagrama, G. R. No. 151228, Aug. 15, 2002).

- (Oscar Garcia vs Malayan Insurance, GR#

- SERIOUS MISCONDUCT AS COMPARED TO ORDINARY MISCONDUCT

The charge of drug abuse inside the company's premises and during working hours against
petitioner constitutes serious misconduct, which is one of the just causes for termination.
Misconduct is improper or wrong conduct. It is the transgression of some established and definite
rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent
and not merely an error in judgment. The misconduct to be serious within the meaning of the Act
must be of such a grave and aggravated character and not merely trivial or unimportant. Such
misconduct, however serious, must nevertheless, in connection with the work of the employee,
constitute just cause for his separation. This Court took judicial notice of scientific findings that drug
abuse can damage mental faculties of the user. It is beyond question therefore that any employee
under the influence of drugs cannot possibly continue doing his duties without posing a serious
threat to the lives and property of his co-workers and even his employer.
(Bughaw vs Treasure Island, GR# 173151 – 03/28/08)

- SIMPLE MISCONDUCT IS NOT A JUST CAUSE FOR DISMISSAL

Simple misconduct which does not merit employee’s termination from his employment. Although,
an employer has the right to discipline its erring employees, exercise of such right should be
tempered with compassion and understanding. The magnitude of the infraction committed by an
employee must be weighed and equated with the penalty prescribed and must be commensurate
thereto, in view of the gravity of the penalty of dismissal or termination from the service. The
employer should bear in mind that in termination cases, what is at stake is not simply the
employee’s job or position but his very livelihood.
(PLDT vs Berbano, GR# 165199 – 11/27/09)

- A SERIES OF ORDINARY MISCONDUCTS MAY CONSTITUTE SERIOUS MISCONDUCT

It bears noting that petitioner cited Cathedral School of Technology in its Comment/Rely to
Complainant-Appellant's Appeal Memorandum precisely to show that its dismissal of complainant
on the ground of "gross inefficiency and unreasonable behavior", was correctly upheld by the labor
arbiter. When an employee, despite repeated warnings from the employer, obstinately refuses to
curtail a bellicose (war like) inclination such that it erodes the morale of co-employees, the same
may be a ground for dismissal for serious misconduct. As this court said, a series of irregularities
when put together may constitute serious misconduct, which under Art. 283 of the Labor Code, is a
just cause for termination." Likewise, acts destructive of the morale of one's co-employees may be
considered serious misconduct.
(Citibank vs NLRC, GR# 159302 – 02/06/08)

- SLEEPING ON DUTY AND LEAVING WORK AREA AS SERIOUS MISCONDUCT

Sleeping on the job without prior authorization was held to constitute serious misconduct and is a
valid ground for dismissal. The court considered that the employee in this case (Tomada) was
“directly responsible for a significant portion of his employer’s property.” Tomada’s act was not
merely a disregard company rules, but in effect an open invitation for others to violate those same
company rules.

Court denies financial assistance despite employee’s long years of service;

Although his nearly two decades of service might generally be considered for some form of financial
assistance to shield him from the effects of his termination, Tomada’s acts reflect a regrettable lack
of concern for his employer. If length of service justifies the mitigation of the penalty of dismissal,
then this Court would be awarding disloyalty, distorting in the process the meaning of social justice
and undermining the efforts of labor to cleanse its ranks of undesirables.
(Tomada Sr. vs RFM Corp, GR# 163270 – 09/11/09)

- CONVICTION IN A CRIMINAL CASE AS SERIOUS MISCONDUCT; DISMISSAL/AQUITTAL OF THE


EMPLOYEE IN THE CRIMINAL CASE WILL NOT BAR HIS DISMISSAL

Conviction in a criminal case is not necessary to find just cause for termination of employment.
Criminal cases require proof beyond reasonable doubt while labor disputes require only substantial
evidence, which means such relevant evidence as a reasonable mind might accept as adequate to
justify a conclusion. The evidence in this case was reviewed by the appellate court and two labor
tribunals endowed with expertise on the matter – the Labor Arbiter and the NLRC. They all found
substantial evidence to conclude that Capor had been validly dismissed for dishonesty or serious
misconduct.
(Reno Foods Inc. vs NLM-Katipunan, GR# 164016 – 03/15/10)

- CONFIRMATORY TEST AFTER DRUG TEST IS REQUIRED


The importance of the confirmatory test is underscored in Plantation Bay’s own “Policy and
Procedures,” in compliance with Republic Act No. 9165, requiring that a confirmatory test must be
conducted if an employee is found positive for drugs in the Employee’s Prior Screening Test, and
that both tests must arrive at the same positive result.
But where the confirmatory test results were released earlier than those of the drug test, the
veracity of the confirmatory results is put to doubt.
(Plantation Bay Resort vs Dubrico, GR# 182216 – 12/04/09)

- FRAUD CONSTITUTES SERIOUS MISCONDUCT

Misconduct has been defined as improper or wrong conduct. It is the transgression of some
established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and
implies wrongful intent and not mere error of judgment. The misconduct to be serious must be of
such grave and aggravated character and not merely trivial and unimportant. Such misconduct,
however serious, must nevertheless be in connection with the employee’s work to constitute just
cause for his separation.

In the present case, the Court found substantial evidence to prove that a serious misconduct has
been committed to justify termination from employment. The Certified Public Accountant and
Corporate Finance Manager of the company submitted a report dated February 19, 2000 stating
that in spite of management’s memorandum, the keys to the office and filing cabinets were not
surrendered. It was likewise stated in the report that petitioner Wilfredo Baron pulled out some
records without allowing a representative from the internal audit team to inspect them. He noticed
Wilfredo Baron deleting some files from the computer, which could no longer be retrieved.
Moreover, a member of the audit team saw Cynthia Junatas (another petitioner) carrying some
documents, including a Daily Collection Report. When asked to present the documents for
inspection, Junatas refused and tore the document.

In addition, the audit team discovered that MSI incurred an inventory shortage of One Million Thirty
Thousand Two Hundred Fifty-Eight Pesos and Twenty-One Centavos (P1,030,258.21). It found that
Wilfredo Baron, the operations manager, in conspiracy with the other petitioners, orchestrated
massive irregularities and grand scale fraud, which could no longer be documented because of theft
of company documents and deletion of computer files. Unmistakably, the unauthorized taking of
company documents and files, failure to pay unremitted collections, failure to surrender keys to the
filing cabinets despite earlier instructions, concealment of shortages, and failure to record inventory
transactions pursuant to a fraudulent scheme are acts of grave misconduct, which are sufficient
causes for dismissal from employment.
(Baron vs NLRC, GR# 182299 – 02/22/10)

b. Gross and Habitual Neglect

Gross Negligence Meaning.


Gross negligence is a just cause for termination of employment by employer under Article 282 of the
Labor Code of the Philippines.
Gross negligence has been defined as the want or absence of or failure to exercise slight care or
diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without
exerting any effort to avoid them.

Negligence must be Habitual.


In order to constitute a just cause for the employee’s dismissal, the neglect of duties must not only be
gross but also habitual. Habitual neglect implies repeated failure to perform one’s duties for a period
of time, depending upon the circumstances.

Single isolated acts of negligence do not constitute a just cause for the dismissal of the employee.
However, in a number of cases, the SC upheld the validity of dismissal on the ground of gross
negligence even if the act complained of was not habitual. Thus, a bank employee was found grossly
negligent when she delivered newly approved credit cards to a person she had not even seen before
and she did not even ask for receipts, thereby enabling fictitious persons to use these cards, causing
P740,000.00 loss to the bank. (SeeCitibank vs. Gatchalian, G.R. No. 111222, January 18, 1995.)

Habitual Absenteeism and Tardiness.


Habitual absenteeism and tardiness constitute gross and habitual neglect of duty. Repeated acts of
absences without leave and frequent tardiness reflect indifferent attitude to and lack of motivation in
his work. (Valiao vs. CA, G.R. No. 146621, July 30, 2004.)

What constitutes the ground of gross and habitual neglect of duties?


 Element of habituality may be disregarded where loss is substantial.
 Element of habituality may be disregarded if totality of evidence justifies dismissal.
 Element of actual loss or damage, not an essential requisite.
 Habitual tardiness or habitual absenteeism may be a ground for termination.

What are the requisites to validly invoke abandonment of work?

Requisites. - Abandonment of work is a valid ground to terminate an employment. To constitute


abandonment, two (2) elements must concur, namely:

1. The failure to report for work or absence without valid or justifiable reason; and
2. A clear intention to sever the employer-employee relationship. This is the more determinative
factor being manifested by some overt acts.

Requirement of notice before declaring abandonment. - The notice required consists of two (2) parts
to be separately served on the employee in his last known address, to wit:

1. notice to apprise the employee of the particular acts or omissions for which his dismissal is
sought; and
2. subsequent notice to inform him of the employer’s decision to dismiss him.

This notice requirement is not a mere technicality but a requirement of due process to which every
employee is entitled to insure that the employer’s prerogative to dismiss or lay-off is not abused or
exercised in an arbitrary manner.

Notices in abandonment cases, where sent.

In case of abandonment of work, the notices should be served at the worker’s last known address.
(Icawat vs. NLRC, G. R. No. 133573, June 20, 2000).

In the 2004 case of Agabon vs. NLRC, [G.R. No. 158693, Nov. 17, 2004], while the validity of the
dismissal based on abandonment was upheld, however, the employer was deemed to have violated
due process when it did not follow the notice requirements and instead argued that sending notices
to the last known addresses would have been useless because they did not reside there anymore.
Unfortunately for the employer, this is not a valid excuse because the law mandates the twin notice
requirements be sent to the employee’s last known address. Thus, it should be held liable for non-
compliance with the procedural requirements of due process.

Immediate filing of complaint negates abandonment.

In a 2004 case, it was ruled that the immediate filing of complaint for illegal dismissal by the
employees praying for their reinstatement, negates the finding of abandonment. They cannot, by any
reasoning, be said to have abandoned their work, for as the Supreme Court had consistently ruled,
the filing by an employee of a complaint for illegal dismissal is proof enough of his desire to return to
work, thus negating the employer’s charge of abandonment. (Unicorn Safety Glass, Inc. vs. Basarte, G.
R. No. 154689, Nov. 25, 2004).

An employee who had truly forsaken his job would not have bothered to file a complaint for illegal
dismissal. (Hodieng Concrete Products vs. Dante Emilia, G. R. No. 149180, Feb. 14, 2005).

For instance, the filing of such complaint the very next day after the employee was removed (Anflo
Management & Investment Corp. vs. Bolanio, G. R. No. 141608, Oct. 4, 2002) or two (2) days after
receiving the termination letter (EgyptAir, vs. NLRC, G. R. No. 63185, Feb. 27, 1989) or six (6) days
(Masagana Concrete Products vs. NLRC, G. R. No. 106916, Sept. 3, 1999) or four (4) days from the
time the employees were prevented from entering their workplace, is an indication that they have not
abandoned their work. (Artemio Labor vs. NLRC, G. R. No. 110388, Sept. 14, 1995).
The Supreme Court did not likewise consider the lapse of nine (9) months (Kingsize Manufacturing
Corp. vs. NLRC, G. R. Nos. 110452-54, Nov. 24, 1994) or six (6) months before filing the complaints for
illegal dismissal as an indication of abandonment. Under the law, the employee has four (4) years
within which to institute his action for illegal dismissal. (Pare vs. NLRC, G. R. No. 128957, Nov. 16,
1999).

When filing of complaint does not negate abandonment; consequence of failure to pray for
reinstatement.

The rule that abandonment of work is inconsistent with the filing of a complaint for illegal dismissal is
not applicable to a case where the complainant does not pray for reinstatement and just asks for
separation pay instead. It goes without saying that the prayer for separation pay, being the
alternative remedy to reinstatement, contradicts private respondent-employee’s stance. That he was
illegally dismissed is belied by his own pleadings as well as contemporaneous conduct. (Jo vs. NLRC, G.
R. No. 121605, Feb. 2, 2000).

But in Sentinel Security Agency, Inc. vs. NLRC, [G. R. No. 122468, Sept. 3, 1998], the fact that
complainants did not pray for reinstatement was considered by the Supreme Court as not sufficient
proof of abandonment. A strong indication of the intention of the complainants to resume work is
their allegation that on several dates, they reported to the Security Agency for reassignment, but
were not given any. In fact, the contention of complainants was that the Agency constructively
dismissed them. Abandonment has recently been ruled to be incompatible with constructive
dismissal.

When refusal to return to work does not constitute abandonment.

In the 2004 case of The Philippine American Life and General Insurance Co. vs. Gramaje, [G. R. No.
156963, Nov. 11, 2004], the Assistant Vice-President was directed to report to her new assignment
and submit to a medical examination. She did not comply leading to her being declared as having
abandoned her work. However, the Supreme Court ruled that the there could not have been an
abandonment since at the time she was being asked to report to her new assignment, she had already
filed a case for illegal dismissal against her employer. For the employer to anticipate the employee to
report for work after the latter already filed a case for illegal dismissal before the NLRC, would be
absurd. The two requisites for abandonment are not present here. There was no abandonment as
the latter is not compatible with constructive dismissal.

Offer of reinstatement during proceedings before Labor Arbiter, effect.

The respondent-employee in the 2002 case of Hantex Trading Co., Inc. vs. CA, [G. R. No. 148241,
September 27, 2002], accused of abandoning his work, filed a complaint and prayed therein, among
others, for reinstatement. However, during the initial hearing before the Labor Arbiter, the petitioners
made an offer to reinstate him to his former position, but he “defiantly” refused the offer despite the
fact that in his complaint, he was asking for reinstatement. Again, the petitioners extended the offer
in its position paper filed with the Labor Arbiter but was likewise rejected by the respondent. The
petitioners consequently asserted that these circumstances are clear indications of respondent’s lack
of further interest to work and effectively negate his claim of illegal dismissal.

The Supreme Court, however, ruled otherwise. It considered the refusal to be reinstated as more of a
symptom of strained relations between the parties, rather than an indicium of abandonment of work
as obstinately insisted by petitioners. While the respondent desires to have his job back, it must have
later dawned on him that the filing of the complaint for illegal dismissal and the bitter incidents that
followed have sundered the erstwhile harmonious relationship between the parties. He must have
surely realized that even if reinstated, he will find it uncomfortable to continue working under the
hostile eyes of the petitioners who had been forced to reinstate him. He had every reason to fear that
if he accepted petitioners’ offer, their watchful eyes would thereafter be focused on him, to detect
every small shortcoming of his as a ground for vindictive disciplinary action. In such instance,
reinstatement would no longer be beneficial to him.

Neither does the fact that petitioners made offers to reinstate respondent legally disproves illegal
dismissal. As observed by the Court of Appeals, to which the Supreme Court was in full agreement,
the offer may very well be “a tacit admission of petitioners that they erred in dismissing him verbally
and without observance of both substantive and procedural due process.” Curiously, petitioners’ offer
of reinstatement was made only after more than one (1) month from the date of the filing of the
illegal dismissal case. Their belated gesture of goodwill is highly suspect. If petitioners were indeed
sincere in inviting respondent back to work in the company, they could have made the offer much
sooner. In any case, their intentions in making the offer are immaterial, for the offer to re-employ
respondent could not have the effect of validating an otherwise arbitrary dismissal.

In Ranara vs. NLRC, [212 SCRA 631], where the employer offered to re-employ the illegally dismissed
employee, the Supreme Court stated:
“The fact that his employer later made an offer to re-employ him did not cure the vice of his early
arbitrary dismissal. The wrong had been committed and the wrong done. Notably, it was only after
the complaint had been filed that it occurred to Chang, in a belated gesture of good will, to invite
Ranara back to work in his store. Chang’s sincerity is suspect. We doubt if his offer would have been
made if Ranara had not complained against him. At any rate, sincere or not, the offer of reinstatement
could not correct the earlier illegal dismissal of the petitioner. The private respondents incurred
liability under the Labor Code from the moment Ranara was illegally dismissed and the liability did
not abate as a result of Chang’s repentance.”

In the 2001 case of Suan vs. NLRC, [G. R. No. 141441, June 19, 2001], a letter was sent to the
petitioner almost one (1) month after the filing of the complaint for illegal dismissal which required
him to explain his absence without leave (AWOL). He found refuge in the above case of Ranara. The
Supreme Court, however, did not find any analogy between the two cases as the factual backdrop of
Ranara [supra] is not the same as Suan. In contrast, petitioner Jose Suan in the latter case who
suffered a stroke, was not dismissed but was only asked to go on extended leave from July 10 to
August 10, 1997 because when petitioner reported for work on July 10, 1997, after more than six
months of sick leave, respondent Oripaypay noticed that petitioner’s left arm down to his left limb
was paralyzed, thus Oripaypay could readily see that petitioner was not yet ready and physically well
to perform his usual assignment as master fisherman. However, after petitioner’s extended leave
expired, he did not return to work which prompted private respondent Oripaypay to send him a letter
dated August 16, 1997 requiring him to explain why no disciplinary action should be taken against him
for his absence without official leave. The said letter clearly shows that respondent Oripaypay was
waiting for the return of petitioner unlike in Ranara, wherein petitioner Ranara, a driver, upon
reporting for work, was surprised to find some other person who replaced him in handling the vehicle
previously assigned to him, thus confirming his dismissal without proper notice.

Subcontracting for another company indicates abandonment.

In Agabon vs. NLRC, [G.R. No. 158693, November 17, 2004], the Supreme Court held that the act of
the petitioners who were frequently absent to engage in subcontracting work for another company
clearly shows the intention to sever the employer-employee relationship with their employer. Hence,
they are guilty of abandonment.

- WHAT IS GROSS NEGLIGENCE; HOW TO DETERMINE ITS EXSISTENCE;

Under the Labor Code, gross negligence is a valid ground for an employer to terminate an
employee. Gross negligence is negligence characterized by want of even slight care, acting or
omitting to act in a situation where there is a duty to act, not inadvertently but willfully and
intentionally with a conscious indifference to consequences insofar as other persons may be
affected. In this case, however, there is no substantial basis to support a finding that petitioner
committed gross negligence.

The test to determine the existence of negligence is as follows:

“Did petitioner in doing the alleged act use that reasonable care and caution which an ordinarily
prudent person would use in the same situation?”

It is not disputed that petitioner tried to turn left to avoid a collision. To put it otherwise, petitioner
did not insist on his right of way, notwithstanding the green light in his lane. Still, the collision took
place as the ten-wheeler careened on the wrong lane. Clearly, petitioner exerted reasonable effort
under the circumstances to avoid injury not only to himself but also to his passengers and the van
he was driving. To hold that petitioner was grossly negligent under the circumstances goes against
the factual circumstances shown. It appears to us he was more a victim of a vehicular accident
rather than its cause.
(Tres Reyes vs Maxim’s Tea House, GR# 140853 – 02/27/03)
- (Golden Thread Knitting vs NLRC, GR# 119157 – 03/11/99)

- ABANDONMENT AS JUST CAUSE FOR DISMISSAL; ELEMENTS

To constitute abandonment, two elements must concur:

(1) The failure to report for work or absence without valid or justifiable reason, and
(2) A clear intention to sever the employer-employee relationship.

The second element is the more determinative factor and should be manifested by some overt acts.
Mere absence is not sufficient. To prove abandonment, the employer must show that the employee
deliberately and unjustifiably refused to resume his employment without any intention of returning.
It is the employer who has the burden of proof to show abandonment.
(Icawat vs NLRC, GR# 133573 – 06/20/00) &
(R. Transport Corp. vs Ejandra, GR# 148508 – 05/20/04)

- IMMEDIATE FILING OF COMPLAINT NEGATES ABANDONMENT

Private respondent, after his vacation leave, immediately reported back for work but was not
allowed by the petitioners on the ground that he was already replaced by regular drivers. After he
was notified, of his termination, private respondent lost no time in filing the case for illegal
dismissal against petitioners. He cannot therefore, by any reasoning, be said to have abandoned his
work or had no intention of going back to work. It would be illogical for him to have left his job and
later on file said complaint. We have consistently ruled that a charge of abandonment is totally
inconsistent with the immediate filing of a complaint for illegal dismissal.
(Icawat vs NLRC, GR# 133573 – 06/20/00)

- EXCEPTION TO THE RULE THAT FILING OF COMPLAINT NEGATES ABANDONMENT

The rule that abandonment of work is inconsistent with the filing of a complaint for illegal dismissal
does not apply where the complainant does not pray for reinstatement and just asks for separation
pay instead. Public respondents assertion that the institution of the complaint for illegal dismissal
manifests private respondents lack of intention to abandon his job is untenable. Such rule applies
where the complainant seeks reinstatement as a relief. Corollary, it has no application where the
complainant does not pray for reinstatement and just asks for separation pay instead as in the
present case. It goes without saying that the prayer for separation pay, being the alternative remedy
to reinstatement, contradicts private respondents stance. That he was illegally dismissed is belied
by his own pleadings as well as contemporaneous conduct.
(Jo vs NLRC, GR# 121605 – 02/02/00)

- WHAT IS GROSS NEGLIGENCE

To warrant removal from service, the negligence should not merely be gross, but also habitual.
Gross negligence implies a want or absence of, or failure to exercise slight care or diligence, or the
enitre absence of care. It evinces a thoughtless disregard of consequences without exerting any
effort to avoid them.
(Union Motor Corp. vs NLRC, GR# 159738 – 12/09/04)

- (RP Dinglasan Construction Inc. vs Atienza, GR# 156104 – 06/29/04)

- GROSS INSUBORDINATION; REQUISITES

For gross insubordination, also called willful disobedience of a lawful order, to lie, two requisites are
also necessary:

(1) The assailed conduct must have been intentional and characterized by a wrongful and perverse
attitude.
(2) The order violated must have been reasonable, lawful, and made known to the employee and
should pertain to the duties which he has been engaged to discharge.
(Cosmos Bottling Corp. vs Nagrama, GR# 164403 – 03/04/08)
c. Fraud or Willful Breach of Trust/Loss of Confidence

NOTE:

(Revised Penal Code)


Chapter Three
DISCOVERY AND REVELATION OF SECRETS

Art. 290. Discovering secrets through seizure of correspondence. — The penalty of prision
correccional in its minimum and medium periods and a fine not exceeding 500 pesos shall be
imposed upon any private individual who in order to discover the secrets of another, shall
seize his papers or letters and reveal the contents thereof.

If the offender shall not reveal such secrets, the penalty shall be arresto mayor and a fine not
exceeding 500 pesos.

The provision shall not be applicable to parents, guardians, or persons entrusted with the
custody of minors with respect to the papers or letters of the children or minors placed under
their care or study, nor to spouses with respect to the papers or letters of either of them.

Art. 291. Revealing secrets with abuse of office. — The penalty of arresto mayor and a fine
not exceeding 500 pesos shall be imposed upon any manager, employee, or servant who, in
such capacity, shall learn the secrets of his principal or master and shall reveal such secrets.

Art. 292. Revelation of industrial secrets. — The penalty of prision correccional in its
minimum and medium periods and a fine not exceeding 500 pesos shall be imposed upon the
person in charge, employee or workman of any manufacturing or industrial establishment
who, to the prejudice of the owner thereof, shall reveal the secrets of the industry of the
latter.

LOSS OF CONFIDENCE

Loss of confidence arising from fraud or willful breach of trust by employee of the trust reposed in
him by his employer or his duly authorized representative is a just cause for termination of
employment under Article 282 of the Labor Code of the Philippines.

Fraud Meaning.
Fraud is any act, omission, or concealment which involves a breach of legal duty, trust, or confidence
justly reposed and is injurious to another.

Breach of Trust Meaning.


Breach of trust refers to the violation by the employee of the trust and confidence reposed in him by
his employer or duly authorized representative.

Elements of Loss of Confidence.


To determine whether the termination of employment based on loss of confidence is justified, the
following elements are generally considered:
1. Whether the fraud or breach of trust is in connection to the employee’s work; and
2. Whether the employee concerned is holding a position of trust and confidence.

Fraud or Breach must be in Connection to Employee’s Work.


To constitute just cause, fraud or breach of trust must be committed in connection with the
employee’s work or related to the performance of the employee’s functions.

Employee must Hold Position of Trust and Confidence.


The basic premise for dismissal on the ground of loss of confidence is that the employee concerned
holds a position of trust and confidence. It is the breach of this trust that results in the employer’s loss
of confidence in the employee. (See Nat’l Sugar Refineries Corp. vs. NLRC, G.R. No. 122277 February
24, 1998.)

Thus, loss of confidence ideally applies only to cases involving employee occupying positions of trust
and confidence, e.g., managerial employees, and those situations where the employee is routinely
charged with the care and custody of the employer’s money or property, e.g., cashiers, auditors,
property custodian, etc.

Title not Conclusive Indicator of Trust and Confidence.


However, the title or appellation of the employee’s position is not a conclusive indicator as to whether
or not an employee holds a position of trust and confidence. The determination should hinge on the
authority actually possessed by employee.

Breach of Trust must be Willful.


Ordinary breach will not suffice. It must be willful and without justifiable excuse, there must be basis
therefor, and it must be supported by substantial evidence and not merely by the whims or caprice of
the employer. (See Falguera vs. Linsangan, G.R. No. 114848 December 14, 1995.)

What are the requisites for the ground of willful breach of trust?

In the 2004 case of Charles Joseph U. Ramos vs. The Honorable Court of Appeals and Union Bank of
the Philippines, [G.R. No. 145405, June 29, 2004], the Supreme Court held that, in order to validly
dismiss an employee on the ground of loss of trust and confidence under Article 282, the following
guidelines must be followed:
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;

4. It must be genuine, not a mere afterthought, to justify earlier action taken in bad faith; and

5. The employee involved holds a position of trust and confidence. (Tolentino vs. PLDT, G. R. No.
160404, June 8, 2005).

Breach must be work-related.

In order to constitute a just cause for dismissal, the act complained of should be “work-related” and
must show that the employee concerned is unfit to continue to work for the employer. (Sulpicio Lines,
Inc. vs. Gulde, G. R. No. 149930, Feb. 22, 2002).

For instance, in the 2005 case of Philippine National Construction Corporation vs. Matias, [G. R. No.
156283, May 6, 2005], undeniably, the position of project controller - the position of respondent at
the time of his dismissal - required trust and confidence, for it related to the handling of business
expenditures or finances. However, his act allegedly constituting breach of trust and confidence
(referring to the unlawful scheme by PNCC of using its employees as ‘dummies’ for the acquisition of
vast tract of land in Bukidnon and thereafter compelling them to assign all rights over same properties
in favor of PNCC – a scheme by PNCC which is a flagrant violation of the Constitution as regards the
maximum area of real property which a corporation can acquire under the CARP Law) was not in any
way related to his official functions and responsibilities as controller. In fact, the questioned act
pertained to an unlawful scheme deliberately engaged in by petitioner in order to evade a
constitutional and legal mandate.

Breach must be willful and without justifiable excuse.

Loss of trust and confidence must be based on a willful breach and founded on clearly established
facts. (Asia Pacific Chartering [Phils.], Inc. vs. Farolan, G. R. No. 151370, Dec. 4, 2002).

It must rest on substantial grounds and not on the employer’s arbitrariness, whims, caprices or
suspicion; otherwise, the employee would eternally remain at the mercy of the employer. It should be
genuine and not simulated; nor should it appear as a mere afterthought to justify earlier action taken
in bad faith or a subterfuge for causes which are improper, illegal or unjustified. It has never been
intended to afford an occasion for abuse because of its subjective nature. (Atlas Consolidated Mining
& Development Corporation vs. NLRC, G. R. No. 122033, May 21, 1998).

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

As firmly entrenched in our jurisprudence, loss of trust and confidence as a just cause for termination
of employment is premised on the fact that an employee concerned holds a position where greater
trust is placed by management and from whom greater fidelity to duty is correspondingly expected.
This includes managerial personnel entrusted with confidence on delicate matters, such as the
custody, handling, or care and protection of the employer’s property. (Caingat vs. NLRC, G. R. No.
154308, March 10, 2005).

This situation also holds in the case of supervisory personnel occupying positions of responsibility.
(Cruz vs. Coca-Cola Bottlers Phils., Inc., G. R. No. 165586, June 15, 2005).

The betrayal of this trust is the essence of the offense for which an employee is penalized. (Santos vs.
San Miguel Corporation, G. R. No. 149416, March 14, 2003).

There must be “some basis” for the loss of trust and confidence.

While it is true that loss of trust and confidence is one of the just causes for termination, such loss of
trust and confidence must, however, have some basis. Proof beyond reasonable doubt is not
required. It is sufficient that there must only be some basis for such loss of confidence or 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. (Central Pangasinan Electric
Cooperative, Inc. vs. Macaraeg, G. R. No. 145800, Jan. 22, 2003).

In Limketkai Sons Milling, Inc. vs. Llamera, [G. R. No. 152514, July 12, 2005], petitioners simply allege
that respondent’s failure to report to the quality control head the batch that did not meet the
minimum standard showed connivance to sabotage petitioners’ business. The Supreme Court ruled
that not only is petitioners’ logic flawed, it is an instance of arguing non sequitur. Said allegation
alone, without proven facts to back it up, could not and did not suffice as a basis for a finding of willful
breach of trust. Petitioners failed to prove the existence of a valid cause for the dismissal of
respondent. Therefore, the dismissal must be deemed contrary to the provisions of the Labor Code,
hence illegal.

Prolonged practice, not an excuse for wrongful act.

In Santos vs. San Miguel Corporation, [G. R. No. 149416, March 14, 2003], it was held that prolonged
practice of encashing personal checks among payroll personnel does not excuse or justify petitioner’s
misdeeds. Petitioner’s willful and deliberate acts were in gross violation of respondent company’s
policy against encashment of personal checks of its personnel. She, as Finance Director, cannot feign
ignorance of such policy as she is duty-bound to keep abreast of company policies related to financial
matters within the corporation.

Grant of promotions and bonuses negates loss of trust and confidence.

In Norkis Distributors, Inc. vs. NLRC, [G. R. No. 112230, July 17, 1995], where the employer alleged
inefficiency and loss of trust and confidence as grounds for termination of employment, the High
Tribunal said that these are negated by the fact that the evidence shows that the employee received
several promotions since his employment in 1986 and was given bonuses for his collection efforts and
a compensation adjustment for his excellent performance.

Long years of service, absence of derogatory record and small amount involved, when deemed
inconsequential.

In Etcuban, Jr. vs. Sulpicio Lines, Inc., [G. R. No. 148410, January 17, 2005], the petitioner theorizes
that even assuming that there was evidence to support the charges against him, his dismissal from
the service is unwarranted, harsh and is not commensurate to his misdeeds, considering the
following: first, his 16 long years of service with the company; second, no loss or damages was
suffered by the company since the tickets were unissued; third, he had no previous derogatory record;
and, lastly, the amount involved is miniscule. Citing jurisprudence, he appeals for compassion and
requests that he be merely suspended, or at the very least, given separation pay for his length of
service. The Supreme Court, however, found no merit in the petitioner’s contention:
“We are not unmindful of the foregoing doctrine, but after a careful scrutiny of the cited cases, the
Court is convinced that the petitioner’s reliance thereon is misplaced. It must be stressed that in all of
the cases cited, the employees involved were all rank-and-file or ordinary workers. As pointed out
earlier, the rules on termination of employment, penalties for infractions, insofar as fiduciary
employees are concerned, are not necessarily the same as those applicable to the termination of
employment of ordinary employees. Employers, generally, are allowed a wider latitude of discretion in
terminating the employment of managerial personnel or those of similar rank performing functions
which by their nature require the employer’s trust and confidence, than in the case of ordinary rank-
and-file employees. (Citing Gonzales vs. NLRC, 355 SCRA 195 [2001]).
“The fact that the petitioner has worked with the respondent for more than 16 years, if it is to be
considered at all, should be taken against him. The infraction that he committed, vis-à-vis his long
years of service with the company, reflects a regrettable lack of loyalty. Loyalty that he should have
strengthened instead of betrayed. If an employee’s length of service is to be regarded as a justification
for moderating the penalty of dismissal, it will actually become a prize for disloyalty, perverting the
meaning of social justice and undermining the efforts of labor to cleanse its ranks of all undesirables.
(Citing Flores vs. NLRC, 219 SCRA 350 [1993]).

“xxx

“It cannot be over-emphasized that there is no substitute for honesty for sensitive positions which call
for utmost trust. Fairness dictates that the respondent should not be allowed to continue with the
employment of the petitioner who has breached the confidence reposed on him. Unlike other just
causes for dismissal, trust in an employee, once lost, is difficult, if not impossible, to regain. (Citing
Salvador vs. Philippine Mining Service Corporation, 395 SCRA 729 [2003]). There can be no doubt that
the petitioner’s continuance in the extremely sensitive fiduciary position of Chief Purser would be
patently inimical to the respondent’s interests. It would be oppressive and unjust to order the
respondent to take him back, for the law, in protecting the rights of the employee, authorizes neither
oppression nor self-destruction of the employer.” (San Miguel Corporation vs. NLRC, 115 SCRA 329
[1982]).

In another case, Central Pangasinan Electric Cooperative, Inc. vs. Macaraeg, [G. R. No. 145800,
January 22, 2003], the teller and cashier (who were charged and dismissed for unauthorized
encashments of checks) have been employed with the petitioner-electric cooperative for 22 and 19
years of continuous service, respectively, and this is the first time that either of them has been
administratively charged. Nonetheless, their dismissal was held justified considering the breach of
trust they have committed. Well to emphasize, the longer an employee stays in the service of the
company, the greater is his responsibility for knowledge and compliance with the norms of conduct
and the code of discipline in the company. Considering that they have mishandled the funds of the
cooperative and the danger they have posed to its members, their reinstatement is neither sound in
reason nor just in principle. It is irreconcilable with trust and confidence that has been irretrievably
lost.

In Salvador vs. Philippine Mining Service Corporation, [G. R. No. 148766, January 22, 2003], petitioner
argues that assuming there was evidence to support the charges against him, his dismissal from
service is unwarranted, harsh and grossly disproportionate to his act, considering his long years of
service with the company. The Supreme Court, however, disagreed, thusly:
“To be sure, length of service is taken into consideration in imposing the penalty to be meted an
erring employee. However, the case at bar involves dishonesty and pilferage by petitioner which
resulted in respondent’s loss of confidence in him. Unlike other just causes for dismissal, trust in an
employee, once lost is difficult, if not impossible, to regain. Moreover, petitioner was not an ordinary
rank-and-file employee. He occupied a high position of responsibility. As foreman and shift boss, he
had over-all control of the care, supervision and operations of respondent’s entire plant. It cannot be
over-emphasized that there is no substitute for honesty for sensitive positions which call for utmost
trust. Fairness dictates that respondent should not be allowed to continue with the employment of
petitioner who has breached the confidence reposed on him. (Citing Galsim vs. Philippine National
Bank, 29 SCRA 293 [1969]). As a general rule, employers are allowed wider latitude of discretion in
terminating the employment of managerial employees as they perform functions which require the
employer’s full trust and confidence. (Citing Gonzales vs. NLRC, 355 SCRA 195 [2001]).

“In the case at bar, respondent has every right to dismiss petitioner, a managerial employee, for
breach of trust and loss of confidence as a measure of self-preservation against acts patently inimical
to its interests. Indeed, in cases of this nature, the fact that petitioner has been employed with the
respondent for a long time, if to be considered at all, should be taken against him, (Citing Flores vs.
NLRC, 219 SCRA 350 [1993]). as his act of pilferage reflects a regrettable lack of loyalty which he
should have strengthened, instead of betrayed.”

In Cruz vs. Coca-Cola Bottlers Phils., Inc., [G. R. No. 165586, June 15, 2005], involving the spiriting out
of thirty (30) cases of canned soft drinks loaded on petitioner’s truck without the required
documentation, the Supreme Court took his long years of service as militating against his claim of
good faith. Petitioner’s length of service (as driver/helper), which spans almost fifteen (15) years,
works against his favor in this case. The reason is, it has long been held that the longer an employee
stays in the service of the company, the greater is his responsibility for knowledge and compliance
with the norms of conduct and the code of discipline in the company.

Rules on termination of managerial employee, different from rank-and-file.

The rules on termination of managerial employees are different from those applicable to rank-and-file
employees. Obviously, a managerial employee is tasked to perform key and sensitive functions, and
thus he is bound by more exacting work ethics. (Gonzales vs. NLRC and Pepsi-Cola Products, Phils.,
Inc., G. R. No. 131653, March 26, 2001).

This distinction has been underscored by the Supreme Court in recent decisions involving the
application of the doctrine of loss of trust and confidence. Thus, with respect to rank-and-file
personnel, loss of trust and confidence as 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 such employee has breached the trust of his employer would suffice for his
dismissal. Hence, in the case of managerial employees, proof beyond reasonable doubt is not
required, it being sufficient that there is some basis for such loss of confidence, such as when the
employer has reasonable ground to believe that the employee concerned is responsible for the
purported misconduct, and the nature of his participation therein renders him unworthy of the trust
and confidence demanded by his position. (Etcuban, Jr. vs. Sulpicio Lines, Inc., G. R. No. 148410, Jan.
17, 2005).

It is thus important that in termination based on this ground, it must be shown that the employee is a
managerial employee since the term “trust and confidence” is restricted to said class of employees.
As a managerial employee, any transgression on her part gives the employer a wider latitude of
discretion in terminating her services. (Deles, Jr. vs. NLRC, G. R. No. 121348, March 9, 2000).

If what is involved in a case is a rank-and-file employee, the doctrine of loss of trust and confidence
may not be appropriately applied. For instance, the task of a janitor, said the Supreme Court, does
not fall squarely under this category. (De los Santos vs. NLRC, G. R. No. 121327, Dec. 20, 2001).

When rank-and-file employees may be dismissed based on loss of trust and confidence.

While generally, the doctrine of loss of trust and confidence may only be invoked against managerial
employees, there are instances when the doctrine may also be successfully invoked against rank-and-
file employees who, by reason of the nature of their positions, are reposed with trust and confidence.

For example, as held in Coca-Cola Bottlers Philippines, Inc. vs. NLRC, [172 SCRA 751 (1989)], route
salesmen are rank-and-file employees but they are highly individualistic personnel who roam around
selling products, deal with customers and are entrusted with large assets and funds and property of
the employer. There is a high degree of trust and confidence reposed on them, and when such
confidence is breached, the employer may take proper disciplinary action on them.

In holding that the dismissal of the food attendant was valid, the Supreme Court, in Philippine Pizza,
Inc. vs. Bungabong, [G. R. No. 154315, May 9, 2005], ruled that where the employee has access to the
employer’s property in the form of merchandise and articles for sale, the relationship of the employer
and the employee necessarily involves trust and confidence. Hence, when respondent drank stolen
beer from the dispenser of Pizza Hut-Ermita on Decem¬ber 6, 1997, he gave cause for his termination
and his termination was within the ambit of Article 282 of the Labor Code.

Examples of cases where rank-and-file employees may not be dismissed based on loss of trust and
confidence.

But in another case involving the same company, Coca-Cola Bottlers, Phils., Inc. vs. Kapisanan ng
Malayang Manggagawa sa Coca-Cola-FFW, [G. R. No. 148205, Feb. 28, 2005], it was pronounced that
the temporary assignment as route salesman for a period of three (3) days of an employee who was
employed as driver-helper does not automatically make him an employee on whom his employer
reposed trust and confidence, for breach of which he shall be meted the penalty of dismissal. The
assumption by said employee, for only three days, of some of the duties of a route salesman on
orders of his employer, did not automatically make him an employee holding a position of trust and
confidence. Despite his additional duties, said employee remained a driver-helper of the petitioner.
Thus, he cannot be dismissed based on loss of trust and confidence.

In Vallacar Transit, Inc. vs. NLRC, [G. R. No. 109809, July 17, 1995], it was held that a non-managerial
position such as a bus driver does not hold a position of trust and confidence. That he figured in
several accidents prejudicial to petitioner cannot serve as basis for the loss of trust and confidence.

What constitutes the ground of fraud?

Commission of fraud by an employee against the employer will necessarily result in the latter's loss of
trust and confidence in the former. Proof of loss is not required under this ground.

Commission of fraud or deceit leading to loss of trust and confidence.

In the 2003 case of De la Cruz, Jr. vs. NLRC, G. R. No. 145417, [December 11, 2003], the petitioner was
holding a managerial position in which he was tasked to perform key functions in accordance with an
exacting work ethic. His position required the full trust and confidence of his employer. While
petitioner could exercise some discretion, this obviously did not cover acts for his own personal
benefit. As found by the court a quo, he committed a transgression that betrayed the trust and
confidence of his employer - reimbursing his family’s personal travel expenses out of company funds.
Petitioner failed to present any persuasive evidence or argument to prove otherwise. His act
amounted to fraud or deceit which led to the loss of trust and confidence of his employer.

Lack of damage or losses 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. (Villanueva vs. NLRC, G.
R. No. 129413, July 27, 1998).

In Diamond Motors Corporation vs. CA, [G. R. No. 151981, Dec. 1, 2003] and in the earlier case of
Philippine Airlines, Inc. vs. NLRC, [G. R. No. 126805, March 16, 2000] involving the commission of
fraud against the company, it was ruled that the fact that the employer failed to show it suffered
losses in revenue as a consequence of the employee’s act is immaterial. It must be stressed that
actual defraudation is not necessary in order that an employee may be held liable under the company
rule against fraud. That the dismissed employee attempted to deprive the employer of its lawful
revenue is already tantamount to fraud against the company which warrants dismissal from the
service.

Restitution does not have absolutory effect.

In Gonzales vs. NLRC and Pepsi-Cola Products, Phils., Inc., [G. R. No. 131653, March 26, 2001], it was
held that the fact that the employer ultimately suffered no monetary damage as the employee
subsequently settled his account is of no moment. This was not the reason for the termination of his
employment in the company but the anomalous scheme he engineered to cover up his past due
account which constitutes a clear betrayal of trust and confidence.

The Supreme Court has reiterated this rule in Santos vs. San Miguel Corporation, [G. R. No. 149416,
March 14, 2003]. Hence, even if the shortages have been fully restituted, the fact that the employee
has misappropriated company funds is a valid ground to terminate the services of an employee of the
company for loss of trust and confidence. (See also San Miguel Corporation vs. Deputy Minister of
Labor and Employment, 145 SCRA 196, 203-204 [1986]).

Lack of misappropriation or shortage, immaterial.

Where there was a series of unauthorized encashments of personal checks, the Supreme Court in
Central Pangasinan Electric Cooperative, Inc. vs. Macaraeg, [G. R. No. 145800, January 22, 2003], ruled
that it is not material that the teller and cashier did not “misappropriate any amount of money, nor
incur any shortage relative to the funds in their possession.” The basic premise for dismissal on the
ground of loss of confidence is that the employees concerned hold positions of trust. The betrayal of
this trust is the essence of the offence for which an employee is penalized. The respondents here
held positions of utmost trust and confidence. As teller and cashier, they are expected to possess a
high degree of fidelity. They are entrusted with a considerable amount of cash. Respondent de Vera
accepted payments from petitioner’s consumers while respondent Macaraeg received remittances for
deposit at petitioner’s bank. They did not live up to their duties and obligations.

- LOSS OF CONFIDENCE; GUIDELINES

The guidelines for the application of the doctrine of loss of confidence are:

(1) Loss of confidence should not be simulated.


(2) It should not be used as a subterfuge for causes which are improper, illegal, or unjustified.
(3) It may not be arbitrarily asserted in the face of overwhelming evidence to the contrary.
(4) It must be genuine, not a mere afterthought to justify earlier action taken in bad faith.
(Nokom vs NLRC, GR# 140043 – 07/18/00)

To validly dismiss an employee on the ground of loss of trust and confidence, the following
guidelines must be followed:

(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.
(4) It must be genuine, not a mere afterthought, to justify earlier action taken in bad faith.
(5) The employee involved holds a position of trust and confidence.
(Charles Ramos vs CA, GR# 145405 – 06/29/04)

- FOR LOSS OF TRUST AND CONFIDENCE TO BE A JUST CAUSE, THE EMPLOYEE MUST HOLD A
POSITION WHICH REQUIRES TRUST AND CONFIDENCE

Of course, it must be stressed that loss of confidence as a just cause for the termination of
employment is based on the premise that the employee holds a position of trust and confidence, as
when he is entrusted with responsibility involving delicate matters, and the task of a janitor does
not fall squarely under this category.
(Delos Santos vs NLRC, GR# 121327 – 12/20/01)

- PROOF REQUIRED IN LOSS OF TRUST AND CONFIDENCE

There is no dispute over the fact that respondent was a managerial employee and therefore loss of
trust and confidence was a ground for his valid dismissal. The mere existence of a basis for the loss
of trust and confidence justifies the dismissal of the employee.

Proof beyond reasonable doubt is not required provided there is a valid reason for the loss of trust
and confidence, such as when the employer has a reasonable ground to believe that the managerial
employee concerned is responsible for the purported misconduct and the nature of his
participation renders him unworthy of the trust and confidence demanded by his position.
(PLDT vs Tolentino, GR# 143171 – 09/21/04)

- BURDEN OF PROVING LOSS OF CONFIDENCE

The burden of establishing facts as bases for an employer's loss of confidence in an employee - facts
which reasonably generate belief by the employer that the employee was connected with some
misconduct and the nature of his participation therein is such as to render him unworthy of trust
and confidence demanded of his position - is on the employer. Should the employer fail in
discharging his onus, the dismissal of the employee cannot be sustained. This is consonant with the
constitutional guarantee of security of tenure, as implemented in what is now Sec. 279 of the Labor
Code.
(Adelino Felix vs NLRC, GR# 148256 – 11/17/04)

- WHO MAY BE DISMISSED FOR LOSS OF CONFIDENCE


Loss of trust and confidence, as a ground for dismissal, is premised on the fact that the employee
concerned holds a position of responsibility or of trust and confidence. As such, the employee must
be invested confidence on delicate matters, such as the custody, handling, or care of the employer's
money and other assets. Loss of confidence as a just cause for dismissal was never intended to
provide employer's with a blank check for terminating their employees. Such a vague, all-
encompassing pretext as loss of confidence, if unqualifiedly given the seal of approval by this court,
could readily reduce to barren form the words of the constitutional guarantee of security of tenure.
Having this in mind, loss of confidence should ideally apply only to cases involving employees
occupying positions of trust and confidence or to those situations where the employee is routinely
charged with the care and custody of the employer's money or property. To the first class belong
managerial employee, i.e., those vested with the powers or prerogatives to lay down management
policies, effect personnel movements, or effectively recommend such managerial actions; and to
the second class belong cashiers, auditors, property custodians, etc., or those who, in the normal
and routine exercise of their functions, regularly handle significant amounts of money or property.
(Rolando Aromin vs NLRC, GR# 164824 – 04/30/08)

d. Commission of a Crime or Offense against Employer

Crime - Punished under the Revised Penal Code.


- Involves Mala in Se
- Good Faith is a defense

Offense - Punished under Special Penal Laws.


- Involves Mala Prohibita
- Good Faith is not a Defense

What constitutes the ground of commission of crime or offense?

The commission of a crime or offense by the employee may justify the termination of his
employment, if such crime or offense is committed against any of the following persons:

1. His employer;
2. Any immediate member of his employer’s family; or
3. His employer’s duly authorized representative.

Q: Who are Immediate Family Members?


A: Spouse, ascendants, descendants, or legitimate, natural, or adopted brothers or sisters of the
employer or of his relative by affinity in the same degrees, and those by consanguinity within the
fourth civil degree. (Art. 11 (2) RPC)

Q: Does the Crime/Offense have to be committed within the work place?


A: No. It may also be done outside.

Q: What crimes/offenses are involved?


A: Those against the Person of the offended party.

Refers to an offense by the employee against the person of his employer or any immediate member if
his family or his duly authorized representative and thus, the conviction of a crime involving moral
turpitude is not analogous thereto as the element of relation to his work or to his employer is lacking.

NOTE: The CONVICTION of an employee in a criminal case is NOT necessary to warrant his dismissal
by his employer.

e. Other Analogous Cases

DOCTRINE OF INCOMPATIBILITY

Where the employee has done something that is contrary or incompatible with the faithful
performance of his duties, his employer has a just cause for terminating his employment.
(Manila Chauffer’s League vs Bachrach Motor Co., 40 O.G. 159)
Instances considered analogous causes.

1. The ground of inefficiency.


2. Violation of safety rules.
3. Ban on one’s employees imposed by another company.
4. Violation of the company code of conduct or company rules and regulations.

- UNREASONABLE BEHAVIOR MAY BE A JUST CAUSE FOR DISMISSAL

An evaluative review of the records of this case nonetheless supports a finding of a just cause for
termination. The reason for which private respondent's services were terminated, namely, her
unreasonable behavior and unpleasant deportment in dealing with the people she closely works
with in the course of her employment, is analogous to the other "just causes" enumerated under
the Labor Code.
(Cathedral School of Technology vs NLRC, GR# 101438 – 10/13/92)

- GROSS INEFFICIENCY IS ANALOGOUS TO GROSS NEGLIGENCE

We cannot but agree with PEPSI that gross inefficiency falls within the purview of other analogous
causes to the foregoing, and constitutes, therefore, a just cause to terminate an employee under
Art. 282 of the Labor Code. One is analogous to another if it is susceptible of comparison with the
latter either in general or in some specific detail; or has a close relationship with the latter. Gross
Inefficiency is closely related to Gross Neglect, for both involve specific acts of omission on the part
of the employee resulting in damage to the employer or to his business. In Buiser vs Leogardo, this
Court ruled that failure to observe prescribed standards of work, or to fulfill reasonable work
assignments due to inefficiency may constitute just cause for dismissal.
(Lim vs NLRC, GR# 118434 – 07/26/96)

3. Authorized Causes

(Labor Code)
ART. 283. Closure of establishment and reduction of personnel. - The employer may also terminate the
employment of any employee due to:

1. The installation of labor-saving devices,


2. Redundancy,
3. Retrenchment to prevent losses or
4. The closing or cessation of operation of the establishment or undertaking

Unless the closing is for the purpose of circumventing the provisions of this Title,

By serving a written notice on the workers and the Ministry of Labor and Employment at least one (1)
month before the intended date thereof.

In case of termination due to the installation of labor-saving devices or redundancy, the worker affected
thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one
(1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and
in cases of closures or cessation of operations of establishment or undertaking not due to serious business
losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-
half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months
shall be considered one (1) whole year.

(Rule I, Book VI, IRR)


SECTION 9. Termination pay. —
(a) An employee shall be entitled to termination pay equivalent to at least one month's salary for every
year of service a fraction of at least six (6) months being considered as one whole year, in case of
termination of his employment due to the installation of labor-saving devices or redundancy.
(b) Where the termination of employment is due to retrenchment to prevent losses and in case of
closure or cessation of operations of establishment or undertaking not due to serious business losses
or financial reverses, or where the employment is prohibited by law or is prejudicial to his health or to
the health of his co-employees, the employee shall be entitled to termination pay equivalent to at
least one-half month's pay for every year of service, a fraction of at least six months being considered
as one whole year.
(c) The termination pay provided in the Section shall in no case be less than the employee's one month
pay.

SECTION 10. Basis of termination pay. — The computation of the termination pay of an employee as
provided herein shall be based on his latest salary rate, unless the same was reduced by the employer to
defeat the intention of the Code, in which case the basis of computation shall be the rate before its
deduction.

NOTE:

Unlike the “just causes”, the “authorized causes” under this article are not faults of the employee, they are
concomitants [accompanying thing or circumstance] of business needs or business fate. The business
situation makes the employment termination necessary. Ironically, some employees have to lose their jobs
to strengthen or save the business. In the worse situation the business itself may be terminated. In any
case, the law gives the separated employees separation pay whose amount varies according to the cause
of the separation. But separation pay is not required if business closure or cessation is due to serious
losses.

Similar to the “just causes”, the “authorized causes” are coupled with proper procedure. The process is not
by way of investigation and hearing but by a 30-day notice to the employee and to the DOLE. If this
procedure is not observed, the employer, as in Art. 282 will have to pay full backwages in addition to the
statutory severance pay. This ruling is found in Serrano vs NLRC (GR# 117040 – 01/27/00) which modifies
the Wenphil Doctrine which imposes only indemnity of an uncertain amount.

AUTHORIZED CAUSES FOR TERMINATION OF EMPLOYEE’S

The two most commonly used grounds for termination of employee are the Authorized Causes
under Article 283 and 284 of the Labor Code, and the Just Causes under Article 282. Below are the
authorized causes for termination of employment.

Definition
As maybe broadly defined, authorized causes for dismissal of employee refer to those lawful grounds for
termination which in general do not arise from fault or negligence of the employee. “Authorized causes”
are distinguished from “just causes” under Article 282 in that the latter are always based on acts
attributable to the employee’s own fault or negligence.

Authorized causes
The authorized causes for termination of employee are enumerated under Article 283 and 284 of the
Labor Code, as follows:

1. Installation of labor-saving devices. The installation of labor-saving devices contemplates the


installation of machinery to effect economy and efficiency in the method of production [1].
2. Redundancy. Redundancy exists where the services of an employee are in excess of what is
reasonably demanded by the actual requirements of the enterprise. A position is redundant where it
superfluous, and superfluity of a position or positions may be the outcome of a number of factors,
such as over hiring of workers, decreased of volume business, or dropping of a particular product line
or service activity previously manufactured or undertaken by the enterprise [2].
3. Retrenchment to prevent losses. Retrenchment is an economic ground to reduce the number of
employees. Retrenchment is the reduction of personnel for the purpose of cutting down on costs of
operations in terms of salaries and wages resorted to by an employer because of losses in operation
of a business occasioned by lack of work and considerable reduction in the volume of business [3]. It is
sometimes also referred to as downsizing. It is aimed at saving a financially ailing business
establishment from eventually collapsing.
4. Closure or cessation of operation. The closure of a business establishment is a ground for the
termination of the services of an employee unless the closing is for the purpose of circumventing
pertinent provisions of the Labor Code.
5. Disease. An employer may terminate the services of an employee who has been found to be suffering
from any disease and whose continued employment is prohibited by law or is prejudicial to his health
as well as the health of his co-employees.
It should be noted though that the above enumeration is not an exhaustive list of authorized causes of
termination of employment. Valid application of union security clause, relocation of business, among
others, may also considered authorized causes of termination.

Footnotes
1. Edge Apparel, Inc. vs. NLRC, G.R. No. 121314, February 12, 1998.
2. Tierra International Construction Corporation vs. NLRC, G.R. No. 88912, July 3, 1992.
3. Alabang Country Club vs. NLRC, G.R. No. 157611, August 9, 2005.

AUTHORIZED CAUSES (TERMINATION PROCESS)

Requirements of Procedural Due Process.


For valid termination based on authorized causes such as installation of labor-saving devices, redundancy,
retrenchment to prevent losses, and closure or cessation of operation, the employer must serve written
notice to the individual employee concerned and to the appropriate Regional Office of DOLE at least 30
days before the effectivity of the termination.
Also, the employer must observe the following requirements as part of the process of termination:
1. Good faith in the termination of employee, i.e., the implementation of the company program
resulting to termination of employees must be for a valid cause and not merely a tool to circumvent
the law on employee’s security of tenure;
2. The employer must adopt a fair and reasonable criteria in the selection of employee to be dismissed;
and,
3. The employee must be paid separation pay not less than the amount fixed by law.

Criteria in Selection of Employee to be Dismissed.


In the selection of the employee to be dismissed, the employer must adopt of a fair and reasonable
criteria which must be applied in good faith, such as:
1. Less preferred status of employee;
2. Efficiency rating; and
3. Seniority.

Payment of Separation Pay.


In termination of employment due to authorized causes, the employer is required to give separation pay
to the employee concerned. The amount of separation pay depends on the specified cause of termination.
1. In case of termination due to the installation of labor-saving devices or redundancy – at least one
month pay or to at least one month pay for every year of service, whichever is higher.
2. In case of (a) retrenchment to prevent losses and (b) closures not due to serious financial reverses –
one month pay or at least one-half month pay for every year of service, whichever is higher.
3. No separation pay for closure due to serious business losses.
4. No separation pay is required when the closure of business is due to serious business losses or
financial reverses. (North Davao Mining, 1996.)
5. When closure of the business establishment is forced upon the employer and ultimately for the
benefit of the employees. The closure contemplated under Article 283 of the Labor Code is a
unilateral and voluntary act on the part of the employer to close the business establishment.
(National Federation of Labor vs. NLRC, 2000.)

Effects of Termination.
1. If the termination is for authorized cause and the employee is given 30-day prior notice, the dismissal
is valid.
2. If the termination is for authorized cause but the employee was not given 30-day prior notice, the
dismissal is valid but the employer may be ordered to pay nominal damages to dismissed employee.
In Jaka Food Processing vs. Pacot, 2005, the amount of nominal damages is P50,000.00.
3. If the dismissal is not for a valid authorized cause, the dismissal is illegal, whether or not there is 30-
day prior notice. Consequently the employee shall be entitled to reinstatement and backwages, and
damages if warranted.

a. Installation of Labor Saving Devices

Replacement of workers with machinery or job contractors with the aim of increasing efficiency in the
company.

REQUISITES TO EFFECT DISMISSAL:


Notice to the employees at least 30 days prior to the dismissal
Notice to the DOLE at least 30 days prior to the dismissal

Installation of Labor-Saving Devices Concept


The law authorizes an employer to terminate the employment of any employee due to the installation
of labor saving devices. The installation of these devices is a management prerogative, and the courts
will not interfere with its exercise in the absence of abuse of discretion, arbitrariness, or maliciousness
on the part of management. (See Magnolia Dairy Products Corporation vs. NLRC, G.R. No. 114952,
January 29, 1996.)

The installation of labor-saving devices contemplates the installation of machinery to effect economy
and efficiency in the method of production.

Distinguished from Retrenchment


The institution of “new methods or more efficient machinery, or of automation” is technically a
ground for termination of employment by reason of installation of labor-saving devices but where the
introduction of these methods is resorted to not merely to effect greater efficiency in the operations
of the business but principally because of serious business reverses and to avert further losses, the
device could then verily be considered one of retrenchment. (Edge Apparel vs. NLRC, G.R. No. 121314,
February 12, 1998; See alsoRetrenchment.)

Separation Pay
In case of termination due to the installation of labor saving devices, the worker affected thereby shall
be entitled to a separation pay equivalent to at least his one month pay or to at least one month pay
for every year of service, whichever is higher. (Article 283, Labor Code.)

Case
1. An employee was terminated after the company instituted a modernization program. Under said
program, the operations of the quality control unit, to which said employee was assigned, were all
automated. The dismissal was upheld as valid. (Agustilo vs. Court of Appeals, G.R. No. 142875,
September 7, 2001.)

- INDEPENDENT CONTRACTING QUALIFIES AS LABOR SAVING DEVICES

In any event, we have held that an employer's good faith in implementing a redundancy program is
not necessarily destroyed by availment of the services of an independent contractor to replace the
services of the terminated employee's. We have previously ruled that the reduction of the number
of workers in a company made necessary by the introduction of the services of an independent
contractor is justified when the latter is undertaken in order to effectuate more economic and
efficient methods of production. In the case at bar, private respondents failed to proffer any proof
that the management acted in a malicious or arbitrary manner in engaging the services of an
independent contractor to operate the Laura wells. Absent such proof, the Court has no basis to
interfere with the bona fide decision of management to effect more economic and efficient
methods of production.
(Asian Alchohol Corp. vs NLRC, GR# 131108 – 03/25/99)

- VALIDITY OF LABOR SAVING DEVICE

Private respondents harp on the fact that petitioner's desire to save on labor costs was the
motivation for the redundancy program. The law, however, does not prevent employers from saving
on labor costs. This Court has recognized such right. In International Macleod, Inc. vs IAC, this Court
found that the appointment by the company to the International Heavy Equipment Corporation as
its dealer with the government rendered redundant the position of Government Relations Officer
held by the private respondent therein. It was held that the determination of the need for the
phasing out of a department as a labor and cost saving device because it was no longer economical
to retain said department is a management prerogative, with which the courts will not interfere.

So long as the undertaking to save on labor costs is not attended by malice, arbitrariness, or intent
on the part of the employer to circumvent the law, the Court will not interfere with such endeavor.
(Dole Phils. Vs NLRC, GR# 120009 – 09/13/01)
- IMPLEMENTATION OF LABOR SAVING DEVICES IS A BUSINESS DECISION NOT SUBJECT TO REVIEW
OF THE LABOR ARBITER OR NLRC

As we pointed out in another case, the management of a company cannot be denied the faculty of
promoting efficiency and attaining economy by a study of what units are essential for its operation.
To it belongs the ultimate determination of whether services should be performed by its personnel
or contracted to outside agencies. While there should be mutual consultation, eventually deference
is to be paid to what management decides. Consequently, absent proof that management acted in a
malicious or arbitrary manner, the court will not interfere with the exercise of judgment by an
employer.

The hiring of an independent security agency is a business decision properly within the exercise of
management prerogative. The wisdom or soundness of the management decision is not subject to
the discretionary review of the Labor Arbiter nor of the NLRC.
(Serrano vs NLRC, GR# 117040 – 01/27/00)

b. Redundancy

Redundancy Concept
Redundancy is one of the authorized causes for termination of employment under Article 283 of the
Labor Code of the Philippines.

Redundancy exists where the services of an employee are in excess of what is reasonably demanded
by the actual requirements of the enterprise. A position is redundant where it superfluous, and
superfluity of a position or positions may be the outcome of a number of factors, such as over hiring
of workers, decreased of volume business, or dropping of a particular product line or service activity
previously manufactured or undertaken by the enterprise.

In Wiltshire, the Court held that an employer has no legal obligation to keep on the payroll employees
more than the number needed for the operation of the business. (See Wiltshire File Co., v. NLRC,
1991; Coats Manila Bay vs. Ortega, 2009)

Adequate Proof of Redundancy


It is the employer’s burden to show that redundancy exists. It is not enough for a company to merely
declare that it has become overmanned. It must produce adequate proof of such redundancy to
justify the dismissal of the affected employees (Asufrin vs. San Miguel Corporation, 2004).

Evidence must be presented to substantiate 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 (Panlilio vs. NLRC, 1997).

Requirements of a Valid Redundancy Program


The employer must comply with the following requisites to ensure the validity of the implementation
of a redundancy program:
1. A written notice served on both the employees and the Department of Labor and Employment
(DOLE) at least one month prior to the intended date of retrenchment as required by the Labor
Code;
2. Payment of separation pay equivalent to at least one month pay or at least one month pay for
every year of service, whichever is higher;
3. Good faith in abolishing the redundant positions; and
4. Fair and reasonable criteria in ascertaining what positions are to be declared redundant and
accordingly abolished. (See Caltex vs. NLRC, 2007, )

Separation Pay
In case of termination due to redundancy, the worker affected thereby shall be entitled to a
separation pay equivalent to at least one (1) month pay or to at least one (1) month pay for every year
of service, whichever is higher.

Proof of Losses Not Required


Redundancy does not require the exhibition of proof of losses or imminent losses. In fact, of all the
statutory grounds provided in Article 283 of the Labor Code, it is only retrenchment which requires
proof of losses or possible losses as justification for termination of employment. (See Coats Manila
Bay case.)

Duplication of Work Not Necessary.


Redundancy does not necessarily refer to duplication of work. That no other person was holding the
same position prior to the termination of the employee’s services does not mean that his position had
not become redundant. Indeed, in any well-organized business enterprise, it would be surprising to
find duplication of work and two or more people doing the work of one person. (See Wiltshire case.)

In redundancy, what is looked into is the position itself, the nature of the services performed by the
employee and the necessity of such position. (Tierra International Construction Corp. vs. NLRC, 1992)

Redundancy Arising from Contracting Out of Labor


In several cases, the court upheld the dismissal on ground of redundancy even when the employer
contracts out the services of another company to perform the same task as the redundant
positions. Contracting out of labor has been held as a valid management prerogative. (See De Ocampo
vs. NLRC, 1992; Serrano vs. NLRC, 2000.)

Cases
1. The employer was engaged in the production of wooden doors and furniture. The complainants
who were hired as mechanics were terminated by the employer when their positions were
abolished, and contracted out to Gemac Machineries. The dismissal is proper. In contracting the
services of Gemac, which the company has the right to do, the services rendered by the
mechanics became redundant and superfluous, and therefore properly terminable. (De Ocampo
vs. NLRC, G.R. No. 101539 September 4, 1992.)
2. As a result of the phasing-out of the company’s security section, and contracting out the same
with an independent contractor, the services of the complainant as head of the security checker’s
section, was terminated. The termination was for an authorized cause, i.e., redundancy. (Serrano
vs. NLRC, G.R. No. 117040. January 27, 2000.)

- WHAT IS MEANT BY REDUNDANCY

The characterization of an employee's services as no longer necessary or sustainable, and therefore


properly terminable, is an exercise of business judgment on the part of the employer. It is not
enough for a company to merely declare that it has become overmanned -- it must produce
adequate proof that such is the actual situation in order to justify the dismissal of the affected
employees for redundancy.

In selecting the employees to be dismissed, a fair and reasonable criteria must be used, such as but
not limited to: a) less preferred status, b) efficiency, and c) seniority
(Golden Thread Knitting vs NLRC, GR# 119157 – 03/11/99)

- WHEN IS THERE REDUNDANCY

Redundancy exists where the services of an employee are in excess of what is reasonably
demanded by the actual requirement of the enterprise.

The appropriate forum to contest the legality or good faith of the retrenchment or redundancy is
the Department of Labor and Employment, not an investigation or hearing to be held by the
employer itself.
(Witshire File Co. Inc. vs NLRC, 193 SCRA 665)

- REQUISITES FOR A VALID REDUNDANCY PROGRAM

In case of redundancy, the employer must prove that:


(1) a written notice was served on both the employees and the DOLE at least one month prior to
the intended date of retrenchment;
(2) separation pay equivalent to at least one month pay or at least one month pay for every year of
service, whichever is higher, has been paid;
(3) good faith in abolishing the redundant positions; and
(4) adoption of fair and reasonable criteria in ascertaining which positions are to be declared
redundant and accordingly abolished.
It is the employer who bears the onus of proving compliance with these requirements,
retrenchment and redundancy being in the nature of affirmative defenses.
(Dole Phils. vs NLRC, GR# 120009 – 09/13/01)

NOTE:

The reason for including the 4th requisite is based on the principle of security of tenure. Just
because you have a valid ground for dismissal, it should be based on clear criteria.

- ABSENT BAD FAITH, A REDUNDANCY PROGRAM WILL BE HELD AS VAILD

Dole's redundancy program does not appear to be tainted with bad faith. The petition alleges that
the redundancy program is part of a wide-scale restructuring of the company. This purported
restructuring is supported by the company's undisputed history towards these ends, which
culminated in the abolition of certain positions and the Voluntary Resignation Program in 1990-
1991. Among the avowed goals of such restructuring is the reduction of absenteeism in the
company. The harsh economic and political climate then prevailing in the country also emphasized
the need for cost-saving measures. Reorganization as a cost-saving device is acknowledged by
jurisprudence. An employer is not precluded from adopting a new policy conducive to a more
economical and effective management, and the law does not require that the employer should be
suffering financial losses before he can terminate the services of the employee on the ground of
redundancy.
(Dole Phils. vs NLRC, GR# 120009 – 09/13/01)

- ADEQUATE PROOF IS NEEDED FOR THERE TO BE REDUNDANCY

Determination that employee's services are no longer necessary or sustainable and, therefore,
properly terminable is an exercise of business judgment of the employer. It is not enough for a
company to merely declare that it has become overmanned. It must produce adequate proof that
such is the actual situation to justify the dismissal of affected employees for redundancy.

Whether it be by redundancy or retrenchment or any of the other authorized causes, no employee


may be dismissed without the observance of the fundamentals of good faith.
(Bonifacio Asufrin vs CA, GR# 156658 – 03/10/04)

c. Retrenchment to Prevent Losses

Retrenchment Concept
Retrenchment is an economic ground to reduce the number of employees. It is the reduction of
personnel for the purpose of cutting down on costs of operations in terms of salaries and wages
resorted to by an employer because of losses in operation of a business occasioned by lack of work
and considerable reduction in the volume of business (See Alabang Country Club vs. NLRC, G.R. No.
157611, August 9, 2005 ).

Retrenchment is sometimes also referred to as downsizing. It is aimed at saving a financially ailing


business establishment from eventually collapsing.

Basic Requisites of Valid Retrenchment


To justify retrenchment, the following requisites must be complied with:
1. The retrenchment must be necessary to prevent business losses; and
2. The business losses sought to be prevented are serious, actual and real.

Meaning of “To Prevent Losses”


The phrase “to prevent losses” means that retrenchment is authorized to be undertaken by the
employer sometime before the losses anticipated are actually sustained or realized. Actual losses
need not set in prior to retrenchment. (Lopez Sugar Corporation vs. Federation of Free Workers, G.R.
Nos. 75700-01, August 30, 1990.)

Meaning of “Serious, Actual and Real”


In order to be justified, the termination of employment by reason of retrenchment must be due to
business losses or reverses which are serious, actual and real.
Not every loss incurred or expected to be incurred by the employer will justify retrenchment, since, in
the nature of things, the possibility of incurring losses is constantly present, in greater or lesser
degree, in carrying on the business operations. (See Edge Apparel Inc. vs. NLRC, G.R. No. 121314,
February 12, 1998 .)

The following are the general standards to determine whether the business losses sought to be
prevented are serious, actual and real, and sufficient to justify retrenchment of employees:
1. The losses expected should be substantial and not merely de minimis in extent;
2. The losses apprehended must be reasonably imminent;
3. The alleged losses if already realized, and the expected imminent losses sought to be forestalled,
must be proven by sufficient and convincing evidence. (See Lopez Sugar Corporation case.)

Separation Pay
In case of retrenchment to prevent losses, the separation pay shall be equivalent to one month pay or
at least one-half month pay for every year of service, whichever is higher. A fraction of at least six
months shall be considered one whole year. (Article 283, LC.)

Temporary Retrenchment or Lay-Off


Article 283 of the Labor Code of the Philippines speaks only of permanent retrenchment or lay-off.
There is no specific provision in the Labor Code that governs temporary retrenchment, particularly the
requisites for its implementation and maximum duration.

To remedy this situation, the Court has applied by analogy Art. 286 to set a specific period that
employees may remain temporarily laid, or, sometimes referred to as in floating status.
(See Sebuguero vs. NLRC, G.R. No. 115394 September 27, 1995.) Article 286 provides:

Article 286. When employment not deemed terminated. The bonafide suspension of the operation of
a business or undertaking for a period not exceeding six months, or the fulfillment by theemployee 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 month from the resumption of operations of his employer or from his
relief from the military or civic duty.

Applying the above provision in the case of temporary retrenchment, an employee who has been
temporarily laid-off should be recalled or otherwise permanently retrenched after the lapse of six
months. Failing this would be tantamount to illegal dismissal.

- CONDITIONS FOR A VALID RETRENCHMENT

Retrenchment is one of the authorized causes for the dismissal of employees. Resorted to by
employers to avoid or minimize business losses, it is recognized under Art. 283 of the Labor Code.
The "loss" referred to in this provision cannot be of just any kind or amount, otherwise, a company
could easily feign excuses to suit its whims and prejudices or to rid itself of unwanted employees.
The Court has laid down the following standards that a company must meet to justify retrenchment
and to guard against abuse:

Firstly, the losses expected should be substantial and not merely de minimis in extent. If the loss
purportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial and
inconsequential in character, the bona fide nature of the retrenchment would appear to be
seriously in question.

Secondly, the substantial loss apprehended must be reasonably imminent, as such imminence can
be perceived objectively and in good faith by the employer. There should, in other words, be a
certain degree of urgency for the retrenchment, which is after all a drastic recourse with serious
consequences for the livelihood of the employees retired or otherwise laid-off.

Thirdly, because of the consequential nature of retrenchment, it must be reasonably necessary and
likely to effectively prevent the expected losses. The employer should have taken other measures
prior or parallels to retrenchment to forestall losses, i.e., cut other costs other than labor costs. An
employer who, for instance, lays off substantial numbers of workers while continuing to dispense fat
executive bonuses and perquisites or so-called "golden parachutes", can scarcely claim to be
retrenching in good faith to avoid losses.
To impart operational meaning to the constitutional policy of providing "full protection to labor",
the employer's prerogative to bring down labor costs by retrenching must be exercised essentially
as a measure of last resort, after less drastic means - e.g., reduction of both management and rank-
and-file bonuses and salaries, going on reduced time, improving manufacturing efficiencies,
trimming or marketing and advertising costs, etc. - have been tried and found wanting.

Lastly, but certainly not the least important, alleged losses if already realized, and the expected
imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence.
The reason for requiring this quantum of proof is readily apparent: any less exacting standard of
proof would render too easy the abuse of this ground for termination of services of employees.
(EMCO Plywood Corp. vs Ablegas, GR# 04/14/04)

- CONDITIONS FOR A VALID RETRENCHMENT

The CA committed no reversible error in affirming the NLRC ruling that Talam was validly dismissed
on the ground of retrenchment. The Supreme Court came to this conclusion based on the following
considerations:

First, the decision to retrench had a basis; it was not simulated nor resorted to for the purpose of
getting rid of employees. The decision was upon the recommendation of the company’s external
auditor.

Second, the cost-cutting measure recommended involved reduction of TSFI’s payroll expense
account which, as the auditor found, makes up 41% of the company’s total operating expenses.

Third, Talam was dismissed due to a cause authorized by law – retrenchment to prevent losses. At
the time of Talam’s dismissal, TSFI’s financial condition, as found by the external auditor, showed
that it was not just expecting losses, it already suffered a net income loss of P2,474,418.00 and
retained earnings deficit of P7,424,250.00 for the period ending December 31, 2002.

Fourth, TSFI resorted to other measures to abate its losses. It claimed that during the crises period,
it used as an office a small-room (a mere cubicle) with only a two-person support staff in the
persons of Grapilon and Hermle; it reduced the salaries of its employees by as much as 30%. This
submission by the company is substantiated by the schedule of Operating Expenses for the year
ended December 31, 2002 and September 30, 2002. A quick glance at the schedule readily shows a
reduction of TSFI’s operating expenses across the board. The schedule indicates a substantial
decrease in operating expenses, from P5,733,735.00 in September 2002 to P1,698,552.36 as of the
end of December 2002.
(Talam vs NLRC, GR# 175040 – 04/06/10)

- REQUISITES TO EFFECT A VALID RETRENCHMENT

Retrenchment has been defined as the termination of employment initiated by the employer
through no fault of the employees and without prejudice to the latter, resorted by management
during periods of business recession, industrial depression, or seasonal fluctuations, or during lulls
occasioned by lack of orders, shortage of materials, conversion of the plant for a new production
program or the introduction of new methods or more efficient machinery, or of automation. It is a
management prerogative resorted to by an employer to avoid or minimize business losses which is
consistently recognized by the Court.

In order that retrenchment due to serious business losses may be validly exercised, the following
requisites must occur:

(a) Necessity of the retrenchment to prevent losses, and proof of such losses;
(b) Written notice to the employees and to the DOLE at least 1 month prior to the intended date of
retrenchment;
(c) Payment of separation pay equivalent to 1 month pay or at least 1/2 month pay for every year
of service, whichever is higher.
(PLDT vs NLRC, GR# 147002 – 04/15/05)

- ACTUAL LOSSES NEED NOT SET IN PRIOR TO RETRENCHMENT


For his part, petitioner insists that actual, not probable losses, justify retrenchment. Art. 283 of the
Labor Code entails, among others, only a situation where there is "retrenchment to prevent losses".
The phrase "to prevent losses" means that retrenchment or termination from the service of some
employees is authorized to be undertaken by the employer sometime before the losses anticipated
are actually sustained or realized. This is the situation in the case at bar. Evidently, actual losses
need not set in prior to retrenchment.
(Cajucom VII vs TPI Phils. Cement Corp., GR# 149090 – 02/11/05)

- THE LOSSES NEED NOT BE IN ONE PARTICULAR BRANCH/DEPARTMENT BUT IN THE COMPANY AS
A WHOLE

Even if we take into consideration the figures submitted by petitioner and accede to her position
that respondent was gaining substantial profits from its Central Visayas office, the said numbers,
nonetheless, do not bespeak respondents overall financial standing in light of the fact that
respondent is operating nationwide and the Central Visayas office is only one of its many branches.
Losses or gains of a business entity cannot be fully assessed by isolating or selecting only particular
branches or offices. There are recognized accounting principles and methods by which the business
firm's performance can be objectively and thoroughly evaluated at the end of every fiscal year, and
the assessment accurately reported in the company's financial statement.
(Manatad vs PT&T, GR# 172363 – 03/07/08)

- (Brizuela vs Dingle, GR# 175371 – 04/30/08)

- ELEMENTS FOR A VALID RETRENCHMENT

To effect a valid retrenchment, the following elements must be present:

(1) the retrenchment is reasonably necessary and likely to prevent business losses which, if already
incurred, are not merely de minimis, but substantial, serious, and real, or only if expected, are
reasonably imminent as perceived objectively and in good faith by the employer;

(2) the employer serves written notice both to the employee/s concerned and the Department of
Labor and Employment at least a month before the intended date of retrenchment;

(3) the employer pays the retrenched employee separation pay in an amount prescribed by the
Code;

(4) the employer exercises its prerogative to retrench in good faith; and

(5) the employer uses fair and reasonable criteria in ascertaining who would be retrenched or
retained.

The losses must be supported by sufficient and convincing evidence, the normal method of
discharging which is the submission of financial statements duly audited by independent external
auditors.

For failure then of Asiakonstrukt to clearly and satisfactorily substantiate its financial losses, the
dismissal of petitioner on account of retrenchment is unjustified. Petitioner is thus entitled to the
twin reliefs of payment of backwages and other benefits from the time of his dismissal up to the
finality of this Court’s Decision, and reinstatement without loss of seniority rights or, in lieu thereof,
payment of separation pay.
(Anabe vs Asiakonstukt., GR# 183233 – 12/23/09)

- THE FINANCIAL STATUS OF A COMPANY MUST BE VIEWED IN ITS ENTIRETY, AND NOT IN
ISOLATION

In the case at bar, petitioner justifies the downsizing scheme on the ground of serious business
losses it suffered in 2001. Some positions had to be declared redundant to cut losses. In this
context, what may technically be considered as redundancy may verily be considered as a
retrenchment measure.
Losses or gains of a business entity cannot be fully and satisfactorily assessed by isolating or
highlighting only a particular part of its financial report. There are recognized accounting principles
and methods by which a company’s performance can be objectively and thoroughly evaluated at
the end of every fiscal or calendar year. What is important is that the assessment is accurately
reported, free from any manipulation of figures to suit the company’s needs, so that the company’s
actual financial condition may be impartially and accurately gauged.

The audit of financial reports by independent external auditors is strictly governed by national and
international standards and regulations for the accounting profession. It bears emphasis that the
financial statements submitted by petitioner were audited by a reputable auditing firm and are
clear and substantial enough to prove that the company was in a precarious financial condition.
(Hotel Enterprises of the Phils. Inc. vs SAMASAH-NUWHRAIN, GR# 165756 – 06/05/09)

- THE DOWNSIZING PROGRAM OF A COMPANY DOES NOT PRECLUED THE HIRING OF


CONTRACTUAL OR AGENCY-HIRED EMPLOYEES

We have held that an employer’s good faith in implementing a redundancy program is not
necessarily destroyed by availment of the services of an independent contractor to replace the
services of the terminated employees. We have previously ruled that the reduction of the number
of workers in a company made necessary by the introduction of the services of an independent
contractor is justified when the latter is undertaken in order to effectuate more economic and
efficient methods of production. In the case at bar, private respondent failed to proffer any proof
that the management acted in a malicious or arbitrary manner in engaging the services of an
independent contractor to operate the Laura wells. Absent such proof, the Court has no basis to
interfere with thebona fide decision of management to effect more economic and efficient methods
of production.
(Hotel Enterprises of the Phils. Inc. vs SAMASAH-NUWHRAIN, GR# 165756 – 06/05/09)

- (Mendros vs Mitsubishi Motors Phils. Corp., GR# 169760 - 02/16/09)

PRINCIPLE OF LAST RESORT

Good faith in retrenchment, can be shown through the financial statements, and also by showing
that other cost saving measures have been availed of first before retrenchment can be allowed.

- (FASAP vs PAL, GR# 178083 – 10/02/09)

- (Mobilia Products Inc. vs Demecillo, GR# 170669 – 02/04/09)

d. Closure or Cessation of Operation due to Serious Business Losses

Closure of Business Concept


Closure or cessation of operation of the establishment or undertaking is another authorized cause for
termination of employment under Article 283 of the Labor Code. (See Authorized Causes for Dismissal
of Employee.)

Closure of business is the reversal of fortune of the employer whereby there is a complete cessation
of business operations and/or an actual locking-up of the doors of establishment, usually due to
financial losses. Closure of business as an authorized cause for termination of employment aims to
prevent further financial drain upon an employer who cannot pay anymore his employees since
business has already stopped. (See JAT General Services vs. NLRC, G.R. No. 148340, January 26, 2004.)

Total or Partial Closure of Business


Closure or cessation of business may mean either total closure or partial closure, as in the case of
abolition of only a department or section of the establishment or of only a part of company activities.
In either case, the right of the employer to terminate employee affected by the closure has been
recognized. (See Dangan vs. NLRC, G.R. No. 63127-28, February 20, 1984; Also, La Union Cement
Workers’ Union vs. NLRC, G.R. No. 174621, January 30, 2009.)
Closure of Business Distinguished from Retrenchment
While closure of business and retrenchment are often used interchangeably and are interrelated, they
are actually two separate and independent authorized causes for termination of employment.
Termination of an employment may be predicated on one without need of resorting to the other.
(Read more about Retrenchment.)

Closure of business, on one hand, is the reversal of fortune of the employer whereby there is a
complete cessation of business operations and/or an actual locking-up of the doors of establishment,
usually due to financial losses. Closure of business as an authorized cause for termination of
employment aims to prevent further financial drain upon an employer who cannot pay anymore his
employees since business has already stopped. On the other hand, retrenchment is reduction of
personnel usually due to poor financial returns so as to cut down on costs of operations in terms of
salaries and wages to prevent bankruptcy of the company. It is sometimes also referred to as down-
sizing. Retrenchment is an authorized cause for termination of employment which the law accords an
employer who is not making good in its operations in order to cut back on expenses for salaries and
wages by laying off some employees. The purpose of retrenchment is to save a financially ailing
business establishment from eventually collapsing. (See JAT General Services case.)

Cessation Strictly Management Prerogative


Cessation of business is strictly management prerogative. No law can compel a company to continue
operation. The management may decide to cease operation for whatever reason it deems proper, as
long as it is done in good faith.

In Mac Adams Metal case, the court reiterated viz. “Just as no law forces anyone to go into business,
no law can compel anybody to continue in it. It would indeed be stretching the intent and spirit of the
law if we were to unjustly interfere with the management’s prerogative to close or cease its business
operations just because said business operation or undertaking is not suffering from any loss or simply
to provide the workers continued employment.

Cessation Need not be Due to Financial Losses


The reason for cessation need not be financial losses or drain, as long as it is done in good faith and
not for the purpose of defeating or circumventing the rights of employees under the law or a valid
agreement. Article 283 of the Labor Code does not require that the cessation be due to serious
business reverses.

The cause of cessation, whether it is due to financial losses or not, is material only in the
determination of entitlement to separation pay.

In Maya Farms Employees Organization vs. NLRC, 1994, the Court held that even if the employer is not
suffering from business losses, it can still resort to closure of business as long as the company’s
exercise of the same is done in good faith to advance its interest and not for the purpose of defeating
or circumventing the rights of employees under the law or a valid agreement such exercise will be
upheld.

Separation Pay
In case of retrenchment and closures not due to serious financial reverses, the employee shall be
entitled to separation pay equivalent to one month pay or at least one-half month pay for every year
of service, whichever is higher.

If the closure is due to business losses, there is no obligation on the part of the employer to pay
separation benefits to employees.

Cases
1. The company terminated its employees when its plant was relocated from Makati to Batangas.
The relocation was in view of the expiration of the lease contract on the premises it occupied in
Makati and the refusal of the lessor to renew the same. The termination was for authorized cause
as there was cessation of the company’s operations in Makati. (Cheniver Deco vs. NLRC, G.R. No.
122876, February 17, 2000.)
2. The closure of business by the owner after she became sickly and her health did not improve
despite proper medical attention, was affirmed as valid as it was done in good faith although the
business was not undergoing economic losses. (Mac Adams Union vs. Mac Adams, G.R. No.
141615, October 24, 2003.)
- NO SEPARATION PAY IN SERIOUS BUSINESS LOSSES

Article 283 of the Labor Code does not obligate an employer to pay separation benefits when the
closure is due to losses.

Reasons behind closure of business:


1. Serious Business Losses
2. Management Prerogative (Owner simply chooses to close the business)

What is contemplated in Art. 283 is closure due to serious losses, and not closure due to
management prerogative.

If the closure is due to Management Prerogative, then separation pay should be awarded.
(North Davao Mining vs NLRC, 254 SCRA 721)

- TEST OF LIQUIDITY; DISMISSAL DUE TO SERIOUS BUSINESS LOSSES DOES NOT ENTITLE THE
EMPLOYEE TO SEPARATION PAY

To test the liquidity of an employer company for the periods under consideration, working capital
ratio is used. This ratio, also known as the current ratio, measures the number of times that the
current liabilities could be paid with the current assets.

The Constitution, while affording full protection to labor, nonetheless, recognizes "the right of
enterprises to reasonable returns on investments, and to expansion and growth". It is only in
instance of "retrenchment to prevent losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses" that
employees whose employment has been terminated as a result are entitled to separation pay. To
require an employer to be generous when it is no longer in a position to do so would be unduly
oppressive, unjust, and unfair to the employer.
(Cama vs Joni’s Food Services Inc., GR# 153021 – 03/10/04)

- MONETARY AWARD

The Research and Information Unit of National Labor Relations Commission (NLRC), the
government's accountant in labor cases, is responsible for computing monetary awards in
accordance with official guidelines. The Supreme Court has time and again frowned on the practice
of a party's submitting his case for decision and then accepting the verdict only if favorable, while
attacking it for lack of jurisdiction if it is not.
(CBL Transit Inc. vs NLRC, GR# 128425 – 03/11/04)

- BURDEN OF PROOF THAT THE CLOSURE IS BONA FIDE IS WITH THE EMPLOYER

Closure or suspension of business operations for economic reasons is recognized as a valid exercise
of management prerogative, but the burden of proving, with sufficient and convincing evidence,
that such closure or suspension is bona fide falls upon the employer.
(Nasipit Lumber Co. vs NLRC, GR# 146225 – 11/25/04)

- LIABILITY FOR CLOSURE IS SOLIDARY

Corporate directors and officers are solidarily liable with the corporation for the termination of
employees done with malice or bad faith.
(Mandaue Dinhow Dimsum House vs NLRC, GR# 161134 – 03/03/08)

- FINANCIAL ASSISTANCE IN CLOSURE OF BUSINESS OPERATIONS

Based on Article 283, in case of cessation of operations, the employer is only required to pay his
employees a separation pay of one month pay or at least one-half month pay for every year of
service, whichever is higher. That is all that the law requires.

In the case at bar, petitioner paid respondents the following: (a) separation pay computed at 150%
of their gross monthly pay per year of service; and (b) cash equivalent of earned and accrued
vacation and sick leaves. Clearly, petitioner had gone over and above the requirements of the law.
Despite this, however, the Labor Arbiter ordered petitioner to pay respondents an additional
amount, equivalent to one month’s salary, as a form of financial assistance.

The award of financial assistance is bereft of legal basis and serves to penalize petitioner who had
complied with the requirements of the law. The Court also point out that petitioner may, as it has
done, grant on a voluntary and ex gratia basis, any amount more than what is required by the law,
but to insist that more financial assistance be given is certainly something that the Court cannot
countenance. Moreover, any award of additional financial assistance to respondents would put
them at an advantage and in a better position than the rest of their co-employees who similarly lost
their employment because of petitioner’s decision to cease its operations.
(Solidbank Corp. vs NLRC, GR# 165951 – 03/30/10)

e. Criteria in Termination of Employees under Authorized Causes (except Closure)

- SENIORITY IS GIVEN PREFERENCE IN RETENTION

It is not disputed that the LIFO rule applies to termination of employment in the line of work. Verily,
what is contemplated in the LIFO rule is that when there are two or more employees occupying the
same position in the company affected by the retrenchment program, the last one employed will
necessarily be the first to go.
(Maya Farms vs NLRC, GR# 106256 – 12/28/94)

- CRITERIA IN SELECTING WHICH EMPLOYEES TO BE DISMISSED FIRST

In selecting the employees to be dismissed, a fair and reasonable criteria must be used, such as but
not limited to: a) less preferred status, b) efficiency and c) seniority
(Capitol Wireless vs Confessor, 264 SCRA 68)

f. Procedural Requirement under Art. 283 Labor Code

ART. 283. Closure of establishment and reduction of personnel. - The employer may also terminate
the employment of any employee due to the installation of labor-saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by
serving a written notice on the workers and the Ministry of Labor and Employment at least one (1)
month before the intended date thereof. In case of termination due to the installation of labor-saving
devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to
at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is
higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses, the separation
pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of
service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole
year.

(Rule 1, Book VI, IRR)


SECTION 9. Termination pay. —
(a) An employee shall be entitled to termination pay equivalent to at least one month's salary for
every year of service a fraction of at least six (6) months being considered as one whole year, in
case of termination of his employment due to the installation of labor-saving devices or
redundancy.
(b) Where the termination of employment is due to retrenchment to prevent losses and in case of
closure or cessation of operations of establishment or undertaking not due to serious business
losses or financial reverses, or where the employment is prohibited by law or is prejudicial to his
health or to the health of his co-employees, the employee shall be entitled to termination pay
equivalent to at least one-half month's pay for every year of service, a fraction of at least six
months being considered as one whole year.
(c) The termination pay provided in the Section shall in no case be less than the employee's one
month pay.
SECTION 10. Basis of termination pay. — The computation of the termination pay of an employee as
provided herein shall be based on his latest salary rate, unless the same was reduced by the employer
to defeat the intention of the Code, in which case the basis of computation shall be the rate before its
deduction.

- Sec. 2, Rule 1(d), Book VI, IRR

In all cases of termination of employment, the following standards of due process shall be
substantially observed:

For termination of employment based on just causes as defined in Art. 282 of the Labor Code:

a) A written notice served on the employee specifying the ground or grounds for termination,
and giving said employee reasonable opportunity within which to explain his side.
b) A hearing or conference during which the employee concerned, with the assistance of
counsel if he so desires is given opportunity to respond to the charge, present his evidence,
or rebut the evidence presented against him.
c) A written notice of termination served on the employee, indicating that upon due
consideration of all the circumstances, grounds have been established to justify his
termination.

For termination of employment as defined in Art. 283 of the Labor Code, the requirement of due
process shall be deemed complied with upon service of a written notice to the employee and the
appropriate Regional Office of the Department of Labor and Employment at least 30 days before
effectivity of the termination, specifying the ground or grounds for termination.

If the termination is brought about by the completion of a contract or phase thereof, or by failure
of an employee to meet the standards of the employer in case of probationary employment, it
shall be sufficient that a written notice is served the employee within a reasonable time from the
effective date of termination. (D.O. No. 10 series of 1997)

- Twin Notice Requirement

4. Disease

(Labor Code)
ART. 284. Disease as ground for termination. - An employer may terminate the services of an employee
who has been found to be suffering from any disease and whose continued employment is prohibited by
law or is prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid
separation pay equivalent to at least one (1) month salary or to one-half (1/2) month salary for every year
of service, whichever is greater, a fraction of at least six (6) months being considered as one (1) whole
year.

(Rule 1, Book VI, IRR)


SECTION 8. Disease as a ground for dismissal. — Where the employee suffers from a disease and his
continued employment is prohibited by law or prejudicial to his health or to the health of his co-
employees, the employer shall not terminate his employment unless there is a certification by competent
public health authority that the disease is of such nature of at such a stage that it cannot be cured within a
period of six (6) months even with proper medical treatment. If the disease or ailment can be cured within
the period, the employee shall not terminate the employee but shall ask the employee to take a leave of
absence. The employer shall reinstate such employee to his former position immediately upon the
restoration of his normal health.

Requisites:
1) The disease is incurable within 6 months and the continued employment of the employee is
prohibited by law or prejudicial to his health as well as to the health of his co-employee;
2) With a certification from a competent authority (such as public health officer) that the disease is
incurable within 6 months despite due medication and treatment.
Nota Bene:
 Termination of services must be effected only upon compliance with the above
requisite; otherwise, in the absence of the required certification by a competent public health officer,
the court will rule against the validity of the employee’s dismissal.
(Viola Cruz vs. NLRC, GR# 116384 – 02/07/00)
 The requirement for a medical certificate under Article 284 of the Labor Code
cannot be dispensed with, otherwise, it would sanction the unilateral and arbitrary determination by
the employer of the gravity or extent of the employee’s illness and thus defeat the public policy in the
protection of labor. (Sy, et al vs. CA, February 27, 2003)
 Discrimination in any form from pre-employment to post-employment,
including hiring, promotion or assignment, based on the actual, perceived or suspected HIV status of
an individual is prohibited. Termination from work on the sole basis of actual, perceived or suspected
HIV status is deemed unlawful.
(Sec.35, R.A. 8504, HIV/AIDS LAW)
 Certification in Cebu is issued by the Department of Health and other
government hospitals such as the Vicente Sotto Memorial Hospital, CCMC, etc.
 The certification is to be secured by the employer. The burden rests upon the
employer to secure a certification.
(Tan vs. NLRC)

- THE DISEASE MUST BE PREJUDICIAL TO THE HEALTH OF THE EMPLOYEE AND HIS CO-WORKERS TO BE
A GROUND FOR DISMISSAL

An employer may terminate the services of his employees who has been found to be suffering from a
disease when the latter's continued employment is prohibited by law or is prejudicial to his health as
well as to the health of his co-employees. However, the dismissal may not be summarily carried out. The
employer must comply with certain prerequisites contained in Sec. 8, Rule I, Book VI, of the Omnibus
Rules Implementing the Labor Code, which states -- Where the employee suffers from a disease and his
continued employment is prohibited by law or prejudicial to his health or to the health of his co-
employees, the employer shall not terminate his employment unless there is certification by a
competent public health authority that the disease is of such nature or at such a stage that it cannot be
cured within a period of six (6) months even with proper medical treatment. If the disease or ailment
can be cured within the period, the employer shall not terminate the employee but shall ask the
employee to take a leave. The employer shall reinstate such employee to his former position
immediately upon the restoration of his normal health.
(ATCI Overseas Corp. vs CA, GR# 143949 – 08/09/01)

5. Retirement

(Labor Code)
ART. 287. Retirement. - Any employee may be retired upon reaching the retirement age established in the
collective bargaining agreement or other applicable employment contract.

In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have
earned under existing laws and any collective bargaining agreement and other agreements: Provided,
however, That an employee’s retirement benefits under any collective bargaining and other agreements
shall not be less than those provided therein.

In the absence of a retirement plan or agreement providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five
(65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years
in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half
(1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one
whole year.

Unless the parties provide for broader inclusions, the term ‘one-half (1/2) month salary’ shall mean fifteen
(15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5)
days of service incentive leaves.

An underground mining employee upon reaching the age of fifty (50) years or more, but not beyond sixty
(60) years which is hereby declared the compulsory retirement age for underground mine workers, who
has served at least five (5) years as underground mine worker, may retire and shall be entitled to all the
retirement benefits provided for in this Article.

Retail, service and agricultural establishments or operations employing not more than ten (10) employees
or workers are exempted from the coverage of this provision.
Violation of this provision is hereby declared unlawful and subject to the penal provisions under Article
288 of this Code.

Nothing in this Article shall deprive any employee of benefits to which he be entitled under existing laws
or company policies or practices. (As amended by RA 7641, and RA 8553, February 26, 1998)

(Rule II, II-A, Book VI, IRR)

NOTE:

What is the coverage of the Retirement Pay Law?

The Retirement Pay Law applies to all employees in the private sector, regardless of their position,
designation or status and irrespective of the method by which their wages are paid, except those
specifically exempted. It also includes and covers part-time employees, employees of service and other
job contractors and domestic helpers or persons in the personal service of another. chanrobles virtual law
library

Who are the employees not covered by the Retirement Pay Law?

The Retirement Pay Law does not apply to the following employees:
1. Employees of the National Government and its political subdivisions, including government-owned
and/or controlled corporations, if they are covered by the Civil Service Law and its regulations.

2. Employees of retail, service and agricultural establishments or operations regularly employing not more
than ten (10) employees. As used in this sub-section:
• “Retail establishment” is one principally engaged in the sale of goods to end-users for personal or
household use. It shall lose its retail character qualified for exemption if it is engaged in both retail and
wholesale of goods.

• “Service establishment” is one principally engaged in the sale of service to individuals for their own or
household use and is generally recognized as such.

• “Agricultural establishment/operation” refers to an employer which is engaged in agriculture. This term


refers to all farming activities in all branches and includes, among others, the cultivation and tillage of soil,
production, cultivation, growing and harvesting of any agricultural or horticultural commodities, dairying,
raising of livestock or poultry, the culture of fish and other aquatic products in farms or ponds, and any
activities performed by a farmer or on a farm as an incident to, or in conjunction with, such farming
operations, but does not include the manufacture and/or processing of sugar, coconut, abaca, tobacco,
pineapple, aquatic or other farm products.

May an employee retire under the CBA or employment contract?

Any employee may retire or be retired by his employer upon reaching the retirement age established in
the CBA or other applicable employment contract and he shall be entitled to the benefits thereunder. If
the amount is less than those provided under the law, the employer shall pay the difference.

What is the distinction between optional and compulsory retirement?

Article 287 of the Labor Code, as amended by Republic Act No. 7641, provides for two (2) types of
retirement: (a) optional; and (b) compulsory.

1. Optional retirement. - In the absence of a retirement plan or other applicable agreement providing for
retirement benefits of employees in an establishment, an employee may retire upon reaching the age of
sixty (60) years or more if he has served for at least five (5) years in said establishment.
2. Compulsory retirement. - Where there is no such retirement plan or other applicable agreement
providing for retirement benefits of employees in an establishment, an employee shall be retired upon
reaching the age of sixty-five (65) years.

Is the option granted to the employer to retire an employee valid?

Yes. The decision of the Supreme Court in the case of PAL vs. ALPAP. (G.R. No.143686, January 15, 2002), is
instructive:
“Finally, on the issue of whether petitioner should consult the pilot concerned before exercising its option
to retire pilots, we rule that this added requirement, in effect, amended the terms of Article VII, Section 2
of the 1976 PAL-ALPAP Retirement Plan. The option of an employer to retire its employees is recognized as
valid.

“Surely, the requirement to consult the pilots prior to their retirement defeats the exercise by
management of its option to retire the said employees. It gives the pilot concerned an undue prerogative
to assail the decision of management. Due process only requires that notice be given to the pilot of
petitioner's decision to retire him. Hence, the Secretary of Labor overstepped the boundaries of reason
and fairness when he imposed on petitioner the additional requirement of consulting each pilot prior to
retiring him.

“Furthermore, when the Secretary of Labor and Employment imposed the added requirement that
petitioner should consult its pilots prior to retirement, he resolved a question which was outside of the
issues raised, thereby depriving petitioner an opportunity to be heard on this point.

May an employee retire at an earlier or older age?

The law recognizes as valid any retirement plan, agreement or management policy regarding retirement at
an earlier or older age.

What are included in the minimum 5-year service requirement?

The minimum 5-year service requirement includes the following.


1. Authorized absences, vacations, regular holidays, included.

2. Only actual service included.

What are included in the retirement benefits under the Retirement Pay Law?

Retirement benefits.

1. One-half (1/2) month salary.

In the absence of an applicable employment contract, an employee who retires shall be entitled to
retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at
least six (6) months being considered as one (1) whole year.

2. One-half (1/2) month salary, components. - For the purpose of determining the minimum retirement
pay due an employee, the term “one-half month salary” shall include all the following:
(a) fifteen (15) days salary of the employee based on his latest salary rate.

(b) the cash equivalent of five (5) days of service incentive leave;

(c) one-twelfth (1/12) of the 13th month pay due the employee; and

(d) all other benefits that the employer and employee may agree upon that should be included in the
computation of the employee’s retirement pay.

3. One-half monthly salary of employees who are paid by results. - For covered workers who are paid by
results and do not have a fixed monthly rate, the basis for determination of the salary for fifteen (15) days
shall be their average daily salary (ADS).

Does the Retirement Pay Law have any retroactive effect?


Yes. R. A. 7641 (Retirement Pay Law) is applicable to services rendered prior to January 7, 1993.
Consequently, in reckoning the length of service, the period of employment with the same employer
before the effectivity date of the law (Republic Act No. 7641) shall be included.

May Pag-IBIG be considered as substitute retirement plan?

As provided in R. A. No. 7742, a private employer shall have the option to treat the coverage of the Pag-
IBIG Fund as a substitute retirement benefit for the employee concerned within the purview of the Labor
Code as amended; provided such option does not in any way contravene an existing collective bargaining
agreement or other employment agreement.

Thus, the Pag-IBIG Fund can be considered as a substitute retirement plan of the company for its
employees provided that such scheme offers benefits which are more than or at least equal to the
benefits under Republic Act No. 7641. If said scheme provides for less than what the employee is entitled
to under Republic Act No. 7641, the employer is liable to pay the difference.

What is the latest amendment to the Retirement Pay Law (Article 287 of the Labor Code)?

The latest amendment to Article 287 of the Labor Code was introduced by Republic Act No. 8558 [An Act
Amending Article 287 of Presidential Decree No. 442, as Amended, Otherwise Known as the Labor Code of
the Philippines by Reducing the Retirement Age of Underground Mine Workers from Sixty (60) to Fifty
(50)] which was approved on February 26, 1998.

Who is an underground mine employee?

An underground mine employee is a person employed to extract mineral deposits underground or to work
in excavations or workings such as shafts, winzes, tunnels, drifts, crosscuts, raises, working places whether
abandoned or in use beneath the earth's surface for the purpose of searching for and extracting mineral
deposits.

What is the distinction between retirement and dismissal?

Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and
the employee whereby the latter, after reaching a certain age, agrees or consents to sever his employment
with the former.

Dismissal, on the other hand, refers to the unilateral act of the employer in terminating the services of an
employee with or without cause. (Gamogamo vs. PNOC Shipping and Transport Corp., G. R. No. 141707,
May 7, 2002).

Dismissal for cause, effect on entitlement to retirement benefits.

Management discretion may not be exercised arbitrarily or capriciously especially with regards to the
implementation of the retirement plan. As held in Razon, Jr. vs. NLRC, [G. R. No. 80502, May 7, 1990, 185
SCRA 44], upon acceptance of employment, a contractual relationship is established giving the employee
an enforceable vested interest in the retirement fund. Hence, the dismissed employee is entitled to the
retirement benefits provided thereunder. chanrobles virtual law library

However, in the 2002 case of San Miguel Corporation vs. Lao, [G. R. No. 143136-37, July 11, 2002], an
employee who was dismissed for cause was held not entitled to the retirement benefits under the
company’s retirement plan which concededly prohibits the award of retirement benefits to an employee
dismissed for a just cause, a proscription that binds the parties to it.

Distinguishing Razon from San Miguel, the Supreme Court ruled that in Razon, the employer’s refusal to
give the employee his retirement benefits is based on the provision of the retirement plan giving
management wide discretion to grant or not to grant retirement benefits, a prerogative that obviously
cannot be exercised arbitrarily or whimsically. But in San Miguel, the retirement plan expressly prohibits
the grant of retirement benefits in case of dismissal for cause. Hence, the employee is bound by such
prohibition.

What is the distinction between retirement pay and separation pay?

1. Retirement pay differs from separation pay in that the former is paid by reason of retirement; while the
latter is required in the cases enumerated in Articles 283 and 284 of the Labor Code.
2. The purpose for the grant of retirement pay is to help the employee enjoy the remaining years of his life
thereby lessening the burden of worrying for his financial support. It is also a form of reward for the
employee’s loyalty and service to the employer. Separation pay, on the other hand, is designed as a
wherewithal during the period that an employee is looking for another employment after his termination.

As a general rule, retiring employees are entitled only to retirement benefits. But there are instances
when separation pay and retirement pay must both be paid to the employee. The reason is, the
separation pay is mandated by law; while retirement pay is required by contract.

Cases where both separation pay and retirement pay must be paid.

In the case of University of the East vs. Hon. Minister of Labor, [G. R. No. 74007, July 31, 1987], the school
claimed that teachers who were terminated because of phased-out units cannot be considered retired
and, therefore, entitled to retirement benefits and, at the same time, retrenched, which would entitle
them to separation pay. This would be tantamount to enriching them at the expense of the school. The
Supreme Court, however, ruled that separation pay arising from a forced termination of employment and
retirement benefits given as a contractual right to the teachers for many years of faithful service, are not
necessarily antagonistic to each other. Moreover, the retirement scheme has become part of the school’s
policy and, therefore, it should be enforced separately from the provision of the Labor Code.
Consequently, the teachers were ordered paid for both retirement pay and separation pay.

In another case, Aquino vs. NLRC, [G. R. No. 87653, February 11, 1992; See also BLTB vs. CA, 71 SCRA 470
(1976)], the Supreme Court ordered the payment of both the separation pay for retrenchment embodied
in the CBA as well as the retirement pay provided under a separate Retirement Plan to the retrenched
employees. The argument of the company that it has more than complied with the mandate of the law on
retrenchment by paying separation pay double that required by the Labor Code (at the rate of one month
pay instead of the one-half month pay per year of service) was not favorably taken into account by the
Supreme Court because the employees were not pleading for generosity but demanding their rights
embodied in the CBA which was the result of negotiations between the company and the employees.

On the issue of mutual exclusivity of the CBA-mandated separation pay in case of retrenchment, on the
one hand, and the retirement benefits provided in the Retirement Plan, on the other, the Supreme Court
in this case of Aquino opined that:
“The Court feels that if the private respondent (company) really intended to make the separation pay and
the retirement benefits mutually exclusive, it should have sought inclusion of the corresponding provision
in the Retirement Plan and the Collective Bargaining Agreement so as to remove all possible ambiguity
regarding this matter.

“We may presume that the counsel of the respondent company was aware of the prevailing doctrine
embodied in the cases earlier cited. Knowing this, he should have made it a point to categorically provide
in the Retirement Plan and the CBA that an employee who had received separation pay would no longer
be entitled to retirement benefits. Or to put it more plainly, collection of retirement benefits was
prohibited if the employee had already received separation pay.” (See also Batangas Laguna Tayabas Bus
Co. vs. Court of Appeals, G.R. No L-38482, June 18, 1976, 71 SCRA 470).

In Bongar vs. NLRC, [G. R. No. 107234, August 24, 1998], the Supreme Court ordered the payment not only
of separation pay and backwages to an illegally dismissed teacher but additionally, of the retirement
benefits “pursuant to any collective bargaining agreement in the workplace or, in the absence thereof, as
provided in Section 14 [Retirement Benefits], Book VI of the Implementing Rules of the Labor Code.”

Case where separation pay was charged to retirement pay.

In Ford Philippines Salaried Employees Association vs. NLRC, [G. R. No. 75347, Dec. 11, 1987], a case
decided before the advent of Republic Act No. 7641, the Supreme Court ruled that if it is provided in the
Retirement Plan of the company that the retirement, death and disability benefits paid in the plan are
considered integrated with and in lieu of termination benefits under the Labor Code, then the retirement
fund may be validly used to pay such termination or separation pay because of closure of business.

Cases where employees are entitled only to one form of benefit.

In Cipriano vs. San Miguel Corporation, [G. R. No. L-24774, August 21, 1968], it was ruled that in case the
Retirement Plan of the company provides that the employee shall be entitled to either the retirement
benefit provided therein or to the separation pay provided by law, whichever is higher, the employee
cannot be entitled to both benefits. Article X of said Retirement Plan reads:
‘Regular employees who are separated from the service of the company for any reason other than
misconduct or voluntary resignation shall be entitled to either 100% of the benefits provided in Section 2,
Article VIII hereof, regardless of their length of service in the company or to the severance pay provided by
law, whichever is the greater amount.’

In the 2004 case of Cruz vs. Philippine Global Communications, Inc., [G. R. No. 141868, May 28, 2004], the
Supreme Court reiterated the said rule in Cipriano [supra] under the following provision in the Retirement
Plan which states:
“b)Adjustment of Benefits Payments.- x x x, in the event the Company is required under the law or by
lawful order of competent authority to pay to the Member benefits or emoluments similar or analogous
to those already provided in the Plan, the Member concerned shall not be entitled to both what the law or
the lawful order of competent authority requires the Company to give and the benefits provided by the
Plan, but shall only be entitled to whichever is the greatest among them, x x x.” (Section 6 (b), Article XI of
the Retirement Plan).

The employees in this case who were terminated due to closure of the company’s branches, are entitled
only to either the separation pay provided under Article 283 of the Labor Code, as amended, or retirement
benefits prescribed by the Retirement Plan, whichever is higher. Consequently, they were paid separation
benefits computed under the Retirement Plan, the same being higher than what Article 283 provides.

In the 2005 case of Salomon vs. Association of International Shipping Lines, Inc., [G. R. No. 156317, April
26, 2005], petitioners who were duly paid separation pay when they were retrenched, claimed that they
are, in addition, entitled to retirement benefits under the CBA citing the Aquino case [supra] as basis. Said
CBA provides, thus:
“Section 1. In case of termination due to redundancy, retrenchment, dissolution of a department/
conference/section and/or the whole ASSOCIATION, sickness or physical disability, a regular employee
shall be entitled to a separation pay equivalent to his one (1) month basic pay for every year of service. A
fraction of at least six (6) months shall be considered as one (1) whole year and less than six (6) months
shall be prorated accordingly.

xxx xxx xxx

“Section 3. Optional Retirement – An employee shall have the option to retire regardless of age provided
he/she has rendered at least 15 years of continuous service to the ASSOCIATION. An employee shall be
entitled to the following benefits.

a. 15 to less than 20 years of service – 50% of the monthly basic salary for every year of service.

b. 20 years of service – 100% of the monthly basic salary for every year of service.”

According to the Supreme Court, it is obvious that petitioners, as prescribed by the parties’ CBA quoted
above, are entitled only to either the separation pay, if they are terminated for cause, or optional
retirement benefits, if they rendered at least fifteen (15) years of continuous services. Here, petitioners
were separated from the service for cause. Accordingly, pursuant to the CBA, what each actually received
is a separation pay. Hence, considering their Releases and Quitclaims, they are no longer entitled to
retirement benefits.

The provisions of the retirement plan are controlling.

As held in Cipriano [supra] and Aquino [supra], the employees’ right to payment of retirement benefits
and/or separation pay is governed by the Retirement Plan of the parties. The provisions of the Retirement
Plan are controlling in determining such entitlement. (Cruz vs. Philippine Global Communications, Inc.,
supra).

In other words, if the Retirement Plan mandates that the employees who are separated under any of the
authorized causes under Article 283 of the Labor Code are entitled to both the separation pay provided
therein as well as the retirement benefits under the Retirement Plan, then, they shall be so paid.
Otherwise, if the Retirement Plan says that the employees shall be entitled to either the separation pay
under the said provision of the law or the retirement benefits under the Retirement Plan, whichever is
higher, then, they should not be allowed to claim both.

Clearly, under the above cases, the right of the concerned employees to receive both retirement benefits
and separation pay depends upon the provisions in the Retirement Plan. (Ibid.).

Forced retirement.

If the intention to retire is not clearly established or if the retirement is involuntary, it is to be treated as a
discharge. (De Leon vs. NLRC, 100 SCRA 691 [1980]).

In San Miguel Corporation vs. NLRC, [G. R. No. 107693, July 23, 1998], the employees were given the
option to retire, be retrenched or dismissed but they were made to understand that they had no choice
but to leave the company. It was in reality a Hobson’s choice which means that they have no choice at all.
All that the private respondents were offered was a choice on the means or method of terminating their
services but never as to the status of their employment. In short, they were never asked if they still
wanted to work for petitioner. The mere absence of actual physical force to compel private respondents
to ink an application for retirement did not make their retirement voluntary. Confronted with the danger
of being jobless, unable to provide their families even with the basic needs or necessities of life, the
private respondents had no choice but to sign the documents proffered to them. But neither their receipt
of separation pay nor their negotiating for more monetary benefits estopped private respondents from
questioning and challenging the legality of the nature or cause of their separation from the service.

In Villena vs. NLRC, [G. R. No. 90664, Feb. 7, 1991], an employee whose age was 57 when he was illegally
singled out for retirement, after serving the bus company since he was 25 years old, was declared to be
entitled to his full backwages, allowances and other benefits for a period of three (3) years after his illegal
dismissal from the service until he reached the compulsory retirement age, plus his retirement benefits
equivalent to his gross monthly pay, allowances and other benefits for every year of service up to age sixty
(60) which is the normal retirement age for him.

Case of non-entitlement to retirement pay due to termination for cause.

In the 2004 case of Piñero vs. NLRC, [G. R. NO. 149610, August 20, 2004], the petitioner employee who
turned 60 years old and retired on March 1, 1996 after 29 years of service was declared not entitled to the
payment of retirement benefits because he lost his employment status effective as of the date of the
decision of the Labor Arbiter on October 28, 2004 which declared as legal the termination of his
employment as a consequence of an illegal strike. At that time, his employer refused to pay his retirement
benefits pending the final resolution of the case. Instead, the Supreme Court, on ground of equity for his
long years of service without any derogatory record, awarded him financial assistance equivalent to one-
half (½) month’s pay for every year of service computed from his date of employment up to October 28,
1994 when he was declared to have lost his employment status.

Is the retirement pay under the SSS similar to or may be a substitute for the retirement pay under the
Labor Code?

The employee’s retirement pay under Article 287 of the Labor Code or under a unilaterally promulgated
retirement policy or plan of the employer or under a Collective Bargaining Agreement, is separate and
distinct from the retirement benefits granted under Republic Act No. 8282, otherwise known as the Social
Security Act of 1997.

Other latest cases on retirement.

Concept of retirement under Article 287.

The opening paragraph of Article 287 clearly enunciates the intent and application of the law. It conveys in
clear and unmistakable terms that once an employee retires, it is not Article 287 that is controlling but the
retirement plan under the CBA or other applicable employment contract. Article 287 becomes relevant
only in the matter of ensuring that the retirement benefits are not less than those provided therein.

This explains why, in the third paragraph of Article 287, it is further underscored that the retirement
package provided therein is made applicable only “in the absence of a retirement plan or agreement
providing for retirement benefits of employees in the establishment.”

In case of retirement under the CBA or other applicable employment contract, the employee is entitled to
receive such retirement benefits as he may have earned under existing laws, the CBA and other
agreements; provided that such retirement benefits under the CBA or other agreements should not, in any
way, be less than those provided under the law. In the event that such benefits are less, the employer is
obligated to pay the difference between the amount due the employee under the law and that provided
under the CBA or other applicable employment contract. (Sections 3.1 and 3.2, Rule II, Ibid.).

This is best illustrated in the 2001 case of Manuel L. Quezon University vs. NLRC, [G. R. No. 141673,
October 17, 2001]. the issue raised is whether respondent-teachers are entitled to the retirement benefits
provided for under Republic Act No. 7641, even if the petitioner has an existing valid retirement plan. The
Supreme Court ruled that they are so entitled. Republic Act No. 7641 intends to give the minimum
retirement benefits to employees not entitled thereto under collective bargaining and other agreements.
Its coverage applies to establishments with existing collective bargaining or other agreements or voluntary
retirement plans whose benefits are less than those prescribed under the proviso in question.
Consequently, petitioner University was ordered to pay the teachers their retirement differential pay (i.e.,
the difference between the retirement pay under R. A. No. 7641 and the MLQU Retirement Plan) plus legal
interest of six percent (6%) per annum from the date of filing of their complaints on March 27, 1997 up to
actual payment.

If after applying Article 287, however, it is clear that the retirement plan under the CBA or other
agreements, company policy or practice provides for retirement benefits which are equal or superior to
that which is provided in said law, then, such retirement plan and not Article 287, should prevail and thus
govern the computation of the benefits to be awarded. (Labor Advisory on Retirement Pay Law dated Oct.
24, 1996, issued by Secretary Leonardo A. Quisumbing).

The best case to exemplify this point is the 2002 case of Philippine Airlines, Inc. vs. Airline Pilots
Association of the Philippines, [G. R. No. 143686, January 15, 2002], where the Supreme Court had
occasion to comment on the following pertinent provision of the 1967 PAL-ALPAP Retirement Plan:
“SECTION 1. Normal Retirement. (a) Any member who completed twenty (20) years of service as a pilot
for PAL or has flown 20,000 hours for PAL shall be eligible for normal retirement. The normal retirement
date is the date on which he completes twenty (20) years of service, or on which he logs his 20,000 hours
as a pilot for PAL. The member who retires on his normal retirement shall be entitled to either (a) a lump
sum payment of P100,000.00 or (b) to such termination pay benefits to which he may be entitled to
under existing laws, whichever is the greater amount.”

A pilot who retires after twenty years of service or after flying 20,000 hours would still be in the prime of
his life and at the peak of his career, compared to one who retires at the age of 60 years old. Based on this
peculiar circumstance that PAL pilots are in, the parties provided for a special scheme of retirement
different from that contemplated in the Labor Code. Conversely, the provisions of Article 287 of the Labor
Code could not have contemplated the situation of PAL’s pilots. Rather, it was intended for those who
have no more plans of employment after retirement, and are thus in need of financial assistance and
reward for the years that they have rendered service.

In any event, petitioner contends that its pilots who retire below the retirement age of 60 years not only
receive the benefits under the 1967 PAL-ALPAP Retirement Plan but also an equity of the retirement fund
under the PAL Pilots’ Retirement Benefit Plan, entered into between petitioner and respondent on May
30, 1972.

The PAL Pilots’ Retirement Benefit Plan is a retirement fund raised from contributions exclusively from
petitioner of amounts equivalent to 20% of each pilot’s gross monthly pay. Upon retirement, each pilot
stands to receive the full amount of the contribution. In sum, therefore, the pilot gets an amount
equivalent to 240% of his gross monthly income for every year of service he rendered to petitioner. This is
in addition to the amount of not less than P100,000.00 that he shall receive under the 1967 Retirement
Plan. In short, the retirement benefits that a pilot would get under the provisions of Article 287 of the
Labor Code are less than those that he would get under the applicable retirement plans of petitioner.
(Ibid.).

Indeed, Article 287 makes clear the intention and spirit of the law to give employers and employees a free
hand to determine and agree upon the terms and conditions of retirement. The law presumes that
employees know what they want and what is good for them absent any showing that fraud or intimidation
was employed to secure their consent thereto. (Pantranco North Express, Inc. vs. NLRC, G. R. No. 95940,
July 24, 1996, 259 SCRA 161).

Who should exercise the option to retire?

Compulsory retirement takes place at age 65, while optional retirement is primarily determined by the
CBA or other employment contract or employer’s retirement plan. In the absence of any provision on
optional retirement in a CBA, other employment contract, or employer’s retirement plan, an employee
may optionally retire upon reaching the age of 60 years or more, but not beyond 65 years, provided he has
served at least five (5) years in the establishment concerned. That prerogative is exclusively lodged in the
employee.

Thus, in Capili vs. NLRC, [G. R. No. 120802, June 17, 1997, 273 SCRA 576], it was held that the act of
accepting the retirement benefits is deemed an exercise of the option to retire under the third paragraph
of Article 287, as amended by Republic Act No. 7641. Thereunder, he could choose to retire upon reaching
the age of 60 years, provided it is before reaching 65 years which is the compulsory age of retirement.
(Capili vs. NLRC, G. R. No. 120802, June 17, 1997, 273 SCRA 576).

May employers exercise the option to retire?

The answer to this query is, of course, in the affirmative. If there is a provision on retirement in a CBA or
any other agreement or if the employer has a retirement plan, the option may be exercised by the
employer in accordance therewith. Article 287 is clear: “(a)ny employee may be retired upon reaching
the retirement age established in the collective bargaining agreement or other applicable employment
contract.”

In Philippine Airlines, Inc. vs. Airline Pilots Association of the Philippines, [G. R. No. 143686, January 15,
2002], an issue was raised on whether petitioner should consult the pilot concerned before exercising its
option to retire pilots. The Supreme Court ruled in the negative. It held that this constitutes an added
requirement which, in effect, amended the terms of Article VII, Section 2 of the 1976 PAL-ALPAP
Retirement Plan which states:
“SECTION 2. Late Retirement. Any member who remains in the service of the Company after his normal
retirement date may retire either at his option or at the option of the Company and when so retired he
shall be entitled either (a) to a lump sum payment of P5,000.00 for each completed year of service
rendered as a pilot, or (b) to such termination pay benefits to which he may be entitled under existing
laws, whichever is the greater amount.”

Surely, the requirement to consult the pilots prior to their retirement defeats the exercise by management
of its option to retire the said employees. It gives the pilot concerned an undue prerogative to assail the
decision of management. Due process only requires that notice be given to the pilot of petitioner’s
decision to retire him.

In the 2000 case of Progressive Development Corporation vs. NLRC, [G. R. No. 138826, October 30, 2000],
the optional retirement provision of the Employees’ Non-Contributory Retirement Plan states:
“Section 3. Optional Retirement. - Any participant with twenty (20) years of service, regardless of age, may
be retired at his option or at the option of the Company and shall be entitled to the following benefits x x
x.”

In upholding the validity of the decision of management to retire employees in accordance with the afore-
quoted provision, the Supreme Court ruled that the said retirement plan is valid for it forms part of the
employment contract of petitioner company. The following pronouncement made by no less than the
DOLE was given substantial weight, to wit:
“Considering therefore the fact that your client’s retirement plan now forms part of the employment
contract since it is made known to the employees and accepted by them, and such plan has an express
provision that the company has the choice to retire an employee regardless of age, with twenty (20) years
of service, said policy is within the bounds contemplated by the Labor Code. Moreover, the manner of
computation of retirement benefits depends on the stipulation provided in the company retirement plan.”
(Opinion of Director Augusto G. Sanchez of the Bureau of Working Conditions, Department of Labor and
Employment, Oct. 8, 1990, confirming the validity of The Plan, particularly its provision on optional
retirement).

Moreover, the undisputed fact that a number of employees of petitioner company had availed of The Plan
since its effectivity only confirms that The Plan has already been part of the employment contract of
petitioner company for a long time. (Ibid.).

In Pantranco North Express, Inc. vs. NLRC, [G. R. No. 95940, July 24, 1996, 259 SCRA 161], it was ruled that
an employee who was compulsorily retired after rendering 25 years of service in accordance with the
provision of the CBA cannot claim that he was illegally dismissed. Providing in a CBA for compulsory
retirement of employees after 25 years of service is legal and enforceable so long as the parties agree to
be governed by such CBA.

In the earlier case of Bulletin Publishing Corp. vs. Sanchez, [144 SCRA 628 (1986)], the Supreme Court
held:
“The aforestated sections explicitly declare, in no uncertain terms, that retirement of an employee may be
done upon initiative and option of the management. And where there are cases of voluntary retirement,
the same is effective only upon the approval of management. The fact that there are some supervisory
employees who have not yet been retired after 25 years with the company or have reached the age of
sixty merely confirms that it is the singular prerogative of management, at its option, to retire supervisors
or rank-and-file members when it deems fit. There should be no unfair labor practice committed by
management if the retirement of private respondents were made in accord with the agreed option. That
there were numerous instances wherein management exercised its option to retire employees pursuant to
the aforementioned provisions, appears to be a fact which private respondents have not controverted. It
seems only now when the question of the legality of a supervisors union has arisen that private
respondents attempt to inject the dubious theory that the private respondents are entitled to form a
union or go on strike because there is allegedly no retirement policy provided for their benefit. As above
noted, this assertion does not appear to have any factual basis.”

Interruption in the service, effect.

The decision of the Supreme Court in the 2003 case of Sta. Catalina College vs. NLRC, [G. R. No. 144483,
November 19, 2003] is instructive on the issue of interruption in the service. In this case, the teacher was
hired by the Sta. Catalina College in June 1955 as an elementary school teacher. In 1970, she applied for
and was granted a one-year leave of absence without pay on account of the illness of her mother. After
the expiration in 1971 of her leave of absence, she had not been heard from by petitioner school. In the
meantime, she was employed as a teacher in another school - the San Pedro Parochial School during
school year 1980-1981 and later, at the Liceo de San Pedro, Biñan, Laguna during school year 1981-1982.
In 1982, she applied anew at petitioner school which hired her. In 1997, the teacher reached compulsory
retirement age. The threshold issue is whether the teacher’s services for petitioner school during the
period from 1955 to 1970 should be factored in the computation of her retirement benefits

The Supreme Court ruled that she cannot be credited for her services in 1955-1970 in the determination
of her retirement benefits. For, after her one year leave of absence expired in 1971 without her
requesting for extension thereof as in fact she had not been heard from until she resurfaced in 1982 when
she reapplied with petitioner school, she abandoned her teaching position as in fact she was employed
elsewhere in the interim and effectively relinquished the retirement benefits accumulated during the said
period. As the teacher was considered a new employee when she rejoined petitioner school upon re-
applying in 1982, her retirement benefits should thus be computed only on the basis of her years of
service from 1982 to 1997.

Service in another firm, excluded in the computation of retirement benefits.

In the 2002 case of Gamogamo vs. PNOC Shipping and Transport Corp., [G. R. No. 141707, May 7, 2002], it
was held that since the retirement pay solely comes from respondent company’s funds, it is but natural
that respondent should disregard petitioner-employee’s length of service in another company for the
computation of his retirement benefits.

Petitioner in Gamogamo was first employed with the Department of Health (DOH) and remained
employed as dentist at the DOH for fourteen (14) years until he resigned on November 2, 1977. On
November 9, 1977, petitioner was hired as company dentist by Luzon Stevedoring Corporation
(LUSTEVECO), a private domestic corporation. Subsequently, respondent PNOC Shipping and Transport
Corporation (hereafter respondent) acquired and took over the shipping business of LUSTEVECO, and on
August 1, 1979, petitioner was among those who opted to be absorbed by the respondent. Thus, he
continued to work as company dentist. Ordinarily, his creditable service should be reckoned from such
date. However, since respondent took over the shipping business of LUSTEVECO and agreed to assume
without interruption all the service credits of petitioner with LUSTEVECO, petitioner’s creditable service
must start from November 9, 1977 when he started working with LUSTEVECO until his day of retirement
on April 1, 1995. Thus, petitioner’s creditable service is 17.3333 years.

Petitioner’s contention cannot be upheld that his fourteen (14) years of service with the DOH should be
considered because his last two employers were government-owned and controlled corporations, and fall
under the Civil Service Law.

It is not at all disputed that while respondent and LUSTEVECO are government-owned and controlled
corporations, they have no original charters; hence they are not under the Civil Service Law. In any case,
petitioner’s fourteen years of service with the DOH may not remain uncompensated because it may be
recognized by the GSIS pursuant to Section 12 of Presidential Decree No, 1146, as amended, otherwise
known as the Government Service Insurance Act of 1977, as may be determined by the GSIS.
“One-half (½) month salary” means 22.5 days.

To dispel any further confusion on the meaning of “one-half [½] month salary” in the law, the Supreme
Court, in the case of Capitol Wireless, Inc. vs. Confesor, [G. R. No. 117174, November 13, 1996, 264 SCRA
68, 77], simplified its computation by declaring that it means the total of “22.5 days” arrived at after
adding 15 days plus 2.5 days representing one-twelfth [1/12] of the 13th month pay plus 5 days of service
incentive leave.

Should 1/12 of 13th month pay and 5 days of service incentive leave be included if the employees are
not entitled thereto?

A question may be posed. Supposing the retiring employee, by reason of the nature of his work, was not
entitled to 13th month pay or to the service incentive leave pay pursuant to the exceptions mentioned in
the 13th-Month Pay Law and the Labor Code, should he be paid upon retirement, in addition to the salary
equivalent to fifteen (15) days, the additional 2.5 days representing one-twelfth [1/12] of the 13th month
pay as well as the five (5) days representing the service incentive leave for a total of 22.5 days?

This question was answered in the negative in the 2004 case of R & E Transport, Inc. vs. Latag, [G. R. No.
155214, February 13, 2004]. The Supreme Court ruled that employees who are not entitled to 13th
month pay and service incentive leave pay while still working should not be paid the entire “22.5 days” but
only the fifteen (15) days salary. In other words, the additional 2.5 days representing one-twelfth [1/12] of
the 13th month pay and the five (5) days of service incentive leave should not be included as part of the
retirement benefits.

The employee in the said case was a taxi driver who was being paid on the “boundary” system basis. It
was undisputed that he was entitled to retirement benefits after working for 14 years with R & E
Transport, Inc. On the question of how much he should receive as and by way of retirement benefits, the
Supreme Court pronounced:
“The rules implementing the New Retirement Law similarly provide the above-mentioned formula for
computing the one-half month salary. (Section 5, Rule II of the Rules Implementing RA 7641 or the New
Retirement Law). Since Pedro was paid according to the “boundary” system, he is not entitled to the 13th
month in accordance with Section 3 of the Rules and Regulations Implementing P. D. No. 851 [which
exempts from its coverage employers of those who are paid on purely boundary basis], and the service
incentive leave pay pursuant to Section 1 of Rule V, Book III of the Rules to Implement the Labor Code
[which expressly excepts field personnel and other employees whose performance is unsupervised by the
employer, including those who are engaged on task or contract basis, purely commission basis, or those
who are paid a fixed amount for performing work irrespective of the time consumed in the performance].
Hence, his retirement pay should be computed on the sole basis of his salary.

“It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in excess of the
“boundary” or fee they pay to the owners or operators of their vehicles. Thus, the basis for computing
their benefits should be the average daily income. In this case, the CA found that Pedro was earning an
average of five hundred pesos (P500) per day. We thus compute his retirement pay as follows: P500 x 15
days x 14 years of service equals P105,000. Compared with this amount, the P38,850 he received, which
represented just over one third of what was legally due him, was unconscionable.” (Underscoring
supplied)

Liberal interpretation of retirement laws; exception.

It is axiomatic that retirement laws are liberally construed and administered in favor of the persons
intended to be benefited. All doubts as to the intent of the law should be resolved in favor of the retiree to
achieve its humanitarian purposes. The intention is to provide for the retiree’s sustenance and hopefully
even comfort, when he no longer has the stamina to continue earning his livelihood.

While it is axiomatic that retirement laws are liberally construed in favor of the persons intended to be
benefited, however, such interpretation cannot be made in the event there is clear lack of consensual and
statutory basis of the grant of retirement benefits to the claimant-employee.

For instance, in the 2004 case of Lopez vs. National Steel Corporation, [G. R. No. 149674, February 16,
2004], the Labor Arbiter, the NLRC and the Court of Appeals were one in saying that there is no provision
in the parties’ CBA authorizing the payment to petitioner-employee of retirement benefits in addition to
her retrenchment pay; and that there is no indication that she was forced or “duped” by respondent-
employer to sign the Release and Quitclaim. The Court of Appeals also ruled that petitioner, not having
reached the retirement age, is not entitled to retirement benefits under Article 287 of the Labor Code. In
justifying her claim for retirement benefits, petitioner contends that respondent’s September 20, 1994
termination letter declares in unequivocal terms that “(Y)ou will receive a separation package in
accordance with the program and existing policies, including benefits you may be entitled to, if any, under
the Company’s Retirement Plan.” According to her, the quoted statement expressly guarantees the grant
of retirement benefits. Suffice it to reiterate that the respondent’s retirement plan precludes employees
whose services were terminated for cause, from availing retirement benefits.

- LIBERAL INTERPRETATION OF RETIREMENT LAWS; NOT APPLIED IF THERE IS NO CLEAR CONSENSUAL


AND STATUTORY BASIS FOR THE BENEFIT

The interpretation that retirement laws are liberally construed in favor of the persons intended to be
benefited cannot be made in this case in light of the clear lack of consensual and statutory basis of the
grant of retirement benefits to petitioner.
(Divina Lopez vs Nat’l Steel Corp., GR# 149674 – 02/16/04)

- RETIREMENT BENEFITS CANNOT INCLUDE THE YEARS OF SERVICE FROM A PREVIOUS COMPANY

In this case, respondent was employed in a previous taxi company but it closed and was later employed
by herein respondent. When he was asked to retire, he sought retirement pay for his time with the
previous taxi company and with petitioner, invoking the doctrine of piercing the corporate veil. The
Supreme Court denied this contention, saying that an application of the doctrine in this case is not
proper since the requisite elements were not present to show that both companies were one and the
same. These elements are; (1) Control; (2) Such control was used to commit fraud or unlawful activity;
(3) Such control is the proximate cause of the injury.

There was a failure to establish that the element of control existed between the 2 companies,
considering the fact that petitioner was only established 7 years after the closure of the previous
company.
(R&E Transport vs Latag, GR# 155214 – 02/13/04)

- NO RETIREMENT PAY FOR CONTRACTUAL EMPLOYEES

The age of retirement is primarily determined by the existing agreement or employment contract. In the
absence of such agreement, the retirement age shall be fixed by law.

Seafarers are considered contractual employees. They cannot be considered as regular employees
under Article 280 of 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. Their employment
is contractually fixed for a certain period of time. They fall under the exception of Article 280 whose
employment has been fixed for a specific project or undertaking the completion or termination of which
has been determined at the time of engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season.

Seafarers’ employment automatically ceased upon the expiration of their contracts of enlistment (COE).
Since there was no dismissal to speak of, it follows that they are not entitled to reinstatement or
payment of separation pay or backwages, as provided by law.
(Eastern Shipping Lines Inc. vs Antonio, GR# 171587 – 10/13/09)

- FINANCIAL ASSISTANCE MAY BE AWARDED INSTEAD OF RETIREMENT OR SEPARATION PAY IN THE


INTEREST OF SOCIAL AND COMPASSIONATE JUSTICE

The instant case equally calls for balancing the interests of the employer with those of the
worker, if only to approximate what Justice Laurel calls justice in its secular sense.

In this instance, our attention has been called to the following circumstances: that private
respondent joined the company when he was a young man of 25 years and stayed on until he
was 48 years old; that he had given to the company the best years of his youth, working on
board ship for almost 24 years; that in those years there was not a single report of him
transgressing any of the company rules and regulations; that he applied for optional retirement
under the company’s non-contributory plan when his daughter died and for his own health
reasons; and that it would appear that he had served the company well, since even the
company said that the reason it refused his application for optional retirement was that it still
needed his services; that he denies receiving the telegram asking him to report back to work;
but that considering his age and health, he preferred to stay home rather than risk further
working in a ship at sea.

In our view, with these special circumstances, we can call upon the same “social and compassionate
justice” cited in several cases allowing financial assistance. These circumstances indubitably merit
equitable concessions, via the principle of “compassionate justice” for the working class.
(Eastern Shipping Lines Inc. vs Antonio, GR# 171587 – 10/13/09)

- PREVIOUSLY RESIGNED EMPLOYEES ARE NOT ENTITLED TO NEW RETIREMENT BENEFITS; RETIREMENT
BENEFITS ARE NOT RETROACTIVE

Entitlement of employees to retirement benefits must specifically be granted under existing laws, a
collective bargaining agreement or employment contract, or an established employer policy. In this case,
no law or collective bargaining agreement or other applicable contract, or an established company
policy was existing during the employees’ (respondents’) employment entitling them to the P200,000
lump-sum retirement pay. The company (petitioner) was not thus obliged to grant them such pay.
(Kimberly-Clark Phils. Inc. vs Dimayuga, GR# 1777705 – 09/18/09)

- (Januaria Rivera vs United Laboratories Inc. , GR# 155639 – 04/22/09)

6. Resignation

(Labor Code)
ART. 285. Termination by employee. –
(a) An employee may terminate without just cause the employee-employer relationship by serving a
written notice on the employer at least one (1) month in advance. The employer upon whom no such
notice was served may hold the employee liable for damages.

(b) An employee may put an end to the relationship without serving any notice on the employer for any
of the following just causes:
1. Serious insult by the employer or his representative on the honor and person of the employee;

2. Inhuman and unbearable treatment accorded the employee by the employer or his
representative;

3. 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

4. Other causes analogous to any of the foregoing.

(Rule 1, Book VI, IRR)


SECTION 11. Termination of employment by employee. — The just causes for putting an end to the
employer-employee relationship by the employee shall be those provided in Article 286 of the Labor Code.

- GENERALLY, RESIGNATION PRECLUDES SEPARATION PAY, UNLESS THERE IS AN AGREEMENT

Generally, an employee who voluntarily resigns from employment is not entitled to separation pay. In
the present case, however, upon the request of petitioner, private respondent agreed to a scheme
whereby the former would receive separation pay despite having voluntarily resigned. Thus, the terms
and conditions they both agreed upon constituted a contract freely entered into, which should be
performed in good faith, as it constituted the law between the parties.
(Alfaro vs CA, GR# 140812 – 08/28/01)

- CONDITIONS FOR VALID RESIGNATION

To constitute a resignation, it must be unconditional and with the intent to operate as such. There must
be an intention to relinquish a portion of the term of office accompanied by an act of relinquishment.
Having introduced the resignation letters in evidence, it was incumbent upon petitioners to prove clearly
and convincingly their genuiness and due execution, especially considering the serious doubts on their
authenticity.
(Azcor Mfg. Inc. vs NLRC, GR# 117963 – 02/11/99)

- FILING OF A COMPLAINT FOR ILLEGAL DISMISSAL IS NOT IN CONSONANCE WITH RESIGNATION

When a first resignation letter was a pro forma one, entirely drafted by the employer for the employee
to merely affix his signature, and the second one entirely copied by the employee with his own hand
from the first resignation letter, voluntariness is not attendant.

It is a rule that resignation is difficult to reconcile with the filing of a complaint for illegal dismissal.
(Mobile Protective & Detective Agency vs Ompad, GR# 159195 – 05/09/05)

AA. CONSEQUENCES OF ILLEGAL DISMISSAL

1. Reinstatement

(Labor Code)
ART. 279. Security of tenure. - In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the time of his actual
reinstatement. (As amended by Section 34, Republic Act No. 6715, March 21, 1989).

(Rule I, Book VI, IRR)


Sec. 2. Security of Tenure. - In cases of regular employment, the employer shall not terminate
the services of an employee, except for a just cause as provided in the Labor Code or when
authorized by existing laws.
Sec. 3. Reinstatement. - An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and to backwages.

(Labor Code)
ART. 223. Appeal. - Decisions, awards, or orders of the Labor Arbiter are final and executory unless
appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such
decisions, awards, or orders. Such appeal may be entertained only on any of the following grounds:

(a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter;

(b) If the decision, order or award was secured through fraud or coercion, including graft and corruption;

(c) If made purely on questions of law; and

(d) If serious errors in the findings of facts are raised which would cause grave or irreparable damage or
injury to the appellant.

In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon
the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the
Commission in the amount equivalent to the monetary award in the judgment appealed from.

In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as
the reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The
employee shall either be admitted back to work under the same terms and conditions prevailing prior to
his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting
of a bond by the employer shall not stay the execution for reinstatement provided herein.
To discourage frivolous or dilatory appeals, the Commission or the Labor Arbiter shall impose reasonable
penalty, including fines or censures, upon the erring parties.

In all cases, the appellant shall furnish a copy of the memorandum of appeal to the other party who shall
file an answer not later than ten (10) calendar days from receipt thereof.

The Commission shall decide all cases within twenty (20) calendar days from receipt of the answer of the
appellee. The decision of the Commission shall be final and executory after ten (10) calendar days from
receipt thereof by the parties.

Any law enforcement agency may be deputized by the Secretary of Labor and Employment or the
Commission in the enforcement of decisions, awards or orders. (As amended by Section 12, Republic Act
No. 6715, March 21, 1989).

ART. 224. Execution of decisions, orders or awards. - (a) The Secretary of Labor and Employment or any
Regional Director, the Commission or any Labor Arbiter, or Med-Arbiter or Voluntary Arbitrator may, motu
proprio or on motion of any interested party, issue a writ of execution on a judgment within five (5) years
from the date it becomes final and executory, requiring a sheriff or a duly deputized officer to execute or
enforce final decisions, orders or awards of the Secretary of Labor and Employment or regional director,
the Commission, the Labor Arbiter or med-arbiter, or voluntary arbitrators. In any case, it shall be the duty
of the responsible officer to separately furnish immediately the counsels of record and the parties with
copies of said decisions, orders or awards. Failure to comply with the duty prescribed herein shall subject
such responsible officer to appropriate administrative sanctions.

(b) The Secretary of Labor and Employment, and the Chairman of the Commission may designate special
sheriffs and take any measure under existing laws to ensure compliance with their decisions, orders or
awards and those of the Labor Arbiters and voluntary arbitrators, including the imposition of
administrative fines which shall not be less than P500.00 nor more than P10,000.00. (As amended by
Section 13, Republic Act No. 6715, March 21, 1989).

(Rule VI, 2005 NLRC Rules of Procedure)


APPEALS

Section 1. Periods of Appeal. - Decisions, resolutions or orders of the Labor Arbiter shall be final and
executory unless appealed to the Commission by any or both parties within ten (10) calendar days from
receipt thereof; and in case of decisions, resolutions or orders of the Regional Director of the Department
of Labor and Employment pursuant to Article 129 of the Labor Code, within five (5) calendar days from
receipt thereof. If the 10th or 5th day, as the case may be, falls on a Saturday, Sunday or holiday, the last
day to perfect the appeal shall be the first working day following such Saturday, Sunday or holiday.

No motion or request for extension of the period within which to perfect an appeal shall be allowed.

Section 2. Grounds. - The appeal may be entertained only on any of the following grounds:
a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter or Regional
Director;
b) If the decision, resolution or order was secured through fraud or coercion, including graft and
corruption;
c) If made purely on questions of law; and/or
d) If serious errors in the findings of facts are raised which, if not corrected, would cause grave or
irreparable damage or injury to the appellant.

Section 3. Where Filed. - The appeal shall be filed with the Regional Arbitration Branch or Regional Office
where the case was heard and decided.

Section 4. requisites For Perfection Of Appeal. –


a) The appeal shall be:
1) filed within the reglementary period provided in Section 1 of this Rule;
2) verified by the appellant himself in accordance with Section 4, Rule 7 of the Rules of Court, as
amended;
3) in the form of a memorandum of appeal which shall state the grounds relied upon and the
arguments in support thereof, the relief prayed for, and with a statement of the date the
appellant received the appealed decision, resolution or order;
4) in three (3) legibly typewritten or printed copies; and
5) accompanied by:
i. proof of payment of the required appeal fee;
ii. posting of a cash or surety bond as provided in Section 6 of this Rule;
iii. a certificate of non-forum shopping; and iv) proof of service upon the other parties.
b) A mere notice of appeal without complying with the other requisites aforestated shall not stop the
running of the period for perfecting an appeal.
c) The appellee may file with the Regional Arbitration Branch or Regional Office where the appeal was
filed, his answer or reply to appellant's memorandum of appeal, not later than ten (10) calendar days
from receipt thereof. Failure on the part of the appellee who was properly furnished with a copy of
the appeal to file his answer or reply within the said period may be construed as a waiver on his part
to file the same.
d) Subject to the provisions of Article 218 of the Labor Code, once the appeal is perfected in accordance
with these Rules, the Commission shall limit itself to reviewing and deciding only the specific issues
that were elevated on appeal.

Section 5. Appeal Fee. - The appellant shall pay an appeal fee of One Hundred Fifty Pesos (P150.00) to the
Regional Arbitration Branch or Regional Office of origin, and the official receipt of such payment shall form
part of the records of the case.

Section 6. Bond. - In case the decision of the Labor Arbiter or the Regional Director involves a monetary
award, an appeal by the employer may be perfected only upon the posting of a bond, which shall either be
in the form of cash deposit or surety bond equivalent in amount to the monetary award, exclusive of
damages and attorney's fees.

In case of surety bond, the same shall be issued by a reputable bonding company duly accredited by the
Commission or the Supreme Court, and shall be accompanied by original or certified true copies of the
following:

a) a joint declaration under oath by the employer, his counsel, and the bonding company, attesting that
the bond posted is genuine, and shall be in effect until final disposition of the case.
b) an indemnity agreement between the employer-appellant and bonding company;
c) proof of security deposit or collateral securing the bond: provided, that a check shall not be
considered as an acceptable security;
d) a certificate of authority from the Insurance Commission;
e) certificate of registration from the Securities and Exchange Commission;
f) certificate of authority to transact surety business from the Office of the President;
g) certificate of accreditation and authority from the Supreme Court; and
h) notarized board resolution or secretary's certificate from the bonding company showing its authorized
signatories and their specimen signatures.

A cash or surety bond shall be valid and effective from the date of deposit or posting, until the case is
finally decided, resolved or terminated, or the award satisfied. This condition shall be deemed
incorporated in the terms and conditions of the surety bond, and shall be binding on the appellants and
the bonding company.

The appellant shall furnish the appellee with a certified true copy of the said surety bond with all the
above-mentioned supporting documents. The appellee shall verify the regularity and genuineness thereof
and immediately report any irregularity to the Commission.

Upon verification by the Commission that the bond is irregular or not genuine, the Commission shall cause
the immediate dismissal of the appeal, and censure or cite in contempt the responsible parties and their
counsels, or subject them to reasonable fine or penalty.

No motion to reduce bond shall be entertained except on meritorious grounds, and only upon the posting
of a bond in a reasonable amount in relation to the monetary award.

The mere filing of a motion to reduce bond without complying with the requisites in the preceding
paragraphs shall not stop the running of the period to perfect an appeal.

Section 7. Records of Case on Appeal. - The records of a case shall have a corresponding index of its
contents which shall include the following: a) the original copy of the complaint; b) other pleadings and
motions; c) minutes of the proceedings, notices, transcripts of stenographic notes, if any; d) decisions,
orders, and resolutions as well as proof of service thereof, if available; e) the computation of the award; f)
memorandum of appeal and the reply or answer thereto, if any, and proof of service, if available; g) official
receipt of the appeal fee; and h) the appeal bond, if any.
The records shall be chronologically arranged and paged prominently.

Section 8. Transmittal Of Records Of Case On Appeal. - Within forty-eight (48) hours after the filing of the
appeal, the records of the case shall be transmitted by the Regional Arbitration Branch or office of origin
to the Commission.

Section 9. Perfection Of Appeal; Effect. - Without prejudice to immediate reinstatement pending appeal
under Section 6 of Rule XI, once an appeal is filed, the Labor Arbiter loses jurisdiction over the case. All
pleadings and motions pertaining to the appealed case shall thereafter be addressed to and filed with the
Commission.

Section 10. Frivolous or Dilatory Appeals. - No appeal from an interlocutory order shall be entertained. To
discourage frivolous or dilatory appeals, including those taken from interlocutory orders, the Commission
may censure or cite in contempt the erring parties and their counsels, or subject them to reasonable fine
or penalty.

Section 11. Appeals from Decision of Other Agencies. - The Rules provided herein governing appeals from
the decisions or orders of Labor Arbiters shall apply to appeals to the Commission from decisions or orders
of the other offices or agencies appealable to the Commission according to law.

What is reinstatement?

a. Reinstatement under Articles 279 and 223 of the Labor Code, distinguished.

Reinstatement under Article 279 presupposes that the judgment has already become final and executory.
Consequently, there is nothing left to be done except the execution thereof. Reinstatement under Article
223 of the Labor Code, however, may be availed of as soon as the Labor Arbiter renders a judgment
declaring that the dismissal of the employee is illegal and ordering said reinstatement. It may be availed
of even pending appeal.
• In case of illegal dismissal - The consequence of illegality thereof is reinstatement without loss of
seniority rights and with full backwages (inclusive of allowances and other benefits computed from the
time his compensation was withheld up to the time of his actual reinstatement).

Reinstatement when not prayed for, effect.

The failure to allege reinstatement as one of the reliefs in the complaint for illegal dismissal is not fatal. In
the interest of justice, according to Manipon vs. NLRC, [G. R. No. 105338, Dec. 27, 1994], although the
issue of the grant of separation pay was never contested even at the level of the Labor Arbiter nor
assigned as error at the NLRC level, the Labor Arbiter’s ruling where he granted petitioner separation pay
instead of ordering his reinstatement should be corrected. Reinstatement should be granted although he
failed to specifically pray for the same in his complaint. (See also General Baptist Bible College vs. NLRC,
219 SCRA 549 [1993]).

In Pheschem Industrial Corporation vs. Moldez, [G. R. No. 161158, May 9, 2005], respondent’s omission to
pray for reinstatement in his position paper before the Labor Arbiter was not considered as an implied
waiver to be reinstated. It was considered a mere procedural lapse which should not affect his substantive
right to reinstatement. It is a settled principle that technicalities have no place in labor cases as rules of
procedure are designed primarily to give substance and meaning to the objectives of the Labor Code to
accord protection to labor.

Reinstatement when what is prayed for is separation pay.

A different rule, however, applies in a case where reinstatement was not prayed for in the complaint but
the payment of separation pay in lieu thereof. As pronounced in Dela Cruz vs. NLRC, [G. R. No. 121288,
Nov. 20, 1998, 299 SCRA 1, 13], the petitioner therein would have been entitled to reinstatement as a
consequence of his illegal dismissal from employment. However, by expressly asking for separation pay,
he is deemed to have opted for separation pay in lieu of reinstatement. This is the tenor of the holding in
Reformist Union vs. NLRC, [266 SCRA 713, 728-729 (1997)] to the effect that separation pay is awarded as
an alternative to reinstatement.
In the 2003 case of Solidbank Corporation vs. CA, [G. R. No. 151026, Aug. 25, 2003], where the employee
explicitly prayed for an award of separation pay in lieu of reinstatement, the Supreme Court said that by so
doing, he forecloses reinstatement as a relief by implication. Consequently, he is entitled to separation pay
equivalent to one month pay for every year of service, from the time of his illegal dismissal up to the
finality of this judgment, as an alternative to reinstatement.

Employee ordered reinstated may, at the end of the proceeding, opt for separation pay instead.

The employee who files an illegal dismissal case may choose between reinstatement and payment of
separation pay in lieu of reinstatement. He is bound by the relief he prayed for in his complaint. If
ordered reinstated later on after the end of the proceedings, he has no other option but to abide thereby.

However, the Supreme Court recognizes an exception. In the 2004 case of Procter and Gamble Philippines
vs. Bondesto, [G. R. No. 139847, March 5, 2004], after more than a year after the respondent was placed
on payroll reinstatement, the company’s Tondo Plant, where the respondent was assigned, was shut
down. Since the respondent’s employment could not be maintained at the Tondo Plant, so the petitioner
maintains, it was constrained to discontinue the respondent’s payroll reinstatement. Clearly, the
respondent is entitled to reinstatement, without loss of seniority rights to another position of similar
nature in the company. It should be stressed that while the petitioner manifested the closure of the Tondo
Plant, it failed to indicate the absence of an unfilled position more or less of a similar nature as the one
previously occupied by the respondent at its other plant/s. However, if the respondent no longer desires
to be reinstated, he should be awarded separation pay at the rate of one (1) month for every year of
service as an alternative, following settled jurisprudence.

Reinstatement not possible due to old age.

While reinstatement is a relief mandated in illegal dismissal cases, the same cannot be awarded in
instances where it is no longer feasible as in a case where private respondent is already over-aged. In such
a case, the proper remedy is to award separation pay in lieu of reinstatement. (Benguet Corporation vs.
NLRC and Felizardo A. Guianan, G. R. No. 124166, Nov. 16, 1999; Espejo vs. NLRC, G. R. No. 112678, March
29, 1996, 255 SCRA 430, 435).

Reinstatement when position no longer exists.

An illegally dismissed employee is entitled to be reinstated to his former position, unless such position no
longer exists at the time of his reinstatement, in which case, he should be given a substantially equivalent
position in the same establishment without loss of seniority rights. (Section 4, Rule I, Book VI, Rules to
Implement the Labor Code; Pedroso vs. Castro, G. R. No. 70361, Jan. 30, 1986).

However, as held in Tanduay Distillery Labor Union vs. NLRC, [G. R. No. 73352, Dec. 06, 1994], in the event
that the previous positions of petitioners may no longer be open or available, considering that more than
ten (10) years have since elapsed from the date of their dismissal, private respondent-employer has to pay,
in lieu of reinstatement and in addition to the three-year back salaries, separation pay equivalent to at
least one (1) month pay for every year of service. (See also RCPI vs. NLRC, 210 SCRA 222; Torillo vs.
Leogardo, Jr., 197 SCRA 471).

Reinstatement rendered moot and academic by supervening events.

Reinstatement should no longer be ordered when it is rendered moot and academic by reason of
supervening events such as:

1. Declaration of insolvency by the court. (Electruck Asia, Inc. vs. Meris, G. R. No. 147031, July 27, 2004).
2. Fire which gutted the hotel and resulted in its total destruction. (Bagong Bayan Corporation vs. Ople,
G. R. No. 73334, Dec. 8, 1986).
3. Closure of the business of the employer. (Section 4[b], Rule I, Book VI, Rules to Implement the Labor
Code; Philtread Tire & Rubber Corporation vs. Vicente, G. R. No. 142759, Nov. 10, 2004).
4. Non-existence of the employee’s former position at the time of reinstatement for reasons not
attributable to the fault of the employer. (Section 4[b], Rule I, Book VI, Rules to Implement the Labor
Code; Pizza Inn vs. NLRC, G. R. No. 74531, June 28, 1988).
5. Take over of the business of the employer by another company and there is no agreement regarding
assumption of liability by the acquiring company. (Callanta vs. Carnation Philippines, G. R. No. 70615,
Oct. 28, 1986).
Payroll reinstatement meaning
There is payroll reinstatement when the employer, instead of physically reinstating the employee to his
former or substantially equivalent position, chooses to reinstate the employee in the payroll only by
paying him wages and other benefits without however allowing or requiring him to actually report for
work.

Instances when payroll reinstatement may be allowed


There are two instances when the employer may exercise the option of payroll reinstatement:

1. In case of preventive suspension pending termination/disciplinary proceeding under Sections 9,


Department Order No. 9, Series of 1997.

Section 9. Period of suspension. No preventive suspension shall last longer than thirty (30) days. The
employer shall thereafter reinstate the worker in his former or in a substantially equivalent position or the
employer may extend the period of suspension provided that during the period of extension, he pays the
wages and other benefits due to the worker. In such case, the worker shall not be bound to reimburse the
amount paid to him during the extension if the employer decides, after completion of the hearing, to
dismiss the worker.

2. Another instance of payroll reinstatement is found in Article 223 of the Labor Code, after the Labor
Arbiter ordered the reinstatement of the employee pending appeal to NLRC, employer has the option to
reinstate the employee concerned only on payroll. The provision states:

Article 223. Appeal.


xxx
“In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as
the reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The
employee shall either be admitted back to work under the same terms and conditions prevailing prior to
his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting
of a bond by the employer shall not stay the execution for reinstatement provided herein.”
xxx

Instances when payroll reinstatement is not allowed


In assumption or certification cases under Article 263 (g), Labor Code, the employer is not given the option
to reinstate the employee in the payroll only. Actual reinstatement is required.

Article 263 (g). When, in his opinion, there exists a labor dispute causing or likely to cause a strike or
lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may
assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory
arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended
or impending strike or lockout as specified in the assumption or certification order. If one has already
taken place at the time of assumption or certification, all striking or locked out employees shall
immediately return to work and the employer shall immediately resume operations and readmit all
workers under the same terms and conditions prevailing before the strike or lockout. x x x

Under the said provision, all workers must immediately return to work and all employers must readmit all
of them under the same terms and conditions prevailing before the strike or lockout. (See Manila
Diamond Hotel case, compare with University of Santo Tomas case.)

Effect of failure of employer to exercise the option


Under Article 223, the option whether to actually reinstate the employee, or to reinstate him only in the
payroll belongs to the employer. Thus, the employer may either re-admit the employee to work under the
same terms and conditions prevailing prior to their dismissal, or to reinstate him in the payroll. Failing to
exercise the options in the alternative, employer must pay the employee’s salaries.

Refund/reimbursement of salary paid


In payroll reinstatement pending termination/disciplinary proceedings against employee, the rule is
explicit that the employee is not bound to reimbursed the salary already paid to him by reason of the
exercise by employer of the option. The salary paid to the employee during the period of suspension
serves as the price that employer must pay for opting for payroll reinstatement instead of actual
reinstatement.
The same thing may be said in payroll reinstatement under Article 223, although the article does not
expressly so states.

However, there was an authority supporting the opposite view that the employee may be required to
refund the employer for salary paid. This view was articulated in Genuino v. National Labor Relations
Commission as follows:

If the decision of the labor arbiter is later reversed on appeal upon the finding that the ground for
dismissal is valid, then the employer has the right to require the dismissed employee on payroll
reinstatement to refund the salaries s/he received while the case was pending appeal, or it can be
deducted from the accrued benefits that the dismissed employee was entitled to receive from his/her
employer under existing laws, collective bargaining agreement provisions, and company practices.
However, if the employee was reinstated to work during the pendency of the appeal, then the employee is
entitled to the compensation received for actual services rendered without need of refund.

The above view, however, does not appear to be the prevailing principle on the matter, and was played
down as a mere stray posture in a subsequent case (See Garcia vs. Philippine Airlines).

References
1. Manila Diamond Hotel vs. Court of Appeals, G.R. No. 140518, December 16, 2004.
2. University of Santo Tomas (UST) vs. NLRC, G.R. No. 89920, October 18, 1990.
3. Genuino v. NLRC, G.R. Nos. 142732-33, December 4, 2007.
4. Garcia vs. Philippine Airlines, G.R. No. 164856, January 20, 2009.

OBLIGATIONS OF THE EMPLOYER

1. Actual Reinstatement
2. Payroll Reinstatement

A. Nature

- REINSTATEMENT IS A MATTER OF RIGHT, ONLY IN EXCEPTIONAL CASES WILL IT BE DENIED

Under the law and prevailing jurisprudence, an illegally dismissed employee is entitled to
reinstatement as a matter of right. However, if reinstatement would only exacerbate the tension
and strained relations between the parties, or where the relationship between the employer and
the employee has been unduly strained by reason of their irreconcilable differences, particularly
where the illegally dismissed employee held a managerial or key position in the company, it would
be more prudent to order payment of separation pay instead of reinstatement.

In order for the doctrine of strained relations to apply, it should be proved that the employee
concerned occupies a position where he enjoys the trust and confidence of his employer and that it
is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to
adversely affect the efficiency and productivity of the employee concerned.

It bears to stress that reinstatement is the rule and, for the exception of strained relations to apply,
it should be proved that it is likely that if reinstated, an atmosphere of antipathy and antagonism
would be generated as to adversely affect the efficiency and productivity of the employee
concerned. However, both the LA and the CA failed to state the basis for their finding that a strained
relationship exists.

In conclusion, it bears to stress that it is human nature that some hostility will inevitably arise
between parties as a result of litigation, but the same does not always constitute strained relations
in the absence of proof or explanation that such indeed exists.
(Cabigting vs San Miguel Foods Inc., GR# 167706 – 11/05/09)

- (Dumago vs PAL, GR# 164856 – 01/20/09)

B. Instances when Reinstatement is not Possible


Strained Relations
Old Age of the Employee
Ill-health of the Employee
The position is no longer available
Closure of the company

- (Manila Diamond Hotel EU vs CA, GR# 140518 – 12/16/04)

- DOCTRINE OF STRAINED RELATIONS

Under the doctrine of strained relations, the payment of separation pay is considered an acceptable
alternative to reinstatement when the latter option is no longer desirable or viable. On one hand,
such payment liberates the employee from what could be a highly oppressive work environment.
On the other hand, it releases the employer from the grossly unpalatable obligation of maintaining
in its employ a worker it could no longer trust.

Strained relations must be demonstrated as a fact, however, to be adequately supported by


evidence— substantial evidence to show that the relationship between the employer and the
employee is indeed strained as a necessary consequence of the judicial controversy.

In the present case, the Labor Arbiter found that actual animosity existed between petitioner Azul
and respondent as a result of the filing of the illegal dismissal case. Such finding, especially when
affirmed by the appellate court as in the case at bar, is binding upon the Court, consistent with the
prevailing rules that the Court will not try facts anew and that findings of facts of quasi-judicial
bodies are accorded great respect, even finality.
(Golden Ace Builders vs Talde, GR# 187200 – 05/05/10)

2. Backwages

- (Jenny Agabon vs NLRC, GR# 158693 – 11/17/04)

- (Chronicles Securities Corp. vs NLRC, GR#

- (Phil. Journalist Inc. vs Mosqueda, GR#

- PROBATIONARY EMPLOYEES MAY ALSO BE AWARDED BACKWAGES IF THE REASON THEY WERE NOT
REGULARIZED WAS NOT JUSTIFIED

In this case, private respondent was hired as a probationary employee of petitioner, but he was not
regularized because of his alleged unsatisfactory performance. Under Art. 282 of the Labor Code, an
unsatisfactory rating can be a just cause for dismissal only if it amounts to gross and habitual neglect of
duties. Gross negligence has been defined to be the want or absence of even slight care or diligence as
to amount to a reckless disregard of the safety of person or property. It evinces a thoughtless disregard
of consequences without exerting any effort to avoid them. A careful perusal of the records of this case
does not show that private respondent Paras was grossly negligent of his duties.

The normal consequences of illegal dismissal are reinstatement without loss of seniority rights and the
payment of backwages computed from the time the employees compensation was withheld from him.
Since respondents dismissal from employment is illegal, he is entitled to reinstatement and t be paid
backwages from the time of his dismissal up to the time of his actual reinstatement.
(Mitsubishi Motors Phils. Corp. vs Chrysler Phils Labor Union, GR# 148738 – 06/29/04)

- (Sime Darby Pilipinas Inc. vs Arguilla, GR# 143542 – 06/08/06)

- IF REINSTATEMENT IS NOT POSSIBLE, BACKWAGES SHALL BE COMPUTED FROM THE DISMISSAL UP TO


THE DATE THE DECISION BECOMES FINAL

Clearly, the law intends the award of backwages and similar benefits to accumulate past the date of the
Labor Arbiter’s decision until the dismissed employee is actually reinstated. But if, as in this case,
reinstatement is no longer possible, this Court has consistently ruled that backwages shall be computed
from the time of illegal dismissal until the date the decision becomes final.

Separation pay, on the other hand, is equivalent to one month pay for every year of service, a fraction of
six months to be considered as one whole year. Here that would begin from January 31, 1994 when
petitioner Belen began his service. Technically the computation of his separation pay would end on the
day he was dismissed on August 20, 1999 when he supposedly ceased to render service and his wages
ended. But, since Belen was entitled to collect backwages until the judgment for illegal dismissal in his
favor became final, here on September 22, 2008, the computation of his separation pay should also end
on that date.

Further, since the monetary awards remained unpaid even after it became final on September 22, 2008
because of issues raised respecting the correct computation of such awards, it is but fair that
respondent Javellana be required to pay 12% interest per annum on those awards from September 22,
2008 until they are paid. The 12% interest is proper because the Court treats monetary claims in labor
cases the equivalent of a forbearance of credit. It matters not that the amounts of the claims were still
in question on September 22, 2008. What is decisive is that the order to pay the monetary awards had
long become final.
(Javellana, Jr. vs Belen, GR# 181913 – 03/05/10)

- THE ALTERNATIVE REMEDY TO REINSTATEMENT WITH BACKWAGES IS FULL SEPARATION PAY OF ONE
MONTH SALARY FOR EVERY YEAR OF SERVICE OR ONE MONTH SALARY WHICH EVER IS HIGHER

Abandonment as a just ground for dismissal thus requires clear, willful, deliberate, and unjustified
refusal of the employee to resume employment. Mere absence or failure to report for work, even after
notice to return, is not tantamount to abandonment.

Hence they are entitled to reinstatement with full backwages or in the alternative to full separation pay
of one month per year of service.
(Fe La Rosa vs Ambasador Hotel, GR# 177059 – 03/13/09)

DAMAGES

(Civil Code)
Title XVIII. - DAMAGES

CHAPTER 1
GENERAL PROVISIONS

Art. 2195. The provisions of this Title shall be respectively applicable to all obligations mentioned in Article
1157.

Art. 2196. The rules under this Title are without prejudice to special provisions on damages formulated
elsewhere in this Code. Compensation for workmen and other employees in case of death, injury or illness
is regulated by special laws. Rules governing damages laid down in other laws shall be observed insofar as
they are not in conflict with this Code.

Art. 2197. Damages may be:

(1) Actual or compensatory;


(2) Moral;

(3) Nominal;

(4) Temperate or moderate;

(5) Liquidated; or

(6) Exemplary or corrective.

Art. 2198. The principles of the general law on damages are hereby adopted insofar as they are not
inconsistent with this Code.

CHAPTER 2
ACTUAL OR COMPENSATORY DAMAGES

Art. 2199. Except as provided by law or by stipulation, one is entitled to an adequate compensation only
for such pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual
or compensatory damages.

Art. 2200. Indemnification for damages shall comprehend not only the value of the loss suffered, but also
that of the profits which the obligee failed to obtain. (1106)

Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is
liable shall be those that are the natural and probable consequences of the breach of the obligation, and
which the parties have foreseen or could have reasonably foreseen at the time the obligation was
constituted.

In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages
which may be reasonably attributed to the non-performance of the obligation. (1107a)

Art. 2202. In crimes and quasi-delicts, the defendant shall be liable for all damages which are the natural
and probable consequences of the act or omission complained of. It is not necessary that such damages
have been foreseen or could have reasonably been foreseen by the defendant.

Art. 2203. The party suffering loss or injury must exercise the diligence of a good father of a family to
minimize the damages resulting from the act or omission in question.

Art. 2204. In crimes, the damages to be adjudicated may be respectively increased or lessened according
to the aggravating or mitigating circumstances.

Art. 2205. Damages may be recovered:

(1) For loss or impairment of earning capacity in cases of temporary or permanent personal injury;

(2) For injury to the plaintiff's business standing or commercial credit.

Art. 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three
thousand pesos, even though there may have been mitigating circumstances. In addition:

(1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the
indemnity shall be paid to the heirs of the latter; such indemnity shall in every case be assessed and
awarded by the court, unless the deceased on account of permanent physical disability not caused by the
defendant, had no earning capacity at the time of his death;

(2) If the deceased was obliged to give support according to the provisions of Article 291, the recipient
who is not an heir called to the decedent's inheritance by the law of testate or intestate succession, may
demand support from the person causing the death, for a period not exceeding five years, the exact
duration to be fixed by the court;

(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand
moral damages for mental anguish by reason of the death of the deceased.
Art. 2207. If the plaintiff's property has been insured, and he has received indemnity from the insurance
company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance
company shall be subrogated to the rights of the insured against the wrongdoer or the person who has
violated the contract. If the amount paid by the insurance company does not fully cover the injury or loss,
the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury.

Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial
costs, cannot be recovered, except:

(1) When exemplary damages are awarded;

(2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to
incur expenses to protect his interest;

(3) In criminal cases of malicious prosecution against the plaintiff;

(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;

(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly
valid, just and demandable claim;

(6) In actions for legal support;

(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;

(8) In actions for indemnity under workmen's compensation and employer's liability laws;

(9) In a separate civil action to recover civil liability arising from a crime;

(10) When at least double judicial costs are awarded;

(11) In any other case where the court deems it just and equitable that attorney's fees and expenses of
litigation should be recovered.

In all cases, the attorney's fees and expenses of litigation must be reasonable.

Art. 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the
indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest
agreed upon, and in the absence of stipulation, the legal interest, which is six per cent per annum. (1108)

Art. 2210. Interest may, in the discretion of the court, be allowed upon damages awarded for breach of
contract.

Art. 2211. In crimes and quasi-delicts, interest as a part of the damages may, in a proper case, be
adjudicated in the discretion of the court.

Art. 2212. Interest due shall earn legal interest from the time it is judicially demanded, although the
obligation may be silent upon this point. (1109a)

Art. 2213. Interest cannot be recovered upon unliquidated claims or damages, except when the demand
can be established with reasonably certainty.

Art. 2214. In quasi-delicts, the contributory negligence of the plaintiff shall reduce the damages that he
may recover.

Art. 2215. In contracts, quasi-contracts, and quasi-delicts, the court may equitably mitigate the damages
under circumstances other than the case referred to in the preceding article, as in the following instances:

(1) That the plaintiff himself has contravened the terms of the contract;

(2) That the plaintiff has derived some benefit as a result of the contract;

(3) In cases where exemplary damages are to be awarded, that the defendant acted upon the advice of
counsel;
(4) That the loss would have resulted in any event;

(5) That since the filing of the action, the defendant has done his best to lessen the plaintiff's loss or
injury.

CHAPTER 3
OTHER KINDS OF DAMAGES

Art. 2216. No proof of pecuniary loss is necessary in order that moral, nominal, temperate, liquidated or
exemplary damages, may be adjudicated. The assessment of such damages, except liquidated ones, is left
to the discretion of the court, according to the circumstances of each case.

SECTION 1. - Moral Damages

Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of
pecuniary computation, moral damages may be recovered if they are the proximate result of the
defendant's wrongful act for omission.

Art. 2218. In the adjudication of moral damages, the sentimental value of property, real or personal, may
be considered.

Art. 2219. Moral damages may be recovered in the following and analogous cases:

(1) A criminal offense resulting in physical injuries;

(2) Quasi-delicts causing physical injuries;

(3) Seduction, abduction, rape, or other lascivious acts;

(4) Adultery or concubinage;

(5) Illegal or arbitrary detention or arrest;

(6) Illegal search;

(7) Libel, slander or any other form of defamation;

(8) Malicious prosecution;

(9) Acts mentioned in Article 309;

(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.

The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this article, may
also recover moral damages.

The spouse, descendants, ascendants, and brothers and sisters may bring the action mentioned in No. 9 of
this article, in the order named.

Art. 2220. Willful injury to property may be a legal ground for awarding moral damages if the court should
find that, under the circumstances, such damages are justly due. The same rule applies to breaches of
contract where the defendant acted fraudulently or in bad faith.

SECTION 2. - Nominal Damages

Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated
or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying
the plaintiff for any loss suffered by him.

Art. 2222. The court may award nominal damages in every obligation arising from any source enumerated
in Article 1157, or in every case where any property right has been invaded.
Art. 2223. The adjudication of nominal damages shall preclude further contest upon the right involved and
all accessory questions, as between the parties to the suit, or their respective heirs and assigns.

SECTION 3. - Temperate or Moderate Damages

Art. 2224. Temperate or moderate damages, which are more than nominal but less than compensatory
damages, may be recovered when the court finds that some pecuniary loss has been suffered but its
amount can not, from the nature of the case, be provided with certainty.

Art. 2225. Temperate damages must be reasonable under the circumstances.

SECTION 4. - Liquidated Damages

Art. 2226. Liquidated damages are those agreed upon by the parties to a contract, to be paid in case of
breach thereof.

Art. 2227. Liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced
if they are iniquitous or unconscionable.

Art. 2228. When the breach of the contract committed by the defendant is not the one contemplated by
the parties in agreeing upon the liquidated damages, the law shall determine the measure of damages,
and not the stipulation.

SECTION 5. - Exemplary or Corrective Damages

Art. 2229. Exemplary or corrective damages are imposed, by way of example or correction for the public
good, in addition to the moral, temperate, liquidated or compensatory damages.

Art. 2230. In criminal offenses, exemplary damages as a part of the civil liability may be imposed when the
crime was committed with one or more aggravating circumstances. Such damages are separate and
distinct from fines and shall be paid to the offended party.

Art. 2231. In quasi-delicts, exemplary damages may be granted if the defendant acted with gross
negligence.

Art. 2232. In contracts and quasi-contracts, the court may award exemplary damages if the defendant
acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.

Art. 2233. Exemplary damages cannot be recovered as a matter of right; the court will decide whether or
not they should be adjudicated.

Art. 2234. While the amount of the exemplary damages need not be proved, the plaintiff must show that
he is entitled to moral, temperate or compensatory damages before the court may consider the question
of whether or not exemplary damages should be awarded. In case liquidated damages have been agreed
upon, although no proof of loss is necessary in order that such liquidated damages may be recovered,
nevertheless, before the court may consider the question of granting exemplary in addition to the
liquidated damages, the plaintiff must show that he would be entitled to moral, temperate or
compensatory damages were it not for the stipulation for liquidated damages.

Art. 2235. A stipulation whereby exemplary damages are renounced in advance shall be null and void.

- (Colegio de San Juan vs Villas, GR#

- WHEN ARE MORAL AND EXEMPLARY DAMAGES ALLOWED TO BE RECOVERED/AWARDED

There is merit in petitioners submission that the award of moral and exemplary damages in her favor is
warranted by her unjustified dismissal. Award of moral and exemplary damages for an illegally dismissed
employee is proper where the employee had been harassed and arbitrarily terminated by the employer.
Moral damages may be awarded to compensate one for diverse injuries such as mental anguish,
besmirched reputation, wounded feelings, and social humiliation occasioned by the employers
unreasonable dismissal of the employee. This Court has consistently accorded the working class a right
to recover damages for unjust dismissals tainted with bad faith; where the motive of the employer in
dismissing the employee is far from noble. The award of such damages is based not on the Labor Code
but on Art. 220(???) of the Civil Code. However, under the attendant facts and circumstances, the Court
is of the sense that the amount of P120,000 awarded by the Labor Arbiter for moral and exemplary
damages is too much. P50,000 of moral damages and P10,000 of exemplary damages should suffice.

Moral damages are recoverable when the dismissal of an employee is attended by bad faith or fraud or
constitutes an act oppressive to labor, or is done in a manner contrary to good morals, good customs, or
public policy.
(Cruz vs NLRC, GR# 116384 – 02/07/00)

- SOURCE OF MORAL DAMAGES

Under these circumstances, the award of damages was proper. As a rule, moral damages are
recoverable when the dismissal of the employee was attended by bad faith or fraud or constituted an
act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy. We
believe that the dismissal of the respondents was attended with bad faith and meant to evade the
lawful obligations imposed upon an employer. To rule otherwise would lead to the anomaly of
respondents being terminated from employment in 1997 as a matter of fact, but without legal redress.
This runs counter to the notions of fair play, substantial justice and the constitutional mandate that
labor rights should be respected. 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 - the employer must affirmatively
show rationally adequate evidence that the dismissal was for justifiable cause. It is a time-honored rule
that in controversies between a laborer and his master, doubts reasonably arising from the evidence, or
in the interpretation of agreements and writing should be resolved in the formers favor. The policy is to
extend the doctrine to a greater number of employees who can avail of the benefits under the law,
which is in consonance with the avowed policy of the State to give maximum aid and protection of labor.

While it is true that other forms of damages under the Civil Code may be awarded to illegally dismissed
employees, any award of moral damages by the Labor Arbiter cannot be based on the Labor Code but
should be grounded on the Civil Code.
(Mayon & Hotel Restaurant, GR# 157634 – 05/16/05)

- (Phil. Employ Services & Resources Inc. vs Paramlo, GR# 144786 – 04/15/04)

- (Armando David vs Nat’l Fed. Of Labor Union, GR# 148263 & 148271-72 – 04/21/09)

- (Virgilio Sapio vs Undaloc Construction, GR# 155034 – 05/22/06)

- (Celebes Japan Foods Corp. vs Yermo, GR# 175855 – 10/02/09)

Nominal damages awarded was P50,000. This was a retrenchment case, but no notice was given.

- NOMINAL DAMAGES MAY BE AWARDED FOR DISMISSAL WITH VALID CAUSE BUT WITHOUT
COMPLIANCE OF PROCEDURAL DUE PROCESS (Agabon Doctrine)

The propriety of employee's dismissal is not affected by the lack of written notices. When the dismissal
is for just cause, the lack of due process does not render the dismissal ineffectual but merely gives rise
to the payment of P30,000 in nominal damages.
(Bernardo Jose, Jr. vs Michaelmar Phils. Inc. , GR# 169605 – 11/27/09)

- (Genesis Transport Services Inc. vs UMMGT, GR# 182114 – 04/05/10)

- PURPOSE OF THE NOMINAL DAMAGES BASED ON THE AGABON DOCTRINE


In an unlawful dismissal case, the employer has the burden of proving the lawful cause sustaining the
dismissal of the employee. The employer must affirmatively show rationally adequate evidence that the
dismissal was for a justifiable cause. The employee’s behavior constituted just cause. However, the
company cannot deny that it failed to observe due process.

The law requires that the employer must furnish the worker sought to be dismissed with two written
notices before termination of employment can be legally effected:

(1) notice which apprises the employee of the particular acts or omissions for which his dismissal is
sought; and
(2) the subsequent notice which informs the employee of the employer’s decision to dismiss him.

Violation of the employee’s right to statutory due process, even if the dismissal was for a just cause,
warrants the payment of indemnity in the form of nominal damages. This indemnity is not intended to
penalize the employer but to vindicate or recognize the employee’s right to statutory due process, which
was violated by the employer in the present case.

In this case, the amount of nominal damages was P120,000 because it was the company that offered
the amount.
(Hilton Heavy Equipment Corp. vs Ananias Dy, GR# 164860 – 02/02/10)

3. Separation Pay

- GENERALLY, IF THE DISMISSAL IF FOR A JUST/AUTHORIZED CAUSE, THERE IS NO SEPARATION PAY.


EXCEPT WHEN THE CAUSE FOR THE DISMISSAL DOES NOT REFLECT ON THE CHARACTER OF THE
EMPLOYEE - (Discerning Compassion Doctrine)

The rule embodied in the Labor Code is that a person dismissed for cause as defined therein is not
entitled to separation pay. The cases cited above constitute the exception, based upon considerations of
equity. Equity has been defined as justice outside law, being ethical rather than jural and belonging to
the sphere of morals than of law. It is grounded on the precepts of conscience and not on any sanction
of positive law. Hence, it cannot prevail against the expressed provision of the labor laws allowing
dismissal of employees for cause and without any provision for separation pay.

Strictly speaking, however, it is not correct to say that there is no express justification for the grant of
separation pay to lawfully dismissed employees other than the abstract consideration of equity. The
reason is that our Constitution is replete with positive commands for the promotion of social justice,
and particularly the protection of the rights of the workers. The enhancement of their welfare is one of
the primary concerns of the present charter. In fact, instead of confining itself to the general
commitment to the cause of labor in Article II on the Declaration of Principles of State Policies, the new
Constitution contains a separate article devoted to the promotion of social justice and human rights
with a separate sub-topic for labor. Article XIII expressly recognizes the vital role of labor, hand in hand
with management, in the advancement of the national economy and the welfare of the people in
general. The categorical mandates in the Constitution for the improvement of the lot of workers are
more than sufficient basis to justify the award of separation pay in proper cases even if the dismissal be
for cause.

Grant of separation pay to the dismissed employee is just where the separation was due to valid but
iniquitous causes as failure to comply with work standards. Grant of award is based on the social justice
policy even if separation is for cause.

Where the cause of separation is more serious than mere inefficiency, the award is not justified.

Henceforth, separation pay shall be allowed only in those instances where the employee is validly
dismissed for causes other than serious misconduct or those reflecting on his moral character. Where
the reason for the valid dismissal is habitual insubordination or an offense involving moral turpitude, the
employer may not be required to give the dismissed employee separation pay or financial assistance.

A contrary rule would have the effect of rewarding rather than punishing the erring employee for his
offense.
If found to be due under the circumstances of each case, the separation pay should be computed at the
rate of 1 month salary for every year of service.
(PLDT vs NLRC, GR# 80609 – 08/23/88)

- CONDITIONS FOR THE AWARD OF SEPARATION PAY EVEN THOUGH THE DISMISSAL IS VALID

An employee dismissed for any of the just causes enumerated under Art. 282 of the Labor Code is not,
as a rule, entitled to separation pay, though, as an exception, allowing the grant of separation pay or
some other financial assistance to an employee dismissed for just causes is based on equity.

Notwithstanding the valid dismissal, an employee’s lack of moral depravity could evoke compassion and
thereby compel an award of separation pay.

Separation pay may be awarded provided that the dismissal does not fall under either of the 2
circumstances:

1. There was serious misconduct


2. The dismissal reflected on the employees moral character

An employee’s employment of 25 years with only 1 other infraction that petitioner has failed to
elaborate on, supports the award of separation pay.
(PCI Bank vs Abad, GR# 158045 – 02/28/05)

- (Phil. Commercial Int’l Bank vs Abad, GR#

- (Diversified Sec. Inc. vs Alicia Bautista, GR#

- (Sagrasso Construction & Dev’t Corp. vs NLRC, GR#

4. Attorney’s Fees (Art. 111 Labor Code)

(Labor Code)
ART. 111. Attorney’s fees. - (a) In cases of unlawful withholding of wages, the culpable party may be
assessed attorney’s fees equivalent to ten percent of the amount of wages recovered.

(b) It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings
for the recovery of wages, attorney’s fees which exceed ten percent of the amount of wages recovered.

ART. 222. Appearances and Fees. - (a) Non-lawyers may appear before the Commission or any Labor
Arbiter only:

1. If they represent themselves; or 2. If they represent their organization or members thereof.

(b) No attorney’s fees, negotiation fees or similar charges of any kind arising from any collective bargaining
agreement shall be imposed on any individual member of the contracting union: Provided, However, that
attorney’s fees may be charged against union funds in an amount to be agreed upon by the parties. Any
contract, agreement or arrangement of any sort to the contrary shall be null and void. (As amended by
Presidential Decree No. 1691, May 1, 1980).

(Rule VIII, Book III, IRR)


SECTION 8. Attorney's fees. — Attorney's fees in any judicial or administrative proceedings for the
recovery of wages shall not exceed 10 percent of the amount awarded. The fees may be deducted from
the total amount due the winning party.
BB. PRESCRIPTIVE PERIOD

1. For Illegal Dismissal (Art. 1146 Civil Code) - 4 yrs from Cause of Action Accrued
2. Unfair Labor Practice - 1 yr from Cause of Action Accrued
3. Money Claims - 3 yrs from Cause of Action Accrued

- (Kar Asia Inc. vs Corona, GR#


- (Texon Mfg. vs Millena, GR#

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