LABOR LAWS OF THE PHILIPPINES

MINDANAO JURIS REVIEW CENTER

PRELIMINARY:
Situation: Supposed a Doctor (Caloy) who is single has a Secretary
(Karen). He pays the Secretary monthly compensation for doing the work of a
receptionist but the relationship deeloped and eentually they got married.
!ut een after marriage" the wife continued to be a Secretary of the Doctor
and continued receiing monthly salary which is deducted from the gross
earnings of the Doctor and to what e#tent is ta#able income. Howeer" the
Doctor$husband decides and wants his wife to stop working because they now
hae a child. Conse%uently" her employment has been seered.
Q1. (a) &hat is the employment status of 'uby before and after
marriage( (b) )s there employer$employee relationship between Dr. Caloy and
Karen( (c) Can Karen (the wife$secretary$employee) *le an action for illegal
dismissal because she claims security of tenure after haing been employed
for more than one (+) year" and for money claims (labor standards bene*ts)(
Q2. &ould your answer be the same if 'ene and 'uby lied as husband
and wife without the bene*t of alid marriage(
A. Before marriage , employer and employee e#ist and Karen is deemed
a regular employee- after marriage such relationship no longer subsists.
Hence" she has no cause of action against her husband$doctor.
.he principle of law is that if there is more fundamental relationship
between the parties" that is the relationship that preails (/amily and 0roperty
'elations between Husband and &ife- 'ights and 1bligations of Husband and
&ife" /amily Code of the 0hilippines). .hat is why we will *nd out in labor
standards (Book III, Title I) that 2 member of t!e famil" #e$e%#e%t o% t!e
em$lo"er for &$$ort are e'(l&#e# from t!e $ro)iio% of t!e labor ta%#ar#
la*.3 .his is because there may be accountabilities4conictions for its
iolations.
)t is ery di5cult to demarcate the relationship of the employee$wife$
'uby with the husband$'ene and secondly" it becomes a problem of
6urisdiction.
7nlike the regular courts" the labor tribunals are %uasi$6udicial bodies
with special4limited 6urisdiction. .hey do not hae general 6urisdiction.

7nder the factual milieu" there is no doubt that no employer$employee
relationship e#ists between 'ene and 'uby after marriage. !y law and
6urisprudence" there being a *nding that there e#ists no employer$employee
relationship between the parties" the issues of whether or not 'uby is entitled
to backwages" separation pay and other money claims" do not desere to be
passed upon. /or the 6urisdiction of the labor tribunal is primarily predicated
upon the e#istence of an employer$employee relationship between the
parties. Hence" the absence of such element remoes the controersy from its
scope of limited 6urisdiction.
+

1
891'89 8'1.:;H< 8=!H > C1. s. :7D89 )S<;<)" ?@A SC'; ?+B" ;ugust +C" +DDE- S;';
s. ;8;'';D1" +FB SC'; B?G.
0age ? of +CG H 'eiew <otes on Iabor Iaws
Q3. &hat is the importance of the e#istence of employer$employee
relationship(
A. !ecause the application of labor laws is predicated upon the
e#istence of such 2employer$employee3 relationship.
<o wonder many employers4businessmen deny the e#istence of
employer$employee relationship because they try to aoid legal obligations
related to labor standards" security of tenure" social security workmenJs
compensation and unioniKation.
What is labo!

$ )t may refer to the actiity" in which case it is serice or work- the
e#ertion of physical or mental eLort" or both to the production of goods and
serices.
$ )t may refer to the working class $ the sector which deries its lielihood
chieMy from rendition of work or serices in e#change for compensation.
$ )t may also refer to the labor force. .he group or portion of the
population which is employed or capable of being employed in productie work.
Nou will therefore include not only those already employed but also the
unemployed4under$employed.
$ )t also means that sector or group in a society" which deries its
lielihood chieMy from performance4rendition of work or serices in e#change for
compensation under managerial direction. (Ba#+)
$ Labo is further capable of being classi*ed as:
a) 1rganiKed: .hose who are members of a trade union- with C!;.
b) 7norganiKed: .hose who are not members of any trade unionH and
no C!;.
a) /ormal: .hose with a de*nite employer" there being an employer$
employee relationship-
b) )nformal: .hose persons engaging in work producing goods or
serices without any de*nite employer. .here is no employer$
employee relationship. /alling here would be the sidewalk
endors" pedicab tricycle driers" een scaengers (bote$
dyaryo).
What is Labo La"!
$ .he law goerning the rights and duties of employers and employees"
frst with respect to the terms and conditions of employment" and second"
with respect to the labor disputes arising from collectie bargaining
respecting such terms and conditions.
Labo la"s a# $%th# &i'i&#& i(to:
0age @ of +CG H 'eiew <otes on Iabor Iaws
1. Labo sta(&a&s la" , deals with the minimum re%uirement
prescribed by law" rules and regulations on wages" hours of work" cost of liing
allowance and other monetary and welfare bene*ts" including 1SHS. (Mater%it"
C!il#re%, -o$ital ). Se(retar" of /abor, 012 SCRA 345)6 or other minimum
terms" conditions and bene*ts that employers must proide their employees
which they are entitled as a matter of right.
2. Labo R#latio(s la" , de*nes the status" rights and obligations as
well as the institutional mechanism that goern the indiidual and collectie
interactions between employer" employees and their representaties. )t is also
a means by which terms and conditions aboe the minimum are *#ed (e.g.
C!;" ;rbitration).
NOTE: ;lthough the distinction between labor ta%#ar# and labor relatio% is
useful for academic purposes" they in reality oerlap. /or e#ample" the
7rie)a%(e ma(!i%er" is a labor relatio% matter but ery often the &b8e(t of
the complaint is labor ta%#ar# such as unpaid 1." S)I0" or a disciplinary
action.
3. So)ial l#*islatio( $ those laws that proide particular kinds of
protection or bene*ts to society (all members of society) or segments thereof
in furtherance of social 6ustice (A+&(e%a 5202)6 those that re%uires payment of
bene*ts by goernment agencies to the worker or his family when and while he
cannot work by reason of sickness" old age" death and similar haKards.
+. So)ial W#l$a# L#*islatio( $ coers bene*ts for contingencies oer
and aboe what the law re%uires of" employers" which state proides to worker
and4or his family. )t is distinguished from o(ial le7ilatio% in that *elfare
tat&te are predicated upon employer$employee relationship" whereas" the
other is not.
$ Labo la"s,l#*islatio( , directly ;Lects employment- designed to
meet the daily needs of workers- coers employment for pro*t or gain- aLects
the work of employee- bene*ts are paid by the workerJs employer. )n short it
refers only to employees.
1n the other hand" social legislation goerns the 9Lects of
employment (e.g. 9CC" sickness bene*ts)- inoles long range bene*ts (e.g.
retirement bene*ts" disability or death bene*ts- coers employment for pro*t
and %o%9$ro:t- aLects life of employee- bene*ts are paid by concerned
goernment agencies. (e.7. ;SIS, SSS, ECC, Me#i(are)
What is LABOR -ISP.TE / it includes any controersy or matter concerning
terms and conditions of employment or the association or representation of
persons in negotiating" *#ing" maintaining" changing or arranging the terms
and conditions of employment " regardless of whether the disputants stand in
the pro#imate relation of employer and employee. (Art. 505 <l=, /abor Co#e of
t!e >!ili$$i%e)
0IN-S OF LABOR -ISP.TES:
;. Iabor Standards Disputes $ pertains to (om$e%atio% (e.g. 70&"
stringent
0age E of +CG H 'eiew <otes on Iabor Iaws
output %uota" illegal deductions)
$ be%e:t (e.g. <0 Holiday 0ay" 1. or other
wage$
related bene*ts).
$ Worki%7 (o%#itio% (e.g. unrecti*ed work
haKards)
!. Iabor 'elations Disputes $ Or7a%i+atio%al Ri7!t Di$&te?U/> (e.g.
coercion"
'estraint or interference in unioniKation-
reprisal
1r discrimination due to union actiities-
company
7nionism- intra$union dispute.
$ Re$ree%tatio% Di$&te (e.g. certi*cation
election-
Determination of the S9!;- contest for
recognition by diLerent sets of union o5cers
of
same union.
$ Bar7ai%i%7 Di$&te (e.g. 'efusal to bargain
O7I0P-
bargaining in bad faith- bargaining deadlock-
economic strike or lockout.
$ Co%tra(t a#mi%itratio%?>ero%%el >oli("
Di$&te
(e.g. non$compliance with C!; proiso (7I0 if
gross
non$compliance of economic proisions-
disregard of
grieance machinery" etc.
$ Em$lo"me%t Te%&re Di$&te (e.g. non$
regulariKation
of employees- labor$only contracting- illegal
dismissal- non$issuance of employment
contract.
A. F.N-AMENTAL PRIN1IPLES

1. So%)#s o$ LABOR LAWS:
+. Constitution
?. Iegislation (/abor Co#e of t!e >!ili$$i%e6 Ci)il Co#e6 a%# ot!er
0age A of +CG H 'eiew <otes on Iabor Iaws
$e(ial la*)
@. Contract4C!;
E. Company 0olicy <C!i%a Ba%ki%7 Cor$. ). Borromeo, @@2 SCRA 355
(522@)=
A. Company 0ast 0ractices <DO/E >!il. ). >a*i %7 Makaba"a%7
Obrero, 4AB
SCRA 005 (5224)=
2. Basi) i*hts o$ Wo2#s as *%aa(t##& b3 th# 1o(stit%tio( (Art. CIII,
Se(. 4)
;. 7nder Iabor Standards:
+. 'ight to Security of .enure-
?. 'ight to Receie a liing wage-
@. 'ight to Share in the fruits of production- and
E. 'ight to work under Humane conditions.
!. 7nder Iabor 'elations:
+. 'ight to OrganiKe themseles-
?. 'ight to 1onduct collectie bargaining or negotiation with
management-
@. 'ight to Engage in peaceful concerted actiities including
strike- and
E. 'ight to Participate in policy and decision$making processes.
3. What is th# )o(stit%tio(al basis $o labo la"s!
Iabor laws are enacted under the police powers of the state. State
power to pass laws to promote the general welfare. .his may limit e#isting
rights.
Iikewise" under the social 6ustice proisions" the state shall guarantee the
rights of all workers to self$organiKation" collectie bargaining and negotiation"
peaceful conceited actiities" and right to strike according to law. .hey shall be
entitled to security of tenure" humane conditions of work and liing wage. .hey
shall participate in policy and decision making processes aLecting their rights
and bene*ts as may be proided by law. (Art. 04, Se(. 4) )t contemplates
e%uitable diLusion of wealth and political power (Natio%al Ser)i(e Cor$. ).
N/RC, No). 5A, 0ADD)
!ut this does not mean eery labor dispute should be decided pro$labor.
=anagement also has its own rights.
Oth# )o(stit%tio(al basis $o labo la"s:
$ 0rinciple of shared responsibility40rinciple of co$determination (Se(. 4,
Art. CIII)
$ 0referential use of olume modes of settling disputes" including
0age B of +CG H 'eiew <otes on Iabor Iaws
$ 'ight to 6ust share in fruits of production (management4to reasonable
return on inestments and to e#pansion and growth)
$ 'ight to form unions (Art. III, Se(. D)
$ 'ight to self$organiKation for goernment workers (Art. A9B, Se(. 50B)
$ 0romotion of full employment (Art. II, Se(. A)
$ ;5rmation of labor as a primary social economic force (Art. II, Se(.
0D)
$ <o inoluntary seritude (Art. III, Se(. 0D <5=)
$ 0referential use of /ilipino labor (Art. CII, Se(. 05)
$ /ull protection to labor4full employment (Art. CIII, Se(. 4)
$ 0rotection of working women (Art. CIII, Se(. 0@)
$ /amily liing wage and income$a right (Art. CVIII, Se(. 4)
R#lat#& La"s
A. 1i'il 1o&#:
+. ;rt +GCC , .he relations between capital and labor are not
merely contractual. .hey are so impressed with public interest that
labor contracts must yield to the common good. .herefore" such
contracts are sub6ect to the special laws on labor unions" collectie
bargaining" strikes and lockouts" closed shop" wages" working
conditions" hours of work and similar sub6ects.
?. ;rt. +GC+ , <either capital nor labor shall act oppressie against
the other" or impair the interest or conenience of the public.
(>ri%(i$le of No%9o$$reio%).
@. ;rt. +GC? , )n case of doubt" all labor legislations and all labor
contracts shall be construed in faor of safety and decent liing
for the laborers. (Correlate *it! art. @, /C>)
E. ;rt. +GC@ , <o contract which practically amounts to
inoluntary seritude under the guise whatsoeer shall be alid.
A. ;rt. +GCF , .he laborerJs wages shall not be sub6ect to
e#ecution or attachment" e#cept for debts incurred for food"
shelter" clothing and medical attendance.
B. ;rt. +GCD , .he employer shall neither seiKe nor retain any tool
or other articles belonging to the laborer.
G. ;rt. +G+C , Dismissal of laborers shall be sub6ect to the
superision of the goernment" under special laws.
B. R#'is#& 4#(al 1o&#:
+. ;rt ?FD , /ormation" maintenance and prohibition of
combination of capital or labor through iolence or threats. , .he
penalty of arreto ma"or and a *ne not e#ceeding 0@CC shall be
imposed upon any person who" for the purpose of organiKing"
maintaining or preenting coalitions of capital or labor" strike of
laborers or lock$out of employees" shall employee iolence or
threats in such a degree as to compel or force the laborers or
employers in the free and legal e#ercise of their industry or work"
if the act shall not constitute a more serious oLense in accordance
with the proisions of the '0C.
0age G of +CG H 'eiew <otes on Iabor Iaws
?. ;rt. @+A (E)(a) , /ailure of the employer to pay his
employees4laborer as re%uired by Section + of '; BC? (0
t
Mi%im&m Wa7e /a*, A$ril 3, 0AB0 a ame%#e# b" RA 3151 *!i(!
took eEe(t o% J&l" 0, 0ADA, a%# f&rt!er ame%#e# b" RA D0DD,
Do&ble I%#em%it" A(t of 0AAD), at least once eery two weeks
e#cept due to for(e ma8e&re shall be prima facie be considered a
2/raud3 committed by such employer against his
employees4laborers by means of false pretenses similar to those
mentioned in the said ;rt. of the 'eised 0enal Code and shall be
punished in the same manner as therein proided. (>eo$le ). Vera
Re"e, 31 >!il. 0D1)
NOTE:
9ery pay day gies an independent cause of action. (Abraal#o ).
CIA Maritima, /900A01, J&l" 50, 0ABA)
1. SPE1IAL LAWS:
+. SSS Iaw (RA 0030, a ame%#e# b" RA D5D5, Ma" 5@, 0AA1)
?. 8S)S Iaw ('; ++EB" as amended by '; F?D+" =ay @C" +DDG)
@. Iimited 0ortability Iaw of +DDE (RA 13AA)
E. <ational Health )nsurance ;ct of +DDA (RA 1D1B, a ame%#e# RA
A5@0)
A. 0aternity Ieae Iaw (RA D0D1)
B. =aternity Ieae (RA A. 1455, Mar(! 4, 0AA5)
G. Home =utual Deelopment /und Iaw (0ag)!)8) (RA 11@5, a
ame%#e# b" RA A31A of 522A F Ma%#ator" Co)era7e of OGW)
F. +@
th
=onth 0ay Iaw (0D FA+)
D. 'etirement 0ay Iaw (RA 13@0 a%# RA DBDD (U%#er7ro&%# Mi%e
Worker)
+C. =igrant &orkers ;ct (RA D2@5 a ame%#e# b" RA 02255)
++. ;nti$Se#ual Harassment Iaw (RA 1D11)
+?. =agna Carta for 0ublic Health &orkers of +DDA (RA 142B)
+@. ;ct ;llowing the 9mployment of <ight &orkers (RA 020B0, 50
J&%e 5200)
+E. ;nti$Child Iabor ;ct (RA 1302, Se(tio% 0@, a ame%#e# b" R. A.
No. A540, De(ember 0A, 5224).

+ O+P. What is th# 4ot#)tio(/to/labo )la%s# i( th# 1o(stit%tio(!
2.he State shall aLord full protection to labor" local and
oerseas" organiKed and unorganiKed" and promote full
employment and e%uality of employment opportunities for all. )t
shall guarantee the rights of all workers to self$organiKation"
collectie bargaining and negotiations" and peaceful concerted
actiities" including the right to strike in accordance with law. .hey
shall be entitled to security of tenure" humane conditions of work"
and a liing wage. .hey shall also participate in policy and
decision$making processes aLecting their rights and bene*ts as
may be proided by law.
2.he State shall promote the principle of shared responsibility
between workers and employers and the preferential use of
oluntary modes in settling disputes" including conciliation" and
0age F of +CG H 'eiew <otes on Iabor Iaws
shall enforce their mutual compliance therewith to foster
industrial peace.
2.he State shall regulate the relations between workers and
employers" recogniKing the right of labor to its 6ust share in the
fruits of production and the right of enterprises to reasonable
returns on inestments" and to e#pansion and growth.3 (Se(tio% 4
(/abor), Arti(le CIII <So(ial J&ti(e a%# -&ma% Ri7!t= of t!e 0AD1
Co%tit&tio%)
5. What a# th# basi) 4i()i4l#s #(%()iat#& i( th# Labo 1o&# o(
4ot#)tio( to labo!
a. .he State shall aLord 4ot#)tio( to labo6 4o7ot# $%ll
#74lo37#(t6 #(s%# #8%al "o2 o44ot%(iti#s #*a&l#ss o$ s#96
a)# o )##& a(& #*%lat# th# #latio(s b#t"##( "o2#s a(&
#74lo3#s. .he State shall assure the rights of workers to s#l$/
o*a(i:atio(6 )oll#)ti'# ba*ai(i(*6 s#)%it3 o$ t#(%#6 and 6ust and
humane conditions of work. (Art. 3, LCP). (Ra%i(e, et al., ). N/RC, et
al.,;.R. No. 3D0@1, J&%e 42, 0ADD.
b. Iabor contracts are not ordinary contracts as the relation between
capital and labor is impressed with public interest. (Art. 0122, NCC)
c. )n case of doubt" labor laws and rules shall be interpreted in faor of
labor. (Art.
, LCP)

$2.he settled rule is that in case of conMict between the
eidence presented by the employer and the worker" the scales
of 6ustice must be tilted in faor of worker consonant with the
Social :ustice adage hat 2those who hae in life should hae
more in laws.3
$ 2)t is a time$honored rule that in controersies between a
worker and his employer" &o%bts #aso(abl3 aisi(* $o7
th# #'i&#()#" or in the interpretation of agreements and writing
sho%l& b# #sol'#& i( th# "o2#;s $a'o.3 (>ra%7a% ). N/RC,
;.R. No. 053B5A, A$ril 0B, 0AAD, 5DA SCRA 0@5, 0@D90@A (ite# i% A(&%a
et al ). Co&rt of A$$eal H Joi% I%tIl. Cor$., ;.R. No. 0BAD45, Ma" B,
5223)
$ Iikewise" labor laws" particularly those granting rights and
bene*ts are of a mandatory character and cannot be waied by
contract.
)n one case" the union and management agreed in the C!; to
condone implementation of a wage order granting +? pesos wage
increases. .he SC said that this was oid. /irstly" it is only the wage
board which could approe an e#emption. Secondly" the parties in
a C!; may establish clauses they deem conenient proided they
are not contrary to law" morals" good customs" public order or
public policy. 1ne cannot apply the rule on compromise
agreements to such a proision in the C!;. Compromises are
0age D of +CG H 'eiew <otes on Iabor Iaws
means to end labor disputes and not against public policy. (Ma%ila
Ga!io% ). N/RC, ;R 001D1D, No). 04, 0AA3)
$ Construed in faor of labor IG T-ERE IS A DOUBT as to the
meaning of the legal and contractual proision. )f the proision is clear
and unambiguous" it must be applied in accordance with its e#press
terms. (MERA/CO ). N/RC, ;R No. 1D134, J&l" 05, 0ADA)
$ <ot all labor disputes should be resoled in faor of labor. .he
law also recogniKes that management has rights which are also
entitled to respect and enforcement of fair play. (St. /&keI Me#i(al
Ce%ter Em$lo"eeI Ao(iatio% ). N/RC, ;R No. 0352B4, Mar(! 1, 5221)
d. Li7its to th# Pot#)tio( A<o&#&:
0. .he protection of the rights of workers cannot 6ustify disregard of
releant facts in the construction of the te#t and applicable rules in
order to arrie at a disposition in faor of an employee. ( >A/, I%(.
). N/RC, 520 SCRA 3D1)
5. Courts cannot render decision on the basis of sympathy for the
workingman at the e#pense of the employer. (Calte' ). >/O, A5 >!il.
020@6 Ma%%i%7 I%ter%atio%al Cor$. ). N/RC, 0AB SCRA 0BB <0AA0=)
4. &here both parties hae iolated the law" neither party is entitled
to protection. (>MBUSCO Em$lo"ee U%io% ). CIR, 3D >!il. BA0)
@. 0rotection to labor is <1. a license to condone wrong. (>a(i:( Mill,
I%(. ). Alo%+o, 0AA SCRA 301)
e. Ma(a*#7#(t Ri*hts: .he employer has the right to:
+. Conduct business-
?. 0rescribe rules-
@. Select and Hire employees-
E. .ransfer or discharge employees- and
A. 'eturn of inestment and e#pansion of business.
$ 7nder the Do(tri%e of Ma%a7eme%t >rero7ati)e" eery employer
has the inherent right to regulate" according to his own discretion and
6udgment" all aspects of employment" including H)')<8" &1'K
;SS)8<=9<.S" &1'K)<8 =9.H1DS" .H9 .)=9" 0I;C9" and =;<<9' 1/
&1'K" &1'.K S709'Q)S)1<" .';<S/9' 1/ &1'K9'S" and D)SC)0I)<9"
D)S=)SS;I" and '9C;II 1/ 9=0I1N99S. (R&ral Ba%k of Ca%tilla% ).
J&l)e, ;R No. 03A1B2, Gebr&ar" 51, 5221).
$ !anage"ent prerogati#es" howeer" are sub6ect limitations by
(+) law- (?) contract or C!;- and (@) general principles of fair play and
6ustice (Me%#o+a ). R&ral Ba%k of /&(ba%, ;R No.0BB@50, J&l" 1, 522@)
=. A44li)abilit3 o$ Labo 1o&# (;rt. B" IC0) $ applies to all workers" whether
agricultural or non$agricultural" including employees in a goernment$
owned or controlled corporation incorporated under the Corporation Code.
E9)#4tio(s:
0age +C of +CG H 'eiew <otes on Iabor Iaws
+. 8oernment employees $ Ciil Serice laws" rules and regulations
goerns-
?. 9mployees of 81CC created by special or original charter. (J&(o
). N/RC, ;R No. AD0A1, A&7&t 0D, 0AA1)6
@. /oreign goernment instrumentalities. (:7S=;8$0hilippines . <I'C" 8'
No. 02DD04, De(ember 0B, 0AA@)6
E. )nternational ;gencies (/a(o ). UNRGNRE, ;R No. 02A2AB902A021,
Gebr&ar" 54, 0AAB)6
A. 9mployees of )ntergoernmental or international organiKations
(SEGDEC9AJD ). N/RC, ;R No. D3114, Gebr&ar" 0@, 0AA5)6
B. Corporate 15cers 4 )ntra$corporate disputes which fall under 0D DC?$
; and now under the 6urisdiction of the 'egular Courts pursuant to
Securities 'egulations Code O'; FGDDP. (Na($il ). IBC, ;R No. 0@@131,
Mar(! 50, 5225)-
G. Iocal &ater Districts (Ta%8a" Water Ditri(t ). ;abato%, ;R No. 341@5
a%# D@422, A$ril 01, 0ADA) 9RC90. where <I'C 6urisdiction is inoked.
(KCWD ). B&at. ;R No. 02@4DA, Ma" 51, 0AA@)6 and
F. =embers of the !1D" o5cers or employees of electric cooperaties.
(Gra%(i(o Sil)a a NEA A#mi%itrator ). /eo)i7il#o T. Matio%7, ;.R. No.
0B4D41, J&l" 50, 52026 SAME/CO II, et al ). Sel&#o, ;R No. 014D@2, A$ril
5B, 5205).
LO% t!e i&e of 8&ri#i(tio%, t$ere is e#identl% no
e"plo%"ent relations$ip bet&een t$e parties. Hence" the
instant controersy does not inole a labor dispute re%uiring the
e#pertise of the <ational Iabor 'elations Commission. .his case
inoles the e#ercise of the enforcement power of the <9; under
Section +C of 0D ?BD as amended.
?

NOTE: Pi'at# S)hool T#a)h#s > Suestions respecting a priate school
teacherJs entitlement to security of tenure are goerned by the
=anual of 'egulations for 0riate Schools and <1. the Iabor Code.
Howeer" the Iabor Code applies suppletorily. (Akla% (olle7e, I%(. ).
;&ari%o, ;R No. 0B5A@A, 52216 St. >a&l Colle7e ). A%(!eta, ;R No.
03AA2B, Se$t. 1, 5200)
B. PRE/EMPLOYMENT (!ook 1ne)
.he law on pre$employment is !ook ) (;rt. +?$E?) of the Iabor Code and
'; FCE?" the =igrant &orkers and 1erseas /ilipino &orkers ;ct of +DDA" as
amended by '; +CC??.
RE1R.ITMENT AN- PLA1EMENT OF WOR0ERS:
2
Section +C. E%for(eme%t >o*er a%# Reme#ie. )n the e#ercise of its
power of superision and control oer electric cooperaties and other borrower"
superised or controlled entities" the <9; is empowered to issue orders" rules and
regulations and mot& $ro$rio or upon petition of third parties" to conduct
inestigations" referenda and other similar actions in all matters aLecting said
electric cooperaties and other borrower" or superised or controlled entities.
# # # #

(e) Ta2# 4#'#(ti'# a(&,o &is)i4li(a3 7#as%#s i()l%&i(*
suspension and'or re"o#al and replace"ent o$ a(3 o all o$ th#
7#7b#s o$ th# Boa& o$ -i#)tos6 o?)#s o #74lo3##s o$ th#
1oo4#ati'#" other borrower institutions or superised or controlled entities
as the <9; !oard of ;dministrators may deem *t and necessary and to take
any other remedial measures as the law may proide.
0age ++ of +CG H 'eiew <otes on Iabor Iaws
1. What is #)%it7#(t a(& 4la)#7#(t!
$ any acts of canassing" enlisting" contracting" transporting" utiliKing"
hiring" or procuring workers and includes contract serices" referral" or
adertising" promising for employment locall% or abroad" whether for pro*t
or not" when undertaken by a non$licensee or non$holder of authority:
>ro)i#e#" that any such non$licensee or non$holder who" in any manner" oLers
or promises for a fee employment abroad to two or more persons shall be
deemed as engaged in such act.
NOTES:
+. (ecruit"ent includes the act of re)erral or the the act of passing along or
forwarding of an applicant for employment after an initial interiews for employment
to a selected employer" placement o5cer or bureau. (>eo$le ). Sale", 5A0 SCRA 10B,
0AAD6 >eo$le ). ;o(e, A&7. 5A, 0AAB)
?. .he number of persons dealt with is not an essential ingredient4element of
the act of recruitment and placement of workers. )t is not necessary that one promise
employment to ? or more for a fee for there to be recruitment and placement. .he
proiso merely creates a presumption. (>eo$le ). >a%i, ;R No. /9BD31@911, J&l" 00,
0AD3)
2. What is a Pi'at# R#)%it7#(t A*#()3!
$ any person or association engaged in the recruitment and placement of
workers" locall% or o#erseas, without charging" directly or indirectly"
any fee from the workers or employers.
3. What is a li)#(s# a(& a%thoit3!
License $ a document issued by D1I9 authoriKing a person or entity
to operate a priate employment agency.
Aut$orit% / a document issued by D1I9 authoriKing a person or
association to engage in recruitment and placement actiities as a
priate recruitment agency.
+. What is th# #l#'a(t la" o( #)%it7#(t $o o'#s#as
#74lo37#(t!
=igrant &orkers and 1erseas /ilipinos ;ct of +DDA (R. A. No. D2@5 a
ame%#e# b" RA 02255, Ma" D, 5202).
(See 0ower0oint presentation for more e#tensie discussion of this
topic)
5. What is o'#s#as #74lo37#(t!
$ employment of a worker outside the 0hilippines coered by a alid
contract. (>OEA R&le a%# Re7&latio% ;o)er%i%7 t!e Re(r&itme%t a%#
Em$lo"me%t of /a%#9Bae# O)erea Worker, Geb @, 5225)
NOTES:
0age +? of +CG H 'eiew <otes on Iabor Iaws
+. O'#s#as Fili4i(o Wo2# @OFWA , refers to a person (/ilipino) who is
to be engaged" is engaged" or has been engaged in a remunerated
actiity ins State of which he or she is not a citiKen or on board a essel
naigating the foreign seas other than a goernment ship used for
military or non$commercial purposes or on an installation located
oLshore or on the high seas- to be used interchangeably with migrant
worker. (Se(. 5, RA 02255)
=. 1lassiB)atio( o$ OFWs:
+. Sea9bae# ? Seama% $ those employed in a essel engaged in maritime
naigation.
Seama% $ any person employed in a essel engaged in maritime
naigation.
?. /a%#9bae# * contract workers other than a seaman including workers
engaged in oLshore actiities whose occupation re%uires that ma6ority
of his working or gainful hours are spent on land.
C. A*#()i#s Di'#( th# -%t3 to Po7ot# th# W#l$a# a(& Ri*hts o$
OFW
+. Department of /oreign ;Lairs (D/;)-
?. D1I9
@. 019;
E. 1&&; $ proides social and welfare serices including insurance
coerage" legal assistance" placement assistance" and remittances
serices to 1/&- under '; FCE?" it shall proide the /ilipino migrant
worker and his family assistance in the enforcement of contractual
obligations by agencies" entities and4or their principals
A. 'e$0lacement and =onitoring Center ('0=) , deelops lielihood
programs for the returning migrant workers to reintegrate the returning
migrant workers to the 0hilippine society- and
B. NL(C $ tasked with the settlement or ad6udication of labor disputes.
NOTE:
+. POEA $ has taken oer the functions of the 1erseas 9mployment
Deelopment !oard (19D!) and <ational Seaman !oard (<S!).
E. Pi()i4al F%()tio(s o$ POEA:
a. /ormulation" implementation" and monitoring of oerseas
employment of /ilipino workers-
b. 0rotection of their right to fair and e%uitable employment practices-
and
c. Deployment of /ilipino workers through goernment hiring.
F. R#*%lato3 F%()tio(s (RA A@55) 9 .he POEA shall:
+. (egulate priate sector participation in the recruitment and
oerseas placement of workers through its licensing and registration
system-
?. +or"ulate and implement in coordination with appropriate entities
concerned" when necessary" a system for promoting and monitoring
the oerseas employment of /ilipino workers taking into consideration
0age +@ of +CG H 'eiew <otes on Iabor Iaws
their welfare and the domestic manpower re%uirements-
@. ,n)or" migrant workers their rights as workers and as human being-
E. ,nstruct and guide the workers how to assert their rights and proide
the aailable mechanism to redress iolation of their rights-
B. -eplo% trained and competent /ilipino workers to foreign
goernments and instrumentalities and such other employers as
public interest may re%uire" only to countries:
a. where the 0hilippines has concluded Bilateral labor
agreements or arrangements-
b. Obsering and4or complying with the international laws
and standards for migrant workers-
c. Duaranteeing to protect the rights of /ilipino migrant
workers.

1G. A&H%&i)ato3 F%()tio(s o$ POEA.
+. A#mi%itrati)e (ae inoling iolations of licensing rules and
regulations and registration of recruitment and employment
agencies-
?. Di(i$li%ar" a(tio% (ae and other special cases which are
administratie in character" inoling employers" principals"
contracting partners and /ilipino migrant workers.
11. -is)i4li(a3 A)tio( 1as#s (R&le VII, Book VII of >OE R&le) , .rounds
for disciplinary action under '; FCE?:
+. 0rostitution-
?. U%8&t Ref&al to #e$art for the worksite-
@. ;&%9r&%%i%7 or possession of deadly weapons-
E. Va%#alim or destroying company property-
A. Violatio% of t!e la* a%# a(re# $ra(ti(e of t!e !ot (o&%tr" and
&%8&ti:e# brea(! of em$lo"me%t (o%tra(t-
B. Embe++leme%t of f&%# of the company or fello* *orker e%tr&te# for
#eli)er" to relaties in the 0hilippines-
G. Creati%7 tro&ble at the worksite or in the essel-
F. 8ambling-
D. I%itiati%7 or 8oi%i%7 a trike or work stoppage where the laws of the host
country prohibit strikes or similar actions-
+C. Commiio% of Gelo%" punishable by 0hilippine laws or by the host
country-
++. .heft or 'obbery-
+?. Drunkenness
+@. Drug addiction or possession or tra5cking of prohibited drugs- and
+E. Desertion or abandonment.
12. Whi)h has H%is&i)tio( o'# &is)i4li(a3 a)tio( )as#s o$ OFWs!
.he POEA retains 6urisdiction oer disciplinary action cases. (Eater%
Me#iterra%ea% Maritime /t#. H A;EMAR Ma%%i%7 A7e%(", I%(. ). Eta%ilao
S&rio, et al., ;.R. No. 0B@504, August /3, /01/)
;lthough 'epublic ;ct <o. FCE?" through its Section +C" transferred
the original and e#clusie 6urisdiction to hear and decide mo%e" (laim
inoling oerseas /ilipino workers from the 019; to the Iabor ;rbiters"
the law did not remoe from the 019; the original and e#clusie
6urisdiction to hear and decide all disciplinary action cases and other
0age +E of +CG H 'eiew <otes on Iabor Iaws
special cases administratie in character inoling such workers. .he
obious intent of 'epublic ;ct <o. FCE? was to hae the 019;
focus its eLorts in resoling all administratie Decision matters aLecting
and inoling such workers. .his intent was een e#pressly recogniKed in
the Om%ib& R&le a%# Re7&latio% Im$leme%ti%7 t!e Mi7ra%t Worker
a%# O)erea Gili$i%o A(t of 0AAB promulgated on /ebruary ?D" +DDB"
iK:
Section ?F. J&ri#i(tio% of t!e >OEA. , .he 019; shall
e#ercise original and e#clusie 6urisdiction to hear and decide:
(a) all cases" which are administratie in character"
inoling or arising out of iolations or rules and regulations
relating to licensing and registration of recruitment and
employment agencies or entities- and
@bA &is)i4li(a3 a)tio( )as#s a(& oth# s4#)ial
)as#s6 "hi)h a# a&7i(istati'# i( )haa)t#6 i('ol'i(*
#74lo3#s6 4i()i4als6 )o(ta)ti(* 4at(#s a(& Fili4i(o
7i*a(t "o2#s.
Section ?D. Ve%&e , .he cases mentioned in Section ?F(a)
of this 'ule" may be *led with the 019; ;d6udication 15ce or
the D1I94019; regional o5ce of the place where the
complainant applied or was recruited" at the option of the
complainant. .he o5ce with which the complaint was *rst
*led shall take cogniKance of the case.
Disciplinary action cases and other special cases" as
mentioned in the preceding Section" shall be *led with the
019; ;d6udication 15ce.
)t is clear" therefore" that the <I'C had no appellate 6urisdiction to
reiew the decision of the 019; in disciplinary cases inoling oerseas
contract workers.3
13. What a# th# #(titi#s a%thoi:#& to #(*a*# i( #)%it7#(t a(&
4la)#7#(t!
a. 0ublic 9mployment 15ces (>ESO A(t of 0AAA9 RA D1BA)6
b. 0hilippine 1erseas 9mployment ;dministration (019;)-
c. priate recruitment entities-
d. priate employment agencies-
e. shipping or manning agents or representaties-
f. such other persons or entities as may be authoriKed by the Secretary of
Iabor and 9mployment- and
g. construction contractors" if authoriKed by D1I9 (DO 0A, .0AA4).
h. members of the diplomatic corps (but hiring must also go through the
019;)
i. <ame hirees (ee Note &%#er Art. 0D for it #e:%itio%6 ame a #ire(t9!ire)
1+. -is8%aliB#& $o7 R#)%it7#(t a(& Pla)#7#(t o$ Wo2#s $o
O'#s#as E74lo37#(t "h#th# $o 4oBt o (ot:
+. .rael agencies and sales agencies of airline companies (Art. 53, /C>)6
0age +A of +CG H 'eiew <otes on Iabor Iaws
?. 15cers and members of the !oard of any corporation or members in a
partnership engaged in the business of a trael agency-
@. Corporations and partnerships when any of its o5cers" members of the
board or partners" is also an o5cer" member or partner of a corporation
or partnership engaged in the business of a trael agency (i%terlo(ki%7
oM(er)6
E. 0ersons" partnerships or corporations which hae derogatory records"
such as but not limited to:
a. .hose certi*ed to hae derogatory record or information by the <!) or
by the ;nti$illegal 'ecruitment !ranch of the 019;-
b. .hose against whom probable cause or $rima fa(ie *nding of guilt for
illegal recruitment or other related cases e#ists-
(. .hose conicted for illegal recruitment or other related cases and4or
crimes inoling moral turpitude-
#. .hose agencies whose licenses hae been preiously cancelled or
reoked by 019; for iolation of '; FCE?" 0D EE? as amended and their
implementing rules and regulations as well as the Iabor CodeJs
)mplementing 'ules and 'egulations-
e. 15cials and employees of the D1I9 or other goernment agencies
directly inoled in oerseas employment program and their relaties
within the E
th
ciil degree by consanguinity or a5nity- and
f. .hose whose license hae been preiously cancelled or reoked (Se(. 5,
R&le I, 5225 R&le a%# Re7&latio% o% t!e Re(r&itme%t a%# Em$lo"me%t
of /a%#9Bae# Worker)
15. Is &i#)t/hii(* o$ OFWs allo"#&! Wh3!
9mployers cannot directly hire workers for oerseas employment
e2cept through authoriKed entities (ee e%&meratio% abo)e). Art. 0D, /C>
E9)#4tio(: Direct$hiring by:
0. =embers of the -iplomatic corps-
5. International organiKations-
4. 1ther employers as may be allowed by the Sec. of Iabor- and
@. Name Hirees , indiidual workers who are able to secure
contracts for oerseas employment on their own eLorts and
representations without the assistance or participation of any
agency. .heir hiring" nonetheless" shall pass through the 019;
for processing purposes. (>art III, R&le III of >OEA R&le ;o)er%i%7
O)erea Em$lo"me%t, a ame%#e# i% 5225)
NoteN A%" %o%9rei#e%t forei7% (or$oratio% #ire(tl" !iri%7 Gili$i%o
*orker i #oi%7 b&i%e i% t!e >!ili$$i%e a%# ma" be &e# i%
t!e >!ili$$i%e.
.he reason for the ban:
$ to ensure full regulation of employment in order to aoid e#ploitation-
$ to assure the best possible terms and conditions of work to the
employee- and $ to assure the foreign employer that he hires only
%uali*ed /ilipino workers.

1=. Ma(&ato3 #7itta()# o$ Fo#i*( E9)ha(*# Ea(i(*s. (Art. 55)

$ ;ll 1/&s are re%uired to remit a portion of their foreign e#change
0age +B of +CG H 'eiew <otes on Iabor Iaws
earnings ranging from ACT to FCT depending on the workerJs kind of 6ob to
their families. (R&le VIII, Book III, >OEA R&le)

a) Seaman or mariners $ FCT
b) &orkers for /ilipino Contractors4Construction Co. $ GCT
c) 0rofessionals" 9mployment Contract proide freelodging $ GCT
d) 0rofessionals without !oard > Iodging $ ACT
e) Domestic4other Serice workers $ ACT
E9)#4t:
+. /ilipino sericemen working in 7DS military installation-
?. )mmediate family members" dependents or bene*ciaries" 'esiding with 1/&
abroad-
@. )mmigrants and /ilipino 0rofessionals4employees working with 7< agencies
or
specialiKed bodies (Reol&tio% 09D4, I%ter9A7e%(" Committee 9
Im$leme%ti%7 EO DB1)
EFFE1TS o$ Fail%# to R#7it:
1. 3or4ers who fail to comply with mandatory remittance re%uirement shall
be &$e%#e# or e'(l&#e# from the lit of eli7ible *orker for o)erea
em$lo"me%t. Subse%uent iolations shall warrant his repatriation-
/. E"plo%ers who fail to complay shall be e#cluded from the oerseas
employment program. 0riate employment agencies or entities shall face
cancellation or reocation of their licenses or authority to recruit" without
pre6udice to other liabilities under e#isting laws and regulations. (Se(. A, EO
DB1, De(ember 04, 0AD5)
1C. POEA has th# 4o"# to:
0. Suspend or cancel license- and
5. 1rder the refund or reimbursement of such illegally collected fees.
(Eater% A&ra%(e a%# S&ret" Cor$. ). Se(. of /abor, ;R No. 1A@439
B2, Ja%&ar" 01, 0AA2)

DRO.N-S $o s%s4#(sio( , 1a()#latio( o$ Li)#(s#:
+. .he acts prohibited under ;rt. @E-
?. Charging a fee in e#cess of the authoriKed amount-
@. Doing recruitment in places outside its authoriKed area-
E. Deploying workers without processing through the 019;- and
5. 0ublishing 6ob announcements without the 019;Js prior approal
(Se(. @, R&le II, Book IV, >OEA R&le)

I%is&i)tio( / .he D1I9 Secretary (Art. 4B, /C>) and the 019;
;dministrator (Se(. 0 R&le II, Book VI, Ne* R&le o%
O)erea Em$lo"me%t) hae C1<C7''9<. 6urisdiction to
suspend or cancel a license (Tra% O)erea Cor$. ). Se(. of
/abor, ;R No. 02ABD4, Se$tember B, 0AA1)
1E. O.TSI-E OF POEA I%is&i)tio(
0age +G of +CG H 'eiew <otes on Iabor Iaws
+. Gorei7% 8&#7me%t , 019; no authority to hear and decide a claim for
enforcement of a foreign 6udgment. Scuh claim must be *eld before
regular courts (>a(i:( Aia O)erea S!i$$i%7 Cor$. ). N/RC, ;R
13BAB, 3 Ma" 0ADD)-
?. Tort , fall under the proisions of Ciil Code.
1F. EJAMPLE OF INKALI- ADREEMENTS
+. Signing satisfaction receipts is not a waier. ;ny agreement to
receie less compensation than what the worker is entitled to recoer
is inalid. (MR Oar# Cre* U%io% ). >NR, ;R /9 44350, 53 J&l" 0A13)
?. ;ltering agreement that diminishes the workerJs pay and bene*ts as
contained in a 019;$approed contract is oid" 7<I9SS" such
subse%uent agreement is approed by 019;. (C!a)e+ ). Bo%to9>ere+,
;R No. 02AD2D, 20 Mar(! 0AAB)6
@. ; i#e a7reeme%t that authoriKes the employer to deduct the 7SU?AC
commission of the 1C&Js manager is oid" being against public
policy" 7<I9SS" approed by the 019; (C!a)e+ ). Bo%to9>er+, &$ra)
2G. Mi(i7%7,Sta(&a& 1o(&itio(s o$ O'#s#as E74lo37#(t 1o(ta)t
+. 8uaranteed wages for regular working hours and oertime pay-
?. /ree transportation from point of hire to site of employment and
return-
@. /ree de%uate board and lodging facilities or compensatory food
allowance-
E. /ree emergency medical and dental treatment facilities-
A. :ust causes for termination of the serices of 1/&-
B. &orkmenJs compensation bene*ts and war haKard protection-
G. /ree repatriation of workerJs remains and properties in case of death-
and
F. ;ssistance on remittance of workerJs salaries and allowances.
21. So7# SALIENT FEAT.RES o$ RA 1GG226 ame%#i%7 Se(tio% 02, RA
D2@5:
+. ;ny compromise4amicable settlement or oluntary agreement to be
paid4implement within @C days from approal Opreiously E monthsP (Se(.
1)-
?. ;utomatic dis%uali*cation of foreign employer4principal from participating in
the 019; 0rogram and recruiting4hiring /ilipino workers" in case of *nal and
e#ecutory 6udgment" until and unless it fully satis*es the 6udgment award-
ibi#
@. 0erformance bond *led recruitment4placement agency shall be answerable
for all money claims or damages- ibi#
E. Compulsory insurance coerage for ;gency$hired &orkers at no cost to the
worker deployed- alid4eLectie for the duration of the 19C- (Se(. 419A)
22. What is ILLEDAL RE1R.ITMENT @IRA!
0age +F of +CG H 'eiew <otes on Iabor Iaws
)llegal recruitment under ;rticle @F applies to both local and oerseas
employment. ,llegal recruit"ent may be committed by any person whether
licensees or non$licensees or holders or non$holders of authority.
$ ,( is any act of canassing" enlisting" contracting" transporting"
utiliKing" hiring" or procuring workers and includes contract serices" referral"
or adertising" promising for employment abroad" whether for pro*t or not"
when undertaken by a non$licensee or non$holder of authority: >ro)i#e#" that
any such non$licensee or non$holder who" in any manner" oLers or promises
for a fee employment abroad to two or more persons shall be deemed as
engaged in such act. ;lso includes the act of reprocessing workers through a
6ob order that pertains to none#istent work" work diLerent fromt eh actual
oerseas work or work with a diLerent employer" whether registered or not
with the 019;. (Se(. B, $ara7ra$! ( a ame%#e# b" RA 02255)
)t shall likewise include the commission of the following prohibited acts
whether committed by a non$licensee or non$holder of authority or a license
or holder of authority (Se(. 3, RA D2@5)N
+. .hose prohibited practices enumerated under ;rt. @E-
?. /ailure to actually deploy without alid reason as determined by
D1I9-
@. /ailure to reimburse e#penses 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
workerJs fault- and
E. 'ecruitment and placement actiities of agents or representaties
appointed by a licensee" *!oe a$$oi%tme%t *ere %ot $re)io&l"
a&t!ori+e# by the 019; shall likewise constitute IR.
NOTE:
(e)erral $ the act of passing along or forwarding of an applicant for
employment for initial interiews. (>eo$le ). ;o(e, A&7. 5A, 0AAB)
23. ELEMENTS o$ ill#*al #)%it7#(t:
a. Fist #l#7#(t: R#)%it7#(t a(& 4la)#7#(t a)ti'iti#s.
.he oLender undertakes either any recruitment actiities de*ned
under ;rt. +@ (b) or any prohibited practices enumerated under ;rt.
@E- and

b. S#)o(& #l#7#(t: No(/li)#(s## o (o(/hol&# o$ a%thoit3.
.he oLender is a licensee4non$licensee or holder4non$holder of
authority engaged in the recruitment and placement of workers.
(>eo$le ). Sa#ioa, ;R No. 0212D@, Ma" 0B, 0AAD)
Non*licensee or non*$older o) aut$orit% $ means any person"
corporation or entity which has not been issued a alid license or authority to engage
in recruitment and placement by the Secretary of Iabor and 9mployment" or whose
license or authority has been suspended" reoked or canceled by the 019; or the
Secretary of Iabor and 9mployment.
So7# #l#'a(t 4i()i4l#s:
0age +D of +CG H 'eiew <otes on Iabor Iaws
$ =ere impression that recruiter is capable of proiding work abroad is
su5cient.
$ V'eferralV of recruits also constitutes recruitment actiity.
$ ;bsence of receipt to proe payment is not essential to proe
recruitment.
$ 1nly one (+) person recruited is su5cient to constitute recruitment.
$ <on$prosecution of another suspect is not material.
$ person conicted for illegal recruitment may still be conicted for
estafa.
Si74l# ill#*al #)%it7#(t , is committed where a person: (a)
undertakes any recruitment actiity de*ned under under ;rt. +@ (b) or any
prohibited practices enumerated under ;rt. @E and ;rt. @F of the Iabor Code-
and (b) does not hae a license or authority to lawfully engage in the
recruitment and placement of workers
Ill#*al #)%it7#(t i( La*# S)al# > re%uires a t!ir# eleme%t" i.e."
oLense is committed against three or more persons indiidually or as a group.
2+. Wh#( is ill#*al #)%it7#(t )o(si&##& #)o(o7i) sabota*#!
,llegal recruit"ent is considered economic sabotage $ when the
commission thereof is attended by the %ualifying circumstances as follows:
a. B3 a s3(&i)at# $ if carried out by a group of @ or more persons
conspiring and confederating with one another-
b. I( la*# s)al# $ if committed against @ or more persons indiidually
or as a group.
25. ILLEDAL RE1R.ITMENT 's. ESTAFA:
$ ; person may be charged and conicted for both illegal recruitment
and estafa. )llegal recruitment is mal&m $ro!ibit&m whereas 9stafa is mal&m
i% e F meaning that the criminal intent of the accused is not necessary for
coniction in the former but is re%uired in the latter.
A)t )o(stit%ti(* Esta$a > .he accused represented themseles to
complainants to hae the capacity to send workers abroad" although they did
not hae any authority or license. )t is by this representation that they
induced complainants to pay a placement fee. Such act constitutes estafa
under ;rt. @+A" par. ? of the 'eised 0enal Code. (>eo$le ). -er%a%#e+, ;R
No. 0@0550943, mar(! 1, 5225)
2=. MONEY 1LAIMS o$ OFWs.
a. OFWs a# NOT ENTITLE- to th# #li#$s %(&# Ati)l# 2CF.
.he proper basis for the monetary awards of the oerseas /ilipino
workers (1/&s) is Section +C of '. ;. <o. FCE? and not ;rticle ?GD of the
Iabor Code. Conse%uently" the remedies proided for under ;rticle ?GD such
as reinstatement" or separation pay in lieu of reinstatement or full backwages"
are not aailable to 1/&s. .his is so because the 1/&s are contractual
0age ?C of +CG H 'eiew <otes on Iabor Iaws
employees whose rights and obligations are goerned primarily by the 'ules
and 'egulations of the 019; and" more importantly" by '. ;. <o. FCE?. (;&9
Miro ). A#orable, ;. R. No. 032AB5, A&7. 52, 522@).
;s early as the +DDA case of Co%oca #s. NL(C, <;.R. No. 0043BD,
!arc$ 31, 1556, /3 SC(A 150=" the Supreme Court had already declared
that a seafarer" not being a regular employee" is not entitled to separation or
termination pay. (See Ra)a7o ). Eo Eater% Mari%e, /t#., ;. R. No. 0BD45@,
Mar(! 0@, 522B).
Section +C of 'epublic ;ct <o. FCE? (=igrant &orkers and 1erseas
/ilipinos ;ct of +DDA) proides:
2)n case of termination of oerseas employment without 6ust" alid
or authoriKed cause as de*ned by law or contract" the worker shall be
entitled to the full reimbursement of his placement fee with interest at
twele percent (+?T) per annum" 4l%s his salai#s $o th#
%(#94i#& 4otio( o$ his #74lo37#(t )o(ta)t or $o th## @3A
7o(ths $o #'#3 3#a o$ th# %(#94i#& t#76 "hi)h#'# is
l#ss.L (7nderscoring supplied)
b. OFW;s 7o(#ta3 a"a&s i()l%&# #i7b%s#7#(t o$ 4la)#7#(t
$##.
)n >!il. Em$lo" Ser)i(e a%# Reo&r(e, I%(. ). >aramio" O8. '. <o.
+EEGFB" ;pril +A" ?CCEP" the Supreme Court" in addition to the monetary
award" had granted full reimbursement of the placement fee with +?T
interest per annum.
7nder Section +A of '. ;. <o. FCE?" the repatriation of the worker and
the transport of his personal belongings are the primary responsibilities of
the agency which recruited or deployed the oerseas contract worker. ;ll the
costs attendant thereto should be borne by the agency concerned and4or its
principal. (At!e%%a I%ter%atio%al Ma%$o*er Ser)i(e, I%(. ). Villa%o, ;. R.
No. 0B0424, A$ril 0B, 522B).
2C. Mo(#ta3 a"a&s to ill#*all3 &is7iss#& OFWs6 ho" #)2o(#&.

)n A%to%io Serra%o ). ;alla%t Maritime, et al., ;.R. No. 03130@, 5@
Mar(! 522A, AF? SC'; ?AE $ the SC declared unconstitutional the clause
7or )or t$ree "ont$s )or e#er% %ear o) t$e une2pired ter",
&$ic$e#er is less8 proided in A
th
paragraph Sec. +C of '; FCE?" for
being iolatie of the rights of the 1/& to 29%ual 0rotection Clause3 of Sec.
@" ;rt. R))) of the +DG Constitution" thus:
20etitioner is #(titl#& to his salai#s $o th# #(ti# %(#94i#&
4#io& o$ (i(# 7o(ths a(& 23 &a3s o$ his #74lo37#(t )o(ta)t"
pursuant to law and 6urisprudence prior to the enactment of '.;. <o. FCE?.3
2E. Th# sa7# &is8%isitio( a44li#& i( th# s%bs#8%#(t )as#s:
+. )n Cla&#io Oa$ ). T!e%amari S!i$ Ma%a7me%t" 8' <o. +GDA@?" =ay
@C" ?C++ $ the SC held that this case should not be diLerent from Serra%o,
thus:
0age ?+ of +CG H 'eiew <otes on Iabor Iaws
7A a 7e%eral r&le, an unconstitutional act is not a la&- it
confers no rights- it imposes no duties- it aLords no protection- it creates
no o5ce- it is inoperati#e as i) it $as not been passed at all. .he
general rule is supported by ;rticle G of the Ciil Code" which proides:
;rt. G. Iaws are repealed only by subse%uent ones"
and their iolation or non$obserance shall not be e#cused
by disuse or custom or practice to the contrary.
2.he doctrine o) operati#e )act ser#es as an e2ception to
t$e a)ore"entioned general rule. )n >la%ter >ro#&(t, I%(. ).
Gerti$!il Cor$oratio%"
@O?DP
we held:
.he doctrine o) operati#e )act" as an e#ception to
the general rule" only applies as a matter of e%uity and fair
play. It (%lliB#s th# #<#)ts o$ a( %()o(stit%tio(al la"
b3 #)o*(i:i(* that th# #9ist#()# o$ a stat%t# 4io to
a &#t#7i(atio( o$ %()o(stit%tio(alit3 is a( o4#ati'#
$a)t and may hae conse%uences which cannot always be
ignored. T$e past cannot al&a%s be erased b% a ne&
9udicial declaration.

.he doctrine is applicable when a declaration of
unconstitutionality will impose an undue burden on those
who hae relied on the inalid law. .hus" it was applied to a
criminal case when a declaration of unconstitutionality would
put the accused in double 6eopardy or would put in limbo the
acts done by a municipality in reliance upon a law creating
it.
EO@CP

2/ollowing Serrano" we hold that this case should not be included
in the aforementioned e#ception. A)ter all, it &as not t$e )ault o)
petitioner t$at $e lost $is 9ob due to an act o) illegal dis"issal
co""itted b% respondents. .o rule otherwise would be ini%uitous to
petitioner and other 1/&s" and would" in eLect" send a wrong signal
that principals4employers and recruitment4manning agencies may
iolate an 1/&Js security of tenure which an employment contract
embodies and actually pro*t from such iolation based on an
unconstitutional proision of law.
# # # # # # # # #.
MWHEREFORE6 ### the petitoner is ;&;'D9D his salaries )or
t$e entire une2pired portion o) $is e"plo%e"nt contract
consisting of nine months computed at teh rate of 7SU+"E@C.CC per
month. # # #.3
?. Iikewise" in >ERT?C>M Ma%$o*er E'$o%e%t ). Vi%&"a, et al., ;R No.
0A1B5D, Se$t. B, 5205 9 the SC emphasiKed:
2;ll statutes are to be construed as haing only a prospectie
application" unless the purpose and intention of the legislature to gie
them a retrospectie eLect are e#pressly declared or are necessarily
implied from the language used.
A
3O?DP
8.'. <o. +BBCCB" =arch +E" ?CCF" 5+E S1RA +E5.
4O@CP
I#. at A+B$A+G. (Citations omitted.)
5
.olentino" Ciil Code of the 0hilippines" Commentaries and :urisprudence" +DDC" Qol.
+" p. ?F.
0age ?? of +CG H 'eiew <otes on Iabor Iaws
3e t$us see no reason to nulli)% t$e application o) t$e Serrano
ruling in t$e present case. 3$et$er or not (.A. 100// is
constitutional is not )or us to rule upon in t$e present case as
t$is is an issue t$at is not s:uarel% be)ore us. )n other words" this
is an issue that awaits its proper day in court- in the meanwhile" we make
no pronouncement on it.3
2&H9'9/1'9" the petition is D9<)9D. # # #.3
2F. THEORY OF IMP.TE- 0NOWLE-DE >
)n S&%a(e I%ter%atio%al Ma%a7eme%t Ser)i(e, I%(. ). N/RC a%# Di)i%a
Mo%te!ermo+o, ;R No. 0301B1, Ja%&ar" 5B, 5223), the Supreme Court held
that the recruitment agency is not solidarily liable for any money claims
arising from the ?$year employment e#tension $ when principal e#tended the
oerseas employment contract of the workers without its knowledge.
;s e#plained by the Supreme Court" thus:
2.he t$eor% o) i"puted 4no&ledge ascribes the knowledge of
the agent" S&%a(e" to the principal" employer Riong" (ot th# oth# "a3
ao%(&.
BO?@P
.he knowledge of the principal$foreign employer cannot"
therefore" be imputed to its agent Sunace.
.here being no substantial proof that S&%a(e knew of and
consented to be bound under the ?$year employment contract
e#tension" it cannot be said to be priy thereto. As suc$, it and its
7o&ner8 cannot be $eld solidaril% liable )or an% o) -i#ina;s
clai"s arising )ro" t$e /*%ear e"plo%"ent e2tension. ;s the
<ew Ciil Code proides"
Co%tra(t take eEe(t o%l" bet*ee% t!e $artie, t!eir
ai7%, a%# !eir, e'(e$t i% (ae *!ere t!e ri7!t a%#
obli7atio% arii%7 from t!e (o%tra(t are %ot tra%miible b"
t!eir %at&re, or b" ti$&latio% or b" $ro)iio% of la*.
GO?EP

/urthermore" as Sunace correctly points out" there was an implied
reocation of its agency relationship with its foreign principal when"
after the termination of the original employment contract" the foreign
principal directly negotiated with Diina and entered into a new and
separate employment contract in .aiwan. ;rticle +D?E of the <ew Ciil
Code reading
T!e a7e%(" i re)oke# if t!e $ri%(i$al #ire(tl" ma%a7e
t!e b&i%e e%tr&te# to t!e a7e%t, #eali%7 #ire(tl" *it!
t!ir# $ero%.P

3G. What is th# (at%# o$ th# liabilit3 o$ lo)al #)%it7#(t a*#()3
a(& $o#i*( 4i()i4al!
+. Iocal ;gency is solidarily liable with foreign principal for unpaid
6
Ro)el E%ter$rie" I%(. ). O(am$o" 8.'. <o. +@BF?+" 1ctober +G" ?CC?" 3F1 S1RA
1C=- )i#e Air +rance #. Court o) Appeals, et al., 211 Phil. =G1 @1FE3A.
7
;rt. +@++" <CC.
0age ?@ of +CG H 'eiew <otes on Iabor Iaws
salaries.
?. Seerance of relations between local agent and foreign principal
does not aLect liability of local recruiter. .he recruitment agency
may still be sued een if the agency and principal is already seered
if no notice of the termination was gien to the employee based on
;rt. +D?+" <CC. (Cata% ). N/RC, ;R No. 115A1, A$ril 0B, 0ADD)
EJ1EPTION to Liabilit3 o$ R#)%it7#(t A*#()3 /
/ &here the workers themseles insisted for the recruitment agency to
send them back to their foreign employer despite their knowledge of its
inability to pay their wages" the Court absoled the agency from liability
(Gea7le Co%tr&(tio% Cor$. ). ;a"#a, ;R No. D5402, J&%e 0D, 0AA2)
$ .he worker persuaded the agency to send him abroad een if the agency
already refused since his pay and his 6ob were not assured. .he Supreme
Court said he took a calculated risk by signing the waier and rendered the
agency free from liability. (Gea7le Co%tr&(tio% Cor$. ). Dora#o, 0A3 SCRA
@D0 O+DD+P)
NOTE:
$ ;n e"plo%ee o) a co"pan%'corporation engaged in illegal
recruitment may be held liable as 0')<C)0;I together with his employer"
if it is shown that he ACTIVE/O and CONSCIOUS/O >ARTICI>ATED in illegal
recruitment. (>eo$le ). Cabai, ;R No. 05A212, 03 Mar(! 5220)
31. R.LE ON PREMAT.RE TERMINATION o$ OE1.
+. )f terminated on grounds other than those that are lawful and alid
before the agreed termination date" the employer will pay the workers
their salaries corresponding to the une#pired portion of the
employment contract. (Vi%ta Maritime Co. ). N/RC, ;R 004A00, 54 Ja%&ar"
0AAD)
?. )f the date of termination occurred on or after :uly +DDA" the law to
apply is '; FCE?. 7nder Se(. 02" a worker dismissed from oerseas
employment without 6ust" alid or authoriKed cause is entitled to full
reimbursement of his placement fee with interest at +?T $er a%%&m"
plus his salaries for the une#pired portion of his employment contract
or for three (@) months for eery year of the une#pired term" whicheer
is lesser.
NOTE: 0'9$.9'=)<;.)1< 1/ 1Q9'S9;S 9=0I1N=9<. C1<.';C.
(OE1A > if the pre$termination is not attributed to the fault of the oerseas
worker" he is entitled to the une#pired portion of the 19C. (ee Serra%o r&li%7,
;.R. No. 03130@, 5@ Mar(! 522A, AF? SC'; ?AE)
32. EFFE1T o$ +ailure to deplo% * )n >a&l Sa%tia7o ). CG Cre*
Ma%a7eme%t, I%(., ;R, 035@0A, 02 J&l" 5221" the Court held:
2'espondentJs act o) pre#enting petitioner )ro" departing
t$e port o) !anila and boarding 2=SQ Seaspread3 constitutes a
breac$ o) contract, gi#ing rise to petitioner;s cause o) action.
0age ?E of +CG H 'eiew <otes on Iabor Iaws
'espondent unilaterally and unreasonably reneged on its obligation to
deploy petitioner and must therefore answer for the actual damages he
suLered.
33. Who has H%is&i)tio( o'# )lai7s $o &#ath a(& oth# b#(#Bts o$
OFWs!
Iabor ;rbiters hae 6urisdiction oer claims for death" disability and
other bene*ts arising from employment of 1/&s. &ork$connection is
re%uired.
3+. What is th# basis o$ )o74#(satio( $o &#ath b#(#Bts o$ OFWs!
!asis of compensation for death generally is whicheer is greater
between 0hilippine law or foreign law.
35. What is th# 4#s)i4ti'# 4#io& o$ ill#*al #)%it7#(t )as#s!
7nder '. ;. FCE?" the prescriptie period of illegal recruitment cases is
B'# @5A years #9)#4t illegal recruitment inoling #)o(o7i) sabota*#
which prescribes in t"#(t3 @2GA 3#as.
3=. P#(alt3 for si"ple ,( is +?$?C years- #)o(o7i) sabota*# $ Iife
imprisonment
/ine for si"ple ,( is 0+ $?=- #)o(o7i) sabota*# $ 0? $ A =.
3C. What a# th# #8%i#7#(ts b#$o# a (o(/#si&#(t ali#( 7a3 b#
#74lo3#& i( th# Phili44i(#s! @At.
;ny alien seeking admission to the 0hilippines for employment
purposes and any domestic or foreign employer who desires to engage an
alien for employment in the 0hilippines shall obtain an ;lien 9mployment
0ermit @AEPA from the Department of Iabor.
.he alien employment permit may be issued to a non$resident alien or
to the applicant employer after a determination of the non$aailability of a
person in the 0hilippines who is competent" able and willing at the time of
application to perform the serices for which the alien is desired.
/or an enterprise registered in preferred areas of inestments" said
employment permit may be issued upon recommendation of the goernment
agency charged with the superision of said registered enterprise.
NOTES:
/ D1 +? and D1I9 0rimer proide that the LU%#ert&#" Trai%i%7
>ro7ramP is no longer a re%uirement in the issuance of ;90 and the employer
has now the option to implement 2.ransfer of .echnology3.
$ )mmigrants and rei#e%t aliens are not re%uired to secure a working
permit. .hey are re%uired to secure their ;lien 9mployment 'egistration
0age ?A of +CG H 'eiew <otes on Iabor Iaws
Certi*cates (;9'C). (Almo#iel ). N/RC, ;R No. 0223@0, J&%e 0@, 0AA4)
$ E9#74tio( $o7 P#7it: Categories of alien e#empted from
securing employment permit in order to work in the 0hilippines ,
+. ;ll members of the Diplomatic Serice and foreign goernment
o5cials accredited by and with reciprocity arrangement with the
0hilippine goernment-
?. 15cers and staL of )nternational organiKations of which the
0hilippines is a member" and their legitimate spouses desiring to
work in the 0hilippines-
@. /oreign nationals elected as members of the 8oerning !oard
who do not occupy any other position" but hae only oting
rights in the corporation-
E. ;ll /oreign nationals grated e#emption by law-
A. 1wners and representaties of foreign nationals whose
companies are ;ccredited by the 019; who come to the
0hilippines for a limited period and solely for the purpose of
interiewing /ilipino applicants for employment abroad-
B. /oreign nationals who come to the 0hilippines to .each" present
and4or conduct research studies in 7niersities and Colleges as
Qisiting 9#change or ad6unct 0rofessors under formal agreements
between the 7niersities or Colleges in the 0hilippines and
foreign 7niersities or Colleges- or between the 0hilippine
goernment and foreign goernment- 0roided that the
e#emption is on a reciprocal basis- and
G. 'esident foreign nationals (DO No. 1B923, Ma" 40, 5223)

3E. Ma3 a( ali#( #74lo3## ta(s$# his #74lo37#(t a$t# iss%a()#
o$ 4#7it!
;fter the issuance of an employment permit" the alien shall not
transfer to another 6ob or change his employer without prior approal of the
Secretary of Iabor.
<on$resident alien shall not take up employment in iolation of the
proisions of the Code. Qiolations of the aforementioned acts will sub6ect the
alien to the punishment of proided in ;rts. ?FD and ?DC" IC0 and to
deportation after serice of sentence
1. H.MAN RESO.R1ES (!ook .wo)
TRAININD AN- EMPLOYMENT OF SPE1IAL WOR0ERS
APPRENTI1E:
3F. What is a( a44#(ti)#shi4! Who is a( a44#(ti)#!
MA44#(ti)#shi4L means any practical training on the 6ob
supplemented by related theoretical instruction inoling a$$re%ti(eable
o((&$atio% and trades as may be approed by the Secretary of Iabor and
0age ?B of +CG H 'eiew <otes on Iabor Iaws
9mployment" for a period of not less than @ months but not more than B
months.
A44#(ti)#abl# o))%4atio( , an occupation o5cially endorsed by a
tripartite body and approed for apprenticeship by .echnical 9ducation Skills
Deelopment ;uthority (.9SD;).
)t is .9SD; who approes a$$re%ti(eable o((&$atio% and no longer by
the Sec. of Iabor and 9mployment. (Sec. EOmP" '; GGDB)
O( th# Iob/Tai(i(* @OITA , practical work e#perience through actual
participation in productie actiities gien to or ac%uired by an apprentice.
Hi*hl3 T#)h(i)al I(&%sti#s , a trade business" enterprise" industry
or other actiity which is engaged in the application of adanced technology.
+G. Who is a( a44#(ti)#!
;n Ma44#(ti)#L is a worker who is coered by a written
apprenticeship agreement with an employer. ; person undergoing training
for an approed apprenticeable occupation during an established period
assured by an apprenticeable agreement. (Se(. @, RA 11A3, TESDA /a* of
0AA@)
+1. What a# th# 8%aliB)atio(s o$ a( a44#(ti)#!
a. be at least *fteen (+A) years of age" proided those who are at least
*fteen (+A) years of age but less than eighteen (+F) may be eligible for
apprenticeship only in non$haKardous occupation-
b. be physically *t for the occupation in which he desires to be trained-
c. possess ocational 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.
+2 . What a# th# i74ota(t 4i()i4l#s #lat#& to a44#(ti)#shi4!
a. &age rate of apprentices $ GAT of the statutory minimum wage.
b. ;pprentices become regular employees if program is not approed
by D1I9.
c. 'atio of theoretical instructions and on$the$6ob training $ +CC hours
of theoretical instructions for eery ?"CCC hours of practical training
on$the$6ob.
APPRENTI1ES WITHO.T 1OMPENSATION (;rt. G?" IC0), apprentices
may be hired without compensation where the on$the$6ob$training is (a)
'e%uired by the School4.raining 0rogram Curriculum as a re%uisite for
8raduation- (b) a 'e%uisite for !oard 9#amination. (Se(. @2, R&le VI, Book II,
Im$leme%ti%7 t!e /abor Co#e)
LEARNERS:
0age ?G of +CG H 'eiew <otes on Iabor Iaws
+3. Who is a l#a(#!
; Ml#a(#L is a person hired as a trainee in industrial occupations
which are non$apprenticeable and which may be learned through practical
training on the 6ob for a period not e#ceeding three (@) months" whether or
not such practical training is supplemented by theoretical instructions.
&age rate of learners is GAT of the statutory minimum wage.
++. What a# th# 4#/#8%isit#s b#$o# l#a(#s 7a3 b# hi#&!
0re$re%uisites before learners may be alidly employed:
a. when no e#perienced workers are aailable-
b. the employment of learners is necessary to preent curtailment
of employment opportunities- and
c. the employment does not create unfair competition in terms of
labor costs or impair or lower working standards.
NOTE: ; learner who has worked during the *rst two (?) months shall be
deemed as regular employee if training is terminated by the
employer before the end of the stipulated period through no fault of
the leaner (Se(. @, R&le VII, Book II, &$ra)
+5. E74lo37#(t o$ Mi(os as L#a(#s.
; "inor below +A years of age shall not be eligible for employment
as learner. .hose below +F years of age may 1<IN be employed in
<1<$H;W;'D17S occupations.(Se(. 3, R&le VII, Book II, R&le
Im$leme%ti%7 t!e /abor Co#e)
HAN-I1APPE- WOR0ERS: (Art. 1D, /C>)
+=. Who is a ha(&i)a44#& "o2#! Ha(&i)a44#& 4#so(!
$ ; Mha(&i)a44#& "o2#L is one whose earning capacity is
impaired:
a. by age- or
b. physical de*ciency- or
c. mental de*ciency- or
d. in6ury- or
e. )llness or disease
X )f disability is not related to the work for which he was hired" he
should not be so considered as handicapped worker. He may hae a
disability but since the same is not related to his work" he cannot be
considered a handicapped worker insofar as that particular work is
concerned.
X &age rate $ GAT of the statutory minimum wage. 022Q of t!e SMW9
(Ber%ar#o et al ). N/RC H GEBTC, ;.R. 055A01, J&l" 0A, 0AAA).
0age ?F of +CG H 'eiew <otes on Iabor Iaws
$ Ha(&i)a44#& 4#so(s (RA 1511, Ma7%a Carta for Diable#
>ero%, a ame%#e# b" RA A@@5) , those who are suLering from
restrictions or diLerent disabilities as a result of a =ental" 0hysical" or
Sensory impairmentto perform an actiity in the manner or within the
range considered noraml for a human being.

- Ha(&)a44#& "o2#s 7a3 b#)o7# #*%la #74lo3##s.
.he noble ob6ecties of teh =agna Carta for Disabled 0ersons are not
based merely on charity or accomodation" but on 6ustice and e%ual
treatment of %uali*ed employees" disabled or not. ;fter the disbaled
employees had shown their *tness for the work assigned to them" they
should be treated and granted the same rights like any other reguale
employees. (Ber%ar#o et al ). N/RC H GEBTC, ;.R. 055A01, J&l" 0A, 0AAA).

<ature of employment does not depend on the will of the
employer. Contract of employment is aki% to probationary
employment. &hile the acts of /9!.C in accomodating the
handicapped workers is commendable" but the employer should bear
in mind that 2compassionate for the disable3 has its legal
conse%uences.
+C. ELIDIBILTY $o A44#(ti)#shi4 o L#a(#shi4.
$ Handicapped workers are eligible for employment as apprentices or
learner if their $andicap is such that it does not i"pede the
performance of 6ob operations in the particualr trade or occupation
which is the sub6ect of teh apprenticeship or leanership program.
1. LAW ON LABOR STAN-AR-S (!ook .hree)
P#li7i(a3:
)n relation to the *rst situation as discussed aboe with respect to the
Doctor (Caloy) and Secretary$wife (Karen) , that is." there is no 9'$99
0age ?D of +CG H 'eiew <otes on Iabor Iaws
relationship between them since Karen is a Lmember of t!e famil"
#e$e%#e%t o% t!e em$lo"er for &$$ort are e'(l&#e# from t!e $ro)iio% of
t!e labor ta%#ar# la*.3
How about in the instant case of a son ('obert) suing his father (Don
Caloy). 'obert was made an 1erseer$=anager of the plantation4hacienda
owned by Don :uan in 8uimaras. He did well in the *rst year and afterwards
he got married. ;fter his marriage" he builds a house in !acolod. 1ne day he
got sick so that he was not compensated. He wrote his father$Don Caloy but
the latter did not pay him. .hus" he sued his father.
)t was held that this case is not coered by the e#ception because what
is operatie in the e#ception is that the employee who is a member of the
family of the employer m&t be #e$e%#e%t o% !im for &$$ort. )n other
words" mere relationship (paternity and *liation) is not enough. 'obert is
entitled to the labor standards bene*ts.
.o reiterate, Labor Standards La& , deals with the minimum
re%uirement prescribed by law" rules and regulations on wages" hours of work"
cost of liing allowance and other monetary and welfare bene*ts" including
1SHS- or the minimum terms" conditions and bene*ts that employers must
proide their employees which they are entitled as a matter of right.
What a# th#s# labo sta(&a&s!

.hey include:
+. =inimum wage ('; BG?G) D. Serice incentie Ieae
?. Holiday 0ay +C. =aternity Ieae ('; G@??)
@. 0remium 0ay ++. 0aternity leae ('; F+FG)
E. 1ertime 0ay +?. SSS (RA 0030 a ame%#e# b" RA
D5D5)
A. <ight shift DiLerential 0ay +@. 9CC (>D 353)
B. +@th =onth 0ay (>D DB0) +E. =edicare(RA 1D1B a ame%#e#
RA A5@0)
G. .ermination 0ay +A. 0ag)!)8 (RA 11@5)
F. 'etirement 0ay (RA 13@0?RA DBDD) +B. =edical4Dental Srices (Art.
0DB, /C>)
+G. !attered &oman Ieae (RA A535)
WOR0IND 1ON-ITIONS OF EMPLOYMENT:
1. What a# th# 4o'isio(s o$ th# Labo 1o&# o( "o2i(* )o(&itio(s!
.he following proisions are coered under !ook ))) of the Iabor Code:
Ati)l# E3 / No7al ho%s o$ "o2N
Ati)l# E+ / Ho%s "o2#&N
Ati)l# E5 / M#al 4#io&sN
Ati)l# E= / Ni*ht shi$t &i<##(tialN
Ati)l# EC / O'#ti7# "o2N
Ati)l# EE / .(&#ti7# (ot o<s#t b3 o'#ti7#N
Ati)l# EF / E7#*#()3 o'#ti7# "o2N
Ati)l# FG / 1o74%tatio( o$ a&&itio(al )o74#(satio(N
Ati)l# F1 / Ri*ht to "##2l3 #st 4#io&N
Ati)l# F2 / Wh#( #74lo3# 7a3 #8%i# "o2 o( a #st &a3N
Ati)l# F3 / 1o74#(satio( $o #st &a36 S%(&a3 o holi&a3 "o2N
0age @C of +CG H 'eiew <otes on Iabor Iaws
Ati)l# F+ / Ri*ht to holi&a3 4a3N
Ati)l# F5 / Ri*ht to s#'i)# i()#(ti'# l#a'#N a(&
Ati)l# F= / S#'i)# )ha*#s.
2. Who a# )o'##& (and not co#ered) b3 th# sai& 4o'isio(s o( "o2i(*
)o(&itio(s!
+. E74lo3##s )o'##& $ applicable to all employees in all establishments
whether operated for pro*t or not.
?. E74lo3##s NOT )o'##&:
a. 8oernment employees-
b. =anagerial employees-
c. 1ther o5cers or members of a managerial staL-
d. Domestic serants and persons in the personal serice of another-
e. &orkers paid by results 4 piece$rate workers- two (?) categories (ee
/ambo et al ). N/RC, ;.R. No. 0002@5, O(tober 53, 0AAA)-
f. <on$agricultural *eld personnel- and
g. =embers of the family of the employer.
3. What is th# 7ost i74ota(t #8%i#7#(t i( o&# $o th# Labo 1o&#
4o'isio(s o( "o2i(* )o(&itio(s to a44l3!
.he e#istence of employer$employee relationship is necessary. &ithout this
relationship" the Iabor Code (labor standards laws) does not apply.
Howeer" it has been noted that many employers4businessmen try to aoid or
deny the e#istence of 9'$99 relationship because it creates or spawns legal
obligations related to security of tenure" social security" labor standards" workmenJs
compensation" and unionism.

+. What is th# t#st o$ #74lo37#(t #latio(shi4!
.here is no uniform test of employment relationship but the four (E) elements
of an employer$employee relationship are as follows:
(a) Selection and engagement of employee-
(b) 0ayment of wages-
(c) 0ower of dismissal- and
(d) 0ower of control (the most important test). >a(i:( Co%&lta%t
I%ter%atio%al Aia, I%(. ). S(!o%fe#, ;R No. 033A52, Geb. 0A,
5221)
NOTES: T"o/ti##& a44oa)h:
1. .he putatie employerJs power to control employee with respect to the
means and methods by which the work is to be accomplished-
?. the underlying economic realities of the actiity or relationship.
E)o(o7i) -#4#(&#()# , E)o(o7i) R#alt3 T#st
$ &hether the worker is dependent on the alleged employer for his
continuous employment in that line of business.
1o(tol T#st / refers to the employerJs power of control or right to
control the employees NOT o(l3 as to the result of the work to be done b%t
also as to the means and methods by whichthe same is to be
accomplished.
0age @+ of +CG H 'eiew <otes on Iabor Iaws
.he control test is the most important test in distinguishing an
employee from independent contractor. .his tet is based on the e#tent of
control the hirer e#ercises oer a worker. .he greater the superision and
control the hirer e#ercises" the more likely the worker is deemed an
employee. .he conerse holds true , the less control the hirer e#ercises"
the more likely the worker is considered as independent contractor (So%+a
). ABS9CBN Cor$., ;R No. 04D2B0, J&%e 02, 52@@)
.he control test merely calls for the e#istence of the right of control
the manner of doing the work <1. the actual e#ercise of the right. (Ka%ote
S!oe ),. N/RC, ;GR No. 022233B, Gebr&ar" 04, 0AAB)
.he issuance of the principal of the guidelines D19S <1. establish
control by the principal. (Co(a9Cola Bottler >!il. V. Clima(o, ;R No.
0@3DD0, Gebr&ar" B, 5221)
1ASES "h## ER/EE #latio(shi4s #9ists:
0. :eepney driers on boundary basis (Villamaria ). CA, ;R No. 03BDD0, A$ril
0A, 5223)6
5. Driers or helpers of salesmen are employees of the company (Al!ambra
I%#&trie ). CIR, ;R /90BAD@, O(t. 42, 0A1A)-
4. 9mployees of unregistered association (Orla%#o Garm ;ro*er ). N/RC, ;R
No. 05A213, No)ember 5B, 0AAD)6
@. Street$Hired cargador (Ca&r#a%eraa% >ie(e Worker U%io% ). /a7&ema, ;R
No.004B@5, Gebr&ar" 5@, 0AAD) -
B. &orkers in moie pro6ects (Mara7&i%ot ). N/RC, ;R No. 052A3A, Ja%&ar"
55,0AAD)-
3. Salaried insurance agent as distinguished from registered agents on
commission basis (;reat >a(i:( /ife A&ra%(e Cor$. ). J&#i(o, ;R No.
14DD1, De(. 50, 0ADA)-
1. .ailors" seamstresses" serers" basters" plantsadoras paid on piece$rate
basis (Makati -aber#a!er" ). N/RC, ;R No. D44D29D4, No)ember 0B,
0ADA)-
D. )n$house lawyers as distinguished from an outside retainer (-"#ro
Reo&r(e Co%tra(tor (or$. ). >a7alila&a%, ;R No. /935A2A, A$ril 0D,
0ADA)6
A. 7niersity professors and )nstructors (GEU ). CIR, ;R No. /901352, A&7.40,
0A35) -
02. .a#i Drier (Citi+e% /ea7&e of Gree Worker ). Abba, ;R No./950505,
Se$tember 54, 0A33)-
00. =anicurists" barbers (Cor$oral, et al ). N/RC, ;R No. 05A40B, O(tober 5,
5222)6
05. 8'1" hospitality girls (Art. 04D, /C>)
04. Studio =anager (Cear /irio? CE/ROR ). ;e%o)ia, ;R No. 03A1B1, No). 54,
5200)-
0@. 1rchid /arm Caretaker (;ala%7 ). Mala&7&i, ;R No. 01@014, Mar(! 1,
5205)
1ASES "h## th## is (o ER/EE #latio(shi4s:
+. 0art$time consultant (Atok Bi7 We#7e ). Je& ;i+o%, ;R No. 03AB02, A&7.
D, 5200)-
?. /arm workers are not employees of the Sugar Central (Vi(toria Milli%7
Co., I%(., ). N/RC, ;R. No. 0034@1, O(t. 4, 0AA3)-
@. &orking scholars are not employees of the school (Gilamer C!ritia%
I%tit&te ). IAC, ;R No. 1B05, A&7&t 01, 0AA5)-
E. Shoe shine boys (Bea ). Tra8a%o, ;R No. 15@2A, De(ember 5A, 0AD3)6
0age @? of +CG H 'eiew <otes on Iabor Iaws
A. Collecting agents on commission basis (Si%7er Se*i%7 Ma(!i%e Co. ).
Drilo%, ;R No.A0003, Ja%&ar" 5@, 0AA0)-
B. Helper$pahinante (Ja)ier ). Gl" A(e Cor$. , ;R No. 0A5BB3, Gebr&ar" 0B,
5205)

5. What is th# 8%a(t%7 o$ #'i&#()# #8%i#& to 4o'# #74lo37#(t
#latio(shi4!
.he %uantum of eidence re%uired to proe employment relationship is mere
s%bsta(tial #'i&#()# (e.7., I. D. (ar#, Ca! Vo&(!er for alarie, i%(l&io% i%
$a"roll, re$orti%7 to SSS a%# tetimo%ial e)i#e%(e of *it%ee).
&hile no particular form of proof is re%uired to proe e#istence of employer$
employee relationship. ;ny competent and releant eidence may show the
relationship. <VINOOA ). N/RC, ET A/., ;.R. No. 053BD3, Gebr&ar" 5, 52226
O>U/ENCIA ICE >/ANT H STORA;E ). N/RC, 55D SCRA @14=.
)f only documentary eidence would be re%uired to demonstrate the
relationship" no scheming employer may be brought before the bar of 6ustice.
<VINOOA ). N/RC, ET A/.&$ra.= ;side from the documentary eidence" s%)h
#latio(shi4 7a3 b# s%?)i#(tl3 #stablish#& o 4o'#& b3 t#sti7o(ial
#'i&#()#6 li2# th# t#sti7o(3 o$ th# )o/"o2#s. <SSS ). COURT OG A>>EA/S,
;.R. No. 0224DD, De(ember 0@, 5222=.
NOTE: 8enerally" labor standards and conditions apply only if there is 9'$99
relationship. !ut in some instances" een if there is no 9'$99
relationship" the Iabor Code may still be inoked (e.7. i%#ire(t
em$lo"erI liabilit"6 ille7al re(r&itme%t a%# mi&e of >OEA li(e%e)
NORMAL HO.RS OF WOR0: (Art. D4)
=. What is 7#a(t b3 M(o7al ho%s o$ "o2L!
+. ONo7alO hours of work of employees $eight (F) hours per day.
?. OWo2 &a3O means ?E consecutie$hour period which commences from
the time the employee regularly starts to work. )t does not necessarily
mean the ordinary calendar day from +?:CC midnight to +?:CC midnight
unless the employee starts to work at this unusual hour.
@. OWo2 "##2O is a week consisting of +BF consecutie hours or G
consecutie ?E$hour work days beginning at the same hour and on the
same calendar day each calendar week.
E. R#&%)tio( o$ #i*ht/ho% "o2i(* &a3 $ not prohibited by law proided
there is no reduction in pay of workers.
A. Shot#(i(* o$ "o2 "##2 $ allowed proided employees oluntarily
agree thereto- there is no diminution in pay- and only on temporary
duration.
B. Ho%s o$ "o2 o$ 4at/ti7# "o2#s $ payment of wage should be in
proportion only to the hours worked.
G. Ho%s o$ "o2 o$ hos4ital a(& )li(i) 4#so((#l $ .he Supreme Court
has oided 0olicy )nstructions <o. AE in Sa% J&a% #e Dio -o$ital
Em$lo"ee Ao(iatio% ). N/RC (;. R. No. 0534D4, No). 5D, +DDG).
Conse%uently" the rule that hospital employees who worked for only EC
hours4A days in any gien workweek should be compensated for full
weekly wage for G days is no longer applicable.
P#o*ati'# to )ha(*# "o2i(* ho%s.
&ell$settled is the rule that management retains the prerogatie" wheneer
e#igencies of the serice so re%uire" to change the working hours of its employees.
0age @@ of +CG H 'eiew <otes on Iabor Iaws
(Sime Darb" >ili$i%a, I%(. ). N/RC, ;.R. No. 00A52B, 0B A$ril 0AAD, /<5 SC(A
<=).
.he employer has the prerogatie to control all aspects of employment in his
business organiKation such as hiring" work assignments" working methods" time"
place and manner of work" tools to be used" processes to be followed" superision of
workers" working regulations" transfer of employees" work superision" lay$oL of
workers and the discipline" dismissal and recall of workers. (Co%oli#ate# Goo#
Cor$oratio%, et al. ). N/RC, et al., ;. R. No. 00D3@1, Se$t. 54, 0AAA).
)n the ?CC+ case of I(t#4hil Laboatoi#s E74lo3##s .(io(/FFW 's.
I(t#4hil Laboatoi#s6 I().6 O8. '. <o. +E?F?E" December +D" ?CC+P" the parties
to the C!; stipulated:

2Section +. (egular 3or4ing >ours $ ; normal workday shall
consist of not more than eight (F) hours. .he regular working hours for
the Company shall be from G:@C ;.=. to E:@C 0.=. .he schedule of shift
work shall be maintained- howeer the company may change the
preailing work time at its discretion" should such change be necessary
in the operations of the Company. ;ll employees shall obsere such
rules as hae been laid down by the company for the purpose of
eLecting control oer working hours.3 (;rticle Q) of the C!;).
;ccording to the Supreme Court" it is eident from the foregoing proision
that the working hours may be changed" at the discretion of the company " should
such change be necessary for its operations" and that the employees shall obsere
such rules as hae been laid down by the company. )n the instant case" the Iabor
;rbiter found that respondent company had to adopt a continuous ?E$hour work
daily schedule by reason of the nature of its business and the demands of its
clients. )t was established that the employees adhered to the said work schedule
since +DFF. .he employees are deemed to hae waied the eight$hour schedule
since they followed" without any %uestion or complaint" the two$shift schedule while
their C!; was still in force and een prior thereto. .he two$shift schedule eLectiely
changed the working hours stipulated in the C!;. ;s the employees assented by
practice to this arrangement" they cannot now be heard to claim that the oertime
boycott is 6usti*ed because they were not obliged to work beyond eight hours. ;s
the Iabor ;rbiter elucidated in his report:
2'espondentsY attempt to deny the e#istence of such regular
oertime schedule is belied by their own awareness of the e#istence of
the regular oertime schedule of B:CC ;.=. to B:CC 0.=. and B:CC 0.=. to
B:CC ;.=. of the following day that has been going on since +DFF. 0roof
of this is the case undisputedly *led by the union for and in behalf of
its members" wherein it is claimed that the company has not been
computing correctly the night premium and oertime pay for work
rendered between ?:CC ;.=. and B:CC ;.=. of the B:CC 0.=. to B:CC ;.=.
shift. ### )n fact" the union Qice$0resident Carmelo C. Santos"
demanded that the company make a recomputation of the oertime
records of the employees from +DFG ###. H. Iikewise" while in the
oertime permits" dated =arch +" B" F" D to +?" +DD@" which were
passed around daily for the employees to sign" his name appeared but
without his signatures" he" howeer" had rendered oertime during
those dates and was paid because unlike in other departments" it has
become a habit to them to sign the oertime schedule weekly ###.3
C. Ma3 "o2&a3s b# #&%)#& o( a))o%(t o$ loss#s!
?es, in situations where the reduction in the number of regular working days is
resorted to by the employer to preent serious losses due to causes beyond his
control" such as when there is a substantial slump in the demand for his goods or
serices or when there is lack of raw materials. .his is more humane and in keeping
0age @E of +CG H 'eiew <otes on Iabor Iaws
with sound business operations than the outright termination of the serices or the
total closure of the enterprise. (E'$la%ator" B&lleti% o% t!e EEe(t of Re#&(tio% of
Work#a" o% Wa7e?/i)i%7 Allo*a%(e i&e# b" t!e DO/E o% J&l" 54, 0ADB).
2.he law recogniKes the right of any business to reduce workforce or work days
if the same is made necessary by compelling economic factors or reasons which
would endanger its e#istence and stability.3 (Balbale( ). N/RC, ;.R. No. 0211B3,
De(ember 0A, 0AAB" BB SC;D BF?)
2.he eLectiity of the proposed working days arrangement shall be of
temporary duration" or that the period shall not e#ceed si# (B) months (Meral(o
Worker U%io% ). Ma%ila Ele(tri( Com$a%", et al., Ma" 5B, 0ADA)
E. What is th# #<#)t o$ #&%)tio( o$ "o2&a3s o( "a*#s,li'i(*
allo"a()#s!
)n situations where there is alid reduction of workdays" the employer may
deduct the wages and liing allowances corresponding to the days taken oL from
the workweek" in the absence of an agreement speci*cally proiding that a
reduction in the number of workdays will not adersely aLect the remuneration of
the employees. .his iew is consistent with the principle of 2no$work$no$pay.3
/urthermore" since the reduction of workdays is resorted to as a cost$saing
measure" it would be unfair to re%uire the employer to pay the wages and liing
allowances een on unworked days that were taken oL from the regular workweek.
(E'$la%ator" B&lleti% o% t!e EEe(t of Re#&(tio% of Work#a" o% Wa7e?/i)i%7
Allo*a%(e i&e# b" t!e DO/E o% J&l" 54, 0ADB).
2.he workers will not be depried of a gainful occupation under the work
scheme to be adopted" otherwise" it would tanta"ount to retrenc$"ent and4or
t$e &or4ers &ill be considered constructi#el% dis"issed" and the coered
workers are entitled to separation pay as re%uired by law.3 (I%ter%atio%al -ar#*are,
I%(. ). N/RC, ;.R. No. D2112, A&7&t 52, 0ADA).
F. What is 7#a(t b3 Mho%s "o2#&L ( Art. D@)!
+. .he following are the compensable hours worked:
a. ;ll time during which an employee is re%uired to be on duty or to be at
the employerJs premises or to be at a prescribed workplace- and
b. ;ll time during which an employee is suLered or permitted to work.
?. 1o<## b#a2s a(& #st 4#io& o$ shot &%atio( $ considered
compensable hours worked.
@. Waiti(* ti7# $ considered compensable if waiting is an integral part of
the employeeYs work or he is re%uired or engaged by the employer to wait.
E. Sl##4i(* while on duty is compensable if the nature of the employeeJs
work allows sleeping without interrupting or pre6udicing work or when
there is an agreement between the employee and his employer to that
eLect. /or e#ample" a truc4 $elper "a% sleep a)ter per)or"ing $is
tas4 and &$ile $is truc4 is tra#eling on its &a% to its assign"ent.
!ut the same may not be done by the drier.
A. Wo2i(* "hil# o( )all $ compensable if employee is re%uired to remain
on call in the employerJs premises or so close thereto that he cannot use
the time eLectiely and gainfully for his own purpose.
G. Ta'#l ti7#:
a. .rael from home to work $ not compensable working time
b. .rael that is all in the dayJs work $ compensable hours worked.
c. .rael away from home $ compensable hours worked.
F. ;ttendance in lectures" meetings" and training periods sanctioned by
employer $ considered hours worked.
D. Po"# i(t#%4tio(s o bo"(/o%ts" basic rules:
0age @A of +CG H 'eiew <otes on Iabor Iaws
/ !rown$outs of short duration not e#ceeding twenty (?C) minutes $
compensable hours worked.
/ !rown$outs running for more than twenty (?C) minutes may not be
treated as hours worked proided any of the following conditions are
present:
a. .he employees can leae their workplace or go elsewhere
whether within or without the work premises- or
b. .he employees can use the time eLectiely for their own
interest.
+C. ;ttendance in C!; negotiations or grieance meeting $ (om$e%able
hours worked.
++. ;ttendance in hearings in cases *led by employee $ not (om$e%able
hours worked.
+?. 0articipation in strikes $ not (om$e%able working time.
0B.Se"estral brea4s of teachers $ is co"pensable and apply to regular
full$time teachers only. )t is a form of interruption beyond their control.
(U%i)erit" of >a%7ai%a% Ga(&lt" U%io% ). U%i). of >a%7ai%a%, ;R No. /9
34055, Geb. 52, 0AD@)
MEAL PERIO- : (Art. DB)
1G. What is M7#al 4#io&L!
+. 9ery employee is entitled to not less than one (+) hour (or BC minutes)
time$oL for regular meals. !eing time$oL" it is not compensable hours
worked and employee is free to do anything he wants" e#cept to work. )f he
is re%uired to work while eating" he should be compensated therefor.
?. )f meal time is shortened to not less than twenty (?C) minutes $
compensable hours worked. )f shortened to less than ?C minutes" it is
considered coLee break or rest period of short duration and" therefore"
compensable.
NIDHT/SHIFT -IFFERENTIAL : (Art. D3)
11. What is M(i*ht/shi$t &i<##(tialL!
+. Nig$t s$i)t di@erential is e%uialent to +CT of employeeYs regular wage
for each hour of work performed between +C:CC p.m. and B:CC a.m. of the
following day.
?. Nig$t s$i)t di@erential and o#erti"e pa%, distinguis$ed $ &hen the
work of an employee falls at nighttime" the receipt of oertime pay shall
not preclude the right to receie night diLerential pay. .he reason is" the
payment of the night diLerential pay is for the work done during the night-
while the payment of the oertime pay is for work in e#cess of the regular
eight (F) working hours.
@. Computation of <ight Shift DiLerential 0ay:
a. Wh## (i*ht shi$t @1G 4.7. to = a.7.A "o2 is #*%la "o2.
+. O( a( o&i(a3 &a3: 0lus +CT of the basic hourly rate or a total
of ++CT of the basic hourly rate.
?. O( a #st &a36 s4#)ial &a3 o #*%la holi&a3: 0lus +CT of
the regular hourly rate on a rest day" special day or regular
holiday or a total of ++CT of the regular hourly rate.
b. Wh## (i*ht shi$t @1G 4.7. to = a.7.A "o2 is o'#ti7# "o2.
+. O( a( o&i(a3 &a3: 0lus +CT of the oertime hourly rate on
an ordinary day or a total of ++CT of the oertime hourly rate on
an ordinary day.
0age @B of +CG H 'eiew <otes on Iabor Iaws
?. O( a #st &a3 o s4#)ial &a3 o #*%la holi&a3: 0lus +CT of
the oertime hourly rate on a rest day or special day or regular
holiday.
c. Fo o'#ti7# "o2 i( th# (i*ht shi$t. Since oertime work is not
usually eight (F) hours" the compensation for oertime night shift
work is also computed on the basis of the hourly rate.
+. O( a( o&i(a3 &a3. 0lus +CT of +?AT of basic hourly rate or a
total of ++CT of +?AT of basic hourly rate.
?. O( a #st &a3 o s4#)ial &a3 o #*%la holi&a3. 0lus +CT of
+@CT of regular hourly rate on said days or a total of ++CT of
+@CT of the applicable regular hourly rate.
OKERTIME WOR0: (Art. D1)
12. What is Mo'#ti7# "o2L!
+. &ork rendered after normal eight (F) hours of work is called oertime
work.
?. )n computing oertime work" Vregular wageV or Vbasic salaryV means VcashV
wage only without deduction for facilities proided by the employer.
@. V0remium payV means the additional compensation re%uired by law for
work performed within F hours on non$working days" such as rest days
and special days.

E. OO'#ti7# 4a3O means the additional compensation for work performed
beyond F hours. 9ery employee entitled to premium pay is also entitled
to the bene*t of oertime pay.
A. )llustrations on how oertime is computed:
a. Fo o'#ti7# "o2 4#$o7#& o( a( o&i(a3 &a3" the
oertime pay is plus ?AT of the basic hourly rate.
b. Fo o'#ti7# "o2 4#$o7#& o( a #st &a3 o o( a
s4#)ial &a3" the oertime pay is plus @CT of the basic hourly
rate which includes @CT additional compensation as proided
in ;rticle D@ OaP of the Iabor Code.
c. Fo o'#ti7# "o2 4#$o7#& o( a #st &a3 "hi)h $alls
o( a s4#)ial &a3" the oertime pay is plus @CT of the basic
hourly rate which includes ACT additional compensation as
proided in ;rticle D@ OcP of the Iabor Code.
d. Fo o'#ti7# "o2 4#$o7#& o( a #*%la holi&a3" the
oertime pay is plus @CT of the basic hourly rate which
includes +CCT additional compensation as proided in ;rticle
DE ObP of the Iabor Code.
e. Fo o'#ti7# "o2 4#$o7#& o( a #st &a3 "hi)h $alls
o( a #*%la holi&a3" the oertime pay is plus @CT of the
basic hourly rate which includes +BCT additional
compensation.
I%&i)ial a&7issio( b3 #74lo3# o$ o'#ti7# "o26 #<#)t.
)n the ?CCC case of -a7as)o 's. NLR1" <;. R. No. 00B1BB, De(ember @,
5222=, the employer admitted in his pleadings that the employeeJs work starts at
F:@C in the morning and ends up at B:@C in the eening daily" e#cept holidays and
Sundays. Howeer" the employer claims that the employeeJs basic salary of
0+EC.CC a day is more than enough to coer the 2one hour e#cess work3 which is
the compensation they allegedly agreed upon. .he Supreme Court ruled that in
iew of the employerJs formal admission that the employee worked beyond eight
hours daily" the latter is entitled to oertime compensation. <o further proof is
re%uired. .he employer already admitted she worked an e#tra hour daily. Audicial
0age @G of +CG H 'eiew <otes on Iabor Iaws
ad"issions "ade b% parties in t$e pleadings, or in t$e course o) t$e trial
or ot$er proceedings in t$e sa"e case are conclusi#e, no )urt$er e#idence
being re:uired to pro#e t$e sa"e, and cannot be contradicted unless
pre#iousl% s$o&n to $a#e been "ade t$roug$ palpable "ista4e or t$at no
suc$ ad"ission &as "ade. (Citi%7 >!ili$$i%e Ameri(a% ;e%eral I%&ra%(e I%(. ).
S*eet /i%e I%(., 505 SCRA 0A@, 52@ <0AA5=).
P#7i%7 a(& o'#ti7# 4a36 &isti(*%ish#&.
7Pre"iu" pa%8 refers to the additional co"pensation re%uired by law for
&or4 per)or"ed &it$in eig$t (<) $ours on non*&or4ing da%s, such as rest
days and special days. (<o. )))" D1I9 Handbook on &orkers Statutory =onetary
!ene*ts).
7O#erti"e pa%8 refers to the additional co"pensation for work
per)or"ed be%ond eig$t (<) $ours a da%. 9ery employee who is entitled to
premium pay is likewise entitled to the bene*t of oertime pay. (<o. )Q" Ibi#.).
.N-ERTIME NOT OFFSET BY OKERTIME: (Art. DD)
13. What is 7#a(t b3 M%(&#ti7# (ot o<s#t b3 o'#ti7#L!
+. 7ndertime work on any particular day shall not be oLset by oertime on
any other day.
?. 0ermission gien to the employee to go on leae on some other day of the
week shall not e#empt the employer from paying the additional
compensation re%uired by law such as oertime pay or night shift
diLerential pay.
EMERDEN1Y OKERTIME WOR0: (Art. DA)
1+. Wh#( 7a3 a( #74lo3## b# )o74#ll#& to 4#$o7 o'#ti7# "o2!
+. .he general rule remains that no employee may be compelled to render
oertime work against his will.
?. E2ceptions when employee may be compelled to render oertime work:
a. &hen the country is at war or when any other national or local
emergency has been declared by the <ational ;ssembly or the Chief
9#ecutie-
b. &hen oertime work is necessary to preent 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" *re" Moods"
typhoons" earth%uake" epidemic or other disasters or calamities-
c. &hen there is urgent work to be performed on machines" installations
or e%uipment" or in order to aoid serious loss or damage to the
employer or some other causes of similar nature-
d. &hen the work is necessary to preent loss or damage to perishable
goods-
e. &hen the completion or continuation of work started before the Fth
hour is necessary to preent serious obstruction or pre6udice to the
business or operations of the employer- and
f. &hen oertime work is necessary to aail of faorable weather or
enironmental conditions where performance or %uality of work is
dependent thereon.
15. Ma3 a( #74lo3## 'ali&l3 #$%s# to #(&# o'#ti7# "o2 %(&# a(3 o$
th# a$o#/sai& )i)%7sta()#s!
;n employee cannot alidly refuse to render oertime work if any of the
0age @F of +CG H 'eiew <otes on Iabor Iaws
afore$mentioned circumstances is present. &hen an employee refuses to render
emergency oertime work under any of the foregoing conditions" he may be
dismissed on the ground of insubordination or willful disobedience of the lawful
order of the employer.
WEE0LY REST PERIO- : (Art. A0)
1=. What is M"##2l3 #st 4#io&L!
+. 9ery employer shall gie his employees a rest period of not less than ?E
consecutie hours after eery B consecutie normal work days.
?. )f business is open on Sundays4holidays" rest day may be scheduled on
another day.
@. 0reference of employee as to his rest day should be respected if based on
religious grounds.
E. &aier of compensation for work on rest days and holidays is not alid.
1C. Wh#( 7a3 a( #74lo3# )o74#l his #74lo3##s to #(&# "o2 o( a
#st &a3!
7nder any of the following circumstances:
a. )n case of actual or impending emergencies caused by serious accident"
*re" Mood" typhoon" earth%uake" epidemic or other disaster or calamity"
to preent loss of life and property" or in case of force ma6eure or
imminent danger to public safety-
b. )n case of urgent work to be performed on machineries" e%uipment" or
installations" to aoid serious loss which the employer would otherwise
suLer-
c. )n the eent of abnormal pressure of work due to special
circumstances" where the employer cannot ordinarily be e#pected to
resort to other measures-
d. .o preent serious loss of perishable goods-
e. &here the nature of the work is such that the employees hae to work
continuously for seen (G) days in a week or more" as in the case of the
crew members of a essel to complete a oyage and in other similar
cases- and
f. &hen the work is necessary to aail of faorable weather or
enironmental conditions where performance or %uality of work is
dependent thereon.
1OMPENSATION FOR WOR0 ON REST -AY6 S.N-AY OR HOLI-AY: (Art. A4)
1E. Ho" is 4#7i%7 )o74%t#& $o "o2 #(&##& o( a #st &a36 S%(&a3 o
holi&a3!
a. P#7i%7 4a3 $o "o2 o( s)h#&%l#& #st &a3.
; coered employee who is made or permitted to work on his scheduled
rest day shall be paid with an additional compensation of at least thirty
percent (@CT) of his regular wage.
b. P#7i%7 4a3 $o "o2 o( S%(&a3 "h#( it is #74lo3##;s #st &a3.
; coered employee shall be entitled to such additional compensation of
thirty percent (@CT) of his regular wage for work performed on a Sunday
only when it is his established rest day.
). P#7i%7 4a3 $o "o2 4#$o7#& o( S%(&a3s a(& holi&a3s "h#(
#74lo3## has (o #*%la "o2&a3s a(& (o s)h#&%l#& #*%la #st
&a3s.
0age @D of +CG H 'eiew <otes on Iabor Iaws
&here 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 (@CT) of his
regular wage for work performed on Sundays and holidays.
&. P#7i%7 4a3 $o "o2 4#$o7#& o( s4#)ial holi&a3s @(o" s4#)ial
&a3sA "hi)h $all o( #74lo3##;s s)h#&%l#& #st &a3.
&ork performed on any special holiday (now special day) shall be paid with
an additional compensation of at least thirty percent (@CT) of the regular
wage of the employee. &here such holiday work falls on the employeeJs
scheduled rest day" he shall be entitled to additional compensation of at
least *fty percent (ACT) of his regular wage.
#. Hi*h# at# 4o'i&#& i( a*##7#(ts.
&here the collectie bargaining agreement or other applicable
employment contract stipulates the payment of higher premium pay than
that prescribed by law" the employer shall pay such higher rate.
HOLI-AY PAY : (Art. A@)N
1F. What is holi&a3 4a3!
Holiday pay is a premium gien to employees pursuant to law een if he is
not suLered to work on a regular holiday.
$ )f worker did not work on regular holiday" he is entitled to +CCT of his
basic pay-
$ )f he worked" he is entitled to ?CCT thereof.
E(titl#7#(t o$ 7o(thl3/4ai& #74lo3##s to #*%la holi&a3 4a3.
.he Iabor Code does not e#clude monthly$paid employees from the bene*ts
of holiday pay. Howeer" the implementing rules on holiday pay e#cluded monthly$
paid employees from the said bene*ts by inserting under 'ule )Q" !ook ))) of the said
rules" Section ? which proides that monthly$paid employees are presumed to be
paid for all days in the month" whether worked or not. )n Polic% ,nstructions No.
5 " the Secretary of Iabor categorically declared that the bene*t is intended
primarily for daily$paid employees when the law clearly states that
eery worker should be paid their regular holiday pay. .his is a Magrant iolation of
the mandatory directie of ;rticle E of the Iabor Code which states that doubts in
the implementation and interpretation of the Code" including its implementing rules"
shall be resoled in faor of labor. =oreoer" it shall always be presumed that the
legislature intended to enact a alid and permanent statute which would hae the
most bene*cial eLect that its language permits. (I%&lar Ba%k of Aia a%# Ameri(a
Em$lo"ee U%io% <IBAAEU= ). I%(io%7, et al., ;. R. No. /9B5@0B, O(t. 54, 0AD@).
;n administratie interpretation which diminishes the bene*ts of labor more
than what the statute delimits or withholds is obiously ultra ires. (T!e C!artere#
Ba%k Em$lo"ee Ao(iatio% ). O$le, et al., ;. R. No. /9@@101, A&7. 5D, 0ADB).
!ut in the ?CCE case of O&a(*o 's. NLR1" (;. R. No. 0@1@52, J&%e 02,
522@)" both the petitioners and respondent *rm anchored their respectie
arguments on the alidity of Section ?" 'ule )Q of !ook ))) of the 1mnibus 'ules
)mplementing the Iabor Code. )ndeed" it is deplorable" said the Supreme Court" that
both parties (the petitioners and the respondent employer) premised their
arguments on an implementing rule that the Court had declared oid twenty years
ago in ,nsular Ban4 o) Asia #s. ,nciong, <&$ra=. .his case is cited prominently in
basic commentaries. ;nd yet" counsel for both parties failed to consider this. .his
does not speak well of the %uality of representation they rendered to their clients.
.his controersy should hae ended long ago had either counsel *rst checked the
0age EC of +CG H 'eiew <otes on Iabor Iaws
alidity of the implementing rule on which they based their contentions. .he High
Court declared:
2&e hae long ago declared oid Section ?" 'ule )Q of !ook ))) of the
1mnibus 'ules )mplementing the Iabor Code. )n ,nsular Ban4 o) Asia
#. ,nciong, <;. R. No. /9B5@0B, O(tober 54, 0AD@6 /1C P$il. =/5
(0AD@)=, we ruled as follows:
ZSection ?" 'ule )Q" !ook ))) of the )mplementing 'ules and
0olicy )nstructions <o. D issued by the Secretary (then =inister)
of Iabor are null and oid since in the guise of clarifying the
Iabor CodeJs proisions on holiday pay" they in eLect amended
them by enlarging the scope of their e#clusion.
Z.he Iabor Code is clear that monthly$paid employees are not
e#cluded from the bene*ts of holiday pay. Howeer" the
implementing rules on holiday pay promulgated by the then
Secretary of Iabor e#cludes monthly$paid employees from the
said bene*ts by inserting" under 'ule )Q" !ook ))) of the
implementing rules" Section ? which proides that monthly$paid
employees are presumed to be paid for all days in the month
whether worked or not.J
2.hus" Section ? cannot sere as basis of any right or claim. ;bsent
any other legal basis" petitionersJ claim for wage diLerentials must fail.
29en assuming that Section ?" 'ule )Q of !ook ))) is alid"
petitionersJ claim will still fail. .he basic rule in this 6urisdiction is 2no
work" no pay.3 .he right to be paid for un$worked days is generally
limited to the ten legal holidays in a year. (See Arti(le A@ of t!e /abor
Co#e a%# E'e(&ti)e Or#er No. 554).
0etitionersJ claim is based on a mistaken notion that Section ?" 'ule
)Q of !ook ))) gae rise to a right to be paid for un$worked days beyond
the ten legal holidays. )n eLect" petitioners demand that ;<.9C1
should pay them on Sundays" the un$worked half of Saturdays and
other days that they do not work at all. 0etitionersJ line of reasoning is
not only a iolation of the 2no work" no pay3 principle" it also gies rise
to an inidious classi*cation" a iolation of the e%ual protection clause.
Sustaining petitionersJ argument will make monthly$paid employees a
priileged class who are paid een if they do not work.
2.he use of a diisor less than @BA days cannot make ;<.9C1
automatically liable for underpayment. .he facts show that petitioners
are re%uired to work only from =onday to /riday and half of Saturday.
.hus" the minimum allowable diisor is ?FG" which is the result of @BA
days" less A? Sundays and less ?B Saturdays (or A? half Saturdays).
;ny diisor below ?FG days means that ;<.9C1Js workers are
depried of their holiday pay for some or all of the ten legal holidays.
.he @CE days diisor used by ;<.9C1 is clearly aboe the minimum of
?FG days.
2/inally" petitioners cite 1hat##& Ba(2 E74lo3##s Asso)iatio(
'. O4l#6 <;.R. No. /9@@101, 5D A&7&t 0ADB, 13< SC(A /C3=" as an
analogous situation. 0etitioners hae misread this case.
2)n 1hat##& Ba(2" the workers sought payment for un$worked
l#*al holidays as a right guaranteed by a alid law. )n this case"
petitioners seek payment of wages for un$worked (o(/l#*al holidays
citing as basis a oid implementing rule. .he circumstances are also
markedly diLerent. )n 1hat##& Ba(2" there was a collectie
bargaining agreement that prescribed the diisor. <o C!; e#ists in this
0age E+ of +CG H 'eiew <otes on Iabor Iaws
case. )n 1hat##& Ba(2" the employer was liable for underpayment
because the diisor it used was ?A+ days" a *gure that clearly fails to
account for the ten legal holidays the law re%uires to be paid. Here" the
diisor ;<.9C1 uses is @CE days. .his *gure does not deprie
petitioners of their right to be paid on legal holidays.3 (O#a%7o ).
N/RC, et al., ;. R. No. 0@1@52, J&%e 02, 522@).
2G. What a# th# #*%la holi&a3s a(& s4#)ial &a3s!
Iist of eleen (++) regular holidays and two (?) special days under E.O. 2G36
I%(# 3G6 1FECAN R.A . No. F1CC6 <oember +@" ?CC?- and (A 55/, :uly ?A"
?CCG.
@aA RED.LAR HOLI-AYS
N#" Y#aPs -a3 / Ia(%a3 1
Ma%(&3 Th%s&a3 / Mo'abl# -at#
Doo& Fi&a3 / Mo'abl# -at#
Ei&;l Fit / Mo'abl# -at#
Aa" (* 0a*iti(*a(
@Bataa( a(&
1o#*i&o -a3A
/ A4il F
Labo -a3 / Ma3 1
I(&#4#(&#()# -a3 / I%(# 12
Natio(al H#o#s -a3
/Last S%(&a3 o$
A%*%st

Bo(i$a)io -a3 / No'#7b# 3G
1hist7as -a3 / -#)#7b# 25
Ri:al -a3 / -#)#7b# 3G
Ei&;l A&ha / 7o'abl#
@bA NATIONWI-E
SPE1IAL HOLI-AYS
All Sai(ts -a3 / No'#7b# 1
Last -a3 o$ th# Y#a / -#)#7b# 31
O<1.9: (.A. No. 51CC declares the *rst day of Shawwal" the tenth month of the
)slamic calendar" a national holiday for the obserance of Eid;l +itr" and the tenth
day of Whul Hi66a, the twelfth month of the )slamic calendar" a regional holiday in the
;utonomous 'egion in =uslim =indanao (;'==) for the obserance of Eid;l Ad$a.
Eid;l +itr (culmination of the 'amadhan /asting) is the *rst day marking the end of
the thirty (@C)$day fasting period of 'amadhan Eid;l Ad$a (Hari 'aya Ha6 $ /east of
Sacri*ce) is a tenth day in the month of Ha66 or )slamic 0ilgrimage to =ecca wherein
=uslims pay homage to ;brahamYs supreme act of sacri*ce and signi*es mankindYs
obedience to 8od.
1ther =uslim holidays * A"un Aadid ()slamic <ew Near) +
st
day of Hi6rah-
!aulin Nabi (!irthday of 0rophet =uhammad )- ,sra 3al !ira9 (=uhammadJs
<ight :ourney and ;scension)
.he appro#imate date of these )slamic holidays may be determined in
accordance with the )slamic calendar (>i9ra) or the lunar calendar" or upon )slamic
astronomical calculations" whicheer is possible or conenient.P Osee also 0D +CF@"
!ook Q" .itle ) , list =uslim HolidaysP
0age E? of +CG H 'eiew <otes on Iabor Iaws
21. What a# th# &isti()tio(s b#t"##( M#*%la holi&a3sL a(& Ms4#)ial
&a3sL!
.he following are the distinctions between 7regular $olida%s8 and 7special
da%s8D
a. ; coered employee who does not work during regular holidays is paid
+CCT of his regular daily wage- while a coered employee who does not
work during a special day does not receie any compensation under the
principle of 2no work" no pay.3
b. ; coered employee who works during regular holidays is paid ?CCT of
his regular daily wage- while a coered employee who works during special
days is only paid an additional compensation of not less than @CT of the
basic pay or a total of +@CT and at least ACT oer and aboe the basic
pay or a total of +ACT" if the worker is permitted or suLered to work on
special days which fall on his scheduled rest day.
22. What is th# &isti()tio( b#t"##( Ms4#)ial holi&a3sL a(& Ms4#)ial
&a3sL!
.here is none. MS4#)ial holi&a3s3 are now known as Ms4#)ial &a3s.L
(NOTEN R. A. A011 &e LS$e(ial -oli#a"P i%tea# of LS$e(ial Da"P i% #e(ribi%7
All Sai%t Da" a%# /at Da" of t!e Oear *!i(! *ere #e(ribe# a &(! &%#er
E'e(&ti)e Or#er No. 524 <J&%e 42, 0AD1=).
23. What is th# a44li)atio( o$ th# 4i()i4l# o$ M(o "o26 (o 4a3L to
#(titl#7#(t to holi&a3 4a3!
.he principle of 2no work" no pay3 applies to special days but not to
%("o2#& regular holidays where the employees are always paid the e%uialent of
+CCT of their basic pay.
2+. What a# th# 4#7i%7 4a3 $o "o2i(* o( holi&a3s!
+. 0remium pay for work performed during special days $ 3GQ on top of basic pay.
0remium pay for work performed during special days falling on
scheduled rest day $ 5GQ oer and aboe the basic pay.
25. What a# th# #<#)ts o$ abs#()#s o( #(titl#7#(t to #*%la holi&a3
4a3!
.he following are the eLect of absences on entitlement to regular holiday
pay:
a. E74lo3##s o( l#a'# o$ abs#()# "ith 4a3 $ entitled to regular
holiday pay.
b. E74lo3##s o( l#a'# o$ abs#()# "itho%t 4a3 o( th# &a3
i77#&iat#l3 4#)#&i(* a #*%la holi&a3 / may not be paid the
re%uired holiday pay if he has not worked on such regular holiday.
c. E74lo3##s o( l#a'# "hil# o( SSS o #74lo3##Ps )o74#(satio(
b#(#Bts/ 9mployers shall grant the same percentage of the holiday pay
as the bene*t granted by competent authority in the form of employeeJs
compensation or social security payment" whicheer is higher" if they are
not reporting for work while on such bene*ts.
d. Wh#( th# &a3 4#)#&i(* #*%la holi&a3 is a (o(/"o2i(* &a3
o s)h#&%l#& #st &a3 $ 9mployee shall not be deemed to be on leae
of absence on that day" in which case" he shall be entitled to the regular
0age E@ of +CG H 'eiew <otes on Iabor Iaws
holiday pay if he worked on the day immediately preceding the non$
working day or rest day.
25. What is th# %l# i( )as# o$ abs#()# &%i(* s%))#ssi'# #*%la
holi&a3s!
.he rule in case of successie regular holidays is as follows: ;n employee may
not be paid for both holidays i) $e absents $i"sel) )ro" &or4 on t$e da%
i""ediatel% preceding t$e frst $olida%, unless $e &or4s on t$e frst
$oliday" in which case" he is entitled to his holiday pay on the second holiday.
2=. What is th# %l# i( )as# t"o #*%la holi&a3s $alli(* o( th# sa7#
&a3!
D1I9 9#planatory !ulletin on &orkersJ 9ntitlement to Holiday 0ay on D ;pril
+DD@" ;raw ng Kagitingan and 8ood /riday enunciated the following rule in case of
two regular holidays falling on the same day <e.7., Ara* %7 Ra7iti%7a% a%# ;oo#
Gri#a" falli%7 o% A$ril A, 0AA4 (A$ril A, 522A 9 Ara* %7 Ra7iti%7a% a%# Ma&%#"
T!&r#a")N
+. )f employee did not work: ?CCT of basic pay-
?. )f employee worked: @CCT of basic pay.
Said bulletin dated =arch ++" +DD@" including the manner of computing the
holiday pay" was reproduced on :anuary ?@" +DDF" when ;pril D" +DDF was both
=aundy .hursday and ;raw ng Kagitingan.
)n the ?CCE case of Asian Trans"ission Corporation #s. CA" <;. R. No.
0@@33@, Mar(! 0B, 522@=, the petitioner sought the nulli*cation of the said =arch
++" +DD@ 9#planatory !ulletin. .he Supreme Court" in a5rming the alidity thereof"
ruled that ;rticle DE of the Iabor Code" as amended" aLords a worker the en6oyment
of ten paid regular holidays. .he proision is mandatory" regardless of whether an
employee is paid on a monthly or daily basis.
7nlike a bonus" which is a management prerogatie" holiday pay is a
statutory bene*t demandable under the law. Since a worker is entitled to the
en6oyment of ten paid regular holidays" the fact that two holidays fall on the same
date should not operate to reduce to nine the ten holiday pay bene*ts a worker is
entitled to receie.
)t is elementary" under the rules of statutory construction" that when the
language of the law is clear and une%uiocal" the law must be taken to mean
e#actly what it says. (I%&lar Ba%k of Aia a%# Ameri(a Em$lo"ee U%io% (IBAAEU)
). I%(io%7, ;.R. No. /9B5@0B, O(t. 54, 0AD@, 045 SCRA 334, 314).
)n the case at bar" there is nothing in the law which proides or indicates that
the entitlement to ten days of holiday pay shall be reduced to nine when two
holidays fall on the same day.
2C. OBCP. What is th# %l# i( )as# o$ #*%la M%sli7 holi&a3s!
)n the ?CC? case of Sa( Mi*%#l 1o4oatio( 's. Th# Ho(. 1A" <;. R. No.
0@311B, Ja%&ar" 42, 5225=" a routine inspection conducted by the Department of
Iabor and 9mployment in the premises of San =iguel Corporation (S=C) in Sta.
0age EE of +CG H 'eiew <otes on Iabor Iaws
/ilomena" )ligan City reealed that there was underpayment by S=C of regular
=uslim holiday pay to its employees. 0etitioner S=C asserts that ;rticle @(@) of
0residential Decree <o. +CF@ proides that 2(t)he proisions of this Code shall be
applicable only to =uslims # # #.3
.he Supreme Court" howeer" ruled that there should be no distinction
between =uslims and non$=uslims as regards payment of bene*ts for =uslim
holidays. .he Court of ;ppeals did not err in sustaining 7ndersecretary 9spa[ol who
stated:
2;ssuming arguendo that the respondentJs position is correct" then
by the same token" =uslims throughout the 0hilippines are also not
entitled to holiday pays on Christian holidays declared by law as
regular holidays. &e must remind the respondent$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 workerJs faith or religion.3
;t any rate" ;rticle @(@) of 0residential Decree <o. +CF@ also declares that 2#
# # nothing herein shall be construed to operate to the pre6udice of a non$=uslim.3
SERKI1E IN1ENTIKE LEAKE: (Art. AB)
2E OB+P. What a# th# basi) 4i()i4l#s *o'#(i(* th# *a(t o$ s#'i)#
i()#(ti'# l#a'#!
+. 9ery coered employee who has rendered at least one (+) year of serice
shall be entitled to a yearly serice incentie leae of *e (A) days with
pay.
?. =eaning of Eone %ear o) ser#iceE $ serice within twele (+?) months"
whether continuous or broken" reckoned from the date the employee
started working" including authoriKed absences and paid regular holidays"
unless the number of working days in the establishment as a matter of
practice or policy" or that proided in the employment contract" is less
than twele (+?) months" in which case" said period shall be considered as
one (+) year for the purpose of determining entitlement to the serice
incentie leae.
@. Serice incentie leae is commutable to cash if unused at the end of the
year.
E. .he basis of computation of serice incentie leae is the salary rate at the
date of commutation.
A. 8rant of acation leae or sick leae may be considered substitute for
serice incentie leae. (<ote: there is no proision in the Iabor Code
granting acation or sick leae).
)n the ?CCC case of I7b%i&o 's. NLR1" O8. '. <o. ++EG@E" =arch @+" ?CCCP"
where one of the issues pertained to the entitlement of an illegally dismissed
employee to serice incentie leae pay" it was held that haing already worked for
more than three (@) years at the time of her unwarranted dismissal" petitioner is
undoubtedly entitled to serice incentie leae bene*ts" computed from +DFD until
the date of her actual reinstatement. ;s ruled in +ernandeF #s. NL(C" O?FA SC';
+ED" +GB (+DDF)P 2OsPince a serice incentie leae is clearly demandable after one
year of serice $ whether continuous or broken $ or its e%uialent period" and it is
one of the Zbene*tsJ which would hae accrued if an employee was not otherwise
illegally dismissed" it is fair and legal that its computation should be up to the date
of reinstatement as proided under Section O;rticleP ?GD of the Iabor Code" as
amended.3
0age EA of +CG H 'eiew <otes on Iabor Iaws
.his ,"buido ruling was cited in the ?CCA case of I(t#*at#& 1o(ta)to
a(& Pl%7bi(* Wo2s6 I(). 's. NLR1" <;. R. No. 0B5@51, A&7&t A, 522B= which
inoles a pro6ect employee who later on became a regular employee after a series
of re$hiring. ;ccordingly" it was held that priate respondentJs serice incentie
leae credits of *e (A) days for eery year of serice" based on the actual serice
rendered to the petitioner in accordance with each contract of employment" should
be computed up to the date of reinstatement pursuant to ;rticle ?GD.
!ut in another ?CCA case" IPL Ma2#ti(* Po7otio(s 's. 1A" <;. R. No.
0B0A33, J&l" D, 522B=" where an employee was neer paid his serice incentie
leae during all the time he was employed" it was held that the same should be
computed not from the start of employment but a year after commencement of
serice" for it is only then that the employee is entitled to said bene*t. .his is
because the entitlement to said bene*t accrues only from the time he has rendered
at least one year of serice to his employer. )t must be noted that this bene*t is
gien by law on the basis of the serice actually rendered by the employee" and in
the particular case of the serice incentie leae" it is granted as a motiation for
the employee to stay longer with the employer. =oreoer" the computation thereof
should only be up to the date of termination of employment.
.here is no cause for granting said incentie to one who has already
terminated his relationship with the employer.
Ratio(al# $o l#a'# )#&it a))%7%latio( a(& )ash )o('#sio(.
)n a case inoling the accumulation of leae credits and their conersion into
cash" as proided in the Collectie !argaining ;greement" the Supreme Court
obsered that the conersion of leae credits into their cash e%uialent is aimed
primarily to encourage workers to work continuously and with dedication for the
company. Companies oLer incenties" such as the conersion of the accumulated
leae credits into their cash e%uialent" to lure employees to stay with the company.
Ieae credits are normally conerted into their cash e%uialent based on the last
preailing salary receied by the employee. (Re$&bli( >la%ter Ba%k, %o* k%o*% a
>NB9Re$&bli( Ba%k, ). N/RC, et al., ;. R. No. 001@32, Ja%. 3, 0AA1).
)n the ?CCA case of Auto Bus Transport S%ste", ,nc. #s. Bautista" <;. R.
No. 0B3431, Ma" 03, 522B, +5E S1RA 5CE=, the Supreme Court obsered that the
ser#ice incenti#e lea#e is a curious ani"al in relation to ot$er benefts
granted b% t$e la& to e#er% e"plo%ee. ,n t$e case o) ser#ice incenti#e
lea#e, t$e e"plo%ee "a% c$oose to eit$er use $is lea#e credits or
co""ute it to its "onetar% e:ui#alent i) not e2$austed at t$e end o) t$e
%ear. /urthermore" if the employee entitled to serice incentie leae does not use
or commute the same" $e is entitled upon $is resignation or separation )ro"
&or4 to t$e co""utation o) $is accrued ser#ice incenti#e lea#e. (NoteD B&
#ri)er a%# (o%#&(tor are %ot :el# $ero%%el6 ee latet SC R&li%7 GAR EAST
A;RICU/TURA/ ENT. ). /EBATIJUE, ET A/., ;.R. No. 035D04, Gebr&ar" 05, 5221)
;s enunciated by the Supreme Court in +ernandeF #s. NL(C" <;.R. No.
02BDA5, Ja%&ar" 5D, 0AAD, 35 P$il =6=, the clear policy of the Iabor Code is to
grant serice incentie leae pay to workers in all establishments" sub6ect to a few
e#ceptions. Section ?" 'ule Q" !ook ))) of the )mplementing 'ules and 'egulations
proides that 2OePery employee who has rendered at least one year of serice shall
be entitled to a yearly serice incentie leae of *e days with pay.L Ser#ice
incenti#e lea#e is a rig$t &$ic$ accrues to e#er% e"plo%ee &$o $as ser#ed
7&it$in 1/ "ont$s6 whether continuous or broken reckoned from the date the
employee started working" including authoriKed absences and paid regular holidays
unless the working days in the establishment as a matter of practice or policy" or
that proided in the employment contracts" is less than +? months" in which case
said period shall be considered as one year.3 It is also M)o77%tabl# to its
0age EB of +CG H 'eiew <otes on Iabor Iaws
7o(#3 #8%i'al#(t i$ (ot %s#& o #9ha%st#& at th# #(& o$ th# 3#a.L )n other
words" an employee who has sered for one year is entitled to
it. He may use it as leae days or he may collect its monetary alue. .o limit the
award to three years" as the solicitor general recommends" is to unduly restrict such
right.
(ee GAR EAST A;RICU/TURA/ ENT. ). /EBATIJUE, ET A/., ;.R. No. 035D04, Gebr&ar" 05,
522)
SERKI1E 1HARDES : (Art. A3)
2F OB?P. What a# s#'i)# )ha*#s!
.he rule on serice charges applies only to establishments collecting serice
charges" such as hotels" restaurants" lodging houses" night clubs" cocktail lounges"
massage clinics" bars" casinos and gambling houses" and similar enterprises"
including those entities operating primarily as priate subsidiaries of the
goernment. )t applies to all employees of coered employers" regardless of their
positions" designations or employment status" and irrespectie of the method by
which their wages are paid.
3G OB@P. Ho" is s#'i)# )ha*# &istib%t#&!
Serice charges are distributed in accordance with the following percentage
of sharing:
a. eighty$*e percent @E5QA for the employees to be distributed e%ually
among them- and
b. *fteen percent @15QA for the management to answer for losses and
breakages and distribution to managerial employees.
X .he 0?"CCC.CC salary ceiling for entitlement thereto is no longer
applicable.
X .he shares shall be distributed to employees not less often than once
eery ? weeks or twice a month at interals not e#ceeding +B days.
S#'i)# )ha*# is (ot 4oBt sha# a(& 7a3 th%s (ot b# &#&%)t#& $o7
"a*#.
)n the ?CCA case of Ma3o( Hot#l R R#sta%a(t 's. A&a(a" <;. R. No.
0B134@, Ma" 03, 522B=, the employer alleged that the *e (A) percent of the gross
income of the establishment being gien to the respondent$employees can be
considered as part of their wages. .he Supreme Court was not persuaded. )t %uoted
with approal the Iabor ;rbiter on this matter" to wit:
2&hile complainants" who were employed in the hotel"
receieOdP arious amounts as pro*t share" the same cannot be
considered as part of their wages in determining their claims for
iolation of labor standard bene*ts. ;lthough called pro*t shareO"P such
is in the nature of share from serice charges charged by the hotel.
.his is more e#plained by OrespondentsP when they testi*ed that what
they receied are not *#ed amounts and the same are paid not on a
monthly basis (pp. AA" D@" DE" +C@" +CE- ol. ))" rollo). ;lso" OpetitionersP
failed to submit eidence that the amounts receied by OrespondentsP
as pro*t share are to be considered part of their wages and had been
agreed by them prior to their employment. /urther" how can the
amounts receieOdP by OrespondentsP be considered as pro*t share
0age EG of +CG H 'eiew <otes on Iabor Iaws
when the same OareP based on the gross receipt of the hotelO(P <o
pro*t can as yet be determined out of the gross receipt of an
enterprise. 0ro*ts are realiKed after e#penses are deducted from the
gross income.3
WADES: (.itle ))" !ook .hree)
31 OBEP. What a# th# attib%t#s o$ "a*#! (Art. A1 <f=6 >ar.P%P, IRR of RA 3151)
+. ;ttributes of wage: (ame a t!e #e:%itio% of L*a7eP )
a. it is the remuneration or earnings" howeer designated" for work done or
to be done or for serices rendered or to be rendered-
b. it is capable of being e#pressed in terms of money" whether *#ed or
ascertained on a time" task" piece" or commission basis" or other method
of calculating the same-
c. it is payable by an employer to an employee under a written or unwritten
contract of employment for work done or to be done" or for serices
rendered or to be rendered- and
d. it includes the fair and reasonable alue" as determined by the Secretary
of Iabor and 9mployment" of board" lodging" or other facilities
customarily furnished by the employer to the employee. 2/air and
reasonable alue3 shall not include any pro*t to the employer" or to any
person a5liated with the employer.
?. 2&age3" 2salary3 and 2pay3- &isti()tio( $ they are synonymous in
meaning and usage.
@. 1o77issio( / 7a3 o 7a3 (ot b# t#at#& as 4at o$ "a*#
&#4#(&i(* o( th# )i)%7sta()#s.
E. ;ctual work is the basis of claim for wages (V<o work" no payV).
A. )ncentie 0ay <1. part of basic wage (Re"e ). N/RC, ;.R. No.032544, D
A&7. 5221)
MINIM.M WADE: ('; BC?- '; BG?G" as amended by '; F+FF)
32 OF?P. What is 7#a(t b3 Mstat%to3 7i(i7%7 "a*#L!
.he term 2statutory minimum wages3 refers simply to the lowest basic wage
rate *#ed by law that an employer can pay his workers.
33. OF@P. Ho" is th# 7i(i7%7 "a*# B9#&!
.he minimum wage rates for agricultural and non$agricultural workers and
employees in eery region shall be those prescribed by the 'egional .ripartite
&ages and 0roductiity !oards ('.&0!) which shall in no case be lower than the
statutory minimum wage rates.
3+. What is th# basis o$ th# )o74%tatio( o$ th# Mstat%to3 7i(i7%7
"a*#L!
.he basis of the minimum wage rates prescribed by law shall be the normal
working hours which shall not be more than eight (F) hours a day.
35. What is th# 4i()i4l# o$ (o(/#li7i(atio( o (o(/&i7i(%tio( o$ b#(#Bts!
0age EF of +CG H 'eiew <otes on Iabor Iaws
.his principle mandates that the reduction or diminution or withdrawal by
employers of any bene*ts" supplements or payments as proided in e#isting laws"
indiidual agreements or collectie bargaining agreements between workers and
employers or oluntary employer practice or policy" is not allowed. (Art. 022)
3=. What is a MWa*# O&#L!
2&age order3 refers to the 1rder promulgated by the 'egional .ripartite
&ages and 0roductiity !oard ('.&0!) pursuant to its wage *#ing authority.
3C OFGP. Wh#( is a MWa*# O&#L (#)#ssa3!
&heneer conditions in a particular region so warrant" the '.&0! shall
inestigate and study all pertinent facts and based on the standards and criteria
herein prescribed" shall proceed to determine whether a &age 1rder should be
issued.
3E OFFP. Wh#( &o#s a MWa*# O&#L b#)o7# #<#)ti'#!
;ny &age 1rder shall take eLect after *fteen (+A) days from its complete
publication in at least one (+) newspaper of general circulation in the region.
3F OFDP. What is th# 7o&# o$ a44#al $o7 a MWa*# O&#L iss%#& b3 th#
RTWPB!
;ny party aggrieed by the &age 1rder issued by the '.&0! may appeal
such order to the <ational &ages and 0roductiity Commission within ten (+C)
calendar days from the publication of such order. .he *ling of the appeal does not
stay the order or suspend the eLectiity thereof unless the person appealing such
order shall *le with the Commission" an undertaking with a surety or sureties
satisfactory to the Commission for the payment to the employees aLected by the
order of the corresponding increase" in the eent such order is a5rmed.
+G ODCP. What a# th# sta(&a&s,)it#ia $o 7i(i7%7 "a*# B9i(*!
)n the determination of regional minimum wages" the 'egional !oard shall"
among other releant factors" consider the following:
(a) .he demand for liing wages-
(b) &age ad6ustment is$\$is the consu"er price inde2 (CP,)-
(c) .he cost of liing and changes or increases therein ,nGation (ate
(,()H
(d) .he needs of workers and their families (+a"il% T$res$old)-
(e) .he need to induce industries to inest in the countryside (e.g.
C!!9" !=!9)-
(f) )mproements in standards of liing-
(g) .he preailing wage leels-
(h) /air return of the capital inested and capacity to pay of employers-
(i) 9Lects on employment generation and family income- and
(6) .he e%uitable distribution of income and wealth along the
imperaties of economic and social deelopment.
+1 OD+P. What is M"a*# &istotio(L!
V&age distortionV is a situation where an increase in prescribed wage rates
results in the elimination or seere contraction of intentional %uantitatie
diLerences in wage or salary rates between and among employee groups in an
establishment as to eLectiely obliterate the distinctions embodied in such wage
structure based on skills" length of serice" or other logical bases of diLerentiation.
0age ED of +CG H 'eiew <otes on Iabor Iaws
.he issue of whether or not a wage distortion e#ists is a %uestion of fact that
is within the 6urisdiction of the %uasi$6udicial tribunals.
PAYMENT OF WADES:
+2 OD?P. What a# th# $o7s o$ 4a37#(t o$ "a*#s!
+. 7nder the Ciil Code" it is mandated that the laborerJs wages shall be paid
in legal currency. 7nder the Iabor Code and its implementing rules" as a
general rule" wages
shall be paid in legal tender and the use of tokens" promissory notes"
ouchers" coupons or any other form alleged to represent legal tender is
prohibited een when e#pressly re%uested by the employee. (Art. 025)
?. E9)#4tio(s :
;. 0ayment through a%to7at#& t#ll# 7a)hi(# @ATMA of banks
proided the following conditions are met:
+. the ;.= system of payment is with the written consent of the
employees concerned-
?. .he employees are gien reasonable time to withdraw their
wages from the bank facility which time" if done during working
hours" shall be considered compensable hours worked-
@. .he system shall allow workers to receie their wages within the
period or fre%uency and in the amount prescribed under the Iabor
Code" as amended-
E. .here is a bank or ;.= facility within a radius of one (+) kilometer
to the place of work-
A. 7pon re%uest of the concerned employee4s" the employer shall
issue a record of payment of wages" bene*ts and deductions for a
particular period-
B. .here shall be n additional e#penses and no diminution of
bene*ts and priileges as a result of the ;.= system of payment-
G. .he employer shall assume responsibility in case the wage
protection proisions of law and regulations are not complied with
under the arrangement. (9#planatory !ulletin issued by D1I9
Secretary Ieonardo Suisumbing dated <oember ?A" +DDB).
!. 0ayment by )h#)2 o 7o(#3 o&#" (the foregoing conditions on
e#istence of bank facility and other factors should also concur).
Pa3sli4s as #'i&#()# o$ 4a37#(t.
)deally" according to the Supreme Court in 0a Asia6 I().6 #t al. 's.
1oo(a" (;. R. No. 0B@ADB, Aug. /, /00)" the signatures of the employees
should appear in the payroll as eidence of actual payment. Howeer" the absence
of such signatures does not necessarily lead to the conclusion that the amount due
the employees was not receied. =ore so in a case where it appears that the
payslips for the same period bear the signatures of the employees plus a
certi*cation that they receied the full compensation for the serices rendered.
3$ile ordinaril% a pa%slip is onl% a state"ent o) t$e gross "ont$l% inco"e
o) t$e e"plo%ee, $is signature t$erein coupled b% an ac4no&ledge"ent o)
)ull co"pensation alter t$e legal co"ple2ion o) t$e docu"ent. T$e pa%slip
beco"es a substantial proo) o) actual pa%"ent. =oreoer" there is no hard$
0age AC of +CG H 'eiew <otes on Iabor Iaws
and$fast rule re%uiring that the employeeJs signature in the payroll is the only
acceptable proof of payment. !y implication" the employees" in signing the payslips
with their acknowledgement of full compensation" un%uali*edly admitted the receipt
thereof.
)n the ?CCA case of D R M SPhils.T6 I(). 's. 1%:" (;. R. No. 0@2@AB, April
16, /006), the Supreme Court a5rmed the *nding of both the Iabor ;rbiter and
the <I'C on the ad"issibilit% as e#idence o) t$e pa% slips. ;s a general rule"
the Court is not duty$bound to dele into the accuracy of the <I'CJs factual *ndings
in the absence of a clear showing that these were arbitrary and bereft of any
rational basis. )n the present case" petitioner failed to demonstrate any arbitrariness
or lack of rational basis on the part of the <I'C.
;rticle ??+ of the Iabor Code proides that proceedings before the <I'C are
not coered by the technical rules of eidence and procedure. .he probatie alue
of the copy of the pay slips is aptly 6usti*ed by the <I'C" as follows:
2H t$e pa%slips are original duplicates o) co"puteriFed
pa%slips issued b% t$e e"plo%er" Salim ;l Nami 9st." to its workers
which contain entries such as pay date" employeeJs ).D. number"
employee name" category" basic rate" oertime hours and other
releant information" including an itemiKation of earnings (basic pay"
oertime pay" meal allowance for the period coered) and deductions.
T$e )act t$at t$e pa%slips are not aut$enticated &ill not
"ilitate against co"plainant;s clai", considering t$at in
presenting t$e pa%slips, co"plainant $as establis$ed t$e )act
o) underpa%"ent, and t$e burden $as s$i)ted to t$e
respondent to pro#e t$at co"plainant &as totall%
co"pensated )or actual ser#ices rendered.3
Pa3oll.
7nder Section BOaP" 'ule R" !ook ))) of the 'ules )mplementing the Iabor
Code" eery employer is re:uired to pa% $is e"plo%ees b% "eans o) pa%roll.
.he payroll should show" among other things" the employeeJs rate of pay"
deductions made" and the amount actually paid to the employee. )nterestingly" the
)ailure o) t$e e"plo%er to present t$e pa%roll to support his claim that the
petitioner was not his employee raises speculation whether this omission proes
that its presentation would be aderse to his case. (C!a)e+ ). N/RC, et al., ;. R.
No. 0@3B42, Aan. 1C, /006 citing Ta% ). /a7rama, 3<C SC(A 353 <5225=).
+3 OD@P. What is th# ti7# o$ 4a37#(t o$ "a*#s!
+. .ime of payment- e#ception. $ .he general rule is" wages shall be paid not
less often than once eery two (?) weeks or twice a month at interals not
e#ceeding si#teen (+B) days. <o employer shall make payment with less fre%uency
than once a month. .he e#ception to aboe rule is when payment cannot be made
with such regularity due to force ma6eure or circumstances beyond the employerJs
control" in which case" the employer shall pay the wages immediately after such
force ma6eure or circumstances hae ceased. (Arti(le 024, /abor Co#e)
++ ODEP. Wh## is th# 4la)# o$ 4a37#(t o$ "a*#s! (Art. 02@)
+. ;s a general rule" the place of payment shall be at or near the place of
undertaking.
?. E2ceptions:
0age A+ of +CG H 'eiew <otes on Iabor Iaws
a. &hen payment cannot be eLected 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 *re" Mood" epidemic or
other calamity rendering payment thereat impossible-
b. &hen the employer proides free transportation to the employees back
and forth- c. 7nder any other analogous circumstances" proided that the
time spent by the employees in collecting their wages shall be considered
as compensable hours worked.
@. 0ayment of wages in bars" massage clinics or nightclubs is prohibited
e#cept in the case of employees thereof.
0ayment through banks $ allowed in businesses and other entities with
twenty *e (?A) or more employees and located within one (+)
kilometer radius to a commercial" saings or rural bank.
+5 ODAP. To "ho7 sho%l& "a*#s b# 4ai&!
+. .eneral rule: payment of wages shall be made directly to the employee
entitled thereto and to nobody else.
?. E2ceptions.
a. &here the employer is authoriKed in writing by the employee to pay his
wages to a member of his family-
b. &here payment to another person of any part of the employeeJs wages
is authoriKed by e#isting law" including payments for the insurance
premiums of the employee and union dues where the right to check$oL
has been recogniKed by the employer in accordance with a collectie
agreement or authoriKed in writing by the indiidual employees
concerned- or
c. )n case of death of the employee" in which case" the same shall be paid
to his heirs without necessity of intestate proceedings.
Pa37#(t o$ "a*#s a(& oth# 7o(#ta3 )lai7s6 b%&#( o$ 4oo$.
)n Ii7#(#: 's. NLR1" <;.R. No. 003A32, A$ril 5, 0AA3, /6= SC(A <I which
inoles a claim for unpaid wages4commissions" separation pay and damages
against an employer" t$e Supre"e Court ruled t$at &$ere a person is sued
)or a debt ad"its t$at t$e debt &as originall% o&ed, and pleads pa%"ent
in &$ole or in part, it is incu"bent upon $i" to pro#e suc$ pa%"ent. .his is
based on the principle of eidence that each party must proe his a5rmatie
allegations. Since petitioner asserts that respondent has already been fully paid of
his stipulated salary" the burden is upon petitioner to proe such fact of full
payment. (See alo Natio%al Semi(o%#&(tor <-R= ). N/RC, et al., ;. R. No. 054B52,
J&%e 53, 0AAD)"
.hus" it was stated in the Ii7#(#: case that:
2;s a general rule" one who pleads payment has the burden of proing it.
9en where the plaintiL must allege non$payment" the general rule is that the
burden rests on the defendant to proe payment" rather than on the plaintiL
to proe non$payment. .he debtor has the burden of showing with legal
certainty that the obligation has been discharged by payment.
2&hen the e#istence of a debt is fully established by the eidence
contained in the record" the burden of proing that it has been e#tinguished
by payment deoles upon the debtor who oLers such a defense to the claim
of the creditor. &here the debtor introduces some eidence of payment" the
burden of going forward with the eidence $ as distinct from the general
burden of proof $ shifts to the creditor" who is then under a duty of producing
some eidence to show non$payment.3
0age A? of +CG H 'eiew <otes on Iabor Iaws
)n the ?CCA case of D R M SPhils.T6 I(). 's. 1%:" <;. R. No. 0@2@AB, April
16, /006I, petitioner merely denied respondentJs claim of underpayment. )t did not
present any controerting eidence to proe full payment. Hence" the *ndings of
the Iabor ;rbiter" the <I'C and the Court of ;ppeals that respondent was not fully
paid of his wages stand.
T$e positi#e testi"on% o) a creditor "a% be suJcient o) itsel) to
s$o& non*pa%"ent, e#en &$en "et b% indefnite testi"on% o) t$e debtor.
Similarly" the testimony of the debtor may also be su5cient to show payment" but"
where his testimony is contradicted by the other party or by a disinterested witness"
the issue may be determined against the debtor since he has the burden of proof.
Th# t#sti7o(3 o$ th# &#bto )#ati(* 7##l3 a( i($##()# o$ 4a37#(t "ill
(ot b# #*a&#& as )o()l%si'# o( that iss%#.
H#()#6 $o $ail%# to 4#s#(t #'i&#()# to 4o'# 4a37#(t6 4#titio(#s
&#$a%lt#& i( th#i &#$#(s# a(& i( #<#)t a&7itt#& th# all#*atio(s o$ 4i'at#
#s4o(&#(ts. (; H M <>!il.=, I%(. ). Cr&+, ;. R. No. 0@2@AB, A$ril 0B, 522B).
.he reason for the rule" according to the ?CCC case of Killa 's. NLR1, K..(.
No. 130536, 11 !a% /000I, is that the pertinent personnel *les" payrolls" records"
remittances and other similar documents , which will show that oertime"
diLerentials" serice incentie leae and other claims of workers hae been paid ,
are not in the possession of the worker but in the custody and absolute control of
the employer
FA1ILITIES AN- S.PPLEMENTS:
+= OBAP. What a# M$a)iliti#sL!
+. 2/acilities3 shall include articles or serices for the bene*t of the employee
or his family but shall not include tools of the trade or articles or serices
primarily for the bene*t of the employer or necessary to the conduct of the
employerJs business.
?. Qalue of facilities $ the fair and reasonable alue of board" lodging and
other facilities customarily furnished by an employer to his employees both
in agricultural and non$agricultural enterprises.
+C OBBP. What a# Ms%44l#7#(tsL!
+. 2Supplements3 means e#tra remuneration or special priileges or bene*ts
gien to or receied by the laborers oer and aboe their ordinary earnings
or wages.
)n the same ?CCA case of Ma3o( Hot#l R R#sta%a(t 's. A&a(a" <;. R.
No. 0B134@, Ma" 03, 522B= it was noted by the Supreme Court the uncontroerted
testimony of respondents on record that they were re%uired to eat in the hotel and
restaurant so that they will not go home and there is no interruption in the serices
of =ayon Hotel > 'estaurant. ;s ruled in =abeKa OinfraP" )ood or snac4s or ot$er
con#enience pro#ided b% t$e e"plo%ers are dee"ed as supple"ents i)
t$e% are granted )or t$e con#enience o) t$e e"plo%er. .he criterion in
making a distinction between a supplement and a facility does not so much lie in
the kind (food" lodging) but the purpose. Considering" therefore" that hotel workers
are re%uired to work diLerent shifts and are e#pected to be aailable at arious odd
hours" their ready aailability is a necessary matter in the operations of a small
hotel" such as petitionersJ business. .he deduction of the cost of meals from
respondentsJ wages" therefore" should be remoed.
L#*al #8%i#7#(ts 7%st b# )o74li#& "ith b#$o# &#&%)ti(* $a)iliti#s $o7
"a*#s.
0age A@ of +CG H 'eiew <otes on Iabor Iaws
;s stated in Mab#:a 's. NLR16 <;.R. No. 00DB23, A$ril 0D, 0AA1 (/C1 SC(A
=C0)=, the employer simply cannot deduct the alue from the employeeYs wages
without satisfying the following: (a) proof that such facilities are customarily
furnished by the trade- (b) the proision of deductible facilities is oluntarily
accepted in writing by the employee- and (c) the facilities are charged at fair and
reasonable alue.
Conse%uently" as held in =ayon Hotel > 'estaurant OsupraP" een granting
that meals and snacks were proided by the hotel to its employees and indeed
constituted facilities" such facilities could not be deducted without compliance with
certain legal re%uirements. .he records are clear that petitioners failed to comply
with these re%uirements. .here was no proof of respondentsJ written authoriKation.
)ndeed" the Iabor ;rbiter found that while the respondents admitted that they were
gien meals and merienda" the %uality of food sered to them was not what was
proided for in the +acilit% E#aluation Orders and it was only when they *led the
cases that they came to know of this supposed /acility 9aluation 1rders.
Considering the failure to comply with the aboe$mentioned legal re%uirements" the
Iabor ;rbiter therefore erred when he ruled that the cost of the meals actually
proided to respondents should be deducted as part of their salaries" on the ground
that respondents hae aailed themseles of the food gien by petitioners. .he law
is clear that mere aailment is not su5cient to allow deductions from employeesJ
wages.
Kol%(ta3 a))#4ta()# o$ $a)iliti#s #8%i#&.
)n order that the cost of facilities furnished by the employer may be charged
against an employee" his acceptance of such facilities must be oluntary. (Se(tio% 1,
R&le VII, Book III, R&le to Im$leme%t t!e /abor Co#e).
+E OBGP. What is th# &isti()tio( b#t"##( 7)acilitiesL a(& Msupple"ents8!
7+acilitiesE and Esupple"ents86 &isti()tio(: .he bene*t or priilege
gien to the employee which constitutes an e#tra remuneration oer and
aboe his basic or ordinary earning or wage" is supple"ent- and when
said bene*t or priilege is part of the laborerJs basic wage" it is a )acilit%.
.he criterion is not so much with the kind of the bene*t or item (food"
lodging" bonus or sick leae) gien but its purpose. .hus" free meals
supplied by the ship operator to crew members" out of necessity" cannot
be considered as facilities but supplements which could not be reduced
haing been gien not as part of wages but as a necessary matter in the
maintenance of the health and e5ciency of the crew personnel during the
oyage.
+F. What is th# %l# o( &#&%)tibilit3 o$ M$a)iliti#sL o Ms%44l#7#(tsL $o7
"a*#s!
+acilities may be charged to or deducted from wages. Supple"ents, on the
other hand" may not be so charged. .hus" when meals are freely gien to crew
members of a essel while they were on the high seas" not as part of their wages
but as a necessary matter in the maintenance of the health and e5ciency of the
crew personnel during the oyage" t$e deductions "ade t$ere)ro" )or t$e
"eals s$ould be returned to t$e"" and the operator of the coastwise essels
aLected should continue giing the same bene*t. (State Mari%e Coo$eratio% a%#
Ro"al /i%e, I%(. ). Ceb& Seame%I Ao(iatio%, I%(., ;. R. No. /905@@@, Geb. 5D,
0A34).
)n another case where the company used to pay to its driers and conductors"
who were assigned outside of the city limits" aside from their regular salary" a
certain percentage of their daily wage" as allo"a()# $o $oo&" it was ruled that
0age AE of +CG H 'eiew <otes on Iabor Iaws
the company should continue granting the said priilege. (Ceb& A&tob& Com$a%"
). U%ite# Ceb& A&tob& Em$lo"ee Ao(iatio%, ;. R. No. /9A1@5, O(t. 51, 0ABB).
)n the recent case of S// I%ter%atio%al Cable S$e(ialit ). N/RC, Rol#a%
/o$e+ et al., ;.R. No. 015030, !arc$ /, /0116 the Supreme Court held: 2&$et$er
t$e #alue o) t$e )acilities s$ould be included in t$e co"putation o) t$e
7&ages8 recei#ed b% pri#ate respondents, Section + of D1I9 =emorandum
Circular <o. ? proides that an employer may proide subsidiKed meals and snacks
to his employees proided that the subsidy shall not be less that @CT of the fair and
reasonable alue of such facilities. )n such cases" t$e e"plo%er "a% deduct )ro"
t$e &ages o) t$e e"plo%ees not "ore t$an C0L o) t$e #alue o) t$e "eals
and snac4s en9o%ed b% t$e latter, pro#ided t$at suc$ deduction is &it$ t$e
&ritten aut$oriFation o) t$e e"plo%ees concerned.
=oreoer" be)ore t$e #alue o) )acilities can be deducted )ro" t$e
e"plo%ees; &ages, t$e )ollo&ing re:uisites "ust all be attendant: :rt,
proof must be shown that such facilities are customarily furnished by the trade-
se(o%#" the proision of deductible facilities must be oluntarily accepted in writing
by the employee- and :%all"" facilities must be charged at reasonable alue.
E
=ere
aailment is not su5cient to allow deductions from employeesJ wages.
F
.hese re%uirements" howeer" hae not been met in this case. SLL )ailed to
present an% co"pan% polic% or guideline s$o&ing t$at pro#isions )or "eals
and lodging &ere part o) t$e e"plo%ee;s salaries. )t also failed to proide
proof of the employeesJ written authoriKation" much less show how they arried at
their aluations.
.he Court" at this point" makes a distinction between M$a)iliti#sL and
Ms%44l#7#(ts.L ,t is o) t$e #ie& t$at t$e )ood and lodging, or t$e
electricit% and &ater allegedl% consu"ed b% pri#ate respondents in t$is
case &ere not )acilities but supple"ents. )n the case of Ato4*Big 3edge
Assn. #. Ato4*Big 3edge Co.6
1G
the two terms were distinguished from one
another in this wise:
ESupple"ents,E therefore" constitute e#tra remuneration or
special priileges or bene*ts gien to or receied by the laborers o)er
and abo)e t!eir or#i%ar" ear%i%7 or *a7e. E+acilities,E on the other
hand" are items of e#pense necessary for the laborerYs and his familyYs
e#istence and subsistence so that by e#press proision of law (Sec.
?OgP)" they form part of the wage and when furnished by the employer
are deductible therefrom" since if they are not so furnished" the laborer
would spend and pay for them 6ust the same.
)n short" t$e beneft or pri#ilege gi#en to t$e e"plo%ee &$ic$
constitutes an e2tra re"uneration abo#e and o#er $is basic or ordinar%
earning or &age is supple"ent- and &$en said beneft or pri#ilege is part
o) t$e laborersM basic &ages, it is a )acilit%. .he distinction lies not so much in
the kind of bene*t or item (food" lodging" bonus or sick leae) gien" but in the
purpose for which it is gien.
11
I( th# )as# at b#()h" t$e ite"s pro#ided &ere
gi#en )reel% b% SLL )or t$e purpose o) "aintaining t$e eJcienc% and
$ealt$ o) its &or4ers &$ile t$e% &ere &or4ing at t$eir respecti#e pro9ects.
NOTE: .he )ost o$ %(i$o7 (employee) re%uired by the employer cannot be
deducted from their wages since the article is primarily for the bene*ts of the
8
=ayon Hotel > 'estaurant . ;dana, 8.'. <o. +AGB@E" ED? 0hil. FD? (?CCA)- Mabe+a ).
N/RC" @@F 0hil. @FB (+DDG).
9
=ayon Hotel > 'estaurant . ;dana" &$ra.
10
DG 0hil. ?DE (+DAA).
11
States =arine Corporation and 'oyal Iine" )nc. . Cebu SeamenYs ;ssociation" )nc." ++G
0hil. @CG (+DB@).
0age AA of +CG H 'eiew <otes on Iabor Iaws
latter (>SMSMC ). E%riS&e+, ;R /905AAA, J&l" 5B, 0A326 Sal)atierra et al ).
D"%at" &$er Ci%erama, N/RC CN RO@9DA9@0A@91@, A&7&t 5, 0A1B) see
p. 66 (preiously p. GG)
DRAT.ITY AN- ALLOWAN1ES :
5G OBDP. What is a *at%it3!
7.ratuit%P is a gift freely gien by the employer in appreciation of certain
faors or serices rendered. )t is not part of wages since" strictly speaking" it
is not intended as compensation for actual work. )t is further not demandable
as a matter of right.
51 OGCP. A# allo"a()#s 4at o$ "a*#!
OAllo"a()#sO a# (ot 4at o$ "a*#s. .herefore" in the computation of
the amount of retirement and other bene*ts" allowances shall not be included
therein.
NOTE: )ncentie 0ay is (ot 4at of basic wage (Re"e ). N/RC, ;R 032544, A&7.
D, 5221)
BON.S:
52 OG+P. What is bo(%s! Is it &#7a(&abl#!
7Bonus8 is an amount granted and paid e' 7ratia to the employee for
his industry or loyalty" hence" generall% not de"andable or en)orceable.
)f there is no pro*t" there should be no bonus. )f pro*t is reduced" bonus
should likewise be reduced" absent any agreement making such bonus part of
the compensation of the employees.
!y de*nition" a 7bonus8 is a gratuity or act of liberality of the gier. )t
is something gien in addition to what is ordinarily receied by or strictly due
the recipient. ; bonus is granted and paid to an employee for his industry
and loyalty which contributed to the success of the employerJs business and
made possible the realiKation of pro*ts.
12

; bonus is also granted by an enlightened employer to spur the
employee to greater eLorts for the success of the business and realiKation of
bigger pro*ts.
+@
53 OG?P. Wh#( is bo(%s &#7a(&abl# a(& #($o)#abl#!
1n the basis of e%uitable considerations" long practice" agreement
(e.g." C!;) and other peculiar circumstances" bonus may become
demandable and enforceable. Co%eS&e%tl", if bo%& i 7i)e% a a%
a##itio%al (om$e%atio% *!i(! t!e em$lo"er a7ree# to 7i)e *it!o&t a%"
(o%#itio% &(! a &((e of b&i%e or more eM(ie%t or more $ro#&(ti)e
o$eratio%, it is deemed part of wage or salary" hence" demandable.
(/e$a%to Cerami(, I%(. ). /e$a%to Cerami( Em$lo"ee Ao(iatio%, ;.R.
No. 0D2D33, Mar(! 5, 5202)
12
0rotacio . Iaya =ananghaya and Co." 8.'. <o. +BFBAE" 25 Ma)h 2GGF.
13
0hilippine ;irlines" )nc. . 0hilippine ;irlines 9mployees ;ssociation (0;I9;)" 8.'. <o.
+E?@DD" =arch +?" ?CCF" AEF SC'; ++G"+?D (iti%7 Stamford =arketing Corporation .
:ulian" EBF 0hil. @E" AA (?CCE)- 0hilippine 9ducation Co." )nc. (09C1) . Court of )ndustrial
'elations" D? 0hil. @F+" @FA (+DA?).
0age AB of +CG H 'eiew <otes on Iabor Iaws
7nlike +@
th

month pay" bonus may be forfeited in case employee is
found guilty of an administratie charge.
Bo(%s6 "h#( )o(si&##& a )o74a(3 4a)ti)#.
.o be considered a 2regular practice"3" the giing of the bonus should hae
been done oer a long period of time" and must be shown to hae been consistent
and deliberate. (;lobe Ma(ka" Cable a%# Ra#io Cor$oratio% ). N/RC, ;.R. No. /9
1@0B3, 034 SCRA 10).
.he t#st or rationale o$ this %l# on long practice re%uires an indubitable
showing that the employer agreed to continue giing the bene*ts knowing fully well
that said employees are not coered by the law re%uiring payment thereof.
(Natio%al S&7ar Re:%erie Cor$oratio% ). N/RC, ;.R. No. 020130, //0 SC(A 6/).
.hus" een if the bonus has been gien for %uite some time or since 2time$
immemorial3 as asserted by the union" in an amount e%uialent to two (?) months
gross pay for mid$year bonus and three (@) months gross pay for the year$end
bonus" t$e e"plo%er "a% #alidl% reduce it to two (?) months basic pay for mid$
year bonus" and two$months for year$end bonus" &it$out #iolating t$e non*
di"inution clause in t$e la& since bonuses are not part o) labor standards
in t$e sa"e class as salaries, cost*o)*li#ing allo&ances, $olida% pa% and
lea#e benefts, pro#ided under t$e Labor Code. .he contention of the union
that the granting of said bonuses had ripened into a company practice that may no
longer be ad6usted to the preailing condition of the bank has no legal and moral
bases. )ts *scal condition haing declined" the bank may not be forced to distribute
bonuses which it can no longer aLord to pay and" in eLect" be penaliKed for its past
generosity to its employees. (Tra#er Ro"al Ba%k ). N/RC, et al., ;. R. No. DD03D,
A&7. 42, 0AA2, 1<5 SC(A /C).
13th MONTH PAY: (>D DB0)
5+ OG@P. What is 13
th
7o(th 4a3!
2.hirteenth$month pay3 shall mean one$twelfth (+4+?) of the basi) sala3 of
an employee within a calendar year.
.he 7basic salar%8 of an employee for the purpose of computing the +@
th
month pay shall include all remunerations or earnings paid by the employer for
serices rendered but does not include allowances and monetary bene*ts which are
not considered or integrated as part of the regular or basic salary" suc$ as the cash
e%uialent of unused acation and sick leae credits" oertime" premium" night
diLerential and holiday pay and cost$of$liing allowances. Howeer" these salary$
related bene*ts should be included as part of the basic salary in the computation of
the +@
th
month pay if by indiidual or collectie agreement" company practice or
policy" the same are treated as part of the basic salary of the employees. (No. @ <a=,
Re)ie# ;&i#eli%e o% t!e Im$leme%tatio% of t!e 04
t!


Mo%t! >a" /a*6 No. C <C=,
DO/E -a%#book o% Worker Stat&tor" Mo%etar" Be%e:t).
0remium pay is not included in the computation of the +@
th
month pay.
(Da)ao Gr&it Cor$oratio% ). Ao(iate# /abor U%io%, ;. R. No. DB214, A&7. 5@,
0AA4, 55B SCRA B35).
)n the ?CCA case of Ho(&a Phils.6 I(). 's. Sa7aha( (* Mala3a(*
Ma(**a*a"a sa Ho(&a" O8. '. <o. +EAAB+" :une +A" ?CCAP" it was ruled that for
0age AG of +CG H 'eiew <otes on Iabor Iaws
employees receiing regular wage" 2basic salary3 has been interpreted to mean" not
the amount actually receied by an employee" but +4+? of their standard monthly
wage multiplied by their length of serice within a gien calendar year. .hus"
e#cluded from the computation of 2basic salary3 are payments for sick" acation
and maternity leaes" night diLerentials" regular holiday pay and premiums for work
done on rest days and special holidays as held preiously in San =iguel Corporation
<Ca7a"a% Co(a9Cola >la%t= ). I%(io%7, et al., <024 SCRA 04A (0AD0)=.
)n Ha*o(o3 R%al Ba(2 's. NLR1" K35 P$il. //0 (155<)I, St. Mi)ha#l
A)a&#73 's. NLR1" O36 P$il. 51 (155<)I" 1o(soli&at#& Foo& 1o4oatio(
's. NLR1" K3C3 P$il. C61 (1555)I and similar cases" the +@
th

month pay due an
employee was computed based on the employeeJs basic monthly wage multiplied
by the number of months worked in a calendar year prior to separation from
employment.
!ut in a case where the employer" from +DGA to +DF+" freely" oluntarily and
continuously included in the computation of its employeesJ thirteenth$month pay"
payments for sick" acation and maternity leaes" regular holiday pay and
premiums for work done on rest days and special holidays" despite the fact that the
law and the goernment issuances e#pressly e#cluded the same" it was ruled that
such act of the employer" being faorable to the employees" had ripened into a
practice and" therefore" they can no longer be withdrawn" reduced" diminished"
discontinued or eliminated. (Da)ao Gr&it Cor$oratio% ). Ao(iate# /abor U%io%,
et al., ;. R. No. DB214, A&7. 5@, 0AA4, //6 SC(A 6=/).
;nd the same holding was made in the ?CCE case of S#'illa Ta&i(*
1o74a(3 's. A. K. A. S#7a(a6 ;. R. No. 0B5@B3, A$ril 5D, 522@=" where the
employer" for two to three years prior to +DDD" added to the base *gure" in its
computation of the +@
th
month pay of its employees" the amount of other bene*ts
receied by the employees which are beyond the basic pay. .hese bene*ts included
oertime premium for regular oertime" legal and special holidays- legal holiday
pay" premium pay for special holidays- night premium- bereaement leae pay-
union leae pay- maternity leae pay- paternity leae pay- company acation and
sick leae pay- and cash conersion of unused company acation and sick leae.
0etitioner$employer claimed that it entrusted the preparation of the payroll to its
o5ce staL" including the computation and payment of the +@
th
month pay and other
bene*ts. &hen it changed its person in charge of the payroll in the process of
computeriKing its payroll" and after audit was
conducted" it allegedly discoered the error of including non$basic pay or other
bene*ts in the base *gure used in the computation of the +@
th
month pay of its
employees.
.he Supreme Court" howeer" was unconinced. ,t aJr"ed t$e ruling o)
t$e Noluntar% Arbitrator t$at petitioner;s stance o) "ista4e or error in t$e
co"putation o) t$e t$irteent$ "ont$ pa% is un"eritorious. 0etitionerJs
submission of *nancial statements eery year re%uires the serices of a certi*ed
public accountant to audit its *nances. )t is %uite impossible to suggest that they
hae discoered the alleged error in the payroll only in +DDD. .his implies that in
preious years it does not know its cost of labor and operations. .his is merely basic
cost accounting. ;lso" petitioner failed to adduce any other releant eidence to
support its contention. ;side from its bare claim of mistake or error in the
computation of the thirteenth month pay" petitioner merely appended to its petition
a copy of the +DDG$?CC? Collectie !argaining ;greement and an alleged
2corrected3 computation of the thirteenth month pay. .here was no e#planation
whatsoeer why its inclusion of non$basic bene*ts in the base *gure in the
computation of their +@
th


month pay in the prior years was made by mistake"
despite the clarity of statute and 6urisprudence at that time. (Se)illa Tra#i%7
Com$a%" ). A. V. A. Sema%a, et al., ;. R. No. 0B5@B3, A$ril 5D, 522@).
0age AF of +CG H 'eiew <otes on Iabor Iaws
55 OGEP. Who a# #(titl#& to 13
th


7o(th 4a3!
;ll rank$and$*le employees are entitled to a +@th$month pay regardless
of the amount of basic salary that they receie in a month and regardless
of their designation or employment status" and irrespectie of the method
by which their wages are paid" proided that they hae worked for at least
o(# @1A 7o(th during a calendar year.
13
th
/7o(th 4a3 o$ #si*(#& o s#4aat#& #74lo3##.
;n employee who has resigned or whose serices were terminated at any
time before the time for payment of the +@
th
month pay is entitled to this monetary
bene*t in proportion to the length of time he worked during the year" reckoned from
the time he started working during the calendar year up to the time of his
resignation or termination from serice. .hus" if he worked only from :anuary up to
September" his proportionate +@
th
month pay should be the e%uialent of +4+? of his
total basic salary which he earned during that period. (No. 3, Re)ie# ;&i#eli%e o%
t!e Im$leme%tatio% of t!e 04
t!
Mo%t! >a" /a*6 No. C <;=, DO/E -a%#book o%
Worker Stat&tor" Mo%etar" Be%e:t6 I%ter%atio%al S(!ool of S$ee(! ). N/RC, et
al., ;. R. No. 0053BD, Mar(! 0D, 0AAB6 Nillara"a #s. NL(C, et al., ;. R. No.
0234@0, Se$t. 5, 0AA@, /3= SC(A /<0).
)n the ?CCA case of 1laio( Pi(ti(* Ho%s#6 I(). 's. NLR1" <;. R. No.
0@D415, J&%e 51, 522B=, an employee who was receiing 0B"ACC.CC in monthly
salary and who had worked for at least si# (B) months at the time of her
retrenchment" was held to be entitled to her proportionate +@
th


month pay
computed as follows:
(=onthly Salary # B ) 4 +? ] 0roportionate +@
th


month pay
(0B"ACC.CC # B) 4 +? ] 0@"?AC.CC
.he payment of the +@
th
month pay may be demanded by the employee upon
the cessation of employer$employee relationship. .his is consistent with the
principle of e%uity that as the employer can re%uire the employee to clear himself of
all liabilities and property accountability" so can the employee demand the payment
of all bene*ts due him upon the termination of the relationship. (No. 3, Re)ie#
;&i#eli%e o% t!e Im$leme%tatio% of t!e 04
t!
Mo%t! >a" /a*).
'egarding pro$ration of the +@
th


month pay" the Supreme Court in Ho(&a
Phils.6 I(). 's. Sa7aha( (* Mala3a(* Ma(**a*a"a sa Ho(&a" <;. R. No.
0@BB30, J&%e 0B, 522B=" took cogniKance of the fact that the said 'eised 8uidelines
on the )mplementation of the +@
th
=onth 0ay Iaw proided for a pro$ration of this
bene*t only in cases of resignation or separation from work. ;s the rules state"
under these circumstances" an employee is entitled to a pay in proportion to the
length of time he worked during the year" reckoned from the time he started
working during the calendar year. (Section B thereof). .he Court of ;ppeals thus
held that:
2Considering the foregoing" the computation of the +@
th


month pay
should be based on the length of serice and not on the actual wage
earned by the worker. )n the present case" there being no gap in the
serice of the workers during the calendar year in %uestion" the
computation of the +@
th


month pay should not be pro$rated but should
be gien in full.3 (9mphasis supplied)
0age AD of +CG H 'eiew <otes on Iabor Iaws
=ore importantly" it has not been refuted that Honda has not implemented
any pro$rating of the +@
th


month pay before the instant case. Honda did not adduce
eidence to show that the +@
th
month" +E
th


month and *nancial assistance bene*ts
were preiously sub6ect to deductions or pro$rating or that these were dependent
upon the companyJs *nancial standing. ;s held by the Qoluntary ;rbitrator:
2.he Company (Honda) e#plicitly accepted that it was the strike
held that promptOedP them to adopt a pro$rata computation" aside
OfromP being in OaP state of rehabilitation due to ??G= substantial
losses in +DDG" ++E= in +DDF and ?+A= lost of sales in +DDD due to
strike. .his is an implicit acceptance that prior to the strike" a full
month basic pay computation was the 2present practice3 intended to
be maintained in the C!;.3
.he memorandum dated <oember ??" +DDD which Honda issued shows that
it was the *rst time a pro$rating scheme was to be implemented in the company. )t
was a conenient coincidence for the company that the work stoppage held by the
employees lasted for thirty$one (@+) days or e#actly one month. .his enabled them
to deise a formula using ++4+? of the total annual salary as base amount for
computation instead of the entire amount for a +?$month period.
.hat a full month payment of the +@
th


month pay is the established practice
at Honda is further bolstered by the a5daits e#ecuted by /eliteo !autista and
9dgardo CruKada. !oth attested that when they were absent from work due to
motorcycle accidents" and after they hae e#hausted all their leae credits and
were no longer receiing their monthly salary from Honda" they still receied the full
amount of their +@
th
month" +E
th
month and *nancial assistance pay.
.he case of -a'ao F%its 1o4oatio( 's. Asso)iat#& Labo .(io(s6 #t
al. <;.R. No. DB214, A&7&t 5@, 0AA4, //6 SC(A 6=/I presented an e2a"ple o) a
#oluntar% act o) t$e e"plo%er t$at $as ripened into a co"pan% practice. )n
that case" the employer" from +DGA to +DF+" freely and continuously included in the
computation of the +@
th


month pay those items that were e#pressly e#cluded by the
law. )t was held that this act" which was faorable to the employees though not
conforming to law" has ripened into a practice and" therefore" can no longer be
withdrawn" reduced" diminished" discontinued or eliminated. /urthermore" in S#'illa
Ta&i(* 1o74a(3 's. S#7a(a" <;.R. No. 0B5@B3, 5D A$ril 522@, @5D SCRA 54A=,
it was stated:
2&ith regard to the l#(*th o$ ti7# th# )o74a(3 4a)ti)#
sho%l& ha'# b##( #9#)is#& to )o(stit%t# 'ol%(ta3 #74lo3#
4a)ti)# "hi)h )a((ot b# %(ilat#all3 "ith&a"( b3 th#
#74lo3#6 "# hol& that H%is4%&#()# has (ot lai& &o"( a(3
%l# #8%ii(* a s4#)iB) 7i(i7%7 (%7b# o$
3#as. )n the aboe %uoted case of Daao /ruits Corporation s.
;ssociated Iabor 7nions" the company practice lasted for si# (B) years.
)n another case" Daao )ntegrated 0ort Steedoring Serices s.
;bar%ueK" the employer" for three (@) years and nine (D) months"
approed the commutation to cash of the unen6oyed portion of the sick
leae with pay bene*ts of its intermittent workers. &hile in .iangco s.
Ieogardo" :r. the employer carried on the practice of giing a *#ed
monthly emergency allowance from <oember +DGB to /ebruary +DFC"
or three (@) years and four (E) months. I( all th#s# )as#s6 this 1o%t
h#l& that th# *a(t o$ th#s# b#(#Bts has i4#(#& i(to )o74a(3
4a)ti)# o 4oli)3 "hi)h )a((ot b# 4##74toil3 "ith&a"(. )n
the case at bar" petitioner Seilla .rading kept the practice of including
non$basic bene*ts such as paid leaes for unused sick leae and
acation leae in the computation of their +@
th
$month pay for at least
two (?) years. This6 "# %l# li2#"is# )o(stit%t#s 'ol%(ta3
#74lo3# 4a)ti)# "hi)h )a((ot b# %(ilat#all3 "ith&a"( b3
0age BC of +CG H 'eiew <otes on Iabor Iaws
th# #74lo3# "itho%t 'iolati(* At. 1GG o$ th# Labo 1o&#.L
(9mphasis supplied)
Iastly" the foregoing interpretation of law and 6urisprudence is more in
keeping with the underlying principle for the grant of this bene*t. )t is primarily
gien to alleiate the plight of workers and to help them cope with the e#orbitant
increases in the cost of liing. .o allow the pro$ration of the +@
th


month pay in this
case is to undermine the wisdom behind the law and the mandate that the
workingmanJs welfare should be the primordial and paramount consideration.
<Citi%7 Sa%to ). Velar#e, 60 P$il. 3<1, 350*351 <5224=). W!at i more, t!e
fa(t&al milie& of t!i (ae i &(! t!at to r&le ot!er*ie i%e)itabl" re&lt to
#i&aio%, if %ot a #eterre%t, for *orker from t!e free e'er(ie of t!eir
(o%tit&tio%al ri7!t to elf9or7a%i+atio% a%# to trike i% a((or#a%(e *it! la*.
(Se(tio% 4, Arti(le CIII9So(ial J&ti(e a%# -&ma% Ri7!t, >!ili$$i%e Co%tit&tio%6
-o%#a >!il., I%(. ). Sama!a% %7 Mala"a%7 Ma%77a7a*a a -o%#a, ;. R. No.
0@BB30, J&%e 0B, 522B).
!ut the rule is diLerent if an employee was neer paid his +@
th


month pay
during his employment. ; case in point is IPL Ma2#ti(* Po7otio(s 's. 1A" <;.
R. No. 0B0A33, J&l" D, 522B=" where the Supreme Court ruled that" in such a case"
the computation for the +@
th


month pay should properly begin from the *rst day of
employment up to the last day of work of the employee. .his bene*t is gien by law
on the basis of the serice actually rendered by the employee.
5= OGAP. Who a# #9#74t#& #74lo3#s $o7 th# )o'#a*# o$ 13
th
7o(th
4a3!
.he following are e2e"pted e"plo%ersD
a. .he go#ern"ent and any of its political subdiisions" including
goernment$owned and controlled corporations" #9)#4t those
corporations operating essentially as priate subsidiaries of the
goernment.
b. E"plo%ers alread% pa%ing t$eir e"plo%ees 13t$*"ont$ pa% or
"ore in a calendar year or its e%uialent at the time of this issuance.
c. E"plo%ers o) $ouse$old $elpers and persons in t$e personal
ser#ice o) anot$er in relation to such workers.
9mployers of those who are paid on purel% co""ission"
boundary" or tas4 basis, and those who are paid a *#ed amount for
performing a speci*c work" irrespectie of the time consumed in the
performance thereof" #9)#4t where the &or4ers are paid on
piece*rate basis in which case" the employer shall be coered by the
+@
th
month pay law insofar as such workers are concerned.
5C OGBP. What is 7#a(t b3 th# 4has# Mits #8%i'al#(tL i( th# 13
th


7o(th
4a3 la"!
.he term 2its e%uialent3 shall include Christmas bonus" mid$year bonus"
pro*t$sharing payments and other cash bonuses amounting to not less than +4+?th
of the basic salary but shall not include cash and stock diidends" cost of liing
allowances and all other allowances regularly en6oyed by the employee" as well as
non$monetary bene*ts. &here an employer pays less than +4+?th of the employeeJs
basic salary" the employer shall pay the diLerence.
)n the ?CCA case of IPL Ma2#ti(* Po7otio(s 's. 1A" O8. '. <o. +A+DBB"
:uly F" ?CCAP" the petitioner$employer contends that the employees are no longer
entitled to the payment of +@
th
month pay as well as serice incentie leae pay
0age B+ of +CG H 'eiew <otes on Iabor Iaws
because they were proided salaries which were oer and aboe the minimum
wage. ;dmittedly" priate respondent$employees were not gien their +@
th
month
pay and serice incentie leae pay while they were under the employ of :0I. T$e
Supre"e Court ruled t$at t$e di@erence bet&een t$e "ini"u" &age and
t$e actual salar% recei#ed b% pri#ate respondents cannot be dee"ed as
t$eir 13
t$
"ont$ pa% and ser#ice incenti#e lea#e pa% as suc$ di@erence is
not e:ui#alent to or o) t$e sa"e i"port as t$e said benefts conte"plated
b% la&. .hus" as properly held by the Court of ;ppeals and by the <I'C" priate
respondents are entitled to the +@
th
month pay and serice incentie leae pay.
5E OGGP. Wh#( sho%l& th# 13
th

7o(th 4a3 b# 4ai&!
.he re%uired +@th month pay shall be paid not later than December ?E of
each year.

5F OGFP. What is th# %l# i( )as# a( #74lo3## has 7%lti4l# #74lo3#s!
8oernment employees working part$time in a priate enterprise" including
priate educational institutions" as well as employees working in two or more
priate *rms" whether on full or part$time basis" are e%title# to t!e reS&ire# 04t!9
mo%t! $a" from all t!eir $ri)ate em$lo"er re7ar#le of t!eir total ear%i%7 from
ea(! or all t!eir em$lo"er.
=G OGDP. Is 13
th


7o(th 4a3 ta9/#9#74t!
Y#s. The +@
th
month pay is ta# e#empt @R.A. CE33A. !ut under (A </"
the e#emption is limited to 0@C"CCC.CC.
=1 OFCP. Ma3 4a37#(t o$ bonus b# credited as pa%"ent o) 13
t$
"ont$ pa%!
a. =arcopper =ining Corp. s. 1ple" et al. case $ No
b. </S& s. 1e6era" et al. case $ Y#s
c. D1I9 0hilippines s. Ieogardo" et al. case $ Y#s
d. !rokenshire =emorial Hospital" )nc. s. <I'C" et al. case $ Y#s
e. 7nited C=C .e#tile &orkers 7nion s. QalenKuela" et al. case $ No
f. 7niersal Corn 0roducts s. <I'C" et al. case $ Y#s
g. /97 9mployees Iabor 7nion s. /97 case (inoling transportation
allowance which was treated as compliance with +@
th
month pay)
h. /ramanlis /arms" )nc. s. =inister of Iabor" et al. case $ No
i. Kamaya 0oint Hotel s. <I'C" et al. case $ Y#s
6. 7S. /aculty 7nion s. <I'C" et al. case $ No
1+th MONTH PAY:
=2 OF+P. What is a 1+
th


7o(th 4a3!
Th## is (o la" 7a(&ati(* th# 4a37#(t o$ 1+th/7o(th 4a3. )t
is" therefore" in the nature of a bonus which may not be imposed upon the
employer. )t is a gratuity to which the recipient has no right to make a
demand. (Oa"a%a Point >otel #s. NL(C, et al., ;. R. No. 1B5DA, A&7&t
40, 0ADA, 1CC SC(A 1=0).
0age B? of +CG H 'eiew <otes on Iabor Iaws
NOTE: '7I9 1< C1<.';C.)<8 1' S7!C1<.';C.)<8: (Art. 023, /C>) transposed to the
last page.
<os. DB $+CE ($$. B5 9 1@)
=3 O+CAP. What is 7#a(t b3 "o2# 4#$##()# i( )as# o$ ba(2%4t)3!
+. .he right to preference gien to workers under ;rticle ++C cannot e#ist in
any eLectie way prior to the time of its presentation in distribution
proceedings. ;rticle ++C applies only in case of bankruptcy or 6udicial
li%uidation of the employer.
?. :udicial proceedings i% rem is re%uired for creditorsJ claims against debtors
to become operatie.
@. .o contend that ;rticle ++C of the Iabor Code is applicable also to
e#tra6udicial proceedings would be putting the worker in a better position
than the State which could only assert its own prior preference in case of a
6udicial proceeding.
E. .he rig$t o) pre)erence as regards unpaid &ages recogniKed by
;rticle ++C of the Iabor Code does not constitute a lien on t$e
propert% o) t$e insol#ent debtor in )a#or o) t$e &or4ers but a rig$t
to a frst pre)erence in the discharge of the funds of the 6udgment
debtor.
A. Article 110 of the Iabor Code does not purport to create a lien in faor of
workers or employees for unpaid wages either upon all of the properties or
upon any particular property owned by their employer. Claims for unpaid
wages do not" therefore" fall at all within the category of specially preferred
claims established under ;rticles ??E+ and ??E? of the Ciil Code" e#cept
to the e#tent that such claims for unpaid wages are already coered by
;rticle ??E+" number B: 2claims for laborerJs wages" on the goods
manufactured or the work done-3 or by ;rticle ??E?" number @: 2claims of
laborers and other workers engaged in the construction" reconstruction or
repair of buildings" canals and other works" upon said buildings" canals or
other works.3 .o the e#tent that claims for unpaid wages fall outside the
scope of ;rticle ??E+" number B and ??E?" number @" they would come
within the ambit of the category of ordinary preferred credits under ;rticle
??EE.
B. Mot*a*# )#&it. / ; mortgage credit is a special preferred credit under
;rticle ??E+ of the Ciil Code while workersJ preference is an ordinary
preferred credit.
G. P#$##()# o$ ta9#s. )n one case" it was held that there is no merit in the
contention of the <I'C that ta#es are also absolutely preferred claims only
with respect to moable and immoable properties on which they are due.
.he claim of the goernment predicated on a ta# lien is superior to the
claim of a priate litigant predicated on a 6udgment. .he ta# lien attaches
not only from the serice of the warrant of distraint of personal property
but from the time the ta# became due and payable.
NOTE: ;s enunciated in the case of Ma%ila Ba%ki%7 Cor$oratio%, et al ).
N/RC, /abor Arbiter >ati, et al.,
1+
9 the Supreme Court" e% ba%(" resoled the
merits of the bene*ts awarded by the <I'C to the =anila !ank employees"
but with the #o(tri%al $ro%o&%(eme%t o% laborI e%titleme%t to $refere%(e"
to wit:
2&ith respect to 8.'. <o.+CGEFG =anila" the same is dismissed"
the issues raised therein haing been rendered moot and academic by
the foregoing dis%uisitions and disposition. Besides, it is be%ond
14
8.'. <o. +CGDC?" ?D September +DDG.
0age B@ of +CG H 'eiew <otes on Iabor Iaws
dispute t$at e"plo%ees indeed en9o% frst pre)erence in t$e
e#ent o) ban4ruptc% or li:uidation o) an e"plo%er;s business.3
(9mphasis supplied)
=oreoer" in DB> ). Sa%to, et al., ;.R. No. 1D530935, 2D Mar(! 0ADA
citing the rule e#pressed in Re$&bli( ). >eralta, 0B2 SCRA 41 <0ADD= $ it was
categorically stated: that 7a declaration o) ban4ruptc% or a li:uidation
"ust be present be)ore t$e &or4er;s pre)erence "a% be en)orced.8
;pparently" such circumstance is obtaining in the instant case.
REHABILITATION RE1EIKERSHIP:
=+ O+CBP.What is th# #<#)t o$ #habilitatio( #)#i'#shi4 o( 7o(#ta3
)lai7s o$ #74lo3##s!
(PBBE(3O(L- (P>,LS.), ,NC. NS. NL(C, ET AL.6 (8. '. <1. +?FCC@"
:7IN ?B" ?CCC)
ALE!A(;S S,BAL AN- SONS, ,NC. NS. NL(C, ET AL. (8. '. <1. ++EGB+"
:;<7;'N +D" ?CCC)
(S99 ;IS1 RUBBERWOR/D (>-I/S.), INC. VS. N/RC, ET A/., (;. R. NO.
053114" A>RI/ 0@, 0AAA) where the same issue is discussed and further
0'9/9'9<C9 )< C;S9 1/ !;<K'70.CN 1' I)S7)D;.)1< 7<D9' ;'.)CI9
++C 1/ .H9 I;!1' C1D9.
ATTORNEY;S FEES: (Art. 000)
=5 O+CGP. What is th# a7o%(t o$ atto(#3;s $##s that 7a3 b# allo"#& b3
la"!
+. )n cases of unlawful withholding of wages" the employer may be assessed
attorneyJs fees e%uialent to ten percent (+CT) of the amount of wages
recoered.
?. )t shall be unlawful for any person to demand or accept" in any 6udicial or
administratie proceedings for the recoery of wages" attorneyJs fees
which e#ceed ten percent (+CT) of the amount of wages recoered.
@. .he attorneyJs fees may be awarded only when the withholding of wages is
declared unlawful.
E. .he basis of the +CT attorneyJs fees is the amount of wages recoered.
Should there be any other monetary awards gien in the proceedings" the
same may not be assessed or sub6ected to the +CT attorneyJs fees.
PROHIBITIONS REDAR-IND WADES : (Chapter )Q" !ook .hree)
== O+CFP. What is 7#a(t b3 th# 4i()i4l# o$ (o(/i(t#$##()# i( &is4osal o$
"a*#s!

9mployers are not allowed to interfere in the disposal of wages of employees.
(Art.005)
=C O+CDP. What a# allo"abl# "a*# &#&%)tio(s! (Art. 004)
-eductions from the wages of the employees may be made by the
employer in any of the following cases:
0age BE of +CG H 'eiew <otes on Iabor Iaws
a. &hen the &#&%)tio(s a# a%thoi:#& b3 la"" (e.g." SSS" 0ag$)!)8)"
including deductions for the insurance premiums adanced by the
employer in behalf of the employee as well as union dues where the
right to check$oL has been recogniKed by the employer or authoriKed in
writing by the indiidual employee himself-
b. &hen the &#&%)tio(s a# "ith th# "itt#( a%thoi:atio( o$ th#
#74lo3##s for payment to a third person and the employer agrees to
do so6 4o'i&#& that th# latt# &o#s (ot #)#i'# a(3 4#)%(ia3
b#(#Bt6 &i#)tl3 o i(&i#)tl36 $o7 th# ta(sa)tio(-
c. Withhol&i(* ta9 mandated under the <ational )nternal 'eenue Code-
d. Withhol&i(* o$ "a*#s b#)a%s# o$ #74lo3##;s &#bt to th#
#74lo3# "hi)h is al#a&3 &%#-
e. -#&%)tio(s 7a&# 4%s%a(t to a H%&*7#(t a*ai(st th# "o2#r
under circumstances where the wages may be the sub6ect of
attachment or e#ecution but only for debts incurred for food" clothing"
shelter and medical attendance.
f. &hen &#&%)tio(s from wages are o&##& b3 th# )o%t-
g. -#&%)tio(s made for a*#()3 $## from non$union members who
accept the bene*ts under the C!; negotiated by the bargaining union.
.his form of deduction does not re%uire the written authoriKation of the
non$union member.
NOTE: See Note p. = (preiously p. EC).
=E O++CP. What a# &#4osits $o loss o &a7a*#!
<o employer shall re%uire his worker to make deposits from which deductions
shall be made for the reimbursement of loss of or damage to tools" materials" or
e%uipment supplied by the employer" e#cept when the employer is engaged in such
trades" occupations or business where the practice of making deductions or
re%uiring deposits is a recogniKed one" or is necessary or desirable as determined
by the Secretary of Iabor and 9mployment in appropriate rules and regulations.
=F O+++P. Is "ithhol&i(* o$ "a*#s a(& 2i)2ba)2 allo"#&!
No. )t shall be unlawful for any person" directly or indirectly" to withhold any
amount from the wages of a worker or induce him to gie up any part of his wages
by force" stealth" intimidation" threat or by any other means whatsoeer without the
workerJs consent.
CG. Ma3 &#&%)tio( b# allo"#& to #(s%# #74lo37#(t o #t#(tio( o$
#74lo37#(t!
)t shall be unlawful to make any deduction from the wages of any employee
for the bene*t of the employer or his representatie or intermediary as
consideration of a promise of employment or retention in employment.
C1 O++@P. What a# th# #taliato3 7#as%#s 4ohibit#& %(&# th# la"!
)t shall be unlawful for an employer to refuse to pay or reduce the wages and
bene*ts" discharge or in any manner discriminate against any employee who has
*led any complaint or instituted any proceeding or has testi*ed or is about to testify
in such proceedings.
A-MINISTRATION AN- ENFOR1EMENT OF LABOR LAWS:(Chapter Q)"
!ook .hree)
C2 O++EP.What is th# l#*al basis $o th# #9#)is# b3 th# S#)#ta3 o$ Labo
o$ his 'isitoial a(& #($o)#7#(t 4o"#s!
.he legal basis is ;rticle +?F which inoles the e#ercise by the Secretary of
Iabor and 9mployment or his duly authoriKed representaties" of the isitorial and
0age BA of +CG H 'eiew <otes on Iabor Iaws
enforcement powers proided therein. ;rticle +?F applies to inspection cases
inoling *ndings of the labor employment and enforcement o5cers or industrial
safety engineers regarding iolations of labor standards proisions of the Iabor
Code and other labor legislation.
;rticle +?F contemplates situations where the case for iolation of labor
standards laws and other labor legislations" arose from the routine inspection
conducted by the labor employment and enforcement o5cer or industrial safety
engineers of the Department of Iabor and 9mployment" with or without a complaint
initiated by an interested party. Here" it is generally the Department of Iabor and
9mployment which initiates the action.
EMPLOYMENT OF WOMEN:
C3 O++AP. What is (i*ht"o2 4ohibitio(! (Art. 042 a%# 040 re$eale# b" RA
020B0, J&%e 50, 5200)
'egardless of age" no woman shall be employed or permitted or suLered to
work" with or without compensation:
(a) )n any industrial undertaking or branch thereof between +C:CC oJclock at
night and B oJclock in the morning of the following day- or
(b) )n any commercial or non$industrial undertaking or branch thereof" other
than agricultural" between midnight and B oJclock in the morning of the
following day- or
(c) )n any agricultural undertaking at nighttime unless she is gien a period of
rest of not less than nine (D) consecutie hours.
C+ O++BP. What a# th# #9)#4tio(s to (i*ht"o2 4ohibitio(!
.he nightwork prohibition shall not apply in any of the following cases:
(a) )n cases of actual or impending emergencies caused by serious
accident" *re" Mood" typhoon" earth%uake" epidemic or other
disasters or calamity" to preent loss of life or property" or in cases of
force ma6eure or imminent danger to public safety-
(b) )n case of urgent work to be performed on machineries" e%uipment
or installation" to aoid serious loss which the employer would
otherwise suLer-
(c) &here the work is necessary to preent serious loss of perishable
goods-
(d) &here the woman employee holds a responsible position of
managerial or technical nature" or where the woman employee has
been engaged to proide health and welfare serices-
(e) &here the nature of the work re%uires the manual skill and de#terity
of women workers and the same cannot be performed with e%ual
e5ciency by male workers-
(f) &here the women employees are immediate members of the family
operating the establishment or undertaking- and
(g) 7nder other analogous cases e#empted by the Secretary of Iabor
and 9mployment in appropriate regulations.
C5 O++GP. What a# th# #8%i#& $a)iliti#s $o "o7#(!
9mployers are re%uired to:
(a) 0roide seats proper for women and permit them to use such seats when
they are free from work and during working hours" proided they can
perform their duties in this position without detriment to e5ciency-
(b) .o establish separate toilet rooms and laatories for men and women and
proide at least a dressing room for women-
(c) .o establish a nursery in a workplace for the bene*t of the women
employees therein- and
0age BB of +CG H 'eiew <otes on Iabor Iaws
(d) .o determine appropriate minimum age and other standards for
retirement or termination in special occupations such as those of Might
attendants and the like.
C= O++FP. What a# th# a)ts o$ &is)i7i(atio( a*ai(st "o7#( #94#ssl3
4ohibit#& %(&# R. A. =C25 @Ma3 126 1FEFA!
)t 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 se#.
Th# $ollo"i(* a# a)ts o$ &is)i7i(atio(:
(a) 0ayment of a lesser compensation" including wage" salary or other form of
remuneration and fringe bene*ts" to a female employee as against a male
employee" for work of e%ual alue- and
(b) /aoring a male employee oer a female employee with respect to
promotion" training opportunities" study and scholarship grants solely on
account of their se#es.
.here is criminal liability for the willful commission of any of the foregoing
unlawful act. ((. A. =C/6, id.).
MATERNITY LEAKE BENEFITS:
CC O++DP. What a# 7at#(it3 l#a'# b#(#Bts!
; coered female employee who has paid at least three monthly maternity
contributions in the twele$month period preceding the semester of her childbirth"
abortion or miscarriage and who is currently employed shall be paid a daily
maternity bene*t e%uialent to one hundred percent (+CCT) of her present basic
salary" allowances and other bene*ts or the cash e%uialent of such bene*ts for
si#ty (BC) days sub6ect to the following conditions:
(a) .hat the employee shall hae noti*ed her employer of her pregnancy and
the probable date of her childbirth which notice shall be transmitted to the
SSS in accordance with the rules and regulations it may proide-
(b) .hat the payment shall be adanced by the employer in two e%ual
installments within thirty (@C) days from the *ling of the maternity leae
application-
(c) .hat in case of caesarian deliery" the employee shall be paid the daily
maternity bene*t for GF days-
(d) .hat payment of daily maternity bene*ts shall be a bar to the recoery of
sickness bene*ts proided by this ;ct for the same compensable period of
si#ty (BC) days for the same childbirth" abortion or miscarriage-
(e) .hat the maternity bene*ts shall be paid only for the *rst four delieries
after =arch +@" +DG@-
(f) .hat the SSS s$all i""ediatel% rei"burse t$e e"plo%er o) one
$undred percent (100L) o) t$e a"ount o) "aternit% benefts
adanced to the employee by the employer upon receipt of satisfactory proof
of such payment and legality thereof- and
@*A .hat if an employee should gie birth or suLer abortion or miscarriage
&it$out t$e re:uired contributions $a#ing been re"itted )or $er b%
$er e"plo%er to t$e SSS, or &it$out t$e latter $a#ing been
pre#iousl% notifed b% t$e e"plo%er o) t$e ti"e o) t$e pregnanc%,
0age BG of +CG H 'eiew <otes on Iabor Iaws
t$e e"plo%er s$all pa% to t$e SSS da"ages e:ui#alent to t$e
benefts &$ic$ said e"plo%ee &ould ot$er&ise $a#e been entitled to"
and the SSS shall in turn pay such amount to the employee concerned. ((A
C3//, !arc$ 3, 155/).
CE O+?CP. Is a( %(7ai#& 4#*(a(t "o7a( #(titl#& to 7at#(it3 l#a'#
b#(#Bts!
9ery pregnant woman in the priate sector" "h#th# 7ai#& o
%(7ai#&" is entitled to the maternity leae bene*ts.
CFO+?+P.A# 7at#(it3 l#a'# b#(#Bts i()l%&#& i( th# )o74%tatio( o$ 13
th
7o(th 4a3!
Mat#(it3 b#(#Bts" like other bene*ts granted by the SSS" are granted to
employees in lieu of wages and" therefore" may (ot b# i()l%&#& i( )o74%ti(*
th# #74lo3##;s 13th/7o(th 4a3 $o th# )al#(&a 3#a.
EG O+??P. A# 'ol%(ta3 o s#l$/#74lo3#& 7#7b#s o$ th# SSS #(titl#& to
7at#(it3 l#a'# b#(#Bts!
Noluntar% or sel)*e"plo%ed "e"bers are not entitled to t$e
"aternit% beneft because to be entitled thereto" corresponding maternity
contributions should be paid by employers. Qoluntary or self$employed members
hae no employers so they do not hae maternity contributions.
PATERNITY LEAKE: (RA D0D1)
E1 O+?@P. What is 4at#(it3 l#a'#!
MPat#(it3 l#a'#3 refers to the bene*t granted to a married male employee
allowing him not to report for work for seen (G) days (for each deliery for the *rst
E delieries) but continues to earn the compensation therefor" on the condition that
his spouse has deliered a child or suLered miscarriage for purposes of enabling
him to eLectiely lend support to his wife in her period of recoery and4or in the
nursing of the newly$born child. )f paternity leae is not aailed of" it is not
conertible to cash.
E2 O+?EP. What is M&#li'#3L!
7-eli#er%8 shall include childbirth or any miscarriage.
E3 O+?AP. What is 7#a(t b3 Ms4o%s#L!
2Spouse3 refers to the lawful wife. /or this purpose" lawful wife refers to a
woman who is legally married to the male employee concerned.
E+ O+?BP. What is 7#a(t b3 M)ohabiti(*L!
2Cohabiting3 refers to the obligation of the husband and wife to lie together.
THE SOLO PARENTSP WELFARE A1T OF 2GGG:
E5 O+?GP. What is 4a#(tal l#a'#!
R#4%bli) A)t No. EFC2 (;n ;ct 0roiding for !ene*ts and 0riileges to Solo
0arents and .heir Children" ;ppropriating /unds .herefor and for 1ther 0urposes)"
otherwise known as 2.he Solo 0arentsJ &elfare ;ct of ?CCC"3 was approed on
0age BF of +CG H 'eiew <otes on Iabor Iaws
<oember G" ?CCC proiding for parental leae of seen (G) days. )t is de*ned as
follows:
2(d) Z0arental leaeJ $ shall mean leae bene*ts granted to a solo
parent to enable him4her to perform parental duties and
responsibilities where physical presence is re%uired.3
)t bears noting that this leae priilege is an additional leae bene*t which is
separate and distinct from any other leae bene*ts proided under e#isting laws or
agreements. .hus" under Section F thereof" it is proided:
2Sec. F. 0arental Ieae. $ )n addition to leae priileges under
e#isting laws" parental leae of not more than seen (G) working days
eery year shall be granted to any solo parent employee who has
rendered serice of at least one (+) year.3
E= O+?FP. What is 7#a(t b3 U#9ibl# "o2 s)h#&%l# %(&# R. A. No. EFC2!
7nder Re$&bli( A(t No. DA15" solo parents are allowed to work on a Me#ible
schedule" thus:
2Sec. B. /le#ible &ork Schedule. , .he employer shall proide for a
Me#ible working schedule for solo parents: 0roided" .hat the same
shall not aLect indiidual and company productiity: 0roided" further"
.hat any employer may re%uest e#emption from the aboe
re%uirements from the D1I9 on certain meritorious grounds.3 (Section
B" 'epublic ;ct <o. FDG?).
.he phrase 2Me#ible work schedule3 is de*ned in the same law as follows:
(e) 2/le#ible work schedule3 $ is the right granted to a solo
parent employee to ary his4her arrial and departure time without
aLecting the core work hours as de*ned by the employer. (Se(tio%
4<e=, Re$&bli( A(t No. DA15).
-IS1RIMINATION ADAINST WOMEN: (Art. 04B, /C>)
ECO+?DP. What a# th# a)ts )o(si&##& &is)i7i(ato3 a*ai(st "o7#( %(&#
th# la"!
)t shall be unlawful for any employer:
(+) .o deny any woman employee the bene*ts proided for in the law or to
discharge any woman employed by him for the purpose of preenting her
from en6oying any of the bene*ts proided under the Iabor Code.
(?) To disc$arge suc$ &o"an on account o) $er pregnanc%, or
while on leae or in confne"ent due to $er pregnanc%H
(@) .o discharge or refuse the admission of such woman upon returning to her
work for fear that she may again be pregnant-
(E) .o pay lesser compensation to a female employee as against a male
employee for work of e%ual alue.
(@) .o faor a male employee oer a female employee with respect to
promotion" training opportunities" study and scholarship grants solely on
account of their se#es.
EE O+@CP. What a# sti4%latio(s a*ai(st 7aia*#! (Art. 043. /C>)
)t shall be unlawful for an employer to re%uire as a condition of employment
or continuation of employment that a woman employee shall (ot *#t 7ai#&" or
to stipulate e#pressly or tacitly that %4o( *#tti(* 7ai#&6 a "o7a( #74lo3##
0age BD of +CG H 'eiew <otes on Iabor Iaws
shall b# &##7#& #si*(#& o s#4aat#&6 or to actually dismiss" discharge"
discriminate or otherwise pre6udice a woman employee merely b3 #aso( o$ h#
7aia*#.
EF O+@+P. What is th# stat%s o$ "o7#( "o2i(* i( (i*ht)l%bs6 7assa*#
)li(i)s6 a(& si7ila #stablish7#(ts!
;ny woman who is permitted or suLered to work" "ith o "itho%t
)o74#(satio(" in any night club" cocktail lounge" massage clinic" bar or similar
establishments under the eLectie control or superision of the employer for a
substantial period of time as determined by the Secretary of Iabor and
9mployment" shall b# )o(si&##& as a( #74lo3## o$ s%)h #stablish7#(t $o
4%4os#s o$ labo a(& so)ial l#*islatio(. (Art. 04D. /C>)
Th#3 a# )o(si&##& #*%la #74lo3##s of said establishments #9)#4t
when the night club operator does not control nor direct the details and manner of
their work in the entertainment of night club patrons and" ha'i(* (o B9#& ho%s
o$ "o26 th#3 7a3 )o7# a(& *o as th#3 4l#as#.
NOTE:
+. .his @
rd
kind of 9'$99 relationship created by law is comprehensie. )t does
not only coer labor legislation but also social legislation like SSS" 0ag)!)8.
.hus %uestion arises.
Q. &hat is the relationship between the Club4!ar owner and the hospitality
girl(
A. ;ccording to the law" the relationship is of 9'$99 relationship. )t is
comprehensie for all purposes of labor and social legislation.
Q. )s the issue whether or nor 9'$99 relations a factual or legal issue(
A. .he SC held that it is %uestion of fact. !ut in Tabas #. Cali)ornia or
Brot$er$ood #. Qa"ora" the SC made an assertion that 9'$99 relations
are a %uestion of law.
So6 "hi)h is "hi)h!.
A. .his is how to reconcile. )f it is a straight out and simple 9'$99 relation
which does <1. )<Q1IQ9 multiple employers" then it is %uestion of fact.
&hen it )<Q1IQ9S a %uestion of multiple employers such that the proision
of ;rt. +CB" +CG and +CD come into play" then the issue becomes a
%uestion of law. !ecause take note that it is the law itself that imposes an
9'$99 relations.
FG. Batt##& Wo7#( L#a'# (RA A535, A%ti9Viole%(e a7ai%t Wome% a%#
t!eir C!il#re% A(t of 522@, Mar(! D, 522@)
* ; female employee who is a ictim of iolence (physical" se#ual or
psychological) is entitled to a 4ai& l#a'# of t#( @1GA &a3s in addition to
other paid leaes. .he leae is e#tendible when the necessity arises. .he
employee has to submit a certi*cation from the >&%o%7 Bara%7a",
Ra7a*a#, >roe(&tior or Clerk of Co&rt that an action under '; D?B? ha
been *led and is pending.
0age GC of +CG H 'eiew <otes on Iabor Iaws
E!PLO?!ENT O+ C>,L-(END
F1 O+@?P. What a# th# #l#'a(t t#7s &#B(#& i( th# la"!
(a) 7C$ild8 refers to any person under +F years of age.
(b) 7C$ild labor3 refers to any work or economic actiity performed by a
child that sub6ects him4her to any form of e#ploitation or is harmful to
his4her health and safety or physical" mental or psychosocial deelopment.
(c) 23or4ing C$ild8 refers to any child engaged as follows:
i. when the child is below eighteen (+F) years of age" in work or
economic actiity that is not child labor as de*ned in the immediately
preceding sub$paragraph" and
ii. when the child below *fteen (+A) years of age" (i) in work where
he4she is directly under the responsibility of his4her parents or legal
guardian and where only members of the childJs family are employed-
or (ii)in public entertainment or information.
(d) 7>ours o) &or48 include (+) all time during which a child is re%uired to
be at a prescribed workplace" and (?) all time during which a child is
suLered or permitted to work. 'est periods of short duration during working
hours shall be counted as hours worked.
(e) 73or4place8 refers to the o5ce" premises or worksite where a child is
temporarily or habitually assigned. &here there is no *#ed or de*nite
workplace" the term shall include the place where the child actually
performs work to render serice or to take an assignment" to include
households employing children.
(f) 7Public entertain"ent or in)or"ation3 refers to artistic" literary" and
cultural performances for teleision show" radio program" cinema or *lm"
theater" commercial adertisement" public relations actiities or
campaigns" print materials" internet" and other media.
(g) 7+orced labor and sla#er%8 refers to the e#traction of work or
serices from any person by means of enticement" iolence" intimidation or
threat" use of force or coercion" including depriation of freedom" abuse of
authority or moral ascendancy" debt bondage or deception.
(h) 7C$ild pornograp$%8 refers to any representation of a child engaged
in real or simulated e#plicit se#ual actiities or any representation of the
se#ual parts of a child for primarily se#ual purposes.
F2 O+@@P. What is th# 7i(i7%7 #74lo3abl# a*# o$ )hil&#(! (Art. 04A)
Children below B$t##( @15A 3#as o$ a*# shall not be employed e#cept:
(+) &hen a child works directly under the sole responsibility of his4her parents
or legal guardian and where only members of his4her family are employed:
0roided" howeer" .hat his4her employment neither endangers his4her life"
safety" health" and morals" nor impairs his4her normal deelopment:
0roided" further" .hat the parent or legal guardian shall proide the said
child with the prescribed primary and4or secondary education- or
(?) &here a childYs employment or participation in public entertainment or
information through cinema" theater" radio" teleision or other forms of
media is essential: 0roided" .hat the employment contract is concluded
by the childYs parents or legal guardian" with the e#press agreement of the
child concerned" if possible" and the approal of the Department of Iabor
and 9mployment: 0roided" further" .hat the following re%uirements in all
instances are strictly complied with:
(a) .he employer shall ensure the protection" health" safety" morals and
normal deelopment of the child-
0age G+ of +CG H 'eiew <otes on Iabor Iaws
(b) .he employer shall institute measures to preent the childYs
e#ploitation or discrimination taking into account the system and leel
of remuneration" and the duration and arrangement of working time-
and
(c) .he employer shall formulate and implement" sub6ect to the approal
and superision of competent authorities" a continuing program for
training and skills ac%uisition of the child.
)n the aboe e#ceptional cases where any such child may be employed" the
employer shall *rst secure" before engaging such child" a work permit from the
Department of Iabor and 9mployment which shall ensure obserance of the aboe
re%uirements. (Section 1/, (.A. No. C=10, as a"ended b% (. A. No. 5/31,
-ece"ber 15, /003).
ONOTE: .he term Ec$ildE shall apply to all persons under #i*ht##( @1EA
3#as o$ a*#.P
F3 O+@EP. What a# th# "o2i(* ho%s o$ a "o2i(* )hil&!
(+) ; child below *fteen (+A) years of age may be allowed to work for not more
than twenty (?C) hours a week: 0roided" .hat the work shall not be more
than four (E) hours at any gien day-
(?) ; child *fteen (+A) years of age but below eighteen (+F) shall not be
allowed to work for more than eight (F) hours a day" and in no case beyond
forty (EC) hours a week-
(@) <o child below *fteen (+A) years of age shall be allowed to work between
eight oYclock in the eening and si# oYclock in the morning of the following
day and no child *fteen (+A) years of age but below eighteen (+F) shall be
allowed to work between ten oYclock in the eening and si# oYclock in the
morning of the following day. (Section 1/*A, (.A. No. C=10, as
a"ended b% (. A. No. 5/31, -ece"ber 15, /003).
F+ O+@AP. Ho" is th# "o2i(* )hil&;s i()o7# b# %s#& o a&7i(ist##&!
.he wages" salaries" earnings and other income of the working child shall
belong to him4her in ownership and shall be set aside primarily for his4her support"
education or skills ac%uisition and secondarily to the collectie needs of the family:
0roided" .hat not more than t"#(t3 4#)#(t @2GQA of the childYs income may be
used for the collectie needs of the family.
.he income of the working child and4or the property ac%uired through the
work of the child shall be administered by both parents. )n the absence or incapacity
of either of the parents" the other parent shall administer the same. )n case both
parents are absent or incapacitated" the order of preference on parental authority
as proided for under the /amily Code shall apply. (Se(tio% 059B, R.A. No. 1302, a
ame%#e# b" R. A. No. A540, De(ember 0A, 5224).
T%st F%(& to P#s#'# Pat o$ th# Wo2i(* 1hil&Ps I()o7#. $ .he
parent or legal guardian of a working child below eighteen (+F) years of age shall
set up a trust fund for at least thirty percent (@CT) of the earnings of the child
whose wages and salaries from work and other income amount to at least two
hundred thousand pesos (0?CC"CCC.CC) annually" for which he4she shall render a
semi$annual accounting of the fund to the Department of Iabor and 9mployment" in
compliance with the proisions of this ;ct. .he child shall hae full control oer the
trust fund upon reaching the age of ma6ority. (Section 1/*C, (.A. No. C=10, as
a"ended b% (. A. No. 5/31, -ece"ber 15, /003).
0age G? of +CG H 'eiew <otes on Iabor Iaws
F5 O+@BP. What is 7#a(t b3 M"ost $o7 o$ )hil& laboL %(&# R. A. No.
F231 (De(ember 0A, 5224) !
<o child shall be engaged in the worst forms of child labor. .he phrase
O"ost $o7s o$ )hil& laboO shall refer to any of the following:
(+) ;ll forms of slaery" as de*ned under the V;nti$tra5cking in 0ersons ;ct of
?CC@V" or practices similar to slaery such as sale and tra5cking of
children" debt bondage and serfdom and forced or compulsory labor"
including recruitment of children for use in armed conMict- or
(?) .he use" procuring" oLering or e#posing of a child for prostitution" for the
production of pornography or for pornographic performances- or
(@) .he use" procuring or oLering of a child for illegal or illicit actiities"
including the production and tra5cking of dangerous drugs and olatile
substances prohibited under e#isting laws- or
(E) &ork which" by its nature or the circumstances in which it is carried out" is
haKardous or likely to be harmful to the health" safety or morals of children"
such that it:
(a) Debases" degrades or demeans the intrinsic worth and dignity of a
child as a human being- or
(b) 9#poses the child to physical" emotional or se#ual abuse" or is found
to be highly stressful psychologically or may pre6udice morals- or
(c) )s performed underground" underwater or at dangerous heights- or
(d) )noles the use of dangerous machinery" e%uipment and tools such
as power$drien or e#plosie power$actuated tools- or
(e) 9#poses the child to physical danger such as" but not limited to the
dangerous feats of balancing" physical strength or contortion" or
which re%uires the manual transport of heay loads- or
(f) )s performed in an unhealthy enironment e#posing the child to
haKardous working conditions" elements" substances" co$agents or
processes inoling ioniKing" radiation" *re" Mammable substances"
no#ious components and the like" or to e#treme temperatures" noise
leels" or ibrations- or
(g) )s performed under particularly di5cult conditions- or
(h) 9#poses the child to biological agents such as bacteria" fungi" iruses"
protoKoans" nematodes and other parasites- or
(i) )noles the manufacture or handling of e#plosies and other
pyrotechnic products.
F= O+@GP. Who 7a3 Bl# a )o74lai(t i( )as# o$ %(la"$%l a)ts )o77itt#&
a*ai(st )hil&#(!
Complaints on cases of unlawful acts committed against children as
enumerated herein may be *led by the following:
(a) 1Lended party-
(b) 0arents or guardians-
(c) ;scendant or collateral relatie within the third degree of consanguinity-
(d) 15cer" social worker or representatie of a licensed child$caring
institution-
(e) 15cer or social worker of the Department of Social &elfare and
Deelopment-
(f) !arangay chairman of the place where the iolation occurred" where the
child is residing or employed- or
(g) ;t least three (@) concerned" responsible citiKens where the iolation
occurred.
FC O+@FP. Is th# #74lo37#(t o$ )hil&#( i( a&'#tis#7#(ts 4ohibit#&!
<o child shall be employed as a model in any adertisement directly or
indirectly promoting alcoholic beerages" into#icating drinks" tobacco and its
0age G@ of +CG H 'eiew <otes on Iabor Iaws
byproducts" gambling or any form of iolence or pornography. (Section 1, (.A.
No. C=10, as a"ended b% (. A. No. 5/31, -ece"ber 15, /003).
EMPLOYMENT OF HO.SEHELPERS: (RA 13BB a ame%#e# b" RA 02430, Ja%.
0D, 52046
eEe(ti)e J&%e @, 5204)
FE O+@DP. Who is a Mho%s#h#l4#L o M&o7#sti) s#'a(tL! (Art. 0@0)
2Househelper3 or 2domestic worker 2 or 2Kasambahay3 shall refer to any
person" whether male or female" who renders serices in and about the employerJs
home and which serices are usually necessary or desirable for the maintenance
and en6oyment thereof" and ministers e#clusiely to the personal comfort and
en6oyment of the employerJs family.
Household serices include the serices of family driers" cooks" nursemaids
or 2yaya3" or family serants" but not the serices of laborers in a commercial or
industrial enterprise.
.he original contract of domestic serice shall not last for more than two (?)
years but it may be mutually renewed for such periods by the parties.
.he term shall not include children who are under foster family arrangement
and are proided access to education and gien allowance incidental to education"
i.e." 2baon3" transportation" school pro6ects and school actiities. (Se(. @, RA 02430)
FF O+ECP. What sho%l& b# 4ai& b3 "a3 o$ )o74#(satio( to th# ho%s#h#l4#!
(Art. 0@4)
.he minimum wage rates of househelpers shall be the basic cash wages
which shall be paid to the househelpers in addition to lodging" food and medical
attendance.
7nder Se(tio% 5@ of RA 02430" monthly =& of househelper shall not be less
than the following:
P265GG.GG $ employed in <C'-
P26GGG.GG $ employed in +
st
class cities and municipalities- and
P165GG.GG $ employed in other cities and municipalities.
1GG O+E+P. What is th# ti7# a(& 7a((# o$ 4a37#(t o$ "a*#s!
&ages shall be paid directly to the househelper to whom they are due at
least once a month. <o deductions therefrom shall be made by the employer unless
authoriKed by the househelper himself or by e#isting laws.
1G1 O+E?P. Ma3 a ho%s#h#l4# b# assi*(#& to (o(/ho%s#hol& "o2!
No domestic worker or househelper shall be assigned to work in a
commercial" industrial or agricultural enterprise at a wage or salary rate lower than
that proided for agricultural or non$agricultural workers as prescribed herein. )n
such cases" the domestic worker shall be paid the applicable minimum wage. (Se(.
55, RA 02430)
1G2 O+E@P.Is a( #74lo3# obli*at#& to 4o'i&# a ho%s#h#l4# th#
o44ot%(it3 $o #&%)atio(!
)f the househelper is under the age of eighteen (+F) years" the employer shall
gie him or her an opportunity for at least elementary education. .he cost of
0age GE of +CG H 'eiew <otes on Iabor Iaws
education shall be part of the househelperJs compensation" unless there is a
stipulation to the contrary.
1G3 O+EEP. Is a( #74lo3# obli*at#& to 4o'i&# boa& a(& lo&*i(* to a
ho%s#h#l4#!
.he employer shall furnish the househelper" free of charge" suitable and
sanitary liing %uarters as well as ade%uate food and medical attendance.
1G+ O+EAP. Ho" sho%l& a ho%s#h#l4# b# t#at#&!
; househelper should be treated in a 6ust and humane manner and no
physical iolence should be inMicted on him.
1G5O+EBP. What is th# i(&#7(it3 $o %(H%st t#7i(atio( o$ s#'i)#s o$ a
ho%s#h#l4#!
)f the period of household serice is *#ed" neither the employer nor the
househelper may terminate the contract before the e#piration of the term" e#cept
for a 6ust cause. )f the househelper is un6ustly dismissed" he or she shall be paid the
compensation already earned plus that for *fteen (+A) days by way of indemnity. )f
the househelper leaes without 6usti*able reason" he or she shall forfeit any unpaid
salary due him or her not e#ceeding *fteen (+A) days. (Noti(e of termi%atio% at
leat :)e #a")
EMPLOYMENT OF HOMEWOR0ERS R FIEL- PERSONNEL:
1G= O+EGP. Who is a( Mi(&%stial ho7#"o2#L! (Art. 0B4, /C>)
;n industrial homeworker is a worker who is engaged in industrial homework"
a system of production under which work for an employer or contractor is carried
out by a homeworker at his4her home. .he materials may or may not be furnished
by the employer or contractor.
1GC O+EFP. Who is a MB#l& 4#so((#lL!
; :el# $ero%%el is a non$agricultural employee who regularly performs his
duties away from the principal place of business or branch o5ce of the employer
and whose actual hours of work in the *eld cannot be determined with reasonable
certainty.
THE SO1IAL SE1.RITY SYSTEM @SSSA:
1GE O+EDP. -#B(itio( o$ t#7s %(&# th# SSS La" ('; F?F?).
(a) E"plo%er$ ;ny person" natural or 6uridical" domestic or foreign" who carries
on in the 0hilippines any trade" business" industry" undertaking" or actiity
of any kind and uses the serices of another person who is under his orders
as regards the employment" e2cept the 8oernment and any of its
political subdiisions" branches or instrumentalities" including corporations
owned or controlled by the 8oernment: 0roided" T$at a sel)*e"plo%ed
person s$all be bot$ e"plo%ee and e"plo%er at t$e sa"e ti"e.
(b) E"plo%ee $ ;ny person who performs serices for an employer in which
either or both mental or physical eLorts are used and who receies
compensation for such serices" where there is an employer$employee
relationship: 0roided" .hat a self$employed person shall be both employee
and employer at the same time.
0age GA of +CG H 'eiew <otes on Iabor Iaws
(c) -ependents $ .he dependents shall be the following:
(+) .he legal spouse entitled by law to receie support from the member-
(?) .he legitimate" legitimated or legally adopted" and illegitimate child
who is unmarried" not gainfully employed" and has not reached twenty$
one (?+) years of age" or if oer twenty$one (?+) years of age" he is
congenitally or while still a minor has been permanently incapacitated
and incapable of self$support" physically or mentally- and
(@) .he parent who is receiing regular support from the member.
(d) Co"pensation $ ;ll actual remuneration for employment" including the
mandated cost$of$liing allowance" as well as the cash alue of any
remuneration paid in any medium other than cash e#cept that part of the
remuneration in e#cess of the ma#imum salary credit as proided under
Section 9ighteen of this ;ct.
(e) !ont$l% salar% credit $ .he compensation base for contributions and
bene*ts as indicated in the schedule in Section 9ighteen of this ;ct.
(f) !ont$l% $ .he period from one end of the last payroll period of the
preceding month to the end of the last payroll period of the current month
if compensation is on hourly" daily or weekly basis- if on any other basis"
ZmonthlyJ shall mean a period of one (+) month.
(g) Contribution $ .he amount paid to the SSS by and on behalf of the
members in accordance with Section 9ighteen of this ;ct.
(h) E"plo%"ent $ ;ny serice performed by an employee for his employer
e#cept:
(+) 9mployment purely casual and not for the purpose of occupation or
business of the employer-
(?) Serice performed on or in connection with an alien essel by an
employee if he is employed when such essel is outside the
0hilippines-
(@) Serice performed in the employ of the 0hilippine 8oernment or
instrumentality or agency thereof-
(E) Serice performed in the employ of a foreign goernment or
international organiKation" or their wholly$owned instrumentality:
0roided" howeer" .hat this e#emption notwithstanding" any foreign
goernment" international organiKation or their wholly$owned
instrumentality employing workers in the 0hilippines or employing
/ilipinos outside of the 0hilippines" may enter into an agreement with
the 0hilippine 8oernment for the inclusion of such employees in the
SSS e#cept
those already coered by their respectie ciil serice retirement
systems: 0roided" further" .hat the terms of such agreement shall
conform with the proisions of this ;ct on coerage and amount of
payment of contributions and bene*ts: 0roided" *nally" .hat the
proisions of this ;ct shall be supplementary to any such agreement-
and
(A) Such other serices performed by temporary and other employees
which may be e#cluded by regulation of the Commission. 9mployees of
bona *de independent contractors shall not be deemed employees of
the employer engaging the serice of said contractors.
(i) Benefciaries $ .he dependent spouse until he or she remarries" the
dependent legitimate" legitimated or legally adopted" and illegitimate
children" who shall be the primary bene*ciaries of the member: 0roided"
.hat the dependent illegitimate children shall be entitled to *fty percent
(ACT) of the share of the legitimate" legitimated or legally adopted
children: 0roided" further" .hat in the absence of the dependent
legitimate" legitimated children of the member" his4her dependent
illegitimate children shall be entitled to one hundred percent (+CCT) of the
bene*ts. )n their absence" the dependent parents who shall be the
secondary bene*ciaries of the member. )n the absence of all the foregoing"
any other person designated by the member as his4her secondary
bene*ciary.
0age GB of +CG H 'eiew <otes on Iabor Iaws
(6) Contingenc% $ .he retirement" death" disability" in6ury or sickness and
maternity of the member.
(k) A#erage "ont$l% salar% credit $ .he result obtained by diiding the sum
of the last si#ty (BC) monthly salary credits immediately preceding the
semester of contingency by si#ty (BC)" or the result obtained by diiding
the sum of all the monthly salary credits paid prior to the semester of
contingency by the number of monthly contributions paid in the same
period" whicheer is greater: 0roided" .hat the in6ury or sickness which
caused the disability shall be deemed as the permanent disability for the
purpose of computing the aerage monthly salary credit.
(l) A#erage dail% salar% credit $ .he result obtained by diiding the sum of
the si# (B) highest monthly salary credits in the twele$month period
immediately preceding the semester of contingency by one hundred eighty
(+FC).
(m) Credited %ears o) ser#ice $ /or a member coered prior to :anuary
nineteen hundred and eighty *e (+DFA) minus the calendar year of
coerage plus the number of calendar years in which si# (B) or more
contributions hae been paid from :anuary nineteen hundred and eighty
*e (+DFA) up to the calendar year containing the semester prior to the
contingency. /or a member coered in or after :anuary nineteen hundred
and eighty *e (+DFA)" the number of calendar years in which si# (B) or
more contributions hae been paid from the year of coerage up to the
calendar year containing the semester prior to the contingency: 0roided"
.hat the Commission may proide for a diLerent number of contributions
in a calendar year for it to be considered as a credited year of serice.
(n) !e"ber $ .he worker who is coered under Section <ine and Section <ine$
; of this ;ct.
(o) Sel)*e"plo%ed $ ;ny person whose income is not deried from
employment" as de*ned under this ;ct" as well as those workers
enumerated in Section <ine$; hereof.
(p) Net earnings $ <et income before income ta#es plus non$cash charges
such as depreciation and depletion appearing in the regular *nancial
statement of the issuing or assuming institution.
1GF O+ACP. Who a# )o'##& b3 th# SSS!
(a) Coerage in the SSS shall be )o74%lso3 upon all employees (ot oer
si#ty (BC) years of age and their employers: 0roided" .hat in the case of
&o7#sti) h#l4#s" their monthly income shall not be less than 1ne
thousand pesos (0+"CCC.CC) a month: 0roided" further" .hat any bene*t
already earned by the employees under
priate bene*t plans e#isting at the time of the approal of this ;ct shall
not be discontinued" reduced or otherwise impaired: 0roided" further" .hat
priate plans which are e#isting and in force at the time of compulsory
coerage shall be integrated with the plan of the SSS in such a way where
the employerJs contribution to his priate plan is more than that re%uired
of him in this ;ct" he shall pay to the SSS only the contribution re%uired of
him and he shall continue his contribution to such priate plan less his
contribution to the SSS so that the employerJs total contribution to his
bene*t plan and to the SSS shall be the same as his contribution to his
priate bene*t plan before the compulsory coerage: 0roided" further"
.hat any changes" ad6ustments" modi*cations" eliminations or
improements in the bene*ts to be aailable under the remaining priate
plan" which may be necessary to adopt by reason of the reduced
contributions thereto as a result of the integration" shall be sub6ect to
agreements between the employers and employees concerned: 0roided"
further" .hat the priate bene*t plan which the employer shall continue for
his employees shall remain under the employerJs management and control
0age GG of +CG H 'eiew <otes on Iabor Iaws
unless there is an e#isting agreement to the contrary: 0roided" *nally"
.hat nothing in this ;ct shall be construed as a limitation on the right of
employers and employees to agree on and adopt bene*ts which are oer
and aboe those proided under this ;ct.
(b) S4o%s#s who deote full time to managing the household and family
aLairs" unless they are also engaged in other ocation or employment
which is sub6ect to mandatory coerage- "a% be co#ered b% t$e SSS on
a #oluntar% basis.
(c) /ilipinos recruited by foreign$based employers for employment abroad may
be coered by the SSS on a oluntary basis.
11G O+A+P. A# s#l$/#74lo3#& 4#so(s )o'##&!
Coerage in the SSS shall also be )o74%lso3 upon such self$employed
persons as may be determined by the Commission under such rules and regulations
as it may prescribe" including but not limited to the following:
+. ;ll self$employed professionals-
?. 0artners and single proprietors of businesses-
@. ;ctors and actresses" directors" scriptwriters and news correspondents who
do not fall within the de*nition of the term VemployeeV in Section F (d) of
this ;ct-
E. 0rofessional athletes" coaches" trainers and 6ockeys- and
A. )ndiidual farmers and *shermen.
7nless otherwise speci*ed in the law" all proisions of the SSS I;& applicable
to coered employees shall also be applicable to the coered self$employed
persons.

111 O+A?P. Wh#( &o#s )o'#a*# ta2# #<#)t!
Compulsory coerage of the #74lo3# shall take eLect on the Bst &a3 of
his operation and that of the #74lo3## on the &a3 o$ his #74lo37#(t: 0roided"
.hat the compulsory coerage of the s#l$/#74lo3#& 4#so( shall take eLect %4o(
his #*istatio( with the SSS.
112 O+A@P. What is th# #<#)t o$ s#4aatio( $o7 #74lo37#(t!
&hen an employee under compulsory coerage is separated from
employment" his employerJs contribution on his account and his obligation to pay
contributions arising from that employment shall )#as# at the #(& o$ th# 7o(th
o$ s#4aatio(" but said employee shall be credited with all contributions paid on
his behalf and entitled to bene*ts according to the proisions of this ;ct. He may"
howeer" continue to pay the total contributions to maintain his right to full bene*t.
113 O+AEP. What is th# #<#)t o$ i(t#%4tio( o$ b%si(#ss o 4o$#ssio(al
i()o7#!
)f the self$employed realiKes no income in any gien month" he shall (ot b#
#8%i#& to 4a3 )o(tib%tio(s $o that 7o(th . He may" howeer" be allowed to
continue paying contributions under the same rules and regulations applicable to a
separated employee member: 0roided" .hat no retroactie payment of
contributions shall be allowed other than as prescribed under Section ??$; of the
SSS Iaw.
11+ O+AAP. What a# th# b#(#Bts %(&# th# SSS La"!
(+) =onthly pension- (?) DependentsJ pension -(@) 'etirement bene*ts- (E)
Death bene*ts- (A) 0ermanent disability bene*ts- (B) /uneral bene*t- (G) Sickness
0age GF of +CG H 'eiew <otes on Iabor Iaws
bene*t- (F) =aternity leae bene*t.
THE DOKERNMENT SERKI1E INS.RAN1E SYSTEM @DSISA:
115 O+ABP. -#B(itio( o$ t#7s %(&# th# DSIS La" ((. A. No. </51).
(a) 9mployer$ .he national goernment" its political subdiisions" branches"
agencies or instrumentalities" including goernment$owned or controlled
corporations" and *nancial institutions with original charters" the
constitutional commissions and the 6udiciary-
(b) 9mployee or =ember$ ;ny person receiing compensation while in the
serice of an employer as de*ned herein" whether by election or
appointment" irrespectie of status of appointment" including barangay
and Sanggunian o5cials-
(c) ;ctie =ember$ ; member who is not separated from the serice-
(d) Dependents$ Dependents shall be the following: (a) the legitimate spouse
dependent for support upon the member or pensioner- (b) the legitimate"
legitimated" legally adopted child" including the illegitimate child" who is
unmarried" not gainfully employed" not oer the age of ma6ority" or is oer
the age of ma6ority but incapacitated and incapable of self$support due to a
mental or physical defect ac%uired prior to age of ma6ority- and (c) the
parents dependent upon the member for support-
(e) 0rimary bene*ciaries$ .he legal dependent spouse until he4she remarries
and the dependent children-
(f) Secondary bene*ciaries$ .he dependent parents and" sub6ect to the
restrictions on dependent children" the legitimate descendants-
(g) Compensation$ .he basic pay or salary receied by an employee" pursuant
to his election4appointment" e#cluding per diems" bonuses" oertime pay"
honoraria" allowances and any other emoluments receied in addition to
the basic pay which are not integrated into the basic pay under e#isting
laws-
(h) Contribution$ .he amount payable to the 8S)S by the member and the
employer in accordance with Section A of this ;ct-
(i) Current Daily Compensation$ .he actual daily compensation or the actual
monthly compensation diided by the number of working days in the
month of contingency but not to e#ceed twenty$two (??) days-
(6) ;erage =onthly Compensation (;=C)$ .he %uotient arried at after diiding
the aggregate compensation receied by the member during his last thirty$
si# (@B) months of serice preceding his separation4retirement4
disability4death by thirty$si# (@B)" or by the number of months he receied
such compensation if he has less than thirty$si# (@B) months of serice:
0roided" .hat the aerage monthly compensation shall in no case e#ceed
the amount and rate as may be respectiely set by the !oard under the
rules and regulations implementing this ;ct as determined by the actuary
of the 8S)S: 0roided" further" .hat initially the aerage monthly
compensation shall not e#ceed .en thousand pesos (0+C"CCC.CC)" and
premium shall be nine percent (DT) and twele percent (+?T) for
employee and employer coering the ;=C limit
and below and two percent (?T) and twele percent (+?T) for employee
and employer coering the compensation aboe the ;=C limit-
(k) 'ealued aerage monthly compensation$ ;n amount e%ual to one hundred
seenty percent (+GCT) of the *rst 1ne thousand pesos (0+"CCC.CC) of the
aerage monthly compensation plus one hundred percent (+CCT) of the
aerage monthly compensation in e#cess of 1ne thousand pesos
(0+"CCC.CC)-
(l) Iump sum$ .he basic monthly pension multiplied by si#ty (BC)-
(m) 0ensioner$ ;ny person receiing old$age permanent total disability pension
or any person who has receied the lump sum e#cluding one receiing
suriorship pension bene*ts as de*ned in Section ?C of this ;ct-
0age GD of +CG H 'eiew <otes on Iabor Iaws
(n) 8ainful 1ccupation$ ;ny productie actiity that proided the member with
income at least e%ual to the minimum compensation of goernment
employees-
(o) Disability$ ;ny loss or impairment of the normal functions of the physical
and4or mental faculty of a member which reduces or eliminates his4her
capacity to continue with his4her current gainful occupation or engage in
any other gainful occupation-
(p) .otal Disability$ Complete incapacity to continue with his present
employment or engage in any gainful occupation due to the loss or
impairment of the normal functions of the physical and4or mental faculties
of the member-
(%) 0ermanent .otal Disability$ ;ccrues or arises when recoery from the
impairment mentioned in Section ? (S) is medically remote-
(r) .emporary .otal Disability$ ;ccrues or arises when the impaired physical
and4or mental faculties can be rehabilitated and4or restored to their normal
functions-
(s) 0ermanent 0artial Disability$ ;ccrues or arises upon the irreocable loss or
impairment of certain portion4s of the physical faculties" despite which the
member is able to pursue a gainful occupation.
11= O+AGP. 1o74%lso3 7#7b#shi4 i( th# DSIS.
=embership in the 8S)S shall be compulsory for all employees receiing
compensation who hae not reached the compulsory retirement age" irrespectie of
employment status" e#cept members of the ;rmed /orces of the 0hilippines and the
0hilippine <ational 0olice" sub6ect to the condition that they must settle *rst their
*nancial obligation with the 8S)S" and contractuals who hae no employer and
employee relationship with the agencies they sere.
ERCEPT $o th# 7#7b#s o$ th# H%&i)ia3 a(& )o(stit%tio(al
)o77issio(s "ho shall ha'# li$# i(s%a()# o (l3" all members of the 8S)S
s$all $a#e li)e insurance, retire"ent, and all ot$er social securit%
protections suc$ as disabilit%, sur#i#ors$ip, separation, and
une"plo%"ent benefts.
11C O+AFP. E<#)t o$ S#4aatio( $o7 th# S#'i)#.
; member separated from the serice shall continue to be a member" and
shall be entitled to whateer bene*ts he has %uali*ed to in the eent of any
contingency compensable under this ;ct.
11E O+ADP. 1o(tib%tio(s.
)t shall be "andator% for the member and employer to pay the monthly
contributions speci*ed in the 8S)S Iaw.
11F O+BCP. DSIS b#(#Bts.
=onthly 0ension- Separation !ene*ts- 7nemployment or )noluntary
Separation !ene*ts- 'etirement !ene*ts- 0ermanent Disability !ene*ts- .emporary
.otal Disability !ene*ts- Suriorship !ene*ts- /uneral !ene*ts- Compulsory Iife
)nsurance !ene*t- 1ptional
)nsurance and4or pre$need coerage embracing life" health" hospitaliKation"
education" memorial plans" and such other plans as may be designed by the 8S)S"
for the member and4or his dependents.
0age FC of +CG H 'eiew <otes on Iabor Iaws
NATIONAL HEALTH INS.RAN1E PRODRAM @R.A. CEC56 as a7#(&#& b3 R. A.
F2+1A:
12G O+B+P. -#B(itio( o$ T#7s.
(a) !ene*ciary $ ;ny person entitled to health care bene*ts under '. ;. GFGA.
(b) !ene*t 0ackage $ Serices that the 0rogram oLers to its members.
(c) Capitation $ ; payment mechanism where a *#ed rate" whether per person"
family" household or group" is negotiated with a health care proider who
shall be responsible in deliering or arranging for the deliery of health
serices re%uired by the coered person under the conditions of a health
care proider contract.
(d) Contribution $ .he amount paid by or in behalf of a member to the 0rogram
for coerage" based on salaries or wages in the case of $o7al s#)to
#74lo3##s" and on household earnings and assets" in the case of s#l$/
#74lo3#&" or on other criteria as may be de*ned by the 0hilippine Health
)nsurance Corporation (2Corporation3).
(e) Coerage $ .he entitlement of an indiidual" as a member or as a dependent"
to the bene*ts of the program.
(f) Dependent $ .he legal dependents of a member are: +) the legitimate spouse
who is not a member- ?) the unmarried and unemployed legitimate"
legitimated" illegitimate" acknowledged children as appearing in the birth
certi*cate- legally adopted or step$children below twenty$one (?+) years of
age- @) children who are twenty$one (?+) years old and aboe but suLering
from congenital disability" either physical or mental" or any disability
ac%uired that renders them totally dependent on the member of our
support- E) the parents who are si#ty (BC) years old or aboe whose monthly
income is below an amount to be determined by the Corporation in
accordance with the guiding principles set forth in ;rticle ) of this ;ct.
(g) Diagnostic 0rocedure $ ;ny procedure to identify a disease or condition
through analysis and e#amination.
(h) 9mergency $ ;n unforeseen combination of circumstances which calls for
immediate action to presere the life of a person or to presere the sight of
one or both eyes- the hearing of one or both ears- or one or two limbs at or
aboe the ankle or wrist.
(i) 9mployee $ ;ny person who performs serices for an employer in which
either or both mental and physical eLorts are used and who receies
compensation for such serices" where there is an employer$employee
relationship.
(6) 9mployer $ ; natural or 6uridical person who employs the serices of an
employee.
(k) 9nrollment $ .he process to be determined by the Corporation in order to
enlist indiiduals as members or dependents coered by the 0rogram.
(l) /ee for Serice $ ; reasonable and e%uitable health care payment system
under which physicians and other health care proiders receie a payment
that does not e#ceed their billed charge for each unit of serice proided.
(m) 8lobal !udget $ ;n approach to the purchase of medical serices by which
health care proider negotiations concerning the costs of proiding a
speci*c package of medical bene*ts is based solely on a predetermined and
*#ed budget. 0urchase of medical serices by which health care proider
negotiations concerning the costs of proiding a speci*c package of medical
bene*ts is based solely on a predetermined and *#ed budget.
(n) Health Care 0roider $ 'efers to:
(+) a health care institution" which is duly licensed and accredited deoted
primarily to the maintenance and operation of facilities for health
promotion" preention" diagnosis" in6ury" disability" or deformity" drug
addiction or in need of obstetrical or other medical and nursing care. )t
shall also be construed as any institution" building" or place where there
are installed beds" cribs" or bassinets for twenty$four hour use or longer
by patients in the treatment of diseases" in6uries" deformities" or
abnormal physical and mental states" maternity cases or sanitarial care-
0age F+ of +CG H 'eiew <otes on Iabor Iaws
or in*rmaries" nurseries" dispensaries" rehabilitation centers and such
other similar names by which they may be designated- or
(?) a health care professional" who is any doctor of medicine" nurse"
midwife" dentist" or other health care professional or practitioner duly
licensed to practice in the 0hilippines and accredited by the Corporation-
or
(@) a health maintenance organiKation" which is entity that proides" oLers"
or arranges for coerage of designated health serices needed by plan
members for a *#ed prepaid premium- or
(E) a community$based health organiKation" which is an association of
indigenous members of the community organiKed for the purpose of
improing the health status of that community through preentie"
promotie and curatie health serices.
(o) Health )nsurance )denti*cation ()D) Card $ .he document issued by the
Corporation to members and dependents upon their enrollment to sere as
the instrument for proper identi*cation" eligibility eri*cation" and utiliKation
recording.
(p) ,ndigent $ ; person who has no isible means of income" or whose income
is insu5cient for the subsistence of his family" as identi*ed by the Iocal
Health )nsurance 15ce and based on speci*c criteria set by the Corporation
in accordance with the guiding principles set forth in ;rticle ) of this ;ct.
(%) )npatient 9ducation 0ackage $ ; set of informational serices made aailable
to an indiidual who is con*ned in a hospital to aLord him with knowledge
about his illness and its treatment" and of the means aailable" particularly
lifestyle changes" to preent the recurrence or aggraation of such illness
and to promote his health in general.
(r) =ember $ ;ny person whose premiums hae been regularly paid to the
<ational Health )nsurance 0rogram. He may be a paying member" or a
pensioner4retiree member.
(s) !eans Test $ ; protocol administered at the barangay leel to determine
the ability of indiiduals or households to pay arying leels of contributions
to the 0rogram" ranging from the indigent in the community whose
contributions should be totally subsidiKed by the goernment" to those who
can aLord to subsidiKe part but not all the re%uired contributions for the
0rogram.
121 O+B?P. Who a# )o'##& b3 th# Philh#alth Po*a7!
;ll citiKens of the 0hilippines shall be coered by the <ational Health
)nsurance 0rogram.
122 O+B@P. B#(#Bt 4a)2a*#.
.he following categories of personal health serices granted to the member
or his dependents as medically necessary or appropriate" shall include:
@aA I(4ati#(t hos4ital )a#:
+) room and board-
?) serices of health care professionals-
@) diagnostic" laboratory" and other medical e#amination serices-
E) use of surgical or medical e%uipment and facilities-
A) prescription drugs and biologicals- sub6ect to the limitations stated in
Section @G of this ;ct-
B) inpatient education packages-
@bA O%t4ati#(t )a#:
+) serices of health care professionals-
?) diagnostic" laboratory" and other medical e#amination serices-
@) personal preentie serices- and
E) prescription drugs and biologicals" sub6ect to the limitations described in
Section @G of this ;ct-
@)A E7#*#()3 a(& ta(s$# s#'i)#s- and
0age F? of +CG H 'eiew <otes on Iabor Iaws
@&A S%)h oth# h#alth )a# s#'i)#s that th# 1o4oatio( shall
&#t#7i(# to b# a44o4iat# a(& )ost/#<#)ti'#..
123 O+BEP. E9)l%&#& 4#so(al h#alth s#'i)#s.
.he bene*ts granted under the law shall not coer e#penses for the serices
enumerated hereunder e#cept when the Corporation" after actuarial studies"
recommends their inclusion sub6ect to the approal of the !oard:
(a) non$prescription drugs and deices-
(b) alcohol abuse or dependency treatment-
(c) cosmetic surgery-
(d) optometric serices-
(e) *fth and subse%uent normal obstetrical delieries- and
(f) cost$ineLectie procedures" which shall be de*ned by the Corporation.
0roided" that" such actuarial studies must be done within a period of three
(@) years" and then periodically reiewed" to determine the *nancial sustainability of
including the foregoing personal health serices in the bene*t package.
123 O+BAP. Who a# #(titl#& to th# b#(#Bts!
; member whose premium contributions for at least three @3A months hae
been paid within si# (B) months prior to the *rst day of his or his aailment" shall be
entitled to the bene*ts of the 0rogram: 0roided" .hat such member can show that
he contributes thereto with su5cient regularity" as eidenced in his health
insurance )D card: and 0roided" further" .hat he is not currently sub6ect to legal
penalties as proided for in Section EE of the law.
12+ O+BBP. Who a# (ot #8%i#& to 4a3 7o(thl3 )o(tib%tio(s to b#
#(titl#& to th# b#(#Bts!
.he following need not pa% t$e "ont$l% contributions to be entitled to the
0rogramJs bene*ts:
(a) (etirees and pensioners of the SSS and 8S)S prior to the eLectiity of '. ;.
GFGA-
(b) =embers who reach the age of retirement as proided for by law and hae
paid at least one hundred twenty (+?C) contributions- and
(c) Enrolled indigents.
NOTES:
/ R#ti#7#(t Pa3 (RA 13@0 H RA DBBD) a(& S#4aatio( 4a3 (Art
5D4, 5D@ a%# 5D3, /C>) a# &is)%ss#& i( Pat III.
/ B%&#( o$ 4oo$ / O&i(a3 Mo(#3 )lai7s (e.g 70&" <0 +@
th
month
> A$day S)I0) is with the employer. 7nless" the
employer has adduced controerting eidence" in
which case the burden of proof is shifted to the
employee.
/ E9ta/o&i(a3 7o(#3 )lai7s (e.g." 1." <SD0" etc.)
the burden is with he employee that he is entitled to
such labor standards bene*ts. (Ca7am$a% ). N/RC,
;.R. No. DB05595@, Mar(! 55, 0AA0)
/ EN- OF PART ONE /
0repared and condensed by:
0age F@ of +CG H 'eiew <otes on Iabor Iaws
Att%. E2e:uiel !. -a%ot ,,,
/abor Arbiter
R.LE ON 1ONTRA1TIND OR S.B1ONTRA1TIND: (Art. 023, /C>) from p.
A?$GE
F=. What is )o(ta)ti(* o s%b)o(ta)ti(*!
1o(ta)ti(* o s%b)o(ta)ti(* / )t refers to an arrangement whereby a
principal agrees to put out or farm out with a contractor or subcontractor
the performance or completion of a speci*c 6ob" work or serice within a
de*nite or predetermined period" regardless of whether such 6ob" work or
serice is to be performed or completed within or outside the premises of
the principal.
E74lo37#(t a(& i(&#4#(&#(t )o(ta)ti(*6 &isti(*%ish#&.
.he ?CCA case of C$a#eF #s. NL(C, O8. '. <o. +EBA@C" Ja%&ar" 01, 522BP" is
i%tr&(ti)e a far a t!e #iti%(tio% bet*ee% em$lo"me%t a%# i%#e$e%#e%t
(o%tra(ti%7 i (o%(er%e#. )n debunking the contention of the employer that the
truck drier is an independent contractor and not an employee" the Supreme Court
ruled:
2/ourth. ;s earlier opined" of the four elements of the employer$
employee relationship" the Zcontrol testJ is the most important.
Compared to an employee" an independent contractor is one who
carries on a distinct and independent business and undertakes to
perform the 6ob" work" or serice on its own account and under its own
responsibility according to its own manner and method" free from the
control and direction of the principal in all matters connected with the
performance of the work e#cept as to the results thereof. Hence" while
an independent contractor en6oys independence and freedom from the
control and superision of his principal" an employee is sub6ect to the
employerJs power to control the means and methods by which the
employeeJs work is to be performed and accomplished.
2;lthough the respondents denied that they e#ercised control oer
the manner and methods by which the petitioner accomplished his
work" a careful reiew of the records shows that the latter performed
his work as truck drier under the respondentsJ superision and
control. .heir right of control was manifested by the following
attendant circumstances:
+. .he truck drien by the petitioner belonged to respondent
company-
?. .here was an e#press instruction from the respondents that the
truck shall be used e#clusiely to delier respondent companyJs
goods-
@. 'espondents directed the petitioner" after completion of each
deliery" to park the truck in either of two speci*c places only" to
wit: at its o5ce in =etro =anila at ?@?C 1sme[a Street" =akati
City or at !90W" =arieles" !ataan- and
E. 'espondents determined how" where and when the petitioner
would perform his task by issuing to him gate passes and
routing slips.
a. .he routing slips indicated on the column '9=;'KS" the
0age FE of +CG H 'eiew <otes on Iabor Iaws
chronological order and priority of deliery such as +
st
drop"
?
nd
drop" @
rd
drop" etc. .his meant that the petitioner had to
delier the same according to the order of priority indicated
therein.
b. .he routing slips" likewise" showed whether the goods were to
be deliered urgently or not by the word '7SH printed
thereon.
c. .he routing slips also indicated the e#act time as to when the
goods were to be deliered to the customers as" for e#ample"
the words Ztomorrow morningJ was written on slip no. ?GGB.
2.hese circumstances" to the CourtJs mind" proe that the
respondents e#ercised control oer the means and methods by which
the petitioner accomplished his work as truck drier of the respondent
company. 1n the other hand" the Court is hard put to beliee the
respondentsJ allegation that the petitioner was an independent
contractor engaged in proiding deliery or hauling serices when he
did not een own the truck used for such serices. 9idently" he did not
possess substantial capitaliKation or inestment in the form of tools"
machinery and work premises. =oreoer" the petitioner performed the
deliery serices e#clusiely for the respondent company for a
continuous and uninterrupted period of ten years.
2.he contracts of serice to the contrary notwithstanding" the
factual circumstances earlier discussed indubitably establish the
e#istence of an employer$employee relationship between the
respondent company and the petitioner. )t bears stressing that the
e#istence of an employer$employee relationship cannot be negated by
e#pressly repudiating it in a contract and proiding therein that the
employee is an independent contractor when" as in this case" the facts
clearly show otherwise. )ndeed" the employment status of a person is
de*ned and prescribed by law and not by what the parties say it
should be.3 (C$a#eF #s. NL(C, et al., 8. '. <o. +EBA@C" :an. +G"
?CCA).
)n the ?CC? case of Ta( 's. La*a7a" O8. '. <o. +A+??F" A%*%st 156 2GG2P"
the Supreme Court distinguis$ed e"plo%"ent from independent contracting.
;ccording to the Court" compared to an employee" an independent contractor is
one &$o carries on a distinct and independent business and underta4es to
per)or" t$e 9ob, &or4, or ser#ice on its o&n account and under its o&n
responsibilit% according to its o&n "anner and "et$od, )ree )ro" t$e
control and direction o) t$e principal in all "atters connected &it$ t$e
per)or"ance o) t$e &or4 e2cept as to t$e results t$ereo). (Citing De los
Santos . <I'C" 8.'. <o. +?+@?G" Dec. ?C" ?CC+). Hence" while an independent
contractor en6oys independence and freedom from the control and superision of
his principal" an employee is sub6ect to the employerJs power to control the means
and methods by which the employeeJs work is to be performed and accomplished.
/ollowing the )o(tol t#st" the High Court held in Tan #s. Lagra"a KsupraI
that albeit petitioner .an claims that priate respondent Iagrama was an
independent contractor and neer his employee" the eidence shows that the latter
performed his work as a painter" making ad billboards and murals for the motion
pictures shown at the 9mpress" Supreme" and Crown .heaters for more than +C
years" under the superision and control of petitioner. Iagrama worked in a
designated work area inside the Crown .heater of petitioner" for the use of which
petitioner prescribed rules. .he rules included the obserance of cleanliness and
hygiene and a prohibition against urinating in the work area and any place other
than the toilet or the rest rooms. 0etitionerJs control oer IagramaJs work e#tended
not only to the use of the work area" but also to the result of IagramaJs work" and
the manner and means by which the work was to be accomplished.
0age FA of +CG H 'eiew <otes on Iabor Iaws
.he Supreme Court further ruled:
2=oreoer" it would appear that petitioner not only proided the
workplace" but supplied as well the materials used for the paintings"
because he admitted that he paid Iagrama only for the latterJs
serices.
20riate respondent Iagrama claimed that he worked daily" from F
oJclock in the morning to A oJclock in the afternoon. 0etitioner disputed
this allegation and maintained that he paid Iagrama 0+"EGA.CC per
week for the murals for the three theaters which the latter usually
*nished in @ to E days in one week. 9en assuming this to be true" the
fact that Iagrama worked for at least @ to E days a week proes
regularity in his employment by petitioner.
7Second. .hat petitioner had the right to hire and *re was
admitted by him in his position paper submitted to the <I'C" the
pertinent portions of which stated:
ZComplainant did not know how to use the aailable comfort
rooms or toilets in and about his work premises. He was
urinating right at the place where he was working when it was so
easy for him" as eerybody else did and had he only wanted to"
to go to the comfort rooms. !ut no" the complainant had to
make a irtual urinal out of his work place^ .he place then stunk
to high heaens" naturally" to the consternation of respondents
and eeryone who could smell the malodor.
. . .
Z8ien such circumstances" the respondents had eery right"
nay all the compelling reason" to *re him from his painting 6ob
upon discoery and his admission of such acts. <onetheless"
though thoroughly scolded" he was not *red. )t was he who
stopped to paint for respondents.
2!y stating that he had the right to *re Iagrama" petitioner in eLect
acknowledged Iagrama to be his employee. /or the right to hire and
*re is another important element of the employer$employee
relationship. )ndeed" the fact that" as petitioner himself said" he waited
for Iagrama to report for work but the latter simply stopped reporting
for work reinforces the coniction that Iagrama was indeed an
employee of petitioner. /or only an employee can nurture such an
e#pectancy" the frustration of which" unless satisfactorily e#plained"
can bring about some disciplinary action on the part of the employer.
7T$ird. 0ayment of wages is one of the four factors to be
considered in determining the e#istence of employer$employee
relation. &ages are de*ned as Zremuneration or earnings" howeer
designated" capable of being e#pressed in terms of money" whether
*#ed or ascertained on a time" task" piece" or commission basis" or
other method of calculating the same" which is payable by an
employer to an employee under a written or unwritten contract of
employment for work done or to be done" or for serices rendered or to
be rendered.J .hat Iagrama worked for .an on a *#ed piece$work basis
is of no moment. Pa37#(t b3 #s%lt is a 7#tho& o$ )o74#(satio(
a(& &o#s (ot &#B(# th# #ss#()# o$ th# #latio(. )t is a method of
computing compensation" not a basis for determining the e#istence or
absence of employer$employee relationship. 1ne may be paid on the
basis of results or time e#pended on the work" and may or may not
ac%uire an employment status" depending on whether the elements of
an employer$employee relationship are present or not.
0age FB of +CG H 'eiew <otes on Iabor Iaws
2T$e (ules ,"ple"enting t$e Labor Code re:uire e#er%
e"plo%er to pa% $is e"plo%ees b% "eans o) pa%roll. (!ook )))"
'ule R" Sec. BOaP). .he 4a3oll should show among other things" the
employeeJs rate of pay" deductions made" and the amount actually
paid to the employee. )n the case at bar" petitioner did not present the
payroll to support his claim that Iagrama was not his employee,
raising speculations &$et$er $is )ailure to do so pro#es t$at
its presentation &ould be ad#erse to $is case. (Citing 'eised
'ules on 9idence" 'ule +@+" Section @ (e). See Ta( #s. Lagra"a, et
al., .. (. No. 161//<, Aug. 16, /00/H Nillaruel #s. NL(C, /<
SC(A 355 <0AAD=.
2.he primary standard for determining regular employment is the
reasonable connection between the particular actiity performed by
the employee in relation to the usual trade or business of the
employer. )n this case" there is such a connection between the 6ob of
Iagrama painting billboards and murals and the business of petitioner.
.o let the people know what moie was to be shown in a moie theater
re%uires billboards. 0etitioner in fact admits that the billboards are
important to his business.
LT$e )act t$at Lagra"a &as not reported as an e"plo%ee to
t$e SSS is not conclusi#e on the %uestion of whether he was an
employee of petitioner. (Citing La"bo #s. NL(C, 31C SC(A /0
K1555I). 1therwise" an employer would be rewarded for his failure or
een neglect to perform his obligation. (See Santos #s. NL(C, /53
SC(A 113 K155<I).
2Neit$er does t$e )act t$at Lagra"a painted )or ot$er
persons a@ect or alter $is e"plo%"ent relations$ip &it$
petitioner. .hat he did so only during weekends has not been denied
by petitioner. 1n the other hand" Samuel Qillalba" for whom Iagrama
had rendered serice" admitted in a sworn statement that he was told
by Iagrama that the latter worked for petitioner.3 (.an s. Iagrama" et
al." 8. '. <o. +A+??F" ;ug. +A" ?CC?).
=oreoer" in Es)aio6 #t al. 's. NLR1" O8. '. <o. +?ECAA" :une F" ?CCCP" the
Supreme Court also used the so$called 2four$fold test3 in determining employer$
employee relationship" to establish that the legitimate independent contractor is the
true employer of petitioners. .he elements of this test are (+) the selection and
engagement of employee- (?) the payment of wages- (@) the power of dismissal-
and (E) the power to control the employeeJs conduct.
1as# o$ i(&#4#(&#(t )o(ta)to SSo(:a 's. ABS/1BN )as#T.
.he ?CCE case of So(:a 's. ABS/1BN Boa&)asti(* 1o4oatio(" O8. '.
<o. +@FCA+" :une +C" ?CCEP is one of *rst impression. ;lthough 0hilippine labor laws
and 6urisprudence de*ne clearly the elements of an employer$employee
relationship" this is the *rst time that the Supreme Court has resoled the nature of
the relationship between a teleision and radio station and one of its 7talents.8
.here is no case law stating that a radio and teleision program host is an employee
of the broadcast station.
)n =ay +DDE" respondent ;!S$C!< !roadcasting Corporation (2;!S$C!<3)
signed an ;greement (2;greement3) with the =el and :ay =anagement and
Deelopment Corporation (2=:=DC3). ;!S$C!< was represented by its corporate
o5cers while =:=DC was represented by SonKa" as 0resident and 8eneral =anager"
and Carmela .iangco (2.);<8C13)" as 9Q0 and .reasurer. 'eferred to in the
;greement as 2;89<."3 =:=DC agreed to proide S1<W;Js serices e#clusiely to
0age FG of +CG H 'eiew <otes on Iabor Iaws
;!S$C!< as talent )or radio and tele#ision. .he ;greement listed the serices
SonKa would render to ;!S$C!<" as follows:
a. Co$host for =el > :ay radio program" F:CC to +C:CC a.m." =ondays to
/ridays-
b. Co$host for =el > :ay teleision program" A:@C to G:CC p.m." Sundays.
;!S$C!< agreed to pay for SonKaJs serices a monthly talent fee of 0@+C"CCC
for the *rst year and 0@+G"CCC for the second and third year of the ;greement. ;!S$
C!< would pay the talent )ees on the +C
th
and ?A
th
days of the month.
1n @C ;pril +DDB" SonKa *led a complaint against ;!S$C!< before the
Department of Iabor and 9mployment" <ational Capital 'egion in SueKon City.
SonKa complained that ;!S$C!< did not pay his salaries" separation pay" serice
incentie leae pay" +@
th
month pay" signing bonus" trael allowance and amounts
due under the 9mployees Stock 1ption 0lan (29S103).
1n +C :uly +DDB" ;!S$C!< *led a =otion to Dismiss on the ground that no
employer$employee relationship e#isted between the parties. SonKa *led an
1pposition to the motion on +D :uly +DDB.
=eanwhile" ;!S$C!< continued to remit SonKaJs monthly talent fees through
his account at 0C)!ank" SueKon ;enue !ranch" SueKon City. )n :uly +DDB" ;!S$C!<
opened a new account with the same bank where ;!S$C!< deposited SonKaJs talent
fees and other payments due him under the ;greement.
.he Iabor ;rbiter rendered his Decision dated F :uly +DDG dismissing the
complaint for lack of 6urisdiction. .he <I'C" on appeal" a5rmed the Iabor ;rbiterJs
ruling. 1n certiorari" the Court of ;ppeals a5rmed the <I'CJs *nding that no
employer$employee relationship e#isted between SonKa and ;!S$C!<.
T$e basic issue presented $ere is &$et$er SonFa is an e"plo%ee or
an independent contractor.
)n a5rming the said decision of the Court of ;ppeals and holding that SonKa
was not an employee but an independent contractor" the Supreme Court used the
four$fold test of determining the e#istence of an employer$employee relationship"
more particularly" the control test.
A. S#l#)tio( a(& E(*a*#7#(t o$ E74lo3##
)ndependent contractors often present themseles to possess uni%ue skills"
e#pertise or talent to distinguish them from ordinary employees. .he speci*c
selection and hiring of SonKa" b#)a%s# o$ his %(i8%# s2ills6 tal#(t a(&
)#l#bit3 stat%s (ot 4oss#ss#& b3 o&i(a3 #74lo3##s" is a circumstance
indicatie" but not conclusie" of an independent contractual relationship. )f SonKa
did not possess such uni%ue skills" talent and celebrity status" ;!S$C!< would not
hae entered into the ;greement with SonKa but would hae hired him through its
personnel department 6ust like any other employee.
B. Pa37#(t o$ Wa*#s
All t$e talent )ees and benefts paid to SonFa &ere t$e result o)
negotiations t$at led to t$e Agree"ent. )f SonKa were ;!S$C!<Js employee"
there would be no need for the parties to stipulate on bene*ts such as 2SSS"
=edicare" # # # and +@
th
month pay3 which the law automatically incorporates into
eery employer$employee contract. &hateer bene*ts SonKa en6oyed arose from
contract and not because of an employer$employee relationship.
0age FF of +CG H 'eiew <otes on Iabor Iaws
SonKaJs talent fees" amounting to 0@+G"CCC monthly in the second and third
year" are so huge and out of the ordinary that they indicate more an independent
contractual relationship rather than an employer$employee relationship. ;!S$C!<
agreed to pay SonKa such huge talent fees precisely because of SonKaJs uni%ue
skills" talent and celebrity status not possessed by ordinary employees.
1. Po"# o$ -is7issal
/or iolation of any proision of the ;greement" either party may terminate
their relationship. SonKa failed to show that ;!S$C!< could terminate his serices
on grounds other than breach of contract" such as retrenchment to preent losses
as proided under labor laws. During the life of the ;greement" ;!S$C!< agreed to
pay SonKaJs talent fees as long as 2;89<. and :ay SonKa shall faithfully and
completely perform each condition of this
;greement.3 9en if it suLered seere business losses" ;!S$C!< could not
retrench SonKa because ;!S$C!< remained obligated to pay SonKaJs talent fees
during the life of the ;greement. .his circumstance indicates an independent
contractual relationship between SonKa and ;!S$C!<.
-. Po"# o$ 1o(tol
Since t$ere is no local precedent on &$et$er a radio and tele#ision
progra" $ost is an e"plo%ee or an independent contractor" reference to
foreign case law in analyKing the present case is necessary. .he 7nited States Court
of ;ppeals" /irst Circuit" recently held in ;lberty$Q_leK s. Corporaci`n De 0uerto
'ico 0ara Ia Difusi`n 0ablica (2&)0'3)" O@B+ /.@d +" ? =arch ?CCEP that a teleision
program host is an independent contractor" thus:
+irst, a t#l#'isio( a)t#ss is a s2ill#& 4ositio( re%uiring talent and
training not aailable on$the$6ob.
Second, the actress proided the 2tools and instrumentalities3 necessary for
her to perform.
T$ird" &)0' could not assign the actress work in addition to *lming 2Desde
=i 0ueblo.3
;pplying the control test" SonKa is not an employee but an independent
contractor. .he control test is the most important test the courts apply in
distinguishing an employee from an independent contractor. .his test is based on
the e#tent of control the hirer e#ercises oer a worker. .he greater the superision
and control the hirer e#ercises" the more likely the worker is deemed an employee.
.he conerse holds true as well $ the less control the hirer e#ercises" the more likely
the worker is considered an independent contractor.
/irst" SonKa contends that ;!S$C!< e#ercised control oer the means and
methods of his work.
SonFa;s argu"ent is "isplaced. ;!S$C!< engaged SonKaJs serices
speci*cally to co$host the 2=el > :ay3 programs. ;!S$C!< did not assign any other
work to SonKa. .o perform his work" SonKa only needed his skills and talent. How
SonKa deliered his lines" appeared on teleision" and sounded on radio were
outside ;!S$C!<Js control. SonKa did not hae to render eight hours of work per
day. .he ;greement re%uired SonKa to attend only rehearsals and tapings of the
shows" as well as pre$ and post$production staL meetings. ;!S$C!< could not
dictate the contents of SonKaJs script. Howeer" the ;greement prohibited SonKa
from criticiKing in his shows ;!S$C!< or its interests. .he clear implication is that
SonKa had a free hand on what to say or discuss in his shows proided he did not
attack ;!S$C!< or its interests. =oreoer" ;!S$C!< was not inoled in the actual
performance that produced the *nished product of SonKaJs work. ;!S$C!< did not
0age FD of +CG H 'eiew <otes on Iabor Iaws
instruct SonKa how to perform his 6ob. ;!S$C!< merely resered the right to modify
the program format and airtime schedule 2for more eLectie programming.3 ;!S$
C!<Js sole concern was the %uality of the shows and their standing in the ratings.
Clearly" ;!S$C!< did not e#ercise control oer the means and methods of
performance of SonKaJs work.
SonKa claims that ;!S$C!<Js power not to broadcast his shows proes ;!S$
C!<Js power oer the means and methods of the performance of his work. ;lthough
;!S$C!< did hae the option not to broadcast SonKaJs show" ;!S$C!< was still
obligated to pay SonKaJs talent fees. .hus" een if ;!S$C!< was completely
dissatis*ed with the means and methods of SonKaJs performance of his work" or
een with the %uality or product of his work" ;!S$C!< could not dismiss or een
discipline SonKa. ;ll that ;!S$C!< could do is not to broadcast SonKaJs show but
;!S$C!< must still pay his talent fees in full.
Clearly" ;!S$C!<Js right not to broadcast SonKaJs show" burdened as it was
by the obligation to continue paying in full SonKaJs talent fees" did not amount to
control oer the means and methods of the performance of SonKaJs work. ;!S$C!<
could not terminate or discipline SonKa een if the means and methods of
performance of his work $ how he deliered his lines and appeared on teleision $
did not meet ;!S$C!<Js approal. .his proes that ;!S$C!<Js control was limited
only to the result of SonKaJs work" whether to broadcast the *nal product or not. )n
either case" ;!S$C!< must still pay SonKaJs talent fees in full until the e#piry of the
;greement.
)n Naug$an, et al. #s. 3arner, et al., K16C +./d /=, < August 15=I, the
7nited States Circuit Court of A44#als %l#& that 'a%&#'ill# 4#$o7#s "##
i(&#4#(&#(t )o(ta)tos altho%*h th# 7a(a*#7#(t #s#'#& th# i*ht to
&#l#t# obH#)tio(abl# $#at%#s i( th#i sho"s. Since the management did not
hae control oer the manner of performance of the skills of the artists" it could only
control the result of the work by deleting ob6ectionable features.
SonKa further contends that ;!S$C!< e#ercised control oer his work by
supplying all e%uipment and crew. <o doubt" ;!S$C!< supplied the e%uipment" crew
and airtime needed to broadcast the 2=el > :ay3 programs. Howeer" the
e%uipment" crew and airtime are not the 2tools and instrumentalities3 SonKa needed
to perform his 6ob. &hat SonKa principally needed were his talent or skills and the
costumes necessary for his appearance. 9en though ;!S$C!< proided SonKa with
the place of work and the necessary e%uipment" So%+a *a till a% i%#e$e%#e%t
(o%tra(tor i%(e ABS9CBN #i# %ot &$er)ie a%# (o%trol !i *ork. ABS9CBNI ole
(o%(er% *a for So%+a to #i$la" !i tale%t #&ri%7 t!e airi%7 of t!e $ro7ram.
; radio broadcast specialist who works under minimal superision is an
independent contractor. SonKaJs work as teleision and radio program host re%uired
special skills and talent" which SonKa admittedly possesses. .he records do not
show that ;!S$C!< e#ercised any superision and control oer how SonKa utiliKed
his skills and talent in his shows.
Second" SonKa urges the Court to rule that he was ;!S$C!<Js employee
because ;!S$C!< sub6ected him to its rules and standards of performance. SonKa
claims that this indicates ;!S$C!<Js control 2not only OoerP his manner of work but
also the %uality of his work.3
.he ;greement stipulates that SonKa shall abide with the rules and standards
of performance 2coering talents3 of ;!S$C!<. .he ;greement does not re%uire
SonKa to comply with the rules and standards of performance prescribed for
employees of ;!S$C!<. .he code of conduct imposed on SonKa under the
;greement refers to the 2.eleision and 'adio Code of the Kapisanan ng mga
!roadcaster sa 0ilipinas (K!0)" which has been adopted by the C1=0;<N (;!S$C!<)
as its Code of 9thics.3 .he K!0 code applies to broadcasters" not to employees of
radio and teleision stations. !roadcasters are not necessarily employees of radio
0age DC of +CG H 'eiew <otes on Iabor Iaws
and teleision stations. Clearly" the rules and standards of performance referred to
in the ;greement are those applicable to talents and not to employees of ;!S$C!<.
)n any eent" not all rules imposed by the hiring party on the hired party
indicate that the latter is an employee of the former. (AG> M&t&al Be%e:t
Ao(iatio%, I%(. ). N/RC, ;.R. No. 0250AA, 5D Ja%. 0AA1, 531 SCRA @1). )n this case"
SonKa failed to show that these rules controlled his performance. &e *nd that these
general rules are merely guidelines towards the achieement of the mutually
desired result" which are top$rating teleision and radio programs that comply with
standards of the industry.
.he Qaughan case also held that one could still be an independent contractor
although the hirer resered certain superision to insure the attainment of the
desired result. .he hirer" howeer" must not deprie the one hired from performing
his serices according to his own initiatie.
Iastly" SonKa insists that the 2e#clusiity clause3 in the ;greement is the
most e#treme form of control which ;!S$C!< e#ercised oer him.
.his argument is futile. !eing an e#clusie talent does not by itself mean that
SonKa is an employee of ;!S$C!<. 9en an independent contractor can alidly
proide his serices e#clusiely to the hiring party. )n the broadcast industry"
e#clusiity is not necessarily the same as control.
.he hiring of e#clusie talents is a widespread and accepted practice in the
entertainment industry. .his practice is not designed to control the means and
methods of work of the talent" but simply to protect the inestment of the broadcast
station. .he broadcast station normally spends substantial amounts of money" time
and eLort 2in building up its talents as well as the programs they appear in and thus
e#pects that said talents remain e#clusie with the station for a commensurate
period of time.3 <ormally" a much higher fee is paid to talents who agree to work
e#clusiely for a particular radio or teleision station. )n short" the huge talent fees
partially compensates for e#clusiity" as in the present case. (SonFa #s. ABS*CBN
Broadcasting Corporation, .. (. No. 13<061, Aune 10, /00).
IN-IKI-.ALS AS IN-EPEN-ENT 1ONTRA1TORS.
.he law does not preclude indiiduals from engaging as independent
contractors. )ndiiduals with special skills" e#pertise or talent en6oy the freedom to
oLer their serices as independent contractors. Th# i*ht to li$# a(& li'#lihoo&
*%aa(t##s this $##&o7 to )o(ta)t as i(&#4#(&#(t )o(ta)tos. .he right
of labor to security of tenure cannot operate to deprie an indiidual" possessed
with special skills" e#pertise and talent" of his right to contract as an independent
contractor. ;n indiidual like an artist or talent has a right to render his serices
without any one controlling the means and methods by which he performs his art or
craft. .he Supreme Court will not interpret the right of labor to security of tenure to
compel artists and talents to render their serices only as employees. )f radio and
teleision program hosts can render their serices only as employees" the station
owners and managers can dictate to the radio and teleision hosts what they say in
their shows. .his is not conducie to freedom of the press. @So(:a 's. ABS/1BN
Boa&)asti(* 1o4oatio(6 D. R. No. 13EG516 I%(# 1G6 2GG+A.
Conse%uently" a teleision program host is deemed an independent
contractor. @Alb#t3/KVl#: 's. 1o4oa)iW( -# P%#to Ri)o Paa La -i$%siW(
PXbli)a K3=1 +.3d 1, / !arc$ /00I Pnited States Court o) Appeals, +irst
Circuit).
)n another case" it was ruled by the 7nited States Circuit Court of ;ppeals
that #aude#ille per)or"ers are independent contractors. (Va&7!a%, et al. ).
War%er, et al., <0B1 G.5# 53, D A&7. 0A@3=).
0age D+ of +CG H 'eiew <otes on Iabor Iaws
)n Yh#(*9i(* 's. Natha(so(6 S215 F.S%44.2& 11+6 5 A%*%st 2GG2P" the
plaintiL Wheng#ing" a Chinese language broadcaster and translator was deemed an
independent contractor because she worked under minimal superision.
)n the insurance industry" an insurance ad6uster or a commission agent of
insurance *rms is not considered an employee thereof but an independent
contractor in the light of the absence of control by the latter oer the work of the
former e#cept as to the results of such work. (A+P !utual Beneft Association,
,nc. #s. NL(C, et al., .. (. No. 10/155, Aan. /<, 155CH ,nsular Li)e
Assurance Co., Ltd. #s. NL(C, et al., .. (. No. <<, No#. 16, 15<5).
,n case o) doubt6 o(# 7%st b# )lassiB#& as #74lo3##6 (ot as
i(&#4#(&#(t )o(ta)to.
)n the ?CCC case of SSS 's. 1A" O8. '. <o. +CC@FF" December +E" ?CCCP" the
Supreme Court reiterated its ruling in the case of -3 0#h B#(* 's. I(t#(atio(al
Labo" ODC SC'; +B+ (+DGD)P" where the long$standing ruling in S%(i4# 1o)o(%t
Po&%)ts 1o. 's. 1o%t o$ I(&%stial R#latio(s" OF@ 0hil. A+F" A?@" I$?CCD" ;pril
@C" +DEDP" was cited" to wit:
2&hen a worker possesses some attributes of an employee and
others of an independent contractor" which make him fall within an
intermediate area" he may be classi*ed under the category of an
employee when the economic facts of the relations make it more
nearly one of employment than one of independent business
enterprise with respect to the ends sought to be accomplished.3
E74lo37#(t o$ s#)%it3 *%a&s i( th# s#)%it3 s#'i)# i(&%st3.
.he Supreme Court had occasion to discuss once again the issue of
employment status of security guards in the ?CCA case of Ma(ila El#)ti)
1o74a(3 's. B#(a7ia" O8. '. <o. +EA?G+" :uly +E" ?CCAP. ,n e"p$asiFing t$e
)act t$at t$ere &as no e"plo%er*e"plo%ee relations$ip bet&een petitioner
!eralco and t$e securit% guards assigned to it b% t$e securit% agenc%
e"plo%ing t$e"" it cited the case of So)ial S#)%it3 S3st#7 's. 1o%t o$
A44#als" O<o. I$?F+@E" :une @C" +DG+" @D SC'; B?DP that:
2....he guards or watchmen render their serices to priate
respondent by allowing themseles to be assigned by said respondent"
which furnishes them arms and ammunition" to guard and protect the
properties and interests of priate respondentYs clients" thus enabling
that respondent to ful*ll its contractual obligations. 3$o t$e clients
&ill be, and under &$at ter"s and conditions t$e ser#ices &ill
be rendered, are "atters deter"ined not b% t$e guards or
&atc$"en, but b% pri#ate respondent.
1n the other hand" the client companies hae no hand in selecting
who among the guards or watchmen shall be assigned to them. )t is
priate respondent that issues assignment orders and instructions and
e#ercises control and superision oer the guards or watchmen" so
much so that if" for one reason or another" the client is dissatis*ed with
the serices of a particular guard" the client cannot himself terminate
the serices of such guard" but has to notify priate respondent" which
either substitutes him with another or metes out to him disciplinary
measures. .hat in the course of a watchmanYs assignment the client
conceiably issues instructions to him" does not in the least detract
from the fact that priate respondent is the employer of said
watchman" for in legal contemplation such instructions carry no more
weight than mere re%uests" the priity of contract being between the
0age D? of +CG H 'eiew <otes on Iabor Iaws
client and priate respondent" not between the client and the guard or
watchman. Corollarily" such giing out of instructions ineitably spring
from the clientYs right predicated on the contract for serices entered
into by it with priate respondent.
2)n the matter of compensation" there can be no %uestion at all that
the guards or watchmen receie compensation from priate
respondent and not from the companies or establishments whose
premises they are guarding. .he fee contracted for to be paid by the
client is admittedly not e%ual to the salary of a guard or watchman-
such fee is arried at independently of the salary to which the guard or
watchman is entitled under his arrangements with priate respondent.
Said ruling in SSS was reiterated in A7#i)a( P#si&#(t Li(#s 's. 1la'#"
O<o. I$A+BE+" :une ?D" +DF?" ++E SC'; F?BP" thus:
2)n the light of the foregoing standards" &e fail to see how the
complaining watchmen of the =arine Security ;gency can be
considered as employees of the petitioner. )t is the agency that
recruits" hires" and assigns the work of its watchmen. Hence" a
watchman can not perform any security serice for the petitionerYs
essels unless the agency *rst accepts him as its watchman. Wit!
re$e(t to !i *a7e, t!e amo&%t to be $ai# to a e(&rit" 7&ar# i
be"o%# t!e $o*er of t!e $etitio%er to #etermi%e. Certainly" the lump
sum amount paid by the petitioner to the agency in consideration of
the latterYs serice is much more than the wages of any one
watchman. )n point of fact" it is the agency that %uanti*es and pays the
wages to which a watchman is entitled.
2<either does the petitioner hae any power to dismiss the security
guards. )n fact" &e fail to see any eidence in the record that it wielded
such a power. )t is true that it may re%uest the agency to change a
particular guard. !ut this" precisely" is proof that the power lies in the
hands of the agency.
2Since the petitioner has to deal with the agency" and not the
indiidual watchmen" on matters pertaining to the contracted task" it
stands to reason that the petitioner does not e#ercise any power oer
the watchmenYs conduct. ;lways" the agency stands between the
petitioner and the watchmen- and it is the agency that is answerable to
the petitioner for the conduct of its guards.3
;nd as held in said !eralco case:
2Pnder t$e securit% ser#ice agree"ent" it was ;SD;) which (a)
selected" engaged or hired and discharged the security guards- (b)
assigned them to =9';IC1 according to the number agreed upon- (c)
proided the uniform" *rearms and ammunition" nightsticks"
Mashlights" raincoats and other paraphernalia of the security guards-
(d) paid them salaries or wages- and" (e) disciplined and superised
them or principally controlled their conduct. .he agreement een
e#plicitly proided that 2OnPothing herein contained shall be understood
to make the security guards under this ;greement" employees of the
C1=0;<N" it being clearly understood that such security guards shall
be considered as they are" employees of the ;89<CN alone.3 Clearly"
the indiidual respondents are the employees of ;SD;).
2;s to the proision in the agreement that =9';IC1 resered the
right to seek replacement of any guard whose behaior" conduct or
appearance is not satisfactory" such merely con*rms that the power to
discipline lies with the agency. )t is a standard stipulation in security
0age D@ of +CG H 'eiew <otes on Iabor Iaws
serice agreements that the client may re%uest the replacement of the
guards to it. Serice$oriented enterprises" such as the business of
proiding security serices" generally adhere to the business adage
that 2the customer or client is always right3 and" thus" must satisfy the
interests" conform to the needs" and cater to the reasonable
impositions of its clients.
2<either is the stipulation that the agency cannot pull out any
security guard from =9';IC1 without its consent an indication of
control. )t is simply a security clause designed to preent the agency
from unilaterally remoing its security guards from their assigned posts
at =9';IC1Js premises to the latterJs detriment.
2.he clause that =9';IC1 has the right at all times to inspect the
guards of the agency detailed in its premises is likewise not indicatie
of control as it is not a unilateral right. .he agreement proides that
the agency is principally mandated to conduct inspections" without
pre6udice to =9';IC1Js right to conduct its own inspections.
2<eedless to stress" for the power of control to be present" the
person for whom the serices are rendered must resere the right to
direct not only the end to be achieed but also the means for reaching
such end. <ot all rules imposed by the hiring party on the hired party
indicate that the latter is an employee of the former. 'ules which sere
as general guidelines towards the achieement of the mutually desired
result are not indicatie of the power of control.
2Qerily" the security serice agreements in the present case
proided that all speci*c instructions by =9';IC1 relating to the
discharge by the security guards of their duties shall be directed to the
agency and not directly to the indiidual respondents. .he indiidual
respondents failed to show that the rules of =9';IC1 controlled their
performance. ###
2.he indiidual respondents can not be considered as regular
employees of the =9';IC1 for" although security serices are
necessary and desirable to the business of =9';IC1" it is not directly
related to its principal business and may een be considered
unnecessary in the conduct of =9';IC1Js principal business" which is
the distribution of electricity.3
FC. Who a# th# 4ati#s to a )o(ta)ti(* o s%b)o(ta)ti(* aa(*#7#(t!
Pati#s. $ .here are @ parties: 4i()i4al" the )o(ta)to or
s%b)o(ta)to" and the "o2#s engaged by the latter. .he principal and
the contractor or subcontractor may be a natural or 6uridical person.
/ MPi()i4alL refers to any employer who puts out or farms out a 6ob"
serice" or work to a contractor or subcontractor" whether or not the
arrangement is coered by a written contract.
/ M1o(ta)toO or Os%b)o(ta)toL refers to any person or entity
engaged in a legitimate contracting or subcontracting arrangement.
/ O1o(ta)t%al #74lo3##L includes one employed by a contractor or
subcontractor to perform or complete a 6ob" work or serice pursuant to
an arrangement between the latter and a principal called 2contracting3
or 2subcontracting3.
FE. Wh#( is )o(ta)ti(* o s%b)o(ta)ti(* l#*iti7at#!
0age DE of +CG H 'eiew <otes on Iabor Iaws
1o(ta)ti(* o s%b)o(ta)ti(* shall be legitimate if the following
circumstances concur:
(i) .he contractor or subcontractor carries on a distinct and
independent business and undertakes to perform the 6ob" work or
serice 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 e#cept as to the results thereof-
(ii) .he contractor or subcontractor has substantial capital or
inestment- and
(iii) .he agreement between the principal and the contractor or
subcontractor assures the contractual employeesY entitlement to all
labor and occupational safety and health standards" free e#ercise of
the right to self$organiKation" security of tenure" and social and
welfare bene*ts.
FF. What is 4#7issibl# )o(ta)ti(* o s%b)o(ta)ti(* aa(*#7#(t!
.he principal may engage the serices of a contractor or subcontractor for
the performance of any of the following:
(a) &orks or serices temporarily or occasionally needed to meet abnormal
increase in the demand of products or serices" proided that the normal
production capacity or regular workforce of the principal cannot
reasonably cope with such demands-
(b) &orks or serices temporarily or occasionally needed by the principal for
undertakings re%uiring e#pert or highly technical personnel to improe
the management or operations of an enterprise-
(c) Serices temporarily needed for the introduction or promotion of new
products" only for the duration of the introductory or promotional period-
(d) &orks or serices not directly related or not integral to the main business
or operation of the principal" including casual work" 6anitorial" security"
landscaping" and messengerial serices and work not related to
manufacturing processes in manufacturing establishments-
(e) Serices inoling the public display of manufacturersJ products which do
not inole the act of selling or issuance of receipts or inoices-
(f) SpecialiKed works inoling the use of some particular" unusual or peculiar
skills" e#pertise" tools or e%uipment the performance of which is beyond
the competence of the regular workforce or production capacity of the
principal- and
(g) 7nless a relieer system is in place among the regular workforce"
substitute serices for absent regular employees proided that the period
of serice shall be coe#tensie with the period of absence and the same
is made clear to the substitute employee at the time of engagement. .he
phrase 2absent regular employees3 includes those who are sering
suspensions or other disciplinary measures not amounting to termination
of employment meted out by the principal but e#cludes those on strike
where all the formal re%uisites for the legality of the strike hae been
prima facie complied with based on the records *led with the <ational
Conciliation and =ediation !oard. (Section B" 'ule Q)))$;" !ook )))" 'ules to
)mplement the Iabor Code" as amended by Department 1rder <o. +C"
Series of +DDG) (ee -O 1<*0/, s. /000)
1GG. What a# th# 4ohibit#& a)ts i( th# la" o( )o(ta)ti(* a(&
s%b)o(ta)ti(*!
.he following are hereby declared prohibited for being contrary to law or
public policy:
(a) Iabor$only contracting-
(b) Contracting out of work which will either displace employees of the
0age DA of +CG H 'eiew <otes on Iabor Iaws
principal from their 6obs or reduce their regular working hours-
(c) Contracting out of work with a 2cabo3. O; VcaboV refers to a person or
group of persons or to a labor group which" in the guise of a labor
organiKation" 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.P
(d) .aking undue adantage of the economic situation or lack of bargaining
strength of the contractual employee" or undermining his security of
tenure or basic rights" or circumenting the proisions of regular
employment in any of the following instances:
(i) )n addition to his assigned function" re%uiring the contractual
employee to perform functions which are currently being
performed by the regular employee of the principal or of the
contractor or subcontractor-
(ii) 'e%uiring him to sign as a precondition to employment or
continued employment" an antedated resignation letter- a blank
payroll- a waier of labor standards including minimum wages and
social or welfare bene*ts- or a %uitclaim releasing the principal"
contractor or subcontractor from any liability as to payment of the
future claims- and
(iii) 'e%uiring him to sign a contract *#ing 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 diisible into phases for which substantially diLerent
skills are re%uired and this is made known to the employee at the
time of engagement.
(e) Contracting out of a 6ob" work or serice through an i(/ho%s# a*#()3 as
de*ned herein-
(f) Contracting out of a 6ob" work or serice directly related to the business or
operation of the principal by reason of a strike or lockout whether actual
or imminent- and
(g) Contracting out of a 6ob" work or serice when not 6usti*ed by the
e#igencies of the business and the same results in the reduction or
splitting of the bargaining unit.
1G1. What is labo/o(l3 )o(ta)ti(*!
Labor*onl% contracting is $ereb% declared pro$ibited. /or this purpose"
labor$only contracting shall refer to an arrangement where the contractor or
subcontractor merely recruits" supplies or places workers to perform a 6ob" work or
serice for a principal" and any of the following elements are present:
i) the contractor or subcontractor does not hae substantial capital o
inestment which relates to the 6ob" work or serice to be performed and
the e"plo%ees recruited, supplied or placed b% suc$ contractor or
subcontractor are per)or"ing acti#ities &$ic$ are directl% related
to t$e "ain business o) t$e principal- or
ii) t!e (o%tra(tor #oe %ot e'er(ie t!e ri7!t to (o%trol o)er t!e $erforma%(e
of t!e *ork of t!e (o%tra(t&al em$lo"ee. (;rticle +CB" Iabor Code- (<o. D"
D1I9 0rimer on Contracting and Subcontracting" 9Lects of Department
1rder <o. @" Series of ?CC+- !anila 3ater Co., ,nc. #s. Pena, et al., ..
(. No. 16</66, Aul% <, /00).
E<#)ts o$ a labo/o(l3 )o(ta)ti(* aa(*#7#(t.
)n summary" the following are the eLects of a labor$only contracting
arrangement:
a. .he subcontractor will be treated as the agent or intermediary of the
principal. Since the act of an agent is the act of the principal"
0age DB of +CG H 'eiew <otes on Iabor Iaws
representations made by the subcontractor to the employees will bind the
principal.
b. .he principal will become the employer as if it directly employed the
workers engaged to undertake the subcontracted 6ob or serice. )t will be
responsible to them for all their entitlements and bene*ts under the labor
laws.
c. .he principal and the subcontractor will be solidarily treated as the
employer.
d. .he employees will become employees of the principal" sub6ect to the
classi*cations of employees under ;rticle ?F of the Iabor Code. (See
=anila 9lectric Company s. !enamira" 8. '. <o. +EA?G+" :uly +E" ?CCA).
)f the labor$only contracting actiity is undertaken by a legitimate labor
organiKation" a petition for cancellation of union registration may be *led against it"
pursuant to ;rticle ?@D(e) of the Iabor Code. (No. 13, -OLE Pri"er on
Contracting and Subcontracting, E@ects o) -epart"ent Order No. 3, Series
o) /001).
S%bsta(tial )a4ital o i('#st7#(t6 7#a(i(*.
7Substantial capital or in#est"ent8 refers to capital stocks and
subscribed capitaliKation in the case of corporations" tools" e%uipment" implements"
machineries and work premises" actually and directly used by the contractor or
subcontractor in the performance or completion of the 6ob" work or serice
contracted out. (Se(tio% B, -epart"ent Order No. 1<*0/, Serie of 5225, <Geb.
50, 5225=6 No. D, DO/E >rimer o% Co%tra(ti%7 a%# S&b(o%tra(ti%7, EEe(t of
De$artme%t Or#er No. 4, Serie of 5220).
Ri*ht o$ )o(tol6 7#a(i(*.
.he 7rig$t to control8 shall refer to the right resered to the person for
whom the serices of the contractual workers are performed" to determine not only
the end to be achieed" but also the manner and means to be used in reaching that
end. (Section 6, -epart"ent Order No. 1<*0/, Series o) /00/, K+eb. /1,
/00/I).
S%bsta(tial )a4ital &it$out i('#st7#(t i( tools6 #8%i47#(t6 7a)hi(#i#s6
#t).N #<#)t.
)n N#i 's. NLR1" O8. '. <os. DGCCF$CD" :uly ?@" +DD@" ??E SC'; G+G+P" the
Supreme Court ruled that the labor contractor is not engaged in labor$only
contracting because it has su5ciently proed that it has substantial capital. Haing
substantial capital in the amount of 0+ =illion fully subscribed and paid for and is a
big *rm which serices" among others" a uniersity" an international bank" a big
local bank" a hospital center" goernment agencies" etc." it is a hi*hl3 )a4itali:#&
'#(t%# a(& )a((ot b# &##7#& #(*a*#& i( labo/o(l3 )o(ta)ti(*. It is a
8%aliB#& i(&#4#(&#(t )o(ta)to. /urther" it need not proe that it made
inestments in the form of tools" e%uipment" machineries" work premises" among
others. T$e la& does not re:uire bot$ substantial capital and in#est"ent in
suc$ tools, e:uip"ent, etc. .his is clear from the use of the con6unction 2or3 in
the proision of fourth paragraph of ;rticle +CB of the Iabor Code.
)f the intention was to re%uire the contractor to proe that he has both capital
and the re%uisite inestment" then the con6unction 2and3 should hae been used.
!ut haing established that it has substantial capital" it was no longer necessary for
the labor contractor to further adduce eidence to proe that it does not fall within
the puriew of 2labor$only3 contracting. .here is een no need for it to refute
petitionersJ contention that the actiities they perform are directly related to the
0age DG of +CG H 'eiew <otes on Iabor Iaws
principal business of respondent bank (/9!.C). (<eri s. <I'C" 8. '. <os. DGCCF$CD"
:uly ?@" +DD@" ??E SC'; G+G+).
)n another similar case" Fili4i(as S3(th#ti) Fib# 1o4oatio( SFILSYNT
's. NLR16 #t al." O8. '. <o. ++@@EG" :une +E" +DDBP" the Supreme Court ruled that a
contractor which is a going$concern duly registered with the Securities and
9#change Commission with substantial capitaliKation of 0+.B =illion" 0ECC"CCC of
which is actually subscribed" cannot be considered as engaged in labor$only
contracting being a highly capitaliKed enture. =oreoer" while the 6anitorial
serices performed by the employee pursuant to the agreement between the
indirect employer and the contractor may be considered directly related to the
principal business of the indirect employer which is the manufacture of polyester
*ber" neertheless" they are not necessary in its operation. (See also Baguio #s.
NL(C, et al., .. (. Nos. C500*0<, Oct. , 1551, /0/ SC(A =6, C0).
1n the contrary" they are merely incidental thereto" as opposed to being
integral" without which production and company sales will suLer. (Ecal #s. NL(C,
et al., .. (. Nos. 5/CCC*C<, !arc$ 13, 1551, 156 SC(A //, //3).
)n the /006 case of Wa)2 Wa)2 Dol$ R 1o%(t3 1l%b 's. NLR1" O8. '. <o.
+EDGD@" A4il 156 2GG5P" the Supreme Court ruled that there is indubitable
eidence showing that !usiness Sta5ng and =anagement" )nc. @BSMIA6 a
)o4oatio( #(*a*#& i( th# b%si(#ss as Ma(a*#7#(t S#'i)# 1o(s%lta(t6
is a( i(&#4#(&#(t )o(ta)to6 #(*a*#& i( th# 7a(a*#7#(t o$ 4oH#)ts6
b%si(#ss o4#atio(s6 $%()tio(s6 Hobs a(& oth# 2i(&s o$ b%si(#ss '#(t%#s6
a(& has s%?)i#(t )a4ital a(& #so%)#s to %(&#ta2# its 4i()i4al
b%si(#ss. )t had proided management serices to arious industrial and
commercial business establishments. Its Ati)l#s o$ I()o4oatio( 4o'#s its
s%?)i#(t )a4itali:atio(. =oreoer" in December +DD@" Iabor Secretary
!ienenido Iaguesma" in the case of )n re 0etition for Certi*cation 9lection ;mong
the 'egular 'ank$and$/ile 9mployees &orkers of !yron$:ackson (!:) Serices
)nternational )ncorporated" /ederation of /ree &orkers (//&)$!yron :ackson Serices
9mployees Chapter" #)o*(i:#& BSMI as a( i(&#4#(&#(t )o(ta)to.
)n the ?CCE case of Ma(ila Wat# 1o.6 I(). 's. P#(a" O8. '. <o. +AF?AA"
:uly F" ?CCEP" the Supreme Court" in holding that th# #(tit3 is (ot a(
i(&#4#(&#(t )o(ta)to b%t a labo/o(l3 )o(ta)to6 ratiocinated:
7+irst, O;ssociation Collectors 8roup" )nc.P @A1DIA6 Owhich was
contracted by petitioner =anila &ater Company" )nc. to collect charges
for the !alara !ranchP" does not hae substantial capitaliKation or
inestment in the form of tools" e%uipment" machineries" work
premises" and other materials" to %ualify as an independent contractor.
&hile it has an authoriKed capital stock of 0+"CCC"CCC.CC" only
0B?"ACC.CC is actually paid$in" which cannot be considered substantial
capitaliKation. Th# 121 )oll#)tos S)o74osi(* A1DIT s%bs)ib#&
to $o% sha#s #a)h a(& 4ai& o(l3 th# a7o%(t o$ P=25.GG i(
o&# to )o74l3 "ith th# i()o4oatio( #8%i#7#(ts. /urther"
priate respondents reported daily to the branch o5ce of the petitioner
because ;C8) has no o5ce or work premises. )n fact" the corporate
address of ;C8) was the residence of its president" =r. Herminio D.
0e[a. =oreoer" in dealing with the consumers" priate respondents
used the receipts and identi*cation cards issued by petitioner.
7Second, the work of the priate respondents was directly related
to the principal business or operation of the petitioner. !eing in the
business of proiding water to the consumers in the 9ast Wone" the
collection of the charges therefor by priate respondents for the
petitioner can only be categoriKed as clearly related to" and in the
pursuit of the latterJs business.
0age DF of +CG H 'eiew <otes on Iabor Iaws
7Lastl%, ;C8) did not carr% on an independent business or
underta4e t$e per)or"ance o) its ser#ice contract according to
its o&n "anner and "et$od, )ree )ro" t$e control and
super#ision o) its principal, petitioner. 0rior to priate
respondentsJ alleged employment with ;C8)" th#3 "## al#a&3
"o2i(* $o 4#titio(#" sub6ect to its rules and regulations in regard
to the manner and method of performing their tasks. This $o7 o$
)o(tol a(& s%4#'isio( (#'# )ha(*#& altho%*h th#3 "##
al#a&3 %(&# th# s##7i(* #74lo3 o$ A1DI. 0etitioner issued
memoranda regarding the billing methods and distribution of books to
the collectors- it re%uired priate respondents to report daily and to
remit their collections on the same day to the branch o5ce or to
deposit them with !ank of the 0hilippine )slands- it monitored strictly
their attendance as when a collector cannot perform his daily
collection" he must notify petitioner or the branch o5ce in the morning
of the day that he will be absent- and although it was ;C8) which
ultimately disciplined priate respondents" the penalty to be imposed
was dictated by petitioner as shown in the letters it sent to ;C8)
specifying the penalties to be meted on the erring priate respondents.
.hese are indications that ;C8) was not left alone in the superision
and control of its alleged employees. Conse%uently" it can be
concluded that ;C8) was not an independent contractor since it did not
carry a distinct business free from the control and superision of
petitioner.
27nder this factual milieu" t!ere i %o #o&bt t!at AC;I *a e%7a7e#
i% labor9o%l" (o%tra(ti%7, a%# a &(!, i (o%i#ere# merel" a% a7e%t
of t!e $etitio%er. '''. 3 (Ma(ila Wat# 1o.6 I(). 's. P#(a." 8. '. <o.
+AF?AA" I%l3 E6 2GG+).
)n the case of Phili44i(# F%Hi J#o9 1o4oatio(6 's. NLR1" O8. '. <o.
+++AC+" =arch A" +DDBP" the S%4#7# 1o%t %l#& that th# 7a(4o"# a*#()3
is a labo/o(l3 )o(ta)to (ot"ithsta(&i(* th# latt#;s i('o)atio( o$ th#
%li(* i( th# N#i )as# @s%4aA t$at it is a $ig$l%*capitaliFed business
#enture6 #*ist##& as a( Mi(&#4#(&#(t #74lo3#L "ith th# S#)%iti#s a(&
E9)ha(*# 1o77issio( as well as the Department of Iabor and 9mployment- that
it is a member of the Social Security System- that in +DFE" it had assets e#ceeding
0A =illion and at least ?C typewriters" o5ce e%uipment and serice ehicles- and
that it had employees of its own and a pool of ?A clerks assigned to clients on a
temporary basis.
)n distinguishing the Phili44i(# F%Hi J#o9 1o4oatio( case OsupraP from
the N#i )as#" the Supreme Court cited the following:
I( th# N#i )as#" the High Court considered not only the capitaliKation of the
contractor but also the fact that it was proiding speci*c special serices
(radio4tele# operator and 6anitor) to the employer- that in another case
(Associated Labor Pnion*TPCP #s. NL(C, et al., .. (. No. 101C<, October
/1, 1551), the Supreme Court had already found that the said contractor was an
independent contractor- that the contractor retained control oer the employees
and the employer was actually 6ust concerned with the end$result- that th#
)o(ta)to ha& th# 4o"# to #/assi*( th# #74lo3##s a(& th#i
&#4lo37#(t "as (ot s%bH#)t to th# a44o'al o$ th# #74lo3#N and that th#
)o(ta)to "as 4ai& i( l%74 s%7 $o th# s#'i)#s it #(&##&.
.hese features of the Neri case make it distinguishable from the P$ilippine
+u9i Rero2 Corporation case where the serice being rendered by the priate
respondent (contractorJs employee) was not a speci*c or special skill that the
contractor was in the business of proiding. ;lthough in the <eri case" the tele#
machine operated by the employee belonged to the employer" the serice was
deemed permissible because it was speci*c and technical. .his cannot be said of
0age DD of +CG H 'eiew <otes on Iabor Iaws
the serice rendered by the priate respondent (contractorJs employee) in the
0hilippine /u6i Rero# Corporation case.
.he argument in the 0hilippine /u6i Rero# Corporation case that the contractor
had typewriters and serice ehicles for the conduct of its business independently
of the employer does not make it a legitimate 6ob contractor because typewriters
and ehicles bear no direct relationship to the 6ob for which the contractor
contracted its serice of operating copier machines and oLering copying serices to
the public. .he fact is that the contractor did not hae copying machines of its own.
What it &i& "as si74l3 to s%44l3 7a(4o"# to F%Hi J#o9.
.he phrase Ms%bsta(tial )a4ital a(& i('#st7#(t i( th# $o7 o$ tools"
e%uipment" machineries" work premises and other materials which are necessary in
the conduct of his business3 in the )mplementing 'ules" )l#al3 )o(t#74lat#s
tools6 #8%i47#(t6 #t).6 "hi)h a# &i#)tl3 #lat#& to th# s#'i)# it is b#i(*
)o(ta)t#& to #(&#. O(# "ho &o#s (ot ha'# a( i(&#4#(&#(t b%si(#ss $o
%(&#ta2i(* th# Hob )o(ta)t#& $o is H%st a( a*#(t o$ th# #74lo3#.
(0hilippine /u6i Rero# Corporation" et al. s. <I'C" et al." 8. '. <o. +++AC+" =arch A"
+DDB).
.he ?CC@ case of San !iguel Corporation #s. !aerc ,ntegrated
Ser#ices, ,nc.., <;. R. No. 0@@315, Aul% 10, /003=, where the )o(ta)to "as
a&H%&*#& to ha'# #(*a*#& i( labo/o(l3 )o(ta)ti(*6 further e2plained t$e
principles o) labor*onl% contracting. .he Supreme Court said:
20etitioner also ascribes as error the failure of the Court of ;ppeals to
apply the ruling in <eri s. <I'C" O8.'. <os. DGCCF$CD" :uly ?@" +DD@" ??E
SC'; G+GP. )n that case" it was held that the law did not re%uire one to
possess both substantial capital and inestment in the form of tools"
e%uipment" machinery" work premises" among others" to be considered a 6ob
contractor. .he second condition to establish permissible 6ob contracting was
su5ciently met if one possessed either attribute.
2;ccordingly" petitioner alleged that the appellate court and the <I'C
erred when they declared =;9'C a labor$only contractor despite the *nding
that =;9'C had inestments amounting to 0E"BCF"CFC.CC consisting of
buildings" machinery and e%uipment.
2Howeer" in Ki(o3a 's. NLR16 SD.R. No. 12=5E=6 F#b%a3 26 2GGG6
32+ S1RA +=FT" &e clarifed t$at it &as not enoug$ to s$o&
substantial capitaliFation or in#est"ent in t$e )or" o) tools,
e:uip"ent, "ac$iner% and &or4 pre"ises, etc., to be considered an
independent contractor. )n fact" 6urisprudential holdings were to the eLect
that in determining the e#istence of an independent contractor relationship"
s#'#al $a)tos 7a3 b# )o(si&##& " such as" but not necessarily con*ned
to" whether the contractor was carrying on an independent business- the
nature and e#tent of the work- the skill re%uired- the term and duration of the
relationship- the right to assign the performance of speci*ed pieces of work-
the control and superision of the workers- the power of the employer with
respect to the hiring" *ring and payment of the workers of the contractor- the
control of the premises- the duty to supply premises" tools" appliances"
materials and labor- and the mode" manner and terms of payment. (Citing
Po()# '. NLR16 D.R. No. 12+=+36 I%l3 3G6 1FFE6 2F3 S1RA 3==A.
2)n <eri" the Court considered not only the fact that respondent B&il#i%7
Care Cor$oratio% @BB1A had substantial capitaliKation but noted that !CC
carried on an independent business and performed its contract according to
its own manner and method" free from the control and superision of its
principal in all matters e#cept as to the results thereof. .he Court likewise
mentioned that the employees of !CC were engaged to perform speci*c
special serices for their principal. T$e status o) BCC $ad also been
passed upon b% t$e Court in a pre#ious case &$ere it &as )ound to be
a :ualifed 9ob contractor because it &as Sa big fr" &$ic$ ser#ices
0age +CC of +CG H 'eiew <otes on Iabor Iaws
a"ong ot$ers, a uni#ersit%, an international ban4, a big local ban4, a
$ospital center, go#ern"ent agencies, etc.J /urthermore" there were only
two (?) complainants in that case who were not only selected and hired by the
contractor before being assigned to work in the Cagayan de 1ro branch of
/9!.C but the Court also found that the contractor maintained eLectie
superision and control oer them.
2)n comparison" !AE(C" as earlier discussed" &is4la3#& th#
)haa)t#isti)s o$ a labo/o(l3 )o(ta)tor. =oreoer" while =;9'CJs
inestments in the form of buildings" tools and e%uipment amounted to more
than 0E =illion" we cannot disregard the fact that it was the S=C which
re%uired =;9'C to undertake such inestments under the understanding that
the business relationship between petitioner and =;9'C would be on a long
term basis. No &o "# b#li#'# MAER1 to ha'# a( i(&#4#(&#(t
b%si(#ss. <ot only was it set up to speci*cally meet the pressing needs of
S=C which was then haing labor problems in its segregation diision" none of
its workers was also eer assigned to any other establishment6 th%s
)o('i()i(* %s that it "as )#at#& sol#l3 to s#'i)# th# (##&s o$ SM1.
<aturally" with the seerance of relationship between =;9'C and S=C
followed =;9'CJs cessation of operations" the loss of 6obs for the whole
=;9'C workforce and the resulting actions instituted by the workers. @Sa(
Mi*%#l 1o4oatio( 's. Ma#) I(t#*at#& S#'i)#s6 I().6 #t al.6 8. '. <o.
+EEBG?" I%l3 1G6 2GG3A.
Sti4%latio( i( th# )o(ta)tN #<#)t.
T$e e2istence o) e"plo%er*e"plo%ee relations$ip cannot be "ade
sub9ect o) an agree"ent or contract. .he 2labor only3 contractor is considered
merely an agent of the employer. ;ny liability shall deole upon the 2labor only3
contractor and the employer" 6ointly and seerally. @Tabas 's. 1ali$o(ia
Ma2#ti(* 1o.6 I().6 1=F S1RA +FCA.
;s held in the ?CC+ case of -# los Sa(tos 's. NLR1" O8. '. <o. +?+@?G"
December ?C" ?CC+P" the parties cannot dictate, b% t$e "ere e2pedient o) a
unilateral declaration in a contract, t$e c$aracter o) its business, i.e.,
&$et$er as 7labor*onl%8 contractor, or 9ob contractor, it being crucial t$at
its c$aracter be "easured in ter"s o) and deter"ined b% t$e criteria set
b% statute.
.hus" notwithstanding that the agreement or contract between the principal
employer and the contractor states that the latter is an 2independent contractor3
and that the workers hired by it 2shall not" in any manner and under any
circumstances" be considered employees of the Company" and that the Company
has no control or superision whatsoeer oer the conduct of the Contractor or any
of its workers in respect to how they accomplish their work or perform the
ContractorJs obligations under this ;greement"3 the contractor may still be
considered a labor$only contractor. T$is &as t$e $olding o) t$e Supre"e Court
in t$e case o) P$ilippine +u9i Rero2 Corporation OsupraP. .he Court cited t$e
analogous case of .abas s. California =anufacturing Company" )nc." O+BD SC';
EDG @1FEFAP" thus:
2.here is no doubt that in the case at bar" Iii performs Zmanpower
serices"J meaning to say" it contracts out labor in faor of clients. &e hold that
it is one notwithstanding its ehement claims to the contrary" and
notwithstanding the proision of the contract that it is Zan independent
contractor.J T$e nature o) one;s business is not deter"ined b% sel)*
ser#ing appellations one attac$es t$ereto but b% t$e tests pro#ided
b% statute and pre#ailing case la&. .he bare fact that Iii maintains a
separate line of business does not e#tinguish the e%ual fact that it has
proided California with workers to pursue the latterJs own business. )n this
connection" we do not agree that the petitioners had been made to perform
actiities Zwhich are not directly related to the general business of
manufacturing"J CaliforniaJs purported Zprincipal operation actiity.J .he
0age +C+ of +CG H 'eiew <otes on Iabor Iaws
petitioners had been charged with ZmerchandiKing OsicP promotion or sale of
the products of OCaliforniaP in the diLerent sales outlets in =etro =anila
including task and occasional OsicP price tagging"J an actiity that is doubtless"
an integral part of the manufacturing business. )t is not" then" as if Iii had
sered as its OCaliforniaJsP promotions or sales arm or agents" or otherwise"
rendered a piece of work it OCaliforniaP could not hae itself done- Iii as a
placement agency" had simply supplied it with the manpower necessary to
carry out its OCaliforniaJsP merchandising actiities" using its OCaliforniaJsP
premises and e%uipment.
2###.
2.he fact that the petitioners hae allegedly admitted being IiiJs Zdirect
employeesJ in their complaints is nothing conclusie. /or one thing" the fact
that the petitioners were OareP" will not absole California since liability has
been imposed by legal operation. /or another" and as we indicated" the
relations of parties must be 6udged from case to case and the decree of law"
and not by declaration of parties.3 (0hilippine /u6i Rero# Corporation" et al. s.
<I'C" et al." 8. '. <o. +++AC+" =arch A" +DDB).
!ut in the ?CCC case of Es)aio 's. NLR1" O8. '. <o. +?ECAA" :une F" ?CCCP"
petitioners who were likewise agency$supplied workers in the same company
(Cali)ornia !anu)acturing Co., ,nc. or 7C!C8) were not similarly fortunate as
those in Tabas OsupraP. 0etitioners here relied on the .abas case in claiming that
they are employees of said company. .he Supreme Court considered such reliance
on .abas as misplaced. /or in Tabas" the Supreme Court ruled that therein
contractor Iii =anpower Serices was a mere placement agency and had simply
supplied C=C with the manpower necessary to carry out the companyJs
merchandising actiity. )t was" howeer" further stated in said case that:
2)t would hae been diLerent" we beliee" had Iii been discretely a
promotions *rm" and that California had hired it to perform the latterJs
merchandising actiities. /or then" Iii would hae been truly the employer of
its employees and California" its client. # # #.3
)n other words6 1M1 can alidly farm out its merchandising actiities to a
legitimate independent contractor. )n declaring that -. L. A&7a2 (petitionersJ
employer) is a l#*iti7at# i(&#4#(&#(t )o(ta)to" the Supreme Court cited the
following circumstances that tend to establish it as such:
+) .he S9C registration certi*cate of D.I. ;dmark states that it is a *rm engaged in
promotional" adertising" marketing and merchandising actiities.
?) .he serice contract between C=C and D.I. ;dmark clearly proides that the agreement is
for the supply of sales promoting merchandising serices rather than one of manpower
placement.
@) D.I. ;dmark was actually engaged in seeral actiities" such as adertising" publication"
promotions" marketing and merchandising. )t had seeral merchandising contracts with
companies like 0urefoods" Corona Supply" <abisco !iscuits" and Iicron. )t was likewise
engaged in the publication business as eidenced by it magaKine the 20henomenon.3
E) )t had its own capital assets to carry out its promotion business. )t then had current assets
amounting to 0B million and is therefore a highly capitaliKed enture. )t had an authoriKed
capital stock of 0ACC"CCC.CC. )t owned seeral motor ehicles and other tools" materials
and e%uipment to serice its clients. )t paid rentals of 0@C"C?C for the o5ce space it
occupied.
)n the ?CC@ case of Sa( Mi*%#l 1o4oatio( 's. Ma#) I(t#*at#&
S#'i)#s6 I()." O8. '. <o. +EEBG?" I%l3 1G6 2GG3P" it was stipulated in the contract
of serices between =;9'C and S=C that =;9'C was an independent contractor
and that the workers hired by it 2shall not" in any manner and under any
circumstances" be considered employees of the Company" and that the Company
has no control or superision whatsoeer oer the conduct of the Contractor or any
of its workers in respect to how they accomplish their work or perform the
ContractorYs obligations under the Contract.3
0age +C? of +CG H 'eiew <otes on Iabor Iaws
.he Supreme Court" howeer" following the 2control test"3 disregarded the
said stipulation in the contract. )t ratiocinated" thus:
2)n deciding the %uestion of control" the language of the contract is not
determinatie of the partiesY relationship- rather" it is the totality of the facts
and surrounding circumstances of each case.
2Despite S=CJs disclaimer" there are indicia that it actiely superised the
complainants. S!C "aintained a constant presence in t$e &or4place
t$roug$ its o&n c$ec4ers. )ts asseeration that the checkers were there
only to check the end result was belied by the testimony of Carlito '. Singson"
head of the =andaue Container Serice of S=C" that the checkers were also
tasked to report on the identity of the workers whose performance or %uality
of work was not according to the rules and standards set by S=C. ;ccording to
Singson" Zit (was) necessary to identify the names of those concerned so that
the management Oreferring to =;9'CP could call the attention to make these
people improe the %uality of work.J
2Qiewed alongside the *ndings of the Iabor ;rbiter that the =;9'C
organiKational set$up in the bottle segregation pro9ect was such that the
segregators'cleaners &ere super#ised b% c$ec4ers and eac$ c$ec4er
&as also under a super#isor &$o &as in turn under a feld super#isor,
t$e responsibilit% o) &atc$ing o#er t$e !AE(C &or4ers b% !AE(C
personnel beca"e superGuous &it$ t$e presence o) additional
c$ec4ers )ro" S!C.8 (San =iguel Corporation s. =aerc )ntegrated
Serices" )nc." et al." 8. '. <o. +EEBG?" :uly +C" ?CC@).
)n the I%(# 2GG5 decision in the case of Ab#lla 's. PL-T" O8. '. <o. +ADEBD"
I%(# E6 2GG5T" the Supreme Court ruled that the security guards supplied by
0eopleJs Security" )nc. (0S)) to 0ID. are the employees of 0S) and not of 0ID.. )n
holding that 0S) is a legitimate 6ob contractor" the High Court declared:
2&e hasten to add on this score that the Iabor ;rbiter as well as the <I'C
and the Court of ;ppeals found that 0S) is a legitimate 6ob contractor pursuant
to Section F" 'ule Q))" !ook )) of the 1mnibus 'ules )mplementing the Iabor
Code. )t is a registered corporation duly licensed by the 0hilippine <ational
0olice to engage in security business. )t has substantial capital and inestment
in the form of guns" ammunitions" communication e%uipments" ehicles" o5ce
e%uipments like computer" typewriters" photocopying machines" etc." and
aboe all" it is sericing clients other than 0ID. like 0C)!ank" Crown .riumph"
and 0hilippine Cable" among others. Here" the security guards which 0S) had
assigned to 0ID. are already the formerJs employees prior to assignment and
if the assigned guards to 0ID. are re6ected by 0ID. for reasons germane to
the security agreement" then the re6ected or terminated guard may still be
assigned to other clients of 0S) as in the case of :onathan Daguno who was
posted at 0ID. on ?+ /ebruary +DDB but was subse%uently relieed therefrom
and assigned at 0C)!ank =akati S%uare eLectie +C =ay +DDB. .herefore" the
eidence as it stands is at odds with petitionersJ assertion that 0S) is an Mi(/
ho%s#L a*#()3 of 0ID. so as to call for a piercing of eil of corporate
identity as what the Court has done in -e leon, et al. #s. NL(C and
+ortune Tobacco Corporation, et al. O8.'. <o. ++?BB+" =ay @C" ?CC+P.3
Nat%# o$ liabilit3 o$ #74lo3# a(& labo/o(l3 )o(ta)to.
)n a labor*onl% contract" there are t$ree parties inoled: (+) the 2labor$
only3 contractor- (?) the employee who is ostensibly under the employ of the 2labor$
only3 contractor- and (@) the principal who is deemed the real employer. 7nder this
scheme" the 2labor$only3 contractor is the agent of the principal. .he law makes the
principal responsible to the employees of the 2labor$only3 contractor as if the
principal itself directly hired or employed the employees. (So(:a 's. ABS/1BN
Boa&)asti(* 1o4oatio(6 8. '. <o. +@FCA+" :une +C" ?CCE- Sa(&o'al
Shi43a&s6 I().6 #t al. 's. P#4ito6 #t al." 8. '. <o. +E@E?F" :une ?A" ?CC+).
0age +C@ of +CG H 'eiew <otes on Iabor Iaws
)t has been )o(sist#(tl3 h#l& i( o% H%is&i)tio( that since the 2labor$
only3 contractor does not hae substantial capital inestment in the form of tools"
e%uipment" machineries" work premises and other materials" the workers supplied
by him are employees of the owner of the pro6ect to whom said labor was supplied.
@Ki(o3a 's. NLR16 #t al.6 D. R. No. 12=5E=6 F#b. 26 2GGGN I(&%stial Ti7b#
1o4oatio( 's. NLR16 #t al.6 1=F S1RA 3+1A.
.he reason is" th# labo/o(l3 )o(ta)to is t#at#& as 7## a*#(t o
i(t#7#&ia3 o$ th# #74lo3#. Conse%uently" the nature of the liability of the
employer is more direct" the labor$only contractor is treated as agent and the
former" the principal. (!anila Electric Co"pan% #s. Bena"ira, .. (. No.
16/C1, Aul% 1, /006H !anila 3ater Co., ,nc. #s. Pena, et al., .. (. No.
16</66, Aul% <, /00H San !iguel Corporation #. !AE(C ,ntegrated
Ser#ices, ,nc., ..(. No. 1=C/, 10 Aul% /003).
.he employer is made by the statute responsible to the employees of the
labor$only contractor as if such employees had been directly employed by the
employer. .hus" where labor$only contracting e#ists in a gien case" the statute
itself implies or establishes an employer$employee relationship between the
employer (the owner of the pro6ect) and the employees of the labor$only contractor"
this time for a comprehensie purpose: employer for purposes of the Iabor Code" to
preent any iolation or circumention of any proision of said Code. .he law" in
eLect" holds both the employer and the labor$only contractor responsible to the
latterJs employees for the more eLectie safeguarding of the employeesJ rights
under the Iabor Code. (P$ilippine Ban4 o) Co""unications #s. NL(C, et al.,
.. (. No. L*==65<, -ec. 15, 15<=, 1= SC(A 3C).
.he statute creates an employer$employee relationship for a comprehensie
purpose: to preent a circumention of labor laws. (!anila 3ater Co., ,nc. #s.
Pena, et al., .. (. No. 16</66, Aul% <, /00).
)n a case" a serice agency supplied ++ messengers to its client" a bank. .he
messengers worked in the premises of the client and were paid their salaries
through the serice agency. .he client company controlled the performance of the
duties of the messenger. .he Supreme Court declared that the serice agency is
engaged in 2labor$only3 contracting. Conse%uently" the client was held liable to the
complainant messenger as if the latter had been directly employed not only by the
agency but also by said client. (P$ilippine Ban4 o) Co""unications #s. NL(C,
et al. 1= SC(A 3C).
Liabilit3 o$ l#*iti7at# )o(ta)to a(& labo/o(l3 )o(ta)to6
&isti(*%ish#&.
.here is a wide gulf of distinction between the liability of a legitimate
independent contractor and the liability of a labor$only contractor.
I( l#*iti7at# Hob )o(ta)ti(*" the law creates an employer$employee
relationship for a limited purpose" i.e." to ensure that the employees are paid their
wages. .he principal employer becomes 6ointly and seerally liable with the 6ob
contractor only for the payment of the employeesY wages wheneer the contractor
fails to pay the same. 1ther than that" the principal employer is not responsible for
any claim made by the employees. (Sa% Mi7&el Cor$oratio% ). Maer( I%te7rate#
Ser)i(e, I%(., et al., ;. R. No. 0@@315, J&l" 02, 5224).
1n the other hand" in labor$only contracting" the statute creates an employer$
employee relationship for a comprehensie purpose: to preent a circumention of
labor laws. .he contractor is considered merely an agent of the principal employer
and the latter is responsible to the employees of the labor$only contractor as if such
employees had been directly employed by the principal employer. .he principal
0age +CE of +CG H 'eiew <otes on Iabor Iaws
employer" therefore" becomes solidarily liable with the labor$only contractor for all
the rightful claims of the employees. (San !iguel Corporation #s. !aerc
,ntegrated Ser#ices, ,nc., et al., .. (. No. 1=C/, Aul% 10, /003).
-%t3 to )o74l3 "ith l#*al #8%i#7#(ts $o 'ali& t#7i(atio( i( labo/o(l3
)o(ta)ti(* sit%atio(s.
Haing made the distinction between the liability of a 6ob contractor and that
of a labor$only contractor" it is clear that if there is a *nding of labor$only
contracting" the duty to comply with the re%uirements of the law for terminating
employees as well as payment of monetary claims of the latter would necessarily
deole on the principal which is deemed the real" direct employer" in solidum with
the labor$only contractor.
)n a case inoling retrenchment of workers eLected by the labor$only
contractor conse%uent to the termination of the labor$only contract" it was ruled
that the principal was not discharged from paying the separation bene*ts of the
workers inasmuch as the contractor was shown to be a labor$only contractor.
'esultantly" the principal should hae complied with the re%uirement of written
notice to both the employees concerned and the Department of Iabor and
9mployment (D1I9) which must be gien at least one (+) month before the
intended date of retrenchment. Hence" the principal should be held liable for the
separation pay of said workers" including the *nes imposed for iolations of the
notice re%uirement. (San !iguel Corporation #s. !aerc ,ntegrated Ser#ices,
,nc., et al., .. (. No. 1=C/, Aul% 10, /003).
Ill%stati'# )as#s o$ labo/o(l3 )o(ta)ti(*.
a. ;n employee who hires dispatchers for the operator of a transportation
company" is a labor$only contractor and" therefore" a mere agent of the petitioner$
employer. (Tiu #s. NL(C, et al., .. (. No. 56<6, +eb. /1, 155=).
b. ; company which supplies a considerable workforce totaling +?C
mechanics" 6anitors" gardeners" *remen and grasscutters to a garment
manufacturer" was declared a labor$only contractor for its failure to proe that it had
substantial capital or inestment in the form of tools" e%uipment" machineries" work
premises and other materials. =oreoer" the work assigned to them are directly
related to the business of the latter. (.uarin, et al. #s. NL(C, et al., .. (. No.
<=010, Oct. 3, 15<5).
c. )n accordance with the proisions of ;rticle +CB of the Iabor Code" the
workers supplied by three manpower agencies to a supermarket to work as
7#)ha(&is#s6 cashiers" baggers" check$out personnel" sales ladies"
&are$ouse"en and so forth were declared employees of the supermarket and the
manpower agencies" labor$only contractors. .heir work was directly related"
necessary and ital to the day$to$day operations of the supermarket- their 6obs
inoled normal and regular functions in the ordinary business of the petitioner
corporation and gien the nature of their functions and responsibilities" it is
improbable that petitioners did not e#ercise direct control oer their work.
=oreoer" there is no eidence $ as in fact" petitioners do not een allege $ that
aside from supplying the manpower" the labor agencies hae 2substantial capital or
inestment in the form of tools" e%uipment" machineries" work premises" among
others.3 'esultingly" the supermarket is deemed the direct employer of the labor$
only contractorJs employees and thus liable for all bene*ts to which such workers
are entitled" like wages" separation bene*ts and so forth. (S$oppers .ain
Super"art, et al. #s. NL(C, et al., .. (. No. 110C31, Aul% /=, 155=).
d. A s#a)h )o74a(3 "hi)h s%44li#s 7#ss#(*#s to a ba(2 is a labo/
o(l3 )o(ta)to considering that the messengers rendered serices to the bank"
within the premises of the bank and alongside other people also rendering serices
0age +CA of +CG H 'eiew <otes on Iabor Iaws
to the bank. )ts argument that it is not so engaged as labor$only contractor since it
is possessed of substantial capital or inestment in the form of o5ce e%uipment"
tools and trained serice personnel was not accepted by the Supreme Court. Sai&
)o74a(3 is (ot a 4a)#l &#li'#3 )o74a(36 as its (a7# i(&i)at#s.
=essengerial work $ the deliery of documents to designated persons whether
within or without the bank premises $ is directly related to the day$to$day operations
of the bank. It is a #)%it7#(t a(& 4la)#7#(t )o4oatio( 4la)i(* bo&i#s6
as it "##6 i( &i<##(t )li#(t/)o74a(i#s $o lo(*# o shot# 4#io&s o$
ti7#. )t is this factor that distinguishes this case from A"erican President Lines
#s. Cla#e, et al. O++E SC'; F?B (+DF?)P if indeed such distinguishing way is
needed . (P$ilippine Ban4 o) Co""unications #s. NL(C, et al., .. (. No. L*
==65<, -ec. 15, 15<=, 1= SC(A 3C).
e. .he person who agreed with a motor company under the terms of their
&ork Contract to supply only labor and superision oer his contractual workers in
doing automotie body$painting work and to hire or bring in additional workers as
may be re%uired by the company and to handle additional work load or to
accelerate or facilitate completion of work in process is a labor$only contractor in
the light of the following circumstances" among others: the company supplied all
the tools" e%uipment" machinery and materials necessary for the performance by
the former and his men of the contracted 6ob within the premises of the company-
th#i )o74#(satio( "as 4ai& i( l%74 s%7- they were re%uired to obsere
regular working hours and render oertime serices when needed- defects in the
workmanship of their 6obs while in progress" are sub6ect to correction by the
companyJs superisors- and they are re%uired to obsere company rules"
regulations and policies such as the wearing of identi*cation cards and uniforms.
(Broad&a% !otors, ,nc. #s. NL(C, et al., .. (. No. 5<3</, -ec. 1, 15<C,
16= SC(A 6//).
Pi()i4al &isti()tio(s b#t"##( legiti"ate 9ob contracting and labor*onl%
contracting.
.he principal distinctions between legitimate" permissible 6ob contracting" on
the one hand" and the prohibited labor$only contracting" on the other.
a. )n the former" no employer$employee relationship e#ists between the
employees of the 6ob contractor and the principal employer (indirect
employer)- while in the latter" an employer$employee relationship is
created by law between the principal employer and the employees of the
labor$only contractor.
b. )n the former" the principal employer is considered only an 2indirect
employer3" as this term is understood under ;rticle +CG of the Iabor
Code- while in the latter" the principal employer is considered the 2direct
employer3 of the employees in accordance with the last paragraph of
;rticle +CB of the Iabor Code.
c. )n the former" the 6oint and seeral obligation of the principal employer and
the legitimate 6ob contractor is only for a limited purpose" that is" to
ensure that the employees are paid their wages. 1ther than this obligation
of paying the wages" the principal employer is not responsible for any
claim made by the employees- while in the latter" the principal employer
becomes solidarily liable with the labor$only contractor for all the rightful
claims of the employees.
d. )n the former" the legitimate 6ob contractor proides speci*c serices- while
in the latter" the labor$only contractor proides only manpower.
e. )n the former" the legitimate 6ob contractor undertakes to perform a
speci*c 6ob for the principal employer- while in the latter" the labor$only
contractor merely proides the personnel to work for the principal
employer.
1G2. What is Mi(/ho%s# a*#()3L!
0age +CB of +CG H 'eiew <otes on Iabor Iaws
Similarly prohibited under the law is the operation of an Mi(/ho%s# a*#()3L
whereby a contractor or subcontractor is engaged in the supply of labor which:
(i) is owned" managed or controlled by the principal- and
(ii) operates solely for the principal owning" managing" or controlling it.
; *nding that a contractor is a 2labor$only3 contractor is e%uialent to a
*nding that there e#ists an employer$employee relationship between the owner of
the pro6ect and the employees of the 2labor$only3 contractor since that relationship
is de*ned and prescribed by law itself.
1G3. Who is a( i(&i#)t #74lo3# i( a )o(ta)ti(* o s%b)o(ta)ti(*
aa(*#7#(t!
.he principal is considered the indirect employer of the workers supplied by
independent contractor or subcontractor.
1G+. What is th# (at%# o$ th# liabilit3 o$ a( i(&i#)t #74lo3#!
.he nature of the liability of the principal is 6oint and solidary with the
contractor or subcontractor for any iolation of any proision of the Iabor Code. /or
purposes of determining the e#tent of their ciil liability for the payment of wages"
the indirect employer shall be considered as direct employer. (;rticle +CD" Iabor
Code).
.he best illustration of these principles is the ?CCA case of Ma(ila El#)ti)
1o74a(3 's. B#(a7ia" O8. '. <o. +EA?G+" :uly +E" ?CCAP where it was held" thus:
2.he fact that there is no actual and direct employer$employee
relationship between =9';IC1 and the indiidual respondents does not
e#onerate =9';IC1 from liability as to the monetary claims of the indiidual
respondents. &hen =9';IC1 contracted for security serices with ;SD;) as
the security agency that hired indiidual respondents to work as guards for it"
=9';IC1 became an indirect employer of indiidual respondents pursuant to
;rticle +CG of the Iabor Code. ###
2&hen ;SD;) as contractor failed to pay the indiidual respondents"
=9';IC1 as principal becomes 6ointly and seerally liable for the indiidual
respondentsJ wages" under ;rticles +CB and +CD of the Iabor Code.
###
2;SD;) is held liable by irtue of its status as direct employer" while
=9';IC1 is deemed the indirect employer of the indiidual respondents for
the purpose of paying their wages in the eent of failure of ;SD;) to pay
them. .his statutory scheme gies the workers the ample protection
consonant with labor and social 6ustice proisions of the +DFG Constitution.
2Howeer" as held in Mai'#l#s Shi43a& 1o4. 's. 1o%t o$ A44#als"
O8.'. <o. +EE+@E" <oember ++" ?CC@" E+A SC'; AG@P" the solidary liability of
=9';IC1 with that of ;SD;) does not preclude the application of ;rticle +?+G
of the Ciil Code on the right of reimbursement from his co$debtor by the one
who paid" which proides:
ZART. 121C. 0ayment made by one of the solidary debtors
e#tinguishes the obligation. )f two or more solidary debtors oLer to
pay" the creditor may choose which oLer to accept.
ZHe who made the payment may claim from his co$debtors only the
share which corresponds to each" with the interest for the payment
already made. )f the payment is made before the debt is due" no
interest for the interening period may be demanded.
Z&hen one of the solidary debtors cannot" because of his
insolency" 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.J
0age +CG of +CG H 'eiew <otes on Iabor Iaws
2;SD;) may not seek e#culpation by claiming that =9';IC1Js
payments to it were inade%uate for the indiidual respondentsJ lawful
compensation. ;s an employer" ;SD;) is charged with knowledge of
labor laws and the ade%uacy of the compensation that it demands for
contractual serices is its principal concern and not any otherJs.3