TABLE OF CONTENTS
LABOR AND SOCIAL LEGISLATION
I. Introduction......................................................... 1
A. LABOR LEGISLATION ....................... 1
B. LEGAL BASIS OF LABOR LAW .............. 1
1. Police Power of the State ............... 1
2. 1987 Philippine Constitution ............ 1
a. Social Justice............................................................1
b. Protection of Labor..................................................2
c. Right to Due Process and Right to Labor as Property
.....................................................................................2
d. Gender Equality and Protection of Women ............2
e. Right of Government Employees to Organize .........2
f. Protection to Rights of Employer .............................2
3. Civil Code ................................. 3
C. SOURCES OF LABOR LAW .................. 3
II. Recruitment and Placement of Workers/Alien
Employment .......................................................... 4
A. Recruitment and Placement of Workers4
i. Allowed Entities to Engage in Recruitment
and Placement of Workers ..................... 4
Ii. Disqualified Entities to Engage in
Recruitment and Placement of Workers: .... 6
iii. Ban on Direct Hiring ........................ 6
B. Government Techniques of Regulation –
Private Recruitment .......................... 6
i. Issuance of License/Authority............... 6
ii.Reports/Employment Information .......... 7
C. PROHIBITED PRACTICE .................... 8
i. Recruitment Violations of Persons or
Entities holding a License or Authority ....... 8
ii.Illegal Recruitment ........................... 9
Types of Illegal recruitment under Philippine laws: ....9
1. Illegal Recruitment under the Labor Code: .............9
2. Illegal Recruitment under RA 8042 .......................10
iii. Enforcement and Sanctions .............. 10
D. JOINT AND SEVERAL LIABILITY OF
PRIVATE EMPLOYMENT AGENCY/ MANNING
AGENT AND EMPLOYER ..................... 12
E. JURISDICTION ............................. 12
F. ALIEN EMPLOYMENT REGULATION ..... 13
i. Coverage ..................................... 14
ii. Conditions of Grant of Permit ............ 14
III. Human Resources Development.................... 15
A. DEVELOPMENT OF HUMAN RESOURCES 15
Policy ........................................... 15
Goals and Objectives ......................... 15
Middle-Level Manpower ...................... 15
B. TRAINING AND EMPLOYMENT OF
APPRENTICES ................................. 15
When Apprentices may be Employed .......
Qualifications ..................................
Allowed employment .........................
Conditions of Employment ...................
LA SALLIAN COMMISION ON BAR OPERATIONS
i LABOR LAW
1. Contents of apprenticeship agreements .............. 16
2. Deductibility of training costs ............................... 17
Enforcement .................................... 17
C. TRAINING AND EMPLOYMENT OF
LEARNERS ......................................17
When Learners may be Employed ............ 18
Enforcement .................................... 18
D. TRAINING AND EMPLOYMENT OF
DISABLED PERSONS ...........................18
Policy Declaration .............................. 19
Coverage ........................................ 19
Conditions of employment .................... 19
Rights and Privileges ........................... 19
IV. Labor Standards............................................. 20
A. GENERAL PROVISIONS ....................20
i. Declaration Of Basic Policy ................. 20
10 CARDINAL RIGHTS OF WORKERS ......................... 20
ii. Construction In Favor Of Labor ........... 21
iii. Rule making power......................... 21
iv. Applicability................................. 21
B. WORK RELATIONSHIP .....................22
i. Employer-employee relationship .......... 22
Concept of Employer-Employee relationship (EER) .. 22
Rules as Guidelines vs Rules as Control .................... 22
Social Justice in Employer-Employee Relationship ... 22
Two-tiered approach test ......................................... 23
ii. Independent contractor and labor-only
contractor ....................................... 23
Trilateral Relationship in Contracting Arrangements
.................................................................................. 24
Rules on Registration of Legitimate Contractors ..... 25
Other Prohibitions aside from Labor-Only Contracting
.................................................................................. 25
Consequences of Labor-Only Contracting ................ 26
Consequences of Legitimate Job-Contracting: ......... 26
V. Labor standards .............................................. 27
A. COVERAGE..................................27
How to determine Employer-Employee relationship 27
B. HOURS OF WORK ..........................29
i. Normal hours of work ....................... 29
a. Health personnel .................................................. 29
b. Compressed work week ........................................ 30
c. Flexible Work Arrangements ................................ 31
ii. Compensable hours of work ............... 31
iii. General Principles in determining if time
is considered as hours worked (Summary) .. 31
iv. Specific rules determining hours of work
and compensability ............................ 31
a. Rest period ............................................................ 31
b. Meal period .......................................................... 32
c. Waiting time ......................................................... 32
15 d. On call ................................................................... 33
16 e. Inactive due to work interruptions ....................... 33
16 f. Work interruption due to brownout ...................... 33
16 g. Work after normal hours ...................................... 33
h. Lectures, meeting, trainings ................................. 33
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i. Travel time .............................................................34
j. Commuting time.....................................................34
k. No work, no pay principle......................................34
v. Night work................................... 34
Coverage: ..................................................................34
Exception: ..................................................................34
a. Night shift..............................................................34
b. Overtime during 10:00pm – 6:00 am ....................35
c. Work on a scheduled rest day/special holiday ......35
d. Work on a regular holiday ....................................35
vi. CBA provision vis-a-vis overtime ........ 35
Why pay NSD? ...........................................................35
Waiver .......................................................................35
vii. Overtime work/pay ....................... 35
a. Overtime work: .....................................................35
b. Emergency or compulsory overtime work ............36
viii. Weekly Rest Day ......................... 38
When employer may require work on rest day.........38
C. WAGES ..................................... 38
“No work no pay” Principle .................. 38
“Equal Work for Equal Pay” Principle ...... 38
Coverage ...................................................................38
Facilities, defined ......................................................39
Facilities and Supplements, distinction .....................39
Wages and Salaries, distinguished ...........................39
i. Wage distortion ............................. 39
Elements ....................................................................39
How to Resolve wage distortion ...............................39
ii. Non-diminution of Benefits ............... 40
Requisites ..................................................................40
iii. Worker’s preference in case of
bankruptcy ..................................... 41
Jurisprudence ............................................................41
iv. Wage protection ........................... 41
a. Prohibition against interference in wage disposal42
b. Prohibition against wage deduction .....................42
c. Prohibition against requirement to make deposits
for loss or damage ....................................................43
d. Prohibition against withholding of wages ............43
e. Prohibition against deduction to ensure
employment ..............................................................43
f. Prohibition against retaliatory measures ..............43
g. Prohibition against False Reporting ......................44
h. Prohibition against keeping of employee’s records
in a place than the workplace ...................................44
i.Prohibition against garnishment or execution........44
v. Criteria/factors for wage setting ........ 44
Factors/Criteria in determining regional minimum
wages: .......................................................................45
Procedure for Wage Fixing by Regional Board .........45
Agencies on Wage Studies and Determination.........46
D. REST DAYS ................................. 47
Coverage and Scheduling ..........................................47
Compulsory Work ......................................................47
Compensation ...........................................................47
Implementing rules ...................................................47
E. HOLIDAYS .................................. 49
LA SALLIAN COMMISION ON BAR OPERATIONS
ii LABOR LAW
i. Holidays Covered ............................ 49
Regular Holidays and Nationwide Special Days ....... 49
Muslim holidays........................................................ 50
ii. Computation of Holiday pay ............... 50
Special holidays: ....................................................... 50
Double holiday pay ................................................... 50
Double Holiday Rule for Monthly-paid employees ... 50
Successive holiday pay.............................................. 50
Role of divisor in determining payment of holiday pay
for monthly paid employees ..................................... 51
Sundays .................................................................... 51
Non-working/scheduled rest day ............................. 51
iii. Right to Holiday Pay ....................... 51
a. In case of absences ............................................... 52
b. In case of temporary cessation of work ............... 52
c. Of teachers, piece workers, seafarers and seasonal
workers ..................................................................... 52
F. LEAVES ......................................53
i. Service incentive leave ..................... 53
Coverage................................................................... 53
Entitlement ............................................................... 53
ii. Maternity leave ............................. 54
Coverage................................................................... 54
Requisites ................................................................. 54
Benefits ..................................................................... 54
Avaliment ................................................................. 54
iii. Paternity leave ............................. 54
Coverage................................................................... 54
Requisites ................................................................. 54
iv. Parental leave .............................. 54
Coverage................................................................... 54
Conditions to entitlement ......................................... 55
Other Employment-related benefits available to all
“solo parents” ........................................................... 55
v. Leaves for victims of Violence against
Women........................................... 55
Availment ................................................................. 55
G. SERVICE CHARGE ..........................55
Coverage................................................................... 56
Distribution of Service Charges ................................ 56
Integration ................................................................ 56
H. THIRTEENTH (13TH) MONTH PAY AND
OTHER BONUSES ..............................56
i. Nature of 13th month pay ................... 57
Amount and Date of Payment .................................. 57
Time of payment ...................................................... 57
ii. 13th Month pay in Special Cases ........... 57
Additional Rules ........................................................ 58
iii. Commissions vis-à-vis 13th month pay ... 58
iv. CBA vis-à-vis 13th month pay .............. 58
VI. Working Conditions for Special groups .......... 58
A. WOMEN WORKERS .........................58
i. Prohibited acts ............................... 58
a. Night work ............................................................ 59
b.Discrimination ....................................................... 59
c. Stipulation against marriage ................................ 59
d. Discharge to prevent enjoyment of benefits and on
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account of pregnancy................................................59
e. Discharge on Account of Testimony ......................60
ii.Facilities and Family planning services .. 60
iii. Special women workers .................. 60
iv.Maternity leave ............................. 60
Coverage ...................................................................60
Requisites ..................................................................60
Benefits .....................................................................60
Avaliment ..................................................................61
v. Sexual Harrassment ........................ 61
How work-related sexual harassment is committed 61
Who are liable ...........................................................61
Role of the employer or Head of Office .....................61
Independent Action for Damages .............................62
Sanctions ...................................................................62
B. MINOR WORKERS ......................... 62
Quantity ....................................................................62
Night work prohibition ..............................................62
C. EMPLOYMENT OF HOUSEKEEPERS...... 63
Conditions of Employment and Rights of
House Helpers.................................. 63
1. Compensation .......................................................63
2. Time and Manner of Payment ..............................63
3. Right against assignment to non-household work
...................................................................................63
4. Opportunity for education ....................................64
5. Just and humane treatment ..................................64
6. Board, lodging and medical attendance shall be
furnished by employer...............................................64
7. Household work ....................................................64
8. Contract for Domestic Service ...............................64
9. Hours of Work .......................................................64
10.Vacation with Pay ................................................64
11. Funeral Expenses .................................................64
12. Employment Certification ...................................64
13. Employment Records ..........................................65
Termination of a housekeeper ............... 65
1. Fixed- Security of tenure .......................................65
2. Not fixed- Indemnity for unjust .............................65
D. EMPLOYMENT OF HOMEWORKERS ..... 65
Rights and benefits of homeworkers ........ 66
Conditions for deduction from homeworker’s
earnings......................................... 66
VII.Termination of Employment ........................... 66
A. GENERAL CONCEPTS ..................... 66
Basic Principles in Termination cases........................66
Security of Tenure ............................ 66
Nature of right ..........................................................67
Coverage ...................................................................67
Requisites of a Valid Termination ........... 67
Measure of Penalty ............................ 67
B. TERMINATION OF EMPLOYMENT BY
EMPLOYEE..................................... 68
i. Resignation .................................. 68
ii. RA 7641: Retirement Pay Law ............ 68
C. TERMINATION OF EMPLOYMENT BY
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iii LABOR LAW
EMPLOYER .....................................69
Substantive RequirementS .................... 69
i. Just Causes ................................... 69
a. Serious Misconduct or Willful disobedience ......... 69
b. Gross and Habitual Neglect (Neglect of duties) ... 70
c. Loss of trust and confidence/ fraud or willful breach
of trust ...................................................................... 71
d. Commission of a crime ......................................... 72
e. Analogous causes ................................................. 72
f. Others .................................................................... 72
g.Constructive Dismissal ........................................... 72
h. Preventive Suspension .......................................... 73
i. Transfer.................................................................. 73
j. Promotion .............................................................. 73
k.Residency training ................................................. 74
ii. Authorized Causes .......................... 74
a. Labor-Saving Devices ............................................ 74
b. Redundancy .......................................................... 75
c. Retrenchment ....................................................... 75
d. Closing or cessation of operation ......................... 76
e. Temporary Closure ............................................... 76
Redundancy, Retrenchment, and Closure, distinction
.................................................................................. 77
f. Disease .................................................................. 79
g. Totality of Infraction ............................................. 79
iii. General concepts .......................... 80
Procedural requirements for termination with just
cause under Art 282 ................................................. 80
Dismissal without due process ................................. 81
iv. Right to counsel ............................ 81
v. Burden of proof ............................. 81
vi. Degree of proof ............................. 82
vii. Prescription ................................ 82
D. RELIEFS IN ILLEGAL DISMISSAL ..........82
i. Reinstatement ............................... 82
Doctrine of Strained relations rule ........................... 83
ii. Backwages ................................... 83
Effect of failure to order Backwages ........................ 83
Computation of Backwages ..................................... 83
iii. Separation pay ............................. 84
Kinds ......................................................................... 84
Separation pay and Backwages, distinguished ........ 84
Computation ............................................................. 84
iv. Damages, Attorney’s Fees and other
Indemnity ....................................... 84
Liability of Corporate officers ................................... 85
E. RETIREMENT................................85
RA 7641 .......................................... 85
Computation of retirement pay .............. 85
Termination and Retirement, distinguished 86
VII. Management Prerogative .............................. 86
Discipline ........................................ 86
Transfer of employees ......................... 86
Productivity standard .......................... 86
Grant of bonus .................................. 86
Change of working hours ...................... 86
Marital discrimination ......................... 87
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Post-employment ban ........................ 87
Limitations in its exercise .................... 87
VIII. Social legislation .......................................... 87
A. SOCIAL SECURITY SYSTEM and
GOVERNMENT SERVICE INSURANCE SYSTEM
................................................. 87
B. RA 7699: Limited Portability Scheme . 95
Coverage........................................ 95
Definition of terms ............................ 95
Overlapping periods ........................... 95
C. RA 7875: National Health Insurance Act
................................................. 95
Coverage: All citizens ........................ 95
Who are dependents? ......................... 95
Requisites for availment ..................... 96
IX. Labor Standards-Related Special Laws ......... 96
A. RA 8187: Paternity Leave Act of 1996 96
Who is entitled to paternity leave .......... 96
When may it be availed of ................... 96
What are the benefits under the law ....... 96
B. PD 851: 13th month pay ................. 96
What is 13th month pay ....................... 96
Coverage........................................ 96
Exempted: ...................................... 96
1. Distressed employerS ............................................96
LA SALLIAN COMMISION ON BAR OPERATIONS
iv LABOR LAW
2. The Government and any of its political
subdivisions .............................................................. 96
3. Employers already paying their employees 13-
month pay ................................................................ 96
4. Employers of household helpers and persons in the
personal service ........................................................ 96
5. Employers of those who are paid on purely
commission, boundary, or task basis ....................... 96
Features of the benefit........................ 96
C. RA 7877: Anti-Sexual Harrasment Act .97
Who are liable .................................. 97
Role of the employer or Head of Office ..... 97
Employer shall be solidarily liable for
damages if: ..................................... 97
Independent Action for Damages ............ 97
Sanctions ........................................ 98
D. RA 7277: Magna Carta for the Disabled
Persons .........................................98
Forms of discrimination ....................... 98
Forms of discrimination against the the
handicapped in employment ................. 98
E. RA 8972: Solo Parents’ Welfare Act ....98
What are the employment-related benefits
available to all solo parents? ................. 98
 LABOR STANDARDS 1 LABOR LAW

I. Introduction worker’s employer; government

A. LABOR LEGISLATION
It consists of statutes, regulations and jurisprudence
governing the relations between capital and labor,
by providing for certain employment standards and a
legal framework for negotiating, adjusting and
administering those standards and other incidents of
employment. (Azucena)
Labor Law, defined
Law governing the rights and duties of employer and
employees respecting term and conditions of
employment by:
1. Prescribing certain standards, or
2. By establishing a legal framework within which
better terms and conditions of work could be
obtained through:
a. Collective Bargaining or
b. Other concerted activity
administering
agencies
the
program such as SSS
Broader in scope. Narrower.
B. LEGAL BASIS OF LABOR LAW
1. POLICE POWER OF THE STATE
While the right of workers to security of tenure is
guaranteed by the Constitution, its exercise may be
reasonably regulated pursuant to the police power of
the State to safeguard health, morals, peace,
education, order, safety, and the general welfare of
the people. Consequently, persons who desire to
engage in the learned professions requiring scientific
or technical knowledge may be required to take an
examination as a prerequisite to engaging in their
chosen careers.1

Bar 1997
2. 1987 PHILIPPINE CONSTITUTION
Division of labor law: A. SOCIAL JUSTICE
i. Labor Standards
Sec 5, Art II, 1987 Constitution: Declaration of
That which sets out the least or basic terms,
Principles
conditions and benefits of employment that
The maintenance of peace and order, the protection
employers must provide or comply with and to
of life, liberty, and property, and the promotion of
which employees are entitled as a matter of
the general welfare are essential for the enjoyment
legal right.
by all the people of the blessings of democracy.
ii. Labor Relations
That which defines the status, rights, and Sec 10, Art II, 1987 Constitution: Declaration of
duties, and the institutional mechanisms that State Policies
govern the individual and collective The State shall promote social justice in all phases
interactions of employers, employees or their of national development.
representatives.

Bar 2006 Sec 1, Art XIII, 1987 Constitution:

Social Legislation, defined Social Justice and Human Rights
Those laws that provide particular kinds of The Congress shall give highest priority to the
protection or benefits to society or segments thereof enactment of measures that protect and enhance
in furtherance of social justice. the right of all the people to human dignity, reduce
social, economic, and political inequalities, and
Bar 1994 remove cultural inequalities by equitably diffusing
Labor law Social legislation wealth and political power for the common good.
More direct in its Governs the effects of
application as it affects employment such as To this end, the State shall regulate the acquisition,
ownership, use and, disposition of property and its
directly actual compensation for injuries
increments.
employment such as and death;
wages;
Designed to meet the Involves long-range Sec 2, Art XIII, 1987 Constitution
daily needs of a worker; benefits; The promotion of social justice shall include the
commitment to create economic opportunities based
Covers employment for Cover employment for on freedom of initiative and self-reliance.
profit or gain; gain or non-profit;
Bar 2003
Affects the work of the Affects the life of the
employee; employee; Social Justice, defined

Benefits are paid by the Benefits are paid by

1St. Lukes Medical Center Employees-Association-AFW vs NLRC, 517
SCRA 677, 2007

LA SALLIAN COMMISION ON BAR OPERATIONS

 LABOR STANDARDS
It is neither communism, nor despotism nor atomism
nor anarchy, but the humanization or laws and the
equalization of social and economic forces by the
State so that justice in its rational and objectively
secular conception may at least be approximated.2
General rule: Social justice in favor of labor
Where the evidence may be reasonably interpreted
in two divergent ways, one prejudicial and the other
favorable to him, the balance must be tilted in his
favor (labor) consistent with the principle of social
justice.3
Exception: when the employer is in the right
The constitutional policy of providing full protection
to labor is not intended to oppress or destroy
management. The commitment of the Supreme
Court to the cause of labor does not prevent the
High Tribunal from sustaining the employer when it
is in the right.4
Social justice not to countenance wrongdoing of
labor
The policy of social justice is not intended to
countenance wrongdoing simply because it is
committed by the underprivileged. At best it may
mitigate the penalty but it certainly will not
condone the offense. Compassion for the poor is an
imperative of every humane society but only when
the recipient is not a rascal claiming an undeserved
privilege.5
B. PROTECTION OF LABOR
Bar 1998
Sec 18, Art II, 1987 Constitution:
Social Justice and Human Rights
The State affirms labor as a primary social economic
force. It shall protect the rights of workers and
promote their welfare.
Sec 3, Art XIII, 1987 Constitution
The State shall afford full protection to labor, local
and overseas, organized and unorganized, and
promote full employment and equality of
employment opportunities for all.
It shall guarantee the rights of all workers to self-
organization, collective bargaining and negotiations,
and peaceful concerted activities, including the right
to strike in accordance with law. They shall be
entitled to security of tenure, humane conditions of
work, and a living wage. They shall also participate
in policy and decision-making processes affecting
their rights and benefits as may be provided by law.
The State shall promote the principle of shared
2Calalang
v Williams, 70 Phil. 762 (1940)
3 HFS Phil.Inc., vs Pilar, G.R. No. 168716, April 16, 2009
4 Garcia vs NLRC, 234 SCRA 632, (1994)
5 PLDT vs NLRC, 1988
LA SALLIAN COMMISION ON BAR OPERATIONS
2 LABOR LAW
responsibility between workers and employers and
the preferential use of voluntary modes in settling
disputes, including conciliation, and shall enforce
their mutual compliance therewith to foster
industrial peace.
The State shall regulate the relations between
workers and employers, recognizing the right of
labor to its just share in the fruits of production and
the right of enterprises to reasonable returns to
investments, and to expansion and growth.
C. RIGHT TO DUE PROCESS AND
RIGHT TO LABOR AS PROPERTY
Bar 2006
Sec 1, Art III, 1987 Constitution
No person shall be deprived of life, liberty, or
property without due process of law, nor shall any
person be denied the equal protection of the laws.
One's employment, profession, trade or calling is a
"property right," and the wrongful interference
therewith is an actionable wrong. The right is
considered to be property within the protection of a
constitutional guaranty of due process of law.6
D. GENDER EQUALITY AND
PROTECTION OF WOMEN
Sec. 14, Art II, 1987 Constitution
The State recognizes the role of women in nation-
building, and shall ensure the fundamental equality
before the law of women and men.
Sec 2, Art XIII, 1987 Constitution
The promotion of social justice shall include the
commitment to create economic opportunities based
on freedom of initiative and self-reliance.
E. RIGHT OF GOVERNMENT EMPLOYEES
TO ORGANIZE
Sec 2(5), Art IX-B, 1987 Constitution
The right to self-organization shall not be denied to
government employees.
Sec 8, Art III, 1987 Constitution
The right of the people, including those employed in
the public and private sectors, to form unions,
associations, or societies for purposes not contrary to
law shall not be abridged.
F. PROTECTION TO RIGHTS OF
EMPLOYER
Sec 20, Art II, 1987 Constitution
6Callanta vs Carnation Philippines, Inc, 145 SCRA 268 (1986)
 LABOR STANDARDS
The State recognizes the indispensable role of the
private sector, encourages private enterprise, and
provides incentives to needed investments.
Sec 3 (4), Art XIII, 1987 Constitution
The State shall regulate the relations between
workers and employers, recognizing the right of
labor to its just share in the fruits of production and
the right of enterprises to reasonable returns to
investments, and to expansion and growth.
3. CIVIL CODE
Article 1700, Book IV, New Civil Code
The relations between capital and labor are not
merely contractual. They are so impressed with
public interest that labor contracts must yield to the
common good. Therefore, such contracts are subject
to the special laws on labor unions, collective
bargaining, strikes and lockouts, closed shop, wages,
working conditions, hours of labor and similar
subjects.
Article 1701, Book IV, New Civil Code
Neither capital nor labor shall act oppressively
against the other, or impair the interest or
convenience of the public.
Article 1702, Book IV, New Civil Code
In case of doubt, all labor legislation and all labor
contracts shall be construed in favor of the safety
and decent living for the laborer.
Article 1703, Book IV, New Civil Code
No contract which practically amounts to involuntary
servitude, under any guise whatsoever, shall be
valid.
It is the Civil Code (1700-1712), not the Labor Code,
that describes the nature of labor-management
relations. (Azucena)
Bar 1994, 2000
While the employer is not precluded from
prescribing rules and regulations to govern the
conduct of his employees, these rules and their
implementation must be fair, just and reasonable. It
must be underscored that no less than our
Constitution looks with compassion on the
workingman and protects his rights not only under a
general statement of a state policy, but under the
Article on Social Justice and Human Rights, thus
placing labor contracts on a higher plane and with
greater safeguards. Verily, relations between capital
and labor are not merely contractual. They are
impressed with public interest and labor contracts
must, perforce, yield to the common good. (Brew
Master International vs National Federation of Labor
LA SALLIAN COMMISION ON BAR OPERATIONS
3 LABOR LAW
Unions, 271 SCRA 275, 1997)
C. SOURCES OF LABOR LAW
1. The Labor Code and its implementing rules and
regulations;
2. Social Legislation (SSS, GSIS, etc.);
3. Civil Code;
4. Decisions of the Supreme Court;
5. Labor Contracts/CBA;
6. Company Practice;
7. Company Policy.
ON LABOR CONTRACTS…
IMPLIED INCORPORATION OF LABOR LAWS IN
LABOR CONTRACTS
Labor laws are considered written in every contract.
Stipulations in violation thereof are considered null.
(Mariveles Shipyard vs CA, G.R. 144134, Nov. 11,
2003)
LEGISLATED WAGE INCREASES AS AMENDMENTS
IN LABOR CONTRACTS
Similarly, legislated wage increases are deemed
amendments to the contract. Thus, employers
cannot hide behind their contracts in order to evade
their (or their contractors' or subcontractors')
liability for noncompliance with the statutory
minimum wage. (Id.)
ON COMPANY PRACTICE...
If the benefits are enjoyed at the time or even
before promulgation of the Labor Code (May 1,
1974), Art. 100 applies – non-diminution rule.
If the benefits are enjoyed after promulgation of
Labor Code, it is a matter of company practice
which cannot be unilaterally revoked by the
employer.
Same requisites in non-diminution rule apples.
Bar 2006
Article 100 refers solely to the non-diminution of
benefits enjoyed at the time of the promulgation of
the Labor Code. Employer-employee relationship is
contractual and is based on the express terms of the
employment contract as well as on its implied terms,
among them, those not expressly agreed upon but
which the employer has freely, voluntarily and
consistently extended to its employees. Under the
principle of mutuality of contracts embodied in
Article 1308 of the Civil Code, the terms of a
contract – both express and implied – cannot be
withdrawn except by mutual consent or agreement
of the contracting parties. (Arco Metal Products et
al. vs Samahan ng mga Mangagawa sa Arco-Metal-
Nafula, G.R. 170734, May 14, 2008)
 LABOR STANDARDS 4 LABOR LAW

6. the construction contractors if authorized to

ON COMPANY POLICY…
FOLLOW POLICY UNTIL DECLARED NULL BY
PROPER AUTHORITIES
But until and unless the rules or orders are declared
to be illegal or improper by competent authority,
the employees ignore or disobey them at their peril.
It is impermissible to reverse the process: suspend
enforcement of the orders or rules until their
legality or propriety shall have been subject of
negotiation, conciliation, or arbitration. (GTE
Directories Corp. v. Sanchez, 197 SCRA 452, 1991)
II. Recruitment and
Placement of
Workers/Alien
operate by DOLE and the Construction Industry
Authority;
7. Members of the Diplomatic Corps (Sec. 18, LC);
8. International Organizations (Sec. 18, LC); and
9. Name Hires (POEA Rules).
1. PRIVATE EMPLOYMENT AGENCY
Art. 13 (c), Labor Code
"Private fee-charging employment agency" means
any person or entity engaged in recruitment and
placement of workers for a fee which is charged,
directly or indirectly, from the workers or employers
or both.
Art. 13 (d), Labor Code
"License" means a document issued by the
Department of Labor authorizing a person or entity
to operate a private employment agency.

Employment 2. PRIVATE RECRUITMENT ENTITY

A. RECRUITMENT AND PLACEMENT OF Art.13 (e), Labor Code
WORKERS "Private recruitment entity" means any person or
association engaged in the recruitment and
BAR 2004 placement of workers, locally or overseas, without
Recruitment and Placement. defined. charging, directly or indirectly, any fee from the
Art. 13 (b), Labor Code workers or employers.
“Recruitment and placement” refers to any act of Art. (f), Labor Code
canvassing, enlisting, contracting, transporting, "Authority" means a document issued by the
utilizing, hiring or procuring of workers, and includes Department of Labor authorizing a person or
referrals, contract services, promising or advertising association to engage in recruitment and placement
for employment, locally or abroad whether for profit activities as a private recruitment entity.
or not: Provided, that any person or entity, which in
any manner offers or promises for a fee employment
to two or more persons shall be deemed engaged in Private Employment Agency and Private
recruitment and placement. Recruitment Agency, distinguished
Bar 2002
The proviso raises a presumption that the individual Type Definition Requires
or entity is engaged in recruitment and placement of
Private Any person or entity License
workers whenever he or it is dealing with two or
Employment engaged in recruitment
more persons to whom, in consideration of a fee, an
Agency and placement of
offer or promise of employment is made in the
workers for a fee from
course of the “canvassing, enlisting, contracting,
the workers or
transporting, utilizing, hiring or procuring of
employers or both.
workers.” (People v. Panis, 142 SCRA 667, [1986])
Private Any person or Authority
Recruitment association engaged in
The number of persons dealt with is not an essential
Agency the recruitment and
requisite of the act of recruitment and placement of
placement of workers,
workers. (Id.)
locally or overseas,
without charging any
fee from the workers or
I. ALLOWED ENTITIES TO ENGAGE IN employers
RECRUITMENT AND PLACEMENT OF WORKERS
1. Private employment agencies (Sec. 25, LC);
2. Private recruitment entities (Sec. 25, LC); 3. PUBLIC EMPLOYMENT OFFICES
3. Public employment offices (Sec. 16, LC); To pursue its responsibility to promote employment
4. Shipping or manning agents or representatives; opportunities, the DOLE carries out programs for
5. the POEA (EO 797); local and overseas employment. (Azucena)

Effective allocation of manpower resources in local

LA SALLIAN COMMISION ON BAR OPERATIONS

 LABOR STANDARDS
employment is assigned to the BLE (Bureau of Local
Employment and to POEA (Philippine Overseas
Employment Administration) for overseas
employment. (Id.)
Sec. 3(f), Powers and Functions, EO No. 247
(1986) Reorganizing the Philippines Overseas
Employment Administration and For Other
Purposes, as amended by RA 10022
The POEA shall recruit and place workers to service
the requirement for trained and competent Filipino
workers by foreign governments and their
instrumentalities and such other employers as public
interest may require.
4. SHIPPING OR MANNING AGENTS OR
REPRESENTATIVES;
5. POEA (E.O. 797);
Philippine Overseas Employment Administration
(POEA) was created by EO 7979 and was reorganized
by EO 247.
Among the principal functions of the POEA are the
formulation, implementation, and monitoring of the
overseas employment of Filipino workers and the
protection of their rights to fair and equitable
employment practices. It also participates in the
deployment of Filipino workers through governemtn-
to-government hiring. (Azucena)
RA 8042, as amended by 10022, is known as the
“Migrant Workers and Overseas Filipino Act of 1995.”
The law institutes the policies on overseas
employment and establishes a higher standard of
protection and promotion of the welfare of migrant
workers, their families, and of overseas Filipinos in
distress. (Id.)
It requires certain guarantee of protection for the
overseas workers before they are deployed in
countries that meet some criteria. (Id.)
POEA Rules and RA 8042 only apply to migrant
workers/overseas workers.
Sec. 4, Deployment of Migrant Workers, Ra 8042
The State shall deploy overseas Filipino workers only
in countries where the rights of Filipino migrant
workers are protected. The government recognizes
any of the following as guarantee on the part of the
receiving country for the protection of the rights of
overseas Filipino workers:
a. It has existing labor and social laws protecting
the rights of migrant workers;
b. It is a signatory to multilateral conventions,
declarartions or resolutions relating to the
protection of migrant workers;
c. It has concluded a bilateral agreement or
LA SALLIAN COMMISION ON BAR OPERATIONS
5 LABOR LAW
arrangement with the government protecting
the rights of overseas Filipino workers; and
d. It is taking positive, concrete measures to
protect the rights of migrant workers.
Provided, That the receiving country is taking
positive, concrete measures to protect the rights of
migrant workers in furtherance of any of the
guarantees under subparagraphs (a), (b) and (c)
hereof.
In the absence of a clear showing that any of the
aforementioned guarantees exists in the country of
destination of the migrant workers, no permit for
deployment shall be issued by the Philippine
Overseas Employment Administration (POEA).
Sec. 5, Termination or Ban on Deployment, RA
8042
Notwithstanding the provisions of Section 4 hereof,
in pursuit of the national interest or when public
welfare so requires, the POEA Governing Board,
after consultation with the Department of Foreign
Affairs, may, at any time, terminate or impose a ban
on the deployment of migrant workers..
6. CONSTRUCTION CONTRACTORS IF
AUTHORIZED TO OPERATE BY DOLE AND THE
CONSTRUCTION INDUSTRY AUTHORITY;
7. MEMBERS OF THE DIPLOMATIC CORPS (SEC. 18,
LC);
8. INTERNATIONAL ORGANIZATIONS (SEC. 18, LC);
Art. 18, Ban on Direct Hiring, Labor Code
No employer may hire a Filipino worker for overseas
employment except through the Boards and entities
authorized by the Secretary of Labor. Direct hiring
by members of the diplomatic corps, international
organizations and such other employers as may be
allowed by the Secretary of Labor is exempted from
this provision.
9. NAME HIREES
Part III, Rule III, POEA Rules Governing the
Overseas Employment as amended (2002)
‘Name Hirees’ or those individual workers who are
able to secure contracts for overseas employment on
their own efforts and representation without the
assistance or participation of any agency.
Are there prohibited entities to engage in
recruitment and placement of workers? Yes, those
not included in the ‘allowed entities’ above are
prohibited.
 LABOR STANDARDS
II. DISQUALIFIED ENTITIES TO ENGAGE IN
RECRUITMENT AND PLACEMENT OF WORKERS:
Bar 2006
Art. 26, Travel Agencies Prohibited To Recruit,
Labor Code
Travel agencies and sales agencies of airline
companies are prohibited from engaging in the
business of recruitment and placement of workers
for overseas employment whether for profit or not.
DISQUALIFICATIONS
The following are not qualified to engage in the
business of recruitment and placement of Filipino
workers overseas:7
1. Travel agencies and sales agencies of airline
companies;
2. Officers or members of the Board of any
corporation or members in a partnership
engaged in the business of a travel agency;
3. Corporations and partnerships, when any of its
officers, members of the board or partners, is
also an officer, member of the board or partner
of a corporation or partnership engaged in the
business of a travel agency;
4. Persons, partnerships or corporations which
have derogatory records, such as but not limited
to the following:
a. Those certified to have derogatory record
or information by the National Bureau of
Investigation or by the Anti-Illegal
Recruitment Branch of the POEA;
b. Those against whom probable cause or
prima facie finding of guilt for illegal
recruitment or other related cases exists;
c. Those convicted for illegal recruitment or
other related cases and/or crimes involving
moral turpitude; and
d. Those agencies whose licenses have been
previously revoked or cancelled by the
Administration for violation of RA 8042, PD
442 as amended and their implementing
rules and regulations as well as these rules
and regulations.
All applicants for issuance/renewal of
license shall be required to submit
clearances from the National Bureau of
Investigation and Anti-illegal Recruitment
Branch, POEA, including clearances for their
respective officers and employees.
5. Any official or employee of the DOLE, POEA,
OWWA, DFA and other government agencies
directly involved in the implementation of R.A.
8042, otherwise known as Migrant Workers and
Overseas Filipino Act of 1995 and/or any of
his/her relatives within the fourth civil degree
of consanguinity or affinity; and
7 POEA Rules and Regulations Governing the Recruitment and
Employment of Seafarers (Sec. 2, Part II, Rule I, 2003 POEA Rules)
LA SALLIAN COMMISION ON BAR OPERATIONS
6 LABOR LAW
6. Persons or partners, officers and Directors of
corporations whose licenses have been
previously cancelled or revoked for violation of
recruitment laws.
III. BAN ON DIRECT HIRING
Art. 18. Ban on Direct Hiring, Labor Code
No em,loyer may hire a Filipino worker for overseas
employment except through the Boards and entities
authorized by the Secretary of Labor. Direct hiring
by members of the diplomatic corps, international
organizations and such other employers as may be
allowed by the Secretary of Labor is exempted from
this provision.
General Rule: No direct hiring except through the
Boards and Entities authorized by the Secretary of
Labor.
Exception:
1. diplomatic corps;
2. international organizations; and
3. such other employers as may be allowed by
the Secretary of Labor.
Their hiring, nonetheless, has to be processed
through the POEA.8
B. GOVERNMENT TECHNIQUES OF REGULATION
– PRIVATE RECRUITMENT
Art. 13 (d), Labor Code
"License" means a document issued by the
Department of Labor authorizing a person or entity
to operate a private employment agency.
Art. (f), Labor Code
"Authority" means a document issued by the
Department of Labor authorizing a person or
association to engage in recruitment and placement
activities as a private recruitment entity.
I. ISSUANCE OF LICENSE/AUTHORITY
Art. 27. Citizenship Requirement, POEA Rules
Only Filipino citizens or corporations, partnerships or
entities at least seventy-five percent (75%) of the
authorized and voting capital stock of which is
owned and controlled by Filipino citizens shall be
permitted to participate in the recruitment and
placement of workers, locally or overseas.
Art. 28, Capitalization, POEA Rules
All applicants for authority to hire or renewal of
license to recruit are required to have such
substantial capitalization as determined by the
Secretary of Labor.
Qualifications to engage in the business of
recruitment and placement of Filipino workers for
8Part III, Rule III, POEA Rules Governing the Overseas Employment
as amended (2002)
 LABOR STANDARDS
overseas employment:
1. Filipino citizens, partnerships or corporations at
least seventy-five percent (75%) of the
authorized and voting capital stock of which is
owned and controlled by Filipino citizens;
2. A minimum capitalization for:
Private employment agency for local
employment…9
✓ Two Hundred Thousand Pesos (P200,000.00)
in case of a single proprietorship or
partnership;
✓ Minimum paid-up capital of Five Hundred
Thousand Pesos (P2,000,000.00) in case of a
corporation.
Private recruitment or manning agency for
overseas employment…10
✓ Two Million Pesos (P2,000,000.00) in case of
a single proprietorship or partnership;
✓ Minimum paid-up capital of Two Million
Pesos (P2,000,000.00) in case of a
corporation; Provided that those with
existing licenses shall, within four years
from effectivity hereof, increase their
capitalization or paid up capital, as the
case may be, to Two Million Pesos
(P2,000,000.00) at the rate of Two Hundred
Fifty Thousand (P250,000.00) every year;
3. Those not otherwise disqualified by law or other
government regulations to engage in the
recruitment and placement of workers for
overseas employment [seafarers].
Bar 1998
Art. 29, Non-transferability of license or authority,
POEA Rules
No license or authority shall be used directly or
indirectly by any person other than the one in whose
favor it was issued or at any place other than that
stated in the license or authority be transferred,
conveyed or assigned to any other person or entity.
Any transfer of business address, appointment or
designation of any agent or representative including
the establishment of additional offices anywhere
shall be subject to the prior approval of the
Department of Labor.
Licenses are non-transferrable because
1. It can only be used by the person issued to;
2. It can only be used at the place designated
therein
Other Rules and Regulations on
9 Sec. 1(b), Rule II, Rules and Regulations Governing Private
Recruitment and Placement Agency for Local Employment
10 Sec. 1(b) Rule I, Part II, POEA Rules and Regulations Governing
the Recruitment and Employment of Land-Based Overseas Workers
(2002); Section 1(b), Rule I, Part II, POEA Rules and Regulations
Governing the Recruitment and Employment of Seafarers (2003)
LA SALLIAN COMMISION ON BAR OPERATIONS
7 LABOR LAW
License/Authority: 11
1. Only the person or entity to whom the license or
authority was issued, can use it;
2. The license or authority may only be used in the
place stated thereto; Recruitment and
placement should only be made in that place
and nowhere else;
3. License or authority cannot be transferred,
conveyed nor assigned to any person or entity;
4. Any transfer of business address, appointment
or designation of any agent or representative
including the establishment of additional offices
anywhere shall be subject to the prior approval
of the Department of Labor;
5. Provincial recruitment and/or job fairs are
allowed only upon written authority from
POEA;12
6. Overseas employment license are valid for 4
years from the date of issuance unless sooner
cancelled, revoked or suspended;
7. Local employment license are valid only for 2
years from the date of issuance;
8. Provisional license are valid for 1 year within
which the applicant should be able to comply
with its undertaking to deploy 100 workers to its
new principal; Compliance thereto shall result in
upgrade to full license, while failure leads to its
expiration;
9. In case of death of the sole proprietor-license
holder, the license may extended upon the
request of the heirs, to continue only upon for
the purpose of winding up business operations.
II.REPORTS/EMPLOYMENT INFORMATION
Art. 33, Reports on Employment Status, Labor
Code
Whenever the public interest requires, the Secretary
of Labor may direct all persons or entities within the
coverage of this Title to submit a report on the
status of employment, including job vacancies,
details of job requisitions, separation from jobs,
wages, other terms and conditions and other
employment data.
11 Sec. 6, 8, Rule II, Rules and Regulations Governing Private
Recruitment and Placement Agency for Local Employment; Sec. 5-7,
Rule II, 2002 POEA Rules and Regulations on the Recruitment and
Employment of Land-Based Workers
12 Part I, Rule VI, 2002 POEA Rules
 LABOR STANDARDS
C. PROHIBITED PRACTICE
I. RECRUITMENT VIOLATIONS OF PERSONS OR
ENTITIES HOLDING A LICENSE OR AUTHORITY
Art. 34, Prohibited Practices, Labor Code
It shall be unlawful for any individual, entity,
licensee, or holder of authority:
a. To charge or accept, directly or indirectly, any
amount greater than that specified in the
schedule of allowable fees prescribed by the
Secretary of Labor, or to make a worker pay any
amount greater than that actually received by
him as a loan or advance; (i.e. over charging of
fees)
b. To furnish or publish any false notice or
information or document in relation to
recruitment or employment;
c. To give any false notice, testimony, information
or document or commit any act of
misrepresentation for the purpose of securing a
license or authority under this Code.
d. To induce or attempt to induce a worker already
employed to quit his employment in order to
offer him to another unless the transfer is
designed to liberate the worker from oppressive
terms and conditions of employment;
e. To influence or to attempt to influence any
person or entity not to employ any worker who
has not applied for employment through his
agency;
f. To engage in the recruitment or placement of
workers in jobs harmful to public health or
morality or to the dignity of the Republic of the
Philippines;
g. To obstruct or attempt to obstruct inspection by
the Secretary of Labor or by his duly authorized
representatives;
h. To fail to file reports on the status of
employment, placement vacancies, remittance
of foreign exchange earnings, separation from
jobs, departures and such other matters or
information as may be required by the Secretary
of Labor.
i. To substitute or alter employment contracts
approved and verified by the Department of
Labor from the time of actual signing thereof by
the parties up to and including the periods of
expiration of the same without the approval of
the Secretary of Labor;
j. To become an officer or member of the Board of
any corporation engaged in travel agency or to
be engaged directly or indirectly in the
management of a travel agency; and
k. To withhold or deny travel documents from
applicant workers before departure for
monetary or financial considerations other than
those authorized under this Code and its
implementing rules and regulations.
Those grounds mentioned under Art. 34 are
applicable only to holders of license/authority.
LA SALLIAN COMMISION ON BAR OPERATIONS
8 LABOR LAW
Violation of those grounds by a holder of license or
authority is not illegal recruitment.
Sec. 6 of RA 8042 considers these grounds as
illegal recruitment. With the addition of ten (10)
grounds:
Sec. 6, RA 8042, as amended by 10022
l. Failure to actually deploy without valid reasons
as determined by the Department of Labor and
Employment; and
m. Failure to reimburse expenses incurred by the
workers in connection with his documentation
and processing for purposes of deployment, in
cases where the deployment does not actually
take place without the worker's fault
n. To allow a non-Filipino citizen to head or
manage a licensed recruitment/manning
agency.
XXX
In addition to the acts enumerated above, it shall
also be unlawful for any person or entity to commit
the following prohibited acts:
1. Grant a loan to an overseas Filipino worker with
interest exceeding eight percent (8%) per
annum, which will be used for payment of legal
and allowable placement fees and make the
migrant worker issue, either personally or
through a guarantor or accommodation party,
postdated checks in relation to the said loan;
2. Impose a compulsory and exclusive arrangement
whereby an overseas Filipino worker is required
to avail of a loan only from specifically
designated institutions, entities or persons;
3. Refuse to condone or renegotiate a loan
incurred by an overseas Filipino worker after the
latter's employment contract has been
prematurely terminated through no fault of his
or her own;
4. Impose a compulsory and exclusive arrangement
whereby an overseas Filipino worker is required
to undergo health examinations only from
specifically designated medical clinics,
institutions, entities or persons, except in the
case of a seafarer
5. whose medical examination cost is shouldered
by the principal/shipowner;
6. Impose a compulsory and exclusive arrangement
whereby an overseas Filipino worker is required
to undergo training, seminar, instruction or
schooling of any kind only from specifically
designated institutions, entities or persons,
except for recommendatory trainings mandated
by principals/shipowner where the latter
shoulder the cost of such trainings;
7. For a suspended recruitment/manning agency to
engage in any kind of recruitment activity
including the processing of pending workers'
applications; and
 LABOR STANDARDS 9 LABOR LAW

8. For a recruitment/manning agency or a foreign Art. 38 (b), Labor Code Sec. 6 of RA 8042
principal/employer to pass on the overseas of their business shall be
Filipino worker or deduct from his or her salary liable.
the payment of the cost of insurance fees, Doctrine of imputed knowledge applies to both (see
premium or other insurance related charges, as discussion below)
provided under the compulsory worker's 11 grounds (Art. 34, LC) 21 grounds (Sec. 6, RA
insurance coverage. 8042, as amended by
10022; substantially the
The persons criminally liable for the above offenses same with Art. 34 but
are the principals, accomplices and accessories. In with two new grounds)
case of juridical persons, the officers having control,
management or direction of their business shall be Both the Labor Code and the Migrant Workers Act
liable. clearly show that illegal recruitment is an offense
that is essentially committed by non-licensee or non-
holder of authority. (People v Alvarez, 387 SCRA 448
II.ILLEGAL RECRUITMENT [2002].)
Bar 2002, 2005
Kinds of illegal recruitment:
TYPES OF ILLEGAL RECRUITMENT
✓ Illegal recruitment under Art. 38 of Labor Code; UNDER PHILIPPINE LAWS:
and 1. ILLEGAL RECRUITMENT UNDER THE
✓ Illegal recruitment under Sec. 6 of RA 8042.
LABOR CODE:
Art. 38 (b), Labor Code Sec. 6 of RA 8042 A. SIMPLE ILLEGAL RECRUITMENT OR ILLEGAL
Illegal Recruitment RECRUITMENT W/O LICENSE
Definition: “[a]ny Definition: “… any act of
recruitment activities, canvassing, enlisting, Any recruitment activities, including the prohibited
including the prohibited contracting, practices enumerated under Article 34 of this Code,
practices enumerated transporting, utilizing, to be undertaken by non-licensees or non-holders of
under Art. 34 of [the hiring, procuring workers authority, shall be deemed illegal and punishable
Labor Code], to be (CETCHUP) and includes under Article 39 of this Code.
undertaken by non- referring, contact
licensees or non-holders services, promising or The Department of Labor and Employment or any
of authority…” (Sec. 38a) advertising for law enforcement officer may initiate complaints
employment abroad, under this Article.13
(CRAP) whether for
profit or not, when Bar 2005
undertaken by a non-
license or non-holder of B.ILLEGAL RECRUITMENT AS ECONOMIC
authority contemplated SABOTAGE:
under Article 13(f) of i. Large Scale Illegal Recruitment
Presidential Decree No. Illegal recruitment is deemed committed in
442, as amended, large scale if committed against three (3) or
otherwise known as the more persons individually or as a group.14
Labor Code of the
Philippines. ii. Syndicated Illegal Recruitment
Applies only to non- Both applies to holder or Illegal recruitment is deemed committed by a
holder of non-holder of license or syndicate if carried out by a group of three (3)
license/authority authority or more persons conspiring and/or
Local Employment Overseas Employment confederating with one another in carrying out
Both have large-scale and syndicated illegal any unlawful or illegal transaction, enterprise or
recruitment; both recruitments are considered as scheme defined under the first paragraph
offense involving economic sabotage hereof, [i.e. Sec. 38(a)].15
No express provision The persons criminally
regarding criminal liable for the above
liability of accomplices offenses are the ELEMENTS OF SIMPLE ILLEGAL RECRUITMENT:
and accessories in illegal principals, accomplices 1. Undertakes any recruitment activity as defined
recruitment under Labor and accessories. In case under Article 13(b) or any prohibited practice
Code; but there is theory of juridical persons, the
of imputed knowledge; officers having control, 13 Art. 38(a), Illegal Recruitment, Labor Code
management or direction 14 Art. 38(b), Par. 2, Illegal Recruitment, Labor Code
15 Art. 38(b), Par. 2, Illegal Recruitment, Labor Code

LA SALLIAN COMMISION ON BAR OPERATIONS

 LABOR STANDARDS
enumerated under Article 34; AND
2. Does not have a license or authority to engage
in the recruitment and placement of workers.
All you need to prove is that the non-licensee is
practicing recruitment.
It is Large Scale Illegal Recruitment if committed
against 3 or more persons individually or as a group.
It is Syndicated Illegal Recruitment if it is
committed by 3 or more persons in conspiracy.
Illegal Recruitment under the Labor Code is one of
local employment. If it is overseas employment, it is
RA 8042 that applies.
2. ILLEGAL RECRUITMENT UNDER RA
8042
A. ILLEGAL RECRUITMENT COMMITTED BY A
NON-LICENSE OR NON-HOLDER
Any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring, procuring workers
(CETCHUP) and includes referring, contact services,
promising or advertising for employment abroad,
(CRAP) whether for profit or not, when undertaken
by a non-license or non-holder of authority
contemplated under Article 13(f) of Presidential
Decree No. 442, as amended, otherwise known as
the Labor Code of the Philippines.. x x x16
Elements of Illegal Recruitment committed by a
non-license or non-holder
1. any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring, procuring workers
(CETCHUP) and includes referring, contact
services, promising or advertising for
employment abroad, (CRAP) is committed; AND
2. Such act is committed by a non-license or non-
holder of authority.
B. ILLEGAL RECRUITMENT COMMITTED
REGARDLESS OF WHETHER A HOLDER OF
LICENSE/AUTHORITY OR NOT
It shall likewise include the following acts, whether
committed by any person, whether a non-licensee,
non-holder, license or holder of authority: x x x
(enumeration of ground follows)17
It is only under RA 8042 that a holder of
license/authority may commit illegal recruitment.
For enumeration of grounds, see Sec. 34 and
comments above.
Elements of Illegal Recruitment regardless of
whether a holder of license/authority or not :
16 Sec. 6, Par. 1, RA 8042
17 Sec. 6, Par. 1, RA 8042
LA SALLIAN COMMISION ON BAR OPERATIONS
10 LABOR LAW
1. Any of the grounds under Sec. 6 of RA 8042 is
committed (See Art. 34 above); AND
2. It is committed by any person, whether a non-
licensee, non-holder, license or holder of
authority.
C. ILLEGAL RECRUITMENT AS ECONOMIC
SABOTAGE
✓ Large Scale Illegal Recruitment
✓ Syndicated Illegal Recruitment
It is Large Scale Illegal Recruitment if committed
against 3 or more persons individually or as a group.
It is Syndicated Illegal Recruitment if it is
committed by 3 or more persons in conspiracy.
Both the Labor Code and Ra 8042 have illegal
recruitment as economic sabotage.
Illegal Recruitment under RA 8042 is one of overseas
employment. If it is local employment, it is the
Labor Code that applies.
Failure of the prosecution to prove the guilt of the
accused beyond reasonable doubt does not absolve
the civil obligation to return the money collected.
(Id.)
Illegal recruitment is a crime that is mala prohibita.
(People v. Chua)
III. ENFORCEMENT AND SANCTIONS
Suspension and/or cancellation of license or
authority. (Art. 35, LC)
The Secretary of Labor shall have the power to
suspend or cancel any license or authority to recruit
employees for overseas employment for violation of
rules and regulations issued by the Ministry of Labor,
the Overseas Employment Development Board, or for
violation of the provisions of this and other
applicable laws, General Orders and Letters of
Instructions.
Regulatory Power (Art. 36, LC)
The Secretary of Labor shall have the power to
restrict and regulate the recruitment and placement
activities of all agencies within the coverage of this
Title and is hereby authorized to issue orders and
promulgate rules and regulations to carry out the
objectives and implement the provisions of this
Title.
Secretary of Labor has the power and authority not
only to restrict and regulate the recruitment and
placement activities of all agencies but also to
promulgate rules and regulations to carry out
theobjectives and implement the provisions
governingsaid activities. Implicit in these powers is
the award of appropriate relief to the victims of
theoffenses committed by the faulting agency or
 LABOR STANDARDS 11 LABOR LAW

contractor. (Eastern Assurance and Surety Corp. v. were stripped from the Secretary of Labor.
Secretary of Labor) (Anonuevo)

Visitorial Power (Art. 37, LC)
The Secretary of Labor or his duly authorized
representatives may, at any time, inspect the
premises, books of accounts and records of any
person or entity covered by this Title, require it to
submit reports regularly on prescribed forms, and
act on violation of any provisions of this Title.
Close Down Power (Art. 38(c), LC)
The Secretary of Labor shall close companies,
establishments and entities found to be engaged in
the recruitment of workers for overseas
employment, without having been licensed or
authorized to do so.
The Secretary of Labor, not being a judge, may no
longer issue search or arrest warrants. Hence, the
authorities must go through the judicial process. To
that extent, Article 38(c) of the Labor Code is
unconstitutional and of no force and effect. (Salazar
v. Achacoso)
Article 39 (d). Penalties, Labor Code
If the offender is a corporation, partnership,
association or entity, the penalty shall be imposed
upon the officer or officers of the corporation,
partnership, association or entity responsible for
violation; and if such officer is an alien, he shall, in
addition to the penalties herein prescribed, be
deported without further proceedings.
Article 39 (e). Penalties, Labor Code
In every case, conviction shall cause and carry the
automatic revocation of the license or authority and
all the permits and privileges granted to such person
or entity under this Title, and the forfeiture of the
cash and surety bonds in favor of the Overseas
Employment Development Board or the National
Seamen Board, as the case may be, both of which
are authorized to use the same exclusively to
promote their objectives.

Only the power to issue search or arrests warrants

Penalties for Illegal Recruitment under Article 39 and RA 8042

Article 39 RA 8042
Was repealed by implication by
RA 8042. (Anonuevo)
Any person found guilty of illegal
Imprisonment of not less than four years nor recruitment shall suffer the penalty of
more than eight years or a fine of not less imprisonment of not less than six (6) years
Illegal Recruitment and one (1) day but not more than twelve
than P20,000 nor more than P100,000 or
w/o License (12) years and a fine not less than two
both such imprisonment and fine, at the
discretion of the court. hundred thousand pesos (P200,000.00) nor
more than five hundred thousand pesos
(P500,000.00).
Imprisonment of not less than two years nor
more than five years or a fine of not less Provided, however, that the maximum
Illegal Recruitment penalty shall be imposed if the person
than P10,000 nor more than P50,000, or
w/ License illegally recruited is less than eighteen (18)
both such imprisonment and fine, at the
discretion of the court years of age or committed by a non-licensee
or non-holder of authority.
Illegal recruitment when committed by a
syndicate or in large scale shall be
The penalty of life imprisonment and a fine
considered an offense involving economic
of not less than five hundred thousand pesos
sabotage and shall be penalized in
(P500,000.00) nor more than one million
Large Scale Illegal accordance with Article 39 hereof. (Art.
pesos (P1,000,000.00) shall be imposed if
Recruitment 38(b), LC) The penalty of life imprisonment
illegal recruitment constitutes economic
and a fine of One Hundred Thousand Pesos
sabotage as
(P1000,000.00) shall be imposed if illegal
defined herein.
recruitment constitutes economic sabotage
as defined herein
months from the approval of the settlement by the
Bar 1998 appropriate authority.
Money Claims Under Sec. 10 of RA 8042
Any compromise/amicable settlement or voluntary In case of termination of overseas employment
agreement on money claims inclusive of damages without just, valid or authorized cause as defined by
under this section shall be paid within four (4) law or contract, the workers shall be entitled to the

LA SALLIAN COMMISION ON BAR OPERATIONS

 LABOR STANDARDS
full reimbursement of his placement fee with
interest of twelve percent (12%) per annum, plus his
salaries for the unexpired portion of his employment
contract or for three (3) months for every year of
the unexpired term, whichever is less.
Non-compliance with the mandatory periods for
resolutions of cases provided under this section shall
subject the responsible officials to any or all of the
following penalties:
a. The salary of any such official who fails to
render his decision or resolutions within the
prescribed period shall be, or caused to be,
withheld until the said official complies
therewith;
b. Suspension for not more than ninety (90) days;
or
c. Dismissal from the service with disqualifications
to hold any appointive public office for five (5)
years.
Provided, however, that the penalties herein
provided shall be without prejudice to any liability
which any such official may have incurred under
other existing laws or rules and regulations as a
consequence of violating the provisions of this
paragraph.
A plain reading of the above-mentioned provision
clearly reveals that the choice of which amount to
award an illegally dismissed overseas contract
worker comes into play when the employment
contract has a term of at least 1 year or more. In
case of termination of overseas employment without
just, valid or authorized cause as defined by law or
contract, the worker shall be entitled to the full
reimbursement of his placement fee with interest at
12% per annum, plus his salaries for the unexpired
portion of his employment contract or for 3 months
every year of the unexpired term, whichever is
less.18
The choice of which amount to award an illegally
dismissed overseas contract worker, i.e., whether his
salaries for the unexpired portion of his employment
contract, or 3 month’s salary for every year of the
unexpired term, whichever is less, comes into play
only when the employment contract concerns has a
term of at least 1 year or more.19
This clause reiterated above was declared
unconstitutional because there is discrimination and
disparity. There is no more choice and the illegally
terminated overseas employee will be fully paid his
unexpired term of his contract.20
18 Olarte vs. Navona
19 Flourish Maritime Shipping v. Almanzor
20 Serrano v. Gallant Maritime Services, GR No. 167614, March 24,
2009
LA SALLIAN COMMISION ON BAR OPERATIONS
12 LABOR LAW
D. JOINT AND SEVERAL LIABILITY OF PRIVATE
EMPLOYMENT AGENCY/ MANNING AGENT AND
EMPLOYER
Section 10 (2 and 3), RA 8042
The liability of the principal/employer and the
recruitment/placement agency for any and all claims
under this section shall be joint and several. These
provisions shall be incorporated in the contract for
overseas employment and shall be a condition
precedent for its approval. The performance bond to
be filed by the recruitment/placement agency, as
provided by law, shall be answerable for all money
claims or damages that may be awarded to the
workers. If the recruitment/placement agency is a
juridical being, the corporate officers and directors
and partners as the case may be, shall themselves be
jointly and solidarily liable with the corporation or
partnership for the aforesaid claims and damages.
Such liabilities shall continue during the entire
period or duration of the employment contract and
shall not be affected by any substitution,
amendment or modification made locally or in a
foreign country of the said contract.
Sec. 1(f)(3), Rule II, Part II, 2002 POEA Rules
The applicant for license to operate a private
employment agency shall assume joint and solidary
liability with the employer for all claims and
liabilities which may arise in connection with the
implementation of the contract, including but not
limited to payment of wages, death and disability
compensation and repatriations.
Sec. 1(e)(8), Rule II, Part II, 2003 POEA Rules
The applicant for license to operate a manning
agency shall assume joint and solidary liability with
the employer for all claims and liabilities which may
arise in connection with the implementation of the
employment contract, including but not limited to
wages, death and disability compensation and their
repatriation.
The liability extends to the expiration of the
contract.21
E. JURISDICTION
1. Regional Trial Court, for Criminal Action for
Illegal Recruitment
A criminal action arising from illegal recruitment
as defined herein shall be filed with the
Regional Trial Court of the province or city
where the offense was committed or where the
21 OSM Shipping Philippines, Inc. v. NLRC
 LABOR STANDARDS
offended party actually resides at the same time
of the commission of the offense: Provided, That
the court where the criminal action is first filed
shall acquire jurisdiction to the exclusion of
other courts. Provided, however, That the
aforestated provisions shall also apply to those
criminal actions that have already been filed in
court at the time of the effectivity of this Act.
(Sec. 9, RA 8042)
Bar 1995, 1996
2. NLRC, for Money Claims Arising from
Employer - Employee Relations
Notwithstanding any provision of law to the
contrary, the Labor Arbiters of the
National Labor Relations Commission
(NLRC) shall have the original and exclusive
jurisdiction to hear and decide, within
ninety (90) calendar days after filing of the
complaint, the claims arising out of an
employer-employee relationship or by virtue
of any law or contract involving Filipino
workers for overseas deployment including
claims for actual, moral, exemplary and
other forms of damages.
3. POEA, for Administrative and Disciplinary
Actions
The POEA shall exercise original and exclusive
jurisdiction to hear and decide:22
a. All cases, which are administrative in
character, involving or arising out of
violations of rules and regulations relating
to licensing and registration of recruitment
and employment agencies or entities; and
b. Disciplinary action cases and other special
cases, which are administrative in
character, involving employers, principals,
contracting partners and Filipino migrant
workers.
F. ALIEN EMPLOYMENT REGULATION
Art. XII, Sec. 12, 1987 Constitution
The State shall promote the preferential use of
Filipino labor, domestic materials and locally
produced goods, and adopt measures that help make
them competitive.
The ownership and management of mass media shall
be limited to citizens of the Philippines, or to
corporations, cooperatives or associations, wholly-
owned and managed by such citizens.
The Congress shall regulate or prohibit monopolies in
commercial mass media when the public interest so
requires. No combinations in restraint of trade or
22Section 28, RA 8042
LA SALLIAN COMMISION ON BAR OPERATIONS
13 LABOR LAW
unfair competition therein shall be allowed. (Art.
XVI, Sec. 11(1), Constitution)
Art. XVI, Sec. 11(2), 1987 Constitution
The advertising industry is impressed with public
interest, and shall be regulated by law for the
protection of consumers and the promotion of the
general welfare.
Only Filipino citizens or corporations or associations
at least seventy per centum of the capital of which is
owned by such citizens shall be allowed to engage in
the advertising industry.
The participation of foreign investors in the
governing body of entities in such industry shall be
limited to their proportionate share in the capital
thereof, and all the executive and managing officers
of such entities must be citizens of the Philippines.
Art. XII, Sec. 11, 1987 Constitution
No franchise, certificate, or any other form of
authorization for the operation of a public utility
shall be granted except to citizens of the Philippines
or to corporations or associations organized under
the laws of the Philippines, at least sixty per centum
of whose capital is owned by such citizens; nor shall
such franchise, certificate, or authorization be
exclusive in character or for a longer period than
fifty years. Neither shall any such franchise or right
be granted except under the condition that it shall
be subject to amendment, alteration, or repeal by
the Congress when the common good so requires.
The State shall encourage equity participation in
public utilities by the general public. The
participation of foreign investors in the governing
body of any public utility enterprise shall be limited
to their proportionate share in its capital, and all the
executive and managing officers of such corporation
or association must be citizens of the Philippines.
Bar 1995
Employment permit of non-resident aliens, Article
40 of the Labor Code
Any alien seeking admission to the Philippines for
employment purposes and any domestic or foreign
employer who desires to engage an alien for
employment in the Philippines shall obtain an
employment permit from the Department of Labor.
The employment permit may be issued to a non-
resident alien or to the applicant employer after a
determination of the non-availability of a person in
the Philippines who is competent, able and willing at
the time of application to perform the services for
which the alien is desired. For an enterprise
registered in preferred areas of investments, said
employment permit may be issued upon
recommendation of the government agency charged
with the supervision of said registered enterprise.
 LABOR STANDARDS
Article 41 of the Labor Code
Prohibition against transfer of employment.
a. After the issuance of an employment permit,
the alien shall not transfer to another job or
change his employer without prior approval of
the Secretary of Labor.
b. Any non-resident alien who shall take up
employment in violation of the provision of this
Title and its implementing rules and regulations
shall be punished in accordance with the
provisions of Articles 289 and 290 of the Labor
Code.
In addition, the alien worker shall be subject to
deportation after service of his sentence.
Submission of List, Article 42 of the Labor Code
Any employer employing non-resident foreign
nationals on the effective date of this Code shall
submit a list of such nationals to the Secretary of
Labor within thirty (30) days after such date
indicating their names, citizenship, foreign and local
addresses, nature of employment and status of stay
in the country. The Secretary of Labor shall then
determine if they are entitled to an employment
permit.
I. COVERAGE
General rule
All foreign nationals who intend to engage in gainful
employment in the Philippines shall apply for Alien
Employment Permit (AEP).23
The following categories of foreign nationals are
exempt from securing an employment permit24
a. All members of the diplomatic service and
foreign government officials accredited by
and with reciprocity arrangements with the
Philippine government;
b. Officers and staff of international
organizations of which the Philippine
government is a member, and their
legitimate spouses desiring to work in the
Philippines;
c. Foreign nationals elected as members of the
Governing Board who do not occupy any
other position, but have only voting rights in
the corporation;
d. All foreign nationals granted exemption by
law;
23Section 1, D.O. 97-09, The Revised Rules for the Issuance of
Employment Permits to Foreign Nationals
24Section 2, D.O. 97-09, The Revised Rules for the Issuance of
Employment Permits to Foreign Nationals
LA SALLIAN COMMISION ON BAR OPERATIONS
14 LABOR LAW
e. Owners and representatives of foreign
principals whose companies are accredited
by the POEA, who come to the Philippines
for a limited period and solely for the
purpose of interviewing Filipino applicants
for employment abroad;
f. Foreign nationals who come to the
Philippines to teach, present and/or
conduct research studies in universities and
colleges as visiting, exchange or adjunct
professors under formal agreements
between the universities or colleges in the
Philippines and foreign universities or
colleges; or between the Philippine
government and foreign government;
provided that the exemption is one a
reciprocal basis; and
g. Permanent residing foreign nationals,
probationary or temporary resident visa
holders.
II. CONDITIONS OF GRANT OF PERMIT
Article 40 of the Labor Code
Employment permit of non-resident aliens. Any alien
seeking admission to the Philippines for employment
purposes and any domestic or foreign employer who
desires to engage an alien for employment in the
Philippines shall obtain an employment permit from
the Department of Labor.
The employment permit may be issued to a non-
resident alien or to the applicant employer after a
determination of the non-availability of a person
in the Philippines who is competent, able and
willing at the time of application to perform the
services for which the alien is desired. For an
enterprise registered in preferred areas of
investments, said employment permit may be issued
upon recommendation of the government agency
charged with the supervision of said registered
enterprise.
Section 10, D.O. 97-09
An application of AEP may be denied by the Regional
Director based on any of the following grounds:
1. misrepresentation of facts in the
application;
2. submission of falsified documents;
3. the foreign national has a derogatory
record; or
4. availability of a Filipino who is competent,
able and willing to the job intended for the
foreign national.
 LABOR STANDARDS 15 LABOR LAW

III. Human Resources B. TRAINING AND EMPLOYMENT OF

APPRENTICES
Development Apprenticeship, Apprentice, Apprenticeship
Agreement and Apprenticeable Occupation,
A. DEVELOPMENT OF HUMAN RESOURCES
defined
POLICY25 Art 58, Labor Code “TESDA Law”
It is hereby declared the policy of the State to Apprenticeship
provide relevant, accessible, high quality and Practical training on the Training within
efficient technical education and skills development job supplemented by employment with
in support of the development of high quality Filipino related theoretical compulsory related
middle-level manpower responsive to and in instruction theoretical instructions
accordance with Philippine development goals and involving a contract
priorities. between an apprentice
and an employer on an
The State shall encourage active participation of approved apprenticeable
various concerned sectors, particularly private occupation
enterprises, being direct participants in and Apprentice
immediate beneficiaries of a trained and skilled work A worker who is covered A person undergoing
force, in providing technical education and skills by a written trainingfor an approved
development opportunities. apprenticeship apprenticeable
agreement with an occupation during an
GOALS AND OBJECTIVES26 individual employer or established period
any of the entities assured by an
a. Promote and strengthen the quality of technical recognized under this apprenticeship agreement
education and skills development programs to Chapter.
attain international competitiveness;
Apprenticeship Agreement
b. Focus technical education and skills
An employment A contract wherein a
development on meeting the changing demands
contract prospective employer
for quality middle-level manpower;
wherein the employer binds himself to train the
c. Encourage critical and creative thinking by
binds himself to train apprentice who in turn
disseminating the scientific and technical
the apprentice and the accepts the terms of
knowledge base of middle-level manpower
apprentice in turn training for a recognized
development programs;
accepts the terms of apprenticeable
d. Recognize and encourage the complementary
training. occupation emphasizing
roles of public and private institutions in
the rights, duties and
technical education and skills development and
responsibilities of each
training systems; and
party
e. Inculcate desirable values through the
Apprenticeable Occupation
development of moral character with emphasis
on work ethic, self-discipline, self- reliance and Any trade, form of An occupation officially
nationalism. employment or endorsed by a tripartite
occupation which body and approved for
requires more than apprenticeship by the
MIDDLE-LEVEL MANPOWER three (3) months of Authority
a. Those who have acquired practical skills and practical training on the
knowledge through formal or non-formal job supplemented by
education and training equivalent to at least a related theoretical
secondary education but preferably at post- instruction.
secondary education with a corresponding
degree of diploma; or WHEN APPRENTICES MAY BE EMPLOYED
b. Skilled workers who have become highly
Prior approval by the Department of Labor and
competent in their trade or craft as attested by
Employment of the proposed apprenticeship
industry.
program is, therefore, a condition sine quo non
before an apprenticeship agreement can be validly
entered into. The act of filing the proposed
apprenticeship program with the Department of
Labor and Employment is a preliminary step towards
its final approval and does not instantaneously give
25Policy, Section 2, R.A. 7796, Technical Educational and Skills
Development Act of 1994
26Section 3: Goals and Objectives, RA 7796

LA SALLIAN COMMISION ON BAR OPERATIONS

 LABOR STANDARDS
rise to an employer-apprentice relationship.
QUALIFICATIONS
Bar 2004
Sec. 12. Employment of Children, RA 7610: Special
Protection of Children Against Abuse, Exploitation
and Discrimination Act." as amended by RA 7658
Children below fifteen (15) years of age shall not
be employed except:
1. When a child works directly under the sole
responsibility of his parents or legal guardian
and where only members of the employer's
family are employed: Provided, however, That
his employment neither endangers his life,
safety, health and morals, nor impairs his
normal development; Provided, further, That
the parent or legal guardian shall provide the
said minor child with the prescribed primary
and/or secondary education; or
2. Where a child's employment or participation in
public entertainment or information through
cinema, theater, radio or television is essential:
Provided, The employment contract is
concluded by the child's parents or legal
guardian, with the express agreement of the
child concerned, if possible, and the approval of
the Department of Labor and Employment: and
Provided, That the following requirements in all
instances are strictly complied with:
a. The employer shall ensure the protection,
health, safety, morals and normal
development of the child
b. The employer shall institute measures to
prevent the child's exploitation or
discrimination taking into account the
system and level of remuneration, and the
duration and arrangement of working time;
and
c. The employer shall formulate and
implement, subject to the approval and
supervision of competent authorities, a
continuing program for training and skills
acquisition of the requirements.
In the above exceptional cases where any such child
may be employed, the employer shall first secure,
before engaging such child, a work permit from the
Department of Labor and Employment which shall
ensure observance of the child.
The Department of Labor and Employment shall
promulgate rules and regulations necessary for the
effective implementation of this Section.
Art 59. Qualifications of Apprentice, Labor Code
To qualify as an apprentice, a person shall:
a. Be at least fourteen (14) years of age;
b. Possess vocational aptitude and capacity
27 Nitto Enterprises v. NLRC, 248 SCRA 654 (1995)
LA SALLIAN COMMISION ON BAR OPERATIONS
16 LABOR LAW
27 for appropriate tests; and
c. Possess the ability to comprehend and
follow oral and written instructions.
d. Trade and industry associations may
recommend to the Secretary of Labor
appropriate educational requirements for
different occupations.
Sec 11. Qualifications of Apprentices, Rule VI,
Book II, IRR
To qualify as apprentice, an applicant shall:
a. Be at least fifteen years of age; provided
those who are at least fifteen years of age
but less than eighteen may be eligible for
apprenticeship only in non-hazardous
occupations;
b. Be physically fit for the occupation in which
he desires to be trained;
c. Possess vocational aptitude and capacity for
the particular occupation as established
through appropriate tests; and
d. Possess the ability to comprehend and
follow oral and written instructions.
Trade and industry associations may, however,
recommend to the Secretary of Labor and
Employment appropriate educational qualifications
for apprentices in certain occupations. Such
qualifications, if approved, shall be the educational
requirements for apprenticeship in such occupations
unless waived by an employer in favor of an
applicant who has demonstrated exceptional ability.
A certification explaining briefly the ground for such
waiver, and signed by the person in charge of the
program, shall be attached to the apprenticeship
agreement of the applicant concerned.
ALLOWED EMPLOYMENT
Only employers in the highly technical industries
may employ apprentices and only in apprenticeable
occupations approved by the Secretary of Labor and
Employment. (As amended by Section 1, Executive
Order No. 111, December 24, 1986)28
CONDITIONS OF EMPLOYMENT
1. CONTENTS OF APPRENTICESHIP
AGREEMENTS29
Apprenticeship agreements, including the wage rates
of apprentices, shall conform to the rules issued by
the Secretary of Labor and Employment.
Apprenticeship agreements providing for wage rates
below the legal minimum wage, which in no case
shall start below 75 percent of the applicable
minimum wage, may be entered into only in
accordance with apprenticeship programs duly
approved by the Secretary of Labor and Employment.
28Art 60, Employment of apprentices, Labor Code
29Article 61. Contents of apprenticeship agreements, Labor Code
 LABOR STANDARDS 17 LABOR LAW

executory.
The Department shall develop standard model
programs of apprenticeship. 3. EXHAUSTION OF ADMINISTRATIVE
REMEDIES.
The period of apprenticeship shall not exceed six No person shall institute any action for the
months. enforcement of any apprenticeship agreement or
damages for breach of any such agreement, unless
he has exhausted all available administrative
2. DEDUCTIBILITY OF TRAINING remedies.
COSTS
TESDA is the appropriate agency of the Department
Article 71. Deductibility of training costs, Labor of Labor and Employment.
Code
The Secretary of Labor and Employment may Try to settle the dispute first before plant apprentice
authorize the hiring of apprentices without committee before filing a complaint with TESDA.
compensation whose training on the job is required
by the school or training program curriculum or as
requisite for graduation or board examination. C. TRAINING AND EMPLOYMENT OF LEARNERS
Art 124 (j), Labor Code Learners, defined
Persons hired as trainees in semi-skilled and other
In the determination of such regional minimum
industrial occupations which are non-
wages, the Regional Board shall consider the
apprenticeableand which may be learned through
equitable distribution of income and wealth along
practical training on the job in a relatively short
the imperatives of economic and social
period of time which shall not exceed three (3)
development.
months.31

Learnership and Apprenticeship, distinguished

Under TESDA guidelines, the period of apprenticeship
Learnership Apprenticeship
should not be less than 4 months and not more than
6 months. Nature
Semi-Skilled Highly Technical
An apprentice is entitled to the full minimum wage Period
(not 75%) when: 3 Months Not less than 3 months
1. The employer stipulates in the contract and but not more than 6
2. The employer avails of the tax benefit where he months
is able to deduct from his remittance to the
government in exchange of the training program 3 months < P<6 months
given to apprentice. Commitment to employment
At the option of the At the option of the
Learner employer
ENFORCEMENT30 Necessity of DOLE approval of program
Not necessary. Only Prior approval by DOLE is
1. INVESTIGATION OF VIOLATION OF
DOLE inspection necessary
APPRENTICESHIP AGREEMENT.
required
Upon complaint of any interested person or upon its
Deductibility of expenses
own initiative, the appropriate agency of the
No provision for Expenses of training
Department of Labor and Employment or its
deductibility deductible from income
authorized representative shall investigate any
tax
violation of an apprenticeship agreement pursuant to
When employed
such rules and regulations as may be prescribed by
the Secretary of Labor and Employment. 1. When no 1. The person is at least
experienced fifteen (15) years of
2. APPEAL TO THE SECRETARY OF LABOR AND workers are age, provided those
EMPLOYMENT. available who are at least
The decision of the authorized agency of the 2. The employment fifteen (15) years of
Department of Labor and Employment may be of learners is age but less than
appealed by any aggrieved person to the Secretary of necessary to eighteen (18) may be
Labor and Employment within five (5) days from prevent eligible for
receipt of the decision. The decision of the Secretary curtailment of apprenticeship only
of Labor and Employment shall be final and employment in non-hazardous

30Art 65 to 67, Labor Code 31Art 73. Learners defined, Labor Code

LA SALLIAN COMMISION ON BAR OPERATIONS

 LABOR STANDARDS 18 LABOR LAW

Learnership Apprenticeship workers are available, the employment of learners is

opportunities; and occupation; necessary to prevent curtailment of employment
3. The employment 2. The person is opportunities, and the employment does not create
does not create physically fit for the unfair competition in terms of labor costs or impair
unfair competition occupation in which or lower working standards.32
in terms of labor he desires to be
costs or impair or trained; Learnership programs must be approved by the
lower working3. The person possesses Authority.33
standards. vocational aptitude
and capacity for the CONDITIONS OF EMPLOYMENT34
particular occupation Any employer desiring to employ learners shall enter
as established into a learnership agreement with them, which
through appropriate agreement shall include:
tests; and a. The names and addresses of the learners;
4. The person is able to b. The duration of the learnership period, which
comprehend and shall not exceed three (3) months;
follow oral and c. The wages or salary rates of the learners which
written instructions shall begin at not less than seventy-five percent
Wage rate (75%) of the applicable minimum wage; and
General Rule General Rule d. A commitment to employ the learners if they so
Not less than 75% of Not less than 75% of the desire, as regular employees upon completion of
the minimum wage minimum wage the learnership.

Exception Exception All learners who have been allowed or suffered

Learners in piecework No compensation if SOLE to work during the first two (2) months shall be
shall be paid in full for authorizes, as OJT is deemed regular employees if training is
the work done. required by the school terminated by the employer before the end of
Deductibility of training cost the stipulated period through no fault of the
Not allowed Allowed learners.

Conditions Art 76. Learners in Piecework, Labor Code

1. Program is duly Learners employed in piece or incentive-rate jobs
recognized by DOLE during the training period shall be paid in full for the
2. Deduction shall not work done.
exceed 10% of direct
labor wage ENFORCEMENT
3. Payment of minimum Any violation of this Chapter or its implementing
wage to apprentices rules and regulations shall be subject to the general
Regularization penalty clause provided for in this Code.35
A commitment to
employ the learners if
they so desire, as
regular employees
D. TRAINING AND EMPLOYMENT OF DISABLED
upon completion of the PERSONS
learnership. Bar 2000
Handicapped Workers, defined
All learners who have Handicapped workers are those whose earning
been allowed or capacity is impaired by age or physical or mental
suffered to work during deficiency or injury.36
the first two (2)
months shall be Disabled persons, defined
deemed regular Disabled Persons are those suffering from restriction
employees if training of different abilities, as a result of a mental,
is terminated by the physical or sensory impairment, to perform an
employer before the activity in the manner or within the range considered
end of the stipulated
period through no fault
of the learners. 32Art 74. When learners may be hired, Labor Code
33RA 7796
WHEN LEARNERS MAY BE EMPLOYED 34Art 75. Regular Learner Employment, Labor Code
35Art 77. Penalty Clause, Labor Code

Learners may be employed when no experienced 36Art 78. Handicapped worker defined, Labor Code

LA SALLIAN COMMISION ON BAR OPERATIONS

 LABOR STANDARDS
normal for a human being.37
Impairment, defined
Impairment is any loss, diminution or aberration of
psychological, physiological, or anatomical structure
of function.38
Disability, defined
Disability shall mean:39
1. A physical or mental impairment that
substantially limits one or more psychological,
physiological or anatomical function of an
individual or activities of such individual;
2. A record of such an impairment; or
3. being regarded as having such an impairment;
POLICY DECLARATION40
a. Disabled persons are part of Philippine society,
thus the State shall give full support to the
improvement of the total well-being of disabled
persons and their integration into the
mainstream of society. Toward this end, the
State shall adopt policies ensuring the
rehabilitation, self-development and self
reliance of disabled persons. It shall develop
their skills and potentials to enable them to
compete favorably for available opportunities.
b. Disabled persons have the same rights as other
people to take their proper place in society.
They should be able to live freely and as
independently as possible. This must be the
concern of everyone — the family, community
and all government and non-government
organizations. Disabled persons' rights must
never be perceived as welfare services by the
Government.
c. The rehabilitation of the disabled persons shall
be the concern of the Government in order to
foster their capacity to attain a more
meaningful, productive and satisfying life. To
reach out to a greater number of disabled
persons, the rehabilitation services and benefits
shall be expanded beyond the traditional urban
based centers to community based programs,
that will ensure full participation of different
sectors as supported by national and local
government agencies.
d. The State also recognizes the role of the private
sector in promoting the welfare of disabled
persons and shall encourage partnership in
programs that address their needs and concerns.
37Sec 4 (a). Disabled persons, RA 7277. Magna Carta for Disabled
Persons
38Sec 4 (b). Impairment, RA 7277. Magna Carta for Disabled Persons
39Sec 4 (c). Disability, RA 7277. Magna Carta for Disabled Persons
40Sec 2 . Declaration of Policies, RA 7277. Magna Carta for Disabled
Persons
LA SALLIAN COMMISION ON BAR OPERATIONS
19 LABOR LAW
e. To facilitate integration of disabled persons into
the mainstream of society, the State shall
advocate for and encourage respect for disabled
persons. The State shall exert all efforts to
remove all social, cultural, economic,
environmental and attitudinal barriers that are
prejudicial to disabled persons.
COVERAGE41
This Act shall cover all disabled persons and, to the
extent herein provided, departments, offices and
agencies of the National Government or non-
government organizations involved in the attainment
of the objectives of this Act.
WHEN HANDICAPPED WORKERS MAY BE EMPLOYED
Handicapped workers may be employed when their
employment is necessary to prevent curtailment of
employment opportunities and when it does not
create unfair competition in labor costs or impair or
lower working standards.42
CONDITIONS OF EMPLOYMENT43
Any employer who employs handicapped workers
shall enter into an employment agreement with
them, which agreement shall include:
a. The names and addresses of the handicapped
workers to be employed;
b. The rate to be paid the handicapped workers
which shall not be less than seventy five (75%)
percent of the applicable legal minimum wage;
c. The duration of employment period; and
d. The work to be performed by handicapped
workers.
Subject to the appropriate provisions of this Code,
handicapped workers may be hired as apprentices or
learners if their handicap is not such as to effectively
impede the performance of job operations in the
particular occupations for which they are hired.44
RIGHTS AND PRIVILEGES
Sec 5 (1). Equal Opportunity for Employment, RA
7277
No disabled person shall be denied access to
opportunities for suitable employment. A qualified
disabled employee shall be subject to the same
terms and conditions of employment and the same
compensation, privileges, benefits, fringe benefits,
incentives or allowances as a qualified able bodied
person.
Section 5 (2). Guaranteed Employment in
41Sec 3. Coverage, RA 7277. Magna Carta for Disabled Persons
42Art 79. When employable, Labor Code
43Art 80. Employment agreement, Labor Code
44Art 81 Eligibility for apprenticeship, Labor Code
 LABOR STANDARDS
Government, R.A. 7277
Five percent (5%) of all casual emergency and
contractual positions in the Departments of Social
Welfare and Development; Health; Education,
Culture and Sports; and other government agencies,
offices or corporations engaged in social
development shall be reserved for disabled persons.
Sec 6. Sheltered Employment, R.A. 7277
If suitable employment for disabled persons cannot
be found through open employment as provided in
the immediately preceding Section, the State shall
endeavor to provide it by means of sheltered
employment. In the placement of disabled persons in
sheltered employment, it shall accord due regard to
the individual qualities, vocational goals and
inclinations to ensure a good working atmosphere
and efficient production.
The Magna Carta for Disabled Persons mandates that
qualified disabled persons be granted the same terms
and conditions of employment as qualified able-
bodied employees. Once they have attained the
status of regular workers, they should be accorded
all the benefits granted by law, notwithstanding
written or verbal contracts to the contrary. This
treatment is rooted not merely on charity or
accommodation, but on justice for all.45
IV. Labor Standards
A. GENERAL PROVISIONS
I. DECLARATION OF BASIC POLICY
Art. 3, Declaration of basic policy, Labor Code
The State shall afford protection to labor, promote
full employment, ensure equal work opportunities
regardless of sex, race or creed and regulate the
relations between workers and employers. The State
shall assure the rights of workers to self-
organization, collective bargaining, security of
tenure, and just and humane conditions of work.
Sec. 3, Art XIII, 1987 Constitution
45 Bernardo v NLRC, 310 SCRA 186 (1999)
LA SALLIAN COMMISION ON BAR OPERATIONS
20 LABOR LAW
The State shall afford full protection to labor, local
and overseas, organized and unorganized, and
promote full employment and equality of
employment opportunities for all.
It shall guarantee the rights of all workers to self-
organization, collective bargaining and negotiations,
and peaceful concerted activities, including the right
to strike in accordance with law. They shall be
entitled to security of tenure, humane conditions of
work, and a living wage. They shall also participate
in policy and decision-making processes affecting
their rights and benefits as may be provided by law.
The State shall promote the principle of shared
responsibility between workers and employers and
the preferential use of voluntary modes in settling
disputes, including conciliation, and shall enforce
their mutual compliance therewith to foster
industrial peace.
The State shall regulate the relations between
workers and employers, recognizing the right of
labor to its just share in the fruits of production and
the right of enterprises to reasonable returns to
investments, and to expansion and growth.
10 CARDINAL RIGHTS OF WORKERS
1. Right to Self-Organization – right to form, join
and assist unions (granted to private and public
sector employees)
Bar 2005
2. Right to Collectively Bargain
Employee’s right to bargain the terms and
conditions of work; end product is a Collective
Bargaining Agreement (CBA); for private sector
employees
3. Right to Collectively Negotiate
For public sector employees
4. Right to Peaceful and Concerted Activities
5. Right to Strike
there is a temporary stoppage of work
6. Right to Security of Tenure – right to be secure
in work unless there is a just cause that would
warrant dismissal
7. Right to Humane Conditions of Work – safe and
healthy working conditions
8. Right to a Living Wage – reasonable wages and
salaries that are sufficient to sustain a family
 LABOR STANDARDS
9. Right to Participate in Policy and Decision-
Making Processes (affecting their rights and
benefits) – related to MP; there must be an
enabling law for workers to enforce this right
10. Right to a just share in the Profits – there must
be an enabling law for workers to enforce this
right (e.g. Productivity Incentive Act)
First 5 rights are cognate rights (intimately related
to each other) – Violation of these rights would be
considered as unfair labor practice under the Labor
Code.
II. CONSTRUCTION IN FAVOR OF LABOR
Bar 1998, 2006
Art. 4, Construction in Favor of Labor, Labor Code
All doubts in the implementation and interpretation
of the provisions of this Code, including its
implementing rules and regulations, shall be resolved
in favor of labor.
Article 1702, Book IV, New Civil Code
In case of doubt, all labor legislation and all labor
contracts shall be construed in favor of the safety
and decent living for the laborer.
Art. 4 of the Labor Code only applies to the
provisions of the Code, while Art. 1702 of the Civil
Code applies to all labor laws and contracts.
EMPLOYEE’S WELFARE AS PARAMOUNT
CONSIDERATION
In carrying out and interpreting the Labor Code's
provisions and its implementing regulations, the
employees’ welfare should be the primordial and
paramount consideration. This kind of interpretation
gives meaning and substance to the liberal and
compassionate spirit of the law as provided in Article
4 of the Labor Code which states that [a]ll doubts in
the implementation and interpretation of the
provisions of [the Labor] Code including its
implementing rules and regulations, shall be resolved
in favor of labor, and Article 1702 of the Civil Code
which provides that [i]n case of doubt, all labor
legislation and all labor contracts shall be construed
in favor of the safety and decent living for the
laborer. (Reyes vs CA, 409 SCRA 267, 2003)
NOT AMBIGUOUS, NO LIBERAL CONSTRUCTION
There is no room for construction if the contract is
clear and unambiguous. (PNCC Skyway Traffic
Management and Security Division Workers
Organization (PSTMSDWO) v. PNCC Skyway Corp.,
613 SCRA 28, 2010)
LA SALLIAN COMMISION ON BAR OPERATIONS
21 LABOR LAW
III. RULE MAKING POWER
Art. 5, Rules and Regulations, Labor Code
The Department of labor and Employment and other
government agencies charged with administration
and enforcement of this Code or any of its parts shall
promulgate the necessary implementing rules and
regulations. Such rules and regulations shall become
effective fifteen (15) days after announcement of
their adoption in newspapers of general circulation.
LIMITATION TO THE POWER
The recognition of the power of administrative
officials to promulgate rules in the administration of
the statute, necessarily limited to what is provided
for in the legislative enactment the scope of such
competence. (Insular Bank of Asia and America
Employees' Union v. Inciong, G.R. No. L-52415,
October 23, 1984)
Administrative interpretation is merely advisory
Administrative interpretation of the law is at best
merely advisory, for it is the courts that finally
determine what the law means." (Id.)
IV. APPLICABILITY
Art. 6, Applicability, Labor Code
All rights and benefits granted to workers under this
Code shall, except as may otherwise be provided
herein, apply alike to all workers, whether
agricultural or non-agricultural. (As amended by
Presidential Decree No. 570-A, November 1, 1974)
Bar 1994
General rule
The Labor code applies to all workers, whether
agricultural or non-agricultural.
Exceptions: (GIFS)
1. Government employees;
2. Employees of International Organizations and
Specialized agencies (ICMC v Calleja,, 190 SCRA
130, 1990);
3. Foreign government.
4. Employees of corporations created by Special
(original) charter.46
46 Sec. 2(1), Art. IX, 1987 Constitution: “The Civil Service embraces
all branches, subdivisions, instrumentalities and agencies of the
Government, includinggovernment-owned or –controlled
corporations with original charters.”
 LABOR STANDARDS
TEST IN DETERMINING WHETHER A interest of an employer, directly or indirectly. The
GOVERNMENT-OWNED AND –CONTROLLED
CORPORATION IS SUBJECT TO THE CIVIL
SERVICE LAW IS THE MANNER OF ITS
CREATION
1. Created by special (original) charter - Civil
Service Law applies.
2. Created by Corporation Law - Labor Code
applies.
IS EMPLOYEE-EMPLOYER RELATIONSHIP (EER)
A CONDITION SINE QUA NON BEFORE THE
LABOR CODE APPLIES?
No. It depends on what kind of issues is involved.
When one speaks of employments benefits or of
unionization, EER is a requisite. When the issue is an
indirect employer’s liability, or illegal recruitment,
or misuse of POEA license, there is no EER between
the complainant and the respondent, and yet the
pertinent Labor Code provisions may be invoked.
(Azucena, p. 6)
B. WORK RELATIONSHIP
I. EMPLOYER-EMPLOYEE RELATIONSHIP
EMPLOYER
One who employs the services of others; One for
whom employees work and who pays their wage or
salaries.
EMPLOYEE
One who is engaged in the service of another; who
performs services for another; who works for salary
or wages.
His work is subject to control of the employer not
only as to the result but the matter and means of
doing it.
It is not the Labor Code but court rulings that explain
the elements or indicators of an employer-employee
relationship. (Azucena)
CONCEPT OF EMPLOYER-EMPLOYEE
RELATIONSHIP (EER)
Art. 1700, Civil Code
The relation between capital and labor are not
merely contractual. They are so impressed with
public interest that labor contracts must yield to
common good. Therefore, such contracts are subject
to the special laws on labor unions, collective
bargaining, strikes and lockouts, closed shop, wages,
working conditions, hours of labor and similar
subjects
Juridical entity is considered as an employer,
whether registered or unregistered
Article 212(e) of the Labor Code, as amended, which
defines an employer as any person acting in the
LA SALLIAN COMMISION ON BAR OPERATIONS
22 LABOR LAW
law does not require an employer (in this case, an
association) to be registered before he may come
within the purview of the Labor Code. (Orlando Farm
Works v NLRC, 299 SCRA 364, 1998)dd
Bar 1999
Directors, officers and agents of a corporation may
be held liable if corporate veil is being used to
commit injustice
The shield of corporate fiction should be pierced
when it is deliberately and maliciously designed to
evade financial obligations to employees. (A.C.
Ransom Labor Union-CCLU vs NLRC, G.R. L-69494,
1987)
Bar 1996
Four-Fold Test: The four elements must be
considered to determine the existence of employer-
employee relationship:
1. Selection and engagement of the employees
2. Paymentof wages
3. Power of dismissal
4. Power to controlthe employees conduct in
relation to his work,
The control test is the most crucial indication of the
existence of an employer-employee relationship.47
Power of control refers to the existence of the
power and not the actual exercise thereof.
The most important is the employer’s control of the
employee’s conduct, not only as to the results of the
work to be done, but also as to the means and
methods to accomplish.
RULES AS GUIDELINES VS RULES AS
CONTROL
The first, which aim only to promote the result,
create no employer-employee relationship unlike the
second, which address both the result and the means
used to achieve it. (Insurance Life Assurance Co.,
Ltd. vs NLRC)
SOCIAL JUSTICE IN EMPLOYER-
EMPLOYEE RELATIONSHIP
Since the burden of proving the validity of the
dismissal of the employee rests on the employer, the
latter should likewise bear the burden of showing
that the requisites for a valid dismissal due to a
disease have been complied with. (Sy vs CA, G.R.
144293, Feb. 27, 2003)
If doubt exists between the evidence presented by
47The Manila Hotel Corp v. NLRC, 343 SCRA 1 (2000); Jo v. NLRC 324
SCRA 437 (2000); Canlubang Security Agency v. NLRC, et al., 216
SCRA 280 (1992).
 LABOR STANDARDS
the employer and the employee, the scales of justice
must be tilted in favor of the latter. (Id.)
Bar 1999
Decided Cases where there is EER:
1. Between jeepney owners/operators and jeepney
drivers (National Labor Union vs. Dinglasan, 98
Phil. 649, 652, [1956]);
2. Between bus owner/operator and bus conductor
(Doce vs. Workmen’s Compensation Commission,
104 Phil. 946, 948 [1958]);
3. Between auto-calesa owner/operator and driver
(Citizens’ League of Freeworkers vs. Abbas, 18
SCRA 71, 73 [1966]);
4. Between taxi owners/operators and taxi
drivers.22 (Martinez vs. NLRC, 272 SCRA 793,
800, [1977]);
5. Between barbershop owner and barbers and
manicurists (Corporal Sr. v. NLRC, 341 SCRA 658
[2000]);
6. Between fishing enterprise and fishermen-crew
members whose fishing activity is scheduled by
the former (Ruga v. NLRC, 181 SCRA 266
[1990]48);
7. Between an insurance corporation and an
insurance agent (Tongko vs Manulife Phils Inc.,
G.R. 167622, Jan. 25, 2011)49;
TWO-TIERED APPROACH TEST
(Francisco vs NLRC, G.R. 170087, August 31, 2006)
1. the putative employer’s power to control the
employee with respect to the means and
methods by which the work is to be
accomplished; and
2. the underlying economic realities of the activity
or relationship.
Purpose: This two-tiered test would provide us with
a framework of analysis, which would take into
consideration the totality of circumstances
surrounding the true nature of the relationship
between the parties. This is especially appropriate in
this case where there is no written agreement or
terms of reference to base the relationship on; and
due to the complexity of the relationship based on
the various positions and responsibilities given to the
worker over the period of the latter’s employment.
CIRCUMSTANCES TO CONSIDER
1. The extent to which the services performed are
an integral part of the employer’s business;
2. The extent of the worker’s investment in
equipment and facilities;
48 As distinguished from a “joint fishing venture” in Pajarillo vs.
SSS, 17 SCRA 1014 (1966)
49 As distinguished from a subsequent management contract which
superseded a contract of agency between the insurance corporation
and insurance agent in Great Pacific Life Assurance Corporation v.
National Labor Relations Commission, 187 SCRA 694 (1990) and
Insular Life Assurance Co., Ltd. v. National Labor Relations
Commission 350 Phil. 918 (1998).
LA SALLIAN COMMISION ON BAR OPERATIONS
23 LABOR LAW
3. The nature and degree of control exercised by
the employer;
4. The worker’s opportunity for profit and loss;
5. The amount of initiative, skill, judgment or
foresight required for the success of the claimed
independent enterprise;
6. The permanency and duration of the relationship
between the worker and the employer; and
7. The degree of dependency of the worker upon
the employer for his continued employment in
that line of business.
The proper standard of economic dependence is
whether the worker is dependent on the alleged
employer for his continued employment in that line
of business.
II. INDEPENDENT CONTRACTOR AND LABOR-
ONLY CONTRACTOR
Art. 106, Contractor or Subcontractor, Labor Code
Whenever an employer enters into a contract with
another person for the performance of the former’s
work, the employees of the contractor and of the
latter’s subcontractor, if any, shall be paid in
accordance with the provisions of this Code.
In the event that the contractor or subcontractor
fails to pay the wages of his employees in
accordance with this Code, the employer shall be
jointly and severally liable with his contractor or
subcontractor to such employees to the extent of the
work performed under the contract, in the same
manner and extent that he is liable to employees
directly employed by him.
The Secretary of Labor and Employment may, by
appropriate regulations, restrict or prohibit the
contracting-out of labor to protect the rights of
workers established under this Code. In so
prohibiting or restricting, he may make appropriate
distinctions between labor-only contracting and job
contracting as well as differentiations within these
types of contracting and determine who among the
parties involved shall be considered the employer for
purposes of this Code, to prevent any violation or
circumvention of any provision of this Code.
There is "labor-only" contracting where the person
supplying workers to an employer does not have
substantial capital or investment in the form of
tools, equipment, machineries, work premises,
among others, and the workers recruited and placed
by such person are performing activities which are
directly related to the principal business of such
employer. In such cases, the person or intermediary
shall be considered merely as an agent of the
employer who shall be responsible to the workers in
the same manner and extent as if the latter were
directly employed by him
Art. 107, Indirect Employer, Labor Code
 LABOR STANDARDS
The provisions of the immediately preceding article
shall likewise apply to any person, partnership,
association or corporation which, not being an
employer, contracts with an independent contractor
for the performance of any work, task, job or
project.
Art. 108, Posting of Bond, Labor Code
An employer or indirect employer may require the
contractor or subcontractor to furnish a bond equal
to the cost of labor under contract, on condition that
the bond will answer for the wages due the
employees should the contractor or subcontractor, as
the case may be, fail to pay the same.
Bar 1997
Art. 109, Solidary Liability, Labor Code
The provisions of existing laws to the contrary
notwithstanding, every employer or indirect
employer shall be held responsible with his
contractor or subcontractor for any violation of any
provision of this Code. For purposes of determining
the extent of their civil liability under this Chapter,
they shall be considered as direct employers.
Sec. 2, D.O. No. 18-A (2011)
These Rules shall apply to all parties of contracting
and subcontracting agreements where employer-
employee relationship exist. It shall also apply to
cooperatives engaging in contracting or
subcontracting arrangements.
Contractors and subcontractors referred to in these
Rules are prohibited from engaging in recruitment
and placement activities as defined in Article 13 (b)
of the Labor Code, whether for local or overseas
employment.
TRILATERAL RELATIONSHIP IN
CONTRACTING ARRANGEMENTS
A trilateral relationship exists when there are:
1. CONTRACT for specific job, work of service
between the principal and the
contractor/subcontractor; AND
2. CONTRACT of employment between the
contractor/subcontractor and its workers
(contractual employee).
‘Principal’ refers to any employer who puts out
or farms out a job, a service or work to a
contractor or subcontractor. [indirect employer]
Between the principal and the contractor the
major laws applicable to their work relationship
are the Civil Code and pertinent commercial
law.
‘Contractor or subcontractor’ refers to any
LA SALLIAN COMMISION ON BAR OPERATIONS
24 LABOR LAW
person or entity engaged in a legitimate
contracting or subcontracting arrangement.
[independent contractor]
Between the contractor and his employees the
major laws pertinent to their work relationship
are the Labor Code and special labor laws.
Bar 2002
‘Contractual employee’ includes one employed
by a contractor or subcontractor to perform or
complete a job, work or service pursuant to an
arrangement between the latter and a principal.
[indirect employee of ‘principal’; direct
employee of ‘contractor or subcontractor’/
independent contractor]
Between the principal and contractor’s
employees, no EER exists, because the
contractor, being himself a businessman, is the
employer.
Bar 2001, 2002
Independent contractor, defined
They are those who undertake ‘job contracting’.
They exercise independent employment, contracting
to do a piece of work according to their own
methods and without being subject to control of
their employer except as to the result of their work.
(Wack Wack Gold v NLRC, 456 SCRA 280, 2005)
THEY MUST HAVE:
(Sec. 4, Deparment Order No. 18-A, Series of
2011)
1. Registered in accordance with the rules and
carries a distinct and independent business;
2. Undertakes to perform a job, work or service on
its own responsibility, according to its own
manner and method, and free from control and
direction of the principal in all matters
connected with the performance of the work
except as to the results therof;
3. The contractor has substantial capital and/or
investment
4. The Service Agreement ensures compliance with
all the rights and benefits under Labor Laws.
Assure that the contractual employees are
entitled to all labor and occupational safety and
health standards, free to exercise right to self-
organization, security of tenure and social and
welfare benefits.
Bar 2004
Labor only contractor, defined
This happens when the contractors merely supply,
recruit, or place workers to perform job, work/
service for the principal and any of the following are
present:
1. Does not have substantial capital or does not
 LABOR STANDARDS
have substantial Investment; (Neri v NLRC, July
23, 1993)
2. The service to be rendered by the employee is
directly related to the main business of the
principal; OR
3. The recruiter does not exercise control over
the performance of the contractual employees.
SEVERAL FACTORS THAT MAY BE CONSIDERED
IN DETERMINING THE EXISTENCE OF
INDEPENDENT CONTRACTOR RELATIONSHIP:
1. whether the contractor is carrying on an
independent business;
2. the nature and extent of work;
3. the skill required;
4. the term and duration of the relationship;
5. the right to assign the performance of
specified pieces of work;
6. the control and supervision of the workers;
7. The power of the employer with respect to
the hiring, firing and payment of workers of
the contractor;
8. The control of the premises;
9. The duty to supply premises, tools,
appliances, materials and labor;
10. The mode and manner and terms of
payment. (Vinoya v NLRC, G.R. No. 126286,
Feb. 2, 2000)
Substantial Capital, defined
A contractor’s paid-up capital stocks/shares must at
least P3,000,000 in the case of corporations,
partnerships and cooperatives; in the case of single
proprietor ship, a net worth of at least P3,000,000.
(Sec. 3, D.O. No. 18-A, 2011)
RULES ON REGISTRATION OF
LEGITIMATE CONTRACTORS
1. It shall be mandatory for all the persons or
entities, including cooperatives, acting as
contractors to register with the Regional Office
of the DOLE where it principally operates (Sec.
14, D.O. No. 18-A, 2011);
2. A contractor shall only be deemed registered on
the date of issuance of its Certificate of
Registration (Sec. 20, D.O. No. 18-A, 2011);
3. Such certificate shall be effective for 3 years
only unless cancelled after due process (Id.);
4. Such certificate shall only be valid in the region
where it is registered (Id.);
5. If the contractor has Service Agreements
operates outside the region where it is
registered, it shall request a duly authenticated
copy of its Certificate of Registration from the
registering Regional Office and submit the same
to the DOLE Regional Office where it seeks to
operate, together with a copy of its Service
Agreements in the area, for purposes of
monitoring compliance with the rules (Id.);
LA SALLIAN COMMISION ON BAR OPERATIONS
25 LABOR LAW
6. Existence of a Certificate of Registration is not
conclusive and is merely disputable (Ramy
Gallego v Reyes)
7. The absence of a registration only gives rise to
the presumption that the contractor is engaged
in labor-contract, a presumption that it may
refute (Aklan, et al. v San Miguel Corp., BMA
Phil. Asia, Inc. et al., G.R. No. 168537, Dec. 11,
2008).
OTHER PROHIBITIONS ASIDE FROM
LABOR-ONLY CONTRACTING
(Sec. 7, D.O. 18-A, 2011)
1. Contracting out of jobs, works, or service when
not done in good faith and not justified by the
exigencies of the business such as the following:
a. Contracting out of jobs, works or services
when the same results in the termination or
reduction of regular employees and
reduction of work hours or reduction or
splitting of the bargaining unit.
b. Contracting out of work with a ‘cabo”.
c. Taking undue advantage of the economic
situation or lack of bargaining strength of
the contractor’s employees, or undermining
their security of tenure or basic rights, or
circumventing the provisions of regular
employment, in any of the following
instances:
i. Requiring them to perform functions
which are currently being performed
by the regular employees of the
principal; and
ii. Requiring them to sign, as a
precondition to employment or
continued employment, an antedated
resignation letter, a blank payroll; a
waiver of labor standards including
minimum wages and social or welfare
benefits; or a quitclaim releasing the
principal, contractor or from any
liability as to payment of future
claims.
d. Contracting out of a job, work or service
through an in-house agency;
e. Contracting out of a job, work or service
that is necessary or desirable or directly
related to the business or operation of the
principal by reason of a strike or lockout
whether actual or imminent;
f. Repeated hiring of employees under
employment contract of short duration or
under Service Agreement of short duration
with the same or different contractors,
which circumvents the Labor Code
provisions on Security of Tenure;
g. Requiring employees under subcontracting
arrangements to sign a contract fixing the
period of employment to a term shorter
than the term of the Service Agreement,
 LABOR STANDARDS
unless contract is divisible into phases for
which substantially different skills are
required and this is made known to the
employee at the time of management.
h. Refusal to provide a copy of the Service
Agreement and the employees deployed to
work in the bargaining unit of the
principal’s certificate bargaining agent to
the sole and exclusive bargaining agent
(SEBA);
i. Engaging or maintaining by the principal of
subcontracted employees in excess of those
provided for in the applicable Collective
Bargaining Agreement (CBA) or as set by the
Industry Tripartite Council (ITC),
2. Contracting out of jobs, works or services
analogous to the above when not done in good
faith and not justified by the exigencies of the
business.
CONSEQUENCES OF LABOR-ONLY
CONTRACTING
1. A principal-agent relationship is established
between the principal and the contractor
(Aliviado v P&G, G.R. No. 160506, March 9,
2010)
2. The workers supplied by the contractor becomes
the direct employee of the principal (Phil. Bank
Communication v NLRC, G.R. No. L-66598, Dec.
19, 1986);
3. Thus, an EER arises between the principal and
the employees of the contractor (Labor Code
governs);
4. Consequently, it becomes entitled to the
benefits under the CBA of the principal (Tabas,
et al v California Manufacturing Company, Inc.
et al., G.R. No. 80680, Jan. 26, 1989);
5. The principal becomes solidarily liable to the
employees of his contractor on their wages and
money claims.
Bar 2004
LA SALLIAN COMMISION ON BAR OPERATIONS
26 LABOR LAW
CONSEQUENCES OF LEGITIMATE JOB-
CONTRACTING:
1. Between the principal and the contractor the
major laws applicable to their work relationship
are the Civil Code and pertinent commercial
law;
2. The employees of the contractor becomes the
indirect employees of the principal;
3. It is the contractor who is principally liable with
the wages and monetary claim of his employees;
4. The principal may require the contractor or
subcontractor to furnish a bond equal to the cost
of labor under contract, on condition that the
bond will answer for the wages due the
employees should the contractor, as the case
may be, fail to pay the same (Art. 108, Labor
Code);
5. For any violation of any provision of the Labor
Code, including the payment of wages, the
principal shall be held solidarily liable with his
contractor to his indirect employees;
6. But this solidary liability with his contractor is a
qualified or limited liability; if the liability is
for failure to pay the minimum wage, or the
service incentive leave or other benefits derived
from or provided for by law, the principal is
equally liable with the contractor as if the
principal were the direct employer; but not if
the liability is invested with punitive character,
i.e. backwages
7. and separation pay by reason of illegal dismissal
(Rosewood Processing, Inc. v NLRC, et al., G.R.
Nos. 16476-84, May 21, 1998);
8. The principal may be held liable for the payment
of wages of the employees of the contractor
even if he has already paid the worker’s wage
rates in accordance with the stipulations in the
contract with the latter; the employees are not
privy to the contract (Id.);
9. In such case, the principal may seek
reimbursement against his contractor (Art. 1217,
Civil Code);
10. In any case, the obligation of the principal to
reimburse his contractor for the payment of
wages of the latter’s employees only arises if
and when the contractor actually pays its
employees the adjudged liabilities (Lapamday
Agricultural Development Corporation v Court of
Appeals).
 LABOR STANDARDS 27 LABOR LAW

employed or of a department or subdivision thereof,

Bar 1994, 1997 and to other officers or members of the managerial
Job Contracting Labor-Only Contracting staff.
The principal is The principal is
considered by the law as considered the direct "Field personnel" shall refer to non-agricultural
an indirect employer of employer of the employees who regularly perform their duties away
the contractor’s contractor’s employees; from the principal place of business or branch office
employees; of the employer and whose actual hours of work in
the field cannot be determined with reasonable
The relationship between the principal and the certainty.
contractor is governed by the Civil Code and
pertinent commercial laws; And if it is labor-only General rule: Applicable to all employees in all
contracting, there arises a principal-agent establishments and undertakings, whether for profit
relationship between them; thus, the principal is or not
responsible to the employees of the contractor as if
such employees had been directly employed by the Employer
principal employer (Aliviado v P&G, G.R. No. 160506, Any person, natural or juridical, domestic or foreign,
March 9, 2010); who carries on in the Philippines any trade, business,
industry, undertaking or activity of any kind and uses
Permissible Prohibited by law the services of another person who is under his order
as regards employment.
There is substantial There is no substantial
capital or investment capital or investment Employee
Any person who performs services for an employer in
EER exists between for a EER exists for a which either or both mental and physical efforts are
limited purpose, that is, comprehensive purpose, used an who receives compensation for such
to ensure that the i.e. to prevent a services.
employees are paid their circumvention of labor
wages (Aliviado v P&G, laws. (Alivido v P&G, HOW TO DETERMINE EMPLOYER-
G.R. No. 160506, March G.R. No. 160506, March EMPLOYEE RELATIONSHIP
9, 2010) 9, 2010)
✓ Four Fold Test
✓ Two-tiered Approach
A presumption arises A presumption arises
that it is job contracting that it is a labor-only
FOUR FOLD TEST
if it is registered with contractor if it is not
1. Selection and engagement of the employee
DOLE pursuant to D.O. registered with the DOLE
2. Payment of wages
18-A, 2011. But such pursuant to D.O. 18-a,
3. Power to dismiss
presumption may be 2011. Such presumption
4. Power to control
refuted. may be refuted.
TWO-TIERED APPROACH
1. The putative employer’s power to control
employee with respect to the means and
V. Labor standards methods by which the work is to be
accomplished
A. COVERAGE 2. The underlying economic realities of the activity
or relationship
Bar 2002
Article 82.Coverage
Bar 2000
The provisions of this Title shall apply to employees
Note: The existence of employer-employee
in all establishments and undertakings whether for
relationship is determined by law, not by contract.
profit or not, but not to government employees,
Exceptions: Not covered
managerial employees, field personnel, members of
1. Government employees
the family of the employer who are dependent on
2. Managerial Employees
him for support, domestic helpers, persons in the
3. Field personnel
personal service of another, and workers who are
4. Dependent family members
paid by results as determined by the Secretary of
5. Domestic helpers or Persons in service of
Labor in appropriate regulations.
another
6. Piece workers
As used herein, "managerial employees" refer to
those whose primary duty consists of the
management of the establishment in which they are

LA SALLIAN COMMISION ON BAR OPERATIONS

 LABOR STANDARDS
Exempted from the coverage of the provisions of
Book 3, Title I: Working Conditions and Rest
Periods under Labor Code
GOVERNMENT EMPLOYEES
Employees of government agencies,
instrumentalities, or political subdivision and of
government corporations that are NOT :
1. those who have their original charters
2. those which are incorporated under the
Corporation Code.
Governing law: Civil Service Law, rules
regulations
MANAGERIAL EMPLOYEES
Those whose primary duty consists of the
management of the establishment in which they are
employed or of a department or subdivision thereof,
and to other officers or members of the managerial
staff.50
MUST MEET ALL REQUIREMENTS: 51
a. Their primary duty consists of the management
of the establishment in which they are employed
or of a department or sub-division thereof.
b. They customarily and regularly direct the work
of two or more employees therein.
c. They have the authority to hire or fire
employees of lower rank; or their suggestions
and recommendations as to hiring and firing and
as to the promotion or any other change of
status of other employees, are given particular
weight.
Managerial employees are not usually employed for
every hour of work but their compensation is
determined considering their special training,
experience or knowledge which requires the
exercise of discretion and independent judgment, or
perform work related to management policies or
general business operations along specialized or
technical lines.52
It is not feasible to provide a fixed hourly rate of
pay or maximum hours of labor.53
ELEMENTS TO BE CONSIDERED in order to determine
whether one is a managerial employee. If they
perform the ff duties:54
a. The primary duty consists of the performance of
work directly related to management policies
of their employer;
b. Customarily and regularly exercise discretion
and independent judgment; and
c. (i) Regularly and directly assist a proprietor or
a managerial employee whose primary duty
50 Art 82, Par 2, Labor Code
51 Sec 2 (b), Rule 1, Book III, IRR
52 NAWASA v NAWASA Consolidated Unions, 11 SCRA 766 (1964)
53 NAWASA v NAWASA Consolidated Unions, 11 SCRA 766 (1964)
54 Sec 2 (c), Rule 1, Book III, IRR
LA SALLIAN COMMISION ON BAR OPERATIONS
28 LABOR LAW
consists of the management of the establishment
in which he is employed or subdivision thereof; or
(ii) execute under general supervision work along
specialized or technical lines requiring special
training, experience, or knowledge; or
(iii) execute, under general supervision, special
assignments and tasks; and
d. Who do not devote more than 20 percent of
and their hours worked in a work week to activities
which are not directly and closely related to the
performance of the work described in paragraphs
(a), (b) and (c) above.
SUPERVISORY EMPLOYEES
They are those who, in the interest of management,
effectively recommend such managerial actions if
the exercise of such authority is not merely routinary
or clerical in nature, but requires use of independent
judgment.55
A supervisor is deemed a member of the managerial
staff.56
TEST OF MANAGERIAL OR SUPERVISORY
It depends whether the employee possesses authority
that is not merely routinely or clerical in nature.
The test requires that the employee requires use of
independent judgment.
FIELD PERSONNEL
Non-agricultural employees who regularly perform
their duties away from the principal place of
business or branch office of the employer and whose
actual hours of work in the field cannot be
determined with reasonable certainty.57
In deciding whether or not an employee’s actual
working hours in the field can be determined with
reasonable certainty, query must be made as to
whether or not such employee’s time and
performance is constantly supervised by the
employer.58
Field personnel are employees whose time and
performance is unsupervised by the employer.59
Employees in the field are not entitled since their
employer has no way of knowing the number of hours
they actually work. (San Miguel Brewery v.
Democratic Labor Union)
DEPENDENT FAMILY MEMBERS
Family members are given support by the employee
55 Art 212, par N, Labor Code
56 Quebec v NLRC, 301 SCRA 627 (1999); Salazar v NLRC, 256 SCRA
273 (1996); National Sugar Refineries Corporation v NLRC (1993)
57 Art 82, par 3, Labor Code; Sec 2 (f), Rule 1, Book III, IRR
58 Mercidar fishing corp v nlrc, 297 SCRA 440 (1998); Union of Filipro
Employees v Vivar (1992)
59 Salazar v NLRC (1996)
 LABOR STANDARDS 29 LABOR LAW

which support may be more than or may exceed the B. HOURS OF WORK
usual benefits extended to employees under the
provision of this law. I. NORMAL HOURS OF WORK
Art 83, Normal Hours of Work
Bar 1998 The normal hours of work of any employee shall not
DOMESTIC HELPERS OR PERSONS IN SERVICE exceed eight (8) hours a day.
OF ANOTHER
“Domestic or household service" shall mean service Health personnel in cities and municipalities with a
in the employer’s home which is usually necessary population of at least one million (1,000,000) or in
or desirable for the maintenance and enjoyment hospitals and clinics with a bed capacity of at least
thereof and includes ministering to the personal one hundred (100) shall hold regular office hours for
comfort and convenience of the members of the eight (8) hours a day, for five (5) days a week,
employer’s household, including services of family exclusive of time for meals, except where the
drivers.60 exigencies of the service require that such personnel
1. Perform services in the employer’s home which work for six (6) days or forty-eight (48) hours, in
are usually necessary and desirable for the which case, they shall be entitled to an additional
maintenance or enjoyment thereof; compensation of at least thirty percent (30%) of
2. Minister to personal comfort, convenience, or their regular wage for work on the sixth day. For
safety of the employer and the latter’s family. purposes of this Article, "health personnel" shall
include resident physicians, nurses, nutritionists,
Governing provisions: Book 3, Title III: Working dietitians, pharmacists, social workers, laboratory
Conditions for Special Groups of Employees, Chapter technicians, paramedical technicians, psychologists,
3: Employment of househelpers, Labor Code. midwives, attendants and all other hospital or clinic
Republic Act No. 10361 or the Domestic Workers Act personnel.
or Kasambahay Law
General Rule:
The normal hours of work of any employee shall not
Domestic servants and persons in the personal exceed 8 hours a day, for 6 days a week
service of another are those who perform such
services in the employer's home which are usually Exception:
necessary or desirable for the maintenance and 1. Health Personnel
enjoyment thereof, or minister to the personal 2. Compressed Work Week
comfort, convenience, or safety of the employer as 3. Flexibe Work Arrangements
well as the members of his employer's household. 61
A. HEALTH PERSONNEL
Bar 2004
PIECE OF WORK Includes
✓ resident physicians
Workers who are paid by results, including those
✓ nurses, nutritionists
who are paid on piece-work, "takay,""pakiao" or task
✓ dietitians
basis, and other non-time work if their output rates
✓ pharmacists
are in accordance with the standards prescribed
✓ social workers
under Section 8, Rule VII, Book Three of these
✓ laboratory technicians
regulations, or where such rates have been fixed by
✓ paramedical technicians
the Secretary of Labor and Employment in
✓ psychologists
accordance with the aforesaid Section.62
✓ midwives
✓ attendants
Piece workers are paid depending upon the work
✓ All other hospital or clinic personnel.
they do irrespective of the amount of time employed
in doing said work.63
HOURS OF WORK FOR HEALTH PERSONNEL
Health personnel in cities and municipalities:
1. With a population of at least one million
(1,000,000) or
2. In hospitals and clinics with a bed capacity of at
least one hundred (100)

NORMAL WORKING HOURS:

60 Art 141, Labor Code
61 Sec 2(d), Rule 1, Book III, IRR
62 Sec 2 (e), Rule 1, Book III, IRR
63 Red v Coconut Products Ltd. v CIR, 1966
Shall hold regular office hours for eight (8) hours a
day, for five (5) days a week, exclusive of time for
meals (40 hours)
Exception:

LA SALLIAN COMMISION ON BAR OPERATIONS

 LABOR STANDARDS
Where exigencies of the service require that such
personnel work for six (6) days or forty-eight (48)
hours (48 hours)
Health personnel shall be entitled to an additional
compensation of at least thirty percent (30%) of
their regular wage for work on the sixth day
B. COMPRESSED WORK WEEK
Compressed Workweek (CWW), Department Order
no. 2, series of 2004
The Compressed Work Week is done by the employer
in order to prevent serious losses due to causes
beyond his control.
For example: Substantial slump in demand for his
goods or services | Lack of raw materials
Conditions. DOLE shall recognize CWW schemes
adopted in accordance with the following:
1. The CWW scheme is undertaken as a result of an
express and voluntary agreement of majority of
the covered employees or their duly authorized
representatives. This agreement may be
expressed through collective bargaining or other
legitimate workplace mechanisms of
participation such as labor-management
councils, employee assemblies or referenda.
2. In firms using substances, chemicals and
processes or operating under conditions where
there are airborne contaminants, human
carcinogens or noise prolonged exposure to
which may pose hazards to the employees'
health and safety, there must be a certification
from an accredited health and safety
organization or practitioner or from the firm's
safety committee that work beyond eight hours
is within threshold limits or tolerable levels of
exposure, as set in the OSHS.
3. The employer shall notify DOLE, through the
Regional Office having jurisdiction over the
workplace, of the adoption of the CWW scheme.
The notice shall be in DOLE CWW Report Form
attached to this Advisory.
Effects. A CWW scheme which complies with the
foregoing conditions shall have the following
effects:
1. Unless there is a more favorable practice
existing in the firm, work beyond eight hours
will not be compensable by overtime premium
provided the total number of hours worked per
day shall not exceed twelve (12) hours. In any
case, any work performed beyond 12 hours a
day or 48 hours a week shall be subject to
overtime premium.
2. Consistent with Articles 85 of the Labor Code,
LA SALLIAN COMMISION ON BAR OPERATIONS
30 LABOR LAW
employees under a CWW scheme are entitled to
meal periods of not less than sixty (60) minutes.
Nothing herein shall impair the right of
employees to rest days as well as to holiday pay,
rest day pay or leaves in accordance with law or
applicable collective bargaining agreement or
company policy.
Adoption of the CWW scheme shall in no case result
in diminution of existing benefits. Reversion to the
normal eight-hour workday shall not constitute a
diminution of benefits. The reversion shall be
considered a legitimate exercise of management
prerogative, provided that the employer shall give
the employees prior notice of such reversion within a
reasonable period of time
The employees must agree to the change of work
schedule.
The employees must not suffer any loss of overtime
pay, fringe benefits, or their weekly or monthly
take-home pay.
Conditions of a valid Compressed Work Week
1. It is expressly and voluntarily supported by
majority of the employees affected.
2. If work is hazardous, a certification is needed
from an accredited safety organization or the
firm’s safety committee that work beyond 8
hours is within the limits or level of exposure set
by DOLE’s occupational safety and health
standards.
3. The Department of Labor and Employment is
notified about the CWW.
D.O. No. 21 sanctions the waiver of overtime pay
in consideration of the benefits that the employees
will derive from the adoption of a compressed
workweek scheme.64
The compressed workweek scheme was originally
conceived for establishments wishing to save on
energy costs, promote greater work efficiency and
lower the rate of employee absenteeism, among
others.65
Under this scheme, the generally observed workweek
of six (6) days is shortened to five (5) days but
prolonging the working hours from Monday to Friday
without the employer being obliged for pay overtime
premium compensation for work performed in excess
of eight (8) hours on weekdays, in exchange for the
benefits above cited that will accrue to the
employees.66
64 Bisig Manggagawa sa Tryco v NLRC, GR 1513098, 2008
65 Bisig Manggagawa sa Tryco v NLRC, GR 1513098, 2008
66 Bisig Manggagawa sa Tryco v NLRC, GR 1513098, 2008
 LABOR STANDARDS
C. FLEXIBLE WORK ARRANGEMENTS
Flexible Work Arrangements include:
1. Reduction of workdays
The normal workdays per week are reduced but
should not last for more than six months.
2. Rotation of workers
Employees are rotated or alternatively provided
work within the workweek.
3. Forced leave
Employees are required to go on leave.
4. Broken time schedule
The schedule of work is not continuous but the
number of work hours within the day or week is
not reduced.
5. Flexi-holiday schedule
The employees agree to avail themselves of the
holidays at some other days.
II. COMPENSABLE HOURS OF WORK
Art 84, Hours Worked
Hours worked shall include (a) all time during which
an employee is required to be on duty or to be at a
prescribed workplace; and (b) all time during which
an employee is suffered or permitted to work.
Rest periods of short duration during working hours
shall be counted as hours worked.
HOURS WORKED INCLUDE:
1. All time which an employee is required to be on
duty or to be at a prescribed workplace.
2. All time during which an employee is suffered or
permitted to work.
3. Rest periods of short duration (must not be more
than 20 minutes).
4. Meal periods which are less than twenty
minutes.
COMPENSABLE HOURS OF WORK IN GENERAL
1. On duty
All time during which an employee is required to
be on duty or to be at a prescribed workplace
All hours are hours worked which the employee
is required to give his employer, regardless of
whether or not such hours are spent in
productive labor or involve physical or
mental exertion.67
2. At work
All time during which an employee is suffered or
permitted to work.
67 Sec 4(a), Rule 1, Book III, IRR
LA SALLIAN COMMISION ON BAR OPERATIONS
31 LABOR LAW
III. GENERAL PRINCIPLES IN DETERMINING IF
TIME IS CONSIDERED AS HOURS WORKED
(SUMMARY)68
1. All hours are hours worked which the employee
is required to give his employer, regardless of
whether or not such hours are spent in
productive labor or involve physical or mental
exertion.
2. An employee need not leave the premises of
the work place in order that his rest period
shall not be counted, it being enough that:
✓ he stops working,
✓ may rest completely and
✓ may leave his work place, to go elsewhere,
whether within or outside the premises of
his work place.
3. All time spent shall be Considered as hours
worked, if the work was with the knowledge of
his employer or immediate supervisor.
a. If the work performed was necessary, or
b. It benefited the employer, or
c. The employee could not abandon his work
at the end of his normal working hours
because he had no replacement
4. The time during which an employee is inactive
by reason of interruptions in his work beyond his
control shall be considered working time either
if:
a. the imminence of the resumption of work
requires the employee's presence at the
place of work or
b. if the interval is too brief to be utilized
effectively and gainfully in the employee's
own interest.
IV. SPECIFIC RULES DETERMINING HOURS OF
WORK AND COMPENSABILITY
A. REST PERIOD
SHORT DURATION OR “COFFEE BREAK”
Rest periods of short duration during working hours
shall be counted as hours worked.69
Rest periods or coffee breaks running from five (5)
to twenty (20) minutes shall be considered as
compensable working time. 70
If more than 20 minutes71
An employee need not leave the premises of the
work place in order that his rest period shall not be
counted, it being enough that:
68Sec 4, Rule I, Book III, IRR, Principles in determining hours worked.
69 Art 84(a), Labor Code
70Sec 7, par 2, Rule I, Book III, IRR
71Sec 4(b), Rule I, Book III, IRR
 LABOR STANDARDS
1. he stops working,
2. may rest completely and
3. may leave his work place, to go elsewhere,
whether within or outside the premises of
his work place.
B. MEAL PERIOD
REGULAR MEAL PERIOD (1 HOUR) 72
Subject to such regulations as the Secretary of Labor
may prescribe, it shall be the duty of every employer
to give his employees not less than sixty (60)
minutes time-off for their regular meals.
The eight-hour work period does not include the
meal break. Nowhere in the law may it be inferred
that employees must take their meals within the
company premises. Employees are not prohibited
from going out of the premises as long as they return
to their posts on time.73
SHORTER MEAL PERIOD (LESS THAN 1 HOUR BUT
NOT LESS THAN 20 MINS)
Sec 7, par 1, Rule I, Book III, IRR
Meal and Rest Periods. — Every employer shall give
his employees, regardless of sex, not less than one
(1) hour time-off for regular meals, except in the
following cases when a meal period of not less
than twenty (20) minutes may be given by the
employer provided that such shorter meal period is
credited as compensable hours worked of the
employee:
a. Where the work is non-manual work in nature
or does not involve strenuous physical exertion;
b. Where the establishment regularly operates
not less than sixteen (16) hours a day;
c. In case of actual or impending emergencies or
there is urgent work to be performed on
machineries, equipment or installations to
avoid serious loss which the employer would
otherwise suffer; and
d. Where the work is necessary to prevent serious
loss of perishable goods.
During meal period where the laborers are required
to stand by for emergency work or where said meal
hour is not one of complete rest, such period is
considered overtime.74
General rule: Meal periods are not compensable
Exceptions: it is compensable
1. Where meal time is predominantly spent for the
employer’s benefit75
72Art
85, Meal Periods
73 Philippine Airlines v NLRC, 302 SCRA 582 (1999)
74 Philippine Airlines v NLRC, 302 SCRA 582 (1999)
75 Azucena citing 31 Am. Jur. 881; Duka, Labor Laws and Social
Legislation
LA SALLIAN COMMISION ON BAR OPERATIONS
32 LABOR LAW
2. Meal period of 1 hour is deemed compensable
when employee is on continuous shift76
3. Shortened meal period of less than 1 hour but
not less than 20 hours subject to qualifications
under Sec 7, par 1, Rule I, Book III, IRR
If meal time is less than 20 minutes, it is
considered Rest period and shall be considered
compensable time.
Employees may request that their meal
period be shortened so that they can leave work
earlier than the established schedule. However,
such shortened meal period is not compensable.
REQUISITES FOR SHORTENED MEAL
a. Employees voluntarily agree in writing and waive
the overtime pay;
b. No diminution in the salary and other fringe
benefits of the employees already existing;
c. Work is not physically strenuous and that they
are provided with adequate coffee breaks in the
morning and afternoon;
d. Value of benefits is equal to the compensation
due them;
e. Overtime pay will become due and demandable
if ever they are permitted or made to work
beyond 4:30pm;
f. The arrangement is only for a temporary
duration.
C. WAITING TIME
Bar 1997
Sec 5 (a). Waiting time, Rule 1, Book III, IRR
Waiting time spent by an employee shall be
considered as working time if waiting is an integral
part of his work or the employee is required or
engaged by the employer to wait.
“Waiting time” is compensable if during the period
the employee is subject to the absolute control of
the employer such that the employee is effectively
deprived of the time to attend to other personal
pursuits77
Legal test
Whether waiting time constitute working time
depends upon the circumstances of each particular
case. The facts may show that the employer was
engaged or was waiting to be engaged. The
controlling factor is whether waiting time spend in
idleness is so spent predominantly for the employer’s
benefit or for the employee’s.78
CONSIDERED AS HOURS WORKED IF:
1. It is an integral part of his work;
76National Development Co. v. CIR, G.R. No. L-15422 (1962)
77 Africa v NLRC, 170 SCRA 776 (1989)
78 Azcucena citing Armour v Wantock
 LABOR STANDARDS
2. The employee is required by the employer to
wait.
3. Employee is required to remain on call in the
premises of the employer or so close thereto
that he can no longer use the time effectively
for his own purpose or benefit.
D. ON CALL
Bar 2004
Sec 5 (b). Working while on call, Rule 1, Book III,
IRR
An employee who is required to remain on call in the
employer's premises or so close thereto that he
cannot use the time effectively and gainfully for
his own purpose shall be considered as working
while on call.
An employee who is not required to leave word at
his home or with company officials where he may be
reached is not working while on call.
When employee is required to remain on call in the
premises of the employer or so close thereto that he
can no longer use the time effectively for his own
purpose or benefit.
E. INACTIVE DUE TO
INTERRUPTIONS
The time during which an employee is inactive by
reason of interruptions in his work beyond his control
shall be considered working time either if the
imminence of the resumption of work requires the
employee's presence at the place of work or if the
interval is too brief to be utilized effectively and
gainfully in the employee's own interest.79
F. WORK INTERRUPTION DUE
BROWNOUT
Policy instruction no. 36 of the Department of Labor
and Employment provided the following rides
regarding power interruptions or brownouts:
BROWNOUTS NOT MORE THAN 20 MINS
Brownouts of short duration but not exceeding 20
minutes shall be treated as worked or compensable
hours whether used productively by the employees
or not.
First 20 minutes is compensable. But if the
employees are required to stay in their workplaces,
such time is compensable even if it exceeds the first
20 minutes.
BROWNOUTS FOR MORE THAN 20 MINS
Brownouts running for more than 20 minutes may not
79Sec 4 (d), Rule 1, Book III, IRR
LA SALLIAN COMMISION ON BAR OPERATIONS
33 LABOR LAW
be treated as hours worked provided any of the
following conditions are present:
a. The employees can leave their workplace or go
elsewhere whether within or without the work
premises; or
b. The employees can use the time effectively for
their own interest
In each case, the employer may extend the
working hours of his employees outside the regular
schedules to compensate for the loss of productive
man-hours without being liable for overtime
Industrial enterprise with one or two workshifts may
adopt any of the workshifts prescribed for
enterprises with 3 workshifts to prevent serious loss
or damage to materials, machineries, or equipment
that may result in case of power interruptions.
G. WORK AFTER NORMAL HOURS
Bar 2002
Sec 4 (c), Rule 1, Book III, IRR
If the work performed was necessary, or it benefited
the employer, or the employee could not abandon
his work at the end of his normal working hours
because he had no replacement, all time spent for
WORK such work shall be considered as hours worked, if
the work was with the knowledge of his employer or
immediate supervisor.
All time spent shall be Considered as hours worked,
if the work was with the knowledge of his employer
or immediate supervisor.
a. If the work performed was necessary, or
b. It benefited the employer, or
c. The employee could not abandon his work at the
end of his normal working hours because he had
no replacement
TO
H. LECTURES, MEETING, TRAININGS
Sec 6. Lectures, meetings, training programs, Rule
1, Book III, IRR
Attendance at lectures, meetings, training programs,
and other similar activities shall not be counted as
working timeif all of the following conditions are
met:
a. Attendance is outside of the employee's
regular working hours;
b. Attendance is in fact voluntary; and
c. The employee does not perform any
productive work during such attendance.
 LABOR STANDARDS
I. TRAVEL TIME
Official travel away from an employee’s (workplace)
is hours of work if travel is:80
1. Within the days and hours of the employee’s
regularly scheduled administrative workweek,
including regularly scheduled overtime hours, or
2. Outside the hours of the employee’s regularly
scheduled administrative workweek, is ordered
or approved, and meets one of the following
four conditions:
a. Involves the performance or work while
traveling (such as driving a loaded truck)
b. Is incidental to travel that involves the
performance of work while traveling (such
as driving an empty truck back to the point
of origin)
c. Is carried out under arduous and unusual
conditions (e.g. travel on rough terrain or
under extremely severe weather contions);
or
d. Results from an event that could not be
scheduled or controlled administratively by
any individual (such as a job-related court
appearance required by a court subpoena)
J. COMMUTING TIME 81
General rule: Normal commuting time from home to
work and from work to home is not hours of work.
Exception:
Commuting time may be hours of work when the
employee is required to perform substantial work
under the control and supervision of the employer.
K. NO WORK, NO PAY PRINCIPLE
General Rule: NO WORK, NO PAY
law contemplates a "no work" situation where the
employees voluntarily absent themselves. 82
WHEN NOT APPLICABLE:
Semestral break of private school teachers.
Petitioners certainly do not, ad voluntatem absent
themselves during semestral breaks. Rather, they are
constrained to take mandatory leave from work. 83
The principle of "no work, no pay" does not apply as
the fact that the complainants had not worked at
the jobsite was not of their own doing. If they
were not able to work at all, it was because they
80 USC 5542(b)(2) and 5 CFR 550. 112(g), US Office of Personnel
Management; Abad (2011), Compendium on labor law
81 CFC 551.422(b), US Office of Personnel Management; Abad (2011),
Compendium on labor law
82 University of Pangasinan Faculty Union v University of Pangasinan,
GR 64821-23 (1993)
83 University of Pangasinan Faculty Union v University of Pangasinan,
GR 64821-23 (1993)
LA SALLIAN COMMISION ON BAR OPERATIONS
34 LABOR LAW
refused to sign the third contract providing for
another lowering of their salaries in violation of their
first agreement as approved by the POEA. They had a
right to insist on the higher salaries agreed upon in
the original contract and to reject the subsequent
impositions of SAM, which obviously thought the
petitioners would have to accept because they had
no choice.84
Work hours of seaman. Seamean are required to stay
on board of their vessels by the very nature of their
duties, and it is for this reason that, in addition to
their regular compensation, they are given free
living quarters to be on board. It could not have
been the purpose of the law to require their
employers to pay them overtime pay even when they
are not actually working. The correct criterion in
determining whether or not sailors are entitled to
overtime pay is not, therefore, whether they are on
board and cannot leave ship beyond the regular eight
working number of hours, but whether they actually
rendered service in excess of said number of hours.
85
V. NIGHT WORK
Bar 2002
Art 86. Night shift differential.
Every employee shall be paid a night shift
differential of not less than ten percent (10%) of
his regular wage for each hour of work performed
between ten o’clock in the evening and six o’clock in
the morning.
COVERAGE:86
All employees
EXCEPTION:
1. Government employees
2. Those of retail and service establishments
regularly employing not more than five (5)
workers;
3. Domestic helpers and persons in the personal
service of another;
4. Managerial employees
5. Field personnel and other employees whose time
and performance is unsupervised by the
employer including those who are engaged on
task or contract basis, purely commission basis,
or those who are paid a fixed amount for
performing work irrespective of the time
consumed in the performance thereof.
A. NIGHT SHIFT
Night shift
84 Prieto v NLRC, 226 SCRA 232 (1993)
85Cagampan, et. al. v. NLRC, G.R. Nos. 85122-24 (1991)
86Sec 1, Rule II, Book III, IRR
 LABOR STANDARDS
Time: 10:00pm – 6:00 am
Rate: not less than 10% of his regular wage for each
hour of work
Sec 3. Additional compensation, Rule II. Night Shift
Differential, Book III, IRR
Where an employee is permitted or suffered to work
on the period covered after his work schedule, he
shall be entitled to his regular wage plus at least
twenty-five per cent (25%) and an additional amount
of no less than ten per cent (10%) of such overtime
rate for each hour or work performed between 10
p.m. to 6 a.m.
Sec 4. Additional compensation on scheduled rest
day/special holiday, Rule II. Night Shift
Differential, Book III, IRR
An employee who is required or permitted to work
on the period covered during rest days and/or
special holidays not falling on regular holidays, shall
be paid a compensation equivalent to his regular
wage plus at least thirty (30%) per cent and an
additional amount of not less than ten (10%) per cent
of such premium pay rate for each hour of work
performed.
Sec 5. Additional compensation on regular
holidays,Rule II. Night Shift Differential, Book III,
IRR
For work on the period covered during regular
holidays, an employee shall be entitled to his regular
wage during these days plus an additional
compensation of no less than ten (10%) per cent of
such premium rate for each hour of work performed.
B. OVERTIME DURING 10:00PM
6:00 AM
Rate: Employee shall be entitled to his regular wage
plus at least twenty-five per cent (25%) and an
additional amount of no less than ten per cent
(10%) of such overtime rate for each hour or work
performed between 10 p.m. to 6 a.m.
LA SALLIAN COMMISION ON BAR OPERATIONS
35 LABOR LAW
Bar 2005
C. WORK ON A SCHEDULED REST
DAY/SPECIAL HOLIDAY
Rate: Employee shall be paid a compensation
equivalent to his regular wage plus at least thirty
(30%) percent and an additional amount of not less
than ten (10%) per cent of such premium pay rate for
each hour of work performed.
D. WORK ON A REGULAR HOLIDAY
Rate: regular wage plus an additional compensation
of no less than ten (10%) per cent of such premium
rate for each hour of work performed.
VI. CBA PROVISION VIS-A-VIS OVERTIME
Sec 6. Relation to agreements,Rule II. Night Shift
Differential, Book III, IRR
Nothing in this Rule shall justify an employer in
withdrawing or reducing any benefits, supplements
or payments as provided in existing individual or
collective agreements or employer practice or
policy.
WHY PAY NSD?
It is a form of premium for working at a time when
people are supposed to be asleep in accordance with
the law of nature.
WAIVER
– General Rule: Night Shift Differential cannot be
waived.
Exception: For higher and bigger benefits.
VII. OVERTIME WORK/PAY
Bar 1992
Art 87: Overtime work
Work may be performed beyond eight (8) hours a day
provided that the employee is paid for the overtime
work, an additional compensation equivalent to his
regular wage plus at least twenty-five percent (25%)
thereof.
Work performed beyond eight hours on a holiday or
rest day shall be paid an additional compensation
equivalent to the rate of the first eight hours on a
holiday or rest day plus at least thirty percent (30%)
thereof.
A. OVERTIME WORK:
VOLUNTARY AND CONSENSUAL
Overtime compensation, defined
 LABOR STANDARDS
Overtime compensation is additional pay for service
or work rendered or performed in excess of eight
hours a day by employees or laborers covered by the
Eight-hour Labor Law. 87
NATURE OF OVERTIME WORK
To be considered as overtime work, the hours
worked must be in excess of and in addition to the 8
hours worked during the prescribed daily work
period.88
In case of health personnel, overtime work is hours
worked in excess of 8 hours during the prescribed
daily work period or in excess of 40 hours worked
during the regular work week of 5 days.89
RATIONALE FOR OVERTIME COMPENSATION
There can be no other reason than that he is made to
work longer than what is commensurate with his
agreed compensation for the statutorily fixed or
voluntary agreed hours of labor he is supposed to
do.90
In case of health personnel, overtime work is hours
worked in excess of 8 hours during the prescribed
daily work period or in excess of 40 hours worked
during the regular work week of 5 days.91
When an employee spends additional time to his
work, the effect upon him is multi-faceted: he puts
in more effort, physical and/or mental; he is delayed
in going home to his family to enjoy the comfort
thereof; he might have no time for relaxation,
amusement or sports; he might miss important
prearranged engagement; etc. it is thus the
additional work labor or service employed and the
adverse effects of his longer stay in his place of work
that justify and is the real reason for the extra
compensation called overtime.92
B. EMERGENCY OR COMPULSORY
OVERTIME WORK
Art 89. Emergency overtime work
Any employee may be required by the employer to
perform overtime work in any of the following cases:
When the country is at war or when any other
national or local emergency has been declared by
the National Assembly or the Chief Executive;
When it is necessary to prevent loss of life or
property or in case of imminent danger to public
87National Shipyard and Steel Corp. v. CIR (1961)
88 Caltex Regular Employees at Manila Office v Caltex Philippines
Inc., 247 SCRA 398 (1995)
89 Art 83, Labor Code
90 PNB v PEMA, 115 SCRA 507 (1982)
91 Art 83, Labor Code
92 Philippine National Bank v Philippine National Bank Employees
Association, 115 SCRA 507 (1982)
LA SALLIAN COMMISION ON BAR OPERATIONS
36 LABOR LAW
safety due to an actual or impending emergency in
the locality caused by serious accidents, fire, flood,
typhoon, earthquake, epidemic, or other disaster or
calamity;
When there is urgent work to be performed on
machines, installations, or equipment, in order to
avoid serious loss or damage to the employer or
some other cause of similar nature;
When the work is necessary to prevent loss or
damage to perishable goods; and
Where the completion or continuation of the work
started before the eighth hour is necessary to
prevent serious obstruction or prejudice to the
business or operations of the employer.
Any employee required to render overtime work
under this Article shall be paid the additional
compensation required in this Chapter.
Bar 2003
Art 88. Undertime not offset by overtime.
Undertime work on any particular day shall not be
offset by overtime work on any other day.
Permission given to the employee to go on leave on
some other day of the week shall not exempt the
employer from paying the additional compensation
required in this Chapter.
EMERGENCY OVERTIME WORK93
Employees cannot be compelled to render overtime
work against their will for this will result in
involuntary servitude.
Exceptions:
1. In times of war or any national or local
emergency declared by the Congress or the
Chief Executive;
2. When it is necessary to avail of favorable
weather or environmental conditions where
performance or quality of work is dependent
thereon;
3. When work is necessary to preserve perishable
goods;
4. When there is urgent work needed on machines
and equipment;
5. To prevent loss or damage to life or property
due to emergencies or force majeure;
6. To prevent serious obstruction or prejudice to
the business or operations of the employer.
Art 90. Computation of additional compensation.
For purposes of computing overtime and other
additional remuneration as required by this Chapter,
the "regular wage" of an employee shall include the
93Art. 89, Labor Code
 LABOR STANDARDS 37 LABOR LAW

cash wage only, without deduction on account of provided under Department Order no. 2 series of
facilities provided by the employer. 2004.

Bar 1997
BASE FOR OVERTIME PAY
Overtime pay shall be based only on the regular basic
pay, exclusive of fringe benefits.94

Fringe benefits not regularly received, and not by all

employees, are not included in the computation.95

Overtime pay is for extra effort beyond that

contemplated in the employment contract, hence
when additional pay is given for any other purpose, it
is illogical to include the same in the basis for the
computation of overtime pay.96

BURDEN OF PROOF
Entitlement to overtime pay must first be
established by proof that said overtime work was
actually performed, before an employee may avail of
said benefit.97

Factors to consider where Collective Bargaining

Agreement does not contain any provision on
computation of overtime pay:98
1. Whether or not the addition pay is for extra
work done or service rendered; and
2. Whether the same is intended to be permanent
and regular, not contingent nor temporary and
given only to remedy a situation which can
change anytime.

WAIVER OF OVERTIME PAY

General rule: Overtime compensation cannot be
waived, whether expressly or impliedly; and
stipulation to the contrary is against the law.
Quitclaim where workers agree to forego payment of
overtime compensation is null and void ab initio. 99

Exceptions
1. Non-payment by employer of overtime pay to
employee in excess of the regular hours worked
is valid as overtime pay was already provided in
the written contract with a “built-in” overtime
pay and signed by the Director of the Bureau of
Employment Services and enforced by the
employer.100

2. Adoption of Compressed Workweek (CWW) on

voluntary basis, subject to the guidelines

94 Bisig Manggagawa ng Philippien Refining Co., Inc v Phil. Refining

Co., Inc., 107 SCRA 677 (1981)
95 Shell Oil Workers Union v Shell and Affiliates Supervisor’s Union,

70 SCRA 238 (1976)

96PNB v Phil National Bank Employees Association, 115 SCRA 507

(1982)
97Lagatic v NLRC, GR 121004 (1998)
98 PNB V PEMA, 115 SCRA 507 (1982)
99 Pampanga Sugar Development Co., Inc. v CIR, 114 SCRA 725 (1982)
100 Engineering Equipment, Inc. v Minister of Labor, 138 SCRA 616

(1985)

LA SALLIAN COMMISION ON BAR OPERATIONS

 LABOR STANDARDS
VIII. WEEKLY REST DAY
RIGHT TO A WEEKLY REST DAY101
The employee is entitled to a rest not less than
twenty four consecutive hours after six consecutive
normal working days.
The employer, in determining the weekly rest days
must consider the following:
1. The collective bargaining
2. Rules and regulations issued by the Secretary of
Labor
3. Employee’s preference based on religious
grounds.
WHEN EMPLOYER MAY REQUIRE WORK
ON REST DAY102
1. In cases of urgent work to be performed on the
machinery, equipment, or installation;
2. To prevent loss or damage to perishable goods;
3. When the nature of work requires continuous
operations and the stoppage of work may result
in irreparable injury or loss to the employer;
4. In cases of actual or impending emergencies
caused by force majeure to prevent loss of life
and property, or imminent danger to public
safety.
5. In cases of abnormal pressure of work due to
special circumstances, where the employer
cannot ordinarily be expected to resort to other
measures;
6. Other circumstances analogous to the foregoing
as determined by the Secretary of Labor.
C. WAGES
Art 97 (f): Definition of Wage
"Wage"paid to any employee shall mean the
remuneration or earnings, however designated,
capable of being expressed in terms of money,
whether fixed or ascertained on a time, task, piece,
or commission basis, or other method of calculating
the same, which is payable by an employer to an
employee under a written or unwritten contract of
employment for work done or to be done, or for
services rendered or to be rendered and includes the
fair and reasonable value, as determined by the
Secretary of Labor and Employment, of board,
lodging, or other facilities customarily furnished by
the employer to the employee. "Fair and reasonable
value" shall not include any profit to the employer,
or to any person affiliated with the employer.
DEFINITION OF WAGE
1. It is the remuneration or earnings, however
designated capable of being expressed in
terms of money,
101Art. 91, Labor Code
102Art. 92, labor Code
LA SALLIAN COMMISION ON BAR OPERATIONS
38 LABOR LAW
2. Whether fixed or ascertained on a time, task,
piece, or commission basis, or other method of
calculating the same,
3. Which is payable by an employer to an employee
4. Under a written or unwritten contract of
employment for work done or to be done, or for
services rendered or to be rendered and
5. Includes the fair and reasonable value, as
determined by the Secretary of Labor and
Employment, of board, lodging, or other
facilities customarily furnished by the employer
to the employee
6. Fair and reasonable value - shall not include
any profit to the employer, or to any person
affiliated with the employer.
“NO WORK NO PAY” PRINCIPLE
General Rule: A fair day‘s wage for a fair day‘s labor
Exception: When the laborer was able, willing and
ready to work but was illegally locked out,
suspended or dismissed, or otherwise illegally
prevented from working.103
“EQUAL WORK FOR EQUAL PAY” PRINCIPLE
Persons who work with substantially equal
qualifications, skill, effort and responsibility under
similar working conditions should be paid similar
salaries.104
If an employer accords employees the same position
and rank, the presumption is that these employees
perform equal work.105
COVERAGE
The rules on wages do not apply to the following
1. Household or domestic helpers, including family
drivers, and persons in the personal service of
another
2. Homeoworkers engaged in needlework
3. Workers employed in any establishment
registered with the National Cottage Industries
and Development Authority (NACIDA) in
accordance with RA 3470 provided that such
workers work in ther respective homes.106
4. Workers in any duly registered cooperative with
recommended by the Bureau of Cooperative
103Sugue v Triumph International (2009); Aklan Electric Cooperative,
Inc. vs. NLRC, 323 SCRA 258 (2000)
104 International School Alliance of Educators (ISAE) v Quisumbing,
Maccanley and Internatinal School, Inc, 333 SCRA 13 (2000)
105 Philex Gold Philippines, Inc v. Philex Bulawan Supervisors Union,
468 SCRA 111 (2005)
106 Approved and took effect on 16 June 1962; amended by RA 5326
on 15 June 1968
 LABOR STANDARDS 39 LABOR LAW

Development and upon approval of the Secretary Wage Salary

of Labor and Employment.107 Paid to white collar
5. Farm tenancy or leasehold; Paid for skilled or workers and denote a
6. Workers in registered barangay micro business unskilled manual labor higher grade of
enterprise108 employment
Not subject to
execution, garnishment Not exempt from
FACILITIES, DEFINED or attachment except for execution, garnishment
debts related to or attachment114
Board, lodging, and other facilities customarily
necessities113
provided by an employer to his employees both in
agricultural and non-agricultural enterprises.
Acceptance of facilities must be voluntary.
I. WAGE DISTORTION
FACILITIES AND SUPPLEMENTS, Bar 1997
DISTINCTION Wage distortion, defined
Facilities Supplements A situation where an increase in prescribed wage
How treated rates results in the elimination or severe contraction
Wage-deductible Not wage-deductible of intentional quantitative differences in wage or
(includes facilities) salary rates between and among employee groups in
an establishment as to effectively obliterate the
Purpose
distinctions embodied in such wage structure based
Articles or services for Tools of the trade or
on skills, length of service, or other logical bases of
the benefit of the articles or service
differentiation
employee or his family. primarily for the
benefit of the
employer or necessary ELEMENTS115
to the conduct of the 1. Existing hierarchy of positions with
employer‘s business. corresponding salary rates
2. A significant change in the salary rate of a
lower pay class without a concomitant increase
Criterion. In determining whether a privilege is a in the salary rate of a higher one
facility, the criterion is not so much its kind but it‘s 3. The elimination of the distinction between the
purpose.109 two levels; and
4. The existence of the distortion in the same
REQUIREMENTS FOR DEDUCTING VALUE OF region of the country.
FACILITIES
1. Customarily furnished by the trade - "Customary"
is founded on long-established and constant HOW TO RESOLVE WAGE DISTORTION
practice connoting regularity. The receipt of an
allowance on a monthly basis does not ipso facto Organized Establishment (with bargaining
characterize it as regular and forming part of representative)
salary because the nature of the grant is a factor 1. Employer and the union shall negotiate to
worth considering110 correct the distortions.
2. Voluntarily accepted in writing by the employee; 2. Disputes shall be resolved through the grievance
3. Charged at fair and reasonable value. 111 procedure.
3. If still unresolved, voluntary arbitration.
WAGES AND SALARIES,
Unorganized Establishment 116
DISTINGUISHED 1. Employer and Employees shall endeavor to
Wages and salary are in essence synonymous and correct such distortions.
are used interchangeably. However, strictly 2. Disputes shall be settled through the National
speaking, there is a legal distinction.112 Conciliation and Mediation Board.
3. If still unresolved after 10 calendar days of
conciliation, it shall be referred to the
Bar 1994 appropriate branch of the NLRC – compulsory
arbitration.
107 When the cooperative cannot resort to other remedial measures
without serious loss or prejudice to its operation
108RA 9178
109Millares v NLRC & PICOP (1999) 113Art.1708
110Millares v. NLRC, (1999) 114Gaa vs. CA, 1985
111Mabeza v. NLRC (1997) 115Prubankers Assn. v. Prudential Bank and Co., (1999)
112Songco v. NLRC (1990) 116National Federation of Labor v. NLRC (1994)

LA SALLIAN COMMISION ON BAR OPERATIONS

 LABOR STANDARDS
Both the employer and employee cannot use
economic weapons.
Employer cannot declare a lock-out. Employee
cannot declare a strike because the law has provided
for a procedure for settling
The salary or wage differential does not need to be
maintained.
In determining an employee‘s regular wage, the
pertinent stipulations in the CBA are controlling,
provided the result is not less than the statutory
requirement.117
II. NON-DIMINUTION OF BENEFITS
Art. 100. Prohibition against elimination or
diminution of benefits.
Nothing in this Book shall be construed to eliminate
or in any way diminish supplements, or other
employee benefits being enjoyed at the time of
promulgation of this Code.
Article 100 of the Labor Code, otherwise known as
the Non-Diminution Rule, mandates that benefits
given to employees cannot be taken back or reduced
unilaterally by the employer because the benefit has
become part of the employment contract, written or
unwritten. (Central Azucarera De Tarlac v. Central
Azucarera De Tarlac Labor Union-NLU, G.R. 188949,
July 26, 2010)
REQUISITES
If the following are met, then the employer cannot
remove or reduce benefits:
1. Ripened company policy
Benefit is founded on a policy which has ripened
into a practice over a long period118
2. Practice is consistent and deliberate and
3. practice is not due to error in the construction
or application of a doubtful or difficult question
of law.119
4. The diminution or discontinuance
unilaterally by the employer.
117Philippine
National Bank vs. PEMA, 115 SCRA 507
118PrubankersAssn. vs. Prudential Bank and Co., (1999)
119Globe Mackay Cable vs. NLRC (1988)
LA SALLIAN COMMISION ON BAR OPERATIONS
40 LABOR LAW
General rule: Prohibition against elimination or
diminution of employee benefits and supplements.
Exceptions:
1. Mistake in the application of the law;120
2. Negotiated benefits;121
Benefits initiated through negotiation between
Employee and Employer, e.g. CBA, can only be
eliminated or diminished bilaterally.
3. Wage Order Compliance;122
4. Benefits on reimbursement basis;
5. Reclassification of Positions;
e.g. loss of some benefits by promotion.
6. Contingent benefits or Conditional bonus;
The rule does not apply to a benefit whose
grant depends on the existence of certain
conditions, so that the benefit is not
demandable if those preconditions are absent.
7. Productivity incentives.
GRATUITOUS ON THE PART OF THE EMPLOYER
Moreover, to ripen into a company practice that is
demandable as a matter of right, the giving of the
increase should not be by reason of a strict legal or
contractual obligation, but by reason of an act of
liberality on the part of the employer. (Pag-asa Stee
Works vs CA, et al., G.R. 166647, March 31, 2006)
[E.g. contingent benefits or conditional bonus,
productivity incentives, wage order compliance]
ON COMPANY PRACTICE...
If the benefits are enjoyed at the time or even
before promulgation of the Labor Code (May 1,
1974), Art. 100 applies – non-diminution rule.
If the benefits are enjoyed after promulgation of
Labor Code, it is a matter of company practice which
cannot be unilaterally revoked by the employer.
Same requisites in non-diminution rule apples.
is done Article 100 refers solely to the non-diminution of
benefits enjoyed at the time of the promulgation of
the Labor Code. Employer-employee relationship is
contractual and is based on the express terms of the
employment contract as well as on its implied terms,
among them, those not expressly agreed upon but
which the employer has freely, voluntarily and
consistently extended to its employees. Under the
principle of mutuality of contracts embodied in
Article 1308 of the Civil Code, the terms of a
120Globe Mackay Cable v. NLRC, G.R. No. 74156 (June 29, 1988)
121 Azucena
122 Pag-asa Steel Works vs CA, et al., G.R. 166647, March 31, 2006)
 LABOR STANDARDS
contract – both express and implied – cannot be
withdrawn except by mutual consent or agreement
of the contracting parties. (Arco Metal Products et
al. vs Samahan ng mga Mangagawa sa Arco-Metal-
Nafula, G.R. 170734, May 14, 2008)
III. WORKER’S PREFERENCE IN CASE OF
BANKRUPTCY
Art. 110. Worker preference in case of
bankruptcy.
In the event of bankruptcy or liquidation of an
employer's business, his workers shall enjoy first
preference as regards their wages and other
monetary claims, any provision of law to the
contrary notwithstanding.
Such unpaid wages and monetary claims shall be
paid in full before the claims of the Government and
other creditors may be paid. (As amended by R. A.
6715)
Art. 1707, Civil Code
The laborer's wages shall be a lien on the goods
manufactured or the work done.
Art 2241 (6)
With reference to specific movable property of the
debtor, the following claims or liens shall be
preferred:
6. Claims for laborers' wages, on the goods
manufactured or the work done;
Art 2242 (2) and (3)
With reference to specific immovable property and
real rights of the debtor, the following claims,
mortgages and liens shall be preferred, and shall
constitute an encumbrance on the immovable or real
right:
2. Credits for services rendered the insolvent by
employees, laborers, or household helpers for
one year preceding the commencement of the
proceedings in insolvency.
3. Claims of laborers, masons, mechanics and other
workmen, as well as of architects, engineers and
contractors, engaged in the construction,
reconstruction or repair of buildings, canals or
other works, upon said buildings, canals or other
works
JURISPRUDENCE
1. It only creates a preference and not a license;
2. Worker preference shall apply only to ordinary
preferred credits (meaning unencumbered
property)
3. It must yield to special preferred credits where
liens are attached;
4. Covers unpaid wages as well as other monetary
LA SALLIAN COMMISION ON BAR OPERATIONS
41 LABOR LAW
claims; and
5. Judicial declaration of insolvency or bankruptcy
and filing of claims by workers still required.
Article 110 of the Labor Code did not sweep away
the overriding preference accorded under the
scheme of the Civil Code: 123
1. Tax claims of the government or any subdivision
thereof which constitute a lien upon properties
of the Insolvent still preferred over wages.
2. The use of the phrase "first preference" in
Article 110 indicates that what Article 110
intended to modify is the order of preference
found in Art. 2244, which pertains to
unencumbered property.
3. Art. 2241 and 2242 pertain to encumbered
property and such property shall still remain
reserved to its respective lienholder.
4. Exception is if either 2241 (6) or 2242 (3)
applies.
Primary effect
It moves wages from 2nd priority in 2244 to 1st
priority; as if 2244 (2) became 2244 (1).
Art. 110 of the Labor Code cannot be viewed in
isolation but must be read in relation to the Civil
Code scheme on classification and preference of
credits. 124
Requirements of judicial liquidation or declaration of
bankruptcy still intact; workers must also file their
claims.
Bar 1995, 1999
A preference applies only to claims which do not
attach to specific properties. A lien creates a charge
on a particular property. The right of first preference
as regards unpaid wages recognized by Art. 110 does
not constitute a lien on the property of the insolvent
debtor in favor of workers. It is but a preference of
credit in their favor, a preference in application.
Preference does not apply when the Employer
corporation is under rehabilitation or receivership.
125
IV. WAGE PROTECTION
1. Prohibition against interference in wage disposal
2. Prohibition against wage deduction
3. Prohibition against requirement to make
deposits for loss or damage
4. Prohibition against withholding of wages
5. Prohibition against deduction to ensure
employment
6. Prohibition against retaliatory measures
123Republic
vs. Peralta (1987)
124Development Bank of the Philippines vs. NLRC (1995)
125Rubberworld (Phils.), Inc. vs. NLRC (1999)
 LABOR STANDARDS
7. Prohibition against False Reporting
8. Prohibition against keeping of employee’s
records in a place than the workplace
9. Prohibition against garnishment or execution
A. PROHIBITION AGAINST
INTERFERENCE IN WAGE DISPOSAL
Art. 112. Non-interference in disposal of wages.
No employer shall limit or otherwise interfere with
the freedom of any employee to dispose of his
wages. He shall not in any manner force, compel, or
oblige his employees to purchase merchandise,
commodities or other property from any other
person, or otherwise make use of any store or
services of such employer or any other person.
1. No employer shall limit or otherwise interfere
with the freedom of any employee to dispose of
his wages.
2. He shall not in any manner force, compel, or
oblige his employees
3. To purchase merchandise, commodities or other
property from any other person, or otherwise
make use of any store or services of such
employer or any other person.
RELATED CIVIL CODE PROVISIONS
Art. 1705, Civil Code
The laborer's wages shall be paid in legal currency.
Art. 1706, Civil Code
Withholding of the wages, except for a debt due,
shall not be made by the employer.
Art. 1707, Civil Code
The laborer's wages shall be a lien on the goods
manufactured or the work done.
Art. 1708, Civil Code
The laborer's wages shall not be subject to execution
or attachment, except for debts incurred for food,
shelter, clothing and medical attendance.
Art. 1709, Civil Code
The employer shall neither seize nor retain any tool
or other articles belonging to the laborer.
B. PROHIBITION AGAINST WAGE
DEDUCTION
Art. 113. Wage deduction.
No employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages of
his employees, except:
a. In cases where the worker is insured with his
consent by the employer, and the deduction is
to recompense the employer for the amount
paid by him as premium on the insurance;
LA SALLIAN COMMISION ON BAR OPERATIONS
42 LABOR LAW
b. For union dues, in cases where the right of the
worker or his union to check-off has been
recognized by the employer or authorized in
writing by the individual worker concerned; and
c. In cases where the employer is authorized by
law or regulations issued by the Secretary of
Labor and Employment.
General Rule: No employer, in his own behalf or in
behalf of any person, shall make any deduction from
the wages of his employees.
Exceptions
1. Employee is insured with his consent by the
employer, and the deduction is to recompense
the employer for the amount paid by him as
premium on the insurance;
2. For union dues, in cases where the right of the
worker or his union to check-off has been
recognized by the employer or authorized in
writing by the individual worker concerned; and
3. In cases where the employer is authorized by
law or regulations issued by the Secretary of
Labor and Employment, such as:
a. Employee debt to employer is due and
demandable126
b. Attachment or execution in cases of debts
incurred for necessities: food, shelter,
clothing, medical attendance127
c. Withholding tax
d. Deductions of a legally established
cooperative
e. Payment to 3rd parties upon written
authority by employee
f. Deductions for loss or damage
g. SSS, Medicare, Pag-IBIG premiums
h. Deduction for value meals and other
facilities.
It shall be unlawful to make any deduction from the
wages of any Employee for the benefit of the
Employer as consideration of a promise of
employment or retention in employment. (Art. 117)
or to retaliate against the Employee who filed a
complaint. (Art. 118)
RATIONALE
Prohibition seeks to protect the employee against
unwarranted practices that would diminish his
compensation without his knowledge and consent.128
With Employee’s Without Employee’s
consent in Writing consent
126Art1706, Civil Code
127Art1708, Civil Code
128Radio Communication of the Phil., Inc. v. Sec. of Labor (1989)
 LABOR STANDARDS 43 LABOR LAW

1. SSS Payments 1. Worker‘s insurance or damage; and

2. PHILHEALTH acquired by the 4. The deduction from the employee‘s wage does
payments employer not exceed 20% of the employee‘s wages in a
3. Contributions to 2. Union dues, where week.129
PAG-IBIG Fund the right to check-
4. Value of meals and off is recognized by
other facilities the employer DAILY DEPOSITS TO COVER SHORTAGE IN
5. Payments to third (provided in the BOUNDARY ILLEGAL
persons with CBA) The article providing the rule on deposits for loss or
employee‘s 3. Debts of the damage to tools, materials or equipment supplied by
consent employee to the the employer does not apply to or permit deposits to
6. Deduction of employer that have defray any deficiency which the taxi driver may incur
absences become due and in the remittance of his "boundary."
7. Union dues, where demandable
check-off is not When employee stops working for employer, the
provided in the alleged purpose for the unauthorized deposits no
CBA. longer exists. Any balance due must be returned to
employee with legal interest.130

C. PROHIBITION AGAINST
REQUIREMENT TO MAKE DEPOSITS FOR
LOSS OR DAMAGE
Art. 114. Deposits for loss or damage.
No employer shall require his worker to make
deposits from which deductions shall be made for
the reimbursement of loss of or damage to tools,
materials, or equipment supplied by the employer,
except when the employer is engaged in such trades,
occupations or business where the practice of
making deductions or requiring deposits is a
recognized one, or is necessary or desirable as
determined by the Secretary of Labor and
Employment in appropriate rules and regulations.
Art. 115. Limitations.
No deduction from the deposits of an employee for
the actual amount of the loss or damage shall be
made unless the employee has been heard thereon,
and his responsibility has been clearly shown.
D. PROHIBITION AGAINST
WITHHOLDING OF WAGES
Art. 116. Withholding of wages and kickbacks
prohibited
It shall be unlawful for any person, directly or
indirectly, to withhold any amount from the wages
of a worker or induce him to give up any part of his
wages by force, stealth, intimidation, threat or by
any other means whatsoever without the worker’s
consent.
E. PROHIBITION AGAINST DEDUCTION
TO ENSURE EMPLOYMENT
Art. 117. Deduction to ensure employment
It shall be unlawful to make any deduction from the
wages of any employee for the benefit of the
employer or his representative or intermediary as
consideration of a promise of employment or
retention in employment.

General Rule: No deposits from which deductions F. PROHIBITION AGAINST

shall be made for the reimbursement of loss of or
damage to tools, materials, or equipment supplied
by the employer
Exception:
1. Recognized industry practice or
2. When such is necessary or desirable
determined by the DOLE Secretary
appropriate rules and regulations.
RETALIATORY MEASURES
Art. 118. Retaliatory measures
It shall be unlawful for an employer to refuse to pay
or reduce the wages and benefits, discharge or in
any manner discriminate against any employee who
has filed any complaint or instituted any proceeding
as
under this Title or has testified or is about to testify
in
in such proceedings.

CONDITIONS FOR THE DEDUCTIONS
1. Employee is clearly shown to be responsible for
the loss or damage
2. The Employee is given ample opportunity to
show cause why deduction should not be made;
This article is similar to Art. 248(f) which classifies as
unfair labor practice (ULP) an employer‘s prejudicial
act against an employee who gave or is about to give
a testimony under the Code. However, they differ on
the subject of the testimony.

3. The amount of the deduction is fair and

129Art. 115, Labor Code
reasonable and shall not exceed the actual loss 130Five J Taxi vs. NLRC (1994)

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 LABOR STANDARDS 44 LABOR LAW

Art. 118 Art. 248(f) It shall be unlawful for any person to demand or
Subject of testimony is Subject is anything accept, in any judicial or administrative proceedings
wages under the Code for the recovery of the wages, attorney‘s fees, which
The employer‘s The employer‘s exceed 10% of the amount of wages recovered.
retaliatory act is retaliatory act is ULP.
unlawful but not ULP
(unless the act is V. CRITERIA/FACTORS FOR WAGE SETTING
intended to impair the
Bar 1997
right to self-
Art.124. Standards/Criteria for minimum wage
organization of
fixing.
employees)
The regional minimum wages to be established by
the Regional Board shall be as nearly adequate as is
G. PROHIBITION AGAINST FALSE economically feasible to maintain the minimum
REPORTING standards of living necessary for the health,
Art. 119. False reporting efficiency and general well-being of the employees
It shall be unlawful for any person to make any within the framework of the national economic and
social development program. In the determination of
statement, report, or record filed or kept pursuant
such regional minimum wages, the Regional Board
to the provisions of this Code knowing such
shall, among other relevant factors, consider the
statement, report or record to be false in any
following:
material respect.
a. The demand for living wages
b. Wage adjustment vis-a -vis the consumer
H. PROHIBITION AGAINST KEEPING price index
OF EMPLOYEE’S RECORDS IN A PLACE c. The cost of living and changes or increases
THAN THE WORKPLACE therein
d. The needs of workers and their families
Sec. 11, Rule X, Book II, IRR
e. The need to induce industries to invest in
All employment records of the employees of an the countryside
employer shall be kept and maintained in or about f. Improvements in standards of living
the premises of the workplace – main or branch g. The prevailing wage levels
office or establishment, if any, depending upon h. Fair return of the capital invested and
where the employees are regularly assigned. capacity to pay of employers
i. Effects on employment generation and
The keeping of the employee's records in another family income; and
place is prohibited. j. The equitable distribution of income and
wealth along the imperatives of economic
I.PROHIBITION AGAINST and social development.
GARNISHMENT OR EXECUTION
The wages prescribed in accordance with the
Art. 1708, Civil Code
provisions of this Title shall be the standard
The laborer's wages shall not be subject to execution prevailing minimum wages in every region. These
or attachment, except for debts incurred for food, wages shall include wages varying with industries,
shelter, clothing and medical attendance. provinces or localities if in the judgment of the
Regional Board, conditions make such local
General Rule: The laborer's wages shall not be differentiation proper and necessary to effectuate
subject to execution or attachment the purpose of this Title.
Exception: For debts incurred for food, shelter,
clothing and medical attendance Any person, company, corporation, partnership or
any other entity engaged in business shall file and
Article 1708 of the New Civil Code to operate in register annually with the appropriate Regional
favor of any but those who are laboring men or Board, Commission and the National Statistics
women in the sense that their work is manual. Office, an itemized listing of their labor component,
Persons belonging to this class usually look to the specifying the names of their workers and employees
reward of a day's labor for immediate or present below the managerial level, including learners,
support, and such persons are more in need of the apprentices and disabled/handicapped workers who
exemption than any others. were hired under the terms prescribed in the
employment contracts, and their corresponding
In cases of unlawful withholding of wages, the salaries and wages.
culpable party may be assessed attorney's fees
equivalent to 10% of the amount of wages recovered. Where the application of any prescribed wage

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 LABOR STANDARDS
increase by virtue of a law or wage order issued by
any Regional Board results in distortions of the wage
structure within an establishment, the employer
and the union shall negotiate to correct the
distortions. Any dispute arising from wage
distortions shall be resolved through the grievance
procedure under their collective bargaining
agreement and, if it remains unresolved, through
voluntary arbitration. Unless otherwise agreed by
the parties in writing, such dispute shall be decided
by the voluntary arbitrators within ten (10) calendar
days from the time said dispute was referred to
voluntary arbitration.
In cases where there are no collective agreements or
recognized labor unions, the employers and workers
shall endeavor to correct such distortions. Any
dispute arising therefrom shall be settled through
the National Conciliation and Mediation Board and, if
it remains unresolved after ten (10) calendar days of
conciliation, shall be referred to the appropriate
branch of the National Labor Relations Commission
(NLRC). It shall be mandatory for the NLRC to
conduct continuous hearings and decide the dispute
within twenty (20) calendar days from the time said
dispute is submitted for compulsory arbitration.
The pendency of a dispute arising from a wage
distortion shall not in any way delay the applicability
of any increase in prescribed wage rates pursuant to
the provisions of law or wage order.
As used herein, a wage distortion shall mean a
situation where an increase in prescribed wage rates
results in the elimination or severe contraction of
intentional quantitative differences in wage or salary
rates between and among employee groups in an
establishment as to effectively obliterate the
distinctions embodied in such wage structure based
on skills, length of service, or other logical bases of
differentiation.
All workers paid by result, including those who are
paid on piecework, takay, pakyaw or task basis, shall
receive not less than the prescribed wage rates per
eight (8) hours of work a day, or a proportion
thereof for working less than eight (8) hours.
All recognized learnership and apprenticeship
agreements shall be considered automatically
modified insofar as their wage clauses are concerned
to reflect the prescribed wage rates. (As amended
by Republic Act No. 6727, June 9, 1989)
LA SALLIAN COMMISION ON BAR OPERATIONS
45 LABOR LAW
FACTORS/CRITERIA IN DETERMINING
REGIONAL MINIMUM WAGES:
1. Demand for living wages;
2. Wage adjustment vis-a-vis the consumer price
index;
3. Cost of living and changes or increases therein;
4. The needs of workers and their families;
5. The need to induce industries to invest in the
countryside;
6. Improvements in standards of living;
7. Prevailing wage levels;
8. Fair return of the capital invested and capacity
to pay of employers;
9. Effects in employment generation and family
income; and
10. Equitable distribution of income and wealth
along the imperatives of economic and social
development.
PROCEDURE FOR WAGE FIXING BY
REGIONAL BOARD
1. Investigate and study pertinent facts, based on
criteria set in Art. 124
2. Conduct public hearings or consultations with
notice to employer and employee groups,
provinces, city, municipal officials and other
interested parties
3. Decide to ISSUE or NOT TO ISSUE a wage order
Frequency
Wage orders issued may not be disturbed for 12
months from effective date; this serves as a bar
for petitions for wage hikes as well
EXCEPT
When Congress passes a new law
affecting wages or other supervening
circumstances
Effectivity
If it decides to ISSUE a wage order, the wage
order takes effect after 15 days from complete
publication in at least 1 newspaper of general
circulation in the region
4. Appeal wage order to Commission within 10
calendar days; mandatory for the Commission to
decide within 60 calendar days from filing
Filing of an appeal DOES NOT STAY order unless
appellant files an undertaking with a surety, to
guarantee payment of employees if the wage order is
affirmed (as amended by RA 6727)
 LABOR STANDARDS 46 LABOR LAW

AGENCIES ON WAGE STUDIES AND

DETERMINATION
National Wages and Productivity Commission
1. Ex Officio Chairman: Secretary of Labor and
Employment
2. Ex-officio vice-chairman: Director-General of
NEDA
Composition 3. Two members each from the workers‘ and
employers‘ sectors who shall be appointed
by the President of the Philippines upon the
recommendation of the Sec. of Labor
4. Executive Director of the Commission
1. Headed by the Executive Director
Secretariat 2. Two (2) Deputy Directors
1. To act as the national consultative and
advisory body to the President of the
Philippines and Congress on matters relating
to wages, incomes and productivity;
2. To formulate policies and guidelines on
wages, incomes and productivity
improvement at the enterprise, industry and
national levels;
3. To prescribe rules and guidelines for the
determination of appropriate minimum wage
and productivity measures at the regional,
provincial, or industry levels;
4. To review regional wage levels set by the
Regional Tripartite Wages and Productivity
Boards to determine if these are in
accordance with prescribed guidelines and
national development plans;
5. To undertake studies, researches and surveys
necessary for the attainment of its functions
Powers and
and objectives, and to collect and compile
Functions
data and periodically disseminate
information on wages and productivity and
other related information, including, but not
limited to, employment, cost-of-living, labor
costs, investments and returns;
6. To review plans and programs of the
Regional Tripartite Wages and Productivity
Boards to determine whether these are
consistent with national development plans;
7. To exercise technical and administrative
supervision over the Regional Tripartite
Wages and Productivity Boards;
8. To call, from time to time, a national
tripartite conference of representatives of
government, workers and employers for the
consideration of measures to promote wage
rationalization and productivity; and
9. To exercise such powers and functions as
may be necessary to implement this Act.131
Regional Tri-partite Wages and Productivity
Boards
1. Chairman: Regional Director of DOLE
2. Vice Chairman: Regional Director of NEDA
3. Vice Chairman: Regional Director of DTI
4. 2 Members from the employer sector
5. 2 Members from the employee sector
6. Secretariat
Tri-partite body – 3 sectors are represented:
1. Government
2. Employers
3. Employees.
1. To develop plans, programs and projects
relative to wages, incomes and
productivity improvement for their
respective regions;
2. To determine and fix minimum wage
rates applicable in their regions,
provinces or industries therein and to
issue the corresponding wage orders,
subject to guidelines issued by the
Commission;
3. To undertake studies, researches, and
surveys necessary for the attainment of
their functions, objectives and programs,
and to collect and compile data on
wages, incomes, productivity and other
related information and periodically
disseminate the same;
4. To coordinate with the other Regional
Boards as may be necessary to attain the
policy and intention of this Code;
5. To receive, process and act on
applications for exemption from
prescribed wage rates as may be
provided by law or any Wage Order; and
6. To exercise such other powers and
functions as may be necessary to carry
out their mandate under this Code.132

131 Art 121, Labor Code

132 Art 122, Labor Code

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 LABOR STANDARDS 47 LABOR LAW

COMPENSATION
D. REST DAYS Article 93. Compensation for rest day, Sunday or
COVERAGE AND SCHEDULING holiday work.
a. Where an employee is made or permitted to
Bar 1998
work on his scheduled rest day, he shall be paid
Art 91. Right to weekly rest day. an additional compensation of at least thirty
It shall be the duty of every employer, whether percent (30%) of his regular wage. An
operating for profit or not, to provide each of his employee shall be entitled to such additional
employees a rest period of not less than twenty- compensation for work performed on Sunday
four (24) consecutive hours after every six (6) only when it is his established rest day.
consecutive normal work days.
b. When the nature of the work of the employee
The employer shall determine and schedule the is such that he has no regular workdays and no
weekly rest day of his employees subject to regular rest days can be scheduled, he shall be
collective bargaining agreement and to such rules paid an additional compensation of at least
and regulations as the Secretary of Labor and thirty percent (30%) of his regular wage for
Employment may provide. However, the employer work performed on Sundays and holidays.
shall respect the preference of employees as to
their weekly rest day when such preference is based c. Work performed on any special holiday shall be
on religious grounds. paid an additional compensation of at least
thirty percent (30%) of the regular wage of the
employee. Where such holiday work falls on the
COMPULSORY WORK employee’s scheduled rest day, he shall be
Article 92. When employer may require work on a entitled to an additional compensation of at
rest day. least fifty per cent (50%) of his regular wage.
The employer may require his employees to work on
any day: d. Where the collective bargaining agreement or
a. In case of actual or impending emergencies other applicable employment contract stipulates
caused by serious accident, fire, flood, typhoon, the payment of a higher premium pay than that
earthquake, epidemic or other disaster or prescribed under this Article, the employer
calamity to prevent loss of life and property, or shall pay such higher rate.
imminent danger to public safety;
b. In cases of urgent work to be performed on the When work performed Premium pay
machinery, equipment, or installation, to avoid On scheduled rest day 30% of Regular wage
serious loss which the employer would otherwise On Sunday ONLY
30% of regular wage
suffer; established rest day
c. In the event of abnormal pressure of work due 30% of regular wage of
No regular work and rest
to special circumstances, where the employer work performed on
days
cannot ordinarily be expected to resort to other Sundays and Holidays
measures; On any special
30% of regular wage
d. To prevent loss or damage to perishable holidays/special day
goods; On any regular holiday
e. Where the nature of the work requires falling on scheduled rest 30% of regular wage
continuous operations and the stoppage of work day
may result in irreparable injury or loss to the
employer; and IMPLEMENTING RULES
f. Under other circumstances analogous or similar
to the foregoing as determined by the Secretary Sec.1.General statement on coverage, Rule III,
of Labor and Employment. Book III, IRR
This Rule shall apply to all employers whether
operating for profit or not, including public utilities
operated by private persons.

Sec.2.Business on Sundays/Holidays., Rule III, Book

III, IRR
All establishments and enterprises may operate or
open for business on Sundays and holidays provided
that the employees are given the weekly rest day
and the benefits as provided in this Rule.

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 LABOR STANDARDS
Sec.3.Weekly rest day,Rule III, Book III, IRR
Every employer shall give his employees a rest
period of not less than twenty-four (24) consecutive
hours after every six consecutive normal work days.
Sec.4.Preference of employee,Rule III, Book III, IRR
The preference of the employee as to his weekly
day of rest shall be respected by the employer if the
same is based on religious grounds. The employee
shall make known his preference to the employer in
writing at least seven (7) days before the desired
effectivity of the initial rest day so preferred.
Where, however, the choice of the employee as to
his rest day based on religious grounds will inevitably
result in serious prejudice or obstruction to the
operations of the undertaking and the employer
cannot normally be expected to resort to other
remedial measures, the employer may so schedule
the weekly rest day of his choice for at least two (2)
days in a month.
Sec.5.Schedule of rest day,Rule III, Book III, IRR
a. Where the weekly rest is given to all employees
simultaneously, the employer shall make known
such rest period by means of a written notice
posted conspicuously in the work place at least
one week before it becomes effective.
b. Where the rest period is not granted to all
employees simultaneously and collectively, the
employer shall make known to the employees
their respective schedules of weekly rest
through written notices posted conspicuously in
the work place at least one week before they
become effective.
Sec.6. When work on rest dayauthorized,Rule III,
Book III, IRR
An employer may require any of his employees to
work on his scheduled rest day for the duration of
the following emergencies and exceptional
conditions:
a. In case of actual or impending emergencies
caused by serious accident, fire, flood, typhoon,
earthquake, epidemic or other disaster or
calamity, to prevent loss of life or property, or
in cases of force majeure or imminent danger to
public safety;
b. In case of urgent work to be performed on
machineries, equipment or installations to avoid
serious loss which the employer would otherwise
suffer;
c. In the event of abnormal pressure of work due
to special circumstances, where the employer
cannot ordinarily be expected to resort to other
measures;
d. To prevent serious loss of perishable goods;
e. Where the nature of the work is such that the
employees have to work continuously for seven
(7) days in a week or more, as in the case of the
LA SALLIAN COMMISION ON BAR OPERATIONS
48 LABOR LAW
crew members of a vessel to complete a voyage
and in other similar cases; and
f. When the work is necessary to avail of
favorable weather or environmental
conditions where performance or quality of
work is dependent thereon.
No employee shall be required against his will to
work on his scheduled rest day except under
circumstances provided in this Section: Provided,
However, that where an employee volunteers to
work on his rest day under other circumstances, he
shall express such desire in writing, subject to the
provisions of Section 7 hereof regarding additional
compensation.
Sec.7. Compensation on rest
day/Sunday/holiday,Rule III, Book III, IRR
a. Except those employees referred to under
Section 2, Rule I, Book Three, an employee who
is made or permitted to work on his scheduled
rest day shall be paid with an additional
compensation of at least 30% of his regular
wage. An employee shall be entitled to such
additional compensation for work performed on
a Sunday only when it is his established rest day.
b. Where the nature of the work of the employee is
such that he has no regular work days and no
regular rest days can be scheduled, he shall be
paid an additional compensation of at least 30%
of his regular wage for work performed on
Sundays and holidays.
c. Work performed on any special holiday shall be
paid with an additional compensation of at least
30% of the regular wage of the employees.
Where such holiday work falls on the employee's
scheduled rest day, he shall be entitled to
additional compensation of at least 50% of his
regular wage.
d. The payment of additional compensation for
work performed on regular holiday shall be
governed by Rule IV, Book Three, of these
regulations.
e. Where the collective bargaining agreement or
other applicable employment contract stipulates
the payment of a higher premium pay than that
prescribed under this Section, the employer
shall pay such higher rate.
Sec.8.Paid-off days, Rule III, Book III, IRR
Nothing in this Rule shall justify an employer in
reducing the compensation of his employees for the
unworked Sundays, holidays, or other rest days which
are considered paid-off days or holidays by
agreement or practice subsisting upon the effectivity
of the Code.
Sec.9.Relation to agreements, Rule III, Book III, IRR
Nothing herein shall prevent the employer and his
employees or their representatives in entering into
any agreement with terms more favorable to the
employees than those provided herein, or be used to
 LABOR STANDARDS 49 LABOR LAW

diminish any benefit granted to the employees under 3. Domestic helpers and persons in the personal
existing laws, agreements, and voluntary employer service of another
practices. 4. Managerial employees
5. Field personnel and other employees whose time
and performance is unsupervised by the
E. HOLIDAYS employer including those who are engaged on
task or contract basis, purely commission basis
Art. 94. Right to holiday pay. or those who are paid a fixed amount for the
a. Every worker shall be paid his regular daily wage performing work irrespective of the time
during regular holidays, except in retail and consumed in the performance thereof.
service establishments regularly employing less
than ten (10) workers;
b. The employer may require an employee to work MECHANICS OF THE AVAILMENT OF THE
on any holiday but such employee shall be paid a HOLIDAY PAY BENEFIT
compensation equivalent to twice his regular The employee is entitled to the payment of his
rate; and regular daily basic wage (100%) during said holidays,
c. As used in this Article, "holiday" includes: New even if the worker did not report for work on said
Year’s Day, Maundy Thursday, Good Friday, the days.
ninth of April, the first of May, the twelfth of
June, the fourth of July, the thirtieth of Provided that he was present or was on leave of
November, the twenty-fifth and thirtieth of absence with pay on the work day immediately
December and the day designated by law for preceding the holiday.
holding a general election.133
If the employee was suffered to work during the
Holiday pay is a legislated benefit enacted as part of holidays, he will be entitled to payment of holiday
Constitutional imperative that the state shall afford premium of 200% of his basic wage (100% of basic
protection to labor. Its purpose is not merely “to wage plus 100%)
prevent diminution of the monthly income of the
workers on account of work interruptions. Xxx
although the worker is forced to take a rest, he earns I. HOLIDAYS COVERED
what he should earn, that is, his holiday pay.” It is
also intended to enable the worker to participate REGULAR HOLIDAYS AND NATIONWIDE
in the national celebrations held during the days SPECIAL DAYS137
identified as with great historical and cultural
Unless otherwise modified by law, and or
significance.134
proclamation, the following regular holidays and
special days shall be observed in the country:
COVERAGE
REGULAR HOLIDAYS
General rule: Every worker should be paid his
1. New year’s Day. Jan 1
regular daily wage during regular holidays
2. Maundy Thursday
Exception: Holiday pay benefits shall not cover the
3. Good Friday
following persons
4. Eidul Fitr
5. Araw ng Kagitingan
1. Those of the government and any of its political
6. (Bataaan and Corregidor Day).
subdivisions, including government-owned and
7. Monday nearest Apr 9
controlled-corporations
8. Labor Day. Mon nearest May 1
2. Those of retail and service establishments
9. Independence Day. Mon nearest Jun 12
regularly employing less tan 10 workers
10. National Heroes Day. Last mon of Aug
a. Retail Establishment
11. Bonifacio Day. Mon nearest Nov 3
One principally engaged in the sale of goods
12. Christmas Day. Dec 25
to end-users for personal or household
13. Rizal Day. Mon nearest Dec 30
use135
NATIONWIDE SPECIAL HOLIDAYS
b. Service establishment
1. Ninoy Aquino Day. Mon nearest 21
One principally engaged in the sale of
2. All Saints Day. Nov 1
service to individuals for their own or
3. Last Day of the Year. Dec 31
household use and is generally recognized as
such136
133 Amended by RA 9492
In the event the holiday falls on a Wednesday, the
134Asian Transmission v CA (2004)
135 IRR of RA 6727. Wage Rationalization Act
136 IRR of RA 6727. Wage Rationalization Act 137 RA 9492

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 LABOR STANDARDS 50 LABOR LAW

holiday will be observed on the Monday of the week. the scheduled rest day amount
If the holiday falls on a Sunday, the holiday will be Regular holiday-
observed on the Monday that follows: Work on any regular
on0restday rate (200% of
holiday which falls on
regular daily wage + 30%
Provided, That for movable holidays, the President the scheduled rest day,
of such amount)
shall issue a proclamation, at least six months prior +
+
to the holiday concerned, the specific date that shall overtime
30% of the rate
be declared as a nonworking day: Regular daily wage
Work on special holidays +
Provided, however, The Eidul Adha shall be 30% of regular wage
celebrated as a regional holiday in the Autonomous Regular daily wage
Region in Muslim Mindanao." Work on special holiday
+
+
50% of the regular daily
Overtime
wage
MUSLIM HOLIDAYS
Article 169. Official Muslim holidays, PD 1083 Special holidays are not the same as special working
Code of Muslim Personal Laws holidays
The following are hereby recognized as legal Muslim
holidays: SPECIAL HOLIDAYS:
a. 'Amun Jadid (New Year), which falls on the National Special days Declared Special days
first day of the first lunar month of 1. Ninoy Aquino day 1. Special Non-Working
Muharram; 2. All Saints day Holiday
b. Maulid-un-Nabi (Birthday of the Prophet 3. Last day of new 2. Special Public Holiday
Muhammad), which falls on the twelfth day year 3. Special National Holiday
of the third lunar month of Rabi-ul-Awwal;
c. Lailatul Isra Wal Mi'raj (Nocturnal Journey
and Ascension of the Prophet Muhammad), Special working holiday is considered an ordinary
which falls on the twenty-seventh day of the working holiday, so there is no premium pay
seventh lunar month of Rajab;
d. 'Id-ul-Fitr (Hari Raya Pausa), which falls on DOUBLE HOLIDAY PAY
the first day of the tenth lunar month of
Shawwal, commemorating the end of the DOLE explanatory Bulletin on Worker’s Entitlement
fasting season; and to Holiday pay on 9 April 1993, if 2 holidays fall on
e. 'Id-ul-Adha (Hari Raja Haji), which falls on the same day
the tenth day of the twelfth lunar month of
Dhu 1-Hijja. IF UNWORKED IF WORKED
200% of basic wage 300% of basic wage

There should be no distinction between muslims

and non-muslims as regards to the payment of DOUBLE HOLIDAY RULE FOR MONTHLY-
benefits for Muslim Holidays. Wages and other PAID EMPLOYEES
emoluments granted by aw to the working man are
For covered employees whose monthly salaries are
determined on the basis of the criteria laid down by
computed based on 365 days and for those other
laws and not on worker’s faith.138
employees who are paid using factor 314, or 262, or
any other factor which already considers the
payment for the 11 regular holidays, NO additional
II. COMPUTATION OF HOLIDAY PAY payment is due them.139
Bar 2005
When work performed Premium pay
Work on any regular 200% of regular daily
holiday wage
Work on any regular
200% of regular daily
holiday
wage SUCCESSIVE HOLIDAY PAY140
+
+
overtime Employee is entitled to holiday for both days if:
30% of such amount
(if it exceeds 8 hours) 1. Employee is present on day immediately
Work on any regular 200% of regular daily preceding first holiday
holiday which falls on wage + 30% of such
139BWC-WHSD Opinion No. 053, s. 1998
138San Miguel Corp v CA (2002) 140 Sec 10, Rule IV, Book III, IRR

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 LABOR STANDARDS 51 LABOR LAW

2. Employee works on first holiday, which 2. The difference, 314, shall be used as divisor
entitles him to pay on second holiday for determining the monthly salary.
3. The monthly salary thus fixed actually
ROLE OF DIVISOR IN DETERMINING covers payment for 314 days of the year,
PAYMENT OF HOLIDAY PAY FOR including regular and special holidays.
MONTHLY PAID EMPLOYEES
No provision of law requires any employer to make
The divisor assumes an important role in determining adjustments in the monthly salary rate set by him to
whether or not holiday pay is already included in the take account of legal holidays falling on Sundays in a
monthly paid employee’s salary141 given year, otherwise to reckon a year at more than
365 days.
Monthly paid employees are not entitled to the
holiday pay if their total annual income is divided by
365 days resulting in a wage which is beyond the NON-WORKING/SCHEDULED REST DAY
minimum wage per day because they are considered
paid everyday of the year including holidays, rest Sec 6 (c), Rule V, Book III, IRR
days, and other non-working days. The 365 days are Where the day immediately preceding the holiday is
as follows: a non-working day in the establishment or the
scheduled rest day of the employee, he shall not be
365 days deemed to be on leave of absence on that day, in
300 ordinary days which case he shall be entitled to the holiday pay if
he worked on the day immediately preceding the
51 rest days
non-working day or rest day.
11 regular holidays
3 special holidays
III. RIGHT TO HOLIDAY PAY
1. FOR COMPANY WITH 6-DAY WORKING Right to Holiday Pay
SCHEDULE In case of absences
The divisor 314 means that the 10 legal holidays are Employee is on leave of absence
already included in the monthly pay of the employee with pay on the day immediately Entitled
preceding a regular holiday
2. FOR THE COMPANY WITH 5-DAY WORKING An employee is on leave of absence
SCHEDULE without pay on the day immediately Not entitled
The divisor 261 means that the holiday pay is already preceding a regular holiday
included in the monthly salary of the employee Temporary cessation of work
Regular holidays falling within the
142
period in cases of temporary
SUNDAYS shutdowns or cessation of work,
When a holiday falls on a Sunday, the following when:
Entitled
Monday will not be considered a holiday unless a 1. an annual inventory; or
proclamation says so. 2. repair or cleaning of machineries
and equipment is undertaken.
Furthermore as stated in the Wellington case, a legal
holiday falling on a Sunday does not create a legal Regular holidays during the
obligation to pay extra, aside from the usual holiday suspension of work if:
pay, to monthly-paid employees 1. Cessation of operation is due to
Not entitled
business reverses, and
2. Authorizedby the Secretary of
HOLIDAYS FALLING ON A SUNDAY 143 Labor.
Supreme Court ruled that the Regional Director erred Private school teachers, including faculty members
in saying that if a holiday fell on Sunday, an extra of colleges and universities
day of pay was created; thus, an employer should regular holidays during semestral
Not entitled
pay twice the amount of holiday pay on that day. vacations.
regular holidays during Christmas
Entitled
In fixing the salary: vacation;
1. Deduct 51 Sundays from the 365 Piece workers
His holiday pay shall not be less than
141Producers Bank v NLRC, 355 SCRA 489 (2001) his average daily earnings for the last
142Letter of Instruction No. 1087 seven (7) actual working days Entitled
143Wellington Investment and Manufacturing Corporation vs. Trajano

(1995):
preceding the regular holiday;

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 LABOR STANDARDS 52 LABOR LAW

Provided, However, that in no case C. OF TEACHERS, PIECE WORKERS,

shall the holiday pay be less than the
applicable statutory minimum wage
rate.
Seasonal workers
During off-season when they are not
at work
Workers assigned to “skeleton crews”
that work during the off-season and
regular holidays fall in that duration.
Seafarers
Any hours of work or duty including
hours of watch-keeping performed by
the seafarer on designated rest days
and holidays
A. IN CASE OF ABSENCES
Sec 6 (a), Rule IV, Book III, IRR
All covered employees shall be entitled to the
benefit provided herein when they are on leave of
absence with pay.
SEAFARERS AND SEASONAL WORKERS
Sec 8. Holiday pay of certain employees, Rule IV,
Book III, IRR
a. Private school teachers, including faculty
Not entitled members of colleges and universities, may not
be paid for the regular holidays during semestral
Entitled vacations. They shall, however, be paid for the
regular holidays during Christmas vacation;
b. Where a covered employee, is paid by results or
Entitled to
paid rest day output, such as payment on piece work, his
holiday pay shall not be less than his average
or holiday
daily earnings for the last seven (7) actual
pay
working days preceding the regular holiday;
Provided, However, that in no case shall the
holiday pay be less than the applicable statutory
minimum wage rate.
c. Seasonal workers may not be paid the required
holiday pay during off-season when they are not
at work

Employees who are on leave of absence without pay d. Workers who have no regular working days shall
on the day immediately preceding a regular holiday be entitled to the benefits provided in this Rule.
may not be paid the required holiday pay if he has
not worked on such regular holiday.
HOLIDAY PAY OF HOURLY-PAID FACULTY
MEMBERS144
B. IN CASE OF TEMPORARY They are not entitled to payment of holiday pay
because they are paid only for work actually
CESSATION OF WORK
done. Since regular holidays are known to both the
Sec 7, Rule IV, Book III, IRR school and faculty members as ―no class days;
a. In cases of temporary or periodic shutdown and certainly the latter do not expect payment for said
temporary cessation of work of an unworked holidays.
establishment, as when a yearly inventory or
when the repair or cleaning of machineries and They are entitled to their hourly rate on days
equipment is undertaken, the regular holidays declared as special holidays. Be it noted that when
falling within the periods shall be compensated a special public holiday is declared, the faculty
in accordance with this Rule. member paid by the hour is deprived of expected
income, and it does not matter that the school
b. The regular holiday during the cessation of calendar is extended in view of the days or hours
operation of an enterprise due to business lost, for their income that could be earned from
reverses as authorized by the Secretary of Labor other sources is lost during the extended days.
may not be paid by the employer.
Similarly, when classes are called off or shortened
on account of typhoons, floods, rallies, and the
like, these faculty members must likewise be
paid, whether or not extensions are ordered.

PIECE WORKERS
Philosophy underlying the exclusion of piece workers
from the 8-hour law is that said workers are paid
depending upon the work they do irrespective of the
amount of time employed in doing said work.145

144Jose Rizal College v. NLRC, G.R. No. 65482, Dec. 1, 1987

145Red V Coconut Products Ltd., v. CIR, 1966

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 LABOR STANDARDS
SEAFARERS
Any hours of work or duty including hours of watch-
keeping performed by the seafarer on designated
rest days and holidays shall be paid rest day or
holiday pay.146
SEASONAL WORKERS
Seasonal workers who do not work during off-season
are not entitled to pay for the regular holidays
occurring during their off-season. Workers assigned
to “skeleton crews” that work during the off-season
have the right to be paid on regular holidays falling
in that duration.
F. LEAVES
I. SERVICE INCENTIVE LEAVE
Art. 95. Right to service incentive leave.
Every employee who has rendered at least one year
of service shall be entitled to a yearly service
incentive leave of five days with pay.
This provision shall not apply to those who are
already enjoying the benefit herein provided, those
enjoying vacation leave with pay of at least five days
and those employed in establishments regularly
employing less than ten employees or in
establishments exempted from granting this benefit
by the Secretary of Labor and Employment after
considering the viability or financial condition of
such establishment.
The grant of benefit in excess of that provided
herein shall not be made a subject of arbitration or
any court or administrative action.
COVERAGE
Every employee who has rendered at least one year
of service shall be entitled to a yearly service
incentive leave of five days with pay.
Exceptions: not covered
1. Those of the government and any of its
political subdivisions, including GOCCs
2. Domestic helpers and persons in the
personal service of another
3. Managerial employees as defined in Book 3
of this Code
4. Field personnel and other employees whose
performance is unsupervised by the
employer including those who are engaged
on task or contract basis, purely commission
basis, or those who are paid a fixed amount
for performing work irrespective of the time
consumed in the performance thereof
146Section
11.C, Standard Terms and Conditions Governing the
Employment of Filipino Seafarers on Board Ocean-Going Vessels
LA SALLIAN COMMISION ON BAR OPERATIONS
53 LABOR LAW
5. Those who are already enjoying the benefit
herein provided
6. Those enjoying vacation leave with pay of at
least 5 days
7. Those employed in establishments regularly
employing less than 10 employees.147
Teachers of private school on contract basis are
entitled to service incentive leave.148
Piece-rate workers are not entitled to service
incentive leave. 149 However, they shall be entitled
to service incentive leave when, although they are
piece-rate wokers, they are regular employees.150
MEANING OF “1 YEAR OF SERVICE”
Sec 3, Rule V, Book III, IRR
The term "at least one-year service" shall mean
service for not less than 12 months, whether
continuous or broken, reckoned from the date the
employee started working, including authorized
absences and paid regular holidays unless the
working days in the establishment as a matter of
practice or policy, or that provided in the
employment contract is less than 12 months, in
which case said period shall be considered as one
year.
ENTITLEMENT
The grant of benefit in excess of that provided
herein shall not be made a subject of arbitration or
any court or administrative action. 151
The service incentive leave shall be commutable to
its money equivalent if not used or exhausted at the
end of the year. 152
The cause of action of an entitled employee to claim
his service incentive leave pay accrues from the
moment the employer refuses to remunerate its
monetary equivalent if the employee did not make
use of said leave credits but instead chose to avail of
its commutation (into money). Accordingly, if the
employee wishes to accumulate his leave credits and
opts for its commutation upon his resignation or
separation from employment, his cause of action to
claim the whole amount of his accumulated service
incentive leave shall arise when the employer fails to
pay such amount at the time of his resignation or
separation from employment.153
147Sec. 1, Rule V, Implementing Rules and Regulations
148Cebu Institute of Technology v. Ople, 156 SCRA 531
149 Makati Haberdashery v NLRC (1989)
150 Labor Congress v NLRC (1998)
151 Art 95 (c)
152 Sec 3, Rule V, Book III, IRR
153Auto Bus Transport vs. NLRC (2005)
 LABOR STANDARDS
II. MATERNITY LEAVE154
COVERAGE
Every woman in the private sector, whether married
or unmarried, is entitled to the maternity leave
benefits.
REQUISITES
1. Employment
A female employee employed at the time of
delivery, miscarriage or abortion
2. Contribution
Who has paid at least 3 monthly contributions in
the 12-month period immediately preceding the
semester of her childbirth, or miscarriage
3. Notice
Employee notified 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
provide.
BENEFITS
Adaily maternity benefit equivalent to 100% of her
average daily salary credit for:
1. 60 days for normal delivery
2. 78 days for caesarean delivery
This benefit shall not be included in the
computation of 13th month pay as it is granted to
an employee in lieu of wages which is the basis for
computing 13th month.
AVALIMENT
OTHER CONDITIONS
1. Employer shall advance the payment subject to
reimbursement by the SSS within 30 days from
filing of leave application.
2. Availment shall be a bar to the recovery of
sickness benefits provided by this Act for the
same period for which daily maternity benefits
have been received.
3. Employee may only avail of benefit for the first
four (4) deliveries or miscarriages.
4. Sanction: That if an employee should give birth
or suffer miscarriage
a. without the required contributions having
been remitted for her by her ER to the
SSS, or
b. without the latter having been previously
notified by the ER of time of the
pregnancy, then the employer shall pay to
the SSS damages equivalent to the
benefits which said employee member
154 Sec 14-A, RA 1161 as amended by RA 7322 and RA 8282
LA SALLIAN COMMISION ON BAR OPERATIONS
54 LABOR LAW
would otherwise have been entitled to.
III. PATERNITY LEAVE155
COVERAGE
Every married male employee in the private and
public sectors shall be entitled to a paternity leave
of 7 days with full pay for the first four deliveries of
the legitimate spouse with whom he is cohabiting.
REQUISITES
1. Employment
2. Marriage to and cohabitation with his
legitimate spouse
3. Delivery of the legitimate spouse
WHO IS ENTITLED TO PATERNITY LEAVE
Married male employee both in the public and
private sectors156
WHEN MAY IT BE AVAILED OF
It may be availed of for the first 4 deliveries of the
legitimate spouse with whom he is cohabiting157
WHAT ARE THE BENEFITS UNDER THE LAW
A married male employee is allowed not to report
for work for seven (7) days.
While on leave, the employee continues to earn the
compensation, on the condition that his spouse has
delivered a child or suffered a miscarriage for
purposes of enabling him to effectively lend support
to his wife in her period of recovery and/or in the
nursing of the newly-born child.158
For purposes of this Act, delivery shall include
childbirth or any miscarriage.
IV. PARENTAL LEAVE159
Leave benefits granted to a solo parent to enable
him/her to perform parental duties and
responsibilities where physical presence is required.
COVERAGE
Any solo parent or individual who is left alone with
the responsibility of parenthood due to:
1. Giving birth as a result of rape or, as used by the
law, other crimes against chastity
2. Death of spouse
3. Spouse is detained or is serving sentence for a
criminal conviction for at least one (1) year
4. Physical and/or mental incapacity of spouse as
certified by a public medical practitioner
5. Legal separation or de facto separation from
155 RA 8187: Paternity Leave Act of 1996
156 Sec 2, RA8187. Paternity Leave
157 Sec 2, RA8187. Paternity Leave
158 Sec 3, RA8187. Paternity Leave
159RA 8972: Parental Leave for Solo Parents
 LABOR STANDARDS
spouse for at least one (1) year: Provided that
he/she is entrusted with the custody of the
children
6. Declaration of nullity or annulment of marriage
as decreed by a court or by a church: Provided,
that he/she is entrusted with the custody of the
children
7. Abandonment of spouse for at least one (1) year
8. Unmarried father/mother who has preferred to
keep and rear his/her child/children, instead of
having others care for them or give them up to a
welfare institution
9. Any other person who solely provides parental
care and support to a child or children:
Provided, that he/she is duly licensed as a foster
parent by the Department of Social Welfare and
Development (DSWD) or duly appointed legal
guardian by the court; and
10. Any family member who assumes the
responsibility of head of family as a result of the
death, abandonment, disappearance, or
prolonged absence of the parents or solo parent:
Provided, that such abandonment,
disappearance, or prolonged absence lasts for at
least one (1) year.
A change in status or circumstances of parent
claiming benefits, such that he/she is no longer left
alone with the responsibility of parenthood, shall
terminate his/her eligibility for these benefits160
CONDITIONS TO ENTITLEMENT
A solo parent employee shall be entitled to the
parental leave under the following conditions:
1. He/she has rendered at least one (1) year of
service, whether continuous or broken
2. He/she has notified his/her employer that
he/she will avail himself/herself of it, within a
reasonable period of time; and
3. He/she has presented to his/her employer a Solo
Parent Identification Card, which may be
obtained from the DSWD office of the city or
municipality where he/she resides.
OTHER EMPLOYMENT-RELATED
BENEFITS AVAILABLE TO ALL “SOLO
PARENTS”
(See VIII. Labor Standards - Related Special Laws)
1. Parental leave
2. Flexible work schedule
3. No discrimination policy
4. Educational benefits
5. Housing benefits
6. Medical assistance
160 Sec 3, RA 8972
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55 LABOR LAW
V. LEAVES FOR VICTIMS OF VIOLENCE AGAINST
WOMEN
Sec 43, RA 9262: Anti Violence against Women and
Children
Victims under this Act shall be entitled to take a paid
leave of absence up to ten (10) days in addition to
other paid leaves under the Labor Code and Civil
Service Rules and Regulations, extendible when the
necessity arises as specified in the protection order.
Any employer who shall prejudice the right of the
person under this section shall be penalized in
accordance with the provisions of the Labor Code
and Civil Service Rules and Regulations. Likewise, an
employer who shall prejudice any person for assisting
a co-employee who is a victim under this Act shall
likewise be liable for discrimination.
VAWC VICTIMS
A victim of VAWC who is employed shall be entitled
to a paid leave of up to ten (10) days in addition to
other paid leaves under the Labor Code and Civil
Service Rules and Regulations and other existing laws
and company policies:
1. At any time during the application of any
protection order, investigation, prosecution
and/or trial of the criminal case, extendible
when the necessity arises as specified in the
protection order.
2. Upon the issuance of the Punong
Barangay/kagawad or prosecutor or the
Clerk of Court, as the case may be, of a
certification (at no cost) to the woman that
such an action is pending, and this is all
that is required for the employer to comply
with the 10- day paid leave.
3. For government employees, in addition to
the aforementioned certification, the
employee concerned must file an
application for leave citing as basis R.A.
9262.
AVAILMENT
In addition to other paid leaves under existing labor
laws, company policy, and/or collective bargaining
agreement, the qualified victim employee shall be
entitled to a leave of up to 10 days with full pay,
consisting of basic salary and mandatory allowances
fixed by the Regional Wage Board, if any.
G. SERVICE CHARGE
Art. 96.Service Charges
All service charges collected by hotels, restaurants
and similar establishments shall be distributed at the
rate of eighty-five percent (85%) for all covered
 LABOR STANDARDS
employees and fifteen percent (15%) for
management. The share of the employees shall be
equally distributed among them. In case the service
charge is abolished, the share of the covered
employees shall be considered integrated in their
wages.
COVERAGE
This rule shall apply only to establishments which
collect service charges such as: 161
1. Hotels, restaurants, lodging houses, night clubs,
cocktail lounge, massage clinics, bars, casinos
and gambling houses and similar enterprises
2. Including those entities operating primarily as
private subsidiaries of the Government
Shall apply to ALL employees of covered employers
regardless of their positions, designations, or
employment status, irrespective of the method by
which their wages are paid 162
Exception: not covered
Managerial employees
DISTRIBUTION OF SERVICE CHARGES
Sec. 3.Distribution of service charges, Rule VI,
Book III, IRR
All service charges collected by covered employers
shall be distributed at the rate of 85% for the
employees and 15% for the management. The 85%
shall be distributed equally among the covered
employees. The 15% shall be for the disposition by
management to answer for losses and breakages and
distribution to managerial employees at the
discretion of the management in the latter case.
Sec. 4. Frequency of distribution, Rule VI, Book III,
IRR
The shares referred to herein shall be distributed
and paid to the employees not less than once every
two (2) weeks or twice a month at intervals not
exceeding sixteen (16) days.
Service charges are distributed in accordance with
the following percentage of sharing:
1. Eighty-five percent (85%) for the employees to
be distributed equally among them; and The
shares shall be distributed to employees not less
than once every 2 weeks or twice a month at
intervals not exceeding 16 days.
2. Fifteen percent (15%) for the management to
answer for losses and breakages and, at the
discretion of the management, distribution to
managerial employees.
161Sec 1, Rule VI, Book 3, IRR
162Sec 2, Rule VI, Book 3, IRR
LA SALLIAN COMMISION ON BAR OPERATIONS
56 LABOR LAW
INTEGRATION
Sec. 5. Integration of service charges., Rule VI,
Book III, IRR
In case the service charges is abolished the share of
covered employees shall be considered integrated in
their wages. The basis of the amount to be
integrated shall be the average monthly share of
each employee for the past twelve (12) months
immediately preceding the abolition of withdrawal of
such charges.
Sec. 6.Relation to agreements., Rule VI, Book III,
IRR
Nothing in this Rule shall prevent the employer and
his employees from entering into any agreement with
terms more favorable to the employees than those
provided herein, or be used to diminish any benefit
granted to the employees under existing laws,
agreement and voluntary employer practice.
Sec. 7, Rule VI, Book III, IRR
This rule shall be without prejudice to existing,
future collective bargaining agreements.
Nothing in this rule shall be construed to justify the
reduction or diminution of any benefit being enjoyed
by any employee at the time of effectivity of this
rule.
H. THIRTEENTH (13TH) MONTH PAY AND OTHER
BONUSES163
RATIONALE
1. To further protect the level of real wages from
the ravage of world-wide inflation
2. There has been no increase in the legal
minimum wage rates since 1970
3. The Christmas season is an opportune time for
society to show its concern for the plight of the
working masses so they may properly celebrate
Christmas and New Year.
Bar 1994, 1998
Coverage
General Rule
All employers are hereby required to pay all their
rank and file employees a 13th month pay not later
than Dec 24 of every year,
Provided that they have worked for at least one (1)
month during a calendar year.
Exceptions
Exempted Employers
1. Government, its political subdivisions, including
GOCCs except those operating essentially as
private subsidiaries of the Government
163Revised
Guidelines on the Implementation of the 13th Month Pay
Law and PD 851
 LABOR STANDARDS
2. Employers already paying their employees a 13th
month pay or more in a calendar year or its
equivalent at the time of this issuance
“Equivalent” includes:
a. Christmas bonus, mid-year bonus, cash
bonuses
b. and other payments amounting to not less
than 1/12 of the basic salary
c. but shall NOT INCLUDE cash and stock
dividends, cost of living allowances and all
other allowances regularly enjoyed by the
employee as well a non-monetary benefits.
3. Employers of household helpers and persons in
the personal service of another relation to such
workers
4. Employers of those who are paid on purely
commission, boundary or task basis and those
who are paid a fixed amount for performing
specific work
Exception
Where the workers are paid on piece-rate
basis in which case the employer shall grant the
required 13th month pay to such workers.
Workers paid on a piece-rate basis: those who
are paid a standard amount for every piece or
unit of work produced that is more or less
regularly replicated, without regard to the time
spent in producing the same.
I. NATURE OF 13TH MONTH PAY
AMOUNT AND DATE OF PAYMENT
MINIMUM AMOUNT
1/12 of the total basic salary earned by an employee
within a calendar year for the year 1987
Bar 1997, 2002
Base amount
Basic salary shall include:
1. Cost of living allowances (COLA) integrated into
the basic salary of a covered employee pursuant
to EO 178.
2. All remuneration‘s or earning paid by this
employer for services rendered.
3. But not the allowances and monetary benefits
which are not considered or integrated as part
of the regular or basic salary, such as the cash
equivalent of:
a. unused vacation and sick leave credits,
b. overtime,
c. premium,
d. night differential
e. holiday pay and, and
f. cost-of-living allowances.
LA SALLIAN COMMISION ON BAR OPERATIONS
57 LABOR LAW
TIME OF PAYMENT
General Rule: 13th month pay ispaid not later than
Dec 24 of each year.
Exception: Employer may give to his employees half
of the required 13th Month Pay before the opening of
the regular school year and the other half on or
before the 24th of December every year.
The frequency of payment of this monetary benefit
may be the subject of agreement between the
employer and the recognized CBA of the employees.
II. 13TH MONTH PAY IN SPECIAL CASES
1. Paid by Results
Employees who are paid on piece work basis are,
by law, entitled to the 13th Month Pay.
2. Employees who are paid a fixed or guaranteed
wage plus commission are entitled to 13th
month pay (not purely commission); the basis for
computation shall be both their fixed or
guaranteed wage and commission.
3. Those with Multiple Employers
Government Employees working part time in a
private enterprise, including private educational
institutions, as well as Employees working in two
or more private firms, whether on full or part
time bases, are entitled to the required 13th
Month Pay from all their private Employers
regardless of their total earnings from each or
all their Employers.
4. Private School Teacher
Private school teachers, including faculty
members of universities and colleges, are
entitled to the required 13th month pay,
regardless of the number of months they teach
or are paid within a year, if they have rendered
service for at least one (1) month within a year.
Overload pay is NOT included in the computation
for 13th month pay; overload is not overtime as
it is additional work done within the normal
shift164
5. Resigned or Separated Employee
An Employee who has resigned or whose services
were terminated at any time before the time for
payment of the 13th month pay is entitled to
this monetary benefit 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 service.
6. Wage Difference
The difference between the minimum wage and
164Letran Calamba Faculty vs. NLRC, 2008
 LABOR STANDARDS 58 LABOR LAW

the actual salary received by the Employee
cannot be deemed as his 13th month pay as such
difference is not equivalent to or of the same
import as the said benefit contemplated by
law.165
integral part of the basic salary structure. They
are not overtime payments, or profit sharing
payments or any other fringe benefit. 172

7. Terminated Employees IV. CBA VIS-À-VIS 13TH MONTH PAY

The payment of the 13th month pay may be
demanded by the employee upon the cessation In order to exempt the employer from paying 13th
of employer- employee relationship. 166 month pay, a bonus stipulation in the CBA should be
general in scope, applicable to all employees, not
only a few, for the legal obligation benefits all
ADDITIONAL RULES employees regardless of their designation or
employment status so long as they have worked at
1. Commissions least one month during the calendar year.173
If the commissions may be properly considered
part of the basic salary, then they should be
INCLUDED. If they are not an integral part of the
basic salary, then they should be EXCLUDED. 167 VI. Working
2. Substitute Payment not allowed
Benefits in the form of food or free electricity,
Conditions for
assuming they were given, were not a proper
substitute for the 13th month pay required by
Special groups
law. Neither may year-end rewards for loyalty A. WOMEN WORKERS
and service be considered in lieu of 13th month COVERAGE
pay.168
Shall apply to all employers, whether operating for
profit or not, including educational, religious and
3. 14th Month Pay is not mandated Employers
charitable institutions
already paying their employees a 13th month
pay or its equivalent are not covered by this EXCEPTIONS
Decree.169 The government and its subdivisions including
GOCC’s and to the employers of household helpers
and persons in their personal service insofar as such
III. COMMISSIONS VIS-À-VIS 13TH MONTH PAY workers are concerned.174
Bar 1995, 2002, 2003
Commissions are excluded from the term basic
salary because commissions are paid as I. PROHIBITED ACTS
productivity bonuses. These have no clear direct or 1. Night work
necessary relation to the amount of work actually 2. Discrimination
done by each individual employee.170 3. Stipulation against marriage
4. Discharge to prevent enjoyment of benefits
A bonus is an amount granted and paid ex gratia to and on account of pregnancy
an employee. If an employer cannot be compelled to 5. Discharge on account of Testimony
pay a productivity bonus to its employees, it should
follow that such productivity bonus, when given,
should not be deemed to fall within the basic
salary of employees when the time comes to
compute their 13th month pay171

It appears that petitioner pays its salesmen a small

fixed or guaranteed wage; the greater part of the
salesmen‘s wages or salaries being composed of the
sales or incentive commissions earned on actual sales
closed by them. The sales commissions were an

165JPL Marketing Promotions vs. CA, 2005

166ArchillesManufacturing Corp. vs. NLRC (1995)
167Phil. Duplicators Inc. vs. NLRC (1995)
168Framanlis Farms, Inc. v. MOLE (1989)
169Kamaya Port Hotel v. NLRC (1989) 172Phil.Duplicators vs. NLRC, 227 SCRA 747 (1995)
170Boie Takada v de la Serna, 228 SCRA 329 (1993) 173Marcopper Mining Corp. vs. Ople
171Boie Takada v de la Serna, 228 SCRA 329 (1993) 174 Sec 1, Rule XII, Book III, IRR

LA SALLIAN COMMISION ON BAR OPERATIONS

 LABOR STANDARDS
A. NIGHT WORK
**RA 10151(21 June 2011) repealed Art 130 & 131
Art 130. Night work prohibition
No woman, regardless of age, shall be employed or
permitted or suffered to work, with or without
compensation:
a. In any industrial undertaking or branch thereof
between ten o’clock at night and six o’clock in
the morning of the following day; or
b. In any commercial or non-industrial undertaking
or branch thereof, other than agricultural,
between midnight and six o’clock in the morning
of the following day; or
c. In any agricultural undertaking at nighttime
unless she is given a period of rest of not less
than nine (9) consecutive hours.
General rule: No woman should work during the
following periods.
Industry Prohibited hours
Industrial 10 pm – 6 pm (8 hrs)
Commercial 12 mn to 6 am (6 hrs)
At nighttime unless she is given a
Agricultural
rest period of not less than 9 hrs175
Exceptions:176 The prohibitions prescribed by the
preceding Article shall not apply in any of the
following cases:
1. In cases of actual or impending emergencies
caused by serious accident, fire, flood, typhoon,
earthquake, epidemic or other disasters or
calamity, to prevent loss of life or property, or
in cases of force majeure or imminent danger to
public safety;
2. In case of urgent work to be performed on
machineries, equipment or installation, to avoid
serious loss which the employer would
otherwise suffer;
3. Where the work is necessary to prevent serious
loss of perishable goods;
4. Where the woman employee holds a responsible
position of managerial or technical nature, or
where the woman employee has been engaged
to provide health and welfare services;
5. Where the nature of the work requires the
manual skill and dexterity of women workers
and the same cannot be performed with equal
efficiency by male workers;
6. Where the women employees are immediate
members of the family operating the
establishment or undertaking; and
7. Under other analogous cases exempted by the
Secretary of Labor and Employment in
appropriate regulations.
175 Art 130, Labor Code (Repealed by RA 10151)
176 Art 131, Labor Code (Repealed by RA 10151)
LA SALLIAN COMMISION ON BAR OPERATIONS
59 LABOR LAW
B.DISCRIMINATION
Bar 1997, 2003
Art 135. Discrimination prohibited
It shall be unlawful for any employer to discriminate
against any woman employee with respect to terms
and conditions of employment solely on account of
her sex.
The following are acts of discrimination:
a. Payment of a lesser compensation,
including wage, salary or other form of
remuneration and fringe benefits, to a
female employees as against a male
employee, for work of equal value; and
b. Favoring a male employee over a female
employee with respect to promotion,
training opportunities, study and scholarship
grants solely on account of their sexes.
Criminal liability for the willful commission of any
unlawful act as provided in this Article or any
violation of the rules and regulations issued pursuant
to Section 2 hereof shall be penalized as provided in
Articles 288 and 289 of this Code: Provided, That the
institution of any criminal action under this provision
shall not bar the aggrieved employee from filing
an entirely separate and distinct action for
money claims, which may include claims for
damages and other affirmative reliefs. The actions
hereby authorized shall proceed independently of
each other. (As amended by Republic Act No. 6725,
May 12, 1989)
C. STIPULATION AGAINST MARRIAGE
Bar 1995
Art 136. Stipulation against marriage
It shall be unlawful for an employer to require as a
condition of employment or continuation of
employment that a woman employee shall not get
married, or to stipulate expressly or tacitly that upon
getting married, a woman employee shall be deemed
resigned or separated, or to actually dismiss,
discharge, discriminate or otherwise prejudice a
woman employee merely by reason of her marriage.
D. DISCHARGE TO PREVENT
ENJOYMENT OF BENEFITS AND ON
ACCOUNT OF PREGNANCY
Art 137. Prohibited Act
It shall be unlawful for any employer:
1. To deny any woman employee the benefits
provided for in this Chapter or to discharge any
woman employed by him for the purpose of
preventing her from enjoying any of the
benefits provided under this Code.
 LABOR STANDARDS
2. To discharge such woman on account of her
pregnancy, or while on leave or in confinement
due to her pregnancy;
3. To discharge or refuse the admission of such
woman upon returning to her work for fear that
she may again be pregnant.
E. DISCHARGE ON ACCOUNT OF
TESTIMONY
Sec 13(d), Rule XII, Book III
It shall be unlawful for any employer to discourage
any woman or child or any other employee for having
filed a complaint or having testified or being about
to testify under the code.
II.FACILITIES AND FAMILY PLANNING SERVICES
Art 132. Facilities for Women
The Secretary of Labor and Employment shall
establish standards that will ensure the safety and
health of women employees. In appropriate cases, he
shall, by regulations, require any employer to:
a. Provide seats proper for women and permit
them to use such seats when they are free from
work and during working hours, provided they
can perform their duties in this position without
detriment to efficiency;
b. To establish separate toilet rooms and
lavatories for men and women and provide at
least a dressing room for women;
c. To establish a nursery in a workplace for the
benefit of the women employees therein; and
d. To determine appropriate minimum age and
other standards for retirement or termination
in special occupations such as those of flight
attendants and the like.
Art. 134. Family planning services; incentives for
family planning.
a. Establishments which are required by law to
maintain a clinic or infirmary shall provide
free family planning services to their
employees which shall include, but not be
limited to, the application or use of
contraceptive pills and intrauterine devices.
b. In coordination with other agencies of the
government engaged in the promotion of family
planning, the Department of Labor and
Employment shall develop and prescribe
incentive bonus schemes to encourage family
planning among female workers in any
establishment or enterprise.
LA SALLIAN COMMISION ON BAR OPERATIONS
60 LABOR LAW
III. SPECIAL WOMEN WORKERS
Art. 138. Classification of certain women workers.
Any woman who is permitted or suffered to work,
with or without compensation, in any night club,
cocktail lounge, massage clinic, bar or similar
establishments under the effective control or
supervision of the employer for a substantial period
of time as determined by the Secretary of Labor and
Employment, shall be considered as an employee
of such establishment for purposes of labor and
social legislation.
IV.MATERNITY LEAVE177
COVERAGE
Every woman in the private sector, whether married
or unmarried, is entitled to the maternity leave
benefits.
REQUISITES
1. Employment
A female employee employed at the time of
delivery, miscarriage or abortion
2. Contribution
Who has paid at least 3 monthly contributions in
the 12-month period immediately preceding the
semester of her childbirth, or miscarriage
3. Notice
Employee notified 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
provide.
BENEFITS
Adaily maternity benefit equivalent to 100% of her
average daily salary credit for:
1. 60 days for normal delivery
2. 78 days for caesarean delivery
This benefit shall not be included in the
computation of 13th month pay as it is granted to
an employee in lieu of wages which is the basis for
computing 13th month.
177 Sec 14-A, RA 1161 as amended by RA 7322 and RA 8282
 LABOR STANDARDS
AVALIMENT
Other conditions
1 Employer shall advance the payment subject to
reimbursement by the SSS within 30 days from
filing of leave application.
2 Availment shall be a bar to the recovery of
sickness benefits provided by this Act for the
same period for which daily maternity benefits
have been received.
3 Employee may only avail of benefit for the first
four (4) deliveries or miscarriages.
4 Sanction: That if an employee should give birth
or suffer miscarriage
a. Without the required contributions having
been remitted for her by her ER to the SSS,
or
b. Without the latter having been previously
notified by the ER of time of the pregnancy,
then the employer shall pay to the SSS
damages equivalent to the benefits which
said employee member would otherwise
have been entitled to.
V. SEXUAL HARRASSMENT178
WORK, EDUCATION OR TRAINING-RELATED
SEXUAL HARASSMENT, DEFINED
Sec 3. definition, RA 7877
Work, education or training-related sexual
harassment is committed by an employee, manager,
supervisor, agent of the employer, teacher,
instructor, professor, coach, trainor, or any other
person who, having authority, influence or moral
ascendancy over another in a work or training or
education environment, demands, requests or
otherwise requires any sexual favor from the other,
regardless of whether the demand, request or
requirement for submission is accepted by the object
of said Act.
HOW WORK-RELATED SEXUAL
HARASSMENT IS COMMITTED
Bar 2000, 2004
Sec 3. Definition, RA 7877
a. In a work-related or employment
environment, sexual harassment is committed
when:
i. The sexual favor is made as a condition in
the hiring or in the employment, re-
employment or continued employment of
said individual, or in granting said individual
favorable compensation, terms, conditions,
promotions, or privileges; or the refusal to
grant the sexual favor results in limiting,
segregating or classifying the employee
which in a way would discriminate, deprive
or diminish employment opportunities or
178 RA 7877: Anti-Sexual Harrasment Act
LA SALLIAN COMMISION ON BAR OPERATIONS
61 LABOR LAW
otherwise adversely affect said employee;
ii. The above acts would impair the
employee’s rights or privileges under
existing labor laws; or
iii. The above acts would result in an
intimidating, hostile, or offensive
environment for the employee.
b. In an education or training environment,
sexual harassment is committed:
i. Against one who is under the care, custody
or supervision of the offender;
ii. Against one whose education, training,
apprenticeship or tutorship is entrusted to
the offender;
iii. When thesexual favor is made a condition
to the giving of a passing grade, or the
granting of honors and scholarships, or the
payment of a stipend, allowance or other
benefits, privileges, or considerations; or
iv. When the sexual advances result in an
intimidating, hostile or offensive
environment for the student, trainee or
apprentice.
WHO ARE LIABLE
1. The offender:
a. Employee
b. Manager, Supervisor, agent of the employer
c. Teacher, instructor, professor, coach,
trainer
d. Any other person who, having authority,
influence or moral ascendancy over another
in a work or training or education
environment
2. Any person who directs or induces another to
commit any act of sexual harassment
3. Any person who cooperates in the commission
thereof by another without which it would not
have been committed
ROLE OF THE EMPLOYER OR HEAD OF
OFFICE
The Employer or Head of Office shall have the duty:
1. To prevent the commission of such acts and
2. To lay down the procedure for the resolution,
settlement or prosecution of committed acts.
EMPLOYER SHALL BE SOLIDARILY LIABLE FOR
DAMAGES IF:
1. The employer or head of office, educational or
training institution is informed of such acts by
the offended party and
2. No immediate action is taken thereon
 LABOR STANDARDS 62 LABOR LAW

INDEPENDENT ACTION FOR DAMAGES commercials promoting alcohol, tobacco

and its by-products or violence.182
The victim of work, education or training-related
b. the employment contract is concluded by
sexual harassment can institute a separate and
the child’s parents or guardian, and
independent action for damages and other
approved by DOLE
affirmative relief.
c. The ER shall ensure the protection, health,
safety and morals of the child
SANCTIONS d. The ER shall institute measures to prevent
1. Criminal: imprisonment of 1 month to mos. Or the child’s exploitation or discrimination
fine of P10k to P20k or both taking into account the system and level of
Prescription of such action is in 3 years. remuneration, and the duration and
2. Termination arrangement of working time
e. The ER shall formulate and implement,
subject to the approval and supervision of
B. MINOR WORKERS competent authorities, a continuing
program for training and skills acquisition
Article 139. Minimum employable age. of the child.183
No child below fifteen (15) years of age shall be
employed, except when he works directly under the
sole responsibility of his parents or guardian, and his Bar 2002
employment does not in any way interfere with his Employment of Children from 15 to 18 - allowed
schooling. but restricted to non-hazardous undertakings.
Any person between fifteen (15) and eighteen (18) The following are hazardous workplaces: 184
years of age may be employed for such number of 1. Nature of the work exposes the workers to
hours and such periods of the day as determined by dangerous environmental elements,
the Secretary of Labor and Employment in contaminants or working conditions;
appropriate regulations. 2. Construction work, logging, fire-fighting,
mining, quarrying, blasting, stevedoring,
The foregoing provisions shall in no case allow the dock work, deep sea fishing, and
employment of a person below eighteen (18) years of mechanized farming;
age in an undertaking which is hazardous or 3. Manufacture or handling of explosives and
deleterious in nature as determined by the other pyrotechnic products;
Secretary of Labor and Employment. 4. Exposure to or use of heavy power-driven
machinery or equipment;
Bar 2004
General Rule: Children below 15 shall NOT be Exposure to or use of power-driven tools
employed 179
QUANTITY
Exceptions:
1. Child works directly under the sole Age Bracket Daily Max Weekly Max
responsibility of his parents or legal guardian Below 15 y 4 hours 20 hours
and where only members of the ER‘s family are 15 to below 18 8 hours 40 hours
employed, provided:
a. his employment does NOT endanger his NIGHT WORK PROHIBITION
life, safety, health and morals, Age Bracket Prohibited Hours
b. nor impairs his normal development, and
Below 15 y 8 pm to 6 am (10 hrs)
c. the parent or legal guardian shall provide
15 to below 18 10 pm to 6 am (8 hrs)
the said minor child with the prescribed
primary and/or secondary education180

2. Child‘s employment or participation in public

entertainment or information through cinema,
theater, radio or television is essential, provided
that:181
a. employment does NOT involve ads or

179Art. 139(a), Labor Code and Sec. 12 to 16 of RA 7610 as amended 182Sec. 14 of RA 7610 as amended by RA 7658
by RA 7658 and RA 9231 183Sec. 12 of RA 7610 as amended by RA 7658
180 Sec. 12, RA 7610 as amended by RA 7658 184 Sec 3, Rule XIII, Book III, IRR
181Sec. 12 of RA 7610 as amended by RA 7658

LA SALLIAN COMMISION ON BAR OPERATIONS

 LABOR STANDARDS
C. EMPLOYMENT OF HOUSEKEEPERS
Bar 2000
Domestic or household Service, defined
Art 141. Coverage
This Chapter shall apply to all persons rendering
services in households for compensation.
"Domestic or household services" shall mean
service in the ER's home, which is usually
necessary or desirable for the maintenance and
enjoyment thereof and includes ministering to the
personal comfort and convenience of the members of
the ER's.
Sec1(b), Rule XII, BookIII, IRR
(b) The term ―househelper”as used herein is
synonymous to the term ―domestic servant” and
shall refer to any person, whether male or female,
who renders services in and about the employer‘s
home and which services are usually necessary or
desirable for the maintenance and enjoyment
thereof, and ministers exclusively to the persona
comfort and enjoyment of the employer‘s family.
The term `househelper' is synonymous to the term
`domestic servant' and shall refer to any person,
whether male or female, who renders services in and
about the ER's home and which services are usually
necessary or desirable for the maintenance and
enjoyment thereof, and ministers exclusively to the
personal comfort and enjoyment of the ER's
family.185
A househelper or a laundry woman, as well as a
gardener, driver, or a houseboy who work in the
staff house of a company are not househelpers.186
The criterion is not the nature of the work but the
personal comfort and enjoyment of the family of
the employer in the home of said employer. 187
CONDITIONS OF EMPLOYMENT AND RIGHTS OF
HOUSE HELPERS
1. COMPENSATION
Minimum wage rates shall be equivalent to the basic
cash wages plus lodging, food and medical
attendance.188
Art 143. Minimum Wage
Househelpers shall be paid the following minimum
wage rates:
185Apex Mining Co. v. NLRC, 1991
186Apex Mining Co. v. NLRC, 1991
187Apex Mining Co. v. NLRC, 1991
188Art. 143-144; Civil Code Art. 1689
LA SALLIAN COMMISION ON BAR OPERATIONS
63 LABOR LAW
1. Eight hundred pesos (P800.00) a month for
househelpers in Manila, Quezon, Pasay, and
Caloocan cities and municipalities of Makati, San
Juan, Mandaluyong, Muntinlupa, Navotas,
Malabon, Paranaque, Las Pinas, Pasig, Marikina,
Valenzuela, Taguig and Pateros in Metro Manila
and in highly urbanized cities;
2. Six hundred fifty pesos (P650.00) a month for
those in other chartered cities and first-class
municipalities; and
3. Five hundred fifty pesos (P550.00) a month for
those in other municipalities.
Provided, That the employers shall review the
employment contracts of their househelpers every
three (3) years with the end in view of improving the
terms and conditions thereof.
Provided, further, That those househelpers who are
receiving at least One thousand pesos (P1,000.00)
shall be covered by the Social Security System (SSS)
and be entitled to all the benefits provided
thereunder. (As amended by Republic Act No. 7655,
August 19, 1993)
Art 144. Minimum Cash Wage
Minimum cash wage. The minimum wage rates
prescribed under this Chapter shall be the basic cash
wages which shall be paid to the househelpers in
addition to lodging, food and medical attendance.
Art. 1689, Civil Code
Household service shall always be reasonably
compensated. Any stipulation that household service
is without compensation shall be void. Such
compensation shall be in addition to the house
helper's lodging, food, and medical attendance.
2. TIME AND MANNER OF PAYMENT
Wages shall be paid directly to the househelper to
whom they are due at least once a month. No
deductions therefrom shall be made by the employer
unless authorized by the househelper himself or by
existing laws.189
3. RIGHT AGAINST ASSIGNMENT TO
NON-HOUSEHOLD WORK
at a wage rate lower than that mandated for
agricultural or non-agricultural enterprises
depending on the case.
Art. 145. Assignment to non-household work.
No househelper shall be assigned to work in a
commercial, industrial or agricultural enterprise at a
189Sec 9, Rule XIII, Book III, IRR
 LABOR STANDARDS
wage or salary rate lower than that provided for
agricultural or non-agricultural workers as prescribed
herein.
4. OPPORTUNITY FOR EDUCATION
If househelper is below 18 years, employer shall
provide for at least elementary education. The cost
shall be part of the emplyee’s compensation unless
otherwise agreed upon.
Art. 146. Opportunity for education.
If the househelper is under the age of eighteen (18)
years, the employer shall give him or her an
opportunity for at least elementary education. The
cost of education shall be part of the househelper’s
compensation, unless there is a stipulation to the
contrary.
Art 1691, Civil Code
If the house helper is under the age of eighteen
years, the head of the family shall give an
opportunity to the house helper for at least
elementary education. The cost of such education
shall be a part of the house helper's compensation,
unless there is a stipulation to the contrary.
5. JUST AND HUMANE TREATMENT
The employer shall treat the househelper in a just
and humane manner. In no case shall physical
violence be used upon the househelper190
6. BOARD, LODGING AND MEDICAL
ATTENDANCE SHALL BE FURNISHED BY
EMPLOYER
Art. 148. Board, lodging, and medical attendance
The employer shall furnish the househelper, free of
charge, suitable and sanitary living quarters as well
as adequate food and medical attendance.
Art 1690, Civil Code
The head of the family shall furnish, free of charge,
to the house helper, suitable and sanitary quarters as
well as adequate food and medical attendance.
7. HOUSEHOLD WORK
Non-hazardous work for persons between 15-18 years
old.191
8. CONTRACT FOR DOMESTIC SERVICE
shall not exceed 2 years but renewable annually
Art. 142. Contract of domestic service.
The original contract of domestic service shall not
last for more than two (2) years but it may be
renewed for such periods as may be agreed upon by
190Art. 147, Labor Code; Art 1694, Civil Code
191DO 4-99 Sec. 4
LA SALLIAN COMMISION ON BAR OPERATIONS
64 LABOR LAW
the parties.
Art 1692, Civil Code
No contract for household service shall last for more
than two years. However, such contract may be
renewed from year to year.
9. HOURS OF WORK
House helpers shall not be required to work more
than 10 hours a day
Art 1695, Civil Code
House helper shall not be required to work more
than ten hours a day. Every house helper shall be
allowed four days' vacation each month, with pay.
10.VACATION WITH PAY
Shall be allowed 4 paid vacation days per month
Art 1695, Civil Code
House helper shall not be required to work more
than ten hours a day. Every house helper shall be
allowed four days' vacation each month, with
pay.
11. FUNERAL EXPENSES
In case of death of the house helper:
a. The head of the family shall bear the
funeral expenses
b. If the house helper has no relatives in the
place where the head of the family lives,
with sufficient means.
Art 1696, Civil Code
In case of death of the house helper, the head of the
family shall bear the funeral expenses if the house
helper has no relatives in the place where the head
of the family lives, with sufficient means therefor.
12. EMPLOYMENT CERTIFICATION
ER shall give the househelper a written statement of
the nature and duration of the service and his or her
efficiency and conduct as househelper upon
severance.
Art 151. Employment Certification
Upon the severance of the household service
relation, the employer shall give the househelper a
written statement of the nature and duration of the
service and his or her efficiency and conduct as
househelper.
Art 1699, Civil Code
Upon the extinguishment of the service relation, the
house helper may demand from the head of the
family a written statement on the nature and
duration of the service and the efficiency and
conduct of the house helper.
 LABOR STANDARDS
13. EMPLOYMENT RECORDS
The employer may keep such records as he may
deem necessary to reflect the actual terms and
conditions of employment of his househelper, which
the latter shall authenticate by signature or
thumbmark upon request of the employer.
Art. 152. Employment record
The employer may keep such records as he may
deem necessary to reflect the actual terms and
conditions of employment of his househelper, which
the latter shall authenticate by signature or
thumbmark upon request of the employer.
TERMINATION OF A HOUSEKEEPER
1. FIXED- SECURITY OF TENURE
Termination prior to contract expiry must be for just
cause, if the duration of the household service is
NOT determined either by stipulation or by the
nature of the service, the ER or the househelper may
give notice to put an end to the relationship five
days before the intended terminationof the
service.
If the period for household service is fixed, the house
helper has a right against termination before the
expiration of the term, except for a just cause.
Art. 149. Indemnity for unjust termination of
services.
If the period of household service is fixed, neither
the employer nor the househelper may terminate the
contract before the expiration of the term, except
for a just cause. If the househelper is unjustly
dismissed, he or she shall be paid the compensation
already earned plus that for fifteen (15) days by way
of indemnity.
If the househelper leaves without justifiable reason,
he or she shall forfeit any unpaid salary due him or
her not exceeding fifteen (15) days.
Art. 1697, Civil Code
If the period for household service is fixed neither
the head of the family nor the house helper may
terminate the contract before the expiration of the
term, except for a just cause. If the house helper is
unjustly dismissed, he shall be paid the
compensation already earned plus that for fifteen
days by way of indemnity. If the house helper leaves
without justifiable reason, he shall forfeit any salary
due him and unpaid, for not exceeding fifteen days.
2. NOT FIXED- INDEMNITY FOR
UNJUST TERMINATION OF SERVICE
If the duration of the household service is not fixed
either by stipulation or by the nature of the service,
LA SALLIAN COMMISION ON BAR OPERATIONS
65 LABOR LAW
the employer or the house helper may give notice to
end, the relationship five days before the intended
termination. (Rule XII, Book III Sec. 10-17 IRR)
Art. 150. Service of termination notice
If the duration of the household service is not
determined either in stipulation or by the nature of
the service, the employer or the househelper may
give notice to put an end to the relationship five (5)
days before the intended termination of the service.
Art. 1698, Civil Code
If the duration of the household service is not
determined either by stipulation or by the nature of
the service, the head of the family or the house
helper may give notice to put an end to the service
relation, according to the following rules:
1. If the compensation is paid by the day, notice
may be given on any day that the service shall
end at the close of the following day
2. If the compensation is paid by the week,
notice may be given, at the latest on the first
business day of the week, that the service
shall be terminated at the end of the seventh
day from the beginning of the week
3. If the compensation is paid by the month,
notice may be given, at the latest, on the
fifth day of the month, that the service shall
cease at the end of the month.
If unjustly dismissed, the house helper is entitled to
be paid the compensation already earned plus that
for 15 days by way of indemnity.
D. EMPLOYMENT OF HOMEWORKERS
Note: DO 5, DOLE (February 4, 1992), is now Rule
XIV, Book III of the IRRI.
Bar 2000
Homeworker, defined
Homeworker applies to any person who performs
industrial homework for an employer, contractor, or
sub-contractor.192
EMPLOYER OF A HOMEWORKERS, DEFINED
Art. 155. Distribution of homework.
192Sec. 1, Rule XIV, Book III, IRR
 LABOR STANDARDS
For purposes of this Chapter, the "employer" of
homeworkers includes any person, natural or
artificial who, for his account or benefit, or on
behalf of any person residing outside the country,
directly or indirectly, or through an employee, agent
contractor, sub-contractor or any other person:
1. Delivers, or causes to be delivered, any goods,
articles or materials to be processed or
fabricated in or about a home and thereafter to
be returned or to be disposed of or distributed in
accordance with his directions; or
2. Sells any goods, articles or materials to be
processed or fabricated in or about a home and
then rebuys them after such processing or
fabrication, either by himself or through some
other person.
RIGHTS AND BENEFITS OF HOMEWORKERS
1. Right to form, join or assist organizations 193
2. Right to acquire legal personality and the rights
and privileges granted by law to legitimate labor
organizations upon issuance of the certification
of registration 194
3. Immediate payment upon ER‘s receipt of
finished goods or articles195
4. SSS, MEDICARE and ECC premium contributions
shall be deducted from their pay and shall be
remitted by ER/contractor/subcontractor to the
SSS196
5. Employer may require homeworker to redo work
improperly executed without additional pay197
6. Employer need not pay homeworker for any
work done on goods or articles not returned due
to homeworker‘s fault198
7. If subcontractor/contractor fails to pay
homeworker, ER is jointly and severally liable
with the former to the homeworker for his/her
wage199
8. ER shall assist the homeworkers in the
maintenance of basic safe and healthful
working conditions at the homeworkers‘ place
of work200
9. Homework prohibited in the ff: 201
a. explosives, fireworks and articles of like
character;
b. drugs and poisons; and
c. other articles, the processing of which
requires exposure to toxic substances.
Regional Office shall provide technical assistance to
registered homeworkers‘ organizations202
193Sec
3, Rule XIV, Book III
194Sec 4, Rule XIV, Book III
195Sec 6, Rule XIV, Book III
196Sec 6, Rule XIV, Book III
197Sec 9a, Rule XIV, Book III
198Sec 9b, Rule XIV, Book III
199Sec 11, Rule XIV, Book III
200Sec 11, Rule XIV, Book III
201 Sec 13, Rule XIV, Book III
202Sec 14, Rule XIV, Book III
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66 LABOR LAW
CONDITIONS FOR DEDUCTION FROM
HOMEWORKER’S EARNINGS
Sec. 8.Deduction, Rule XIV, Book III
No deduction from the homeworker‘s earnings for
the value of materials lost, destroyed or damaged
unless:
1. Homeworker is clearly shown to be
responsible for loss or damage
2. Reasonable opportunity to be heard
3. Amount of deduction is fair and reasonable,
and does not exceed actual loss or damage
4. Deduction does not exceed 20% of
homeworker‘s weekly earnings
VII.Termination of
Employment
A. GENERAL CONCEPTS
BASIC PRINCIPLES IN TERMINATION
CASES
Balancing of Interest in disciplinary cases
1. Labor’s interests
Worker’s right to labor is recognized by the
Constitution as property right. An employee
cannot be deprived of his work without just
cause or due process
2. Management’s interests
Discipline of employees is a `. The employer
cannot be compelled to continue to employ such
persons whose continuance in the service will
patently be inimical to his interest.203
SECURITY OF TENURE
Bar 2006
Art 278. Coverage
The provisions of this Title shall apply to all
establishments or undertakings, whether for profit or
not.
Art 279. Security of Tenure
In cases of regular employment, the employer shall
not terminate the services of an employee except for
a just cause or when authorized by this Title. An
employee who is unjustly dismissed from work shall
be entitled to reinstatement without loss of seniority
rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or
203 Virginia Sugue v Triumph International Phils, Inc. (2009)
 LABOR STANDARDS
their monetary equivalent computed from the time
his compensation was withheld from him up to the
time of his actual reinstatement.
Security of Tenure, defined
Security of Tenure means the right not to be
removed from one’s job except for a valid reason
and through proper procedure.204
In case of regular employment, the employer shall
not terminate the services of an employee.
Exceptions:205
1. When it is for a just cause206or
2. When authorized by law207
Bar 2002
When unjustly dismissed from work, employee shall
be entitled to:
1. Reinstatement without loss of seniority
rights and
2. Backwages 208
The right of employees to security of tenure does not
give them vested rights to their positions to the
extent of depriving management of its prerogative
to change their assignments or to transfer them.
Bar 2004
The employer must be able to show that the transfer
is not unreasonable, inconvenient or prejudicial to
the employee; nor does it involve a demotion in rank
or a diminution of his salaries, privileges and other
benefits. Otherwise the transfer shall tantamount to
constructive dismissal.209
The employer’s privilege to transfer its employees to
different workstations cannot be used as a
subterfuge to rid itself of an undesirable worker.210
NATURE OF RIGHT
Security of tenure is aright of paramount value
guaranteed by the Constitution. 211 It stands to
reason that a right so highly ranked as security of
tenure should not lightly be denied on mere
speculation.212
204 az ucena
205 Subject to the requirements of due process (IRR, Book V, Rule 23,
Sec1. Security of Tenure)
206 See Art 282, Labor Code
207 See Art 283-284, Labor Code
208 Computed from the time his compensation was withheld from
him up to time of his actual reinstatement (as amended by RA 6715)
209 Endico v Quantim Foods Distribution Center
210 Veterans Security Agency Inc. v Gonzalvo, Jr.
211 Art 11, Sec 9, 1987 Constitution. The State shall afford protection
to labor and "shall assure the rights of workers to . . . security of
tenure"
212 Llosa Tan v Silahis International Hotel 181 SCRA 738 (1990); City
Service Corp. Workers Union v City Services Corp 135 SCRA 564
(1985)
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67 LABOR LAW
Dismissal based on loss of trust and confidence
arising from alleged misconduct of employee is not
to be used as a shield to dismiss an employee
arbitrarily.213
Termination without just cause entitles a worker to
reinstatement regardless of whether he was
accorded due process.
Termination for a just cause even without
procedural due process, does not warrant
reinstatement. The employer incurs only liability for
damages.214
COVERAGE
All workers are entitled to security of tenure.215
Confidential and Managerial employees are also
entitled to security of tenure. They cannot be
arbitrarily dismissed at any time, and without cause
as reasonably established in an appropriate
investigation.216
REQUISITES OF A VALID TERMINATION217
1. Substantive due process
Legality of the act of dismissal as provided
under articles 282 to 284 of the Labor Code.
2. Procedural due process
Legality in the manner of dismissal with due
observance of the procedural requirements.
MEASURE OF PENALTY
Employee’s length of service is taken into
consideration in imposing the penalty to be meted an
erring employee.218 But if it is to be regarded as a
justifying circumstance in moderating the penalty of
dismissal, it will actually become a prize for
disloyalty, perverting the meaning of social justice
and undermining the efforts of labor to cleanse its
ranks of all undesirables.219
The penalty must be commensurate with the act,
conduct or omission imputed to the employee and
must be imposed in connection with the disciplinary
authority of the employer.220
213 Llosa Tan v Silahis International Hotel 181 SCRA 738 (1990);
214 Alhambra Industries v NLRC
215 Art XIII, Sec 3, 1987 Constitution
216 Inter Oriental Maritime Enterprises, Inc. v NLRC 235 SCRA 268
(1994)
217 Shoemart v NLRC, 176 SCRA 385 (1989); Ting v CA, 494 SCRA 610
(2006)
218 Inter Oriental Maritime Enterprises, Inc. v NLRC 235 SCRA 268
(1994)
219 Bago v NLRC (2007)
220 Sagales v Rustan’s Commercial Corporation (2008); Farrol v CA
(2000)
 LABOR STANDARDS 68 LABOR LAW

While the employer has the inherent right to
discipline, including that of dismissing its employees,
this prerogative is subject to the regulation by the
State in the exercise of its police power.221
B. TERMINATION OF EMPLOYMENT
EMPLOYEE
Art. 285. Termination by employee.
a. An employee may terminate without just cause
the employee-employer relationship by serving a
written notice on the employer at least one (1)
month in advance. The employer upon whom no
such notice was served may hold the employee
liable for damages.
b. An employee may put an end to the relationship
without serving any notice on the employer for
any of the following just causes:
1. Serious insult by the employer or his
representative on the honor and person of
the employee;
2. Inhuman and unbearable treatment
accorded the employee by the employer or
his representative;
3. Commission of a crime or offense by the
employer or his representative against the
person of the employee or any of the
immediate members of his family; and
4. Other causes analogous to any of the
foregoing.
I. RESIGNATION
Resignation, defined
Voluntary resignation is the act of an employee, who
finds himself in a situation in which he believes that
personal reasons cannot be sacrificed in favor of the
exigency of the service; thus he has no other choice
but to disassociate himself from his employment.222
Bar 1994
Voluntary resignation, when accepted, cannot be
withdrawn without consent of the employer as
employer has no longer any right to the job.223
If resignation is not voluntary, it can be deemed to
be constructive dismissal.224
NOT ENTITLED TO SEPARATION PAY 226
An employee who voluntarily resigns is not entitled
to separation pay.
Exceptions:
BY 1. When otherwise stipulated in the employment
contract
2. Stipulated in the CBA
3. Sanction by established employer practice and
policy.
Art. 286. When employment not deemed
terminated.
The bona-fide suspension of the operation of a
business or undertaking for a period not exceeding
six (6) months, or the fulfillment by the employee of
a military or civic duty shall not terminate
employment. In all such cases, the employer shall
reinstate the employee to his former position
without loss of seniority rights if he indicates his
desire to resume his work not later than one (1)
month from the resumption of operations of his
employer or from his relief from the military or civic
duty.
II. RA 7641: RETIREMENT PAY LAW
Bar 2005
Coverage
Any employee may be retired upon reaching the
retirement age established in the collective
bargaining agreement or other applicable
employment contract.
Exempted
Retail, service and agricultural establishments or
operations employing not more than (10)
employees or workers
Bar 2005
In the absence of a CBA or an applicable
employment contract:
1. When retirement is optional
Age of sixty (60) years or more, but not beyond
sixty-five (65) years
2. Compulsory
65 years old

Voluntary resignation and illegal dismissal are Bar 1994, 2001

adversely opposed modes of terminating employment
relations, in that the presence of one precludes that
of the other225
221 Sagales v Rustan’s Commercial Corporation (2008)
222 Alfaro v CA, 363 SCRA 799 (2001)
223 Intertrod Martime, Inc v NLRC, 198 SCRA 318 (1991)
224 Abad, Jr, Antonio H. (2008). The Law on Labor Standards. Rex
How much are employees entitled to as retirement
pay
At least one-half (1/2) month salary for every year of
service, a fraction of at least six (6) months being
considered as one whole year.

Printing Company, Inc.

225 Alfaro v CA, 363 SCRA 799 (2001) 226 CJC Trading, Inc. v NLRC, 246 SCRA 724 (1995)

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 LABOR STANDARDS 69 LABOR LAW

Unless the parties provide for broader inclusions, the

term one-half (1/2) month salary shall mean fifteen
(15) days plus one-twelfth (1/12) of the 13th month
pay and the cash equivalent of not more than five (5)
days of service incentive leaves.
Bar 1994, 2001
How long is the service requirement for an
employee to be entitled to retirement pay
Employee must have served at least five (5) years in
the said establishment
Bar 1995, 1996
A. SERIOUS MISCONDUCT OR WILLFUL
DISOBEDIENCE
MISCONDUCT
Improper or wrong conduct. It is the transgression of
some established and definite rule of action, a
forbidden act, a dereliction of duty willful in
character, and implies wrongful intent and not mere
error in judgment.227

Requisites for serious misconduct 228

1. Conduct must be serious
C. TERMINATION OF EMPLOYMENT BY 2. Must relate to the performance of the
EMPLOYER employee’s duties
3. Must show that the employee has become
SUBSTANTIVE REQUIREMENTS unfit to continue working for the employer
I. JUST CAUSES
Examples of Serious Misconduct justifying
Bar 1996, 2001
termination
Art. 282. Termination by employer. 1. Falsification of time records229
An employer may terminate an employment for any 2. Immorality. Teachers must adhere to the
of the following causes: exacting standards of morality and decency.
A teacher, both in his official and personal
a. Serious misconduct or willful conduct, must display exemplary
disobedience by the employee of the lawful behavior.230
orders of his employer or representative in 3. Moonlighting. It is a valid ground for
connection with his work; dismissal for unauthorized use of company
b. Gross and habitual neglect by the time.231
employee of his duties; 4. Theft of company property232
c. Fraud or willful breach by the employee of 5. Drug abuse. Supreme Court has taken
the trust reposed in him by his employer or judicial notice of scientific findings that
duly authorized representative; drug abuse can damage the mental faculties
d. Commission of a crime or offense by the of the user. 233
employee against the person of his
employer or any immediate member of his
family or his duly authorized
representatives; and
e. Other causes analogous to the foregoing.

227 Pastor Austria v NLRC, 312 SCRA 410 (1999); Fujitsu Computer
Products Corporation of the Philippines v CA, 454 SCRA 737 (2005)
228 Pastor Austria v NLRC, 312 SCRA 410 (1999); Fujitsu Computer

Products Corporation of the Philippines v CA, 454 SCRA 737 (2005)

229 Felix v Enertech Systems Industries, Inc, 355 SCRA 680 (2001)
230 Santos, Jr v NLRC, 287 SCRA 117 (1998)
231 Capitol Wireless v Balagot, 513 SCRA 672 (2007)
232 Caltex Phils, Inc v Agad (2010)
233 Bughaw Jr v Treasure Island 550 SCRA 307 (2008)

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 LABOR STANDARDS 70 LABOR LAW

A single or isolated acts of negligence do not

Bar 1995, 1999, 2003 constitute a just cause for the dismissal of the
WILLFUL DISOBEDIENCE (INSUBORDINATION) employee.238

Requisites of Willful disobedience234 An unsatisfactory rating can be a just cause for

1. Employee’s assailed conduct must have
been willful or intentional,
2. The willfulness being characterized by a
“wrongful and perverse attitude”;
3. The order violated must have been
reasonable, lawful, made known to the
employee and
4. Order must pertain to the duties which he
had been engaged to discharge.
dismissal only if it amounts to gross and habitual
neglect of duties. The fact that an employee’s
performance is found to be poor or unsatisfactory
does not necessarily mean that the employee is
grossly and habitually negligent of his duties.239
EXAMPLES OF GROSS OF HABITUAL NEGLECT OF
DUTIES JUSTIFYING TERMINATION

1. Abandonment of work
The deliberate and unjustified refusal of an
B. GROSS AND HABITUAL NEGLECT employee to resume his employment. It is a
form of neglect of duty, and hence, a just cause
(NEGLECT OF DUTIES)
for termination by employer.240

GROSS AND HABITUAL NEGLECT Requisites of Abandonment241

a. Failure to report for work or absence
Gross Negligence, defined without valid or justifiable reason
Want or absence of or failure to exercise slight care b. Clear intention to sever the employer-
of diligence, or the entire absence of care. It evinces employee relationship.
a thoughtless disregard of consequences without
exerting any effort to avoid them. The burden of proof to show that there was
unjustified refusal to go back to work rests on
REQUISITES OF NEGLECT OF DUTIES the employer.242
1. Gross neglect of duty
2. Neglect must be habitual The filing by an employee of a complaint for
illegal dismissal is proof of her desire to return
GROSS NEGLIGENCE, HABITUAL NEGLECT AND to work, thus negating the employer’s charge of
FRAUD 235 abandonment.243
Fraud and
Gross
Habitual neglect willful neglect Employer must serve a memo or show-cause
negligence
of duties letter to the employee at her last known address
Imply bad faith requiring her to report for work or to explain her
on the part of absence, with a warning that her failure to
Repeated
the employee report would be construed as abandonment of
failure to
Want of care in failing to work.244
perform one’s
in the perform his job Employer should serve the employee a notice of
duties over a
performance to the termination as required by law.245
period of time,
of one’s detriment of
depending upon
duties the employer
the
and the 2. Habitual absenteeism
circumstances
employer’s Repeated and habitual infractions, committed
business despite several warnings, constitute gross
misconduct. Habitual absenteeism without leave
Bar 1999 constitute gross negligence and is sufficient to
To be a valid ground for dismissal, neglect must be justify termination of an employee.246
both gross and habitual.236 However, if gross
negligence, though not habitual, results to loss of
trust and confidence, dismissal is valid and legal.237 238 National Bookstore, Inc. v CA (2000), 327 SCRA 541
239 Eastern Overseas Employment Center, Inc. v Bea, GR 143023
(2005)
240 Abad
234 First Dominion Resources Corporation v Penaranda, 480 SCRA 504 241 Padilla Machine Shop v Javilgas, 2008, 546 SCRA 351

(2006) 242 Tacloban Far East Marketing Corporation v CA, GR 182320, 2009
235 JGB and Associates, Inc. v NLRC (1996), 254 SCRA 457 243 Henlin Panay Company v NLRC, GR no 180718
236 National Sugar v NLRC (1998) 244 Henlin Panay Company v NLRC, GR no 180718
237 School of the Holy Spirit of Quezon City v Taguiam, GR 165565 245 Henlin Panay Company v NLRC, GR no 180718

(2008) 246 Challenge Socks Corporation v CA, 2005, 474 SCRA 356

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 LABOR STANDARDS
Employee’s infractions areworse than
inefficiency. They border on dishonesty
constituting serious misconduct.247
A series of irregularities when put together may
constitute serious misconduct. We also held
that gross neglect of duty becomes serious in
character due to frequency of instances. There
can be no good faith in intentionally and
habitually incurring unexcusable absences.248
C. LOSS OF TRUST AND CONFIDENCE/
FRAUD OR WILLFUL BREACH OF TRUST
LOSS OF TRUST AND CONFIDENCE
Fraud, defined
Deemed to comprise anything calculated to deceive,
including all acts, omissions, and concealment
involving a breach of legal or equitable duty, trust or
confidences justly reposed, resulting in damage to
another, or by which an undue and unconscientious
advantage is taken of another. Deceit is a specie of
fraud.249
REQUISITES OF WILLFUL BREACH OF TRUST
LEADING TO LOSS OF TRUST AND CONFIDENCE 250
1. Breach must be willful and not ordinary
breach251
2. Employee hold a position of trust and
confidence
3. Must be in relation to the work performed
4. There must exist substantial evidence, and
should not be based on mere surmises,
speculations and conjectures
BREACH MUST BE WILLFUL AND NOT ORDINARY
BREACH252
The breach is willful if it is done intentionally,
knowingly and purposely without justifiable excuse.
There must be a cause for the loss of confidence. It
must rest on some basis which must be convincingly
established. An employee must not be dismissed on
mere presumptions or suppositions.253
EMPLOYEE HOLDS A POSITION OF TRUST AND
CONFIDENCE
General rule: dismissal on the ground of loss of trust
and confidence is restricted to Managerial
employees254
247 Arseno Quiambao v Manila Electric Company, 2009
248 Quiambao v Manila Electric Co., GR 171023, 2009
249 Yolanda Garcia v People (1999), 375 Phil 1078, 1091
250 Roberto Gonzales v NLRC
251 Salas v Aboitiz One, Inc., GR 178236 (2008)
252 Salas v Aboitiz One, Inc., GR 178236 (2008)
253 Nozario Austria v NLRC, 310 SCRA 293 (1991)
254 Fujitsu Computer Products Corp v. CA; 2005, Villanueva v NLRC
(1998)
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71 LABOR LAW
Exception: it also applies to rank-and-file employees
when position is reposed with trust and confidence.
255 (Cashiers, auditors, property custodians)
Rules of dismissal for managerial employees are
different from those governing ordinary
employees.256
Managerial and confidential Rank and file
employees employees
Employers are generally Termination based
allowed a wider latitude of on the ground of loss
discretion in terminating of trust and
managerial personnel, or confidence requires
those similar rank, proof of involvement
performing functions which, in the events in
by their nature, require the question257
employer’s full trust and
confidence
STRAINED RELATION RULE
It would be unjust and inequitable to compel an
employer to continue with the employment of a
person who occupies a managerial and sensitive
position despite loss of trust and confidence
The relationship must be considered seriously
strained, foreclosing the remedy of reinstatement.258
Trust in an employee, once lost is difficult, if not
impossible to regain.259
Strained Relation rule does not apply to ULP cases
where the employee was dismissed for union
activities.260
Penalty of dismissal for breach of trust cannot be
mitigated by length of service.261 The longer an
employee stays in the service of the company, the
greater is his responsibility for knowledge and
compliance with the norms and conduct and the
code of discipline of the company.262
REQUIREMENT OF SUBSTANTIAL EVIDENCE
Proof beyond reasonable doubt of employee’s
misconduct is not required. It is sufficient that
employer has reasonable grounds to believe that the
employee is responsible for the misconduct which
renders him unworthy of the trust and confidence
demanded of his position.263
255 Coca Cola v NLRC (1989)
256 Mania Midtown Commercial Corporation v NUHRAIN, (1988), 159
SCRA 212
257 Mania Midtown Commercial Corporation v NUHRAIN, (1988), 159
SCRA 212
258 Aurelio v NLRC, 1993, 221 SCRA 432
259 Bago v NLRC, Standard Insurance Co. Inc., 2007
260 Gubac v NLRC, 187 SCRA 412 (1990)
261 PLDT v NLRC, 164 SCRA 671 (1988)
262 Citybank N.A. v Gatchalian, 240 SCRA 212 (1995)
263 Ocean Terminal Services, Inc. v NLRC, 197 SCRA 491 (1991)
 LABOR STANDARDS
If there is sufficient evidence to show that the
employee occupying a position of trust and
confidence is guilty of a breach of trust, or that his
employer has ample reason to distrust him, the labor
tribunal cannot justly deny the employer the
authority to dismiss such employee.264
D. COMMISSION OF A CRIME
REQUISITES
Commission of a crime should be made against:
1. The employer himself or
2. Any immediate member of his family265
1. Spouse
2. Ascendants
3. Descendants
4. Legitimate, natural or adopted siblings of
the employer or of his relative by affinity
or consanguinity within the 4th civil degree
Termination by employer on the basis of commission
of a crime is an act of self-defense impelled by the
natural instinct of self-preservation.
The acquittal in a criminal prosecution involving
misconduct is not binding and conclusive upon a
labor tribunal.266 Conviction of an employee in a
criminal case is not indispensable to warrant his
dismissal by his employer.267
E. ANALOGOUS CAUSES
Examples of Analogous causes justifying
termination
1. Attitude problem is a valid ground for
termination.268
An employee who cannot get along with his co-
employees is detrimental to the company for he
can upset and strain the working environment.
Thus management has the prerogative to take
the necessary action to correct the situation and
protect its organization.
It is analogous to loss of trust and confidence
that must be duly proved by the employer.
2. Stealing the wallet of a co-employee cannot
be a ground for dismissal under serious
misconduct because it is not work-related. But
the employee can be validly dismissed for cause
264 Eats-cetera Food Services Outlet v Letran, GR 179507, 2009
265 Art 11 (2), RPC
266 Starlight Plastic Industrial Corporation v NLRC, 1989, 171 SCRA
315; Commercial motors Corporation v Commissioners, NLRC. 1990,
192 SCRA 191; Reno Foods Inc. v Nagkakaisang Lakas ng
Manggagawa-Katipunan, 2010
267 Mercury Drug Corp. v NLRC, 1989, 177 SCRA 580
268 Heavylift Manila, Inc v CA, 473 SCRA 541, 2005
LA SALLIAN COMMISION ON BAR OPERATIONS
72 LABOR LAW
analogous to serious misconduct.269
A cause analogous to serious misconduct is a
voluntary and/or willful act or omission attesting
to an employee's moral depravity.
Theft committed by an employee against a
person other than his employer, if proven by
substantial evidence, is a cause analogous to
serious misconduct.
3. Obesity of a flight attendant, when the airline
company constituted a continuing qualification
of an employee to keep the job, is a ground for
dismissal under Art 282(e). His obesity may not
be unintended, but is nonetheless voluntary.270
F. OTHERS
Courtesy resignations were utilized in government
reorganization.271
Change of ownership is a management prerogative.
Where such transfer of ownership is in good faith,
the transferee is under no legal duty to absorb the
transferor employees. The most that the transferee
may do is to give preference to the qualified
separated employees in the filling of vacancies in the
facilities of the purchaser.272
Fixed-term employment.If the contract is for a
fixed term and the employee is dismissed without
just cause, he is entitled to the payment of his
salaries corresponding to the unexpired portion of
the employment contract.273
Previous offenses may be used as valid justification
for dismissal from work only if they are related to
the subsequent infraction-basis of the termination of
employment. Previous infractions, in other words,
may be used if they have a bearing on the proximate
offense warranting dismissal.274
G.CONSTRUCTIVE DISMISSAL
Constructive dismissal, defined
Quitting because continued employment is rendered
impossible, unreasonable or unlikely, as an offer
involving demotion in rank and a diminution in
pay.275
May also involve act of clear discrimination,
269 John hancock life insurance corporation v Davis, GR 169549, 2008
270 Yrasuegui v PAL, GR 168081, 2008
271 Batongbacal v Associated Bank, 168 SCRA 600, 1988
272 Manlimos v nlrc , 242 SCRA 145, 1995
273 Medenilla v PVB, GR 127673, 2000
274 Mc Donald’s v Alba, GR 156382, 2008; La Carlota Planters
Association v NLRC, 1998
275 Jo Cinema Corporation v. Abellana, 2001, 360 SCRA 142
 LABOR STANDARDS 73 LABOR LAW

insensibility, or disdain by an employer that it REQUIREMENTS FOR PREVENTIVE SUSPENSION 282

becomes so unbearable on the part of the employee 1. An employee may be placed in a preventive
that it could foreclose any choice by him except suspension if his continued employment poses a
forego his continued employment.276 serious and imminent threat to the life or
property of the employer or his co-workers.

TEST OF CONSTRUCTIVE DISMISSAL 2. However, when it is determined that there is no

Whether a reasonable person in the employee's sufficient basis to justify an employee’s
position would have felt compelled to give up his preventive suspension, the employee is entitled
position under the circumstances.277 to the payment of salaries during the time of
preventive suspension
Resignation contemplates a voluntary act; thus, an
employee who is forced to relinquish his position due I. TRANSFER
to the employer's unfair or unreasonable treatment is
The transfer of employees is a management
deemed to have been illegally terminated or
discharged.278 prerogative subject only to limitations found in law,
collective bargaining agreement, and general
Employer’s sudden, arbitrary and unfounded principles of fair play and justice.283
adoption of the two-day work scheme which greatly
An employee’s right to security of tenure does not
reduced petitioners’ salaries renders it liable for
constructive dismissal.279 give him such a vested right in his position as
would deprive the company of its prerogative to
change his assignment or transfer him where he will
Demotion is allowed as a penalty. The
be most useful.284
appropriateness depends on factors such as
employer’s tolerance of or laxity in past similar
offences, employee’s years of service and record, The objection to the transfer being grounded solely
upon the personal inconvenience or hardship that
and even the amount of money or value involved.
will be caused to the employee by reason of the
transfer is not a valid reason to disobey an order of
transfer. Employee may be dismissed for Willful
H. PREVENTIVE SUSPENSION disobedience.285
NATURE
A disciplinary measure for a protection of the
company’s property pending investigation of any TRANSFER AS VALID MANAGEMENT
alleged malfeasance committed by the employee. PREROGATIVE AND TRANSFER AS CONSTRUCTIVE
DISMISSAL 286
Preventive suspension is not a penalty. Valid management
Constructive dismissal
prerogative
PERIOD When continued
It cannot exceed 30 days. No demotion in rank or employment is rendered
diminution of salary, impossible, unreasonable
After the period, employee must be reinstated to benefits, and other or unlikely;
his former position privileges, and the When there is a demotion
action is not motivated in rank and/or a
If suspension is extended, the employee shall be by discrimination, diminution in pay; or
entitled to his salaries and other benefits that may made in bad faith, or When a clear
accrue to him during the period of such effected as a form of discrimination,
suspension.280 punishment or insensibility or disdain by
demotion without an employer becomes
sufficient cause. unbearable to the
When preventive suspension exceeds maximum employee.
period allowed without reinstatement or when
preventive suspension is for indefinite period, only
then will constructive dismissal set in.281 J. PROMOTION
Promotion, defined
The advancement from one position to another with
276 Hyatt Taxi Services, Inc v. Catinoy, 2002, 359 SCRA 686; Gilles v
CA, GR 149273, 2009
277 Gilles v CA, GR 149273, 2009; 282 Gatbanton v NLRC, 479 SCRA 416, 2006
278 Gilles v CA, GR 149273, 2009; 283 Aguanza v Asian Termminal Inc, GR 163505, 2009
279 La Rosa v Ambassador Hotel, GR 177059, 2009 284 PLDT v Paguio, 472 SCRA 453, 2005
280 Philippine Airline v NLRC, 1998 285 Herida v F&C Pawnshop and Jewelry Store, GR 172601, 2009
281 Mandapat v ADD Force Personnel Services, Inc. 2010 286 Aguanza v Asian Termminal Inc, GR 163505, 2009

LA SALLIAN COMMISION ON BAR OPERATIONS

 LABOR STANDARDS
an increase in duties and responsibilities as
authorized by law, and usually accompanied by an
increase in salary.287
For there to be a promotion is that there must be an
“advancement from one position to another” or an
upward vertical movement of the employee’s rank or
position. Any increase in salary should only be
considered incidental but never determinative of
whether or not a promotion is bestowed upon an
employee.288
There is no law that compels an employee to accept
a promotion for the reason that a promotion is in the
nature of a gift or reward, which a person has a right
to refuse.289
K.RESIDENCY TRAINING
Residency or resident physician position in a medical
specialty is never a permanent one. Residency
connotes training and temporary status. It is a step
taken by a physician right after post-graduate
internship prior to his recognition as a specialist or
sub specialist in a given field.
The appointment was for a definite and renewable
period which, when it was not renewed, did not
involve a dismissal but an expiration of the
petitioner's term.290
II. AUTHORIZED CAUSES
Bar 2001, 2002
Authorized causes of termination 291
1. Labor-saving devices
2. Redundancy
3. Retrenchment
4. Closing or cessation of operation
5. Disease or illness
6. Totality of infractions
Art. 283. Closure of establishment and reduction
of personnel.
The employer may also terminate the employment of
any employee due to the installation of labor-saving
devices, redundancy, retrenchment to prevent losses
or the closing or cessation of operation of the
establishment or undertaking unless the closing is for
the purpose of circumventing the provisions of this
Title, by serving a written notice on the workers and
the Ministry of Labor and Employment at least one
(1) month before the intended date thereof. In case
of termination due to the installation of labor-saving
devices or redundancy, the worker affected thereby
287 Phil Telegraph v CA, GR 152057, 2003
288 Phil Telegraph v CA, GR 152057, 2003
289 Phil Telegraph v CA, GR 152057, 2003
290 Felix v Buenaseda, 240 SCRA 139, 1995
291 Art 283, 284; Abad
LA SALLIAN COMMISION ON BAR OPERATIONS
74 LABOR LAW
shall be entitled to a separation pay equivalent to at
least his one (1) month pay or to at least one (1)
month pay for every year of service, whichever is
higher. In case of retrenchment to prevent losses and
in cases of closures or cessation of operations of
establishment or undertaking not due to serious
business losses or financial reverses, the separation
pay shall be equivalent to one (1) month pay or at
least one-half (1/2) month pay for every year of
service, whichever is higher. A fraction of at least six
(6) months shall be considered one (1) whole year.
PROCEDURAL STEPS REQUIRED
1. Written notice to DOLE 30 days prior to the
intended date of termination
2. Written notice to employee(s) concerned 30
days prior to the intended date of
termination
3. Payment of separation pay:
FOR REDUNDANCY AND INSTALLATION OF LABOR
SAVING DEVICES
1 month pay, or 1 month pay for every year of
service (a fraction of 6 months or more to be
considered 1 year), whichever is higher
For retrenchment, closure not due to serious
business losses, and diseases
1 month pay, or 1 half month pay for every year of
service (a fraction of 6 months or more to be
considered as 1 year) whichever is higher.
BASIS OF EMPLOYER’S RIGHT
The law acknowledges the right of every business
entity to reduce its work force if such measure is
made necessary or compelled by economic factors
that would otherwise endanger its stability or
existence.292
General rule: The wisdom or soundness of the
decision is not subject to discretionary review on the
part of the Labor Arbiter, the NLRC and the CA.
Exception: Such decision may, however, be rejected
if the same is found to be in violation of the law or is
arbitrary or malicious.293
A. LABOR-SAVING DEVICES
Labor-Saving Devices, defined
Contemplates the installation of machinery to effect
economy and efficiency in its method of
production.294
292 Edge Apparel Inc. v NLRC, 286 SCRA 302, 1998
293 Elleccion v NLRC, GR 184735, 2009
294 Edge Apparel Inc. v NLRC, 286 SCRA 302, 1998
 LABOR STANDARDS
Where the introduction of labor-saving devices is
resorted to not merely to effect greater efficiency
in the operations of the business but principally
because of serious business reverses and to avert
further losses, the device could then verily be
considered one of retrenchment.295
Bar 1999, 2000, 2001
B. REDUNDANCY
WHEN POSITION CONSIDERED REDUNDANT
Redundancy exists where the services of an
employee are in excess of what would reasonably be
demanded by the actual requirements of the
enterprise.
An employer has no legal obligation to keep on the
payroll employees more than the number needed for
the operation of the business.296
CAUSE OF REDUNDANCY
Redundancy could be a result of a number of factors,
such as the overhiring of workers, a decrease in the
volume of business or the dropping of a particular
line or service previously manufactured or
undertaken by the enterprise.297
REQUISITES FOR VALID REDUNDANCY
PROGRAM 298
1. Written notice served on both the employee
and the DOLE at least one month prior to the
intended date of termination;
2. Payment of separation pay equivalent to at
least one month pay or at least one month pay
for every year of service, whichever is higher;
3. good faith in abolishing the redundant position;
and
4. Use of fair and reasonable criteria in
ascertaining what positions are to be declared
redundant.
CRITERIA IN IMPLEMENTING A REDUNDANCY
PROGRAM 299
1. Preferred status
2. Efficiency
3. Seniority.
C. RETRENCHMENT
Bar 1998, 2001, 2003
Retrenchment, defined
An economic ground to reduce the number of
employees due to business losses or reverses which
are serious, actual and real.
295 Edge Apparel Inc. v NLRC, 286 SCRA 302, 1998
296 Edge Apparel Inc. v NLRC, 286 SCRA 302, 1998
297 Edge Apparel Inc. v NLRC, 286 SCRA 302, 1998; Lowe Inc v CA, GR
164813, 2000
298 Lowe Inc v CA, GR 164813, 2000
299 Lowe Inc v CA, GR 164813, 2000
LA SALLIAN COMMISION ON BAR OPERATIONS
75 LABOR LAW
CAUSE OF RETRENCHMENT
Normally resorted to by management during periods
of business reverses and economic difficulties
occasioned by such events as recession, industrial
depression, or seasonal fluctuations.
RETRENCHMENT AS A MEANS OF LAST RESORT
Retrenchment is only a measure of last resort, when
other less drastic means have been tried and found
to be inadequate.300
REQUIREMENTS FOR VALID RETRENCHMENT301
The requirements must be proved by clear and
convincing evidence
1. That retrenchment is reasonably necessary and
likely to prevent business losses which, if
already incurred, are not merely de minimis, but
substantial, serious302, actual and real, or if
only expected, are reasonably imminent as
perceived objectively and in good faith by the
employer;
2. Written notice served on both the employee
and the DOLE at least one month prior to the
intended date of termination;
3. Payment of separation pay equivalent to at
least one month pay or at least one month pay
for every year of service, whichever is higher;
4. good faith in exercising management’s
prerogative to retrench employees for the
advancement of its interest and not to defeat or
circumvent the employees' right to security of
tenure; and,
5. Used offair and reasonable criteria in
ascertaining who would be dismissed and who
would be retained among the employees, such
as status, efficiency, seniority303, physical
fitness, age, and financial hardship for certain
workers.
The fact alone that a mere portion of the business
shut down and not the whole of it does not
necessarily remove the measure within the meaning
of Retrenchment.304
Retrenchment cannot be resorted to once business
losses had already decreased and the business had
picked up.305
Bar 2001, 2006
300 Flight Attendants & Stewards Association of the Philippines v PAL,
GR 178083, 2008
301 Flight Attendants & Stewards Association of the Philippines v PAL,
GR 178083, 2008
302 Metro Construction Inc. v Aman, GR 168324, 2009
303 Emcor, Inc v Sienes, GR 152101, 2009
304 Edge Apparel Inc. v NLRC, 286 SCRA 302, 1998
305 PSBA v NLRC, 223 SCRA 305 (1993)
 LABOR STANDARDS 76 LABOR LAW

D. CLOSING OR CESSATION OF desire to resume his work not later than one (1)
OPERATION month from the resumption of operations of his
employer or from his relief from the military or civic
Closure of company may pertain to:306 duty.
1. Complete cessation of business operation
2. Partial cessation of business operation
3. Shut-down of establishment BONA FIDE SUSPENSION OF THE OPERATION
✓ less than 6 months:
CLOSURE MAY BE DUE TO: closure shall not terminate employment
1. Serious business loss
2. Not due to business loss ✓ More then 6 months:
employment shall be deemed terminated
REQUISITES OF A VALID CLOSURE OF BUSINESS
1. Bona fide closure/cessation of business, i.e., Article 286 applies only when there is a bonafide
its purpose is to advance the interest of the suspension of the employer’s operation of a business
employer and not to defeat or circumvent the or undertaking for a period not exceeding six (6)
rights of employees under the law or a valid months. In such a case, there is no termination of
agreement; employment but only a temporary displacement of
2. Written notice served on both the employee employees, albeit the displacement should not
and the DOLE at least one month prior to the exceed six (6) months.308
intended date of termination;
The paramount consideration should be the dire
Bar 2006 exigency of the business of the employer that
3. Separation pay, in case of closure/cessation of compels it to put some of its employees temporarily
business not due to financial losses. It must be out of work.309
equivalent to ½ month pay for every year of
service or one month pay, whichever is higher. If the employee was forced to remain without work
or assignment for a period exceeding six months,
then he is in effect constructively dismissed.310
EFFECTS OF CLOSURE OF BUSINESS 307
Due to NOT due to Bar 2004
serious serious The so-called "floating status" of an employee should
Closure of business
business business last only for a legally prescribed period of time.
done in bad faith
losses losses When that "floating status" of an employee lasts for
Good faith more than six months, he may be considered to have
Legal Legal Illegal dismissal been illegally dismissed from the service.311
No Employee is Employee is entitled to
separation entitled to reinstatement and
benefits separation payment of full wages.
pay.
If reinstatement not
possible, employee is
entitled to full
backwages and
separation pay

E. TEMPORARY CLOSURE
Bar 2001
Article 286. When employment not deemed
terminated.
The bona-fide suspension of the operation of a
business or undertaking for a period not exceeding
six (6) months, or the fulfillment by the employee of
a military or civic duty shall not terminate
employment. In all such cases, the employer shall
reinstate the employee to his former position
without loss of seniority rights if he indicates his
308 Eagle Gold Club Inc. v Mirando, GR 179512, 2009
306 Cheniver Deco Print Technics Corp. v NLRC, 325 SCRA 758 (2000) 309 Eagle Gold Club Inc. v Mirando, GR 179512, 2009
307 Eastridge Golf Club Inc. v Eastridge Golf Club Inc. Labor Union, 310 Valdez v NLRC, 286 SCRA 87, 1998

GR 166760, 2008 311 Valdez v NLRC, 286 SCRA 87, 1998

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 LABOR STANDARDS 77 LABOR LAW

REDUNDANCY, RETRENCHMENT, AND CLOSURE, DISTINCTION

REDUNDANCY RETRENCHMENT
Management prerogative Management prerogative
Service capability of the Effected by management during
workforce is in excess of periods of business recession,
what is reasonably industrial depression, seasonal
needed to meet the fluctuations, lack of work or
demands of the business considerable reduction in the
Cause enterprise volume of the employer’s
business. Resorted to by an
employer to avoid or minimize
business losses.
CLOSURE OF BUSINESS
Management prerogative
Carried out to either stave off
the financial ruin or promote
the business interest of the
employer.
Art 283 authorizes termination
of employment due to business
closure, regardless of the
underlying reasons and
motivations therefor, be it
financial losses or not.

1. Written notice served 1. That retrenchment is 1. Bona fide closure/ cessation

on both the employee reasonably necessary and of business, i.e., its
and the DOLE at least likely to prevent business purpose is to advance the
one month prior to the losses which, if already interest of the employer and
intended date of incurred, are not merely de not to defeat or circumvent
termination; minimis, but substantial, the rights of employees
2. Payment of serious313, actual and real, under the law or a valid
separation pay or if only expected, are agreement;
equivalent to at least reasonably imminent as 2.Written notice served on
one month pay or at perceived objectively and in both the employee and the
least one month pay good faith by the employer; DOLE at least one month
for every year of 2. Written notice served on prior to the intended date
service, whichever is both the employee and the of termination;
higher; DOLE at least one month 3. Separation pay, in case of
3. Good faith in prior to the intended date of closure/cessation of
abolishing the termination; business not due to financial
redundant position; 3. Payment of separation pay losses. It must be equivalent
and equivalent to at least one to ½ month pay for every
4. Use of fair and month pay or at least one year of service or one month
Requisite to
reasonable criteria in month pay for every year of pay, whichever is higher.
be valid
ascertaining what service, whichever is higher;
positions are to be 4. Good faith in exercising
declared redundant, management’s prerogative to
such as: (1) preferred retrench employees for the
status; (2) efficiency; advancement of its interest
and (3) seniority.312 and not to defeat or
circumvent the employees’
right to security of tenure;
and,
5. Used offair and reasonable
criteria in ascertaining who
would be dismissed and who
would be retained among the
employees, such as status,
efficiency, seniority314,
physical fitness, age, and
financial hardship for certain
workers.

Employer must prove that Employer must prove serious Must prove that the closure is
it has become business losses. bona fide. Unlike retrenchment,
Justification
overmanned. closure or cessation of business,
Necessary conditions for the as an authorized cause of

312 Lowe Inc v CA, GR 164813, 2000

313 Metro Construction Inc. v Aman, GR 168324, 2009
314 Emcor, Inc v Sienes, GR 152101, 2009

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 LABOR STANDARDS 78 LABOR LAW

company losses to justify termination of employment,

retrenchment: need not depend for validity on
1. Losses must be substantial evidence of actual or imminent
and not de minimis; reversal of the employer's
2. Losses must be actual or fortune.
reasonably imminent;
3. the retrenchment is
reasonably necessary and is
likely to be effective in
preventing the expected
losses; and
4. the alleged losses, if already
incurred, or the expected
imminent losses sought to
be forestalled, are proven
by sufficient and
convincing evidence.
New staffing pattern, Books of accounts, profit and loss
feasibility studies/ statements, and even its
proposal on the viability accountant to competently
Evidence
of the newly created amplify its financial position.316
that may be
positions, job description
proffered
and the approval by the
management of the
restructuring.315

315 AMA v Garcia, GR 166703, 2008

316 Metro Construction Inc. v Aman, GR 168324, 2009

LA SALLIAN COMMISION ON BAR OPERATIONS

 LABOR STANDARDS
F. DISEASE
Article 284. Disease as ground for termination.
An employer may terminate the services of an
employee who has been found to be suffering from
any disease and whose continued employment is
prohibited by law or is prejudicial to his health as
well as to the health of his co-employees: Provided,
That he is paid separation pay equivalent to at least
one (1) month salary or to one-half (1/2) month
salary for every year of service, whichever is greater,
a fraction of at least six (6) months being considered
as one (1) whole year.
Bar 2004
Requisites for Disease or illness to be a ground for
termination317
1. The continued employment of the employee is
prohibited by law or prejudicial to his health
or the health of his co-employees
2. There is a certification by a competent public
health authority that the disease is of such a
nature or at such a stage that it cannot be cured
within a period of 6 month, even with proper
medical treatment
3. Notice to the employee and DOLE at least 1
month prior to the intended date of termination
4. Separation pay of one month or one-half month
for every year of service, whichever is higher, a
fraction of 6 months or more being considered
as 1 year.
Requirements are mandatory for
termination.318
The requirement for a medical certificate under
Art 284 of the Labor Code cannot be dispensed
with.
The burden of proving the validity of the dismissal of
the employee rests on the employer.319
The employer, before it can legally dismiss its
employee on the ground of disease, must adduce a
certification from a competent public authority that
the disease of which its employee is suffering is of
such nature or at such a stage that it cannot be
cured within a period of six months even with
proper treatment.320
The requirement of a medical certificate under
Article 284 cannot be dispensed with; otherwise, it
would sanction the unilateral and arbitrary
determination by the employer of the gravity or
extent of the employee's illness and thus defeat the
public policy in the protection of labor.321
317 Savallana v IT International Corp., 356 SCRA 451 (2001)
318 Viola Cruz v NLRC, 324 SCRA 770 (2000)
319 Savallana v IT International Corp., 356 SCRA 451 (2001)
320 Duterte v Kingswood Trading Co., GR 160325, 2007
321 Crayon Processing v Pula, GR 167727, 2007
LA SALLIAN COMMISION ON BAR OPERATIONS
79 LABOR LAW
G. TOTALITY OF INFRACTION
TOTALITY OF INFRACTION DOCTRINE
Where the employee has been found to have
repeatedly incurred several suspensions or warnings
on account of violations of company rules and
regulations, the law warrants their dismissal as it is
akin to “habitual delinquency”.322
General rule: It is the totality, not the
compartmentalization of company infractions that
the employee had consistently committed, which
justifies the penalty of dismissal. 323
Exceptions: Previous past infractions may be used as
a justification for an employee’s dismissal from work
only if in connection with a subsequent similar
offense.324
Past infractions for which an employee had already
been penalized cannot be collectively taken as a
justification for his dismissal from the service.325
PROCEDURAL REQUIREMENTS
Art 277(b). Miscellaneous provisions.
Subject to the constitutional right of workers to
security of tenure and their right to be protected
against dismissal except for a just and authorized
cause and without prejudice to the requirement of
notice under Article 283 of this Code, the employer
shall furnish the worker whose employment is sought
to be terminated a written notice containing a
valid statement of the causes for termination and shall
afford the latter ample opportunity to be heard and
to defend himself with the assistance of his
representative if he so desires in accordance with
company rules and regulations promulgated pursuant
to guidelines set by the Department of Labor and
Employment. Any decision taken by the employer
shall be without prejudice to the right of the worker
to contest the validity or legality of his dismissal by
filing a complaint with the regional branch of the
National Labor Relations Commission. The burden of
proving that the termination was for a valid or
authorized cause shall rest on the employer. The
Secretary of the Department of Labor and
Employment may suspend the effects of the
termination pending resolution of the dispute in the
event of a prima facie finding by the appropriate
official of the Department of Labor and Employment
before whom such dispute is pending that the
termination may cause a serious labor dispute or is in
implementation of a mass lay-off. (As amended by
Section 33, Republic Act No. 6715, March 21, 1989)
322 Villeno v NLRC, 251 SCRA 494 (1995)
323 Manila Electric Company v NLRC, 263 SCRA 531 (1996)
324 Stellar Industrial Services, Inc. v NLRC, 252 SCRA 323 (1996)
325 Tower Industrial Sales v CA, 487 SCRA 556 (2006), citing Lopez v
NLRC, 297 SCRA 508 (1998)
 LABOR STANDARDS 80 LABOR LAW

III. GENERAL CONCEPTS “Reasonable opportunity” should be construed as

a period of at least 5 calendar days from receipt of
Dismissals based on just causes contemplate acts or notice.328
omissions attributable to the employee while
dismissals based on authorized causes involve
grounds under the Labor Code which allow the 2. A hearing or conference wherein the employees
employer to terminate employees. 326 will be given the opportunity to:
a. Explain and clarify their defenses to the
Bar 1994 charge against them;
Rationale for strict adherence to procedural b. present evidence in support of their
requirements defenses; and
The due process must be observed in effecting an c. rebut the evidence presented against them
employee’s dismissal because the dismissal of an by the management.
employee affects not only his position but also his
means of livelihood and his dependents’ Hearing or conference in termination cases is not
sustenance.327 necessary. Employer however must provide the
employee an ample opportunity to be heard and to
defend himself with the assistance of his
Procedural Requirement representatives if he so desires329
Basis for termination Requirements
Art 282: Just Cause
1. Serious misconduct Twin-notices and hearing Exception:330 a formal hearing or conference
or willful rule becomes mandatory only when:
disobedience 1. Notice specifying the 1. Requested by the employee in writing
2. Gross and habitual grounds for which 2. Substantial evidentiary disputes exist
neglect of duties dismissal is sought 3. company rule or practice requires it
3. Fraud or willful 2. Hearing or opportunity 4. When similar circumstances justify it
breach to be heard
4. Commission of a 3. Notice of the decision to “Ample opportunity”, connotes every kind of
crime or offense dismiss
assistance that management must accord the
5. Analogous causes
employee to enable him to prepare adequately for
Art 283 and 284: his defense, including legal representation331
Authorized cause
1. Labor-saving 1. Notice to:
devices a. Employee 3. Written notice of termination indicating that:
2. Redundancy b. DOLE a. All circumstances involving the charge
3. Retrenchment At least 30 days prior to the against the employees have been
4. Closing or effectivity of the separation considered; and
cessation of b. grounds have been established to justify
operation the severance of their employment.
5. Disease or illness

PROCEDURAL REQUIREMENTS FOR

TERMINATION WITH JUST CAUSE
UNDER ART 282
1. First written notice to be served on the
employees. It must contain:
a. Specific causes or grounds for termination
b. Directive that the employees are given the
opportunity to submit their written
explanation within a reasonable period.
c. Detailed narration of the facts and
circumstances that will serve as basis for
the charge
d. Company rules, if any, are violated and/or
which among the grounds under Art. 282 is
beingcharged against the employees. 328King of Kings Transport, Inc. v Mamac, GR 166208 (2007)

329
330 Perez v Philippine Telegraph and Telephone Company, GR
326 Agabon v NLRC, 442 SCRA 573, 2004 152048, 2009
327 RCPI v NLRC, 221 SCRA 782 (1993) 331 Abiera v NLRC, 215 SCRA 476 (1992)

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 LABOR STANDARDS 81 LABOR LAW

DISMISSAL WITHOUT DUE PROCESS WENPHIL OR BELATED DUE PROCESS RULE

Where the employer had a valid reason to dismiss an
Bar 2002 employee but did not follow the due process
Consequence of non-compliance with procedural requirement, the dismissal may be upheld but the
requirements employer will be penalized to pay an indemnity to
Just or Effects the employee.332
Due
authorized Employer’s
process Dismissal
cause liability
No liability WENPHIL-SERRANO DOCTRINE
Serrano modifies Wenphil. The Wenphil doctrine was
Separation pay if meant to discourage dismissal without due process.
Legal dismissal is due But the purpose is not achieved as many employers
to authorized “dismiss now and pay later”. Employer isliable for
cause the full backwages although the dismissal is not
outright illegal since it is based on a valid reason.
Reinstatement
Full backwages The employee remains dismissed. The dismissal is
merely defective or “ineffectual”. The doctrine
X Illegal Separation pay if applies to dismissals under Art 282, 283 and 284.
reinstatement
not possible
AGABON ABANDONED SERRANO RULING
Reinstatement
Full backwages The doctrine in Serrano had already been abandoned
in Agabon v. NLRC by ruling that if the dismissal is
X X Illegal Separation pay if done without due process, the employer should
reinstatement indemnify the employee with nominal damages.333
not possible

Damages due to IV. RIGHT TO COUNSEL

non-compliance
with procedural It is true that administrative and quasi-judicial
requirements bodies are not bound by the technical rules of
X Legal procedure in the adjudication cases. However, the
Separation pay if right to counsel, a very basic requirement of
dismissal is due substantive due process, has to be observed. Indeed,
to authorized rights to counsel and to due process of law are two
cause of fundamental rights guaranteed by the 1987
Constitution to person under investigation, be the
History of the effects of non-compliance with proceeding administrate civil, or criminal.334
procedural requirements
Ruling
Year Employer’s liability for non V. BURDEN OF PROOF
Dismissal compliance with procedural Burden of Proof335
requirements Employee Employer
Prior to Must first establish the Burdened to prove that
Illegal
1989 fact of his or her they did not commit
1989 dismissal. illegal dismissal.
Wenphil
Legal Damages
Corp v
NLRC
Full backwages
2000 Computed from the time of
Serrano v Legal dismissal until the court
NLRC finds the dismissal to be for
just cause
Nominal damages
2004 Indenity is stiffer than
Agabon v Legal Wenphil Corp. v NLRC to
NLRC discourage the practive of 332 Agabon v NLRC, 442 SCRA 573, 2004
“dismiss now, pay later” 333 King of Kings Transport, Inc. v Mamac, GR 166208, 2007
334 Salaw v NLRC, 202 SCRA 7, 1991
335 Romeo Basay, et al. v Havienda Consolacion, et al., GR 175532

(2010)

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 LABOR STANDARDS
VI. DEGREE OF PROOF
All administrative determinations require only
substantial proof and not clear and convincing
evidence.336
As a general rule, employers are allowed a wider
latitude of discretion in terminating the services
of managerial employees who perform functions
which by their nature require the employers' full
trust and confidence, thus, existence of basis for
believing that the employee has breached the trust
of the employer is sufficient and does not require
proof beyond reasonable doubt. In fact, it has been
held that when the employer has ample reason to
distrust an employee, a labor tribunal cannot
deny the employer the authority to dismiss him. 337
VII. PRESCRIPTION
Bar 1994, 1997
An action for reinstatement by reason of illegal
dismissal is one based on an injury which may be
brought within 4 years from the time of dismissal.338
D. RELIEFS IN ILLEGAL DISMISSAL
Bar 1999
The employee who has been illegally terminated is
entitled to the twin reliefs of reinstatement and
backwages.339
1. Reinstatement without loss of seniority
rights and other privileges
2. Full backwages inclusive of allowances,
and to other benefits or their monetary
equivalent computed from the time his
compensation was withheld up to the time
of actual reinstatement
The fact that his employer later made an offer to re-
employ him did not cure the vice of his earlier
arbitrary dismissal.340
336 Manalo v Roldan-Confesor, 215 SCRA 808 (1992)
337 Rentokil Philippines, Inc. v Sanchez, GR 176219, 2008
338 Art 1146, Civil Code
339 Condo Suite Club Travel, Inc. v NLRC, 323 SCRA 679 (2000);
Golden Donuts, Inc. v NLRC, 322 SCRA 294 (2000)
340 Ranara v NLRC, GR 100969, 1992
LA SALLIAN COMMISION ON BAR OPERATIONS
82 LABOR LAW
I. REINSTATEMENT
Reinstatement, defined
The restoration to a state or condition from which
one had been removed or separated.341
Bar 1995
General rule:
An employee illegally dismissed is entitled to
reinstatement.
Exceptions:
1. Closure of business
Reinstatement presupposses that the previous
position from which one had been removed still
exists, or that there is an unfilled position more
or less of similar nature as the one previously
occupied by the employee.
When the position no longer exists, order of
reinstatement is improper. The law itself cannot
exact compliance with what is impossible342
2. Prayer is for separation pay in lieu of
reinstatement
Reinstatement is no longer viable where the
employee decides not to be
reinstated. Respondent expressly prayed for an
award of separation pay in lieu of reinstatement
from the very start of the proceedings. By so
doing, he forecloses reinstatement as a relief
by implication.343
Omission to pray for reinstatement in
employee’s position paper before the labor
arbiter cannot be considered as an implied
waiver to be reinstated. Technicalities have no
place in labor cases.344
3. Economic business conditions
When employer is declared to be
insolvent, reinstatement is no longer feasible.345
4. Employees unsuitability
Reinstatement is no longer possible when,
though innocent herself, her continued presence
of the employee as a teacher in a catholic
school may well be met with antipathy and
antagonism by some sectors in the school
community.346
5. Employee’s retirement/overage
When during the pendency of the illegal
dismissal case, the employee reaches the age of
341 Pheschem Industrial Corporation v Moldez, 458 SCRA 339, 2005
342 Philippine Engineering Corporation v CIR, 41 SCRA 102 (1971)
343 City trucking, Inc. v Balajadia, GR 160769 (2006)
344 Pheschem Industrial Corporation v Moldez, 458 SCRA 339 (2005)
345 Electruck Asia, Inc. v Meris, 435 SCRA 310 (2004)
346 Divine Word High School v NLRC, 143 SCRA 346 (1986)
 LABOR STANDARDS
retirement, reinstatement becomes
academic.347
6. Strained relations
In order for the doctrine of strained relations to
apply, it should be proved that the employee
concerned occupies a position where he enjoys
the trust and confidence of his employer and
that it is likely that if reinstated, an atmosphere
of antipathy and antagonism may be generated
as to adversely affect the efficiency and
productivity of the employee concerned.348
Indeed, labor disputes almost always result in
"strained relations," and the phrase cannot
be given an overarching interpretation;
otherwise, an unjustly dismissed employee can
never be reinstated.349
7. Not feasible
The impossibility of the reinstatement of
petitioner considering that his position or any
equivalent position may no longer be available
in view of the length of time that this case has
been pending. Moreover, the protracted
litigation may have seriously abraded the
relationship of the parties so as to render
reinstatement impractical.350
DOCTRINE OF STRAINED RELATIONS
RULE351
1. Where reinstatement is not feasible, expedient
or practical
2. Where reinstatement would only exacerbate the
tension and strained relations between parties
3. Where relationship between the employer and
employee has been unduly strained by reason of
their irreconcilable differences, particularly
where the illegality dismissed employee held a
managerial or key position in the company
4. It would be more prudent to order payment of
separation pay instead of reinstatement
WHEN REINSTATEMENT NO LONGER AVAILABLE,
PAYMENT OF SEPARATION PAY IS AWARDED
Clearly, the law intended reinstatement to be the
general rule. It is only when reinstatement is no
longer feasible that payment of separation pay is
awarded to an illegally dismissed employee.352
Payment of separation pay as a substitute for
reinstatement is allowed only under exceptional
circumstances, viz:353
347 City Trust Banking Corporation v. NLRC, GR 104860 (1996)
348 Cabigting v San Miguel Foods, Inc., GR 167706 (2009)
349 Pentagon Steel Corporation v CA, GR 174141 (2009)
350 Goma v Pamplona Plantation, Inc., GR 160905 (2008)
351 Quijano v Mercury Drug Corp (1998)
352 Pheschem Industrial Corporation v Moldez, 458 SCRA 339 (2005)
353 Pheschem Industrial Corporation v Moldez, 458 SCRA 339 (2005)
LA SALLIAN COMMISION ON BAR OPERATIONS
83 LABOR LAW
1. When reasons exist which are not
attributable to the fault or beyond the
control of the employer, such as, when the
employer, who is in severe financial strait and
has suffered serious business losses, has ceased
operations, implemented retrenchment, or
abolished the position due to the installation of
labor-saving devices;
2. when the illegally dismissed employee has
contracted a disease and his reinstatement will
endanger the safety of his co-employees; or,
3. where strained relationship exists between the
employer and the dismissed employee.
II. BACKWAGES
Backwages, defined
Earnings lost by a work due to employee’s illegal
dismissal. It is a form of relief that restores the
income lost by reason of such unlawful dismissal.
It is not a private compensation or damages, nor is it
a redress of a private right, but rather, in the nature
of a command to the employer to make public
reparation for illegally dismissing an employee354
EFFECT OF FAILURE TO ORDER
BACKWAGES
The fact that the NLRC did not award backwages to
the respondents or that the respondents themselves
did not appeal the NLRC decision does not bar the
Court of Appeals from awarding backwages.355
Substantive rights like the award of
backwagesresulting from illegal dismissal must not
be prejudiced by a rigid and technical application of
the rules. The order of the Court of Appeals to award
backwages being a mere legal consequence of the
finding that respondents were illegally dismissed by
petitioners, there was no error in awarding the
same.356
COMPUTATION OF BACKWAGES
1. Without deduction for their earnings elsewhere
during their layoff357
2. Awards including salary differentials are not
allowed358
3. The salary base properly used should be the
basic salary rate at the time of dismissal plus
the regular allowance.
354 St. Theresea’s school of Novaliches Foundation v NLRC (1998)
355 Asian Terminals, Inc. v NLRC, GR 158458 (2007)
356 Asian Terminals, Inc. v NLRC, GR 158458 (2007)
357 Bustamante v NLRC, 265 v SCRA 61 (1996)
358 Insular Life Assurance Co. v NLRC (1987)
 LABOR STANDARDS 84 LABOR LAW

Allowance includes: SEPARATION PAY AND BACKWAGES,

✓ Emergency cost of living allowances (ECOLA), DISTINGUISHED
transportation allowances, 13th month pay359
✓ Vacation leaves, service incentive leaves and Separation pay in lieu
Backwages
sick leaves of reinstatement
Granted to an illegally Granted to an illegally
The effects of extraordinary inflation are not to dismissed employee dismissed employee
be applied without an official declaration thereof by
competent authority360 Granted where Granted with
reinstatement is no reinstatement
longer feasible.
III. SEPARATION PAY
Employer must still pay
KINDS for backwages.
1. Separation pay as statutory requirement for
authorized causes Oriented towards the Payment of backwages
immediate future, the is a form of relief that
When termination is based on grounds under Art transitional period the restores the income that
283 and 284: dismissed employee was lost by reason of
a. Installation of labor saving devices must undergo before unlawful dismissal366
b. Redundancy locating a replacement
c. Retrenchment job.365
d. Cessation of the employer’s business
e. Disease
COMPUTATION
2. Separation pay as financial assistance 1. Employer may not, in the guise of exercising
Separation pay shall be allowed as a measure of management prerogatives, pay separation
social justice benefits unequally.367
2. Allowances and commissions are included in the
Separation Pay as Financial Assistance computation of separation pay368
When allowed When not allowed
Though validly dismissed, Where employee was Employees who receive their separation pay are
employee may be dismissed for just cause not barred from contesting the legality of their
awarded as some under Art 282 of the dismissal from the service and their acceptance of
equitable relief in Labor code362 or for an those benefits would not amount to estoppel.
consideration of the past offense involving moral Otherwise, employees who have been forced to
services rendered where turpitude, like theft or resign and accept their separation pay can no longer
dismissal was due to illicit sexual relations resort to legal remedies.369
causes other than just with a fellow worker363
causes under Art 282 or
those reflecting on his
IV. DAMAGES, ATTORNEY’S FEES AND OTHER
moral character.361
INDEMNITY
3. Separation pay in lieu of reinstatement where Bar 2001
reinstatement is not feasible Moral damages
Recoverable when the dismissal of an employee is
The grant of separation pay was a proper attended by: 370
substitute only for reinstatement; it could not 1. badfaith,
be an adequate substitute both 2. fraud
for reinstatement and for backwages.364 3. constitutes an act oppressive to labor
4. done in a manner contrary to good
4. Separation pay as a benefit in the CBA or customs and public policy
company policy
Such an award cannot be justified solely upon the
premise that the employer fired his employee
359 Paramount Vinyl Product Corpo v NLRC (1990) 365 Nissan North EDSA Balintawak v Serrano, GR 162538 (2009)
360 Lantion v NLRC (1990) 366 Nissan North EDSA Balintawak v Serrano, GR 162538 (2009)
361 Bristol Myers Squibb v Baban, GR 167449 (2008); Toyota Motor 367 Businessday Information Systems and Services, Inc. v NLRC, 221

Phils. Corp Workers Association v NLRC, 537 SCRA 171 (2007) SCRA 9, 1993
362 BPI and BPI Family Bank v NLRC and Arambulo, GR 179801 (2010) 368 Songco v NLRC, 183 SCRA 610 (1990)
363 PLDT v NLRC, GR 80609 (1988) 369 Amkor Technlogy Philippines, Inc. v Juangco, GR 166507 (2006)
364 Nissan North EDSA Balintawak v Serrano, GR 162538 (2009) 370 PAL v NLRC (1999)

LA SALLIAN COMMISION ON BAR OPERATIONS

 LABOR STANDARDS
without just cause or due process. Additional facts
must be pleaded and proven to warrant the grant of
moral damages under the Civil Code.371
Exemplary damages
Awarded if the dismissal is effected in a wanton,
oppressive or malevolent manner.372
Attorney’s fees
Not recoverable when there is no sufficient showing
of bad faith.
Justified when claimant is compelled to litigate
with 3rd parsons or to incur expenses to protect his
interest by reason of an unjustified act of the party
against whom it is sought.373
LIABILITY OF CORPORATE OFFICERS
In cases of illegal dismissal, corporate directors and
officers are solidarily liable with the corporation,
where termination of employment are done with
malice or bad faith.374
CORPORATE VEIL IS PIERCED:
1. When it is deliberately and maliciously designed
to evade financial obligations to employees or
when used as means to perpetuate fraud or an
illegal act375
2. Directors or trustees who willfully and knowingly
assent to patently unlawful acts or who are
guilty of gross negligence or bad faith in the
managing corporate affairs376
Otherwise, the manager, officer or the stockholder s
are not liable personally since the corporation is
vested by law with a separate and distinct
personality.377
E. RETIREMENT
Art 287. Retirement
Any employee may be retired upon reaching the
retirement age established in the collective
bargaining agreement or other applicable
employment contract.
In case of retirement, the employee shall be entitled
to receive such retirement benefits as he may have
earned under existing laws and any collective
bargaining agreement and other agreements:
Provided, however, That an employee’s retirement
benefits under any collective bargaining and other
371 M+W Zander Philippines, Inc. v Enriquez, GR 169173 (2009)
372 Kay Products v CA, 464 SCRA 544 (2005)
373 Lopez v NLRC (1998)
374 Bogo Medelin Sugarcane Planters Association v NLRC (1998)
375 Pabalan v NLRC (1990)
376 Sec 31 of the Corporation Code
377 Sunio v NLRC (1984)
LA SALLIAN COMMISION ON BAR OPERATIONS
85 LABOR LAW
agreements shall not be less than those provided
therein.
In the absence of a retirement plan or agreement
providing for retirement benefits of employees in the
establishment, an employee upon reaching the age
of sixty (60) years or more, but not beyond sixty-five
(65) years which is hereby declared the compulsory
retirement age, who has served at least five (5)
years in the said establishment, may retire and shall
be entitled to retirement pay equivalent to at least
one-half (1/2) month salary for every year of service,
a fraction of at least six (6) months being considered
as one whole year.
Unless the parties provide for broader inclusions, the
term ‘one-half (1/2) month salary’ shall mean fifteen
(15) days plus one-twelfth (1/12) of the 13th month
pay and the cash equivalent of not more than five (5)
days of service incentive leaves.
Retail, service and agricultural establishments or
operations employing not more than ten (10)
employees or workers are exempted from the
coverage of this provision.
Violation of this provision is hereby declared
unlawful and subject to the penal provisions under
Article 288 of this Code.
A retirement plan in a company partakes the nature
of a contract, with the employer and the employee
as the contracting parties. It creates a contractual
obligation in which the promise to pay retirement
benefits is made in consideration of the continued
faithful service of the employee for the requisite
period.
RA 7641
AGE REQUIREMENT
1. Compulsory
Upon reaching 65 years of age; with at least 5
years of service
2. Optional
Upon reaching 60 years of age; with at least 5
years of service; at the option of the employee
COMPUTATION OF RETIREMENT PAY
1. 15 days based on the employee’s latest
salary
2. 1/12 of the 13th month pay; and
3. cash equivalent of the 5 years service
incentive leave
COMPUTATION: 22.5 DAYS X NUMBER OF YEARS
OF SERVICE
22.5 days is computed at 15 days plus 2.5 days
representing 1/12 of the 13th month pay plus 5 days
 LABOR STANDARDS 86 LABOR LAW

of service incentive leave378 TRANSFER OF EMPLOYEES

R.A. NO. 7641 DOES NOT APPLY TO A Business enterprises have the right to transfer
RETIREMENT PLAN WHICH GIVES TO THE employees from one work station to another where it
RETIRING EMPLOYEE MORE THAN WHAT THE LAW deems the employee will be most useful and
REQUIRES.379 productive. The limits as to transferring employees
While termination of employment and retirement are as long as there is no unreasonable cause,
from service are common modes of ending inconvenience, and prejudice in their transfer.383
employment, they are mutually exclusive, with
varying juridical bases and resulting benefits. 380
PRODUCTIVITY STANDARD
Failure to observe prescribed standards of work or to
TERMINATION AND RETIREMENT, fulfil reasonable work assignments due to
DISTINGUISHED381 inefficiency may constitute just cause for dismissal.
Such inefficiency is understood to mean failure to
Termination Retirement attain work goals or work quotas, either by failing to
mode of ending mode of ending complete the same within the allotted reasonable
employment employment period, or by producing unsatisfactory results. This
Statutory, governed by Contractual, based on a management prerogative of requiring standards may
the Labor code and other bilateral agreement of be availed of so long as they are exercised in good
related law as to its the employer and faith for the advancement of the employer's
grounds, benefits and employee interest.384
procedure
Benefits resulting from Article 287 of the Labor
termination vary, Code gives leeway to the GRANT OF BONUS
depending on the cause parties to stipulate
above a floor of benefits A bonus is a gratuity or act of liberality of the giver
which the recipient has no right to demand as a
matter of right. The grant of a bonus is basically a
management prerogative which cannot be forced
VII. Management upon the employer who may not be obliged to
assume the onerous burden of granting bonuses or
Prerogative other benefits aside from the employee’s basic
salaries or wages.385
Management Prerogative, defined A bonus, however, becomes a demandable or
Act by which one directing a business is able to enforceable obligation when it is made part of the
control the variables thereof so as to enhance the wage or salary or compensation of the employee
chances of making a profit. which was promised to the employee.386
This is also one which, the employer is free to
regulate, according to his own discretion and
judgment all aspects of employment; this includes
CHANGE OF WORKING HOURS
hiring, working assignments, methods, time, place The management is also empowered to change their
and manner, tools to be used, process to be employees work schedule whenever exigencies so
followed, supervision of workers, working require provided that it is done in good faith. 387
regulations, transfer of employees, lay-off of
workers, discipline, dismissal and recall of work.

DISCIPLINE
In revising the employees Code of Conduct which
would have repercussions to their security of tenure
and deprive them of their livelihood the company
must have participation in the decision and policy
making process of affecting their rights, duties, and
welfare.382
378 Capitol Wireless v Confessor, 264 SCRA 68 (1996)
379 Oxales v Unilab, GR 152991, 2008
380 Quevedo v Benguet Electric Cooperative Inc., GR 168927, 2009
381 Quevedo v Benguet Electric Cooperative Inc., GR 168927, 2009
382 Philippine Airlines v. NLRC 225 SCRA 301 (1993)
383 Chu vs. NLRC 232 SCRA 764 (1994)
384Buiser v. Leogardo, Jr. 131 SCRA 151, 158 (1984)
385Trader’s Royal Bank v. National Labor Relations Commission, G.R.
No. 88168, August 30, 1990, 189 SCRA 274, 277
386Philippine National Construction Corp. v. National Labor
Relations Commission, 366 Phil. 678 (1999); Philippine Duplicators,
Inc. v. National Labor Relations Commission, 311 Phil. 407, 419
(1995)
387 Union Carbide Labor Union vs. Union Carbide Phils., Inc. 215
SCRA 554 (1992)

LA SALLIAN COMMISION ON BAR OPERATIONS

 LABOR STANDARDS
MARITAL DISCRIMINATION
Section 136, Title III, Chapter I, Stipulation Against
Marriage
It shall be unlawful for an employer to require as a
condition of employment or continuation of
employment that a woman employee shall not get
married, or to stipulate expressly or tacitly that
upon getting married, a woman employee shall be
deemed resigned or separated, or
to actually dismiss, discharge, discriminate or
otherwise prejudice a woman employee merely by
reason of her marriage.
POST-EMPLOYMENT BAN
Whether such an agreement would be held valid
andbinding will depend on its reasonableness in
relation to the parties concerned, as well as to its
public policy.
LIMITATIONS IN ITS EXERCISE
The limitations of the exercise of management
prerogative is that there must be an exercise of
good faith for the advancement of the employees
interest and not for the purpose of defeating or
circumventing the rights of the employees under
the law are valid exercise of management
prerogative.388
In particular, the employer must be able to show
that the transfer is not unreasonable, inconvenient
or prejudicial to the employee; nor does it involve a
demotion in rank or a diminution of his salaries,
privileges and other benefits. The employer bears
the burden of proving that the transfer of the
employee has complied with the foregoing test.389
Limitations in their exercise of management
prerogatives are the following:
1. Constitution
2. Law
3. Contracts (CBA)
4. General principles of fair play and justice
388 Chu vs. NLRC 232 SCRA 764 (1994)
389PLDT v. Paguio, G.R. No. 152689, Oct. 12, 2005
LA SALLIAN COMMISION ON BAR OPERATIONS
87 LABOR LAW
VIII. Social
legislation
A. SOCIAL SECURITY SYSTEM AND
GOVERNMENT SERVICE INSURANCE SYSTEM
Bar 1994, 1995
CONCEPT
The new law establishes a state insurance fund
built up by the contributions of employers based
on the salaries of their employees.390
The injured worker does not have to litigate his
right to compensation. No employer opposes his
claim. There is no notice of injury nor requirement
of controversion. The sick worker simply files a claim
with a new neutral Employees' Compensation
Commission which then determines on the basis of
the employee's supporting papers and medical
evidence whether or not compensation may be paid.
The payment of benefits is more prompt. The
cost of administration is low. The amount of
death benefits has also been doubled.391
The employer's duty is only to pay the regular
monthly premiums to the scheme.392
Since there is no employer opposing or fighting a
claim for compensation, the rules on presumption
of compensability and controversion cease to
have importance.393 The lopsided situation of an
employer versus one employee, which called for
equalization through the various rules and concepts
favoring the claimant, is now absent.394
390 De Jesus v ECC, GR L-56191, 1986
391 De Jesus v ECC, GR L-56191, 1986
392 De Jesus v ECC, GR L-56191, 1986
393 GSIS v de Guzman, GR 173049, 2009
394 De Jesus v ECC, GR L-56191, 1986
 LABOR STANDARDS 88 LABOR LAW

Social Security Act of 1997 Government Service Insurance Act of 1997

RA 8282
RA 1161 as amended by RA 8282 Social
Enabling Law
Security Act of 1997.
Any person, natural or juridical,
domestic or foreign, who carries on in
the Philippines any trade business,
industry, undertaking, and uses the
services of another person who is under
his orders as regards the employment,
except those considered as employer
under the GSIS.
RA 8291
RA 8291 amending PD 1146
Employer
National government, its political subdivisions,
branches, agencies or instrumentalities, including
government-owned or controlled corporations and
financial institutions with original charters
(GOCCs).

A self-employed person shall be both at

the same time.
Employee
Any person who performs services for an Any person receiving compensation while in service
employer who receives compensation for of an employer whether by election or
such services, where there is an appointment, irrespective of status of
Employer-employee relationship. appointment.

A self-employed person shall be both

employer and employee at the same
time.
Self-employed
Any person whose income is not derived No definition provided
from employment, including, but not
limited to:

Definition of self-employed professionals

terms partners and single proprietors of
businesses;
actors, directors, scriptwriters, news
correspondents not considered as
employees under the above definition;
Individual farmers and fishers.

Dependents
Legal spouse entitled to receive support Same except that a child here is below 18
Child
unmarried, not gainfully employed and
below 21 or
Child over 21 if he or she became
incapacitated while still a minor:

child may be legitimate, legally adopted,

or illegitimate;

Parent who is receiving regular support.

Beneficiaries
Primary Same except that RA 8291 does not distinguish
Dependent spouse share of legitimate and illegitimate children
Dependent children

Illegitimate children are entitled only to

50% of the share of legitimate children
unless there are no legitimate children,

LA SALLIAN COMMISION ON BAR OPERATIONS

 LABOR STANDARDS 89 LABOR LAW

Social Security Act of 1997 Government Service Insurance Act of 1997

RA 8282 RA 8291
in which case, they get 100%.

Secondary
Shall only receive when the primary
beneficiaries are absent.
Dependent parents.
Other person designated by employee.

Compensation
all actual remuneration for employment, basic pay received excluding per diems, bonuses,
including allowance, converted value of overtime, honoraria, allowances and other
noncash remuneration, except that emoluments not integrated into the basic pay
portion already above the max salary under existing laws.
credit
(P 15,000).

Bar 1997
Compulsory Public sector employees below the compulsory
Employers retirement age of 65,
Employees not over 60 years including
household helpers with at least 1,000 Exceptions;
monthly pay; and AFP and PNP;
Self-employed Members of the Judiciary and Constitutional
Commissions who are covered only by life insurance
Voluntary as they have separate retirement schemes.
Spouses who devote full time to Contractual employees with no employee-employer
managing household and family affairs; relationship with the agency they serve.
OFWs recruited by foreign-based
employers;
Employees already separated from
Coverage
employment or those self-employed with
no realized income for a given month,
who chose to continue with contributions
to maintain right to full benefit.

Note: Foreign governments, international

organizations or their wholly owned
instrumentally employing workers in the
Philippines may enter into an agreement
with the Philippine government to
include their employees in the SSS
except those already covered by their
civil service retirement system.

Monthly pension Monthly pension.

Dependents’ pension Retirement benefits
Retirement benefits Permanent disability benefits
Permanent disability benefits Funeral benefits
Death benefits Loan – GSIS website provides for this
Benefits
Funeral benefits Temporary disability benefits (similar to sickness)
(tax-exempt)
Loan Separation benefits
Sickness benefits. Unemployment benefits
Maternity Leave benefits. Survivorship benefits
Life insurance benefits

Bar 1995, 2000, 2002

Reporting Each employer shall immediately report The employer shall report to the GSIS the names of
requirements to the SSS the names, ages, civil status, all its employees, their corresponding employment
occupations, salaries and dependents of status, positions, salaries and such other pertinent

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 LABOR STANDARDS 90 LABOR LAW

Social Security Act of 1997 Government Service Insurance Act of 1997

RA 8282
all his employees who are subject to
compulsory coverage.395
Each covered self-employed person shall,
within thirty (30) days from the first day
he started the practice of his profession
or business operations register and
report to the SSS his name, age, civil
status, and occupation, average monthly
net income and his dependents.396
RA 8291
information, including subsequent changes therein,
if any, as may be required by the GSIS; the
employer shall deduct each month from the
monthly salary or compensation of each employee
the contribution payable by him in accordance with
the schedule prescribed in the rules and
regulations implementing this Act.397
Each employer shall remit directly to the GSIS the
employee’s and employer’s contributions within
the first ten (10) days of the calendar month
following the month to which the contributions
apply. The remittance by the employer of the
contribution to the GSIS shall take priority over and
above the payment of any and all obligations,
except salaries and wages of its employees.398

To the Employee
Employee is still entitled to SSS benefits
even if the employer fails or refuses to
remit the SSS contributions.

To the Employer
Employer is liable to the employee and
must:
Pay to SSS damages equivalent to the
benefits of those who die, become
disabled, get sick or reach retirement
age, except that in case of pension
benefits;
Pay all unpaid contributions plus a
penalty of 3% per month until paid; and
Be held criminally liable through an
action commenced either by the SS or
Effect of Non- the employee concerned.
reporting and
Non-remittance To the Self-employed
of Contributions a self employed person who fails to
register with SSS will also be fined
and/or imprisoned. However, in the
event the self-employed person does not
realize earnings in a given month,
payment of SSS contributions for that
month is no longer required.

To the Self-employed and voluntary

Member
a self-employee and voluntary member
who fails to remit contributions after
membership is approved, may pay the
monthly contribution prospectively but is
not allowed to pay contributions
retroactively from the month no
contribution payments were remitted.

395 Sec 24, RA 8282. SSS Act

396 Sec 24-A, RA 8282. SS Act of 1997
397 Sec 6. RA 8291. GSI Act of 1997
398 Sec 6. RA 8291. GSI Act of 1997

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 LABOR STANDARDS 91 LABOR LAW

Social Security Act of 1997 Government Service Insurance Act of 1997

RA 8282 RA 8291
Change of Membership Category:
Non-working spouse gets employed or
becomes self-employed: membership
shall be reclassified accordingly as
employed or self-employed or OFW.
The receipt of a lump sum permanent
total disability,who is re-employed or
has resumed self-employment or as an
OFW or Non-working spouse, not earlier
than one year from the date of
disability, shall again be subject to
compulsory coverage and shall be
considered a new member.

Employer: 1st day of the operation.

Effective Date of Employee: 2nd day at work
Coverage Self-employed: upon retirement system

Employer’s contribution, and Continued membership for the unemployed

Employee’s obligation to pay member; and entitlement to whatever benefits he
contribution both cease at the end of the has qualified to in the event of any compensable
Effective
month of separation; contingency.
separation from
EE shall be credited with all contribution
employment
paid on his behalf and entitled to all
benefits set forth by the law.

Social Security Commission GSIS

Dispute CA (Rule 43; Questions of law and fact) CA (Rule 43)
Settlement SC (Rule 45; questions of law only) SC (Rule 45); appeal does not stay execution.

Bar 2001
Prescriptive 20 years 4 years
Period

SSS Benefits GSIS Benefits BAR 2004

Monthly Pension
Computation of monthly pension: the monthly pension The amount shall be:
shall be the highest of the following amounts: a. 37.5% x (revalued ave. monthly compensation)
a. P300 + [20% x (ave. monthly credit)] + [2% x (ave. b. Plus 2.5 x (revalued ave. monthly compensation) x
monthy credit) x (# of cash credited years of service (years in service in excess of 15 years).
in excess of 10 years)]; or
b. 40% x (ave. monthly credit); or The monthly pension shall not exceed 90% of the
c. P1,000; provided, that the monthly pension shall in average monthly compensation.
no case be paid for an aggregate amount of less
than 60 months. It shall not be less than P2,400 for those with 20
d. Notwithstanding the abovementioned, minimum years of service
pension is P1,200 for members with at least 10
years credit service, P2,400 for those with 20 years.

Bar 2005
Dependents’ Pension
a. Paid when member dies, retires or with permanent Not available
total disability.
b. Paid to each child conceived on or prior to
contingency with the youngest and preferring the
legitimate;
c. Amount is either P250 or 10% of the monthly
pension as computed above, whichever is higher.

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SSS Benefits GSIS Benefits BAR 2004

Bar 2005
Retirement Benefits
Eligibility requirements
a. 120 monthly contributions; 1. 15 years service;
b. Age 2. 60 years of age; and
• 65 years old; or 3. Not receiving pension benefit from permanent total
• A member who has reached 60 years may also disability.
avail if he is already separated from Note: Retirement is compulsory for employees 65 years
employment or has ceased to be self-employed. of age who have rendered at least 15 years of service; if
employee has less than 15 years of service, he may be
allowed to continue in accordance with civil service
laws.
Benefits
Benefit: Choice between

a. Monthly pension
Entitled to monthly pension from retirement
until death Benefit: Choice between

b. Lump sum Alternative a. 60 x (basic monthly pension) lump sum

Member may opt to receive his first 18 monthly
pensions in lump sum but such is discounted at
a preferential rate of interest.
To those Ineligible – to the 60 year old with less than
120 monthly contributions who is no longer employed or
self-employed, and who is not continuing contributions
independently, he is entitled to a lump sum equal to his
total contributions paid.
payment at the time of retirement plusbasic
monthly pension payable monthly for life after
expiry of the 5-year guaranteed period which is
already covered by the lump sum; or
b. Cash payment equivalent to 18 x (basic
monthly pension) plus monthly pension for life

Bar 1996
Permanent Disability Benefits
Eligibility requirements
36 monthly contributions prior to the semester of
disability; same as death benefit; only difference is that
the pension is paid directly to the member.
Benefits
a. When a permanently disabled member dies. In case
the permanently disabled member dies, it would be
given the same treatment as a retiree dying.
b. For permanent partial disability, the pension is not
lifetime. (e.g. loss of thumb entitles member to
only 10 months of pension, while loss of arm 50
months).
It shall be paid in lump sum if the period is less than
12 months.
c. For multiple partial disabilities, they shall be
additive when related or deteriorating – the
percentage shall be equal to the number of months
the partial disability is entitled to divided by 75
months. (e.g. loss of sight in one eye à 25/75; loss
1. Disability not due to employee’s own grave
misconduct, notorious negligence, habitual
intoxication, or willful intention to kill himself or
another;
2. Employee is:
a. in service at the time of disability; or
b. even if separated, he has paid at least 36
monthly contributions within the 5-year period
immediately prior to disability or has paid a
total of at least 180 monthly contributions
prior to disability; and
3. Member is not enjoying old-age retirement benefit.
1. Permanent Total Disability Monthly income benefit
for life equal to basic monthly pension –This is
effective from date of disability;
If member is in service at the time of disability and
he has paid at least 180 monthly contributions, in
addition to the monthly income benefit, he shall
receive an additional cash payment of 18 times
basic monthly pension.
2. To the ineligible
If member has rendered at least 3 years of service,
then he shall receive cash payment equal to 100%
of ave. monthly compensation for each year of
service (essentially total amount of contributions
made) or P12,000 whichever is higher.

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of arm à 50/75; if both occur due to same cause, 3. Partial Disability
then 25/75 + 50/75 = 100% so treated as if it were Paid according to GSIS prescribed schedule (this is
permanent total disability. similar to the scheme used by SSS; refer to section
II subsection D-3 above); member availing of
permanent partial disability must satisfy condition
E.1.a. above regarding the disability not being due
to his own fault and either E.1.b.i. or E.1.b.ii.
regarding employment status and services
rendered.
Death Benefits
Eligibility requirements
When member dies, the primary beneficiaries are
entitled to only one of the following:
a. Survivorship pension
1. If he was in the service when he died; or
2. Even if separated from the service, he has at
least 3 years of service and has paid 36
monthly contributions within the 5 years
immediately preceding death; or
3. Even if separated from the service, he has paid
36 monthly contributions prior to the semester of death 180 monthly contributions prior to death.
b. Survivorship pension plus cash payment of 100%ave.
monthly compensation for every year of service
1. If he was in the service when he died; and
2. With 3 years of service.
c. Cash payment equivalent to 100% ave. monthly
compensation for each year of service he paid
contributions or P12,000 whichever is higher
1. With 3 years of service; and
2. He has failed toqualify in the prior 2 schemes.
Benefits
When member dies, the primary beneficiaries are
entitled to only one of the following:
a. Survivorship benefits
Beneficiaries are entitled to the following:
Monthly pension to primary or secondary beneficiaries.
1. Basic survivorship pension which is 50% of basic
To those ineligible – lump sum benefit which shall be
monthly pension; and
the higher between the two:
2. Dependent children’s pension not exceeding
a. (monthly pension) x 12; or
50% of the basic monthly pension.
b. (monthly pension) x (# of monthly
b. Survivorship pension plus cash payment of 100%ave.
contributions)
monthly compensation for every year of service
(pension plus total contributions made)
c. Cash payment equivalent to 100% ave. monthly
compensation for each year of service he paid
contributions or P12,000 whichever is higher
Funeral Benefits
Eligibility requirements
Entitled to this are the following:
a. Active member;
b. Member separated from service but still entitled to
Upon death of a member funeral benefit;
c. Pensioner;
d. Retiree who at the time of retirement was of
pensionable age but opted to retire under RA 1616.
Benefits
P12,000 in cash or in kind, upon death of member
Loan Beneficiaries are entitled to a P20,000 funeral benefit
Social Security Commission Resolution No. 669. payable upon the death of a member or old age
Moreover, several SSS-issued circulars such as Circular pensioner.
No. 21-P and No. 52 pertain to the treatment of salary

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SSS Benefits GSIS Benefits BAR 2004

loans, sometimes providing for more flexible payment
terms or condonation for delinquent payers; Santiago v.
CA and SSS, GR # L-39949 (1984) resolved an issue
involving the treatment of salary loan repayments

Sickness benefits (SSS) / Temporary disability benefits (GSIS)

Eligibility requirements and other conditions
1. Inability to work due to sickness or injury
2. Confined for at least 4 days either in a hospital or
elsewhere with SSS approval;
3. At least 3 months of contributions in the 12 month
period immediately before the semester of sickness
1. Employee must be:
or injury has been paid;
a. in service at the time of disability; or
4. All company sick leaves with pay for the current
b. if separated, he has rendered at least 3 years
year has been used up;
of service and paid at least 6 monthly
5. Maximum of 120 days per 1 calendar year (so
contributions in the 12 month period
maximum permissible for the same sickness and
immediately prior to disability;
confinement is 240 days for 2 consecutive years);
2. All sick leave credits including CBA sick leaves for
6. The employer has been notified, or, if a separated,
the current year has been used up; and
voluntary or self-employed member, the SSS
3. Maximum of 120 days per 1 calendar year
directly notified within 5 days of confinement;
(maximum permissible for the same sickness and
7. Notice to employer or SSS not needed when
confinement is 240 days for 2 consecutive years).
confinement is in a hospital; notice to employer not
required as well when Employee became sick or
injured while working or within premises of the
employer.

Benefits
Daily cash allowance paid for the number of days a 75% of the current daily compensation for every day or
member is unable to work due to sickness or injury fraction thereof of disability or P70 whichever is higher.
equivalent to 90% x (average daily salary credit)

Maternity Leave benefits

limited only to first four
deliveries or miscarriage
Not available
Not available
Not available
Separation Benefits
Eligibility requirements
1. 60 years of age, or separation from service with at least 3 years but not over 15
years served
2. Below 60 years of age, but at least 15 years of service rendered.
Benefits
1. For 60 years of age or separated from service with 3 to 15 years of service:
cash payment of 100% of ave. monthly compensation for each year of service (so
essentially, the total amount of all contributions paid) or P12,000 whichever is
higher.
2. Below 60 years of age and at least 15 years of service:
cash payment equivalent to 18 x (monthly pension) at the time of resignation or
separation plus an old-age pension benefit equal to basic monthly pension.
Life Insurance Benefits
Note: Judiciary and Constitutional Commissions are entitled to life insurance only.

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C. RA 7875: NATIONAL HEALTH INSURANCE ACT

B. RA 7699: LIMITED PORTABILITY SCHEME
COVERAGE: ALL CITIZENS
COVERAGE 1. Paying:
1. Workers who transfer employment from one a. Both public and private sector employees;
sector to another; and b. The self-employed
2. Those employed in both sectors (private and
public). 2. Nonpaying:
a. Retirees and pensioners of either SSS or
GSIS;
DEFINITION OF TERMS b. Members who have reached retirement age
and who at least have paid 120 monthly
1. Portability
contributions;
Shall refer to the transfer of funds for the c. Indigent members; and
account and benefit of a worker who transfers d. Legal dependents.
from one system to the other399

2. Totalization
Shall refer to the process of adding up the WHO ARE DEPENDENTS?
periods of creditable services or contributions 1. Legitimate spouse who is not a member, (same
under each of the Systems, for purposes of as SSS)
eligibility and computation of benefits400 2. Children below 21 unless incapacitated(same
as SSS; RA 9241 however also includes step
children as well); and
Sec 3, RA 7699 3. Parents who are 60 years old or above whose
A covered worker who transfers employment from monthly income is below an amount to be
one sector to another or is employed in both sectors determined by Phil Health Insurance Corp
shall have his credible services or contributions in (PHIC).
both Systems credited to his service or contribution
record in each of the Systems and shall be totalized National Health Insurance Benefits
for purposes of old-age, disability, survivorship and INCLUDED
other benefits in case the covered member does In-patient Hospital Care
not qualify for such benefits in either or both 1. Room and board
Systems without totalization. 2. Services of health care professionals
3. Diagnostics, laboratory, and other medical
Provided, however, That overlapping periods of examination services
membership shall be credited only once for purposes 4. Use of surgical or medical equipment and
of totalization. facilities
5. Prescription drugs and biological
6. Inpatient education packages
Bar 2005
What happens? Out-patient Care
Workers shall be combine his years of creditable 1. Services of health care professionals
service and paid contributions in onesector, private 2. Diagnostic, laboratory, and other medical
or public, as represented by his contributions to examination services
either SSS or GSIS, respectively, with his service in 3. Personal preventive services; and
the other sector. 4. Prescription drugs and biologists

Why? Emergency and transfer services

To be able to satisfy eligibility requirements of Other health care services
benefits provided for by either SSS or GSIS. NOT INCLUDED401
1. Non-Prescription drugs and services
OVERLAPPING PERIODS 2. Alcohol abuse or dependency treatment
Overlapping periods of membership in case of those 3. Cosmetic surgery
employed in both sectors at once are to be counted 4. Optometric Services
once only for purposes of totalization. 5. Fifth and Subsequent normal obstetrical
deliveries; and
6. Cost-ineffective procedures, which shall be
defined by the PHIC.
399 Sec 2(b), RA 7699
400 Sec 2(b), RA 7699 401 Sec 11, RA 7875

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of the basic salary of an employee within a calendar

Note: This list of excluded items are subject to year;
review and revision by the PHIC through actuarial
studies every 3 years. COVERAGE
ALL employers, provided that they have worked for
REQUISITES FOR AVAILMENT402 at least one month during the calendar year
1. Payment of at least 3 monthly contributions
within theimmediate 6 months prior to EXEMPTED:406
availment; and
1. DISTRESSED EMPLOYERS
2. The following need not pay to qualify: those which are currently incurring substantial
a. SSS and GSIS pensioners to effectively of RA losses or
7875.
b. Members who have reached the age of in the case of non-profit institutions and
retirement and have paid at least 120 organizations, where their income, whether from
monthly contributions; donations, contributions, grants and other earnings
c. Enrolled indigents from any source, has consistently declined by more
than forty (40%) percent of their normal income for
the last two (2) years, subject to the provision of
Section 7 of this issuance;
IX. Labor Standards- 2. THE GOVERNMENT AND ANY OF ITS
Related Special Laws POLITICAL SUBDIVISIONS
including government-owned and controlled
corporations,
A. RA 8187: PATERNITY LEAVE ACT OF 1996
except those corporations operating essentially as
WHO IS ENTITLED TO PATERNITY LEAVE private subsidiaries of the Government;
Married male employee both in the public and 3. EMPLOYERS ALREADY PAYING
private sectors403
THEIR EMPLOYEES 13-MONTH PAY
or more in a calendar year of its equivalent at the
WHEN MAY IT BE AVAILED OF time of this issuance;
It may be availed of for the first 4 deliveries of the
legitimate spouse with whom he is cohabiting404 4. EMPLOYERS OF HOUSEHOLD
HELPERS AND PERSONS IN THE
PERSONAL SERVICE
WHAT ARE THE BENEFITS UNDER THE LAW of another in relation to such workers; and
A married male employee is allowed not to report
for work for seven (7) days. 5. EMPLOYERS OF THOSE WHO ARE
PAID ON PURELY COMMISSION,
While on leave, the employee continues to earn the BOUNDARY, OR TASK BASIS
compensation, on the condition that his spouse has
delivered a child or suffered a miscarriage for and those who are paid a fixed amount for
purposes of enabling him to effectively lend support performing a specific work, irrespective of the time
to his wife in her period of recovery and/or in the consumed in the performance thereof, except where
nursing of the newly-born child.405 the workers are paid on piece-rate basis in which
case the employer shall be covered by this issuance
insofar as such workers are concerned.
B. PD 851: 13TH MONTH PAY
FEATURES OF THE BENEFIT
WHAT IS 13TH MONTH PAY
Employers shall pay to all their employees receiving
Sec 2(a), PD 851 a basic salary of not more than P1,000 a month a
Thirteenth-month pay shall mean one twelfth (1/12) thirteenth-month pay not later than December 24 of
every year.407
402 Sec 12, RA 7875
403 Sec 2, RA8187. Paternity Leave
404 Sec 2, RA8187. Paternity Leave 406 Sec 3, PD 851
405 Sec 3, RA8187. Paternity Leave 407 Sec 1, PD 851

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 LABOR RELATIONS
Memorandum Order no. 28, 1986 Aug 13 removed
“limiting coverage to workers receiving not more
than P1,000”
Employers are required to pay all their rank-and-
file employees 13th month pay
13th month pay may be the subject of collective
bargaining408
The benefits granted under this issuance shall not
be credited as part of the regular wage of the
employees for purposes of determining overtime and
premium pay, fringe benefits, as well as premium
contributions to the State Insurance Fund, social
security, medicare and private welfare and
retirement plans.409
C. RA 7877: ANTI-SEXUAL HARRASMENT ACT
Bar 2000, 2004, 2005, 2006
Work, education or training-related sexual
harassment, defined
Sec 3. definition, RA 7877
Work, education or training-related sexual
harassment is committed by an employee, manager,
supervisor, agent of the employer, teacher,
instructor, professor, coach, trainor, or any other
person who, having authority, influence or moral
ascendancy over another in a work or training or
education environment, demands, requests or
otherwise requires any sexual favor from the other,
regardless of whether the demand, request or
requirement for submission is accepted by the
object of said Act.
How work-related sexual harassment is committed
Sec 3. Definition, RA 7877
In a work-related or employment environment,
sexual harassment is committed when:
a. The sexual favor is made as a condition in
the hiring or in the employment, re-
employment or continued employment of said
individual, or in granting said individual
favorable compensation, terms, conditions,
promotions, or privileges; or the refusal to
grant the sexual favor results in limiting,
segregating or classifying the employee which
in a way would discriminate, deprive or
diminish employment opportunities or
otherwise adversely affect said employee;
b. The above acts would impair the employee’s
rights or privileges under existing labor laws;
c. The above acts would result in an
intimidating, hostile, or offensive
environment for the employee.
408 Sec 5, PD 851
409 Sec 6, PD 851
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97 LABOR LAW
In an education or training environment, sexual
harassment is committed:
a. Against one who is under the care, custody or
supervision of the offender;
b. Against one whose education, training,
apprenticeship or tutorship is entrusted to the
offender;
c. When thesexual favor is made a condition to
the giving of a passing grade, or the granting of
honors and scholarships, or the payment of a
stipend, allowance or other benefits, privileges,
or considerations; or
d. When the sexual advances result in an
intimidating, hostile or offensive
environment for the student, trainee or
apprentice.
WHO ARE LIABLE
1. The offender:
a. Employee
b. Manager, Supervisor, agent of the employer
c. Teacher, instructor, professor, coach,
trainer
d. Any other person who, having authority,
influence or moral ascendancy over another
in a work or training or education
environment
2. Any person who directs or induces another to
commit any act of sexual harassment
3. Any person who cooperates in the commission
thereof by another without which it would not
have been committed
ROLE OF THE EMPLOYER OR HEAD OF OFFICE
The Employer or Head of Office shall have the duty:
1. To prevent the commission of such acts and
2. To lay down the procedure for the
resolution, settlement or prosecution of
committed acts.
EMPLOYER SHALL BE SOLIDARILY LIABLE FOR
DAMAGES IF:
1. The employer or head of office, educational
or training institution is informed of such
acts by the offended party and
2. No immediate action is taken thereon
INDEPENDENT ACTION FOR DAMAGES
The victim of work, education or training-related
sexual harassment can institute a separate and
independent action for damages and other
affirmative relief.
 LABOR RELATIONS
SANCTIONS
1. Criminal: imprisonment of 1 month to mos.
Or fine of P10k to P20k or both
Prescription of such action is in 3 years.
2. Termination
D. RA 7277: MAGNA CARTA FOR THE DISABLED
PERSONS
FORMS OF DISCRIMINATION
1. Discrimination in employment
2. Discrimination on transportation
3. Discrimination on the use of Public
accommodations and services
FORMS OF DISCRIMINATION AGAINST THE THE
HANDICAPPED IN EMPLOYMENT410
1. Limiting, segregating or classifying a disabled
job applicant in such a manner that adversely
affects his work opportunities;
2. Using qualification standards, employment
tests or other selection criteria that screen
out or tend to screen out a disabled person
unless such standards, tests or other selection
criteria are shown to be job related for the
position on question and are consistent with
business necessity;
3. Utilizing standards, criteria, or methods of
administration that:
a. have the effect of discrimination on the
basis of disability; or
b. perpetuate the discrimination of others who
are subject to common administrative
control;
4. Providing less compensation, such as salary,
wage or other forms of remuneration and
fringe benefits, to a qualified disabled
employee, by reason of his disability, than the
amount to which a non-disabled person
performing the same work is entitled;
5. Favoring a non-disabled employee over a
qualified disabled employee with respect to
promotion, training opportunities, study and
scholarship grants, solely on account of the
latter’s disability;
6. Re-assigning or transferring a disabled
employee to a job or position he cannot
perform by reason of his disability;
410 Sec 32, RA 7277
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98 LABOR LAW
7. Dismissing or terminating the services of a
disabled employee by reason of his disability
unless the employer can prove that he impairs
the satisfactory performance of the work involve
to the prejudice of the business entities;
Provided, however, That the employer first
sought provide reasonable accommodations for
disabled persons;
8. Failing to select or administer in the
effective manner employment tests which
accurately reflect the skills, aptitude or
other factor of the disabled applicant or
employee that such test purports to measure,
rather than the impaired sensory, manual or
speaking skills of such applicant or employee, if
any; and
9. Excluding disabled persons from membership
in labor unions or similar organization.
IF THE VIOLATOR IS A CORPORATION OR AN
ORGANIZATION, WHO IS/ARE LIABLE UNDER
THE ACT
If the violator is a corporation, organization or any
similar entity, the officials thereof directly
involved shall be liable411
E. RA 8972: SOLO PARENTS’ WELFARE ACT
WHAT ARE THE EMPLOYMENT-RELATED
BENEFITS AVAILABLE TO ALL SOLO PARENTS?
1. Parental leave
In addition to leave privileges under existing
laws, parental leave of not more than seven (7)
working days every year shall be granted to any
solo parent employee who has rendered service
of at least one (1) year.412
2. Flexible work schedule
The employer shall provide for a flexible
working schedule for solo parents: Provided,
That the same shall not affect individual and
company productivity: Provided, further, That
any employer may request exemption from the
above requirements from the DOLE on certain
meritorious grounds.413
3. Non discrimination policy
No employer shall discriminate against any solo
parent employee with respect to terms and
conditions of employment on account of his/her
status.414
411 Sec 46 (c), RA 7277
412 Sec 8, RA 8972
413 Sec 6, RA 8972
414 Sec 7, RA 8972
 LABOR RELATIONS 99 LABOR LAW

4. Educational benefits
The DECS, CHED and TESDA shall provide the
following benefits and privileges:

a. Scholarship programs for qualified solo

parents and their children in
institutions of basic, tertiary and
technical/skills education; and
b. Nonformal education programs
appropriate for solo parents and their
children.

The DECS, CHED and TESDA shall promulgate

rules and regulations for the proper
implementation of this program.415

5. Housing benefits
Solo parents shall be given allocation in housing
projects and shall be provided with liberal terms
of payment on said government low-cost housing
projects in accordance with housing law
provisions prioritizing applicants below the
poverty line as declared by the NEDA.416

6. Medical assistance
The DOH shall develop a comprehensive health
care program for solo parents and their
children. The program shall be implemented by
the DOH through their retained hospitals and
medical centers and the local government units
(LGUs) through their provincial/ district/ city/
municipal hospitals and rural health units
(RHUs).417

415 Sec 9, RA 8972

416 Sec 10, RA 8972
417 Sec 11, RA 8972

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