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BONUS: GUIDE TO CORRECT ANSWERS FOR THE 2013 BAR

By: J. OSWALD B. LORENZO, Professor of Law and Pre-Bar Reviewer

CONSTITUTIONAL MANDATE.

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 setting 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 on investments, and to expansion and growth.
(Section 3 (Labor), Article XIII [Social Justice and Human Rights] of the 1987).

LABOR LAW AND THE CONSTITUTION

A. General Principles.

Q. What is labor law?

A. It is the body of statutes, rules, regulations, doctrines and principles


governing the relations, interactions or dynamics between labor and
capital, which include but not limited to their rights, obligations and
liabilities.

Q. What is Scope or Divisions of Labor Law?


Answer.
1. Labor standards. These are laws which set out the minimum terms,
conditions and benefits of employment that the employers must provide or
comply with and to which employees are entitled as a matter of legal right.
Labor standards, as defined more specially by jurisprudence, are the
minimum requirements prescribed by existing laws, rules and regulations
relating to wages, hours of work, cost of living allowance, and other
monetary and welfare benefits, including occupational, safety and health
standards (Maternity Children's Hospital vs. Secretary of Labor, G.R. No.
78909, 30 June 1989).

2. Labor relations law. These are the body of laws, which have for its
purpose, the harmonization of the relationship between labor and
management, through institutional mechanism, whether individually or
collective, by means of compulsory or voluntary arbitration, conciliation and
mediation. The end objective of labor law, is the attainment of industrial
peace in company level in particular and in the industrial front in general
.
3. Social and welfare legislation. These refer to the special laws and
statutes impressed with public interest, the enactment of which by the
legislature is geared to flesh-out the Constitution's social justice provisions,
their intendment being the welfare of society as a whole and the working
class in particular.

Basic Labor Law Concepts.

Labor Explained. In its present day connotation the term labor may refer
collectively to the working or laboring class when taken in connection with
its relationship with collective capital or management. It also means the
"worker," who as defined, is "one who belongs to the labor force whether
employed or not." Labor, as commonly understood, may also refer to the toil
exerted by any worker or an employee, whether physical or mental that is
necessary in the production of goods and services.

The Labor Code definitions of the term "employee" are at times,


interchangeably used, when referring to a laborer or worker. It should,
therefore be noted, that in Book II, the term "worker" is defined. "Employee"
is likewise defined in Book III, Book IV and Book V for the purpose of labor
standards, employees compensation and labor relations respectively. (Refer
to Art. 97 (c); Art.167 (g), now Art. 173 (g); and Art. 218 (f), now renumbered
as Aty. 224 (f) of the Labor Code, as amended).
Concept of Management Prerogative. This refers to an employer's right
to freely regulate all aspects of employment through the adoption of
strategies or schemes geared toward attaining profit, subject, however, to
limitations set by law, the CBA and the principles of fairness and justice and
must be effected in good faith and not tainted by unfair labor practice.
Q: What are the constitutional provisions related to labor?

A: Article II, Section 18 of the 1987 Constitution provides that The State
affirms labor as a primary social economic force. It shall protect the rights of
workers and promote their welfare.
Article XIII, Section 3 of the 1987 Constitution provides that 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-organizations, 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 on investments, and to
expansion and growth.

FUNDAMENTAL PRINCIPLES AND POLICIES

I. Constitutional Provisions

1. a. Art II, Secs. 9, 10, 11, 13, 14, 18, 20.


2. b. Art III, Secs. 1, 4, 8.
3. c. Art. XIII, Secs. 1, 2, 3, 14.

Q. What are the Constitutional Provisions Related to Labor?

ANSWER:
Article II
Section 9. The State shall promote a just and dynamic social order that will ensure the
prosperity and independence of the nation and free the people from poverty through policies
that provide adequate social services, promote full employment, a rising standard of living,
and an improved quality of life for all.
Section 10. The State shall promote social justice in all phases of national development.
Section 11. The State values the dignity of every human person and guarantees full respect
for human rights.
Section 13. The State recognizes the vital role of the youth in nation-building and shall
promote and protect their physical, moral, spiritual, intellectual, and social well-being. It shall
inculcate in the youth patriotism and nationalism, and encourage their involvement in public
and civic affairs.
Section 14. The State recognizes the role of women in nation-building, and shall ensure the
fundamental equality before the law of women and men.
Section 18. The State affirms labor as a primary social economic force. It shall protect the
rights of workers and promote their welfare.
Section 20. The State recognizes the indispensable role of the private sector, encourages
private enterprise, and provides incentives to needed investments.
Article III
Section 1. No person shall be deprived of life, liberty, or property without due process of
law, nor shall any person be denied the equal protection of the laws.
Section 4. No law shall be passed abridging the freedom of speech, of expression, or of the
press, or the right of the people peaceably to assemble and petition the government for
redress of grievances.
Section 8. 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.

ARTICLE XIII -- SOCIAL JUSTICE AND HUMAN RIGHTS

Section 1. The Congress shall give highest priority to the enactment of measures that
protect and enhance the right of all the people to human dignity, reduce social, economic, and
political inequalities, and remove cultural inequities by equitably diffusing wealth and political
power for the common good.
To this end, the State shall regulate the acquisition, ownership, use, and disposition of
property and its increments.
Section 2. The promotion of social justice shall include the commitment to create
economic opportunities based on freedom of initiative and self-reliance.

LABOR

Sec. 3. The state shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all. It
shall guarantee the rights of all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike in accordance
with law. They shall be entitled to security of tenure, humane conditions of work, and a living
wage. They shall also participate in policy and decision-making processes affecting their
rights and benefits as may be provided by law.
The State shall promote the principle of shared responsibility between workers and
employers and the preferential use of voluntary modes in setting 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 on investments, and to expansion and growth. (Section 3 (Labor), Article
XIII [Social Justice and Human Rights] of the 1987).

The Rights of Labor Guaranteed by the Constitution (Sec. 3, Art. XIII)


1. full protection to labor;
2. promotion of full employment and equality of employment opportunity to all;

3. guarantee of right of workers to self-organization;

4. collective bargaining and negotiations;

5. right to peaceful concerted activities including the right to strike in accordance with law;

6. right to security of tenure;

7. right to human conditions of work;

8. right to participate in policy and decision-making affecting their rights and benefIts.

4. WOMEN

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

Q: Define: a) Labor Legislation; b) Labor Standards c) Labor Relations; and


d) Social Legislation

ANSWER: a) Labor legislation refers to the body of statutes, rules and


doctrines that defines State policies on labor and employment, and governs
the rights and duties of workers and employers respecting terms and
conditions of employment by prescribing certain standards therefore, or by
establishing a legal framework within which better terms and conditions of
work could be obtained through collective bargaining or other concerted
activity

b) As defined in the case of Maternity Childrens Hospital vs. Sec of Labor


[G.R. No. 78909. June 30,1989], Labor Standards refers to the minimum
requirements prescribed by existing laws, rules and regulations relating to
wages, hours of work, cost-of-living allowance, and other monetary and
welfare benefits, including occupational safety, and health standards.

c) Labor Relations refers to the law which seeks to stabilize the relation
between employers and employees, to forestall and thresh out their
differences through the encouragement of collective bargaining and the
settlement of labor disputes through conciliation, mediation and arbitration.

d) Social Legislation comprises the general laws that are supposed to protect
the welfare of the public in general. Part of this would be the Social Security
Law, the Employees Compensation Commission and the revised GSIS Act.
The Agrarian Reforms Law is also included. The basis of all these
enactments and legislations is SOCIAL JUSTICE.

Q: Define Social Justice.

A: Social Justice simply means the humanization of 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 proximated. (Calalang vs.
Williams 70 Phil. 726)
This is the aim, reason and justification for the enactment of labor laws.

Q: While m social justice is the aim, reason and justification of labor laws, what
is the foundation of labor laws?

A: The basis and foundation of labor laws is the police power of the State. It is
the power of the Government to enact laws, within Constitutional limits, to
promote the order, safety, health, morals and general welfare of society.

Q: What is the States basic policy on labor as provided in the Labor Code as
amended?

A: Article 3 of the Labor Code as amended provides that 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.

Q: How should Labor Laws be construed?

A: Under the Article 4 of the Labor Code, as amended, it is provided: 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.
However, it should not be supposed that every labor dispute be
automatically decided in favor of labor. The rule is applicable only if there is
a doubt as to the meaning of the legal and contractual provision. If the
provision is clear and unambiguous, it must be applied in accordance with its
express terms.
The law, in protecting the rights of the laborer, authorizes neither
oppression nor self-destruction of the employer.

Q: What is management prerogative?

ANSWER: Management prerogative simply means that except as otherwise


limited by special laws, an employer is free to regulate, according to his own
discretion and judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place, and manner of work, tools to be
used, processes to be followed, supervision of workers, working regulations,
transfer of employees, work supervision, lay-off of workers and discipline,
dismissal and recall of workers.

Q: What are the limitations on the exercise of management prerogative?

A: The following are the limitations on the exercise of management


prerogative:

1.) It must be exercised in good faith;


2.) It must not be tainted with unfair labor practice;
3.) The exercise of management prerogative must be within the
limitations set by law;
4.) It must also be within the limitations set by the Collective
Bargaining Agreement; and
5.) The exercise must be consistent with the principles of fair play and
justice.

Supreme Court Rulings On Management Rights.

a. In NORKIS TRADING CO., INC., ET AL. vs. NATIONAL LABOR


RELATIONS COMMISSION, ET AL; G.R. No. 168159. August 19, 2005, the
employers are allowed, under the broad concept of management prerogative,
to regulate all aspects of personnel administration including hiring, work
assignments, working methods, time, place and manner of work, tools to be
used, processes to be followed, supervision of workers, working regulations,
transfer of employees, work supervision, lay-off of workers, and the dismissal
and recall of workers.
b. The Supreme Court in Garcia vs. National Labor Relations
Commission, 243 SCRA 632, reiterated the existing doctrine that the
Constitution also protects management from oppression and destruction in
this wise: "(t)he Constitutional policy of providing full protection to labor is
not intended to oppress or destroy management xxxx. The unfledging
commitment of this Court to the cause of the labor will not prevent Us from
sustaining the employer, when it is in the right xxxx."

c. In Philippine Geothermal, Inc. vs. The National Labor Relations


Commission, 236 SCRA 371, the Supreme Court balanced the conflicting
interests of both labor and management and placed the parties in relatively
equal positions.

d. Likewise, in earlier cases, the Court ruled that the law in protecting
the rights of the employees does not authorize the oppression nor self-
destruction of the employer. It should be made clear that when the law tilts
the scales of justice to put the two (2) parties in favor of labor, it is but
recognition of the inherent inequality between labor and management. The
evident intent is to balance the scale of justice to put the two parties on
relatively equal positions. There may be cases where the circumstances
warrant favoring labor over the interests of management but never should
the scale be so tilted if the result is an injustice to the employer. (Justicia
nemeni neganda est (Justice is to be denied to none).

RELATED SC DECISIONS

1. In a 1996 case, the Supreme Court ruled in Home Owners Savings and
Loan Association, Inc. vs. NLRC and Marilyn Cabatbat, G.R No.97067, 26
September 1996, that an "(a)n owner of a business enterprise is given
considerable leeway in managing because it is deemed important to society
as a whole that he should succeed."

Our law, therefore, recognizes certain rights as inherent in the


management of business enterprises. These rights are collectively called
management prerogatives or acts by which directing the business is able to
control the variables thereof, so as to enhance the chances of making a
profit. Together, they may taken as the freedom to administer the affairs of a
business enterprise such that the costs of running it would be below the
expected earnings or receipts. In short, the elbow room in the quest for
profits"(Citing Chu vs. NLRC, 232 SCRA 764 [1994].
2. The scope of these prerogatives was laid down in a number of cases,
one of which was San Miguel Brewery Sales Force Union (PTGWO) vs. Ople,
170 SCRA 25 (1989), where the Court held that "(e)xcept as limited by
special laws, an employer is free to regulate, according to his own discretion
and judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place and manner of work, tools to be
used, processes to be followed, supervision of workers, working regulations,
transfer of employees, work supervision, lay-off of workers and the
discipline, dismissal and recall of work." (Based on National Labor Union
(NLU) vs. Insular La Yebana Co., 2 SCRA 924, Republic Savings Bank vs. CIR,
21 SCRA 226, 235).

3. As a general rule, it is recognized "that normally it is the


prerogative of the employer to transfer and re-assign its employees
according to the requirements of its business (Pocketbell Philippines, Inc. vs.
NLRC, et. al., G.R. No. 106843, 20 January 1995; Phil. Telegraph and
Telephone Co. vs. Laplana, 199 SCRA 485 [1991] ).

4. This same ruling was the Court's position in Interwood Employees


Association vs. International Hardwood and Veneer Co. of the Phil., 99 Phil.
82 (1956) and in Yuco Chemical Chemical Industries, Inc. vs. MOLE, 185
SCRA 727 (1990), which upheld "the employer's right to transfer its personnel
for valid reasons".
LABOR LAW AND THE CONSTITUTION

A. General Principles.

R. What is labor law?

B. It is the body of statutes, rules, regulations, doctrines and principles governing


the relations, interactions or dynamics between labor and capital, which
include but not limited to their rights, obligations and liabilities.

R. What is Scope or Divisions of Labor Law?


Answer.
1. Labor standards. These are laws which set out the minimum terms,
conditions and benefits of employment that the employers must provide or comply
with and to which employees are entitled as a matter of legal right. Labor standards,
as defined more specially by jurisprudence, are the minimum requirements
prescribed by existing laws, rules and regulations relating to wages, hours of work,
cost of living allowance, and other monetary and welfare benefits, including
occupational, safety and health standards (Maternity Children's Hospital vs.
Secretary of Labor, G.R. No. 78909, 30 June 1989).
2. Labor relations law. These are the body of laws, which have for its
purpose, the harmonization of the relationship between labor and management,
through institutional mechanism, whether individually or collective, by means of
compulsory or voluntary arbitration, conciliation and mediation. The end objective of
labor law, is the attainment of industrial peace in company level in particular and in
the industrial front in general
.
3. Social and welfare legislation. These refer to the special laws and
statutes impressed with public interest, the enactment of which by the legislature is
geared to flesh-out the Constitution's social justice provisions, their intendment
being the welfare of society as a whole and the working class in particular.

Basic Labor Law Concepts.

Labor Explained. In its present day connotation the term labor may refer
collectively to the working or laboring class when taken in connection with its
relationship with collective capital or management. It also means the "worker," who
as defined, is "one who belongs to the labor force whether employed or not." Labor,
as commonly understood, may also refer to the toil exerted by any worker or an
employee, whether physical or mental that is necessary in the production of goods
and services.

The Labor Code definitions of the term "employee" are at times,


interchangeably used, when referring to a laborer or worker. It should, therefore be
noted, that in Book II, the term "worker" is defined. "Employee" is likewise defined
in Book III, Book IV and Book V for the purpose of labor standards, employees
compensation and labor relations respectively. (Refer to Art. 97 (c); Art.167 (g), now
Art. 173 (g); and Art. 218 (f), now renumbered as Aty. 224 (f) of the Labor Code, as
amended).
Concept of Management Prerogative. This refers to an employer's right to
freely regulate all aspects of employment through the adoption of strategies or
schemes geared toward attaining profit, subject, however, to limitations set by law,
the CBA and the principles of fairness and justice and must be effected in good faith
and not tainted by unfair labor practice.

Q: What are the constitutional provisions related to labor?

A: Article II, Section 18 of the 1987 Constitution provides that The State affirms
labor as a primary social economic force. It shall protect the rights of workers and
promote their welfare.
Article XIII, Section 3 of the 1987 Constitution provides that 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-organizations, 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 on investments, and to expansion and growth.

FUNDAMENTAL PRINCIPLES AND POLICIES

II. Constitutional Provisions

4. a. Art II, Secs. 9, 10, 11, 13, 14, 18, 20.


5. b. Art III, Secs. 1, 4, 8.
6. c. Art. XIII, Secs. 1, 2, 3, 14.

Q. What are the Constitutional Provisions Related to Labor?

ANSWER:
Article II
Section 9. The State shall promote a just and dynamic social order that will
ensure the prosperity and independence of the nation and free the people from
poverty through policies that provide adequate social services, promote full
employment, a rising standard of living, and an improved quality of life for all.
Section 10. The State shall promote social justice in all phases of national
development.
Section 11. The State values the dignity of every human person and guarantees
full respect for human rights.
Section 13. The State recognizes the vital role of the youth in nation-building
and shall promote and protect their physical, moral, spiritual, intellectual, and social
well-being. It shall inculcate in the youth patriotism and nationalism, and encourage
their involvement in public and civic affairs.
Section 14. The State recognizes the role of women in nation-building, and shall
ensure the fundamental equality before the law of women and men.
Section 18. The State affirms labor as a primary social economic force. It shall
protect the rights of workers and promote their welfare.
Section 20. The State recognizes the indispensable role of the private sector,
encourages private enterprise, and provides incentives to needed investments.
Article III
Section 1. No person shall be deprived of life, liberty, or property without due
process of law, nor shall any person be denied the equal protection of the laws.
Section 4. No law shall be passed abridging the freedom of speech, of
expression, or of the press, or the right of the people peaceably to assemble and
petition the government for redress of grievances.
Section 8. 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.

ARTICLE XIII -- SOCIAL JUSTICE AND HUMAN RIGHTS

Section 1. The Congress shall give highest priority to the enactment of


measures that protect and enhance the right of all the people to human dignity,
reduce social, economic, and political inequalities, and remove cultural inequities by
equitably diffusing wealth and political power for the common good.
To this end, the State shall regulate the acquisition, ownership, use, and
disposition of property and its increments.
Section 2. The promotion of social justice shall include the commitment to
create economic opportunities based on freedom of initiative and self-reliance.

LABOR

Sec. 3. The state shall afford full protection to labor, local and overseas,
organized and unorganized, and promote full employment and equality of
employment opportunities for all. It shall guarantee the rights of all workers to self-
organization, collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law. They shall be entitled
to security of tenure, humane conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting their rights and
benefits as may be provided by law.
The State shall promote the principle of shared responsibility between
workers and employers and the preferential use of voluntary modes in setting
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 on investments, and to expansion and growth.
(Section 3 (Labor), Article XIII [Social Justice and Human Rights] of the 1987).

The Rights of Labor Guaranteed by the Constitution (Sec. 3, Art. XIII)


9. full protection to labor;
10. promotion of full employment and equality of employment opportunity to all;
11. guarantee of right of workers to self-organization;
12. collective bargaining and negotiations;
13. right to peaceful concerted activities including the right to strike in accordance
with law;
14. right to security of tenure;
15. right to human conditions of work;
16. right to participate in policy and decision-making affecting their rights and
benefIts.
4. WOMEN

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

Q: Define: a) Labor Legislation; b) Labor Standards c) Labor Relations; and d)


Social Legislation

ANSWER: a) Labor legislation refers to the body of statutes, rules and doctrines
that defines State policies on labor and employment, and governs the rights and
duties of workers and employers respecting terms and conditions of employment by
prescribing certain standards therefore, or by establishing a legal framework within
which better terms and conditions of work could be obtained through collective
bargaining or other concerted activity

b) As defined in the case of Maternity Childrens Hospital vs. Sec of Labor [G.R.
No. 78909. June 30,1989], Labor Standards refers to the minimum requirements
prescribed by existing laws, rules and regulations relating to wages, hours of work,
cost-of-living allowance, and other monetary and welfare benefits, including
occupational safety, and health standards.

c) Labor Relations refers to the law which seeks to stabilize the relation between
employers and employees, to forestall and thresh out their differences through the
encouragement of collective bargaining and the settlement of labor disputes through
conciliation, mediation and arbitration.

d) Social Legislation comprises the general laws that are supposed to protect the
welfare of the public in general. Part of this would be the Social Security Law, the
Employees Compensation Commission and the revised GSIS Act. The Agrarian
Reforms Law is also included. The basis of all these enactments and legislations is
SOCIAL JUSTICE.

Q: Define Social Justice.


A: Social Justice simply means the humanization of 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 proximated. (Calalang vs. Williams 70 Phil. 726)
This is the aim, reason and justification for the enactment of labor laws.

Q: While m social justice is the aim, reason and justification of labor laws, what
is the foundation of labor laws?

A: The basis and foundation of labor laws is the police power of the State. It is
the power of the Government to enact laws, within Constitutional limits, to promote
the order, safety, health, morals and general welfare of society.

Q: What is the States basic policy on labor as provided in the Labor Code as
amended?

A: Article 3 of the Labor Code as amended provides that 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.

Q: How should Labor Laws be construed?

A: Under the Article 4 of the Labor Code, as amended, it is provided: 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.
However, it should not be supposed that every labor dispute be
automatically decided in favor of labor. The rule is applicable only if there is a doubt
as to the meaning of the legal and contractual provision. If the provision is clear and
unambiguous, it must be applied in accordance with its express terms.

The law, in protecting the rights of the laborer, authorizes neither oppression
nor self-destruction of the employer.

Q: What is management prerogative?

ANSWER: Management prerogative simply means that except as otherwise


limited by special laws, an employer is free to regulate, according to his own
discretion and judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place, and manner of work, tools to be used,
processes to be followed, supervision of workers, working regulations, transfer of
employees, work supervision, lay-off of workers and discipline, dismissal and recall
of workers.
Q: What are the limitations on the exercise of management prerogative?

A: The following are the limitations on the exercise of management


prerogative:

6.) It must be exercised in good faith;


7.) It must not be tainted with unfair labor practice;
8.) The exercise of management prerogative must be within the limitations set
by law;
9.) It must also be within the limitations set by the Collective Bargaining
Agreement; and
10.) The exercise must be consistent with the principles of fair play and
justice.

Supreme Court Rulings On Management Rights.

a. In NORKIS TRADING CO., INC., ET AL. vs. NATIONAL LABOR RELATIONS


COMMISSION, ET AL; G.R. No. 168159. August 19, 2005, the employers are allowed,
under the broad concept of management prerogative, to regulate all aspects of
personnel administration including hiring, work assignments, working methods, time,
place and manner of work, tools to be used, processes to be followed, supervision of
workers, working regulations, transfer of employees, work supervision, lay-off of
workers, and the dismissal and recall of workers .
b. The Supreme Court in Garcia vs. National Labor Relations Commission, 243
SCRA 632, reiterated the existing doctrine that the Constitution also protects
management from oppression and destruction in this wise: "(t)he Constitutional
policy of providing full protection to labor is not intended to oppress or destroy
management xxxx. The unfledging commitment of this Court to the cause of the
labor will not prevent Us from sustaining the employer, when it is in the right xxxx."

c. In Philippine Geothermal, Inc. vs. The National Labor Relations Commission,


236 SCRA 371, the Supreme Court balanced the conflicting interests of both labor
and management and placed the parties in relatively equal positions.

d. Likewise, in earlier cases, the Court ruled that the law in protecting the
rights of the employees does not authorize the oppression nor self-destruction of the
employer. It should be made clear that when the law tilts the scales of justice to put
the two (2) parties in favor of labor, it is but recognition of the inherent inequality
between labor and management. The evident intent is to balance the scale of
justice to put the two parties on relatively equal positions. There may be cases
where the circumstances warrant favoring labor over the interests of management
but never should the scale be so tilted if the result is an injustice to the employer.
(Justicia nemeni neganda est (Justice is to be denied to none).

RELATED SC DECISIONS

1. In a 1996 case, the Supreme Court ruled in Home Owners Savings and Loan
Association, Inc. vs. NLRC and Marilyn Cabatbat, G.R No.97067, 26 September 1996,
that an "(a)n owner of a business enterprise is given considerable leeway in
managing because it is deemed important to society as a whole that he should
succeed."

Our law, therefore, recognizes certain rights as inherent in the management of


business enterprises. These rights are collectively called management prerogatives
or acts by which directing the business is able to control the variables thereof, so as
to enhance the chances of making a profit. Together, they may taken as the freedom
to administer the affairs of a business enterprise such that the costs of running it
would be below the expected earnings or receipts. In short, the elbow room in the
quest for profits"(Citing Chu vs. NLRC, 232 SCRA 764 [1994].

2. The scope of these prerogatives was laid down in a number of cases, one
of which was San Miguel Brewery Sales Force Union (PTGWO) vs. Ople, 170 SCRA 25
(1989), where the Court held that "(e)xcept as limited by special laws, an employer is
free to regulate, according to his own discretion and judgment, all aspects of
employment, including hiring, work assignments, working methods, time, place and
manner of work, tools to be used, processes to be followed, supervision of workers,
working regulations, transfer of employees, work supervision, lay-off of workers and
the discipline, dismissal and recall of work." (Based on National Labor Union (NLU)
vs. Insular La Yebana Co., 2 SCRA 924, Republic Savings Bank vs. CIR, 21 SCRA 226,
235).

3. As a general rule, it is recognized "that normally it is the prerogative of


the employer to transfer and re-assign its employees according to the requirements
of its business (Pocketbell Philippines, Inc. vs. NLRC, et. al., G.R. No. 106843, 20
January 1995; Phil. Telegraph and Telephone Co. vs. Laplana, 199 SCRA 485 [1991] ).

4. This same ruling was the Court's position in Interwood Employees


Association vs. International Hardwood and Veneer Co. of the Phil., 99 Phil. 82 (1956)
and in Yuco Chemical Chemical Industries, Inc. vs. MOLE, 185 SCRA 727 (1990),
which upheld "the employer's right to transfer its personnel for valid reasons".

Declaration of basic principles.

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.

1. Labor contracts are not ordinary contracts as the relation between capital
and labor is impressed with public interest.

2. In case of doubt, labor laws and rules shall be interpreted in favor of labor.

3.Labor Code applies to all workers, whether agricultural or non-agricultural.

4.Applicability of Labor Code to government-owned or controlled corporations:


- When created with original or special charter Civil Service laws, rules
and regulations;
- When created under the Corporation Code applies.

RECRUITMENT AND PLACEMENT OF WORKERS


1. Relevant law Migrant Workers and Overseas Filipinos Act of 1995 (R. A.
No. 8042 AS RECENTLY AMENDED BY Rep. Act No. 10022 )
2. Free placement services by public employment offices for
domestic/overseas work.

Entities authorized to engage in recruitment and placement


a. public emplyment offices;
b. Philippine Overseas Employment Administration (POEA);
c. Private recruitment entities;
d. Private employment agencies;
e. Shipping or manning agents or representatives;
f. Such other persons or entities as may be authorized by the Secretary of
Labor and Employment; and
g. Construction contractors.

Money claims of OFWs jurisdiction and appeal


1. Jurisdiction over money claims of OFWs is vested with Labor Arbiters of
the NLRC and not with POEA (R. A. no. 8042).
2. Decisions of Labor Arbiters in money claims of OFWs are appealable to
NLRC.

Liability of local recruitment agency and foreign principal


1. Local Agency is solidarily liable with foreign principal.
2. Severance of relations between local agent and foreign principal does not
affect liability of local recruiter.

Claims for Death and other Benefits


1. Labor Arbiters have jurisdiction over claims for death, disability and other
benefits arising from employment.
2. Basis of compensation for death generally is whichever is greater between
Philippine law or foreign law.
3. Work-connection required.

Disciplinary Action Cases [POEA retains jurisdiction over disciplinary action cases]

Direct-hiring
1. Employers cannot directly hire workers for overseas employment except
through authorized entities (see enumeration above).
2. Rationale for the ban to ensure full regulation of employment in order to
avoid exploitation.
3. Non-resident foreign corporation directly hiring Filipino workers is doing
business in the Philippines and may be sued in the Philippines.

Illegal recruitment
1. Illegal recruitment under Article 38 applies to both local and overseas
employment.
2. Illegal recruitment- may be committed by any person whether licensees or
non-licensees or holders or non-holders of authority.
3. Elements of illegal recruitment:
a. First element: recruitment and placement activities.

Any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or


procuring workers and includes referring, contract services, promising or advertising
for employment abroad, whether from profit or not, when undertaken by a non-
licensee or non-holder of authority: Provided, That any such licensee or non-holder
who, in any manner, offers or promises for a fee employment abroad to two or more
persons shall be deemed as engaged in such act.

b. Second element: Non-licensee or non-holder of authority means any


person, corporation or entity which has not been issued a valid license
or authority to engage in recruitment and placement by the Secretary of
Labor and Employment, or whose license or authority has been
suspended, revoked or canceled by the POEA or the Secretary of Labor
and Employment.

Note:
i. Mere impression that recruiter is capable of providing work abroad is
sufficient.
i. Referral of recruits also constitutes recruitment activity.
ii. Absence of receipt to prove payment is not essential to prove
recruitment.
iii. Only one (1) person recruited is sufficient to constitute recruitment.
iv. Non-prosecution of another suspect is not material.
4. Illegal recruitment, when considered economic sabotage when the
commission thereof is attended by the qualifying circumstances as follows:
a. By a syndicate if carried out by a group of 3 or more persons
conspiring and confederating with one another;
b. In large scale if committed against 3 or more persons individually or
as a group.
5. Prescriptive period of illegal recruitment cases Under Republic Act No.
8042 Five (5) years except illegal recruitment involving economic
sabotage which prescribes in 20 years.

Employment of non-resident aliens


1. Non-resident aliens should secure Alien Employment Registration
Certificate (AERC).
2. There should be understudies.
3. Alien employee should not transfer to another job or charge his employer.

TRAINING AND EMPLOYMENT OF SPECIAL WORKERS:

APPRENTICES
1. Apprenticeship program to be implemented and administered by TESDA.
2. Apprenticeship means any training on the job supplemented by related
theoretical instruction involving apprenticeable occupations and trades as
may be approved by the Secretary of Labor and Employment. An
apprentice is a worker who is covered by a written apprenticeship
agreement with an employer.
3. Qualifications of apprentices:
a. be at least fifteen (15) years of age, provided those who are at least
fifteen (15) years of age but less than eighteen may be eligible for
apprenticeship only in non-hazardous occupation;
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.
4. Wage rate of apprentices 75% of the statutory minimum wage.
5. Apprentices become regular employees if program is not approved by
DOLE.
6. Ratio of theoretical instructions and on-the-job training 100 hours of
theoretical instructions for every 1,000 hours of practical training on-the-
job.

LEARNERS
1. Learners is a person hired as a trainee in industrial occupations which
are non-apprenticeable and which may be learned through practical
training on the job for a period not exceeding three (3) months, whether or
not such practical training is supplemented by theoretical instructions.
2. Pre-requisites before learners may be validly employed:
a. when no experienced workers are available;
b. the employment of learners is necessary to prevent curtailment of
employment opportunities; and
c. the employment does not create unfair competition in terms of labor
costs or impair or lower working standards.
3. Wage rate of learners 75% of the statutory minimum wage.

HANDICAPPED WORKERS
1. Handicapped workers are those whose earning capacity is impaired:
a. by age; or
b. physical deficiency; or
c. mental deficiency; or
d. injury
2. If disability is not related to the work for which he was hired, he should not
be so considered as handicapped worker. He may have a disability but
since the same is not related to his work, he cannot be considered a
handicapped worker insofar as that particular work is concerned.
3. Wage rate 75% of the statutory minimum wage.

CONDITIONS OF EMPLOYMENT
1. Employees covered applicable to all employees in all establishments
whether operated for profit or not.
2. Employees not covered:
a. Government employees;
b. Managerial employees;
c. Other officers or members of a managerial staff;
d. Domestic servants and persons in the personnel service of another;
e. Workers paid by results;
f. Non-agricultural field employer;
g. Members of the family of the employer;
3. More specially, the above excluded groups of employees are not covered
by the following provisions of Title I, Book III of the Labor Code:

Article 83 - Normal hours of work;


Article 84 - Hours worked;
Article 85 - Meal periods;
Article 86 - Night shift differential;
Article 87 - Overtime work;
Article 88 - Undertime not offset by overtime;
Article 89 - Emergency overtime work;
Article 90 - Computation of additional compensation;
Article 91 - Right to weekly rest period;
Article 92 - When employer may require work on a rest day;
Article 93 - Compensation for the rest day, Sunday or holiday work;
Article 94 - Right to holiday pay;
Article 95 - Right to service incentive leave; and
Article 96 - Service charges.

4. Existence of employer-employee relations is necessary.


a. Employment relationship; contractual and voluntary in nature.
b. Existence of employment relationship is both a question of fact and
law.
5. Test of employment relationship (there is no uniform test) but the four (4)
elements of the employer-employee relationship are as follows:
(a) Selection and engagement of employee;
(b) Payment of wages;
(c) Power of dismissal; and
(d) Power of control (the most important test).
6. Quantum of evidence required to prove employment relationship mere
substantial evidence (e. g. I. D. card, Cash Vouchers for salaries, inclusion
in payroll, reporting to SSS).

Normal hours of work


1. Normal hours of work of employees SHALL NOT EXCEED eight (8) hours
per day.
2. The phrase SHALL NOT EXCEED is the basis for parttime work in this
country.
3. Work day means consecutive-hour period which commences from the
time the employee regularly starts to work. It does not necessarily mean
the ordinary calendar day from 12:00 midnight unless the employee starts
to work at this unusual hour.
4. Work week is a week consisting of 168 consecutive hours or 7
consecutive 24-hour work days beginning at the same hour and on the
same calendar day each calendar week.
5. Reduction of eight-hour working day not prohibited by law provided there
is no reduction in pay of workers.
6. Shortening of work week allowed provided employees voluntarily agree
thereto; there is no diminution in pay; and only on temporary duration.
7. Hours of work of part-time workers payment of wage should be in
proportion only to the hours worked.
8. Hours of work of hospital and clinic personnel The Supreme Court has
voided Policy Instructions No. 54 in San Juan de Dios Hospital Employees
Association vs. NLRC (G. R> No. 12638683, Nov. 28, 1997). Consequently,
the rule that hospital employees who worked for only 40 hours/5 days in
any given workweek should be compensated for full weekly wage for 7
days is no longer applicable.
Home work
1. The following are the compensable hours worked:

a. All time during which an employee is required to be on duty or to be at


the employers premises or to be at a prescribed workplace; and
b. All time during which an employee is suffered or permitted to work.
2. Coffee breaks and rest period of short duration considered compensable
hours worked.
3. Waiting time considered compensable if waiting is an integral part of the
employers work or he is required or engaged by the employer to wait.
4. Sleeping while on duty is compensable if the nature of the employees work
allows sleeping without interrupting or prejudicing work or when there is
an agreement between the employee and his employer to that effect. For
example, a truck helper may sleep after performing his task and while his
truck is travelling on its way to its assignment. But the same may not be
done by the driver.
5. Working while on call compensable if employee is required to remain on
call in the employers premises or so close thereto that he cannot use the
time effectively and gainfully for his own purpose.
6. Travel time:
a. Travel from home to work not compensable working time.
b. Travel that is all in the days work compensable hours worked.
c. Travel away from home compensable hours worked.
7. Attendance in lectures, meetings, and training periods sanctioned by
employer-considered hours worked.
8. Power interruptions or brown-outs, basic rules:
- Brown-outs of short duration not exceeding twenty (20) minutes
compensable hours worked.
- Brown-outs running for more than twenty (20) minutes may not 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.
9. Attendance in CBA negotiations or grievance meeting compensable hours
worked.
10. Attendance in hearings in cases filed by employee not compensable
hours worked.
11. Participation in strikes not compensable working time.

Meal period
1. Every employee is entitled to not less than one (1) hour (or 60 minutes)
time-off for regular meals. Being time-off, it is not compensable hours
worked and employee is free to do anything he wants, except to work. If he
required to work while eating, he should be compensated therefor.
2. If meal time is shortened to not less than twenty (20) minutes
compensable hours worked. If shortened to less than 20 minutes, it is
considered coffee break or rest period of short duration and, therefore,
compensable.

Night shift differential


1. Night shift differential is equivalent to 10% of employees regular wage for
each hour of work performed between 10:00 p.m. and a.m. of the following
day.
2. Night shift differential and overtime pay, distinguished. When the work of
an employee falls at nighttime, the receipt of overtime pay shall not
preclude the right to receive night differential pay. The reason is, the
payment of the night differential pay is for the work done during the night;
while the payment of the overtime pay is for work in excess of the regular
eight (8) working hours.
3. Computation of Night Shift Differential Pay.
a. Where night shift (10 p.m. to 6 a.m.) work is regular work.
1. On an ordinary day: Plus 10% of the basic hourly rate or a total of 110%
of the basic hourly rate.
2. On a rest day, special day or regular holiday: Plus 10% of the regular
hourly rate on a rest day, special day or regular holiday or a total of
110% of the regular hourly rate.
b. Where night shift (10 p.m. to 6a.m.) work is overtime work
1. On an ordinary day: Plus 10% of the overtime hourly rate on an ordinary
day or a total of 110% of the overtime hourly rate on an ordinary day.
2. On a rest day or special day or regular holiday: Plus 10% of the
overtime hourly rate on a rest day or special day or regular holiday.
b. For overtime work in the night shift. Since overtime work is not usually
eight (8) hours, the compensation for overtime night shift work is also
computed on the basis of hourly rate.
1. On an ordinary day. Plus 10% of 125% of basic hourly rate or a total of
110% of 125% of basic hourly rate.
2. On a rest day or special day or regular holiday. Plus 10% of 130% of
regular hourly rate on said days or a total of 110% of 130% of the
applicable regular hourly rate.

Overtime work
1. Work rendered after normal eight (8) hours of work is called overtime work.
2. In computing overtime work, regular wage or basic salary means cash
wage only without deduction for facilities provided by the employer.
3. Premium pay means the additional compensation required by law for
work performed within 8 hours on non-working days, such as rest days and
special days.
4. Overtime pay means the additional compensation for work performed
beyond 8 hours. Every employee entitled to premium pay is also entitled to
the benefit of overtime pay.
5. Illustrations on how overtime is computed:
a. For ovetime work performed on an ordianry day, the overtime pay is
plus 25% of the basic hourly work.
b. For overtime work performed on a rest day or on a special day, the
overtime pay is plus 30% of the basic hourly rate which includes 30%
additional compensation as provided in Article 93 [a] of the Labor Code.
c. For overtime work performed on a rest day which falls on a special day,
the overtime pay is plus 30% of the basic hourly rate which includes
50% additional compensation as provided in Article 93 [c] of the Labor
Code.
d. For overtime work performed on a regular holiday, the overtime pay is
plus 30% of the basic hourly rate which includes 100% additional
compensation as provided in compensation.
e. For overtime work performed on a rest day which falls on a regular
holiday, the overtime pay is plus 30% of the basic hourly rate which
includes 160% additional compensation.

Undertime not offset by overtime


1. Undertime work on any particular day shall not be offset by overtime on
any other day.
2. 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 by law such as overtime pay or night shift
differential pay.

Emergency overtime work


1. The general rule remains that no employee may be compelled to render
overtime work against his will.
2. Exceptions when employee may be compelled to render overtime work:
a. 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;
b. When overtime work is necessary to prevent loss of life or property or in
case of imminent danger to public safety due to actual or impending
emergency in the locality caused by serious accident, fire, floods,
typhoons, earthquake, epidemic or other disasters or calamities;
c. When there is urgent work to be performed on machines, installations
or equipment, or in order to avoid serious loss or damage to the
employer or some other causes of similar nature;
d. When the work is necessary to prevent loss or damage to perishable
goods.
e. When the completion or continuation of work started before the 8th hour
is necessary to prevent serious obstruction or prejudice to the business
or operations of the employer; and
f. When overtime is necessary to avail of favorable weather or
environmental conditions where or quality of work is dependent
thereon.
3. When employee refuses to render emergency overtime work under any of
the foregoing conditions, he may be dismissed on the ground of
insubordination or willful disobedience of the lawful order of the employer.

WEEKLY REST PERIODS


1. Every employer shall give his employees a rest period of no less than 24
consecutive hours after every 6 consecutive normal work days.
2. If business is open on Sundays/holidays, rest day may be scheduled on
another day.
3. Preference of employee as to his rest day should be respected if based on
religious grounds.
4. Waiver of compensation for work on rest days and holidays is not valid.

When employer may require work on a rest day.


a. In case of actual or impending emergencies cause by serious
accident, fire, flood, typhoon, earthquake, epidemic or other disaster
or calamity to prevent loss of life and property, or in case of force
majeure or imminent danger to public safety;
b. In case of urgent work to be performed on machineries, equipment,
or installations, to avoid serious loss which the employer would
otherwise suffer;
c. In the event of abnormal pressure of work due to special
circumstances, where the employer cannot ordinarily be expected
to resort to other measures;
d. To prevent serious loss of perishable goods;
e. Where the nature of the work is such that the employees have to
work continuously for seven (7) days in a week or more, as in the
case of the crew members of a vessel 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 equality of work is
dependent thereon.

Compensations for rest day, Sunday or holiday work


a. Premium pay for work on scheduled rest day.
A covered employee who is made or permitted to work on his scheduled rest day
shall be paid with an additional compensation of at least thirty percent (30%) of his
regular wage.
b. Premium pay for work on Sunday when it is employees rest day.
A covered employee shall be entitled to such additional compensation of thirty
percent (30%) of his regular wage for work performed on a Sunday only when it is his
established rest day.
c. Premium pay for work performed on Sundays and holidays when employee
has no regular workdays and no scheduled regular rest day.
Where the nature of the work of the employee is such that he has no regular
workdays and no regular rest days can be scheduled, he shall be paid an additional
compensation of at least thirty percent (30%) of his regular wage for work performed
on Sundays and holidays.
d. Premium pay for work performed on special holidays (now special days)
which fall on employees scheduled rest day.
Work performed on any special holiday (now special day) shall be paid with an
additional compensation of at least thirty percent (30%) of the regular wage of the
employee. Where such holiday work falls on the employees scheduled rest day, he
shall be entitled to additional compensation of at least fifty percent (50%) of his
regular wage.
e. Higher rate provided in agreements.
Where the collective bargaining agreement or other applicable employment contract
stipulates the payment of higher premium pay than that prescribed by law, the
employer shall pay such higher rate.

HOLIDAY PAY
1. Holiday pay; meaning and purpose:
Holiday pay is a premium given to employees pursuant to law even if he is not
suffered to work on a regular holiday.
- If worker did not work on regular holiday, he is entitled to 100% of his
basic pay;
- If he worked, he is entitled to 200% thereof.
2. List of regular holidays and special days:

A. Regular holidays.
New Years Day - January 1
Maundy Thursday - Movable date
Good Friday - Movable date
Araw ng Kagitingan
[Bataan and Corregidor Day] - April 9
Labor Day - May 1
Independence Day - June 12
National Heroes Day - Last Sunday of August
Bonifacio Day - November 30
Christmas Day - December 25
Rizal Day - December 30

Plus Eidl-Fer, a Muslim holiday at the end of Ramadan


B. Nationwide special days.

All Saints Day - November 1


Last Day of the Year - December 31
Plus Ninoy Aquino Day

3. Distinction between regular holidays and special days:


a. A covered employee who does not work during regular holidays is
paid 100% of his regular daily wage; while a covered employee who
does not work during a special day does not receive any
compensation under the principle of no work, no pay.
b. A covered employee who works during special days is paid 200% of
his regular daily wage; while a covered employee who works during
special days is only paid an additional compensation of not less than
30% of the basic pay or a total of 130% and at least 50% over and
above the basic pay or a total of 150% if the worker is permitted or
suffered to work on special days which fall on his scheduled rest
day.

4. Special holidays are now known as special days.


5. Principle of no work, no pay applies to special days but not to unworked
regular holidays where the employees are always paid the equivalent of
100% of their basic pay.
6. Premium pay for work performed during special days 30% on top of basic
pay.
7. Premium pay for work performed during special days falling on scheduled
rest day 50% over and above the basic pay.
8. Effect of absences on entitlement to regular holiday pay:

a. Employees on leave of absence with pay entitled to regular holiday


pay.
b. Employees on leave of absence without pay on the day immediately
preceding a regular holiday may not be paid the required holiday pay if
he has not worked on such regular holiday.
c. Employees on leave while on SSS or employees compensation benefits
Employers shall grant the same percentage of the holiday pay as the
benefit granted by competent authority in the form of employees
compensation or social security payment, whichever is higher, if they
are not reporting for work while on such benefits.
d. When the day preceding regular holiday is a non-working day or
scheduled rest day employees shall not be deemed to be on leave of
absence on that day, in which case, he shall be entitled to the regular
holiday pay if he worked on the day immediately preceding the non-
working day or rest day.
9. Rule in case of successive regular holidays an employee may not be paid
for both holidays if he absents himself from work on the day immediately
preceding the first holiday, unless he works on the first holiday, in which
case, he is entitled to his holiday pay on the second holiday.
10. Rule in case of two regular holidays falling on the same day (e. g., Araw ng
Kagitingan and Good Friday falling on April 9, 1993) if employee did not
work: 200% of basic pay; If employee worked: 300% of basic pay.

Service incentive leave


1. Every covered employee who has rendered at least one (1) year of service
shall be entitled to a yearly service incentive leave of five (5) days with
pay.
2. Meaning of one year of service service within twelve (12) months,
whether continuous or broken, reckoned from the date the employee
started working, , including authorized absences and paid regular holidays,
unless the number of working days in the establishment as a matter of
practice or policy, or that provided in the employment contract, is less
than twelve (12) months, in which case, said period shall be considered as
one (1) year for the purpose of determining entitlement to the service
incentive leave.
3. Service incentive leave is commutable to cash if unused at the end of the
year.
4. The basis of computation of service incentive leave is the salary rate at
the date of commutation.
5. Grant of vacation leave or sick leave may be considered substitute for
service incentive leave. (Note: there is no provision in the Labor Code
granting vacation or sick leave).

Service charges
1. Coverage The rule on service charges applies only to establishments
collecting service charges, such as hotels, restaurants, lodging houses,
night clubs, cocktail lounges, massage clinics, bars, casinos and gambling
houses, and similar enterprises, including those entities operating
primarily as private subsidiaries of the government. It applies to all
employees of covered employers, regardless of their positions, designation
or employment status, and irrespective of the method by which their
wages are paid.
2. Distribution of service charges (Percentage of sharing):

a. eighty-five percent (85%) for the employees to be distributed equally


among them; and
b. fifteen percent (15%) for the management to answer for losses and
breakages and distribution to managerial employees.
3. The P2,000.00 salary ceiling for entitlement thereto is no longer applicable.
4. The shares shall be distributed to employees not less often than once
every 3 weeks or twice a month at intervals not exceeding 16 days.

WAGES
1. Attributes of wage:

a. It is the renumeration or earnings, however designated, for work done


or to be done or for services rendered or to be rendered.
b. It is capable of being expressed in terms of money, whether fixed or
ascertained on a time, task, piece, or commission basis, or other
method of calculating the same;
c. It is payable by an employer to an employee under a written or
unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered; and
d. It 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.
2. Wage, salary and pay; distinction they are synonymous in meaning
and usage.
3. Commission may or may not be treated as part of wage depending on the
circumstances.
4. Actual work is the basis of claim for wages (No work, no pay).

Facilities
1. Facilities shall include articles or services for the benefit of the
employee or his family but shall not include tools of the trade or articles or
services primarily for the benefit of the employer or necessary to the
conduct of the employers business.
2. Value of facilities the fair and reasonable value of board, lodging and
other facilities customarily furnished by an employer to his employees both
in agricultural and non-agricultural enterprises.

Supplements
1. Supplements means extra renumeration or special privileges or benefits
given to or received by the laborers over and above their ordinary earnings
or wages.
2. Facilities and supplements, distinction: The benefit or privilege given
to the employee which constitutes an extra renumeration over and above
his basic or ordinary earning or wage, is supplement; and when said benefit
or privilege is part of the laborers basic wage, it is a facility. The criterion
is not so much with the kind of the benefit or item (food, lodging, bonus or
sick leave) given but its purpose. Thus, free meals supplied by the ship
operators to crew members, out of necessity, cannot be considered as
facilities but supplements which could not be reduced having been given
not as a part of wages but as necessary matter in the maintenance of the
health and efficiency of the crew personnel during the voyage.
1. Rule on deductibility. Facilities may be charged to or deducted from
wages. Supplements, on the other hand, may not be so charged.

Gratuity and allowances.


1. Gratuity is a gift given by the employer in appreciation of certain favors
or services rendered. It is not part of wages since, strictly speaking, it is
not intended as compensation for actual work. It is further not demandable
as a matter of right.
2. Allowances are not part of wages. Therefore, in the computation of the
amount of retirement and other benefits, allowances shall not be included
therein.

Bonus
1. Bonus, not generally demandable.- bonus is an amount granted and paid ex
gratia to the employee for his industry or loyalty, hence, generally not
demandable or enforceable. If there is no profit, there should be no bonus.
If profit is reduced, bonus should likewise be reduced, absent any
agreement making such bonus part of the compensation of the employees.
2. Bonus; when demandable and enforceable. On the basis of equitable
considerations, long practice, agreement (e. g. CBA) and other peculiar
circumstances, bonus may become demandable and enforceable.
Consequently, if bonus is given as an additional compensation which the
employer agreed to give without any condition such as success of business
or more efficient or more productive operation, it is deemed part of wage
or salary, hence, demandable.
3. Unlike 13th month pay, bonus may be forfeited in case employee is found
guilty of an administrative charge.

13th month pay

1. Thirteenth-month pay shall mean one twelfth (1/12) of the basic salary of
an employee within a calendar year.
2. All rank-and-file employees are entitled to a 13th-month pay regardless of
the amount of basic salary that they receive in a month and regardless of
their designation or employment status, and inspective of the method by
which their wages are paid, provided that they have worked for at least
one (1) month during a calendar year.
3. Exempted employers
a. the government and any of its political subdivision, including
government-owned and controlled corporations, except those
corporations operating essentially as private subsidiaries of the
government.
b. Employers already paying their employees 13th-month pay or more in a
calendar year or its equivalent at the time of this issuance.
c. Employers of household helpers and persons in the personal service of
another in relation to such workers.
d. Employers of those are paid on purely commission, boundary, or task
basis, and those who are paid a fixed amount for performing a specific
work, irrespective of the time consumed in the performance thereof,
except where the workers are paid on piece-rate basis in which case,
the employer shall be covered by the 13th month pay law insofar as such
workers are concerned.
4. The term its equivalent shall include Christmas bonus, mid-year bonus,
profit-sharing payments and other cash bonuses amounting to not less than
1/12th of the basic salary but shall not include cash and stock dividends,
cost of living allowances and all other allowances regularly enjoyed by the
employee, as well as non-monetary benefits. Where an employer pays less
than 1/12th of the employees basic salary, the employer shall pay the
difference.
5. Time of payment. The required 13th month pay shall be paid not later than
December 24 of each year.
6. 13th-month pay for employees 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 basis, are entitled to the required
13th-month pay from their private employers regardless of their total
earnings from each or all their employers.
7. 13th month pay is tax exempt (R. A. 7833).
8. May payment of bonus be credited as payment of 13th-month pay?
a. Marcopper Mining Corp. vs. Ople, et. al. case No
b. NFSW vs. Ovejera, et. al. case Yes
c. DOLE Philippines vs. Leogardo, et. al. case Yes
d. Brokenshire Memorial Hospital, Inc. vs. NLRC, et. al. case No
e. United CMC Textile Workers union vs. Valenzuela, et. al. case No
f. Universal Corn Products vs. NLRC, et. al. case Yes
g. FEU Employees Labor Union vs. FEU case (involving transportation
allowance which was treated as compliance with 13th month pay)
h. Framanlis Farms, Inc. vs. Minister of Labor, et. al. case No
i. Kamaya Point Hotel vs. NLRC, et. al. case Yes
j. UST Faculty Union vs. NLRC, et. al. case No

No 14th month pay


There is no law mandating the payment of 14th-month pay. It is, therefore, in
the nature of a bonus which may not be imposed upon the employer. It is a gratuity
to which the recipient has no right to make a demand. Kamaya Point Hotel vs. NLRC,
et. al., G. R. No. 75289, August 31, 1989, 177 SCRA 160).
MINIMUM WAGE
Regional minimum wages
1. The minimum wage rates for agricultural and non-agricultural workers and
employees in every region shall be those prescribed by the Regional
Tripartite Wages and Productivity Boards (RTWPB) which shall in no case
be lower than the statutory minimum wage rates.
2. The term statutory minimum wages refers simply to the lowest basic
wage rate fixed by law that an employer can pay his workers.
3. The basis of the minimum wage rates prescribed by law shall be the
normal working hours which shall not be more than eight (8) hours a day.

Prohibition against elimination or diminution of benefits


This principle mandates that the reduction or diminution or withdrawal by
employers of any benefits, supplements or payments as provided in existing laws,
individual agreements or collective bargaining agreements between workers and
employers or voluntary employer practice or policy, is not allowed.

PAYMENT OF WAGES: In what form, where, when and to should wages be paid>

Forms of payment of wages


1. Under the Civil Code, it is mandated that the laborers wages shall be paid
in legal currency. Under the Labor Code and its implementing rules, as a
general rule, wages shall be paid in legal tender and the use of tokens,
promissory notes; vouchers, coupons or any other form alleged to
represent legal tender is prohibited even when expressly requested by the
employee.

2. Exceptions; payment by check or money order, or through automatic teller


machines (ATM card) or other similar electronic devices, provided the
following concur:

a. there is a bank or other facility for encashment within a radius of one


(1) kilometer from the workplace;
b. the employer or any of his agents or representatives does not receive
any pecuniary benefit directly or indirectly from the arrangement;
c. the employees are given reasonable time during banking hours to
withdraw their wages from the bank which time shall be considered as
compensable hours worked if done during working hours; and
d. the payment by check or through ATM Card is with the written consent
of the employees concerned, if there is no collective agreement
authorizing the payment of wages by bank checks.

Time of payment of wages


1. Time of payment; exception.- The general rule is, wages shall be paid not
less often than once every two (2) weeks or twice a month at intervals not
exceeding sixteen (16) days. No employer shall make payment with less
frequency than once a month. The exception to above rule is when
payment cannot be made with such regularity due to force majeure or
circumstances beyond the employers control, in which case, the employer
shall pay the wages immediately after such force majeure or
circumstances have ceased.

Place of payment of wages


1. As a general rule, the place of payment shall be at or near the place of
undertaking.
2. Exceptions:

a. When payment cannot be effected at or near the place of work by


reason of the deterioration of peace and order conditions, or by reason
of actual or impending emergencies caused by fire, flood, epidemic or
other calamity rendering payment thereat impossible;
b. When the employer provides free transportation to the employees back
and forth; and
c. Under any other analogous circumstances, provided that the time spent
by the employees in collecting their wages shall be considered as
compensable hours worked.
3. Payment of wages in bars, massage clinics or nightclubs is prohibited
except in the case of employees thereof.
4. Payment through banks allowed in business and other entities with
twenty five (25) or more employees and located within one (1) kilometer
radius to a commercial, savings or rural bank.

Direct payment of wages


1. General rule: payment of wages shall be made directly to the employee
entitled thereto and to nobody else.
2. Exceptions.
a. Where the employer is authorized in writing by the employee to pay his
wages to a member of his family;
b. Where payment to another person of any part of the employees wages
is authorized by existing law, including payments for the insurance
premiums of the employee and union dues where the right to check-off
has been recognized by the employer in accordance with a collective
agreement or authorized in writing by the individual employees
concerned; or
c. In case of death of the employee, in which case, the same shall be paid
to his heirs without necessity of intestate proceedings.

THE LAW ON LABOR-ONLY CONTRACTING (PROHIBITED) AND INDEPENDENT OR


JOB CONTRACTING (PERMITTED)
DOLE Department Order 18-A (Rules on Contracting and Subcontracting
Arrangements)

Department Order No. 18-A


Series of 2011

RULES IMPLEMENTING ARTICLES 106 TO 109 OF THE LABOR CODE, AS AMENDED


By virtue of the power vested in the Secretary of Labor and Employment under
Articles 5 and 106 to 109 of the Labor Code of the Philippines, as amended, the
following regulations governing contracting and subcontracting arrangements are
hereby issued:
Section 1. Guiding principles. Contracting and subcontracting arrangements
are expressly allowed by law and are subject to regulations for the promotion of
employment and the observance of the rights of workers to just and humane
conditions of work, security of tenure, self-organization and collective bargaining.
Labor-only contracting as defined herein shall be prohibited.

Section 2. Coverage. These Rules shall apply to all parties of contracting and
subcontracting arrangements where employer-employee relationships 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.

Section 3. Definition of terms. The following terms as used in these Rules, shall
mean:

(a) Bond/s refers to the bond under Article 108 of the Labor Code that the
principal may require from the contractor to be posted equal to the cost of labor
under contract. The same may also refer to the security or guarantee posted by the
principal for the payment of the services of the contractors under the Service
Agreement.

(b) Cabo refers to a person or group of persons or to a labor group which, in


the guise of a labor organization, cooperative or any entity, supplies workers to an
employer, with or without any monetary or other consideration, whether in the
capacity of an agent of the employer or as an ostensible independent contractor.

(c) Contracting or Subcontracting refers to an arrangement whereby a


principal agrees to put out or farm out with a contractor the performance or
completion of a specific job, work or service within a definite or predetermined
period, regardless of whether such job, work or service is to be performed or
completed within or outside the premises of the principal.
(d) Contractor refers to any person or entity, including a cooperative, engaged
in a legitimate contracting or subcontracting arrangement providing either services,
skilled workers, temporary workers, or a combination of services to a principal under
a Service Agreement.

(e) Contractors employee includes one employed by a contractor to perform


or complete a job, work, or service pursuant to a Service Agreement with a principal.
It shall also refer to regular employees of the contractor whose functions are not
dependent on the performance or completion of a specific job, work or service within
a definite period of time, i.e., administrative staff.

(f) In-house agency refers to a contractor which is owned, managed, or


controlled directly or indirectly by the principal or one where the principal
owns/represents any share of stock, and which operates solely or mainly for the
principal.

(g) Net Financial Contracting Capacity (NFCC)1 refers to the formula to


determine the financial capacity of the contractor to carry out the job, work or
services sought to be undertaken under a Service Agreement. NFCC is current
assets minus current liabilities multiplied by K, which stands for contract duration
equivalent to: 10 for one year or less; 15 for more than one (1) year up to two (2)
years; and 20 for more than two (2) years, minus the value of all outstanding or
ongoing projects including contracts to be started.

1 Refers to the formula set out in the Implementing Rules and Regulations of
Republic Act No. 9184, or An Act Providing for the Modernization, Standardization
and Regulation of the Procurement Activities of the Government and For Other
Purposes.

(h) Principal refers to any employer, whether a person or entity, including


government agencies and government-owned and controlled-corporations,
who/which puts out or farms out a job, service or work to a contractor.

(i) Right to control refers to the right reserved to the person for whom the
services of the contractual workers are performed, to determine not only the end to
be achieved, but also the manner and means to be used in reaching that end.

(j) Service Agreement refers to the contract between the principal and
contractor containing the terms and conditions governing the performance or
completion of a specific job, work or service being farmed out for a definite or
predetermined period.

(k) Solidary liability refers to the liability of the principal, pursuant to the
provision of Article 109 of the Labor Code, as direct employer together with the
contractor for any violation of any provision of the Labor Code.
It also refers to the liability of the principal, in the same manner and extent that
he/she is liable to his/her direct employees, to the extent of the work performed
under the contract when the contractor fails to pay the wages of his/her employees,
as provided in Article 106 of the Labor Code, as amended.

(l) "Substantial capital refers to paid-up capital stocks/shares of at least Three


Million Pesos (P3,000,000.00) in the case of corporations, partnerships and
cooperatives; in the case of single proprietorship, a net worth of at least Three
Million Pesos (P3,000,000.00).

(m) Trilateral Relationship refers to the relationship in a contracting or


subcontracting arrangement where there is a contract for a specific job, work or
service between the principal and the contractor, and a contract of employment
between the contractor and its workers. There are three (3) parties involved in these
arrangements: the principal who decides to farm out a job, work or service to a
contractor; the contractor who has the capacity to independently undertake the
performance of the job, work or service; and the contractual workers engaged by the
contractor to accomplish the job, work or service.
Section 4. Legitimate contracting or subcontracting. Contracting or
subcontracting shall be legitimate if all the following circumstances concur:

(a) The contractor must be registered in accordance with these Rules and
carries a distinct and independent business and undertakes to perform the 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 thereof;

(b) The contractor has substantial capital and/or investment; and

(c) The Service Agreement ensures compliance with all the rights and benefits
under Labor Laws.

Section 5. Trilateral relationship in contracting arrangements; Solidary liability. In


legitimate contracting or subcontracting arrangement there exists:

(a) An employer-employee relationship between the contractor and the employees it


engaged to perform the specific job, work or service being contracted; and

(b) A contractual relationship between the principal and the contractor as governed
by the provisions of the Civil Code.

In the event of any violation of any provision of the Labor Code, including the failure
to pay wages, there exists a solidary liability on the part of the principal and the
contractor for purposes of enforcing the provisions of the Labor Code and other
social legislation, to the extent of the work performed under the employment
contract.

However, the principal shall be deemed the direct employer of the contractors
employee in cases where there is a finding by a competent authority of labor-only
contracting, or commission of prohibited activities as provided in Section 7, or a
violation of either Sections 8 or 9 hereof.

Section 6. Prohibition against labor-only contracting. Labor-only contracting is


hereby declared prohibited. For this purpose, labor only contracting shall refer to an
arrangement where:

(a) The contractor does not have substantial capital or investments in the form of
tools, equipment, machineries, work premises, among others, and the employees
recruited and placed are performing activities which are usually necessary or
desirable to the operation of the company, or directly related to the main business of
the principal within a definite or predetermined period, regardless of whether such
job, work or service is to be performed or completed within or outside the premises
of the principal; or

(b) The contractor does not exercise the right to control over the performance of the
work of the employee.

Section 7. Other Prohibitions. Notwithstanding Section 6 of these Rules, the


following are hereby declared prohibited for being contrary to law or public policy:

A. Contracting out of jobs, works or services when not done in good faith and not
justified by the exigencies of the business such as the following:
(1) 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.

(2) Contracting out of work with a Cabo.

(3) Taking undue advantage of the economic situation or lack of bargaining


strength of the contractors 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.

(4) Contracting out of a job, work or service through an in-house agency.

(5) 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.

(6) Contracting out of a job, work or service being performed by union members
when such will interfere with, restrain or coerce employees in the exercise of their
rights to self-organization as provided in Art. 248 (c) of the Labor Code, as amended.

(7) Repeated hiring of employees under an employment contract of short duration


or under a Service Agreement of short duration with the same or different
contractors, which circumvents the Labor Code provisions on Security of Tenure.

(8) Requiring employees under a subcontracting arrangement to sign a contract


fixing the period of employment to a term shorter than the term of the Service
Agreement, unless the contract is divisible into phases for which substantially
different skills are required and this is made known to the employee at the time of
engagement.

(9) Refusal to provide a copy of the Service Agreement and the employment
contracts between the contractor and the employees deployed to work in the
bargaining unit of the principals certified bargaining agent to the sole and exclusive
bargaining agent (SEBA).

(10) 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).

B. 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.

Section 8. Rights of contractors employees. All contractors employees, whether


deployed or assigned as reliever, seasonal, week-ender, temporary, or promo
jobbers, shall be entitled to all the rights and privileges as provided for in the Labor
Code, as amended, to include the following:
(a) Safe and healthful working conditions;

(b) Labor standards such as but not limited to service incentive leave, rest days,
overtime pay, holiday pay, 13th month pay, and separation pay as may be provided in
the Service Agreement or under the Labor Code;
(c) Retirement benefits under the SSS or retirement plans of the contractor, if
there is any;

(d) Social security and welfare benefits;

(e) Self-organization, collective bargaining and peaceful concerted activities; and

(f) Security of tenure.

Section 9. Required contracts under these Rules.


(a) Employment contract between the contractor and its employee.

Notwithstanding any oral or written stipulations to the contrary, the contract


between the contractor and its employee shall be governed by the provisions of
Articles 279 and 280 of the Labor Code, as amended. It shall include the following
terms and conditions:
i. The specific description of the job, work or service to be performed by the
employee;

ii. The place of work and terms and conditions of employment, including a
statement of the wage rate applicable to the individual employee; and

iii. The term or duration of employment that must be co-extensive with the
Service Agreement or with the specific phase of work for which the employee is
engaged.
The contractor shall inform the employee of the foregoing terms and conditions
of employment in writing on or before the first day of his/her employment.

(b) Service Agreement between the principal and the contractor. The Service
Agreement shall include the following:
i. The specific description of the job, work or service being subcontracted.

ii. The place of work and terms and conditions governing the contracting
arrangement, to include the agreed amount of the services to be rendered, the
standard administrative fee of not less than ten percent (10%) of the total contract
cost.

iii. Provisions ensuring compliance with all the rights and benefits of the
employees under the Labor Code and these Rules on: provision for safe and healthful
working conditions; labor standards such as, service incentive leave, rest days,
overtime pay, 13th month pay and separation pay; retirement benefits; contributions
and remittance of SSS, Philhealth, PagIbig Fund, and other welfare benefits; the right
to self-organization, collective bargaining and peaceful concerted action; and the
right to security of tenure.
iv. A provision on the Net Financial Contracting Capacity of the contractor, which
must be equal to the total contract cost.

v. A provision on the issuance of the bond/s as defined in Section 3(m) renewable


every year.

vi. The contractor or subcontractor shall directly remit monthly the employers
share and employees contribution to the SSS, ECC, Philhealth and Pagibig.

vii. The term or duration of engagement. The Service Agreement must conform to
the DOLE Standard Computation and Standard Service Agreement, which form part
of these Rules as Annexes A and B.

Section 10. Duties of the principal. Pursuant to the authority of the Secretary of
Labor and Employment to restrict or prohibit the contracting of labor to protect the
rights of the workers and to ensure compliance with the provisions of the Labor
Code, as amended, the principal, as the indirect employer or the user of the services
of the contractor, is hereby required to observe the provisions of these Rules.

Section 11. Security of tenure of contractors employees. It is understood that all


contractors employees enjoy security of tenure regardless of whether the contract
of employment is co-terminus with the service agreement, or for a specific job, work
or service, or phase thereof.

Section 12. Observance of required standards of due process; requirements of


notice. In all cases of termination of employment, the standards of due process laid
down in Article 277(b) of the Labor Code, as amended, and settled jurisprudence on
the matter2, must be observed. Thus, the following is hereby set out to clarify the
standards of due process that must be observed:

2 King of Kings Transport, Inc., Claire dela Fuente, and Melissa Lim, vs. Santiago
O. Mamac, G.R. No. 166208, (29 June 2007); and Felix B. Perez and Amante G. Doria
v. Philippine Telegraph and Telephone Company and Jose Luis Santiago, G.R. No.
152048, (7 April 2009), (en banc Decision).

I. For termination of employment based on just causes as defined in Article 282


of the Code, the requirement of two written notices served on the employee shall
observe the following:

(A) The first written notice should contain:


(1) The specific causes or grounds for termination;

(2) Detailed narration of the facts and circumstances that will serve as basis for the
charge against the employee. A general description of the charge will not suffice;
(3) The company rule, if any, that is violated and/or the ground under Art. 282 that is
being charged against the employee; and

(4) A directive that the employee is given opportunity to submit a written explanation
within a reasonable period.

Reasonable period should be construed as a period of at least five (5) calendar


days from receipt of the notice to give the employee an opportunity to study the
accusation, consult a union official or lawyer, gather data and evidence, and decide
on the defenses against the complaint.

(B) After serving the first notice, the employer should afford the employee ample
opportunity to be heard and to defend himself/herself with the assistance of his/her
representative if he/she so desires, as provided in Article 277(b) of the Labor Code,
as amended.

Ample opportunity to be heard means any meaningful opportunity (verbal or


written) given to the employee to answer the charges against him/her and submit
evidence in support of his/her defense, whether in a hearing, conference or some
other fair, just and reasonable way. A formal hearing or conference becomes
mandatory only when requested by the employee in writing or substantial evidentiary
disputes exist or a company rule or practice requires it, or when similar
circumstances justify it.

(C) After determining that termination of employment is justified, the employer


contractor shall serve the employee a written notice of termination indicating that:
(1) all circumstances involving the charge against the employees have been
considered; and (2) the grounds have been established to justify the severance of
their employment. The foregoing notices shall be served on the employees last
known address.

II. For termination of employment based on authorized causes defined in Article


283 of the Labor Code, the requirement of due process shall be deemed complied
with upon service of a written notice to the employee and the appropriate regional
office of the Department of Labor and Employment at least thirty days before the
effectivity of the termination, specifying the ground or grounds for termination.

III. If the termination is brought about by the completion of the contract or phase
thereof, no prior notice is required. If the termination is brought about by the failure
of a probationary employee to meet the reasonable standards of the employer, which
was made known to the employee at the time of his/her employment, it shall be
sufficient that a written notice is served upon the employee within a reasonable time
prior to the expiration of the probationary period.

Section 13. Effect of termination of employment. The termination of employment


of the contractor employee prior to the expiration of the Service Agreement shall be
governed by Articles 282, 283 and 284 of the Labor Code.

In case the termination of employment is caused by the pre-termination of the


Service Agreement not due to authorized causes under Article 283, the right of the
contractor employee to unpaid wages and other unpaid benefits including unremitted
legal mandatory contributions, e.g., SSS, Philhealth, Pag-ibig, ECC, shall be borne by
the party at fault, without prejudice to the solidary liability of the parties to the
Service Agreement.

Where the termination results from the expiration of the service agreement, or
from the completion of the phase of the job, work or service for which the employee
is engaged, the latter may opt for payment of separation benefits as may be provided
by law or the Service Agreement, without prejudice to his/her entitlement to the
completion bonuses or other emoluments, including retirement benefits whenever
applicable.

Section 14. Mandatory Registration and Registry of Legitimate Contractors.


Consistent with the authority of the Secretary of Labor and Employment to restrict or
prohibit the contracting out of labor to protect the rights of workers, it shall be
mandatory for all persons or entities, including cooperatives, acting as contractors,
to register with the Regional Office of the Department of Labor and Employment
(DOLE) where it principally operates.

Failure to register shall give rise to the presumption that the contractor is engaged
in labor-only contracting.

Accordingly, the registration system governing contracting arrangements and


implemented by the Regional Offices of the DOLE is hereby established, with the
Bureau of Working Conditions (BWC) as the central registry.

Section 15. Requirements for registration. The application for registration as a


contractor shall be filed at the DOLE Regional Office in the region where it seeks to
principally operate. The applicant shall provide in the application form the following
information:
(a) The name and business address of the applicant and the areas where it
seeks to operate;

(b) The names and addresses of officers, if the applicant is a corporation,


partnership, cooperative or a labor organization;

(c) The nature of the applicants business and the industry or industries where the
applicant seeks to operate;

(d) The number of regular workers and the total workforce;


(e) The list of clients, if any, the number of personnel assigned to each client, if any,
and the services provided to the client;

(f) The description of the phases of the contract, including the number of
employees covered in each phase, where appropriate; and

(g) Proof of compliance with substantial capital requirement as defined in Section


3(l) of these Rules.
The application shall be supported by:
(a) A certified true copy of a certificate of registration of firm or business name
from the Securities and Exchange Commission (SEC), Department of Trade and
Industry (DTI), Cooperative Development Authority (CDA), or from the DOLE if the
applicant is a labor organization;

(b) A certified true copy of the license or business permit issued by the local
government unit or units where the contractor operates;

(c) A certified listing, with proof of ownership or lease contract, of facilities,


tools, equipment, premises implements, machineries and work premises, that are
actually and directly used by the contractor in the performance or completion of the
job, work or service contracted out. In addition, the applicant shall submit a photo of
the office building and premises where it holds office;

(d) A copy of audited financial statements if the applicant is a corporation,


partnership, cooperative or a labor organization, or copy of the latest ITR if the
applicant is a sole proprietorship; and

(e) A sworn disclosure that the registrant, its officers and owners or principal
stockholders or any one of them, has not been operating or previously operating as a
contractor under a different business name or entity or with pending cases of
violations of these Rules and/or labor standards, or with a cancelled registration. In
case any of the foregoing has a pending case, a copy of the complaint and the latest
status of the case shall be attached.

The application shall be verified. It shall include a DOLE certification of


attendance to orientation seminar on these Rules and an undertaking that the
contractor shall abide by all applicable labor laws and regulations.

Section 16. Filing and processing of application. The application with all
supporting documents shall be filed in triplicate in the Regional Office where the
applicant principally operates. No application for registration shall be accepted
unless all the requirements in the preceding Section are complied with.

Section 17. Verification inspection. Within two (2) working days upon receipt of
the application with complete supporting documents, the authorized representative
of the Regional Director shall conduct a verification inspection of the facilities, tools,
equipment, and work premises of the applicant.

Section 18. Approval or denial of the application. The Regional Office shall deny
or approve the application within one (1) working day after the verification
inspection.

Applications that fail to meet the requirements set forth in Section 15 of these Rules
shall be denied.

Section 19. Registration fee. Payment of registration fee of Twenty-Five Thousand


Pesos (P25,000.00) shall be required upon approval of the application.

Upon registration, the Regional Office shall return one set of the duly-stamped
application documents to the applicant, retain one set for its file, and transmit the
remaining set to the Bureau of Working Conditions (BWC) within five (5) days from
registration.

Section 20. Validity of certificate of registration of contractors. The contractor


shall be deemed registered only on the date of issuance of its Certificate of
Registration.

The Certificate of Registration shall be effective for three (3) years, unless
cancelled after due process. The same shall be valid in the region where it is
registered.

In case the contractor has Service Agreements or 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
Agreement/s in the area, for purposes of monitoring compliance with these Rules.

Section 21. Renewal of registration. All registered contractors shall apply for
renewal of their Certificates of Registration thirty (30) days before the expiration of
their registration to remain in the roster of legitimate service contractors. The
applicant shall pay a registration renewal fee of Twenty-Five Thousand Pesos
(P25,000.00) to the DOLE Regional Office.

Copies of all the updated supporting documents in letters (a) to (e) of Section 15
hereof shall be attached to the duly accomplished application form, including the
following:

(a) Certificate of membership and proof of payment of SSS, Philhealth, BIR, ECC
and Pag-Ibig contributions for the last three (3) years, as well as loan amortizations;
and

(b) Certificate of pending or no pending labor standards violation case/s with the
National Labor Relations Commission (NLRC) and Department of Labor and
Employment (DOLE). The pendency of a case will not prejudice the renewal of the
registration, unless there is a finding of violation of labor standards by the DOLE
Regional Director.

Section 22. Semi-annual reporting. The contractor shall submit in triplicate its
subscribed semi-annual report using a prescribed form to the appropriate Regional
Office. The report shall include:

(a) A list of contracts entered with the principal during the subject reporting
period;

(b) The number of workers covered by each contract with the principal;

(c) Proof of payment of remittances to the Social Security System (SSS), the Pag-
Ibig Fund, Philhealth, Employees Compensation Commission (ECC), and Bureau of
Internal Revenue (BIR) due its employees during the subject reporting period and of
amortization of declared loans due from its employees; and

(d) A certified listing of all cases filed against the contractor before the NLRC

The Regional Office shall return one set of the duly-stamped report to the
contractor, retain one set for its file, and transmit the remaining set to the Bureau of
Working Conditions (BWC) within five (5) days from receipt thereof.

Section 23. Grounds for cancellation of registration. The Regional Director shall,
upon a verified complaint, cancel or revoke the registration of a contractor after due
process, based on any of the following grounds:

(a) Misrepresentation of facts in the application;

(b) Submission of a falsified or tampered application or supporting documents to


the application for registration;

(c) Non-submission of Service Agreement between the principal and the


contractor when required to do so;

(d) Non-submission of the required semi-annual report as provided in Section 22


(Semi-annual reporting) hereof;

(e) Findings through arbitration that the contractor has engaged in labor-only
contracting and/or the prohibited activities as provided in Section 7 (Other
Prohibitions) hereof;

(f) Non-compliance with labor standards and working conditions;

(g) Findings of violation of Section 8 (Rights of contractors employees) or


Section 9 (Required contracts) of these Rules;

(h) Non-compliance with SSS, the HDMF, Pag-Ibig, Philhealth, and ECC laws; and

(i) Collecting any fees not authorized by law and other applicable rules and
regulations.

Section 24. Due process in cancellation of registration. Complaint/s based on


any of the grounds enumerated in the preceding Section against the contractor shall
be filed in writing and under oath with the Regional Office which issued the
Certificate of Registration.

The complaint/s shall state the following:


(a) The name/s and address/es of the complainant/s;

(b) Name and address of the contractor;

(c) The ground/s for cancellation;

(d) When and where the action complained of happened;

(e) The amount of money claim, if any; and

(f) The relief/s sought.


Upon receipt of the complaint, the Regional Director shall direct the contractor,
with notice to the complainant, to file a verified answer/counter affidavit within ten
(10) calendar days without extension, incorporating therein all pertinent documents
in support of his/her defenses, with proof of service of a copy to the complainant.
Failure to file an answer/counter affidavit shall constitute a waiver on the part of the
respondent. No motion to dismiss shall be entertained.

The Regional Director or his duly authorized representative may conduct a


clarificatory hearing within the prescribed ten (10) calendar days within which to file
a verified answer/counter affidavit.

Within the said ten (10) calendar days period, the contractor shall make the
necessary corrections/rectifications on the violations that are immediately
rectifiable upon its own initiative in order to be fully compliant.

The Regional Director may avail himself of all reasonable means to ascertain the
facts of the case, including conduct of inspection, where appropriate, and
examination of informed persons.

The proceedings before the Regional Office shall be summary in nature.

The conduct of hearings shall be terminated within fifteen (15) calendar days
from the first scheduled clarificatory hearing. The Regional Director shall resolve the
case within ten (10) working days from the date of the last hearing. If there is no
necessity to conduct a hearing, the case shall be resolved within ten (10) working
days from receipt of the verified answer/counter affidavit.

Any motion for reconsideration from the Order of the Regional Director shall be
treated as an appeal.

Section 25. Appeal. The Order of the Regional Director is appealable to the
Secretary within ten (10) working days from receipt of the copy of the Order. The
appeal shall be filed with the Regional Office which issued the cancellation Order.
The Office of the Secretary shall have thirty (30) working days from receipt of the
records of the case to resolve the appeal. The Decision of the Secretary shall
become final and executory after ten (10) days from receipt thereof by the parties.
No motion for reconsideration of the Decision shall be entertained.

Section 26. Effects of cancellation of registration. A final Order of cancellation


shall divest the contractor of its legitimate status to engage in
contracting/subcontracting.

Such Order of cancellation shall be a ground to deny an application for renewal of


registration to a contractor under the Rules.

The cancellation of the registration of the contractor for engaging in labor-only


contracting or for violation of any of the provisions of these Rules involving a
particular Service Agreement will not, however, impair the validity of existing
legitimate jobcontracting arrangements the contractor may have entered into with
other principals prior to the cancellation of its registration. Any valid and subsisting
Service Agreement shall be respected until its expiration; thereafter, contracting
with a delisted contractor shall make the principal direct employer of all employees
under the Service Agreement pursuant to Articles 106 and 109 of the Labor Code.

Section 27. Effects of finding of labor-only contracting and/or violation of


Sections 7. 8 or 9 of the Rules. A finding by competent authority of labor-only
contracting shall render the principal jointly and severally liable with the contractor
to the latter's employees, in the same manner and extent that the principal is liable
to employees directly hired by him/her, as provided in Article 106 of the Labor Code,
as amended.
A finding of commission of any of the prohibited activities in Section 7, or
violation of either Sections 8 or 9 hereof, shall render the principal the direct
employer of the employees of the contractor or subcontractor, pursuant to Article
109 of the Labor Code, as amended.

Section 28. Retaliatory measures. Pursuant to Article 118 of the Labor Code, as
amended, it shall be unlawful for the principal, contractor, or any party privy to the
contract or services provided to refuse to pay or reduce the wages and benefits, and
discharge or in any manner discriminate against any worker who has filed any
complaint or instituted any proceeding on wages (under Title II, Book III of the Labor
Code), labor standards violation, or has testified or is about to testify in such
proceedings.

Section 29. Enforcement of labor standards and working conditions. Consistent


with Article 128 (Visitorial and Enforcement Power) of the Labor Code, as amended,
the Regional Director through his/her duly authorized representatives, shall conduct
routine inspection of establishments engaged in contracting arrangement regardless
of the number of employees engaged by the principal or by the contractor.

They shall have access to employers records and premises at any time of the
day or night whenever work is being undertaken therein, and the right to copy
therefrom, to question any employee and investigate any fact, condition or matter
which may be necessary to determine violations or which may aid in the
enforcement of the Labor Code and of any labor law, wage order, or rules and
regulations issued pursuant thereto.

The findings of the duly authorized representative shall be referred to the


Regional Director for appropriate action as provided for in Article 128, and shall be
furnished the collective bargaining agent, if any.

Based on the visitorial and enforcement power of the Secretary of Labor and
Employment in Article 128 (a), (b), (c), and (d), the Regional Director shall issue
compliance orders to give effect to the labor standards provisions of the Labor Code,
other labor legislation, and these Rules.

Section 30. Duty to produce copy of contract between the principal and the
contractor. The principal or the contractor shall be under an obligation to produce a
copy of the Service Agreement in the ordinary course of inspection. The contractor
shall likewise be under an obligation to produce a copy of any contract of
employment when directed to do so by the Regional Office Director or his/her
authorized representative.

Section 31. Tripartite implementation and monitoring of compliance; Use of


registration fees. A region-based tripartite monitoring team on the observance of
labor standards in contracting and subcontracting arrangements shall be constituted
as a subcommittee of the Regional Tripartite Industrial Peace Council (RTIPC) within
fifteen (15) days from the effectivity of these Rules. It shall submit a quarterly
regional monitoring report to the DOLE Secretary and to the National Tripartite
Industrial Peace Council (NTIPC). The Bureau of Working Conditions (BWC) shall
ensure the implementation of this provision, and shall conduct capacity building to
the members of the regional tripartite monitoring team.

For this purpose, a portion of the collected registration fees shall be used in the
operation of the region-based tripartite monitoring team, including in the
development of an internet-based monitoring system and database. It shall likewise
be used for transmittal of the monthly report of all registered contractors to the
Bureau of Local Employment (BLE), and in generating labor market information.

Section 32. Oversight function of the National TIPC. The National Tripartite
Industrial Peace Council (NTIPC) as created under Executive Order No. 49, Series of
1998, as amended, shall serve as the oversight committee to verify and monitor the
following:

(a) Engagement in allowable contracting activities; and

(b) Compliance with administrative reporting requirements.

Section 33. Collective bargaining and/or Industry Tripartite Council (ITC).


Nothing herein shall preclude the parties in collective bargaining agreements (CBAs)
to determine the functions that can or cannot be farmed out or contracted out to a
legitimate contractor, including the terms and conditions of the workers
engagement under the arrangement, provided the provisions of these Rules are
observed.

In industries with established Industry Tripartite Councils (ITCs), the tripartite


partners may agree, through a voluntary code of good practices, on the functions or
processes that can or cannot be contracted out to a legitimate contractor.

Section 34. Financial Relief Program; Tripartite Co-Regulation Engagement. A


Financial Relief Program or Unemployment Assistance Fund shall be established for
employees under a Service Agreement or employees in transition from one Service
Agreement to the next. For this purpose, the National Tripartite Industrial Peace
Council (NTIPC), upon the effectivity of this issuance, shall constitute a Local
Service Provider Tripartite Working Group (LSP-TWG) composed of representatives of
the stakeholders in the industry. The LSP-TWG shall:

(a) Recommend the mechanics and details in setting up the Financial Relief
Program or Unemployment Assistance Fund with proposed funding sources before
end of June 2012; and
(b) Draw-up the terms of a Tripartite Co-Regulation Engagement in ensuring full
compliance with labor laws for approval/endorsement by the NTIPC, including a
proposed Table of Progressive Rate of Increases in the minimum capitalization
requirement at reasonable intervals to ensure that only legitimate contractors can
engage in subcontracting arrangement.

Section 35. Enrollment in DOLE programs on improving compliance with labor


standards. For purposes of ensuring compliance with labor standards, the principal
and subcontractors covered by these Rules are encourage to enroll and participate
in the DOLE Kapatiran Work Improvement for Small Enterprise (WISE)-TAV Program
(Department Advisory No. 06, dated 07 March 2011) and/or in the Incentivizing
Compliance Program (Department Order No. 115-11).

Section 36. Contracting or subcontracting arrangements in the Construction and


Other Industries. Contracting or subcontracting arrangements in the Construction
Industry, under the licensing coverage of the Philippine Construction Accreditation
Board (PCAB), shall be covered by the applicable provisions of these Rules and shall
continue to be governed by Department Order No. 19, Series of 1993 (Guidelines
Governing the Employment of Workers in the Construction Industry); Department
Order No. 13, Series of 1998 (Guidelines Governing the Occupational Safety and
Health in the Construction Industry); and DOLE-DPWH-DILG-DTI and PCAB
Memorandum of Agreement-Joint Administrative Order No. 1, Series of 2011 (on
coordination and harmonization of policies and programs on occupational safety and
health in the construction industry).

In industries covered by a separate regulation of the DOLE or other government


agency, contracting or subcontracting therein shall be governed by these Rules
unless expressly provided otherwise.

Section 37. Prohibition on DOLE officials or employees. Any official or employee of


the DOLE or its attached agencies is prohibited from engaging or having any interest
in any contracting or subcontracting business.

Section 38. Non-impairment of existing contracts; Non-diminution of benefits.


Subject to the provisions of Articles 106 to 109 of the Labor Code, as amended, the
applicable provisions of the Civil Code and existing jurisprudence, nothing herein
shall impair the rights or diminish the benefits being enjoyed by the parties to
existing contracting or subcontracting arrangements.

The effectivity of Certificates of Registration acquired under Department Order


No. 18, Series of 2002, issued on 21 February 2002, shall be respected until
expiration.

Section 39. Supersession. All rules and regulations issued by the Secretary of
Labor and Employment inconsistent with the provisions of these Rules are hereby
superseded.

Section 40. Separability Clause. If any provision or portion of these Rules are
declared void or unconstitutional, the remaining portions or provisions hereof shall
continue to be valid and effective.

Section 41. Effectivity. This Department Order shall be effective fifteen (15) days
after completion of its publication in a newspaper of general circulation.

Manila, Philippines, 14 November 2011.

ROSALINDA DIMAPILIS-BALDOZ
Secretary

DEPARTMENT CIRCULAR NO. 01 SERIES OF 2012

Republic of the Philippines


DEPARTMENT OF LABOR AND EMPLOYMENT
lntramuros, Manila

Department Circular No. 01 Series of 2012


Clarifying the Applicability of Department Order No. 18-A, Series of 2011, to
Business Processing Outsourcing (BPO)/Knowledge Process Outsourcing (KPO) and
the Construction Industry

1. Purpose. This Circular is being issued in response to queries on whether firms


or companies in the Business Process Outsourcing (BPO) or Knowledge Process
Outsourcing (KPO) and in the Construction Industry are covered by Department Order
No. 18-A, Series of 2011, or the Rules Implementing Articles 106 to 109 of the Labor
Code of the Philippines, as amended.
2. Existing Rules under Department Order No.18-A, Series of 2011.
2.1. In the implementation of Articles 106 to 109 of the Labor Code, as
amended, Department Order No. 18-A, Series of 2011, states in Section 3(c) that
contracting or subcontracting is an arrangement whereby a principal agrees to put
out or farm out with a contractor the performance or completion of a specific job,
work or service within a definite or predetermined period, regardless of whether
such job, work or service is to be performed or completed within or outside the
premises of the principal".
Additionally, it denes trilateral relationship in Section 3 (m) to refer to the
relationship in a contracting or subcontracting arrangement where there is a
contract for a specic job, work or service between the principal and the contractor,
and a contract of employment between the contractor and its workers. There are
three (3) parties involved in contracting or subcontracting arrangements, the
principal who decides to farm out a job, work or service to a contractor; the
contractor who has the capacity to independently undertake the performance of the
job, work or service; and the workers engaged by the contractor to accomplish the
job, work or service.
2.2. Further, Section 36 of D.O.18-A, Series of 2011, provides that contracting or
subcontracting arrangements in the Construction Industry, under the licensing
coverage of the Philippine Contractors (Construction) Accreditation Board (PCAB),
shall be covered by the applicable provisions of these Rules and shall continue to be
governed by Department Order No. 19, Series of 1993 (Guidelines Governing the
Employment of Workers in the Construction Industry); Department Order No. 13,
Series of 1998 (Guidelines Governing the Occupational Safety and Health in the
Construction Industry); and DOLE-DPWH-DILG-DTI and PCAB Memorandum of
Agreement-Joint Administrative Order No. 1, Series of 2011 (on coordination and
harmonization of policies and programs on occupational safety and health in the
construction industry). While other industries covered by a separate regulation of the
DOLE or other government agency, contracting or subcontracting therein shall be
governed by these Rules unless expressly provided otherwise.
2.3. Section 2, subparagraph 2.5 of Department Order No. 19, Series of 1993, or
the Guidelines Governing the Employment of Workers in the Construction Industry
provides:
"Contracting and subcontracting. The practice of contracting out certain phases
of a construction project is recognized by law, particularly wage legislations and
wage orders, and by industry practices. The Labor Code and its Implementing
Regulations allow the contracting out of jobs under certain conditions. Where such
job contracting is permissible, the construction workers are generally considered as
employees of the contractor or subcontractor, as the case may be, subject to Article
109 of the Labor Code, as amended."
3. Applicability of the D.O.18-A, Series of 2011 to BPO.
3.1. DO 18-A, Series of 2011, clearly speaks of a trilateral relationship that
characterizes the covered contracting/subcontracting arrangement. Thus, vendor-
vendee relationship for entire business processes covered by the applicable
provisions of the Civil Code on Contracts is excluded.
3.2 D018-A, Series of 2011, contemplates generic or focused singular activity
in one contract between the principal and the contractor (for example, janitorial,
security, merchandising, specic production work) and does not contemplate
information technology-enabled services involving an entire business processes (for
example, business process outsourcing, knowledge process outsourcing, legal
process outsourcing. hardware and/or software support, medical transcription,
animation services, back ofce operations/support). These companies engaged in
business processes (BPOs) may hire employees in accordance with applicable
laws, and maintain these employees based on business requirements, which may or
may not be for different clients of the BPOs at different periods of the employees
employment.
4. Applicability of D.O.18-A, Series of 2011 to the Construction Industry; Coordination
with PCAB-CIAP.
4.1 Licensing and the exercise of regulatory powers over the construction
industry is lodged with the Philippine Contractors Accreditation Board (PCAB), which
is under the Construction Industry Authority of the Philippines (CIAP), pursuant to the
provisions of Presidential Decree No. 1746, Series of 1980, and not with the
Department of Labor and Employment or any of its regional ofces.
PCAB registers all contractors, whether general or subcontractors, in the
Construction Industry and regulates the same including ensuring compliance with
DOLE Department Order No. 13, Series of 1998 (Guidelines Goveming the
Occupational Safety and Health in the Construction Industry); and DOLE-DPWH-DILG-
DTI and PCAB Memorandum of Agreement-Joint Administrative Order No. 1, Series of
2011 (on coordination and harmonization of policies and programs on occupational
safety and health in the construction industry).
Thus, the DOLE, through its regional ofces, shall not require contractors
licensed by PCAB in the Construction Industry to register under D.O. 18-A, Series of
2011. Moreover, ndings of violation/s on labor standards and occupational health
and safety standards shall be coordinated with PCAB for its appropriate action,
including the possible cancellation/suspension of the contractor's license.
5. Effectivity. This Circular shall take effect immediately after its publication in
a newspaper of general circulation.
Manila, Philippines. 13 March 2012.

ROSALINDA DlMAPlLlS-BALDOZ - - Secretary

Q: What are the two types of contractors under the law? What is the main
difference between the two?

A: The two types of contractors are the Labor-only contractor and the Job
contractor. Labor only contracting is prohibited while job contracting is legally
allowed by law.

Q: When is there labor-only contracting?

A: 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 persons are performing activities which are directly related to
the principal business of such employer.

Q: What are the consequences of labor-onlt contracting?


A: The person acting as contractor shall be considered merely as an agent of the
employer and the latter shall be responsible to the workers in the same manner and
extent as if the latter were directly employed by him.

Q: What is job-contracting?

A: It is an arrangement whereby a principal agrees to put out or farm out with a


contractor or series of contractor the performance or completion of a specific job,
work or service within a definite or predetermined period, regardless of whether
such job, work, or service is to be performed or completed within or outside the
premises of the principal.

Q: What are the elements of job or independent contracting?

A: The following are the elements of job or independent contracting:


a) the contractor or subcontractor carries on a distinct and independent
business and undertakes to perform the job on his own account and under his own
responsibility, according to its own manner and method and free from the control
and direction of the principal in all matters connected with the performance of the
work except as to the results thereof;

b) the independent contractor or subcontractor has substantial capital or


investment; and
c) the agreement between the principal and contractor or subcontractor assures
the contractual employees entitlement to all labor and occupational safety and
health standards, free exercise of the right to self-organization, security of tenure
and social and welfare benefits

Q: Who is an independent or job contractor?

A: An independent or job contractor is one who carries on a distinct and


independent business and undertakes to perform the job or to do a piece of work on
its own account and under its own responsibility, according to his own manner and
methods and free from the control and direction of the principal in all matters
connected with the performance of the work except as to the results thereof.

A television anchor is one example of an independent contractor. (Jose Sonza


vs. ABS-CBN [G.R. 138051 June 10, 2004]

A mere statement in a contract with a company that laborers who are paid
according to the amount and quality of work are independent contractors does not
change their status as mere employees in contemplation of labor laws.
Contracting or subcontracting
1. Parties.- There are 3 parties: principal, the contractor or subcontractor,
and the workers engaged by the latter. The principal and the contractor or
subcontractor may be a natural or jurisdictional person.
- Principal refers to any employer who puts out or farms out a job,
service, or work to a contractor or subcontractor, whether or not the
arrangement is covered by a written contract.
- Contractor or Subcontractor refers to any person or entity engaged
in a legitimate contracting and subcontracting arrangements.
- Contractual employee includes one employed by a contractor
subcontractor to perform or complete a job, work or service pursuant to
an arrangement between the latter and a principal called Contractor
or Subcontractor.

2. Contracting or Subcontracting; definition.- It refers to an arrangement


whereby a principal agrees to put out or farm out with a contractor or
subcontractor the performance or completion of a specific job, work or
service within a definite or predetermined period, regardless of whether
such job, work or service is to be performed or completed within or outside
the premises of the principal.
3. Contracting or Subcontracting; when legitimate. It shall be if the following
circumstances concur:
(i) The contractor or subcontractor carries on a distinct and independent
business and undertakes to perform the job, work or service on its own
account and under its own responsibility, according to its own manner
and method, and free from the control and directions of the principal in
all matters connected with the performance of the work except as to
the results thereof;
(ii) The contractor or subcontractor has substantial capital or investment;
and
(iii) The agreement between the principal and the contractor or
subcontractor assures the contractual employees entitlement to all
labor and occupational safety and health standards, free exercise of the
right of self-organization, security of tenure, and social and welfare
benefits.

4. Permissible contracting or subcontracting


The principal may engage the services of a contractor or subcontractor for
the performance of any of the following:
(a) Works or services temporarily or occasionally needed to meet abnormal
increase in the demand of products or services, provided that the normal
production capacity or regular workforce of the principal cannot
reasonably cope with such demands;
(b) Works or services temporarily or occasionally needed by the principal for
undertaking requiring expert or highly technical personnel to improve the
management or operations of an enterprise;
(c) Services temporarily needed for the introduction or promotion of new
products, only for the duration of the introductory or promotional period;
(d) Works and services not directly related or not integral to the main
business or operation of the principal, including casual work, janitorial,
security, landscaping, and messengerial services and work not related to
manufacturing processes in manufacturing establishments;
(e) Services involving the public display of manufacturers products which do
not involve the act of selling or issuance of receipts or invoices;
(f) Specialized works involving the use of some particular, unusual or
peculiar skills, expertise, tools or equipment the performance of whish is
beyond the competence of the regular workforce or production capacity of
the principal; and
(g) Unless a reliever system is in place among the regular workforce,
substitute services for absent regular employees provided that the period
of service shall be coextensive with the period of absence and the same
is made to the substitute employee at the time of engagement. The phrase
absent regular employees includes those who are serving suspensions
or other disciplinary measures not amounting to termination of
employment meted out by the principal but excludes those on strike
where all the formal requisites for the legality of the strike have been
prima facie complied with based on the records filed with the National
Conciliation and Mediation Board. (Section 6, Rule VIII-A, Book III, Rules
to Implement the Labor Code, as amended by Department Order No. 10,
Series of 1997).
5. Prohibitions.

The following are hereby declared prohibited for being contrary to law or
public policy:
(a) Labor-only contracting;
(b) Contracting out of work which will either displace employees of the
principal from their jobs or reduce their regular working hours;
(c) Contracting out of work with a cabo. [A cabo refers to a person or
group of persons or to a labor group which, in the guise of a labor
organization, supplies workers to an employer, with or without any
monetary or other consideration whether in the capacity of an agent of the
employer or as an ostensible independent contractor.]
(d) Taking undue advantage of the economic situation or lack of bargaining
strength of the contractual employee, or undermining his security of tenure
or basic rights, or circumventing the provisions or regular employment in
any of the following instances:
(i) In addition to his assigned function, requiring the contractual employee
to perform functions which are currently being performed by the regular employee of
the principal or of the contractor or subcontractor;
(ii) Requiring him to sign as a precondition to employment or continued
employment an antedated resignation letter; a blank payroll; a waiver of
labor standards including minimum wages and social welfare benefits;
or a quitclaim releasing the principal, contractor or subcontractor from
any liability as to payment of the future claims; and
(iii) Requiring him to sign a contract fixing the period of employment to a
term shorter than the term of the contract between the principal and
the contractor or subcontractor, unless the latter contract is divisible
into phases for which substantially different skills are required and this
is made known to the employee at the time of engagement.
(e) Contracting out of a job, work or service through an in-house agency as
defined herein;
(f) Contracting out of a job, work or service directly related to the business or
operation of the principal by reason of a strike or lockout whether actual or
imminent; and
(g) Contracting out of a job, work or service when not justified by the
exigencies of the business and the same results in the reduction or
splitting of the bargaining unit.
Labor-only contracting
There is labor-only contracting when contractor or subcontractor merely
recruits, supplies or places workers to perform a job, work or service for a principal
and the following elements are present:

(i) The contractor or subcontractor does not have substantial capital or investment
to actually perform a job, work or service under its own account and responsibility;
and
(ii) The employees recruited, supplied or placed by such contractor or subcontractor
are performing activities which are directly related to the main business of the
principal.

In-house agency
Similarly prohibited under the law is the operation of an in-house agency
whereby a contractor or subcontractor is engaged in the supply of labor which:
(i) is owned, managed or controlled by the principal; and
(ii) operates solely for the principal owning, managing, or controlling it.

A finding that a contractor is a labor-only contractor is equivalent to a


finding that there exists an employer-employee relationship between the owner of
the project and the employee of the labor-only contractor since that relationship is
defined and prescribed by law itself.

Indirect Employer; liability


1. The principal is considered the indirect employer of the workers supplied
by independent contractor or subcontractor.
2. The nature of the liability of the principal is joint and solidarily with the
contractor or subcontractor in case the latter failed to pay the wages of
the employees.

Worker preference in case of bankruptcy


1. The right to perform given to workers under Article 110 cannot exist in any
effective way prior to the time of its presentation in distribution
proceedings. Article 110 applies only in case of bankruptcy or judicial
liquidation of the employer.
2. Judicial proceedings in rein is required for creditors claims against
debtors to become operative.
3. To contend that Article 110 of the Labor Code is applicable also to
extrajudicial proceedings would be putting the worker in a better position
than the State which could only assert its own prior preference in case of a
judicial proceeding.
4. The right of preference as regards unpaid wages recognized by Article 110
of the Labor Code does not constitute a lien on the property of the
insolvent debtor in favor of the workers but a right to a first preference in
the discharge of the funds of the judgment debtor.
5. Article 110 of the Labor Code does not purport to create a lien in favor of
workers or employees for unpaid wages upon all of the properties or upon
any particular property owned by their employer. Claims for unpaid wages
do not, therefore, fall at all within the category of specially preferred
claims established under articles 2241 and 2242 of the Civil Code, except
to the extent that such claims for unpaid wages are already covered by
Article 2241, number 6: claims of laborers and other workers engaged in
the construction, reconstruction or repair of buildings, canals and other
works, upon said buildings, canals or other works. To the extent that
claims for unpaid wages fall outside the scope of Article 2241, number 6
and 2242, number 3, they would come within the ambit of the category of
ordinary preferred credits under Article 2242.
6. Mortgage credit.- A mortgage credit id a special preferred credit under
Article 2241 of the Civil Code while workers preference is an special
preferred credit.
7. Preference of taxes. In one case, it has held that there is no merit in the
contention of the NLRC that taxes are also absolutely preferred claims only
with respect to movable and immovable properties on which they are due.
The claim of the government predicated on a tax lien is superior to the
claim of a private litigant predicated on a judgment. the tax lien attaches
not only from the service of the warrant of distraint property but from the
time of the tax become due and payable.

Attorneys fees
1. In cases of unlawful withholding of wages, the employer may be assessed
attorneys fees equivalent to ten percent (10%) of the amount of wages
recovered.
2. It shall be unlawful for any person to demand or accept, in any judicial or
administrative proceedings for the recovery of wages, attorneys fees
which exceed ten percent (10%) of the amount of wages recovered.
3. The attorneys fees may be awarded only when the withholding of wages is
declared unlawful.
4. The basis of the 10% attorneys fees is the amount of wages recovered.
Should there be any other monetary awards given in the proceedings, the
same may not be assessed or subjected to the 10% attorneys fees.

PROHIBITIONS REGARDING WAGES

Non-interference in disposal of wages


1. Employers are not allowed to interfere in the disposal of wages of
employees.

Wage deduction
Deductions from the wages of the employees may be made by the employer in
any of the following cases:
a. When the deductions are authorized by law, (e. g. SSS, Pag-IBIG), including
deductions for the insurance premiums advanced by the employer in behalf
of the employee as well as union dues where the right to check-off has
been recognized by the employer or authorized in writing by the individual
employee himself;
b. When the deductions are with the written authorization of the employees
for payment to a third person and the employer agrees to do so, provided
that the latter does not receive any pecuniary, directly or indirectly, from
the transaction;
c. Withholding tax mandated under the National Internal Revenue Code;
d. Withholding of wages because of employees debt to the employer which is
already due;
e. Deductions made pursuant to a judgment against the worker under
circumstances where the wages may be the subject of attachment or
execution but only for debts incurred for food, clothing, shelter and
medical attendance.
f. When deductions from wages are ordered by the court;
g. Deductions made for agency fee from non-union members who accept the
benefits under the CBA negotiated by the bargaining union. This form of
deduction does not require the written authorization of the non-union
member.

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.

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
workers consent.

Deductions 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.

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 institute any proceeding or has testified or is about to testify in
such proceedings.

False reporting
It shall be unlawful for any person to make any statement, report, or record
filed or kept pursuant to the provisions of this Code knowing such statement, report
to be false in any material respect.

Wage Order
1. Wage order refers to the Order promulgated by the Regional Tripartite
Wages and Productivity Board (RTWPB) pursuant to its wage fixing
authority.
2. Necessity for wage order.- Wherever conditions in a particular region so
warrant, the RTWPB shall investigate and study all pertinent facts and
based on the standards and criteria herein prescribed, shall proceed to
determine whether a Wage Order should be issued.
3. Affectivity of wage order.- Any Wage Order shall take effect after fifteen
(15) days from its complete publication in at least one (1) newspaper of
general circulation in the region.
4. Appeal to the National Wages and Productivity Commission.- Any party
aggrieved by the Wage Order issued by the RTWPB may appeal such order
to the Commission within ten (10) calendar days from the publication of
such order. The filing of the appeal does not stay the order or suspend the
affectivity thereof unless the person appealing such order shall file with
the Commission, an undertaking with a surety or sureties satisfactory to
the Commission for the payment to the employees affected by the order of
the corresponding increase, in the event such order is affirmed.

Standards/Criteria for minimum wage fixing

In the determination of regional minimum wages, the Regional Board


shall, among other relevant factors, consider the following:
(a) The demand for living wages;
(b) Wage adjustment vis--vis the consumer price index;
(c) The cost of living and changes or increases therein;
(d) The needs of workers and their families;
(e) The need to induce industries to invest in the countryside;
(f) Improvements in standards of living;
(g) The prevailing wage levels;
(h) Fair return of the capital invested and capacity to pay of employers;
(i) Effects on employment generation and family income; and
(j) The equitable distribution of income and wealth along the imperatives
of economic and social development.
Wage distortion
Wage distortion is a situation where an increase in prescribed wage rates
results in the elimination or severe contraction of intentional quantitative
differences in wage or salary rates between among employee groups in an
establishment as to effectively obliterate the distinctions embodied in such wage
structure based on skills, length or service, or other logical bases of differentiation.
The issue of whether or not a wage distortion exists is a question of fact that
is within the jurisdiction of the quasi-judicial tribunals.

ADMINISTRATION AND ENFORCEMENT


Distinctions between Article 128 (b), Article 129 and Article 217
For purposes of clarification, the following are the major distinctions
regarding the jurisdictions over money claims of the Secretary of Labor and
Employment under Article 128 [b], the Regional Director of the Department of Labor
and Employment under Article 129 and the Labor Arbiter under Article 217 of the
Labor Code.

1. On the nature of the powers granted and proceedings.


Article 128 [b] involves the exercise by the Secretary of Labor and Employment or
his duly authorized representatives, of the visitorial and enforcement powers
provided therein.

Article 129 involves the exercise by the Regional Director of the Department of Labor
and Employment or any of the duly authorized hearing officers of the Department, of
adjudicatory powers over cases concerning recovery of wages, simple money claims
and other benefits not exceeding P5,000.00 and not accompanied by any claim for
reinstatement.

Article 217 involves the exercise by the Labor Arbiter of its quasi-judicial power to
hear and decide claims involving an amount exceeding P5,000.00 regardless of
whether accompanied with a claim for reinstatement.

2. On the person or officer granted the powers


Article 128 [b] grants the power to specifically to the Secretary of Labor and
Employment or his duly authorized representative.

The Regional Directors shall be the duly authorized representatives of the Secretary
of Labor and Employment in the administration and enforcement of labor standards
within their respective territorial jurisdictions. (Section 3, Rule I, Rules on the
Disposition of Labor Standards Cases in the Regional Offices, September 16, 1987).

Article 129 grants the power specifically to the Regional Director of the Department
of Labor and Employment or any of the duly authorized hearing officers of the
Department.
Article 217 grants the power specifically to the Labor Arbiters of the National Labor
Relations Commission.

3. On the subject matter.


Article 128 [b] applies only to inspection cases involving findings of the labor
employment and the enforcement officers or industrial safety engineers regarding
violations of labor standards provisions of the Labor Code and other labor
legislations.

The term labor standards refers to the minimum requirements prescribed by


existing laws, rules and regulations and other issuances relating to wages, hours of
work, cost of living allowances and other monetary and welfare benefits, including
those set by occupational safety and health standards. (Section 7, Rule 1, Rules on
the Disposition of Labor Standards Cases in the Regional Offices, September 16,
1987).

Article 129 applies only to cases initiated by complaint filed by any interested party
involving the recovery of wages and other monetary claims and benefits (including
interest) but the amount of which should not exceed P5,000.00 and should not
include a claim for reinstatement.

Article 217 applies only to cases of claims involving an amount exceeding P5,000.00
whether or not accompanied with a claim for reinstatement.

4. On the party initiating the action.


Article 128 [b] contemplates situations where the case for violation of labor
standards laws and other labor regulations, arose from the routine inspection
conducted by the labor employment and enforcement officer or industrial safety
engineers of the Department of Labor and Employment, with or without a complaint
initiated by an interested party. Here, it is generally the Department of Labor and
Employment which initiates the action.

Article 129 contemplates situations where there is a complaint initiated by an


interested party for recovery of wages, simple money claims and other benefits.
Here, it is the complainant who initiates the action.

Article 217 contemplates situations where a complaint is initiated by a worker,


whether agricultural or non-agricultural. Here, it is the complainant who initiates the
action.

5. On the existence of employer-employee relationship.


Article 128 [b] is applicable only when the employer-employee relationship still
exists. In case the relationship no longer exists, claims for payment of monetary
benefits fall within the exclusive and original jurisdiction of the Labor Arbiters.
Accordingly, if on the face of the complaint, it can be ascertained that employer-
employee relationship no longer exists, the case, whether or not accompanied by an
allegation of illegal dismissal, shall immediately be endorsed by the Regional
Director to the appropriate Branch of the National Labor Relations Commission.
(Section 3, Rule II, Rules on the Disposition of Labor Standards Cases in the Regional
Offices, September 16, 1987).

Article 129 is applicable whether the employer-employee relationship still exists or


not for as long as the claim arose from said relationship.

Article 217 is applicable irrespective of whether or not the employer-employee


relationship still exists for as long as the claim arose from said relationship.

6. On the remedy of appeal, how taken.


Article 128 [b] grants appeal from the order issued by the duly authorized
representative of the Secretary of Labor and Employment to the latter.

Article 129 grants appeal from the decision of the Regional Director or Hearing
Officer to the National Labor Relations Commission.

Article 217 grants appeal from the decision of the Labor Arbiter to the National Labor
Relations Commission.

7. On the reglementary period of appeal.


Article 128 [b] prescribes no specific reglementary period for appeal. The law is
silent on this matter. However, under the Rules on the Disposition of Labor
Standards Cases in the Regional Offices promulgated on September16, 1987 by the
Secretary of Labor and Employment, the reglementary period is fixed at ten (10)
calendar days from receipt of the order. (Section 1, Rule IV, Rules on the Disposition
of Labor Standards Cases in the Regional Offices, September 16, 1987).

Article 129 prescribes the reglementary period of five (5) calendar days from receipt
of a copy of the decision or resolution, within which to perfect the appeal.

Article 217 does not contain any provision on the reglementary period for appeal.
However, Article 223 prescribes the reglementary period of ten (10) calendar days
from receipt of the decision, award or order of the Labor Arbiter, within which to
perfect appeal.

8. On requirement of posting of bond to perfect the appeal.


Article 128 [b] requires that in case the order subject of the appeal involves
monetary award, an appeal by the employer may be perfected only upon the posting
of cash or surety bond issued by a reputable bonding company duly accredited by the
Secretary of Labor and Employment in the amount equivalent to the monetary award
in the order appealed from.
Article 129 is silent on the requirement of bond, hence, this is not required to perfect
the appeal.

Article 127 does not embody the provision requiring posting of bond to perfect the
appeal but Article 223. A bond may stay the execution of monetary awards but not
the order of reinstatement which is executory even pending appeal.

9. On the grounds for appeal.


Article 128 [b] does not specify the grounds for appeal. But the Rules on the
Disposition of Labor Standards Cases in the Regional Offices which issued by the
Secretary of Labor and Employment on September 16, 1987, to implement Article 128
[b] (prior to its amendment by Republic Act No. 7730 on June 2, 1994), enumerates
the following grounds:

a. there is a prima facie evidence of abuse of discretion on the part of the


Regional Director;
b. the Order was secured through fraud, coercion or graft and corruption;
c. the appeal is made purely on questions of law; or
d. serious errors in the findings of facts were committed which, if not
corrected, would cause grave or irreparable damage to the appellant.

Article 129 expressly makes reference to the grounds provided in Article223 of the
Labor Code as applicable to appeals brought under this Article.

Article 217 does not contain the grounds but those mentioned in Article 223 are
applicable to appeals from decisions, awards or orders of the Labor Arbiter.
10. On period to decide appeal and finality of decisions.
Article 128 [b] does not prescribe the period within which to decide the appeal and
when such decision will become final and executory. However, its implementing
rules, while not providing the period within which the decision should be rendered,
mention that the decisions, orders or resolutions of the Secretary of Labor and
Employment shall become final and executory after ten (10) calendar days from
receipt thereof. (Section 5, Rules on the Disposition of Labor Standards Cases in the
Regional Office).

Article 129 mentions expressly that the NLRC should resolve the appeal within ten
(10) calendar days from the submission of the last pleading required or allowed
under its rules contrary to Article 223 which provides for twenty (20) calendar days.
With respect to the finality of the decision on the appealed case. Article 223 provides
that the same shall be final and executory after ten (10) calendar days from receipt
thereof by the parties.

Article 217 does not embody the provision on the period to decide appealed cases or
the period within which such decision shall become final and executory. These
matters are provided under Article 223 of the Labor Code.

EMPLOYMENT OF WOMEN

NOTE: Article 130 and 131 of the Labor Code, as amended was replaced with the
provisions on Nightworkers (Articles 154 to 161) pursuant to Rep. Act No. 10151,
June, 2011

THE LAW ON WORKING CONDITIONS FOR SPECIAL GROUP OF EMPLOYEES

NOTE: Article 130 and 131 of the Labor Code, as amended was replaced with the
provisions on Nightworkers (Articles 154 to 161) pursuant to Rep. Act No. 10151,
June, 2011

NEW: The provisions on night workers are:

Art. 154. Coverage. This chapter shall apply to all persons who shall be employed
or permitted or suffered to work at night, except those employed in agriculture,
stock raising, fishing, maritime transport and inland navigation, during a period of
not less than seven (7) consecutive hours, including the interval from midnight to
five oclock in the morning, to be determined by the Secretary of Labor and
Employment, after consulting the workers representatives/labor orbanizations and
employers.
Night worker means any employed person whose work requires performance
of a substantial number of hours of night work which exceeds a specific limit. This
limit shall be fixed by the Secretary of Labor after consulting the workers
representatives/labot organizations and employers (R.A. 10151, signed into law on 21
June 2011).

Art. 156. Health Assessment. At their request, workers shall have the right to
undergo a health assessment without charge and to receive advice on how to reduce
or avoid health problems associated with their work:
(a) Before taking up an assignment as a night worker;
(b) At regular intervals during such an assignment; and
(c) If they experience health problems during such an assignment which are
not caused by factors other than the performance of night work.

With the exception of a finding of unfitness for night work, the findings of such
assessments shall not be transmitted to others without the workers consent and
shall not be used to their detriment. (R.A. 10151, signed into law on 21 June 2011).

Art. 157. Transfer. Night workers who are certified as unfit for night work, due to
health reasons, shall be transferred, whenever practicable, to a similar job for which
they are fit to work.
If such transfer to a similar job is not practicable, these workers shall be
granted the same benefits as other workers who are unable to work, or to secure
employment during such period.
A night worker certified as temporarily unfit for night work shall be given the
same protection against dismissal or notice of dismissal as other workers who are
prevented from working for reasons of health. (R.A. 10151, signed into law on 21
June 2011).

Art. 158. Women Night Workers.- Measures shall be taken to ensure that an
alternative to night work is available to womenworkers who would otherwise be
called upon to perform such work:
(a) Before and after childbirth, for a period of at least sixteen (16) weeks,
which shall be divided between the time before and after childbirth;
(b) For additional periods, in respect of which a medical certificate is
produced stating that said additional periods are necessary for the health
of the mother or child:
1. During pregnancy;
2. During a specified time beyond the period, after childbirth is fixed
pursuant to subparagraph (a) above, the length of which shall be
determined by the DOLE after consulting the labor organizations and
employers.

During the periods referred to in this article:


(i) A woman worker shall not be dismissed or given notice of
dismissal, except for just or authorized causes provided for in
this Code that are not connected with pregnancy, childbirth
and childcare responsibilities
(ii) A woman worker shall not lose the benefits regarding her
status, seniority, and access to promotion which may attach
to her regular night work position.

Pregnant woman and nursing mothers may be allowed to work at night only if
a competent physician, other than the company physician, shall certify their fitness
to render night work, and specify, in the case of pregnant employees, the period of
the pregnancy that they can safely work.

The measures referred to in this article may include transfer to day work
where this is possible, the provision of social security benefits or an extension of
maternity leave.
The provisions of this article shall not have the effect of reducing the
protection and benefits connected with maternity leave under existing laws. (R.A.
10151, signed into law on 21 June 2011).

Art. 159. Compensation. The compensation for night workers in the form of working
time, pay or similar benefits shall recognize the exceptional nature of night work.
(R.A. 10151, signed into law on 21 June 2011).

Art. 160. Social Services. Appropriate social services shall be provided for night
workers and where necessary, for workers performing night work. (R.A. 10151,
signed into law on 21 June 2011).

Art. 161. Night Work Schedules. Before introducing work schedule requiring the
services of night workers, the employer shall consult the workers
representatives/labor organizations concerned on the details of such schedules and
the forms of organizations of night work that are best adapted to the establishment
and its personnel, as well as, on the occupational health measures and social
services which are required. In establishments employing night workers,
consultation shall take place regularly. (R.A. 10151, signed into law on 21 June
2011).

Q: What are the different facilities that an employer must at least furnish for his
women employees?

A: The Secretary of Labor may require employers to:

1. Provide seats proper for women and permit them to use the seats when they are
free from work or during office hours provided the quality of the work will not be
compromised;
2. Establish separate toilet rooms and lavatories for men and women and provide at
least a dressing room for women;
3. Establish a nursery in the establishment; and
4. Determine appropriate minimum age and other standards for retirement or
termination in special occupations such as those of flight attendants and the like.

THE MATERNITY LEAVE UNDER THE SSS LAW:

Q: Discuss briefly the concept of Maternity Leave.

A: MATERNITY LEAVE- A female member, who need not be legally married,


who has paid for at least three (3) monthly contributions in the 12-month period
immediately preceding the semester of her childbirth or miscarriage shall be paid a
daily maternity benefit equivalent to 100% of her average daily salary credit for 60
days or 78 days, in case of caesarian delivery.
Maternity benefits provided herein shall be paid only for the first four (4)
deliveries or miscarriages;
Maternity benefits like other benefits granted by the SSS, are granted in
lieu of wages and therefore, may not be included in computing the employees 13 th
month pay for the calendar year.

In order to be entitled to the SSS benefit, the female employee should


be employed at the time of the delivery, miscarriage, or abortion.
The employee shall have notified her employer of her pregnancy and the
probable date of her childbirth, which notice shall be transmitted to the SSS in
accordance with the rules and regulations it may provide.
Full payment shall be advanced by the employer within thirty (30) days
from the filing of the maternity leave application.
Payment of daily maternity benefits have been received.
The SSS shall immediately reimburse the employer of one hundred
percent (100%) of the amount of maternity benefits advanced to the employee by the
employer upon receipt of satisfactory proof of such payment and legality thereof.
If an employee member should give birth or suffer miscarriage without
the required contributions having been remitted for her by her employer to the SSS,
or without the latter having been previously notified the employer of the time of the
pregnancy, the employer shall pay to the SSS damages equivalent to the benefits
which said employee would otherwise have been entitled to.

Q: What are the different facilities that an employer must at least furnish for his
women employees?

A: The Secretary of Labor may require employers to:

5. Provide seats proper for women and permit them to use the seats when they are
free from work or during office hours provided the quality of the work will not be
compromised;
6. Establish separate toilet rooms and lavatories for men and women and provide at
least a dressing room for women;
7. Establish a nursery in the establishment; and
8. Determine appropriate minimum age and other standards for retirement or
termination in special occupations such as those of flight attendants and the like.

THE MATERNITY LEAVE LAW

Q: Discuss briefly the concept of Maternity Leave.

A: MATERNITY LEAVE UNDER THE SSS LAW:

A female member, who need not be legally married, who has paid for at least
three (3) monthly contributions in the 12-month period immediately preceding the
semester of her childbirth or miscarriage shall be paid a daily maternity benefit
equivalent to 100% of her average daily salary credit for 60 days or 78 days, in case
of caesarian delivery.
Maternity benefits provided herein shall be paid only for the first four (4)
deliveries or miscarriages;
Maternity benefits like other benefits granted by the SSS, are granted in
lieu of wages and therefore, may not be included in computing the employees 13th
month pay for the calendar year.

In order to be entitled to the SSS benefit, the female employee should


be employed at the time of the delivery, miscarriage, or abortion.
The employee shall have notified her employer of her pregnancy and the
probable date of her childbirth, which notice shall be transmitted to the SSS in
accordance with the rules and regulations it may provide.
Full payment shall be advanced by the employer within thirty (30) days
from the filing of the maternity leave application.
Payment of daily maternity benefits have been received.
The SSS shall immediately reimburse the employer of one hundred
percent (100%) of the amount of maternity benefits advanced to the employee by the
employer upon receipt of satisfactory proof of such payment and legality thereof.
If an employee member should give birth or suffer miscarriage without
the required contributions having been remitted for her by her employer to the SSS,
or without the latter having been previously notified the employer of the time of the
pregnancy, the employer shall pay to the SSS damages equivalent to the benefits
which said employee would otherwise have been entitled to.

THE PATERNITY LEAVE LAW

Q: Briefly discuss paternity leave.


A: It is a benefit grants paternity leave of 7 days with full pay, consisting of basic
salary, to all married male employees in the public and private sector.
Available only for the first 4 deliveries of the legitimate spouse with
whom the husband is cohabiting; the term delivery includes childbirth, miscarriage
or abortion.
In the event that such leave was not availed of, said leave shall not be
convertible to cash
The purpose is to enable the husband to lend support to his wife during
the period of recovery and/ or in the nursing of the newly born child.
In order to be entitled, the following conditions must be met:
1. He is an employee at the time of the delivery of his child;
2. He is cohabiting with his spouse at the time she gives birth or suffers a
miscarriage;
3. He has applied for paternity leave with his employer;
4. His wife has given birth or suffered a miscarriage; the term wife refers
to the lawful wife which means the woman who is legally married to the
male employee concerned.

The application must be made within a reasonable time from the expected
date of delivery by the pregnant spouse and within such period as may be provided
by company rules & regulations or CBA. However, prior application for leave shall
NOT be required in case of miscarriage.

Q: When is there discrimination based on sex?

A: The following constitute acts of discrimination:


1. Payment of a lesser compensation for work of equal value.
2. Favoring a male employee over a female employee solely on the account of
their sexes.

Q: What is the law on prohibitions or stipulation against marriage?

A: Article 134 of the Labor Code as amended and renumbered provides that it
shall be unlawful for an employer:

1. to require as a condition for employment or continuation of employment that a


woman employee shall not get married,

2. to stipulate expressly or tacitly that upon getting married a woman employee


shall be deemed resigned or separated

3. to actually dismiss, discharge, discriminate or otherwise prejudice a woman


employee merely by reason of her marriage.
Q: What are the prohibited acts of an employer with respect to his female
employees?

A: The following constitute prohibited acts:


1. To discharge any woman employed by him for the purpose of preventing
such woman from enjoying the maternity leave, facilities and other benefits
provided under the Code;

2. To discharge such woman employee 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 be pregnant;

4. To discharge any woman or child or any other employee for having filed a
complaint or having testified or being about to testify under the Code;

Q: State the law on women working nightclubs and other similar establishments.

A: Article 136 of the Labor Code as amended and renumbered provides that any
woman who is permitted to work or suffered to work, with or without compensation,
in any night club, cocktail lounge, massage clinic, bar or similar establishment,
under the effective control or supervision of the employer for a substantial period of
time as determined by the Secretary of Labor, shall be considered as an employee of
such establishment for purposes of labor and social legislation.

Q: Briefly state the laws on employment of minors.

A: As a general rule, no child below 15 shall be employed. The exceptions to the


rule are:
1. When the child works directly under the sole responsibility of his/her
parents or legal guardian who employs members of his/her family only under the
following conditions:
a. employment does not endanger the childs life, safety, health and morals;
b. employment does not impair the childs normal development; and
c. the parent/legal guardian provides the child with the primary and/or secondary
education prescribed by DECS.

2. Where the childs employment or participation in public entertainment or


information through cinema, theater, radio, or television is essential, provided that:
a. employment does not involve advertisements or commercials promoting
alcoholic beverages, intoxicating drinks, tobacco and its by-products or
exhibiting violence;
b. There is a written contract approved by the DOLE; and
c. The conditions prescribed for the employment of minors {above stated} are
met.

Q: What are considered hazardous work places?

A: The following are considered hazardous places:

1 where the nature of the work exposes the workers to dangerous environmental
elements, contaminants or work conditions;
2 where the workers are engaged in construction work, logging, fire-fighting, mining,
quarrying, blasting, stevedoring, dock work, deep-sea fishing, and mechanized
farming;
3 where the workers are engaged in the manufacture or handling of explosives and
other pyrotechnic products;
4.where the workers use or are exposed to heavy or power-driven machinery or
equipment; and
5.where the workers use or are exposed to power-driven tools,

Q: What are the rights of house helpers?

A: a) They cannot be assigned to non-household work


b) They are entitled to reasonable compensation
c) They are entitled to be furnished lodging, food, and medical attendance
d) If under 18 years old, she must be given an opportunity for elementary
education (the cost of which shall be part of househelpers compensation)
e) The contract for household service shall not exceed 2 years. (Renewable
however from year to year)
f) They are entitled to just and humane treatment
g) They must not to be required to work for more than 10 hours a day. If the
househelper agrees to work overtime, and there is additional compensation, the
same is permissible.
h) They have the right to four days vacation each month with pay. (If the
helper does not ask for the vacation, the number of vacation days cannot be
accumulated, she is entitled only to its monetary equivalent.)
i) Funeral expenses must be paid by the employer if the househelper has no
relatives with sufficient means in the place where the head of the family lives
j) Her termination must only be for a just cause.

Upon the severance of the household service relationship, the househelper


may demand from the employer a written statement of the nature and duration of the
service and his or her efficiency and conduct as househelper.

Q: Who are homeworkers?


A: Homeworkers are those who perform in or about his home any processing of
goods or materials, in whole or in part, which have been furnished directly or
indirectly by an employer and thereafter to be returned to the latter.

Q: Who are considered by law as the employers of these homeworkers?

A: Any natural or artificial person who, for his own account or benefit, or on
behalf of any person residing outside the Philippines, directly or indirectly, or through
any employee, agent, contractor, sub-contractor; or any other person:

(1) Delivers or causes to be delivered any goods or articles to be processed in or


about a home and thereafter to be returned or to be disposed of or distributed in
accordance with his direction; or
(2) Sells any goods or articles for the purpose of having such goods or articles
processed in or about a home and then repurchases them himself or through another
after such processing.

Facilities for women


Employers are required 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.

Maternity leave benefits (Pregnant women, whether married or not, are entitled)
1. A female member who has paid at least 3 monthly contributions in the 12-
month period immediately proceeding the semester of childbirth or
miscarriage shall be paid a daily maternity benefit of 100% of her average
daily salary credit for 60 days or 78 days in case of caesarian delivery. This
payment of daily maternity benefit shall be a ___ to the recovery of
sickness benefit for the same compensable period.
2. The maternity leave shall be extended without pay on account of illness
medically certified to arise out of the pregnancy, delivery, abortion or
miscarriage, which renders the woman unfit for work, unless she has
earned unused leave credits from which such extended leave may be
charged.
3. The maternity leave shall be paid by the employer only for the first four (4)
deliveries by a woman employee after the effectivity of this Code.
Paternity leave
Every married employee in the private and public sectors shall be entitled to
paternity leave of 7 days (for each delivery) with full pay for the first 4 deliveries of
the legitimate spouse with whom he is cohabiting. If paternity leave is not availed of,
it is not convertible to cash.

Discrimination against woman prohibited


It shall be unlawful for any employer:
(1) To deny any woman employee the benefits provided for in the law or to
discharge any woman employed by him for the purpose of preventing her
from enjoying any of the benefits provided under the Labor Code.
(2) To discharge such woman on account of her pregnancy, or while on leave
or in confinement due to her pregnancy;
(3) To discharge or refuse the admission of such woman upon returning to her
work for work of equal value.
(4) To pay lesser compensation to a female employee with respect to
promotion, training opportunities, study and scholarship grants solely on
account of their sexes.

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.

Woman working in nightclubs, massage clinics, etc.


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.
They are considered regular employees of said establishments except when
the night club operator does not control nor direct the details and manner of their
work in the entertainment of nightclub patrons and, having no fixed hours or work,
they may come and go as they please.

EMPLOYMENT OF MINORS
1. prohibition against child discrimination.- No Employer shall discriminate
against any person in respect to terms and conditions of employment on
account of his age.
2. Relevant law: Republic Act No. 7610 The Special Protection of Cild
Against Child Abuse, Exploitation and Discrimination Act.
Minimum employment age.
1. 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 employment does not in any way interfere with his schooling.
2. Any person between fifteen (15) and eighteen (18) years of age may be
employed for such number of hours and such periods of the day as
determined by the Secretary of Labor and Employment in appropriate
regulations.
3. The foregoing provisions shall in no case allow the employment of a person
below eighteen (18) years of age in an undertaking which is hazardous or
deleterious in nature as determined by the Secretary of Labor and
Employment.

Employment of househelpers
1. Househelper or domestic servant shall refer to any person, whether
male or female, who renders services in and about the employers 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 employers family.
2. Household services include the services of family drivers, cooks,
nursemaids or family servants, but not the services of laborers in a
commercial or industrial enterprise.
3. The original contract of domestic service shall not last for more than two
(2) years but it may be mutually renewed for such periods by the parties.
4. The minimum wage rates of househelpers shall be the basic cash wages
which shall be paid to the househelpers in addition to lodging, food and
medical attendance.
5. Time and manner of payment of wages.- 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.
6. Assignment to non-household work. No househelper shall be assigned to
work in a commercial, industrial or agricultural enterprise at a wage or
salary rate lower than that provided for agricultural or non-agricultural
workers as prescribed herein.
7. 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
househelpers compensation, unless there is a stipulation to the contrary.
8. Treatment of househelpers just and humane manner and no physical
violence.
9. The employer shall furnish the househelper, free of charge, suitable and
sanitary living quarters as well as adequate food and medical attendance.
10. 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
compensation already earned plus that for fifteen (15) days by way of
indemnity. If the househelper leaves without a justifiable reason, he or she
shall forfeit any unpaid salary due him or her not exceeding fifteen (15)
days.

EMPLOYMENT OF HOMEWORKERS & FIELD PERSONNEL


1. An industrial homeworker is a worker who is engaged in industrial
homework, a system of production under which work for an employer or
contractor is carried out by a homeworker at his/her home. The materials
may or may not be furnished by the employer or contractor.
2. A field personnel is a non-agricultural employee who regularly performs his
duties away from the principal place of business or branch office of the
employer an whose actual hours or work in the field cannot be determined
with reasonable certainty.
\
Q: Who are homeworkers?

A: Homeworkers are those who perform in or about his home any


processing of goods or materials, in whole or in part, which have been
furnished directly or indirectly by an employer and thereafter to be
returned to the latter.

Q: Who are considered by law as the employers of these


homeworkers?

A: Any natural or artificial person who, for his own account or


benefit, or on behalf of any person residing outside the Philippines,
directly or indirectly, or through any employee, agent, contractor, sub-
contractor; or any other person:

(1) Delivers or causes to be delivered any goods or articles to be


processed in or about a home and thereafter to be returned or to be
disposed of or distributed in accordance with his direction; or
(2) Sells any goods or articles for the purpose of having such goods
or articles processed in or about a home and then repurchases them
himself or through another after such processing.
THE LAWS ON DISMISSALS, TERMINATION, RETIREMENT AND
RELATED LAWS

BOOK VI. LABOR CODE,AS AMENDED

TERMINATION OF EMPLOYMENT

BOOK SIX

POST EMPLOYMENT

TITLE I

ART. 279. Q. WHAT IS SECURITY OF TENURE?

A. SECURITY OF TENURE - the constitutional right granted the


employee, that the employer shall not terminate the services of an
employee except for just cause or when authorized by law

Q. WHAT ARE THE RELIEFS AVAILABLE TO AN ILLEGALLY DISMISSED


EMPLOYEE?

A. REINSTATEMENT - Restoration of the employee to the state from


which he has been unjustly removed or separated without loss of
seniority rights and other privileges.

THE TWO (2) FORMS OF REINSTATEMENT:


1. ACTUAL OR PHYSICAL REINSTATEMENT

- the employee shall be admitted back to work


2. PAYROLL REINSTATEMENT
- the employee is merely reinstated in the payroll

Q. May a court order the reinstatement of a dismissed employee even


if the prayer of the complaint did not include such relief?

A. YES. So long as there is a finding that the employee was illegally


dismissed, the court can order the reinstatement of an employee even
if the complaint does not include a prayer for reinstatement, unless, of
course, the employee has waived his right to reinstatement. By law, an
employee who is unjustly dismissed is entitled to reinstatement,
among others. The mere fact that the complaint did not pray for
reinstatement will not prejudice the employee, because technicalities
of law and procedure are frowned upon in labor proceedings (General
Baptist Bible College v. NLRC, 219 SCRA 549).

Q. What happens if there is an order of reinstatement but the position


is no longer available?

A. The employee should be given a substantially equivalent position.


If no substantially equivalent position is available, reinstatement
should not be ordered because that would in effect compel the
employer to do the impossible. In such a situation, the employee
should merely be given separation pay consisting of one month salary
for every year of service (1:1).

Q. UNDER WHAT CIRCUMSTANCES MAY A COMPANY NOT REINSTATE


DESPITE ORDER OF REINSTATEMENT?

A. 1. Transfer of business ownership -There is no law requiring a


purchasing corporation to absorb the employees of the selling
corporation. A fortiori, reinstatement of unjustly dismissed employees
CANNOT be enforced against the new owner UNLESS there is an
express agreement on the assumption of liabilities by the purchasing
corporation:

2. When reinstatement is rendered impossible due to the


abolition of the position;
3. When the business has closed down;
4. Physical incapacity of the employee; and
5. Doctrine of Strained Relations - When the employer can no
longer trust the employee and vice-versa, reinstatement could not
effectively serve as a remedy. This doctrine only applies only to
positions which require trust and confidence

NOTE: Under the circumstances where the employment relationship


has become so strained to preclude a harmonious working
relationship, and that all hopes at reconciliation are nil after
reinstatement, it would be more beneficial to accord the employee
backwages and separation pay.

B. BACKWAGES the relief given to an employee to compensate him


for lost earnings during the period of his dismissal.

PERIOD COVERED BY THE PAYMENT OF BACKWAGES - Backwages


shall cover the period from the date of dismissal of the employee up to
the date of actual reinstatement

How computed - Under existing law, backwages is computed from the


time of the illegal dismissal up to time of actual reinstatement.

Q. WHAT ARE DEEMED INCLUDED IN THE COMPUTATION OF


BACKWAGES?
A.

1. transportation and emergency allowances


2. vacation or service incentive leave and sick leave
3. 13th month pay.
NOTE: facilities such as uniforms, shoes, helmets and ponchos should
NOT be included in the computation of backwages.

REASON: said items are given free, to be used only during official tour
of duty not for private or personal use.

Q. WHAT CIRCUMSTANCES THAT MAY PREVENT AWARD OF


BACKWAGES?
A.
1. death of the employee
2. physical and mental incapacity
3. business reverses
4. closure of business
5. reinstatement of dismissed employ
6. confinement in jail

Q. Which takes precedence in conflicts arising between employers


MANAGEMENT PREROGATIVE and the employ ees right to security
of tenure?

A. The employees right to security of tenure. Thus, an employers


management prerogative includes the right to terminate the services
of the employee but this management prerogative is limited by the
labor code which provides that the employer can terminate an
employee only for a just cause or when authorized by law. This
limitation is because no less than the constitution recognizes and
guarantees employees right to security of tenure. (Art. 279, Labor
Code; Art. XIII, Sec. 3, Constitution)

KINDS OF EMPLOYMENT

ART. 280. REGULAR AND CASUAL EMPLOYMENT

Q. WHAT ARE THE KINDS OF EMPLOYMENT UNDER THE LABOR


CODE?

A.
a. REGULAR EMPLOYMENT - one wherein an employee is
engaged to perform activities which are usually necessary or desirable
in the usual business or trade of the employer.
Test of regularity: nature of employment

PROJECT vs. REGULAR EMPLOYEE

PROJECT EMPLOYEE REGULAR EMPLOYEE

A regular employee is one a project employee is one whose


engaged to perform activities employment is fixed for a specific
which are usually necessary or project or undertaking the
desirable in the usual business or completion of which has been
trade of the employer determined at the time of the
engagement of the employee. (See
Art. 280 LC)

b. TEMPORARY EMPLOYMENT - one wherein an employee is engaged


to work on a specific project or undertaking which is usually
necessary or desirable in the usual business or trade of the employer,
the completion of which has been determined at the time of the
engagement of the employee.

c. SEASONAL EMPLOYMENT - one wherein an employee is engaged to


work during a particular season on an activity that is usually
necessary or desirable in the usual business or trade of the employer.

Pakiao employees are considered employees as long as the


employer exercises control over the means by which such
workers are to perform their work.

d. PROBATIONARY PERIOD OF EMPLOYMENT - the period needed to


determine the fitness for the job, i .e., the time needed to learn the job.
It is the period during which the employer may determine if the
employee is qualified for possible inclusion in the regular force.
Purpose: To afford the employer an opportunity to observe the fitness
of a probationary employee at work.
NOTE: The standard which the probationary employee is to meet
must be made known by the employer to the employee at the time of
engagement. The services of probationary employees may be
terminated for the same

causes as in the case of regular employee, except that there is an


additional ground failure to meet the standard.

Q. WHAT ARE LIMITATIONS ON THE EMPLOYERS POWER TO


TERMINATE A PROBATIONARY EMPLOYMENT CONTRACT?

A. The limitations are:

1. the power must be exercised in accordance with the specific


requirements of the contract [COMPLIANCE WITH SPECIFIC
REQUIREMENTS];
2. if a particular time is prescribed, the termination must be within
such time and if formal notice is required, then that form must be
used [WITHIN PARTICULAR PRESCRIBED TIME];
3. the employers dissatisfaction must be real and in good faith, not
feigned so as to circumvent the contract or the law
[DISSATISFACTIONREAL AND IN GOOD FAITH]; and
4. there must be no unlawful discrimination in the dismissal.

GENERAL RULE: Probationary employment shall not exceed six


months from the date the employee started working.

EXCEPTIONS:
1. when it is covered by an apprenticeship agreement stipulating a
longer period; or
2. when the parties to an employment contract agree otherwise, such
as when the same is established by company policy or when the same
is required by the nature of the work to be performed by the employee

Q. WHAT IS THE EFFECT IF PROBATIONARY EMPLOYEE IS ALLOWED


TO WORK BEYOND 6 MONTHS?
A. If the probationary employee is allowed to work beyond the period
of 6 months or the agreed probationary period, said employee
becomes a regular employee by operation of law.
Under the Labor Code, an employee who is allowed to work after a
probationary period shall be considered a regular employee. (Art.
281.)

ART. 282. TERMINATION BY EMPLOYER

SECURITY OF TENURE - An employer CANNOT terminate the


services of an employee EXCEPT for a just cause or when authorized
by law.

Q. WHAT ARE THE GUIDELINES TO DETERMINE THE VALIDITY OF


TERMINATION?
1. Gravity of the offense
2. Position occupied by the employee
3. Degree of damage to the employer
4. Previous infractions of the same offense
5. Length of service

A. JUST CAUSES

1. Serious misconduct or willful disobedience by the employee of the


lawful orders of his employer or representative in connection with his
work;
2. Misconduct- 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. (Dept. of Labor
Manual, Sec. 4353.01)

3. Gross and habitual neglect by the employee of his duties;

4. Fraud or willful breach by the employee of the trust reposed in


him by his employer or duly organized representative
5. Fraud must be committed against the employer or his
representative and in connection with the employees work. ((Dept. of
Labor Manual)

6. Commission of a crime or offense by the employee against the


person of his employer or any immediate member of his family or his
duly authorized representative;
7. Conviction or prosecution is not requiOther causes analogous to the
foregoing; and

.8. A cause must be due to the voluntary or willful act or omission of


the employee. (Nadura v. Benguet Consolidated, G.R. No. L-17780)

Q. WHAT IS THE PROCEDURE ON DUE PROCESS TO BE OBSERVED BY


THE EMPLOYER BEFORE AN EMPLOYEE IS DISMISSED?

A. For termination of the employment based on the any of the just


causes for termination, the requirements of due process that an
employer must comply with are:

1. Written notice should be served to the employee


specifying the ground or grounds for termination and
giving the said employee reasonable opportunity within
which to explain;
2. A hearing or conference should be held during which the
employee concerned, with the assistance of counsel, if
the employee so desires, is given the opportunity to
respond to the charge, present his evidence and present
the evidence presented against him;

3. A written notice of termination, if termination is the


decision of the employer, should be served on the
employee indicating that upon due consideration of all
the circumstances, grounds have been established to
justify his termination.

For termination of employment based on authorized causes, the


requirements of due process shall be deemed complied with
upon service of a written notice to the employee and the
appropriate Regional office of the Department of Labor and
employment at least thirty days before the effectivity of the
termination specifying the grounds for termination.

NOTE: Under the so-called WENPHIL DOCTRINE if the services of the


employee was terminated due to a just or authorized cause but
the affected employees right to due process has been violated, the
dismissal is legal but the employee is entitled to damages by way
of indemnification for the violation of the right.
NOTE: New Doctrine is Agabon and Jaka Food, wherein nominal
damages were awarded. For just causes it is P 30,000 and for
authorized causes, it is P 50,000 in cases of lack of dur process,
respectively.

ARTS. 283-284.B. AUTHORIZED CAUSES OF TERMINATION BY THE


EMPLOYER:

1. installation of labor-saving devices (automation)

2. redundancy (superfluity in the performance of a particular work)

redundancy, for purposes of the Labor Code, exists where the


services of an employee are in excess of what is reasonably
demanded by the actual requirements of the enterprise.
(Wishire File Co. Inc. vs. NLRC)

Reorganization as a cost-saving device is acknowledged by


jurisprudence. An employer is not precluded from adopting a
new policy conducive to a more economical and effective
management, and the law does not require that the employer
should be suffering financial losses before he can terminate the
services of the employee on the ground of redundancy (DOLE
PHILIPPINES, INC et al., vs. NATIONAL LABOR RELATIONS
COMMISSION et al.)

3. retrenchment to prevent losses (there is excess of employees and


employer wants to prevent financial losses)

Q. UNDER WHAT CONDITIONS WHEREIN AN EMPLOYER MAY


RETRENCH ITS EMPLOYEES?

A. (a) substantial losses which are not merely de minimis in extent;


(b) imminence of such substantial losses;
(c) retrenchment would effectively prevent the expected and
additional losses;
(d) the alleged losses and expected losses must be proven by
sufficient and convincing evidence. (NDC-GUTHRIE PLANTATIONS,
INC., vs. NATIONAL LABOR RELATIONS COMMISSION, ET. AL)

4. closing or cessation of operation of the establishment or


undertaking UNLESS the closing is for the purpose of circumventing
the provisions of the Labor Code.

5. Disease

a. the disease is incurable within 6 months and the continued


employment of the employee is prohibited by law or prejudicial
to his health as well as to the health of his co-employees

b. with a certification from public heath officer that the disease


is incurable within 6 months.
Before an employer could dismiss an employee based on a
disease, Section 8 of Rule 1, Book VI of the Omnibus Rules
Implementing the Labor Code requires a certification by a
competent public health authority that the disease is of such a
nature or at such stage that it cannot be cured within a period of
6 months even with proper medical treatment. (Cathay 44Pacific
Airways vs. NLRC and Martha Singson)
Cause of termination Separation pay
Automation Equivalent to at least one month pay
or at least one month pay for every
year of service, whichever is higher
Redundancy Equivalent to at least one month pay
or at least one month pay for every
year of service, whichever is higher
Retrenchment Equivalent to one month pay or at
least one-half month pay for every
year of service
Closures or cessation of Equivalent to one month pay or at
operations not due to serious least one-half month pay for every
business losses or financial year of service
reverses
Disease Equivalent to at least one-month
salary or to month salary for every
year of service, whichever is greater,
a fraction of at least 6 months shall
be considered one (1) whole year.

NOTE: ARTICLE 283 governs the grant of separation benefits in case


of closures or cessation of operation of business establishments NOT
due to serious business losses or cessation of operation [North Davao
Mining Corp. vs. NLRC, et al]. Therefore, the employee is not entitled
to such benefit if the closure was due to SERIOUS BUSINESS LOSSES.

When termination of employment is brought by the failure of an


employee to meet the standards of the employer in case of
probationary employment, it shall be sufficient that a written notice is
served the employee within a reasonable time from the effective date
of termination.

When termination is brought about by the completion of the contract


or phase thereof, no prior notice is required
ART. 285. TERMINATION BY EMPLOYEE

Q. MAY A TERMINATION BE MADE BY THE EMPLOYEE?

A. YES, BUT IF:

a. WITHOUT A JUST CAUSE- by serving a WRITTEN NOTICE on the


employer at least one month in advance. . The employer upon whom
no such notice was served may hold the employee liable for damages.

b. WITH A JUST CAUSE - An employee may put an end to establish


WITHOUT SERVING ANY NOTICE on the employer for any of the
following just causes [SUCA]:

1. Serious insult by the employer or his representative on the hour 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.

THE LAWS ON RETIREMENT, COVERAGE, EXEMPTIONS AND


BENEFITS THEREUNDER

ART. 287. RETIREMENT


RETIREMENT AGE - The age of retirement is that specified in the CBA
or iin the employment contract. If it is not specified,
The rule is different with respect to underground mining
employees whose optional retirement age is 50-60 provided
they have at least served for a period of 5 years (Art. 287 as
amended by RA 8558).
BENEFITS- A retiree is entitled to a retirement pay equivalent to
at least 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:
15 days plus 1/12 of the 13th month pay and
the cash equivalent of NOT more than 5 days of service incentive
leaves.
(22.5 days per year of service)

Under Section 26, R.A. No. 4670, otherwise known as the Magna Carta
for Public School Teachers, public school teachers having fulfilled the
age and service requirements of the applicable retirement laws shall
be given ONE

RANGE SALARY RAISE upon retirement, which shall be the basis of


the computation of the lump sum of the retirement pay and the
monthly benefit thereafter.

NOTE: Exempted from the payment of retirement pay are retail,


service and agricultural establishments or operations employing NOT
more than ten (10) employees or workers.

Age Retirement

60-65 Optional but the employee must have served


at least 5 years

65 Compulsory (no need for five years of service


BOOK SEVEN

TRANSITORY AND FINAL PROVISIONS


TITLE II
PRESCRIPTION OF OFFENSES AND CLAIMS

ART. 291. MONEY CLAIMS


PERIODS OF PRESCRIPTION

Cause Period of Prescription


Money Claims 3 years from the accrual of the causes of
action
ULP 1 year from the accrual of the cause of action

Illegal Dismissal 4 years from the accrual of the cause of action

Reinstatement 4 years based on Art. 1146 of the Civil Code

NOTE: The period of prescription mentioned under Article 292 of the


Labor Code refers to and is limited to money claims, all other cases of
injury to rights of a workingman being governed by the Civil Code.
Hence, reinstatement prescribes in four (4) years
SOCIAL LEGISLATION

Republic Act No. 7877- The Anti-Sexual Harassment Act

SEXUAL HARASSMENT in a work-related or employment


environment- in a work-related or employment environment, sexual
harassment is committed when:
1. the sexual favor is made a condition in the hiring or in the
employment, re-employment or continued employment of said
individual or 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 any way would discriminate,
deprive or diminish employment opportunities or otherwise
adversely affect said employee;
2. the above acts would impair the employees rights or privileges
under existing labor laws; or
3. the above acts would result in an intimidating, hostile, or
offensive environment for the employee. (Section 3(a), Republic
Act No. 7877)

Sexual harassment in an education or training environment- in an


education or training environment, sexual harassment is committed:
1. against one who is under the care, custody or supervision of the
offender;
2. against one whose education, training, apprenticeship or
tutorship is entrusted to the offender;
3. when the sexual favor is made a condition to the giving of a
passing grade, or the granting of honors and scholarships, or the
payment of a stipend, allowance or other benefits, privileges, or
considerations; or
4. when the sexual advances result in an intimidating, hostile or
offensive environment for the student, trainee or apprentice.
(Section 3(b), Republic Act No. 7877)
THE SOLO PARENTS' WELFARE ACT OF 2000

Q. What is parental leave?

Answer: Republic Act No. 8972 (An Act Providing for Benefits and
Privileges to Solo Parents and Their Children, Appropriating Funds
Therefor and for Other Purposes), otherwise known as The Solo
Parents Welfare Act of 2000, was approved on November 7, 2000
providing for parental leave of seven (7) days. It is defined as follows:

(d) Parental leave - shall mean leave benefits granted to a solo


parent to enable him/her to perform parental duties and
responsibilities where physical presence is required.

It bears noting that this leave privilege is an additional leave benefit


which is separate and distinct from any other leave benefits provided
under existing laws or agreements. Thus, under Section 8 thereof, it is
provided:

Sec. 8. 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.
Q. What is meant by flexible work schedule under R. A. No. 8972?

Answer: Under Republic Act No. 8972, solo parents are allowed to
work on a flexible schedule, thus:

Sec. 6. 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. (Section
6, Republic Act No. 8972).
The phrase flexible work schedule is defined in the same law as
follows:

(e) Flexible work schedule - is the right granted to a solo parent


employee to vary his/her arrival and departure time without affecting
the core work hours as defined by the employer. (Section 3[e],
Republic Act No. 8972).
Entitlement
Q: How many days are entitled to a solo parent?
A: A Male or Female Solo Parent is entitled to 1 7 days of leave each
year.

Q: Who is considered a solo parent under Republic Act 8972\


A: The following are considered a solo parent:
1. A woman who gives birth as a result of rape;
2. A widow or widower;
3. A spouse of convict in jail;
4. A spouse of insane;
5. A spouse after legal separation with custody of children;
6. A spouse after declaration of nullity of marriage with custody of
children;
7. A spouse abandoned for at least one year;
8. An unmarried mother or father with custody of children;
9. Any person who solely provides pastoral care and support to a child;
and
10. Any family member who assumes responsibility of a parent who
abandons. (R.A. NO. 8972, 11/7/2000)

BATTERED WOMAN LEAVE


Q: How many days leave is entitled to a battered woman under R.A.
9262?
A: A battered woman is entitled to ten (10) days leave with pay in
addition to other paid leaves under the labor code, other laws and
company policies.
BATTERED WOMAN DEFINED.
Q: Who is considered a Battered Woman?
A: A Battered Woman is one who is a victim of any act or series of acts
of violence committed by any person which resulted to her physical,
sexual or psychological suffering.
Q: How does a battered woman apply for such leave?
A: The woman employee has to submit a certification from the
barangay captain or kagawad or prosecutor or the clerk of court that
an action under R.A. No. 9262 has been filed and is pending.
Usage of the 10-day leave is at the option of the woman employee. It
shall cover the day or days when she will have to attend to medical
and legal concerns.
Leaves not availed of are non-cumulative and not convertible to cash
(r.a. no. 9262, the anti-violence against women and their children act
of 2004; 3/8/04).

SOCIAL SECURITY SYSTEM


RA1161 as amended by RA 8282

COVERAGE:

Compulsory:
1. Compulsory upon all employees not over 60 years of age and
their employers
2. In case of domestic helpers, their monthly income should not be
less than one thousand pesos

Limitation: Sec. 9 (a)


a. Any benefit already earned by the employees under private
benefit plans existing at the time of the approval of the Act
shall not be discontinued, reduced or otherwise impaired
b. Private plans which are existing and in force at the time of
compulsory coverage shall be integrated with the plan of the
SSS in such a way where the employers contribution to his
private plan is more than that required of him in this Act, he
shall pay to the SSS only the contribution required of him and
he shall continue his contribution to such private plan less his
contribution to the SSS so that the employers total
contribution to his benefit plan and and to the SSS shall be
the same as his contribution to his private benefit plan before
any compulsory coverage.
c. Any changes, adjustments, modifications, eliminations or
improvements in the benefits to be available under the
remaining private plan, which may be necessary to adopt by
reason of the reduced contribution thereto as a result of the
integration shall be subject to agreements between the
employers and the employees concerned
d. The private benefit plan which the employer shall continue for
his employees shall remain under the employers
managementand control unless there is an existing agreement
to the contrary.
e. Nothing in this Act shall be construed as a limitation on the
right of employers and employees to agree on and adopt
benefits which are over and above those provided under this
act

3. Compulsory upon such self- employed persons as may be


determined by the Commission including but not limited to the
following (Sec 9-A): (APAPI)
1. All self employed professionals
2. Partners and single proprietors
3. Actors and actresses directors, scriptwriters and news
correspondents who do not fall within the definition of the
term employee in Section 8 (d) of this Act
4. Professional athletes, coaches, trainers, and jockeys
5. Individual farmers and fishermen

Voluntary:

1. Spouses who devote full time to managing the household and


family affairs, unless they are also engaged in other vocation or
employment which is subject to mandatory coverage, may be
covered by the SSS on a voluntary basis.
2. Filipinos recruited by foreign based employers for employment
abroad may be covered by the SSS on a voluntary basis
3. Employees separated from employment may continue to pay
contributions to maintain his right to full benefits (Sec. 11)
4. Self-employed with no income (11-A)

BY AGREEMENT:

Any foreign government, international organization, or their


wholly-owned instrumentality employing workers in the Philippines,
may enter into an agreement with the Philippine government for the
inclusion of such employees in the SSS except those already covered
by their respective civil service retirement systems (Sec.8 (j (4)).

Excluded Employment (Sec. 8 (j)):


1. Employment purely casual and not for the purpose of occupation or
business of the employer
2. Service performed on or in connection with an alien vessel by an
employee if he is employed when such vessel is outside the
Philippines.
3. Service performed in the employ of the Philippine government or
instrumentality or agency thereof.
4. Service performed in the employ of a foreign government,
international organization, or their wholly owned instrumentality;
5. Services performed by temporary employees, which may be
excluded by regulation of the commission.

EFFECTIVE DATE OF COVERAGE:

1. Employer: It shall take effect on the first day of his operation


2. Employee: On the day of his employment
3. Self-employed: It shall take effect upon his registration with SSS

Definition of Terms

EMPLOYER
Any person natural or juridical, domestic or foreign, who carries on
in the Philippines, any trade business, industry undertaking or activity
of any kind and uses the services of another person who is under his
orders as regards the employment except the Government and any of
its political subdivisions, branches or instrumentalities, including
corporations owned or controlled by the Government
Self- employed person shall be both the employer and employee at the
same time

EMPLOYEE

Any person who performs services for an employer in which either


or both mental and physical efforts are used and who receives
compensation for such services, where there is an employer-
employee relationship.
Self- employed person shall be both the employer and employee at the
same time

DEPENDENTS:

1. The legal spouse entitled by law to receive support from the


member
2. the legitimate, legitimated or legally adopted and illegitimate
child who is unmarried, not gainfully employed and has not
reached 21 years of age or if 21 years of age, he is congenitally
incapacitated or while still a minor has been permanently
incapacitated and incapable of self- support, physically and
mentally and
3. the parent who is receiving regular support from the member

BENEFICIARIES

a. The dependent spouse until he or she remarries, the dependent


legitimate, legitimated or legally adopted and illegitimate
children who shall be the primary beneficiaries of the member
b. PROVIDED that the dependent illegitimate children shall be
entitled to 50% of the share of the legitimate, legitimated or
legally adopted children.
c. PROVIDED FURTHER in the absence of the legitimated, legally
adopted or legitimate children, illegitimate children shall be
entitled to 100% of the benefits.
d. In their absence, the dependent parents who shall be the
secondary beneficiaries.
e. In the absence of all of the foregoing, any person designated by
the covered employee as secondary beneficiary.

Benefits

1. Monthly pension

2. Dependents pension
It shall be paid for each dependent child conceived on or before the
date of the contingency but not exceeding five, beginning with the
youngest without substitution PROVIDED that where there are
legitimate and illegitimate children, the former shall be preferred.

3. Retirement benefits

A member who has paid at least 120 monthly contributions prior to


the semester of retirement and who:
a. has reached the age of 60 years and is already separated
from employment or has ceased to be self-employed
b. has reached the age of 65 years, shall be entitled for as a
covered member who is 60 years old not qualified under No.
1 shall still be entitled to retirement benefits PROVIDED, he
is separated from employment and is not continuing
payment of contributions to the SSS on his own.

SUSPENSION OF MONTHLY PENSION: Upon the re-employment or


resumption of self-employment of a retired employee who is less than
65 years old.

4. Death Benefits

5. Permanent disability benefits

6. Funeral Benefit
A funeral grant equivalent to Twelve thousand pesos (P12,
000.00) shall be paid, in cash or in kind, to help defray the cost of
funeral expenses upon the death of a member, including permanently
totally disabled member or retiree.
7. Sickness Benefit

Requirements:
a. A member must have paid at least 3 monthly contributions in
the twelve month period immediately preceding the semester
of sickness or injury
b. and is confined therefor for more than three days in a hospital
or elsewhere with the approval of the SSS

8. Maternity Leave Benefit

It shall be paid to a female employee who has paid at least 3


monthly contributions in the twelve month period immediately
preceding the semester of her childbirth or miscarriage PROVIDED:
a. That the employee shall have notified her employer of her
pregnancy and the probable date of her childbirth which notice
shall be transmitted to the SSS.
b. The full payment shall be advanced by the employer within 30
days from the filing of the maternity leave application
c. Payment of daily maternity benefits shall be a bar to the
recovery of sickness benefits
d. The maternity benefits provided under this section shall be paid
only for the first 4 deliveries or miscarriages
e. The SSS shall immediately reimburse the employer 100% of the
benefits advanced by the latter
f. If no contributions were remitted by the employer or no notice
was given to SS, the employer shall be liable for damages
equivalent to the benefits which said employee member would
otherwise have been entitled to.

Non-transferability of Benefits (Sec. 15)

Such benefits are not transferable and no power of attorney or


other document executed by those entitled thereto, in favor of any
agent, attorney or any other person for the collection thereof on their
behalf shall be recognized, except when they are physically unable to
collect personally such benefits.
Sources of Fund

1. Collection:
Beginning on the last day of the month when an employees
compulsory coverage takes effect and every month thereafter during
his employment, his employer shall pay the employers contribution
and shall deduct and withhold from such employees monthly salary
the employees contribution.The same time of collection for self-
employed

2. Remittance:
It shall be remitted within the first 10 days of each calendar
month following the month for which they are applicable or within
such time as the Commission may prescribe.
For self-employed they shall remit their contributions quarterly on such
dates and schedules as the Commission may require.

(NOTE: SEE TABLE ON SOCIAL WELFARE LEGISLATION FOR


COMPARISON WITH GSIS)

TRANSFER OF HEALTH INSURANCE FUNDS OF SSS AND GSIS

It shall be transferred to the Corporation within 60 days from the


promulgation of the Implementing Rules and Regulation

The SSS and GSIS shall continue to perform Medicare functions under
contract with the Corporation until such time that such functions are
assumed by the Corporation.
TRANSFER OF MEDICARE FUNCTIONS OF THE SSS AND GSIS
Within 5 years from the promulgation of the implementing rules and
regulations. But the SSS and GSIS shall continue performing its
Medicare functions beyond the stipulated 5-year period if such
extension will benefit Program members.

PRIMER ON SOCIAL SECURITY LAW OF 1997


Republic Act No. 8282

1. In addition to the Employees Compensation Law found in the Labor


Code, what are the other social securities law in the Philippines?

The following social security laws:


(1) RA No. 8282-Social Security Act of 1997
(2) RA No. 8291-Government Service Insurance System Act of
1997
(3) RA No. 7875-National Health Insurance Act of 1995
(4) RA No. 7699-Limited Portability Scheme in Social Security
System
(5) PD 1753 as amended by RA No. 7743 - The Home Development
Mutual Fund Law of 1980 or the PAG-IBIG Fund.

2. What law governs the social security system of the private


employees?

The Social Security Law of 1997 which is RA No. 1161 as


amended by RA No. 8282 which took effect last 24 May 1997.

3. What is the declared policy of the state relative to social security


system?

As provided by Sec.2, RA No. 8282:


Sec. 2. Declaration of Policy- It is the policy of the State to
establish, develop, promote and perfect a sound and viable tax-exempt
social security system suitable to the needs of the people throughout
the Philippines which shall promote social justice and provide
meaningful protection to members and their beneficiaries against the
hazards, disability, sickness, maternity, old age, and death and other
contingencies resulting in loss of income or financial burden. Towards
this end, the State shall endeavor to extend social security protection
to workers and their beneficiaries.

4. Give the organizational set-up of the Social Security System.

The Social Security System is a corporate body, with principal


place of business in Metro Manila. It is directed and controlled by the
Social Security System.
The Social Security System is composed by the Secretary of
Labor and Employment or his duly designated undersecretary, the SSS
president and sever (7) appointive members, three of whom shall
represent the workers' group, one of whom shall be a woman, three
from the employers' group, at least one of whom shall be a woman and
one, the general public whose representative shall have adequate
knowledge and experience regarding social security, to be appointed
by the President of the Philippines. (Sec. 3, RA No. 8282)

5. Who shall generally conduct the operations and management


functions of the SSS?

Vested in the SSS President who shall serve as chief executive


officer in carrying the SSS program.

6. What are the duties and powers of the Commission?

These powers and duties:

(1) To adopt, amend, rescind, subject to the approval of the


President such rules and regulations as may be necessary to carry out
the provision and purposes of this Act.
(2) To establish a provident fund for the members which will
consist of voluntary contributions of employers and/or employees, self-
employed and voluntary members and their earnings, for payment of
benefits, subject to such rules and regulations as it may promulgate
and approved by the President of the Philippines.
(3) To maintain a Provident Fund which consist of contributions
made by both the SSS and its officials and employees and their
earnings, for th payment of benefits to such officials and employees or
their heirs under such terms and conditions as it may prescribe;
(4) To approve restructuring proposals for the payment of due but
unremitted contributions and unpaid loan amortization under such
terms and conditions as it may prescribe.
(5) To authorize cooperatives registered with cooperative
development authority to act as collecting agent of SSS with respect
to their members;
(6) To compromise or release in whole or in part any interest,
penalty or civil liability to SSS in connection with the investment under
Sec. 26 of this Act.
(7) To approve, confirm, pass upon any and all actions of the SSS.
[ Sec. 4(a), RA No. 8282].

7. What are the powers and duties of the Social Security System?

The following:
(1) To submit annually public report to the President, not later
than 30 April;
(2) To require the actuary to submit a valuation report on the SSS
benefit program every four years; and to undertake actual studies and
cancellations for any possible increase of benefits.
(3) To establish SSS offices covering many provinces and cities
and congressional districts;
(4) To enter into contracts or agreements for such services and
aids;
(5) To adopt from time to time a budget of expenditures;
(6) To set up its accounting systems;
(7) To require reports, compilations and analyses of statistical
and economic data;
(8) To acquire and dispose of property, real or personal;
(9) To acquire, receive or hold by way of purchase, expropriation
or otherwise, public and private property
(10) To sue and be sued in court;
(11) To perform such other corporate acts as it may deem
appropriate for the proper enforcement of this Act [Sec. 4(b), RA No.
8282].

8. Are decisions of the Commission appealable by judicial review to


regular courts?

Yes. The appeal by judicial review under Sec. 5( c ), RA No. 8282


may be made within 15 days from receipt of decision/order/denial of
motion for reconsideration to:
(1) Court of Appeals if it involves question of law and fact.
(2) Supreme Court if it involves solely question of law
NOTE: On No. 2, the same is to be processed first with the Court of
Appeals under the doctrine of hierarchy of courts.

9. Under the existing SSS system what are the two classes of
coverages?

Coverage of the system may either be:


(1) Compulsory coverage of the system; and
(2) Voluntary coverage of the system.

10. When shall the coverage in the SSS be considered as compulsory


or mandatory?

Coverage shall be compulsory upon:


(1) All employees not over sixty (60) years of age and their
employers;
(2) Domestic helpers whose monthly income shall not be less
than P1,000.00 a month
(3) Self-employed persons, including but not limited to:
(a) All self-employed professionals;
(b) Partners and single proprietors of business;
(c ) Actors and actresses, directors, scriptwriters and news
correspondents who do not fall within the term "employee under Sec.
8(d) of this act
(d) Individual farmers and fishermen. [Sec.9(a), RA No. 8282].
11. Who may be covered by the SSS on a voluntary basis?

The following:
(1) Spouses who devote full time to managing the household and
family affairs unless they are also engaged in other vocation or
employment which is subject to mandatory coverage may be covered
by the SSS on a voluntary basis. [Sec.9(b), RA No. 8282]
(2) Filipinos recruited by foreign-based employers for
employment abroad may be covered by the SSS on a voluntary basis.
[Sec.9(c ), RA No. 8282].

12. What is meant by "employer" under the SSS?

Employer means any person, natural or juridical, domestic or


foreign, who carries on in the Philippines any trade, business, industry,
undertaking or activity of any kind and uses the services of another
person who is under his orders as regards the employment, except
government and any of its political subdivisions, branches or
instrumentalities including corporations owned and controlled by the
Government; Provided, That a self-employed person shall be both
employee and employer at the same time. [Sec.8(c), RA No. 8282].

13. What is an "employee" within the coverage of the SSS?

Any person who performs services for an employer in which


either or both mental and physical efforts are used and who receives
compensation for such services, where there is an employer-employee
relationship. Provided, that a self-employed person shall be both
employee and employer at the same time. [Sec.8(d), RA No. 8282].

14. Under the SSS, what do you mean by "self-employed"?

Self-employed shall mean any person whose income is not


derived from employment, as defined in this Act, as well as those
workers enumerated in Section 9-A hereof.

15. Under the SSS, what is meant by employment?


Any service performed by an employee for an employer except:
(1) Employment purely casual and not for the purpose of
business or occupation of the employer;
(2) Service performed on or in connection with an alien vessel by
an employee if he is employed when such vessel is outside of the
Philippines;
(3) Service performed in the employ of the Philippine Government
or instrumentality or agency thereof.
(4) Service performed in the employ of a foreign government or
international organization or their wholly-owned instrumentality.
(5) Such other services performed by temporary employees
which may be excluded by the regulation of the Commission. [Sec.8(j)]

16. When does the compulsory coverage of an employer, employee or a


self-employed person take effect? or when is the effective date of SSS
coverage?

Compulsory coverage of the employer shall take effect on the


first day of his operation and that the compulsory coverage of the self-
employed shall take effect upon his registration with the SSS. (Sec.10,
RA No. 8282)

17. State the effect of the employee's separation of employment upon


his membership in the SSS.

When an employee under compulsory coverage is separated from


employment, his employer's contribution on his account and his
obligation to pay contribution arising from that employment shall
cease at the end of the month of separation, but said employee shall
be credited with all contributions paid on his behalf and entitled to the
benefits according to the provisions of this Act. He may, however,
continue to pay the total contribution to maintain his right to full
benefits. (Sec.11, RA No. 8282).

18. Cite the effects of interruption of business or professional income.

If the self-employed realizes no income in an government, he


shall not be required to pay contributions for that month. He may,
however, be allowed to continue paying contributions under the same
rules and regulations applicable to separated employee member. (Sec.
11-A).

19. What are the benefits accorded/available to the SSS members?

The benefits are:


(1) Monthly pensions (Sec.12)
(2) Dependent's pension (Sec.12-A);
(3) Retirement benefits (Sec.12-B);
(4) Death benefits (Sec.13)
(5) Permanent disability benefits (Sec.13-A);
(6) Funeral benefits (Sec.13-B);
(7) Sickness benefit (Sec.14);
(8) Maternity leave benefit (Sec.14-A)

20. What is the minimum monthly pension?

The following:
(1) P1,200.00 for members with at least 10 credited years of
service;
(2) P2,400.00 for those with 20 credited years of service
[Sec.12(b), RA No. 8282].

21. What shall be the highest monthly pension?

The monthly pension shall be the highest of the sum of P300.00


plus:
(1) 20% of the average monthly salary credit; plus
(2) 2% of the average monthly salary credit for each credited
year of service in excess of ten years; or
Forty percent (40%) of the average monthly salary credit; or
One thousand pesos (P1,000.00) Provided that the monthly
pension shall in no case be paid for an aggregate amount of less than
60 months. * Monthly salary credit means- the compensation base for
contributions and benefits as indicated in the schedule 18 of this Act.
[Sec.8(g), RA No. 8282].
22. Who are the dependents under SSS?

The dependents shall be the following:


(1) The legal spouse entitled by law to receive support from the
member.
(2) The legitimate, legitimated or legally adopted, and
illegitimate child who is unmarried, not gainfully employed and has not
reached 21 years of age or over if congenitally incapacitated or
incapable of self-support, physically or mentally. [Sec.8(e), RA No.
8282].
(3) The parent who is receiving regular support from the member.

23. Explain briefly dependent's pension.

The dependent pension shall be 10% of the monthly pension or


P250.00 whichever is higher to be received by each dependent but not
exceeding five. (Sec. 12-A)

24. Who are the members to enjoy retirement benefits?

The following:
(1) Those who contributed prior to his semester of retirement has
paid 120 monthly contributions;
(2) Those who reach the age of 60 or 65 years of age. (Sec.12-B)

25. Classify beneficiaries under SSS.

They are:
(1) Primary beneficiaries - dependent spouse, dependent
legitimate/legitimated/adopted/illegitimate children;
(2) Secondary beneficiaries - in the absence of the primary
beneficiaries, the dependent parents and other person designated by
the member.

26. How much is the death benefit to be enjoyed by the primary


beneficiaries?
If the member has paid at least 36 monthly contributions, the
benefit shall be a lump sum equivalent to 36 times the monthly
pension.
However, if he had not paid the 36 monthly contributions, the
beneficiary shall be entitled to a lump sum benefit equivalent to the
monthly pension times the number of monthly contributions paid to
SSS or 12 times the monthly pension whichever is higher.

27. What are the two types of permanent disability?

(1) Permanent total disability - is loss or reduction of earning


capacity due to impairment of the normal functions of the physical
and/or mental faculties, recovery therefrom being medically remote.
The loss or reduction of earning capacity must amount to at least 75%
or the aggregate loss or reduction of earning capacity from more than
one injury or disease amounts to at least 100%. [Sec.13-1 (g), RA No.
8282].
(2) Permanent partial disability - accrues or arises when the loss
or reduction or earning capacity amounts to less than 75% or when the
aggregate loss or reduction of earning capacity resulting from more
than one injury or disease amounts to less than 100% as a result of
unrecoverable anatomical loss.

28. What is the condition to entitle a member to permanent disability


benefits?

He has paid 36 monthly contributions prior to the semester of


the disability. [Sec.13-A(a), RA No. 8282].

29. How are permanent disability benefits classified?

They are classified as permanent total disability benefits and the


permanent partial disability benefits.

30. What disabilities are considered permanent and total?

The following:
(1) Complete loss of sight of both eyes;
(2) Loss of two limbs at or above the ankle or wrists;
(3) Permanent complete paralysis of two limbs;
(4) Brain injury resulting to incurable imbecility or insanity; and
(5) Such cases as determined and approved by the SSS [Sec.13-
A(c ), RA No. 8282]

31. What are the disability benefits provided by SSS?

(1) Upon the permnanent total disability of a member who has


paid at least 36 monthly contributions prior to the semester of
disability, he shall be entitled to the monthly pension. [Sec.13-A(a)]
(2) If the disability is permanent partial, and such disability
occurs before the 36 monthly contributions have been paid prior to the
semester of disability, the benefit shall be such percentage of the
lump sum benefit prescribed in the preceding paragraph with due
regard to the degree of disability as the Commission may determine.
(3) If the disability is permanent partial and such disability
occurs after 36 monthly contributions have been paid prior to the
semester of disability, the benefit shall be the monthly pension for
permanent total disability payable than the period designated in the
schedules set forth in par. (f), Sec.13-A, RA No. 8282.

32. When is the monthly pension as well as the dependent's pension be


suspended?

The monthly pension and the dependent's pension shall be


suspended upon the re-employment or resumption of self-employment
or the recovery of the disabled member from his permanent total
disability or his failure to present himself for examination of at least
once a year upon notice by the SSS. [Sec.13-A(b), RA No. 8282].

33. Who are entitled to monthly pensions?

(1) Those who are receiving retirement benefits (Sec.12-B);


(2) Those who are receiving permanent disability benefits
(Sec.13-A);
(3) Primary beneficiaries upon the death of the retired members
[Sec.12-B (d), RA No. 8282];
(4) Primary beneficiaries upon the death of the permanent total
disability pensioner. [Sec. 13-A(c )].

34. In case a permanent total disability pensioner dies, are his


beneficiaries entitled to any death benefits?

His primary beneficiaries shall be entitled to the monthly


pensions upon the death of the permanent total disability pensioner.
(Sec.13-A)

35. If a retired employee pensioner dies, what death benefits if any will
his beneficiaries and dependents get?

Upon the death of the retired employee pensioner, his primary


beneficiaries shall be entitled to the monthly pension and if he has no
primary beneficiaries, his secondary beneficiaries shall be entitled to a
lump sum benefit. [Sec. 12-B (c ), RA No. 8282].

36. In case no beneficiary qualifies for entitlement of death benefit


under the SSS law, how will such benefits be disposed of?

The death benefits shall be paid to the legal heirs of the


deceased in accordance with the law of succession (Sec. 15, RA No.
8282)

37. How much is the funeral benefit?

P12,000.00 (Sec.13-B).

38. What is the sickness benefit?

It is a daily allowance paid to a covered employee who becomes


sick and is confined in a hospital for more than three days or elewhere
with the Commission's approval. Such daily sickness benefit
equivalent to 90% of his average daily salary credit. (Sec.14).
* Average daily salary credit - the result obtained by dividing the
sum of the six highest monthly salary credits in the twelve month
period immediately preceding the semester of contingency by 180
[Sec.8(n), RA No. 8282].
*Contingency - the retirement, death, permanent disability, injury
or sickness and maternity of the member [Sec.8 (l)].

39. What are the conditions governing sickness benefits?

(1) The payment of the daily allowance not to exceed 120 days in
one calendar year;
(2) The daily sickness benefits shall not be paid for more than
240 days on account of the same confinement; and
(3) The employee shall notify his employer of the fact of his
sickness or injury within five days from the start of the confinement.
[Sec.14(1)(20)(3), RA No. 8282].

40. Who may advance the daily allowance for the sickness benefit?

The employer subject to 100% reimbursement by SSS provided


said employer complied the notification requirement.

41. Give the effect if the employer has failed to make the proper
notification.

The employer is not entitled to reimbursement.

42. When is the employer or the unemployed member not entitled to


reimbursement of sickness benefits?

(1) Where the employer failed to notify the SSS of the


confinement;
(2) In case of the unemployed, where he failed to send the notice
directly to the SSS except when the confinement is in a hospital; and
(3) Where the claim for reimbursement is made after one (1) year
from date of confinement.

43. Who are entitled to maternity benefit under SSS?


A female employee who has paid at least three (3) monthly
contributions in the twelve month period immediately preceding the
semester of her childbirth or miscarriage shall be paid daily maternity
benefit equivalent to 100% of her average salary credit for 60 days or
78 days in case of Caesarian delivery subject to certain conditions.
(Sec.14-A).

44. What are the conditions set by SSS relative to maternity benefits?

The conditions are:

(1) That the employee shall have notified her employer of her
pregnancy and the probable date of her childbirth which notice shall
be transmitted to the SSS in accordance with the rules and regulations
it may provide;
(2) The full payment shall be advanced by the employer within 30
days from the filing of the maternity leave application.
(3) That the payment of daily maternity benefits 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.
(4) That the maternity benefits provided under this section shall
be paid only for the first four (4) deliveries or miscarriages. [Sec.14-
A(a-d), RA No. 8282].

45. What are the effects if no contributions being made due to the fault
of the employer?

As a rule, the SSS shall immediately reimburse the employer of


the 100% of the amount of maternity benefits advanced by the
employer upon the receipt of satisfactory proof of such payment and
legality thereof [Sec.14-A(e), RA No. 8282]. However, if an employee
should give birth or suffer a miscarriage without the required
contribution having been remitted for her by her employer to the SSS
or without the latter having been previously notified by the employer of
the time of the pregnancy, the employer shall pay to the SSS damages
equivalent to the benefits which said employee member would
otherwise have been entitled to [Sec.14-A(f), RA No. 8282].
46. Who are those beneficiaries disqualified to receive any benefits
under the SSS law?

Those beneficiaries who are nationals of foreign countries which


do not extend benefits to the Filipino beneficiaries residing in the
Philippines or which are not recognized by the Philippines, shall not be
entitled to receive any benefit under this Act; Provided, that
notwithstanding the foregoing, where the best interest of the SSS will
be served, the Commission may direct payments without regard to
nationality or country of residence. (Sec.15, RA No. 8282).

47. What are the characteristics of the SSS benefits?

(1) Enjoyable only by covered members;


(2) Non-transferrable (Sec.15)
(3) Exempted from tax or attachments (Sec.16)
(4) Not chargeable by any agent or attorneys (Sec.17)

48. What is contribution?

It is the amount paid to the SSS by and on behalf of the member


in accordance with Sec. 18 of this Act.

49. Define compensation.

All actual remunerations for employment, the mandated cost of


living allowance, as well as the cash value of any remuneration paid in
any medium other than cash except that part of the remuneration
received during the month in excess of the maximum salary credit as
provided under Sec.18 of this Act [Sec.8(f)].

50. What are the sources of funds of the SSS?

From the contributions of the following:

(1) Employees contributions (Sec.18);


(2) Employers contributions
(3) Contributions of the self-employed. (Sec.19-A)
(4) Government contribution and guarantee (Sec.20 & 21)

51. What is the method of remittance, collection and payment?

The SSS shall require a complet and proper collection and


payment of contributions and proper collection and payment of
contributions and proper identification of the employer and the
employee. Payment may be made in cash, checks, stamps, coupons,
tickets or other reasonable devices that the Commission may adopt
(Sec. 23, RA No. 8282).

52. What is a "Reserved Fund"?

All revenues of the SSS that are not needed to meet the current
administrative and operational expenses incidental to the carrying of
this Act shall be known as the the Reserve Fund (Sec.26, RA No.
8282).

53. What is an "Investment Reserve Fund"?

Such portion of the Reserve Fund as are not needed to meet the
current benefit obligations thereof shall be known as the "Investment
Reserve Fund" which the Commission shall manage and invest with
the skill, care, prudence and diligence necessary under the
circumstances then prevailing that a prudent man setting in like
capacity and familiar with such matters would exercise in the conduct
of an enterprise of a like character and with similar aims. (Sec.26, RA
No. 8282).

54. For what purpose are the contributions to the Social Security
System utilized?

The revenue of the SSS are to be used to meet current


administrative and operational expenses and for the payment of the
benefits under the SSS law.

55. What are the various loans that may be extended by SSS to its
members?
The various loans are:
(1) salary loan
(2) educational loan
(3) housing loan
(4) community hospital loan

56. Before local government may issue any business permit or license,
what is required?

Notwithstanding any law to the contrary, local government units


shall prior to issuing any annual business license or permit, require
submission of certificate of SSS coverage and compliance with the
provisions of this Act. Provided, that the certification or clearance
shall be issued by the SSS within five (5) working days from receipt of
the request [Sec.239(g), RA No. 8282].

57. Relative to the SSS Investment Reserve Fund, in what fields of


investments are they allowed to be invested?

The SSS Reserve Fund may be invested in any or all of the


following:
(1) Interest-bearing bonds or securities of the Government of the
Philippines;
(2) Interest-bearing deposits or securities in any domestic bank
doing business in the Philippines;
(3) In loans or interest-bearing advances to the National
Government for construction of bridges, roads and public buildings;
(4) In direct housing loans;
(5) In small short-term loans to covered employees;
(6) In other income earning projects and investments secured by
first mortgages on real estate collaterals which, in the determination
of the Social Security Commission, shall redound to the benefit of the
SSS, its members as well as the public welfare. (Sec.26, RA No. 8282).

58. Is the SSS law a law of succession?


No. The benefits under the SSS law do not form part of the estate
of the SSS member. Further, persons other than the heirs of deceased
employee may be entitled to the said benefits.

59. What are the proprietary functions of the SSS?

The SSS is exercising proprietary reasons for the following


reasons:
(1) It can enter into agreements or contracts for the proper,
stable and efficient administration of the System;
(2) It can sue and be sued;
(3) It covers an insurance scheme of general application; and
(4) It is operated for profit, it being authorized to invest its funds
in profitable securities.

60. How is the Social Security law to be construed?

The SSS law should be construed in favor of giving benefits to its


members and their beneficiaries. Any doubt shall be resolved in favor
of the claimant. Even if a person was mistakenly or wrongfully
covered, when he paid the premium regularly and where the mistaken
covered was discovered only after his death, his beneficiaries or heirs
upon his death, shall be entitled to the death benefits. Thus it was
ruled that the provisions of the SSS should be liberally construed in
favor of those seeking its benefits. Any interpretation which would
defeat rather than promote the ends for which the SSS was enacted
should be schewed.

61. Distinguish ECC and SSS.

Employers' Compensation Social Security


System
1) requires injury or death to 1) injury or death need not
be work
be work connected connected
2) only employers contribute 2) both are required to
contribute
3) no loan benefits 3) affords loan benefits
4) administered by Employees 4) GSIS or SSS
Compensation Commission

62. What rules or guidelines govern the Househelpers?

Circular No. 21-V dated September 1, 1993 entitled " Guidelines


on SSS Coverage of Househelpers".

63. Who are the househelpers that are mandatorily covered by SSS?

Under Sec. 1, Rule II, the following appears: "Coverage in the


SSS shall be compulsory upon all househelpers who are sixty (60)
years of age and below (i.e., have not yet reached their 61st birth) and
who are receiving a monthly cash compensation of at least one
thousand pesos. (Sec.1, II, Coverage).

64. Define the following: househelper, domestic or household services,


and household employer.

(1) Househelper - any person who renders domestic or household


services exclusively to a household employer. (i.e., driver, babysitter,
gardener, cook, nursemaid, etc.)
(2) Domestic or household services - service in the employer's
home which is usually necessary or desirable for the maintenance
thereof and includes ministering to the personal comfort and
convenience of the members of the employer's household including
services of family drivers.
(3) Household employer - any person who engages the services of
a househelper. For the purposes of this rule, the head of the family
(i.e., the husband or in his absence, the wife) shall be deemed the
household helper's employer (Secs.1-3. I, (Circular No. 21-V).

65. Define Compensation, Contribution, Monthly Salary Credit and


Quarter as used in Circular No. 21-V.

(1) Compensation - monthly cash wage paid to the househelper.


(2) Contribution - amount paid or to be paid to the SSS by the
househelper and by his/her employer in accordance with the attached
scheduled of Monthly contributions.
(3) Monthly Salary Credit - the compensation base for
contributions/benefits as indicated in the attached Schedule Monthly
Contribution.
(4) Quarter - period of three consecutive calendar months ending
on the last day of March, June, September and December.

66. When is the effective date of the coverage?

To take effect on the day of his employment but not earlier than
1 September 1, 1993.

67. What are required in the registration of househelpers?

Prior to reporting by the household employer, a househelper


subject to compulsory coverage shall first secure his SSS number by
submitting duly accomplished SSS Form No. E-1 together with: birth
certificate (in its absence, baptismal certificate) and if none, joint
affidavit of two persons personally known attesting to the correct
names and date of birth.

68. State the effect of separation.

He may continue to pay voluntarily the contributions of both the


employer and employee shares. If re-employed he can use the same
SSS number.

69. What are the rights of the covered household employer? Covered
househelper?

A household employer shall be subject to the same rights and


obligations applicable to a regular covered employer under SSS,
Medicare and EC laws and pertinent rules and regulations (Sec.2, III.
Implementing Guidelines).
A covered househelper shall be entitled to the same benefits,
loans and other privileges that are made available to a regular covered
employee under the SSS, Medicare and EC laws (V, Implementing
Guidelines).

70. What are the prohibited and penal acts under the SSS?

(1) Whoever, for the purpose of any payment to be made under


this Act, or under agreement thereunder, where none is authorized to
be paid, shall make or cause to be made, false statement or
representation as to any compensation paid or received or whoever
makes or causes to be made any false statement of a material fact of
any claim for any benefit payable under this act, or application for loan
with SSS, or whoever or causes to be made false statement or
representation, affidavit or document in connection with such claim or
loan, shall suffer the penalty provided for in Art. 172 of the Revised
Penal Code.
(2) Whoever shall obtain or receive any money or check under
this Act or any agreement thereunder, without being entitled thereto
with intent to defraud any covered employee, employer or the SSS
shall be fined not less than P5,000.00 nor more than P20,000.00 and
imprisoned for not less than six years and one day nor more than 12
years.
(3) Whoever buys, sells, offers for sale, uses, transfers, takes or
gives in exchange, or pledges to give a pledge, except as authorized in
this Act or in regulation made pursuant thereto any stamp, coupon,
ticket, book or other device, prescribed pursuant to Sec.27 hereof by
the Commission for the collection or payment of contributions required
herein, shall be fined not less than P5,000.00 nor more than
P20,000.00 or imprisoned for not less than six years and one day nor
more than 12 years, or both at the discretion of the court.
(4) Whoever, with intent to defraud, alters, forges or makes
counterfeits any stamp, coupon, ticket, book or other device
prescribed by the Commission for the collection or payment of any
contribution required herein, or uses, sells, lends, or has in his
possession any such altered, forged or counterfeited materials, or
makes, uses, sells or has in his possession any material imitation of
the materials, used in the manufacture of such stamps, coupons,
ticket, book or other device shall be fined not less than P5,000.00 nor
more than P20,000.00 or imprisoned for not less than six years and
one day nor more than 12 years, or both at the discretion of the court.
(5) Whoever fails or refuses to comply with the provisions
promulgated by the Commission, shall be punished by a fine not less
than P5,000.00 nor more than P20,000.00 or imprisoned for not less
than six years and one day nor more than 12 years, or both at the
discretion of the court. Provided, that when the violation consists in
failure or refusal to register employees or himself, in case of the
covered self-employed or to deduct contributions from employee's
compensation and remit the same to the SSS, the penalty shall be a
fine not less than P5,000.00 nor more than P20,000.00 and imprisoned
for not less than six years and one day nor more than 12 years.
(6) Any employee of the SSS who receives or keeps funds or
property belonging, payable or deliverable to the SSS and who shall
appropriate the same, or shall take or misappropriate or shall consent
or through abandonment or negligence shall permit any other person
to take such property or funds, wholly or partially, or shall otherwise
be guilty of misappropriation of such funds or property, shall suffer the
penalties provided in Art. 217 of the RPC.
(7) Any employer who, after deducting the monthly contribution
or loan amortizations from his employee's compensation fails to remit
said contribution to the SSS within 30 days from the date they become
due shall be presumed to have misappropriated such contributions or
loan amortizations and shall suffer penalties provided in Art.315 of the
RPC. (Sec. 28, RA No. 8282).

71. In case juridical person commits any of the prohibited acts under
the SSS law, who shall be liable?

If the act or omission penalized by this Act be committed by an


association, partnership, corporation or any other institution, its
managing head, directors or partners shall be liable to the penalties
provided in this Act for the offense. [Sec.28 (f), RA No.8282].

72. Who will initiate the filing of the criminal cases under the penal
cause of this Act?
Criminal action arising from a violation of the provisions of this
Act may be commenced by the SSS or the employee concerned either
under this Act or in appropriate case under the RPC; Provided, that
such criminal action may be filed by the SSS in the city or municipality
where the SSS provincial or regional office is located if the violation
was committed within its territorial jurisdiction or in Metro Manila, at
the option of the SSS. [Sec.28 (j), RA No. 8282].

QUESTIONS ON SSS LAW

1. Phil. Daily News prints and publishes the Daily News, copies of
which are circulated through dealers in Metro Mla. These dealers, who
are single proprietors exclusively distributing the Daily News but
handling competing dailies for a fixed amount per copy sold, engage
the services of newsboys. These newsboys are given a specified
number of copies to sell everyday within a six hour period in the
morning. After this period, the newsboys are free to sell other
newspapers or go to school or engage in other activities. Each
newsboy is paid 50c for every copy sold.
As counsel for the Phil. Daily News would you advise your client
to report the dealers and newsboys as its employees pursuant to the
SSS Act? (BAR 1987).

I will advise my client not to cover the dealers and newsboys


because Phil. Daily News will not qualify as their employer under the
SSS law. They are not under its supervision or control. But dealers and
newsboys may be covered by SSS as its self-employed persons.

2. Union Drug Company has sick leave policy, contained in a


collective bargaining agreement requiring the accumulation of five
days of the 15 days sick leave earned annually. Thus, an employee
could use only 10 days of earned sick leave every year. The
accumulated leave is convertible to cash when employment is
terminated for any cause but may be used upon prior application with
and approved by the company.
Pedro San Juan, an employee of the company, applied for
sickness benefits under the Social Security Act, when he fell ill of
pneumonia and his 10 day company sick leave had been exhausted.
The System denied the application.
Decide. (BAR 1987).

The System has no reason to deny the applied sick benefits


because of these reasons:
First, the sickness benefit has not yet reached its limitations. Thus,
(1) In no case shall daily sickness benefit be paid longer than 120 days
in one calendar year; nor shall any unused portion of the 120 days of
sickness benefit granted under this section be carried forward and
added to the total number of compensable days allowable in the
subsequent year [Sec.14(a)(1), RA No. 8282]. (2) The daily sickness
benefit shall not be paid for more than 240 days on account of the
same confinement.
Second, The compensable confinement shall begin on the first
day of sickness, and the payment of such allowances shall be
promptly made by the employer every regular payday or on the 15th and
last day of each month and similarly, in the case of direct payment by
the SSS, for as long as such allowance are due and payable; Provided,
That such allowances shall being only after all sick leaves of absence
with full pay to the credit of the employee shall have been exhausted
[Sec.14(b), RA No. 8282].

3. Leonardo Marasigan started working for Madrid Development


Corporation in August 1984 when it was being organized and had no
fixed offices. The company did not ask for his Social Security
Registration number, nor did it report him to the SSS. He died a year
later and his widow filed a claim for death benefits with the SSS.
While following up the claim, the widow discovered that it was only in
November 1985 whn he was reported by his employer to the SSS and
the premiums covering the entire period from August 1984 were
remitted.
Leonardo's widow came to you for assistance. What would be
your legal advice? (BAR 1987).
I will advise the widow that as primary beneficiary she is entitled
to receive the SSS death benefits.
The nonreporting is not fatal because the premium were
adequately remitted.
Since Leonardo failed to pay 36 monthly contributions, his widow
is not entitled to a monthly pension but the widow as primary
beneficiary is entitled to a lump sum benefit equivalent to 35 times the
monthly pension.

4. Sapatilya Company, a manufacturer of wooden shoes, started its


operations on Jan. 1, 1989. As of June 15, 1989, the company had in
its payroll a general manager, an assistant general manager, three
supervisors and forty rank and file employees,all of whom started with
the company on Jan.1, 1989. On July 1, 1989, the company also had 10
casual employees who had been in the company since Feb. 16, 1989
and 12 contractual employees whose contract of employment with the
company is for the period from Aug.1, 1989 to Sept. 30, 1989. Who
among the aforementioned employees are under the coverage of the
Social Security Law? When did their coverage under the said law take
effect? (BAR 1987).

All of them are covered (Sec. 9, RA No. 8282). Formerly,


employment purely casual and not for the purpose of occupation or
business of employer are not covered. The mandatory coverage of all
employees takes effect on the day of their employment.

5. Don Jose, a widower owns a big house with a large garden. One
day, his househelper and gardener left after they were scolded. For
days, Don Jose, who lives alone in the compound to look for someone
who could water the plants in the garden and clean the house. He
chanced upon Mang Kiko on the street and asked him to water the
plants and clean the house. Without asking any question, Mang Kiko
attended to the plants in the garden and cleaned the house. He
finished the work in two days.
(a). Is there an employer-employee relationship between Don
Jose and Mang Kiko?
(b) Are they compulsorily covered by the SSS? (BAR 1991).
(a) No employer-employee relationship exists between them. The
test and elements of the relationship are not present.
(b) No, he was performing a domestic service. He cannot be
covered by the SSS because there is no mention in the problem that
his monthly salary is P1,000.00 or more which makes a person doing
household or domestic services within the coverage of SSS.

6. Ma. Sara Mira is an unwed mother with three children from 3


different fathers. In 1999, she became a member of the Social Security
System. In August 2000, she suffered a miscarriage, also out of
wedlock and again by a different father. Can Ma. Mira claim maternity
benefits under the Social Security Act of 1997? Reason. (BAR 2000).

Yes. She is entitled to maternity benefits because such benefit


(not dependent upon her being married or not under Sec.14-A, RA No.
8282). However, the delivery or miscarriage under such benefits
cannot extend beyond four deliveries/miscarriages.

7. Marvin Patrimonio is a caddy rendering caddying services for the


members and guests of the Barili Gold and Country Club. As such
caddy, he is subject to Barili's golf's rules and regulations governing
Caddies regarding conduct, dress, language, etc. However, he does
not have to observe any working hours, he is free to leave anytime he
pleases and he can stay away for as long as he likes. Nonetheless, if
he is found remise in the observance of club rules, he can be
disciplined by being barred from the premises of the Barili Golf.
Is Marvin within the compulsory coverage of the Social Security
System? When? (BAR 1999).

No employer-employee relationship exists between them (Manila


Golf & Country Club, Inc. vs. IAC; 237 SCRA 207). However, Marvin
Patrimonio may qualify as self-employed person under Sec.9-A of the
Social Security Act of 1997.

FREQUENTLY ASKED QUESTIONS ON SSS

1. How can one register with the SSS?


a. General Requirements
A person registering with the SSS for the first time as an employee,
self employed, non-working spouse or OFW should submit, together
with the SSS registration form, a photocopy of his/her birth or
baptismal certificate or passport. In the absence of these documents,
any two of the following documents:
o record of employment
o GSIS member's record
o certificate from the National Archive
o birth/baptismal certificate of children
o marriage contract
o drivers license
o school records or voters ID card
o Alien Certificate of Registration, or
o joint affidavit of two disinterested parties attesting to the
correct name and/or fact of birth of the person concerned
A married person should also submit his or her marriage contract upon
registration. If reporting children, he or she should submit the birth or
baptismal certificate of the child, if legitimate; proof of filiation
showing acknowledgment of the child, if illegitimate; or decree of
adoption, if legally adopted.
The original or certified true copies of these documents should be
presented to the SSS for authentication.
b. For Employees
An employee should accomplish SSS Form E-1 (Personal Data Record)
and submit it together with the general requirements.
c. For Employers
a. Single Proprietorships
An owner of a single proprietorship business should accomplish and
submit SSS Forms R-1 (Employer's Data Record) and R-1A (Initial or
Subsequent List of Employees).
b. Partnerships
Any of the partners of a partnership firm should accomplish
SSS Forms R-1 (Employer's Data Record) and R-1A (Initial or
Subsequent List of Employees) and submit these forms
together with a photocopy of the Articles of Partnership.
The original copy of the Articles of Partnership must be
presented for authentication.
c. Corporations
A corporation must accomplish SSS Forms R-1 (Employer's
Data Record) and R-1A (Initial or Subsequent List of
Employees) signed by its President or any of the corporate
officers or incorporators and submit these forms together
with the photocopy of the Articles of Incorporation. The
original copy of the Articles of Incorporation must be
presented to the SSS for authentication.
d. Household-Helper Employers
A household-helper employer who has an existing SS
number should use his personal SS number as his employer
number in all transactions with regard to his household-
helper. If the employer has no existing SS number, he
should get his SS number by accomplishing SSS Form E-1
(Member's Data Record).

d. For Self-Employed Members


A self-employed person should accomplish SSS Form RS-1 (Self-
Employed Data Record) and submit it together with the general
requirements. If the self-employed member has employees, he should
also register as an employer and secure an employer ID number that
his company must use in all transactions with the SSS.
e. For Voluntary Members
a. Separated Members
A member who is separated from employment or ceased to be self-
employed/ overseas Filipino worker/ non-working spouse and would
like to continue paying his contributions should get in touch with the
nearest SSS office. Being a previous member, he will not be issued a
new number. It is only his membership status that will be changed
from covered employee, self-employed, OFW or non-working spouse to
a voluntary paying member.
b. Non-Working Spouses
A non-working spouse should accomplish SSS Form NW-1 (Non-
Working Spouse Data Record) and submit it, duly signed by the
working spouse, with a copy of his marriage certificate. In the
absence of the marriage certificate, the applicant may submit a copy
of SSS Form E-1 or E-4 of the working spouse where his name is
reported.
c. Overseas Filipino Workers (OFWs)
An OFW should accomplish SSS Form OW-1 (Overseas Worker Record
Form) and submit it together with the general requirements.

2. How can a member change the data in his membership records?


Changes in a member's record should be reported immediately to the
nearest SSS office by accomplishing SSS Form E-4 (Member's Data
Amendment Form). He should submit a photocopy of the following:
marriage certificate for change of status
birth or baptismal certificates of children for change or addition
of dependents
birth or baptismal certificate for correction of birth date and
name
In case of non-availability of birth record or baptismal certificate,
submit a certificate of loss or non-availability from the local civil
registrar of the place where the member was born and from the parish
priest of the locality where the member was baptized, together with
any two of the following documents:
record of employment
GSIS member's record
certificate from the National Archive
Alien Certificate of Registration
birth/baptismal certificates of children
marriage contract
school records
passport
joint affidavit of two disinterested parties attesting to the correct
name and/or fact of birth of the person concerned
The original or certified true copies of the documents should be
presented to the SSS for authentication.
3. Who are considered the legal dependents of a member?
The legal beneficiaries of a married member are his legally married
spouse, legitimate, legitimated, legally adopted or illegitimate
children. These are his primary beneficiaries.
If he is single, his benefits will go to his dependent parents, who are
considered his secondary beneficiaries.
In the absence of both primary and secondary beneficiaries, whoever
is designated by the member in his membership record becomes the
legal beneficiary.

4. When the member loses his SS ID card or cannot remember his SS


number, should he secure another SS number?
No. The SS number assigned to a member is his lifetime number and
must always be used in all transactions with the SSS. He should not
secure another number at any other time.
If he wishes to secure another SS ID and cannot remember his SS
number, he may inquire from the nearest SSS office.
5. What are the duties and responsibilities of an SSS employee-
member?
An SSS member should:
1. secure an SS number;
2. ensure that he is reported by his employer to the SSS;
3. pay his monthly share of contributions and ensure that these
contributions are remitted to the SSS by his employer;
4. ensure that SSS Form R3s (Quarterly Collection Lists), where
his name is included, are submitted to the SSS by his
employer every quarter;
5. pay his monthly loan amortization, if any, through salary
deduction and ensure that these payments are remitted to the
SSS by his employer;
6. update or correct his personal records with the SSS by
submitting a duly filled-up SSS Form E-4 (Member's Data
Amendment Form) and supporting documents, such as
marriage certificate for change of status, or birth or baptismal
certificate for change or correction of name or date of birth, to
avoid delays in the processing of benefit claims; and
7. be conscious of changes and improvements in SSS policies
and benefit structure.
6. What are the duties and responsibilities of an SSS employer-
member?
An employer is obliged to:
1. require the presentation of the SS number of prospective
employees;
2. report all his employees for SS coverage within one month
from date of employment by submitting an
3. accomplished SSS Form R-1A at the membership counter of
the nearest SSS office;
4. deduct from his employees the monthly SS contribution based
on the schedule of contributions; pay his share of
contributions including Employees' Compensation (EC) and
remit these contributions to any SSS-accredited bank within
five days after the covered month;
5. submit a summary of all his employees' contributions
(Contribution Collection List) together with a copy of the
Special Bank Receipt (SBR) and SSS Form R-5 (Payment
Return Form) to the nearest SSS branch or Postal Services
Office within 10 days after the applicable quarter;

An employer may also participate in the SSSNet, a computer


service using the electronic data interchange technology,
designed to hasten the posting of employees contributions for
faster processing and availment of benefits and loan
privileges. Employers who are using this facility shall pay their
employees' contributions and transmit both the employee and
employer contributions data on or before the 10th day
following the month when said contributions are due and
applicable.

Or, the employer may opt to participate in the R3 Tape/


Diskette Project, which allows the submission of the quarterly
summary of employees' contributions thru a computer tape or
diskette. This system is a better alternative to manual
reporting as it minimizes encoding errors and processing time.
Under this scheme, the employer shall submit the R3 tape or
diskette on or before the last working day of the applicable
month.
6. issue official receipts and maintain official records of
employment and remittances for all contributions deducted
from his employees every month or indicate such deductions
from his employees' pay envelopes;
A household helper employer should submit an accomplished
SSS Form H-3 (Quarterly Collection List for Househelpers)
together with the SSS Form R-5s. Household helpers
employers in the National Capital Region may enroll in the
Auto-Debit Arrangement System, which allows the one-time
enrollment of the employer's bank account for the automatic
payment of monthly SS contributions and loan repayments.
This arrangement is open at the United Coconut Planters
Bank, Far East Bank and Trust Co., Equitable Bank, Bank of
the Philippine Islands, Metropolitan Bank and Trust Co. and
the Philippine National Bank.
7. remit to the SSS all salary, educational, stocks investment or
privatization loan amortization of his employees and submit an
accomplished SSS Form ML-1 (Quarterly Salary/ Educational/
Calamity/ Stock Investment Loan Payment Return Form) to any
of the SSS-accredited banks on or before the 20th day of the
month after the applicable quarter; submit a summary of all
employees' loan amortization thru an accomplished SSS Form
ML-2 (Collection List) with copies of the SBRs and SSS Form
ML-1 to the nearest branch or Postal Services Office within 10
days after the applicable quarter;

An employer may also participate in the Salary Loan


Repayment Tape/Diskette project, which allows the
submission of the quarterly summary of employees' loan
repayment thru a computer tape or diskette. This system
provides the employer with convenience and hastens the
posting of member's loan repayments. Under this scheme, the
employer shall submit the ML-2 tape or diskette on or before
the last working day of the applicable month.
8. advance SS and EC sickness benefits due his employees once
these are approved by the SSS;
9. advance SS maternity benefits due to qualified female
employees;
10. file for reimbursement for all legally advanced sickness and
maternity benefits;
11. keep his employees updated on the changes in SSS policies
and increases in their benefits;
12. ensure that all forms submitted are properly and accurately
accomplished;
13. inform SSS of any change in company address, business
name, or temporary/permanent cessation of business
operations thru the submission of a duly notarized SSS Form
R-8 (Employer's Data Amendment Form);
14. submit annually an updated SSS Form L-501 (Specimen
Signature Card); and,
15. certify Medicare forms and other SSS-related documents for
the employees when required for purposes of their claims.

7. What are the duties and responsibilities of a voluntary/self-employed


member?
A voluntary/self-employed member should:
1. pay his contributions using SSS Form RS-5 (Contributions
Payment Return Form) monthly or in accordance with the
prescribed schedule; In case of change in monthly earnings or
contribution, he should notify the nearest SSS office in writing.
2. update or correct his personal records with the SSS by
submitting a duly filled-up SSS Form E-4 (Member's Data
Amendment Form) and supporting documents such as
marriage certificate;
3. be conscious of changes and improvements in SSS policies
and benefit structure.
Self-employed and voluntary members in the National Capital Region
may enroll in the Auto-Debit Arrangement System, which allows the
one-time enrollment of the member's bank account for the automatic
payment of monthly SSS contributions and loan repayments. This
arrangement is open at the United Coconut Planters Bank, Far East
Bank and Trust Co., Equitable Bank, Bank of the Philippine Islands,
Metropolitan Bank and Trust Co., and the Philippine National Bank.

8. Monthly contributions based on the gross compensation of SSS


members are payable under two programs, as follows:
1. SSS - 9.4% average monthly compensation not exceeding
P15,000 and payable by both employer (6.07%) and employee
(3.33%).
2. EC - 1% of average monthly compensation not exceeding
P1,000 and payable only by the employer.
9. What is the basis for determining the monthly salary credit and
monthly contributions of an SSS member?
1. For an employee - The monthly salary credit should be based
on the total actual remuneration from employment, including
cost of living allowance, as well as the cash value of any
remuneration paid in kind as stated in the Social Security Law
of 1997, Sec. 8 (f). The monthly contributions of a member can
be determined based on his monthly salary credit which will
be according to the Table of Contributions.
2. For self-employed or voluntary members - the monthly
earnings declared at the time of registration shall be the basis
of his monthly salary credit. However, the declared earnings
should not be lower than P1,000 per month except for the
OFWs whose lowest monthly salary credit is pegged at P3,000.

10. What is the minimum/maximum monthly salary credit of a member?

The minimum monthly salary credit is P1,000 and the maximum is


P15,000 beginning January 2002.

11. What are the different modes of paying the SSS contributions?
SSS contributions may be paid through:
accredited banks;
over-the-counter transactions at the Cashiering Department in
the SSS head office;
electronic data interchange (EDI) for enrolled employer
members;
automatic debit arrangement (ADA) with banks.

12. How should the member pay his monthly contributions?

1. For an employee, including household helpers - monthly


through salary deduction, starting on the first month of
employment.
The employer should use SSS Form R-5 (Contributions Payment
Return) for payments over-the-counter and through accredited banks.
Household employers may also pay through ADA.
2. For a self-employed member, including farmers and fisherfolks
- monthly, upon approval of membership.
The self-employed should use SSS Form RS-5 (Contributions Payment
Return for Self-employed/ Voluntary Members) for payment through
accredited banks or over-the-counter. He may also pay through ADA.
3. For a voluntary member, including non-working spouses and
OFWs - monthly. The voluntary member should use SSS Form
RS-5 (Contributions Payment Return for Self-employed/
Voluntary Members) for payment through accredited banks or
over-the-counter. He may also pay through ADA.

Self-employed and voluntary members are allowed to change


their monthly salary credit (MSC) once in a given year without
a need for a written request. Increase or decrease in MSC
shall be up to 20 percent of the current MSC but in no case
shall it be lower than P1,000 (P3,000 for OFWs). Increase
made in excess of 20 percent shall require the presentation
and submission of a copy of the income tax return (ITR) for the
prior year, duly received by the Bureau of Internal Revenue
(BIR).
Retroactive payment of contributions will not be allowed for self
employed and voluntary members.

13. When is the remittance of contributions due?


1. For employers
1. Employers who remit through the electronic data
interchange (EDI) system - on or before the 10th day of
the month following the applicable month
2. Household employers who remit through automatic debit
arrangement (ADA) - deducted from bank account every
10th day of the month following the applicable month
3. Employers, including household helper employers, who
remit over-the-counter or through banks - on or before
the 5th calendar day of the month following the
applicable month
2. For self-employed and voluntary members
1. Self-employed and voluntary members who remit through
automatic debit arrangement (ADA) - deducted from bank
account on or before the 10th day of the month following
the applicable month
2. Self-employed and voluntary members who remit over-
the-counter or through banks - on or before the 5th day of
the month following the applicable month
14. When and how should employers report their contribution
payments to the SSS?
1. Employers who remit through the electronic data interchange
(EDI) system - monthly, through the Monthly Collection List
(MCL), on or before the 10th day of the month following the
applicable month.
2. Household employers who remit through automatic debit
arrangement (ADA) - reporting is done between the SSS and the
bank upon enrollment of the employer.
3. Employers, including household employers, who remit over-the-
counter or through banks - within the first 10 days after every
quarter ending in March, June, September and December using
the Contribution Collection List (SSS Form R-3) with the copies of
the validated SSS Form R-5 and SBR; or within the first 5 days
following the applicable month using R-3 diskette with copies of
the validated Form R-5 and SBR and transmittal letter.

PRIMER ON GOVERNMENT SERVICE INSURANCE SYSTEM-Republic


Act No. 8921

1. What is the title of Rep. Act No. 8921?


Rep. Act No. 8921 provides: Sec. 1 Presidential Decree as
amended, otherwise known as the Revised Government Service
Insurance Act of 1997 is further amended to read as the follows: Sec.
1 Title- The short title of this Act shall be the Government service Act
of 1997.
2. What is the significance of PD No. 1146 of the GSIS law as amended
by Republic Act No. 8921?
PD 1146 is the law expanding and improving the Social Service
Insurance System. It increases the pension benefits, expands
disability benefits, expands disability benefits, expands disability
benefits and will eventually extend the compulsory coverage of the
social security and insurance programs to all government officers
regardless of employment status.
3. Who is the employer for purposes of the GSIS law?
The national government, its political subdivisions, branches, agencies
or instrumentalities, including government-owned or
controlled corporations, and financial institutions with original
charters, the constitutional commissions and the judiciary;
4. Who is an employee or member of the GSIS?
Any person receiving compensation while in the service of an
employer as defined herein, whether by election or appointment,
irrespective of status of appointment, including barangay and
Sanggunian officials;
5. Who may be considered as dependents of a member?
Dependents shall be the following: (a) the legitimate spouse
dependent for support upon the member or pensioner; (b) the
legitimate, legitimated, legally adopted child, including the illegitimate
child, who is unmarried, not gainfully employed, not over the age of
majority, or is over the age of majority but incapacitated and incapable
of self-support due to a mental or physical defect acquired prior to age
of majority; and (c) the parents dependent upon the member for
support;
6. Classify the different beneficiaries of a member.
a. Primary beneficiaries- The legal dependent spouse until he/she
remarries and the dependent children;
b. Secondary beneficiaries- The dependent parents and, subject to
the restrictions on dependent children, the legitimate descendants;
7. What is meant by a. contribution? b. compensation c. What are the
sources of funds of GSIS?
a. Contribution- the amount payable to the GSIS by the member and
the employer in accordance with Section 5 of this Act:
1. Member- 9.0% and 12 %
2. Employee of the Judiciary 3% and employer- 3%
b. Compensation- basic pay or salary received by an employee,
pursuant to his election/ appointment, excluding per diem, bonuses,
overtime pay, honoraria, allowances and any other emoluments
received in addition to the basic pay which are not integrated into the
basic pay under existing laws ( Sec 2(j), GSIS)
c. The funds of the GSIS come from the monthly contributions required
by the covered employees and their employers (Sec 5, GSIS).
5. What do you understand of the term lump sum?
The basic monthly pension multiplied by sixty (60);
6. Is membership in the GSIS Compulsory?
Membership in the GSIS shall be compulsory for all employees
receiving compensation who have not reached the compulsory
retirement age, irrespective of employment status, except members of
the Armed Forces of the Philippines and the Philippine National Police,
subject to the condition that they must settle first their financial
obligation with the GSIS, and contractuals who have no employer and
employee relationship with the agencies they serve.
"Except for the members of the judiciary and constitutional
commissions who shall have life insurance only, all members of the
GSIS shall have life insurance, retirement, and all other social security
protections such as disability, survivorship, separation, and
unemployment benefits. (Section 3)
7. What is the effect of separation from government service?
A member separated from the service shall continue to be a member,
and shall be entitled to whatever benefits he has qualified to in the
event of any contingency compensable under this Act. (SEC. 4.)
8. What are the obligations of the employer under the GSIS law?
The employer has the following obligations under the GSIS law:
1. To report to the GSIS the names of all employees, their
corresponding employment status, positions, salaries and
other information;
2. To remit directly to GSIS the employer and employees
contribution within the first ten days of the calendar month
following the month to which the contributions apply. (Section
6, GSIS).
10. What is the penalty for non- remittance or delayed remittance?
Penalized by interest penalty not less than 2% per month.
11. Enumerate the benefits that may be enjoyed by covered member of
GSIS.
The benefits are:
1. Basic monthly pension benefit
2. Separation benefits
3. Retirement benefits
4. Permanent disability benefits
5. Temporary disability benefits
6. Survivorship benefits
7. Funeral benefits
8. Life insurance benefits
12.How is the basic monthly basic Pension Computed?
SEC. 9. Computation of the Basic Monthly Pension. - (a) The basic
monthly pension is equal to:
"1) thirty-seven and one-half percent (37.5%) of the revalued average
monthly compensation; plus
"2) two and one-half percent (2.5%) of said revalued average monthly
compensation for each year of service in excess of (15) years:
Provided, That the basic monthly pension shall not exceed ninety
percent (90%) of the average monthly compensation.
"(b) The basic monthly pension may be adjusted upon the
recommendation of the President and General Manager of the GSIS
and approved by the President of the Philippines in accordance with
the rules and regulations prescribed by the GSIS: Provided, however,
that the basic monthly pension shall not be less than One thousand
and three hundred pesos (P1,300.00): Provided, further, that the basic
monthly pension for those who have rendered at least twenty (20)
years of service after the effectivity of this Act shall not be less than
Two thousand four hundred pesos (P2,400.00) a month.
13. How is the length of service computed?
"SEC. 10. Computation of Service. - (a) The computation of service for
the purpose of determining the amount of benefits payable under this
Act shall be from the date of original appointment/election, including
periods of service at different times under one or more employers,
those performed overseas under the authority of the Republic of the
Philippines, and those that may be prescribed by the GSIS in
coordination with the Civil Service Commission.
"(b) All service credited for retirement, resignation or separation for
which corresponding benefits have been awarded under this Act or
other laws shall be excluded in the computation of service in case of
reinstatement in the service of an employer and subsequent
retirement or separation which is compensable under this Act.
"For the purpose of this section, the term service shall include full-
time service with compensation: Provided, that part-time and other
services with compensation may be included under such rules and
regulations as may be prescribed by the GSIS.
14. When is retirement compulsory?
Unless the service is extended by appropriate authorities, retirement
shall be compulsory for an employee 65 years of age, with at least 15
years of service. Provided That if he has less than 15 years of service
he may be allowed to continue in the service in accordance with
existing civil service rules and regulations ( Sec 13 b, GSIS)
15. What shall consist the separation benefits?
The separation benefits shall consist of: (a) a cash payment equivalent
to one hundred percent (100%) of his average monthly compensation
for each year of service he paid contributions, but not less than
Twelve thousand pesos (P12,000) payable upon reaching sixty (60)
years of age upon separation, whichever comes later: Provided, that
the member resigns or separates from the service after he has
rendered at least three (3) years of service but less than fifteen (15)
years; or
"(b) a cash payment equivalent to eighteen (18) times his basic
monthly pension at the time of resignation or separation, plus an old-
age pension benefit equal to the basic monthly pension payable
monthly for life upon reaching the age of sixty (60): Provided, that the
member resigns or separates from the service after he has rendered at
least fifteen (15) years of service and is below sixty (60) years of age
at the time of resignation or separation.
16. Supposing a government employee retires, what are the benefits
that he may receive from the GSIS?
Retirement benefits shall be:
"(1) the lump sum payment as defined in this Act payable at the time
of retirement plus an old-age pension benefit equal to the basic
monthly pension payable monthly for life, starting upon expiration of
the five-year (5) guaranteed period covered by the lump sum; or
"(2) cash payment equivalent to eighteen (18) months of his basic
monthly pension plus monthly pension for life payable immediately
with no five-year (5) guarantee.
"(b) Unless the service is extended by appropriate authorities,
retirement shall be compulsory for an employee of sixty-five (65) years
of age with at least fifteen (15) years of service: Provided, That if he
has less than fifteen (15) years of service, he may be allowed to
continue in the service in accordance with existing civil service rules
and regulations.
17. To be entitled to the retirement benefits mentioned under No. 12,
what requirements must a government employee satisfy?
(1) he has rendered at least fifteen years of service;
(2) he is at least sixty (60) years of age at the time of retirement; and
(3) he is not receiving a monthly pension benefit from permanent total
disability.
18. Under the GSIS, what are the two classes of disability benefits?

1. Permanent Disability Benefits


2. Temporary Disability Benefits

19. What do you mean by the following terms: 1. disability 2. total


disability 3. permanent total disability 3. temporary total disability 4.
permanent partial disability?

1. Disability- any loss or impairment of the normal functions of the


physical and/ or mental faculty of a member which reduces or
eliminates his/ her capacity to continue with his/her current gainful
occupation or engage in any other gainful occupation.
2. Total disabilty- complete incapacity to continue with his present
employment or engage in any gainful occupation due to the loss or
impairment of the normal functions of the physical and/ or mental
faculties of the members.
3. Permanent total disability- accrues or arises when recovering from
impairment mentioned in Sec 2 Q is medically remitted.
4. Temporary Total Disability- accrues or arises when the impaired
physical or mental faculties can be rehabilitated and/ or restored to
their normal functions.
5. Permanent Partial Disability- accrues or arises upon the irrevocable
loss or impairment of certain portion/s of the physical faculties,
despite which the member is able to pursue a gainful occupation.

20. What are the two classes of permanent disability benefits?


1. Permanent total disability benefits
2. Permanent partial disability benefits
21. What are the general conditions that must concur before a member
may be entitled to permanent disability benefits?
A member, who suffers permanent disability for reasons not due to his
grave misconduct, notorious negligence, habitual intoxication, or
willful intention to kill himself or another, shall be entitled to the
benefits provided for under Sections 16 and 17 immediately following,
subject to the corresponding conditions thereof.
22. In case the disability is total, what amount will a member receive
because of such disability?
If the permanent disability is total, he shall receive a monthly income
benefit for life equal to the basic monthly pension effective from the
date of disability:
23. What additional conditions must concur before a member may be
entitled to permanent disability benefits?
(1) he is in the service at the time of disability; or
(2) if separated from the service, he has paid at least thirty-six (36)
monthly contributions within the five (5) year period immediately
preceding disability, or has paid a total of at least one hundred eighty
(180) monthly contributions, prior to his disability: Provided, further,
That if at the time of disability, he was in the service and has paid a
total of at least one hundred eighty (180) monthly contributions, in
addition to the monthly income benefit, he shall receive a cash
payment equivalent to eighteen (18) times his basic monthly pension:
Provided, finally, That a member cannot enjoy the monthly income
benefit for permanent disability and the old-age retirement
simultaneously.
"(b) If a member who suffers permanent total disability does not
satisfy conditions (1) and (2) in paragraph (a) of this section but has
rendered at least three (3) years of service at the time of his disability,
he shall be advanced the cash payment equivalent to one hundred
percent (100%) of his average monthly compensation for each year of
service he paid contributions, but not less than Twelve thousand
pesos (P12,000.00) which should have been his separation benefit.
24. When is the disability benefit suspended?
Unless the member has reached the minimum retirement age,
disability benefit shall be suspended when:
"(1) he is reemployed; or
"(2) he recovers from his disability as determined by the GSIS, whose
decision
shall be final and binding; or
"(3) he fails to present himself for medical examination when required
by the GSIS.

25. What disabilities are considered total and permanent?

The following disabilities shall be deemed total and permanent:


"(1) complete loss of sight of both eyes;
"(2) loss of two (2) limbs at or above the ankle or wrist;
"(3) permanent complete paralysis of two (2) limbs;
"(4) brain injury resulting in incurable imbecility or insanity; and
"(5) such other cases as may be determined by the GSIS.
26. What are the conditions that must concur before a member may
be entitled to temporary disability benefits?
"A member who suffers temporary total disability for reasons not due
to any of the conditions enumerated in Section 15 hereof shall be
entitled to seventy-five percent (75%) of his current daily
compensation for each day or fraction thereof of temporary disability
benefit not exceeding one hundred twenty (120) days in one calendar
year after exhausting all his sick leave credits and collective
bargaining agreement sick leave benefits, if any, but not earlier than
the fourth day of his temporary total disability: Provided, That:
"(1) he is in the service at the time of his disability; or
"(2) if separated, he has rendered at least three (3) years of service
and has paid at least six (6) monthly contributions in the twelve-month
period immediately preceding his disability.
"Provided, however, That a member cannot enjoy the temporary total
disability benefit and sick leave pay simultaneously: Provided, further,
That if the disability requires more extensive treatment that lasts
beyond one hundred twenty (120) days, the payment of the temporary
total disability benefit may be extended by the GSIS but not to exceed
a total of two hundred forty (240) days.
27. In case a GSIS pensioner dies, will his survivors receive any
benefit under this Act?
Yes, his survivors will receive survivorship benefits. When a member
or pensioner dies, the beneficiaries shall be entitled to survivorship
benefits provided in Sections 21 and 22 hereunder subject to the
conditions therein provided for. The survivorship pension shall consist
of:
(1) the basic survivorship pension which is fifty percent (50%) of the
basic monthly pension; and
(2) the dependent childrens pension not exceeding fifty percent (50%)
of the basic monthly pension.

28. State the policies on survivorship benefits when the deceased


member was in the active service?
The policies or rules are:
First, if at the time of death, a member is in the active service and has
rendered at least 15 years of creditable service:
1. The primary beneficiaries shall receive the survivorship
pension and cash payment equivalent to 18 x the basic
monthly pension; or
2. In the absence of primary beneficiaries, his secondary, the
legal heirs of members shall receive the cash payment.
Second, if at the time of death, the member was in the service with
less than 15 years of creditable service, his primary beneficiaries shall
receive the cash payment equivalent to 100% of the average monthly
compensation for every year of creditable service, but not less than
P12, 000 .

29. What should be the governing rules and policies on the


survivorship benefits of inactive members?

1. Survivors of members who retired under retirement laws not


administered by the GSIS shall not receive any survivorship
benefits from the system.
2. Primary beneficiaries of inactive members who have at least
15 years of creditable service shall receive the survivorship
pension.
3. Primary beneficiaries of inactive members who have at least
three years but les than 15 years of creditable service and
were less than sixty years of age at the time of death shall
receive a cash benefit equivalent of 100% of the deceased
inactive members average monthly compensation for every
year of creditable service but not less than P12,000.
4. Primary beneficiaries of inactive members who have less than
15 years of creditable service and were at least 60 years of
age at time of separation from service, shall not be entitled to
receive survivorship benefits. However, if the member has not
yet received the separation benefits within four years after his
separation, the primary beneficiaries shall receive the cash
benefit equivalent to 100% of the inactive members average
monthly compensation for every year of creditable service.

30. State the new rule or policy on the GSIS Pensioner or Recipient of
Monthly Income Benefits for Permanent Total Disability?

The survivorship benefits of a retiree- pensioner or a member receiving


a monthly income benefit for permanent total disability shall be
entitled to:
1. The primary beneficiaries shall receive the survivorship
pension.
2. In the case of a pensioner who dies within the covered period
by the lump sum, the survivorship pension shall be paid after
the expiration of the said period.

31. Under Res. No. 188, what is meant by average monthly


compensation(AMC)?

Consistent with the Premium based Policy, the AMC shall be the
average salary for the last three years of service of the member prior
to his/ hr death or separation, where the corresponding premium
contributions have been paid and remitted to the GSIS.( Res. No. 188
No. 6, August 13, 2003).
32. Under the GSIS law, is there such a thing as compulsory life
insurance?
Yes, all employees except for Members of the Armed Forces of the
Philippines (AFP) and the Philippine National Police (PNP) shall, under
such terms and conditions as may be promulgated by the GSIS, be
compulsorily covered with life insurance.
33. What are the benefits under the compulsory insurance?
The member of his designated beneficiaries/ legal heirs are entitled to
any of the following benefits available under the compulsory life
insurance:
1. Maturity benefit
2. Death Benefit
3. Accident Cash benefit
4. Cash Surrender Value
5. Insurance Loans

34. What are the two classes of life insurance under the GSIS?

1. Compulsory life insurance


2. Optional Insurance

35. When may a member apply for optional insurance? What are the
benefits under an optional life insurance policy.

Subject to the rules and regulations prescribed by GSIS, a member


may apply for insurance and / or pre need coverage embracing life,
health, hospitalization, education, memorial plans, and such other
plans as may be designed by the GSIS for himself and/ or his
dependents. Any employer may likewise apply for group insurance
coverage for its employees.

36. Who will effect payment of premium in optional insurance?

The payment of the premium/ installments for optional insurance and


pre- need products may be made by the insured or his employer and/ or
any person acceptable to the GSIS.
37. Until what time should claims for benefits under the GSIS law be
filed?
Claims for benefits under this Act except for life and retirement shall
prescribe after four (4) years from the date of contingency.
38. Does this 4 year prescriptive period cover life and retirement?
No.
39. Give the effects in case of wrong payment of benefits to
ineligible/disqualified party?
Payments made by the GSIS, prior to receipt of an adverse claim,to a
beneficiary or claimant subsequently found not entitled thereto shall
not bar the legal and eligible recipient to his right to demand the
payment of benefits, proceeds and claims from the GSIS, who shall
however, have a right to institute the appropriate action in a court of
law against the ineligible recipient.(Sec 29 GSIS)
40. What government agency has exclusive original jurisdiction to hear
disputes arising from the GSIS law?
The GSIS shall have original and exclusive jurisdiction to settle any
disputes arising under this Act and any other laws administered by the
GSIS.
The Board may designate any member of the Board, or official of the
GSIS who is a lawyer, to act as hearing officer to receive evidence,
make findings of fact and submit recommendations, together with all
documentary and testimonial evidence to the Board within thirty (30)
working days from the time the parties have closed their respective
evidence and filed their last pleading. The Board shall decide the case
within thirty (30) days from the receipt of the hearing officers findings
and recommendations. The cases heard directly by the Board shall be
decided within thirty (30) working days from the time they are
submitted by the parties for decision.
41. What powers have been enjoyed by officials and employees
authorized by the Board to hear and receive evidence for the Board on
any GSIS dispute within its jurisdiction?
They have the power:
1. To administer oaths and affirmation
2. Take depositions
3. Certify to official acts
4. Issue subpoena to persons to testify and for the production of
books, papers, correspondence and other records.

42. What rules shall govern appeals from any decision of the Board?
Appeals from any decision or award of the Board shall be governed by
Rules 43 and 45 of the 1997 Rules of Civil Procedure adopted by the
Supreme Court on April 8, 1997 which will take effect on July 1, 1997:
Provided, That pending cases and those filed prior to July 1, 1997 shall
be governed by the applicable rules of procedure: Provided, further,
That the appeal shall take precedence over all other cases except
criminal cases when the penalty of life imprisonment or death or
reclusion perpetua is imposable.
The appeal shall not stay the execution of the order or award unless
ordered by the Board, by the Court of Appeals or by the Supreme Court
and the appeal shall be without prejudice to the special civil action of
certiorari when proper.
43. What constitute GSIS Social Insurance Fund?
All contributions payable under Sec. 5 of this Act together with the
earnings and accrual thereon shall constitute the GSIS social
Insurance Fund (Section 34, GSIS)
44. What are the other funds being administered by GSIS?
1. Optional Insurance Fund
2. Employees Compensation Insurance Fund
3. General Insurance Fund
4. Other Special Funds
45. When should the retirement benefits be paid to a member?"
The GSIS shall pay the retirement benefits to the employee on his last
day of service in the government: Provided, That all requirements are
submitted to the GSIS within a reasonable period prior to the effective
date of the retirement;
46. In case an employee is also covered by another law, which grants
similar benefits to what is granted by the GSIS law, may such
employee claim under both laws?
No, the employee may not claim under both. Under Section 55. of the
GSIS law:
Exclusiveness of Benefits. - Whenever other laws provide similar
benefits for the same contingencies covered by this Act, the member
who qualifies to the benefits shall have the option to choose which
benefits will be paid to him. However, if the benefits provided by the
law chosen are less than the benefits provided under this Act, the
GSIS shall pay only the difference.
47. What are the powers and functions of the GSIS?
1. To formulate, adopt and amend rules and regulations;
2. To adopt and approve the annual supplemental budget of
receipts and expenditures;
3. To invest funds of GSIS;
4. To acquire, utilize and dispose of its real and personal
properties;
5. To conduct actuarial and statistical studies and evaluation to
determine the financial condition of the GSIS
6. To have the power of succession.
7. To sue and be sued
8. To enter into contracts;
9. To carry on any lawful business;
10. To establish offices for the conduct of its business;
11. To borrow money from other sources;
12. To invest, own or participate in equity in any establishment
firm or entity;
13. To approve appointments;
14. To design and adopt early Retirement Incentive plan;
15. To fix and periodically review and adjust rates of interest
and other terms and conditions;
16. To enter into any agreement with SSS or with any other
entity;
17. To be able to float proper instrument to liquefy long term
maturity by pooling funds for short term secondary market;
18. To submit annually report to the President and Congress of
the Philippines;
19. To maintain provident fund;
20. To approve guidelines affecting investments;
21. To authorize payment of remunerations to officials and
employees;
22. To determine an impose interest upon unpaid premiums due
from employers and employees;
23. To ensure all collection of all indebtedness, liabilities, and
accountabilities;
24. To design and implement programs;
25. To exercise such other powers and functions as may be
necessary and useful in promoting the purposes and
objectives of GSIS.

CASES