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A. DIRECT HIRING....................................................23
Table of Contents
B. REGULATIONS AND ENFORCEMENT ...................23
I. FUNDAMENTAL PRINCIPLE AND POLICIES .............. 1
B.1. SUSPENSION OR CANCELLATION OF LICENSE
A. CONSTITUTIONAL PROVISIONS ............................. 1 OR AUTHORITY ....................................................23
A.1 ARTICLE II, SECS 9,10,11,13,14,18,20.................... 1 B.2. REGULATORY AND VISITORIAL POWERS OF
A.2 ARTICLE III, SECS 1, 4, 7, 8, 10, 16, 18(2)............. 2 THE DOLE SECRETARY.........................................23
A.3 ARTICLE XIII, SECS1, 2, 3, 13, 14......................... 3 B.3. REMITTANCE OF FOREIGN EXCHANGE
EARNINGS............................................................24
B. CIVIL CODE............................................................ 6
B.4. PROHIBITED ACTIVITIES................................24
B.1 ARTICLE 19 ....................................................... 6
III. LABOR STANDARDS...................................... 27
B.2 ARTICLE 1700................................................... 6
A. COVERAGE .......................................................... 27
B.3. ARTICLE 1702 .................................................. 6
A.1. GOVERNMENT EMPLOYEES........................... 27
C. LABOR CODE......................................................... 7
A.2. MANAGERIAL EMPLOYEES............................ 27
C.1 ARTICLE 3 ......................................................... 7
A.3. FIELD PERSONNEL ........................................28
C.2 ARTICLE 4 ........................................................ 7
A.4. DEPENDENT FAMILY MEMBERS ...................28
C.3 ARTICLE 166 (NOW ARTICLE 172)...................... 8
A.5. DOMESTIC HELPERS .....................................28
C.4 ARTICLE 211 (NOW ARTICLE 217) ...................... 8
A.6. PERSONS IN PERSONAL SERVICE OF
C.5 ARTICLE 212 (NOW ARTICLE 218) ..................... 8 ANOTHER.............................................................29
C.6 ARTICLE 255 (NOW ARTICLE 261) ...................10 A.7. WORKERS PAID BY RESULT ..........................29
C.7 ARTICLE 277 (NOW ARTICLE 283)....................10 B. HOURS OF WORK ................................................29
II. RECRUITMENT AND PLACEMENT....................... 12 B.2. NORMAL HOURS OF WORK ..........................29
A. RECRUITMENT OF LOCAL AND B.3. MEAL BREAK .................................................34
MIGRANT WORKERS ................................................ 12
B.4. WAITING TIME ...............................................36
A.1. ILLEGAL RECRUITMENT ................................. 12
B.5. OVERTIME WORK, OVERTIME PAY ................36
B. ESSENTIAL ELEMENTS OF
ILLEGAL RECRUITMENT ........................................... 13 B.6. NIGHT WORK, NIGHT SHIFT DIFFERENTIAL ..38

C. SIMPLE ILLEGAL RECRUITMENT .......................... 14 B.7. PART-TIME WORK .........................................39


C.1. ILLEGAL RECRUITMENT FOR LOCAL WORKERS B.8. CONTRACT FOR PIECE OF WORK ..................39
(GOVERNED BY THE LABOR CODE) ...................... 14 C. WAGES.................................................................39
C.2. ILLEGAL RECRUITMENT FOR MIGRANT C.1. WAGE VS. SALARY ........................................ 40
WORKERS............................................................. 15
C.2. MINIMUM WAGE........................................... 40
D. ILLEGAL RECRUITMENT IN LARGE SCALE............ 18
C.3. MINIMUM WAGE OF WORKERS PAID BY
E. ILLEGAL RECRUITMENT AS RESULTS ..............................................................42
ECONOMIC SABOTAGE............................................ 18
C.4. COMMISSIONS ..............................................42
E.1 OFFENSE INVOLVING ECONOMIC SABOTAGE
(LARGE-SCALE OR BY A SYNDICATE) ................... 18 C.5. DEDUCTIONS FROM WAGES .........................43

E.2 OFFENSE INVOLVING ECONOMIC SABOTAGE C.6. NON-DIMINUTION OF BENEFITS ...................44


(LARGE-SCALE OR BY A SYNDICATE) ................... 19 C.7. FACILITIES VS SUPPLEMENTS .......................44
F. ILLEGAL RECRUITMENT VS. ESTAFA .................... 19 C.8. WAGE DISTORTION/RECTIFICATION.............45
G. LIABILITIES........................................................... 19 C.9. DIVISOR TO DETERMINE DAILY RATE ...........46
G.1 LOCAL RECRUITMENT AGENCY ...................... 19 D. REST DAY ............................................................ 47

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D.1. WEEKLY REST DAY ........................................ 47 A.1. FOUR-FOLD TEST .......................................... 91
D.2. EMERGENCY REST DAY WORK ..................... 47 A.2. KINDS OF EMPLOYMENT...............................92
E. HOLIDAY PAY/PREMIUM PAY.............................. 47 I. PROBATIONARY ................................................92
E.1. COVERAGE .................................................... 48 II. REGULAR .........................................................94
E.2. TEACHERS, PIECE WORKERS, SEAFARERS, III. PROJECT EMPLOYMENT..................................96
SEASONAL WORKERS, ETC. ................................. 51
IV. SEASONAL ......................................................98
F. LEAVES................................................................ 53
V. CASUAL ............................................................98
F.1. SERVICE INCENTIVE LEAVE PAY .................... 53
VI. FIXED-TERM....................................................99
F.2. MATERNITY LEAVE........................................ 54
A.3. JOB CONTRACTING ..................................... 100
F.3. PATERNITY LEAVE......................................... 55
B. DISMISSAL FROM EMPLOYMENT ...................... 105
F.4. PARENTAL LEAVE ......................................... 56
B.1. JUST CAUSE ................................................. 109
F.5. LEAVES FOR VICTIMS OF VIOLENCE
B.2. AUTHORIZED CAUSE.................................... 114
AGAINST WOMEN ............................................... 57
B.3 OTHER CAUSES............................................. 118
F.6. SPECIAL LEAVE BENEFITS (SLB) FOR WOMEN59
B.4 DUE PROCESS............................................... 119
G. SERVICE CHARGES .............................................. 61
I. TWIN-NOTICE REQUIREMENT ......................... 120
I. SEPARATION PAY................................................. 64
II. HEARING; MEANING OF OPPORTUNITY TO BE
J. RETIREMENT PAY ................................................ 66
HEARD ............................................................... 120
J.1. ELIGIBILITY ..................................................... 66
C. RELIEFS FOR ILLEGAL DISMISSAL ..................... 122
J.2. AMOUNT OF RETIREMENT PAY ..................... 67
C.1. REINSTATEMENT ......................................... 122
J.3. RETIREMENT BENEFITS OF WORKERS WHO
C.2. BACKWAGES ............................................... 124
ARE PAID BY RESULTS ........................................ 68
D. PREVENTIVE SUSPENSION................................ 125
J.4. RETIREMENT BENEFIT OF PART-TIME
WORKERS............................................................ 68 E. CONSTRUCTIVE DISMISSAL ............................... 126
J.5. TAXABILITY.................................................... 68
K. WOMEN WORKERS ............................................. 69 V. MANAGEMENT PREROGATIVE ........................ 126
K.1. PROVISIONS AGAINST DISCRIMINATION ...... 69 A. DISCIPLINE ........................................................ 126
K.2. STIPULATION AGAINST MARRIAGE .............. 70 B. TRANSFER OF EMPLOYEES ................................127
K.3. PROHIBITED ACTS ........................................ 70 C. PRODUCTIVITY STANDARD ............................... 128
K.4. ANTI-SEXUAL HARASSMENT......................... 71 D. GRANT OF BONUS............................................. 128
L. MINOR WORKERS ............................................... 73 E. CHANGE OF WORKING HOURS.......................... 128
M. EMPLOYMENT OF HOUSEHELPERS.................... 75 F. RULES ON MARRIAGE BETWEEN EMPLOYEES OF
COMPETITOR-EMPLOYERS ................................... 129
N. EMPLOYMENT OF HOMEWORKERS.................... 78
G. POST-EMPLOYMENT BAN ................................. 129
O. APPRENTICES AND LEARNERS .......................... 79
VI. SOCIAL WELFARE LEGISLATION ..................... 129
O.1. APPRENTICES ............................................... 79
A. SSS LAW ............................................................ 130
O.2. LEARNERS.................................................... 82
A.1. COVERAGE................................................... 130
P. HANDICAPPED WORKERS DIFFERENTLY-ABLED
WORKERS ............................................................... 84 A.2. EXCLUSIONS FROM COVERAGE.................. 130
IV. TERMINATION OF EMPLOYMENT ..................... 89 A.3. BENEFITS ..................................................... 131
A. EMPLOYER-EMPLOYEE RELATIONSHIP .............. 90 I. MONTHLY PENSION [SEC.12] ............................ 131

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II. DEPENDENTS PENSION [SEC. 12-A].................131 VII. LABOR RELATIONS ..................................... 141
III. RETIREMENT BENEFITS [SEC. 12-B] .................131 A. RIGHT TO SELF-ORGANIZATION......................... 141
IV. PERMANENT DISABILITY BENEFITS [SEC. 13-A]132 A.1. WHO MAY UNIONIZE FOR PURPOSES OF
COLLECTIVE BARGAINING? ................................ 142
V. DEATH BENEFITS [SEC. 13] .............................. 132
I. WHO CANNOT FORM, JOIN OR ASSIST LABOR
VI. FUNERAL BENEFITS [13-B] ............................. 132
ORGANIZATIONS ............................................... 143
VII. LOAN ............................................................ 132
A.2. BARGAINING UNIT ...................................... 145
VIII. SICKNESS BENEFITS [SEC. 14] ...................... 133
I. TEST TO DETERMINE THE CONSTITUENCY OF AN
IX. MATERNITY LEAVE BENEFITS [SEC. 14-A] ...... 133 APPROPRIATE BARGAINING UNIT ..................... 146
A.4. BENEFICIARIES............................................ 134 II. VOLUNTARY RECOGNITION ........................... 148
1. PRIMARY ......................................................... 134 III. CERTIFICATION ELECTION............................. 148
2. SECONDARY ................................................... 134 IV. RUN-OFF ELECTION ...................................... 155
3. OTHERS .......................................................... 134 V. RE-RUN ELECTION ......................................... 156
B. GSIS [RA 8291].................................................... 134 VI. CONSENT ELECTION ..................................... 156
B.1. COVERAGE ................................................... 134 VI. AFFILIATION AND DISAFFILIATION OF THE
B.2. EXCLUSIONS FROM COVERAGE .................. 134 LOCAL UNION FROM THE MOTHER UNION........ 156
VIII. UNION DUES AND SPECIAL ASSESSMENTS 158
B.3. BENEFITS..................................................... 134
I. MONTHLY PENSION [SEC. 9] ............................ 134 IX. AGENCY FEES................................................ 159
B. RIGHT TO COLLECTIVE BARGAINING ................. 159
II. RETIREMENT BENEFITS [SEC. 13] .................... 134
III. PERMANENT DISABILITY BENEFITS ............... 135 B.1 DUTY TO BARGAIN COLLECTIVELY ............... 159
I. WHEN THERE IS ABSENCE OF A CBA................ 161
IV. DEATH BENEFITS [SEC. 21]............................. 135
V. FUNERAL BENEFITS [SEC. 23] ......................... 136 II. WHEN THERE IS A CBA .................................... 161
B.2 COLLECTIVE BARGAINING AGREEMENT (CBA)161
VI. LOAN ............................................................. 136
VII. TEMPORARY DISABILITY BENEFITS .............. 136 I. MANDATORY PROVISIONS OF CBA ................. 164
II. DURATION OF
VIII. SEPARATION BENEFITS ............................... 136
COLLECTIVE BARGAINING AGREEMENT .............167
IX. UNEMPLOYMENT BENEFITS [SEC. 11] ............. 136
B.3. UNION SECURITY ........................................ 169
X. SURVIVORSHIP BENEFITS .............................. 136
I. UNION SECURITY CLAUSES; CLOSED SHOP,
XI. LIFE INSURANCE BENEFITS ........................... 137 UNION SHOP, MAINTENANCE OF MEMBERSHIP
B.4. BENEFICIARIES ............................................ 137 SHOP, ETC.......................................................... 169

I. PRIMARY.......................................................... 137 II.CHECK-OFF, UNION DUES, AGENCY FEES....... 170

II. SECONDARY ................................................... 137 B.4 UNFAIR LABOR PRACTICE


IN COLLECTIVE BARGAINING ............................. 170
C. LIMITED PORTABILITY LAW [RA 7699] ...............140
I. BARGAINING IN BAD FAITH............................. 170
C.1 COVERAGE ....................................................140
II. REFUSAL TO BARGAIN .................................... 171
C.2. PROCESS .....................................................140
III. INDIVIDUAL BARGAINING............................... 171
D. EMPLOYEES COMPENSATION COVERAGE AND
WHEN COMPENSABLE ...........................................140 IV. BLUE SKY BARGAINING .................................. 171

D.1 COVERAGE ....................................................140 V. SURFACE BARGAINING ................................... 171

D.2. EFFECTIVITY ................................................140 B.5 UNFAIR LABOR PRACTICE (ULP)................... 171

D.3. WHEN COMPENSABLE.................................140 I. NATURE OF ULP...............................................172

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II. ULP OF EMPLOYERS ....................................... 172 C.1 JURISDICTION (ORIGINAL AND APPELLATE). 193
III. ULP OF LABOR ORGANIZATIONS................... 174 D. NATIONAL CONCILIATION AND MEDIATION
BOARD................................................................... 194
D.1 NATURE OF PROCEEDINGS .......................... 194
C. RIGHT TO PEACEFUL CONCERTED ACTIVITIES... 175
D.2 CONCILIATION VS. MEDIATION .................... 194
C.1. FORMS OF CONCERTED ACTIVITIES............. 175
D.3 PREVENTIVE MEDIATION ............................. 194
C.2 WHO MAY DECLARE A STRIKE OR LOCKOUT?.. 177
E. DOLE REGIONAL DIRECTORS ............................ 194
C.3 REQUISITES FOR A VALID STRIKE .................... 177
E.1 JURISDICTION ............................................... 194
C.4 REQUISITES FOR A VALID LOCKOUT ................ 179
F. DOLE SECRETARY.............................................. 195
C.5 REQUISITES FOR LAWFUL PICKETING ..............181
F.1 VISITORIAL AND ENFORCEMENT POWERS... 195
C.6 ASSUMPTION OF JURISDICTION BY THE DOLE
SECRETARY OR CERTIFICATION OF THE LABOR F.2 POWER TO SUSPEND/EFFECTS OF
DISPUTE TO THE NLRC FOR COMPULSORY TERMINATION.................................................... 196
ARBITRATION......................................................... 182
F.3 ASSUMPTION OF JURISDICTION................... 196
C.7 NATURE OF ASSUMPTION ORDER OR
F.4 APPELLATE JURISDICTION ........................... 196
CERTIFICATION ORDER.......................................... 182
F.5 VOLUNTARY ARBITRATION POWERS........... 196
C.8 EFFECT OF DEFIANCE OF ASSUMPTION OR
CERTIFICATION ORDERS ....................................... 183 G. GRIEVANCE MACHINERY AND VOLUNTARY
ARBITRATION ........................................................ 196
C.9 ILLEGAL STRIKE ............................................... 184
G.1 SUBJECT MATTER OF GRIEVANCE................ 196
I. LIABILITY OF UNION OFFICERS........................ 185
G.2 VOLUNTARY ARBITRATOR........................... 196
II. LIABILITY OF ORDINARY WORKERS................ 186
I. JURISDICTION ................................................. 196
III. LIABILITY OF EMPLOYER ................................ 186
II. PROCEDURE....................................................197
IV. WAIVER OF ILLEGALITY OF STRIKE................ 186
III. REMEDIES ..................................................... 198
C.10 INJUNCTIONS ................................................. 186
H. COURT OF APPEALS.......................................... 198
I. REQUISITES FOR LABOR INJUNCTIONS........... 187
H.1 RULE 65, RULES OF COURT.......................... 198
II. INNOCENT BYSTANDER RULE ..................... 188
I. SUPREME COURT ............................................... 198
VIII. PROCEDURE AND JURISDICTION................... 189
I.1 RULE 45, RULES OF COURT ........................... 199
A. LABOR ARBITER................................................. 189
J. PRESCRIPTION OF ACTIONS .............................. 199
A.1 JURISDICTION ............................................... 189
I. VERSUS REGIONAL DIRECTOR ................... 189
A.2 REINSTATEMENT PENDING APPEAL ............190
A.3 REQUIREMENTS TO PERFECT APPEAL TO
NLRC ..................................................................190
B. NATIONAL LABOR RELATIONS COMMISSION
(NLRC)....................................................................190
B.1 JURISDICTION ...............................................190
B.2 EFFECT OF NLRC REVERSAL OF LABOR
ARBITERS ORDER OF REINSTATEMENT .............191
B.3 REMEDIES......................................................191
B.4 CERTIFIED CASES ......................................... 192
C. BUREAU OF LABOR RELATIONS MED-ARBITERS193

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I. Fundamental [Article II, Section 13.] The State recognizes the


vital role of the youth in nation-building and
Principle and Policies shall promote and protect their physical,
moral, spiritual, intellectual, and social well-
being. It shall inculcate in the youth patriotism
A. CONSTITUTIONAL PROVISIONS and nationalism, and encourage their
involvement in public and civic affairs.
A.1 ARTICLE II, SECS 9,10,11,13,14,18,20
[Article II, Section 9.] The State shall promote a [Article II, Section 14.] The State recognizes the
just and dynamic social order that will ensure role of women in nation-building, and shall
the prosperity and independence of the nation ensure the fundamental equality before the
and free the people from poverty through law of women and men.
policies that provide adequate social services,
promote full employment, a rising standard of
[Article II, Section 18.] The State affirms labor as
living, and an improved quality of life for all.
a primary social economic force. It shall protect
the rights of workers and promote their
[Article II, Section 10.] The State shall promote welfare.
social justice in all phases of national
development. [Article II, Section 20.] The State recognizes the
indispensable role of the private sector,
General definition of Social Justice encourages private enterprise, and provides
Social Justice is neither communism, nor incentives to needed investments.
despotism, nor atomism, nor anarchy, but the
humanization of laws and the equalization of Limits of Social Justice
social and economic forces by the State so that Social justice should be used only to correct an
justice in its rational and objectively secular injustice. It must be founded on the recognition
conception may at least be approximated. of the necessity of interdependence among
[Calalang vs. Williams (1940)] diverse units of a society, and of the protection
that should be equally and evenly extended to
Welfare State all groups as a combined force in our social
The welfare state concept is found in the and economic life. As partners in nation-
constitutional clause on the promotion of building, labor and management need each
social justice to ensure the well-being and other to foster productivity and economic
economic security of all the people, and in the growth; hence, the need to weigh and balance
pledge of protection to labor with specific the rights and welfare of both the employee
authority to regulate the relations between and employer. [Agabon vs. NLRC (2004)]
landowners and tenants and between labor
and capital. [Alalayan vs. National Power The policy of social justice is not intended to
Corporation (1968)] countenance wrongdoing simply because it is
committed by the underprivileged. At best it
[Article II, Section 11.] The State values the may mitigate the penalty but it certainly will
dignity of every human person and guarantees not condone the offense. Compassion for the
full respect for human rights. poor is an imperative of every humane society
but only when the recipient is not a rascal
claiming an undeserved privilege. Social justice

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cannot be permitted to be a refuge of Due Process


scoundrels any more than can equity be an Due process requirements are two-fold
impediment to the punishment of the guilty. substantive (dismissal should be for a valid
Those who invoke social justice may do so only and authorized cause as provided by law) and
if their hands are clean and their motives procedural (due notice and hearing). [Salaw vs.
blameless and not simply because they NLRC (1991)]
happen to be poor. This great policy of our
Constitution is not meant for the protection of To constitute valid dismissal from
those who have proved they are not worthy of employment, two requisites must concur: (1)
it, like the workers who have tainted the cause the dismissal must be for a just or authorized
of labor with the blemishes of their own cause and (2) the employee must be afforded
character. [Tirazona vs. Philippine EDS Techno- an opportunity to be heard and to defend
Service Inc. (2009)] himself. [Jeffrey Nacague vs. Sulpicio Lines, Inc.
(2010)]
Liberty of Contract/Laissez Faire
The prohibition to impair the obligation of Labor as Property Right 6
contracts is not absolute and unqualified. In Ones employment is a property right, and the
spite of the constitutional prohibition and the wrongful interference therewith is an
fact that both parties are of full age and actionable wrong. [Sibal vs. Notre Dame of
competent to contract, it does not necessarily Greater Manila (1990)]
deprive the State of the power to interfere
where the parties do not stand upon an [Article III, Section 4.] No law shall be passed
equality, or where the public health demands abridging the freedom of speech, of
that one party to the contract shall be expression, or of the press, or the right of the
protected against himself. [Leyte Land people peaceably to assemble and petition the
Transportation Co. vs. Leyte Farmers & Workers government for redress of grievances.
Union (1948)]
The Right to Assemble
The Constitution is primarily a document of The right of peaceable assembly is a right 6
social justice, and although it has recognized cognate to those of free speech and free press
the importance of the private sector, it has not and is equally fundamental. [de Jonge vs.
embraced fully the concept of laissez-faire or Oregon, (1937)]
relied on pure market forces to govern the
economy. [Employees Confederation of the In a case where employees were dismissed for
Philippines vs. NWPC (1991)] serious misconduct or willful disobedience, the
SC ruled that the element of willfulness
A.2 ARTICLE III, SECS 1, 4, 7, 8, 10, 16, characterized by a perverse mental attitude in
18(2) disobeying the employers order as to warrant
[Article III, Section 1.] No person shall be the ultimate penalty of dismissal was lacking.
deprived of life, liberty, or property without due It said that wearing armbands and putting up
process of law, nor shall any person be denied placards to express ones views without
the equal protection of the laws. violating the rights of third parties, are legal
per se and even constitutionally protected.
[Bascon v CA, G.R. No. 144899, February 5,
2004]

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equality, or where the public health demands


[Article III, Section 7.] The right of the people to that one party to the contract shall be
information on matters of public concern shall protected against himself. [Leyte Land
be recognized. Access to official records, and Transportation Co. vs. Leyte Farmers & Workers
to documents and papers pertaining to official Union (1948)]
acts, transactions, or decisions, as well as to
government research data used as basis for [Article III, Section 16.] All persons shall have
policy development, shall be afforded the the right to a speedy disposition of their cases
citizen, subject to such limitations as may be before all judicial, quasi-judicial, or
provided by law. administrative bodies.

[Article III, Section 8.] The right of the people, [Article III, Section 18(2).] No involuntary
including those employed in the public and servitude in any form shall exist except as a
private sectors, to form unions, associations, or punishment for a crime whereof the party shall
societies for purposes not contrary to law shall have been duly convicted.
not be abridged.
A.3 ARTICLE XIII, SECS1, 2, 3, 13, 14
The Right to Form Associations [Article XIII, Section 1.] The Congress shall give
The right to form associations shall not be highest priority to the enactment of measures
impaired except through a valid exercise of that protect and enhance the right of all the
police power. [Bernas, The 1987 Philippine people to human dignity, reduce social,
Constitution: a Comprehensive Reviewer] economic, and political inequalities, and
remove cultural inequities by equitably
[Article III, Section 10.] No law impairing the diffusing wealth and political power for the
obligation of contracts shall be passed. common good.

Non-impairment of Contracts To this end, the State shall regulate the


A law which changes the terms of a legal acquisition, ownership, use, and disposition of
contract between parties, either in the time or property and its increments.
mode or performance, or imposes new
conditions, or dispenses with those expressed, [Article XIII, Section 2.] The promotion of social
or authorizes for its satisfaction something justice shall include the commitment to create
different from that provided in its terms, is a economic opportunities based on freedom of
law which impairs the obligation of a contract initiative and self-reliance.
and is null and void. [Clemens vs. Nolting
(1922)] [Article XIII, Section 3.] The State shall afford
full protection to labor, local and overseas,
Compare with Liberty of Contract: organized and unorganized, and promote full
The prohibition to impair the obligation of employment and equality of employment
contracts is not absolute and unqualified. In opportunities for all.
spite of the constitutional prohibition and the
fact that both parties are of full age and It shall guarantee the rights of all workers to
competent to contract, it does not necessarily self-organization, collective bargaining and
deprive the State of the power to interfere negotiations, and peaceful concerted activities,
where the parties do not stand upon an including the right to strike in accordance with

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law. They shall be entitled to security of tenure, the employer. [Phil. Geothermal Inc. vs. NLRC
humane conditions of work, and a living wage. (1994)]
They shall also participate in policy and
decision-making processes affecting their This Court held that the employers right to
rights and benefits as may be provided by law. conduct the affairs of his business according to
its own discretion and judgment, is well-
The State shall promote the principle of shared recognized. An employer has a free reign and
responsibility between workers and employers enjoys wide latitude of discretion to regulate
and the preferential use of voluntary modes in all aspects of employment. This is a
settling disputes, including conciliation, and management prerogative, where the free will
shall enforce their mutual compliance of management to conduct its own affairs to
therewith to foster industrial peace. achieve its purpose takes form. [Torreda vs.
Toshiba (2007)]
The State shall regulate the relations between
workers and employers, recognizing the right Under the doctrine of management
of labor to its just share in the fruits of prerogative, every employer has the inherent
production and the right of enterprises to right to regulate, according to his own
reasonable returns to investments, and to discretion and judgment, all aspects of
expansion and growth. employment, including hiring, work
assignments, working methods, the time,
Participation in Decision-Making Process place and manner of work, work supervision,
Verily, a line must be drawn between transfer of employees, lay-off of workers, and
management prerogatives regarding business discipline, dismissal, and recall of employees.
operations per se and those which affect the The only limitations to the exercise of this
rights of the employees. In treating the latter, prerogative are those imposed by labor laws
management should see to it that its and the principles of equity and substantial
employees are at least properly informed of its justice. [Peckson v Robinsons Supermarket
decisions or modes action. Indeed, industrial Corporation, G.R. No. 198534, July 3, 2013]
peace cannot be achieved if the employees are
denied their just participation in the discussion Limits to Management Prerogative
of matters affecting their rights. [Phil. Airlines (1) Good faith - So long as a companys
Inc. vs. NLRC (1993); also cited in Manila Electric management prerogatives are exercised in
Co. vs. Sec. of Labor Quisumbing (2000)] good faith for the advancement of the
employers interest and not for the purpose of
Management and the Constitution: defeating or circumventing the rights of the
Management Function/Prerogative employees under special laws or under valid
The law in protecting the rights of the agreements, this Court will uphold themEven
employees authorizes neither oppression nor as the law is solicitous of the welfare of the
self-destruction of the employer. It should be employees, it must also protect the right of an
made clear that when the law tilts the scale of employer to exercise what are clearly
justice in favor of labor, it is but a recognition management prerogatives. The free will of
of the inherent economic inequality between management to conduct its own business
labor and management. Never should the affairs to achieve its purpose cannot be denied.
scale be so tilted if the result is an injustice to [Ernesto G. Ymbong vs. ABS-CBN Broadcasting
Corp. (2012)]

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(2) Without grave abuse of discretion - But, like express policy of the law. [Goya, Inc. v. Goya,
other rights, there are limits thereto. The Inc., Employees Union-FFW (2013)]
managerial prerogative to transfer personnel
must be exercised without grave abuse of (5) Equity and/or Substantial Justice The
discretion, bearing in mind the basic elements Court recognized the inherent right of the
of justice and fair play. Having the right should employer to discipline its employees but it
not be confused with the manner in which the should still ensure that the employer exercises
right is exercised. [Tinio vs. CA (2007)] the prerogative to discipline humanely and
considerately, and that the sanction imposed is
(3) Law In one case, a pharmaceutical commensurate to the offense involved and to
company defended its termination of rank and the degree of the infraction. The discipline
file employees during a bargaining deadlock, exacted by the employer should further
as an exercise of management prerogative. consider the employees length of service and
This was after the Labor Secretary had the number of infractions during his
assumed jurisdiction over the dispute and employment. [Dongon v. Rapid Movers and
enjoined the parties from any acts which Forwarders Co., Inc. (2013)]
might exacerbate the situation.
Assumption of jurisdiction by the Secretary of
The Court disagreed with the companys Labor This Court declared that it recognizes
defense, stating that the privilege is not the exercise of management prerogatives and
absolute but subject to limitations imposed by it often declines to interfere with the legitimate
law. In this case, it is limited by Sec. 236(g), business decisions of the employerHowever,
which gives the Secretary the power to assume as expressed in PAL vs. NLRC, the privilege is
jurisdiction and resolve labor disputes not absolute, but subject to exceptions. One of
involving industries indispensable to national these exceptions is when the Secretary of Labor
interest. assumes jurisdiction over labor disputes
involving industries indispensable to the
The companys management prerogatives are national interest under Article 263(g) of the
not being unjustly curtailed but duly tempered Labor Code. [University of Immaculate
by the limitations set by law, taking into Concepcion Inc. vs. Sec. of Labor (2005)]
account its special character and the particular
circumstances in the case at bench. [Metrolab [Article XIII, Section 13.] The State recognizes
Industries, Inc. v. Roldan-Confesor (2013)] the vital role of the youth in nation-building
and shall promote and protect their physical,
(4) Collective Bargaining The CBA provisions moral, spiritual, intellectual, and social well-
agreed upon by the Company and the Union being. It shall inculcate in the youth patriotism
delimit the free exercise of management and nationalism, and encourage their
prerogative. The parties in a CBA may involvement in public and civic affairs.
establish such stipulations, clauses, terms and [Article XIII, Section 14.] The State shall protect
conditions as they may deem convenient working women by providing safe and
provided these are not contrary to law, morals, healthful working conditions, taking into
good customs, public order or public policy. account their maternal functions, and such
Where the CBA is clear and unambiguous, it facilities and opportunities that will enhance
becomes the law between the parties and their welfare and enable them to realize their
compliance therewith is mandated by the full potential in the service of the nation.

5
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B. CIVIL CODE relationships from the impact of labor laws


and regulations by simply contracting with
B.1 ARTICLE 19 each other. Moreover, in case of doubt, the
[Article 19.] Every person must, in the exercise terms of a contract should be construed in
of his rights and in the performance of his favor of labor. [Innodata Philippines, Inc. vs.
duties, act with justice, give everyone his due, Quejada-Lopez (2006)]
and observe honesty and good faith.
Liberal Construction
B.2 ARTICLE 1700 While the terms and conditions of a CBA
constitute the law between the parties, it is not
[Article 1700.] The relations between capital
however, an ordinary contract to which is
and labor are not merely contractual. They are
applied the principles of law governing
so impressed with public interest that labor
ordinary contracts. A CBA, as a labor contract
contracts must yield to the common good.
within the contemplation of Article 1700 of the
Therefore, such contracts are subject to the
Civil Code of the Philippines which governs the
special laws on labor unions, collective
relations between labor and capital, is not
bargaining, strikes and lockouts, closed shop,
merely contractual in nature but impressed
wages, working conditions, hours of labor and
with public interest, thus, it must yield to the
similar subjects.
common good. As such, it must be construed
liberally rather than narrowly and technically,
B.3. ARTICLE 1702
and the courts must place a practical and
[Article 1702.] In case of doubt, all labor realistic construction upon it, giving due
legislation and all labor contracts shall be consideration to the context in which it is
construed in favor of the safety and decent negotiated and purpose which it is intended to
living for the laborer. serve. [Cirtek Employees Labor Union-FFW v
Cirtek Electronics, 2010]
Contracts
Under the Civil Code, contracts of labor are When there is doubt between the evidence
explicitly subject to the police power of the submitted by the employer and that submitted
state because they are not ordinary contracts by the employee, the scales of justice must be
but are impressed with public interest. tilted in favor of the employee. This is
Inasmuch as in this particular instance the consistent with the rule that an employers
contract in question would have been deemed cause could only succeed on the strength of its
in violation of pertinent labor laws, the own evidence and not on the weakness of the
provisions of said laws would prevail over the employees evidence. [Misamis Oriental II
terms of the contract, and private respondent Electric Service Cooperative vs. Virgilio
would still be entitled to overtime pay. [PAL Cagalawan (2012)]
Employees Savings and Loan Assn., Inc. vs.
NLRC (1996)]

Indeed, a contract of employment is impressed


with public interest. For this reason, provisions
of applicable statutes are deemed written into
the contract. Hence, the parties are not at
liberty to insulate themselves and their

6
UP LAW BOC LABOR STANDARDS LABOR LAW

Fair treatment C. LABOR CODE


The right of an employer to dismiss an
employee differs from and should not be 7
C.1 ARTICLE 3
confused with the manner in which such right LC, Art. 3. Declaration of basic policy. The State
is exercised. It must not be oppressive and shall afford protection to labor, promote full
abusive since it affects one's person and employment, ensure equal work opportunities
property. [General Bank and Trust Co. vs. CA regardless of sex, race or creed and regulate
(1985)] the relations between workers and employers.
The State shall assure the rights of workers to
Mutual obligation self-organization, collective bargaining,
The employer's obligation to give his workers security of tenure, and just and humane
just compensation and treatment carries with conditions of work.
it the corollary right to expect from the workers
adequate work, diligence and good conduct. C.2 ARTICLE 4
[Firestone Tire and Rubber Co. vs. Lariosa
[LC, Art. 4.] Construction in favor of labor. All
(1987)]
doubts in the implementation and
interpretation of the provisions of this Code,
Compliance with law
including its implementing rules and
It is also important to emphasize that the
regulations, shall be resolved in favor of labor
return-to-work order not so much confers a
right as it imposes a duty; and while as a right
it may be waived, it must be discharged as a Liberality in Application of Rules
duty even against the worker's will. [Sarmiento [Article 221.] Technical rules not binding and
vs. Tuico (1988)] prior resort to amicable settlement.
In any proceeding before the Commission
Employee's compliance and obedience to or any of the Labor Arbiters, the rules of
employer's orders evidence prevailing in courts of law or equity
The lack of a written or formal designation shall not be controlling and it is the spirit and
should not be an excuse to disclaim any intention of this Code that the Commission and
responsibility for any damage suffered by the its members and the Labor Arbiters shall use
employer due to his negligence. The measure every and all reasonable means to ascertain
of the responsibility of an employee is that if he the facts in each case speedily and objectively
performed his assigned task efficiently and and without regard to technicalities of law or
according to the usual standards, then he may procedure, all in the interest of due process.
not be held personally liable for any damage xxx
arising therefrom. Failing in this, the employee
must suffer the consequences of his negligence We stress at this point that it is the spirit and
if not lack of due care in the performance of his intention of labor legislation that the NLRC
duties. [PCIB vs. Jacinto (1991)] and the labor arbiters shall use every
reasonable means to ascertain the facts in
each case speedily and objectively, without
regard to technicalities of law or procedure,
provided due process is duly observed. The
application of technical rules of procedure in
labor cases may be relaxed to serve the

7
UP LAW BOC LABOR STANDARDS LABOR LAW

demands of substantial justice. [Manila Electric (d) To promote the enlightenment of


Co. vs. Jan Carlo Gala (2012)] workers concerning their rights and
obligations as union members and as
It is settled that subsequent and substantial employees;
(e) To provide an adequate administrative
compliance may call for the relaxation of the machinery for the expeditious
rules of procedureThe Court has time and settlement of labor or industrial
again relaxed the rigid application of the rules disputes;
to offer full opportunity for parties to ventilate (f) To ensure a stable but dynamic and just
their causes and defenses in order to promote industrial peace; and
rather than frustrate the ends of justice. [Ma. (g) To ensure the participation of workers in
decision and policy-making processes
Ligaya Santos vs. Litton Mills (2011)]
affecting their rights, duties and welfare.

C.3 ARTICLE 166 (NOW ARTICLE 172) B. To encourage a truly democratic method of
[Article 166.] Policy. - The State shall promote regulating the relations between the
and develop a tax-exempt employees employers and employees by means of
agreements freely entered into through
compensation program whereby employees
collective bargaining, no court or
and their dependents, in the event of work- administrative agency or official shall have
connected disability or death, may promptly the power to set or fix wages, rates of pay,
secure adequate income benefit and medical hours of work or other terms and conditions
related benefits. of employment, except as otherwise
provided under this Code.
Workmens Compensation Program
This is the general and comprehensive term C.5 ARTICLE 212 (NOW ARTICLE 218)
applied to those laws providing for Article 212.Definitions.
compensation for loss resulting from the injury, (a) Commission means the National Labor
disablement, or death of workmen through Relations Commission or any of its
industrial accident, casualty, or disease. divisions, as the case may be, as provided
under this Code.
[Azucena, The Labor Code with Comments and (b) Bureau means the Bureau of Labor
Cases] Relations and/or the Labor Relations
Divisions in the regional offices established
C.4 ARTICLE 211 (NOW ARTICLE 217) under Presidential Decree No. 1, in the
[Article 211.] Declaration of Policy. Department of Labor.
A. It is the policy of the State: (c) Board means the National Conciliation
and Mediation Board established under
(a) To promote and emphasize the primacy
of free collective bargaining and Executive Order No. 126.
(d) Council means the Tripartite Voluntary
negotiations, including voluntary
arbitration, mediation and conciliation, Arbitration Advisory Council established
under Executive Order No. 126, as
as modes of settling labor or industrial
disputes; amended.
(e) Employer includes any person acting in
(b) To promote free trade unionism as an
instrument for the enhancement of the interest of an employer, directly or
indirectly. The term shall not include any
democracy and the promotion of social
justice and development; labor organization or any of its officers or
agents except when acting as employer.
(c) To foster the free and voluntary
organization of a strong and united (f) Employee includes any person in the
employ of an employer. The term shall not
labor movement;
be limited to the employees of a particular

8
UP LAW BOC LABOR STANDARDS LABOR LAW

employer, unless the Code so explicitly (n) Voluntary Arbitrator means any person
states. It shall include any individual whose accredited by the Board as such or any
work has ceased as a result of or in person named or designated in the
connection with any current labor dispute Collective Bargaining Agreement by the
or because of any unfair labor practice if he parties to act as their Voluntary Arbitrator,
has not obtained any other substantially or one chosen with or without the
equivalent and regular employment. assistance of the National Conciliation and
(g) Labor organization means any union or Mediation Board, pursuant to a selection
association of employees which exists in procedure agreed upon in the Collective
whole or in part for the purpose of Bargaining Agreement, or any official that
collective bargaining or of dealing with may be authorized by the Secretary of
employers concerning terms and Labor and Employment to act as Voluntary
conditions of employment. Arbitrator upon the written request and
(h) Legitimate labor organization means any agreement of the parties to a labor
labor organization duly registered with the dispute.
Department of Labor and Employment, (o) Strike means any temporary stoppage of
and includes any branch or local thereof. work by the concerted action of employees
(i) Company union means any labor as a result of an industrial or labor dispute.
organization whose formation, function or (p) Lockout means any temporary refusal of
administration has been assisted by any an employer to furnish work as a result of
act defined as unfair labor practice by this an industrial or labor dispute.
Code. (q) Internal union dispute includes all
(j) Bargaining representative means a disputes or grievances arising from any
legitimate labor organization whether or violation of or disagreement over any
not employed by the employer. provision of the constitution and by laws of
(k) Unfair labor practice means any unfair a union, including any violation of the
labor practice as expressly defined by the rights and conditions of union membership
Code. provided for in this Code.
(l) Labor dispute includes any controversy (r) Strike-breaker means any person who
or matter concerning terms and conditions obstructs, impedes, or interferes with by
of employment or the association or force, violence, coercion, threats, or
representation of persons in negotiating, intimidation any peaceful picketing
fixing, maintaining, changing or arranging affecting wages, hours or conditions of
the terms and conditions of employment, work or in the exercise of the right of self-
regardless of whether the disputants stand organization or collective bargaining.
in the proximate relation of employer and (s) Strike area means the establishment,
employee. warehouses, depots, plants or offices,
(m) Managerial employee is one who is including the sites or premises used as
vested with the powers or prerogatives to runaway shops, of the employer struck
lay down and execute management against, as well as the immediate vicinity
policies and/or to hire, transfer, suspend, actually used by picketing strikers in
lay-off, recall, discharge, assign or moving to and fro before all points of
discipline employees. Supervisory entrance to and exit from said
employees are those who, in the interest of establishment.
the employer, effectively recommend such
managerial actions if the exercise of such
authority is not merely routinary or clerical
in nature but requires the use of
independent judgment. All employees not
falling within any of the above definitions
are considered rank-and-file employees for
purposes of this Book.

9
UP LAW BOC LABOR STANDARDS LABOR LAW

C.6 ARTICLE 255 (NOW ARTICLE 261) worker whose employment is sought to be
Article 255.Exclusive bargaining representation terminated a written notice containing a
and workers participation in policy and statement of the causes for termination and
decision making. - The labor organization shall afford the latter ample opportunity to be
designated or selected by the majority of the heard and to defend himself with the
employees in an appropriate collective assistance of his representative if he so desires
bargaining unit shall be the exclusive in accordance with company rules and
representative of the employees in such unit regulations promulgated pursuant to
for the purpose of collective bargaining. guidelines set by the Department of Labor and
However, an individual employee or group of Employment. Any decision taken by the
employees shall have the right at any time to employer shall be without prejudice to the
present grievances to their employer. right of the worker to contest the validity or
legality of his dismissal by filing a complaint
Any provision of law to the contrary with the regional branch of the National Labor
notwithstanding, workers shall have the right, Relations Commission. The burden of proving
subject to such rules and regulations as the that the termination was for a valid or
Secretary of Labor and Employment may authorized cause shall rest on the employer.
promulgate, to participate in policy and The Secretary of the Department of Labor and
decision-making processes of the Employment may suspend the effects of the
establishment where they are employed termination pending resolution of the dispute
insofar as said processes will directly affect in the event of a prima facie finding by the
their rights, benefits and welfare. For this appropriate official of the Department of Labor
purpose, workers and employers may form and Employment before whom such dispute is
labor-management councils: Provided, That pending that the termination may cause a
the representatives of the workers in such serious labor dispute or is in implementation of
labor-management councils shall be elected a mass lay-off.
by at least the majority of all employees in said
establishment. (c) Any employee, whether employed for a
definite period or not, shall, beginning on his
C.7 ARTICLE 277 (NOW ARTICLE 283) first day of service, be considered as an
Article 277.Miscellaneous provisions. employee for purposes of membership in any
(a) All unions are authorized to collect labor union.
reasonable membership fees, union dues,
assessments and fines and other contributions (d) No docket fee shall be assessed in labor
for labor education and research, mutual standards disputes. In all other disputes,
death and hospitalization benefits, welfare docket fees may be assessed against the filing
fund, strike fund and credit and cooperative party, provided that in bargaining deadlock,
undertakings. such fees shall be shared equally by the
negotiating parties.
(b) Subject to the constitutional right of
workers to security of tenure and their right to (e) The Minister of Labor and Employment and
be protected against dismissal except for a just the Minister of the Budget shall cause to be
and authorized cause and without prejudice to created or reclassified in accordance with law
the requirement of notice under Article 283 of such positions as may be necessary to carry out
this Code, the employer shall furnish the the objectives of this Code and cause the

10
UP LAW BOC LABOR STANDARDS LABOR LAW

upgrading of the salaries of the personnel


involved in the Labor Relations System of the (h) In establishments where no legitimate
Ministry. Funds needed for this purpose shall labor organization exists, labor-management
be provided out of the Special Activities Fund committees may be formed voluntarily by
appropriated by Batas Pambansa Blg. 80 and workers and employers for the purpose of
from annual appropriations thereafter. promoting industrial peace. The Department of
Labor and Employment shall endeavor to
(f) A special Voluntary Arbitration Fund is enlighten and educate the workers and
hereby established in the Board to subsidize employers on their rights and responsibilities
the cost of voluntary arbitration in cases through labor education with emphasis on the
involving the interpretation and policy thrusts of this Code.
implementation of the Collective Bargaining
Agreement, including the Arbitrators fees, and (i) To ensure speedy labor justice, the periods
for such other related purposes to promote provided in this Code within which decisions or
and develop voluntary arbitration. The Board resolutions of labor relations cases or matters
shall administer the Special Voluntary should be rendered shall be mandatory. For
Arbitration Fund in accordance with the this purpose, a case or matter shall be deemed
guidelines it may adopt upon the submitted for decision or resolution upon the
recommendation of the Council, which filing of the last pleading or memorandum
guidelines shall be subject to the approval of required by the rules of the Commission or by
the Secretary of Labor and Employment. the Commission itself, or the Labor Arbiter, or
Continuing funds needed for this purpose in the Director of the Bureau of Labor Relations
the initial yearly amount of fifteen million or Med-Arbiter, or the Regional Director.
pesos (P15,000,000.00) shall be provided in
the 1989 annual general appropriations acts. Upon expiration of the corresponding period, a
certification stating why a decision or
The amount of subsidy in appropriate cases resolution has not been rendered within the
shall be determined by the Board in said period shall be issued forthwith by the
accordance with established guidelines issued Chairman of the Commission, the Executive
by it upon the recommendation of the Council. Labor Arbiter, or the Director of the Bureau of
Labor Relations or Med-Arbiter, or the
The Fund shall also be utilized for the Regional Director, as the case may be, and a
operation of the Council, the training and copy thereof served upon the parties.
education of Voluntary Arbitrators, and the
Voluntary Arbitration Program. Despite the expiration of the applicable
mandatory period, the aforesaid officials shall,
(g) The Ministry shall help promote and without prejudice to any liability which may
gradually develop, with the agreement of labor have been incurred as a consequence thereof,
organizations and employers, labor- see to it that the case or matter shall be
management cooperation programs at decided or resolved without any further delay.
appropriate levels of the enterprise based on
the shared responsibility and mutual respect in
order to ensure industrial peace and
improvement in productivity, working
conditions and the quality of working life.

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II. Recruitment and Provided, That the receiving country is


taking positive, concrete measures to protect
Placement the rights of migrant workers in furtherance of
any of the guarantees under subparagraphs
(a), (b) and (c) hereof. [Sec. 3, RA 8042, as
A. RECRUITMENT OF LOCAL AND amended]
MIGRANT WORKERS
A.1. ILLEGAL RECRUITMENT
Worker [Sec. 5, R.A. No. 10022]
Refers to any member of the labor force, i. License and Authority
whether employed or unemployed. [Art.13(a), A license is a document issued by the
LC) Department of Labor and Employment (DOLE)
authorizing a person or entity to operate a
Overseas Filipino Worker private employment agency, while an authority
Refers to a person who is to be engaged, is is a document issued by the DOLE authorizing
engaged or has been engaged in a a person or association to engage in
remunerated activity in a state of which he or recruitment and placement activities as a
she is not a citizen or on board a vessel private recruitment agency. [Art. 13(d) and (f),
navigating the foreign seas other than a LC]
government ship used for military or non- License Authority
commercial purposes or on an installation Authorize an entity to Authorize an entity to
located offshore or on the high seas; to be used operate as a private operate as a private
interchangeably with migrant worker. [Sec. employment agency recruitment entity
2(a), RA 8042, as amended] When a license is Does not entitle a
given, one is also private recruitment
Policy of Selective Deployment authorized to collect entity to collect fees.
The State shall allow the deployment of fees
overseas Filipino workers only in countries
where the rights of Filipino migrant workers Private employment agency (PEA) v. Private
are protected. The government recognizes any recruitment entity (PRE)
of the following as a guarantee on the part of Type Definition Requires
the receiving country for the protection of the
Private Any person or License
rights of overseas Filipino workers:
employment entity engaged in
(a) It has existing labor and social laws
agency recruitment and
protecting the rights of workers,
placement of
including migrant workers;
workers for a fee
(b) It is a signatory to and/or a ratifier of
Private Any person or Authority
multilateral conventions, declarations or
recruitment association
resolutions relating to the protection of
entity engaged in the
workers, including migrant workers; and recruitment and
(c) It has concluded a bilateral agreement or placement of
arrangement with the government on workers, locally or
the protection of the rights of overseas overseas, without
Filipino Workers: charging, directly or
indirectly, any fee

12
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Entities disqualified from being issued a license Enforceability of the license


(1) Travel agencies and sales agencies of Licensed agencies are prohibited from
airline companies. [Art. 26] conducting any recruitment activities of any
(2) Officers or members of the Board of any form outside of the address stated in the
corporation or members in partnership license, acknowledged branch or extension
engaged in the business of a travel agency. office, without securing prior authority from the
(3) Corporations and partnerships, when any POEA. [People vs. Buli-e (2003)]
of its officers, members of the board or
partners, is also an officer, member of the Duration of Validity
board of partner of a corporation or 4 years [POEA Rules of 2002]
partnership engaged in the business of a
travel agency. Citizenship requirement
(4) Persons, partnerships or corporations (1) Only Filipino citizens or
which have derogatory records. (2) Corporations, partnerships or entities at
(5) Any official or employee of the DOLE, least seventy-five percent (75%) of the
POEA, OWWA, DFA and other government authorized and voting capital stock of
agencies directly involved in the which is owned and controlled by Filipino
implementation of R.A. 8042 as amended citizens shall be permitted to participate in
and/or any of his/her relatives within the the recruitment and placement of workers,
4th civil degree of consanguinity and locally or overseas. [Art. 27, LC]
affinity. [POEA Rules of 2002] SEE: POEA Rules, Part II, Rule I, Sec. 1(a)
Capitalization requirement
Non-transferability of license or authority All applicants for authority to hire or renewal
(1) No license or authority shall be used of license to recruit are required to have such
directly or indirectly by any person other substantial capitalization as determined by the
than the one in whose favor it was issued Secretary of Labor. [Art. 28, LC)]
or at any place other than that stated in
the license or authority, Based on POEA Rules the following are the
(2) Nor may such license or authority be substantial capital requirements:
transferred, conveyed, or assigned to any (1) Single proprietorships or partnerships with
other person or entity. minimum capitalization of P2,000,000.
(2) Corporations with minimum paid-up
Any transfer of business address, appointment capital of P2,000,000.
or designation of any agent or representative
including the establishment of additional B. ESSENTIAL ELEMENTS OF
offices anywhere shall be subject to the prior
ILLEGAL RECRUITMENT
approval of the Department of Labor. [Art. 29,
LC]
Recruitment and placement" refers to any act
of (C-E-C-T-U-H)
[SEE: POEA Rules Part II, Rule II, Sec. 7, 8, and
(a) Canvassing,
9.]
(b) Enlisting,
(c) Contracting,
(d) Transporting,
(e) Utilizing, or
(f) Hiring procuring workers,

13
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And also includes Promising employment


(a) Referrals, Promising employment as factory workers and
(b) Contract services, receiving money allegedly for processing
(c) Promising, or papers without authorization or license is
(d) Advertising for employment, locally or engaging into unlawful recruitment and
abroad, whether for profit or not placement activities. The absence of the
necessary license or authority renders all of
Provided, That any person or entity which, in accused-appellants recruitment activities
any manner, offers or promises for a fee criminal. [People vs. Saulo (2000)]
employment to two or more persons shall be
deemed engaged in recruitment and C. SIMPLE ILLEGAL RECRUITMENT
placement. [Art. 13 (b), LC]
Any of the acts mentioned above C.1. ILLEGAL RECRUITMENT FOR LOCAL
constitutes recruitment and placement. WORKERS (GOVERNED BY THE LABOR
The proviso provides for a presumption that CODE)
a person or entity so described engages in
Simple Illegal Recruitment (local)
recruitment and placement [People v. Panis
Elements:
(1988)]
(1) The person charged with the crime must
have undertaken recruitment activities
What constitutes recruitment?
defined under Art. 13(b) or prohibited
The number of persons dealt with is not an
activities defined under Art. 34; and
essential ingredient of the act of recruitment
(2) The said person does not have a license or
and placement of workers. Any of the acts
authority to do so. [Art. 38, LC]
mentioned in Article 13(b) will constitute
recruitment and placement even if only one
Profit or lack thereof is immaterial
prospective worker is involved. The proviso
The act of recruitment may be "for profit or
merely lays down a rule of evidence that where
not." Notably, it is the lack of the necessary
a fee is collected in consideration of a promise
license or authority, not the fact of payment
or offer of employment to two or more
that renders the recruitment activity of LCL
prospective workers, the individual or entity
unlawful. [C.F. Sharp vs. Espanol (2007)]
dealing with them shall be presumed to be
engaged in the act of recruitment and
Accused must give the impression of ability to
placement. [People v. Panis, 1988]
send complainant abroad
It is well-settled that to prove illegal
Acts of referral
recruitment, it must be shown that appellant
The act of referral, which is included in
gave complainants the distinct impression that
recruitment, is "the act of passing along or
she had the power or ability to send
forwarding of an applicant for employment
complainants abroad for work such that the
after an initial interview of a selected applicant
latter were convinced to part with their money
for employment to a selected employer,
in order to be employed. [People v. Ochoa
placement officer or bureau." [Rodolfo vs.
(2011)]
People (2006)]

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Contract Substitution amounts to Illegal (g) To obstruct or attempt to obstruct


Recruitment inspection by the Secretary of Labor or by
The reduced salaries and employment period his duly authorized representatives;
in the new employment contract contradicted (h) To fail to file reports on the status of
the POEA-approved employment contract. By employment, placement vacancies,
this act of contract substitution, respondents remittance of foreign exchange earnings,
committed a prohibited practice and engaged separation from jobs, departures and such
in illegal recruitment as defined in Art. 34(i), other matters or information as may be
LC. [PERT/CPM Manpower Exponent Co. v. required by the Secretary of Labor.
Vinuya (2012)] (i) To substitute or alter employment
contracts approved and verified by the
Prohibited practices Department of Labor from the time of
It shall be unlawful for any individual, entity, actual signing thereof by the parties up to
licensee, or holder of authority: and including the periods of expiration of
(a) To charge or accept, directly or indirectly, the same without the approval of the
any amount greater than that specified in Secretary of Labor;
the schedule of allowable fees prescribed (j) To become an officer or member of the
by the Secretary of Labor, or to make a Board of any corporation engaged in travel
worker pay any amount greater than that agency or to be engaged directly or
actually received by him as a loan or indirectly in the management of a travel
advance; agency; and
(b) To furnish or publish any false notice or (k) To withhold or deny travel documents from
information or document in relation to applicant workers before departure for
recruitment or employment; monetary or financial considerations other
(c) To give any false notice, testimony, than those authorized under this Code and
information or document or commit any its implementing rules and regulations.
act of misrepresentation for the purpose of [Art. 34, LC]
securing a license or authority under this
Code. C.2. ILLEGAL RECRUITMENT FOR
(d) To induce or attempt to induce a worker MIGRANT WORKERS
already employed to quit his employment [Governed by R.A. 8042, as amended by, R.A.
in order to offer him to another unless the 10022]
transfer is designed to liberate the worker
from oppressive terms and conditions of Simple Illegal Recruitment
employment; 1 s t type:
(e) To influence or to attempt to influence any (1) Person charged undertakes any
person or entity not to employ any worker recruitment activity as defined in Art.13 (b)
who has not applied for employment of the Labor Code; and
through his agency; (2) Said person does not have a license or
(f) To engage in the recruitment or placement authority to do so.
of workers in jobs harmful to public health
or morality or to the dignity of the Republic
of the Philippines;

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2 n d type: Labor Code, or for the purpose of


(1) Person charged commits any of the documenting hired workers with the POEA,
enumerated acts under Sec. 6 of R.A. which include the act of reprocessing
8042, as amended by, R.A. 10022. workers through a job order that pertains
(2) It is immaterial whether he is a holder or to nonexistent work, work different from
not of any license or authority the actual overseas work, or work with a
different employer whether registered or
Illegal recruitment shall mean any act of not with the POEA;
canvassing, enlisting, contracting, (d) To include or attempt to induce a worker
transporting, utilizing, hiring, or procuring already employed to quit his employment
workers and includes referring, contract in order to offer him another unless the
services, promising or advertising for transfer is designed to liberate a worker
employment abroad, whether for profit or not, from oppressive terms and conditions of
when undertaken by non-licensee or non- employment;
holder of authority contemplated under Article (e) To influence or attempt to influence any
13(f) of Presidential Decree No. 442, as person or entity not to employ any worker
amended, otherwise known as the Labor Code who has not applied for employment
of the Philippines through his agency or who has formed,
joined or supported, or has contacted or is
Provided, supported by any union or workers'
That any such non-licensee or non-holder who, organization;
in any manner, offers or promises for a fee (f) To engage in the recruitment or placement
employment abroad to two or more persons of workers in jobs harmful to public health
shall be deemed so engaged. [Sec. 6, RA 8042 or morality or to the dignity of the Republic
as amended] of the Philippines;
(g) To fail to submit reports on the status of
Other prohibited acts employment, placement vacancies,
It shall likewise include the following acts, remittance of foreign exchange earnings,
whether committed by any person, whether a separation from jobs, departures and such
non-licensee, non-holder, licensee or holder of other matters or information as may be
authority: required by the Secretary of Labor and
(a) To charge or accept directly or indirectly Employment;
any amount greater than that specified in (h) To substitute or alter to the prejudice of
the schedule of allowable fees prescribed the worker, employment contracts
by the Secretary of Labor and Employment, approved and verified by the Department
or to make a worker pay or acknowledge of Labor and Employment from the time of
any amount greater than that actually actual signing thereof by the parties up to
received by him as a loan or advance; and including the period of the expiration
(b) To furnish or publish any false notice or of the same without the approval of the
information or document in relation to Department of Labor and Employment;
recruitment or employment; (i) For an officer or agent of a recruitment or
(c) To give any false notice, testimony, placement agency to become an officer or
information or document or commit any member of the Board of any corporation
act of misrepresentation for the purpose of engaged in travel agency or to be engaged
securing a license or authority under the

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directly or indirectly in the management of been prematurely terminated through no


travel agency; fault of his or her own;
(j) To withhold or deny travel documents from (4) Impose a compulsory and exclusive
applicant workers before departure for arrangement whereby an overseas Filipino
monetary or financial considerations, or for worker is required to undergo health
any other reasons, other than those examinations only from specifically
authorized under the Labor Code and its designated medical clinics, institutions,
implementing rules and regulations; entities or persons, except in the case of a
(k) Failure to actually deploy a contracted seafarer whose medical examination cost
worker without valid reason as determined is shouldered by the principal/shipowner;
by the Department of Labor and (5) Impose a compulsory and exclusive
Employment; arrangement whereby an overseas Filipino
(l) Failure to reimburse expenses incurred by worker is required to undergo training,
the worker in connection with his seminar, instruction or schooling of any
documentation and processing for kind only from specifically designated
purposes of deployment, in cases where institutions, entities or persons, except for
the deployment does not actually take recommendatory trainings mandated by
place without the worker's fault. Illegal principals/shipowners where the latter
recruitment when committed by a shoulder the cost of such trainings;
syndicate or in large scale shall be (6) For a suspended recruitment/manning
considered an offense involving economic agency to engage in any kind of
sabotage; and recruitment activity including the
(m) To allow a non-Filipino citizen to head or processing of pending workers'
manage a licensed recruitment/manning applications; and
agency. (7) For a recruitment/manning agency or a
foreign principal/employer to pass on the
In addition to the acts enumerated above, it overseas Filipino worker or deduct from his
shall also be unlawful for any person or entity or her salary the payment of the cost of
to commit the following prohibited acts: insurance fees, premium or other
(1) Grant a loan to an overseas Filipino worker insurance related charges, as provided
with interest exceeding eight percent (8%) under the compulsory worker's insurance
per annum, which will be used for payment coverage. [Sec. 6, RA 8042 as amended]
of legal and allowable placement fees and
make the migrant worker issue, either Migrant Workers Act (MWA) expands the
personally or through a guarantor or definition of illegal recruitment
accommodation party, postdated checks in The amendments to the Labor Code
relation to the said loan; introduced by Republic Act No. 8042,
(2) Impose a compulsory and exclusive otherwise known as the Migrant Workers and
arrangement whereby an overseas Filipino Overseas Filipinos Act of 1995, broadened the
worker is required to avail of a loan only concept of illegal recruitment and provided
from specifically designated institutions, stiffer penalties, especially for those that
entities or persons; constitute economic sabotage. [People v.
(3) Refuse to condone or renegotiate a loan Ocden (2011)]
incurred by an overseas Filipino worker
after the latter's employment contract has

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Acts and Employment, particularly with respect


Applicabili Who can be
Law Punishabl to the securing of license or an authority to
ty punished
e recruit and deploy workers, either locally
Labor Local Art. 13(b) Non- or overseas; and
Code Workers licensee (3) The accused commits the unlawful acts
Art. 34 Non- against three or more persons individually
licensee or as a group.
RA Migrant Art. 13(b) Non-
8042 Workers Labor licensee Three or more complainants must be in a single
as Code case
amend Enumerat Licensee/ When the Labor Code speaks of illegal
ed by ed Non- recruitment "committed against three (3) or
RA prohibite licensee more persons individually or as a group," it
10022 d acts in must be understood as referring to the number
Section 6 of complainants in each case who are
complainants therein, otherwise, prosecutions
D. ILLEGAL RECRUITMENT IN LARGE for single crimes of illegal recruitment can be
cumulated to make out a case of large scale
SCALE
illegal recruitment.
Illegal recruitment by a syndicate
In other words, a conviction for large scale
(1) The offender undertakes either any activity
illegal recruitment must be based on a finding
within the meaning of "recruitment and
in each case of illegal recruitment of three or
placement" defined under Article 13(b), or
more persons whether individually or as a
any of the prohibited practices enumerated
group. [People vs. Reyes (1995)]
under Art. 34 of the Labor Code;
(2) He has no valid license or authority
E. ILLEGAL RECRUITMENT AS
required by law to enable one to lawfully
engage in recruitment and placement of ECONOMIC SABOTAGE
workers; AND
(3) The illegal recruitment is committed by a E.1 OFFENSE INVOLVING ECONOMIC
group of three (3) or more persons SABOTAGE (LARGE-SCALE OR BY A
conspiring or confederating with one SYNDICATE)
another. [People v. Gallo (2010)]
Illegal recruitment is considered economic
Illegal recruitment in large scale sabotage when the commission thereof is
The acts committed by the accused constituted attended by the ff. qualifying circumstances:
illegal recruitment in large scale, whose (1) By a syndicate - if carried out by a group of
essential elements are the following: 3 or more persons conspiring and
(1) The accused engages in acts of confederating with one another;
recruitment and placement of workers In large scale - if committed against 3 or more
defined under Article 13(b) of the Labor persons individually or as a group. [Art. 38(b),
Code or in any prohibited activities under LC]
Article 43 of the Labor Code;
(2) The accused has not complied with the
guidelines issued by the Secretary of Labor

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E.2 OFFENSE INVOLVING ECONOMIC by other laws. Conversely, conviction for estafa
SABOTAGE (LARGE-SCALE OR BY A under par. 2(a) of Art. 315 of the Revised Penal
SYNDICATE) Code does not bar a conviction for illegal
Illegal recruitment is deemed committed by a recruitment under the Labor Code. It follows
syndicate if carried out by a group of three (3) that one's acquittal of the crime of estafa will
or more persons conspiring or confederating not necessarily result in his acquittal of the
with one another. It is deemed committed in crime of illegal recruitment in large scale, and
large scale if committed against three (3) or vice versa. [People v. Ochoa (2011); People v.
more persons individually or as a group. Ocden (2011)]

F. ILLEGAL RECRUITMENT VS. G. LIABILITIES


ESTAFA
G.1 LOCAL RECRUITMENT AGENCY
Illegal recruitment and estafa are entirely
different offenses and neither one necessarily 1.I. ILLEGAL RECRUITMENT INVOLVING
includes or is necessarily included in the other. LOCAL WORKERS [ART. 39, LC]
A person who is convicted of illegal
recruitment may, in addition, be convicted Act Penalty
of estafa by false pretenses or fraudulent acts Illegal recruitment Life imprisonment
under Article 315, paragraph 2(a) of the constituting economic AND
Revised Penal Code. In the same manner, a sabotage Fine: P100,000.00
person acquitted of illegal recruitment may be Licensee or holder or 2 years
held liable for estafa. Double jeopardy will not authority violating or Imprisonment 5
set in because illegal recruitment causing another to years OR
is malum prohibitum, in which there is no violate Title I, Book I, P10,000 Fine
necessity to prove criminal intent, LC P50,000 OR both
whereas estafa is malum in se, in the Violating or causing 4 years
prosecution of which, proof of criminal intent is another to violate Imprisonment 8
necessary. [Rosita Sy vs. People (2010)] Title I, Book I, LC years OR
P20,000 Fine
One convicted for illegal recruitment may still P100,000 OR both
be convicted of estafa
In People v. Cortez the Court explained that: In If the offender is a corporation, partnership,
this jurisdiction, it is settled that a person who association or entity, the penalty shall be
commits illegal recruitment may be charged imposed upon the officer or officers of the
and convicted separately of illegal recruitment corporation, partnership, association or entity
under the Labor Code and estafa under par. responsible for violation.
2(a) of Art. 315 of the Revised Penal Code. The
offense of illegal recruitment is malum If such officer is an alien, he shall, in addition
prohibitum where the criminal intent of the to the penalties herein prescribed, be deported
accused is not necessary for conviction, while without further proceedings.
estafa is malum in se where the criminal intent
of the accused is crucial for conviction. In every case, conviction shall cause and carry
Conviction for offenses under the Labor Code the automatic revocation of the license or
does not bar conviction for offenses punishable

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authority and all the permits and privileges E.g. In this case the appellant was both the
granted to such person or entity under this APSC Vice-President-Treasurer and the
Title, and the forfeiture of the cash a nd surety Assistant General Manager. She was a high
bonds in favor of the Overseas Employment corporate officer who had direct
Development Board or the National Seamen participation in the management,
Board, as the case may be, both of which are administration, direction and control of the
authorized to use the same exclusively to business of the corporation, and is thus
promote their objectives. liable under Sec. 6 of RA 8042. The terms
control, management or direction broadly
II. ILLEGAL RECRUITMENT INVOLVING cover all phases of business operation,
MIGRANT WORKERS including the aspects of administration,
[Sec. 7, RA 8042 as amended by RA 10022] marketing and finances, among others.
[People vs. Sagayaga (2004)]
Act Penalty
Illegal 12 years and 1 day (2) Local Employment Agency is solidarily liable
with foreign principal. Severance of relations 11
recruitment Imprisonment 20 years
AND between local agent and foreign principal
P1M Fine P2M does not affect liability of local recruiter.
Illegal Life imprisonment AND Private employment agencies are held
recruitment P2M Fine P5M jointly and severally liable with the foreign-
based employer for any violation of the
constituting
recruitment agreement or contract of
economic Maximum penalty:
employment. This joint and solidary liability
sabotage 1. illegally recruited person
imposed by law against recruitment
below 18 years old OR
agencies and foreign employers is meant to
2. Without license/authority
assure the aggrieved worker of immediate
Prohibited 6 years and 1 day
and sufficient payment of what is due him.
Act/s Imprisonment 12 years AND
[Becmen Service Exporter and Promotion,
P500k Fine P1M
Inc. v. Spouses Cuaresma, G.R. 182978-79,
April 7, 2009]
If the offender is an alien, he or she shall, in
addition to the penalties herein prescribed, be
(3) If the recruitment/placement agency is a
deported without further proceedings.
juridical being, the corporate officers and
directors and partners as the case ma y be,
In every case, conviction shall cause and carry
shall themselves be jointly and solidarily liable
the automatic revocation of the license or
with the corporation or partnership for the
registration of the recruitment/manning
aforesaid claims and damages. [Becmen
agency, lending institutions, training school or
Service Exporter and Promotion, Inc. v.
medical clinic.
Spouses Cuaresma, G.R. 182978-79, April 7,
2009]
Common Rules on Liability
(1) Employees of a company corporation engaged
(4) Foreign employer shall assume joint and
in illegal recruitment may be held liable as
solidary liability with the employer for all
principal, together with his employer , if it is
claims and liabilities which may arise in
shown that he actively and consciously
connection with the implementation of the
participated in illegal recruitment.

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contract, including but not limited to Consequently, notice to the former of any
payment of wages, death and disability violation thereof is notice to the latter.
compensation and repatriation It may be good to note the case of Sunace
International Management Services Inc v
Common Rules on Illegal Recruitment (Local or NLRC, GR No. 161757, January 25, 2006 where
Overseas) the theory of imputed knowledge was
Venue mentioned because it was used to try and
A criminal action arising from illegal make an agency liable. The SC said that the
recruitment shall be filed with the RTC of the argument made was a misapplication of the
province or city: theory of imputed knowledge: The theory of
(1) where the offense was committed or imputed knowledge ascribes the knowledge of
(2) where the offended party actually resides at the agent, Sunace, to the principal, employer
the time of the commission of the offense. Xiong, not the other way around. The
[Sec. 9, R.A. 8042 [this part was not knowledge of the principal-foreign employer
amended by R.A. 10022]]. cannot, therefore, be imputed to its agent
Sunace.
Prescriptive Periods
(1) Simple Illegal Recruitment 5 years Solidary Liability
(2) Illegal Recruitment involving Economic
Sabotage 20 years. (Sec. 12, R.A. 8042 Solidary Liability of Agent and Principal
[this part was not amended by R.A, The written application for a license to operate
10022]). a private employment or manning agency shall
be submitted with, among others, a VERIFIED
Foreign Employer UNDERTAKING stating that the applicant:

Foreign employer shall assume joint and solidary (1) Shall assume full and complete
liability with the employer for all claims and responsibility for
liabilities which may arise in connection with all claims and liabilities which may arise
the implementation of the contract, including in connection with the use of license;
but not limited to payment of wages, death all acts of its officials, employees and
and disability compensation and repatriation representatives done in connection with
recruitment and placement;
Theory of imputed knowledge
This is a doctrine in agency which states that (2) Shall assume joint and solidary liability with
the principal is chargeable with and bound by the employer for all claims and liabilities which
the knowledge of or notice to his agent may arise in connection with the
received while the agent was acting as such. implementation of the contract, including but
Simply put, notice to the agent is notice to the not limited to payment of wages, death and
principal. disability compensation and repatriation;

Since the local employment agency is (3) Shall guarantee compliance with the
considered the agent of the foreign employer, existing labor and social legislations of the
the principal, knowledge of the former of Philippines and of the country of employment
existing labor and social legislation in the of recruited workers [POEA Rules, Book II, Rule
Philippines is binding on the latter. II, Sec. 1 (f) (2-5)]

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Purpose of Solidary Liability Serrano ruling: invalidated the 3-month salary


The fact that the manning agency and its cap
principal have already terminated their agency The issue in this case is the constitutionality of
agreement does not relieve the former of its the last clause of Sec.10 of RA 8042:
liability. The agency agreement with the Sec. 10. Money Claims. - x xx In case of
principal even if ended as between them, still termination of overseas employment without
extends up to and until the expiration of, the just, valid or authorized cause as defined by
employment contracts of the employees law or contract, the workers shall be entitled to
recruited and employed pursuant to the said the full reimbursement of his placement fee
recruitment agreement. Otherwise, this will with interest of twelve percent (12%) per
render nugatory the very purpose for which the annum, plus his salaries for the unexpired
law governing the employment of workers for portion of his employment contract or for three
foreign jobs abroad was enacted, that is, to (3) months for every year of the unexpired term,
assure aggrieved workers of immediate and whichever is less.
sufficient payment of what is due them. [OSM
Shipping Phil, Inc. v. NLRC (2003)] The Court held that said clause is
unconstitutional for being an invalid
Pre-Termination of Contract of Migrant Worker classification, in violation of the equal
[Sec. 10, R.A. 8042, as amended by R.A. 10022] protection clause. (Serrano v. Gallant Maritime
Services, Inc., G.R. No. 167614, March 24, 2009)
In case of termination of overseas employment
without just, valid or authorized cause as In the case of Yap v. Thenamaris Ships
defined by law or contract, or Management and Intermare Maritime Agencies,
any unauthorized deductions from the Inc. (G.R. No. 179532, May 30, 2011), RA 8042
migrant worker's salary was declared unconstitutional while the case
was pending in the SC. The Court affirmed the
The worker shall be entitled to the full Serrano ruling, but did not apply the Operative
reimbursement of: Fact doctrine: As an exception to the general
(1) his placement fee and the deductions rule, the doctrine applies only as a matter of
made with interest at twelve percent (12%) equity and fair play.
per annum
(2) plus his salaries for the unexpired portion In view of the reenactment of the section in RA
of his employment contract OR for three 8042 which was declared unconstitutional in
(3) months for every year of the unexpired Serrano, it would be good to note the case of
term, whichever is less. Sameer Overseas Placement Agency v Cabiles
(G.R. No. 170139, August 05, 2014) where the
Rule before Serrano: 3 -month salary rule SC ruled:
applies
The employment contract involved in the We reiterate our finding in Serrano v. Gallant
instant case covers a two-year period but the Maritime that limiting wages that should be
overseas contract worker actually worked for recovered by an illegally dismissed overseas
only 26 days prior to his illegal dismissal. Thus, worker to three months is both a violation of
the three months salary rule applies [Flourish due process and the equal protection clauses
Maritime Shipping v. Almanzor, G.R. No. of the Constitution.
177948, March 14, 2008]

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A. DIRECT HIRING Who can suspend or cancel the license?


General Rule: No employer may hire a Filipino (1) DOLE Secretary
worker for overseas employment except (2) POEA Administrator
through the Boards and entities authorized by
the Secretary of Labor. (Art. 18, LC) The power to suspend or cancel any license or
authority to recruit employees for overseas
Exceptions: employment is concurrently vested with the
(1) Members of the diplomatic corps; POEA and the Secretary of Labor. [People v.
(2) International organizations; Diaz, 259 SCRA 441 (1996)]
(3) Such other employees as may be allowed
by the Sec. of Labor; B.2. REGULATORY AND VISITORIAL
(4) Name hirees those individuals who are POWERS OF THE DOLE SECRETARY
able to secure contracts for overseas Regulatory powers [Art. 36, LC]
employment on their own efforts and The Secretary of Labor shall have the power to
representation without the assistance or restrict and regulate the recruitment and
participation of any agency. Their hiring, placement activities of all agencies within the
nonetheless, has to be processed through coverage of this Title and is hereby authorized
the POEA. (Part III, Rule III of the POEA to issue orders and promulgate rules and
Rules Governing Overseas Employment as regulations to carry out the objectives and
amended in 2002) implement the provisions of this Title.

B. REGULATIONS AND Visitorial powers [Art. 37, LC]


ENFORCEMENT The Secretary of Labor or his duly authorized
representatives may, at any time, inspect the
B.1. SUSPENSION OR CANCELLATION OF premises, books of accounts and records of any
person or entity covered by this Title, require it
LICENSE OR AUTHORITY
to submit reports regularly on prescribed
The Secretary of Labor shall have the power to
forms, and act on violations of any provisions
suspend or cancel any license or authority to
of this Title.
recruit employees for overseas employment for
violation of rules and regulations issued by
Note the old case of Salazar v Achacoso, G.R.
the Department of Labor, the Overseas
No. 81510 March 14, 1990 which declared that
Employment Development Board, and the
Article 38 of the LC is unconstitutional and
National Seamen Board
that the Secretary of Labor and Employment
violation of the provisions of this and other
cannot issue a warrant of arrest.
applicable laws, General Orders and Letters
of Instructions. (Article 35, LC)

The acts prohibited under Article 34 are


grounds for suspension or cancellation of
license. Note that they likewise constitute
illegal recruitment under R.A. 8042 as
amended by R.A. 10022.

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B.3. REMITTANCE OF FOREIGN B.4. PROHIBITED ACTIVITIES


EXCHANGE EARNINGS Prohibited practices
It shall be mandatory for all Filipino workers It shall be unlawful for any individual, entity,
abroad to remit a portion of their foreign licensee, or holder of authority:
earnings to their families, dependents, and/or (a) To charge or accept, directly or indirectly,
beneficiaries in the country (Art. 22, LC) any amount greater than that specified in
the schedule of allowable fees prescribed
Amount required to be remitted by the Secretary of Labor, or to make a
[Executive Order No. 857] worker pay any amount greater than that
The amount of ones salary required to be actually received by him as a loan or
remitted depends on the type or nature of work advance;
performed by the employee. (b) To furnish or publish any false notice or
The following are the percentages of foreign information or document in relation to
exchange remittance required from various recruitment or employment;
kinds of migrant workers: (c) To give any false notice, testimony,
(1) Seaman or mariner 80% of their basic information or document or commit any
salary act of misrepresentation for the purpose of
(2) Workers for Filipino contractors and securing a license or authority under this
construction companies 70% Code.
(3) Doctors, engineers, teachers, nurses and (d) To induce or attempt to induce a worker
other professional workers whose already employed to quit his employment
contract provide for free board and in order to offer him to another unless the
lodging 70% transfer is designed to liberate the worker
(4) All other professional workers whose from oppressive terms and conditions of
employment contracts do not provide for employment;
free board and lodging facilities 50% (e) To influence or to attempt to influence any
(5) Domestic and other service workers person or entity not to employ any worker
50% who has not applied for employment
(6) All other workers not falling under the through his agency;
aforementioned categories 50% (f) To engage in the recruitment or placement
(7) Performing artists 50% of workers in jobs harmful to public health
or morality or to the dignity of the Republic
Individuals exempted from the mandatory of the Philippines;
remittance requirement: (g) To obstruct or attempt to obstruct
(1) The immediate family members, inspection by the Secretary of Labor or by
dependents or beneficiaries of migrant his duly authorized representatives;
workers residing with the latter abroad; (h) To fail to file reports on the status of
(2) Filipino servicemen working within US employment, placement vacancies,
military installations; remittance of foreign exchange earnings,
(3) Immigrants and Filipino professionals separation from jobs, departures and such
working with the United Nations and its other matters or information as may be
agencies or other specialized bodies. required by the Secretary of Labor.
(i) To substitute or alter employment
contracts approved and verified by the
Department of Labor from the time of

24
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actual signing thereof by the parties up to in order to offer him another unless the
and including the periods of expiration of transfer is designed to liberate a worker
the same without the approval of the from oppressive terms and conditions of
Secretary of Labor; employment;
(j) To become an officer or member of the (e) To influence or attempt to influence any
Board of any corporation engaged in travel person or entity not to employ any worker
agency or to be engaged directly or who has not applied for employment
indirectly in the management of a travel through his agency or who has formed,
agency; and joined or supported, or has contacted or is
To withhold or deny travel documents from supported by any union or workers'
applicant workers before departure for organization;
monetary or financial considerations other (f) To engage in the recruitment or placement
than those authorized under this Code and its of workers in jobs harmful to public health
implementing rules and regulations. (Art. 34, or morality or to the dignity of the Republic
LC) of the Philippines;
(g) To fail to submit reports on the status of
Other prohibited acts employment, placement vacancies,
It shall likewise include the following acts, remittance of foreign exchange earnings,
whether committed by any person, whether a separation from jobs, departures and such
non-licensee, non-holder, licensee or holder of other matters or information as may be
authority: required by the Secretary of Labor and
(a) To charge or accept directly or indirectly Employment;
any amount greater than that specified in (h) To substitute or alter to the prejudice of
the schedule of allowable fees prescribed the worker, employment contracts
by the Secretary of Labor and Employment, approved and verified by the Department
or to make a worker pay or acknowledge of Labor and Employment from the time of
any amount greater than that actually actual signing thereof by the parties up to
received by him as a loan or advance; and including the period of the expiration
(b) To furnish or publish any false notice or of the same without the approval of the
information or document in relation to Department of Labor and Employment;
recruitment or employment; (i) For an officer or agent of a recruitment or
(c) To give any false notice, testimony, placement agency to become an officer or
information or document or commit any member of the Board of any corporation
act of misrepresentation for the purpose of engaged in travel agency or to be engaged
securing a license or authority under the directly or indirectly in the management of
Labor Code, or for the purpose of travel agency;
documenting hired workers with the POEA, (j) To withhold or deny travel documents from
which include the act of reprocessing applicant workers before departure for
workers through a job order that pertains monetary or financial considerations, or for
to nonexistent work, work different from any other reasons, other than those
the actual overseas work, or work with a authorized under the Labor Code and its
different employer whether registered or implementing rules and regulations;
not with the POEA; (k) Failure to actually deploy a contracted
(d) To include or attempt to induce a worker worker without valid reason as determined
already employed to quit his employment

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by the Department of Labor and (5) Impose a compulsory and exclusive


Employment; arrangement whereby an overseas Filipino
(l) Failure to reimburse expenses incurred by worker is required to undergo training,
the worker in connection with his seminar, instruction or schooling of any
documentation and processing for kind only from specifically designated
purposes of deployment, in cases where institutions, entities or persons, except for
the deployment does not actually take recommendatory trainings mandated by
place without the worker's fault. Illegal principals/shipowners where the latter
recruitment when committed by a shoulder the cost of such trainings;
syndicate or in large scale shall be (6) For a suspended recruitment/manning
considered an offense involving economic agency to engage in any kind of
sabotage; and recruitment activity including the
(m) To allow a non-Filipino citizen to head or processing of pending workers'
manage a licensed recruitment/manning applications; and
agency. (7) For a recruitment/manning agency or a
foreign principal/employer to pass on the
In addition to the acts enumerated above, it overseas Filipino worker or deduct from his
shall also be unlawful for any person or entity or her salary the payment of the cost of
to commit the following prohibited acts: insurance fees, premium or other
(1) Grant a loan to an overseas Filipino worker insurance related charges, as provided
with interest exceeding eight percent (8%) under the compulsory worker's insurance
per annum, which will be used for payment coverage. (Sec. 6, RA 8042 as amended)
of legal and allowable placement fees and
make the migrant worker issue, either
personally or through a guarantor or
accommodation party, postdated checks in
relation to the said loan;
(2) Impose a compulsory and exclusive
arrangement whereby an overseas Filipino
worker is required to avail of a loan only
from specifically designated institutions,
entities or persons;
(3) Refuse to condone or renegotiate a loan
incurred by an overseas Filipino worker
after the latter's employment contract has
been prematurely terminated through no
fault of his or her own;
(4) Impose a compulsory and exclusive
arrangement whereby an overseas Filipino
worker is required to undergo health
examinations only from specifically
designated medical clinics, institutions,
entities or persons, except in the case of a
seafarer whose medical examination cost
is shouldered by the principal/shipowner;

26
UP LAW BOC LABOR STANDARDS LABOR LAW

A.2. MANAGERIAL EMPLOYEES


III. Labor Standards Two definitions of managerial employees in
the Labor Code:
A. COVERAGE
[Art. 82, Labor Code] [Art. 82, LC] Those whose primary duty consists
of the management of the establishment in
General rule: Shall apply to employees in all which they are employed or of a department or
establishments and undertakings whether for subdivision thereof and to other officers or
profit or not. (Art. 82, LC) members of the managerial staff.

Exceptions (NOT Covered):


[Art. 212 (m), LC] One who is vested with the
(1) Government employees (Art. 82; Art. 76)
powers or prerogatives to lay down and
(2) Managerial Employees including members
execute management policies and/or to hire,
of the managerial staff (Art. 82)
transfer, suspend, lay off, recall, discharge,
(3) Field Personnel (Art. 82)
assign or discipline employees. Supervisory
(4) Members of the family of the employer
employees are those who, in the interest of the
who are dependent on him for support
employer, effectively recommend such
(Art. 82);
managerial actions if the exercise of such
(5) Domestic helpers and persons in personal
authority is not merely routinary or clerical in
service of another (Art. 141, RA 10361)
nature but requires the use of independent
(6) Workers who are paid by result as
judgment. All employees not falling within any
determined by DOLE regulation (Art. 82)
of the above definitions are considered rank
and file employees for purposes of this Book.
A.1. GOVERNMENT EMPLOYEES
The terms and conditions of employment of all
The definition in Art. 82 covers more people
government employees, including employees
than that in Article 212 (m) as Article 82 also
of GOCCs, are governed by the Civil Service
includes managerial staff. In effect,
rules and regulations, not by the Labor Code
managerial employees in Article 82 includes
(Art. 282).
supervisors, but Article 212(m) does not.

However, not all GOCCs are governed by the


It follows that under Book V, supervisors are
Civil Service Rules; only those created by
allowed to form, join or assist a labor union.
original charter:
Supervisors are not, however, entitled to the
benefits under Book III Articles 83 through 96,
Following Sec. 2(i) Art. IX-B of 1987 Phil.
being part of the exemption of managerial
Constitution, the test in determining whether a
employees as defined in Article 82. (Azucena)
government owned corporation is subject to
the Labor Code or the Civil Service law is
Characteristics of managerial employees
finding out what created it if its created by a
[Book 3, Rule 1, Sec. 2(b), IRR]
special charter, then, Civil Service Law applies, if
Managerial employees are exempted from the
it is created by the General Corporation Law,
coverage of Book III Articles 83 through 96 if
then the Labor Code applies. [PNOC Energy
they meet all of the following conditions:
Development Corp. v. NLRC (1991)]
(1) Their primary duty consists of the
management of the establishment in

27
UP LAW BOC LABOR STANDARDS LABOR LAW

which they are employed or of a A.3. FIELD PERSONNEL


department or sub-division thereof. Non-agricultural employees:
(2) They customarily and regularly direct the (1) Who regularly perform their duties away
work of two or more employees therein. from the principal place of business or
(3) They have the authority to hire or fire branch office of the employer AND
employees of lower rank; or their (2) Whose actual hours of work in the field
suggestions and recommendations as to cannot be determined with reasonable
hiring and firing and as to the promotion certainty. (Art. 82, LC)
or any other change of status of other
employees, are given particular weight. Legal Test: Control and Supervision of ER
Although the fishermen perform non-
Managerial Staff also included as they are agricultural work away from petitioners
considered managerial employees as well business offices, the fact remains that
[Book 3, Rule 1, Sec. 2(c), IRR] throughout the duration of their work they are
under the effective control and supervision of
Officers or members of a managerial staff are petitioner through the vessels patron or
also exempted if they perform the following master. Hence, the fishermen are not field
duties and responsibilities: personnel. [Mercidar Fishing Corporation v.
(1) Their primary duty consists of the NLRC (1998)]
performance of work directly related to
management policies of their employer; In order to determine whether an employee is a
(2) Customarily and regularly exercise field employee, it is also necessary to ascertain
discretion and independent judgment; if actual hours of work in the field can be
(3) (a) Regularly and directly assist a determined with reasonable certainty by the
proprietor or a managerial employee employer. In so doing, an inquiry must be
whose primary duty consists of the made as to whether or not the employees time
management of the establishment in and performance are constantly supervised by
which he is employed or subdivision the employer. [Far East Agricultural Supply v.
thereof; OR Lebatique [2007)]
(b) Execute under general supervision
work along specialized or technical lines A.4. DEPENDENT FAMILY MEMBERS
requiring special training, experience, or Workers who are family members of the
knowledge; OR employer, and who are dependent on him for
(c) Execute, under general supervision, their support, are outside the coverage of this
special assignments and tasks; Title on working conditions and rest periods.
(4) Who do not devote more than 20% of
their hours worked in a work week to A.5. DOMESTIC HELPERS
activities which are not directly and [Art. 141, LC.] "Domestic or household service"
closely related to the performance of the shall mean service in the employers home
work described in paragraphs (1), (2) and which is usually necessary or desirable for the
(3) above. maintenance and enjoyment thereof and
includes ministering to the personal comfort
and convenience of the members of the
employers household including services of
family drivers.

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UP LAW BOC LABOR STANDARDS LABOR LAW

Note: The Kasambahay Law (RA 10361) has Associates, OP Decision No. 0183, cited by
redefined domestic worker or kasambahay: Azucena]

[RA 10361 Art. 1, Sec. 4 (d).] Domestic worker or A.7. WORKERS PAID BY RESULT
Kasambahay refers to any person engaged in [Book 3, Rule 1, Sec. 2 (e), IRR.]
domestic work within an employment Workers who are paid by results, including those
relationship such as but not limited to the who are paid on piece work, takay, pakiao or
following: general househelp, nursemaid or task basis, and other nontime work if their output
yaya, cook, gardener or laundry person but rates are in accordance with the standards
shall exclude any person who performs prescribed under Section 8, Rule VII, Book Three
domestic work only occasionally or of these regulations, or where such rates have
sporadically and not on an occupational basis. been fixed by the Secretary of Labor and
Employment in accordance with the aforesaid
A.6. PERSONS IN PERSONAL SERVICE Section.
OF ANOTHER
Workers under piece-rate employment have no
[Book 3, Rule 1, Sec. 2 (d), IRR]
fixed salaries and their compensation is
Domestic servants and persons in the personal
service of another if they perform such services in computed on the basis of accomplished tasks.
the employers home which are usually necessary That their work output might have been
or desirable for the maintenance and enjoyment affected by the change in their specific work
thereof or minister to the personal comfort assignments does not necessarily imply that
convenience or safety of the employer as well as any resulting reduction in pay is tantamount to
the members of his employers household. constructive dismissal. It is the prerogative of
the management to change their assignments
Exclusivity of function required or to transfer them. [Best Wear Garments v. De
Note that the definition contemplates a Lemos and Ocubillo (2012)]
domestic servant who is employed in the
employers home to minister exclusively to the B. HOURS OF WORK
personal comfort and enjoyment of the
employers family. [Azucena] B.1. COVERAGE/EXCLUSIONS
See previous section (A. Coverage) which deals
Thus, it has been held that the following with the general rules of coverage and
personnel are NOT domestic employees: exclusions for the applicability of the
(1) House personnel hired by a ranking Conditions of Employment provisions in Book
company official but paid by the III of the Labor Code.
company itself to maintain a staff house
provided for the official. [Cadiz v. B.2. NORMAL HOURS OF WORK
Philippine Sinter Corp, NLRC Case No. 7- General Rule: 8-Hour Labor Law
1729, cited by Azucena] The normal hours of work of any employee
(2) A family cook, who is later assigned to shall not exceed eight (8) hours a day. [Art. 83,
work as a watcher and cleaner of the LC]
employers business establishment,
becomes an industrial worker entitled to Note: Article 83 of the Labor Code only set a
receive the wages and benefits flowing maximum of number of hours as "normal
from such status. [Villa v. Zaragosa and hours of work" but did not prohibit work of less

29
UP LAW BOC LABOR STANDARDS LABOR LAW

than eight hours [Legend Hotel v. Realuyo General principles in determining if time is
(2012)] considered as hours worked [Book III, Rule 1,
Sec. 4, IRR]
Exception to the 8-Hour Law: Work Hours of (1) All hours are hours worked which the
Health Personnel employee is required to give his employer,
Health personnel in: regardless of whether or not such hours
(1) Cities and municipalities with a are spent in productive labor or involve
population of at least one million physical or mental exertion.
(1,000,000) OR (2) An employee need not leave the premises
(2) Hospitals and clinics with a bed capacity of the work place in order that his rest
of at least one hundred (100) shall hold period shall not be counted, it being
regular office hours for eight (8) hours a enough that he stops working, may rest
day, for five (5) days a week, exclusive of completely and may leave his work place
time for meals, except where the to go elsewhere, whether within or outside
exigencies of the service require that the premises of his work place.
such personnel work for six (6) days or (3) If the work performed was necessary, or it
forty-eight (48) hours, in which case, they benefited the employer, or the employee
shall be entitled to an additional could not abandon his work at the end of
compensation of at least thirty percent his normal working hours because he had
(30%) of their regular wage for work on no replacement, all time spent for such
the sixth day. work shall be considered as hours worked,
if the work was with the knowledge of his
For purposes of this Article, "health personnel" employer or immediate supervisor.
shall include resident physicians, nurses, (4) The time during which an employee is
nutritionists, dietitians, pharmacists, social inactive by reason of interruptions in his
workers, laboratory technicians, paramedical work beyond his control shall be
technicians, psychologists, midwives, considered working time either:
attendants and all other hospital or clinic (a) If the imminence of the resumption of
personnel. [Art. 83, LC] work requires the employees presence
at the place of work, or
Medical secretaries are also considered clinic (b) If the interval is too brief to be utilized
personnel. [Azucena] effectively and gainfully in the
employees own interest.
Compensable Hours of Work (Art. 84, LC)
Hours worked shall include: Rest period short duration or coffee break
(1) All time during which an employee is Rest periods of short duration during working
required to be on duty or to be at a hours shall be counted as hours worked. [Art.
prescribed workplace; AND 84, par. 2, LC]
(2) All time during which an employee is
suffered or permitted to work. Rest periods or coffee breaks running from five
(5) to twenty (20) minutes shall be considered
as compensable working time. [Book III, Rule 1,
Sec. 7, par. 2, IRR]

30
UP LAW BOC LABOR STANDARDS LABOR LAW

[Book 3, Rule 1, Sec. 4 (b), IRR.] premises; or the employees can use the time
An employee need not leave the premises of effectively for their own interest. In this case,
the work place in order that his rest period the employer may extend the working hours
shall not be counted it being enough that he beyond the regular schedule on that day to
stops working may rest completely and may compensate for the loss of productive man-
leave his work place to go elsewhere whether hours without being liable for overtime pay.
within or outside the premises of his work [Policy Instruction No. 36, May 22, 1978]
place.
Note: The time during which an employee is
On call inactive by reason of work interruptions beyond
An employee who is: his control is considered working time, either if
(1) Required to remain on call in the the imminence of the resumption of work
employers premises or so close thereto requires the employees presence at the place
(2) That he cannot use the time effectively of work or if the interval is too brief to be
and gainfully for his own purpose shall utilized effectively and gainfully in the
be considered as working while on call. employees own interest. [Book III, Rule 1 Sec.
4-c OR]
Book III, Rule 1, Sec. 5(b), IRR. An employee who is
not required to leave word at his home or with Necessary Work After Normal Hours
company officials where he may be reached is If the work performed was necessary, or it
NOT working while on call. benefited the employer, or the employee could
not abandon his work at the end of his normal
Inactive due to work interruptions working hours because he had no
The time during which an employee is inactive replacement, all the time spent for such work
by reason of interruptions in his work beyond shall be considered as hours worked if the work
his control shall be considered working time was with the knowledge of his employer or
either: immediate supervisor. [Book III, Rule 1, Sec. 4(c),
(1) If the imminence of the resumption of IRR]
work requires the employee's presence at
the place of work OR Lectures, meetings, trainings
(2) If the interval is too brief to be utilized Attendance at lectures, meetings, training
effectively and gainfully in the programs, and other similar activities shall not
employee's own interest. [Book III, Rule 1, be counted as working time if ALL of the
Sec. 4(d), IRR] following conditions are met:
(1) Attendance is outside of the employees
Work interruption due to brownouts regular working hours;
Brownouts of short duration, but not exceeding (2) Attendance is in fact voluntary; and
20 minutes, shall be treated as hours worked, (3) The employee does not perform any
whether used productively by the employees or productive work during such attendance.
not. [IRR, Book III, Rule 1, Sec. 6]

If they last more than 20 minutes, the time may Note:


not be treated as hours worked if the (1) Attendance in lectures, meetings, and
employees can leave their workplace or go training periods sanctioned by the
elsewhere whether within or without the work employer are considered hours worked.

31
UP LAW BOC LABOR STANDARDS LABOR LAW

(2) Attendance in CBA negotiations or (2) Travel that is all in the days work Time
grievance meeting is compensable hours spent by an employee in travel from jobsite
worked. to jobsite during the workday, must be
(3) Attendance in hearings in cases filed by counted as hours worked. Where an
the employee is NOT compensable hours employee is required to report at a meeting
worked. place to receive instructions or to perform
other work there, the travel from the
Participation in strikes is NOT compensable designated place to the workplace is part
working time. of the days work.
(3) Travel away from home - Travel that keeps
Idle time an employee away from home overnight is
The idle time that an employee may spend for travel away from home. Travel away from
resting and dining which he may leave the spot home is worktime when it cuts across the
or place of work though not the premises of his employees workday. The time is hours
employer, is not counted as working time only worked not only on regular working hours
where the work is broken or is not continuous. but also during the corresponding hours on
[National Development Co. v. CIR (1962)] non-working days.

A laborer need not leave the premises of the Semestral Break of Private School Teachers
factory, shop or boat in order that his period of Regular full-time teachers are entitled to
rest shall not be counted, it being enough that salary during semestral breaks. These
he "cease to work", may rest completely and semestral breaks are in the nature of work
leave or may leave at his will the spot where he interruptions beyond the employees control.
actually stays while working, to go somewhere As such, these breaks cannot be considered as
else, whether within or outside the premises of absences within the meaning of the law for
said factory, shop or boat. If these requisites are which deductions may be made from monthly
complied with, the period of such rest shall not allowances. [University of the Pangasinan
be counted. [Luzon Stevedoring Co. v. Luzon Faculty Union v. University of Pangasinan
Marine Department Union (1957)] (1984)]

Travel time [Department of Labor Manual] Work Hours of Seamen


(1) Travel from home to work An employee Seamen are required to stay on board of their
who travels from home before his regular vessels by the very nature of their duties, and it
workday and returns to his home at the is for this reason that, in addition to their
end of the workday is engaged in ordinary regular compensation, they are given free
home-to-work travel which is NOT living quarters to be on board. It could not
worktime, except: have been the purpose of the law to require
(a) When called to travel during their employers to pay them overtime pay even
emergency; when they are not actually working. The
(b) When travel is done through a correct criterion in determining whether or not
conveyance furnished by the employer; sailors are entitled to overtime pay is not,
(c) Travel is done under vexing and therefore, whether they are on board and
dangerous circumstances; cannot leave ship beyond the regular eight
(d) Travel is done under the supervision working number of hours, but whether they
and control of the employer. actually rendered service in excess of said

32
UP LAW BOC LABOR STANDARDS LABOR LAW

number of hours. [Cagampan, et. al. v. NLR Forced Leave


(1991)] Employees are required to go on leave for
several days or weeks utilizing their leave
Proof of Hours worked credits of there are any.
Entitlement to overtime pay must first be
established by proof that said overtime work Broken-time Schedule
was actually performed, before an employee The works schedule is not continuous but the
may avail of said benefit. [Lagatic v. NLRC work hours within the day or week remain.
(1998)]
Flexi-holidays
Burden of Proof: When an employer alleges The employees agree to avail the holidays at
that his employee works less than the normal some other days provided there is no
hours of employment as provided for in the diminution of existing benefits as a result of
law, he bears the burden of proving his such arrangement.
allegation with clear and satisfactory evidence.
[Prangan v. NLRC, et. al., G.R. No. 126529, April Compressed Work Week (CWW)
15 (1998)] [DOLE Advisory No. 02, Series of 2004]
Under the CWW scheme, the normal workday
2.I FLEXIBLE WORK ARRANGEMENTS goes beyond eight hours without the
[DOLE Advisory No. 02, Series of 2004] corresponding overtime premium.
These are alternative arrangements or
schedules other than the standard work hours, The total hours of work, however, shall not
workdays, and workweek. Their effectivity and exceed 12 hours a day or 48 hours a week, or
implementation shall be temporary in nature. the employer is obliged to pay the worker the
overtime premium in excess of said work hours.
Prior to implementation, the employer shall
notify the Department through the Regional Conditions for CWW
Office which has jurisdiction over the (1) The CWW scheme is undertaken as a result
workplace, of the adoption of any of the of an express and voluntary agreement of
flexible work arrangements. majority of the covered employees or their
duly authorized representatives. This
Under the following work arrangements, the agreement may be expressed through
employers and employees are encouraged to collective bargaining or other legitimate
explore alternative schemes under any workplace mechanisms of participation
agreement and company policy or practice to such as labor management councils,
cushion and mitigate the effect of the loss of employee assemblies or referenda.
income of the employees. (2) In firms using substances, chemicals and
processes or operating under conditions
Reduction of Workdays where there are airborne contaminants,
The normal workdays per week are reduced human carcinogens or noise prolonged
but should not last for more than 6 months. exposure to which may pose hazards to
employees health and safety, there must
Rotation of Workers be a certification from an accredited health
The employees are rotated or alternately and safety organization or practitioner
provided work within the workweek from the firms safety committee that work

33
UP LAW BOC LABOR STANDARDS LABOR LAW

beyond eight hours is within threshold to save on energy costs, promote greater work
limits or tolerable levels of exposure, as set efficiency and lower the rate of employee
in the OSHS. absenteeism, among others. Workers favor the
(3) The employer shall notify DOLE, through scheme considering that it would mean
the Regional Office having jurisdiction over savings on the increasing cost of
the workplace, of the adoption of the CWW transportation fares for at least one (1) day a
scheme. The notice shall be in DOLE CWW week; savings on meal and snack expenses;
Report Form attached to this Advisory. longer weekends, or an additional 52 off-days
(DOLE Advisory No. 02-04) a year, that can be devoted to rest, leisure,
family responsibilities, studies and other
Effects of CWW personal matters, and that it will spare them
(1) Unless there is a more favorable practice for at least another day in a week from certain
existing in the firm, work beyond eight inconveniences that are the normal incidents
hours will not be compensable by overtime of employment, such as commuting to and
premium provided the total number of from the workplace, travel time spent,
hours worked per day shall not exceed exposure to dust and motor vehicle fumes,
twelve (12) hours. In any case, any work dressing up for work, etc. Thus, under this
performed beyond 12 hours a day or 48 scheme, the generally observed workweek of
hours a week shall be subject to overtime six (6) days is shortened to five (5) days but
premium. prolonging the working hours from Monday to
(2) Consistent with Art. 85 of the LC, Friday without the employer being obliged for
employees under a CWW scheme are pay overtime premium compensation for work
entitled to meal periods of not less than 60 performed in excess of eight (8) hours on
minutes. There shall be no impairment of weekdays, in exchange for the benefits above
the right of the employees to rest days as cited that will accrue to the employees. [Bisig
well as to holiday pay, rest day pay or Manggagawa sa Tryco v. NLRC, et al. (2008)]
leaves in accordance with law or applicable
collective bargaining agreement or B.3. MEAL BREAK
company practice. General Rule: Subject to such regulations as
(3) Adoption of the CWW scheme shall in no the Secretary of Labor may prescribe, it shall
case result in diminution of existing be the duty of every employer to give his
benefits. Reversion to the normal eight- employees not less than sixty (60) minutes
hour workday shall not constitute a time-off for their regular meals (Art. 85, LC)
diminution of benefits.
Exception:
Rationale Employees may be given a meal period of not
Although the right to overtime pay cannot be less than twenty (20) minutes provided that
waived as per Cruz v. Yee Sing (1959), D.O. No. such shorter meal period is credited as
21 sanctions the waiver of overtime pay in compensable hours worked of the employee:
consideration of the benefits that the (1) Where the work is non-manual work in
employees will derive from the adoption of a nature or does not involve strenuous
compressed workweek scheme, thus: physical exertion;
(2) Where the establishment regularly
The compressed workweek scheme was operates not less than sixteen (16) hours
originally conceived for establishments wishing a day;

34
UP LAW BOC LABOR STANDARDS LABOR LAW

(3) In case of actual or impending The employees themselves may request that
emergencies or there is urgent work to the meal period be shortened so that they can
be performed on machineries, leave work earlier than the previously
equipment or installations to avoid established schedule. [Drilon: Letter to Kodak
serious loss which the employer would Philippines, Nov. 27, 1989; also Cilindro: BWC-
otherwise suffer; and WHSD Opinion No. 197, s. 1998]
(4) Where the work is necessary to prevent
serious loss of perishable goods [Book 3, Conditions for shortened meal breaks upon
Rule 1, Sec. 7 par 1, IRR] employees request .
(1) The employees voluntarily agree in writing
Employees are not prohibited from going out to a shortened meal period of 30 minutes
of the premises as long as they return to their and are willing to waive the overtime pay
posts on time. Nowhere in the law may it be for such shortened meal period;
inferred that employees must take their meals (2) There will be no diminution whatsoever in
within the company premises. [Philippine the salary and other fringe benefits of the
Airlines v. NLRC (1999)] employees existing before the effectivity of
the shortened meal period;
Synthesis of the Rules (3) The work of the employees does not
involve strenuous physical exertion and
General Rule: Meal periods are NOT they are provided with adequate coffee
compensable. breaks in the morning and afternoon.
Exception: (4) The value of the benefits derived by the
It becomes compensable: employees from the proposed work
(1) Where the lunch period or meal time is arrangement is equal to or commensurate
predominantly spent for the employers with the compensation due them for the
benefit. [Azucena citing 31 Am. Jur. 881; shortened meal period as well as the
Duka, Labor Laws and Social Legislation] overtime pay for 30 minutes as determined
(2) Meal periods of 1 hour is deemed by the employees concerned;
compensable when the employee is on (5) The overtime pay of the employees will
continuous shift. (National Development become due and demandable if ever they
Co. v. CIR, G.R. No. L-15422, Nov. 30, 1962) are permitted or made beyond 4:30pm;
(3) Shortened meal period of less than 1 hour and
(say, 30 minutes) must be compensable. (6) The effectivity of the proposed working
(Sec. 7, Rule I, Book III, IRR) time arrangement shall be of temporary
duration as determined by the Secretary of
Note: To shorten meal time to less than 20 Labor.
minutes is not allowed. If the so-called meal
time is less than 20 minutes, it becomes only a
REST PERIOD and is considered working time.

Exception to the Exception: Shortened meal


breaks upon the employees request NOT
compensable.

35
UP LAW BOC LABOR STANDARDS LABOR LAW

B.4. WAITING TIME regular wage plus at least twenty five percent
[Book III, Rule I Sec. 5(a), IRR] (25%) thereof.
Waiting time spent by an employee shall be
considered as working time if waiting is an Overtime work on holiday or rest day
integral part of his work or the employee is Art. 87, LC. Work performed beyond eight
required or engaged by the employer to wait. hours on a holiday or rest day shall be paid an
additional compensation equivalent to the rate
[Book 3, Rule 1, Sec. 5(b), IRR] of the first eight hours on a holiday or rest day
An employee who is required to remain on call plus at least thirty percent (30%) thereof.
in the employers premises or so close thereto
that he cannot use the time effectively and Computation of additional compensation
gainfully for his own purpose shall be Art. 90, LC. For purposes of computing
considered as working while on call. overtime and other additional remuneration as
required by this Chapter the "regular wage" of
Legal test: Whether waiting time constitutes an employee shall include the cash wage only
working time depends upon the circumstances without deduction on account of facilities
of each particular case. The facts may show provided by the employer.
that the employer was engaged or was waiting
to be engaged. The controlling factor is Base of Computation: Regular wage means
whether waiting time spent in idleness is so regular base pay; it excludes money received in
spent predominantly for the employers benefit different concepts such as Christmas bonus
or for the employees. [Azucena citing Armour and other fringe benefits. [Bisig ng
v. Wantock] Manggagawa ng Philippine Refining Co. v.
Philippine Refining Co (1981)]
B.5. OVERTIME WORK, OVERTIME PAY
BUT when the overtime work was performed
Overtime compensation is additional pay for
on the employees rest day or on special days or
service or work rendered or performed in
regular holidays (Art. 93 and 94), the premium
excess of eight hours a day by employees or
pay, must be included in the computation of
laborers covered by the Eight-hour Labor Law.
the overtime pay.
[National Shipyard and Steel Corp. v. CIR (1961)]
[SEE: p. 19 of Handbook on Workers
Statutory Monetary Benefits, issued by the
Rationale
There can be no other reason than that he is Bureau of Working Conditions, 2006]
made to work longer than what is
commensurate with his agreed compensation Emergency overtime [Art. 89, LC]
for the statutorily fixed or voluntary agreed Any employee may be required by the
hours of labor he is supposed to do. [PNB v. employer to perform overtime work in any of
PEMA (1982)] the following cases:
(1) When the country is at war or when any
Overtime on ordinary working day other national or local emergency has been
declared by the National Assembly or the
Art. 87, LC. Work may be performed beyond
Chief Executive;
eight (8) hours a day provided that the
(2) When it is necessary to prevent loss of life
employee is paid for the overtime work, an
or property or in case of imminent danger
additional compensation equivalent to his
to public safety due to an actual or

36
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impending emergency in the locality no substitute ready to take his


caused by serious accidents, fire, flood, place. [Manila Railroad Co. v. CIR
typhoon, earthquake, epidemic, or other (1952)]
disaster or calamity;
(3) When there is urgent work to be performed Note: However, the Court has also ruled
on machines, installations, or equipment, that a claim for overtime pay is NOT
in order to avoid serious loss or damage to justified in the absence of a written
the employer or some other cause of authority to render overtime after office
similar nature; hours during Sundays and holidays.
(4) When the work is necessary to prevent loss [Global Incorporated v. Atienza (1986)]
or damage to perishable goods; and (3) Compensation for work rendered in
(5) Where the completion or continuation of excess of the eight (8) normal working
the work started before the eighth hour is hours in a day.
necessary to prevent serious obstruction or (a) For ordinary days, additional 25%
prejudice to the business or operations of of the basic hourly rate.
the employer. (b) For rest day/special day/holiday,
additional 30% of the basic hourly
Overtime pay does not preclude night rate.
differential pay (4) A given day is considered an ordinary
When the tour of duty of a laborer falls at day, unless it is a rest day.
nighttime [between 10:00pm and 6:00am], (5) Undertime does NOT offset overtime
the receipt of overtime pay will not preclude Undertime work on any particular
the right to night differential pay. The latter is day shall not be offset by overtime work
payment for work done during the night while on any other day. Permission given to the
the other is payment for the excess of the employee to go on leave on some other
regular eight-hour work. [Naric v. Naric Workers day of the week shall not exempt the
Union (1959)] employer from paying the additional
compensation required in this Chapter.
Synthesis of Rules [Art. 88, LC]
(1) An employer cannot compel an employee
to work overtime No Waiv er of Overtime Pay
Exception: Emergency overtime work as The right to overtime pay cannot be waived.
provided for in Art. 89 The Labor Code (Art. 87) requires that an
(2) Additional compensation is demandable employee be paid all overtime compensation
only if the employer had knowledge and notwithstanding any agreement to work for a
consented to the overtime work rendered lesser wage. Consequently, such an agreement
by the employee. or "waiver" will not prevent an employee from
Exception: Express approval by a recovering the difference between the wages
superior NOT a requisite to make overtime paid the employee and the overtime
compensable: compensation he or she is entitled to receive.
(a) If the work performed is necessary, [Cruz v. Yee Sing (1959)]
or that it benefited the company; or
(b) That the employee could not Exception: When the waiver of overtime pay is
abandon his work at the end of his in consideration of benefits and privileges
eight-hour work because there was which may be more than what will accrue to

37
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them in overtime pay, the waiver MAY be to provide safe and healthful working
permitted. [Meralco Workers Union v. conditions and adequate or reasonable
MERALCO (1959)] facilities such as sleeping or resting quarters in
the establishment and transportation from the
Composite or Package Pay NOT per se illegal work premises to the nearest point of their
Composite or package pay or all-inclusive residence subject to exceptions and guidelines
salary is an arrangement where the to be provided by the DOLE. [Art. 156, RA 10151]
employees salary includes the overtime pay. In
other words, the overtime pay is built-in. Transfer
Night workers who are certified as unfit for
The conditions for validity of the arrangement night work, due to health reasons, shall be
are: transferred to a similar job for which they are
(1) There is a clear written agreement fit to work. If such is not practicable, they shall
knowingly and freely entered by the be granted the same benefits as other workers
employee; and who are unable to work, or to secure
(2) The mathematical result shows that the employment during such period. [Art. 157, RA
agreed legal wage rate and the overtime 1015]
pay, computed separately, are equal to or
higher than the separate amounts legally
due. [Damasco v. NLRC (2000)] Women Night Workers [Art. 158, RA 10151]
Measures shall be taken to ensure that an
B.6. NIGHT WORK, NIGHT SHIFT alternative to night work is available to women
DIFFERENTIAL workers who would otherwise be called upon
Night worker to perform such work:
Any employed person whose work requires (1) Before and after childbirth, for a period of
performance of a substantial number of hours at least sixteen (16) weeks, which shall be
of night work which exceed a specified limit. divided between the time before and after
This limit shall be fixed by the Sec of Labor childbirth;
after consulting the workers (2) For additional periods, in respect of which
representatives/labor organizations and a medical certificate is produced stating
employers. [Art. 154, RA 10151] that said additional periods are necessary
for the health of the mother or child:
Health Assessment (a) During pregnancy;
At the workers request, they shall have the (b) During a specified time beyond the
right to undergo a health assessment without period, after childbirth is fixed
charge and to receive advice on how to reduce pursuant to subparagraph (1) above,
or avoid health problems associated with their the length of which shall be
work. [Art. 155, RA 10151] determined by the DOLE after
consulting the labor organizations and
Mandatory Facilities employers.
Suitable first-aid facilities shall be made
available for workers, including arrangements Night shift differential [Art. 86, LC]
where they, when necessary, can be taken The additional compensation of 10% of an
immediately to a place for appropriate employees regular wage for each hour of work
treatment. The employers are likewise required performed between 10pm and 6am.

38
UP LAW BOC LABOR STANDARDS LABOR LAW

Coverage [Book 3, Rule 2, Sec. 1, IRR] establishment. (International Labor


All employees, except: Organization)
(1) Those of the government and any of its
political subdivisions, including This excludes those forms of employment
government-owned and/or controlled which, although referred to as part-time work,
corporations; are in particular, irregular, temporary or
(2) Those of retail and service establishments intermittent employment, or in cases where
regularly employing not more than five (5) hours of work have been temporarily reduced
workers; for economic, technical or structural reasons.
(3) Domestic helpers and persons in the
personal service of another; The wage and benefits of part-time worker are
(4) Managerial employees as defined in Book in proportion to the number of hours worked.
Three of this Code;
(5) Field personnel and other employees B.8. CONTRACT FOR PIECE OF WORK
whose time and performance is [Art. 1467, CC.] A contract for the delivery at a
unsupervised by the employer including certain price of an article which the vendor in
those who are engaged on task or contract the ordinary course of his business
basis, purely commission basis, or those manufactures or procures for the general
who are paid a fixed amount for market, whether the same is on hand at the
performing work irrespective of the time time or not, is a contract of sale BUT if the
consumed in the performance thereof. goods are to be manufactured specially for the
customer and upon his special order, and not
Rest days (night-off) for the general market, it is a contract for a
Night shift employees are entitled to a weekly piece of work.
night-off (usually Saturday evening) or a
weekly rest period of 24 hours beginning at the C. WAGES
start of the night shift.
Definition
Work on special days
(a) It is the remuneration or earnings,
Night shift employees are also entitled to the
however designated, capable of being
premium pay on special days and holidays.
expressed in terms of money,
These days are reckoned as calendar days
(b) Whether fixed or ascertained on a time,
which start at midnight and end at the
task, piece, or commission basis, or other
following midnight. The premium pay for the
method of calculating the same,
night shift also starts or ends at midnight.
(c) Which is payable by an employer to an
However, the employment contract, company
employee
policy or CBA may provide that in the case of
(d) Under a written or unwritten contract of
night shift workers, daysincluding special
employment for work done or to be done,
days and regular holidaysshall begin on the
or for services rendered or to be rendered
night before a calendar day.
and
(e) Includes the fair and reasonable value, as
B.7. PART-TIME WORK
determined by the Secretary of Labor and
A single, regular or voluntary form of
Employment, of board, lodging, or other
employment with hours of work substantially
facilities customarily furnished by the
shorter than those considered as normal in the
employer to the employee

39
UP LAW BOC LABOR STANDARDS LABOR LAW

Fair and reasonable value - shall not include Note: Workers in registered barangay micro
any profit to the employer, or to any person business enterprise are only exempted from
affiliated with the employer. [Art. 97(f), LC] the Minimum Wage Law, not from the Title on
Wages (RA 9178).
No work no pay principle
General Rule: the age old rule governing the C.1. WAGE VS. SALARY
relation between labor and capital or Wages and salary are in essence synonymous.
management and employee is that a "fair day's [Songco v. NLRC (1990)]
wage for a fair day's labor." [Sugue v. Triumph There are slight differences:
International (2009)] Wage Salary

Exception: When the laborer was able, willing Paid for skilled or Paid to white collar
and ready to work but was illegally locked out, unskilled manual labor workers and denote a
suspended or dismissed, or otherwise illegally higher grade of
prevented from working. [Sugue v Triumph employment
International, supra] Not subject to Not exempt from
execution, execution,
Equal Work for Equal Pay Principle garnishment or garnishment or
Employees working in the Philippines, if they attachment except for attachment [Gaa vs.
are performing similar functions and debts related to CA, 1985]
responsibilities under similar working necessities [Art. 1708]
conditions should be paid equally. If an
employer accords employees the same C.2. MINIMUM WAGE
position and rank, the presumption is that
See also: DOLE Bureau of Working Conditions
these employees perform equal work.
Handbook on Workers Statutory Monetary
[International School Alliance of Educators v.
Benefits and Wage Order No. NCR-19
Hon. Quisumbing (2000)]
Definition
Coverage/Exclusions
Statutory minimum wage is the lowest wage
[Art. 98 and Book 3, Rule VII, Sec 3, IRR]
rate fixed by law that an ER can pay his
The Labor Code Title on wages shall not apply
workers. [IRR, RA 6727, (o)]
to the following:
(1) Farm tenancy or leasehold;
Coverage
(2) Household or domestic helpers,
General Rule: The wage increases prescribed
including family drivers and other
under Wage Orders apply to all private sector
persons in the personal service of
workers and employees receiving the daily
another;
minimum wage rates or those receiving up to a
(3) Homeworkers engaged in needlework;
certain daily wage ceiling, where applicable,
(4) Workers in registered cottage industries
regardless of their position, designation, or
who actually work at home;
status, and irrespective of the method by which
(5) Workers in registered cooperatives when
their wages are paid.
so recommended by the Bureau of
Cooperative Development upon approval
Exceptions:
of the Secretary of Labor;

40
UP LAW BOC LABOR STANDARDS LABOR LAW

(1) Domestic Helpers/kasambahay are (3) Cost of living and changes or increases
covered by RA 10361 therein;
(2) Workers of registered barangay micro (4) The needs of workers and their families;
business enterprise with Certificates of (5) The need to induce industries to invest in
Authority issued by the Office of the the countryside;
Municipal or City Treasurer. [RA 9178] (6) Improvements in standards of living;
(3) Learners [RA 602] (7) Prevailing wage levels;
(4) Apprentices [RA 602] (8) Fair return of the capital invested and
(5) Handicapped Worker [RA 602] capacity to pay of employers;
(9) Effects in employment generation and
Exemptions upon Approval family income; and
Upon application with and as determined by (10) Equitable distribution of income and
the Regional Tripartite Wages and Productivity wealth along the imperatives of economic
Board, based on documentation and other and social development. [Art. 124, LC]
requirements in accordance with applicable
rules and regulations issued by the NWPC, the Procedure for Wage Fixing by Regional Board
following may be exempted from the (Art. 123 , LC)
applicability of this Order: (1) Investigate and study pertinent facts,
(1) Distressed establishments; based on criteria set in Art. 124
(2) Retail/Service establishments regularly (2) Conduct public hearings or consultations
employing not more than 10 workers; with notice to employer and employee
(3) Establishments adversely affected by groups, provinces, city, municipal officials
natural calamities. [Sec. 8, Wage Order No. and other interested parties
19, 2014] (3) Decide to ISSUE or NOT TO ISSUE a wage
order
Basis Frequency: Wage orders issued may
The basis of the minimum wage rates not be disturbed for 12 months from
prescribed by law shall be the normal working effective date; this serves as a bar for
hours of 8 hours a day. [Sec 7, IRR of RA 6727] petitions for wage hikes as well
Except: when Congress passes a new
Freedom to bargain law affecting wages or other
Despite the minimum wage order, employees supervening circumstances
are not prevented from bargaining for higher Effectivity: If it decides to ISSUE a wage
wages with their employers. order, the wage order takes effect after
15 days from complete publication in at
Note: Daily minimum wage in NCR applicable least 1 newspaper of general
from Apr. 4, 2015 is now P481 [Wage Order circulation in the region
No. NCR-19] (4) Appeal wage order to Commission within
10 calendar days; mandatory for the
Factors/Criteria in determining regional Commission to decide within 60 calendar
minimum wages: days from filing
(1) Demand for living wages;
(2) Wage adjustment the consumer price Note: Filing of an appeal DOES NOT STAY
index; order unless appellant files an undertaking
with a surety, to guarantee payment of

41
UP LAW BOC LABOR STANDARDS LABOR LAW

employees if the wage order is affirmed (as Note: Learners employed in piece or incentive-
amended by RA 6727) rate jobs during the training period shall be
paid in full for the work done. [Art. 76, LC]
C.3. MINIMUM WAGE OF WORKERS PAID
BY RESULTS The Secretary of Labor and Employment may
authorize the hiring of apprentices without
C.3.I. WORKERS PAID BY RESULTS compensation whose training on the job is
All workers paid by result, including those who required by the school or training program
are paid on piecework, takay, pakyaw or task curriculum or as requisite for graduation or
basis, shall receive not less than the prescribed board examination. [Art. 72, LC]
wage rates per eight (8) hours of work a day, or C.3.III. MINIMUM WAGE OF PERSONS
a proportion thereof for working less than eight WITH DISABILITY
(8) hours. [Art. 124, LC] A qualified disabled employee shall be subject
to the same terms and conditions of
The wage rates of workers who are paid by employment and the same compensation,
results shall continue to be established in privileges, benefits, fringe benefits or
accordance with Art. 101 of the LC, as allowances as a qualified able-bodied persons.
amended, and its IRR. This will be done [Sec 5, RA 7277, The Magna Carta for Disabled
through: Persons]
(1) Time and motion studies.
(2) Consultation with representatives of C.4. COMMISSIONS
ERs and workers organizations in a Commissions have been defined as the
tripartite conference called by the recompense, compensation or reward of an
DOLE Sec. agent, salesman, executor, trustee, receiver,
factor, broker or bailee, when the same is
Request for the conduct of time and motion calculated as a percentage on the amount of
studies, to determine whether the non-time his transactions or on the profit to the
employees in an enterprise are being paid fair principal. [Philippine Duplicators, Inc. v. NLRC
and reasonable wage rates, may be filed with (1993)]
the proper Regional Office.
Commissions as part of minimum wage
Where the output rates established by the The Court held that the definition of wage
employer do not conform to the standards set under Art. 97 (f) of the LC explicitly includes
under the foregoing methods for establishing commissions as part of wages. While
output rates, the employee shall be entitled to commissions are, indeed, incentives or forms of
the difference between the amount he/she is encouragement to inspire employees to put a
entitled to receive and the amount paid by the little more industry on the jobs particularly
employer. assigned to them, still these commissions are
direct remunerations for services rendered.
C.3.II MINIMUM WAGE OF APPRENTICES
AND LEARNERS Likewise, there is no law mandating that
Wages of apprentices and learners shall in no commissions be paid only after the minimum
case be less than 75% of the applicable wage has been paid to the employee. Verily,
minimum wage rates. [Art. 61 & 75, LC] the establishment of a minimum wage only
sets a floor below which an employees

42
UP LAW BOC LABOR STANDARDS LABOR LAW

remuneration cannot fall, not that employment or retention in employment. [Art.


commissions are excluded from wages in 117, LC] or to retaliate against the employee who
determining compliance with the minimum filed a complaint. [Art. 118, LC]
wage law. [Iran v. NLRC (1998)]
With Employees
C.5. DEDUCTIONS FROM WAGES Without Employees
consent
consent
General Rule: No employer, in his own behalf in Writing
or in behalf of any person, shall make any (1) SSS Payments (1) Workers
deduction from the wages of his employees. (2) PHILHEALTH insurance
(Art. 113, LC) payments acquired by the
(3) Contributions to employer
Exceptions: PAG-IBIG Fund (2) Union dues,
(1) In cases where the worker is insured with (4) Value of meals where the right to
his consent by the employer, and the and other check-off is
deduction is to recompense the employer facilities recognized by the
for the amount paid by him as premium on (5) Payments to third employer
the insurance; persons with (provided in the
(2) For union dues, in cases where the right of employees CBA)
the worker or his union to check-off has consent (3) Debts of the
been recognized by the employer or (6) Deduction of employee to the
authorized in writing by the individual absences employer that
worker concerned; and (7) Union dues, have become due
(3) In cases where the employer is authorized where check-off is and demandable
by law or regulations issued by the not provided in
Secretary of Labor and Employment (Art. the CBA.
113, LC), such as:
(a) Employee debt to employer is due and
Prohibition seeks to protect the employee
demandable (Art. 1706, CC);
against unwarranted practices that would
(b) Attachment or execution in cases of
diminish his compensation without his
debts incurred for necessities: food,
knowledge and consent. [Radio
shelter, clothing, medical attendance
Communication of the Phil., Inc. v. Sec. of Labor
(Art. 1708, CC);
(1989)]
(c) Withholding tax;
(d) Deductions of a legally established
Note: Persons earning minimum wage are
cooperative;
exempted from income tax
(e) Payment to 3 rd parties upon written
That minimum wage earners as defined in
authority by employee;
Section 22(HH) of this Code shall be exempt
(f) Deductions for loss or damage;
from the payment of income tax on their
(g) SSS, Medicare, Pag-IBIG premiums;
taxable income: Provided, further, That the
(h) Deduction for value meals and other
holiday pay, overtime pay, night shift
facilities.
differential pay and hazard pay received by
such minimum wage earners shall likewise be
It shall be unlawful to make any deduction
exempt from income tax. [RA 9504, Sec. 2
from the wages of any employee for the benefit
redefining sec. 24(A) of RA 8424]
of the employer as consideration of a promise of

43
UP LAW BOC LABOR STANDARDS LABOR LAW

C.6. NON-DIMINUTION OF BENEFITS C.7. FACILITIES VS SUPPLEMENTS


General Rule: There is a prohibition against The distinction between facilities and
elimination or diminution of benefits [Art. 100] supplement is relevant because the former is
wage-deductible while the latter is not. Simply
No wage order issued by any regional board put, a wage includes facilities. [Art. 97, LC)
shall provide for wage rates lower than the
statutory minimum wage rates prescribed by The IRR definition [IRR Book III Rule 7-A Sec. 5]
Congress. [Art. 127, as amended by Republic Act has 2 components:
No. 6727, June 9, 1989] (1) Facilities are articles or services for the
benefit of the employee or his family. This
Requisites 1st part defines facilities.
If the following are met, then the employer (2) Facilities shall not include tools of the
cannot remove or reduce benefits: trade or articles or service primarily for the
(1) Ripened company policy: Benefit is benefit of the employer or necessary to the
founded on a policy which has ripened conduct of the employers business. This
into a practice over a long period 2nd part is essentially defines what a
[Prubankers Assn. vs. Prudential Bank supplement is.
and Co., 1999]
(2) Practice is consistent and deliberate Criterion: In determining whether a privilege is
and a facility, the criterion is not so much its kind
(3) Not due to error in the construction or but its PURPOSE [Millares v NLRC & PICOP,
application of a doubtful or difficult 1999]
question of law. [Globe Mackay Cable
vs. NLRC, 1988] Facilities are items of expense necessary for the
(4) The diminution or discontinuance is laborers and his familys existence and
done unilaterally by the employer. subsistence. [States Marine Corp. v. Cebu
Seamen's Assoc., Inc., 1963]
When not applicable: At least one of the
requisites is absent. Comparison between Facilities and
(1) Mistake in the application of the law Supplements
[Globe Mackay Cable v. NLRC, June 29,
1988] Facilities Supplements
(2) Negotiated benefits [Azucena]
(3) Reclassification of Positions e.g. loss What it is
of some benefits by promotion. Articles or Extra remuneration or
(4) Contingent or Conditional Benefits services/items of special benefits /
the rule does not apply to a benefit expense articles or services /
whose grant depends on the existence tools of the trade
of certain conditions, so that the Who Benefits
benefit is not demandable if those
preconditions are absent. For the benefit of the For the benefit or
employee and his convenience of the
Benefits initiated through negotiation between family; for their employer
Employee and Employer, e.g. CBA, can only be existence and
eliminated or diminished bilaterally. subsistence

44
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Facilities Supplements (d) The existence of the distortion in the


same region of the country. [Prubankers
Deductible from Wage Assn. v. Prudential Bank and Co. (1999)]
YES - Part of wage so NO - Independent of
it is deductible the Wage so not How to Resolve [LC Art. 124]
deductible Organized Establishment
(1) Employer and the union shall negotiate
Requirements for deducting value of facilities to correct the distortions.
Mere availment is not sufficient to allow (2) Disputes shall be resolved through the
deductions from employees wages. Before the grievance procedure.
value of facilities can be deducted from the (3) If still unresolved, voluntary arbitration.
employees wages, the following requisites
must all be attendant: Grievance Procedure (under the CBA) if
(1) Proof must be shown that such unresolved, VOLUNTARY arbitration
facilities are customarily furnished by
the trade; Unorganized Establishment
(2) The provision of deductible facilities (1) ERs and Employees shall endeavor to
must be voluntarily accepted in writing correct such distortions.
by the employee; and (2) Disputes shall be settled through the
(3) Facilities must be charged at National Conciliation and Mediation
reasonable value. Board.
[SLL International Cable Specialists v. (3) If still unresolved after 10 calendar days
NLRC, 2011] of conciliation, it shall be referred to the
appropriate branch of the NLRC
C.8. WAGE DISTORTION/RECTIFICATION compulsory arbitration
A situation where an increase in prescribed Both the employer and employee
wage rates results in the elimination or severe cannot use economic weapons.
contraction of intentional quantitative (4) Employer cannot declare a lock-out;
differences in wage or salary rates between Employee cannot declare a strike
and among employee groups in an because the law has provided for a
establishment as to effectively obliterate the procedure for settling
distinctions embodied in such wage structure (5) The salary or wage differential does not
based on skills, length of service, or other need to be maintained. [National
logical bases of differentiation [Art. 124, LC] Federation of Labor v. NLRC, 1994]

4 Elements of wage distortion National Conciliation and Mediation Board


(a) Existing hierarchy of positions with if unresolved, COMPULSORY arbitration by the
corresponding salary rates; NLRC
(b) A significant change in the salary rate of
a lower pay class without a concomitant CBA vis--vis Wage Orders CBA creditability
increase in the salary rate of a higher
one; In determining an employees regular wage,
(c) The elimination of the distinction the pertinent stipulations in the CBA are
between the two levels; and controlling, provided the result is not less than

45
UP LAW BOC LABOR STANDARDS LABOR LAW

the statutory requirement (Philippine National case of workers paid on daily basis. (Wellington
Bank vs. PEMA, 1982) Investment Inc. v. Trajano, 1995)

Note: The manner of resolving wage distortion For daily-paid EEs


are largely based on the applicable wage
order. The current one, for NCR, WO 19, refers Daily-paid employees are those who are paid
to the procedure in Art. 124 on the days actually worked and on unworked
regular holidays.
C.9. DIVISOR TO DETERMINE DAILY
RATE (1) For those who are required to work every day
including Sundays or rest days, special days
Suggested formula for computing the
and regular holidays:
Estimated Equivalent Monthly Rate (EEMR)
394.1 days/year
EEMR = (Applicable Daily Rate (ADR) x 296 days ordinary working
days/year) 12 20 days 10 regular holidays x 200%
52 rest days x 130 %
For monthly-paid EEs 67.60 days 7 special days x 130%
Monthly-paid employees are those who are
paid every day of the month, including 9.1 days
unworked rest days, special days, and regular
holidays. (2) For those who do not work and are not
considered paid on Sundays or rest days:
365 days/year
313 days/year
296 days ordinary working days 296 days ordinary working
52 days rest days 12 days regular holidays
10 days regular holidays 5 days special days (if considered
7 days special days paid; if actually worked, this is
equivalent to 6.5 days)
Note: This monthly salary shall serve as
compensation "for all days in the month (3) For those who do not work and are not
whether worked or not," and "irrespective of considered paid on Saturdays and Sundays
the number of working days therein." In the or rest days:
event of the declaration of any special holiday,
278 days/year
or any fortuitous cause precluding work on any
261 days ordinary working days
particular day or days the employee is entitled
10 days regular holidays
to the salary for the entire month and the
7 days special days (if considered
employer has no right to deduct the
paid; if actually worked, this is
proportionate amount corresponding to the
equivalent to 6.5 days)
days when no work was done. The monthly
compensation is evidently intended precisely [Sec. 6, Rules Implementing RA 6727, 1989]
to avoid computations and adjustments
resulting from the contingencies just Note: Under Proclamation No. 831 signed by
mentioned which are routinely made in the Pres. Benigno Aquino on Jul. 17, 2014, there
are 10 regular holidays and 7 special days.

46
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D. REST DAY (6) Under other circumstances analogous or


similar to the foregoing as determined by
D.1. WEEKLY REST DAY the Secretary of Labor and Employment.
It shall be the duty of every employer, whether [Art. 92, LC]
operating for profit or not, to provide each of
his employees a rest period of not less than Synthesis of the Rules
twenty-four (24) consecutive hours after every (1) Rest day of not less than 24 consecutive
six (6) consecutive normal work days. [Art. 91 hours after 6 consecutive days of work.
(a)] (2) No work, no pay principle applies
(3) If an employee works on his designated
Preference of the employee rest day, he is entitled to a premium pay.
The employer shall determine and schedule (4) Premium pay is additional 30% of the
the weekly rest day of his employees subject to basic pay.
collective bargaining agreement and to such (5) Employer selects the rest day of his
rules and regulations as the Secretary of Labor employees
and Employment may provide. However, the (6) However, employer must consider the
employer shall respect the preference of religious reasons for the choice of a rest
employees as to their weekly rest day when day.
such preference is based on religious grounds. (7) When the choice of the employee as to his
[Art. 94 (b)] rest day based on religious grounds will
inevitably result in serious prejudice or
D.2. EMERGENCY REST DAY WORK obstruction to the operations and the
The employer may require his employees to employer cannot normally be expected to
work on any day: resort to other measures, the employer
(1) In case of actual or impending may so schedule the weekly rest day of his
emergencies caused by serious accident, choice for at least two days in a month.
fire, flood, typhoon, earthquake, [IRR, Book Three, Rule III, Sec. 4]
epidemic or other disaster or calamity to
prevent loss of life and property, or E. HOLIDAY PAY/PREMIUM PAY
imminent danger to public safety;
(2) In cases of urgent work to be performed Holiday pay is a one-day pay given by law to an
on the machinery, equipment, or employee even if he does not work on a regular
installation, to avoid serious loss which holiday. This gift of a days pay is limited to
the employer would otherwise suffer; each of the 12 regular holidays.
(3) In the event of abnormal pressure of
work due to special circumstances, Note: Art. 94 (c), LC was superseded by E.O.
where the employer cannot ordinarily be 203, which was subsequently amended by RA
expected to resort to other measures; 9177, 9256, 9492, and Proclamation No. 459.
(4) To prevent loss or damage to perishable
goods;
(5) Where the nature of the work requires
continuous operations and the stoppage
of work may result in irreparable injury or
loss to the employer; and

47
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E.1. COVERAGE (6) Independence Day June 12


General Rule: All employees (7) National Heroes Day Aug. 31
Exceptions: (8) Bonifacio Day Nov. 30
(1) Those of the government and any of the (9) Christmas Day Dec. 25
political subdivision, including (10) Rizal Day Dec. 30
government-owned and controlled (11) Id-ul-Fitr 1st day of 10th lunar month of
corporation; Shawwal
(2) Those of retail and service (12) Id-ul Adha 10th day of the 12th lunar
establishments regularly employing less month of Dhul-Hijja
than 10 workers;
(3) Domestic helpers and persons in the Special (Non-Working Days)
personal service of another; (1) Chinese New Year Feb. 19
(4) Managerial employees as defined in (2) Black Saturday Apr. 4
Book III (3) Ninoy Aquino Day Aug. 21
(5) Field personnel and other employees (4) All Saints Day Nov. 1
whose time and performance is (5) Additional special (Non-working) days
unsupervised by the employer including (a) Jan. 2
those who are engaged on task or (b) Dec. 24
contract basis, purely commission basis, (6) Last Day of the Year Dec. 31
or those who are paid a fixed amount for
performing work irrespective of the time Special Holiday (for all schools)
consumed in the performance thereof. EDSA Revolution Anniv Feb. 25
[Sec. 1, Rule IV of the IRR]
P.D. 1083 (Code of Muslim Personal Laws)
Retail Establishment is one principally SEE: Arts. 169-173
engaged in the sale of goods to end-users for
personal or household use; Specifically for the Muslim Areas, P.D. 1083, in
its Book V, Title, recognizes five (5) Muslim
Service Establishment is one principally Holidays, namely:
engaged in the sale of service to individuals for (1) Amun Jadid (New Year) which falls on the
their own or household use and is generally first (1st) day of the lunar month of
recognized as such. [RA 6727/The Wage Muharram;
Rationalization Act, IRR] (2) Mauli-un-Nabi (Birthday of the Prophet
Muhammad) which falls on the twelfth
Regular holidays (12th) day of the third (3rd) lunar month of
Proclamation No. 831 signed by President Rabi-ul-Awwal;
Aquino on 17 July 2014, provides for the (3) Lailatul Isra Wal Mi Rai (Nocturnal Journey
observance of the regular holidays and special and Ascencion of the Prophet
(non-working) days for the year 2015 on the Muhammand) which falls on the twenty-
following dates: seventh (27th) day of the seventh (7th)
(1) New years Day Jan. 1 lunar month of Rajab;
(2) Maundy Thursday Apr. 2 (4) Id-ul-Fitr (Hari Raja Pausa) which falls on
(3) Good Friday Apr. 3 the first (1st) day of the tenth (10th) lunar
(4) Araw ng Kagitingan Apr. 9 month of Shawwal commemorating the
(5) Labor Day May 1 end of the fasting season; and

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(5) Id-ul-Adha (Hari Raha Haji) which falls on scheduled rest day, if it regular daily wage
the tenth (10th) day of the twelfth (12th) exceeds 8 plus 30% of such
lunar month of Dhul-Hijja. hours/overtime amount) + 30% of
hourly rate on said
Note: Id-ul-Fitr (Eidl Fitr) and Id-ul-Adha (Eidl day.
Adha) have been added to the list of national
Work on special Regular daily wage +
legal holidays.
holiday not exceeding 30% thereof
8 hours
Note: There should be no distinction between
Muslims & non-Muslims as regards to the Work on special Regular daily wage +
payment of benefits for Muslim holidays. holiday 50% thereof
Wages & other emoluments granted bylaw to
the workingman are determined on the basis According to DOLE Memo Circular 1 -04, a
of the criteria laid down by laws & not on special holiday/special day includes the
workers faith. Art. 3(3), PD 1083 states that National Special Days, and declared special
nothing herein shall be construed to operate to days such as Special Non-working Holiday,
the prejudice of a non-Muslim. [San Miguel Special Public Holiday and Special National
Corp vs. CA (2002)] Holiday. Such days are entitled to the rates
prescribed above. These days are not the same
Holiday pay computation (Art. 94 Labor Code, as a special working holiday.
Book III, Rule IV of IRR, RA 9424 and DOLE
Memorandum Circular 1 Series of 2004) A special working holiday is considered an
ordinary working day, so there is no premium
General Rule: An employer may require an pay.
employee to work on any holiday but such
employee shall be paid a compensation Double holiday pay
equivalent to twice his regular rate. [Art. 94(b)] According to DOLE Explanatory Bulletin on
Workers Entitlement to Holiday Pay on 9 April
According to the LC, IRR and Memo: 1993, if two holidays fall on the same day:
Work on any regular (1) If unworked, 200% of basic wage.
holiday, not Computation (2) If worked, 300% of basic wage.
exceeding 8 hours [Azucena]

Work on any regular 200% of regular daily Double Holiday Rule for Monthly-paid
holiday, if it exceeds 8 wage (for the 1st 8 employees
hours/overtime hours) For covered employees whose monthly salaries
+ 30% of hourly rate are computed based on 365 days and for those
on said day other employees who are paid using factor 314,
Work on any regular 200% of regular daily or 262, or any other factor which already
holiday which falls on wage + 30% of such considers the payment for the 11 regular
the scheduled rest day, amount holidays, NO additional payment is due them.
not exceeding 8 hours [BWC-WHSD Opinion No. 053, s. 1998]
Work on any regular Regular holiday-on-
holiday which falls on rest day rate (200% of

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UP LAW BOC LABOR STANDARDS LABOR LAW

Successive holiday pay proscription against non-diminution of benefits


According to IRR, Rule IV, Sec. 10, an under Sec. 100 of the labor code, the 287
employee is entitled to holiday pay for both divisor should only be used for computations
days, IF: which would be advantageous to the employer
(1) He is present on day immediately (i.e. deduction for absences) and not for
preceding first holiday; or computations which would diminish the
(2) He works on first holiday, which entitles existing benefits of the employees (i.e.,
him to pay on second holiday. overtime pay, holiday pay and leave
conversions).[Trans Asia Phils. v. NLRC (1999)]
Divisors
The divisor assumes an important role in Sundays
determining whether or not holiday pay is (1) When a holiday falls on a Sunday, the
already computed. following Monday will not be considered a
(1) Monthly paid employees are not entitled holiday unless a proclamation says so.
to the holiday pay if their total annual (2) Furthermore as stated in the Wellington
income is divided by 365 days resulting case (see below), a legal holiday falling on
in a wage which is beyond the minimum a Sunday does not create a legal obligation
wage per day because they are to pay extra, aside from the usual holiday
considered paid everyday of the year pay, to monthly-paid employees. [Azucena
including holidays, rest days, and other citing Letter of Instruction No. 1087]
non-working days. The 365 days are as
follows: No provision of law requires any employer to
(a) 296 days ordinary days make adjustments in the monthly salary rate
(b) 52 days rest days set by him to take account of legal holidays
(c) 10 days regular holidays falling on Sundays in a given year, otherwise to
(d) 7 days special holidays reckon a year at more than 365 days.
(2) As a general rule, for a company with a [Wellington Investment and Manufacturing
6-day working schedule, the divisor 313 Corporation vs. Trajano (1995)]
already means that the legal holidays
are included in the monthly pay of the Non-working/scheduled rest day
employee. The divisor is arrived at by Where the day immediately preceding the
subtracting all Sundays from the total holiday is a non-working day in the
number of calendar days in a year. establishment or the scheduled rest day of the
(3) As a general rule for a company with a 5- employee, he shall not be deemed to be on
day working schedule, the divisor 287 leave of absence on that day, in which case he
means that the holiday pay is already shall be entitled to the holiday pay if he worked
included in the monthly salary of the on the day immediately preceding the non-
employee. working day or rest day. [Book III, Rule V, Sec 6
(c), IRR]
Where the employer had a standing practice of
using 286 days as a divisor and following the Example:
correct computation and taking into account If a holiday falls on Monday, and Sunday is a
that one of the holidays always falls on a non-working day in the establishment or is the
Sunday, therefore increasing the divisor to scheduled rest day of the employee, the
287, but increase would in some instances employee shall be entitled to holiday pay if he
prejudice the employees, in violation of the

50
UP LAW BOC LABOR STANDARDS LABOR LAW

worked on Saturday (which is the day cases of temporary shutdowns or cessation of


immediately preceding Sunday, the non- work, when:
working day or rest day). (1) An annual inventory; or
(2) Repair or cleaning of machineries and
Right to holiday pay equipment is undertaken.
In case of absences
All covered employees shall be entitled to the
The employer may not pay his employees for
benefit provided herein when they are on leave
the regular holidays during the suspension of
of absence with pay.
work if: the cessation of operation is due to
business reverses, and is authorized by the
Employees who are on leave of absence
Secretary of Labor.
without pay on the day immediately preceding
a regular holiday may not be paid the required
E.2. TEACHERS, PIECE WORKERS,
holiday pay if he has not worked on such
regular holiday. [Book III, Rule IV, Sec 6(a), SEAFARERS, SEASONAL WORKERS,
IRR] ETC.
(1) Private school teachers, including faculty
Note: members of colleges and universities, may
(1) If an employee is on leave of absence with not be paid for the regular holidays during
pay on the day immediately preceding a semestral vacations. They shall, however,
regular holiday, he is entitled to holiday be paid for the regular holidays during
pay. Christmas vacation;
(2) If an employee is on leave of absence (2) Where a covered employee, is paid by
without pay on the day immediately results or output, such as payment on
preceding a regular holiday, he is not piece work, his holiday pay shall not be
entitled to holiday pay unless he works on less than his average daily earnings for the
such regular holiday. last seven (7) actual working days
preceding the regular holiday; Provided,
In case of temporary cessation of work However, that in no case shall the holiday
(1) In cases of temporary or periodic shutdown pay be less than the applicable statutory
and temporary cessation of work of an minimum wage rate.
establishment, as when a yearly inventory (3) Seasonal workers may not be paid the
or when the repair or cleaning of required holiday pay during off-season
machineries and equipment is undertaken, when they are not at work
the regular holidays falling within the (4) Workers who have no regular working days
periods shall be compensated in shall be entitled to the benefits provided in
accordance with this Rule. this Rule. [Book III, Rule IV, Sec. 8, IRR]
(2) The regular holiday during the cessation of
operation of an enterprise due to business Holiday Pay of Hourly-Paid Faculty Members
reverses as authorized by the Secretary of (1) They are not entitled to payment of
Labor may not be paid by the employer. holiday pay because they are paid only
[Book III, Rule IV, Sec 7, IRR] for work actually done. Since regular
holidays are known to both the school
An employee is entitled to holiday pay for the and faculty members as no class day;
regular holidays falling within the period in

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certainly the latter do not expect Premium Pay


payment for said unworked holidays. Premium pay refers to the additional
(2) They are entitled to their hourly rate on compensation for work performed within 8
days declared as special holidays. Be it hours on non-work days, such as rest days and
noted that when a special public holiday special days.
is declared, the faculty member paid by
the hour is deprived of expected income, Coverage [Book 3, Rule 3, Sec. 7, IRR]
and it does not matter that the school
calendar is extended in view of the days General Rule: All employees
or hours lost, for their income that could Exceptions:
be earned from other sources is lost (1) Those of the government and any of the
during the extended days. political subdivision, including
(3) Similarly, when classes are called off or government-owned and controlled
shortened on account of typhoons, corporations;
floods, rallies, and the like, these faculty (2) Managerial employees as defined in
members must likewise be paid, whether Book III;
or not extensions are ordered. [Jose Rizal (3) Househelpers and persons in the
College v. NLRC, (1987)] personal service of another;
(4) Workers who are paid by results,
Piece workers including those who are paid on piece
Philosophy underlying the exclusion of piece rate, takay, pakyaw, or task basis, and
workers from the 8-hour law is that said other noontime work, if their output rates
workers are paid depending upon the work are in accordance with the standards
they do irrespective of the amount of time prescribed in the regulations, or where
employed in doing said work. [Red v. Coconut such rates have been fixed by the
Products Ltd., v. CIR (1966)] Secretary of Labor and Employment;
(5) Field personnel, if they regularly perform
Seafarers their duties away from the principal or
Any hours of work or duty including hours of branch office or place of business of the
watch-keeping performed by the seafarer on ER and whose actual hours of work in the
designated rest days and holidays shall be filed cannot be determined with
paid rest day or holiday pay. (Section 11.C, reasonable certainty.
Standard Terms and Conditions Governing the
Employment of Filipino Seafarers on Board
Ocean-Going Vessels)

Seasonal workers
Seasonal workers who do not work during off-
season are not entitled to pay for the regular
holidays occurring during their off-season.
Workers assigned to skeleton crews that
work during the off-season have the right to be
paid on regular holidays falling in that
duration.

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Premium pay rates [DOLE Memorandum F. LEAVES


Circular 1, Series of 2004]
F.1. SERVICE INCENTIVE LEAVE PAY
When Work [Art. 95(a), LC.] Every employee who has
Premium Pay
Performed rendered at least one year of service shall be
On scheduled rest day 30% of regular wage entitled to a yearly service incentive leave of
five days with pay.
On Sunday ONLY IF 30% of regular wage
ESTABLISHED rest day Service Incentive Leave DOES NOT apply to the
No regular work and 30% of regular wage following employees:
rest days for work performed on (1) Those of the government and any of its
Sundays and holidays political subdivisions, including GOCCs;
On any special 30% of regular wage (2) Domestic helpers and persons in the
holiday/special day personal service of another;
(3) Managerial employees as defined in Book
On any special holiday 50% of regular wage 3 of this Code;
/special day falling on (4) Field personnel and other employees
scheduled rest day whose performance is unsupervised by the
50% of regular wage 230% of regular wage employer including those who are engaged
on task or contract basis, purely
[Art. 93 (d), LC.] Where the collective commission basis, or those who are paid a
bargaining agreement or other applicable fixed amount for performing work
employment contract stipulates the payment irrespective of the time consumed in the
of a higher premium pay than that prescribed performance thereof;
under this Article, the employer shall pay such (5) Those who are already enjoying the benefit
higher rate. herein provided;
(6) Those enjoying vacation leave with pay of
[Book III, Rule III, Sec. 8, IRR]. Nothing in this at least 5 days;
Rule shall justify an employer in reducing the (7) Those employed in establishments
compensation of his employees for the regularly employing less than 10
unworked Sundays, holidays, or other rest days employees. [Book 3, Rule 5, Sec. 1, IRR]
which are considered paid off days or holidays
by agreement or practice subsisting upon the Employer may require employee to work
effectivity of the Code. [Art. 95(b), LC.] The employer may require an
employee to work on any holiday but such
employee shall be paid a compensation
[Book III, Rule II, Sec. 9, IRR.] Nothing herein
equivalent to twice his regular rate
shall prevent the employer and his employees
or their representatives in entering into any
Jurisprudence:
agreement with terms more favorable to the
(1) Teachers of private school on contract
employees than those provided herein or be
basis are entitled to service incentive leave.
used to diminish any benefit granted to the
[Cebu Institute of Technology v. Ople (1987)]
employees under existing laws agreements
(2) In the case of Makati Haberdashery v.
and voluntary employer practices.
NLRC the Court ruled that piece-rate
employees are not entitled to service

53
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incentive leave. [Makati Haberdashery v. separation from employment. [Auto Bus


NLRC, (1989)] Transport vs. NLRC (2005)]
(3) However, in the case of Labor Congress of
the Philippines v. NLRC the Court held that Commutable nature of benefit
petitioners are entitled to service incentive The service incentive leave shall be
leave. The Court looked at several factors commutable to its money equivalent if not
which led them to conclude that used or exhausted at the end of the year.
petitioners, although compensated on a
per piece basis, were regular employees of F.2. MATERNITY LEAVE
private respondents. [Labor Congress of the [Sec. 14-A of RA 1161 (Social Security Law) as
Philippines v. NLRC, (1998)] amended by RA 7322 and RA 8282]

Meaning of 1 year of service Coverage


[Book III, Rule V, Sec. 3, IRR.] The term "at least Every pregnant woman in the private sector,
one year service" shall mean service for not whether married or unmarried, is entitled to
less than 12 months, whether continuous or the maternity leave benefits.
broken, reckoned from the date the employee
started working, including authorized This is applicable to both childbirth and
absences and paid regular holidays unless the miscarriage.
working days in the establishment as a matter
of practice or policy, or that provided in the Requisites
employment contract is less than 12 months, in (1) Employment: A female employee employed
which case said period shall be considered as at the time of delivery, miscarriage or
one year. abortion
(2) Contribution: who has paid at least 3
Entitlement monthly contributions in the 12-month
[Art. 95 (c), LC.] The grant of benefit in excess period immediately preceding the
of that provided herein shall not be made a semester of her childbirth, or miscarriage.
subject of arbitration or any court or (3) Notice: employee notified employer of her
administrative action. pregnancy and the probable date of her
childbirth, which notice shall be
The cause of action of an entitled employee to transmitted to the SSS in accordance with
claim his service incentive leave pay accrues the rules and regulations it may provide.
from the moment the employer refuses to
remunerate its monetary equivalent if the Benefit received
employee did not make use of said leave A daily maternity benefit equivalent to 100% of
credits but instead chose to avail of its her average daily salary credit for:
commutation (into money). Accordingly, if the (1) 60 days for normal delivery
employee wishes to accumulate his leave (2) 78 days for caesarean delivery
credits and opts for its commutation upon his
resignation or separation from employment, Note: This benefit shall NOT be included in the
his cause of action to claim the whole amount computation of 13 th month pay as it is granted
of his accumulated service incentive leave shall to an employee in lieu of wages which is the
arise when the employer fails to pay such basis for computing 13 th month.
amount at the time of his resignation or

54
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Only 4 maternity leaves available basis). The purpose of this benefit is to allow
The maternity benefits provided under the the husband to lend support to his wife during
Social Security Law shall be paid only for the her period of recovery and/or in nursing her
first four (4) deliveries or miscarriages newborn child. [Sec. 3, RA 8187]

SSS pays for the maternity leave Benefit


The employer advances the benefit to the It shall apply to the first 4 deliveries of the
employee but the SSS shall immediately employees lawful wife with whom he is
reimburse the employer of one hundred cohabiting.
percent (100%) of the amount upon receipt
of satisfactory proof of such payment and It shall be for 7 calendar days, with full pay,
legality thereof consisting of basic salary and mandatory
allowances fixed by the Regional Wage Board,
Other conditions if any, provided that his pay shall not be less
(1) Employer shall advance the payment than the mandated minimum wage. [Sec. 2, RA
subject to reimbursement by the SSS 8187]
within 30 days from filing of leave
application. Cohabiting means the obligation of the
(2) Availment shall be a bar to the recovery of husband and wife to live together. If the
sickness benefits provided by this Act for spouses are not physically living together
the same period for which daily maternity because of the workstation or occupation, the
benefits have been received. male employee is still entitled to the paternity
(3) Employee may only avail of benefit for the leave benefit. [Sec. 1, IRR, RA 8187]
first four (4) deliveries or miscarriages.
(4) Sanction: That if an employee should give Usage of the benefit
birth or suffer miscarriage Usage of the leave shall be after the delivery,
(a) Without the required contributions without prejudice to an employers policy of
having been remitted for her by her ER allowing the employee to avail of the benefit
to the SSS, or before or during the delivery, provided that the
(b) Without the latter having been total number of days shall not be more than 7
previously notified by the ER of time of days for each covered delivery. (Sec. 5, IRR, RA
the pregnancy, then the employer shall 8187)
pay to the SSS damages equivalent to
the benefits which said employee Conditions for entitlement [Sec. 3, IRR, RA
member would otherwise have been 8187]
entitled to. (1) He is married;
(2) He is an employee at the time of the
F.3. PATERNITY LEAVE delivery of his child;
[RA 8187 (Paternity Leave Act of 1996)] (3) He is cohabiting with his spouse at the
time that she gives birth or suffers a
Coverage and purpose miscarriage;
Paternity leave is granted to all married male (4) He has applied for paternity leave with his
employees in the private and public sectors, ER within a reasonable period of time from
regardless of their employment status (e.g. the expected date of delivery by his
probationary, regular, contractual, project pregnant spouse, or within such period as

55
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may be provided by company rules and Any solo parent or individual who is left alone
regulations, or by CBA; and, with the responsibility of parenthood due to:
(5) His wife has given birth or suffered a (1) Giving birth as a result of rape or and other
miscarriage. crimes against chastity even without a final
conviction of the offender: Provided, That
Application for paternity leave the mother keeps and raises the child;
See number 4 under conditions for entitlement. (2) Death of spouse;
(3) Spouse is detained or is serving sentence
In case of miscarriage, prior application for for a criminal conviction for at least one (1)
paternity leave shall not be required. [Sec. 4, year;
IRR, RA 8187] (4) Physical and/or mental incapacity of
spouse as certified by a public medical
Non-conversion to cash practitioner;
In the event that the paternity leave is not (5) Legal separation or de facto separation
availed of, it shall not be convertible to cash from spouse for at least one (1) year:
and shall not be cumulative. [Sec. 7, IRR, RA Provided, that he/she is entrusted with the
8187] custody of the children;
(6) Declaration of nullity or annulment of
Crediting of existing benefits marriage as decreed by a court or by a
(1) If the existing paternity leave benefit under church: Provided, that he/she is entrusted
the CBA, contract, or company policy is with the custody of the children;
greater than 7 calendar days as provided (7) Abandonment of spouse for at least one (1)
for in RA 8187, the greater benefit shall year;
prevail. (8) Unmarried father/mother who has
(2) If the existing paternity leave benefit is less preferred to keep and rear his/her
than that provided in RA 8187, the ER shall child/children, instead of having others
adjust the existing benefit to cover the care for them or give them up to a welfare
difference. institution;
(9) Any other person who solely provides
Where a company policy, contract, or CBA parental care and support to a child or
provides for an emergency or contingency children: Provided, that he/she is duly
leave without specific provisions on paternity licensed as a foster parent by the
leave, the ER shall grant to the employee 7 Department of Social Welfare and
calendar days of paternity leave. [Sec. 9, IRR, Development (DSWD) or duly appointed
RA 8187] legal guardian by the court; and
(10) Any family member who assumes the
F.4. PARENTAL LEAVE responsibility of head of family as a result
[RA 8972 (Solo Parents Welfare Act of 2000)] of the death, abandonment,
Leave benefits granted to a solo parent to disappearance, or prolonged absence of
enable him/her to perform parental duties and the parents or solo parent for at least one
responsibilities where physical presence is (1) year. [Sec. 3 (a), RA 8972]
required. [Sec. 3 (d), RA 8972]
Conditions for entitlement
Coverage A solo parent employee shall be entitled to the
parental leave under the following conditions:

56
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(1) He/she has rendered at least one (1) year of F.5. LEAVES FOR VICTIMS OF VIOLENCE
service, whether continuous or broken; AGAINST WOMEN
(2) He/she has notified his/her employer that [RA 9262 (Anti-Violence against Women and
he/she will avail himself/herself of it, Their Children Act of 2004)]
within a reasonable period of time; and
(3) He/she has presented to his/her employer Coverage and purpose
a Solo Parent Identification Card, which VAWC leave is granted to women employees
may be obtained from the DSWD office of who are victims of violence, as defined in RA
the city or municipality where he/she 9262. The leave benefit covers the days that
resides. [Sec 19, Art. V, IRR, RA 8972] the women employee has to attend to medical
or legal concerns.
Availment
The parental leave is in addition to leave Definition of Terms
privileges under existing laws with full pay, Violence against women and their children
consisting of basic salary and mandatory refers to any act or a series of acts committed
allowances. It shall not be more than seven (7) by any person against a woman who is his wife,
working days every year. [Sec. 8, RA 8972] former wife, or against a woman with whom
the person has or had a sexual or dating
Grant of flexible work schedule relationship, or with whom he has a common
The employer shall provide for a flexible child, or against her child whether legitimate
working schedule for solo parents: Provided, or illegitimate, within or without the family
That the same shall not affect individual and abode, which result in or is likely to result in
company productivity: Provided, further, That physical, sexual, psychological harm or
any employer may request exemption from the suffering, or economic abuse including threats
above requirements from the DOLE on certain of such acts, battery, assault, coercion,
meritorious grounds. [Sec. 6, RA 8972] harassment or arbitrary deprivation of liberty.

Protection against work discrimination VAWC includes, but is not limited to, the
No employer shall discriminate against any following acts:
solo parent employee with respect to terms (1) Physical Violence" refers to acts that
and conditions of employment on account of include bodily or physical harm;
his/her status. [Sec. 7, RA 8972] (2) "Sexual violence" refers to an act which is
sexual in nature, committed against a
Termination of the benefit woman or her child. It includes, but is not
A change in the status or circumstance of the limited to:
parent claiming the benefit under the law, (a) Rape, sexual harassment, acts of
such that he/she is no longer left alone with lasciviousness, treating a woman or
the responsibility of parenthood, shall her child as a sex object, making
terminate his/her eligibility for these benefits. demeaning and sexually suggestive
[Sec. 3 (a), RA 8972] remarks, physically attacking the
sexual parts of the victim's body,
forcing her/him to watch obscene
publications and indecent shows or
forcing the woman or her child to do
indecent acts and/or make films

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thereof, forcing the wife and (d) Controlling the victims' own money or
mistress/lover to live in the conjugal properties or solely controlling the
home or sleep together in the same conjugal money or properties. [Sec.3,
room with the abuser; RA 9262]
(b) Acts causing or attempting to cause
the victim to engage in any sexual Requirement for entitlement
activity by force, threat of force, To be entitled to the leave benefit, the only
physical or other harm or threat of requirement is for the victim-employee to
physical or other harm or coercion; present to her employer a certification from the
(c) Prostituting the woman or child. barangay chairman or barangay councilor or
(3) "Psychological violence" refers to acts or prosecutor or the Clerk of Court, as the case
omissions causing or likely to cause mental may be, that an action relative to the matter is
or emotional suffering of the victim such as pending.
but not limited to intimidation,
harassment, stalking, damage to property, Benefit
public ridicule or humiliation, repeated In addition to other paid leaves under existing
verbal abuse and mental infidelity. It labor laws, company policies, and/or CBA, the
includes causing or allowing the victim to qualified victim-employee shall be entitled to a
witness the physical, sexual or leave of up to 10 days with full pay, consisting
psychological abuse of a member of the of basic salary and mandatory allowances fixed
family to which the victim belongs, or to by the Regional Wage Board, if any.
witness pornography in any form or to
witness abusive injury to pets or to Usage of the benefit
unlawful or unwanted deprivation of the The usage of the 10-day leave shall be at the
right to custody and/or visitation of option of the woman employee. In the event
common children. that the leave benefit is not availed of, it shall
(4) "Economic abuse" refers to acts that make not be convertible into cash and shall not be
or attempt to make a woman financially cumulative.
dependent which includes, but is not
limited to the following: A victim of VAWC who is employed shall be
(a) Withdrawal of financial support or entitled to a paid leave of up to ten (10) days in
preventing the victim from engaging in addition to other paid leaves under the Labor
any legitimate profession, occupation, Code and Civil Service Rules and Regulations
business or activity, except in cases and other existing laws and company policies:
wherein the other spouse/partner (1) At any time during the application of any
objects on valid, serious and moral protection order, investigation, prosecution
grounds as defined in Article 73 of the and/or trial of the criminal case, extendible
Family Code; when the necessity arises as specified in
(b) Deprivation or threat of deprivation of the protection order.
financial resources and the right to the (2) Upon the issuance of the Punong
use and enjoyment of the conjugal, Barangay/kagawad or prosecutor or the
community or property owned in Clerk of Court, as the case may be, of a
common; certification (at no cost) to the woman that
(c) Destroying household property; such an action is pending, and this is all

58
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that is required for the employer to comply within the said 12-month period is sufficient to
with the 10- day paid leave. entitle her to avail of the special leave benefit.
(3) For government employees, in addition to
the aforementioned certification, the Employment service
employee concerned must file an Includes absences with pay such as use of
application for leave citing as basis R.A. other mandated leaves, company-granted
9262. [Sec. 42, IRR, RA 8972] leaves and maternity leaves

F.6. SPECIAL LEAVE BENEFITS (SLB) FOR Competent physician


WOMEN A medical doctor preferably specializing in
[RA 9710 (The Magna Carta of Women), DOLE gynecological disorders or is in the position to
DO No. 112, Series of 2011 as amended by DO determine the period of recuperation of the
No. 112-A Series of 2012] woman employee. [Sec. 1, DO 112, as amended]

Special leave benefit for women Conditions for entitlement of special leave
A female employees leave entitlement of two Any female employee, regardless of age and
(2) months with full pay from her employer civil status, shall be entitled to a special leave
based on her gross monthly compensation benefit, provided she has complied with the
following surgery caused by gynecological following conditions:
disorders, provided that she has rendered (1) She has rendered at least 6 months
continuous aggregate employment service of continuous aggregate employment service
at least six (6) months for the last 12 months. for the last 12 months prior to surgery;
(2) She has filed an application for special
Gynecological disorders leave
Disorders that would require surgical (3) She has undergone surgery due to
procedures such as, but not limited to, gynecological disorders as certified by a
dilatation and curettage and those involving competent physician. [Sec. 2, DO 112]
female reproductive organs such as the vagina,
cervix, uterus, fallopian tubes, ovaries, breast, Application for special leave
adnexa and pelvic floor, as certified by a Application before surgery
competent physician. It shall also include The employee shall file her application for
hysterectomy, ovariectomy, and mastectomy. leave with her employer within a reasonable
period of time from the expected date of
Gross monthly compensation surgery, or within such period as may be
The monthly basic pay plus mandatory provided by company rules and regulations or
allowances fixed by the regional wage boards. by CBA.
[Sec. 7, Rule II, IRR, RA 9710]
Application after surgery
At least six months continuous aggregate Prior application for leave shall not be
employment service for the last 12 months prior necessary in cases requiring emergency
to surgery surgical procedure, provided that the employer
The woman employee should have been with shall be notified verbally or in written form
the company for 12 months prior to surgery. An within a reasonable period of time and
aggregate service of at least six (6) months provided further that after the surgery or
appropriate recuperating period, the female

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UP LAW BOC LABOR STANDARDS LABOR LAW

employee shall immediately file her victims of VAWC, Parental leave for solo
application using the prescribed form. [Sec. 3, parents). The grant of SLB under the law is in
DO 112] recognition of the fact that patients with
gynecological disorder needing surgery require
Period of entitlement a longer period of recovery. The benefit is
The 2 months special leave is the maximum considered an addition to the leave benefits
period of leave with pay that a woman granted under existing laws and should be
employee may avail of under RA 9710. added on top of said statutory leave
entitlements.
For purposes of determining the period of
leave with pay that will be allowed to a female If the SLB has already been exhausted, the
employee, the certification of a competent company leave and other mandated leave
physician as to the required period of benefits may be availed of by the woman
recuperation shall be controlling. [Sec. 4, DO employee. [Sec. 8, DO 112, as amended]
112, as amended]
Special leave benefit vis--vis maternity leave
Availment benefit
The special leave shall be granted to the Where the woman employee had undergone
qualified employee after she has undergone surgery due to gynecological disorder during
surgery. [Sec. 5, DO 112, as amended] her maternity leave, she is entitled only to the
difference between the SLB and maternity
Frequency of availment leave benefit. [Sec. 9, DO 112, as amended]
A woman employee can avail of the SLB for
every instance of surgery due to gynecological Crediting of existing or similar benefits
disorder for a maximum total period of 2 If there are existing or similar benefits under a
months per year. [Sec. 6, DO 112, as amended] company policy, practice or CBA providing
similar or equal benefits to what is mandated
Special leave benefit vis--vis SSS sickness by law, the same shall be considered as
benefit compliance, unless the company policy,
The SLB is different from the SSS sickness practice or CBA provides otherwise.
benefit. The former is granted by the employer
in accordance with RA 9710. In the event the company policy, practice or
CBA provides lesser benefits, the company
It is granted to a woman employee who has shall grant the difference.
undergone surgery due to gynecological
disorder. The SSS sickness benefit, on the More liberal existing or similar benefits cannot
other hand, is administered and given by the be withdrawn or reduced by reason of the
SSS in accordance with RA 1161 as amended by mandate of RA 9710.
RA 8282. [Sec. 7, DO 112, as amended]
The term similar or equal benefits refers to
leave benefits which are of the same nature
Special leave benefit vis--vis existing statutory and purpose as that of the SLB. [Sec. 10, DO
leaves 112, as amended]
The SLB cannot be taken from existing
statutory leaves (i.e. 5-day SIL, leave for

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Mode of payment employees not falling within this definition


The SLB is a leave privilege. The woman shall be considered rank-and-file employees.
employee shall not report for work for the (Sec 2, Rule VI, Book 3, IRR)
duration of the leave but she will still receive
her salary covering said period. The employer, Distribution
in its discretion, may allow said employee to Service charges are distributed in accordance
receive her pay for the period covered by the with the following percentage of sharing:
approved leave before or during the surgery. Eighty-five percent (85%) for the
The computation of her pay shall be based employees to be distributed equally
on her prevailing salary at the time of the among them;
surgery. [Sec. 11, DO 112, as amended] Fifteen percent (15%) for the management
to answer for losses and breakages and, at
Non-commutation of the benefit the discretion of the management,
The SLB shall be non-cumulative and non- distribution to managerial employees. (Sec
convertible to cash unless otherwise provided 3, Rule VI, Book 3, IRR)
by a CBA [Sec. 12, DO 112, as amended]
The shares shall be distributed to employees
G. SERVICE CHARGES not less than once every 2 weeks or twice a
month at intervals not exceeding 16 days. (Sec
Coverage 4, Rule VI, Book 3, IRR)
Employers (Sec 1, Rule VI, Book 3, IRR)
This rule shall apply only to establishments Note: The P2,000.00 salary ceiling for
which collect service charges such as: entitlement thereto is no longer applicable.
(1) Hotels, restaurants, lodging houses, night
clubs, cocktail lounge, massage clinics, Integration
bars, casinos and gambling houses and In case service charge is abolished, the shares
similar enterprises of covered employees shall be considered
(2) Including those entities operating primarily integrated in their wages. (Art 96, LC)
as private subsidiaries of the Government
The basis of the amount to be integrated shall
Employees be the average monthly share of each
Shall apply to ALL employees of covered employee for the past twelve (12) months
employers immediately preceding the abolition of
(1) Regardless of their positions, designations, withdrawal of such charges. (Sec. 5, Rule VI,
or employment status, Book 3, IRR)
(2) Irrespective of the method by which their
wages are paid. Synthesis of the Rules
Service charges must be pooled;
Exceptions Where a restaurant or similar
Managerial employees or one who is vested establishment does not collect service
with powers or prerogatives to lay down and charges but has a practice or policy of
execute managerial policies and/or hire, monitoring and pooling tips given
transfer, suspend, layoff, recall, discharge, voluntarily by its customers to its
assign or discipline employees or to effectively employees, the pooled tips should be
recommend such managerial actions. All monitored, accounted for and distributed

61
UP LAW BOC LABOR STANDARDS LABOR LAW

in the same manner as the services (2) Employers already paying their employees
charges. (DOLE Handbook on Workers a 13th month pay or more in a calendar
Statutory Monetary Benefits, 2014ed.) year or its equivalent at the time of this
The amount collected is divided between issuance; and
the company (15%) and employees (85%); (3) Employers of those who are paid on purely
It shall be given twice a month with commission, boundary or task basis and
intervals of not more than 15 days; those who are paid a fixed amount for
If discontinued, removed, or stopped, the performing specific work, irrespective of
average share of the employees of their the time consumed in the performance
service charge or tips shall be integrated thereof (except those workers who are paid
with their basic wage. on piece-rate basis, in which case their
employer shall grant them 13 th month pay).
H. THIRTEENTH (13TH) MONTH PAY
Note:
AND OTHER BONUSES Equivalent includes:
(1) Christmas bonus, mid-year bonus, cash
(PD 851 (The 13 th-Month Pay Law) and the bonuses
Revised Guidelines on the Implementation of (2) and other payments amounting to not
the 13th Month Pay Law) less than 1/12 of the basic salary
(3) but shall NOT INCLUDE cash and stock
Rationale dividends, cost of living allowances and
To further protect the level of real wages all other allowances regularly enjoyed
from the ravage of world-wide inflation; by the employee as well a non-
There has been no increase in the legal monetary benefits.
minimum wage rates since 1970;
The Christmas season is an opportune time Workers paid on a piece-rate basis
for society to show its concern for the Those who are paid a standard amount for
plight of the working masses so they may every piece or unit of work produced that is
properly celebrate Christmas and New more or less regularly replicated, without
Year. regard to the time spent in producing the
same.
Coverage
General Rule: ALL EMPLOYERS are hereby Minimum Amount: 1/12 of the total basic
required to pay all their rank and file salary earned by an employee within a
employees a 13th month pay not later than Dec calendar year
24 of every year, Provided that they have
worked for at least one (1) month during a BASE AMOUNT, which is the basic salary shall
calendar year. include:
(1) Cost of living allowances (COLA) integrated
Exempted Employers: into the basic salary of a covered employee
(1) Government, its political subdivisions, pursuant to EO 178.
including GOCCs except those operating (2) All remunerations or earnings paid by this
essentially as private subsidiaries of the employer for services rendered.
Government; (3) But not the allowances and monetary
benefits which are not considered or

62
UP LAW BOC LABOR STANDARDS LABOR LAW

integrated as part of the regular or basic from all their private Employers regardless
salary, such as the cash equivalent of: of their total earnings from each or all their
(a) Unused vacation and sick leave employers. (Revised Guidelines)
credits, (4) Private School Teachers: Private school
(b) Overtime, teachers, including faculty members of
(c) Premium, universities and colleges, are entitled to
(d) Night differential, the required 13th month pay, regardless of
(e) Holiday pay and, and the number of months they teach or are
(f) Cost-of-living allowances. paid within a year, if they have rendered
service for at least one (1) month within a
Time of payment year. (Revised Guidelines)
General Rule: paid not later than Dec 24 of
each year. Overload pay is NOT included in the
computation for 13 th month pay; overload is
Exception: ER may give to his employees half not overtime as it is additional work done
() of the required 13th Month Pay before the within the normal shift [Letran Calamba
opening of the regular school year and the Faculty vs NLRC, (2008)]
other half on or before the 24th of December (1) Resigned or Separated Employee: An
every year. Employee who has resigned or whose
services were terminated at any time
The frequency of payment of this monetary before the time for payment of the 13th
benefit may be the subject of agreement month pay is entitled to this monetary
between the employer and the recognized benefit in proportion to the length of time
CBA of the employees. he worked during the year, reckoned from
the time he started working during the
13th Month Pay in Special Cases calendar year up to the time of his
(1) Paid by Results: Employees who are paid resignation or termination from service.
on piece work basis are, by law, entitled to [Revised Guidelines]
the 13th Month Pay. (Revised Guidelines on (2) Wage Difference: The difference between
the Implementation of the 13 th Month Pay the minimum wage and the actual salary
Law) received by the Employee cannot be
(2) Fixed or Guaranteed Wage: Employees who deemed as his 13 th month pay as such
are paid a fixed or guaranteed wage plus difference is not equivalent to or of the
commission are entitled to 13th month pay same import as the said benefit
(not purely commission); the basis for contemplated by law. [JPL Marketing
computation shall be both their fixed or Promotions vs CA, 2005]
guaranteed wage and commission. (3) Terminated Employees: The payment of the
(Revised Guidelines) 13th month pay may be demanded by the
(3) Those with Multiple Employers: employee upon the cessation of employer-
Government Employees working part time employee relationship. [Archilles
in a private enterprise, including private Manufacturing Corp. vs NLRC, 1995]
educational institutions, as well as
Employees working in two or more private
firms, whether on full or part time bases,
are entitled to the required 13th Month Pay

63
UP LAW BOC LABOR STANDARDS LABOR LAW

Additional Rules: the other. The two cases present quite


(1) Commissions: If the commissions may be different factual situations (although the
properly considered part of the basic same word commissions was used or
salary, then they should be INCLUDED. If invoked) the legal characterizations of which
they are not an integral part of the basic must accordingly differ.
salary, then they should be EXCLUDED.
[Phil. Duplicators Inc. vs NLRC (1995)] In the instant case, there is no question that
(2) Substitute Payment not allowed: Benefits the sales commission earned by the salesmen
in the form of food or free electricity, who make or close a sale of duplicating
assuming they were given, were not a machines constitute part of the compensation
proper substitute for the 13th month pay or remuneration paid to salesmen for serving
required by law. Neither may year-end as salesmen, and hence as part of the wage
rewards for loyalty and service be or salary of petitioners salesmen. It appears
considered in lieu of 13th month pay. that petitioner pays its salesmen a small fixed
[Framanlis Farms, Inc. vs MOLE (1989)] or guaranteed wage; the greater part of the
(3) 14 t h Month Pay is not mandated: Employers salesmens wages or salaries being composed
already paying their employees a 13th of the sales or incentive commissions earned
month pay or its equivalent are not covered on actual sales closed by them. The sales
by this Decree.[Kamaya Point Hotel vs commissions were an integral part of the basic
NLRC (1989)] salary structure. They are not overtime
payments, or profit sharing payments or any
Commissions vis--vis 13 t h month pay other fringe benefit. [Phil. Duplicators vs
The Rule on Productivity Bonuses. The so- NLRC (1995)]
called commissions paid to or received by
medical representatives of Boie-Takada CBA vis--vis 13 t h month pay
Chemicals or by the rank-and-file employees The Presidential Decree is specific and
of Philippine Fuji Xerox Co., were excluded mandatory. However, if the employers actually
from the term basic salary because these grant such for the 13 th month pay in the
were paid to the medical representatives and monetary benefits provided for in the CBA,
rank-and-file employees as productivity they could be exempted from the operation of
bonuses. These have no clear direct or the decree. To be exempted, there must be
necessary relation to the amount of work actual payment. [Marcopper Mining Corp. vs.
actually done by each individual employee. Ople (1981)]
More generally, a bonus is an amount granted
and paid ex gratia to an employee. If an I. SEPARATION PAY
employer cannot be compelled to pay a [(Art. 283 & 284, LC, DOLE Handbook on
productivity bonus to its employees, it should Workers Statutory Monetary Benefits, 2014)
follow that such productivity bonus, when
given, should not be deemed to fall within the Separation pay is defined as the amount that
basic salary of employees when the time an employee receives at the time of his
comes to compute their 13 th month pay [Boie- severance from the service and is designed to
Takeda vs de la Serna (1993)] provide the employee with the wherewithal
during the period that he is looking for
The decision in Boie-Takeda and the doctrine another employment. [A Prime Security
enunciated in this case in fact co-exist with Services vs NLRC (1993)]

64
UP LAW BOC LABOR STANDARDS LABOR LAW

General rule: The rule embodied in the Labor Handbook on Workers Statutory Monetary
Code is that a person dismissed for cause as Benefits, 2014 ed.)
defined therein (see Art. 282, LC) is not
entitled to separation pay. [PLDT vs NLRC One-Month Pay per Year of Service
(1988)] An employee is entitled to separation pay
equivalent to his/her one-month pay for every
Exceptions: Considerations of equity as in the year of service, a fraction of at least 6 months
cases of Filipro, Inc. v. NLRC, Metro Drug being considered as one whole year, if his/her
Corp. v. NLRC, Engineering Equipment, Inc. v. separation from service is due to any of the
NLRC, San Miguel Corp v. NLRC. [PLDT vs following:
NLRC (1988)] (1) Installation by employer of labor-saving
devices;
An employee who voluntarily resigns is not (2) Redundancy, as when the position of the
entitled to separation pay unless stipulated in employee has been found to be excessive
the employment contract, or the collective or unnecessary in the operation of the
bargaining agreement, or is sanctioned by enterprise;
established practice or policy of the employer. (3) Impossible reinstatement of the employee
[Phimco Industries vs NLRC (1997); Hinatuan to his/her former position or to a
Mining Corp vs NLRC (1997) cited in JPL substantially equivalent position for
Marketing Promotions v. CA (2005)] reasons not attributable to the fault of the
employer, as when the reinstatement
Amount ordered by a competent authority cannot
One-Half (1/2) Month Pay per Year of Service be implemented due to closure of
An employee is entitled to receive separation cessation of operations of the
pay equivalent to month pay for every year establishment/employer, or the position to
of service, a fraction of at least six (6) months which he/she is to be reinstated no longer
being considered as one whole year, if his/her exists and there is no substantially
separation from the service is due to any of the equivalent position in the establishment to
following authorized causes: which he/she can be assigned. [Gaco vs
(1) Retrenchment to prevent losses (i.e. NLRC (1994)]
reduction of personnel effected by
management to prevent losses); Notice of Termination
(2) Closure or cessation of operation of an The employer may terminate the employment
establishment not due to serious losses or of any employee due to the above-mentioned
financial reverses; and, authorized causes by serving a written notice
(3) When the EE is suffering from a disease on the employee and the DOLE through its
not curable within a period of six (6) regional office having jurisdiction over the
months and his/her continued place of business at least 1 month before the
employment is prejudicial to his/her health intended date thereof.
or to the health of his/her co-employees
In no case will an employee get less than one Basis of Separation Pay
(1) month separation pay if the separation is The computation of separation pay of an
due to the above stated causes and he/she employee shall be based on his/her latest
has served for at least six (6) months. (DOLE salary rate. [DOLE Handbook on Workers
Statutory Monetary Benefits, 2014 ed.]

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Inclusion of Regular Allowance in the Retirement - the result of a bilateral act of the
Computation parties, a voluntary agreement between the
In the computation of separation pay, it would employer and the employee whereby the latter,
be error not to integrate the allowance with after reaching a certain age agrees to sever his
the basic salary. The salary base properly used or her employment with the former ... an
in computing the separation pay should employer is free to impose a retirement age
include not just the basic salary but also the less than 65 for as long as it has the
regular allowances that an employee has employees consent having terminated
been receiving. [Planters Products, Inc. vs petitioner solely on the basis of a provision of a
NLRC (1989)] retirement plan which was not freely assented
to by her, respondent was guilty of illegal
J. RETIREMENT PAY dismissal [Jaculbe vs Silliman University, 2007]
[RA 7641 - The Retirement Pay Law]
J.1. ELIGIBILITY
Rationale General Rule: All employees in the private
RA 7641 is undoubtedly a social legislation. sector, regardless of their position,
The law has been enacted as a labor protection designation, or status, and irrespective of the
measure and as a curative statute that absent method by which their wages are paid [Sec. 1,
a retirement plan devised by, an agreement IRR, RA 7641]
with, or a voluntary grant from, an employer
can respond, in part at least, to the financial Exceptions:
well-being of workers during their twilight (1) employees covered by the Civil Service
years soon following their life of labor. There Law;
should be little doubt about the fact that the (2) domestic helpers and persons in the
law can apply to labor contracts still existing at personal service of another, and
the time the statute has taken effect, and that (3) employees in retail, service and
its benefits can be reckoned not only from the agricultural establishments or operations
date of the law's enactment but retroactively to regularly employing not more than ten
the time said employment contracts have employees [Sec. 2, IRR, RA 7641]
started. [Enriquez Security Services, Inc. v.
Cabotaje, 2006] Exclusions from coverage
Pursuant thereto, this Court imposed two (2) R.A. No. 7641, otherwise known as "The
essential requisites in order that R.A. 7641 may Retirement Pay Law," only applies in a
be given retroactive effect: situation where:
(1) the claimant for retirement benefits was (1) there is no collective bargaining
still in the employ of the employer at the agreement or other applicable
time the statute took effect; and employment contract providing for
(2) the claimant had complied with the retirement benefits for an employee; OR
requirements for eligibility for such (2) there is a collective bargaining agreement
retirement benefits under the statute. or other applicable employment contract
[Universal Robina Sugar Milling Corp. vs providing for retirement benefits for an
Caballeda, 2008] employee, but it is below the requirements
set for by law.
The reason for the first situation is to prevent
the absurd situation where an employee, who

66
UP LAW BOC LABOR STANDARDS LABOR LAW

is otherwise deserving, is denied retirement (2) Cash equivalent of five (5) days of service
benefits by the nefarious scheme of employers incentive leave;
in not providing for retirement benefits for their (3) One-twelfth (1/12) of the 13th month pay.
employees. The reason for the second situation (1/12 x 365/12 = .083 x 30.41 = 2.52)
is expressed in the Latin maxim pacta private
juri public derogare non possunt. Private Thus, one-half month salary is equivalent to
contracts cannot derogate from the public law. 22.5 days. [Capitol Wireless, Inc. vs Sec.
[Oxales vs Unilab, 2008] Confessor, 1996; Reyes v NLRC, 2007]
Other benefits may be included in the
Age of retirement computation of the retirement pay upon
In the absence of a retirement plan or agreement of the ER and the EE or if provided
agreement providing for retirement benefits of in the CBA.
employees in the establishment, an employee
upon reaching the age of sixty (60) years or Retirement pay under RA 7641 vis--vis
more, but not beyond sixty-five (65) years retirement benefits under SSS and GSIS laws
which is hereby declared the compulsory RA 7641 mandates payment of retirement
retirement age (and have served the benefits. All private sector employees
establishment for at least 5 years). [Sec. 1, IRR, regardless of their position, designation or
RA 7641] status and irrespective of the method by which
their wages are paid are entitled to retirement
Optional retirement in the absence of a benefits upon compulsory retirement at the
retirement plan or other applicable agreement age of sixty-five (65) or upon optional
providing for retirement benefits of EEs in an retirement at sixty (60) or more but not 65. The
establishment, an EE may retire upon reaching minimum retirement pay due covered
the age of 60 or more if he has served for at employees shall be equivalent to one-half
least 5 years in said establishment. month salary for every year of service, a
fraction of at least six (6) months being
Compulsory retirement in the absence of a considered as one whole year. The benefits
retirement plan or other applicable agreement under this law are other than those granted by
providing for retirement benefits of EEs in an the SSS or the GSIS.
establishment, an EE shall be retired at the
age of 65 years. [Sec. 4, IRR, RA 7641] Retirement Benefits under a CBA or Applicable
Contract
J.2. AMOUNT OF RETIREMENT PAY Any EE may retire or be retired by his/her ER
The minimum retirement pay shall be upon reaching the age established in the CBA
equivalent to one-half (1/2) month salary for or other applicable agreement/contract and
every year of service, a fraction of at least six shall receive the retirement benefits granted
(6) months being considered as one whole therein; provided, however, that such
year. retirement benefits shall not be less than the
retirement pay required under RA 7641, and
For the purpose of computing retirement pay, provided further that if such retirement
one-half month salary shall include all of the benefits under the agreement are less, the ER
following: shall pay the difference.
(1) Fifteen (15) days salary based on the latest
salary rate;

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Where both the ER and the EE contribute to a J.5. TAXABILITY


retirement fund pursuant to the applicable Any provision of law to the contrary
agreement, the ERs total contributions and notwithstanding, the retirement benefits
the accrued interest thereof should not be less received by officials and employees of private
than the total retirement benefits to which the firms, whether individual or corporate , in
EE would have been entitled had there been no accordance with a reasonable private benefit
such retirement benefits fund. If such total plan maintained by the employer shall be
portion from the ER is less, the ER shall pay exempt from all taxes and shall not be liable to
the deficiency. attachment, garnishment, levy or seizure by or
under any legal or equitable process
J.3. RETIREMENT BENEFITS OF whatsoever except to pay a debt of the official
WORKERS WHO ARE PAID BY RESULTS or employee concerned to the private benefit
For covered workers who are paid by result and plan or that arising from liability imposed in a
do not have a fixed monthly salary rate, the criminal action: Provided, That the retiring
basis for the determination of the salary for 15 official or employee has been in the service for
days shall be their average daily salary (ADS). at least ten (10) years and is not less than fifty
The ADS is derived by dividing the total salary years of age at the time of his retirement:
or earning for the last 12 months reckoned Provided, further, That the benefits granted
from the date of retirement by the number of under this Act shall be availed of by an official
actual working days in that particular period, or employee only once; Provided, finally, That
provided that the determination of rates of in case of separation of an official or employee
payment by results are in accordance with from the service of the employer due to death,
established regulations. sickness, or other physical disability or for any
cause beyond the control of the said official or
J.4. RETIREMENT BENEFIT OF PART- employee, any amount received by him or by
TIME WORKERS his heirs from the employer as a consequence
Part-time workers are also entitled to of such separation shall likewise be exempt as
retirement pay of one-month salary for every hereinabove provided.
year of service under RA 7641 after satisfying
the following conditions precedent for optional As used in this Act, the term "reasonable
retirement: private benefit plan" means a pension,
(a) Theres no retirement plan between the ER gratuity, stock bonus or profit sharing plan
and the EE; and, maintained by an employer for the benefit of
(b) The EE should have reached the age of 60 some or all of his officials and employees,
years, and should have rendered at least 5 wherein contributions are made by such
years of service with the ER. employer or officials and employees, or both,
for the purpose of distributing to such officials
Applying the foregoing principle, the and employees the earnings and principal of
components of retirement benefit of part-time the fund thus accumulated, and wherein it is
workers may likewise be computed at least in provided in said plan that at no time shall any
proportion to the salary and related benefits part of the corpus or income of the fund be
due them. [DOLE Handbook on Workers
used for, or be diverted to, any purpose other
Statutory Monetary Benefits, 2014 ed.]
than for the exclusive benefit of the said
officials and employees.[Sec. 1, RA 4917]

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Any provision of law to the contrary and employees the earnings and principal of
notwithstanding, the retirement benefits the fund thus accumulated, and wherein it is
received by officials and employees of private provided in said plan that at no time shall any
firms, whether individual or corporate, in part of the corpus or income of the fund be
accordance with a reasonable private benefit used for, or be diverted to, any purpose other
plan maintained by the employer than for the exclusive benefit of the said
(1) shall be exempt from all taxes and officials and employees.
(2) shall not be liable to attachment,
garnishment, levy or seizure by or under K. WOMEN WORKERS
any legal or equitable process whatsoever
[Intercontinental Broadcasting Corp. v The State recognizes the role of women in
Amorilla, 2006] nation-building, and shall ensure the
fundamental equality before the law of women
Exception and men.[Consti Art II Sec 14]
Except to pay a debt of the official or employee
concerned to the private benefit plan or that The State shall protect working women by
arising from liability imposed in a criminal providing safe and healthful working
action: conditions, taking into account their maternal
functions, and such facilities and opportunities
Additional conditions that will enhance their welfare and enable
(a) That the retiring official or employee has them to realize their full potential in the service
been in the service of the same employer of the nation.[Consti Art XIII Sec 14]
for at least ten (10) years and is not less
than fifty years of age at the time of his
General Statement on Coverage. This Rule
retirement;
shall apply to all employers, whether operating
(b) That the retirement benefits shall be
for profit or not, including educational,
availed of by an official or employee only
religious and charitable institutions, except to
once; and,
the Government and to government-owned or
(c) That in case of separation of an official or
controlled corporations and to employers of
employee from the service of the employer
household helpers and persons in their
due to death, sickness or other physical
personal service insofar as such workers are
disability or for any cause beyond the
concerned.[Omnibus Rules Bk III Rule XII Sec 1]
control of the said official or employee, any
amount received by him or by his heirs
K.1. PROVISIONS AGAINST
from the employer as a consequence of
DISCRIMINATION
such separation shall likewise be exempt
as hereinabove provided. It shall be unlawful for any employer to
discriminate against any woman employee
Reasonable private benefit plan - means a with respect to terms and conditions of
pension, gratuity, stock bonus or profit sharing employment solely on account of her sex.
plan maintained by an employer for the benefit The following are acts of discrimination:
of some or all of his officials and employees, (1) Payment of a lesser compensation,
wherein contributions are made by such including wage, salary or other form of
employer or officials and employees, or both, remuneration and fringe benefits, to a
for the purpose of distributing to such officials female employees as against a male
employee, for work of equal value; and

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(2) Favoring a male employee over a female K.3. PROHIBITED ACTS


employee with respect to promotion, [Art. 135]
training opportunities, study and Note: Nightwork/ Exception (Art 130-131) No
scholarship grants solely on account of more nightwork prohibition under R.A. 10151
their sexes. [Art.133, Labor Code] (An Act Allowing the Employment of Night
Workers, thereby Repealing Articles 130 and
K.2. STIPULATION AGAINST MARRIAGE 131 of PD 442, as amended, otherwise known
It shall be unlawful for an employer to: as the Labor Code of the Philippines)
(1) require as a condition of employment or
continuation of employment that a woman Coverage. - This chapter shall apply to all
employee shall not get married, or persons, who shall be employed or permitted
(2) stipulate expressly or tacitly that upon or suffered to work at night, except those
getting married a woman employee shall employed in agriculture, stock raising, fishing,
be deemed resigned or separated or maritime transport and inland navigation,
(3) actually dismiss, discharge, discriminate or during a period of not less than seven (7)
otherwise prejudice a woman employee consecutive hours, including the interval from
merely by reason of her marriage. [Art. 134, midnight to five o'clock in the morning, to be
Labor Code][Duncan Assoc of Detailman determined by the Secretary of Labor and
PTGWO v Glaxo Wellcome, 2004] Employment, after consulting the workers'
representatives/labor organizations and
Bona fide occupational qualification exception employers.
When the employer can prove that the Night worker means any employed person
reasonable demands of the business require a whose work requires performance of a
distinction based on marital status and there is substantial number of hours of night work
no better available or acceptable policy which which exceeds a specified limit. This limit shall
would better accomplish the business purpose, be fixed by the Secretary of Labor after
an ER may discriminate against an EE based in consulting the workers' representatives/labor
the identity of the EEs spouse. [Star Paper organizations and employers. [Article 154, RA
Corp. vs. Simbol, 2006] 10151]
The Court sustained the validity of employer
policy prohibiting an employee from having a Women Night Workers. - Measures shall be
personal or marital relationship with an taken to ensure that an alternative to night
employee of a competitor. The prohibition was work is available to women workers who would
reasonable under the circumstances because otherwise be called upon to perform such
relationships of such nature might compromise work:
the interests of the company. [Duncan
Association of Detailmen vs. Glaxo Wellcome, (a) Before and after childbirth, for a period of at
2004] least sixteen (16) weeks, which shall be
divided between the time before and after
childbirth;
(b) For additional periods, in respect of winch a
medical certificate IS produced stating that
said additional periods are necessary for
the health of the mother or child:
(1) During pregnancy;

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(2) During a specified time beyond the


period, after childbirth is fixed Discharge to prevent enjoyment of benefits
pursuant to subparagraph (a) above, To deny any woman employee the benefits
the length of which shall be provided for in this Chapter or to discharge any
determined by the DOLE after woman employed by him for the purpose of
consulting the labor organizations preventing her from enjoying any of the
and employers. benefits provided under this Code. [Art. 135 (1)]

During the periods referred to in this article: Discharge on account of pregnancy


(i) A woman worker shall not be dismissed or To discharge such woman on account of her
given notice of dismissal, except for just or pregnancy, while on leave or in confinement
authorized causes provided for in this Code due to her pregnancy. [Art. 135 (2)]
that are not connected with pregnancy,
childbirth and childcare responsibilities. Discharge on account of test imony
(ii) A woman worker shall not lose the benefits To discharge or refuse the admission of such
regarding her status, seniority, and access woman upon returning to her work for fear that
to promotion which may attach to her she may again be pregnant. [Art. 137 (3)]
regular night work position. It shall be unlawful for any employer: to
discharge any woman or child or any other
Pregnant women and nursing mothers may be employee for having filed a complaint or
allowed to work at night only if a competent having testified or being about to testify under
physician, other than the company physician, the Code [Book III, Rule XII, Sec 13(d), IRR]
shall certify their fitness to render night work,
and specify, in the case of pregnant employees, Expulsion of Women faculty/ female student
the period of the pregnancy that they can due to pregnancy outside of marriage
safely work. The measures referred to in this Expulsion and non-readmission of women
article may include transfer to day work where faculty due to pregnancy outside of marriage
this is possible, the provision of social security shall be outlawed. No school shall turn out or
benefits or an extension of maternity leave. refuse admission to a female student solely on
the account of her having contracted
The measures referred to in this article may pregnancy outside of marriage during her term
include transfer to day work where this is in school. [Sec. 13(c), RA 9710]
possible, the provision of social security
benefits or an extension of maternity leave. K.4. ANTI-SEXUAL HARASSMENT
[RA 7877 - Anti-Sexual Harassment Act of 1995]
The provisions of this article shall not leave the Forms of Sexual Harassment
effect of reducing the protection and benefits (1) Employment or Work Related
connected with maternity leave under existing (a) The sexual favor is made as a condition
laws.[Article 158, RA 10151] (i) in the hiring or in the employment,
re-employment or continued
Discrimination [Art 133, RA 9710] employment of said individual or
See previous section (ii) in granting said individual favorable
compensation, terms, conditions,
Stipulation against marriage [Art 134] promotions, or privileges, or
See previous section

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(iii) in the refusal to grant the sexual (2) Any person who directs or induces another
favor results in limiting, segregating to commit any act of sexual harassment as
or classifying the EE which in any herein defined. OR
way would discriminate, deprive or (3) Any person who cooperates in the
diminish employment opportunities commission by another without which it
or otherwise adversely affect said would NOT have been committed, shall
employee; also be held liable under this Act [Sec. 3,
(b) The above acts would either: RA 7877]
(i) impair the employees rights or
privileges under existing labor laws; Role of the employer or Head of Office
or The Employer or Head of Office shall have the
(ii) result in an intimidating, hostile, or duty:
offensive environment for the (1) to prevent the commission of such acts and
employee. (2) to lay down the procedure for the
resolution, settlement or prosecution of
(2) Education or Training environment. In an committed acts. [Sec. 4, RA 7877]
education or training environment, sexual
harassment is committed: He shall be solidarily liable for damages:
(a) Against one who is under the care, custody (1) if he is informed of such acts by the
or supervision of the offender offended party and
(b) Against one whose education, training, (2) no immediate action is taken thereon. [Sec.
apprenticeship or tutorship is entrusted to 5, RA 7877]
the offender;
(c) When the sexual favor is made a condition
Independent Action for Damages
to the giving of a passing grade, or the
The victim of work, education or training-
granting of honors and scholarships, or the
related sexual harassment can institute a
payment of a stipend, allowance or other
separate and independent action for damages
benefits, privileges, or considerations; or
and other affirmative relief. [Sec. 6, RA 7877]
(d) When the sexual advances result in an
intimidating, hostile or offensive
environment for the result, trainee or Sanctions
apprentice. Criminal: imprisonment of 1 month to mos. Or
fine of P10k to P20k or both
Persons who may be liable Prescription of such action is in 3 years.
(1) Any employer, employee, manager,
supervisor, agent of the employer, teacher, Termination
instructor, professor, coach, trainer or any As a managerial employee, petitioner is bound
other person, regardless of whether the by more exacting work ethics. When such
demand, request for requirement for moral perversity is perpetuated against his
submission is accepted by the object of subordinate, he provides a justifiable ground
said act having authority, influence or for his dismissal for lack of trust and
moral ascendancy over another in a work or confidence. It is the right, nay the duty of every
training or education environment, who employer to protect its employees from
demands, requests or otherwise requires oversexed superiors. [Sec. 7, RA 7877] [Libres vs
any sexual favor from another, NLRC, 1999]

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General Rule: Children below 15 shall NOT be


The gravamen of the offense in sexual employed
harassment is not the violation of the
employee's sexuality but the abuse of power by Employment of Children - Children below
the employer. Any employee, male or female, fifteen (15) years of age shall not be employed
may rightfully cry "foul" provided the claim is except:
well substantiated. Strictly speaking, there is (1) When a child works directly under the sole
no time period within which he or she is responsibility of his/her parents or legal
expected to complain through the proper guardian and where only members of
channels. The time to do so may vary his/her family are employed: Provided,
depending upon the needs, circumstances, and however, That his/her employment neither
more importantly, the emotional threshold of endangers his/her life, safety, health, and
the employee. morals, nor impairs his/her normal
development: Provided, further, That the
Not many women are made of the stuff that parent or legal guardian shall provide the
can endure the agony and trauma of a public, said child with the prescribed primary
even corporate, scandal. If petitioner- and/or secondary education; or
corporation had not issued the third (2) Where a child's employment or
memorandum that terminated the services of participation in public entertainment or
private respondent, we could only speculate information through cinema, theater,
how much longer she would keep her silence. radio, television or other forms of media is
Perhaps, to private respondent's mind, for as essential: Provided, That the employment
long as she could outwit her employer's ploys contract is concluded by the child's parents
she would continue on her job and consider or legal guardian, with the express
them as mere occupational hazards. [Phil. agreement of the child concerned, if
Aelous Automotive United Corp. vs NLRC, possible, and the approval of the
2000] Department of Labor and
Employment: Provided, further, That the
L. MINOR WORKERS following requirements in all instances are
Relevant Laws: RA 7610 (Special Protection of strictly complied with:
Children Against Abuse, Exploitation and (a) The employer shall ensure the
Discrimination Act), RA 9231 (Special protection, health, safety, morals and
Protection of Children Against Child Abuse, normal development of the child;
Exploitation and Discrimination Act), Art. (b) The employer shall institute measures
137(a) to prevent the child's exploitation or
discrimination taking into account the
Constitutional basis: The State recognizes the system and level of remuneration, and
vital role of the youth in nation-building and the duration and arrangement of
shall promote and protect their physical, working time; and
moral, spiritual, intellectual, and social well- (c) The employer shall formulate and
being. It shall inculcate in the youth patriotism implement, subject to the approval
and nationalism, and encourage their and supervision of competent
involvement in public and civic affairs.[Art II, authorities, a continuing program for
Sec. 13 of the 1987 Constitution] training and skills acquisition of the
child.

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In the above-exceptional cases where any such prescribed primary and/or secondary
child may be employed, the employer shall first education; [Sec. 12 of RA 7610 as
secure, before engaging such child, a work amended by RA 7658]
permit from the Department of Labor and
Employment which shall ensure observance of (2) childs employment or participation in
the above requirements. public entertainment or information
through cinema, theater, radio or television
For purposes of this Article, the term "child" is essential, provided that [Sec. 12 of RA
shall apply to all persons under eighteen (18) 7610 as amended by RA 7658]:
years of age.[Sec 2, RA 9231] (a) employment does NOT involve ads or
commercials promoting alcohol,
Child - refers to any person under 18 years of tobacco and its by-products or violence
age [Sec. 14, RA 7610]
(b) the employment contract is concluded
Child labor - refers to any work or economic by the childs parents or guardian, and
activity performed by a child that subjects approved by DOLE
him/her to any form of exploitation or is (c) The ER shall ensure the protection,
harmful to his/her health and safety or health, safety and morals of the child
physical, mental or psychosocial development (d) The ER shall institute measures to
prevent the childs exploitation or
Working child - refers to any child engaged as discrimination taking into account the
follows: system and level of remuneration, and
(1) when the child is below eighteen (18) years the duration and arrangement of
of age, in work or economic activity that is working time
not child labor as defined in the (e) The ER shall formulate and
immediately preceding subparagraph; and implement, subject to the approval
(2) when the child is below fifteen (15) years of and supervision of competent
age, in work where he/she is directly under authorities, a continuing program for
the responsibility of his/her parents or training and skills acquisition of the
legal guardian and where only members of child. [Sec. 12 of RA 7610 as amended
the childs family are employed; or in by RA 7658]
public entertainment or information. [SEC
3, DO 65-04] Employment of Children from 15 to 18
Employment is allowed but restricted to non-
Exceptions hazardous work.
(1) Child works directly under the sole
responsibility of his parents or legal Non-hazardous work shall mean any work or
guardian and where only members of the activity in which the EE is not exposed to any
ERs family are employed, provided: risk which constitutes an imminent danger to
(a) his employment does NOT endanger his safety and health. [Sec. 3, Rule XII, Book III,
his life, safety, health and morals, IRR of LC]
(b) nor impairs his normal development,
and The Secretary of Labor shall from time to time
(c) the parent or legal guardian shall publish a list of hazardous work and activities
provide the said minor child with the in which persons 18 years of age and below

74
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cannot be employed [Sec. 3, Rule XII, Book III, nursemaid or yaya, cook, gardener, or
IRR of LC] laundry person. [Sec 4(D). RA 10361]
The term domestic worker or kasambahay
The following are HAZARDOUS workplaces: excludes any person who performs domestic
(1) Nature of the work exposes the workers to work only occasionally or sporadically and not
dangerous environmental elements, on an occupational basis. [Sec.4(D), RA 10361]
contaminants or working conditions;
(2) construction work, logging, fire-fighting, Rights and Privileges
mining, quarrying, blasting, stevedoring, (a) Minimum wage
dock work, deep sea fishing, and The minimum wage of domestic workers shall
mechanized farming; not be less than the following:
(3) manufacture or handling of explosives and i. P2,500 a month for those employed in
other pyrotechnic products; NCR
ii. P2,000 a month for those employed in
(4) exposure to or use of heavy power-driven
chartered cities and first class
machinery or equipment; municipalities
(5) exposure to or use of power-driven tools iii. P1,500 a month for those employed in
other municipalities
Working Hours of a Child Within one year from the effectivity of the Act,
and periodically thereafter, the Regional
Quantity Tripartite and Productivity Wage Boards shall
Age Bracket Daily Max Weekly Max review, and if proper, determine and adjust the
Below 15 y 4 hrs 20 hrs minimum wage rates of domestic workers.
15 to below 18 8hrs. 40 hrs [Sec. 24, RA 10361]
Night work prohibition
Age Bracket Prohibited Hours SECTION 1. Subparagraphs (1), (2) and (3),
Below 15 y 8 pm to 6 am (10 hrs.) Article 143 of Presidential Decree No. 442, as
15 to below 18 10 pm to 6 am (8 hrs.) amended, otherwise known as the "Labor Code
of the Philippines" are hereby amended to read
as follows:
M. EMPLOYMENT OF
HOUSEHELPERS ART. 143. Minimum wage. (a) Househelpers
shall be paid the following minimum wage
Relevant Law: RA 10361 (Batas Kasambahay or rates;
Domestic Workers Act) (1) Eight hundred pesos (P800.00) a
Note: RA 10361 has expressly repealed Chapter month for househelpers in Manila,
III, Employment of Househelpers, Title III of Quezon, Pasay and Caloocan cities
Book III of the Labor Code and municipalities of Makati, San
Juan, Mandaluyong, Muntinlupa,
Domestic work - This refers to work performed Navotas, Malabon, Paraaque, Las
in or for a household or households. [Sec 4(C). Pias, Pasig, Marikina, Valenzuela,
RA 10361] Taguig and Pateros in Metro Manila
and in highly urbanized cities;
Domestic worker or Kasambahay - Refers to (6) Six hundred fifty pesos (P650.00) a
any person engaged in domestic work within month for those in other chartered
an employment relationship such as, but not cities and first class municipalities;
limited to, the following: general househelp,

75
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and access to communication shall be granted


(7) Five hundred fifty pesos (P550.00) a even during work time. [Sec. 8, RA 10361]
month for those in other
municipalities; Provided, that the (f) Education and Training
employees shall review the The employer shall afford the domestic worker
employment contracts of their the opportunity to finish basic education and
househelpers every three (3) years may allow access to alternative learning
with the end in view of improving the systems and, as far as practicable, higher
terms and conditions thereof. education or technical and vocational training.
Provided, further, that those [Sec. 9, RA 10361]
househelpers who are receiving at
least One thousand pesos (g) Social and Other Benefits
(P1,000.00) shall be covered by the A domestic worker who has rendered at least
Social Security System (SSS) and be one (1) month of service shall be covered by the
entitled to all the benefits provided Social Security System (SSS), the Philippine
thereunder." Health Insurance Corporation (PhilHealth), and
the Home Development Mutual Fund or Pag-
(b) Standard of Treatment IBIG, and shall be entitled to all the benefits in
The employer or any member of the household accordance with the pertinent provisions
shall not subject a domestic worker or provided by law.
kasambahay to any kind of abuse nor inflict
any form of physical violence or harassment or (h) Leave Benefits
any act tending to degrade the dignity of a A domestic worker who has rendered at least
domestic worker. [Sec. 5, RA 10361] one (1) year of service shall be entitled to an
annual service incentive leave of five (5) days
(c) Board, Lodging and Medical Attendance with pay [Sec. 29, RA 10361]
The employer shall provide for the basic
necessities of the domestic worker to include at Pre-Employment Requirement
least three (3) adequate meals a day and Prior to the execution of the employment
humane sleeping arrangements that ensure contract, the employer may require the
safety and shall provide appropriate rest and following from the domestic worker:
assistance to the domestic worker in case of (1) Medical certificate or a health certificate
illnesses and injuries sustained during service issued by a local government health
officer;
without loss of benefits. [Sec. 6, RA 10361]
(2) Barangay and police clearance;
(3) National Bureau of Investigation (NBI)
(d) Privacy clearance; and
Respect for the privacy of the domestic worker (4) Duly authenticated birth certificate or if not
shall be guaranteed at all times and shall available, any other document showing the
extend to all forms of communication and age of the domestic worker such as voters
personal effects [Sec. 7, RA 10361] identification card, baptismal record or
passport.
However, Section 12(a), (b), (c) and (d) shall be
(e) Access to Outside Communication
The employer shall grant the domestic worker standard requirements when the employment
access to outside communication during free of the domestic worker is facilitated through
time: Provided, That in case of emergency, the PEA.

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The cost of the foregoing shall be borne by the employer or any member of the
prospective employer or agency, as the case household;
may be. [Sec. 12, RA 10361] (c) Commission of a crime or offense
against the domestic worker by the
employer or any member of the
Time and Manner of Payment : Payment of household;
wages shall be made on time directly to the (d) Violation by the employer of the terms
domestic worker in cash at least once a month and conditions of the employment
and unless allowed by the domestic worker contract and other standards set forth
through a written consent, employer shall under this law;
make no deductions from the wages other than (e) Any disease prejudicial to the health of
the domestic worker, the employer, or
that which is mandated by law. [Sec. 25, RA
member/s of the household; and
10361] (f) Other causes analogous to the
foregoing. [Sec. 33, RA 10361]
Right against assignment to non-household
work at a wage rate lower than that mandated (2) Initiated by the employer
for agricultural or non-agricultural enterprises An employer may terminate the services of the
depending on the case. [Sec. 22, RA 10361] domestic worker at any time before the
expiration of the contract, for any of the
Employment Age of Domestic Workers: following causes:
Unlawful to employ any person below fifteen (a) Misconduct or willful disobedience by
(15) years of age as a domestic worker [Sec. 16, the domestic worker of the lawful order
RA 10361] of the employer in connection with the
Persons between 15-18 years old should only formers work;
(b) Gross or habitual neglect or
be employed in non-hazardous work. [DO 4-99
inefficiency by the domestic worker in
Sec. 4] the performance of duties;
Daily Rest Period: Aggregate of eight (8) hours (c) Fraud or willful breach of the trust
per day. [Sec. 20, RA 10361] reposed by the employer on the
domestic worker;
Employment Certification: ER shall give the (d) Commission of a crime or offense by
househelper a written statement of the nature the domestic worker against the
person of the employer or any
and duration of the service and his or her work immediate member of the employers
performance as househelper upon severance. family;
[Sec. 35, RA 10361] (e) Violation by the domestic worker of the
terms and conditions of the
Termination employment contract and other
(1) Initiated by the domestic worker standards set forth under this law;
(f) Any disease prejudicial to the health of
The domestic worker may terminate the
the domestic worker, the employer, or
employment relationship at any time before member/s of the household; and
the expiration of the employment contract for (g) Other causes analogous to the
any of the following causes: foregoing. [Sec. 34, RA 10361]
(a) Verbal or emotional abuse of the
domestic worker by the employer or
any member of the household;
(b) Inhuman treatment including physical
abuse of the domestic worker by the

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Unjust dismissal (2) Materials may or may not be furnished by


Neither the domestic worker nor the employer the ER or contractor.
may terminate the contract before the (3) Decentralized form of production, where
expiration of the term except for grounds there is ordinarily very little supervision or
regulation of methods of work. (Sec. 2(a),
provided in Sec. 33 and 34 of RA 10361. Rule XIV, Book III, IRR)

If the domestic worker is unjustly dismissed, Industrial Homeworker - a worker who is


the domestic worker shall be paid the engaged in industrial homework
compensation already earned plus the Employer means any person who
equivalent of 15 days work by way of indemnity. (1) Acts as a contractor delivers or causes to
be delivered any goods, articles, or
Leaving without justifiable reason by the materials to be processed or fabricated in
domestic worker or about a home and thereafter to be
(a) any unpaid salary due not exceeding the returned or to be disposed of or distributed
equivalent 15 days work shall be forfeited in accordance with ERs direction; OR
AND
(b) the employer may recover from the (2) Sells any goods, articles, or materials to be
domestic worker the costs incurred related processed or fabricated in or about a home
to the deployment expenses, if any: and then rebuys them after. [Art. 153, LC]
Provided, that the service has been
terminated within 6 months from the Note: Sec 2(d), Rule XIV, Book III is
domestic workers employment. substantially similar to the above.
Rights and benefits accorded homeworkers
Notice to end the working relationship
(1) Right to form, join or assist organizations
If the duration of the domestic service is not
[Sec 3, Rule XIV, Book III, IRR]
determined either in stipulation or by the
(2) Right to acquire legal personality and the
nature of the service, the employer or the rights and privileges granted by law to
domestic worker may give notice to end the legitimate labor organizations upon
working relationship five (5) days before the issuance of the certification of registration
intended termination of the service. [Sec 4, Rule XIV, Book III, IRR]
The domestic worker and the employer may (3) Immediate payment upon ERs receipt of
mutually agree upon written notice to pre- finished goods or articles [Sec 6, Rule XIV,
terminate the contract of employment to end Book III, IRR]
the employment relationship. [Sec. 32, RA (4) SSS, MEDICARE and ECC premium
10361] contributions shall be deducted from their
pay and shall be remitted by
N. EMPLOYMENT OF ER/contractor/subcontractor to the SSS
HOMEWORKERS [Sec 6, Rule XIV, Book III, IRR]

Note: DO 5, DOLE (February 4, 1992), is now Liability of Employer


Rule XIV, Book III of the IRR. (1) ER may require homeworker to redo work
Industrial homework improperly executed without additional
(1) Is a system of production under which work pay [Sec 9a, Rule XIV, Book III, IRR]
for an ER or contractor is carried out by a (2) ER need not pay homeworker for any work
homeworker at his/her home. done on goods or articles not returned due
to homeworkers fault [Sec 9b, Rule XIV,

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Book III, IRR] O. APPRENTICES AND LEARNERS


(3) If subcontractor/contractor fails to pay
homeworker, ER is jointly and severally Relevant Law: RA 7796 (Technical Education
liable with the former to the homeworker and Skills Development Act of 1994 or TESDA
for his/her wage [Sec 11, Rule XIV, Book III, Act of 1994)
IRR] Statement of objectives. - This Title aims: (1) To
(4) ER shall assist the homeworkers in the help meet the demand of the economy for
maintenance of basic safe and healthful trained manpower; (2) To establish a national
working conditions at the apprenticeship program through the
(5) homeworkers place of work. [Sec 11, Rule participation of employers, workers and
XIV, Book III, IRR of LC] government and non-government agencies;
and (3) To establish apprenticeship standards
Regional Office shall provide technical for the protection of apprentices. [Art 57, RA
assistance to registered homeworkers 7796]
organizations [Sec 14, Rule XIV, Book III, IRR of
LC] O.1. APPRENTICES
Prohibited Homework Note: Art. 58 has been superseded by Section
Homework is prohibited in the ff: 4 (j), (k), (l), (m) of RA 7796 quoted below:
(1) explosives, fireworks and articles of like (j) "Apprenticeship" training within
character; employment with compulsory related
(2) drugs and poisons; and theoretical instruction involving a contract
(3) other articles, the processing of which between an apprentice and an employer
requires exposure to toxic substances. [Sec on an approved apprenticeable
13, Rule XIV, Book III, IRR] occupation.
(k) Apprentice" is a person undergoing
Conditions for deduction from homeworkers training for an approved apprenticeable
earnings occupation during an apprenticeship
No deduction from the homeworkers earnings agreement. [Art 58(b) Labor Code; Sec 4
for the value of materials lost, destroyed or (k), RA 7796]
damaged unless: (l) "Apprenticeship Agreement" is a contract
(1) Homeworker is clearly shown to be wherein a prospective employer binds
responsible for loss or damage himself to train the apprentice who in turn
(2) Reasonable opportunity to be heard accepts the terms of training for a
(3) Amount of deduction is fair and recognized apprenticeable occupation
reasonable, and does not exceed actual emphasizing the rights, duties and
loss or damage responsibilities of each party.
(4) Deduction does not exceed 20% of (m) Apprenticeable Occupation is an
homeworkers weekly earnings [Sec. 8, occupation officially endorsed by a
Rule XIV, Book III, IRR] tripartite body and approved to be
apprenticeable by the authority. [Sec. 4,
RA 7796]

The act of filing the proposed apprenticeship


program with the DOLE is a preliminary step
towards its final approval, and does not

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instantaneously give rise to an employer- The employer shall formulate and implement,
apprentice relationship. It must be duly subject to the approval and supervision of
approved by the Minister of Labor and competent authorities, a continuing
Employment. Hence, since the apprenticeship program for training and skills acquisition
agreement between petitioner and respondent of the child.
has no force and effect, respondent's assertion In the above exceptional cases where any such
that he was hired not as an apprentice but as a child may be employed, the employer shall first
delivery boy deserves credence. (Nitto secure, before engaging child, a work permit
Enterprises vs. NLRC, 1995) from the Department of Labor and
Employment which shall ensure observance of
Conditions under which children below 15 may the above requirements.
be employed The Department of Labor and Employment
Children below fifteen (15) years of age shall shall promulgate rules and regulations
not be employed except: necessary for the effective implementation of
(1) When a child works directly under the sole this Section. [RA 7160, Sec. 12 as amended by
responsibility of his parents or legal RA 7658, Sec. 1]
guardian and where only members of the
employer's family are employed: Provided, Qualifications of apprentice
however, That his employment neither (a) Be at least 14 years of age;
endangers his life, safety, health and (b) Possess vocational aptitude and capacity
morals, nor impairs his normal for appropriate tests; and
development: Provided, further, That the (c) Possess the ability to comprehend and
parent or legal guardian shall provide the follow oral and written instructions.
said minor child with the prescribed Trade and industry associations may
primary and/or secondary education; or recommend to the Secretary of Labor
(2) Where a child's employment or appropriate educational requirements for
participation in public entertainment or different occupations. [Art. 59, LC]
information through cinema, theater, radio
or television is essential: Provided, The Integrating both the abovementioned
employment contract is concluded by the provisions then the qualifications of an
child's parents or legal guardian, with the apprentice are as follows:
express agreement of the child concerned, (1) At least 15 years of age [as amended by
R.A. 7610] , provided that if he is below 18
if possible, and approval of the years, he shall not be eligible for
Department of Labor and Employment: hazardous occupation;
and Provided, That the following (2) Possess vocational aptitude and capacity
requirements in all instances are strictly for appropriate tests;
complied with: (3) Possess the ability to comprehend and
The employer shall ensure the protection, follow oral and written instructions. [Art.
health, safety, morals and normal 59 of the LC, as amended by R.A. 7610]
development of the child; (4) Physically fit for occupation
The employer institute measures to prevent
the child's exploitation or discrimination Allowed employment
taking into account the system and level of SEE: RA 7769, Sec. 4 (m) above
remuneration and the duration and
arrangement of working time; and

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Employment of Apprentices Appeal to the Secretary of Labor and


When applicable: Employment. - The decision of the authorized
(1) Only employers in highly technical agency of the Department of Labor and
industries may employ apprentices; and Employment may be appealed by any
(2) Only in apprenticeable occupations aggrieved person to the Secretary of Labor and
approved by the Secretary of Labor. [Art. Employment within five (5) days from receipt of
60, Labor Code] the decision. The decision of the Secretary of
Labor and Employment shall be final and
Terms and c onditions executory. [Art.66, Labor Code]
Apprenticeship agreements, including the
wage rates of apprentices, shall conform to the Exhaustion of administrative remedies. No
rules issued by the Secretary of Labor and person shall institute any action for the
Employment. enforcement of any apprenticeship agreement
The period of apprenticeship shall not or damages for breach of any such agreement,
exceed six months. unless he has exhausted all available
Apprenticeship agreements providing for administrative remedies. [Art. 67, Labor Code]
wage rates below the legal minimum wage,
which in no case shall start below 75 percent of Incentives for employers
the applicable minimum wage, may be entered An additional deduction from taxable income
into only in accordance with apprenticeship of one-half (1/2) of the value of labor training
programs duly approved by the Secretary of expenses incurred for developing the
Labor and Employment. [Art. 61, Labor Code] productivity and efficiency of apprentices shall
be granted to the person or enterprise
The Secretary of Labor and Employment may organizing an apprenticeship program:
authorize the hiring of apprentices without Provided, That such program is duly
compensation whose training on the job is recognized by the Department of Labor and
required by the school or training program Employment: Provided, further, That such
curriculum or as requisite for graduation or deduction shall not exceed ten (10%) percent
board examination. [Art. 72, Labor Code] of direct labor wage: and Provided, finally,
The wages of apprentices and learners shall in That the person or enterprise who wishes to
no case be less than seventy-five percent (75%) avail himself or itself of this incentive should
of the applicable minimum wage rates. [Sec. 7, pay his apprentices the minimum wage. [Art.
Wage Order No. NCR-19] 71, Labor Code]

Enforcement Requisites of the deduction :


Investigation of violation of apprenticeship a. Apprenticeship program must be duly
agreement. - Upon complaint of any interested approved by the DOLE;
person or upon its own initiative, the b. Deduction shall NOT exceed 10% of direct
appropriate agency of the Department of labor wage;
Labor and Employment or its authorized c. Employer must pay his apprentices the
representative shall investigate any violation of minimum wage.
an apprenticeship agreement pursuant to such
rules and regulations as may be prescribed by
the Secretary of Labor and Employment. [Art.
65, Labor Code]

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Summary of Rules: Sec 4(n), RA 7796]


(1) The apprentice must be paid not less than
75% of the prescribed minimum salary When may learners be hired
[Art. 61, Labor Code] ; (1) No experienced workers are available;
HOWEVER, the employer MAY NOT pay (2) The employment of learners being
any wage if the apprenticeship training is: necessary to prevent the curtailment of
a. part of the school curriculum, employment opportunities; and
b. a requirement for graduation, or (3) The employment will neither create unfair
c. a requirement for board examination competition in terms of labor costs nor
[Art. 72] impair working standards. [Art. 74, Labor
(2) The apprenticeship agreement must be Code]
approved by the DOLE Secretary (without
such one shall be deemed a regular Terms and conditions of employment
employee) [Nitto Enterprises v. NLRC, Any employer desiring to employ learners shall
Sept. 29, 1995] ; enter into a learnership agreement with them,
(3) The employer is not compelled to which agreement shall include:
continue ones employment upon (1) The names and addresses of the learners;
termination of apprenticeship; (2) The duration of the learnership period,
(4) One-half (1/2) of the value of labor which shall not exceed three (3) months;
training expenses incurred for developing (3) The wages or salary rates of the learners
the productivity and efficiency of which shall begin at not less than seventy-
apprentices of the training cost is five percent (75%) of the applicable
deducted from the employers income tax minimum wage; and
but it shall not exceed 10% of direct labor (4) A commitment to employ the learners if
wage [Art. 71] they so desire, as regular employees upon
completion of the learnership. All learners
Working scholars there is no employer- who have been allowed or suffered to work
employee relationship between students on during the first two (2) months shall be
one hand, and schools, colleges or universities deemed regular employees if training is
on the other, where there is written agreement terminated by the employer before the end
between them under which the former agree to of the stipulated period through no fault of
work for the latter in exchange for the privilege the learners.
to study free of charge, provided, the students
are given real opportunities, including such The learnership agreement shall be subject to
facilities as may be reasonable and necessary inspection by the Secretary of Labor and
to finish their chosen courses under such Employment or his duly authorized
agreement. [Sec. 14, Rule X, IRR] representative. [Art. 75, LC]

O.2. LEARNERS Learners employed in piece or incentive-rate


Learners - persons hired as trainees in semi- jobs during the training period shall be paid in
skilled and other industrial occupations which full for the work done. [Art. 76, LC]
are non-apprenticeable and which may be
learned through practical training on the job in
a relatively short period of time which shall not
exceed three (3) months [Art 73, Labor Code,

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UP LAW BOC LABOR STANDARDS LABOR LAW

Summary of Rules are at least 15 years available;


(1) The duration of learnership shall not of age but less than 2. The employment of
exceed 3 months [Art. 73, LC] ; 18 may be eligible learners is
(2) If the learnership of 3 months is for apprenticeship necessary to
completed, the employer may be only in non- prevent
compelled to continue with the services of hazardous curtailment of
the learner as a regular employee; occupation; employment
(3) There is a commitment from the employer 2.The person is opportunities; and
to employ the learners if they so desire, as physically fit for the 3. The employment
regular employees upon completion of the occupation in which does not create
learnership; he desires to be unfair competition
(4) If the learner is dismissed from service trained; in terms of labor
without just and valid cause and without 3.The person costs or impair or
due process after 2 months of service, he possesses lower working
will be deemed as regular employee; and vocational aptitude standards.
[Art. 75(d)] and capacity for the
(5) The wages or salary rates of the learners particular
which shall begin at not less than 75% of occupation as
the applicable minimum wage. [Art. 75(c)] established through
appropriate tests;
Distinctions between Learnership and and
Apprenticeship 4.The person is able to
Apprenticeship Learnership comprehend and
Semi-skilled follow oral and
Highly technical written instructions.
industrial
industries
occupations Wage rate shall begin
Wage rate shall begin
Practical training at not less than 75%
at not less than 75%
Practical training whether or not such of the minimum wage
of the minimum wage
supplemented by practical training is
related theoretical supplemented by No compensation if
Learners in piecework
instruction theoretical SOLE authorizes, as
shall be paid in full
instructions OJT is required by the
for the work done
Apprenticeable school
Non-apprenticeable A commitment to
occupations approved
occupations employ the learners if
by the SOLE
Written apprentice they so desire, as
agreement ratified by Learnership regular employees
the appropriate agreement upon completion of
committees the learnership.
More than 3 months,
Shall not exceed 3 All learners who have
shall not exceed 6
months been allowed or
months
1. The person is at 1. When no suffered to work
least 15 years of age, experienced during the first 2
provided those who workers are months shall be

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deemed regular (c) being regarded as having such an


employees if training impairment [Sec 4(c), RA 7277]
is terminated by the
employer before the Handicap refers to a disadvantage for a given
end of the stipulated individual, resulting from an impairment or a
period through no disability that limits or prevents the function,
fault of the learners. or activity that is considered normal given the
Deductibility of of age and sex of the individual. [Sec 4(d), RA
training costs 7277]
incurred, provided:
Program is duly Declaration of Policy. The grant of the rights
recognized by DOLE and privileges for disabled persons shall be
Deduction shall not guided by the following principles:
exceed 10% of direct (a) Disabled persons are part of the Philippine
labor wage society, thus the Senate shall give full
Payment of support to the improvement of the total
minimum wage to well-being of disabled persons and their
apprenticeship integration into the mainstream of society.
Toward this end, the State shall adopt
policies ensuring the rehabilitation, self-
development and self-reliance of disabled
P. HANDICAPPED WORKERS
persons. It shall develop their skills and
DIFFERENTLY-ABLED WORKERS potentials to enable them to compete
[RA 7277 - Magna Carta for Disabled Persons, favorably for available opportunities.
as amended by RA 9442] (b) Disabled persons have the same rights as
other people to take their proper place in
Disabled Persons are those suffering from society. They should be able to live freely
restriction or different abilities, as a result of a and as independently as possible. This
mental, physical or sensory impairment, to must be the concern of everyone the
perform an activity in the manner or within the family, community and all government and
range considered normal for a human being non-government organizations. Disabled
[Sec. 4 (a), RA 7277] persons rights must never be perceived as
welfare services by the Government.
Impairment is any loss, diminution or (c) The rehabilitation of the disabled persons
aberration of psychological, physiological, or shall be the concern of the Government in
anatomical structure or function [Sec. 4(b), RA order to foster their capability to attain a
7277] more meaningful, productive and
satisfying life. To reach out to a greater
Disability shall mean: number of disabled persons, the
(a) physical or mental impairment that rehabilitation services and benefits shall be
substantially limits one or more expanded beyond the traditional urban-
psychological, physiological or anatomical based centers to community based
function of an individual or activities of programs, that will ensure full
such individual; OR participation of different sectors as
(b) a record of such an impairment; OR supported by national and local

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government agencies (3) Sheltered employment


(d) The State also recognizes the role of the Sheltered Employment refers to the provision
private sector in promoting the welfare of of productive work for disabled persons
disabled persons and shall encourage through workshop providing special facilities,
partnership in programs that address their income producing projects or homework
needs and concerns schemes with a view to given them the
(e) To facilitate integration of disabled opportunity to earn a living thus enabling them
persons into the mainstream of society, the to acquire a working capacity required in open
State shall advocate for and encourage industry. [Sec 4(i), RA 7277]
respect for disabled persons. The State
shall exert all efforts to remove all social, If suitable employment for disabled persons
cultural, economic, environmental and cannot be found through open employment,
attitudinal barriers that are prejudicial to the State shall endeavor to provide it by means
disabled persons. of sheltered employment.
[Sec 2, RA 7277]
In the placement of disabled persons in
Coverage. This Act shall covers all disabled sheltered employment, it shall accord due
persons and, to the extend herein provided, regard to the individual qualities, vocational
departments, offices and agencies of the goals and inclinations to ensure a good
National Government or non-government working atmosphere and efficient production.
organization involved in the attainment of the [Sec 6, RA 7277]
objectives of this Act. [Sec 2, RA 7277]
Apprenticeship Opportunities. Disabled
Rights of disabled workers persons shall be eligible as apprentices or
(1) Equal opportunity for employment learners: Provided, that their handicap is NOT
No disabled person shall be denied access to as much as to effectively impede the
opportunities for suitable employment. A performance of job operations in the particular
qualified disabled EE shall be subject to the occupation for which they are hired; provided,
same terms and conditions of employment and further, That after the lapse of the period of
the same compensation, privileges, benefits, apprenticeship, if found satisfactory in the job
fringe benefits, incentives or allowances as a performance, they shall be eligible for
qualified able-bodied person. [Sec. 5 (par. 1), employment. [Art. 81 Labor Code; Sec. 7, RA
RA 7277] 7277][Bernardo v NLRC & FEBTC, 1999]

(2) Reserved contractual positions (4) Full minimum wage


5% of all casual, emergency and contractual All qualified handicapped workers shall receive
positions in the DSWD; DOH, DepEd; and other the full amount of the minimum wage rate
government agencies, offices or corporations prescribed herein. [Sec 7, Wage Order No.
engaged in social development shall be NCR-19]
reserved for disabled persons. [Sec 5 (par. 2),
RA 7277] In this light, the Magna Carta for Disabled
Persons mandates that a qualified disabled EE
should be given the same terms and conditions
of employment as a qualified able-bodied
person. Since the Magna Carta accords them

85
UP LAW BOC LABOR STANDARDS LABOR LAW

the rights of qualified able-bodied persons, (f) At least 20% discount on fare for domestic
they are thus covered by Article 280 of the air and sea travel for the exclusive use or
Labor Code. In the present case, the handicap enjoyment of persons with disability;
of petitioners (deaf-mutes) is NOT a hindrance (g) At least 20% discount in public railways,
to their work. The eloquent proof of this skyways, and bus fare for the exclusive use
statement is the repeated renewal of their and enjoyment of persons with disability.
employment contracts. (Bernardo v. NLRC, (h) Educational assistance to persons with
1999) disability, for them to pursue primary,
secondary, tertiary, post tertiary, as well as
Discounts and other privileges vocational or technical education, in both
Persons with disability shall be entitled to the public and private schools, through the
following: provision of scholarships, grants, financial
(a) At least 20% discount from all aids, subsidies and other incentives to
establishments relative to the utilization of qualified persons with disability, including
all services in hotels and similar lodging support for books, learning materials and
establishments; restaurants and recreation uniform allowance to the extent feasible;
centers for the exclusive use or enjoyment Provided, That persons with disability shall
of persons with disability; meet minimum admission requirements;
(b) A minimum of 20% discount on admission (i) To the extent practicable and feasible, the
fees charged by theaters, cinema houses, continuance of the same benefits and
concert halls, circuses, carnivals and other privileges given by the GSIS, SSS, and
places of culture, leisure and amusement PAG-IBIG, as the case may be, as are
for the exclusive use or enjoyment of enjoyed by those in actual service;
persons with disability; (j) To the extent possible, the government
(c) At least 20% discount for the purchase of may grant special discounts in special
medicines in all drugstores for the programs for persons with disability on
exclusive use or enjoyment of persons with purchase of basic commodities, subject to
disability; guidelines to be issued for the purpose by
(d) At least 20% discount on medical and the DTI and the DA; and
dental services including diagnostic and (k) Provision of express lanes for persons with
laboratory fees such as, but not limited to, disability in all commercial and
x-rays, computerized tomography scans government establishments; in the
and blood tests, in all government absence thereof, priority shall be given to
facilities, subject to guidelines to be issued them. [Sec 32, RA 7277, as amended by RA
by the DOH in coordination with the 9442]
PHILHEALTH.
(e) At least 20% discount on medical and Conditions for entitlement
dental services including diagnostic and (1) Persons with disability who are Filipino
laboratory fees and professional fees of citizens upon submission of any of the
attending doctors in all private hospitals following as proof of his/her entitlement
and medical facilities, in accordance with thereto:
the rules and regulations to be issued by (a) An identification card issued by the city
the DOH, in coordination with or municipal mayor or the barangay
PHILHEALTH; captain of the place where the persons
with disability reside;

86
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(b) The passport of the persons with qualified disabled employee, by reason
disability concerned; or of his disability, than the amount to
(c) Transportation discount fare ID issued which a non-disabled person
by the National Council for the Welfare performing the same work is entitled;
of Disabled Persons (NCWDP). (e) Favoring a non-disabled employee over
(2) The privileges may not be claimed if the a qualified disabled employee with
persons with disability claim a higher respect to promotion, training
discount as may be granted by the opportunities, study and scholarship
commercial establishment and/or under grants, solely on account of the latter's
other existing laws or in combination with disability;
other discount program/s. [Sec 32, RA (f) Re-assigning or transferring a disabled
7277, as amended by RA 9442] employee to a job or position he cannot
perform by reason of his disability;
Other Provisions Against Discrimination (g) Dismissing or terminating the services
(1) Discrimination of Employment of a disabled employee by reason of his
No entity, whether public or private shall disability unless the employer can prove
discriminate against a qualified disabled that he impairs the satisfactory
person by reason of disability in regard to job performance of the work involved to the
application procedures, the hiring, promotion, prejudice of the business entity;
or discharge of employees compensation, job Provided, however, That the employer
training and other terms, conditions and first sought to provide reasonable
privileges of employment. The following accommodations for the disabled
constitute acts of discrimination: persons;
(a) Limiting, segregating or classifying a (h) Failing to select or administer in the
disabled job applicant in such a manner most effective manner employment
that adversely affects his work tests which accurately reflect the skills,
opportunities aptitude or other factor of the disabled
(b) Using qualification standards, applicant or employee that such test
employment tests or other selection purports to measure, rather than the
criteria that screen out or tend to screen impaired sensory, manual or speaking
out a disabled person unless such skills of such applicant or employee, if
standards, tests or other selection any; and
criteria are shown to be related for the (i) Excluding disabled persons from
position in question and are consistent membership in labor unions or similar
with business necessity; organizations. [Sec. 32, RA 7277 as
(c) Utilizing standards, criteria, or methods amended by RA 9442]
of administration that:
(i) have the effect of discrimination (2) Employment Entrance Examination
on the basis of disability; or Upon an offer of employment, a disabled
(ii) perpetuate the discrimination of applicant may be subjected to medical
others who are the subject to examinations, on the following occasions:
common administrative control. (a) all entering employees are subjected to
(d) Providing less compensation, such as such an examination regardless of
salary, wage or other forms of disability;
remuneration and fringe benefits, to

87
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(b) Information obtained during the Public Ridicule - The act of making fun of or
medical condition or history of the contemptuous imitating or making mockery of
applicant is collected and maintained persons with disability whether in writing, or in
on separate forms and in separate words, or in action due to their impairments.
medical files and is treated as a [Sec. 33, RA 7277, as amended by RA 9442]
confidential medical record; Provided, Vilification includes:
however, That: (1) The utterance of slanderous and abusive
(i) supervisors and managers may statements against a person with
be informed regarding necessary disability; and/or,
restrictions on the work or duties (2) An activity in public which incites hatred
of the employees and necessary towards, serious contempt for, or severe
accommodations: ridicule of persons with disability. [Sec. 41,
(ii) first aid and safety personnel RA 7277, as amended by RA 9442]
may be informed, when
appropriate, if the disability Tax Incentives for Employers/Establishments
might require emergency (1) For employment of disabled persons -
treatment; additional deduction, from their gross
(iii) government officials income, equivalent to 25% of the total
investigating compliance with amount paid as salaries and wages to
this Act shall be provided disabled persons
relevant information on request; (a) Private entities
and (b) Employ disabled persons either as
(iv) the results of such examination regular EEs, apprentice or learner
are used only in accordance with (c) Provided such entities present proof as
this Act. (Sec. 35, RA 7277 as certified by the DOLE and the DOH
amended by RA 9442) [Sec. 8[b], RA 7277]

(3) Prohibition on Verbal, Non-Verbal (2) For construction of disabled-friendly


Ridicule and Vilification Against Persons with facilities - additional deduction from their
Disability net taxable income, equivalent to 50% of
(a) No individual, group or community shall the direct costs of the improvements or
execute any of these acts of ridicule modifications
against persons with disability in any (a) Private entities
time and place which could intimidate (b) That improve or modify their physical
or result in loss of self-esteem of the facilities in order to provide reasonable
latter. [Sec. 40, RA 7277, as amended by accommodation for disabled persons
RA 9442] (c) Does NOT apply to improvements or
(c) Any individual, group or community is modifications or facilities required
hereby prohibited from vilifying any under BP 344. [Sec. 8 (c), RA 7277]
person with disability which could result
into loss of self-esteem of the latter. (3) For establishments giving discounts may
[Sec. 42, RA 7277, as amended by RA claim such discounts as tax deductions
9442] based on the net cost of the goods sold or
services rendered

88
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(a) The cost of the discount shall be (c) making facilities readily accessible to and
allowed as deduction from gross usable by individuals with disabilities.
income for the same taxable year that [Sec 45, RA 7277]
the discount is granted
(d) The total amount of the claimed tax Penal Clause
deduction net of VAT if applicable, (a) Any person who violates any provision of
shall be included in their gross sales this Act shall suffer the following penalties:
receipts for tax purposes and shall be (i) for the first violation, a fine of not less
subject to proper documentation and than Fifty thousand pesos (P
to the provisions of the National 50,000.00) but not exceeding One
Internal Revenue Code, as amended. hundred thousand pesos
[Sec. 32, RA 7277, as amended by RA (P100,000.00) or imprisonment of
9442] not less than six (6) months but not
more than two (2) years, or both at the
Enforcement discretion of the court; and
Enforcement by the Secretary of Justice (ii) for any subsequent violation, a fine of
(a) Denial of Right not less than One hundred thousand
Duty to Investigate. The Secretary of Justice pesos (P100,000.00) but not
shall investigate alleged violations of this exceeding Two hundred thousand
Act, and shall undertake periodic reviews pesos (P 200,000.00) or
of compliance of covered entities under imprisonment for less than two (2)
this Act. years but not more than six (6) years,
(b) Potential Violations or both at the discretion of the court.
The Secretary of Justice may commence a (b) Any person who abuses the privileges
legal action in any appropriate court if the granted herein shall be punished with
Secretary has reasonable cause to believe imprisonment of not less than six (6)
that months or a fine of not less than Five
(1) any person or group of persons is thousand pesos (P 5,000.00) but not more
engaged in a pattern of practice of than Fifty thousand pesos (P 50,000.00),
discrimination under this Act; or or both, at the discretion of the court.
(2) any person or group of persons has (c) If the violator is a corporation, organization
been discriminated against under or any similar entity, the officials thereof
this Act and such discrimination directly involved shall be liable therefor.
raises and issue of general public (d). If the violator is an alien or a foreigner,
importance. [Sec 44, RA 7277] he shall be deported immediately after
service of sentence without further
Authority of Court. The court may grant any deportation proceedings. [Sec 46, RA
equitable relief that such court considers to be 7277]
appropriate, including, to the extent required
by this Act:
(a) granting temporary, preliminary or
permanent relief;
(b) providing an auxiliary aid or service,
modification of policy, practice or
procedure, or alternative method; and

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IV. Termination of (h) "Person" means any individual, partnership,


firm, association, trust, corporation or legal
Employment representative thereof.

Art. 218, LC: Definitions.


A. EMPLOYER-EMPLOYEE (e) "Employer" includes any person acting in
RELATIONSHIP the interest of an employer, directly or
indirectly. The term shall not include any labor
Art. 97, LC: As used in this Title: organization or any of its officers or agents
(a) "Person" means an individual, partnership, except when acting as employer.
association, corporation, business trust, legal
representatives, or any organized group of (f) "Employee" includes any person in the
persons. employ of an employer. The term shall not be
limited to the employees of a particular
(b) "Employer" includes any person acting employer, unless the Code so explicitly states.
directly or indirectly in the interest of an It shall include any individual whose work has
employer in relation to an employee and shall ceased as a result of or in connection with any
include the government and all its branches, current labor dispute or because of any unfair
subdivisions and instrumentalities, all labor practice if he has not obtained any other
government-owned or controlled corporations substantially equivalent and regular
and institutions, as well as nonprofit private employment.
institutions, or organizations.
The existence or absence of ER-EE relationship
(c) "Employee" includes any individual is a question of law and a question of fact, each
employed by an employer. in its defined sense.

Art. 173, LC. As used in this Title, unless the The recognition of the existence of ER-EE
context indicates otherwise: relationship is not dependent upon the
(f) "Employer" means any person, natural or agreement of the parties. The characterization
juridical, employing the services of the of the law prevails over that in the contract. In
employee. this sense, the existence of an EE-ER
relationship is a matter of law. (Tabas et.al. v.
(g) "Employee" means any person compulsorily California Manufacturing Co., et. al., G.R. No.
covered by the GSIS under Commonwealth Act 80680, January 26, 1989).
Numbered One hundred eighty-six, as
amended, including the members of the The conclusion that an EE-ER relationship
Armed Forces of the Philippines, and any depends upon the facts of each case. In this
person employed as casual, emergency, sense, it is a question of fact. (SSS v. CA, G.R.
temporary, substitute or contractual, or any No. 100388, Dec. 14, 2000).
person compulsorily covered by the SSS under
Republic Act Numbered Eleven hundred
sixtyone, as amended.

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A.1. FOUR-FOLD TEST Economic Dependence Test


TEST OF EMPLOYER-EMPLOYEE Two-tiered approach.
RELATIONSHIP (1) First Tier: Control Test (refer to the Four-
(a) Selection and engagement of the Fold Test)
employee; (2) Second Tier: The underlying economic
(b) Payment of wages; realities of the activity or relationship.
(c) Power of dismissal; and (Sevilla v. Court of Appeals, G.R. Nos. L-
(d) Employers power to control the 41182-3, Apr. 15, 1988).
employees conduct with respect to the
means and methods by which the work is The economic realities prevailing within the
to be accomplished (Brotherhood Labor activity or between the parties are examined,
Unity Movement of the Philippines et. al. v. taking into consideration the totality of
Zamora, G.R. No. 48645, Jan. 7, 1987). circumstances surrounding the true nature of
the relationship between the parties.
The most important element is the employers
control of the employees conduct, not only as The benchmark of economic reality in
to the result of the work to be done, but also as analyzing possible employment relationships
to the means and methods to accomplish it. for purposes of applying the Labor Code ought
(Lirio v. Genovia, G.R. No. 169757, Nov. 23, to be the economic dependence of the worker
2011). on his employer.
The control test calls merely for the
existence of the right to control and not the The standard of economic dependence is
actual exercise of the right. (Zanotte Shoes v. whether the worker is dependent on the
NLRC, G.R. No. 100665, Feb. 13, 1995). alleged employer for his continued
Not every form of control will have the effect of employment in that line of business. (Orozco v.
establishing ER-EE relationship. The line CA, GR No. 155207, Aug. 13 2008).
should be drawn between:
Evidence of employee status
(1) Rules that merely serve as guidelines No particular form of evidence is required to
towards the achievement of mutually prove the existence of an employer-employee
desired results without dictating the relationship. Any competent and relevant
means or methods to be employed in evidence to prove the relationship may be
attaining it. These aim only to promote the admitted. For, if only documentary evidence
result. In such case, NO EE-ER relationship would be required to show that relationship,
exists. no scheming employer would ever be brought
(2) Rules that control or fix the methodology before the bar of justice, as no employer would
and bind or restrict the party hired to the wish to come out with any trace of the illegality
use of such means. These address both the he has authored considering that it should take
result and the means used to achieve it much weightier proof to invalidate a written
and hence, EE-ER relationship exists. instrument. (Tenazas, et al., v. R. Villegas Taxi
(Insurance Life Assurance Co, LTD v. NLRC, Transport, G.R. No. 192998, Apr. 2, 2014).
G.R. No. 84484, Nov. 15, 1989).
The onus probandi rests on the employer to
prove that its dismissal was for a valid cause.
However, before a case for illegal dismissal can

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prosper, an employer-employee relationship Exceptions:


must first be established. It is incumbent upon (1) When it is covered by an apprenticeship
the employee to prove the employer-employee agreement stipulating a longer period (Art.
relationship by substantial evidence. (Javier v. 287, LC);
Fly Ace Corporation, G.R. No. 192558, Feb. 15, (2) When the parties to an agreement contract
2012). otherwise, such as when established by
company policy or required by the nature
A.2. KINDS OF EMPLOYMENT of the work performed by the employee
I. PROBATIONARY (San Miguel Corp, v. del Rosario, G.R. Nos.
Art. 287, LC: Probationary employment shall 168194 & 168603, December 13, 2005,
not exceed 6 months from the date the citing Buiser v. Leogardo, G.R. No. L-
employee started working, unless it is covered 63316, July 31, 1984); or
by an apprenticeship agreement stipulating a (3) When it involves the 3 year probationary
longer period. The services of an employee period of teachers (Mercado v. AMA
who has been engaged on a probationary basis Computer College, G.R. No. 183572, April
may be terminated for a just cause or when he 13, 2010).
fails to qualify as a regular employee in
accordance with reasonable standards made Purposes
known by the employer to the employee at the (1) Observance Period for employer to
time of his engagement. An employee who is determine if employee is qualified and for
allowed to work after a probationary period employee to demonstrate to the ER his
shall be considered a regular employee. skills
(2) Restrictive - As long as the termination was
Book VI, Rule 1, Sec. 6(d), IRR: In all cases of made before the expiration of the six-
probationary employment, the employer shall month probationary period, the employer
make known to the employee the standards has a right to sever the employer-employee
under which he will qualify as regular relationship
employee at the time of his engagement.
Where no standards are made known to the Indeed, the employer has the right or is at
employee at the time of engagement, he shall liberty to choose as to who will be hired and
be deemed a regular employee. who will be declined. It is within the exercise of
this right to select his employees that the
Definition employer may set or fix a probationary period
A probationary employee is one who is on trial within which the latter may test and observe
by an employer during which the employer the conduct of the former before hiring him
determines whether or not he is qualified for permanently. (Grand Motors Corp. v. MOLE,
permanent employment (Robinsons Galleria 1984)
et al. v. Ranchez, G.R. No. 177937, Jan. 19,
2011) Standards to qualify as a regular employee
REQUIREMENTS:
Duration (a) The employer must communicate the
General Rule: Probationary employment shall regularization standards to the
not exceed six (6) months from the date the probationary employee; and
employee started working.

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(b) The employer must make such (Bernardo v. NLRC, G.R. No. 122917, July 12,
communication at the time of the 1999)
probationary employees engagement.
Double probation
If the employer fails to comply with either, the There is no basis for subjecting an employee to
employee is deemed as a regular and not a a new probationary or temporary employment
probationary employee. where he had already become a regular
employee when he was absorbed by a sister
An employer is deemed to have made known company. (A Prime Security Services, Inc. v.
the standards that would qualify a NLRC, G.R. No. 107023, Jan. 19, 2000)
probationary employee to be a regular
employee when it has exerted reasonable
efforts to apprise the employee of what he is Absorbed employees not probationary
expected to do or accomplish during the trial The private respondents could not be
period of probation. This goes without saying considered probationary employees because
that the employee is sufficiently made aware of they were already well-trained in their
his probationary status as well as the length of respective functions. As stressed by the
time of the probation. Solicitor General, while private respondents
were still with the CCAS they were already
The exception to the foregoing is when the job clerks. Respondent Gelig had been a clerk for
is self-descriptive in nature, for instance, in the CCAS for more than ten (10) years, while
case of maids, cooks, drivers, or messengers. respondent Quijano had slightly less than ten
(Abbott Laboratories Phil. et al. v. Alcaraz, G.R. (10) years of service. They were, therefore, not
No. 192571, July 23, 2013) novices in their jobs but experienced workers.
[Cebu Stevedoring Co., Inc. v. Regional
In all cases of probationary employment, the Director, G.R. No. L-54285, Dec. 8, 1988]
employer shall make known to the employee
the standards under which he will qualify as a Private school teachers
regular employee at the time of his Questions respecting a private school teachers
engagement. Where no standards are made entitlement to security of tenure are governed
known to the employee at that time, he shall by the Manual of Regulations for Private
be deemed a regular employee. Conversely, an Schools and not the Labor Code. [Aklan
employer is deemed to substantially comply College v. Guarino, G.R. No. 152949, Aug. 14,
with the rule on notification of standards if he 2007]
apprises the employee that he will be
subjected to a performance evaluation on a The legal requisites, therefore, for acquisition
particular date after his hiring. (Alcira v. NLRC, by a teacher of permanent employment, of
G.R. No. 149859, June 9, 2004) security of tenure are:
(a) A full time teacher;
Regular status after probation (b) Must have rendered three consecutive
When the bank renewed the contract after the years of service; and
lapse of the six-month probationary period, the (c) Service must have been satisfactory. (La
employees thereby became regular employees. Salette of Santiago v. NLRC, G.R. No.
No employer is allowed to determine 82918, Mar. 11, 1991)
indefinitely the fitness of its employees.

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Mere completion of the three-year probation, (3) Failure to qualify as a regular employee in
even with an above-average performance, accordance with reasonable standards
does not guarantee that the employee will made known by the employer to the
automatically acquire a permanent employee at the time of engagement.
employment status. The probationer can only (Robinsons Galleria et al. v Ranchez, G.R.
qualify upon fulfillment of the reasonable No. 177937, Jan. 19, 2011)
standards set for permanent employment as a
member of the teaching personnel. (Herrera- The probationary employee is entitled to
Manaois v. St. Scholasticas College, G.R. No. substantial and procedural due process before
188914, Dec. 11, 2013) termination.

These standards should be made known to the Limits to termination


teachers on probationary status at the start of (1) It must be exercised in accordance with the
their probationary period, or at the very least specific requirements of the contract
under the circumstances of the present case, at (2) If a particular time is prescribed, the
the start of the semester or the trimester termination must be within such time and
during which the probationary standards are to if formal notice is required, then that form
be applied. Of critical importance in invoking a must be used;
failure to meet the probationary standards, is (3) The employers dissatisfaction must be real
that the school should show as a matter of and in good faith, not feigned so as to
due process how these standards have been circumvent the contract or the law;
applied. (Colegio del Santisimo Rosario v. (4) There must be no unlawful discrimination
Rojo, G.R. No. 170388, Sept. 4, 2013) in the dismissal. (Manila Hotel Corporation
v. NLRC, G.R. No. 53453, January 22, 1986)
Termination
A probationary employee enjoys only a In order to invoke failure to meet the
temporary employment status. This means probationary standards as a justification for
that he is terminable at any time, permanent dismissal, the employer must show how these
employment not having been attained in the standards have been applied to the subject
meantime. The employer could well decide he employee. (Univac Development, Inc. v.
no longer needed the probationary employees Soriano, G.R. No. 182072, June 29, 2013).
services or his performance fell short of
expectations, etc. As long as the termination II. REGULAR
was made before the termination of the six- Art. 286, LC: The provisions of written
month probationary period, the employer was agreement to the contrary notwithstanding
well within his rights to sever the employer- and regardless of the oral agreement of the
employee relationship. A contrary parties, an employment shall be deemed to be
interpretation would defect the clear meaning regular where the employee has been engaged
of the term probationary. (De la Cruz, Jr. v. to perform activities which are
NLRC, G.R. No. 145417. Dec. 11, 2003) usually necessary or desirable in the usual
business or trade of the employer, except
A probationary employee can only be where the employment has been fixed for a
terminated for: specific project or undertaking the completion
(1) Just causes; or termination of which has been determined
(2) Authorized causes; or at the time of the engagement of the employee

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or where the work or service to be performed is between the particular activity performed by
seasonal in nature and the employment is for the employee in relation to the business or
the duration of the season. trade of the employer. The test is whether the
former is usually necessary or desirable in the
An employment shall be deemed to be casual usual business or trade of the employer. If the
if it is not covered by the preceding paragraph: employee has been performing the job for at
Provided, That any employee who has least one year, even if the performance is not
rendered at least one year of service, whether continuous or merely intermittent, the law
such service is continuous or broken, shall be deems the repeated and continuing need for
considered a regular employee with respect to its performance as sufficient evidence of the
the activity in which he is employed and his necessity, if not indispensability of that activity
employment shall continue while such activity to the business of the employer. Hence, the
exists. employment is also considered regular, but
only with respect to such activity and while
Art. 287, Last sentence, LC: An employee who such activity exists. (Forever Richons Trading
is allowed to work after a probationary period Corp. v. Molina, G.R. No. 206061, Sept. 16,
shall be considered a regular employee. 2013).

Regular employment is not synonymous with Art. 286: When applicable


permanent employment, because there is no Art. 286 is not the yardstick for determining
such thing as a permanent employment. Any the existence of an employment relationship
employee may be terminated for just cause. because it merely distinguishes between two
kinds of employees, i.e., regular employees
A regular employee is one who is engaged to and casual employees, for purposes of
perform activities which are necessary and determining the right of an employee to
desirable in the usual business or trade of the certain benefits, to join or form a union, or to
employer as against those which are security of tenure; it does not apply where the
undertaken for a specific project or are existence of an employment relationship is in
seasonal. dispute. (Atok Big Wedge Co., Inc. v. Gison,
G.R. No. 169510, Aug. 8, 2011)
Art 286 provides two kinds of regular
employees: Hiring for an extended period
(1) Those engaged to perform activities which Where the employment of project employees is
are necessary or desirable in the usual extended long after the supposed project has
business or trade of the employer; and been finished, the employees are removed
(2) casual employees who have rendered at from the scope of project employees and
least 1 year of service, whether continuous considered regular employees. (Audion Electric
or broken, with respect to the activity in Co., Inc. v. NLRC, G.R. No. 106648, June 17,
which they are employed. (Romares v. 1999)
NLRC, G.R. No. 122327. Aug. 19, 1998)
While length of time may not be a controlling
Primary standard to determine regular test for project employment, it can be a strong
employment: reasonable connection rule factor in determining whether the employee
The primary standard to determine a regular was hired for a specific undertaking or in fact
employment is the reasonable connection tasked to perform functions which are vital,

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necessary and indispensable to the usual


business or trade of the employer. (Tomas Lao Whether or not the project has a direct relation
Const. v. NLRC, G.R. No. 116781. Sept. 5, 1997) to the business of the employer is not
important, BUT:
Repeated renewal of contract (1) Employee must be informed of the nature
While the Court has recognized the validity of and duration of project
contractual stipulations as to the duration of (2) Project and principal business of ER are
employment, this cannot apply where the two separate things
contract-to-contract arrangement was but an (3) No attempt to deny security of tenure to
artifice to prevent her from acquiring security the worker
of tenure and to frustrate constitutional
decrees. (Beta Electric Corp. v. NLRC, G.R. No. Rationale for project employment
86408, Feb. 15, 1990) If a project has already been completed, it
would be unjust to require the employer to
Length of time involved maintain them in the payroll while they are
Length of time is not controlling, merely serves doing absolutely nothing except waiting until
as a badge of regular employment. another project is begun, if at all. In effect,
(Maraguinot v. NLRC, G.R. No. 120969. Jan. these stand-by workers would be enjoying the
22, 1998) status of privileged retainers, collecting
payment for work not done, to be disbursed by
III. PROJECT EMPLOYMENT the employer from profits not earned. (De
Art. 286, 1st par, LC: The provisions of written Ocampo, Jr. v. NLRC, G.R. No. 81077, June 6,
agreement to the contrary notwithstanding 1990)
and regardless of the oral agreement of the
parties, an employment shall be deemed to be Two Kinds of Project Employee
regular where the employee has been engaged (1) For a particular job or undertaking that is
to perform activities which are WITHIN the regular or usual business of
usually necessary or desirable in the usual the employer company, but which is
business or trade of the employer, except distinct and separate, and identifiable as
where the employment has been fixed for a such, from the other undertakings of the
specific project or undertaking the completion company (i.e. construction)
or termination of which has been determined (2) For a particular job or undertaking that is
at the time of the engagement of the employee NOT within the regular business of the
or where the work or service to be performed is corporation. Such a job or undertaking
seasonal in nature and the employment is for must also be identifiably separate and
the duration of the season. distinct from the ordinary or regular
business operations of the employer (Villa
A project employee is one who is hired for v. NLRC, G.R. No. 117043, Jan. 14, 1988)
carrying out a separate job, distinct from the
other undertakings of the company, the scope Test of project employment
and duration of which has been determined The litmus test to determine whether an
and made known to the employees at the time individual is a project employee lies in setting a
of employment. (Hanjin Heavy Industries & fixed period of employment involving a specific
Const. Co. v. Ibaez, G.R. No. 170181, June 26, undertaking the completion or termination of
2008)

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which has been determined at the time of the the prescribed form on employees
particular employee's engagement. terminations /dismissals/suspensions;
(7) An undertaking in the employment
The decisive factor in the term employment is contract by the employer to pay
the day certain agreed upon by the parties for completion bonus to the project employee
the commencement and termination of their as practiced by most construction
employment relationship, a day certain being companies. (Samson v. NLRC, G.R. No.
understood to be that which must necessarily 11366, Feb. 1, 1996).
come, although it may not be known when.
(Caasi v. Kanlungan Centre Foundation, Inc., Length of time not applicable in construction
G.R. No. 199769, Sept. 11, 2013) industry
Generally, length of service provides a fair
The repeated and successive rehiring of project yardstick for determining when an employee
employees do not qualify them as regular initially hired on a temporary basis becomes a
employees, as length of service is not the permanent one, entitled to the security and
controlling determinant of the employment benefits of regularization. But this standard
tenure of a project employee, but whether the will not be fair, if applied to the construction
employment has been fixed for a specific industry, simply because construction firms
project or undertaking, its completion has been cannot guarantee work and funding for its
determined at the time of the engagement of payrolls beyond the life of each project. And
the employee. (William Uy Construction Corp. getting projects is not a matter of
v. Trinidad, G.R. No. 183250, Mar. 10, 2010) course. (William Uy Construction Corp. v.
Trinidad, G.R. No. 183250, March 12, 2010
Indicators of project employment
(1) The duration of the specific/identified See also: Policy Instructions No. 20 of 1997 and
undertaking for which the worker is D.O. 19 of 1993
engaged is reasonably determinable;
(2) Such duration, as well as the specific Work pool employee
work/service to be performed, is defined in A project employee or a member of a work pool
an employment may acquire the status of a regular employee
(3) agreement and is made clear to the when the following concur:
employee at the time of the hiring; (1) There is a continuous rehiring of project
(4) The work/service to be performed by the employees even after cessation of a
employee is in connection with the project; and
particular project/undertaking for which he (2) The tasks performed by the alleged
is engaged; project employee are vital, necessary,
(5) The employee, while not employed and and indispensable to the usual business or
awaiting engagement, is free to offer his trade of the employer. However, the length
services to any other employer; of time during which the employee was
(6) The termination of his employment in the continuously rehired is not controlling, but
particular project/undertaking is reported merely serves as a badge of regular
to the DOLE Regional Office having employment.
jurisdiction over the workplace following
the date of his separation from work, using A work pool may exist although the workers in
the pool do not receive salaries and are free to

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seek other employment during temporary IV. SEASONAL


breaks in the business, provided, that the Seasonal employees are those whose work or
worker shall be available when called to report services to be performed are seasonal in
for a project. Although primarily applicable to nature, employment is for the duration of the
regular seasonal workers, this set-up can season.
likewise be applied to project workers insofar
as the effect of temporary cessation of work is There is no continuing need for the worker.
concerned. (Maraguinot v. NLRC, G.R. No.
120969. Jan. 22, 1998) Regular Seasonal Employees After One
Season
Members of a work pool from which a Seasonal workers who are called to work from
construction company draws its project time to time and are temporarily laid off during
employees, if considered employees of the off-season are not separated from service in
construction company while in the work pool, said period, but are merely considered on leave
are non-project employees or employees for an until reemployed
indefinite period. If they are employed in a
particular project, the completion of the The nature of their relationship . . . is such that
project or any phase thereof will not mean during off season they are temporarily laid off
severance of the employer-employee but during summer season they are re-
relationship. (J. & D.O. Aguilar Corp. v. NLRC, employed, or when their services may be
G.R. No. 116352, Mar. 13, 1997) needed. They are not strictly speaking
separated from the service but are merely
Rule on reportorial requirement considered as on leave of absence without pay
A report of termination to the nearest public until they are re-employed. (Philippine
employment office every time their Tobacco Flue-Curing &Redrying Corp. v. NLRC,
employment was terminated due to G.R. No. 127395, Dec. 10, 1998)
completion of each construction
project. Failure of the employer to file V. CASUAL
termination reports after every project Art. 286, 2nd par. LC: An employment shall be
completion proves that the employees are not deemed to be casual if it is not covered by the
project employees. (Pasos v. Philippine preceding paragraph: Provided, That any
National Construction Corp., G.R. No. 192394, employee who has rendered at least one year
July 3, 2013) of service, whether such service is continuous
or broken, shall be considered a regular
Repeated renewal of contract employee with respect to the activity in which
When an employer renews a contract of he is employed and his employment shall
employment after the lapse of the six-month continue while such activity exists.
probationary period, the employee thereby
becomes a regular employee. No employer is Book VI, Rule 1, Sec. 5 (b), IRR: Casual
allowed to determine indefinitely the fitness of employment. There is casual employment
its employees. (Malicdem v. Marulas Industrial where an employee is engaged to perform a
Corp., G.R. No. 204406, Feb. 26, 2014) job, work or service which is merely incidental
to the business of the employer, and such job,
work or service is for a definite period made
known to the employee at the time of

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engagement: Provided, That any employee VI. FIXED-TERM


who has rendered at least one year of service, Art. 286 has no application to instances where
whether such service is continuous or not, shall a fixed period of employment was agreed upon
be considered a regular employee with respect knowingly and voluntarily by the parties,
to the activity in which he is employed and his without any force, duress or improper pressure
employment shall continue while such activity being brought to bear upon the employee and
exists. absent any other circumstances vitiating his
consent, or where it satisfactorily appears that
A casual employee is engaged to perform a job, the employer and employee dealt with each
work or service which is merely incidental to other on more or less equal terms with no
the business of the employer, and such job, moral dominance whatever being exercised by
work or service is for a definite period made the former over the latter. (Brent School v.
known to the employee at the time of Zamora, G.R. No. L-48494, Feb. 5, 1990)
engagement.
Conditions for the validity of fixed contract
Someone who is not a regular, project or agreement between employer and employee
seasonal employee. (1) Fixed period of employment was knowingly
and voluntarily agreed upon by the parties
Requirements to become regular employee: without any force, duress, or improper
(1) One (1) year service, continuous or broken pressure or any other circumstances
with respect to activity employed vitiating his consent; or
(2) Employment shall continue while such (2) The employer and the employee dealt with
activity exists each other on more or less equal terms
with no moral dominance exercised by the
Nature of work former or the latter.
What determines regularity or casualness is
not the employment contract, written or Project employment and Fixed-term
otherwise, but the nature of the job. If the job is employment distinguished
usually necessary or desirable to the main A project employee is assigned to carry out a
business of the employer, then employment is specific project or undertaking, the duration
regular. (A. M. Oreta and Co., Inc. v. NLRC, and scope of which were specified at the time
G.R. No. 74004, Aug. 10, 1989) the employee is engaged for the project

One-year service The duration of a fixed-term employment


As held in Philippine Bank of Communications agreed upon by the parties may be any day
v. NLRC, a temporary or casual employee, certain, which is understood to be "that which
under Article 281 of the Labor Code, becomes must necessarily come although it may not be
regular after service of one year, unless he has known when." The decisive determinant in
been contracted for a specific project. (Tabas v. fixed-term employment is not the activity that
California Marketing Co., Inc., G.R. No. L- the employee is called upon to perform but the
80680, Jan. 26, 1989). day certain agreed upon by the parties for the
commencement and termination of the
employment relationship. (GMA Network, Inc.
v. Pabriga, G.R. No. 176419, November 27,
2013)

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No implied renewal of employment contract The Secretary of Labor and Employment may,
It is a settled rule that seafarers are considered by appropriate regulations, restrict or prohibit
contractual employees. Their employment is the contracting-out of labor to protect the
governed by the contracts they sign everytime rights of workers established under this Code.
they are rehired and their employment is In so prohibiting or restricting, he may make
terminated when the contract expires. Their appropriate distinctions between labor-only
employment is contractually fixed for a certain contracting and job contracting as well as
period of time. Thus, when a contract ends, the differentiations within these types of
employment is deemed automatically contracting and determine who among the
terminated, there being no mutually-agreed parties involved shall be considered the
renewal or extension of the expired contract. employer for purposes of this Code, to prevent
(Unica v. Anscor Swire Ship Management any violation or circumvention of any provision
Corp., G.R. No. 184318, Feb. 12, 2014) of this Code.

As long as the Brent School v. Zamora There is "labor-only" contracting where the
guidelines are satisfied, the court will person supplying workers to an employer does
recognize the validity of the fixed-term not have substantial capital or investment in
contract, especially if they were informed of the form of tools, equipment, machineries,
that their engagement was for a specific work premises, among others, and the workers
period. The Brent doctrine is only applicable in recruited and placed by such person are
a few special cases wherein the employer and performing activities which are directly related
employee are on more or less in equal footing to the principal business of such employer. In
in entering into the contract (Fuji Television such cases, the person or intermediary shall be
Network Inc v. Espiritu, G.R. No. 204944-45, considered merely as an agent of the employer
December 03, 2014). who shall be responsible to the workers in the
same manner and extent as if the latter were
A.3. JOB CONTRACTING directly employed by him.
I. ARTICLES 106 109
Art. 106, LC: Contractor or subcontractor. Art. 107, LC: Indirect employer. The provisions
Whenever an employer enters into a contract of the immediately preceding article shall
with another person for the performance of the likewise apply to any person, partnership,
formers work, the employees of the contractor association or corporation which, not being an
and of the latters subcontractor, if any, shall employer, contracts with an independent
be paid in accordance with the provisions of contractor for the performance of any work,
this Code. task, job or project.

In the event that the contractor or Art. 108, LC: Posting of bond. An employer or
subcontractor fails to pay the wages of his indirect employer may require the contractor or
employees in accordance with this Code, the subcontractor to furnish a bond equal to the
employer shall be jointly and severally liable cost of labor under contract, on condition that
with his contractor or subcontractor to such the bond will answer for the wages due the
employees to the extent of the work performed employees should the contractor or
under the contract, in the same manner and subcontractor, as the case may be, fail to pay
extent that he is liable to employees directly the same.
employed by him.

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Art. 109, LC: Solidary liability. The provisions of organization, cooperative or any entity,
existing laws to the contrary notwithstanding, supplies workers to an employer, with or
every employer or indirect employer shall be without any monetary or other consideration,
held responsible with his contractor or whether in the capacity of an agent of the
subcontractor for any violation of any provision employer or as an ostensible independent
of this Code. For purposes of determining the contractor.
extent of their civil liability under this Chapter,
they shall be considered as direct employers. Legitimate contracting or subcontracting
Contracting or subcontracting shall be
II. D.O. NO. 18-A-11: RULES legitimate if all the following circumstances
IMPLEMENTING ARTICLES 106 TO 109 occur:
OF THE LC, AS AMENDED (1) The contractor must be registered in
Coverage accordance with these rules and carries a
This shall apply to: distinct and independent business
(1) all parties of contracting and (2) The contractor undertakes to perform the
subcontracting arrangements where ER- job, work or service on its own
EE relationships exist responsibility, according to its own manner
(2) cooperatives engaging in contracting or and method, and free from control and
subcontracting arrangements direction of the principal in all matters
connected with the performance of the
Contractors and subcontractors referred to in work except as to the results thereof;
these rules are prohibited from engaging in (3) The contractor has substantial capital
recruitment and placement activities as and/or investment; and
defined in Art. 13(b) of the LC whether for local (4) The Service Agreement ensures
or overseas employment. compliance with all the rights and benefits
under Labor laws.
Contracting or subcontracting refers to an
arrangement whereby a principal agrees to put Rights of contractors employees
out or farm out with a contractor the All contractors employees, whether deployed
performance or completion of a specific job, or assigned as reliever, seasonal, week-ender,
work or service within a definite or temporary, or promo jobbers, shall be entitled
predetermined period, regardless of whether to all the rights and privileges as provided for
such job, work or service is to be performed or in the LC, as amended.
completed within or outside the premises of
the principal. Security of tenure of contractors employees
It is understood that all contractors employees
Service agreement refers to the contract enjoy security of tenure regardless of whether
between the principal and contractor the contract of employment is co-terminus
containing the terms and conditions governing with the service agreement, or for a specific
the performance or completion of a specific job, work, or service, or phase thereof.
job, work or service being farmed out for a
definite or predetermined period.

Cabo refers to a person or group of persons or


a labor groups which, in the guise of a labor

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Effect of termination of employment ELEMENTS OF LABOR-ONLY CONTRACTING:


[Sec. 13, D.O. 18-A-11] (a.1) The contractor does not have substantial
Cause Effect capital or investments in the form of tools,
equipment, machineries, work premises,
Prior to the Governed by Art. 284 292 among others, and
expiration of the of LC (a.2) The employees recruited and places are
Service performing activities which are usually
Agreement necessary or desirable to the operation of the
Prior to expiration The right of the contractor company, or directly related to the main
of the Service employee to unpaid wages business of the principal within a definite or
Agreement and and other unpaid benefits predetermined period, regardless of whether
not due to including unremitted legal such job, work or service is to be performed or
authorized mandatory contributions, completed within or outside the premises of
causes e.g., SSS, PhilHealth, Pag- the principal; or
ibig, ECC, shall be borne by (b) The contractor does not exercise the right
the party at fault, without to control the performance of the work of the
prejudice to the solidary employee.
liability of the parties to the
Service Agreement. Substantial capital refers to paid-up capital
stocks/shares of at least P3,000,000 in the
Due to expiration Employee may opt for case of corporations, partnerships and
of Service payment of separation cooperatives; in case of single proprietorship, a
Agreement, or benefits as may be provided net worth of at least P3,000,000.
from the by law or the Service
completion of the Agreement, without Other prohibitions
phase of the job, prejudice to his/her (1) Contracting out of jobs, works or services
work or service entitlement to the when not done in good faith and not
for which the completion bonuses or justified by the exigencies of the business
employee is other emoluments, such as the following:
engaged including retirement (a) Contracting out of jobs, works or
benefits whenever services when the same results in the
applicable termination or reduction of regular EEs
and reduction of work hours or
reduction or splitting of the bargaining
Prohibition against labor-only contracting
unit.
Labor-only contracting, a prohibited act, is an
(b) Contracting out of work with a Cabo
arrangement where the contractor or
(c) Taking undue advantage of the
subcontractor merely recruits, supplies or
economic situation or lack of
places workers to perform a job, work or
bargaining strength of the contractors
service for a principal. (Polyfoam-RGC
EEs, or undermining their security of
International Corp. v. Concepcion, G.R. No.
tenure or basic rights, or circumventing
172349, June 13, 2012)
the provisions of regular employment
in any of the following instances:
(i) Requiring them to perform
functions which are currently being

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performed by the regular contracts between the contractor and


employees of the principal; and the EEs deployed to work in the
(ii) requiring them to sign, as a bargaining unit of the principals
precondition to employment or certified bargaining agent to the sole
continued employment, an and exclusive bargaining agents.
antedated resignation letter; a (j) Engaging or maintaining by the
blank payroll; a waiver of labor principal of subcontracted EEs in
standards including minimum excess of those provided in the
wages and social or welfare applicable CBA or as set by the
benefits; or a quitclaim releasing Industry Tripartite Council.
the principal, contractor or from (2) Contracting out of jobs, works, or services
any liability as to payment of future analogous to the above when not done in
claims. good faith and not justified by the
(d) Contracting out of a job, work or exigencies of the business. (Sec. 7, D.O. 18-
service through an in-house agency. A-11)
(e) Contracting out of a job, work or
service that is necessary or desirable or Mandatory registration
directly related to the business or It shall be mandatory for all persons or entities,
operation of the principal by reason of including cooperative, acting as contractors, to
a strike or lockout whether actual or register with the Regional Office of the DOLE
imminent. where it principally operates.
(f) Contracting out of a job, work or Failure to register shall give rise to the
service being performed by union presumption that the contractor is engaged in
members when such will interfere with, labor-only contracting.
restrain or coerce employees in the Accordingly, the registration system
exercise of their rights to self- governing contracting arrangements and
organization as provided in Art. 248(c) implemented by the Regional Offices of the
of the LC, as amended. DOLE is hereby established, with the Bureau of
(g) Repeated hiring of EEs under an Working Conditions (BWC) as the central
employment contract of short duration registry. (Sec. 14, D.O. 18-A-11)
or under a Service Agreement of short
duration with the same or different Solidary Liability of Indirect/Direct Employer
contractors, which circumvents the LC There exists a solidary liability on the part of
provisions on Security of Tenure. the principal and the contractor for purposes of
(h) Requiring EEs under a subcontracting enforcing the provisions of the LC and other
arrangement to sign a contract fixing social legislation to the extent of the work
the period of employment to a term performed under employment contract.
shorter than the term of the Service
Agreement, unless the contract is The principal shall be deemed a direct
divisible into phases for which employer of the contractors employee in cases
substantially different skills are where there is a finding by a competent
required and this is made known to the authority of labor-only contracting, or
EE at the time of the engagements. commission of prohibited activities provided in
(i) Refusal to provide a copy of the Service Section 7 or a violation of either Sections 8 or
Agreement and the employment 9.

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III. DEPARTMENT CIRCULAR NO. 01-12 IV. EFFECTS OF LABOR-ONLY


Applicability of D.O. 18-A-11 to BPO CONTRACTING
DO 18-A speaks of a trilateral relationship that Employees become regular employees
characterizes the covered contracting/sub- Where an entity is declared to be a labor-only
contracting arrangement. Thus, vendor-vendee contractor, the employees supplied by said
relationship for entire business processes contractor to the principal employer become
covered by the applicable provisions of the Civil regular employees of the latter. Having gained
Code on Contracts is excluded. regular status, the employees are entitled to
security of tenure and can only be dismissed
DO 18-A contemplates generic or focused for just or authorized causes and after they had
singular activity in one contract between the been afforded due process. (Norkis Trading v.
principal and the contractor (for example, Buenavista, G.R. No. 182018. Oct. 10, 2012)
janitorial, security, merchandising, specific
production work) and does not contemplate Contractor solidarily liable with principal
information technology-enabled services A finding by competent authority of labor-only
involving an entire process (for example, BPO, contracting shall render the principal jointly
KPO, legal process outsourcing, hardware and severally liable with the contractor to the
and/or software support, medical latter's employees, in the same manner and
transcription, animation services, back office extent that the principal is liable to employees
operations/support). These companies directly hired by him/her, as provided in Article
engaged in BPOs may hire employees in 106 of the Labor Code, as amended.
accordance with applicable laws, and maintain
these EEs based on business requirements, A finding of commission of any of the
which may or may not be for different clients of prohibited activities in Sec. 7, or violation of
the BPOs at different periods of the EEs either Secs. 8 or 9 hereof shall render the
employment. principal the direct employer of the employees
of the contractor or subcontractor, pursuant to
Applicability of D.O. 18-A-11 to the Construction Article 109 of the Labor Code, as amended.
Industry (Sec. 27, D.O 18-A-11)
Licensing and the exercise of regulatory
powers over the construction industry is lodged
with PCAB which is under the Construction
Industry Authority of the Philippines and not
with the DOLE or any of its regional offices.
Thus, the DOLE, through its regional offices
shall not require contractors licensed by PCAB
in the Construction Industry to register under
DO 18-A. Moreover, findings 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
contractors license.

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V. TRILATERAL RELATIONSHIP IN JOB (2) A contractual relationship between the


CONTRACTING principal and the contractor as governed
by the provisions of the Civil Code. (Sec. 5,
Principal par. 1, D.O. 18-A-11)

B. DISMISSAL FROM EMPLOYMENT

Coverage:
General rule: All establishments (Art. 284, LC)
Exception: Government, and its political
subdivisions, including GOCCs without original
Contractor er-ee
Contractor's charter. (Book VI, Rule 1, Sec. 1. IRR)
Employee
Security of Tenure
Art. 285, LC: Security of Tenure. In case of
There are three parties involved: regular employment, the employer shall not
(1) Principal refers to any employer, whether a terminate the services of an employee except
person or entity, including government for a just cause or when authorized by this Tile.
agencies and GOCCs, who/which puts out An employee who is unjustly dismissed from
or farms out a job, service or work to a work shall be entitled to reinstatement without
contractor. loss of seniority rights and other privileges and
(2) Contractor refers to any person or entity, to his full backwages, inclusive of allowances,
including a cooperative, engaged in a and to his other benefits or their monetary
legitimate contracting or subcontracting equivalent computed from the time his
arrangement providing either services, compensation was withheld from him up to the
skilled worker, temporary workers or a time of his actual reinstatement.
combination of services to a principal
under a Service Agreement. Security of Tenure
(3) Contractors employee includes one Right not be removed from ones job without
employed by a contractor to perform or valid cause and valid procedure. (Kiamco v.
complete a job, work, or service pursuant NLRC, G.R. No. 129449, June 29, 1999)
to a Service Agreement with a principal
It shall also refer to regular employees of While probationary employees do not enjoy
the contractor whose functions are not permanent status, nonetheless, they were still
dependent on the performance or entitled to the constitutional protection of
completion of a specific job, work or service security of tenure. (Espina v. Court of Appeals,
within a definite period of time i.e. G.R. No. 164582, March 28, 2007)
administrative staff.
Contract Employees
Relationships that exist in a legitimate Limited extent; secured during the period their
contracting or subcontracting: respective contracts of employment remain in
(1) An employer-employee relationship effect. (Labajo v. Alejandro, G.R. No. L-80383,
between the contractor and the employees September 26, 1988)
it engaged to perform the specific job, work
or service being contracted; and

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Probationary Employees Nature


Limited extent; additional limitations on power It is a constitutionally protected right (Art. XIII
of employer to terminate: must be exercised in Sec. 3, 1987 Constitution); it cannot be blotted
accordance with the specific requirements of out by an employment contract.
the contract; dissatisfaction of the employer
must be real and in good faith, not feigned so Termination of employment is not anymore a
as to circumvent the contract or the law mere cessation or severance of contractual
relationship but an economic phenomenon
A probationary employee can only be affecting members of the family. This is the
terminated for: reason why under the broad principles of social
(1) Just causes; justice the dismissal of employees is
(2) Authorized causes; or adequately protected by the laws of the state.
(3) Failure to qualify as a regular employee in (Alhambra Industries, Inc. v. NLRC, G.R. No.
accordance with reasonable standards 106771, November 18, 1994)
made known by the employer to the
employee at the time of engagement. Management Prerogatives and Security of
(Robinsons Galleria et al. v Ranchez, G.R. Tenure
No. 177937, Jan. 19, 2011) An employer may not be compelled to
continue in its employ a person whose
Project/seasonal Employees continuance in the service would patently be
Limited extent; secured for the duration of the inimical to its interests. (Baguio Central
limited period of their employment University v. Gallente, G.R. No. 188267,
December 2, 2013)
Managerial Employees
Entitled to security of tenure; They may be Management prerogative must be exercised in
dismissed upon loss of confidence (Maglutac v. good faith and with due regard to the rights of
NLRC, G.R. No. 78345, 78637, September 21, the workers in the spirit of fairness and with
1990) justice in mind. (Philbag Industrial
Manufacturing Corp. v. Philbag Workers
Fixed-period Employees / Term Employment Union-Lakas at Gabay ng Manggagawang
This arrangement does NOT circumvent Nagkakaisa, G.R. No. 182486, June 20, 2012)
security of tenure when:
(1) Fixed period of employment was knowingly Requisites for the validity of management
and voluntarily agreed upon by the parties prerogative affecting security of tenure
without any force, duress, or improper (a) Exercised in good faith for the
pressure or any other circumstances advancement of the Employer's interest,
vitiating his consent; or and
(2) The employer and the employee dealt with (b) not for the purpose of defeating or
each other on more or less equal terms circumventing the rights of the Employees
with no moral dominance exercised by the under special laws or under valid
former or the latter (Brent School v. agreements. (San Miguel Brewery Sales
Zamora, G.R. No. L-48494, Feb. 5, 1990) Force Union v. Ople, G.R. No. 53515,
February 8, 1989)

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Guide in disposition of labor disputes presented by them. (Functional, Inc. v. Granfil,


Bare and vague allegations as to the manner G.R. No. 176377, November 16, 2011)
of service and the circumstances surrounding
the same would not suffice. A mere copy of the Employee must first establish the fact o f
notice of termination allegedly sent by dismissal
respondent to petitioner, without proof of Before the employer must bear the burden of
receipt, or in the very least, actual service proving that the dismissal was legal, the
thereof upon petitioner, does not constitute employee must first establish by substantial
substantial evidence. (Mansion Printing Center evidence the fact of his dismissal from service.
v. Bitara, Jr., G.R. No. 168120, January 25, If there is no dismissal, then there can be no
2012) question as to the legality or illegality thereof.
(MZR Industries v. Colambot, G.R. No. 179001,
Procedural vis--vis substantive issues August 28, 2013)
A labor case whose substantive issues must be
addressed, more than anything else. Besides, In an illegal dismissal case, the onus
the nature of the alleged procedural infirmity probandi rests on the employer to prove that
cannot prod the Court to dismiss the Petition its dismissal of an employee was for a valid
outright without first considering its merits. cause. However, before a case for illegal
(Ang v. San Joaquin, Jr., G.R. No. 185549, dismissal can prosper, an employer-employee
August 7, 2013) relationship must first be established by the
employee (Javier v. Fly Ace Corp., G.R. No.
Employers Burden of Proof 192558, February 15, 2012)
Art. 283 (b), 3 rd sentence: The burden of
proving the termination was for a valid or Measure of Penalty
authorized cause shall rest on the employer. While an employer enjoys a wide latitude of
discretion in the promulgation of policies, rules
The burden is on the employer to prove that and regulations on work-related activities of
the termination was for valid cause. the employees, those directives, however, must
Unsubstantiated accusations or baseless always be fair and reasonable, and the
conclusions of the employer are insufficient corresponding penalties, when prescribed,
legal justifications to dismiss an must be commensurate to the offense involved
employee. (Garza v. Coca-Cola Bottlers and to the degree of the infraction. (Moreno v.
Philippines, Inc., G.R. No. 180972, January 20, San Sebastian College-Recoletos, G.R. No.
2014) 175283, March 28, 2008)

In illegal dismissal cases, the burden of proof is


upon the employer to show that the Termination of Employment by Employee
employee's termination from service is for a Resignation
just and valid cause. The employer's case Art. 291, LC: Termination by Employee. (a) An
succeeds or fails on the strength of its evidence employee may terminate without just cause
and not the weakness of that adduced by the the employer-employee relationship by serving
employee, in keeping with the principle that a written notice on the employer at least one
the scales of justice should be tilted in favor of (1) month in advance. The employer upon
the latter in case of doubt in the evidence whom no such notice was served may hold the
employee liable for damages

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To constitute a resignation, it must be


(b) An employee may put an end to the unconditional and with the intent to operate as
relationship without serving any notice on the such. There must be an intention to
employer for any of the following relinquish a portion of the term of office
requirements: accompanied by an act of relinquishment
1. Serious insult by the employer or his (Azcor Manufacturing Inc. v. NLRC, G.R. No.
representative on the honor and person of the 117963, Feb. 11, 1999)
employee;
2. Inhuman and unbearable treatment Well-entrenched is the rule that resignation is
accorded the employee by the employer or his inconsistent with the filing of a complaint for
representative; illegal dismissal. (Blue Angel Manpower and
3. Commission of a crime or offense by the Security Services Inc. v Court of Appeals, GR
employer or his representative against the No. 161196, July 28, 2008.)
person of the employee or any of the
immediate members of his family; and Mere allegations of threat or force do not
4. Other causes analogous to any of the constitute evidence to support a finding of
foregoing. forced resignation. In order for intimidation to
vitiate consent, the following requisites must
General rule: Written notice to resign concur: (1) that the intimidation caused the
submitted one (1) month in advance consent to be given; (2) that the threatened act
Exception: No notice required for any of the be unjust or unlawful; (3) that the threat be
following: real or serious, there being evident
(1) Serious insult by the employer or his disproportion between the evil and the
representative on the honor and person of resistance which all men can offer, leading to
the employee; the choice of doing the act which is forced on
(2) Inhuman and unbearable treatment the person to do as the lesser evil; and (4) that
accorded the employee by the employer or it produces a well-grounded fear from the fact
his representative; that the person from whom it comes has the
(3) Commission of a crime or offense by the necessary means or ability to inflict the
employer or his representative against the threatened injury to his person or property.
person of the employee or any of the (Mandapat v. Add Force Personnel Services,
immediate members of his family; and Inc., G.R. No. 180285, July 6, 2010)
(4) Other causes analogous to any of the
foregoing. The rule requiring an employee to stay or
complete the 30-day period prior to the
Resignation is the voluntary act of an effectivity of his resignation becomes
employee who finds himself in a situation discretionary on the part of management as an
where he believes that personal reasons employee who intends to resign may be
cannot be sacrificed in favor of the exigency of allowed a shorter period before his resignation
the service, such that he has no other choice becomes effective. (Hechanova Bugay Vilchez
but to disassociate himself from his Lawyers v. Matorre, G.R. No. 198261, Oct. 16,
employment. (Cervantes v. PAL Maritime 2013)
Corp., G.R. No. 175209, January 16, 2013)

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Performance of Military or Civic Duty confidence in him. (Yabut v. Meralco, G.R. No.
Art. 292, LC: When Employment Not Deemed 190436, January 16, 2012)
Terminated: The bona fide suspension of the
operation of a business or undertaking for a Employers right to dismiss vis--vis employees
period not exceeding six (6) months, or the right to security of tenure
fulfillment by the employee of a military or The managerial prerogative to transfer
civic duty shall not terminate employment. In personnel must be exercised without grave
all such cases the employer shall reinstate the abuse of discretion, bearing in mind the basic
employee to his former position without loss of elements of justice and fair play. Having the
seniority rights if he indicates his desire to right should not be confused with the manner
resume his work not later than one (1) month in which that right is exercised. Thus, it cannot
from the resumption of operations of his be used as a subterfuge by the employer to rid
employer or from his relief from the military or himself of an undesirable worker. In particular,
civic duty the employer must be able to show that the
transfer is not unreasonable, inconvenient or
B.1. JUST CAUSE prejudicial to the employee; nor does it involve
Art. 288, LC: Termination by Employer. An a demotion in rank or a diminution of his
employer may terminate an employment for salaries, privileges and other benefits. (Alert
any of the following causes: Security and Investigation Agency, Inc. v.
(a) Serious misconduct or willful disobedience Pasawilan, G.R. No. 182397, September 14,
by the employee of the lawful orders of his 2011)
employer or representative in connection with
his work; The right of employers to shape their own work
force is recognize; however, this management
(b) Gross and habitual neglect by the employee prerogative must not curtail the basic right of
of his duties; employees to security of tenure. There must be
a valid and lawful reason for terminating the
(c) Fraud or willful breach by the employee of employment of a worker. Otherwise, it is illegal
the trust reposed in him by his employer or and would be dealt with by the courts
duly authorized representative; accordingly. (Alert Security and Investigation
Agency, Inc. v. Pasawilan, G.R. No. 182397,
(d) Commission of a crime or offense by the September 14, 2011)
employee against the person of his employer
or any immediate member of his family or his Serious Misconduct
duly authorized representatives; and ELEMENTS OF SERIOUS MISCONDUCT:
a) There must be misconduct;
(e) Other causes analogous to the foregoing. b) The misconduct must be of such grave
and aggravated character;
Basis c) It must relate to the performance of
As a measure of self-protection against acts the employees duties; and
inimical to its interest, a company has the right d) There must be showing that the
to dismiss its erring employees. An employer employee becomes unfit to continue
cannot be compelled to continue employing an working for the employer.
employee guilty of acts inimical to the
employer's interest, justifying loss of

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Accusatory and inflammatory language used management cannot serve basis as


by an employee to the employer or superior termination. The rule only applies when the
can be a ground for dismissal or termination. violation is not tantamount to fraud or
(Nissan Motors Phils. Inc. v. Angelo, G.R. No. commission of illegal activities. One cannot
164181, September 14, 2011) evade liability based on obedience to the
corporate chain of command (PNB v. Padao,
Willful Disobedience G.R. No. 180849, 187143, Nov. 6, 2011)
ELEMENTS OF WILLFUL DISOBEDIENCE:
a) There must be disobedience or On the principle of respondeat superior or
insubordination; command responsibility alone, a managerial
b) The disobedience or insubordination employee may be held liable for negligence in
must be willful or intentional the performance of her managerial duties.
characterized by a wrongful and (Jumuad v. Hi-Flyer Food, Inc., G.R. No.
perverse attitude; 187887, (September 7, 2011)
c) The order violated must be reasonable,
lawful, and made known to the Gross Negligence includes gross inefficiency
employee (Mirant Philippines Corp v. Article 290 of the Labor Code provides that
Sario, G.R. no. 197598, November 21, one of the just causes for terminating an
2012); and employment is the employee's gross and
d) The order must pertain to the duties habitual neglect of his duties. This cause
which he has been engaged to includes gross inefficiency, negligence and
discharge. carelessness (Century Iron Works, Inc. v.
Baas, G.R. No. 184116, June 19, 2013)
Gross and Habitual Neglect of Duties
Gross negligence has been defined as the want Loss of Trust and Confidence
or absence of or failure to exercise slight care The loss of trust and confidence must be based
or diligence, or the entire absence of care. It on willful breach of the trust reposed in the
evinces a thoughtless disregard of employee by his employer. Such breach is
consequences without exerting any effort to willful if it is done intentionally, knowingly, and
avoid them. In order to constitute just cause for purposely, without justifiable excuse, as
an EEs dismissal due to negligence, it must distinguished from an act done carelessly,
not only be gross, but also habitual. A single or thoughtlessly, heedlessly or inadvertently.
an isolated act that cannot be categorized as And, in order to constitute a just cause for
habitual, hence, not a just cause for their dismissal, the act complained of must be work-
dismissal. (National Bookstore v. CA, G.R. No. related and shows that the employee
146741, Feb. 27, 2002) concerned is unfit to continue working for the
employer. In addition, loss of confidence as a
Gross negligence connotes want of care in the just cause for termination of employment is
performance of ones duties, while habitual premised on the fact that the employee
neglect implies repeated failure to perform concerned holds a position of responsibility,
ones duties for a period of time, depending on trust and confidence or that the employee
the circumstances. concerned is entrusted with confidence with
respect to delicate matters, such as handling
Estoppel by toleration of management: breach or case and protection of the property and
of rules and regulations which are tolerated by assets of the employer. The betrayal of this

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trust is the essence of the offense for which an (d) The loss of trust and confidence should not
employee is penalized. (Villanueva, Jr. v. NLRC, be simulated;
G.R. No. 176893, June 13, 2012) (e) It should not be used as a subterfuge for
causes which are improper, illegal, or
The loss of trust and confidence must be based unjustified; and
not on ordinary breach by the employee of the (f) It must be genuine and not a mere
trust reposed in him by the employer, but, in afterthought to justify an earlier action
the language of Article 282 (c) of the Labor taken in bad faith (China City Restaurant
Code, on willful breach. A breach is willful if it Corp. v. NLRC, 217 SCRA 443; Midas Touch
is done intentionally, knowingly and purposely, v. NLRC, G.R. No. 111639, 29 July 1996)
without justifiable excuse, as distinguished
from an act done carelessly, thoughtlessly, Loss of trust and confidence to be a valid cause
heedlessly or inadvertently. It must rest on for dismissal must be based on a willful breach
substantial grounds and not on the employer's of trust and founded on clearly established
arbitrariness, whims, caprices or suspicion; facts. The basis for the dismissal must be
otherwise, the employee would eternally clearly and convincingly established but proof
remain at the mercy of the employer. beyond reasonable doubt is not necessary.
(Johansen World Group Corp. v. Gonzales III, (Prudential Guarantee and Assurance
G.R. No. 198733, October 10, 2012) Employee Labor Union v. NLRC, G.R. No.
185335, June 13, 2012)
Guidelines for the application of the doctrine of
loss of confidence Positions of trust and confidence:
(1) Loss of confidence should not be (1) Managerial employees - those vested with
simulated; the powers or prerogatives to lay down
(2) It should not be used as a subterfuge for management policies and to hire, transfer,
causes which are improper, illegal or suspend, lay-off, recall, discharge, assign or
unjustified; discipline employees or effectively recommend
(3) It may not be arbitrarily asserted in the such managerial actions.
face of overwhelming evidence to the (2) Fiduciary Rank and file - those who in the
contrary; and normal and routine exercise of their functions,
(4) It must be genuine, not a mere regularly handle significant amounts of money
afterthought to justify earlier action taken or property. Examples are cashiers, auditors,
in bad faith (Nokom v. NLRC, G.R. No. property custodians, etc. (Prudential
140043, July 18, 2000) Guarantee and Assurance Employee Labor
Union v. NLRC, G.R. No. 185335, June 13, 2012)
ELEMENTS OF LOSS OF TRUST AND
CONFIDENCE: Managerial Fiduciary rank-and-file
(a) There must be an act, omission, or
concealment Mere existence of a Proof of involvement in
(b) The act, omission or concealment justifies basis for the belief ofthe alleged events in
the loss of trust and confidence of the employees guilt question required;
employer to the employee; (Grand Asian Shipping mere uncorroborated
(c) The employee concerned must be holding Lines, Inc. v. Galvez, assertions and
a position of trust and confidence; G.R. No. 178184, accusations
January 29, 2014) are not enough

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(Etcuban, Jr. v. mutual loyalty and dedicated service. If an


Sulpicio Lines, Inc., employer had treated his employee well, has
G.R. No. 148410, accorded him fairness and adequate
January 17, 2005) compensation as determined by law, it is only
fair to expect a long-time employee to return
Employment for a long
such fairness with at least some respect and
time is counted
honesty. Thus, it may be said that betrayal by a
against the employee
long-time employee is more insulting and
(Salvador v. Philippine
odious for a fair employer. (Moya v. First Solid
Mining Service Corp.,
Rubber Industries, Inc., G.R. No. 184011,
G.R. No. 148766,
September 18, 2013)
January 22, 2003)
Commission of a crime
Managerial Employees: Reason for the Rule Commission of a crime or offense by the
The employer has broader discretion in employee against the person of his employer
dismissing managerial employees on the or any immediate member of his family or his
ground of loss of trust and confidence than duly authorized representatives (Art. 288 d,
those occupying ordinary ranks. While plain LC)
accusations are not sufficient to justify the
dismissal of rank and file employees, the mere The employer may validly dismiss for loss of
existence of a basis for believing that trust and confidence an employee who
managerial employees have breached the trust commits an act of fraud prejudicial to the
reposed on them by their employer would interest of the employer. Neither a criminal
suffice to justify their dismissal. (Grand Asian prosecution nor a conviction beyond
Shipping Lines, Inc. v. Galvez, G.R. No. 178184, reasonable doubt for the crime is a requisite
January 29, 2014) for the validity of the dismissal (Concepcion v
Minex Import Corporation /Minerama
Acquittal in Criminal Case arising from Corporation, G.R. No. 153569, January 24,
Misconduct 2012).
Notwithstanding petitioners acquittal in the
criminal case for qualified theft, the company Other Analogous Causes
had adequately established the basis for the One is analogous to another if it is susceptible
companys loss of confidence as a just cause to of comparison with the latter either in general
terminate. As opposed to the "proof beyond or in some specific detail; or has a close
reasonable doubt" standard of evidence relationship with the latter.
required in criminal cases, labor suits require
only substantial evidence to prove the validity Other Causes
of the dismissal (Paulino v. NLRC, G.R. No. (1) Abandonment
176184, June 13, 2012) (2) Courtesy Resignation
(3) Change of Ownership
Betrayal by a long-time employee (4) Habitual Absenteeism/Tardiness
Length of service is not a bargaining chip that (5) Past Offenses
can simply be stacked against the employer. (6) Habitual Infractions
After all, an employer-employee relationship is (7) Immorality
symbiotic where both parties benefit from (8) Conviction/Commission of a Crime

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Abandonment Bank, Inc. v. De Guzman, G.R. No. 184517,


Abandonment is the deliberate and unjustified 186641, October 8, 2013)
refusal of an employee to resume his
employment. It constitutes neglect of duty and Habitual Absenteeism/ Tardiness
is a just cause for termination of employment Habitual tardiness is a form of neglect of duty.
under paragraph (b) of Article 282 of the Labor Lack of initiative, diligence, and discipline to
Code. To constitute abandonment, however, come to work on time everyday exhibit the
there must be a clear and deliberate intent to employee's deportment towards work.
discontinue one's employment without any Habitual and excessive tardiness is inimical to
intention of returning. (Tan Brothers Corp. of the general productivity and business of the
Basilan City v. Escudero, G.R. No. 188711, July employer. This is especially true when the
3, 2013) tardiness and/or absenteeism occurred
frequently and repeatedly within an extensive
ELEMENTS OF ABANDONMENT : period of time. (R.B. Michael Press v. Galit,
(a) Failure to report for work or absence G.R. No. 153510, February 13, 2008)
without valid or justifiable reason,
(b) A clear intention to sever the employer- However, there are cases when absenteeism is
employee relationship, with the second not sufficient to justify termination. In the case
element as the more determinative factor of, Cavite Apparel v Michelle Marquez, GR No.
and being manifested by some overt acts. 172044, February 6, 2013, the SC held:
Michelle might have been guilty of violating
Absence must be accompanied by overt acts company rules on leaves of absence and
unerringly pointing to the fact that the employee discipline, still we find the penalty of
employee simply does not want to work dismissal imposed on her unjustified under the
anymore. It has been ruled that the employer circumstances. As earlier mentioned, Michelle
has the burden of proof to show a deliberate had been in Cavite Apparels employ for six
and unjustified refusal of the employee to years, with no derogatory record other than the
resume his employment without any intention four absences without official leave in
of returning. (Tan Brothers Corp. of Basilan question, not to mention that she had already
City v. Escudero, G.R. No. 188711, July 3, 2013) been penalized for the first three absences, the
most serious penalty being a six-day
Courtesy Resignation suspension for her third absence on April 27,
Resignation per se 2000.
means voluntary relinquishment of a position
or office. Adding the word "courtesy" did not Past Offenses
change the essence of Previous offense may be used as valid
resignation. (Batongbacal v. Associated Bank, justification for dismissal from work only if the
G.R. No. 72977, December 21, 1988) infractions are related to the subsequent
offense upon which the basis of termination is
Change of Ownership decreed. (Century Canning Corporation v.
A mere change in the equity composition of a Ramil, G.R. No. 171630, August 9, 2010)
corporation is neither a just nor an authorized
cause that would legally permit the dismissal
of the corporation's employees en masse. (SME

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Habitual Infractions employment by the employer (Alilem Credit


Series of irregularities when put together may cooperative v. Bandiola, Jr. G.R. No. 173489,
constitute serious misconduct, which under February 25, 2013).
Article 282 of the Labor Code, as amended, is a
just cause for dismissal (Gustilo v. Wyeth Phil. Conviction/Commission of a Crime
Inc., G.R. No. 149629, October 4, 2004) The charge of drug abuse within the companys
premises and during work hours constitutes
Totality of infractions doctrine serious misconduct which is one of the just
The totality of infractions or the number of causes for termination. (Bughaw, Jr. v.
violations committed during the period of Treasure Island Industrial, G.R. No. 173151,
employment shall be considered in Mar. 28, 2008)
determining the penalty to be imposed upon
an erring employee. Fitness for continued B.2. AUTHORIZED CAUSE
employment cannot be compartmentalized (1) Installation of labor saving device
into tight little cubicles of aspects of character, (2) Retrenchment to prevent losses
conduct and ability separate and independent (3) Redundancy
of each other. While it may be true that (4) Closure of Business
petitioner was penalized for his previous [Art. 289, LC]
infractions, this does not and should not mean
that his employment record would be wiped Basis
clean of his infractions. After all, the record of Employment is the lifeblood upon which the
an employee is a relevant consideration in worker and his family owe their survival. (Flight
determining the penalty that should be meted Attendants and Stewards Ass'n of the
out since an employee's past misconduct and Philippines v. PAL, Inc., G.R. No. 178083,
present behavior must be taken together in October 2, 2009)
determining the proper imposable penalty.
(Merin v. NLRC, G.R. No. 171790, October 17, Installation of Labor-Saving Device
2008) This refers to the installation of machinery to
effect economy and efficiency in the employers
Immorality method of production (Edge Apparel, Inc. v.
DECS Order No. 92 provides that disgraceful or NLRC, G.R. No. 121314, Feb. 12, 1998)
immoral conduct can be used as a basis for
termination of employment (Santos, Jr. v. Requirements for termination due to
NLRC, G.R. No. 115795, March 6, 1998) installation of labor-saving device
(1) The employer exercises its prerogative to
The act of engaging in extramarital affairs was install the labor-saving device in good faith
specifically provided for by the cooperatives for the advancement of its interest and not
Personnel Policy as one of the grounds for to defeat or circumvent the employees
termination of employment and said act raised right to security of tenure;
concerns to the cooperative as the Board (2) The employer served a written notice both
received numerous complaints and petitions to the employees and to the DOLE at least
from the cooperative members themselves 30 days prior to the intended date of
asking for the removal of Bandiola because of termination; and
his immoral conduct, hence, immorality (3) The employer pays the employees
(extramarital affair) justified terminating the separation pay equivalent to one-month

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pay or at least one-half (1/2) month pay for (2) The losses are actual or reasonably
every year of service, whichever is higher, a imminent;
fraction of at least six months being (3) The retrenchment is reasonably necessary
considered as one whole year (Samson, and is likely to be effective in preventing
2004) the expected losses; and
(4) The alleged losses, if already incurred, or
Retrenchment the expected imminent losses sought to be
ELEMENTS OF RETRENCHMENT: forestalled, are proven by sufficient and
(a) That retrenchment is reasonably necessary convincing evidence (Sanoh Fulton Phils.,
and likely to prevent business losses which, Inc. v. Bernardo, G.R. No. 187214, August
if already incurred, are not merely de 14, 2013)
minimis, but substantial, serious, actual
and real, or if only expected, are Redundancy
reasonably imminent as perceived Redundancy exists when the service capability
objectively and in good faith by the of the workforce is in excess of what is
employer; reasonably needed to meet the demands of the
(b) That the employer served written notice business enterprise. A position is redundant
both to the employees and to the when it is superfluous, and superfluity of a
Department of Labor and Employment at position or positions could be the result of a
least one month prior to the intended date number of factors, such as the overhiring of
of retrenchment; workers, a decrease in the volume of business
(c) The employer pays the retrenched or the dropping of a particular line or service
employees separation pay equivalent to previously manufactured or undertaken by the
one (1) month pay or at least one-half (1/2) enterprise. (Morales v. Metrobank, G.R. No.
month pay for every year of service, 182475, November 21, 2012)
whichever is higher;
(d) That the employer exercises its prerogative For the implementation of a redundancy
to retrench employees in good faith for the program to be valid, however, the employer
advancement of its interest and not to must comply with the following requisites:
defeat or circumvent the employees' right (a) Written notice served on both the
to security of tenure; and, employees and the DOLE at least one
(e) That the employer uses fair and reasonable month prior to the intended date of
criteria in ascertaining who would be termination of employment;
dismissed and who would be retained (b) Payment of separation pay equivalent to at
among the employees, such as status, least one month pay for every year of
efficiency, seniority, physical fitness, age, service;
and financial hardship for certain workers. (c) Good faith in abolishing the redundant
(Flight Attendants and Stewards Ass'n of positions; and
the Philippines v. PAL, Inc., G.R. No. (d) Fair and reasonable criteria in ascertaining
178083, October 2, 2009) what positions are to be declared
redundant and accordingly
Standards for losses abolished. (Morales v. Metrobank, G.R. No.
(1) The losses incurred are substantial and 182475, November 21, 2012)
not de minimis;

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To exhibit its good faith and that there was a allegation in order to avoid the payment of
fair and reasonable criteria in ascertaining separation pay. Otherwise, the affected
redundant positions, a company claiming to be employees are entitled to separation pay.
over manned must produce adequate proof of (5) The burden of proving compliance with all
the same. Such proof includes but is not the above-stated falls upon the employer.
limited to the new staffing pattern, feasibility (Manila Polo Club Employees' Union v.
studies/proposals on the viability of the newly Manila Polo Club, Inc., G.R. No. 172846,
created positions, job description and the July 24, 2013)
approval by the management of the
restructuring. (General Milling Corporation v Closure of Department
Violeta L. Viajar, G.R. No. 181738, January 30, The closure of a department or division of a
2013) company constitutes retrenchment by, and not
closure of, the company itself. (Waterfront
Closure of Business Cebu City Hotel v. Jimenez, G.R. No. 174214,
Guidelines in Closure June 13, 2012)
(1) Closure or cessation of operations of
establishment or undertaking may either Corporate acquisitions
be partial or total Asset Sales Stock Sales
(2) Closure or cessation of operations of
establishment or undertaking may or may Sale
not be due to serious business losses or Corporate entity sells In stock sales, the
financial servicereverses. However, in both all or substantially all individual or corporate
instances, proof must be shown that: of its assets to another shareholders sell a
(a) it was done in good faith to entity. controlling block of
advance the employer's interest stock to new or
and not for the purpose of existing shareholders.
defeating or circumventing the
rights of employees under the law Obligation of Seller
or a valid agreement; and
(b) Written notice on the affected Seller in good faith is A shift in the
employees and the DOLE is served authorized to dismiss composition of its
at least one month before the the affected shareholders will not
intended date of termination of employees, but is affect its existence and
employment. liable for the payment continuity.
(3) The employer can lawfully close shop even of separation pay Notwithstanding the
if not due to serious business losses or under the law. stock sale, the
financial reverses but separation pay, corporation continues
which is equivalent to at least one month to be the employer of
pay as provided for by Article 289 of the its people and
Labor Code, as amended, must be given to continues to be liable
all the affected employees. for the payment of
(4) If the closure or cessation of operations of their just claims.
establishment or undertaking is due to
serious business losses or financial Obligation of Buyer
reverses, the employer must prove such The buyer in good The corporation or its

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Asset Sales Stock Sales operations in operations


terms of and/or actual
faith, on the other new majority
salaries and locking-up of
hand, is not obliged to shareholders are not
wages the doors of the
absorb the employees entitled to lawfully
establishment,
affected by the sale, dismiss corporate
usually due to
nor is it liable for the employees absent a
financial losses
payment of their just or authorized
claims. The most that cause. Resorted to To save Aims to prevent
it may do, for reasons (SME Bank, Inc. v. De primarily to production further financial
of public policy and Guzman, G.R. No. avoid or costs drain upon the
social justice, is to give 184517, 186641, minimize Employer
preference to the [October 8, 2013]) business losses
qualified separated Employee is Employee is In case of
personnel of the entitled to entitled to closure of
selling firm. separation pay separation business not
of 1 month pay pay of 1 due to serious
Procedural steps required or 1/2 month month pay or business losses,
At least 1 month before the intended date of pay per year of 1/2 month the employer
termination, Employer is to serve written notice service, pay per year pays the
to: whichever is of service, employees
(1) Affected employees; higher whichever is terminated
(2) DOLE (Art. 289, LC) higher separation pay
of 1 month pay
Criteria in selecting employees for dismissal: or 1/2 month
Fair and reasonable criteria in ascertaining pay per year of
who will be affected: service,
(1) Preferred status (e.g. temporary, casual or whichever is
regular Employees), higher
(2) Efficiency,
(3) Physical fitness, Temporary Closure / Bona fide suspension of
(4) Age, Operations
(5) Financial hardship, or Art. 292, LC: When Employment Not Deemed
(6) Seniority. (Asian Alcohol Corp. v. NLRC, Terminated: The bona fide suspension of the
G.R. No. 131108, March 25, 1999) operation of a business or undertaking for a
period not exceeding six (6) months, or the
Retrenchment Redundancy Closure fulfillment by the employee of a military or
civic duty shall not terminate employment. In
Reduction of The service The reversal of
all such cases the employer shall reinstate the
personnel of an the fortune of
employee to his former position without loss of
usually due to Employee is the employer
seniority rights if he indicates his desire to
poor financial in excess of whereby there is
resume his work not later than one (1) month
returns so as to what is a complete
from the resumption of operations of his
cut down on required by cessation of
employer or from his relief from the military or
costs of an enterprise business
civic duty

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greater, a fraction of at least six (6) months


Under Art. 286 of the Labor Code, a bona being considered as one (1) whole year.
fide suspension of business operations for not
more than six (6) months does not terminate Requisites
employment. After six (6) months, the (1) The employee must be suffering from a
employee may be recalled to work or be disease which cannot be cured within six
permanently laid off. In this case, more than months;
six (6) months have elapsed from the time the (2) His continued employment is prohibited by
Club ceased to operate. Hence, respondents' law or prejudicial to his health or to the
termination became permanent. (SKM Art health of his co-employees; and
Craft Corp. v. Bauca, G.R. Nos. 171282, 183484, (3) A certification to that effect must be issued
November 27, 2013) by a competent public health
authority. [ Crayons Processing, Inc. v. Pula,
An employer may validly suspend operations G.R. No. 167727, July 30, 2007]
for at most 6 months. Not accepting the
workers back to work after the 6 month period The burden falls upon the employer to
is equivalent to termination which should be establish these requisites, and in the absence
for cause and with proper procedure (Manila of such certification, the dismissal must
Mining Corp v Amor, GR No 182800, April 20, necessarily be declared illegal.
2015).
It is only where there is a prior certification
B.3 OTHER CAUSES from a competent public authority that the
(1) Disease incurable in 6 months [ Art. 290, disease afflicting the employee sought to be
LC] dismissed is of such nature or at such stage
(2) Enforcement of union security clause in the that it cannot be cured within six (6) months
CBA even with proper medical treatment that the
(3) Dismissal of union officers for the conduct latter could be validly terminated from his job.
of an illegal strike [ Art. 270 (a), LC] [ Crayons Processing, Inc. v. Pula ]
(4) Dismissal of union members for
participating in the commission of illegal II. ENFORCEMENT OF UNION SECURITY
acts [ Art. 270 (a), LC] CLAUSE IN CBA
(5) Termination in conformity with existing In terminating the employment of an employee
statute/ qualification requirements by enforcing the union security clause, the
employer needs only to determine and prove
I. DISEASE that:
Art. 290, LC: Disease as Ground for (1) The union security clause is applicable;
Termination: An employer may terminate the (2) The union is requesting for the
services of an employee who has been found to enforcement of the union security provision
be suffering from any disease and whose in the CBA; and
continued employment is prohibited by law or (3) There is sufficient evidence to support the
is prejudicial to his health as well as to the union's decision to expel the employee
health of his co-employees: Provided, That he from the union or company [ Inguillo v. First
is paid separation pay equivalent to at least Philippine Scales, Inc., G.R. No. 165407,
one (1) month salary or to one-half (1/2) month June 5, 2009]
salary for every year of service, whichever is

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III. DISMISSAL OF UNION OFFICERS FOR guidelines set by the Department of Labor and
THE CONDUCT OF AN ILLEGAL STRIKE / Employment. Any decision taken by the
DISMISSAL OF UNION MEMBERS FOR employer shall be without prejudice to the
PARTICIPATING IN THE COMMISSION OF right of the worker to contest the validity or
ILLEGAL ACTS legality of his dismissal by filing a complaint
with the regional branch of the National Labor
Art. 270, a, 3 rd par., 2nd sen., LC: Any union
Relations Commission. The burden of proving
officer who knowingly participates in an illegal
that the termination was for a valid or
strike and any worker or union officer who
authorized cause shall rest on the employer.
knowingly participates in the commission of
illegal acts during a strike may be declared to
Requisites for Valid Dismissal
have lost his employment status.
(1) Substantive due process: The dismissal
must be for any of the causes provided for
IV. TERMINATION IN CONFORMITY WITH
in Article 288 290 of the Labor Code; and
EXISTING STATUTE / QUALIFICATION
(2) Procedural due process: The employee
REQUIREMENTS must be afforded an opportunity to be
While the right of workers to security of tenure heard and defend himself. [Fujitsu
is guaranteed by the Constitution, its exercise Computer Products Corporation of the Phil.
may be reasonably regulated pursuant to the v. Court of Appeals, G.R. No. 158232, March
police power of the State to safeguard health, 31, 2005]
morals, peace, education, order, safety, and
the general welfare of the people. Employer may not substitute the required prior
Consequently, persons who desire to engage in notice & opportunity to be heard with the mere
the learned professions requiring scientific or payment of 30 days' salary. [PNB v. Cabansag,
technical knowledge may be required to take G.R. No. 157010, [June 21, 2005]
an examination as a prerequisite to engaging
in their chosen careers. [ St. Lukess Medical Right to Counsel
Center Employees Ass'n-AFW v. NLRC, G.R. The right to counsel, a very basic requirement
No. 162053, March 7, 2007] of substantive due process, has to be observed.
Indeed, the rights to counsel and to due
B.4 DUE PROCESS process of law are two of the fundamental
Art. 283 (b), LC: Subject to the constitutional rights guaranteed by the 1987 Constitution to
right of workers to security of tenure and their any person under investigation, be the
right to be protected against dismissal except proceeding administrative, civil, or criminal.
for a just and authorized cause without [Salaw v. NLRC, G.R. No. 90786, September 27,
prejudice to the requirement of notice under 1991]
Article 283 of this Code, the employer shall
furnish the worker whose employment is Burden of Proof
sought to be terminated a written notice In illegal dismissal cases, the onus of proving
containing a statement of the causes for that the employee was not dismissed or, if
termination and shall afford the latter ample dismissed, that the dismissal was not illegal,
opportunity to be heard and to defend himself rests on the employer, failure to discharge
with the assistance of his representative if he which would mean that the dismissal is not
so desires in accordance with company rules justified and, therefore, illegal. [Macasero v.
and regulations promulgated pursuant to

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Southern Industrial Gases Philippines, G.R. No. employees. [United Tourist


178524, January 30, 2009] Promotions v. Kemplin, G.R. No.
205453, February 5, 2014]
Degree of Proof (1) Indicate all circumstances
In labor cases, as in other administrative involving the charge against the
proceedings, substantial evidence is required employees considered; and
and it is such relevant evidence as a Second (2) Indicate grounds established to
reasonable mind might accept as adequate to Notice justify the severance of their
support a conclusion [Andrada v. Agemar employment (United Tourist
Manning Agency, Inc., G.R. No. 194758, October Promotions v. Kemplin, G.R. No.
24, 2012] 205453, February 5, 2014])

I. TWIN-NOTICE REQUIREMENT
The employer has the burden of proving that a An employee may be dismissed only if the
dismissed worker has been served two notices: grounds mentioned in the pre-dismissal notice
(1) The first to inform the employee of the were the ones cited for the termination of
particular acts or omissions for which the employment. [Erector Advertising Sign Group,
employer seeks his dismissal, and Inc. v. Cloma, G.R. No. 167218, July 2, 2010]
(2) The second to inform the employee of his
employer's decision to terminate him. II. HEARING; MEANING OF
OPPORTUNITY TO BE HEARD
(1) Contain the specific causes or In employee dismissal cases, the essence of
grounds for termination against due process is simply an opportunity to be
them, and heard; it is the denial of this opportunity that
(2) Contain a directive that the constitutes violation of due process of law.
employees are given the [Technol Eight Philippines Corporation v. NLRC,
opportunity to submit their G.R. No. 187605, April 13, 2010]
written explanation within a
reasonable period or every kind While a formal hearing or conference is ideal, it
of assistance that management is not an absolute, mandatory or exclusive
must accord to the employees to avenue of due process. [Perez v. PT&T, G.R. No.
enable them to prepare 152048, April 7, 2009]
First adequately for their defense. This
Notice should be construed as a period Guiding principles in hearing requirement
of at least five (5) calendar days (1) "Ample opportunity to be heard" means
from receipt of the notice any meaningful opportunity (verbal or
(3) Contain a detailed narration of written) given to the employee to answer
the facts and circumstances that the charges against him and submit
will serve as basis for the charge evidence in support of his defense, whether
against the employees. in a hearing, conference or some other fair,
(4) Specifically mention which just and reasonable way.
company rules, if any, are (2) A formal hearing or conference becomes
violated and/or which among the mandatory only when requested by the
grounds under Art. 288 is being employee in writing or substantial
charged against the evidentiary disputes exist or a company

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rule or practice requires it, or when similar PROCEDURE TO BE OBSERVED IN


circumstances justify it. TERMINATION CASES
(3) The "ample opportunity to be heard" JUST CAUSE
standard in the Labor Code prevails over
Notice specifying the grounds for which
the "hearing or conference" requirement in dismissal is sought
the implementing rules and
regulations. [Perez v. PT&T, G.R. No.
152048, April 7, 2009] Hearing or opportunity to be heard

Use of Position P aper


It is the labor arbiter who is authorized to Notice of the decision to dismiss
determine whether or not there is a necessity
for conducting formal hearings in cases
brought before them for adjudication even AUTHORIZED CAUSE
after the submission of the parties of their Notice to:
position papers or memoranda. A formal trial- (1) Employee, and
type hearing is not at all times and in all (2) DOLE at least 1 month prior to the
instances essential to due process. It is enough effectivity of the separation
that the parties are given a fair and reasonable
opportunity to explain their respective sides of Requisites
the controversy and to present supporting (1) Notice not needed when Employee
evidence on which a fair decision can be based. consented to the retrenchment or
(Seastar Marine Services Inc. v. Bul-an, Jr., G.R. voluntarily applied for one. [International
No. 142609, November 25, 2004) Hardware, Inc. v. NLRC, G.R. No. 80770,
August 10, 1989]
(2) Notice must be individual, not collective
[Shoppers Gain Supermart v. NLRC, G.R.
No. 110731, July 26, 1996]
(3) Voluntary arbitration satisfies notice
requirement for authorized causes
[Revidad v. NLRC, G.R. No. 111105, June 27,
1995]
CONSEQUENCES FOR NON-COMPLIANCE OF PROCEDURAL DUE PROCESS
Validity of
Situation Liability of ER
Dismissal
Just or Authorized Cause Valid No liability.
+ Due Process Separation pay only in authorized cause
No Just or Authorized Cause Invalid Reinstatement or separation pay.
+ Due Process If reinstatement not possible, + full backwages
No Just or Authorized Cause Invalid Reinstatement or separation pay.
+ No Due Process If reinstatement not possible, + full backwages
Just or Authorized Cause Valid Liable for damages due to procedural infirmity.
+ No Due Process Separation pay if for authorized cause

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C. RELIEFS FOR ILLEGAL DISMISSAL (10) When supervening facts have transpired
Art. 285, LC: Security of Tenure. In case of which make execution on that score unjust
regular employment, the employer shall not or inequitable or, to an increasing extent
terminate the services of an employee except (Emeritus Security & Maintenance Systems,
for a just cause or when authorized by this Inc. v. Dailig, G.R. No. 204761, April 2,
Title. An employee who is unjustly dismissed 2014)
from work shall be entitled to reinstatement
without loss of seniority rights and other Prescription Period
privileges and to his full backwages, inclusive An action for reinstatement by reason of
of allowances, and to his other benefits or illegal dismissal is one based on an injury
their monetary equivalent computed from the which may be brought within 4 years from the
time his compensation was withheld from him time of dismissal. [Art. 1146, CC]
up to the time of his actual reinstatement.
I. REINSTATEMENT PENDING APPEAL
C.1. REINSTATEMENT [Art. 229]
Reinstatement means restoration to a state or Art. 229, par. 3 LC: In any event, the decision of
condition from which one had been removed the Labor Arbiter reinstating a dismissed or
or separated. The person reinstated assumes separated employee, insofar as the
the position he had occupied prior to his reinstatement aspect is concerned, shall
dismissal [Asian Terminals, Inc. v. Villanueva, immediately be executory, pending appeal.
G.R. No. 143219, November 28, 2006] The employee shall either be admitted back to
work under the same terms and conditions
General Rule: Reinstatement prevailing prior to his dismissal or separation
or, at the option of the employer, merely
Exceptions: reinstated in the payroll. The posting of a
(1) Separation pay bond by the employer shall not stay the
(2) Closure of business (Retuya v. Hon. execution for reinstatement provided herein.
Dumarpa, G.R. No. 148848, Aug. 5, 2003)
(3) Economic business conditions (Union of If the order of reinstatement of the Labor
Supervisors v. Secretary of Labor, G.R. No. Arbiter is reversed on appeal, it is obligatory
L-39889, November 12, 1981) on the part of the employer to reinstate and
(4) Employees unsuitability (Divine Word High pay the wages of the dismissed employee
School v. NLRC, G.R. No. 72207, August 6, during the period of appeal until reversal by
1986) the higher court. The Labor Arbiter's order of
(5) Employees retirement/ overage (New reinstatement is immediately executory and
Philippine Skylanders, Inc. v. Dakila, G.R. the employer has to either re-admit them to
No. 199547, September 24, 2012) work under the same terms and conditions
(6) Antipathy and antagonism (Wensha Spa prevailing prior to their dismissal, or to
Center v. Yung, G.R. No. 185122, Aug. 16, reinstate them in the payroll, and that failing
2010) to exercise the options in the alternative,
(7) Job with a totally different nature (DUP employer must pay the employee's salaries
Sound Phils. v. CA, G.R. No. 168317m Nov. [Magana v. Medicard Philippines, Inc., G.R. No.
21, 2011) 174833, December 15, 2010]
(8) Long passage of time
(9) Inimical to the employer's interest

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No refund doctrine viable due to the strained relations


An employee cannot be compelled to between them; and
reimburse the salaries and wages he received (3) When the dismissed employee opted not
during the pendency of his appeal, to be reinstated, or the payment of
notwithstanding the reversal by the NLRC of separation benefits would be for the best
the LA's order of reinstatement. [College of the interest of the parties involved. (Book VI,
Immaculate Conception v. NLRC, G.R. No. Rule 1, Section 4 (b), Rule I, IRR)
167563, March 22, 2010]
Separation Pay and Reinstatement, Exclusive
Note, however: Rule XI, Sec. 14 of the 2011 Remedies
NLRC Rules of Procedure provide for restitution The payment of separation pay and
of amounts paid pursuant to execution of reinstatement are exclusive remedies. The
awards during pendency of the appeal. payment of separation pay replaces the legal
However, it expressly disallows restitution of consequences of reinstatement to an
wages paid due to reinstatement pending employee who was illegally dismissed. [Bani
appeal. Rural Bank, Inc. v. De Guzman, G.R. No.
Section 14. Effect of Reversal of Executed 170904, November 13, 2013]
Judgment. Where the executed judgment is
totally or partially reversed or annulled by the Doctrine of Strained Relations
Court of Appeals or the Supreme Court, the Where reinstatement is not feasible, expedient
Labor Arbiter shall, on motion, issue such or practical, as where reinstatement would
orders of restitution of the executed award, only exacerbate the tension and strained
except wages paid during reinstatement relations between the parties or where the
pending appeal. relationship between the employer and
employee has been unduly strained by reason
II. SEPARATION PAY IN LIEU OF of their irreconcilable differences, particularly
REINSTATEMENT where the illegally dismissed employee held a
Kinds of separation pay (SP) managerial or key position in the company, it
(1) SP as a statutory requirement for would be more prudent to order payment of
authorized causes separation pay instead of reinstatement
(2) SP as financial assistance found in the [Quijano v. Mercury Drug Corp., G.R. No.
next section 126561, July 8, 1998]
(3) SP in lieu of reinstatement where
reinstatement is not feasible; and Computation
(4) SP as a benefit in the CBA or company SP as a statutory requirement is computed by
policy integrating the basic salary with regular
allowances employee has been receiving
Instances when the award of separation pay, in [Planters Products, Inc. v. NLRC, G.R. No.
lieu of reinstatement to an illegally dismissed 78524, 78739, January 20, 1989]; allowances
employee, is proper: include transportation and emergency living
(1) When reinstatement is no longer possible, allowances [Santos v. NLRC, G.R. No. 76721,
in cases where the dismissed employee's September 21, 1987]
position is no longer available;
(2) The continued relationship between the Inasmuch as the words "wages", "pay" and
employer and the employee is no longer "salary" have the same meaning, and

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commission is included in the definition of I. COMPUTATION OF BACKWAGES


"wage", the logical conclusion, therefore, is, in Full backwages means exactly
the computation of the separation pay of that, i.e., without deducting from backwages
petitioners, their salary base should include the earnings derived elsewhere by the
also their earned sales commissions. [Songco concerned employee during the period of his
v. NLRC, G.R. Nos. 50999-51000, March 23, illegal dismissal. [Bustamante v. NLRC, G.R.
1990] No. 111651, November 28, 1996]

A dismissed employee who has accepted Awards including salary differentials are not
separation pay is not necessarily estopped allowed [Insular Life Assurance Co. v. NLRC,
from challenging the validity of his or her 1987]
dismissal. Neither does it relieve the employer
of legal obligations. [Anino v. NLRC, G.R. No. The salary base properly used should be the
123226, May 21, 1998] basic salary rate at the time of dismissal plus
the regular allowances; allowances include:
C.2. BACKWAGES
Backwages are earnings lost by a worker due Emergency cost of living allowances (ECOLA),
to his illegal dismissal; a form of relief that transportation allowances, 13 th month pay
restores the income lost by reason of such [Paramount Vinyl Product Corp. v. NLRC, 1990]
unlawful dismissal; it is not private
compensation or damages; nor is it a redress Also included are vacation leaves, service
of a private right but, rather, in the nature of a incentive leaves, and sick leaves
command to the employer to make a public
reparation for illegally dismissing an The effects of extraordinary inflation are not to
employee. [St. Theresa's School of Novaliches be applied without an official declaration
Foundation v. NLRC, G.R. No. 122955, April 15, thereof by competent authorities [Lantion v.
1998] NLRC, 1990]

Backwages and reinstatement are two reliefs II. LIMITED BACKWAGES


that should be given to an illegally dismissed General rule: An illegally dismissed employee
employee. They are separate and distinct from is entitled to full backwages.
each other. An illegally dismissed employee is
entitled to (1) either reinstatement, if viable, or Exceptions
separation pay if reinstatement is no longer (1) The Court awarded limited backwages
viable, and (2) backwages. Payment of where the employee was illegally
backwages is specifically designed to restore dismissed but the employer was found to
an employee's income that was lost because be in good faith. [San Miguel Corporation v.
of his unjust dismissal. [Aurora Land Projects Javate, Jr., 1992]
Corp. v. NLRC, G.R. No. 114733, January 2, 1997] (2) Delay of the EE in filing the case for illegal
dismissal [Mercury Drug Co., Inc. v. CIR,
Effect of failure to order backwages 1974]
A plain error which may be rectified, even if
employee did not bring an appeal regarding Rationale
the matter [Aurora Land Projects Corp. v. Feati University Club vs. Feati University (1974)
NLRC, G.R. No. 114733, January 2, 1997] adopted a consensus policy of pegging the

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amount of backwages to their total equivalent International Corp. (1972)] and attrition and
for three years (depending on the protracted delay in satisfying such award on
circumstances) without deduction or the part of unscrupulous employers who have
qualification. The rationale for the policy was seized upon the further proceedings to
stated in the following words: determine the actual earnings of the
wrongfully dismissed or laid-off employees to
As has been noted, this formula of awarding hold unduly extended hearings for each and
reasonable net backwages without deduction every employee awarded backwages and
or qualification relieves the employees from thereby render practically nugatory such
proving or disproving their earnings during award and compel the employees to agree to
their lay-off and the employers from unconscionable settlements of their
submitting counterproofs, and obviates the backwages award in order to satisfy their dire
twin evils of Idleness on the part of the need. [See La Campana Food Products, Inc. vs.
employee who would "with folded arms, CIR, (1969) and Kaisahan ng Mga
remain inactive in the expectation that a Manggagawa vs. La Campana Food Products,
windfall would come to him" [Itogon Suyoc Inc., (1970)].
Mines, Inc. vs. Sangilo-Itogon Workers Union
(1968), as cited in Diwa ng Pagkakaisa vs. Filtex

Indemnity of Employer
Doctrine in Validity of
Period Liability of ER
effect Dismissal
Prior 1989 Pre-Wenphil Illegal Reinstatement + Backwages
Feb. 1989 1999 Wenphil Valid Dismiss now, indemnity pay later
Jan. 2000 Oct. Serrano Ineffectual Full backwages up to reinstatement/finality of
2004 decision
Nov. 2004 Agabon Valid Nominal damages
present

D. PREVENTIVE SUSPENSION during the time of preventive


suspension. [Gatbonton v. NLRC, G.R. No.
Preventive suspension is a disciplinary 146779, January 23, 2006]
measure for the protection of the company's
property pending investigation of any alleged Preventive suspension is justified where the
malfeasance or misfeasance committed by the employee's continued employment poses a
employee. The employer may place the worker serious and imminent threat to the life or
concerned under preventive suspension if his property of the employer or of the employee's
continued employment poses a serious and co-workers. Without this kind of threat,
imminent threat to the life or property of the preventive suspension is not proper. [Artificio
employer or of his co-workers. However, when v. NLRC, G.R. No. 172988, July 26, 2010]
it is determined that there is no sufficient basis
to justify an employee's preventive suspension,
the latter is entitled to the payment of salaries

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E. CONSTRUCTIVE DISMISSAL this Court will uphold themEven as the law is


solicitous of the welfare of the employees, it
Constructive dismissal is cessation of work must also protect the right of an employer to
because continued employment is rendered exercise what are clearly management
impossible, unreasonable or unlikely; when prerogatives. The free will of management to
there is a demotion in rank or diminution in conduct its own business affairs to achieve its
pay or both; or when a clear discrimination, purpose cannot be denied. [Ernesto G. Ymbong
insensibility, or disdain by an employer vs. ABS-CBN Broadcasting Corp., 2012]
becomes unbearable to the employee.
A. DISCIPLINE
The test of constructive dismissal is whether a
reasonable person in the employee's position The employers right to conduct the affairs of
would have felt compelled to give up his his business, according to its own discretion
position under the circumstances. and judgment, includes the prerogative to
instill discipline in its employees and to
The law recognizes and resolves this situation impose penalties, including dismissal, upon
in favor of employees in order to protect their erring employees. This is a management
rights and interests from the coercive acts of prerogative where the free will of
the employer. In fact, the employee who is management to conduct its own affairs to
constructively dismissed may be allowed to achieve its purpose takes form. The only
keep on coming to work. [McMer Corp., Inc. v. criterion to guide the exercise of its
NLRC, G.R. No. 193421, June 4, 2014] management prerogative is that the policies,
rules and regulations on work-related
V. Management activities of the employees must always be fair
and reasonable and the corresponding
Prerogative penalties, when prescribed, commensurate to
the offense involved and to the degree of the
infraction. [Consolidated Food Corporation vs.
This Court held that the employers right to NRLC, 1999] [St. Michaels Institute vs. Santos,
conduct the affairs of his business, according 2001]
to its own discretion and judgment, is well-
recognized. An employer has a free reign and Right to dismiss or otherwise impose
enjoys wide latitude of discretion to regulate disciplinary sanctions upon an employee for
all aspects of employment. This is a just and valid cause, pertains in the first place
management prerogative, where the free will to the employer, as well as the authority to
of management to conduct its own affairs to determine the existence of said cause in
achieve its purpose takes form. [Torreda vs. accordance with the norms of due process.
Toshiba, 2007] [Makati Haberdashery, Inc. v. NLRC, 1989]

So long as a companys management Management has the prerogative to discipline


prerogatives are exercised in good faith for the its employees and to impose appropriate
advancement of the employers interest and penalties on erring workers pursuant to
not for the purpose of defeating or company rules and regulations. [Jose P.
circumventing the rights of the employees Artificio vs. NLRC, 2010]
under special laws or under valid agreements,

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It is obvious that the company overstepped the the consequent transfer of Trycos personnel,
bounds of its management prerogative in the assigned to the Production Department was
dismissal of Mauricio and Camacho. It lost well within the scope of its management
sight of the Principle that management prerogative.
prerogative must be exercised in good faith
and with due regard to the rights of the When the transfer is not unreasonable, or
workers in the spirit of fairness and with justice inconvenient, or prejudicial to the employee,
in mind. [Philbag Industrial Manufacturing and it does not involve a demotion in rank or
Corp. vs. Philbag Workers Union-Lakas at diminution of salaries, benefits, and other
Gabay ng Manggagawang Nagkakaisa, 2012] privileges, the employee may not complain
that it amounts to a constructive dismissal.
Although we recognize the right of employers [Bisig ng Manggagawa sa TRYCO v. NLRC,
to shape their own work force, this 2008]
management prerogative must not curtail the
basic right of employees to security of tenure. It is management prerogative for employers to
[Alert Security & Investigation Agency, Inc. vs. transfer employees on just and valid grounds
Saidali Pasawilan, et. al., 2011] such as genuine business necessity. [William
Barroga vs. Data Center College of the
B. TRANSFER OF EMPLOYEES Philippines, 2011]

An Employees right to security of tenure does Even though transfers or reassignments per se
not give him such a vested right in his position are indeed valid and fall within the ambit of
as would deprive the company of its management prerogatives, the exercise of
prerogative to change his assignment or these rights must remain within the
transfer him where he will be most useful. boundaries of justice and fair play. [Michelle T.
Tuason vs. Bank of Commerce, 2012]
The Employer has the right to transfer or
assign Employees from one area of operation Re-assignments made by management
to another, or one office to another or in pending investigation of irregularities
pursuit of its legitimate business interest, allegedly committed by an employee fall
Provided there is no demotion in rank or within the ambit of management prerogative.
diminution of salary, benefits and other The purpose of reassignments is no different
privileges and not motivated by discrimination from that of preventive suspension which
or made in bad faith, or effected as a form of management could validly impose as a
punishment or demotion without sufficient disciplinary measure for the protection of the
cause. [Westin Phil. Plaza Hotel v. NLRC, 1999] company's property pending investigation of
any alleged malfeasance or misfeasance
This prerogative extends to the managements committed by the employee. [Ruiz v Wendel
right to regulate, according to its own Osaka Realty Corp., 2012]
discretion and judgment, all aspects of
employment, including the freedom to In cases of a transfer of an employee, the rule
transfer and reassign employees from one are is settled that the employer is charged with
to another in order to meet the requirements the burden of proving that its conduct and
of the business is, therefore, not general action are for valid and legitimate grounds
constitutive of constructive dismissal. Thus, such as genuine business necessity and that

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the transfer is not unreasonable, inconvenient D. GRANT OF BONUS


or prejudicial to the employee. If the employer
cannot overcome this burden of proof, the A bonus is "a gratuity or act of liberality of the
employees transfer shall be tantamount to giver which the recipient has no right to
unlawful constructive dismissal. [Jonathan demand as a matter of right" [Aragon vs. Cebu
Morales v. Harbor Centre Port Terminal Inc., Portland Cement Co., 61 O.G. 4597]. "It is
2012] something given in addition to what is
ordinarily received by or strictly due the
C. PRODUCTIVITY STANDARD recipient." The granting of a bonus is basically
a management prerogative which cannot be
The employer has the right to demote and forced upon the employer "who may not be
transfer an employee who has failed to obliged to assume the onerous burden of
observe proper diligence in his work and granting bonuses or other benefits aside from
incurred habitual tardiness and absences and the employee's basic salaries or wages" xxx
indolence in his assigned work. [Petrophil [Kamaya Point Hotel vs. National Labor
Corporation vs. NLRC, 1986] Relations Commission, Federation of Free
Workers and Nemia Quiambao, G.R. No. 75289,
In the consolidated cases of Leonardo vs. NLRC August 31, 1989]. [Traders Royal Bank vs.
[G. R. No. 125303, June 16, 2000] and Fuerte vs. NLRC, 1990]
Aquino [G. R. No. 126937, June 16, 2000], the
employer claimed that the employee was With regard to the private respondents claim
demoted pursuant to a company policy for the mid-year bonus, it is settled doctrine
intended to foster competition among its that a grant of a bonus is a prerogative, not an
employees. Under this scheme, its employees obligation of the employer. The matter of
are required to comply with a monthly sales giving a bonus over and above the workers
quota. Should a supervisor such as the lawful salaries and allowances is entirely
employee fail to meet his quota for several dependent on the financial capability of the
consecutive months, he will be demoted, employer to give it. [Kimberly-Clark Philippines,
whereupon his supervisors allowance will be Inc. vs. Dimayuga, 2009]
withdrawn and be given to the individual who
takes his place. When the employee concerned E. CHANGE OF WORKING HOURS
succeeds in meeting the quota again, he is re-
appointed supervisor and his allowance is Further, management retains the prerogative,
restored. The Supreme Court held that this whenever exigencies of the service so require,
arrangement is an allowable exercise of to change the working hours of its
company rights since an employer is entitled employees. So long as such prerogative is
to impose productivity standards for its exercised in good faith for the advancement of
workers. In fact, non-compliance may be the employers interest and not for the
visited with a penalty even more severe than purpose of defeating or circumventing the
demotion. rights of the employees under special laws or
under valid agreements, this Court will uphold
such exercise. [Sime Darby Pilipinas Inc. v.
NLRC, 1998]

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F. RULES ON MARRIAGE BETWEEN


EMPLOYEES OF COMPETITOR-
EMPLOYERS

In the recent case of Duncan Association of


Detailman-PTGWO and Pedro Tecson v. Glaxo
Wellcome Philippines, Inc., we passed on the
validity of the policy of a pharmaceutical
company prohibiting its employees from
marrying employees of any competitor
company. We held that Glaxo has a right to
guard its trade secrets, manufacturing
formulas, marketing strategies and other
confidential programs and information from
competitors. We considered the prohibition
against personal or marital relationships with
employees of competitor companies upon
Glaxos employees reasonable under the
circumstances because relationships of that
nature might compromise the interests of
Glaxo. In laying down the assailed company
policy, we recognized that Glaxo only aims to
protect its interests against the possibility that
a competitor company will gain access to its
secrets and procedures. [Star Paper Corp. vs.
Simbol, 2006]

G. POST-EMPLOYMENT BAN
In cases where an employee assails a contract
containing a provision prohibiting him or her
from accepting competitive employment as
against public policy, the employer has to
adduce evidence to prove that the restriction is
reasonable and not greater than necessary to
protect the employers legitimate business
interests. The restraint may not be unduly
harsh or oppressive in curtailing the
employees legitimate efforts to earn a
livelihood and must be reasonable in light of
sound public policy. [Rivera v Solidbank, 2006]

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VI. Social Welfare The domestic worker shall be entitled to all


other benefits under existing laws. [Sec. 30,
Legislation Kasambahay Law [RA 10361]]

II. VOLUNTARY [SEC. 9]


A. SSS LAW [RA 8282] (1) Spouses who devote full time to managing
household and family affairs, unless they
A.1. COVERAGE are also engaged in other vocation or
I. COMPULSORY [SEC. 9 [A]; SEC. 9-A] employment [which is subject of
(1) Employees not over 60 years including compulsory coverage];
domestic helpers with at least P1,000 (2) OFWs recruited by foreign-based
monthly pay; and employers;
(2) Self-employed as may be determined by (3) Employees [previously under compulsory
the Commission, but not limited to: coverage] already separated from
I. Self-employed professionals employment or those self-employed [also
II. Partners and single proprietors of under compulsory coverage] with no
businesses realized income for a given month, who
III. Actors and actresses, directors, chose to continue with contributions to
scriptwriters, and news maintain right to full benefit.
correspondents who do not fall
within the definition of the term Note
employee under Section 8 [d] Foreign governments, international
IV. Professional athletes, coaches, organizations or their wholly owned
trainers and jockeys instrumentality employing workers in the
V. Individual farmers and fishermen Philippines may enter into an agreement with
the Philippine government to include their
A domestic worker who has rendered at least employees in the SSS except those already
one [1] month of service shall be covered by covered by their civil service retirement
the Social Security System [SSS], the system.
Philippine Health Insurance Corporation
[PhilHealth], and the Home Development A.2. EXCLUSIONS FROM COVERAGE
Mutual Fund or Pag-IBIG, and shall be entitled [SEC. 8 [J]]
to all the benefits in accordance with the (1) Employment purely casual and not for the
pertinent provisions provided by law. purpose of occupation or business of the
employer.
Premium payments or contributions shall be (2) Service performed on or in connection with
shouldered by the employer. However, if the an alien vessel by an employee if he is
domestic worker is receiving a wage of Five employed when such vessel is outside the
thousand pesos [P5,000.00] and above per Philippines;
month, the domestic worker shall pay the (3) Service performed in the employ of the
proportionate share in the premium payments Philippine Government or instrumentality
or contributions, as provided by law. or agency thereof;
(4) Service performed in the employ of a
foreign government or international

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organization, or their wholly-owned III. RETIREMENT BENEFITS [SEC. 12-B]


instrumentalities; and Eligibility requirements
(5) Services performed by temporary and (1) 120 monthly contributions;
other employees which may be excluded (2) Age
by SSS regulation. Employees of bona fide I. 65 years old; or
independent contractors shall not be II. a member who has reached 60
deemed employees of the employer years may also avail if he is already
engaging the services of said contractors. separated from employment or
has ceased to be self-employed.
A.3. BENEFITS
I. MONTHLY PENSION [SEC.12] Benefit entitlement to monthly pension from
Computation of monthly pension retirement until death.
The monthly pension shall be the highest of
the following amounts: The monthly pension shall be suspended upon
(1) P300 + [20% x [average monthly credit]] + the reemployment or resumption of self-
[2% x [average monthly credit] x [# of cash employment of a retired member who is less
credited years of service in excess of 10 than sixty-five [65] years old.
years]];
(2) 40% x [average monthly credit]; In Case of Death of Member
(3) P1,000; provided, that the monthly (1) His/her primary beneficiaries as of the
pension shall in no case be paid for an date of his/her retirement shall be entitled
aggregate amount of less than 60 to receive the monthly pension; or
months. (2) If he/she has no primary beneficiaries AND
he/she dies within sixty [60] months from
Note: Notwithstanding the abovementioned, the start of his/her monthly pension,
minimum pension is P1,200 for members with his/her secondary beneficiaries shall be
at least 10 years credit service, P2,400 for entitled to a lump sum benefit equivalent
those with 20 years. to the total monthly pensions
corresponding to the balance of the five-
II. DEPENDENTS PENSION [SEC. 12-A] year guaranteed period, excluding the
(1) Paid on account of members dependents pension.
I. death,
II. retiring, or Lump Sum Alternative
III. permanent total disability; Member may opt to receive his first 18 monthly
(2) Paid to each child conceived on or prior to pensions in lump sum but such is discounted
contingency, but not exceeding 5, at a preferential rate of interest.
beginning with the youngest and
preferring the legitimate; Lump Sum Eligibility
(3) Amount is either P250 or 10% of the A 60 year old member with less than 120
monthly pension as computed above, monthly contributions who is no longer
whichever is higher. employed or self-employed, and who is not
continuing contributions independently, he is
entitled to a lump sum equal to his total
contributions paid.

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IV. PERMANENT DISABILITY BENEFITS In Case of Death of Member


[SEC. 13-A] (1) His primary beneficiaries as of the date of
Eligibility requirement disability shall be entitled to receive the
36 monthly contributions prior to the monthly pension; OR
semester of disability; same as death (2) If he has no primary beneficiaries and he
benefit; the only difference is that the dies within sixty [60] months from the start
pension is paid directly to the member. of his monthly pension, his secondary
In case the permanently disabled member beneficiaries shall be entitled to a lump
dies, it would be given the same treatment sum benefit equivalent to the total
as a retiree dying. monthly pensions corresponding to the
balance of the five-year guaranteed period
For permanent partial disability, the
excluding the dependents pension.
pension is not lifetime. [e.g. loss of thumb
entitles member to only 10 months of
V. DEATH BENEFITS [SEC. 13]
pension, while loss of arm 50 months]. It
shall be paid in lump sum if the period is Eligibility requirement
less than 12 months. 36 monthly contributions prior to the semester
of death.
For multiple partial disabilities, they shall
be additive when related or deteriorating
Benefit monthly pension to primary or a
the percentage shall be equal to the
lump sum benefit equivalent to thirty-six [36]
number of months the partial disability is
times the monthly pension secondary
entitled to, divided by 75 months. [e.g. loss
beneficiaries.
of sight in one eye 25/75; loss of arm
50/75; if both occur due to same cause,
To those ineligible lump sum benefit which
then 25/75 + 50/75 = 100% so treated as
shall be the higher between the two:
if it were permanent total disability]
[monthly pension] x 12; or
Lump Sum Alternative [monthly pension] x [# of monthly
contributions]
A member is entitled to a lump sum benefit
equivalent to the monthly pension times the VI. FUNERAL BENEFITS [13-B]
number of monthly contributions paid to the
P12,000 in cash or in kind, upon death of
SSS or twelve [12] times the monthly pension,
member
whichever is higher.
VII. LOAN
Lump Sum Eligibility
Social Security Commission Resolution No.
A member who has not paid at least 36
669. Moreover, several SSS-issued circulars
monthly contributions
such as Circular No. 21-P and No. 52 pertain to
the treatment of salary loans, sometimes
Note: A member who [1] has received a lump
providing for more flexible payment terms or
sum benefit; and [2] is reemployed or has
condonation for delinquent payers; Santiago v.
resumed self-employment not earlier than one
CA and SSS, GR # L-39949 [1984] resolved an
[1] year from the date of his disability shall
issue involving the treatment of salary loan
again be subject to compulsory coverage and
repayments; SSS website also shows loans
shall be considered a new member.

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VIII. SICKNESS BENEFITS [SEC. 14] only for each day of confinement starting
Eligibility requirements and other conditions from the tenth calendar day immediately
(1) Inability to work due to sickness or injury preceding the date of notification to the
(2) Confined for at least 4 days either in a SSS.
hospital or elsewhere with SSS approval; (3) SSS shall reimburse the employer or pay
(3) At least 3 months of contributions in the 12 the unemployed member only for
month period immediately before the confinement within the one-year period
semester of sickness or injury has been immediately preceding the date the claim
paid; for benefit or reimbursement is received by
(4) All company sick leaves with pay for the the SSS, except confinement in a hospital
current year have been used up; in which case the claim for benefit or
(5) Maximum of 120 days per 1 calendar year reimbursement must be filed within one [1]
[i.e maximum permissible for the same year from the last day of confinement.
sickness and confinement is 240 days for 2
consecutive years]; IX. MATERNITY LEAVE BENEFITS [SEC.
(6) The employer has been notified, or, if a 14-A]
separated, voluntary or self-employed Eligibility Requirements
member, the SSS directly notified within 5 (1) A female member
days of confinement; (2) Paid at least three [3] monthly
(7) Notice to employer or SSS not needed contributions in the twelve-month period
when confinement is in a hospital; notice immediately preceding the semester of her
to employer not required as well when childbirth or miscarriage
Employee became sick or injured while (3) She shall have notified her employer of her
working or within premises of the pregnancy and the probable date of her
employer. childbirth, which notice shall be
transmitted to the SSS in accordance with
Benefit: daily cash allowance paid for the the rules and regulations it may provide;
number of days a member is unable to work
due to sickness or injury equivalent to 90% x Process
[average daily salary credit] The full payment shall be advanced by the
employer within thirty [30] days from the filing
Note: One hundred percent [100%] of the daily of the maternity leave application;
benefits provided in the preceding paragraph
shall be reimbursed by the SSS to said Coverage
employer upon receipt of satisfactory proof of The maternity benefits provided under this
such payment and legality thereof if the section shall be paid only for the first four [4]
following conditions are met: deliveries or miscarriages;
(1) The employer notified the SSS of the
confinement within five calendar days Employers Reimbursement
after receipt of the notification from the That the SSS shall immediately reimburse the
employee member employer of one hundred percent [100%] of
(2) If the notification to the SSS is made by the amount of maternity benefits advanced to
the employer beyond five calendar days the employee by the employer upon receipt of
after receipt of the notification from the satisfactory proof of such payment and legality
employee member, he shall be reimbursed thereof. Note: All of these benefits are tax-exempt.

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A.4. BENEFICIARIES B.3. BENEFITS


1. PRIMARY Computation of Service
(1) Dependent spouse until remarriage [see From date of original appointment/election,
above]; including periods of service at different times
(2) Dependent children [legitimate, under one or more employers, those
legitimated, legally adopted, and performed overseas under the authority of the
illegitimate] [see above]; illegitimate Republic of the Philippines, and those that
children are entitled only to 50% of the may be prescribed by the GSIS in coordination
share of legitimate children unless there with the Civil Service Commission.
are no legitimate children, in which case,
they get 100%. In case of reinstatement in the service of an
employer and subsequent retirement or
2. SECONDARY separation which is compensable under this
Shall only receive when the primary Act, all service credited for retirement,
beneficiaries are absent resignation or separation for which
Dependent parents corresponding benefits have been awarded
under this Act or other laws shall be excluded
3. OTHERS shall only receive when the in the computation of service
primary and secondary beneficiaries are
absent Note: The GSIS may prescribe rules for the
inclusion of part time and other services with
Any other person designated by
compensation.
member as his/her secondary
beneficiary.
I. MONTHLY PENSION [SEC. 9]
The amount shall be:
B. GSIS [RA 8291]
(a) 37.5% x [revalued ave. monthly
compensation]
B.1. COVERAGE
(b) Plus 2.5 x [revalued ave. monthly
All public sector employees below the
compensation] x [years in service in excess
compulsory retirement age of 65, irrespective
of 15 years].
of employment status.
The monthly pension shall not exceed
90% of the average monthly
B.2. EXCLUSIONS FROM COVERAGE
compensation.
(1) AFP and PNP;
It shall not be less than P2,400 for those
(2) Members of the Judiciary and
with 20 years of service and not less than
Constitutional Commissions who are
P1,300 for everyone else.
covered only by life insurance as they have
separate retirement schemes;
II. RETIREMENT BENEFITS [SEC. 13]
(3) Contractual employees with no employer-
Eligibility requirements [Sec. 13-A]
employee relationship with the agency
(1) 15 years service;
they serve.
(2) 60 years of age; and
(3) Not receiving pension benefit from
permanent total disability.

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Note: Retirement is compulsory for employees an additional cash payment of 18 times


65 years of age who have rendered at least 15 basic monthly pension.
years of service; if employee has less than 15
years of service, he may be allowed to To the ineligible
continue in accordance with civil service laws. If member has rendered at least 3 years of
service, then he shall receive cash payment
Benefit [Sec. 13]: Choice between equal to 100% of ave. monthly compensation
(a) 60 x [basic monthly pension] lump sum for each year of service [essentially total
payment at the time of retirement plus amount of contributions made] or P12,000
basic monthly pension payable monthly whichever is higher.
for life after expiry of the 5-year
guaranteed period which is already Partial Disability
covered by the lump sum; or Paid according to GSIS prescribed schedule
(b) Cash payment equivalent to 18 x [basic [this is similar to the scheme used by SSS;
monthly pension] plus monthly pension for refer to section II subsection D-3 above];
life immediately but with no 5-year member availing of permanent partial
guarantee disability must satisfy condition E.1.a. above
Note: Subject to periodic adjustment [Sec. 14] regarding the disability not being due to his
own fault and either E.1.b.i. or E.1.b.ii.
III. PERMANENT DISABILITY BENEFITS regarding employment status and services
Eligibility requirements for Permanent Total rendered.
Disability
(1) Disability not due to employees own grave IV. DEATH BENEFITS [SEC. 21]
misconduct, notorious negligence, When member dies, the primary beneficiaries
habitual intoxication, or willful intention to are entitled to only one of the following:
kill himself or another; (1) Survivorship pension
(2) Employee is: a. If he was in the service when he died;
(a) in service at the time of disability; or or
(b) even if separated, he has paid at least b. Even if separated from the service, he
36 monthly contributions within the 5- has at least 3 years of service and has
year period immediately prior to paid 36 monthly contributions within
disability or has paid a total of at least the 5 years immediately preceding
180 monthly contributions prior to death; or
disability; and c. Even if separated from the service, he
(c) Member is not enjoying old-age has paid 180 monthly contributions
retirement benefit. prior to death.
(2) Survivorship pension plus cash payment of
Benefit for Permanent Total Disability 100% ave. monthly compensation for
Monthly income benefit for life equal to every year of service [so essentially,
basic monthly pension This is effective pension plus total contributions made]
from date of disability; a. If he was in the service when he died;
If member is in service at the time of and
disability and he has paid at least 180 b. With 3 years of service.
monthly contributions, in addition to the (3) Cash payment equivalent to 100% ave.
monthly income benefit, he shall receive monthly compensation for each year of

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service he paid contributions or P12,000 VIII. SEPARATION BENEFITS


whichever is higher Eligibility requirements
a. With 3 years of service; and (1) 60 years of age, or separation from service
b. He has failed to qualify in the prior 2 with at least 3 years but not over 15 years
schemes. served
(2) Below 60 years of age, but at least 15
V. FUNERAL BENEFITS [SEC. 23] years of service rendered.
Fixed by GSIS rules and regulations
Benefit
Entitled to this are the following: (1) For 60 years of age or separated from
(1) Active member; service with 3 to 15 years of service: cash
(2) Member separated from service but still payment of 100% of ave. monthly
entitled to funeral benefit; compensation for each year of service [so
(3) Pensioner; essentially, the total amount of all
(4) Retiree who at the time of retirement was contributions paid] or P12,000 whichever
of pensionable age but opted to retire is higher.
under RA 1616. (2) Below 60 years of age and at least 15 years
of service: cash payment equivalent to 18 x
VI. LOAN [monthly pension] at the time of
GSIS website provides for this resignation or separation plus an old-age
pension benefit equal to basic monthly
VII. TEMPORARY DISABILITY BENEFITS pension.
Similar to sickness
IX. UNEMPLOYMENT BENEFITS [SEC. 11]
Eligibility requirements and other conditions: Eligibility requirements
(1) Employee must be: (1) Employee separated from service due to
I. in service at the time of disability; or abolition of his office or position; and
II. if separated, he has rendered at least (2) Employee has been paying integrated
3 years of service and paid at least 6 contributions for at least 1 year prior to
monthly contributions in the 12 separation.
month period immediately prior to
disability; Benefit
(2) All sick leave credits including CBA sick Monthly cash payments of 50% of average
leaves for the current year has been used monthly compensation for a duration which is
up; and proportional to years rendered, ranging from 2
(3) Maximum of 120 days per 1 calendar year months to 6 months.
[so maximum permissible for the same
sickness and confinement is 240 days for 2 X. SURVIVORSHIP BENEFITS
consecutive years]. Beneficiaries are entitled to the following:
(1) Basic survivorship pension which is 50% of
Benefit basic monthly pension; and
75% of the current daily compensation for (2) Dependent childrens pension not
every day or fraction thereof of disability or exceeding 50% of the basic monthly
P70 whichever is higher. pension.

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XI. LIFE INSURANCE BENEFITS distinguish share of legitimate and


Note: Judiciary and Constitutional illegitimate children.
Commissions are entitled to life insurance II. SECONDARY
only. Shall only receive when the primary
beneficiaries are absent:
B.4. BENEFICIARIES (1) Dependent parents
I. PRIMARY (2) Legitimate descendants, subject to the
(1) Dependent spouse until remarriage; restrictions on dependent children.
(2) Dependent children [legitimate,
legitimated, legally adopted, and
illegitimate] but RA 8291 does not

SSS GSIS
Enabling law RA 1161 as amended by RA 8282: RA 8291 amending PD 1146
Social Security Act of 1997
Employer any person, natural or juridical, Employer National government, its
domestic or foreign, who carries on in the political subdivisions, branches,
Philippines any trade business, industry, agencies or instrumentalities,
undertaking, and uses the services of including government-owned or
another person who is under his orders as controlled corporations and financial
regards the employment, except those institutions with original charters
considered as employer under the GSIS. A [GOCCs]; constitutional commissions;
self-employed person shall be both and judiciary
employer and employee at the same time.
Employee any person who performs Employee any person receiving
services for an employer in which either or compensation while in service of an
both mental and physical efforts are used employer whether by election or
and who receives compensation for such appointment, irrespective of status of
services, where there is an employer appointment; baranggay officials; and
Definition of employee relationship; also, a self- sangguniang officials
Terms employed person who is both employee and
employer at the same time
Self-employed any person whose income Note: No counterpart for self-
is not derived from employment, including, employed.
but not limited to:
self-employed professionals;
partners and single proprietors of
businesses;
actors, directors, scriptwriters, news
correspondents not considered as
employees under the above definition;
athletes, coaches, trainers, jockeys;
and
individual farmers and fishers.

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Dependents: Same except that a child here is below


Legal spouse entitled by law to receive 18
support;
Child unmarried, not gainfully
employed, and below 21 or
Child over 21 if he or she became
permanently incapacitated and
incapable of self-support, physically or
mentally,; child may be legitimate,
legitimated, legally adopted, or
illegitimate;
Parent who is receiving regular
support.
Beneficiaries Same except that RA 8291 does not
Primary distinguish share of legitimate and
Dependent spouse until remarriage illegitimate children
[see above];
Dependent children [see above];
illegitimate children are entitled only
to 50% of the share of legitimate
children unless there are no legitimate
children, in which case, they get 100%.
Secondary
Shall only receive when the primary
beneficiaries are absent: Dependent
parents
Other
Any other person designated by the
member as his/her secondary
beneficiary.
Compensation all actual remuneration for Compensation basic pay received
employment, including living allowance, as excluding per diems, bonuses,
well as the cash value of any remuneration overtime, honoraria, allowances and
paid in any medium other than cash except other emoluments not integrated into
that portion already above the max salary the basic pay under existing laws.
credit under Sec. 18 of the Act.
Compulsory Public sector employees below the
Employers as defined above; compulsory retirement age of 65.
Employees not over 60 years including
Exceptions:
household helpers with at least P1,000
monthly pay; and (1) AFP and PNP;
Self-employed. (2) Members of the Judiciary and
Constitutional Commissions who
Coverage are covered only by life insurance
Voluntary
as they have separate retirement
Spouses who devote full time to
schemes;
managing household and family
(3) Contractual employees with no
affairs;
employee-employer relationship
OFWs recruited by foreign-based with the agency they serve.
employers;
Employees already separated from

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employment or those self-employed


with no realized income for a given
month, who chose to continue with
contributions to maintain right to full
benefit.

Note: Foreign governments, international


organizations or their wholly owned
instrumentality employing workers in the
Philippines may enter into an agreement
with the Philippine government to include
their employees in the SSS except those
already covered by their civil service
retirement system.
Employer: 1st day of operation
Effective Date
Employee: 1st day at work
of Coverage
Self-employed: upon registration with SSS
(1) Monthly pension (1) Monthly pension
(2) Dependents pension (2) Retirement benefits
(3) Retirement benefits (3) Permanent disability benefits
(4) Permanent disability benefits (4) Death Benefits
(5) Death benefits (5) Funeral benefits
(6) Funeral benefits (6) Loan GSIS website provides for
(7) Loan Social Security Commission this
Resolution No. 669. Moreover, several (7) Temporary disability benefits
SSS-issued circulars such as Circular [similar to sickness]
Summary of No. 21-P and No. 52 pertain to the (8) Separation benefits
Benefits treatment of salary loans, sometimes (9) Unemployment benefits Sec 11
providing for more flexible payment (10) Survivorship benefits
terms or condonation for delinquent (11) Life insurance benefits
payers; Santiago v. CA and SSS, GR # L-
39949 [1984] resolved an issue Note: Judiciary and Constitutional
involving the treatment of salary loan Commissions are entitled to life
repayments; SSS website also shows insurance only.
loans
(8) Sickness benefits
(9) Maternity leave benefits
Effects of (1) Employers contribution, and Continued membership for the
separation (2) Employees obligation to pay unemployed member; and entitlement
from contribution both cease at the end of to whatever benefits he has qualified
employment the month of separation; to in the event of any compensable
(3) Employee shall be credited with all contingency.
contributions paid on his behalf and
entitled to all benefits set forth by the
law.
Social Security Commission CA [Rule 43; GSIS CA [Rule 43] SC [Rule 45];
Dispute
questions of law and fact] SC [Rule 45; appeal does not stay execution.
Settlement
questions of law only]
Prescriptive 20 years 4 years
Period

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C. LIMITED PORTABILITY LAW [RA (3) An employee over sixty [60] years of age
7699] shall be covered if he had been paying
contributions to the System prior to age
C.1 COVERAGE sixty [60] and has not been compulsorily
retired.
(1) Workers who transfer employment from
(4) An employee who is coverable by both the
one sector to another; or
GSIS and SSS shall be compulsorily
(2) Those employed in both sectors [public
covered by both Systems. [Sec. 2, IRR of
and private].
Title II, Book IV of LC]
(5) Filipinos working abroad in the service of
C.2. PROCESS
an employer as defined in Section 3 hereof
The covered worker shall have his credible
shall be covered by the System, and
services or contributions in both Systems
entitled to the same benefits as are
credited to his service or contribution record in
provided for employees working in the
each of the Systems and shall be totalized for
Philippines. [Sec. 5, IRR of Title II, Book IV
of LC]
purposes of old-age, disability, survivorship
and other benefits in case the covered member
D.2. EFFECTIVITY
does not qualify for such benefits in either or
both systems without totalization: Provided, Coverage of employees shall take effect on the
however, That overlapping periods of first day of employment. [Sec. 6]
membership shall be credited only once for
purposes of totalization [Sec. 3] D.3. WHEN COMPENSABLE
Grounds
Totalization shall refer to the process of (1) For the injury and the resulting disability or
adding up the periods of creditable services or death to be compensable, the injury must
contributions under each of the Systems, for be the result of accident arising out of and
purposes of eligibility and computation of in the course of the employment.
benefits [Sec. 2e]. (2) For the sickness and the resulting disability
or death to be compensable, the sickness
Overlapping periods of membership in case of must be the result of an occupational
those employed in both sectors at once are to disease listed under Annex A of these
be counted only ONCE for purposes of Rules with the conditions set therein
totalization to be able to satisfy eligibility satisfied, otherwise, proof must be shown
requirements of benefits provided for by either that the risk of contracting the disease is
SSS or GSIS. increased by the working conditions.

D. EMPLOYEES COMPENSATION Limitation: No compensation shall be allowed


to the employee or his dependents when the
COVERAGE AND WHEN injury, sickness, disability, or death was
COMPENSABLE occasioned by any of the following:
(1) his intoxication;
D.1 COVERAGE (2) his willful intention to injure or kill
(1) Every employer shall be covered. himself or another; or
(2) Every employee not over sixty [60] years of (3) his notorious negligence
age shall be covered. (4) As otherwise provided by law.

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VII. Labor Relations the Labor Code. Employees have the right to
form, join or assist labor organizations for the
purpose of collective bargaining or for their
A. RIGHT TO SELF-ORGANIZATION mutual aid and protection. (UST Faculty Union
v Bitonio)
Basis of Right
(1) 1987 Constitution Infringement of the right to self-organization
Art. III Sec. 8. The right of the people, including It shall be unlawful for any person to restrain,
those employed in the public and private coerce, discriminate against or unduly interfere
sectors, to form unions, associations, or with employees and workers in their exercise of
societies for purposes not contrary to law shall the right to self-organization. [] (Art. 252)
not be abridged.
Scope of right to self-organization
Art. XIII Sec. 3. The state shall afford full (1) Right to form, join and assist labor
protection to labor, local and overseas, organizations of their own choosing for the
organized and unorganized, and promote full
purpose of collective bargaining through
employment opportunities for all. It shall
guarantee the rights of all workers to self- representatives (Art. 252);
organization, collective bargaining and (2) Right to engage in lawful concerted
negotiations, and peaceful concerted activities, activities for the same purpose or for their
including the right to strike in accordance with mutual aid and protection (Art. 252)
law. [...] (3) Subsumed in the right to join, affiliate with,
or assist any union is the right NOT to join,
(2) Labor Code affiliate with, or assist any union; or to
Art. 249. All persons employed in commercial, leave a union and join another one.
industrial and agricultural enterprises and in (Heritage Hotel Manila v. PIGLAS-Heritage,
religious, charitable, medical, or educational 2009)
institutions, whether operating for profit or not,
shall have the right to self-organization and to (4) The right of the employees to self-
form, join, or assist labor organizations of their organization is a compelling reason why
own choosing for purposes of collective their withdrawal from the cooperative
bargaining. must be allowed. As pointed out by the
Ambulant, intermittent, and itinerant union, the resignation of the member-
workers, self-employed people, rural workers employees is an expression of their
and those without any definite employers may
preference for union membership over that
form labor organizations for their mutual aid
and protection. of membership in the cooperative. (Central
Negros Electric Cooperative v SOLE, 1991)
Art. 250. Employees of government
corporations established under the corporation
code shall have the right to organize and to
bargain collectively with their respective
employers.

Right to Self-Organization: A Fundamental


Right
Self-organization is a fundamental right
guaranteed by the Philippine Constitution and

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A.1. WHO MAY UNIONIZE FOR work councils and other forms of workers
PURPOSES OF COLLECTIVE participation schemes to achieve the same
BARGAINING? objectives. (EO 180 2 [1987])
(1) All employees (General Rule)
(2) Employees of the government under the (3) Supervisory Employees
civil service, and government employees of Supervisory employees are those who, in the
corporations created under the Corporation interest of the employer, effectively
Code recommend such managerial actions if the
(3) Supervisory Employees exercise of such authority is not merely
(4) Aliens with valid working permits routinary or clerical in nature but requires the
(5) Security personnel use of independent judgment. (Art. 218 (m))

(1) All Employees Supervisory employees shall not be eligible for


Any employee, whether employed for a definite membership in a labor organization of the
period or not, shall, beginning on his first day rank-and-file employees but may join, assist or
of service, be considered as an employee for form separate labor organizations of their own.
purposes of membership in any labor union. (Art. 251)
(Art. 283 [c])
Rationale
Employees of non-profit organizations are Supervisory employees, while in the
allowed to join, form and/or assist labor performance of supervisory functions, become
organizations (FEU-Dr. Nicanor Reyes Medical the alter ego of the management in the
Foundation Inc. v Trajano, 1992) making and the implementing of key decisions.
It would be difficult to find unity or mutuality of
interests in a bargaining unit consisting of a
(2) Employees of Government Corporations
mixture of rank-and-file and supervisory
Created under the Corporation Code
employees. (Toyota Motor Phil. Corp. v Toyota
Motor Phil. Corp. Labor Union, 1997)
The right to self-organization shall not be
denied to government employees. (1987
Effect of Mixed Membership
Constitution, Art. IX-B, 2 [5])
The inclusion as union members of employees
outside the bargaining unit shall not be a
Employees of government corporations
ground for the cancellation of the registration
established under the Corporation Code shall
of the union. Said employees are automatically
have the right to organize and to bargain
deemed removed from the list of membership
collectively with their respective employers. All
of said union. (Art. 251-A)
other employees in the civil service shall have
the right to form associations for purposes not
Note: [T]he rank and file union and the
contrary to law. (Art. 250)
supervisors union operating the same
establishment may join the same federation or
All government employees can form, join, or
national union. (Art. 251)
assist employees organizations of their own
choosing for the furtherance and protection of
their interests. They can also form, in
conjunction with appropriate government
authorities, labor-management committees,

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(4) Aliens I. WHO CANNOT FORM, JOIN OR ASSIST


General rule: All aliens [] are strictly LABOR ORGANIZATIONS
prohibited from engaging directly or indirectly (1) Managerial employees
in all forms of trade union activities. (Art. 275) (2) Confidential employees
(3) Non-employees
Exception: Aliens working in the country [] (4) Member-employee of a cooperative
with valid permits issued by the DOLE [and] (5) Employees of international organizations
are nationals of a country which grants the (6) High-level government employees
same or similar rights to Filipino workers. (Art. (7) Members of the AFP, police officers,
275) policemen, firemen and jail guards

The DFA provides the certification on the (1) Managerial Employees


requirement of reciprocity. (Book V, Rule II, 2, A managerial employee is one who is vested
1, 3rd sentence) with the powers or prerogatives to lay down
and execute management policies and/or to
(5) Security Guards hire, transfer, suspend, lay-off, recall,
The security guards and other personnel discharge, assign or discipline employees. (Art.
employed by the security service contractor 218 (m))
shall have the right:
(1) To form, join, or assist in the formation Managerial employees are not eligible to join,
of a labor organization of their own assist or form any labor organization. [] (Art.
choosing for purposes of collective 251)
bargaining and
(2) To engage in concerned activities which (2) Confidential employees
are not contrary to law including the Nature of Access Test
right to strike.(D.O. No. 14 Series of 2001 A confidential employee is one who, by the
Guidelines Governing the Employment nature of his functions, assists or acts in a
and Working Conditions of Security confidential capacity, and who formulates,
Guards and Similar Personnel in the determines and effectuates management
Private Security Industry) policies in the field of labor relations.

On Dec. 1986, President C. Aquino issued EO The two criteria are cumulative, and both must
No. 111 which eliminated the provision which be met if an employee is to be considered a
made security guards ineligible to join any confidential employee that is,
labor organizations. In 1989, Congress passed (1) the confidential relationship must exist
RA 6715 which also did not impose limitations between the employees and his supervisor,
on the ability of security guards to join labor and
organizations. Thus, security guards may now (2) the supervisor must handle the prescribed
freely join a labor organization with the rank- responsibilities relating to labor relations.
and-file or the supervisory union, depending on (San Miguel Supervisors and Exempt Union
their rank.(Manila Electric Co. v. SOLE, 1991) v Laguesma, 1997)

Rationale of Exclusion of Confidential Employees


By the very nature of their functions, they assist
and act in a confidential capacity to, or have

143
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access to confidential matters of, persons who (4) Employee-Member of Cooperative


exercise managerial functions in the field of Members of cooperatives are not eligible to
labor relations. (Thus there is a fiduciary and form, assist or join a labor organization for the
confidential relationship between manager and purpose of collective bargaining, even though
employer.) It is not far-fetched that in the they do not participate in the actual
course of Collective Bargaining, they might management of the cooperative. Irrespective of
jeopardize that interest which they are duty their degree of participation, they are still co-
bound to protect. (Metrolab Industries Inc. v. owners. Thus they cannot invoke the right to
Roldan-Confessor, 1996) collective bargain because an owner cannot
bargain with himself or his co-owners.
The disqualification of managerial and (Benguet Electric Cooperative v. Ferrer-Calleja,
confidential employees from joining a 1989)
bargaining unit for rank and file employees is Exception
already well-entrenched in jurisprudence. Employees who withdrew their membership
While Article 245 of the Labor Code limits the from the cooperative are entitled to form or
ineligibility to join, form and assist any labor join a labor union for the negotiations of a
organization to managerial employees, Collective Bargaining Agreement (CBA).
jurisprudence has extended this prohibition to (CENECO v. DOLE, 1991)
confidential employees or those who by reason
of their positions or nature of work are required (5) Employees of International Organizations
to assist or act in a fiduciary manner to International organizations are endowed with
managerial employees and hence, are likewise some degree of international legal personality.
privy to sensitive and highly confidential They are granted jurisdictional immunity.
records. (Standard Chartered Bank Employees
Union v SCB, 2008) A certification election cannot be conducted in
an international organization to which the
Function Test: nomenclature is not controlling Philippine Government has granted immunity
The mere fact that an employee is designated from local jurisdiction. (International Catholic
manager does not ipso facto make him one. Migration Commission v. Calleja, 1990)
Designation should be reconciled with the
actual job description of the employee. (Paper (6) High-level / Managerial Government
Industries Corp. of the Philippines. v. Laguesma, Employees
2000) High-level employees of the government
whose functions are normally considered as
(3) Non-Employees policy-making or managerial or whose duties
Persons who are not employees of a Company are of a highly confidential nature shall not be
are not entitled to the constitutional right to eligible to join the organization of rank-and-
join or form a labor organization for purposes file government employees. (E.O. 180 Sec. 3)
of collective bargaining. The question of
whether employer-employee relationship Managerial functions refer to powers such as
exists is a primordial consideration before to:
extending labor benefits under the workmen's (1) Effectively recommend managerial
compensation, social security, medicare, actions;
termination pay and labor relations law.[] (2) Formulate or execute management
(Singer Sewing Machine Co. v. Drilon, 1993) policies or decisions; or

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(3) Hire, transfer suspend, lay-off, recall, Role of a bargaining unit


dismiss, assign or discipline The labor organization designated or selected
employees.(San Miguel Supervisors and by the majority of the employees in an
Exempt Union v Laguesma, 1997) appropriate collective bargaining unit shall be
the exclusive representative of the employees
(7) Members of the AFP, Policemen, Police of such unit for the purpose of collective
Officers, Firemen and Jailguards bargaining.
Members of the AFP, Policemen, Police
Officers, Firemen and Jailguards are expressly Exception
excluded by EO 180 4 from the coverage of However, an individual employee or group of
the law which provides guidelines for the employees shall have the right at any time to
exercise of the right to organize of government present grievances to their employer. Any
employees. provision of law to the contrary
notwithstanding, workers shall have the right,
A.2. BARGAINING UNIT to participate in the policy and decision-
making processes of the establishment where
A Bargaining Unit refers to a group of
they are employed insofar as said processes
employees sharing mutual interests within a
will directly affect their rights, benefits and
given employer unit, comprised of all or less
welfare. For this purpose, workers and
than all of the entire body of employees in the
employers may form labor-management
employer unit or any specific occupational or
councils: Provided, that the representatives of
geographical grouping within such employer
the workers in such labor-management
unit. (Book V, Rule 1, Sec. 1[d])
councils shall be elected by at least the
majority of all employees in said
A bargaining unit is a group of employees of a
establishment. (Art. 261)
given employer comprised of all or less than all
of the entire body of employees, which the
CBA Coverage
collective interests of all the employees
When there has been a factual determination
indicate to be best suited to serve reciprocal
by the Labor Arbiter that the petitioners were
rights and duties of the parties consistent with
regular employees, said employees shall fall
equity to the employer. (Belyca Corp. v. Calleja,
within the coverage of the bargaining unit and
1988)
are therefore entitled to CBA benefits as a
matter of law and contract. (Farley Fulache, et
Functions of an Appropriate Bargaining Unit al. v ABS-CBN, 2010)
(1) An ELECTORAL DISTRICT. It marks the
boundaries of those who may participate in Effect of Prior Agreement
a certification election. A prior agreement as to the inclusion or
(2) An ECONOMIC UNIT. They are a group of exclusion of workers in a bargaining unit or a
employees with community of interests. prohibition from forming their own union
(3) A SOVEREIGN BODY. It selects the sole agreed upon by the corporation with the
and exclusive bargaining agent. previous bargaining representatives can never
bind subsequent federations. (General Rubber &
Footwear Corp. v BLR, 1987)

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Rationale Calica, 1992; Diatagon Labor Federation v.


It is a curtailment of the right to self- Ople, 1980)
organization. During the freedom period, the
parties may not only renew the existing Spun-off corporations
collective bargaining agreement but may also The transformation of companies is a
propose and discuss modifications or management prerogative and business
amendments thereto. (DLSU v. DLSUEA, 2000) judgment which the courts cannot look into
unless it is contrary to law, public policy or
Corporate Entities morals. If, considering the spin-offs, the
Two companies having separate juridical companies would consequently have their
personalities shall NOT be treated as a single respective and distinctive concerns in terms of
bargaining unit. nature of work, wages, hours of work and other
conditions of employment. The nature of their
Exception: Pervasive Unitary Aspect of products and scales of business may require
Management Doctrine different skills, volumes of work, and working
The cross-linking of the agencies command, conditions which must necessarily be
control, and communication systems indicate commensurate by different compensation
their unitary corporate personality. (Philippine packages. (San Miguel Union v Confesor, 1996)
Scouts Veterans v. Torres)
I. TEST TO DETERMINE THE
Principles in determining whether to establish CONSTITUENCY OF AN APPROPRIATE
separate bargaining units BARGAINING UNIT
(1) The existence of a bona fide business
4 Factors:
relationship between the 2 companies is
(1) Will of the Employees (Globe Doctrine)
not proof of being a single corporate entity,
(2) Affinity and unity of employees interest
especially when the services provided by
(3) Prior collective bargaining history
the other company are merely auxiliary.
(4) Employment status (UP v. Ferrer-Calleja,
(2) The fact that there are as many bargaining
1992)
units as there are companies in a
conglomeration of companies is a positive
Note: Of these 4 factors, the court has
proof that a corporation is endowed with a
identified that it is the 2nd factor which has
legal personality DISTINCTLY ITS OWN,
emerged as the standard in determining the
independent and separate from other
proper constituency of a collective bargaining
corporations.
unit.
(3) Separate legitimate purposes militate
against treating one corporation as an
Other factors:
adjunct or alter ego of the other.
(5) Geography and Location
(4) The fact that the businesses are related,
(6) Policy of avoiding fragmentation of the
that some of the employees are the same
bargaining unit
persons working in the other company and
the physical plants, offices and facilities are
in the same compound are NOT sufficient (1) Globe Doctrine: Concept
to justify piercing the corporate veil. A practice designated as the "Globe doctrine,"
(Indophil Textile Mills Workers Union v. sanctions the holding of a series of elections,
not for the purpose of allowing the group

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receiving an over all majority of votes to of work to which they belong, and the unity of
represent all employees, but for the specific employees' interest such as substantial
purpose of permitting the employees in each of similarity of work and duties. (Belyca Corp. v.
the several categories to select the group Calleja, 1988)
which each chooses as a bargaining unit.
(Kapisanan ng mga Manggagawa sa Manila (5) Geography and Location
Road Co. v. Yard Crew Union, 1960) Geography and location only play a significant
role if:
Rationale (1) The separation between the camps and
Highly skilled or specialized technical workers the different kinds of work in each all
may choose to form their own bargaining unit militate in favor of the system of
because they may be in better position to separate bargaining units;
bargain with the employer considering the (2) When the problems and interests of the
market value of their skills. workers are peculiar in each camp or
department;
(2) Community or Mutuality of Interests (3) The system of having one collective
The basic test of an asserted bargaining units bargaining unit in each camp has
ACCEPTABILITY is whether or not it is operated satisfactorily in the past.
fundamentally the combination which will best (Benguet Consolidated Inc. and Balatok
assure to all employees the exercise of their Mining Co. v. Bobok Lumberjack
collective bargaining rights. This is related to Assn.,1958)
the policy of the law in ensuring the right to
collective bargain. (UP v. Ferrer-Calleja, 1992) (6) Policy of avoiding fragmentation of the
bargaining unit
Rationale It bears noting that the goal of the DOLE is
There are greater chances of success for the geared towards "a single employer wide unit
collective bargaining process. The bargaining which is more to the broader and greater
unit is designed to maintain the mutuality of benefit of the employees working force." The
interest among the employees in such unit. philosophy is to avoid fragmentation of the
bargaining unit so as to strengthen the
When the interest between groups has employees bargaining power with the
changed over time, there is reason to dissolve, management. To veer away from such goal
change or expand a certain bargaining unit. would be contrary, inimical and repugnant to
the objectives of a strong and dynamic
(3) Prior Collective Bargaining History unionism. (Phil. Diamond Hotel and Resort Inc v
The existence of prior collective bargaining Manila Diamond Hotel and Employees Union,
history is neither decisive nor conclusive in the 2006)
determination of what constitutes an
appropriate bargaining unit. (San Miguel Corp. Since the confidential employees are very few
v. Laguesma, 1994) in number and are by practice and tradition
identified with the supervisors in their role as
(4) Employment status representatives of management vis--vis the
Among the factors to be considered is the rank and file employees, such identity of
employment status of the employees to be interest has allowed their inclusion in the
affectedthat is the positions and categories bargaining of supervisors for purposes of

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collective bargaining in turn as employees in conspicuous places in the establishment or


relation to the company as their employer. This bargaining unit where the union seeks to
identity of interest logically calls for their operate;
inclusion in the same bargaining unit and at (3) The approximate number of employees in
the same time fulfills the laws objective of the bargaining unit, accompanied by the
insuring to them the full benefit of their right names of those who support the voluntary
to self-organization and to collective recognition comprising at least a majority
bargaining, which could hardly be of the members of the bargaining unit; and
accomplished if the respondent associations (4) A statement that the labor union is the only
membership were to be broken up into five legitimate labor organization operating
separate ineffective tiny units. Creating within the bargaining unit.
fragmentary units would not serve the interest
of industrial peace. The breaking up of All accompanying documents of the notice for
bargaining units into tiny units will greatly voluntary recognition shall be certified under
impair their organizational value. (Filoil oath by the employer representative and
Refinery Corp. v Filoil Supervisory and president of the recognized labor union.
Confidential Employees Union, 1972)
The employer may voluntarily recognize the
II. VOLUNTARY RECOGNITION representation status of a union in
Voluntary Recognition refers to the process by unorganized establishments. However, in
which a legitimate labor union is recognized by cases where an establishment is already
the employer as the exclusive bargaining organized, as when a petition for certification
representative or agent in a bargaining unit, election has already been filed by a union, if
reported with the Regional office in accordance the company voluntarily recognizes a different
to Rule VII, Sec 2 of these Rules. (Book V, Rule union during such time, then the companys
I, Sec. 1 [bbb]) voluntary recognition is void. (SLECC v Sec. of
Labor, 2009)
Requirements
Substantive Requirements III. CERTIFICATION ELECTION
(1) Unorganized establishment; Certification Election" is the process of
(2) Only one union asking for recognition; determining, through secret ballot, the sole
(3) The members of the bargaining unit did not and exclusive bargaining agent of the
object to the projected recognition of the employees in an appropriate bargaining unit,
union. (Book V, Rule VII, Sec. 2) for purposes of collective bargaining. (Book V
Rule I Sec. 1 [x])
Procedural Requirements
The notice of voluntary recognition shall be The certification election is the best method of
accompanied by the original copy and two (2) determining the will of the workers on the
duplicate copies of the following documents: crucial question of who shall represent them in
(1) A joint statement under oath of voluntary their negotiations with the management for a
recognition attesting to the fact of collective bargaining agreement that will best
voluntary recognition protect and promote their interests. It is
(2) Certificate of posting of the joint statement essential that there be no collusion against this
of voluntary recognition for fifteen (15) objective between an unscrupulous
consecutive days in at least two (2) management and a union covertly supporting

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it while professing its loyalty to labor, or at It is a fundamental postulate that the will of
least that the hopes of labor be not frustrated the majority given expression in an honest
because of its representation by a union that election with freedom on the part of the voters
does not enjoy its approval and support. It is to make their choice, is controlling. (PLUM
therefore sound policy that any doubt Federation of Industrial and Agrarian Workers v
regarding the real representation of the Noriel, 1978)
workers be resolved in favor of the holding of Certification Election Union Election
the certification election. This is preferable to
To determine the Exclusive To elect union
the suppression of the voice of the workers Bargaining Agent officers
through the prissy observance of technical All members of the Only union
rules that will exalt procedure over substantial appropriate bargaining members may
justice. (Port Workers Union of the Philippines v unit may vote. vote.
Laguesma, 1992)
It is a statutory policy. (Belyca Corp. v. Ferrer-
Purpose Calleja, 1998)
The purpose of a certification election is
precisely the ascertainment of the wishes of Implications
the majority of the employees in the Thus it should not be circumvented. There
appropriate bargaining unit: to be or not to be should be no obstacle in conducting the
represented by a labor organization, and in the Certification election. (George & Peter Lines,
affirmative case, by which particular labor Inc. v. Associated Labor Union, 1985)
organization. (Reyes v Trajano, 1992)
Technical rules and objections should not
Nature of proceeding hamper the correct ascertainment of the labor
It is not litigation, but a mere investigation of a union that has the support and confidence of
non-adversary character. The object of the the majority of the workers and is thus entitled
proceedings is merely the determination of to represent them in bargaining for the terms
proper bargaining units and the ascertainment and conditions of their employment. (Port
of the will and choice of the employees in Workers Union v. DOLE, 1992)
respect of the selection of the bargaining
representative. The determination of the Who may vote
proceeding does not entail the entry of All employees whether union members or not,
remedial orders or redress of rights, but as long as they belong to the appropriate
culmination solely in an official designation of bargaining unit can vote.
bargaining units and an affirmation of the
employees expressed choice of bargaining Who may file a petition for certification election
agent. (Young Men Labor Union Stevedores v (1) Legitimate labor organization (registered
CIR, 1965) w/ DOLE)
(2) Unregistered local chapter with charter
It is the most democratic and most efficacious/ certificate from national union or
effective way of determining the will of the federation
bargaining unit. (Samahang Manggagawa sa (3) National union or federation in behalf of its
Permex v Sec. of Labor, 1998) local/chapter
(4) Employer (when requested to bargain
collectively and no existing CBA)

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(1) Legitimate Labor Organization (2) submitting the list of employees during
"Legitimate labor organization" means any the pre-election conference should the
labor organization duly registered with the Med-arbiter act favorably on the petition
Department of Labor and Employment, and (Art 258-A introduced by RA 9481)
includes any branch or local thereof. (Art. 218
(f)) A companys interference in the Certification
Election creates a suspicion that it intends to
(2) Unregistered Chapter with Charter establish a company union. (Oriental Tin Can
certificate Labor Union v. Secretary of Labor, 1998)
A duly registered federation or national union
may directly create a local chapter by issuing a The employer is not a party to a certification
charter certificate indicating the establishment election, which is the sole or exclusive concern
of the local chapter. The chapter shall acquire of the workers. The only instance when the
legal personality only for purposes of filing a employer may be involved in that process is
petition for certification election from the date when it is obliged to file a petition for
it was issued a charter certificate. (Art. 240-A) certification election on its workers request to
bargain collectively pursuant to Art. 258.
(3) National Union/Federation (Hercules Industries, Inc. v Sec. of Labor, 1992)
In any establishment where there is no certified
bargaining agent, a certification election shall The employer is a total stranger in the process
automatically be conducted by the Med- of certification election. The employer has no
Arbiter upon filing of a petition by any standing to file a motion to dismiss. (PT&T v
legitimate labor organization, including a Laguesma, 1993)
national union or federation which has already
issued a charter certificate to its local/chapter Venue for filing the petition
participating in the certification election, or a BLR Regional Office which issued the
local/chapter which has been issued a charter petitioning unions certificate of registration or
certificate by the national union or federation. certificate of creation of chartered local.
In cases where the petition was filed by a
national union or federation, it shall not be CERTIFICATION ELECTION IN AN
required to disclose the names of the local UNORGANIZED ESTABLISHMENT
chapters officers and members. (Art. 263) Procedure
(1) A petition for certification election shall be
(4) Employer filed by a legitimate labor organization.
When requested to bargain collectively, an (2) Upon filing of the petition, the Med- Arbiter
employer may petition the Bureau for an shall automatically conduct a certification
election. (Art. 264) election.

Bystander rule Filing of petition is by a legitimate labor


The employer shall not be considered a party organization
in the petition with a concomitant right to It cannot be an unregistered labor
oppose a petition for certification election. The organization. This is best read in relation to
employers participation shall be limited to: Art. 242 which enumerates the rights granted
(1) being notified or informed of petitions of to a legitimate labor organization and one of
such nature those rights is the right to be chosen as the

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exclusive bargaining representative. This is one Rule does not apply to Motions for Intervention
way the law encourages union registration.
The requisite written consent representing
Venue substantial support of the workers in the
BLR Regional Office which issued the bargaining unit [as required in Art. 256 applies
petitioning unions certificate of registration or to petitions for certification only, and not to
certificate of creation of chartered local. motions for intervention. (PAFLU v Calleja, 1989)

CERTIFICATION ELECTION IN Discretionary rule


AN ORGANIZED ESTABLISHMENT If the petition does not comply with the
Procedure substantial support requirement, the BLR may
(1) A verified petition questioning the majority exercise its discretion in determining whether
status shall be filed by a legitimate labor or not a certification election must be
organization conducted. (Scout Albano Memorial College v.
(2) It must be filed within the 60-day period Noriel, 1978)
before expiration of CBA (freedom period)
(3) Supported by written consent of at least
25% of ALL employees in the bargaining Effect of withdrawal o f signatures
unit (substantial support) The employees withdrawal from a labor union
made before the filing of the petition for
Substantial support rule certification election is presumed voluntary,
In organized establishments, the incumbent while withdrawal after the filing of such
sole bargaining agent should not be easily petition is considered to be involuntary and
replaced for that would disturb industrial does not affect the petition. (S.S. Ventures
peace. To justify the disturbance, it must International vs. S.S. Ventures Labor Union,
appear that at least a substantial number 2008)
(25% requirement) seeks to have a new
exclusive bargaining unit. Forced Intervenor
The incumbent bargaining agent shall
automatically be one of the choices in the
certification election as forced intervenor.
(Book V Rule VIII Sec. 7)

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Organized vs. Unorganized Establishment


Art. 256: Art. 257: Unorganized
Organized
Bargaining agent Existing, has one None
Petition filed Has to be a VERIFIED petition No need to be verified
No petition for Certification election EXCEPT Not applicable.
within 60 days before the expiration of the
collective bargaining agreement (See Art. No freedom period.
253 & 253-A) Can file petition anytime.

Take note how SC interpreted the term


Freedom Period
WITHIN.

What is the rationale of freedom period in


Organized establishments, why is there none
in unorganized establishments?
It has something to do with industrial peace
Must be duly supported by 25% of ALL THE NO substantial support rule.
MEMBERS OF THE APPROPRIATE WHY?
BARGAINING UNIT. Intention of law is to bring in
71
Percentage base: all members of an the union, to implement
appropriate bargaining unit. policy behind Art. 211a.
Substantial support
rule
What is intent and purpose of law for requiring
the substantial support rule?
Law wants to know the intention of the
employees. If they really want a CE, since
they already have a bargaining agent.

BARS TO CERTIFICATION ELECTION (2) Negotiation bar rule


(1) One year bar rule A petition for certification election may be filed
(2) Negotiation bar rule anytime EXCEPT:
(3) Deadlock bar rule (1) When the duly certified union has
(4) Contract bar rule commenced and sustained negotiations in
good faith with the employer
(1) One year bar rule (2) In accordance with Art. 256 of the Labor
No certification election may be held within 1 Code
year from the fact that voluntary recognition (3) Within one year after the certification
has been entered, or a valid certification, election. (Book V, Rule VIII, Sec 3 [b])
consent or run-off election has been conducted
within the bargaining unit. (3) Deadlock bar rule
A petition for certification election may be filed
If appealed, the reckoning period is the date anytime, EXCEPT:
when the decision becomes final and [w]hen a bargaining deadlock to which an
executory. (Book V, Rule VIII, Sec 3 [a]) incumbent or certified bargaining agent is a
party had been submitted to conciliation or
arbitration or had become the subject of a

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valid notice of strike or lockout (Book V, Rule


VIII, Sec. 3 [c]) The purpose of the prohibition against the
filing of a petition for certification election
A deadlock is defined as the counteraction of outside the so-called freedom period is to
things producing entire stoppage; a state of ensure industrial peace between the employer
inaction or of neutralization caused by the and its employees during the existence of the
opposition of persons or of factions (as in CBA. (Republic Planters Bank Union v.
government or voting body); standstill. (Divine Laguesma, 1996)
World University v Sec of Labor and
Employment, 1992) The premature renewal of a CBA cannot bar
the holding of a certification election by virtue
(4) Contract Bar Rule of a bona fide petition filed within the freedom
The Bureau shall not entertain any petition for period if the clear intention was to frustrate the
certification election or any other action which constitutional right of the employees to self-
may disturb the administration of duly organization. (Associated Labor Union v.
registered existing collective bargaining Calleja, 1989)
agreements affecting the parties except under
Articles 253, 253-A and 256 of this code. (Art. What is prohibited is the filing of the petition
238) for certification election outside the 60-day
freedom period. The signing of the
The contract bar rule shall not apply: authorization to file was merely preparatory to
(1) When the petition is filed during the the filing of the Petition for Certification
freedom period in Articles 253, 253-A, and Election, or an exercise of the right to self-
256. organization. (PICOP Resources Inc. v. Ricardo
(2) When the CBA is incomplete Dequita, 2011)
(3) When the CBA is substandard
(4) When the CBA is prematurely renewed Expiration of Freedom Period
(5) When the CBA is unregistered At the expiration of the freedom period, the
employer shall continue to recognize the
No petition for certification election may be majority status of the incumbent bargaining
filed after the lapse of the freedom period. The agent where no petition for certification
old CBA is extended until a new one is agreed election is filed.
upon by the parties. (Colegio de San Juan de
Letran v. Assoc., 2000) Petition for cancellation of union registration
does not bar certification election
Freedom Period A petition for cancellation of union registration
The last 60 days in a Collective Bargaining shall not suspend the proceedings for
Agreement (CBA) is referred to as the certification election nor shall it prevent the
freedom period when rival union filing of a petition for certification election. []
representation can be entertained during the (Art. 238-A)
existence of a CBA. It is during this particular
period when the majority status of the A certification election can be conducted
incumbent bargaining agent can be despite pendency of a petition to cancel the
challenged. (Tanduay Distillery Labor Union v. union registration certificate. For the fact is
NLRC, 1987) that at the time the union, whose registration

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certificate is sought to be cancelled, filed its NOTICE REQUIREMENT


petition for certification, it still had legal Posting of Notice
personality to perform such act absent an Who: Election Officer shall cause the
order directing its cancellation. (Samahan ng posting
mga Manggagawa v Laguesma, 1997) What: Notice of election
Where: 2 conspicuous places in company
SUSPENSION OF ELECTI ON premises
Prejudicial Question Rule When: At least 10 days before actual
A formal charge of Unfair Labor Practice election
against the employer for establishing a
company union triggers suspension. (B.F. Contents of Notice
Goodrich Phils. Marikina v. B.F. Goodrich (1) Date and Time of election;
Confidential and Salaried Employees Union) (2) Names of all contending unions;
(3) Description of the bargaining unit
Note: The ONLY party who could ask for the (4) List of eligible and challenged Voters.
suspension of the Certification Election is the
labor union which filed a complaint for Unfair The posting of the notice of election, the
Labor Practices against the employer. information required to be included therein
and the duration of the posting cannot be
Rationale waived by the contending unions or the
If there is a union dominated by the company, employer. (Book V Rule IX Sec 6, IRR)
to which some of the workers belong, an
election among workers and employees of the All Employees entitled to vote
company would not reflect the true sentiment All rank-and-file employees in the appropriate
and wishes of the said workers and employees bargaining unit are entitled to vote. The Code
because the votes of the members of the makes no distinction as to their employment
dominated union would not be free. Such status. All they need to be eligible to support
charge of company domination is a prejudicial the petition is to belong to a bargaining unit.
question that until decided, shall suspend or (Airtime Specialists, Inc. v Director of BLR, 1990)
bar proceedings for certification election. Employees who have been improperly
If it were a labor organization objecting laid off but who have a present, unabandoned
to the participation in a certification election of right to or expectation of reemployment, are
a company-dominated union, as a result of eligible to vote in certification elections. If the
which a complaint for an unfair labor practice dismissal is under question, employees
case against the employer was filed, and when concerned could still qualify to vote in the
the court finds that said union is employer- elections. (Philippine Fruits v Torres, 1992)
dominated in the unfair labor practice case,
the union selected would be decertified and Rationale for Non-Distinction Policy
the whole election proceedings would be Collective bargaining covers all aspects of the
rendered useless and nugatory.' There would employment relation and the resultant CBA
be an impairment of the integrity of the binds all employees in the bargaining unit. All
collective bargaining process if a company- rank and file employees, probationary or
dominated union were allowed to participate permanent, have a substantial interest in the
in a certification election. (United CMC Textile selection of the bargaining representative.
Workers Union v. BLR, 1984) (Reyes v. Trajano, 1992)

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Voting List and Voters IV. RUN-OFF ELECTION


The basis of determining voters may be agreed A "Run-Off election" refers to an election
upon by the parties (i.e. the use of payroll). between the labor unions receiving the 2
(Acoje Workers Union v NAMAWU, 1963) highest number of votes in a certification
election.
Effect of Non-participation in previous election
Failure to take part in previous elections is no It occurs when a certification election provides
bar to the right to participate in future elections. for 3 or more choices and the total number of
No law, administrative rule or precedent votes for all contending unions is at least fifty
prescribes forfeiture of the right to vote by percent (50%) of the number of votes cast,
reason of neglect to exercise the right in past where no choice receives a majority of the valid
cases. (Reyes v. Trajano, 1992) votes cast, a Run-Off election will be
conducted
Challenge Voter
An employer has no standing to question a
Requirements
certification election since this is the sole
(1) majority of the bargaining unit voted (first
concern of the workers but may question the
majority of the double majority rule)
inclusion of any disqualified employee in the
(2) three or more choices are available (note:
certification election during the exclusion-
no union is a choice)
inclusion proceedings before the
(3) not one of the choices receives a majority of
representation officer. (Phil. Telephone &
the valid votes cast
Telegraph Co. v Laguesma, 1993)
(4) total number of votes for all contending
unions is at least 50% of the total number
Voting Day
of votes cast (this means that at least 50%
The election shall be set on a regular business
of the bargaining unit wants to have a
day. (IRR, Book V Rule IX Sec. 2)
union)
(5) the run-off election shall be conducted
Validity
between the labor unions receiving the two
Double majority requirement: (voters, valid votes)
highest number of votes
To have a valid election, at least a majority of
all eligible voters in the unit must have cast
Illustration
their votes. The labor union receiving the
The CBU has 100 members and eighty of which
majority of the valid votes cast shall be
voted. Union A= 30; Union B= 15; Union
certified as the exclusive bargaining agent of
C=15 and No Union= 20. There were no
all the workers in the unit. (Art. 262)
invalid votes. Since none got the majority of
the 80 valid votes and the contending unions
Appeal from order of Med-Arbiter holding
obtained 60 votes (which exceeds of the
certification election
total), a run-off election is proper. The run-off
Any party to an election may appeal the order
will be between the labor unions receiving the
or results of the election [] directly to the
two highest number of votes. The run-off is
Secretary of Labor [] on the ground that the
NOT between two unions but between two
rules and regulations or parts established by
highest votes. Thus, the run-off will be among
the Secretary of Labor for the conduct of
Union A, B and C. (Azucena)
election have been violated. (Art. 265)

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V. RE-RUN ELECTION VI. CONSENT ELECTION


A motion for the immediate holding of another "Consent Election" means the election
certification or consent election can be filed voluntarily agreed upon by the parties to
within six (6) months from the date of the determine the issue of majority representation
declaration of failure of election. (Book V, Rule of all the workers in the appropriate collective
IX Sec 18) bargaining unit.

The contending unions may agree to the


holding of an election. In which case, it shall be
called a consent election. The Med-Arbiter
shall forthwith call for the consent election
reflecting the parties agreement and the call
in the minutes of the conference. (Book V RVIII
Sec 10)

Certification election Consent Election


Aimed at determining the sole and Merely to determine the issue of
exclusive bargaining agent of all majority representation of all the
employees in an appropriate bargaining workers in the appropriate
unit for the purpose of collective collective bargaining unit
bargaining
Purpose
1st Level of Choice: Yes Union or No Union

2nd Level of Choice: If Yes Union wins,


WHICH union.
(UST Faculty Union v. Bitonio, 1999)
Ordered by the DOLE Voluntarily agreed upon by the
Conduct parties, with or w/o intervention
from DOLE

VI. AFFILIATION AND DISAFFILIATION Independent Union


OF THE LOCAL UNION FROM THE A labor organization operating at the
MOTHER UNION enterprise level that required legal personality
through independent registration under
Art.234 of the Labor Code and Rule III Sec. 2-A
Definitions
of the IRR.(Book V Rule 1 Sec. 1 [w])
Affiliate
An affiliate is an independent union affiliated
Local Chapter (Chartered Local)
with a federated, national union or a chartered
A labor organization in the private sector
local which was subsequently granted
operating at the enterprise level that acquired
independent registration but did not
legal personality through the issuance of a
disaffiliate from its federation, reported to the
charter certificate by a duly registered
Regional Office and the Bureau in accordance
federation or national union, and reported to
with Rule III Secs. 6 and 7 of the IRR. (Book V
the Regional Office in accordance with Rule III
Rule 1 Sec. 1 [a])
Sec. 2-E of the IRR. (Book V Rule 1 Sec. 1 [i])

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National Union or Federation Disaffiliation


National Union or Federation a group of General rule: Local unions may disaffiliate from
legitimate labor unions in a private the mother union.
establishment organized for collective
bargaining or for dealing with employers Disaffiliation must be by a majority decision
concerning terms and conditions of The members shall determine by secret ballot,
employment for their member union or for after due deliberation, any question of major
participating in the formulation of social and policy affecting the entire membership of the
employment policies, standards and programs, organization, unless the nature of the
registered with the BLR in accordance with organization or force majeure renders such
Rule III Sec. 2-B of the IRR. (Book V Rule 1 Sec. 1 secret ballot impractical, in which case, the
[kk]) board of directors of the organization may
make the decision. (Art. 247 (d))
Purpose of affiliation
To foster the free and voluntary organization of Limitations: Terms of the affiliation agreement
a strong and united labor movement (Art. 211) (e.g. agreement may require 2/3 vote to
disaffiliate instead of a majority) (Phil.
The sole essence of affiliation is to increase, by Skylanders v. NLRC)
collective action, the common bargaining
power of local unions for the effective Generally, a labor union may disaffiliate from
enhancement and protection of their interests. the mother union to form a local or
Admittedly, there are times when without independent union only during the 60-day
succor and support local unions may find it freedom period immediately preceding the
hard, unaided by other support groups, to expiration of the CBA. However, even before
secure justice for themselves. (Philippine the onset of the freedom period, disaffiliation
Skylanders v. NLRC, 1992) may be carried out when there is a shift of
allegiance on the part of the majority of the
Nature of Relationship (Agency) members of the union. (ANGLO KMU v Samana
The mother union, acting for and in behalf of Bay, G.R. No. 118562 July 5, 1996)
its affiliate, had the status of an agent while
the local remained the basic unit of the A local union, being a separate and voluntary
association, free to serve the common interest association, is free to serve the interests of all
of all its members, subject only to restraints its members. It has the right to disaffiliate or
imposed by the constitution and by the by-laws declare its autonomy from the federation to
of the association. The same is true even if the which it belongs when circumstances warrant,
local is not a legitimate labor organization. in accordance with the constitutional
(Filipino Pipe and Foundry Corp v. NLRC, 1998) guarantee of freedom of association, and such
disaffiliation cannot be considered disloyalty.
Effect of Affiliation (Malayang Samahan ng mga Manggagawa v.
Inclusion of [the federation] in the registration Ramos, 2000)
is merely to stress that they are its affiliates at
the time of registration. It does not mean that The locals are separate and distinct units
said local unions cannot stand on their own. primarily designed to secure and maintain an
Affiliation does not mean they lost their own equality of bargaining power between the
legal personality. (Adamson v CIR, 1984) employer and their employee-members; and

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the association of the locals into the national VIII. UNION DUES AND SPECIAL
union was in furtherance of the same end. ASSESSMENTS
These associations are consensual entities
capable of entering into such legal relations Union dues
with their member. The essential purpose was Union dues are payments to meet the unions
the affiliation of the local unions into a common general and current obligations. The payment
enterprise to increase by collective action the must be regular, periodic, and uniform.
common bargaining po wer in respect of the (Azucena)
terms and conditions of labor. (Tropical Hut
Employees Union v. Tropical Hut Food Market Every payment of fees, dues or other
Inc., 1990) contributions by a member shall be evidenced
by a receipt signed by the officer or agent
Effect of disaffiliation making the collection and entered into the
A registered independent union retains its record of the organization to be kept and
legal personality while a chartered local loses maintained for the purpose. (Art. 247 (h))
its legal personality unless it registers itself.
Special assessments
SUBSTITUTIONARY DOCT RINE Special assessments are payments for a
The substitutionary doctrine provides that special purpose, especially if required only for
the employees cannot revoke the validly a limited time. (Azucena)
executed collective bargaining contract with
their employer by the simple expedient of No special assessment or other extraordinary
changing their bargaining agent. And it is in fees may be levied upon the members of a
the light of this that the phrase said new labor organization unless authorized by a
agent would have to respect said contract written resolution of a majority of all the
must be understood. It only means that the members of a general membership meeting
employees, thru their new bargaining agent, duly called for the purpose. (Art. 247 (n))
cannot renege on their collective bargaining
contract, except of course to negotiate with Other than for mandatory activities under the
management for the shortening thereof. Code, no special assessments, attorneys fees,
(Benguet Consolidated v. BCI Employees and negotiation fees or any other extraordinary fees
Workers Union-PAFLU, 1998) may be checked off from any amount due to an
employee without an individual written
Conditions: authorization duly signed by the employee.
(1) change of bargaining agent (through The authorization should specifically state the
affiliation, disaffiliation, or other means) amount, purpose and beneficiary of the
(2) existing CBA with the previous bargaining deduction. (Art. 247 (o))
agent
REQUIREMENTS FOR VALIDITY OF SPECIAL
Effects: ASSESSMENT
(1) new bargaining agent cannot revoke and (1) Authorization by written resolution of
must respect the existing CBA majority of ALL the members at the general
(2) it may negotiate with management to membership meeting called for that
shorten the existing CBAs lifetime purpose

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(2) Secretarys record of the minutes of the Requisites for assessment of Agency Fees
meetings attested to by the president. Employees of an appropriate bargaining unit
(3) Individual written authorization for check- who are not members of the recognized
off duly signed by the employees collective bargaining agent may be assessed a
concerned. reasonable fee equivalent to the dues and
other fees paid by members of the recognized
collective bargaining agent, if such non-union
Attorneys fees, negotiation fees, and similar members accept the benefits under the
charges collective bargaining agreement: Provided,
No attorneys fees, negotiation fees or similar that the individual authorization required
charges of any kind arising from any collective under Article 242, paragraph (o) of this Code
bargaining negotiations or conclusion of the shall not apply to the non-members of the
recognized collective bargaining agent. (Art.
collective agreement shall be imposed on
254 (e))
individual member of contracting union.
Provided, however, that attorneys fees may be Requirements:
charged against union funds in an amount to (1) Non-member of SEBA
be agreed upon by the parties. Any contract, (2) Member of Collective Bargaining Unit
agreement or arrangement of any sort to the (3) Reasonable fee equivalent to the dues and
contrary shall be null and void. (Art. 228 (b)) other fees paid by member

General rule: that attorneys fees, negotiation


fees, and similar charges should be charged
B. RIGHT TO COLLECTIVE
against the union funds and not as a special BARGAINING
assessment.
B.1 DUTY TO BARGAIN COLLECTIVELY
However, if a special assessment is required to Constitutional Policies
pay such fees, then the requirements above (1) [The State] shall guarantee the rights of
must be satisfied. workers to self-organization, collective
bargaining and negotiations. [] [1987
Strict compliance for special assessment Constitution, Art. XIII, Sec. 3]
There must be strict and full compliance with (2) The State shall promote the principle of
the requisites. Substantial compliance is not shared responsibilities between workers
enough. (Palacol v. Ferrer-Calleja) and employers [] and shall enforce their
mutual compliance therewith to foster
IX. AGENCY FEES industrial peace. [1987 Constitution, Art.
Agency fee is an amount, equivalent to union XIII, Sec. 3 ]
dues, which a non-union member pays to the
union because he benefits from the CBA Statutory Policies
negotiated by the union. (Azucena) (1) To promote and emphasize the primacy of
free collective bargaining and
Rationale for allowing agency fees negotiations, including voluntary
Avoiding unjust enrichment on the part of non- arbitration, mediation and conciliation, as
union members who benefit from the union's modes of setting labor or industrial
efforts without paying any fee therefor, unlike disputes. [Art. 217 (a)]
the members of the bargaining agent. (2) It is the policy of the State to promote and
emphasize the primacy of free and

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responsible exercise of the right to self- Nature and Purpose of Collective Bargaining
organization and collective bargaining, The institution of collective bargaining is a
either through single enterprise level prime manifestation of industrial democracy at
negotiations or through the creation of a work. The two parties to the relationship, labor
mechanism by which different employers and management, make their own rules by
and recognized certified labor unions in coming to terms to govern themselves in
their establishments bargain collectively. matters that really count. [United Employees
[Book V, Rule XVI, 1] Union of Gelmart Industries v. Noriel, 1975]

Definition When Employers May Be Compelled to Bargain


The duty to bargain collectively means the Collectively
performance of a mutual obligation to meet While the duty to bargain collectively is a
and convene promptly and expeditiously in mutual obligation, the employer is not under
good faith for the purpose of negotiating an any legal duty to initiate contract negotiation.
agreement with respect to wages hours of [Kiok Loy v NLRC, 1986]
work and all other terms and conditions of
employment including proposals for adjusting Requisites to Compel Employer to Bargain
any grievances or questions arising under such Collectively:
agreement and executing a contract (1) Proof of majority representation by the
incorporating such agreement if required by representative labor organization
either party but such duty does not compel any (exclusive bargaining agent)
party to agree to a proposal or to make any (2) Demand by the labor organization [Art.
concession. [Art. 258] 250(a)]

Collective bargaining, which is defined as An employer asked by a labor organization


negotiations towards a collective agreement, is (which is not the SEBA of the establishment) to
one of the democratic frameworks under the bargain collectively may file a petition for
Labor Code designed to stabilize the relations certification election to ascertain the will of the
between labor and management and to create bargaining unit or it may voluntarily recognize
a climate of sound and stable industrial peace. the labor organization in proper
It is a mutual responsibility of the employer circumstances.
and the Union and is characterized as a legal
obligation. Waiver of Right to Collectively Bargain
So much so that Article 249, par. (g) of the The right to free collective bargaining includes
Labor Code makes it an unfair labor practice the right to suspend it. [Rivera v. Espiritu,
for an employer to refuse "to meet and 2000]
convene promptly and expeditiously in good
faith for the purpose of negotiating an Rights of the Parties during Bargaining
agreement with respect to wages, hours of To be furnished by the employer, upon written
work, and all other terms and conditions of request, with its annual audited financial
employment. [Kiok Loy v. NLRC, 1986] statements, including the balance sheet and
the profit and loss statement, within thirty (30)
calendar days from the date of receipt of the
request, after the union has been duly
recognized by the employer or certified as the

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sole and exclusive bargaining representative of [A]t the expiration of the freedom period, the
the employees in the bargaining unit, or within employer shall continue to recognize the
sixty (60) calendar days before the expiration majority status of the incumbent bargaining
of the existing collective bargaining agent where no petition for certification
agreement, or during the collective bargaining election is filed. [Art. 256]
negotiation. [Art. 248 (c)]
B.2 COLLECTIVE BARGAINING
The parties may agree to make available such AGREEMENT (CBA)
up-to-date financial information which is A collective bargaining agreement refers to the
normally submitted to relevant government negotiated contract between a legitimate labor
agencies material and necessary for organization and the employer concerning
meaningful negotiations. They may also agree wages, hours of work and all other terms and
to the condition that the information be kept conditions of employment in a bargaining unit,
confidential. [Book V Rule XVI 2] including mandatory provisions for grievances
and arbitration machineries. [Book V Rule I
I. WHEN THERE IS ABSENCE OF A CBA 1(j)]
In the absence of an agreement or other
voluntary arrangement providing for a more CBA Impressed with Public Policy
expeditious manner of collective bargaining, it A CBA, as a labor contract within the
shall be the duty of employer and the contemplation of Article 1700 Civil Code which
representatives of the employees to bargain governs the relations between labor and
collectively in accordance with the provisions capital, is not merely contractual in nature but
of this Code. (Art. 257) impressed with public interest, thus, it must
yield to the common good. [Davao Integrated
Port Stevedoring Services v. Abarquez, 1993]
II. WHEN THERE IS A CBA
General Rule
The relations between capital and labor are
The duty to bargain collectively shall also
not merely contractual. They are so impressed
mean that neither party shall terminate nor
with public interest that labor contracts must
modify such agreement during its lifetime.
yield to the common good. Therefore such
contracts are subject to the special laws on
Exception labor unions collective bargaining strikes and
In organized establishments, when a verified lockouts closed shop wages working
petition questioning the majority status of the conditions hours of labor and similar subjects.
incumbent bargaining agent is filed before the [Art. 1700 Civil Code]
Department of Labor and Employment within
the sixty-day period before the expiration of
Substandard CBA
the collective bargaining agreement, the Med- A CBA that falls below the minimum standards
Arbiter shall automatically order an election by required by law is prohibited. Nonetheless, RA
secret ballot when the verified petition is 9481 removed substandard CBAs as a ground
supported by the written consent of at least for the cancellation of registration of union
twenty-five percent (25%) of all the employees
registration. Note: A substandard CBA cannot
in the bargaining unit to ascertain the will of
bar a petition for certification election under
the employees in the appropriate bargaining
the contract-bar rule.
unit.

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Confidentiality of registered CBA or Parts Contract Interpretation


Thereof Interpretation Tools
A CBA, just like any other contract, is respected
General rule : CBA is not confidential as the law between the contracting parties and
compliance in good faith is mandated.
Exceptions: Similarly, the rules embodied in the Civil Code
(1) confidentiality authorized by Secretary of (Art. 1700) on the proper interpretation of
Labor contracts can very well govern.
(2) when it is at issue in any judicial litigation
(3) public interest or national security requires General Rule : If the terms of the contract are
[Art. 231] clear, the literal meaning of the stipulations
shall control.
Effect of Unregistered CBA
An unregistered CBA is binding upon the
Exception: If the words appear to be contrary to
parties but cannot serve as a bar to a petition
the evident intention of the parties, the latter
for certification election under the contract-bar
shall prevail over the former. [Kimberly Clark
rule. Phils. V. Lorredo, 1993]

Beneficiaries of the CBA


Bargaining Procedure [Book V, Rule XVI]
The CBA benefits all workers in a collective (1) Private Procedure - The parties may provide
bargaining unit. When a collective bargaining for their own procedures in collective
contract is entered into by the union bargaining. The law only requires that these
representing the employees and the employer, procedures be more expeditious than the
even the non-member employees are entitled procedure in Art. 250. [Art 251]
to the benefits of the contract. [New Pacific Rationale - It is the policy of the state
Timber and Supply v. NLRC, 2000] to promote the primacy of free
collective bargaining [Art. 211 (a)]

To accord its benefits only to members of the


union without any valid reason would (2) Labor Code Procedure [Art. 250]
constitute undue discrimination against non- i. Written notice and statement of
members. proposals. When a party desires to
negotiate an agreement, it shall serve
a written notice upon the other party
Nature of Contract and Contract Interpretation
The terms and conditions of a collective with a statement of its proposals.
bargaining contract constitute the law ii. Reply. The other party shall make a
between the parties. [Mactan Workers Union vs. reply thereto not later than ten (10)
Aboitiz, 1972] calendar days from receipt of such
notice.
Those who are entitled to its benefits can iii. Conference. Should differences arise
invoke its provisions. In the event that an on the basis of such notice and reply,
obligation therein imposed is not fulfilled, the either party may request for a
aggrieved party has the right to go to court for conference which shall begin not later
redress. [Babcock-Hitachi (Phils.) v. Babcock- than ten (10) calendar days from the
Hitachi, 2005] date of request.

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iv. Board intervention and conciliation. If Failure to Reply as Indicia of Bad Faith
the dispute is not settled, the Board GMCs failure to make a timely reply to the
shall intervene upon request of either proposal sent by the union is indicative of its
or both parties or at its own initiative utter lack of interest in bargaining with the
and immediately call the parties to union. Its excuse that it felt the union no longer
conciliation meetings. The Board shall represented the workers was mainly dilatory as
have the power to issue subpoenas it turned out to be utterly baseless. GMCs
requiring the attendance of the parties refusal to make a counter-proposal is an
to such meetings. It shall be the duty of indication of its bad faith. Where the employer
the parties to participate fully and did not even bother to submit an answer to the
promptly in the conciliation meetings bargaining proposals of the union, there is a
the Board may call; clear evasion of the duty to bargain
v. Voluntary arbitration. The Board shall collectively. It is guilty of ULP. [General Milling
exert all efforts to settle disputes Corp. v. CA, 2004]
amicably and encourage the parties to
submit their case to a voluntary Conciliation / Preventive Mediation Privileged
arbitrator. Communication
vi. Prohibition against disruptive acts. Information and statements made at
During the conciliation proceedings in conciliation proceedings shall be treated as
the Board, the parties are prohibited privileged communication and shall not be
from doing any act which may disrupt used as evidence in the Commission.
or impede the early settlement of the Conciliators and similar officials shall not
disputes. testify in any court or body regarding any
matters taken up at conciliation proceedings
Period to Reply; Bad Faith conducted by them. [Art. 233]
The period to reply is merely procedural, and
non-compliance cannot be automatically Rationale
deemed to be an Unfair Labor Practice i. a person is entitled to buy his or her
(ULP). [National Union of Restaurant Workers peace without danger of being
vs. CIR, 1964] prejudiced in case his or her efforts fail
ii. offers for compromise are irrelevant
The companys refusal to make a counter- because they are not intended as
proposal to the unions proposed CBA is an admissions by the parties making them
indication of its bad faith. Where the employer [Pentagon Steel v. CA, 2009]
did not even bother to submit an answer to the
bargaining proposals of the union, there is a Mandatory Bargainable Issues
clear evasion of the duty to bargain (1) Wages
collectively. The employers actuations show a (2) Hours of work
lack of sincere desire to negotiate, rendering it (3) All other terms and conditions of
guilty of unfair labor practice. [Colegio de San employment including proposals for
Juan de Letran vs. Association, 2000] adjusting any grievances or questions
arising under such agreement [Art.
252]

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Permissive Issues: agree or that agreement was not reached with


Unilateral benefits extended by the employer respect to other disputed clauses.
[cf., Union of Filipino Employees-Drug v. Nestle, Such refusal will not be deemed as an
2008] unfair labor practice. However, if a party
refuses to contract based on an issue which is
A collective bargaining agreement refers to the not a mandatory bargainable issue, the party
negotiated contract between a legitimate labor will be guilty of ULP. [Samahang Manggagawa
organization and the employer concerning sa Top Form v. NLRC, 1998]
wages, hours of work and all other terms and
conditions of employment in a bargaining unit I. MANDATORY PROVISIONS OF CBA
[]. As in all other contracts, the parties in a
CBA may establish such stipulations, clauses,
Grievance Procedure
terms and conditions as they may deem The parties to a Collective Bargaining
convenient provided they are not contrary to Agreement shall include therein:
law, morals, good customs, public order or 1) Provisions that will ensure the mutual
public policy. [Manila Fashions v. NLRC, 1996] observance of its terms and conditions.
2) A machinery for the adjustment and
Test for Mandatory Bargainable Issues: NEXUS resolution of grievances arising from:
Between the Nature of Employment and the a) The interpretation or implementation
Nature of the Demand. of their CBA; and
For other terms and conditions of
b) those arising from the interpretation
employment to become a mandatory
or enforcement of company
bargainable issue, they must have a
personnel policies.
connection between the proposal and the
All grievances submitted to the grievance
nature of the work.
machinery which are not settled within 7
calendar days from the date of its submission
Importance of Determining Whether an Issue is
a Mandatory Bargaining I ssue or Only a shall be automatically referred to voluntary
Permissive Bargaining I ssue arbitration prescribed in the CBA. [Art. 260]
"The question as to what are mandatory and
what are merely permissive subjects of Grievances arising from the interpretation or
collective bargaining is of significance on the implementation of the CBA are subjects of the
right of a party to insist on his position to the grievance procedure. [Navarro III v. Damasco,
point of stalemate. A party may refuse to enter 1995]
into a collective bargaining contract unless it
includes a desired provision as to a matter It should be remembered that a grievance
which is a mandatory subject of collective procedure is part of the continuous process of
bargaining. But a refusal to contract unless the collective bargaining. It is intended to promote
agreement covers a matter which is not a a friendly dialogue between labor and
mandatory subject is in substance a refusal to management as a means of maintaining
bargain about matters which are mandatory industrial peace. [Master Iron Labor Union v.
subjects of collective bargaining; and it is no NLRC, 1993]
answer to the charge of refusal to bargain in
good faith that the insistence on the disputed No particular setup for a grievance machinery
clause was not the sole cause of the failure to is required by law. Art. 260 of, as incorporated
by R.A. 6715, only mandates that the parties to

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the CBA establish a machinery to settle same force and effect as if the has been
problems arising from "interpretation or selected by the parties as described above.
implementation of their collective bargaining [Art. 266]
agreement and those arising from the
interpretation or enforcement of company Voluntary Arbitration as a Condition Precedent
personnel policies. [Caltex Refinery Employees The stipulation to refer all future disputes to an
Association v. Brillantes, 1997] arbitrator or to submit an ongoing dispute to
one is valid. Being part of a contract between
Voluntary Arbitration the parties, it is binding and enforceable in
Constitutional Basis court in case one of them neglects, fails or
The State shall promote the principle of shared refuses to arbitrate. Going a step further, in the
responsibility between workers and employers event that they declare their intention to refer
and the preferential use of voluntary modes in their differences to arbitration first before
settling disputes, including conciliation, and taking court action, this constitutes a condition
shall enforce their mutual compliance precedent, such that where a suit has been
therewith to foster industrial peace. [CONST. instituted prematurely, the court shall suspend
Art. XIII Section 3] the same and the parties shall be directed
forthwith to proceed to arbitration. A court
Automatic Referral If Grievance Machinery Fails action may likewise be proper where the
All grievances submitted to the grievance arbitrator has not been selected by the parties.
machinery which are not settled within 7 [Chung Fu Industries v. CA, 1992]
calendar days from the date of its submission
shall automatically be referred to voluntary Arbitrable Issues
arbitration prescribed in the CBA. [Art. 266] 1. interpretation or implementation of the
CBA [Art. 261]
2. interpretation or enforcement of
Provision for Voluntary Arbitration in the CBA
company personnel policies [Art. 261]
(1) Parties to a CBA shall: 3. gross violations of CBA provision
a. Name and designate in advance a (flagrant/malicious refusal to comply
Voluntary Arbitrator or panel of with the economic provisions of the
Voluntary Arbitrators, OR CBA [Art. 261]
b. Include in the agreement a procedure 4. all other labor disputes including ULP
for the selection of such Voluntary and bargaining deadlock, if the parties
Arbitrator or panel of Voluntary agree [Art. 262]
Arbitrators preferably from the listing
of qualified Voluntary Arbitrators duly In general, the arbitrator [VA] is expected to
accredited by the Board. decide those questions expressly stated and
2. In case the parties fail to select a Voluntary limited in the submission agreement.
Arbitrator or panel of Voluntary However, since arbitration is the final resort for
Arbitrators, the Board shall designate the the adjudication of disputes, the arbitrator can
Voluntary Arbitrator or panel of Voluntary assume that he has the power to make a final
Arbitrators, as may be necessary, pursuant settlement. The VA has plenary jurisdiction
to the selection Voluntary Arbitrator or and authority to interpret the CBA and to
panel of Arbitrators procedure agreed determine the scope of his or her own
upon in the CBA, which shall act with the authority. Subject to judicial review, this

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leeway of authority and adequate prerogative he and the panel are comprehended within the
is aimed at accomplishing the rationale of the concept of a "quasi-judicial instrumentality." A
law on voluntary arbitration speedy labor fortiori, the decision or award of the voluntary
justice. [Goya, Inc. vs. Goya, Inc. Employees arbitrator or panel of arbitrators should
Union-FFW, 2013] likewise be appealable to the Court of Appeals.
[Luzon Development Bank v. Assoc of Luzon
Powers of the voluntary arbitrators Devt Employees, 1995]
(1) hold hearings Costs
(2) receive evidence The parties to a Collective Bargaining
(3) take whatever action is necessary to Agreement shall provide therein a
resolve the issue or issues subject of proportionate sharing scheme on the cost of
dispute, including efforts to effect a the voluntary arbitration including the
voluntary settlement between parties Voluntary Arbitrators fee. [] [Art. 262-B]
(4) determine attendance of any third
parties Voluntary Arbitrator's Fee
(5) determine exclusion of any witness [] The fixing of the fee of the Voluntary
(6) issue writ of execution for sheriff of Arbitrators, whether shouldered wholly by the
NLRC or regular courts to execute the parties or subsidized by the special voluntary
final decision, order, or award (Art 268- arbitration fund, shall take into account the
A) following factors:
I. nature of the case
Finality of the final decision, Order, or Award II. time consumed in hearing the case
[T]he award or decision of the Voluntary III. professional standing of the voluntary
Arbitrator [] shall be final and executory after arbitrator
10 calendar days from receipt of the copy of the IV. capacity to pay of the parties. [Art.
award or decision by the parties. [] (268-A) 268-B]

No Motion for Reconsideration No Strike-No Lockout Clause


The voluntary arbitrator lost jurisdiction over A "no strike, no lock-out" provision in the CBA
the case submitted to him the moment he is a valid stipulation although the clause may
rendered his decision. Therefore, he could no be invoked by an employer only when the strike
longer entertain a motion for reconsideration is economic in nature or one which is
of the decision for its reversal or modification. conducted to force wage or other concessions
[Solidbank v. BLR] from the employer that are not mandated to be
granted by the law itself. It would be
Appeal inapplicable to prevent a strike which is
While there is an express mode of appeal from grounded on unfair labor practice. [Panay
the decision of a labor arbiter, Republic Act Electric Co. v. NLRC, 1995; Malayang Samahan
No. 6715 is silent with respect to an appeal ng mga Manggagawa sa Greenfield v. Ramos,
from the decision of a voluntary arbitrator. 2000]

Assuming arguendo that the voluntary Labor Management Council


arbitrator or the panel of voluntary arbitrators Any provision of law to the contrary
may not strictly be considered as a quasi- notwithstanding, workers shall have the right,
judicial agency, board or commission, still both subject to such rules and regulations as the

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Secretary of Labor and Employment may day period immediately before the date of the
promulgate, to participate in policy and expiry of such five year term of the Collective
decision-making processes of the Bargaining Agreement. [Contract-bar rule]
establishment where they are employed
insofar as said processes will directly affect CBA Effectivity
their rights, benefits and welfare. For this If it is the first ever CBA, the effectivity date is
purpose, workers and employers may form whatever date the parties agree on.
labor-management councils: Provided, That
the representatives of the workers in such If it is renegotiated CBA, the effectivity date
labor-management councils shall be elected depends upon the duration of conclusion.
by at least the majority of all employees in said i. If it is concluded within 6 months from
establishment. [Art. 255] the expiry date, the new CBA will
retroact to the date following the
II. DURATION OF COLLECTIVE expiry date [Illustration: expiry date:
BARGAINING AGREEMENT December 13; effectivity date:
Any Collective Bargaining Agreement that the December 14].
parties may enter into shall, insofar as the ii. If the renegotiated CBA is concluded
representation aspect is concerned, be for a beyond 6 months from the expiry
term of five (5) years. No petition questioning date, the matter of retroaction and
the majority status of the incumbent effectivity is left with the parties.
bargaining agent shall be entertained and no
certification election shall be conducted by the Art. 253-A serves as the guide in determining
Department of Labor and Employment outside when the CBA at bar is to take effect. It
of the sixty-day period immediately before the provides that the representation aspect of the
date of expiry of such five-year term of the CBA is to be for a term of 5 years. All other
Collective Bargaining Agreement. All other provisions of the CBA shall be renegotiated not
provisions of the Collective Bargaining later than 3 years after its execution. Any
Agreement shall be renegotiated not later agreement on such other provision of the CBA
than three (3) years after its execution. Any entered into within 6 months from the date of
agreement on such other provisions of the expiry of the term of such other provisions as
Collective Bargaining Agreement entered into fixed in such Collective Bargaining Agreement
within six (6) months from the date of expiry of shall retroact to the day immediately following
the term of such other. [Art. 259-A] such date. If such agreement is entered into
beyond 6 months, the parties shall agree on
CBA Duration for economic provisions the duration of the effectivity thereof. If no
3 years. agreement is reached within 6 months from
the expiry date of the 3 years that follow the
CBA Duration for non-economic provisions CBA execution, the law expressly gives the
5 years for representational or political issues. parties not anybody else the discretion to
fix the effectivity of the agreement. The law
CBA Duration: Freedom Period does not specifically cover the situation where
No petition questioning the majority status of 6 months have elapsed but no agreement has
the incumbent bargaining agent shall be been reached with respect to effectivity. In this
entertained and no certification election shall eventuality, any provision of law should then
be conducted by the DOLE outside of the sixty- apply. [Manila Electric Co. v. Quisumbing, 1999]

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Hold Over Principle issued by the Secretary of Labor pursuant to Art.


[In the absence of a new CBA], [i]t shall be the 263(g), the latter is deemed vested with plenary
duty of the parties to keep the status quo and and discretionary powers to determine the
to continue in full force and effect the terms effectivity thereof. [Manila Central Line Corp. v.
and conditions of the existing agreement Manila Central Line Free Workers Union, 1998]
during the 60 day period and/or until a new
agreement is reached by the parties. [Art. 259] CBA and 3rd Party Applicability
Labor contracts such as employment contracts
The last sentence of Article 253, which and CBAs are not enforceable against a
provides for automatic renewal pertains only to transferee of an enterprise, labor contracts
the economic provisions of the CBA, and does being in personam, is binding only between the
not include representational aspect of the parties. As a general rule, there is no law
CBA. An existing CBA cannot constitute a bar requiring a bona fide purchaser of the assets of
to a filing of petition for certification election. an on-going concern to absorb in its employ
When there is a representational issue, the the employees of the latter. However, although
status quo provision insofar as the need to the purchaser of the assets or enterprise is not
await the creation of a new agreement will not legally bound to absorb in its employ the
apply. Otherwise, it will create an absurd employees of the seller of such assets or
situation where the union members will be enterprise, the parties are liable to the
forced to maintain membership by virtue of the employees if the transaction between the
union security clause existing under the CBA parties is colored or clothed with bad faith.
and, thereafter, support another union when [Sundowner Devt. Corp. v. Drilon, 1989]
filing a petition for certification election. If we
apply it, there will always be an issue of General Rule: An innocent transferee of a
disloyalty whenever the employees exercise business establishment has no liability to the
their right to self-organization. The holding of employees of the transferor to continue
a certification election is a statutory policy that employing them. Nor is the transferee liable
should not be circumvented, or compromised. for past unfair labor practices of the previous
[PICOP Resources, Inc. v. Taneca et al., 2010] owner.

Arbitrated CBA Exception: When the liability therefore is


In the absence of an agreement between the assumed by the new employer under the
parties, an arbitrated CBA takes on the nature contract of sale, or when liability arises
of any judicial or quasi-judicial award. It because of the new owner's participation in
operates and may be executed only thwarting or defeating the rights of the
prospectively unless there are legal employees.
justifications for its retroactive application.
[Manila Electric Company vs. Quisumbing, 1999] The most that the transferee may do, for
reasons of public policy and social justice, is to
[O]n the other hand, [when the CBA is only] give preference to the qualified separated
part of an arbitral award [,] [] it may be made employees in the filling of vacancies in the
retroactive to the date of expiration of the facilities of the purchaser. [Manlimos v. NLRC,
previous agreement. Therefore, in the absence 1995]
of a specific provision of law prohibiting
retroactivity of the effectivity of arbitral awards

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B.3. UNION SECURITY agreement, remains a member in good


Nothing in this Code or in any other law shall standing of a union entirely comprised of or of
stop the parties from requiring membership in which the employees in interest are a part.
a recognized collective bargaining agent as a [GMC v. Casio, 2010]
condition for employment, except those
employees who are already members of Only union members can be hired by the
another union at the time of the signing of the company and they must remain as members to
collective bargaining agreement. [Art. 254 (e)] retain employment in the company. [Azucena]

Union security is any form of agreement which Due Process in Termination Under Closed Shop
imposes upon employees the obligation to Provision
acquire or retain union membership as a The requirements laid down by the law in
condition affecting employment. [GMC v. Casio, determining whether or not an employee was
2010] validly terminated must still be followed even
if it is based on a closed-shop provision of a
Purpose CBA, i.e. the substantive as well as the
To safeguard and ensure the existence of the procedural due process requirements. [Del
union and thus, promote unionism in general Monte v. Saldivar, 2007]
as a state policy.
Construction
Limitation The closed shop provision is the most prized
Employees who are already members of achievement of unionism. However it can also
another union at the time of the signing of the be a potent weapon wielded by the union
collective bargaining agreement may not be against the workers whom the union is
compelled by any union security clause to join supposed to protect in the first place. Hence,
any union. [Art. 254 (e)] any doubt as to the existence of a closed shop
provision in the CBA will be resolved in favor of
Types the nonexistence of the closed shop provision.
(1) Closed shop
(2) Maintenance of membership shop
Maintenance of Membership Shop
(3) Union shop There is maintenance of membership shop
(4) Modified union shop when employees, who are union members as
(5) Agency shop of the effective date of the agreement, or who
thereafter become members, must maintain
I. UNION SECURITY CLAUSES; CLOSED union membership as a condition for [their]
SHOP, UNION SHOP, MAINTENANCE OF continued employment until they are
MEMBERSHIP SHOP, ETC. promoted or transferred out of the bargaining
Closed Shop unit or the agreement is terminated. [GMC v.
A closed shop, on the other hand, may be Casio, 2010]
defined as an enterprise in which, by
agreement between the employer and his No employee is compelled to join the union,
employees or their representatives, no person but all present or future members of the union
may be employed in any or certain agreed must, as a condition of employment, remain in
departments of the enterprise unless he or she good standing in the union. [Azucena]
is, becomes, and, for the duration of the

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Union Shop Jurisdiction over Check-off Disputes


There is union shop when all new regular The Bureau of Labor Relations has jurisdiction
employees are required to join the union within to hear, decide and to mete out punishment
a certain period as a condition for their any reported violation under Article 241.
continued employment. [GMC v. Casio, 2010]
Note: Sec of Labor or his duly authorized
Non-members may be hired, but to retain representative may inquire into financial
employment, they must become union activities of legitimate labor orgs UPON filing
members after a certain period. The of complaint under oath and supported by
requirement applies to present and future written consent of at least 20% of total
employees. [Azucena] membership, Provided, such inquiry shall not
be conducted during (60)-day freedom period
Modified Union Shop nor within the thirty (30) days immediately
Employees who are not union members at the
preceding the date of election of union
time of signing the contract need not join the
officials. [Art. 274]
union, but all workers hired thereafter must
join. [Azucena] B.4 UNFAIR LABOR PRACTICE IN
COLLECTIVE BARGAINING
Agency Shop Both employers and labor organizations can
An agreement whereby employees must either commit acts of unfair labor practices in
join the union or pay to the union as exclusive collective bargaining. However, the labor
bargaining agent a sum equal to that paid by organization must be the representative of the
the members. [Azucena] employees before any act it does may be
considered as a violation of the duty to bargain
II.CHECK-OFF, UNION DUES, AGENCY collectively. [Art. 248 (g) and Art. 249 (c)]
FEES
Check-off I. BARGAINING IN BAD FAITH
A check-off is a process or device whereby the GMCs refusal to make a counter-proposal to
employer, on agreement with the Union, the unions proposal for CBA negotiation on
recognized as the proper bargaining the excuse that it felt the union no longer
representative, or on prior authorization from represented the workers is an indication of bad
the employees, deducts union dues or agency faith. [] Failing to comply with the mandatory
fees from the latters wages and remits them obligation to submit a reply to the unions
directly to the Union. [Marino v Gamilla, 2009] proposals, GMC violated its duty to bargain
collectively, making it liable for unfair labor
The system of check-off is primarily for the practice. [GMC v. CA, 2004]
benefit of the Union, and only indirectly, for the
benefit of the individual employees. [Marino v
Garnilla, 2009]

Note: For a check-off to be valid, it must


comply with the requirements of a valid special
assessment.

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II. REFUSAL TO BARGAIN IV. BLUE SKY BARGAINING


Statutory Basis of Employers Blue-Sky Bargaining is defined as "unrealistic
(1) To violate the duty to bargain and unreasonable demands in negotiations by
collectively as prescribed by this code. either or both labor and management, where
[Art. 254 (g)] neither concedes anything and demands the
impossible." It actually is not collective
Statutory Basis of Labor Organizations bargaining at all. [Standard Bank Chartered
(1) To violate the duty, or refuse to
Employees Union v. Confesor, 2004]
bargain collectively with the employer,
provided it is the representatives of the
V. SURFACE BARGAINING
employees; [Art. 256 (c)]
(2) [I]t shall be the duty of employer and Surface bargaining is defined as "going
the representatives of the employees through the motions of negotiating," without
to bargain collectively in accordance any real intent to reach an agreement. It
with the provisions of this Code. [Art. violates the Act's requirement that parties
257] negotiate in "good faith." It is prohibited
because, as one commentator explained: The
Implied refusal bargaining status of a union can be destroyed
The school is guilty of unfair labor practice by going through the motions of negotiating
when it failed to make a timely reply to the almost as easily as by bluntly withholding
proposals of the union more than one month recognition [] As long as there are unions
after the same were submitted by the union. In weak enough to be talked to death, there will
explaining its failure to reply, the school merely be employers who are tempted to engage in
offered a feeble excuse that its Board of the forms of collective bargaining without the
Trustees had not yet convened to discuss the substance. [K-MART Corporation v NLRB, 1980
matter. Clearly, its actuation showed a lack of 626 F.2d 704]
sincere desire to negotiate. [Colegio de San
Juan de Letran v. Association, 2000] B.5 UNFAIR LABOR PRACTICE (ULP)
Unfair labor practice refers to acts that violate
III. INDIVIDUAL BARGAINING the workers right to organize. The prohibited
It is an unfair labor practice for an employer acts are related to the workers right to self-
operating under a CBA to negotiate with his organization and to the observance of a CBA.
employees individually. That constitutes Without that element, the acts, no matter how
interference because the company is still under unfair, are not unfair labor practices. The only
obligation to bargain with the union as the exception is Art. 248 (f) [i.e. to dismiss,
bargaining representative. discharge or otherwise prejudice or
discriminate against an employee for having
given or being about to give testimony under
Individual bargaining contemplates a situation
this Code]. [Philcom Employees Union v. Phil.
where the employer bargains with the union
through the employees instead of the Global, 2006]
employees through the union. [The Insular Life
Assurance Co. Ltd., Employees Assn. v. Insular
Life Assurance Co. Ltd, 1971]

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I. NATURE OF ULP
a. inimical to the legitimate interests of Statutory Construction
both labor and management, including The Labor Code does not undertake the
their right to bargain collectively and impossible task of specifying in precise and
otherwise deal with each other in an unmistakable language each incident which
atmosphere of freedom and mutual constitutes an unfair labor practice. Rather, it
respect leaves to the court the work of applying the
b. disrupt industrial peace law's general prohibitory language in light of
c. hinder the promotion of healthy and infinite combinations of events which may be
stable labor-management relations charged as violative of its terms. [HSBC
d. violations of the civil rights of both Employee Union V. NLRC, 1997]
labor and management but are also
criminal offenses [Art. 247] II. ULP OF EMPLOYERS
(1) Interference/ Restraint/ Coercion
An act which restrains, coerces, or interferes
Purpose of the Policy Against ULPs
Protection of right to self-organization and/or with employees in the exercise of their right to
collective bargaining: self-organization is an Unfair Labor Practice.
a) The employee is not only protected
from the employer but also from labor Interrogation
organizations. General rule: employer may interrogate its
b) Employer is also protected from ULP employees regarding their union affiliation for
committed by a labor organization. legitimate purposes and with the assurance
The public is also protected because it has an that no reprisals would be taken against the
interest in continuing industrial peace. unionists.

Employer-Employee Relationship Required Exception: when interrogation interferes with


General Rule - An unfair labor practice may be or restrains employees' right to self-
committed only within the context of an organization. [Phil. Steam Navigation Co. v.
employer-employee relationship [American Phil. Marine Officers Guild, 1965]
President Lines v. Clave, 1982]
Speech
The acts of a company which subjects a union
Exception
Yellow Dog condition: to require as a to vilification and its participation in soliciting
condition of employment that a person or an membership for a competing union are also
acts constituting a ULP. [Phil. Steam
employee shall not join a labor organization or
Navigation Co. v. Phil. Marine Officers Guild,
shall withdraw from one to which he belongs.
1965]
[Art 248 (b)]

Parties Not Estopped from Raising ULP by An employer may not send letters containing
Eventual Signing of the CBA promises or benefits, nor of threats of
The eventual signing of the CBA does not obtaining replacements to individual workers
operate to estop the parties from raising unfair while the employees are on strike due to a
labor practice charges against each other. bargaining deadlock. This is tantamount to
[Standard Chartered Bank Union v. Confesor, interference and is not protected by the
2004] Constitution as free speech. [Insular Life

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Assurance Co. Employees Assn. v. Insular Life 4) Company Union


Assurance Co. Ltd, 1971] "Company union" means any labor
organization whose formation, function or
Espionage administration has been assisted by any act
Espionage and/or surveillance by the employer defined as unfair labor practice by this Code.
of union activities are instances of interference, [Art. 212(i)]
restraint or coercion of employees in
connection with their right to organize, form The employer commits ULP if it initiates,
and join unions as to constitute unfair labor dominates, or otherwise interferes with the
practice. [] The information obtained by formation or administration of any labor
means of espionage is invaluable to the organization.
employer and can be used in a variety of cases
to break a union. [Insular Life Assurance Co. Example: giving out financial aid to any union's
Employees Assn. v. Insular Life Assurance Co. supporters or organizers.
Ltd, 1971]
5) Discrimination Encourage/Discourage
Unionism
(2) Yellow Dog Contracts
General rule: it is ULP to discriminate in regard
Yellow dog contracts require, as a condition of
to wages, hours of work and other terms and
employment, that a person or an employee
conditions of employment in order to
shall not join a labor organization or shall
encourage or discourage membership in any
withdraw from one to which he belongs.
labor organization. [Art. 254 (e)]

Examples:
Exception [union security clause]:
1. a representation by the employee that
Nothing in this Code or in any other law shall
he is not a member of a labor
stop the parties from requiring membership in
organization
a recognized collective bargaining agent as a
2. a promise by the employee that he will
condition for employment. [Art. 254 (e)]
not join a union
3. a promise by the employee that upon
Exception to exception:
joining a labor organization, he will quit Those employees who are already members of
his employment another union at the time of the signing of the
collective bargaining agreement. [Art. 254(e)]
3) Contracting Out
General rule: contracting out is not a ULP
6) Testimony
Exception: It is an act of ULP by an employer to dismiss,
a. contracted-out services or functions discharge or otherwise prejudice or
are performed by union members AND discriminate against an employee for having
b. contracting out will interfere with, given or being about to give testimony under
restrain, or coerce employees in the this Code. [Art. 254 (f)]
exercise of their right to self-
organization. [Art. 248 (c)] 7) Violate duty to bargain collectively
Duty to bargain collectively is a continuous
process, non-compliance constitutes ULP.
Collective bargaining does not end with the
execution of an agreement, being a continuous

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process, the duty to bargain necessarily 2) Discrimination: Encourage/Discourage


imposing on the parties the obligation to live Unionism [Art. 255 (b)]
up to the terms of such a collective bargaining General rule: it is a ULP for a labor
agreement if entered into, it is undeniable that organization to cause an employer to
non-compliance therewith constitutes an discriminate against an employee.
unfair labor practice. [Shell Oil Workers Union v
Shell Co., 1971] Exception: provisions of a valid union security
clause and other company policies applicable
8) Payment of negotiation or attorney's fees to all employees.
Sweetheart contracts are favorable both to the
union and the employer at the expense of the 3) Violate duty to bargain or the CBA
employees. The settlement of bargaining Please refer to part B.4 for some examples.
issues must be made by fair bargaining in good
4) Exaction (Featherbedding)
faith, and not through the payment of
Featherbedding or make-work by the union
negotiation or attorney's fees which will
is the practice of the union asking (exacting)
ultimately lead to sweetheart contracts.
for money or other things of value from the
employer in return for services which are not
9) To violate a collective bargaining agreement
performed or are not to be performed.
Flagrant and/or malicious refusal required
Violations of collective bargaining agreements,
5) Asking or accepting negotiation and other
except flagrant and/or malicious refusal to
attorney's fees
comply with its economic provisions, shall not See counterpart in ULP by employers
be considered unfair labor practice and shall (sweetheart contracts).
not be strikeable. [IRR]

Note: The list in Art. 254 is not exhaustive. 6) Violate a collective bargaining agreement
Other acts which are analogous to those Flagrant and/or malicious refusal required
enumerated can be ULPs. Violations of collective bargaining agreements,
except flagrant and/or malicious refusal to
The alleged violation of the CBA, even comply with its economic provisions, shall not
assuming it was malicious and flagrant, is not be considered unfair labor practice and shall
a violation of an economic provision, thus not not be strikeable. [IRR]
an Unfair Labor Practice. [BPI Employees
Union-Davao FUBU v. BPI, 2013]

III. ULP OF LABOR ORGANIZATIONS


1) Restraint, or coercion
Interfere is not included in Art. 255 simply
because any act of a labor organization
amounts to interference to the right of self-
organization.

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C. RIGHT TO PEACEFUL CONCERTED Limitation: Concerted activities must be in


ACTIVITIES accordanc e with law
The strike is a powerful weapon of the working
class. Precisely because of this, it must be
Basis handled carefully, like a sensitive explosive,
[The state] shall guarantee the rights of all
lest it blow up in the workers own hands. Thus,
workers to self-organization, collective
it must be declared only after the most
bargaining and negotiations, peaceful
thoughtful consultation among them,
concerted activities, including the right to
conducted in the only way allowed, that is,
strike in accordance with law. [CONST. Art. XIII
peacefully, and in every case conformably to
3]
reasonable regulation. Any violation of the
legal requirements and strictures will render
Workers shall have the right to engage in the strike illegal, to the detriment of the very
concerted activities for purposes of collective workers it is supposed to protect. [Batangas
bargaining or for their mutual benefit and Laguna Tayabas Bus Co. v NLRC, 1992]
protection. The right of legitimate labor
organizations to strike and picket and of
C.1. FORMS OF CONCERTED ACTIVITIES
employers to lockout, consistent with the
Concerted Activities by Employees:
national interest, shall continue to be
a. Strike
recognized and respected. However, no labor
b. Picketing
union may strike and no employer may declare
a lockout on grounds involving inter-union and Response to Concerted Activities available to
intra-union disputes. [Art. 269 (b)] Employers:
c. Lockout
Definition
A concerted activity is one undertaken by two (a) Strike
or more employees to improve their terms and A strike is any temporary stoppage of work by
conditions of work. the concerted action of employees as a result
of an industrial or labor dispute. [Art. 218(o)]
Right to self-organization includes the right to
engage in lawful concerted activities and may Strikes not limited to work stoppages
not be abridged. The term strike shall comprise not only
It shall be unlawful for any person to restrain, concerted work stoppages, but also
coerce, discriminate against or unduly interfere slowdowns, mass leaves, sit-downs, attempts
with employees and workers in their exercise of to damage, destroy or sabotage plant
the right to self-organization. Such right shall equipment and facilities, and similar activities.
include the right to form, join, or assist labor [Samahang Manggagawa v. Sulpicio Lines,
organizations for the purpose of collective 2004]
bargaining through representatives of their
own choosing and to engage in lawful As coercive measure by employees
concerted activities for the same purpose or for A strike is a coercive measure resorted to by
their mutual aid and protection, subject to the laborers to enforce their demands. The idea
provisions of Article 264 of this Code. (Art. 252) behind a strike is that a company engaged in a
profitable business cannot afford to have its
production or activities interrupted, much less,
paralyzed. [Phil. Can Co. v. CIR, 1950]

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No severance of employer-employee employer which he is not required by


relationship during lawful strike law to grant [Consolidated Labor
Although during a strike the worker renders no Association of the Phil. v. Marsman
work or service and receives no compensation, and Company, 1964]
[] his relationship as an employee with his ULP strike called against a company's
employer is not severed or dissolved. [Elizalde unfair labor practice to force the
Rope Factory, Inc. v. SSS, 1972] employer to desist from committing
such practices.
Payment of wages during lawful strikes
General rule: Striking employees are not As to how committed
entitled to the payment of wages for un- I. Slowdown strike one by which workers,
worked days during the period of the strike without a complete stoppage of work,
pursuant to the no work-no pay principle. retard production or their performance of
duties and functions to compel
Exception: Agreement to the contrary. management to grant their demands.

A slowdown is inherently illicit and


Reinstatement after a lawful strike
unjustifiable because while the employees
When strikers abandon the strike and apply for
continue to work, they, at the same time,
reinstatement despite the existence of valid
select what part of their duties they
grounds but the employer either:
perform. In essence, they work on their
a) refuses to reinstate them or
own terms. [Ilaw at Buklod ng
b) imposes upon their reinstatement new
Manggagawa v. NLRC, 1991]
conditions then the employer commits
an act of ULP.
II. Wild-cat strike one declared and staged
without filing the required notice of strike
The strikers who refuse to accept the new
and without the majority approval of the
conditions and are consequently refused
recognized bargaining agent.
reinstatement are entitled to the losses of pay
they may have suffered by reason of the
III. Sit-down strike one wherein workers take
employers discriminatory acts from the time
over possession of the property of such
they were refused reinstatement.
business to cease production and to refuse
access to owners.
Forms of Strikes
As to legality
(1) Legal strike one called for a valid IV. Sympathetic strike one in which the
purpose and conducted through striking workers have no demands of their
means allowed by law. own, but strike to make common cause
(2) Illegal strike one staged for a purpose with other strikers in other establishments.
not recognized by law, or if for a valid
purpose, conducted through means Conversion from economic to ULP strike
It is possible for a strike to change its character
not sanctioned by law.
from an economic to a ULP strike. In the
instant case, initially, the strike staged by the
As to grounds
Union was meant to compel the Company to
Economic strike one staged by
workers to force wage or other grant it certain economic benefits set forth in
economic concessions from the its proposal for collective bargaining. However,

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the strike changed its character from the time C.2 WHO MAY DECLARE A STRIKE OR
the Company refused to reinstate LOCKOUT?
complainants because of their union activities Who may declare a strike
after it had offered to admit all the strikers and 1. The certified or duly recognized
in fact did readmit the others. It was then bargaining representative
converted into an unfair labor practice strike. 2. Any legitimate labor organization in
[Consolidated Labor Assoc. of the Phil. v. the absence of #1, but only on grounds
Marsman and Company, 1964] of ULP [Book V, Rule XXII, 6]

Strike cannot be converted to a lockout by a


Who may declare a lockout
return to work offer
1. The employer [Book V, Rule XXII, Sec. 6]
A strike cannot be converted into a pure and
simple lockout by the mere expedient filing
before the trial court a notice of offer to return C.3 REQUISITES FOR A VALID STRIKE
to work during the pendency of the labor A valid strike must have a lawful ground and
dispute between the union and the employer. must conform with the procedural
[Rizal Cement Workers Union v. CIR, 1962] requirements set by law.

(b) Picketing Substantial Requirements/Grounds


The right of legitimate labor organizations to A strike or lockout may be declared in cases of:
strike and picket and of employers to lockout, a) Bargaining deadlocks
consistent with the national interest, shall b) ULP [Art. 263 (c)]
continue to be recognized and respected. [Art.
269 (b)] When violations of collective bargaining
strikeable as a ULP
Picketing is the right of workers to peacefully Only gross violations of the economic
march to and fro before an establishment provisions of the CBA are treated as ULP. [BPI
involved in a labor dispute generally Employees Union-Davao FUBU v. BPI, 2013]
accompanied by the carrying and display of
signs, placards and banners intended to inform When no lawful strike can be declared
the public about the dispute. [NCMB Manual, 1. Ground is an inter-union or intra-union
1] dispute
2. No notice of strike
3. No strike vote obtained and reported to
(c) Lockout
Lockout is the temporary refusal of an the NCMB
employer to furnish work as a result of an 4. After assumption or certification by the
industrial or labor dispute. [Art. 218 (p)] Secretary of Labor

Procedural requirements
1) Effort to bargain
2) Filing and service of notice of strike
3) Observance of cooling-off period
4) Strike vote
5) Strike vote report
6) Observance of the waiting period

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(1) Effort to bargain In cases of ULP:


No labor organization [] shall declare a strike 1. Statement of Acts complained of
[] without first having bargained collectively
2. Efforts taken to resolve the dispute
in accordance with Title VII of this Book. (Art.
amicably.
270(a))
Action on Notice
(2) Filing and service of notice of strike 1. Upon receipt of a valid notice of strike
Bargaining deadlocks or lockout, the NCMB, through its
[T]he duly certified or recognized bargaining Conciliator-Mediators, shall call the
agent may file a notice of strike [] with the parties to a conference the soonest
Department at least 30 days before the possible time in order to actively assist
intended date thereof. [][Art. 269(c)] them to explore all possibilities for
amicable settlement.
Unfair Labor Practice; Union Busting 2. The Conciliator-Mediator may
[I]n cases of unfair labor practice, the period to suggest/offer proposals as an
file notice of strike shall be 15 days. However, alternative avenue for the resolution of
in cases of union busting (dismissal of duly their disagreement/conflict which may
elected union officers from employment), the not necessarily bind the parties.
cooling period shall not apply. [] [Art. 269 (c)]
3. If conciliation/mediation fails, the
parties shall be encouraged to submit
Note: the notice must be served to the their dispute for voluntary arbitration.
employer. Failure to do so will constitute
noncompliance with the procedural (3) Observance of cooling-off periods
requirements and will result to an illegal strike. Cooling off periods
Rationale: due process. [IRR] 1. Bargaining deadlock 30 days
2. ULP but not union busting 15 days
Contents of Notice of Strike 3. ULP and union busting no cooling-off
1. Names and addresses of the employer period
and the union involved
2. Nature of the industry to which the Purpose of Cooling Off Period
employer belongs During the cooling-off period, it shall be the
3. Number of union members and of duty of the Ministry to exert all efforts at
workers in the bargaining unit mediation and conciliation to effect a voluntary
4. Such other relevant data as may settlement. Should the dispute remain
facilitate the settlement of the dispute. unsettled until the lapse of the requisite
[Book V Rule XXII Sec. 8] number of days from the mandatory filing of
the notice, the labor union may strike or the
Additional Requirements employer may declare a lockout. [Art. 269 (e)]
In case of Bargaining Deadlocks:
1. Statement of Unresolved issues in the
The purpose of the cooling-off period is to
bargaining negotiations
provide an opportunity for mediation and
2. Written Proposals of the union
conciliation. [National Federation of Sugar
3. Counterproposals of the employer
Workers v. Ovejera, 1982]
4. Proof of a request for conference to
settle the differences.

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(4) Strike Vote take a strike vote and report the same within
Requirements for a declaration of a strike in a the statutory cooling-off period. The cooling-
strike vote off and 7-day strike ban provisions of law
1. approval by a majority of the total constitute a valid exercise of police power of
union membership in the bargaining the State. [National Federation of Sugar
nit concerned Workers v. Ovejera, 1982]
2. approval is obtained by secret ballot in
a meeting/referendum called for the Strike-vote Reported within the Cooling-off
purpose Period
When the strike-vote is reported within the
Duration of the Validity of the Strike-Vote cooling-off period, the phrase at least 7 days
[T]he decision shall be valid for the duration of before the intended strike or lockout, subject to
the dispute based on substantially the same the cooling-off period herein provided. in
grounds considered when the strike or lockout Article 269 (f) admits two interpretations:
vote was taken. [][Art. 269 (f)] (1) Mutually exclusive periods (used in the
NCMB Manual). The cooling off period and
the 7-day period are mutually exclusive.
Department of Labor and Employment
intervention Thus, in the case of Capitol Medical Center
[T]he Department may, at its own initiative or v. NLRC, the Court held that when the
upon the request of any affected party, strike vote is conducted within the cooling-
supervise the conduct of the secret balloting. off period, the 7-day requirement shall be
[][Art. 269 (f)] counted from the day following the
expiration of the cooling off period.
(5) Strike Vote Report (2) Coexistent periods. The cooling-off period
[I]n every case, the union or the employer shall and the 7-day requirement may coexist.
furnish the Department the results of the After all, the purpose of the 7-day
voting at least 7 days before the intended requirement is to give time for the DOLE to
strike 1 or lockout, subject to the cooling-off verify if the projected strike is supported by
period herein provided.[Art. 269 (f)] the majority. There is no reason to add it to
the cooling-off period.

(6) Observance of the 7-daywaiting period


The waiting period, on the other hand, is C.4 REQUISITES FOR A VALID
intended to provide opportunity for the LOCKOUT
members of the union or the management to Limitations
take the appropriate remedy in case the strike [N]o employer may declare a lockout on
or lockout vote report is false or inaccurate. grounds involving inter-union and intra-union
[National Federation of Sugar Workers v. disputes. [Art. 269 (b)]
Ovejera, 1982]
Grounds
Compliance with Both Cooling-off and Waiting Similar to a strike, the proper grounds for a
Periods lockout are
The observance of both periods must be 1. bargaining deadlock
complied with, although a labor union may 2. ULP by labor organizations

1 7-day Waiting Period.

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2. Written proposals of the union


Requisites 3. Counterproposals of the employer
1. Effort to bargain 4. Proof of a request for conference to
2. Filing and service of notice of lockout settle the differences.
3. Observance of cooling-off period
4. Lockout vote In cases of ULP
5. Report of lockout vote 1. Statement of acts complained of
6. Observance of the waiting period 2. Efforts taken to resolve the dispute
amicably.
(1) Effort to bargain Action on notice
No employer shall declare a [] lockout 1. Upon receipt of a valid notice of strike or
without first having bargained collectively in lockout, the NCMB, through its Conciliator-
accordance with Title VII of this Book. [Art 270 Mediators, shall call the parties to a
(a)] conference the soonest possible time in
order to actively assist them to explore all
possibilities for amicable settlement.
(2) Filing and service of Notice of Lockout
2. The Conciliator-Mediator may
Bargaining deadlocks
suggest/offer proposals as an alternative
[T]he duly certified or recognized bargaining
avenue for the resolution of their
agent may file [] a notice of lockout with the
disagreement/conflict which may not
Department at least 30 days before the
necessarily bind the parties.
intended date thereof. [] [Art. 269(c)]
3. If conciliation/mediation fails, the parties
shall be encouraged to submit their
Unfair Labor Practice; Union Busting dispute for voluntary arbitration. [Book V
[I]n cases of unfair labor practice, the period to Rule XXII Sec. 9]
file notice of strike shall be 15 days. [] [Art.
269 (c)]
(3) Observance of Cooling-off Periods
Lockout cooling-off periods:
Note: the notice must be served to the based on bargaining deadlock 30
employees through the representative union. days
based on ULP 15 days.
Contents of notice
1. Names and addresses of the employer and (4) Lockout Vote
the union involved A decision to declare a lockout must be
2. Nature of the industry to which the approved by a majority of the board of
employer belongs directors of the corporation or association or of
3. Number of union members and of workers the partners in a partnership, obtained by
in the bargaining unit secret ballot in a meeting called for that
4. Such other relevant data as may facilitate purpose.The decision shall be valid for the
the settlement of the dispute. duration of the dispute based on substantially
the same grounds considered when the strike
Additional Requirements or lockout vote was taken. [Art. 269 (f)]
In cases of bargaining deadlocks
1. Statement of unresolved issues in the
bargaining negotiations

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(5) Report of Lockout Vote


In every case, the union or the employer shall Picketing as Part of Freedom of
furnish the Ministry the results of the voting at Speech/Expression
least seven days before the intended strike or General rule: picketing enjoys constitutional
lockout, subject to the cooling-off period protection as part of freedom of speech and/or
herein provided. [Art. 269 (f)] expression.

(6) Observance of Waiting P eriod (7 days) Exceptions/limitations:


See notes under strike. 1. When picketing is coercive rather than
persuasive [Security Bank Employees
Effect of Illegal Lockout Union v. Security Bank]
Any worker whose employment has been 2. When picketing is achieved through
terminated as a consequence of any unlawful illegal means [Mortera v. CIR]
lockout shall be entitled to reinstatement with 3. Courts may confine the
full backwages. [Art. 270 (a) Sec. 3, 1st Sentence] communication/demonstration to the
parties to the labor dispute [PCIB v.
Philnabank Employees Association]
C.5 REQUISITES FOR LAWFUL 4. Innocent bystander rule. Courts may
PICKETING insulate establishments or persons
Prohibited activities in picketing with no industrial connection or having
1. By any person. No person shall obstruct, interest totally foreign to the context of
impede, or interfere with, by force, the dispute [PCIB v. Philnabank
violence, coercion, threats or intimidation, Employees Association]
any peaceful picketing by employees
during any labor controversy or in the Picketing and L ibel
exercise of the right to self-organization or Libel laws are not applied strictly considering
collective bargaining, or shall aid or abet that there is emotional tension in the picket
such obstruction or interference. [Art. 264 lines and expected discourteous and impolite
(b)] exchanges between the employees and the
2. By police force. The police force shall keep