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Labor Standards Reviewer (based on

Title 2 WAGES

Chapter 1

Art 97. Definitions

a.) Person an individual, partnership, association, corporation, business trust,

legal representative, or any organized group of persons
b.) Employer any person acting directly/indirectly in the interest of an ER in
relation to an EE & shall include the Govt & all its branches, subd., &
instrumentalities, all govt-owned/-controlled corps. & institutions, as well as
non-profit private institutions/orgs.
c.) Employee - any individual employed by an ER
d.) Agriculture includes farming in all its branches, and among other things,
includes the cultivation & tillage of soil, dairying, the production, cultivation,
growing & harvesting of any agricultural & horticultural commodities, the
raising of livestock or poultry, and any practices performed by a farmer on a
farm as an incident to or in conjunction with such farming operations, but
does not include the manufacturing or processing of sugar, coconuts, abaca,
tobacco, pineapples or other farm products.
e.) Employ includes to suffer or permit to work
f.) Wage paid to any EE; shall mean the remuneration or earnings, however
designated, capable of being expressed in terms of money, whether fixed or
ascertained on a time, task, piece, or commission basis, or other method of
calculating the same, w/c is payable by and ER to an EE under a
written/unwritten contract of ENT for work done or to be done, or for services
rendered and includes the fair and reasonable value, as determined by the
Sec of Labor, of board, lodging, or other facilities customarily furnished by the
ER to the EE.
Includes commissions the recompense compensation/reward of an
agent, salesman, executor, trustee, receiver, factor, broker or bailee, when
the same is calculated as a percentage on the amt of his transactions or on
the profit of the principal
Sonco v NLRC: Zuelig was made to pay the terminated EE (due to
retrenchment), separation pay based not only on the basic salary, but also on
the commissions, transpo & emergency living allowances. Even if
commissions were in the form of incentives or encouragement, still these
commissions are direct remunerations for services rendered w/c contributed
to the increase of income of the ER. The nature of work of a salesman & the
reason for such type of remuneration for services rendered demonstrate that
commissions are part of their wage or salary. (Some salesmen do not receive
any basic salary but depend on commissions & allowances or commissions
alone, although an EE-ER relationship exists).

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Includes facilities or commodities fair & reasonable value of board,
lodging, or other facilities customarily furnished by the ER to the EE.
An ER may provide, for instance, food & housing to his EEs but he may
deduct their values from the EES wages to be determined by the Sec of

70% - deducted from wages (must be authorized in writing)
30% - subsidized by the ER

Lodging facility the cost of operation & maintenance, including adequate

depreciation plus amt of capital invested by the ER, provided that if the total
is more than the fair rental value ( or the fair price of the commodities or
facilities offered for sale)
Fair rental value -shall be the reasonable cost of the operation &
Rate of depreciation & depreciated amt those arrived at under good
accounting practices
Good accounting practices shall NOT include accounting practices w/c
have been rejected by the BIR for IT purposes
Depreciation shall include obsolescence
In order that the cost of facilities furnished by the ER may be charged
against an EE, his acceptance of such facilities must be voluntary
Excludes allowances
Fair & reasonable value shall NOT include any profit to the ER or to any
person affiliated w/ the ER

Wages Salary
o Compensation for manual labor, o Denotes a higher degree of ENT,
skilled/unskilled, paid at stated or a superior grade of services,
times, and measured by the day, and implies a position or office
week, month, or season
o Indicates considerable pay for a o Suggestive of a larger and more
lower and less responsible permanent or fixed compensation
character of ENT for more important service
o Has a less extensive meaning o Compensation of clerks, officers of
than salary; being ordinarily pub corps, and pub offices.
restricted to sums paid as hire or
reward to domestic or menial
servants and to sums paid to
artisans, mechanics, laborers, and

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other EEs of like class

TN In many situations, however, and as the SC states, they are in

essence synonymous

Facilities Supplements
o Include articles or services for the
benefit of the EE or his family but
shall NOT include tools of the
trade or articles or service
primarily for the benefit of the ER
or necessary to the conduct of the
ERs business

o Wage-deductible o Not wage-deductible

o Benefit/privilege part of the o Benefit/privilege given to the EE
laborers basic wages, w/c constitutes an extra
renumeration above & over his
basic or ordinary earning or wage

**Rule VII-A Wages (Memo. Circular 2, Nov. 4, 1992)

TN The distinction bet a facility & a supplement is in the purpose, (not the
kind) of the item.

State Marine Corp & Royal Line, Inc. v Cebu Seamens Assoc, inc: The vessel
crew were provided w/ free meals by the ship owners (petitioner), not part of
their wages but as a necessary matter in the maintenance of the health &
efficiency of the crew during the voyage. They should not be deducted from
their wages. The deductions should be returned to them.
Atok-Big Wedge Assoc v Atok-Big Wedge: Supplements constitute extra
remuneration or special privileges or wages, while facilities on the other
hand, are items of expense necessary for the laborers & his familys
existence & substinence, so that by express provision of law, they form part
of the wage and when furnished by the ER are deductible therefrom, since if
they are not so furnished, the laborer would spend and pay for them just the

Requirements for Deducting Value of Facilities

1. Proof must be shown that such facilities are customarily furnished by the trade
(ex. Company policy or guideline showing that the meal & lodging are part of the

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2. The provision of deductible facilities must be voluntarily accepted in writing by
the EE;

3. Facilities must be charged at fair & reasonable value.

Mabeza v NLRC: The ER failed to meet any of the requirements. More

significantly, the food & lodging or the electricity & water consumed by the
EE were not facilities, but supplements. Hotel workers are required to work
different shifts and are expected to be available at various odd hours, their
ready availability is a necessary matter in the operations of respondents

Gratuity - Given freely or w/o recompense; a gift; something voluntarily given in

return for a favor or services; a bounty; a tip.
- gratuity pay is not intended to pay a worker for actual services rendered. It is a
money benefit given to the workers whose purpose is to reward EEs who have
rendered satisfactory & efficient service to the company.
- Not mandatory & not part of labor standard law

A fair days wage for fair days labor. if there is no work performed by the
EE, there can be no wage or pay unless the laborer was able, willing and ready to
work but was prevented by the mgt or was illegally locked out, suspended or

Equal pay for equal work. EEs working in the PH, if they are performing
similar functions & responsibilities under similar working conditions, should be paid
under the principle of equal pay for equal work.

International School Alliance of Educators v Quisumbing: IS hires as members

of the faculty, 1)foreign-hires and 2) local-hires. The school grants foreign-
hires salary of 25% more than that of local-hires due to a) the dislocation
factor, and b) limited tenure. SC: If an ER accords EEs the same position &
rank, the presumption is that these EEs perform equal work. There is no
showing that foreign-hires perform 25% more efficiently or effectively than
the local-hires. Both groups have similar functions & responsibilities w/c they
perform under similar working conditions. The dislocation factor and
limited tenure cannot serve as valid bases for the distinction in salary
rates, and are adequately compensated by certain benefits accorded them
w/c are not enjoyed by local-hires (housing, transpo, shipping, taxes, home
leave allowance).
The state has the right and duty to regulate the relations between labor and
capital. These relations are not merely contractual but are so impressed with
public interest that labor contracts, collective bargaining agreements
included must yield to the common good. Should such contracts contain

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stipulations that are contrary to public policy courts will not hesitate to strike
down these stipulations.

Agricultural Work Industrial Work

o Work on the soil and its harvests o When the harvests are processed
into finished product or
transformed to another product
o Lower rate o Higher rate
o (Agricultural EEs) o (industrial EEs)

Agricultural Activities

Preparation of the soil, planting of ramie stalks and transporting them to the
stripping sheds, stripping the fibers w/ the use of decorticating machines run
by electricity, drying the wet fibers, passing them through the brusher to
cleanse them of impurities and baling the fiers for the market
Planting & harvesting sugar cane & other chores incidental to ordinary
farming operations
Tillage of the soil, raising of crops including discovery of plant pests and
their eradication by means of insecticides
Fishpond business
farmhands employed to cultivate the vegetable garden of a non-agricultural
corp are not agricultural workers

Art 98. This title shall NOT apply to:

1. Farm tenancy or leasehold;

2. Domestic service

3. Persons working in their respective homes in needle work or

4. In any cottage industry duly registered in accordance w/ law.

5. BMBE (according to atty. )



The minimum wage rates for agricultural and non-agricultural EEs and workers in
each and every region of the country shall be those prescribed by the Regional
Tripartite Wages and Productivity Boards

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Statutory Minimum Wage the lowest wage rate fixed by law that an ER
can pay his workers. Compensation w/c is less than such minimum rate is
considered an underpayment that violates the law.
determined for each region by the regional wage boards
provided w/ margin to take care of contingencies, such as increase of
prices of commodities and increase in wants and to provide means for
a desirable improvement in EEs mode of living (A persons needs
increase as his means increase.)


1. Benefits all wage earners by setting a floor below w/c their pay cannot fall

2. raises the standard of competition among ERs, since it would protect the fair-
minded ER from the competition of the ER who pays his workers a wage below

3. is a pre-req. to the adoption of the SSS, w/c requires contributions from EEs

Ability to pay immaterial

ER cannot exempt himself from liability to pay minimum wages

because of poor financial condition of the company
The payment of minimum wage not being dependent on the
employers ability to pay.
Lack of funds is not a valid defense because the payment of minimum
wage is a mandatory statutory obligation

EEs not estopped to sue for difference in amount of wages

the acceptance by an EE of the wages paid him w/o objection does not give
rise to estoppel precluding him from suing for the difference bet the amt.
received and the amt. he should have received pursuant to a valid minimum
wage law

Exemptions to the coverage of the Rule on minimum wages

1. Household or domestic helpers, including family drivers and persons in the

personal service of another;

2. Homeworkers engaged in needle-work;

3. Workers employed in any establishment duly registered w/ the National Cottage

Industries and Devt Authority in accordance w/ RA 3470 provided that such workers
perform the work in their respective homes;

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4. Workers in any duly registered cooperative when so recommended by the Bureau
of Cooperative Devt and upon approval by the Sec of DOLE, provided however, that
such recommendation shall be given only for the purpose of making the cooperative
viable and upon finding and certification of said Bureau supported by adequate
proof, that the cooperative cannot resort to other remedial measures w/o serious
loss or prejudice to its operation except through its exemption from the
requirements of the Rules. The exemption shall be subj to such terms & conditions
and for such period of time as the Sec of Labor may prescribe.

5. Barangay Micro Business Enterprises (BMBE) (under RA 9178/BMBE Law),

provided that all EEs covered under this Act shall be entitled to

The same benefits given to any regular EE such as social security and health
care benefits. BMBEs are also exempt from income tax.
BMBE any business entity or enterprise engaged in the production,
processing or manufacturing of products or commodities, including agro-
processing, trading and services, whose total assets including those arising
from loans but exclusive of the land on w/c the particular business entitys
office, plant and equipment are situated, shall not be more than P3M.
(comprises no less than 90% of Ph ERs)

6. Retail Service Establishments (by virtue of RA 6727/Wage Rationalization Act)

a. regularly employing not more than 10 workers; and

b. upon application w/ and as determined by the Regional Board in accordance w/

the RRs of the Commission.

If not granted, EEs shall receive the approp compensation due them + 1% interest
per month retroactive to the effectivity of the Act.

Burden of proving such exemption rests on the ER.

Exemptions from holiday pay and SIL apply to establishments employing less than
ten employees meaning 1-9. On the other hand, the minimum wage exemption
specifies not more than ten employees, meaning 1-10. With nine or fewer
employees the establishment is exempt from HP and SIL, while with ten or fewer
employees the establishment is exempt from the minimum wage standard.

7. Other exemptions by provisions of Wage Orders by the Regional Tripartite Wage &
Productivity Board


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So that the rule against diminution of supplements/benefits may apply, it must be
shown that:

1. The grant of the benefit is founded on a policy or has ripened into a practice over
a long period;

2. The practice is consistent and deliberate;

3. The practice is not due to error in the construction or application of a doubtful or

difficult question of law; and

4. The diminution or discontinuance is done unilaterally by the ER.

Food/Meal Allowance

Cebu Autobus Co v United Cebu Autobus EEs Assoc: the company used to pay
its drivers and conductors, aside from their regular salary, a certain
percentage of their daily wage, as allowance for food. Discontinued by ER
upon effectivity of Minimum Wage Law. CIR: ---company practice

Nonconributory Retirement Plan

Nestle PH Inc. v NLRC: The fact that the retirement plan is noncontributory,
does not make it a nonissue in the CBA negotiations. The EEs have a vested
right over the existing benefits voluntarily granted to them by their ER. The
latter may not unilaterally withdraw, eliminate or diminish such benefits.

Monthly Emergency Allowance

R. Tiangco & V. Tiangco v Hon. Leogardo: ERs, fishing operator and fish
broker, discontinued paying the batillos (who work by unloading the fish from
the vessels, dependent on arrival of the vessels, hence they work only a few
days a month averaging 4 hrs. a day) a fixed monthly emergency allowance
(which they had been paid as a matter of practice/verbal agreement between
the parties, the discontinuance of the practice and/or verbal agreement
between the petitioners and private respondents contravened the provisions
of the LC)--illegal.

Full 13th month pay

Arco Metal Products v Samahan ng Manggagawa: Any benefit and

supplement being enjoyed by employees cannot be reduced, diminished,
discontinued, or eliminated by the employer. The principle of non-diminution
of benefits is founded on the constitution mandate to protect the rights of
workers and promote their welfare, and to afford labor full protettion. xxx

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ER cannot shrink away from its responsibility by merely claiming that its acts
of giving full 13th month pay to EEs who have not worked for the full year is a
mistake. It has become practice.

Exceptions to the Non-Diminution Rule

1. Correction of error;
2. Negotiated benefits;
3. Wage order compliance;
4. Benefits on reimbursement basis;
5. Reclassification of position;
6. Contingent benefits or conditional bonus; and
7. Productivity incentives.

Not established practice; Mistake in App of Law

Globe Mackay v NLRC: ER had been computing the COLA by multiplying
P3/day by 30 days. Upon effectivity of Wage Order #6, and in virtue thereof,
it used 22 days or actual days of work. Union disagreed and claimed 30 days
basis as company practice. SC: Not voluntary company practice. To be
considered as such, it should have been practiced over a long period of
time, and must be shown to have been consistent & deliberate and
not merely an erroneous application of the law.
Samahang Manggagawa sa Top Form v NLRC: Granted that the ER had
granted an across-the-board wage increase pursuant to RA 6727, that single
instance may not be considered an established company practice.
Negotiated benefits
Benefits initiated through negotiation bet ER & EEs, such as CBAs, are not
w/in the prohibition of Art 100 because, as products of bilateral contract,
they can only be eliminated or diminished bilaterally. What the law forbids is
elimination/modification done unilaterally by the ER.
Wage Order Compliance the giving of across-the-board salary
increases so as to rectify a salary distortion caused by compliance w/ a
wage order cannot be said to have ripened into a company practice.
Pag-asa Steel Works v CA: To ripen into a company practice that is
demandable as a matter of right, the giving of the increase should not only
be by reason of a strict legal (as Wage Order) or contractual obligation (CBA),
but by reason of an act of liberality on the part of the ER. Hence, even if the
company continuously grants a wage increase as mandated by a wage order
or pursuant to CBA the same would not automatically ripen into company
Benefit on Reimbursement Basis
Per diem allowance a daily allowance given for each day when an EE
is away from his home base; intended to cover their cost of lodging &

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subsistence when on duty outside of their permanent stationif the EE
did not leave his permanent station and spent nothing for meals &
lodging outside thereof, then he is not entitled to per diem as there is
nothing to be reimbursed
Monthly ration of gas given to certain managerial EEs is not part of
their basic salary. Its temporary revocation does not constitute a
diminution of the EEs fringe benefits.
The elimination of an existing benefit in exchange for an equal or
better one does not violate Art 100.
Reclassification of Position; Promotion
From rank-and-file to supervisory - the position holders lose OT pay and other
benefits but Art 100 is not violated. But, promotion & position reclassification
must be done in GF.
National Sugar Refineries Corp v NLRS & NBSR Union: ER implemented a Job
Evaluation program affecting all EEs. Respondents were reclassified from
rank-and-file to supervisory/managerial positions. Because of that, they lost
their OT, rest day & holiday pay but it was also shown that they received
upward adjustments in basic pay & allowances. SC: This reclassification is in
essence a promotion w/c is one of the jurisprudentially recognized exclusive
prerogatives of mgt, provided in is done in GF. Union failed to prove BF on the
part of the ER.
Promotion the advancement from one position to another with an increase
in duties & responsibilities as authorized by law and usually accompanied by
an increase in salary

Contingent/Conditional Benefits; Bonus

Art 100 is n/a to a benefit whose grant depends on the existence of certain
conditions, so that the benefit is no demandable if those preconditions are

Bonus an amt. granted & paid to an EE for his industry & loyalty w/c contributed to
the success of the ERs business and made possible the realization of profits. It is an
act of generosity.

it is not a demandable and enforceable oblig. BUT! It is so when it is made a

part of the wage/salary. In such a case, the latter would be a fixed amt. and
the former would be a contingent one dependent upon the realization of

WON bonus forms part of wages: depends on the circumstances and conditions for
its payment.

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a. If it is an addtl compensation w/c the ER promised and agreed to give w/o any
conditions imposed for its payment, such as success of business or greater
production or output, then it is part of the wage.

b. If it is paid only if profits are realized on a certain amt of productivity achieved, it

cannot be considered part of the wages.

c. Where it is not payable to all but only to laborers and only when the laborer
becomes more efficient or more productive, it is only an inducement for efficiency, a
prize therefor, not a part of the wage.

Luzon Stevedoring Corp case: An ER cannot be forced to distribute bonuses

w/c it can no longer afford to pay. To hold otherwise would be to penalize the
ER for his past generosity.
American Wire & Cable Daily Rated EEs Union v AWC Co Inc & the CA: For a
bonus to be enforceable, it must have been promised by the ER and
expressly agreed by the parties, or it must have had a fixed amt and had
been a long and regular practice on the part of the ER.

Equity or Long Practice as Basis of Bonus

Ph Education Co. Inc v CIR: even if a bonus is not demandable for not being
part of the salary of the EE, the bonus may nevertheless be granted on
equitable consideration.
Marcos v NLRC:if one enters into a contract of ENT under an agreemt that he
shall be paid a certain salary by the week or some other stated period and, in
addition, a bonus, in case he serves for a specified length of time, there is not
reason for refusing to enforce the promise to pay the bonus, if the EE has
served during the stipulated time, on the ground that it was a promise of
mere gratuity.

Services Rendered as Basis of Bonus

EEs whose ENT has been terminated may still demand paymt of service
under company policy and of the bonuses. The R is not defeated by a
release & quitclaim
LG Marcos v NLRC & Insular Life: The fact that an EE has signed a satisfaction
receipt for his claims does not necessarily result in the waiver thereof. The
law does not consider as valid any agreement whereby a worker agrees to
receive less compensation than what he is entitled to recover. A deed of
release or quitclaim cannot bar an EE from demanding benefits to w/c he is
legally entitled.

No Profit, No Bonus
Traders Royal Bank v NLRC: The matter of giving the EEs bonuses over &
above their lawful salaries & allowances is entirely dependent on the profits,

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if any, realized by the bank from its operations during the past year. Since the
fiscal condition having declined, the bank may not be forced to distribute
bonuses w/c it can no longer afford to pay and, in effect, be penalized for its
past generosity to its EEs.
A bonus is gratuity or act of liberality of the giver which the recipient has no
right to demand as a matter of right. It is something given in addition to
what is ordinarily received by or strictly due to the recipient. The garanting
of bonus is bascally a management prerogative which cannot be forced upon
the employer who may not be obliged to assume the onerous burden of
granting bonuses or other benefits aside from the employees basic salaries
or wages.

Productivity Incentives - bonus that comes from productivity gain, or

improved output without increasing input
-RA 6971: EEs share is in the nature of salary bonus proportionate to
increases in current productivity over the average for the preceding 3
consecutive years.
Not gratuitous; it is a benefit claimable only on the basis of predefined output
Contingent/conditional; if they are not given because the preconditions are
absent, Art 100 is not violated except perhaps if there is contractual
commitment to the contrary.


Adds 1-month pay to the usual 12-month earnings. BUT, does not change the
EEs basic wage. Hence, OT pay, restday pay, SSS contributions & other roll-
up or add-on payroll costs do not increase.
Requires at least 1 month service during the calendar year
SCOPE: all rank-and-file EEs, regardless or salary rate. EXC: managerial &
supervisory EEs
EXCEPTION: ERs who are already paying their EEs a 13thMP or its
equivalent are not covered by the decree. (the intent of the law was to grant
addtl income to EEs not already receiving the samenot to all EEs but only
to the unfortunate ones who are not paid a 13thmonth salary or what
amounts to it, by whatever name called)

its Equivalent shall include Xmas bonus, mid-year bonus, profit-sharing

payments and other cash bonuses amounting to not less than 1/12 of the basic
salary. When an ER pays less than 1/12 of the EEs basic salary, the ER shall pay the
difference. - Dole PH Inc v Leogardo

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EXC: shall not include cash & stock dividends, CO LAs, & all other allowances
regularly enjoyed by the EEs, as well as nonmonetary benefits (food, free
electricity, etc)
Framanlis Farms Inc. v Minister of Labor: Such benefits in the form of food or
free electricity are not the proper substitute for the 13thMP required by law.
Neither may year-end rewards for loyalty & service be considered in lieu of

EXC: If the bonus was included in or considered as the equivalent of the 13thMP,
there would be no need for a specific provision of such bonus in the CBA. But if
the CBA did provide for a bonus in graduated amts depending on the length of
service, for example, the intention is clear that the bonus provided in the CBA was
meant to be in addition to the legal requirement of 13thMP.

13thMP deemed incorporated in the CBA, employment contract. The absence of

an express provision obligating the ER to pay 13thMP to the EEs is immaterial

14th MP basically a bonus, and gratuitous;

- mgt prerogative & cannot be forced upon the ER; not legally demandable

Exclusions in the Computation of 13th MP

13thMP = 1/12 of the basic salary of the EE w/in a calendar year

Q: What does basic salary include?

A: Basic salary shall include all renumerations or earnings paid by an ER to an EE for

services rendered

Not included (fringe benefits)

COLAs granted pursuant to PD 525/LOI 174,

profit-sharing payments and all allowances and
monetary benefits w/c are not considered or integrated as part of the regular
or basic salary of the EE
OT Pay

Fringe benefits all allowances & monetary benefits w/c are not
considered/integrated as part of the basic salary

The items excluded by the decree may be included through established practice
or agreement binding on the ER

Q: Are commissions included in the computation?

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A: It depends.

1. If the commissions may properly be considered part of the basic salary, they
should be included in computing the 13THMP

Ph Duplicators Inc v NLRC: the sales commission earned by the sales men
constitute part of their compensation, considering that the ER pays them a
small fixed/guaranteed wage; the greater part being composed of the
sales/incentive commissions earned on actual sales closed by them

Sales commissions are intimately related or directly proportional to the extent or

energy of an EEs endeavors; paid upon the specific results achieved by a salesman-
EE; it is a percentage of the sales closed by a salesman & operates as an integral
part of such salesmans bsic pay.

2. If they are NOT integral part of the basic salary, then they shld be excluded.

Boie-Takeda Case: the commissions paid to medreps were excluded from the
term basic salary because these were paid to them as productivity
bonuses. They are generally tied to the productivity or capacity for revenue
production of a corp; such bonuses closely resemble profit-sharing payments
and have no clear direct or necessary relation to the amt of work actually
done by each indiv EE.

The commissions pd by Boie to its medreps could not have been sales commissions.
Medreps are not salesmen; they do not effect any sale of any article at all. They are
EEs engaged in the promotion of pharmaceutical products or med devices
manufactured by their ER. They promote such products by visiting identified
physicians & inform such physicians orally/w/ the aid of brochures, of the existence
& chem composition of the pharma product. The addts payments given to them
were not in fact commissions but rather in the nature of profit-sharing bonuses.

Guaranteed wage/commission EEs whose income is guaranteed by way of wages

and/or commissions are entitled to a 13thMP based on their earnings that include

Ph Agricultural Commercial & Industrial Workers Union v NLRC: the bus

drivers & conductors of respondent transic co. (allegedly paid on purely
commission basis) are entitled to 13thMP on both their fixed & guaranteed
wage and commission
in the case of a bus conductor paid on commission only as supported by his
pay slips w/c indicated the varying amount of commissions he received each
trip not included in 13THMP

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Q: Is Teachers Overload Pay Included?

A: Yes. It is considered part of their basic pay for the purposes of computing 13thMP

GR: Payments for overload work w/in 8 hrs form part of the basic wage, & therefore
are to be included in the computation of 13thMP.

Overload the load in excess of the normal load of private school teachers as
prescribed by the DECS or the policies, rules & standard of particular private

Normal load- 8hrs per working day

Overload work Overtime work

Overtime work Overload work

o Work rendered in excess of the o May be performed either w/in or
normal working hrs. of 8 in a day outside 8 hrs. in a day

Proportionate 13thMP

- an EE who has resigned or was dismissed at any time before the time for payment
of the 13thMP is entitled to this monetary benefit in proportion to the length of time
he worked during the year. unless otherwise stipulated in the CBA

Distressed Employer exempted from paying 13thMP upon prior authorization

from the Sec of DOLE

Difference of opinion in the computation of 13thMP is a nonstrikeable issue. a

strike held on this ground is illegal.

Govt Employees not covered by 13thMP

Seafarers not covered by 13thMP; because they are contractual, not regular
EEs. Their ENT is governed by their Contract of Enlistment w/c was approved by the
POEA. It does not provide for 13thMP.

Art 101. PAYMENT BY RESULTS (Piecework)

The Sec of Labor shall regulate the payment of wages by results, including pakyao,
piecework and other noontime work, in order to ensure the payment of fair &
reasonable wage rates, preferably through time & motion studies or in consultation
w/ reps of workers & ERs orgs.

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Workers paid by results workers whose pay is calculated not on the basis of time
spent on the job but of the quantity & quality or the kind of work they turn out.
(nontime work).

stress is placed on the unit of work produced or the quantity thereof

a uniform amount is paid per unit accomplished

Categories of Piece-rate workers

A. As to presence of control

1. Those whose time & performance is supervised by the ER;

piece-rate workers, esp when they work in company premises (shoes,

handicraft, garment)

2. Those whose time & performance is unsupervised by the ER.

Pakyaw & takay basis commonly practiced in the agricultural industry

(planting, harvesting per hectare of land)

Pakyaw more aptly used when the job/work to be performed is in bulk/volumes

w/c are difficult to quantify

Piece-rate Common where the output may easily be counted or measured

*Payment by result is not determinative of EE-ER Relationship. It is merely a method

of compensation and does not define the essence of the relation.

Basis of Output Rate; Process to set the Standard

1. On petition of any interested party, or upon its initiative, the DOLE shall use all
available reps of ERs & workers orgs, to determine whether the EEs in any
industry/enterprise are being compensated in accordance w/ the min wage reqmts

2. The basis for the establishment of rates per pc, output or contract work shall be
the performance of an ordinary worker of min skill/ability.

3. An ordinary worker of min skill/ability is the average worker of the lowest

producing group representing 50% of the total # of EEs engaged in similar ENT in a
particular establishment, excluding learners, apprentices & handicapped workers
employed therein.

4. Where the output rates established by the ER do not conform w/ the standards
prescribed herein, or w/ the rates prescribed by the DOLE in an approp order, the

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EEs shall be entitled to the diff bet the amt to w/c they are entitled to receive under
such prescribed standards/rates and that actually paid them by the ER.

B. As to Rate of Payment

1. Those that are paid piece rates w/c are prescribed in Piece Rate Orders issued by

# of pieces x rate per pc

These workers are not covered by the Rule on Hours of Work (no premium &
OT pay)

2. Those that are paid output rates w/c are prescribed by the ER and are not yet
approved by the DOLE.

# of pcs x rate per pc as determined by the ER.

a.) If the resulting amt. is than the statutory min daily rate in rel to the # of hrs
worked, the worker will rcv such amt.

b.) BUT, if the amt. is less than the applicable legal rate, it is possible that the rates
per pc are not in accordance w/ the standards. In that case, the ER is required by
law to pay the difference.

Entitlement of Piece-Rate Workers to NSD and SIL

a. Unsupervised no OT/SIL

b. Supervised entitled to OT/SIL

- The yearly commutation/cash conversion of the SIL should be based on their

average daily earnings earned during the yr by the actual number of working days
or the statutory min rate, whichever is higher.

GR: the amt earned during the year may exclude COLA, OT pay, and premium pay,
holiday pay, NSD and company fringe benefits there is agreement to the contrary

Illustration of the computation

Total wages earned for 1 yr 12 = ave monthly earning

AME 30*** = Daily Earnings

DE x 5 = five-day incentive pay

*** should be the actual days of work in a month

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Entitlement to Holiday Pay

shall not be less than his average daily earnings for the last 7 actual working
days immediately preceding the regular holiday. Provided however, that in no
case shall the holiday pay be less than the applicable statutory min wage rate

Entitlement to 13thMP

GR: PD 851 exempts from payment of 13thMP ERs of those who are paid a
fixed amt for performing specific work, irrespective of time consumed in the
perf thereof,
except where the workers are paid on piece-work basis (those who are paid
a standard amt for every pc/unit of work produced that is more/less regularly
replicated, w/o regard to the time spent in producing the same) in w/c case
the ER shall grant the 13thMP to such EEs.
The piece-rate worker should have rendered at least 1 month work/service
during the calendar yr.

Not Entitled to HP,ND, SIL, 13thMP

1. Field personnel
2. Unsupervised employees
3. Engaged on task/contract basis
4. Purely commission basis
5. Paid a fixed amt for performing work irrespective of the time

Not Entitled to OT Pay

1. Paid on piece-work
2. Paid on takay
3. Paid on pakyaw
4. Paid on task basis if their output rates are in accordance w/ the
standards under Sec 8 Rule 7 Book 3, or where such rates have been
fixed by the Sec of Labor

Benefits Payable to Piece-Rate Workers

1. Statutory minimum wage (MW)

2. Yearly service incentive leave of 5 days w/ pay (SIL)
3. Night shift differential (ND)
4. Holiday pay (HP)
5. Meal & rest periods (Meal/rest)
6. Overtime pay (conditional) (OT)
7. Premium pay (conditional) (PP)

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8. 13thMonth pay (13th)
9. other benefits granted by law, by indiv/CBA or company policy/practice

BWC Guidelines Summary

The rate-per-pc to be paid to a worker should be submitted to DOLE for

DOLE decides whether the outpu-and-pay proposal of the ER fairly &
reasonably meets the legal MW, based on the output of ave. workers doing
same products under comparable conditions.
If DOLE approves the proposal it becomes the standard (quota). Because the
DOLE-approved standard is presumed fair & reasonable, a piece-rater who
does not reach the quota will earn less than the legal MW and not w/ the pay
formula. In such case the ER need not make up the diff bet the legal MW and
the wage actually earned.
On the other hand, if the outpu-and-pay scheme has not been approved by
DOLE, or does not conform w/ DOLE-issued orders, then the ER maybe
required to pay the shortfall bet the actual earning and the prescribed MW.
The piece-rate pay formula needs DOLEs approval so ast to protect the
workers right to be paid or to earn at least the MW, and at the same time, to
help the ER obtain the corresponding work ouput.



Proof of Wage payment ER has burden of proof

The IRs require every ER to keep a payroll. Among other things, it must show the
length of time to be paid, the pay rate, the amt actually paid, and so on. AND the EE
should sign the payroll.

ER cannot pay his workers by means of:

1. Promissory notes
2. Vouchers
3. Coupons
4. Tokens
5. Tickets
6. Chits
7. Any obj other than legal tender

Even when expressly requested by the EE.

GR: Payment by legal tender

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EXC: Payment by check or money order may be allowed if the same is:
1. Customary on the date of effectivity of the LC;
2. Necessary because of special circs as determined by the Sec of Labor;
3. Stipulated in the CB; or
4. Where the ff conditions are met
a.) There is a bank or other facility for encashment w/in 1km
b.) The ER, or any of his agents or reps, does not rcv any
pecuniary benefit directly/indirectly from the arrangement;
c.) The EEs are given reasonable time during banking hrs to
withdraw their wages from the bank w/c time shall be
considered as compensable hours worked if done during
working hrs; and
d.) The payment by check is w/ the written consent of the EEs
concerned if there is no CBA authorizing the payment of wages
by bank checks.


1. . At least once every 2 weeks; or
2. 2. Twice a month at intervals not exceeding 16 days.

1. In case of force majeure or other circs beyond the ERs control, payment must be
made immediately after such occurrence has ceased.

2. If engaged to perform a task w/c cannot be completed in 2 weeks and in the

absence of CBA or arbitration award.

a.) Payment shall be made at intervals not exceeding 16 days, in proportion to

the amt of work completed;
b.) That final settlement is made upon completion of work.


GR: At or near the place of undertaking

1. When payment cannot be effected at or near the place of work by reason
of deterioration of peace & order conditions, or by reason of actual or
impending emergencies caused by fire, flood or other calamity rendering
paymt thereat impossible;
2. When the ER provides for free transpo to the EEs back and forth; and
3. Under any other analogous circs.

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Prohibition: No ER shall pay his EEs in a bar, night or day club, drinking
establishment, massage clinic, dance hall or other similar places or in places where
games are played w/ stakes of money or thins representing money except in the
case of persons employed in such places.

Requisites for Payment thru Banks (Wage Rationalization Act)

1. There must be written permission of the majority of the EEs concerned in an


2. The establishment must have 25/more EEs; and

3. The establishment must be located w/in 1 km radius to the bank

Requisites of Payment thru ATM

1. The ATM sys of paymt is w/ the written consent of the EE concerned;

2. The EEs are given reasonable time to withdraw their wages from the bank facility
w/c, if done during working hrs, shall be considered as compensable hrs worked;

3. The sys shall allow the EE to rcv their wage w/in the period & the amt prescribed
under the LC;

4. There is a bank/ATM facility w/in 1km radius from the workplace;

5. Upon the request of the concerned EE, the ER shall issue a record evidencing
paymt of wages, benefits & deductions for a particular pd;

6. The ATM sys of paymt shall neither result in diminution of benefits & privileges of
the EE nor shall the latter incur addtl expenses in the process; and

7. The ER shall assume full responsibility in case the wage protection provisions of
law & regulations are not complied w/ under the arrangemt


GR: Wages shall be paid directly to the workers to whom they are due.

1. Payment through another person

a. In case of force majeure rendering such payment impossible provided said person
is under written authority given by the worker for the purpose;

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b. When authorized under existing law, including payments for insurance premiums
of the EE and union dues where the R to check-off has been recognized by the ER in
accordance w/ a CBA or authorized in writing by the indiv EEs concerned.

2. Payment through the heirs of the worker

In case the worker has died, ER may pay wages of the deceased worker to
the heirs of the latter w/o the necessity of intestate proceedings.


1) Claimants shall execute an affidavit attesting their relationship to the deceased

and the fact that they are his heirs, to the exclusion of all others (Affidavit of Next of

2) In case of a minor heir, affidavit shall be executed on his behalf by his natural
guardian or next of kin;

3) Affidavit shall be presented to the ER who shall make payment through the Sec of
Labor or his rep;

4) The representative shall act as referee in dividing the amt. paid among the heirs;

5) Payment of wages under this Art shall absolve the ER of any further liability w/
respect to the amt paid.

3. Payment through a family member of the workers family

Where the ER is authorized in writing by the EE to pay his wages to a member

of his family

Summary of Legal Prohibitions on Wages

1) Payment of wages in non-cash form;

2) Payment of wages in night and day clubs, bars & other similar places;

3) Non-diminution of wages; and

4) Non-interference by the ERs in the EEs disposition of their wages.

Summary of Rules on Payment of Wages

What must be paid?

Legal Tender.

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promissory notes, vouchers, coupons, tokens, tickets, chits, or any other obj other
than legal tender


Once every 2 weeks, or Twice a month at intervals of at least 16 days


At or near the place of undertaking


Directly to the EE


Whenever an employer enters into a contract with another person for the
performance of the formers work, the employees of the contractor and of the
latters subcontractor, if any, shall be paid in accordance with the provisions of this

In the event that the contractor or subcontractor fails to pay the wages of the
employees in accordance with this code, the ER shall be jointly and severally liable
with his contractor or subcontractor to such EEs to the extent of the work performed
under the contract, in the same manner and extent that he is liable to the
employees directly employed by him.

The Sec. of Labor may, by appropriate regulations, restrict or prohibit the

contracting out of labor to protect the rights of workers established under this code.
In so prohibiting or restricting, he may make appropriate distinctions between labor-
only contracting and job-contracting as well as differentiations within these types of
contracting and determine who among the parties involved shall be considered the
ER for purposes of this Code, to prevent any violation or circumvention of any
provision of this code.

There is labor only contracting where the persons applying worker to an

ER does not have any substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others and the workers recruited
and placed by such persons are performing activities which are directly related to
the principal business of such ER. In such cases, the person or intermediary shall be
considered merely as an agent of the ER who shall be responsible to the workers in
the same manner and extent as if the latter were directly employed by him.

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Types of Contractors under the Law

1. Job Contracting or Subcontracting an arrangement whereby a principal

agrees to put out or farm out with a contractor or subcontractor the performance or
completion of a specific job, work or service w/in a definite or predetermined period,
regardless or whether such job, work, or service is t be performed or completed w/in
or outside the premises of the principal

Existence of Trilateral Relationship

under this legitimate contracting the ff. CONTRACTS exist:

a. Contract for specific job, work or service bet the principal & the
contractor/subcontractor; and

b. Contract of ENT bet the contractor/subcontractor and its workers.

Hence, the PARTIES involved are:

I. Principal- refers to any ER, whether person or entity including the govt
agencies and govt-owned and controlled corporations, who/which puts out or
farms out a job, service or work to a contractor.
II. Contractor/subcontractor- refers to any person or entity, including a
cooperative, engaged in a legitimate contracting or subcontracting
arrangement providing either services, skilled workers, temporary workers or
a combination of services to a principal under a Service Agreement.
III. Contractual workers-include on employed by a contractor to perform or
complete a job, work or service pursuant to a Service Agreement with a

Laws applicable between:

Principal & Contractor Civil Code & pertinent commercial laws

Contractor & his EEsLabor Code & special labor laws
Principal & contractors EEs no EE-ER Relationship

BUT ER-EE Relationship will exist bet the Principal & the Workers where the
contracting arrangement is not legitimate, as in labor-only contracting

Elements of Independent Contractor Job Contracting

1. The sub/contractor carries on a distinct and independent business and

undertakes to perform the job on his own account and under his own responsibility,
according to its own manner and method and free from the control & direction of
the principal in all matters connected w/ the performance of the work except to the
results thereof;

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2. The sub/contractor has substantial capital or investment in tool, equipment and
machineries, work premises and other materials necessary in the conduct of his

3. The agreement bet the principal and sub/contractor assures the contractual EEs
entitlement to all labor & health standards, free exercise of the R to self-org,
security of tenure and social & welfare benefits;

4. Must be properly registered as such in accordance w/ DO #18-02. (The absence

of registration only gives rise to the presumption that the contractor is
engaged in labor-only contracting a presumption that can be refuted.)

2. Labor-only Contracting an arrangement where the sub/contractor merely

recruits, supplies or places workers to perform a job, work or service for a principal
(ESSENTIAL ELEMENT), and ANY of the ff ELEMENTS is present:

a. Lack of substantial capital/investment AND performance of activities directly

related to the principals business (confirming element);

b. The contractor does not exercise the right of control over the performance of the
contractual EE (confirming element); or

c. prohibited acts(
mitch pls be noted katong prohibited acts nga
giingon ni madam or )
LOC = Essential Element + either or both confirming element/s

Labor-only contracting is wrong & prohibited bcoz it is an attempt to evade the

obligs of an EEr:

a) To respect EEs R to unionize;

b) R to ENT standards;

c) R to security of tenure

Substantial capital capital stocks and subscribed capitalization in the case of

corps, tools, equipment, implements, machineries and work premises, actually &
directly used by the sub/contractor in the performance or completion of the job,
work or service contracted out.

o Paid up capital stocks/shares of at least 3M corporation, partnerships

and cooperatives
o Net worth of at least 3M single propreitorship

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The law does not require both substantial capital and investment in the form
of tools, equipment, machineries, etc.
One is not a labor only contractor if one has substantial capital although
without investment in tools, equipment, etc.

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

Insular life v NLRC: exclusive servicing esp springing from a regulation

issued by the Insurance Commission, and not from an intention by the
alleged ER, does not necessarily mean being under the control or ENT of the
entity being served. The relship may still be classified as independent
contractorship because the element of control is absent.

- EEs may resign from their jobs to become contractors to their former ER, but the
latter should cease controlling the means & method of doing the work allegedly
contracted, otherwise, the result is LOC.

Summary of Prohibited Labor Contracting

1. Labor-only contracting;

2. Contracting that terminates the ENT of regular EEs, or reduces their work hrs, or
reduces/splits a bargaining unit, if such contracting out is not done in GF & not
justified by business exigencies;

3. Contracting w/ a Cabo person/s or labor group w/c, in the guise of a labor org,
supplies workers to an ER w/ or w/o any monetary or other consideration whether in
the capacity of an agent of the ER or as an ostensible independent contractor;

4. Contracting w/ in-house agency;

5. Contracting because of a strike/lockout;

6. Contracting that constitutes ULP under Art 248.



The ER/principal is merely an indirect ER, by operation of law, of his contractors EEs

The ER/principal is treated as direct ER of the contractors EEs in all instances


is deemed agen of the ER)

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The law creates an ER-EE relshp for a limited purpose, i.e. to ensure that the EEs are
paid their wages

The statute creates an ER-EE relshp for a comprehensive purpose, i.e. to prevent a
circumvention of labor laws

The principal becomes solidarily liable w/ the contractor in the even the latter fails
to pay the EEs wages and for violation of labor standard laws. The liability, however
does not extend to the paymt of backwages or separation pay of EEs who are
illegally dismissed

The principal becomes solidarily liable w/ the contractor not only for unpaid wages
but also for all the rightful claims of the EEs under the LC AND ANCILLARY LAWS


Prohibited by law

Presence of substantial capital or investment


Note: The principal shall be SOLIDARILY liable w/ the contractor in the event of any
violation of any provision of the LC, including failure to pay wages. This will not
prevent the principal from claiming reimbursement from the contractor.

Note: The principal shall be deemed the ER of the contractual EE in any of the ff
cases as declared by competent authority:

1. Labor-only contracting; and

2. Contracting arrangement falling w/in the prohibitions


Any person, partnership, association or corporation which, not being n ER, contracts
w/ an independent contractor for the performance of any work, task, job or project.

4 Features of Legitimate Contracting

1. Parties a principal (contractee) enters into a contract w/ a contractor, or if the

principal is himself a contractor, he enters into contact w/ a sub-contractor. A
contracted job may be subcontracted, partly or wholly, unless prohibited in the

2. Specific job the contract calls for the performance or completion of a specific
job, work or service;

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3. Period such job, work or service is to be performed or completed w/in a definite
or predetermined period; and

4. Location the contracted job, work or service may be performed or completed

inside or outside the premises of the principal

An independent contractor is one who exercises:

1. Independent ENT;

2. Contracts to do a pc of work accdg to his own methods; and

3. Is not subj to control of ER result

The labor contractor is legit if:

1. He is a job contractor; and

2. Is properly registered w/ DOLE as the same

Judicial Notice of Job Contracting

- The Court has already taken judicial notice of the general practice adopted in
several gort & private institutions and industries of hiring independent contractors
to perform special services. These services range from janitorial, security and even
technical or other specific services. While these services may be considered directly
related to the principal business

of the ER, nevertheless, they are not necessary in the conduct of the principal
business of the ER.

A manpower company may be a LOC in one case but an independent contractor

in another.

Coca-cola Bottlers Ph v Hingpit: Lipercon was adjudged to be a LOC in a previous

case (Guarin v Lipercon), for lacking the substantial capital. But not so in the
present case, where it has been able to establish its characted as an independent
contractor. Aside form hiring its own EEs and paying the workers their salaries, it
also exercised supervision & control over them, w/c is the most important aspect in
determining ER-EE Relshp.


- An ER or indirect ER may require the sub/contractor to furnish a bond equal to the

cost of labor under contract, on condition that the bond will answer for the wages
due the EEs should the sub/contractor, as the case may be fail to pay the same.

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- Where the ER fails to require the contractor to post a bond, the ER must answer for
whatever liabilities the contractor may have incurred to his EEs. This is w/o
prejudice to its seeking reimbursement from the contractor for whatever amt it will
have to pay the EEs.


The provision of existing laws to the contrary notwithstanding, every ER or indirect

ER shall be held responsible w/ his sub/contractor for any violation of any provision
of the LC. For purposes of determining the extent of their civil liability under this Ch,
they shall be considered as direct ERs.

The existence of ER-EE Relshp is a precondition to entitlement to labor standards &

labor relatios Rs.

Extent of Principals Liability in Legitimate Contracting

- solidarily liable in the event of any violation of any provisions of the LC

1. For wages and money claims if the sub/contractor fails to pay the wages of his
EEs in accdance w/ the LC, the ER shall be jointly & severally (solidarily) liable w/ his
contractor to such EEs to the extent of work performed under the contract, in the
same manner & extent that he is liable to EEs directly employed by him.

He cannot escape this liability even if he has paid the workers wage rate in
accordance w/ the contract w/ the contractor. The EEs are not privy to the contract.
Also, the labor standard legislations are considered written in every contract.
Similarly, legislated wage increases are deemed amendments to the contract. Thus,
ERs cannot hide behind their contracts in order to evade their or their contractors
liability for noncompliance w/ the statutory min wage, w/o prejudice to his R to
recover whatever amount he paid from the contractor.

2. a) Reimbursement the joint & several liability of the contractor & the principal
under Arts 106, 107 & 109 of the LC is mandated to assure compliance of the
provisions including the statutory min wage. The contractor is made liable by virtue
of his status as the direct ER; and the principal is made the indirect ER of the
contractors EEs for purposes of paying the EEs their wages should the contractor
fail to do so.

- where no ER-EE Relshp exists bet the parties, as to reimbursement bet the
principal & the contractor, the RTC has jurisdiction

b) Payment before Reimbursement but one may seek reimbursement only AFTER
it has paid the EEs.

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c) For Other Violations qualified or limited liability; if the liability is for failure to
pay the min wage, or the SIL, or other benefits derived from or provided for by law,
the principal is equally liable w/ the contractor as if the principal were the direct ER.

BUT, if the liability is invested w/ punitive character, such as an award for

backwages & separation pay because of an illegal dismissal of the contractors EE,
the liability should be solely that of the contractor in absence of proof that the
principal conspired w/ the contractor in the commission of the illegal dismissal.

Rights of Contractual EEs (EEs of a legitimate contractor)

1. Safe & healthful working conditions;

2. Labor standards such as SIL, rest days, OT Pay, holiday pay, 13thMP, & separation

3. SS & welfare benefits;

4. Self-orgs, CB and peaceful concerted action; and

5. Security of tenure.

Certain conditions required expressly stipulated in the ENT Contract

1. Specific description of the job, work or service to be performed by the contractual


2. The place of work and terms & conditions of ENT, uncluding a statement of the
wage rate applicable to the indiv contractual EE; and

3. The term/duration of ENT, w/c shall be coextensive w/ the contract of the

principal & contractor or w/ the specific phase for w/c the contractual EE is engaged,
as the case may be.

The sub/contractor shall inform the contractual EE of the foregoing terms &
conditions on or before the 1st day of his ENT.

Security of Tenure:

a. in cases of termination of ENT prior to the expiration of the contract bet the
principal & the sub/contractor, the R of the contractual EE to separation pay or
other related benefits shall be governed by applicable laws & jurisprudence on
termination of ENT.

b. Where the termination results from expiration of contract bet the principal & the
contractor, or from completion of the phase of the job for w/c the EE is
engagednot entitled to separation pay. however, this shall be w/o prejudice to

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completion bonuses or other emoluments, incl retirement pay as may be provided
by law/contract bet the principal & the contractor.

Security of tenure requires procedural due process for termination of ENT.

No security of tenure for casual EEs.

Registration of Contractors


1. Submission of annual reports

a. Sworn undertaiking that the sss, Home Devt Mutual Fund, PhilHealth, EEs
Compensation Commission (ECC), and BIR remittances

2. They are subj to routine inspection by the DOLE

Effect of Nonregistration:

GR: The absence of registration gives rise to the presumption that the contractor is
engaged in LOC,

But, if the contractor directly supervises the workers & imposes disciplinary action,
he qualifies as a legit contractor despite nonregistration w/ DOLE.


- Workers shall enjoy first preference as regards their unpaid wages & other
monetary claims, any provision of law to the contrary notwithstanding.

- Unpaid wages earned by EEs before the declaration of bankruptcy or judicial

liquidation of the ERs business shall be given first preference & shall be paid in full
before other creditors may establish any claim to share in the assets of the

- Not only unpaid wages, but also other monetary claims to w/c even claims of the
govt must be deemed subordinate.

n/a in case the ER-corp is under rehabilitation.


1. Formal declaration of insolvency or bankruptcy;

2. General judicial liquidation proceedings of the ERs business; and

3. Filing of claims by workers.

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1. In cases of unlawful withholding of wages, the culpable party may be assessed

attys fees equivalent to 10% of the amt of wages recovered.

2. It shall be unlawful for any person to demand or accept, in any judicial or admin
proceedings for the recovery of the wages, attys fees w/c exceed 10% of the amt of
wages recovered.

Concepts of Attys Fees

a. Ordinary reasonable compensation paid to a lawyer by his client for the legal
services he has rendered.

b. Extraordinary indemnity for damages ordered by the court to be paid by the

losing party in a litigation, and is not to be paid to the lawyer but to the client,
unless they have agreed that the award shall pertain to the lawyer as an addtl
compensation or as a part there of.

GR: Awarded attys fee may not exceed 10%,

but bet lawyer & client quantum meruit may apply.
Quantum meruit as much as he deserves.


1. The time spent & the extent of services rendered or required;

2. The novelty & difficulty of the questions involved;
3. The importance of the subject matter;
4. The skill demanded;
5. The probability of losing other ENT as a result of acceptance of the proferred
IBP chapter to w/c the lawyer belongs;
6. The amt involved in the controversy and the benefits resulting to the client
from the services;
7. The contingency of certainty of compensation;
8. The character of ENT, whether occasional or established; and
9. The professional standing of the lawyer.

2 Kinds of Cases where Attys Fees may be Assessed:

1. Cases arising from unlawful withholding of wages; and

2. Cases arising from CBAs.

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3. Claims for death benefits (Heirs of Aniban) : Art 111 does not limit the award of
attys fees to cases of unlawful withholding of wages only. What it explicitly prohibits
is the award of attys fees w/c exceed 10% of the amt of wages recovered.

Non-lawyers not entitled to Attys Fees

GR: Although the law allows non-lawyers to appear before the NLRC or
any Labor Arbiter, this does not mean that they are entitled to attys
fees. Entitlement to attys fees presupposes the existence of ER-EE
Relationship, and this cannot exist unless the clients rep is a lawyer.
Union Service Fee non-lawyers may represent their org or members.
The said labor federations & local unions have a valid claim to attys
PAO lawyers are disqualified from being awarded attys fees.

Chapter IV Prohibition Regarding Wages

Art. 112. Non-interference in disposal of wages

No ER shall limit or otherwise interfere with the freedom of any EE to dispose

of his wages. He shall not in any manner force, compel or oblige his employees to
purchase merchandise, commodities or other properties from the ER or from any
other person, or otherwise make use of any store or service of such ER or any other

1. Civil Code Provisions

a. Art 1705 CC: paid in legal currency

b. Art 1706 CC: withholding of wages, except for a debt due, shall not be made
by the employer
c. Art 1707 CC: Labors wages shall be a lien on goods manufactured or work
d. Art 1708 CC: wages not subject to execution or attachment, except for debts
incurred for food, shelter, clothing and medical attenda.ce
e. Art 1709 CC: Employer shall neither seize nor retain any tool or other articles
belonging to the laborer.

Art. 113. Wage Deduction

No ER, in his own behalf or in behalf of any person shall make any deduction from
the wages of is EEs, except:

(a) In case where the worker is insured with his consent by the ER, and the
deduction is to recompense the ER for the amount paid by him as premium
on the insurance.

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(b) For union dues, in cases where the right of the worker or his union to check
off has been recognized by the ER or unauthorized in writing by the individual
worker concerned; and
(c) In cases where the ER is authorized by law or regulations issued by the Sec.
of labor.

Wage deduction

Authorized deductions by law:

a. Value of means and other facilities

b. Premium paid by employer where insured with employees consent
c. Union to check off recognized by employer/ authorized in writing by indiv
d. Employee is indebted to employer, due & demandable
e. Subject to exection for debts incurred for food, shelter clothing and medical
f. Withholding tax
g. Salary deductions cooperative
h. SSS, Medicare, Pag-ibig

Payment to 3rd person

Authorized in writing by employee

Employer agrees to make deduction but not obliged to do so.
Employer must not receive any pecuniary benefit, directly or indirectly from

Deductions for absences

Deductions for unpaid absences are allowed.

Reduced pay because of reduced work days

Right to reduce workdays

Art. 114. Deposits for Loss or Damage

No ER shall require his worker to make deposits from which deductions shall
be made for the reimbursement of loss or dam=ge to tools, materials or equipment
supplied by the ER, except when the ER is engaged in such trades, occupations or
business whre the practice of making deductions or requiring deposits is a
recognized one, or is necessary or desirable as determined by the Sec. of labor in
appropriate rules and regulations.

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TN Article 114 provides the rule on deposits for loss or damage to
tools, materials or equipments supplied by the Er. It does not permit,
for instance, the P15.00 daily deposits which the taxi drivers are
required to make to defray any shortage in their boundary. No
Showing that the DOLE Sec recognized such deposit as a practice in
taxi industry. Hence, illegal. (5-J Taxi v. NLRC)

Art. 115. Limitations

No deductions from the deposits of a EE for the actual amt. of the loss or
damage shall be made unless the EE has been heard thereon, and his responsibility
has been clearly shown.

Deductions for Loss or Damage

employee clearly shown to be responsible for loss or damage

employee given ample opportunity to show cause why deduction should not
be made
deduction fair and reasonable and shall not exceed actual loss or damage
deduction not exceed 20% of employees wages in a week

Art. 116 Withholding of wages and kickbacks prohibited

It shall be unlawful for any person, directly or indirectly, to withhold any

amount from the wages of a worker or induce him to give up any part of his wages
by force, stealth, intimidation, threat or any other means whatsoever without the
workers consent.

The withholding of pay even for only one payroll period, the Court
ruled, violated Articles 113 and 116 of the labor code and amounted to
constructive dismissal despite the alleged resignation letter.

Art. 117 Deduction to Ensure employment

It shall be unlawful to make any deduction from wages of any employee for
the benefit of the ER or his representative or intermediary as consideration of a
promise of employment or retention in employment.

Art. 118 Retaliatory Measures

It shall be unlawful for an ER to refuse to pay or reduce the wages and

benefits, discharge or in any manner discriminated against any EE who has filed any

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complaint or instituted any proceeding under this Title or has testifies or is about to
testify is such proceedings.

The dismissal of an EE is illegal where it was shown to be a

consequence of his having filed a complaint against his ER who pays a
subminimum wage.
Is Violation of article 118 strikeable?
Acts under Art 118 are broad, and can lead to a ULP case if
employer retaliated against testifying employee. If ULP,
Reprisal for Silent Testimony
Art. 118 presupposes explicit testimony, it is believed that it
equally applies to implicit or unspoken testimony by an EE.
A violation of Art. 118 consist in the ERs retaliatory or
discriminatory act against an EE who testified or refused to
testify. The violation does not arise from what the EE did or did
not do but from what the ER did to the EE.

Art. 119. False Reporting

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

Records an ER must keep:

1. Length of time to be paid

2. Rate of pay per month, week, day, or hours, piece, etc.;
3. Amount due for regular work
4. Amount due for overtime work
5. Deductions made from the wages; and
6. Amount actually paid.

Chapter V. Wage studies, wage agreements and wage determination

Art. 120 Creation of National Wages and Productivity Commission

There is hereby created a National Wages and Productivity Commission, hereinafter

referred to as the Commission, which shall be attached to the Department of
Labor and Employment (DOLE) for policy and program coordination. (As amended
by Republic Act No. 6727, June 9, 1989).

National Wages and Productivity Commission created by RA 6727.

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Art. 121. Powers and Functions of the Commission

The Commission (NWPC) shall have the following powers and functions:

a) To act as the national consultative and advisory body to the President

of the Philippines and Congress on matters relating to wages, incomes and
b) To formulate policies and guidelines on wages, incomes and
productivity improvement at the enterprise, industry and national levels;
c) To prescribe rules and guidelines for the determination of
appropriate minimum wage and productivity measures at the regional,
provincial, or industry levels;
d) To review regional wage levels set by the Regional Tripartite Wages
and Productivity Boards to determine if these are in accordance with
prescribed guidelines and national development plans;
e) To undertake studies, researches and surveys necessary for the
attainment of its functions and objectives, and to collect and compile
data and periodically disseminate information on wages and productivity and
other related information, including, but not limited to, employment, cost-of-
living, labor costs, investments and returns;
f) To review plans and programs of the Regional Tripartite Wages and
Productivity Boards to determine whether these are consistent with
national development plans;
g) To exercise technical and administrative supervision over the Regional
Tripartite Wages and Productivity Boards;
h) To call, from time to time, a national tripartite conference of
representatives of government, workers and employers for the consideration
of measures to promote wage rationalization and productivity; and
i) To exercise such powers and functions as may be necessary to
implement this Act.

The Commission shall be composed of the Secretary of Labor and Employment as

ex-officio chairman, the Director-General of the National Economic and
Development Authority (NEDA) as ex-officio vice-chairman, and two (2) members
each from workers and employers sectors who shall be appointed by the President
of the Philippines upon recommendation of the Secretary of Labor and Employment
to be made on the basis of the list of nominees submitted by the workers and
employers sectors, respectively, and who shall serve for a term of five (5) years.
The Executive Director of the Commission shall also be a member of the

The Commission shall be assisted by a Secretariat to be headed by an Executive

Director and two (2) Deputy Directors, who shall be appointed by the President of

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the Philippines, upon the recommendation of the Secretary of Labor and

The Executive Director shall have the same rank, salary, benefits and other
emoluments as that of a Department Assistant Secretary, while the Deputy
Directors shall have the same rank, salary, benefits and other emoluments as that
of a Bureau Director. The members of the Commission representing labor and
management shall have the same rank, emoluments, allowances and other benefits
as those prescribed by law for labor and management representatives in the
Employees Compensation Commission. (As amended by Republic Act No. 6727,
June 9, 1989)

Art. 122. Creation of the RTWPB

Regional Tripartite Wages and Productivity Boards Regional Boards

Commission determines the ofiices/headquarters

REGIONAL BOARD shall Composed of:

DOLE Regional Director

NEDA Regional Director
DTI Regional Director
2 workers
2 employers
While the RTWPB has the power to issue wage orders under Art 122 (b) of the
Labor Code, such orders are subject to the guidelines prescribed by the
National Wages and Productivity Commission (NWPC), who has the power to
prescribe the rules and guidelines for the determination of appropriate wages
in the country.

Art. 123 Wage Order

Whenever conditions in the region so warrant, the Regional Board shall investigate
and study all pertinent facts; and based on the standards and criteria herein
prescribed, shall proceed to determine whether a Wage Order should be issued. Any
such Wage Order shall take effect after fifteen (15) days from its complete
publication in at least one (1) newspaper of general circulation in the region.

In the performance of its wage-determining functions, the Regional Board shall

conduct public hearings/consultations, giving notices to employees and employers
groups, provincial, city and municipal officials and other interested parties.

Any party aggrieved by the Wage Order issued by the Regional Board may appeal
such order to the Commission within ten (10) calendar days from the publication of

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such order. It shall be mandatory for the Commission to decide such appeal within
sixty (60) calendar days from the filing thereof.

The filing of the appeal does not stay the order unless the person appealing such
order shall file with the Commission, an undertaking with a surety or sureties
satisfactory to the Commission for the payment to the employees affected by the
order of the corresponding increase, in the event such order is affirmed. (As
amended by Republic Act No. 6727, June 9, 1989)

Wage Order shall take effect after fifteen (15) days from its complete
publication in at least one (1) newspaper of general circulation in the region.
RB shall conduct public hearings/consultations, giving notices to employees
and employers.
Any party aggrieved may appeal such order to the Commission within ten
(10) calendar days from the publication of such order.
Mandatory of the Commission to decide such appeal within sixty (60)
calendar days from the filing.
filing of the appeal does not stay the order UNLESS the person appealing
shall post a surety bond.

Issuance of wage order within 30 days after conclusion of last hearing, the Board
shall dececide the merits of the petition xxx no case the wage order be lower than
the minimum statutory wage rates.

Frequency of Wage Order Not be disturbed for a period of 12 months from

effectivity and no petition for wage increase shall be entertained within the said


Wage-fixing order by the board does not need prior approval by the
What requires is to conduct a public hearing over the petition to decide with
3o days after last hearing and to furnish the commission a copy of the
decision on the petition or the wage order.
What need prior approval are the Implementing rules and regulations which
the board has to prepare within 10dys from the issuance of the wage order.

APPEAL NWPC guidelines allow any party aggrieved by a wage order to appeal in
to the commission within 10 days after the publication.

Article 121 (c ) and (d) and article 122(b) clearly grant the NWPC not the RTWPB,
the power to prescribe the rules and guidelines for the determination of minimum
wage and productivity measures. While the RTWPB has the power to issue wage

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orders under article 122 (b) of the labor code such orders are subject to the
guidelines prescribed by the NWPC.


IN the case of Cagayan sugar milling co vs. Sec of Labor, SC said R02-02 A
was struck down in violation of article 123 of LC on the ground that it was
passed without the required public consultation and newspaper publication.

Art. 124. Standards/Criteria for Min Wage Fixing

Standards/Criteria for Min wage fixing:

a) Living Wage
b) Consumer price index
c) Cost of living
d) Needs of workers and their families
e) Induce industries to invest in countryside
f) Improvements in standards of living
g) Prevailing wage levels
h) Fair return of capital
i) Effects on employment generation and family income
j) Equitable distribution of income and wealth

Where the application of any prescribed wage increase resulted to wage distortions
the ER and union shall negotiate to correct the distortions.

Any dispute arising from Wage distortion: (ORGANIZE)

Collective bargaining agreement

Voluntary arbitration decide disputes within 10 calendar days from the time said
disputes was referred to VA

National conciliation and Mediation Board if it remains unresolved, after 10

calendar days of conciliation

NLRCmandatory within 20 C.D. from time said dispute is submitted

to compulsory arbitration.

TN The pendency of a dispute arising from a wage distortion shall not in any way
delay the applicability of any increase in prescribed wage rates pursuant to the
provisions of law or wage order.

Wage distortion situation where an increase in prescribed wage rates results in the
elimination or severe contraction of intentional quantitative differences in wage of

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salary rates among employee groups, obliterating the distinctions as to skills, length
of service or other logical bases of differentiation.

Distortion adjustment formula (Metro Bank v. NLRC) (mitch WALA KO KAHUMAN ANI)

Minimum wage / actual salary = % x prescribed increase = distortion adjustment

See also equitable bank case

Art. 125. Freedom to bargain

No wage order shall be construed to prevent workers in particular firms or

enterprises or industries from bargaining for higher wages with their respective
employers. (As amended by Republic Act No. 6727, June 9, 1989)

Art. 126. Prohibition against injunction

No preliminary or permanent injunction or temporary restraining order

(TRO) may be issued by any court, tribunal or other entity against any
proceedings before the Commission or the Regional Boards. (As amended by
Republic Act No. 6727, June 9, 1989)

Art. 127. Non-diminution of benefits

No wage order issued by any regional board shall provide for wage rates lower
than the statutory minimum wage rates prescribed by Congress. (As amended
by Republic Act No. 6727, June 9, 1989)Art.

Chapter VI Administration and Enforcement

Art. 128. Visitorial and Enforcement Power

a) The Secretary of Labor and Employment or his duly authorized

representatives, including labor regulation officers, shall have access to
employers records and premises at any time of the day or night whenever
work is being undertaken therein, and the right to copy therefrom, to
question any employee and investigate any fact, condition or matter which

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may be necessary to determine violations or which may aid in the
enforcement of this Code and of any labor law, wage order or rules and
regulations issued pursuant thereto.
b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the
contrary, and in cases where the relationship of employer-employee still
exists, the Secretary of Labor and Employment or his duly authorized
representatives shall have the power to issue compliance orders to give
effect to the labor standards provisions of this Code and other labor
legislation based on the findings of labor employment and enforcement
officers or industrial safety engineers made in the course of inspection. The
Secretary or his duly authorized representatives shall issue writs of execution
to the appropriate authority for the enforcement of their orders, except in
cases where the employer contests the findings of the labor employment and
enforcement officer and raises issues supported by documentary proofs
which were not considered in the course of inspection. (As amended by
Republic Act No. 7730, June 2, 1994).

An order issued by the duly authorized representative of the Secretary of

Labor and Employment under this Article may be appealed to the latter.

In case said order involves a monetary award, an appeal by the employer

may be perfected only upon the posting of a cash or surety bond issued by a
reputable bonding company duly accredited by the Secretary of Labor and
Employment in the amount equivalent to the monetary award in the order
appealed from. (As amended by Republic Act No. 7730, June 2, 1994)

c) The Secretary of Labor and Employment may likewise order stoppage of work
or suspension of operations of any unit or department of an establishment
when non-compliance with the law or implementing rules and regulations
poses grave and imminent danger to the health and safety of workers in the
workplace. Within twenty-four hours, a hearing shall be conducted to
determine whether an order for the stoppage of work or suspension of
operations shall be lifted or not. In case the violation is attributable to the
fault of the employer, he shall pay the employees concerned their salaries or
wages during the period of such stoppage of work or suspension of operation.
d) It shall be unlawful for any person or entity to obstruct, impede, delay or
otherwise render ineffective the orders of the Secretary of Labor and
Employment or his duly authorized representatives issued pursuant to the
authority granted under this Article, and no inferior court or entity shall issue
temporary or permanent injunction or restraining order or otherwise assume
jurisdiction over any case involving the enforcement orders issued in
accordance with this Article.

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e) Any government employee found guilty of violation of, or abuse of authority,
under this Article shall, after appropriate administrative investigation, be
subject to summary dismissal from the service.
f) The Secretary of Labor and Employment may, by appropriate regulations,
require employers to keep and maintain such employment records as may be
necessary in aid of his visitorial and enforcement powers under this Code.

If employer-employee relationship still exists regional director has power to order

and administer, after due notice and hearing, compliance with labor standards
provision of Labor Code/other laws

DOLE regional director must endorse case to Labor arbiter

Where employer contests finding of labor standards and welfare officers and

Raises issues which cannot be resolved without considering evidentiary


That are not verifiable in the normal course of inspection.

Regional director can enforce a labor standards law even if the compliance issue is
not raised in the complaint. (Aboitiz Shipping v. dela Serna)

See also Univ of Immaculate Conception case

But Regional director without authority to declare an order or law unconstitutional;

only duty to enforce the laws, which stands valid.

Double Indemnity

Fine of double prescribed wage increase when employer refuses or fails to pay
prescribed adjustment in wage rates. (RA 6727).

Based on unpaid benefits, where benefits defined to be prescribed wage rates which
employer failed to pay upon effectivity of wage order, exclusive of other wafe
related benefits.

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Labor Standards Cases

DOLE Regional Director exercises both visitorial and enforcement power over labor
standard cases emplowered to adjudicate money claims, provided employer-
employee relationship exists and finding are not contested by employer (Maternity
Childrens Hospital v. sec of labor)

Art. 129. Recovery of wages, simple money claims and other benefits

Money claims arising from complaint/routine inspection

Regional director refers case to Labor Standards and Welfare Officer for field
inspection. LSWO to submit report to Regional Director through the Chief of the
Labor Standards Enforcement Division (LSED) with 24 hrs after investigation or
within a reasonable period as determined by Regional Director.


Plant Level restitution may be effected for money claims not exceeding P50T.
Report submitted to Regional Director for verification and confirmation.

Compromise agreement

In writing, signed by parties in the presence of Regional Director or his duly

authorized rep.


Where no proof of compliance submitted by employer after 7 days from receipt of

inspection, Regional director to summon employer & complainants to a summary

Enforcement under Art 128 are beyond injunctive power of an inferior court.

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Appealable to DOLE sec. Then to CA through certiorari.

DO 57-04 New system for enforcement of labor laws

3 approaches

(1) self-assessment voluntary compliance applicable for shops >= 200 workers or
those with CBA

(2) Inespection 10 to 199 workers; hazardous, construction projects; labor

standards complaints

(3) advisory - < 10 workers; micro business enterprises; not punitive; assistance to
increase productivity; relaxed

DOLE may delegate to Lgu the inspection of safety (ex boiler).

Title III Working Conditions for Special Groups of employees

Chapter I Employment of Women

Nightwork prohibition (Art 130)

Exceptions (Art 131)

Most call centers are exempt DOLE Secretary exemption (under Art 131 (g))

Art. 132 Facilities for Women

Art. 133. Maternity Leave (obsolete)

Maternity leave benefits (now under SSS law)

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Pre-req: at least 3 monthly contributions in 12 month period immediately preceding
semester of childbirth or miscarriage:

60 days salary credit

78 days in case of caesarian delivery

Paternity Leave (RA 8187) legit married, living with spouse

Maternity leave benefits apply to married or unmarried women.

Art. 134. Family Planning Services; Incentives for Family Planning

Art. 135. Discrimination Prohibited

Discrimination prohibited

solely on account of her sex

RA 7192 provides that the state recognizes the role of women in nation-bldg and
shall ensure the fundamental equality before the law of women and men. The State
shall provide women rights and opportunities equal to that of men. To attain this
policy: (1) substantial portion of Official Devt Funds set aside & utilized by agencies
to support programs & activities for women; (2) All govt depts. Ensure that women
benefit equally & participate directly in devt programs & projects of said depts.; and
(3) All depts. And agencies shall review & revise regulations, circulars, issuances
and procedures to remove gender bias therein.

Art. 136. Stipulation against marriage

Stipulation against marriage

Nondiscrimination policy against women for T&C of employment.

See star paper case

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Prohibited acts: (Art 137)

1) Deny any woman employee benefits or dischrage woman for purpose of

preventing her from enjoying benefits under this code

2) Discharge woman on acct of her pregnancy

3) Refuse admission of such woman upon returning to work for fear that she
may again be pregnant

Art 138 Classification of certain women workers

Any woman working in any night club, cocktail lounce, massage clinic, bar or similar
establishment, under the effective control of the employer for a substantial period
of time condiered employee of such establishment

Zialcita v. PAL (1977) OP decision

We cannot agree to the respondent PALs proposition that termination from

employment of flight attendants on account of marriage is a fair and reasonable
standard designed for their own health, safety, protection and welfare, as no basis
has been laid therefore. Actually, respondent claims that its concern is not so much
against the continued employment of the flight attendant merely by reason of
marriage but rather on the consequence of marriage pregnancy. Xxx The
sweeping intendment of the law, be it on special or ordinary occupations is reflected
in the whole text and supported by Art 135 that speaks of nondiscrimination on the
employment of women.


Similar to the Zialcita case except that the employer did not admit that the
employee was dismissed because she was married. The cause of the dismissal, the
employer insisted, was her dishonesty in stating in the job application that she was
single though in fact she was not.

PT&Ts policy that married women are not qualified for employment in PT&T is not
only in derogation of the provisions of Art 136 on the right of women to be free from
any kind of stipulation against marriage in connection with her employment, but it

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likewise assaults good morals and public policy tending as it does to deprive a
woman of the freedom to choose her statusl, a privilege that by all accounts inheres
in the individual as an intangible and inalienable right.

Gualberto v. Marinduque Mining (1978) CA Case

Whether pre-employment agreement or company policy, the policy of the firm to

consider, due to lack of facilities for married women, female employees as
separated the moment they get married, is void. No employer may require female
applicants for jobs to enter into preemployment agreements that they would be
dismissed once they get married.

Art. 137. Prohibited Acts

Art. 138. Classification of Certain Women Workers.

Sexual Harassment

RA 7877

Victim may be male or female.

Elements: DRR AIMA

Demand/Request/Require sexual favor

Authority, influence or moral ascendancy over victim

Punishes sexual harassment if same is:

(1) work related

(2) education related

(3) training related

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Salewoman-Client relations but RPC, Independent Civil Actions

Employee-employee but file case with company based on company rules

Duty of employer or head of office

To prevent or deter the commission of acts of sexual harassment and provide

procedures for resolution or prosecution of acts of sexual harassment

To promulgate rules and regulations prescribing procedure for investigation of

secual harassment cases and admin sanctions therefor

To create committee on decorum and investiation of cases on sexual


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