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Table of Contents

A. DIRECT HIRING ........................................................ 23


B. REGULATIONS AND ENFORCEMENT .................... 23

I. FUNDAMENTAL PRINCIPLE AND POLICIES ................... 1

B.1. SUSPENSION OR CANCELLATION OF LICENSE


OR AUTHORITY ........................................................ 23

A. CONSTITUTIONAL PROVISIONS ............................... 1


A.1 ARTICLE II, SECS 9,10,11,13,14,18,20 .................... 1

B.2. REGULATORY AND VISITORIAL POWERS OF


THE DOLE SECRETARY............................................ 23

A.2 ARTICLE III, SECS 1, 4, 7, 8, 10, 16, 18(2) ..............2

B.3. REMITTANCE OF FOREIGN EXCHANGE


EARNINGS ................................................................ 24

A.3 ARTICLE XIII, SECS1, 2, 3, 13, 14 ........................... 3


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


C.5 ARTICLE 212 (NOW ARTICLE 218) .......................8

A.6. PERSONS IN PERSONAL SERVICE OF


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


MIGRANT WORKERS .................................................... 12

B.3. MEAL BREAK ..................................................... 34


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


(GOVERNED BY THE LABOR CODE) ........................ 14

B.8. CONTRACT FOR PIECE OF WORK ................... 39


C. WAGES ...................................................................... 39

C.2. ILLEGAL RECRUITMENT FOR MIGRANT


WORKERS ................................................................. 15

C.1. WAGE VS. SALARY ............................................40


C.2. MINIMUM WAGE ...............................................40

D. ILLEGAL RECRUITMENT IN LARGE SCALE ............ 18

C.3. MINIMUM WAGE OF WORKERS PAID BY


RESULTS ................................................................... 42

E. ILLEGAL RECRUITMENT AS
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


(LARGE-SCALE OR BY A SYNDICATE)..................... 19

C.6. NON-DIMINUTION OF BENEFITS .................... 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

C.7. FACILITIES VS SUPPLEMENTS ......................... 44

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,


SEASONAL WORKERS, ETC. .................................... 51

III. PROJECT EMPLOYMENT .................................... 96


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


AGAINST WOMEN .................................................... 57

B.2. AUTHORIZED CAUSE ...................................... 114

F.6. SPECIAL LEAVE BENEFITS (SLB) FOR WOMEN59


G. SERVICE CHARGES .................................................. 61

B.3 OTHER CAUSES ................................................ 118


B.4 DUE PROCESS .................................................. 119
I. TWIN-NOTICE REQUIREMENT ........................... 120

I. SEPARATION PAY ..................................................... 64

II. HEARING; MEANING OF OPPORTUNITY TO BE


HEARD .................................................................... 120

J. RETIREMENT PAY .................................................... 66


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


ARE PAID BY RESULTS ........................................... 68

C.2. BACKWAGES ....................................................124


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

D.3. WHEN COMPENSABLE .................................. 140

III. RETIREMENT BENEFITS [SEC. 12-B] .................. 131 VII. LABOR RELATIONS ................................................. 141
IV. PERMANENT DISABILITY BENEFITS [SEC. 13-A]132
V. DEATH BENEFITS [SEC. 13] ................................ 132

A. RIGHT TO SELF-ORGANIZATION........................... 141


A.1. WHO MAY UNIONIZE FOR PURPOSES OF
COLLECTIVE BARGAINING? ...................................142

VI. FUNERAL BENEFITS [13-B] ............................... 132

I. WHO CANNOT FORM, JOIN OR ASSIST LABOR


ORGANIZATIONS ....................................................143

VII. LOAN ................................................................. 132


VIII. SICKNESS BENEFITS [SEC. 14] ........................ 133

A.2. BARGAINING UNIT ......................................... 145

IX. MATERNITY LEAVE BENEFITS [SEC. 14-A]....... 133


A.4. BENEFICIARIES ............................................... 134

I. TEST TO DETERMINE THE CONSTITUENCY OF AN


APPROPRIATE BARGAINING UNIT ....................... 146

1. PRIMARY .............................................................. 134

II. VOLUNTARY RECOGNITION ............................. 148

2. SECONDARY ....................................................... 134

III. CERTIFICATION ELECTION ............................... 148

3. OTHERS ............................................................... 134

IV. RUN-OFF ELECTION ......................................... 155

B. GSIS [RA 8291] ........................................................ 134

V. RE-RUN ELECTION ............................................ 156

B.1. COVERAGE ....................................................... 134

VI. CONSENT ELECTION ........................................ 156

B.2. EXCLUSIONS FROM COVERAGE.................... 134

VI. AFFILIATION AND DISAFFILIATION OF THE


LOCAL UNION FROM THE MOTHER UNION ........ 156

B.3. BENEFITS ......................................................... 134

VIII. UNION DUES AND SPECIAL ASSESSMENTS 158

I. MONTHLY PENSION [SEC. 9] .............................. 134

IX. AGENCY FEES.................................................... 159

II. RETIREMENT BENEFITS [SEC. 13] ...................... 134

B. RIGHT TO COLLECTIVE BARGAINING .................. 159

III. PERMANENT DISABILITY BENEFITS ................ 135

B.1 DUTY TO BARGAIN COLLECTIVELY ................ 159

IV. DEATH BENEFITS [SEC. 21] ............................... 135

I. WHEN THERE IS ABSENCE OF A CBA ................ 161

V. FUNERAL BENEFITS [SEC. 23] ........................... 136

II. WHEN THERE IS A CBA ....................................... 161

VI. LOAN .................................................................. 136

B.2 COLLECTIVE BARGAINING AGREEMENT (CBA)161

VII. TEMPORARY DISABILITY BENEFITS ............... 136

I. MANDATORY PROVISIONS OF CBA .................. 164

VIII. SEPARATION BENEFITS ................................. 136

II. DURATION OF
COLLECTIVE BARGAINING AGREEMENT .............. 167

IX. UNEMPLOYMENT BENEFITS [SEC. 11] .............. 136


X. SURVIVORSHIP BENEFITS ................................. 136

B.3. UNION SECURITY ........................................... 169

XI. LIFE INSURANCE BENEFITS ..............................137


I. PRIMARY ...............................................................137

I. UNION SECURITY CLAUSES; CLOSED SHOP,


UNION SHOP, MAINTENANCE OF MEMBERSHIP
SHOP, ETC. ............................................................. 169

II. SECONDARY ........................................................137

II.CHECK-OFF, UNION DUES, AGENCY FEES ........170

C. LIMITED PORTABILITY LAW [RA 7699]................. 140

B.4 UNFAIR LABOR PRACTICE


IN COLLECTIVE BARGAINING ................................170

B.4. BENEFICIARIES ................................................137

C.1 COVERAGE ........................................................ 140

I. BARGAINING IN BAD FAITH ................................170

C.2. PROCESS ......................................................... 140

II. REFUSAL TO BARGAIN ........................................171

D. EMPLOYEES COMPENSATION COVERAGE AND


WHEN COMPENSABLE............................................... 140

III. INDIVIDUAL BARGAINING ..................................171

D.1 COVERAGE ........................................................ 140

IV. BLUE SKY BARGAINING .....................................171

D.2. EFFECTIVITY .................................................... 140

V. SURFACE BARGAINING.......................................171
B.5 UNFAIR LABOR PRACTICE (ULP) .....................171
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I. NATURE OF ULP .................................................. 172

C. BUREAU OF LABOR RELATIONS MED-ARBITERS193

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
DISPUTE TO THE NLRC FOR COMPULSORY
ARBITRATION ............................................................. 182

F.2 POWER TO SUSPEND/EFFECTS OF


TERMINATION ........................................................ 196
F.3 ASSUMPTION OF JURISDICTION .................... 196

C.7 NATURE OF ASSUMPTION ORDER OR


CERTIFICATION ORDER ............................................. 182

F.4 APPELLATE JURISDICTION ............................. 196


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
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LABOR STANDARDS

I. Fundamental
Principle and Policies

LABOR LAW

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


vital role of the youth in nation-building and
shall promote and protect their physical,
moral, spiritual, intellectual, and social wellbeing. It shall inculcate in the youth patriotism
and nationalism, and encourage their
involvement in public and civic affairs.

A. CONSTITUTIONAL PROVISIONS
A.1 ARTICLE II, SECS 9,10,11,13,14,18,20
[Article II, Section 9.] The State shall promote a
just and dynamic social order that will ensure
the prosperity and independence of the nation
and free the people from poverty through
policies that provide adequate social services,
promote full employment, a rising standard of
living, and an improved quality of life for all.

[Article II, Section 14.] The State recognizes the


role of women in nation-building, and shall
ensure the fundamental equality before the
law of women and men.
[Article II, Section 18.] The State affirms labor as
a primary social economic force. It shall protect
the rights of workers and promote their
welfare.

[Article II, Section 10.] The State shall promote


social justice in all phases of national
development.

[Article II, Section 20.] The State recognizes the


indispensable role of the private sector,
encourages private enterprise, and provides
incentives to needed investments.

General definition of Social Justice


Social Justice is neither communism, nor
despotism, nor atomism, nor anarchy, but the
humanization of laws and the equalization of
social and economic forces by the State so that
justice in its rational and objectively secular
conception may at least be approximated.
[Calalang vs. Williams (1940)]

Limits of Social Justice


Social justice should be used only to correct an
injustice. It must be founded on the recognition
of the necessity of interdependence among
diverse units of a society, and of the protection
that should be equally and evenly extended to
all groups as a combined force in our social
and economic life. As partners in nationbuilding, labor and management need each
other to foster productivity and economic
growth; hence, the need to weigh and balance
the rights and welfare of both the employee
and employer. [Agabon vs. NLRC (2004)]

Welfare State
The welfare state concept is found in the
constitutional clause on the promotion of
social justice to ensure the well-being and
economic security of all the people, and in the
pledge of protection to labor with specific
authority to regulate the relations between
landowners and tenants and between labor
and capital. [Alalayan vs. National Power
Corporation (1968)]

The policy of social justice is not intended to


countenance wrongdoing simply because it is
committed by the underprivileged. At best it
may mitigate the penalty but it certainly will
not condone the offense. Compassion for the
poor is an imperative of every humane society
but only when the recipient is not a rascal
claiming an undeserved privilege. Social justice

[Article II, Section 11.] The State values the


dignity of every human person and guarantees
full respect for human rights.

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LABOR STANDARDS

cannot be permitted to be a refuge of


scoundrels any more than can equity be an
impediment to the punishment of the guilty.
Those who invoke social justice may do so only
if their hands are clean and their motives
blameless and not simply because they
happen to be poor. This great policy of our
Constitution is not meant for the protection of
those who have proved they are not worthy of
it, like the workers who have tainted the cause
of labor with the blemishes of their own
character. [Tirazona vs. Philippine EDS TechnoService Inc. (2009)]

LABOR LAW

Due Process
Due process requirements are two-fold
substantive (dismissal should be for a valid
and authorized cause as provided by law) and
procedural (due notice and hearing). [Salaw vs.
NLRC (1991)]
To
constitute
valid
dismissal
from
employment, two requisites must concur: (1)
the dismissal must be for a just or authorized
cause and (2) the employee must be afforded
an opportunity to be heard and to defend
himself. [Jeffrey Nacague vs. Sulpicio Lines, Inc.
(2010)]

Liberty of Contract/Laissez Faire


The prohibition to impair the obligation of
contracts is not absolute and unqualified. In
spite of the constitutional prohibition and the
fact that both parties are of full age and
competent to contract, it does not necessarily
deprive the State of the power to interfere
where the parties do not stand upon an
equality, or where the public health demands
that one party to the contract shall be
protected against himself. [Leyte Land
Transportation Co. vs. Leyte Farmers & Workers
Union (1948)]

Labor as Property Right


Ones employment is a property right, and the
wrongful interference therewith is an
actionable wrong. [Sibal vs. Notre Dame of
Greater Manila (1990)]

[Article III, Section 4.] No law shall be passed


abridging the freedom of speech, of
expression, or of the press, or the right of the
people peaceably to assemble and petition the
government for redress of grievances.
The Right to Assemble
The right of peaceable assembly is a right
cognate to those of free speech and free press
and is equally fundamental. [de Jonge vs.
Oregon, (1937)]

The Constitution is primarily a document of


social justice, and although it has recognized
the importance of the private sector, it has not
embraced fully the concept of laissez-faire or
relied on pure market forces to govern the
economy. [Employees Confederation of the
Philippines vs. NWPC (1991)]

In a case where employees were dismissed for


serious misconduct or willful disobedience, the
SC ruled that the element of willfulness
characterized by a perverse mental attitude in
disobeying the employers order as to warrant
the ultimate penalty of dismissal was lacking.
It said that wearing armbands and putting up
placards to express ones views without
violating the rights of third parties, are legal
per se and even constitutionally protected.
[Bascon v CA, G.R. No. 144899, February 5,
2004]

A.2 ARTICLE III, SECS 1, 4, 7, 8, 10, 16,


18(2)
[Article III, Section 1.] No person shall be
deprived of life, liberty, or property without due
process of law, nor shall any person be denied
the equal protection of the laws.

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LABOR STANDARDS

LABOR LAW

equality, or where the public health demands


that one party to the contract shall be
protected against himself. [Leyte Land
Transportation Co. vs. Leyte Farmers & Workers
Union (1948)]

[Article III, Section 7.] The right of the people to


information on matters of public concern shall
be recognized. Access to official records, and
to documents and papers pertaining to official
acts, transactions, or decisions, as well as to
government research data used as basis for
policy development, shall be afforded the
citizen, subject to such limitations as may be
provided by law.

[Article III, Section 16.] All persons shall have


the right to a speedy disposition of their cases
before all judicial, quasi-judicial, or
administrative bodies.

[Article III, Section 8.] The right of the people,


including those employed in the public and
private sectors, to form unions, associations, or
societies for purposes not contrary to law shall
not be abridged.

[Article III, Section 18(2).] No involuntary


servitude in any form shall exist except as a
punishment for a crime whereof the party shall
have been duly convicted.

A.3 ARTICLE XIII, SECS1, 2, 3, 13, 14


The Right to Form Associations
The right to form associations shall not be
impaired except through a valid exercise of
police power. [Bernas, The 1987 Philippine
Constitution: a Comprehensive Reviewer]

[Article XIII, Section 1.] The Congress shall give


highest priority to the enactment of measures
that protect and enhance the right of all the
people to human dignity, reduce social,
economic, and political inequalities, and
remove cultural inequities by equitably
diffusing wealth and political power for the
common good.

[Article III, Section 10.] No law impairing the


obligation of contracts shall be passed.

To this end, the State shall regulate the


acquisition, ownership, use, and disposition of
property and its increments.

Non-impairment of Contracts
A law which changes the terms of a legal
contract between parties, either in the time or
mode or performance, or imposes new
conditions, or dispenses with those expressed,
or authorizes for its satisfaction something
different from that provided in its terms, is a
law which impairs the obligation of a contract
and is null and void. [Clemens vs. Nolting
(1922)]

[Article XIII, Section 2.] The promotion of social


justice shall include the commitment to create
economic opportunities based on freedom of
initiative and self-reliance.
[Article XIII, Section 3.] The State shall afford
full protection to labor, local and overseas,
organized and unorganized, and promote full
employment and equality of employment
opportunities for all.

Compare with Liberty of Contract:


The prohibition to impair the obligation of
contracts is not absolute and unqualified. In
spite of the constitutional prohibition and the
fact that both parties are of full age and
competent to contract, it does not necessarily
deprive the State of the power to interfere
where the parties do not stand upon an

It shall guarantee the rights of all workers to


self-organization, collective bargaining and
negotiations, and peaceful concerted activities,
including the right to strike in accordance with
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LABOR STANDARDS

LABOR LAW

the employer. [Phil. Geothermal Inc. vs. NLRC


(1994)]

law. They shall be entitled to security of tenure,


humane conditions of work, and a living wage.
They shall also participate in policy and
decision-making processes affecting their
rights and benefits as may be provided by law.

This Court held that the employers right to


conduct the affairs of his business according to
its own discretion and judgment, is wellrecognized. An employer has a free reign and
enjoys wide latitude of discretion to regulate
all aspects of employment. This is a
management prerogative, where the free will
of management to conduct its own affairs to
achieve its purpose takes form. [Torreda vs.
Toshiba (2007)]

The State shall promote the principle of shared


responsibility between workers and employers
and the preferential use of voluntary modes in
settling disputes, including conciliation, and
shall enforce their mutual compliance
therewith to foster industrial peace.
The State shall regulate the relations between
workers and employers, recognizing the right
of labor to its just share in the fruits of
production and the right of enterprises to
reasonable returns to investments, and to
expansion and growth.

Under the doctrine of management


prerogative, every employer has the inherent
right to regulate, according to his own
discretion and judgment, all aspects of
employment,
including
hiring,
work
assignments, working methods, the time,
place and manner of work, work supervision,
transfer of employees, lay-off of workers, and
discipline, dismissal, and recall of employees.
The only limitations to the exercise of this
prerogative are those imposed by labor laws
and the principles of equity and substantial
justice. [Peckson v Robinsons Supermarket
Corporation, G.R. No. 198534, July 3, 2013]

Participation in Decision-Making Process


Verily, a line must be drawn between
management prerogatives regarding business
operations per se and those which affect the
rights of the employees. In treating the latter,
management should see to it that its
employees are at least properly informed of its
decisions or modes action. Indeed, industrial
peace cannot be achieved if the employees are
denied their just participation in the discussion
of matters affecting their rights. [Phil. Airlines
Inc. vs. NLRC (1993); also cited in Manila Electric
Co. vs. Sec. of Labor Quisumbing (2000)]

Limits to Management Prerogative


(1) Good faith - So long as a companys
management prerogatives are exercised in
good faith for the advancement of the
employers interest and not for the purpose of
defeating or circumventing the rights of the
employees under special laws or under valid
agreements, this Court will uphold themEven
as the law is solicitous of the welfare of the
employees, it must also protect the right of an
employer to exercise what are clearly
management prerogatives. The free will of
management to conduct its own business
affairs to achieve its purpose cannot be denied.
[Ernesto G. Ymbong vs. ABS-CBN Broadcasting
Corp. (2012)]

Management
and
the
Constitution:
Management Function/Prerogative
The law in protecting the rights of the
employees authorizes neither oppression nor
self-destruction of the employer. It should be
made clear that when the law tilts the scale of
justice in favor of labor, it is but a recognition
of the inherent economic inequality between
labor and management. Never should the
scale be so tilted if the result is an injustice to

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LABOR STANDARDS

(2) Without grave abuse of discretion - But, like


other rights, there are limits thereto. The
managerial prerogative to transfer personnel
must be exercised without grave abuse of
discretion, bearing in mind the basic elements
of justice and fair play. Having the right should
not be confused with the manner in which the
right is exercised. [Tinio vs. CA (2007)]

LABOR LAW

express policy of the law. [Goya, Inc. v. Goya,


Inc., Employees Union-FFW (2013)]
(5) Equity and/or Substantial Justice The
Court recognized the inherent right of the
employer to discipline its employees but it
should still ensure that the employer exercises
the prerogative to discipline humanely and
considerately, and that the sanction imposed is
commensurate to the offense involved and to
the degree of the infraction. The discipline
exacted by the employer should further
consider the employees length of service and
the number of infractions during his
employment. [Dongon v. Rapid Movers and
Forwarders Co., Inc. (2013)]

(3) Law In one case, a pharmaceutical


company defended its termination of rank and
file employees during a bargaining deadlock,
as an exercise of management prerogative.
This was after the Labor Secretary had
assumed jurisdiction over the dispute and
enjoined the parties from any acts which
might exacerbate the situation.

Assumption of jurisdiction by the Secretary of


Labor This Court declared that it recognizes
the exercise of management prerogatives and
it often declines to interfere with the legitimate
business decisions of the employerHowever,
as expressed in PAL vs. NLRC, the privilege is
not absolute, but subject to exceptions. One of
these exceptions is when the Secretary of Labor
assumes jurisdiction over labor disputes
involving industries indispensable to the
national interest under Article 263(g) of the
Labor Code. [University of Immaculate
Concepcion Inc. vs. Sec. of Labor (2005)]

The Court disagreed with the companys


defense, stating that the privilege is not
absolute but subject to limitations imposed by
law. In this case, it is limited by Sec. 236(g),
which gives the Secretary the power to assume
jurisdiction and resolve labor disputes
involving industries indispensable to national
interest.
The companys management prerogatives are
not being unjustly curtailed but duly tempered
by the limitations set by law, taking into
account its special character and the particular
circumstances in the case at bench. [Metrolab
Industries, Inc. v. Roldan-Confesor (2013)]

[Article XIII, Section 13.] The State recognizes


the vital role of the youth in nation-building
and shall promote and protect their physical,
moral, spiritual, intellectual, and social wellbeing. It shall inculcate in the youth patriotism
and nationalism, and encourage their
involvement in public and civic affairs.
[Article XIII, Section 14.] The State shall protect
working women by providing safe and
healthful working conditions, taking into
account their maternal functions, and such
facilities and opportunities that will enhance
their welfare and enable them to realize their
full potential in the service of the nation.

(4) Collective Bargaining The CBA provisions


agreed upon by the Company and the Union
delimit the free exercise of management
prerogative. The parties in a CBA may
establish such stipulations, clauses, terms and
conditions as they may deem convenient
provided these are not contrary to law, morals,
good customs, public order or public policy.
Where the CBA is clear and unambiguous, it
becomes the law between the parties and
compliance therewith is mandated by the
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LABOR LAW

relationships from the impact of labor laws


and regulations by simply contracting with
each other. Moreover, in case of doubt, the
terms of a contract should be construed in
favor of labor. [Innodata Philippines, Inc. vs.
Quejada-Lopez (2006)]

B. CIVIL CODE
B.1 ARTICLE 19
[Article 19.] Every person must, in the exercise
of his rights and in the performance of his
duties, act with justice, give everyone his due,
and observe honesty and good faith.

Liberal Construction
While the terms and conditions of a CBA
constitute the law between the parties, it is not
however, an ordinary contract to which is
applied the principles of law governing
ordinary contracts. A CBA, as a labor contract
within the contemplation of Article 1700 of the
Civil Code of the Philippines which governs the
relations between labor and capital, is not
merely contractual in nature but impressed
with public interest, thus, it must yield to the
common good. As such, it must be construed
liberally rather than narrowly and technically,
and the courts must place a practical and
realistic construction upon it, giving due
consideration to the context in which it is
negotiated and purpose which it is intended to
serve. [Cirtek Employees Labor Union-FFW v
Cirtek Electronics, 2010]

B.2 ARTICLE 1700


[Article 1700.] The relations between capital
and labor are not merely contractual. They are
so impressed with public interest that labor
contracts must yield to the common good.
Therefore, such contracts are subject to the
special laws on labor unions, collective
bargaining, strikes and lockouts, closed shop,
wages, working conditions, hours of labor and
similar subjects.

B.3. ARTICLE 1702


[Article 1702.] In case of doubt, all labor
legislation and all labor contracts shall be
construed in favor of the safety and decent
living for the laborer.
Contracts
Under the Civil Code, contracts of labor are
explicitly subject to the police power of the
state because they are not ordinary contracts
but are impressed with public interest.
Inasmuch as in this particular instance the
contract in question would have been deemed
in violation of pertinent labor laws, the
provisions of said laws would prevail over the
terms of the contract, and private respondent
would still be entitled to overtime pay. [PAL
Employees Savings and Loan Assn., Inc. vs.
NLRC (1996)]

When there is doubt between the evidence


submitted by the employer and that submitted
by the employee, the scales of justice must be
tilted in favor of the employee. This is
consistent with the rule that an employers
cause could only succeed on the strength of its
own evidence and not on the weakness of the
employees evidence. [Misamis Oriental II
Electric Service Cooperative vs. Virgilio
Cagalawan (2012)]

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
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Fair treatment
The right of an employer to dismiss an
employee differs from and should not be
confused with the manner in which such right
is exercised. It must not be oppressive and
abusive since it affects one's person and
property. [General Bank and Trust Co. vs. CA
(1985)]

LABOR LAW

C. LABOR CODE
7

C.1 ARTICLE 3
LC, Art. 3. Declaration of basic policy. The
State shall afford protection to labor,
promote full employment, ensure equal work
opportunities regardless of sex, race or creed
and regulate the relations between workers
and employers. The State shall assure the
rights of workers to self-organization,
collective bargaining, security of tenure, and
just and humane conditions of work.

Mutual obligation
The employer's obligation to give his workers
just compensation and treatment carries with
it the corollary right to expect from the workers
adequate work, diligence and good conduct.
[Firestone Tire and Rubber Co. vs. Lariosa
(1987)]

C.2 ARTICLE 4
[LC, Art. 4.] Construction in favor of labor. All
doubts
in
the
implementation
and
interpretation of the provisions of this Code,
including its implementing rules and
regulations, shall be resolved in favor of labor

Compliance with law


It is also important to emphasize that the
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
duty even against the worker's will. [Sarmiento
vs. Tuico (1988)]

Liberality in Application of Rules


[Article 221.] Technical rules not binding and
prior resort to amicable settlement.
In any proceeding before the Commission
or any of the Labor Arbiters, the rules of
evidence prevailing in courts of law or equity
shall not be controlling and it is the spirit and
intention of this Code that the Commission and
its members and the Labor Arbiters shall use
every and all reasonable means to ascertain
the facts in each case speedily and objectively
and without regard to technicalities of law or
procedure, all in the interest of due process.
xxx

Employee's compliance and obedience to


employer's orders
The lack of a written or formal designation
should not be an excuse to disclaim any
responsibility for any damage suffered by the
employer due to his negligence. The measure
of the responsibility of an employee is that if he
performed his assigned task efficiently and
according to the usual standards, then he may
not be held personally liable for any damage
arising therefrom. Failing in this, the employee
must suffer the consequences of his negligence
if not lack of due care in the performance of his
duties. [PCIB vs. Jacinto (1991)]

We stress at this point that it is the spirit and


intention of labor legislation that the NLRC
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
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LABOR STANDARDS

demands of substantial justice. [Manila Electric


Co. vs. Jan Carlo Gala (2012)]

LABOR LAW

(d) To promote the enlightenment of


workers concerning their rights and
obligations as union members and as
employees;
(e) To provide an adequate administrative
machinery
for
the
expeditious
settlement of labor or industrial
disputes;
(f) To ensure a stable but dynamic and just
industrial peace; and
(g) To ensure the participation of workers in
decision and policy-making processes
affecting their rights, duties and welfare.

It is settled that subsequent and substantial


compliance may call for the relaxation of the
rules of procedureThe Court has time and
again relaxed the rigid application of the rules
to offer full opportunity for parties to ventilate
their causes and defenses in order to promote
rather than frustrate the ends of justice. [Ma.
Ligaya Santos vs. Litton Mills (2011)]

C.3 ARTICLE 166 (NOW ARTICLE 172)

B. To encourage a truly democratic method of


regulating the relations between the
employers and employees by means of
agreements freely entered into through
collective bargaining, no court or
administrative agency or official shall have
the power to set or fix wages, rates of pay,
hours of work or other terms and conditions
of employment, except as otherwise
provided under this Code.

[Article 166.] Policy. - The State shall promote


and develop a tax-exempt employees
compensation program whereby employees
and their dependents, in the event of workconnected disability or death, may promptly
secure adequate income benefit and medical
related benefits.
Workmens Compensation Program
This is the general and comprehensive term
applied to those laws providing for
compensation for loss resulting from the injury,
disablement, or death of workmen through
industrial accident, casualty, or disease.
[Azucena, The Labor Code with Comments and
Cases]

C.5 ARTICLE 212 (NOW ARTICLE 218)


Article 212.Definitions.
(a) Commission means the National Labor
Relations Commission or any of its
divisions, as the case may be, as provided
under this Code.
(b) Bureau means the Bureau of Labor
Relations and/or the Labor Relations
Divisions in the regional offices established
under Presidential Decree No. 1, in the
Department of Labor.
(c) Board means the National Conciliation
and Mediation Board established under
Executive Order No. 126.
(d) Council means the Tripartite Voluntary
Arbitration Advisory Council established
under Executive Order No. 126, as
amended.
(e) Employer includes any person acting in
the interest of an employer, directly or
indirectly. The term shall not include any
labor organization or any of its officers or
agents except when acting as employer.
(f) Employee includes any person in the
employ of an employer. The term shall not
be limited to the employees of a particular

C.4 ARTICLE 211 (NOW ARTICLE 217)


[Article 211.] Declaration of Policy.
A. It is the policy of the State:
(a) To promote and emphasize the primacy
of free collective bargaining and
negotiations,
including
voluntary
arbitration, mediation and conciliation,
as modes of settling labor or industrial
disputes;
(b) To promote free trade unionism as an
instrument for the enhancement of
democracy and the promotion of social
justice and development;
(c) To foster the free and voluntary
organization of a strong and united
labor movement;
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LABOR STANDARDS

employer, unless the Code so explicitly


states. It shall include any individual whose
work has ceased as a result of or in
connection with any current labor dispute
or because of any unfair labor practice if he
has not obtained any other substantially
equivalent and regular employment.
(g) Labor organization means any union or
association of employees which exists in
whole or in part for the purpose of
collective bargaining or of dealing with
employers
concerning
terms
and
conditions of employment.
(h) Legitimate labor organization means any
labor organization duly registered with the
Department of Labor and Employment,
and includes any branch or local thereof.
(i) Company union means any labor
organization whose formation, function or
administration has been assisted by any
act defined as unfair labor practice by this
Code.
(j) Bargaining representative means a
legitimate labor organization whether or
not employed by the employer.
(k) Unfair labor practice means any unfair
labor practice as expressly defined by the
Code.
(l) Labor dispute includes any controversy
or matter concerning terms and conditions
of employment or the association or
representation of persons in negotiating,
fixing, maintaining, changing or arranging
the terms and conditions of employment,
regardless of whether the disputants stand
in the proximate relation of employer and
employee.
(m) Managerial employee is one who is
vested with the powers or prerogatives to
lay down and execute management
policies and/or to hire, transfer, suspend,
lay-off, recall, discharge, assign or
discipline
employees.
Supervisory
employees are those who, in the interest of
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.

LABOR LAW

(n) Voluntary Arbitrator means any person


accredited by the Board as such or any
person named or designated in the
Collective Bargaining Agreement by the
parties to act as their Voluntary Arbitrator,
or one chosen with or without the
assistance of the National Conciliation and
Mediation Board, pursuant to a selection
procedure agreed upon in the Collective
Bargaining Agreement, or any official that
may be authorized by the Secretary of
Labor and Employment to act as Voluntary
Arbitrator upon the written request and
agreement of the parties to a labor
dispute.
(o) Strike means any temporary stoppage of
work by the concerted action of employees
as a result of an industrial or labor dispute.
(p) Lockout means any temporary refusal of
an employer to furnish work as a result of
an industrial or labor dispute.
(q) Internal union dispute includes all
disputes or grievances arising from any
violation of or disagreement over any
provision of the constitution and by laws of
a union, including any violation of the
rights and conditions of union membership
provided for in this Code.
(r) Strike-breaker means any person who
obstructs, impedes, or interferes with by
force, violence, coercion, threats, or
intimidation any peaceful picketing
affecting wages, hours or conditions of
work or in the exercise of the right of selforganization or collective bargaining.
(s) Strike area means the establishment,
warehouses, depots, plants or offices,
including the sites or premises used as
runaway shops, of the employer struck
against, as well as the immediate vicinity
actually used by picketing strikers in
moving to and fro before all points of
entrance to and exit from said
establishment.

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C.6 ARTICLE 255 (NOW ARTICLE 261)

LABOR LAW

worker whose employment is sought to be


terminated a written notice containing a
statement of the causes for termination and
shall afford the latter ample opportunity to be
heard and to defend himself with the
assistance of his representative if he so desires
in accordance with company rules and
regulations
promulgated
pursuant
to
guidelines set by the Department of Labor and
Employment. Any decision taken by the
employer shall be without prejudice to the
right of the worker to contest the validity or
legality of his dismissal by filing a complaint
with the regional branch of the National Labor
Relations Commission. The burden of proving
that the termination was for a valid or
authorized cause shall rest on the employer.
The Secretary of the Department of Labor and
Employment may suspend the effects of the
termination pending resolution of the dispute
in the event of a prima facie finding by the
appropriate official of the Department of Labor
and Employment before whom such dispute is
pending that the termination may cause a
serious labor dispute or is in implementation of
a mass lay-off.

Article 255.Exclusive bargaining representation


and workers participation in policy and
decision making. - The labor organization
designated or selected by the majority of the
employees in an appropriate collective
bargaining unit shall be the exclusive
representative of the employees in such unit
for the purpose of collective bargaining.
However, an individual employee or group of
employees shall have the right at any time to
present grievances to their employer.
Any provision of law to the contrary
notwithstanding, workers shall have the right,
subject to such rules and regulations as the
Secretary of Labor and Employment may
promulgate, to participate in policy and
decision-making
processes
of
the
establishment where they are employed
insofar as said processes will directly affect
their rights, benefits and welfare. For this
purpose, workers and employers may form
labor-management councils: Provided, That
the representatives of the workers in such
labor-management councils shall be elected
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
first day of service, be considered as an
employee for purposes of membership in any
labor union.

C.7 ARTICLE 277 (NOW ARTICLE 283)


Article 277.Miscellaneous provisions.
(a) All unions are authorized to collect
reasonable membership fees, union dues,
assessments and fines and other contributions
for labor education and research, mutual
death and hospitalization benefits, welfare
fund, strike fund and credit and cooperative
undertakings.

(d) No docket fee shall be assessed in labor


standards disputes. In all other disputes,
docket fees may be assessed against the filing
party, provided that in bargaining deadlock,
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
be protected against dismissal except for a just
and authorized cause and without prejudice to
the requirement of notice under Article 283 of
this Code, the employer shall furnish the

(e) The Minister of Labor and Employment and


the Minister of the Budget shall cause to be
created or reclassified in accordance with law
such positions as may be necessary to carry out
the objectives of this Code and cause the
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LABOR STANDARDS

upgrading of the salaries of the personnel


involved in the Labor Relations System of the
Ministry. Funds needed for this purpose shall
be provided out of the Special Activities Fund
appropriated by Batas Pambansa Blg. 80 and
from annual appropriations thereafter.

LABOR LAW

(h) In establishments where no legitimate


labor organization exists, labor-management
committees may be formed voluntarily by
workers and employers for the purpose of
promoting industrial peace. The Department of
Labor and Employment shall endeavor to
enlighten and educate the workers and
employers on their rights and responsibilities
through labor education with emphasis on the
policy thrusts of this Code.

(f) A special Voluntary Arbitration Fund is


hereby established in the Board to subsidize
the cost of voluntary arbitration in cases
involving
the
interpretation
and
implementation of the Collective Bargaining
Agreement, including the Arbitrators fees, and
for such other related purposes to promote
and develop voluntary arbitration. The Board
shall administer the Special Voluntary
Arbitration Fund in accordance with the
guidelines it may adopt upon the
recommendation of the Council, which
guidelines shall be subject to the approval of
the Secretary of Labor and Employment.
Continuing funds needed for this purpose in
the initial yearly amount of fifteen million
pesos (P15,000,000.00) shall be provided in
the 1989 annual general appropriations acts.

(i) To ensure speedy labor justice, the periods


provided in this Code within which decisions or
resolutions of labor relations cases or matters
should be rendered shall be mandatory. For
this purpose, a case or matter shall be deemed
submitted for decision or resolution upon the
filing of the last pleading or memorandum
required by the rules of the Commission or by
the Commission itself, or the Labor Arbiter, or
the Director of the Bureau of Labor Relations
or Med-Arbiter, or the Regional Director.
Upon expiration of the corresponding period, a
certification stating why a decision or
resolution has not been rendered within the
said period shall be issued forthwith by the
Chairman of the Commission, the Executive
Labor Arbiter, or the Director of the Bureau of
Labor Relations or Med-Arbiter, or the
Regional Director, as the case may be, and a
copy thereof served upon the parties.

The amount of subsidy in appropriate cases


shall be determined by the Board in
accordance with established guidelines issued
by it upon the recommendation of the Council.
The Fund shall also be utilized for the
operation of the Council, the training and
education of Voluntary Arbitrators, and the
Voluntary Arbitration Program.

Despite the expiration of the applicable


mandatory period, the aforesaid officials shall,
without prejudice to any liability which may
have been incurred as a consequence thereof,
see to it that the case or matter shall be
decided or resolved without any further delay.

(g) The Ministry shall help promote and


gradually develop, with the agreement of labor
organizations
and
employers,
labormanagement cooperation programs at
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


Placement

LABOR LAW

Provided, That the receiving country is


taking positive, concrete measures to protect
the rights of migrant workers in furtherance of
any of the guarantees under subparagraphs
(a), (b) and (c) hereof. [Sec. 3, RA 8042, as
amended]

A. RECRUITMENT OF LOCAL AND


MIGRANT WORKERS

A.1. ILLEGAL RECRUITMENT


Worker
Refers to any member of the labor force,
whether employed or unemployed. [Art.13(a),
LC)

[Sec. 5, R.A. No. 10022]


i. License and Authority
A license is a document issued by the
Department of Labor and Employment (DOLE)
authorizing a person or entity to operate a
private employment agency, while an authority
is a document issued by the DOLE authorizing
a person or association to engage in
recruitment and placement activities as a
private recruitment agency. [Art. 13(d) and (f),
LC]

Overseas Filipino Worker


Refers to a person who is to be engaged, is
engaged or has been engaged in a
remunerated activity in a state of which he or
she is not a citizen or on board a vessel
navigating the foreign seas other than a
government ship used for military or noncommercial purposes or on an installation
located offshore or on the high seas; to be used
interchangeably with migrant worker. [Sec.
2(a), RA 8042, as amended]
Policy of Selective Deployment
The State shall allow the deployment of
overseas Filipino workers only in countries
where the rights of Filipino migrant workers
are protected. The government recognizes any
of the following as a guarantee on the part of
the receiving country for the protection of the
rights of overseas Filipino workers:
(a) It has existing labor and social laws
protecting the rights of workers,
including migrant workers;
(b) It is a signatory to and/or a ratifier of
multilateral conventions, declarations or
resolutions relating to the protection of
workers, including migrant workers; and
(c) It has concluded a bilateral agreement or
arrangement with the government on
the protection of the rights of overseas
Filipino Workers:

License

Authority

Authorize an entity to
operate as a private
employment agency
When a license is
given, one is also
authorized to collect
fees

Authorize an entity to
operate as a private
recruitment entity
Does not entitle a
private recruitment
entity to collect fees.

Private employment agency (PEA) v. Private


recruitment entity (PRE)

Type

Definition

Private
Any person or
employment entity engaged in
agency
recruitment and
placement of
workers for a fee
Any person or
Private
recruitment association
engaged in the
entity
recruitment and
placement of
workers, locally or
overseas, without
charging, directly or
indirectly, any fee
12

Requires
License

Authority

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Entities disqualified from being issued a license


(1) Travel agencies and sales agencies of
airline companies. [Art. 26]
(2) Officers or members of the Board of any
corporation or members in partnership
engaged in the business of a travel agency.
(3) Corporations and partnerships, when any
of its officers, members of the board or
partners, is also an officer, member of the
board of partner of a corporation or
partnership engaged in the business of a
travel agency.
(4) Persons, partnerships or corporations
which have derogatory records.
(5) Any official or employee of the DOLE,
POEA, OWWA, DFA and other government
agencies directly involved in the
implementation of R.A. 8042 as amended
and/or any of his/her relatives within the
4th civil degree of consanguinity and
affinity. [POEA Rules of 2002]

LABOR LAW

Enforceability of the license


Licensed agencies are prohibited from
conducting any recruitment activities of any
form outside of the address stated in the
license, acknowledged branch or extension
office, without securing prior authority from the
POEA. [People vs. Buli-e (2003)]
Duration of Validity
4 years [POEA Rules of 2002]
Citizenship requirement
(1) Only Filipino citizens or
(2) Corporations, partnerships or entities at
least seventy-five percent (75%) of the
authorized and voting capital stock of
which is owned and controlled by Filipino
citizens shall be permitted to participate in
the recruitment and placement of workers,
locally or overseas. [Art. 27, LC]
SEE: POEA Rules, Part II, Rule I, Sec. 1(a)
Capitalization requirement
All applicants for authority to hire or renewal
of license to recruit are required to have such
substantial capitalization as determined by the
Secretary of Labor. [Art. 28, LC)]

Non-transferability of license or authority


(1) No license or authority shall be used
directly or indirectly by any person other
than the one in whose favor it was issued
or at any place other than that stated in
the license or authority,
(2) Nor may such license or authority be
transferred, conveyed, or assigned to any
other person or entity.

Based on POEA Rules the following are the


substantial capital requirements:
(1) Single proprietorships or partnerships with
minimum capitalization of P2,000,000.
(2) Corporations with minimum paid-up
capital of P2,000,000.

Any transfer of business address, appointment


or designation of any agent or representative
including the establishment of additional
offices anywhere shall be subject to the prior
approval of the Department of Labor. [Art. 29,
LC]

B.
ESSENTIAL
ELEMENTS
ILLEGAL RECRUITMENT

OF

Recruitment and placement" refers to any act


of (C-E-C-T-U-H)
(a) Canvassing,
(b) Enlisting,
(c) Contracting,
(d) Transporting,
(e) Utilizing, or
(f) Hiring procuring workers,

[SEE: POEA Rules Part II, Rule II, Sec. 7, 8, and


9.]

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And also includes


(a) Referrals,
(b) Contract services,
(c) Promising, or
(d) Advertising for employment, locally or
abroad, whether for profit or not

LABOR LAW

Promising employment
Promising employment as factory workers and
receiving money allegedly for processing
papers without authorization or license is
engaging into unlawful recruitment and
placement activities. The absence of the
necessary license or authority renders all of
accused-appellants recruitment activities
criminal. [People vs. Saulo (2000)]

Provided, That any person or entity which, in


any manner, offers or promises for a fee
employment to two or more persons shall be
deemed engaged in recruitment and
placement. [Art. 13 (b), LC]
Any of the acts mentioned above
constitutes recruitment and placement.
The proviso provides for a presumption that
a person or entity so described engages in
recruitment and placement [People v. Panis
(1988)]

C. SIMPLE ILLEGAL RECRUITMENT


C.1. ILLEGAL RECRUITMENT FOR LOCAL
WORKERS (GOVERNED BY THE LABOR
CODE)
Simple Illegal Recruitment (local)
Elements:
(1) The person charged with the crime must
have undertaken recruitment activities
defined under Art. 13(b) or prohibited
activities defined under Art. 34; and
(2) The said person does not have a license or
authority to do so. [Art. 38, LC]

What constitutes recruitment?


The number of persons dealt with is not an
essential ingredient of the act of recruitment
and placement of workers. Any of the acts
mentioned in Article 13(b) will constitute
recruitment and placement even if only one
prospective worker is involved. The proviso
merely lays down a rule of evidence that where
a fee is collected in consideration of a promise
or offer of employment to two or more
prospective workers, the individual or entity
dealing with them shall be presumed to be
engaged in the act of recruitment and
placement. [People v. Panis, 1988]

Profit or lack thereof is immaterial


The act of recruitment may be "for profit or
not." Notably, it is the lack of the necessary
license or authority, not the fact of payment
that renders the recruitment activity of LCL
unlawful. [C.F. Sharp vs. Espanol (2007)]
Accused must give the impression of ability to
send complainant abroad
It is well-settled that to prove illegal
recruitment, it must be shown that appellant
gave complainants the distinct impression that
she had the power or ability to send
complainants abroad for work such that the
latter were convinced to part with their money
in order to be employed. [People v. Ochoa
(2011)]

Acts of referral
The act of referral, which is included in
recruitment, is "the act of passing along or
forwarding of an applicant for employment
after an initial interview of a selected applicant
for employment to a selected employer,
placement officer or bureau." [Rodolfo vs.
People (2006)]

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LABOR STANDARDS

Contract Substitution amounts to Illegal


Recruitment
The reduced salaries and employment period
in the new employment contract contradicted
the POEA-approved employment contract. By
this act of contract substitution, respondents
committed a prohibited practice and engaged
in illegal recruitment as defined in Art. 34(i),
LC. [PERT/CPM Manpower Exponent Co. v.
Vinuya (2012)]

LABOR LAW

(g) To obstruct or attempt to obstruct


inspection by the Secretary of Labor or by
his duly authorized representatives;
(h) To fail to file reports on the status of
employment,
placement
vacancies,
remittance of foreign exchange earnings,
separation from jobs, departures and such
other matters or information as may be
required by the Secretary of Labor.
(i) To substitute or alter employment
contracts approved and verified by the
Department of Labor from the time of
actual signing thereof by the parties up to
and including the periods of expiration of
the same without the approval of the
Secretary of Labor;
(j) To become an officer or member of the
Board of any corporation engaged in travel
agency or to be engaged directly or
indirectly in the management of a travel
agency; and
(k) To withhold or deny travel documents from
applicant workers before departure for
monetary or financial considerations other
than those authorized under this Code and
its implementing rules and regulations.
[Art. 34, LC]

Prohibited practices
It shall be unlawful for any individual, entity,
licensee, or holder of authority:
(a) To charge or accept, directly or indirectly,
any amount greater than that specified in
the schedule of allowable fees prescribed
by the Secretary of Labor, or to make a
worker pay any amount greater than that
actually received by him as a loan or
advance;
(b) To furnish or publish any false notice or
information or document in relation to
recruitment or employment;
(c) To give any false notice, testimony,
information or document or commit any
act of misrepresentation for the purpose of
securing a license or authority under this
Code.
(d) To induce or attempt to induce a worker
already employed to quit his employment
in order to offer him to another unless the
transfer is designed to liberate the worker
from oppressive terms and conditions of
employment;
(e) To influence or to attempt to influence any
person or entity not to employ any worker
who has not applied for employment
through his agency;
(f) To engage in the recruitment or placement
of workers in jobs harmful to public health
or morality or to the dignity of the Republic
of the Philippines;

C.2. ILLEGAL RECRUITMENT


MIGRANT WORKERS

FOR

[Governed by R.A. 8042, as amended by, R.A.


10022]
Simple Illegal Recruitment
1st type:
(1) Person
charged
undertakes
any
recruitment activity as defined in Art.13 (b)
of the Labor Code; and
(2) Said person does not have a license or
authority to do so.

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LABOR STANDARDS

2nd type:
(1) Person charged commits any of the
enumerated acts under Sec. 6 of R.A.
8042, as amended by, R.A. 10022.
(2) It is immaterial whether he is a holder or
not of any license or authority
Illegal recruitment shall mean any act of
canvassing,
enlisting,
contracting,
transporting, utilizing, hiring, or procuring
workers and includes referring, contract
services, promising or advertising for
employment abroad, whether for profit or not,
when undertaken by non-licensee or nonholder of authority contemplated under Article
13(f) of Presidential Decree No. 442, as
amended, otherwise known as the Labor Code
of the Philippines

(d)

(e)

Provided,
That any such non-licensee or non-holder who,
in any manner, offers or promises for a fee
employment abroad to two or more persons
shall be deemed so engaged. [Sec. 6, RA 8042
as amended]

(f)

(g)
Other prohibited acts
It shall likewise include the following acts,
whether committed by any person, whether a
non-licensee, non-holder, licensee or holder of
authority:
(a) To charge or accept directly or indirectly
any amount greater than that specified in
the schedule of allowable fees prescribed
by the Secretary of Labor and Employment,
or to make a worker pay or acknowledge
any amount greater than that actually
received by him as a loan or advance;
(b) To furnish or publish any false notice or
information or document in relation to
recruitment or employment;
(c) To give any false notice, testimony,
information or document or commit any
act of misrepresentation for the purpose of
securing a license or authority under the

(h)

(i)

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LABOR LAW

Labor Code, or for the purpose of


documenting hired workers with the POEA,
which include the act of reprocessing
workers through a job order that pertains
to nonexistent work, work different from
the actual overseas work, or work with a
different employer whether registered or
not with the POEA;
To include or attempt to induce a worker
already employed to quit his employment
in order to offer him another unless the
transfer is designed to liberate a worker
from oppressive terms and conditions of
employment;
To influence or attempt to influence any
person or entity not to employ any worker
who has not applied for employment
through his agency or who has formed,
joined or supported, or has contacted or is
supported by any union or workers'
organization;
To engage in the recruitment or placement
of workers in jobs harmful to public health
or morality or to the dignity of the Republic
of the Philippines;
To fail to submit reports on the status of
employment,
placement
vacancies,
remittance of foreign exchange earnings,
separation from jobs, departures and such
other matters or information as may be
required by the Secretary of Labor and
Employment;
To substitute or alter to the prejudice of
the worker, employment contracts
approved and verified by the Department
of Labor and Employment from the time of
actual signing thereof by the parties up to
and including the period of the expiration
of the same without the approval of the
Department of Labor and Employment;
For an officer or agent of a recruitment or
placement agency to become an officer or
member of the Board of any corporation
engaged in travel agency or to be engaged

UP LAW BOC

LABOR STANDARDS

directly or indirectly in the management of


travel agency;
(j) To withhold or deny travel documents from
applicant workers before departure for
monetary or financial considerations, or for
any other reasons, other than those
authorized under the Labor Code and its
implementing rules and regulations;
(k) Failure to actually deploy a contracted
worker without valid reason as determined
by the Department of Labor and
Employment;
(l) Failure to reimburse expenses incurred by
the worker in connection with his
documentation and processing for
purposes of deployment, in cases where
the deployment does not actually take
place without the worker's fault. Illegal
recruitment when committed by a
syndicate or in large scale shall be
considered an offense involving economic
sabotage; and
(m) To allow a non-Filipino citizen to head or
manage a licensed recruitment/manning
agency.

(4)

(5)

(6)

(7)

In addition to the acts enumerated above, it


shall also be unlawful for any person or entity
to commit the following prohibited acts:
(1) Grant a loan to an overseas Filipino worker
with interest exceeding eight percent (8%)
per annum, which will be used for payment
of legal and allowable placement fees and
make the migrant worker issue, either
personally or through a guarantor or
accommodation party, postdated checks in
relation to the said loan;
(2) Impose a compulsory and exclusive
arrangement whereby an overseas Filipino
worker is required to avail of a loan only
from specifically designated institutions,
entities or persons;
(3) Refuse to condone or renegotiate a loan
incurred by an overseas Filipino worker
after the latter's employment contract has

LABOR LAW

been prematurely terminated through no


fault of his or her own;
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;
Impose a compulsory and exclusive
arrangement whereby an overseas Filipino
worker is required to undergo training,
seminar, instruction or schooling of any
kind only from specifically designated
institutions, entities or persons, except for
recommendatory trainings mandated by
principals/shipowners where the latter
shoulder the cost of such trainings;
For a suspended recruitment/manning
agency to engage in any kind of
recruitment
activity
including
the
processing
of
pending
workers'
applications; and
For a recruitment/manning agency or a
foreign principal/employer to pass on the
overseas Filipino worker or deduct from his
or her salary the payment of the cost of
insurance fees, premium or other
insurance related charges, as provided
under the compulsory worker's insurance
coverage. [Sec. 6, RA 8042 as amended]

Migrant Workers Act (MWA) expands the


definition of illegal recruitment
The amendments to the Labor Code
introduced by Republic Act No. 8042,
otherwise known as the Migrant Workers and
Overseas Filipinos Act of 1995, broadened the
concept of illegal recruitment and provided
stiffer penalties, especially for those that
constitute economic sabotage. [People v.
Ocden (2011)]

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Law
Labor
Code

Applicabili
ty
Local
Workers

LABOR STANDARDS
Acts
Punishabl
e
Art. 13(b)
Art. 34

RA
Migrant
8042
Workers
as
amend
ed by
RA
10022

Art. 13(b)
Labor
Code
Enumerat
ed
prohibite
d acts in
Section 6

LABOR LAW

and Employment, particularly with respect


to the securing of license or an authority to
recruit and deploy workers, either locally
or overseas; and
(3) The accused commits the unlawful acts
against three or more persons individually
or as a group.

Who can be
punished
Nonlicensee
Nonlicensee
Nonlicensee

Three or more complainants must be in a single


case
When the Labor Code speaks of illegal
recruitment "committed against three (3) or
more persons individually or as a group," it
must be understood as referring to the number
of complainants in each case who are
complainants therein, otherwise, prosecutions
for single crimes of illegal recruitment can be
cumulated to make out a case of large scale
illegal recruitment.

Licensee/
Nonlicensee

D. ILLEGAL RECRUITMENT IN LARGE


SCALE
Illegal recruitment by a syndicate
(1) The offender undertakes either any activity
within the meaning of "recruitment and
placement" defined under Article 13(b), or
any of the prohibited practices enumerated
under Art. 34 of the Labor Code;
(2) He has no valid license or authority
required by law to enable one to lawfully
engage in recruitment and placement of
workers; AND
(3) The illegal recruitment is committed by a
group of three (3) or more persons
conspiring or confederating with one
another. [People v. Gallo (2010)]

In other words, a conviction for large scale


illegal recruitment must be based on a finding
in each case of illegal recruitment of three or
more persons whether individually or as a
group. [People vs. Reyes (1995)]

E. ILLEGAL RECRUITMENT AS
ECONOMIC SABOTAGE
E.1 OFFENSE INVOLVING ECONOMIC
SABOTAGE (LARGE-SCALE OR BY A
SYNDICATE)
Illegal recruitment is considered economic
sabotage when the commission thereof is
attended by the ff. qualifying circumstances:
(1) By a syndicate - if carried out by a group of
3 or more persons conspiring and
confederating with one another;
In large scale - if committed against 3 or more
persons individually or as a group. [Art. 38(b),
LC]

Illegal recruitment in large scale


The acts committed by the accused constituted
illegal recruitment in large scale, whose
essential elements are the following:
(1) The accused engages in acts of
recruitment and placement of workers
defined under Article 13(b) of the Labor
Code or in any prohibited activities under
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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LABOR STANDARDS

E.2 OFFENSE INVOLVING ECONOMIC


SABOTAGE (LARGE-SCALE OR BY A
SYNDICATE)

by other laws. Conversely, conviction for estafa


under par. 2(a) of Art. 315 of the Revised Penal
Code does not bar a conviction for illegal
recruitment under the Labor Code. It follows
that one's acquittal of the crime of estafa will
not necessarily result in his acquittal of the
crime of illegal recruitment in large scale, and
vice versa. [People v. Ochoa (2011); People v.
Ocden (2011)]

Illegal recruitment is deemed committed by a


syndicate if carried out by a group of three (3)
or more persons conspiring or confederating
with one another. It is deemed committed in
large scale if committed against three (3) or
more persons individually or as a group.

F. ILLEGAL
ESTAFA

RECRUITMENT

LABOR LAW

G. LIABILITIES

VS.

G.1 LOCAL RECRUITMENT AGENCY

Illegal recruitment and estafa are entirely


different offenses and neither one necessarily
includes or is necessarily included in the other.
A person who is convicted of illegal
recruitment may, in addition, be convicted
of estafa by false pretenses or fraudulent acts
under Article 315, paragraph 2(a) of the
Revised Penal Code. In the same manner, a
person acquitted of illegal recruitment may be
held liable for estafa. Double jeopardy will not
set
in
because
illegal
recruitment
is malum prohibitum, in which there is no
necessity
to
prove
criminal
intent,
whereas estafa
is malum in se,
in
the
prosecution of which, proof of criminal intent is
necessary. [Rosita Sy vs. People (2010)]

1.I. ILLEGAL RECRUITMENT INVOLVING


LOCAL WORKERS [ART. 39, LC]
Act
Illegal recruitment
constituting economic
sabotage
Licensee or holder or
authority violating or
causing another to
violate Title I, Book I,
LC
Violating or causing
another to violate
Title I, Book I, LC

One convicted for illegal recruitment may still


be convicted of estafa
In People v. Cortez the Court explained that: In
this jurisdiction, it is settled that a person who
commits illegal recruitment may be charged
and convicted separately of illegal recruitment
under the Labor Code and estafa under par.
2(a) of Art. 315 of the Revised Penal Code. The
offense of illegal recruitment is malum
prohibitum where the criminal intent of the
accused is not necessary for conviction, while
estafa is malum in se where the criminal intent
of the accused is crucial for conviction.
Conviction for offenses under the Labor Code
does not bar conviction for offenses punishable

Penalty
Life imprisonment
AND
Fine: P100,000.00
2 years
Imprisonment 5
years OR
P10,000 Fine
P50,000 OR both
4 years
Imprisonment 8
years OR
P20,000 Fine
P100,000 OR both

If the offender is a corporation, partnership,


association or entity, the penalty shall be
imposed upon the officer or officers of the
corporation, partnership, association or entity
responsible for violation.
If such officer is an alien, he shall, in addition
to the penalties herein prescribed, be deported
without further proceedings.
In every case, conviction shall cause and carry
the automatic revocation of the license or
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LABOR STANDARDS

authority and all the permits and privileges


granted to such person or entity under this
Title, and the forfeiture of the cash and surety
bonds in favor of the Overseas Employment
Development Board or the National Seamen
Board, as the case may be, both of which are
authorized to use the same exclusively to
promote their objectives.

E.g. In this case the appellant was both the


APSC Vice-President-Treasurer and the
Assistant General Manager. She was a high
corporate
officer
who
had
direct
participation
in
the
management,
administration, direction and control of the
business of the corporation, and is thus
liable under Sec. 6 of RA 8042. The terms
control, management or direction broadly
cover all phases of business operation,
including the aspects of administration,
marketing and finances, among others.
[People vs. Sagayaga (2004)]

II. ILLEGAL RECRUITMENT INVOLVING


MIGRANT WORKERS
[Sec. 7, RA 8042 as amended by RA 10022]

Act
Illegal
recruitment

Illegal
recruitment
constituting
economic
sabotage

Prohibited
Act/s

LABOR LAW

Penalty

(2) Local Employment Agency is solidarily liable


with foreign principal. Severance of relations
between local agent and foreign principal
does not affect liability of local recruiter.
Private employment agencies are held
jointly and severally liable with the foreignbased employer for any violation of the
recruitment agreement or contract of
employment. This joint and solidary liability
imposed by law against recruitment
agencies and foreign employers is meant to
assure the aggrieved worker of immediate
and sufficient payment of what is due him.
[Becmen Service Exporter and Promotion,
Inc. v. Spouses Cuaresma, G.R. 182978-79,
April 7, 2009]

12 years and 1 day


Imprisonment 20 years
AND
P1M Fine P2M
Life imprisonment AND
P2M Fine P5M
Maximum penalty:
1. illegally recruited person
below 18 years old OR
2. Without license/authority
6 years and 1 day
Imprisonment 12 years AND
P500k Fine P1M

If the offender is an alien, he or she shall, in


addition to the penalties herein prescribed, be
deported without further proceedings.

(3) If the recruitment/placement agency is a


juridical being, the corporate officers and
directors and partners as the case may be,
shall themselves be jointly and solidarily liable
with the corporation or partnership for the
aforesaid claims and damages. [Becmen
Service Exporter and Promotion, Inc. v.
Spouses Cuaresma, G.R. 182978-79, April 7,
2009]

In every case, conviction shall cause and carry


the automatic revocation of the license or
registration of the recruitment/manning
agency, lending institutions, training school or
medical clinic.
Common Rules on Liability
(1) Employees of a company corporation engaged
in illegal recruitment may be held liable as
principal, together with his employer, if it is
shown that he actively and consciously
participated in illegal recruitment.

(4) Foreign employer shall assume joint and


solidary liability with the employer for all
claims and liabilities which may arise in
connection with the implementation of the
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contract, including but not limited to


payment of wages, death and disability
compensation and repatriation

LABOR LAW

Consequently, notice to the former of any


violation thereof is notice to the latter.
It may be good to note the case of Sunace
International Management Services Inc v
NLRC, GR No. 161757, January 25, 2006 where
the theory of imputed knowledge was
mentioned because it was used to try and
make an agency liable. The SC said that the
argument made was a misapplication of the
theory of imputed knowledge: The theory of
imputed knowledge ascribes the knowledge of
the agent, Sunace, to the principal, employer
Xiong, not the other way around. The
knowledge of the principal-foreign employer
cannot, therefore, be imputed to its agent
Sunace.

Common Rules on Illegal Recruitment (Local or


Overseas)
Venue
A criminal action arising from illegal
recruitment shall be filed with the RTC of the
province or city:
(1) where the offense was committed or
(2) where the offended party actually resides at
the time of the commission of the offense.
[Sec. 9, R.A. 8042 [this part was not
amended by R.A. 10022]].
Prescriptive Periods
(1) Simple Illegal Recruitment 5 years
(2) Illegal Recruitment involving Economic
Sabotage 20 years. (Sec. 12, R.A. 8042
[this part was not amended by R.A,
10022]).

Solidary Liability
Solidary Liability of Agent and Principal
The written application for a license to operate
a private employment or manning agency shall
be submitted with, among others, a VERIFIED
UNDERTAKING stating that the applicant:

Foreign Employer
Foreign employer shall assume joint and solidary
liability with the employer for all claims and
liabilities which may arise in connection with
the implementation of the contract, including
but not limited to payment of wages, death
and disability compensation and repatriation

(1) Shall assume full and complete


responsibility for
all claims and liabilities which may arise
in connection with the use of license;
all acts of its officials, employees and
representatives done in connection with
recruitment and placement;

Theory of imputed knowledge


This is a doctrine in agency which states that
the principal is chargeable with and bound by
the knowledge of or notice to his agent
received while the agent was acting as such.
Simply put, notice to the agent is notice to the
principal.

(2) Shall assume joint and solidary liability with


the employer for all claims and liabilities which
may arise in connection with the
implementation of the contract, including but
not limited to payment of wages, death and
disability compensation and repatriation;

Since the local employment agency is


considered the agent of the foreign employer,
the principal, knowledge of the former of
existing labor and social legislation in the
Philippines is binding on the latter.

(3) Shall guarantee compliance with the


existing labor and social legislations of the
Philippines and of the country of employment
of recruited workers [POEA Rules, Book II, Rule
II, Sec. 1 (f) (2-5)]
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LABOR STANDARDS

Purpose of Solidary Liability


The fact that the manning agency and its
principal have already terminated their agency
agreement does not relieve the former of its
liability. The agency agreement with the
principal even if ended as between them, still
extends up to and until the expiration of, the
employment contracts of the employees
recruited and employed pursuant to the said
recruitment agreement. Otherwise, this will
render nugatory the very purpose for which the
law governing the employment of workers for
foreign jobs abroad was enacted, that is, to
assure aggrieved workers of immediate and
sufficient payment of what is due them. [OSM
Shipping Phil, Inc. v. NLRC (2003)]

LABOR LAW

Serrano ruling: invalidated the 3-month salary


cap
The issue in this case is the constitutionality of
the last clause of Sec.10 of RA 8042:
Sec. 10. Money Claims. - x xx In case of
termination of overseas employment without
just, valid or authorized cause as defined by
law or contract, the workers shall be entitled to
the full reimbursement of his placement fee
with interest of twelve percent (12%) per
annum, plus his salaries for the unexpired
portion of his employment contract or for three
(3) months for every year of the unexpired term,
whichever is less.
The Court held that said clause is
unconstitutional for being an invalid
classification, in violation of the equal
protection clause. (Serrano v. Gallant Maritime
Services, Inc., G.R. No. 167614, March 24, 2009)

Pre-Termination of Contract of Migrant Worker


[Sec. 10, R.A. 8042, as amended by R.A. 10022]
In case of termination of overseas employment
without just, valid or authorized cause as
defined by law or contract, or
any unauthorized deductions from the
migrant worker's salary

In the case of Yap v. Thenamaris Ships


Management and Intermare Maritime Agencies,
Inc. (G.R. No. 179532, May 30, 2011), RA 8042
was declared unconstitutional while the case
was pending in the SC. The Court affirmed the
Serrano ruling, but did not apply the Operative
Fact doctrine: As an exception to the general
rule, the doctrine applies only as a matter of
equity and fair play.

The worker shall be entitled to the full


reimbursement of:
(1) his placement fee and the deductions
made with interest at twelve percent (12%)
per annum
(2) plus his salaries for the unexpired portion
of his employment contract OR for three
(3) months for every year of the unexpired
term, whichever is less.

In view of the reenactment of the section in RA


8042 which was declared unconstitutional in
Serrano, it would be good to note the case of
Sameer Overseas Placement Agency v Cabiles
(G.R. No. 170139, August 05, 2014) where the
SC ruled:

Rule before Serrano: 3-month salary rule


applies
The employment contract involved in the
instant case covers a two-year period but the
overseas contract worker actually worked for
only 26 days prior to his illegal dismissal. Thus,
the three months salary rule applies [Flourish
Maritime Shipping v. Almanzor, G.R. No.
177948, March 14, 2008]

We reiterate our finding in Serrano v. Gallant


Maritime that limiting wages that should be
recovered by an illegally dismissed overseas
worker to three months is both a violation of
due process and the equal protection clauses
of the Constitution.

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LABOR STANDARDS

LABOR LAW

Who can suspend or cancel the license?


(1) DOLE Secretary
(2) POEA Administrator

A. DIRECT HIRING
General Rule: No employer may hire a Filipino
worker for overseas employment except
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
employment is concurrently vested with the
POEA and the Secretary of Labor. [People v.
Diaz, 259 SCRA 441 (1996)]

Exceptions:
(1) Members of the diplomatic corps;
(2) International organizations;
(3) Such other employees as may be allowed
by the Sec. of Labor;
(4) Name hirees those individuals who are
able to secure contracts for overseas
employment on their own efforts and
representation without the assistance or
participation of any agency. Their hiring,
nonetheless, has to be processed through
the POEA. (Part III, Rule III of the POEA
Rules Governing Overseas Employment as
amended in 2002)

B.2. REGULATORY AND VISITORIAL


POWERS OF THE DOLE SECRETARY
Regulatory powers [Art. 36, LC]
The Secretary of Labor shall have the power to
restrict and regulate the recruitment and
placement activities of all agencies within the
coverage of this Title and is hereby authorized
to issue orders and promulgate rules and
regulations to carry out the objectives and
implement the provisions of this Title.
Visitorial powers [Art. 37, LC]
The Secretary of Labor or his duly authorized
representatives may, at any time, inspect the
premises, books of accounts and records of any
person or entity covered by this Title, require it
to submit reports regularly on prescribed
forms, and act on violations of any provisions
of this Title.

B. REGULATIONS AND
ENFORCEMENT
B.1. SUSPENSION OR CANCELLATION OF
LICENSE OR AUTHORITY
The Secretary of Labor shall have the power to
suspend or cancel any license or authority to
recruit employees for overseas employment for
violation of rules and regulations issued by
the Department of Labor, the Overseas
Employment Development Board, and the
National Seamen Board
violation of the provisions of this and other
applicable laws, General Orders and Letters
of Instructions. (Article 35, LC)

Note the old case of Salazar v Achacoso, G.R.


No. 81510 March 14, 1990 which declared that
Article 38 of the LC is unconstitutional and
that the Secretary of Labor and Employment
cannot issue a warrant of arrest.

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
EXCHANGE EARNINGS

LABOR STANDARDS

FOREIGN

LABOR LAW

B.4. PROHIBITED ACTIVITIES


Prohibited practices
It shall be unlawful for any individual, entity,
licensee, or holder of authority:
(a) To charge or accept, directly or indirectly,
any amount greater than that specified in
the schedule of allowable fees prescribed
by the Secretary of Labor, or to make a
worker pay any amount greater than that
actually received by him as a loan or
advance;
(b) To furnish or publish any false notice or
information or document in relation to
recruitment or employment;
(c) To give any false notice, testimony,
information or document or commit any
act of misrepresentation for the purpose of
securing a license or authority under this
Code.
(d) To induce or attempt to induce a worker
already employed to quit his employment
in order to offer him to another unless the
transfer is designed to liberate the worker
from oppressive terms and conditions of
employment;
(e) To influence or to attempt to influence any
person or entity not to employ any worker
who has not applied for employment
through his agency;
(f) To engage in the recruitment or placement
of workers in jobs harmful to public health
or morality or to the dignity of the Republic
of the Philippines;
(g) To obstruct or attempt to obstruct
inspection by the Secretary of Labor or by
his duly authorized representatives;
(h) To fail to file reports on the status of
employment,
placement
vacancies,
remittance of foreign exchange earnings,
separation from jobs, departures and such
other matters or information as may be
required by the Secretary of Labor.
(i) To substitute or alter employment
contracts approved and verified by the
Department of Labor from the time of

It shall be mandatory for all Filipino workers


abroad to remit a portion of their foreign
earnings to their families, dependents, and/or
beneficiaries in the country (Art. 22, LC)
Amount required to be remitted
[Executive Order No. 857]
The amount of ones salary required to be
remitted depends on the type or nature of work
performed by the employee.
The following are the percentages of foreign
exchange remittance required from various
kinds of migrant workers:
(1) Seaman or mariner 80% of their basic
salary
(2) Workers for Filipino contractors and
construction companies 70%
(3) Doctors, engineers, teachers, nurses and
other professional workers whose
contract provide for free board and
lodging 70%
(4) All other professional workers whose
employment contracts do not provide for
free board and lodging facilities 50%
(5) Domestic and other service workers
50%
(6) All other workers not falling under the
aforementioned categories 50%
(7) Performing artists 50%
Individuals exempted from the mandatory
remittance requirement:
(1) The immediate family members,
dependents or beneficiaries of migrant
workers residing with the latter abroad;
(2) Filipino servicemen working within US
military installations;
(3) Immigrants and Filipino professionals
working with the United Nations and its
agencies or other specialized bodies.

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LABOR STANDARDS

actual signing thereof by the parties up to


and including the periods of expiration of
the same without the approval of the
Secretary of Labor;
(j) To become an officer or member of the
Board of any corporation engaged in travel
agency or to be engaged directly or
indirectly in the management of a travel
agency; and
To withhold or deny travel documents from
applicant workers before departure for
monetary or financial considerations other
than those authorized under this Code and its
implementing rules and regulations. (Art. 34,
LC)

(e)

(f)

(g)
Other prohibited acts
It shall likewise include the following acts,
whether committed by any person, whether a
non-licensee, non-holder, licensee or holder of
authority:
(a) To charge or accept directly or indirectly
any amount greater than that specified in
the schedule of allowable fees prescribed
by the Secretary of Labor and Employment,
or to make a worker pay or acknowledge
any amount greater than that actually
received by him as a loan or advance;
(b) To furnish or publish any false notice or
information or document in relation to
recruitment or employment;
(c) To give any false notice, testimony,
information or document or commit any
act of misrepresentation for the purpose of
securing a license or authority under the
Labor Code, or for the purpose of
documenting hired workers with the POEA,
which include the act of reprocessing
workers through a job order that pertains
to nonexistent work, work different from
the actual overseas work, or work with a
different employer whether registered or
not with the POEA;
(d) To include or attempt to induce a worker
already employed to quit his employment

(h)

(i)

(j)

(k)

25

LABOR LAW

in order to offer him another unless the


transfer is designed to liberate a worker
from oppressive terms and conditions of
employment;
To influence or attempt to influence any
person or entity not to employ any worker
who has not applied for employment
through his agency or who has formed,
joined or supported, or has contacted or is
supported by any union or workers'
organization;
To engage in the recruitment or placement
of workers in jobs harmful to public health
or morality or to the dignity of the Republic
of the Philippines;
To fail to submit reports on the status of
employment,
placement
vacancies,
remittance of foreign exchange earnings,
separation from jobs, departures and such
other matters or information as may be
required by the Secretary of Labor and
Employment;
To substitute or alter to the prejudice of
the worker, employment contracts
approved and verified by the Department
of Labor and Employment from the time of
actual signing thereof by the parties up to
and including the period of the expiration
of the same without the approval of the
Department of Labor and Employment;
For an officer or agent of a recruitment or
placement agency to become an officer or
member of the Board of any corporation
engaged in travel agency or to be engaged
directly or indirectly in the management of
travel agency;
To withhold or deny travel documents from
applicant workers before departure for
monetary or financial considerations, or for
any other reasons, other than those
authorized under the Labor Code and its
implementing rules and regulations;
Failure to actually deploy a contracted
worker without valid reason as determined

UP LAW BOC

LABOR STANDARDS

by the Department of Labor and


Employment;
(l) Failure to reimburse expenses incurred by
the worker in connection with his
documentation and processing for
purposes of deployment, in cases where
the deployment does not actually take
place without the worker's fault. Illegal
recruitment when committed by a
syndicate or in large scale shall be
considered an offense involving economic
sabotage; and
(m) To allow a non-Filipino citizen to head or
manage a licensed recruitment/manning
agency.

LABOR LAW

(5) Impose a compulsory and exclusive


arrangement whereby an overseas Filipino
worker is required to undergo training,
seminar, instruction or schooling of any
kind only from specifically designated
institutions, entities or persons, except for
recommendatory trainings mandated by
principals/shipowners where the latter
shoulder the cost of such trainings;
(6) For a suspended recruitment/manning
agency to engage in any kind of
recruitment
activity
including
the
processing
of
pending
workers'
applications; and
(7) For a recruitment/manning agency or a
foreign principal/employer to pass on the
overseas Filipino worker or deduct from his
or her salary the payment of the cost of
insurance fees, premium or other
insurance related charges, as provided
under the compulsory worker's insurance
coverage. (Sec. 6, RA 8042 as amended)

In addition to the acts enumerated above, it


shall also be unlawful for any person or entity
to commit the following prohibited acts:
(1) Grant a loan to an overseas Filipino worker
with interest exceeding eight percent (8%)
per annum, which will be used for payment
of legal and allowable placement fees and
make the migrant worker issue, either
personally or through a guarantor or
accommodation party, postdated checks in
relation to the said loan;
(2) Impose a compulsory and exclusive
arrangement whereby an overseas Filipino
worker is required to avail of a loan only
from specifically designated institutions,
entities or persons;
(3) Refuse to condone or renegotiate a loan
incurred by an overseas Filipino worker
after the latter's employment contract has
been prematurely terminated through no
fault of his or her own;
(4) Impose a compulsory and exclusive
arrangement whereby an overseas Filipino
worker is required to undergo health
examinations only from specifically
designated medical clinics, institutions,
entities or persons, except in the case of a
seafarer whose medical examination cost
is shouldered by the principal/shipowner;
26

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LABOR STANDARDS

III. Labor Standards

LABOR LAW

A.2. MANAGERIAL EMPLOYEES


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
which they are employed or of a department or
subdivision thereof and to other officers or
members of the managerial staff.

General rule: Shall apply to employees in all


establishments and undertakings whether for
profit or not. (Art. 82, LC)
Exceptions (NOT Covered):
(1) Government employees (Art. 82; Art. 76)
(2) Managerial Employees including members
of the managerial staff (Art. 82)
(3) Field Personnel (Art. 82)
(4) Members of the family of the employer
who are dependent on him for support
(Art. 82);
(5) Domestic helpers and persons in personal
service of another (Art. 141, RA 10361)
(6) Workers who are paid by result as
determined by DOLE regulation (Art. 82)

[Art. 212 (m), LC] One who is vested with the


powers or prerogatives to lay down and
execute management policies and/or to hire,
transfer, suspend, lay off, recall, discharge,
assign or discipline employees. Supervisory
employees are those who, in the interest of 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.

A.1. GOVERNMENT EMPLOYEES


The terms and conditions of employment of all
government employees, including employees
of GOCCs, are governed by the Civil Service
rules and regulations, not by the Labor Code
(Art. 282).

The definition in Art. 82 covers more people


than that in Article 212 (m) as Article 82 also
includes managerial staff. In effect,
managerial employees in Article 82 includes
supervisors, but Article 212(m) does not.

However, not all GOCCs are governed by the


Civil Service Rules; only those created by
original charter:

It follows that under Book V, supervisors are


allowed to form, join or assist a labor union.
Supervisors are not, however, entitled to the
benefits under Book III Articles 83 through 96,
being part of the exemption of managerial
employees as defined in Article 82. (Azucena)

Following Sec. 2(i) Art. IX-B of 1987 Phil.


Constitution, the test in determining whether a
government owned corporation is subject to
the Labor Code or the Civil Service law is
finding out what created it if its created by a
special charter, then, Civil Service Law applies, if
it is created by the General Corporation Law,
then the Labor Code applies. [PNOC Energy
Development Corp. v. NLRC (1991)]

Characteristics of managerial employees


[Book 3, Rule 1, Sec. 2(b), IRR]
Managerial employees are exempted from the
coverage of Book III Articles 83 through 96 if
they meet all of the following conditions:
(1) Their primary duty consists of the
management of the establishment in

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LABOR STANDARDS

LABOR LAW

A.3. FIELD PERSONNEL

which they are employed or of a


department or sub-division thereof.
(2) They customarily and regularly direct the
work of two or more employees therein.
(3) They have the authority to hire or fire
employees of lower rank; or their
suggestions and recommendations as to
hiring and firing and as to the promotion
or any other change of status of other
employees, are given particular weight.

Non-agricultural employees:
(1) Who regularly perform their duties away
from the principal place of business or
branch office of the employer AND
(2) Whose actual hours of work in the field
cannot be determined with reasonable
certainty. (Art. 82, LC)
Legal Test: Control and Supervision of ER
Although the fishermen perform nonagricultural work away from petitioners
business offices, the fact remains that
throughout the duration of their work they are
under the effective control and supervision of
petitioner through the vessels patron or
master. Hence, the fishermen are not field
personnel. [Mercidar Fishing Corporation v.
NLRC (1998)]

Managerial Staff also included as they are


considered managerial employees as well
[Book 3, Rule 1, Sec. 2(c), IRR]
Officers or members of a managerial staff are
also exempted if they perform the following
duties and responsibilities:
(1) Their primary duty consists of the
performance of work directly related to
management policies of their employer;
(2) Customarily and regularly exercise
discretion and independent judgment;
(3) (a) Regularly and directly assist a
proprietor or a managerial employee
whose primary duty consists of the
management of the establishment in
which he is employed or subdivision
thereof; OR
(b) Execute under general supervision
work along specialized or technical lines
requiring special training, experience, or
knowledge; OR
(c) Execute, under general supervision,
special assignments and tasks;
(4) Who do not devote more than 20% of
their hours worked in a work week to
activities which are not directly and
closely related to the performance of the
work described in paragraphs (1), (2) and
(3) above.

In order to determine whether an employee is a


field employee, it is also necessary to ascertain
if actual hours of work in the field can be
determined with reasonable certainty by the
employer. In so doing, an inquiry must be
made as to whether or not the employees time
and performance are constantly supervised by
the employer. [Far East Agricultural Supply v.
Lebatique [2007)]

A.4. DEPENDENT FAMILY MEMBERS


Workers who are family members of the
employer, and who are dependent on him for
their support, are outside the coverage of this
Title on working conditions and rest periods.

A.5. DOMESTIC HELPERS


[Art. 141, LC.] "Domestic or household service"
shall mean service in the employers home
which is usually necessary or desirable for the
maintenance and enjoyment thereof and
includes ministering to the personal comfort
and convenience of the members of the
employers household including services of
family drivers.
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LABOR STANDARDS

Note: The Kasambahay Law (RA 10361) has


redefined domestic worker or kasambahay:

LABOR LAW

Associates, OP Decision No. 0183, cited by


Azucena]

[RA 10361 Art. 1, Sec. 4 (d).] Domestic worker or


Kasambahay refers to any person engaged in
domestic work within an employment
relationship such as but not limited to the
following: general househelp, nursemaid or
yaya, cook, gardener or laundry person but
shall exclude any person who performs
domestic
work
only
occasionally
or
sporadically and not on an occupational basis.

A.7. WORKERS PAID BY RESULT


[Book 3, Rule 1, Sec. 2 (e), IRR.]
Workers who are paid by results, including those
who are paid on piece work, takay, pakiao or
task basis, and other nontime work if their output
rates are in accordance with the standards
prescribed under Section 8, Rule VII, Book Three
of these regulations, or where such rates have
been fixed by the Secretary of Labor and
Employment in accordance with the aforesaid
Section.

A.6. PERSONS IN PERSONAL SERVICE


OF ANOTHER

Workers under piece-rate employment have no


fixed salaries and their compensation is
computed on the basis of accomplished tasks.
That their work output might have been
affected by the change in their specific work
assignments does not necessarily imply that
any resulting reduction in pay is tantamount to
constructive dismissal. It is the prerogative of
the management to change their assignments
or to transfer them. [Best Wear Garments v. De
Lemos and Ocubillo (2012)]

[Book 3, Rule 1, Sec. 2 (d), IRR]


Domestic servants and persons in the personal
service of another if they perform such services in
the employers home which are usually necessary
or desirable for the maintenance and enjoyment
thereof or minister to the personal comfort
convenience or safety of the employer as well as
the members of his employers household.

Exclusivity of function required


Note that the definition contemplates a
domestic servant who is employed in the
employers home to minister exclusively to the
personal comfort and enjoyment of the
employers family. [Azucena]

B. HOURS OF WORK
B.1. COVERAGE/EXCLUSIONS
See previous section (A. Coverage) which deals
with the general rules of coverage and
exclusions for the applicability of the
Conditions of Employment provisions in Book
III of the Labor Code.

Thus, it has been held that the following


personnel are NOT domestic employees:
(1) House personnel hired by a ranking
company official but paid by the
company itself to maintain a staff house
provided for the official. [Cadiz v.
Philippine Sinter Corp, NLRC Case No. 71729, cited by Azucena]
(2) A family cook, who is later assigned to
work as a watcher and cleaner of the
employers business establishment,
becomes an industrial worker entitled to
receive the wages and benefits flowing
from such status. [Villa v. Zaragosa and

B.2. NORMAL HOURS OF WORK


General Rule: 8-Hour Labor Law
The normal hours of work of any employee
shall not exceed eight (8) hours a day. [Art. 83,
LC]
Note: Article 83 of the Labor Code only set a
maximum of number of hours as "normal
hours of work" but did not prohibit work of less
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LABOR STANDARDS

than eight hours [Legend Hotel v. Realuyo


(2012)]

LABOR LAW

General principles in determining if time is


considered as hours worked [Book III, Rule 1,
Sec. 4, IRR]
(1) All hours are hours worked which the
employee is required to give his employer,
regardless of whether or not such hours
are spent in productive labor or involve
physical or mental exertion.
(2) An employee need not leave the premises
of the work place in order that his rest
period shall not be counted, it being
enough that he stops working, may rest
completely and may leave his work place
to go elsewhere, whether within or outside
the premises of his work place.
(3) If the work performed was necessary, or it
benefited the employer, or the employee
could not abandon his work at the end of
his normal working hours because he had
no replacement, all time spent for such
work shall be considered as hours worked,
if the work was with the knowledge of his
employer or immediate supervisor.
(4) The time during which an employee is
inactive by reason of interruptions in his
work beyond his control shall be
considered working time either:
(a) If the imminence of the resumption of
work requires the employees presence
at the place of work, or
(b) If the interval is too brief to be utilized
effectively and gainfully in the
employees own interest.

Exception to the 8-Hour Law: Work Hours of


Health Personnel
Health personnel in:
(1) Cities and municipalities with a
population of at least one million
(1,000,000) OR
(2) Hospitals and clinics with a bed capacity
of at least one hundred (100) shall hold
regular office hours for eight (8) hours a
day, for five (5) days a week, exclusive of
time for meals, except where the
exigencies of the service require that
such personnel work for six (6) days or
forty-eight (48) hours, in which case, they
shall be entitled to an additional
compensation of at least thirty percent
(30%) of their regular wage for work on
the sixth day.
For purposes of this Article, "health personnel"
shall include resident physicians, nurses,
nutritionists, dietitians, pharmacists, social
workers, laboratory technicians, paramedical
technicians,
psychologists,
midwives,
attendants and all other hospital or clinic
personnel. [Art. 83, LC]
Medical secretaries are also considered clinic
personnel. [Azucena]
Compensable Hours of Work (Art. 84, LC)
Hours worked shall include:
(1) All time during which an employee is
required to be on duty or to be at a
prescribed workplace; AND
(2) All time during which an employee is
suffered or permitted to work.

Rest period short duration or coffee break


Rest periods of short duration during working
hours shall be counted as hours worked. [Art.
84, par. 2, LC]
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]

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LABOR STANDARDS

LABOR LAW

premises; or the employees can use the time


effectively for their own interest. In this case,
the employer may extend the working hours
beyond the regular schedule on that day to
compensate for the loss of productive manhours without being liable for overtime pay.
[Policy Instruction No. 36, May 22, 1978]

[Book 3, Rule 1, Sec. 4 (b), IRR.]


An employee need not leave the premises of
the work place in order that his rest period
shall not be counted it being enough that he
stops working may rest completely and may
leave his work place to go elsewhere whether
within or outside the premises of his work
place.

Note: The time during which an employee is


inactive by reason of work interruptions beyond
his control is considered working time, either if
the imminence of the resumption of work
requires the employees presence at the place
of work or if the interval is too brief to be
utilized effectively and gainfully in the
employees own interest. [Book III, Rule 1 Sec.
4-c OR]

On call
An employee who is:
(1) Required to remain on call in the
employers premises or so close thereto
(2) That he cannot use the time effectively
and gainfully for his own purpose shall
be considered as working while on call.
Book III, Rule 1, Sec. 5(b), IRR. An employee who is
not required to leave word at his home or with
company officials where he may be reached is
NOT working while on call.

Necessary Work After Normal Hours


If the work performed was necessary, or it
benefited the employer, or the employee could
not abandon his work at the end of his normal
working hours because he had no
replacement, all the time spent for such work
shall be considered as hours worked if the work
was with the knowledge of his employer or
immediate supervisor. [Book III, Rule 1, Sec. 4(c),
IRR]

Inactive due to work interruptions


The time during which an employee is inactive
by reason of interruptions in his work beyond
his control shall be considered working time
either:
(1) If the imminence of the resumption of
work requires the employee's presence at
the place of work OR
(2) If the interval is too brief to be utilized
effectively and gainfully in the
employee's own interest. [Book III, Rule 1,
Sec. 4(d), IRR]
Work interruption due to brownouts
Brownouts of short duration, but not exceeding
20 minutes, shall be treated as hours worked,
whether used productively by the employees or
not.

Lectures, meetings, trainings


Attendance at lectures, meetings, training
programs, and other similar activities shall not
be counted as working time if ALL of the
following conditions are met:
(1) Attendance is outside of the employees
regular working hours;
(2) Attendance is in fact voluntary; and
(3) The employee does not perform any
productive work during such attendance.
[IRR, Book III, Rule 1, Sec. 6]

If they last more than 20 minutes, the time may


not be treated as hours worked if the
employees can leave their workplace or go
elsewhere whether within or without the work

Note:
(1) Attendance in lectures, meetings, and
training periods sanctioned by the
employer are considered hours worked.
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LABOR STANDARDS

(2) Attendance in CBA negotiations or


grievance meeting is compensable hours
worked.
(3) Attendance in hearings in cases filed by
the employee is NOT compensable hours
worked.

LABOR LAW

Idle time
The idle time that an employee may spend for
resting and dining which he may leave the spot
or place of work though not the premises of his
employer, is not counted as working time only
where the work is broken or is not continuous.
[National Development Co. v. CIR (1962)]

(2) Travel that is all in the days work Time


spent by an employee in travel from jobsite
to jobsite during the workday, must be
counted as hours worked. Where an
employee is required to report at a meeting
place to receive instructions or to perform
other work there, the travel from the
designated place to the workplace is part
of the days work.
(3) Travel away from home - Travel that keeps
an employee away from home overnight is
travel away from home. Travel away from
home is worktime when it cuts across the
employees workday. The time is hours
worked not only on regular working hours
but also during the corresponding hours on
non-working days.

A laborer need not leave the premises of the


factory, shop or boat in order that his period of
rest shall not be counted, it being enough that
he "cease to work", may rest completely and
leave or may leave at his will the spot where he
actually stays while working, to go somewhere
else, whether within or outside the premises of
said factory, shop or boat. If these requisites are
complied with, the period of such rest shall not
be counted. [Luzon Stevedoring Co. v. Luzon
Marine Department Union (1957)]

Semestral Break of Private School Teachers


Regular full-time teachers are entitled to
salary during semestral breaks. These
semestral breaks are in the nature of work
interruptions beyond the employees control.
As such, these breaks cannot be considered as
absences within the meaning of the law for
which deductions may be made from monthly
allowances. [University of the Pangasinan
Faculty Union v. University of Pangasinan
(1984)]

Travel time [Department of Labor Manual]


(1) Travel from home to work An employee
who travels from home before his regular
workday and returns to his home at the
end of the workday is engaged in ordinary
home-to-work travel which is NOT
worktime, except:
(a) When called to travel during
emergency;
(b) When travel is done through a
conveyance furnished by the employer;
(c) Travel is done under vexing and
dangerous circumstances;
(d) Travel is done under the supervision
and control of the employer.

Work Hours of Seamen


Seamen are required to stay on board of their
vessels by the very nature of their duties, and it
is for this reason that, in addition to their
regular compensation, they are given free
living quarters to be on board. It could not
have been the purpose of the law to require
their employers to pay them overtime pay even
when they are not actually working. The
correct criterion in determining whether or not
sailors are entitled to overtime pay is not,
therefore, whether they are on board and
cannot leave ship beyond the regular eight
working number of hours, but whether they
actually rendered service in excess of said

Participation in strikes is NOT compensable


working time.

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LABOR STANDARDS

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


(1991)]

LABOR LAW

Forced Leave
Employees are required to go on leave for
several days or weeks utilizing their leave
credits of there are any.

Proof of Hours worked


Entitlement to overtime pay must first be
established by proof that said overtime work
was actually performed, before an employee
may avail of said benefit. [Lagatic v. NLRC
(1998)]

Broken-time Schedule
The works schedule is not continuous but the
work hours within the day or week remain.
Flexi-holidays
The employees agree to avail the holidays at
some other days provided there is no
diminution of existing benefits as a result of
such arrangement.

Burden of Proof: When an employer alleges


that his employee works less than the normal
hours of employment as provided for in the
law, he bears the burden of proving his
allegation with clear and satisfactory evidence.
[Prangan v. NLRC, et. al., G.R. No. 126529, April
15 (1998)]

Compressed Work Week (CWW)


[DOLE Advisory No. 02, Series of 2004]
Under the CWW scheme, the normal workday
goes beyond eight hours without the
corresponding overtime premium.

2.I FLEXIBLE WORK ARRANGEMENTS


[DOLE Advisory No. 02, Series of 2004]
These are alternative arrangements or
schedules other than the standard work hours,
workdays, and workweek. Their effectivity and
implementation shall be temporary in nature.

The total hours of work, however, shall not


exceed 12 hours a day or 48 hours a week, or
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
Office which has jurisdiction over the
workplace, of the adoption of any of the
flexible work arrangements.

Conditions for CWW


(1) The CWW scheme is undertaken as a result
of an express and voluntary agreement of
majority of the covered employees or their
duly authorized representatives. This
agreement may be expressed through
collective bargaining or other legitimate
workplace mechanisms of participation
such as labor management councils,
employee assemblies or referenda.
(2) In firms using substances, chemicals and
processes or operating under conditions
where there are airborne contaminants,
human carcinogens or noise prolonged
exposure to which may pose hazards to
employees health and safety, there must
be a certification from an accredited health
and safety organization or practitioner
from the firms safety committee that work

Under the following work arrangements, the


employers and employees are encouraged to
explore alternative schemes under any
agreement and company policy or practice to
cushion and mitigate the effect of the loss of
income of the employees.
Reduction of Workdays
The normal workdays per week are reduced
but should not last for more than 6 months.
Rotation of Workers
The employees are rotated or alternately
provided work within the workweek
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beyond eight hours is within threshold


limits or tolerable levels of exposure, as set
in the OSHS.
(3) The employer shall notify DOLE, through
the Regional Office having jurisdiction over
the workplace, of the adoption of the CWW
scheme. The notice shall be in DOLE CWW
Report Form attached to this Advisory.
(DOLE Advisory No. 02-04)

LABOR LAW

to save on energy costs, promote greater work


efficiency and lower the rate of employee
absenteeism, among others. Workers favor the
scheme considering that it would mean
savings on the increasing cost of
transportation fares for at least one (1) day a
week; savings on meal and snack expenses;
longer weekends, or an additional 52 off-days
a year, that can be devoted to rest, leisure,
family responsibilities, studies and other
personal matters, and that it will spare them
for at least another day in a week from certain
inconveniences that are the normal incidents
of employment, such as commuting to and
from the workplace, travel time spent,
exposure to dust and motor vehicle fumes,
dressing up for work, etc. Thus, under this
scheme, the generally observed workweek of
six (6) days is shortened to five (5) days but
prolonging the working hours from Monday to
Friday without the employer being obliged for
pay overtime premium compensation for work
performed in excess of eight (8) hours on
weekdays, in exchange for the benefits above
cited that will accrue to the employees. [Bisig
Manggagawa sa Tryco v. NLRC, et al. (2008)]

Effects of CWW
(1) Unless there is a more favorable practice
existing in the firm, work beyond eight
hours will not be compensable by overtime
premium provided the total number of
hours worked per day shall not exceed
twelve (12) hours. In any case, any work
performed beyond 12 hours a day or 48
hours a week shall be subject to overtime
premium.
(2) Consistent with Art. 85 of the LC,
employees under a CWW scheme are
entitled to meal periods of not less than 60
minutes. There shall be no impairment of
the right of the employees to rest days as
well as to holiday pay, rest day pay or
leaves in accordance with law or applicable
collective bargaining agreement or
company practice.
(3) Adoption of the CWW scheme shall in no
case result in diminution of existing
benefits. Reversion to the normal eighthour workday shall not constitute a
diminution of benefits.

B.3. MEAL BREAK


General Rule: Subject to such regulations as
the Secretary of Labor may prescribe, it shall
be the duty of every employer to give his
employees not less than sixty (60) minutes
time-off for their regular meals (Art. 85, LC)
Exception:
Employees may be given a meal period of not
less than twenty (20) minutes provided that
such shorter meal period is credited as
compensable hours worked of the employee:
(1) Where the work is non-manual work in
nature or does not involve strenuous
physical exertion;
(2) Where the establishment regularly
operates not less than sixteen (16) hours
a day;

Rationale
Although the right to overtime pay cannot be
waived as per Cruz v. Yee Sing (1959), D.O. No.
21 sanctions the waiver of overtime pay in
consideration of the benefits that the
employees will derive from the adoption of a
compressed workweek scheme, thus:
The compressed workweek scheme was
originally conceived for establishments wishing
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(3) In case of actual or impending


emergencies or there is urgent work to
be
performed
on
machineries,
equipment or installations to avoid
serious loss which the employer would
otherwise suffer; and
(4) Where the work is necessary to prevent
serious loss of perishable goods [Book 3,
Rule 1, Sec. 7 par 1, IRR]

LABOR LAW

The employees themselves may request that


the meal period be shortened so that they can
leave work earlier than the previously
established schedule. [Drilon: Letter to Kodak
Philippines, Nov. 27, 1989; also Cilindro: BWCWHSD Opinion No. 197, s. 1998]
Conditions for shortened meal breaks upon
employees request.
(1) The employees voluntarily agree in writing
to a shortened meal period of 30 minutes
and are willing to waive the overtime pay
for such shortened meal period;
(2) There will be no diminution whatsoever in
the salary and other fringe benefits of the
employees existing before the effectivity of
the shortened meal period;
(3) The work of the employees does not
involve strenuous physical exertion and
they are provided with adequate coffee
breaks in the morning and afternoon.
(4) The value of the benefits derived by the
employees from the proposed work
arrangement is equal to or commensurate
with the compensation due them for the
shortened meal period as well as the
overtime pay for 30 minutes as determined
by the employees concerned;
(5) The overtime pay of the employees will
become due and demandable if ever they
are permitted or made beyond 4:30pm;
and
(6) The effectivity of the proposed working
time arrangement shall be of temporary
duration as determined by the Secretary of
Labor.

Employees are not prohibited from going out


of the premises as long as they return to their
posts on time. Nowhere in the law may it be
inferred that employees must take their meals
within the company premises. [Philippine
Airlines v. NLRC (1999)]
Synthesis of the Rules
General Rule: Meal periods are NOT
compensable.
Exception:
It becomes compensable:
(1) Where the lunch period or meal time is
predominantly spent for the employers
benefit. [Azucena citing 31 Am. Jur. 881;
Duka, Labor Laws and Social Legislation]
(2) Meal periods of 1 hour is deemed
compensable when the employee is on
continuous shift. (National Development
Co. v. CIR, G.R. No. L-15422, Nov. 30, 1962)
(3) Shortened meal period of less than 1 hour
(say, 30 minutes) must be compensable.
(Sec. 7, Rule I, Book III, IRR)
Note: To shorten meal time to less than 20
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.

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B.4. WAITING TIME

LABOR LAW

regular wage plus at least twenty five percent


(25%) thereof.

[Book III, Rule I Sec. 5(a), IRR]


Waiting time spent by an employee shall be
considered as working time if waiting is an
integral part of his work or the employee is
required or engaged by the employer to wait.

Overtime work on holiday or rest day


Art. 87, LC. Work performed beyond eight
hours on a holiday or rest day shall be paid an
additional compensation equivalent to the rate
of the first eight hours on a holiday or rest day
plus at least thirty percent (30%) thereof.

[Book 3, Rule 1, Sec. 5(b), IRR]


An employee who is required to remain on call
in the employers premises or so close thereto
that he cannot use the time effectively and
gainfully for his own purpose shall be
considered as working while on call.

Computation of additional compensation


Art. 90, LC. For purposes of computing
overtime and other additional remuneration as
required by this Chapter the "regular wage" of
an employee shall include the cash wage only
without deduction on account of facilities
provided by the employer.

Legal test: Whether waiting time constitutes


working time depends upon the circumstances
of each particular case. The facts may show
that the employer was engaged or was waiting
to be engaged. The controlling factor is
whether waiting time spent in idleness is so
spent predominantly for the employers benefit
or for the employees. [Azucena citing Armour
v. Wantock]

Base of Computation: Regular wage means


regular base pay; it excludes money received in
different concepts such as Christmas bonus
and other fringe benefits. [Bisig ng
Manggagawa ng Philippine Refining Co. v.
Philippine Refining Co (1981)]

B.5. OVERTIME WORK, OVERTIME PAY

BUT when the overtime work was performed


on the employees rest day or on special days or
regular holidays (Art. 93 and 94), the premium
pay, must be included in the computation of
the overtime pay.
[SEE: p. 19 of Handbook on Workers
Statutory Monetary Benefits, issued by the
Bureau of Working Conditions, 2006]

Overtime compensation is additional pay for


service or work rendered or performed in
excess of eight hours a day by employees or
laborers covered by the Eight-hour Labor Law.
[National Shipyard and Steel Corp. v. CIR (1961)]
Rationale
There can be no other reason than that he is
made to work longer than what is
commensurate with his agreed compensation
for the statutorily fixed or voluntary agreed
hours of labor he is supposed to do. [PNB v.
PEMA (1982)]

Emergency overtime [Art. 89, LC]


Any employee may be required by the
employer to perform overtime work in any of
the following cases:
(1) When the country is at war or when any
other national or local emergency has been
declared by the National Assembly or the
Chief Executive;
(2) When it is necessary to prevent loss of life
or property or in case of imminent danger
to public safety due to an actual or

Overtime on ordinary working day


Art. 87, LC. Work may be performed beyond
eight (8) hours a day provided that the
employee is paid for the overtime work, an
additional compensation equivalent to his
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LABOR STANDARDS

impending emergency in the locality


caused by serious accidents, fire, flood,
typhoon, earthquake, epidemic, or other
disaster or calamity;
(3) When there is urgent work to be performed
on machines, installations, or equipment,
in order to avoid serious loss or damage to
the employer or some other cause of
similar nature;
(4) When the work is necessary to prevent loss
or damage to perishable goods; and
(5) Where the completion or continuation of
the work started before the eighth hour is
necessary to prevent serious obstruction or
prejudice to the business or operations of
the employer.

LABOR LAW
no substitute ready to take his
place. [Manila Railroad Co. v. CIR
(1952)]

Note: However, the Court has also ruled


that a claim for overtime pay is NOT
justified in the absence of a written
authority to render overtime after office
hours during Sundays and holidays.
[Global Incorporated v. Atienza (1986)]
(3) Compensation for work rendered in
excess of the eight (8) normal working
hours in a day.
(a) For ordinary days, additional 25%
of the basic hourly rate.
(b) For rest day/special day/holiday,
additional 30% of the basic hourly
rate.
(4) A given day is considered an ordinary
day, unless it is a rest day.
(5) Undertime does NOT offset overtime
Undertime work on any particular
day shall not be offset by overtime work
on any other day. Permission given to the
employee to go on leave on some other
day of the week shall not exempt the
employer from paying the additional
compensation required in this Chapter.
[Art. 88, LC]

Overtime pay does not preclude night


differential pay
When the tour of duty of a laborer falls at
nighttime [between 10:00pm and 6:00am],
the receipt of overtime pay will not preclude
the right to night differential pay. The latter is
payment for work done during the night while
the other is payment for the excess of the
regular eight-hour work. [Naric v. Naric Workers
Union (1959)]
Synthesis of Rules
(1) An employer cannot compel an employee
to work overtime
Exception: Emergency overtime work as
provided for in Art. 89
(2) Additional compensation is demandable
only if the employer had knowledge and
consented to the overtime work rendered
by the employee.
Exception: Express approval by a
superior NOT a requisite to make overtime
compensable:
(a) If the work performed is necessary,
or that it benefited the company; or
(b) That the employee could not
abandon his work at the end of his
eight-hour work because there was

No Waiver of Overtime Pay


The right to overtime pay cannot be waived.
The Labor Code (Art. 87) requires that an
employee be paid all overtime compensation
notwithstanding any agreement to work for a
lesser wage. Consequently, such an agreement
or "waiver" will not prevent an employee from
recovering the difference between the wages
paid the employee and the overtime
compensation he or she is entitled to receive.
[Cruz v. Yee Sing (1959)]
Exception: When the waiver of overtime pay is
in consideration of benefits and privileges
which may be more than what will accrue to
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LABOR STANDARDS

them in overtime pay, the waiver MAY be


permitted. [Meralco Workers Union v.
MERALCO (1959)]

to provide safe and healthful working


conditions and adequate or reasonable
facilities such as sleeping or resting quarters in
the establishment and transportation from the
work premises to the nearest point of their
residence subject to exceptions and guidelines
to be provided by the DOLE. [Art. 156, RA 10151]

Composite or Package Pay NOT per se illegal


Composite or package pay or all-inclusive
salary is an arrangement where the
employees salary includes the overtime pay. In
other words, the overtime pay is built-in.

Transfer
Night workers who are certified as unfit for
night work, due to health reasons, shall be
transferred to a similar job for which they are
fit to work. If such is not practicable, they shall
be granted the same benefits as other workers
who are unable to work, or to secure
employment during such period. [Art. 157, RA
1015]

The conditions for validity of the arrangement


are:
(1) There is a clear written agreement
knowingly and freely entered by the
employee; and
(2) The mathematical result shows that the
agreed legal wage rate and the overtime
pay, computed separately, are equal to or
higher than the separate amounts legally
due. [Damasco v. NLRC (2000)]

B.6. NIGHT WORK,


DIFFERENTIAL

NIGHT

LABOR LAW

Women Night Workers [Art. 158, RA 10151]


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

SHIFT

Night worker
Any employed person whose work requires
performance of a substantial number of hours
of night work which exceed a specified limit.
This limit shall be fixed by the Sec of Labor
after
consulting
the
workers
representatives/labor
organizations
and
employers. [Art. 154, RA 10151]
Health Assessment
At the workers request, they shall have the
right to undergo a health assessment without
charge and to receive advice on how to reduce
or avoid health problems associated with their
work. [Art. 155, RA 10151]
Mandatory Facilities
Suitable first-aid facilities shall be made
available for workers, including arrangements
where they, when necessary, can be taken
immediately to a place for appropriate
treatment. The employers are likewise required

Night shift differential [Art. 86, LC]


The additional compensation of 10% of an
employees regular wage for each hour of work
performed between 10pm and 6am.
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Coverage [Book 3, Rule 2, Sec. 1, IRR]


All employees, except:
(1) Those of the government and any of its
political
subdivisions,
including
government-owned and/or controlled
corporations;
(2) Those of retail and service establishments
regularly employing not more than five (5)
workers;
(3) Domestic helpers and persons in the
personal service of another;
(4) Managerial employees as defined in Book
Three of this Code;
(5) Field personnel and other employees
whose time and performance is
unsupervised by the employer including
those who are engaged on task or contract
basis, purely commission basis, or those
who are paid a fixed amount for
performing work irrespective of the time
consumed in the performance thereof.

establishment.
Organization)

LABOR LAW
(International

Labor

This excludes those forms of employment


which, although referred to as part-time work,
are in particular, irregular, temporary or
intermittent employment, or in cases where
hours of work have been temporarily reduced
for economic, technical or structural reasons.
The wage and benefits of part-time worker are
in proportion to the number of hours worked.

B.8. CONTRACT FOR PIECE OF WORK


[Art. 1467, CC.] A contract for the delivery at a
certain price of an article which the vendor in
the ordinary course of his business
manufactures or procures for the general
market, whether the same is on hand at the
time or not, is a contract of sale BUT if the
goods are to be manufactured specially for the
customer and upon his special order, and not
for the general market, it is a contract for a
piece of work.

Rest days (night-off)


Night shift employees are entitled to a weekly
night-off (usually Saturday evening) or a
weekly rest period of 24 hours beginning at the
start of the night shift.

C. WAGES
Definition
(a) It is the remuneration or earnings,
however designated, capable of being
expressed in terms of money,
(b) Whether fixed or ascertained on a time,
task, piece, or commission basis, or other
method of calculating the same,
(c) Which is payable by an employer to an
employee
(d) Under a written or unwritten contract of
employment for work done or to be done,
or for services rendered or to be rendered
and
(e) Includes the fair and reasonable value, as
determined by the Secretary of Labor and
Employment, of board, lodging, or other
facilities customarily furnished by the
employer to the employee

Work on special days


Night shift employees are also entitled to the
premium pay on special days and holidays.
These days are reckoned as calendar days
which start at midnight and end at the
following midnight. The premium pay for the
night shift also starts or ends at midnight.
However, the employment contract, company
policy or CBA may provide that in the case of
night shift workers, daysincluding special
days and regular holidaysshall begin on the
night before a calendar day.

B.7. PART-TIME WORK


A single, regular or voluntary form of
employment with hours of work substantially
shorter than those considered as normal in the
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LABOR STANDARDS

Fair and reasonable value - shall not include


any profit to the employer, or to any person
affiliated with the employer. [Art. 97(f), LC]

LABOR LAW

Note: Workers in registered barangay micro


business enterprise are only exempted from
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
relation between labor and capital or
management and employee is that a "fair day's
wage for a fair day's labor." [Sugue v. Triumph
International (2009)]

C.1. WAGE VS. SALARY


Wages and salary are in essence synonymous.
[Songco v. NLRC (1990)]
There are slight differences:
Wage

Salary

Paid for skilled or


Paid to white collar
unskilled manual labor workers and denote a
higher grade of
employment

Exception: When the laborer was able, willing


and ready to work but was illegally locked out,
suspended or dismissed, or otherwise illegally
prevented from working. [Sugue v Triumph
International, supra]

Not subject to
execution,
garnishment or
attachment except for
debts related to
necessities [Art. 1708]

Equal Work for Equal Pay Principle


Employees working in the Philippines, if they
are performing similar functions and
responsibilities
under
similar
working
conditions should be paid equally. If an
employer accords employees the same
position and rank, the presumption is that
these employees perform equal work.
[International School Alliance of Educators v.
Hon. Quisumbing (2000)]

Not exempt from


execution,
garnishment or
attachment [Gaa vs.
CA, 1985]

C.2. MINIMUM WAGE


See also: DOLE Bureau of Working Conditions
Handbook on Workers Statutory Monetary
Benefits and Wage Order No. NCR-19
Definition
Statutory minimum wage is the lowest wage
rate fixed by law that an ER can pay his
workers. [IRR, RA 6727, (o)]

Coverage/Exclusions
[Art. 98 and Book 3, Rule VII, Sec 3, IRR]
The Labor Code Title on wages shall not apply
to the following:
(1) Farm tenancy or leasehold;
(2) Household
or
domestic
helpers,
including family drivers and other
persons in the personal service of
another;
(3) Homeworkers engaged in needlework;
(4) Workers in registered cottage industries
who actually work at home;
(5) Workers in registered cooperatives when
so recommended by the Bureau of
Cooperative Development upon approval
of the Secretary of Labor;

Coverage
General Rule: The wage increases prescribed
under Wage Orders apply to all private sector
workers and employees receiving the daily
minimum wage rates or those receiving up to a
certain daily wage ceiling, where applicable,
regardless of their position, designation, or
status, and irrespective of the method by which
their wages are paid.
Exceptions:

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LABOR STANDARDS

(1) Domestic
Helpers/kasambahay
are
covered by RA 10361
(2) Workers of registered barangay micro
business enterprise with Certificates of
Authority issued by the Office of the
Municipal or City Treasurer. [RA 9178]
(3) Learners [RA 602]
(4) Apprentices [RA 602]
(5) Handicapped Worker [RA 602]

LABOR LAW

(3) Cost of living and changes or increases


therein;
(4) The needs of workers and their families;
(5) The need to induce industries to invest in
the countryside;
(6) Improvements in standards of living;
(7) Prevailing wage levels;
(8) Fair return of the capital invested and
capacity to pay of employers;
(9) Effects in employment generation and
family income; and
(10) Equitable distribution of income and
wealth along the imperatives of economic
and social development. [Art. 124, LC]

Exemptions upon Approval


Upon application with and as determined by
the Regional Tripartite Wages and Productivity
Board, based on documentation and other
requirements in accordance with applicable
rules and regulations issued by the NWPC, the
following may be exempted from the
applicability of this Order:
(1) Distressed establishments;
(2) Retail/Service establishments regularly
employing not more than 10 workers;
(3) Establishments adversely affected by
natural calamities. [Sec. 8, Wage Order No.
19, 2014]

Procedure for Wage Fixing by Regional Board


(Art. 123, LC)
(1) Investigate and study pertinent facts,
based on criteria set in Art. 124
(2) Conduct public hearings or consultations
with notice to employer and employee
groups, provinces, city, municipal officials
and other interested parties
(3) Decide to ISSUE or NOT TO ISSUE a wage
order
Frequency: Wage orders issued may
not be disturbed for 12 months from
effective date; this serves as a bar for
petitions for wage hikes as well
Except: when Congress passes a new
law affecting wages or other
supervening circumstances
Effectivity: If it decides to ISSUE a wage
order, the wage order takes effect after
15 days from complete publication in at
least 1 newspaper of general
circulation in the region
(4) Appeal wage order to Commission within
10 calendar days; mandatory for the
Commission to decide within 60 calendar
days from filing

Basis
The basis of the minimum wage rates
prescribed by law shall be the normal working
hours of 8 hours a day. [Sec 7, IRR of RA 6727]
Freedom to bargain
Despite the minimum wage order, employees
are not prevented from bargaining for higher
wages with their employers.
Note: Daily minimum wage in NCR applicable
from Apr. 4, 2015 is now P481 [Wage Order
No. NCR-19]
Factors/Criteria in determining regional
minimum wages:
(1) Demand for living wages;
(2) Wage adjustment the consumer price
index;

Note: Filing of an appeal DOES NOT STAY


order unless appellant files an undertaking
with a surety, to guarantee payment of
41

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LABOR STANDARDS

employees if the wage order is affirmed (as


amended by RA 6727)

LABOR LAW

Note: Learners employed in piece or incentiverate 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
compensation whose training on the job is
required by the school or training program
curriculum or as requisite for graduation or
board examination. [Art. 72, LC]

C.3.I. WORKERS PAID BY RESULTS


All workers paid by result, including those who
are paid on piecework, takay, pakyaw or task
basis, shall receive not less than the prescribed
wage rates per eight (8) hours of work a day, or
a proportion thereof for working less than eight
(8) hours. [Art. 124, LC]

C.3.III. MINIMUM WAGE OF PERSONS


WITH DISABILITY
A qualified disabled employee shall be subject
to the same terms and conditions of
employment and the same compensation,
privileges, benefits, fringe benefits or
allowances as a qualified able-bodied persons.
[Sec 5, RA 7277, The Magna Carta for Disabled
Persons]

The wage rates of workers who are paid by


results shall continue to be established in
accordance with Art. 101 of the LC, as
amended, and its IRR. This will be done
through:
(1) Time and motion studies.
(2) Consultation with representatives of
ERs and workers organizations in a
tripartite conference called by the
DOLE Sec.

C.4. COMMISSIONS
Commissions have been defined as the
recompense, compensation or reward of an
agent, salesman, executor, trustee, receiver,
factor, broker or bailee, when the same is
calculated as a percentage on the amount of
his transactions or on the profit to the
principal. [Philippine Duplicators, Inc. v. NLRC
(1993)]

Request for the conduct of time and motion


studies, to determine whether the non-time
employees in an enterprise are being paid fair
and reasonable wage rates, may be filed with
the proper Regional Office.

Commissions as part of minimum wage


The Court held that the definition of wage
under Art. 97 (f) of the LC explicitly includes
commissions as part of wages. While
commissions are, indeed, incentives or forms of
encouragement to inspire employees to put a
little more industry on the jobs particularly
assigned to them, still these commissions are
direct remunerations for services rendered.

Where the output rates established by the


employer do not conform to the standards set
under the foregoing methods for establishing
output rates, the employee shall be entitled to
the difference between the amount he/she is
entitled to receive and the amount paid by the
employer.

C.3.II MINIMUM WAGE OF APPRENTICES


AND LEARNERS

Likewise, there is no law mandating that


commissions be paid only after the minimum
wage has been paid to the employee. Verily,
the establishment of a minimum wage only
sets a floor below which an employees

Wages of apprentices and learners shall in no


case be less than 75% of the applicable
minimum wage rates. [Art. 61 & 75, LC]
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LABOR STANDARDS

remuneration
cannot
fall,
not
that
commissions are excluded from wages in
determining compliance with the minimum
wage law. [Iran v. NLRC (1998)]

LABOR LAW

employment or retention in employment. [Art.


117, LC] or to retaliate against the employee who
filed a complaint. [Art. 118, LC]
With Employees
consent
in Writing

C.5. DEDUCTIONS FROM WAGES


General Rule: No employer, in his own behalf
or in behalf of any person, shall make any
deduction from the wages of his employees.
(Art. 113, LC)

Without Employees
consent

(1) SSS Payments


(1)
(2) PHILHEALTH
payments
(3) Contributions to
PAG-IBIG Fund
(2)
(4) Value of meals
and
other
facilities
(5) Payments to third
persons
with
employees
consent
(3)
(6) Deduction
of
absences
(7) Union
dues,
where check-off is
not provided in
the CBA.

Exceptions:
(1) In cases where the worker is insured with
his consent by the employer, and the
deduction is to recompense the employer
for the amount paid by him as premium on
the insurance;
(2) For union dues, in cases where the right of
the worker or his union to check-off has
been recognized by the employer or
authorized in writing by the individual
worker concerned; and
(3) In cases where the employer is authorized
by law or regulations issued by the
Secretary of Labor and Employment (Art.
113, LC), such as:
(a) Employee debt to employer is due and
demandable (Art. 1706, CC);
(b) Attachment or execution in cases of
debts incurred for necessities: food,
shelter, clothing, medical attendance
(Art. 1708, CC);
(c) Withholding tax;
(d) Deductions of a legally established
cooperative;
(e) Payment to 3rd parties upon written
authority by employee;
(f) Deductions for loss or damage;
(g) SSS, Medicare, Pag-IBIG premiums;
(h) Deduction for value meals and other
facilities.

Workers
insurance
acquired by the
employer
Union
dues,
where the right to
check-off
is
recognized by the
employer
(provided in the
CBA)
Debts of the
employee to the
employer
that
have become due
and demandable

Prohibition seeks to protect the employee


against unwarranted practices that would
diminish his compensation without his
knowledge
and
consent.
[Radio
Communication of the Phil., Inc. v. Sec. of Labor
(1989)]
Note: Persons earning minimum wage are
exempted from income tax
That minimum wage earners as defined in
Section 22(HH) of this Code shall be exempt
from the payment of income tax on their
taxable income: Provided, further, That the
holiday pay, overtime pay, night shift
differential pay and hazard pay received by
such minimum wage earners shall likewise be
exempt from income tax. [RA 9504, Sec. 2
redefining sec. 24(A) of RA 8424]

It shall be unlawful to make any deduction


from the wages of any employee for the benefit
of the employer as consideration of a promise of
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LABOR LAW

C.6. NON-DIMINUTION OF BENEFITS

C.7. FACILITIES VS SUPPLEMENTS

General Rule: There is a prohibition against


elimination or diminution of benefits [Art. 100]

The distinction between facilities and


supplement is relevant because the former is
wage-deductible while the latter is not. Simply
put, a wage includes facilities. [Art. 97, LC)

No wage order issued by any regional board


shall provide for wage rates lower than the
statutory minimum wage rates prescribed by
Congress. [Art. 127, as amended by Republic Act
No. 6727, June 9, 1989]

The IRR definition [IRR Book III Rule 7-A Sec. 5]


has 2 components:
(1) Facilities are articles or services for the
benefit of the employee or his family. This
1st part defines facilities.
(2) Facilities shall not include tools of the
trade or articles or service primarily for the
benefit of the employer or necessary to the
conduct of the employers business. This
2nd part is essentially defines what a
supplement is.

Requisites
If the following are met, then the employer
cannot remove or reduce benefits:
(1) Ripened company policy: Benefit is
founded on a policy which has ripened
into a practice over a long period
[Prubankers Assn. vs. Prudential Bank
and Co., 1999]
(2) Practice is consistent and deliberate
and
(3) Not due to error in the construction or
application of a doubtful or difficult
question of law. [Globe Mackay Cable
vs. NLRC, 1988]
(4) The diminution or discontinuance is
done unilaterally by the employer.

Criterion: In determining whether a privilege is


a facility, the criterion is not so much its kind
but its PURPOSE [Millares v NLRC & PICOP,
1999]
Facilities are items of expense necessary for the
laborers and his familys existence and
subsistence. [States Marine Corp. v. Cebu
Seamen's Assoc., Inc., 1963]

When not applicable: At least one of the


requisites is absent.
(1) Mistake in the application of the law
[Globe Mackay Cable v. NLRC, June 29,
1988]
(2) Negotiated benefits [Azucena]
(3) Reclassification of Positions e.g. loss
of some benefits by promotion.
(4) Contingent or Conditional Benefits
the rule does not apply to a benefit
whose grant depends on the existence
of certain conditions, so that the
benefit is not demandable if those
preconditions are absent.

Comparison
Supplements

between

Facilities

Facilities

and

Supplements
What it is

Articles
services/items
expense

or Extra remuneration or
of special benefits /
articles or services /
tools of the trade
Who Benefits

For the benefit of the For the benefit or


employee and his convenience of the
family;
for
their employer
existence
and
subsistence

Benefits initiated through negotiation between


Employee and Employer, e.g. CBA, can only be
eliminated or diminished bilaterally.
44

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Facilities

LABOR STANDARDS
(d)

Supplements

Deductible from Wage


YES - Part of wage so NO - Independent of
it is deductible
the Wage so not
deductible

LABOR LAW

The existence of the distortion in the


same region of the country. [Prubankers
Assn. v. Prudential Bank and Co. (1999)]

How to Resolve [LC Art. 124]


Organized Establishment
(1) Employer and the union shall negotiate
to correct the distortions.
(2) Disputes shall be resolved through the
grievance procedure.
(3) If still unresolved, voluntary arbitration.

Requirements for deducting value of facilities


Mere availment is not sufficient to allow
deductions from employees wages. Before the
value of facilities can be deducted from the
employees wages, the following requisites
must all be attendant:
(1) Proof must be shown that such
facilities are customarily furnished by
the trade;
(2) The provision of deductible facilities
must be voluntarily accepted in writing
by the employee; and
(3) Facilities must be charged at
reasonable value.
[SLL International Cable Specialists v.
NLRC, 2011]

Grievance Procedure (under the CBA) if


unresolved, VOLUNTARY arbitration
Unorganized Establishment
(1) ERs and Employees shall endeavor to
correct such distortions.
(2) Disputes shall be settled through the
National Conciliation and Mediation
Board.
(3) If still unresolved after 10 calendar days
of conciliation, it shall be referred to the
appropriate branch of the NLRC
compulsory arbitration
Both the employer and employee
cannot use economic weapons.
(4) Employer cannot declare a lock-out;
Employee cannot declare a strike
because the law has provided for a
procedure for settling
(5) The salary or wage differential does not
need to be maintained. [National
Federation of Labor v. NLRC, 1994]

C.8. WAGE DISTORTION/RECTIFICATION


A situation where an increase in prescribed
wage rates results in the elimination or severe
contraction
of intentional quantitative
differences in wage or salary rates between
and among employee groups in an
establishment as to effectively obliterate the
distinctions embodied in such wage structure
based on skills, length of service, or other
logical bases of differentiation [Art. 124, LC]

National Conciliation and Mediation Board


if unresolved, COMPULSORY arbitration by the
NLRC

4 Elements of wage distortion


(a) Existing hierarchy of positions with
corresponding salary rates;
(b) A significant change in the salary rate of
a lower pay class without a concomitant
increase in the salary rate of a higher
one;
(c) The elimination of the distinction
between the two levels; and

CBA vis--vis Wage Orders CBA creditability


In determining an employees regular wage,
the pertinent stipulations in the CBA are
controlling, provided the result is not less than

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LABOR LAW

the statutory requirement (Philippine National


Bank vs. PEMA, 1982)

case of workers paid on daily basis. (Wellington


Investment Inc. v. Trajano, 1995)

Note: The manner of resolving wage distortion


are largely based on the applicable wage
order. The current one, for NCR, WO 19, refers
to the procedure in Art. 124

For daily-paid EEs


Daily-paid employees are those who are paid
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
and regular holidays:

Suggested formula for computing the


Estimated Equivalent Monthly Rate (EEMR)

394.1 days/year
296 days
ordinary working
20 days
10 regular holidays x 200%
52 rest days x 130 %
67.60 days
7 special days x 130%

EEMR = (Applicable Daily Rate (ADR) x


days/year) 12
For monthly-paid EEs
Monthly-paid employees are those who are
paid every day of the month, including
unworked rest days, special days, and regular
holidays.

9.1 days
(2) For those who do not work and are not
considered paid on Sundays or rest days:

365 days/year
296 days
52 days
10 days
7 days

313 days/year
296 days
12 days
5 days

ordinary working days


rest days
regular holidays
special days

Note: This monthly salary shall serve as


compensation "for all days in the month
whether worked or not," and "irrespective of
the number of working days therein." In the
event of the declaration of any special holiday,
or any fortuitous cause precluding work on any
particular day or days the employee is entitled
to the salary for the entire month and the
employer has no right to deduct the
proportionate amount corresponding to the
days when no work was done. The monthly
compensation is evidently intended precisely
to avoid computations and adjustments
resulting from the contingencies just
mentioned which are routinely made in the

ordinary working
regular holidays
special days (if considered
paid; if actually worked, this is
equivalent to 6.5 days)

(3) For those who do not work and are not


considered paid on Saturdays and Sundays
or rest days:
278 days/year
261 days
ordinary working days
10 days
regular holidays
7 days
special days (if considered
paid; if actually worked, this is
equivalent to 6.5 days)
[Sec. 6, Rules Implementing RA 6727, 1989]
Note: Under Proclamation No. 831 signed by
Pres. Benigno Aquino on Jul. 17, 2014, there
are 10 regular holidays and 7 special days.
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LABOR STANDARDS

LABOR LAW

(6) Under other circumstances analogous or


similar to the foregoing as determined by
the Secretary of Labor and Employment.
[Art. 92, LC]

D. REST DAY
D.1. WEEKLY REST DAY
It shall be the duty of every employer, whether
operating for profit or not, to provide each of
his employees a rest period of not less than
twenty-four (24) consecutive hours after every
six (6) consecutive normal work days. [Art. 91
(a)]

Synthesis of the Rules


(1) Rest day of not less than 24 consecutive
hours after 6 consecutive days of work.
(2) No work, no pay principle applies
(3) If an employee works on his designated
rest day, he is entitled to a premium pay.
(4) Premium pay is additional 30% of the
basic pay.
(5) Employer selects the rest day of his
employees
(6) However, employer must consider the
religious reasons for the choice of a rest
day.
(7) When the choice of the employee as to his
rest day based on religious grounds will
inevitably result in serious prejudice or
obstruction to the operations and the
employer cannot normally be expected to
resort to other measures, the employer
may so schedule the weekly rest day of his
choice for at least two days in a month.
[IRR, Book Three, Rule III, Sec. 4]

Preference of the employee


The employer shall determine and schedule
the weekly rest day of his employees subject to
collective bargaining agreement and to such
rules and regulations as the Secretary of Labor
and Employment may provide. However, the
employer shall respect the preference of
employees as to their weekly rest day when
such preference is based on religious grounds.
[Art. 94 (b)]

D.2. EMERGENCY REST DAY WORK


The employer may require his employees to
work on any day:
(1) In case of actual or impending
emergencies caused by serious accident,
fire,
flood, typhoon, earthquake,
epidemic or other disaster or calamity to
prevent loss of life and property, or
imminent danger to public safety;
(2) In cases of urgent work to be performed
on the machinery, equipment, or
installation, to avoid serious loss which
the employer would otherwise suffer;
(3) In the event of abnormal pressure of
work due to special circumstances,
where the employer cannot ordinarily be
expected to resort to other measures;
(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

E. HOLIDAY PAY/PREMIUM PAY


Holiday pay is a one-day pay given by law to an
employee even if he does not work on a regular
holiday. This gift of a days pay is limited to
each of the 12 regular holidays.
Note: Art. 94 (c), LC was superseded by E.O.
203, which was subsequently amended by RA
9177, 9256, 9492, and Proclamation No. 459.

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E.1. COVERAGE

LABOR LAW

(6) Independence Day June 12


(7) National Heroes Day Aug. 31
(8) Bonifacio Day Nov. 30
(9) Christmas Day Dec. 25
(10) Rizal Day Dec. 30
(11) Id-ul-Fitr 1st day of 10th lunar month of
Shawwal
(12) Id-ul Adha 10th day of the 12th lunar
month of Dhul-Hijja

General Rule: All employees


Exceptions:
(1) Those of the government and any of the
political
subdivision,
including
government-owned and controlled
corporation;
(2) Those
of
retail
and
service
establishments regularly employing less
than 10 workers;
(3) Domestic helpers and persons in the
personal service of another;
(4) Managerial employees as defined in
Book III
(5) Field personnel and other employees
whose time and performance is
unsupervised by the employer including
those who are engaged on task or
contract basis, purely commission basis,
or those who are paid a fixed amount for
performing work irrespective of the time
consumed in the performance thereof.
[Sec. 1, Rule IV of the IRR]

Special (Non-Working Days)


(1) Chinese New Year Feb. 19
(2) Black Saturday Apr. 4
(3) Ninoy Aquino Day Aug. 21
(4) All Saints Day Nov. 1
(5) Additional special (Non-working) days
(a) Jan. 2
(b) Dec. 24
(6) Last Day of the Year Dec. 31
Special Holiday (for all schools)
EDSA Revolution Anniv Feb. 25
P.D. 1083 (Code of Muslim Personal Laws)
SEE: Arts. 169-173

Retail Establishment is one principally


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
Holidays, namely:
(1) Amun Jadid (New Year) which falls on the
first (1st) day of the lunar month of
Muharram;
(2) Mauli-un-Nabi (Birthday of the Prophet
Muhammad) which falls on the twelfth
(12th) day of the third (3rd) lunar month of
Rabi-ul-Awwal;
(3) Lailatul Isra Wal Mi Rai (Nocturnal Journey
and
Ascencion
of
the
Prophet
Muhammand) which falls on the twentyseventh (27th) day of the seventh (7th)
lunar month of Rajab;
(4) Id-ul-Fitr (Hari Raja Pausa) which falls on
the first (1st) day of the tenth (10th) lunar
month of Shawwal commemorating the
end of the fasting season; and

Service Establishment is one principally


engaged in the sale of service to individuals for
their own or household use and is generally
recognized as such. [RA 6727/The Wage
Rationalization Act, IRR]
Regular holidays
Proclamation No. 831 signed by President
Aquino on 17 July 2014, provides for the
observance of the regular holidays and special
(non-working) days for the year 2015 on the
following dates:
(1) New years Day Jan. 1
(2) Maundy Thursday Apr. 2
(3) Good Friday Apr. 3
(4) Araw ng Kagitingan Apr. 9
(5) Labor Day May 1
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LABOR STANDARDS

(5) Id-ul-Adha (Hari Raha Haji) which falls on


the tenth (10th) day of the twelfth (12th)
lunar month of Dhul-Hijja.

scheduled rest day, if it regular daily wage


exceeds
8 plus 30% of such
hours/overtime
amount) + 30% of
hourly rate on said
day.

Note: Id-ul-Fitr (Eidl Fitr) and Id-ul-Adha (Eidl


Adha) have been added to the list of national
legal holidays.

Work
on
special Regular daily wage +
holiday not exceeding 30% thereof
8 hours

Note: There should be no distinction between


Muslims & non-Muslims as regards to the
payment of benefits for Muslim holidays.
Wages & other emoluments granted bylaw to
the workingman are determined on the basis
of the criteria laid down by laws & not on
workers faith. Art. 3(3), PD 1083 states that
nothing herein shall be construed to operate to
the prejudice of a non-Muslim. [San Miguel
Corp vs. CA (2002)]

Work
on
holiday

special Regular daily wage +


50% thereof

According to DOLE Memo Circular 1-04, a


special holiday/special day includes the
National Special Days, and declared special
days such as Special Non-working Holiday,
Special Public Holiday and Special National
Holiday. Such days are entitled to the rates
prescribed above. These days are not the same
as a special working holiday.

Holiday pay computation (Art. 94 Labor Code,


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
pay.

General Rule: An employer may require an


employee to work on any holiday but such
employee shall be paid a compensation
equivalent to twice his regular rate. [Art. 94(b)]

Double holiday pay


According to DOLE Explanatory Bulletin on
Workers Entitlement to Holiday Pay on 9 April
1993, if two holidays fall on the same day:
(1) If unworked, 200% of basic wage.
(2) If worked, 300% of basic wage.
[Azucena]

According to the LC, IRR and Memo:

Work on any regular


holiday, not
exceeding 8 hours

LABOR LAW

Computation

Work on any regular 200% of regular daily


holiday, if it exceeds 8 wage (for the 1st 8
hours/overtime
hours)
+ 30% of hourly rate
on said day

Double Holiday Rule for Monthly-paid


employees
For covered employees whose monthly salaries
are computed based on 365 days and for those
other employees who are paid using factor 314,
or 262, or any other factor which already
considers the payment for the 11 regular
holidays, NO additional payment is due them.
[BWC-WHSD Opinion No. 053, s. 1998]

Work on any regular 200% of regular daily


holiday which falls on wage + 30% of such
the scheduled rest day, amount
not exceeding 8 hours
Work on any regular Regular holiday-onholiday which falls on rest day rate (200% of

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LABOR STANDARDS

Successive holiday pay


According to IRR, Rule IV, Sec. 10, an
employee is entitled to holiday pay for both
days, IF:
(1) He is present on day immediately
preceding first holiday; or
(2) He works on first holiday, which entitles
him to pay on second holiday.

proscription against non-diminution of benefits


under Sec. 100 of the labor code, the 287
divisor should only be used for computations
which would be advantageous to the employer
(i.e. deduction for absences) and not for
computations which would diminish the
existing benefits of the employees (i.e.,
overtime pay, holiday pay and leave
conversions).[Trans Asia Phils. v. NLRC (1999)]

Divisors
The divisor assumes an important role in
determining whether or not holiday pay is
already computed.
(1) Monthly paid employees are not entitled
to the holiday pay if their total annual
income is divided by 365 days resulting
in a wage which is beyond the minimum
wage per day because they are
considered paid everyday of the year
including holidays, rest days, and other
non-working days. The 365 days are as
follows:
(a)
(b)
(c)
(d)

LABOR LAW

Sundays
(1) When a holiday falls on a Sunday, the
following Monday will not be considered a
holiday unless a proclamation says so.
(2) Furthermore as stated in the Wellington
case (see below), a legal holiday falling on
a Sunday does not create a legal obligation
to pay extra, aside from the usual holiday
pay, to monthly-paid employees. [Azucena
citing Letter of Instruction No. 1087]
No provision of law requires any employer to
make adjustments in the monthly salary rate
set by him to take account of legal holidays
falling on Sundays in a given year, otherwise to
reckon a year at more than 365 days.
[Wellington Investment and Manufacturing
Corporation vs. Trajano (1995)]

296 days ordinary days


52 days rest days
10 days regular holidays
7 days special holidays

(2) As a general rule, for a company with a


6-day working schedule, the divisor 313
already means that the legal holidays
are included in the monthly pay of the
employee. The divisor is arrived at by
subtracting all Sundays from the total
number of calendar days in a year.
(3) As a general rule for a company with a 5day working schedule, the divisor 287
means that the holiday pay is already
included in the monthly salary of the
employee.

Non-working/scheduled rest day


Where the day immediately preceding the
holiday is a non-working day in the
establishment or the scheduled rest day of the
employee, he shall not be deemed to be on
leave of absence on that day, in which case he
shall be entitled to the holiday pay if he worked
on the day immediately preceding the nonworking 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
correct computation and taking into account
that one of the holidays always falls on a
Sunday, therefore increasing the divisor to
287, but increase would in some instances
prejudice the employees, in violation of the

Example:
If a holiday falls on Monday, and Sunday is a
non-working day in the establishment or is the
scheduled rest day of the employee, the
employee shall be entitled to holiday pay if he
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LABOR STANDARDS

worked on Saturday (which is the day


immediately preceding Sunday, the nonworking day or rest day).

LABOR LAW

cases of temporary shutdowns or cessation of


work, when:
(1) An annual inventory; or
(2) Repair or cleaning of machineries and
equipment is undertaken.

Right to holiday pay


In case of absences
All covered employees shall be entitled to the
benefit provided herein when they are on leave
of absence with pay.

The employer may not pay his employees for


the regular holidays during the suspension of
work if: the cessation of operation is due to
business reverses, and is authorized by the
Secretary of Labor.

Employees who are on leave of absence


without pay on the day immediately preceding
a regular holiday may not be paid the required
holiday pay if he has not worked on such
regular holiday. [Book III, Rule IV, Sec 6(a),
IRR]

E.2. TEACHERS, PIECE


SEAFARERS, SEASONAL
ETC.

WORKERS,
WORKERS,

(1) Private school teachers, including faculty


members of colleges and universities, may
not be paid for the regular holidays during
semestral vacations. They shall, however,
be paid for the regular holidays during
Christmas vacation;
(2) Where a covered employee, is paid by
results or output, such as payment on
piece work, his holiday pay shall not be
less than his average daily earnings for the
last seven (7) actual working days
preceding the regular holiday; Provided,
However, that in no case shall the holiday
pay be less than the applicable statutory
minimum wage rate.
(3) Seasonal workers may not be paid the
required holiday pay during off-season
when they are not at work
(4) Workers who have no regular working days
shall be entitled to the benefits provided in
this Rule. [Book III, Rule IV, Sec. 8, IRR]

Note:
(1) If an employee is on leave of absence with
pay on the day immediately preceding a
regular holiday, he is entitled to holiday
pay.
(2) If an employee is on leave of absence
without pay on the day immediately
preceding a regular holiday, he is not
entitled to holiday pay unless he works on
such regular holiday.
In case of temporary cessation of work
(1) In cases of temporary or periodic shutdown
and temporary cessation of work of an
establishment, as when a yearly inventory
or when the repair or cleaning of
machineries and equipment is undertaken,
the regular holidays falling within the
periods shall be compensated in
accordance with this Rule.
(2) The regular holiday during the cessation of
operation of an enterprise due to business
reverses as authorized by the Secretary of
Labor may not be paid by the employer.
[Book III, Rule IV, Sec 7, IRR]

Holiday Pay of Hourly-Paid Faculty Members


(1) They are not entitled to payment of
holiday pay because they are paid only
for work actually done. Since regular
holidays are known to both the school
and faculty members as no class day;

An employee is entitled to holiday pay for the


regular holidays falling within the period in
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(2)

(3)

LABOR STANDARDS

certainly the latter do not expect


payment for said unworked holidays.
They are entitled to their hourly rate on
days declared as special holidays. Be it
noted that when a special public holiday
is declared, the faculty member paid by
the hour is deprived of expected income,
and it does not matter that the school
calendar is extended in view of the days
or hours lost, for their income that could
be earned from other sources is lost
during the extended days.
Similarly, when classes are called off or
shortened on account of typhoons,
floods, rallies, and the like, these faculty
members must likewise be paid, whether
or not extensions are ordered. [Jose Rizal
College v. NLRC, (1987)]

LABOR LAW

Premium Pay
Premium pay refers to the additional
compensation for work performed within 8
hours on non-work days, such as rest days and
special days.
Coverage [Book 3, Rule 3, Sec. 7, IRR]
General Rule: All employees
Exceptions:
(1) Those of the government and any of the
political
subdivision,
including
government-owned
and
controlled
corporations;
(2) Managerial employees as defined in
Book III;
(3) Househelpers and persons in the
personal service of another;
(4) Workers who are paid by results,
including those who are paid on piece
rate, takay, pakyaw, or task basis, and
other noontime work, if their output rates
are in accordance with the standards
prescribed in the regulations, or where
such rates have been fixed by the
Secretary of Labor and Employment;
(5) Field personnel, if they regularly perform
their duties away from the principal or
branch office or place of business of the
ER and whose actual hours of work in the
filed cannot be determined with
reasonable certainty.

Piece workers
Philosophy underlying the exclusion of piece
workers from the 8-hour law is that said
workers are paid depending upon the work
they do irrespective of the amount of time
employed in doing said work. [Red v. Coconut
Products Ltd., v. CIR (1966)]
Seafarers
Any hours of work or duty including hours of
watch-keeping performed by the seafarer on
designated rest days and holidays shall be
paid rest day or holiday pay. (Section 11.C,
Standard Terms and Conditions Governing the
Employment of Filipino Seafarers on Board
Ocean-Going Vessels)
Seasonal workers
Seasonal workers who do not work during offseason 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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LABOR STANDARDS

Premium pay rates [DOLE Memorandum


Circular 1, Series of 2004]

LABOR LAW

F. LEAVES
F.1. SERVICE INCENTIVE LEAVE PAY

When Work
Performed

[Art. 95(a), LC.] Every employee who has


rendered at least one year of service shall be
entitled to a yearly service incentive leave of
five days with pay.

Premium Pay

On scheduled rest day 30% of regular wage


On Sunday ONLY IF 30% of regular wage
ESTABLISHED rest day

Service Incentive Leave DOES NOT apply to the


following employees:
(1) Those of the government and any of its
political subdivisions, including GOCCs;
(2) Domestic helpers and persons in the
personal service of another;
(3) Managerial employees as defined in Book
3 of this Code;
(4) Field personnel and other employees
whose performance is unsupervised by the
employer including those who are engaged
on task or contract basis, purely
commission basis, or those who are paid a
fixed amount for performing work
irrespective of the time consumed in the
performance thereof;
(5) Those who are already enjoying the benefit
herein provided;
(6) Those enjoying vacation leave with pay of
at least 5 days;
(7) Those employed in establishments
regularly employing less than 10
employees. [Book 3, Rule 5, Sec. 1, IRR]

No regular work and 30% of regular wage


rest days
for work performed on
Sundays and holidays
On
any
special 30% of regular wage
holiday/special day
On any special holiday 50% of regular wage
/special day falling on
scheduled rest day
50% of regular wage

230% of regular wage

[Art. 93 (d), LC.] Where the collective


bargaining agreement or other applicable
employment contract stipulates the payment
of a higher premium pay than that prescribed
under this Article, the employer shall pay such
higher rate.
[Book III, Rule III, Sec. 8, IRR]. Nothing in this
Rule shall justify an employer in reducing the
compensation of his employees for the
unworked Sundays, holidays, or other rest days
which are considered paid off days or holidays
by agreement or practice subsisting upon the
effectivity of the Code.

Employer may require employee to work


[Art. 95(b), LC.] The employer may require an
employee to work on any holiday but such
employee shall be paid a compensation
equivalent to twice his regular rate

[Book III, Rule II, Sec. 9, IRR.] Nothing herein


shall prevent the employer and his employees
or their representatives in entering into any
agreement with terms more favorable to the
employees than those provided herein or be
used to diminish any benefit granted to the
employees under existing laws agreements
and voluntary employer practices.

Jurisprudence:
(1) Teachers of private school on contract
basis are entitled to service incentive leave.
[Cebu Institute of Technology v. Ople (1987)]
(2) In the case of Makati Haberdashery v.
NLRC the Court ruled that piece-rate
employees are not entitled to service
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LABOR LAW

incentive leave. [Makati Haberdashery v.


NLRC, (1989)]
(3) However, in the case of Labor Congress of
the Philippines v. NLRC the Court held that
petitioners are entitled to service incentive
leave. The Court looked at several factors
which led them to conclude that
petitioners, although compensated on a
per piece basis, were regular employees of
private respondents. [Labor Congress of the
Philippines v. NLRC, (1998)]

separation from employment. [Auto Bus


Transport vs. NLRC (2005)]

Meaning of 1 year of service


[Book III, Rule V, Sec. 3, IRR.] The term "at least
one year service" shall mean service for not
less than 12 months, whether continuous or
broken, reckoned from the date the employee
started
working,
including
authorized
absences and paid regular holidays unless the
working days in the establishment as a matter
of practice or policy, or that provided in the
employment contract is less than 12 months, in
which case said period shall be considered as
one year.

Coverage
Every pregnant woman in the private sector,
whether married or unmarried, is entitled to
the maternity leave benefits.

Commutable nature of benefit


The service incentive leave shall be
commutable to its money equivalent if not
used or exhausted at the end of the year.

F.2. MATERNITY LEAVE


[Sec. 14-A of RA 1161 (Social Security Law) as
amended by RA 7322 and RA 8282]

This is applicable to both childbirth and


miscarriage.
Requisites
(1) Employment: A female employee employed
at the time of delivery, miscarriage or
abortion
(2) Contribution: who has paid at least 3
monthly contributions in the 12-month
period
immediately
preceding
the
semester of her childbirth, or miscarriage.
(3) Notice: employee notified employer of her
pregnancy and the probable date of her
childbirth, which notice shall be
transmitted to the SSS in accordance with
the rules and regulations it may provide.

Entitlement
[Art. 95 (c), LC.] The grant of benefit in excess
of that provided herein shall not be made a
subject of arbitration or any court or
administrative action.
The cause of action of an entitled employee to
claim his service incentive leave pay accrues
from the moment the employer refuses to
remunerate its monetary equivalent if the
employee did not make use of said leave
credits but instead chose to avail of its
commutation (into money). Accordingly, if the
employee wishes to accumulate his leave
credits and opts for its commutation upon his
resignation or separation from employment,
his cause of action to claim the whole amount
of his accumulated service incentive leave shall
arise when the employer fails to pay such
amount at the time of his resignation or

Benefit received
A daily maternity benefit equivalent to 100% of
her average daily salary credit for:
(1) 60 days for normal delivery
(2) 78 days for caesarean delivery
Note: This benefit shall NOT be included in the
computation of 13th month pay as it is granted
to an employee in lieu of wages which is the
basis for computing 13th month.

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LABOR LAW

Only 4 maternity leaves available


The maternity benefits provided under the
Social Security Law shall be paid only for the
first four (4) deliveries or miscarriages

basis). The purpose of this benefit is to allow


the husband to lend support to his wife during
her period of recovery and/or in nursing her
newborn child. [Sec. 3, RA 8187]

SSS pays for the maternity leave


The employer advances the benefit to the
employee but the SSS shall immediately
reimburse the employer of one hundred
percent (100%) of the amount upon receipt
of satisfactory proof of such payment and
legality thereof

Benefit
It shall apply to the first 4 deliveries of the
employees lawful wife with whom he is
cohabiting.
It shall be for 7 calendar days, with full pay,
consisting of basic salary and mandatory
allowances fixed by the Regional Wage Board,
if any, provided that his pay shall not be less
than the mandated minimum wage. [Sec. 2, RA
8187]

Other conditions
(1) Employer shall advance the payment
subject to reimbursement by the SSS
within 30 days from filing of leave
application.
(2) Availment shall be a bar to the recovery of
sickness benefits provided by this Act for
the same period for which daily maternity
benefits have been received.
(3) Employee may only avail of benefit for the
first four (4) deliveries or miscarriages.
(4) Sanction: That if an employee should give
birth or suffer miscarriage
(a) Without the required contributions
having been remitted for her by her ER
to the SSS, or
(b) Without the latter having been
previously notified by the ER of time of
the pregnancy, then the employer shall
pay to the SSS damages equivalent to
the benefits which said employee
member would otherwise have been
entitled to.

Cohabiting means the obligation of the


husband and wife to live together. If the
spouses are not physically living together
because of the workstation or occupation, the
male employee is still entitled to the paternity
leave benefit. [Sec. 1, IRR, RA 8187]
Usage of the benefit
Usage of the leave shall be after the delivery,
without prejudice to an employers policy of
allowing the employee to avail of the benefit
before or during the delivery, provided that the
total number of days shall not be more than 7
days for each covered delivery. (Sec. 5, IRR, RA
8187)
Conditions for entitlement [Sec. 3, IRR, RA
8187]
(1) He is married;
(2) He is an employee at the time of the
delivery of his child;
(3) He is cohabiting with his spouse at the
time that she gives birth or suffers a
miscarriage;
(4) He has applied for paternity leave with his
ER within a reasonable period of time from
the expected date of delivery by his
pregnant spouse, or within such period as

F.3. PATERNITY LEAVE


[RA 8187 (Paternity Leave Act of 1996)]
Coverage and purpose
Paternity leave is granted to all married male
employees in the private and public sectors,
regardless of their employment status (e.g.
probationary, regular, contractual, project
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may be provided by company rules and


regulations, or by CBA; and,
(5) His wife has given birth or suffered a
miscarriage.

LABOR LAW

Any solo parent or individual who is left alone


with the responsibility of parenthood due to:
(1) Giving birth as a result of rape or and other
crimes against chastity even without a final
conviction of the offender: Provided, That
the mother keeps and raises the child;
(2) Death of spouse;
(3) Spouse is detained or is serving sentence
for a criminal conviction for at least one (1)
year;
(4) Physical and/or mental incapacity of
spouse as certified by a public medical
practitioner;
(5) Legal separation or de facto separation
from spouse for at least one (1) year:
Provided, that he/she is entrusted with the
custody of the children;
(6) Declaration of nullity or annulment of
marriage as decreed by a court or by a
church: Provided, that he/she is entrusted
with the custody of the children;
(7) Abandonment of spouse for at least one (1)
year;
(8) Unmarried father/mother who has
preferred to keep and rear his/her
child/children, instead of having others
care for them or give them up to a welfare
institution;
(9) Any other person who solely provides
parental care and support to a child or
children: Provided, that he/she is duly
licensed as a foster parent by the
Department of Social Welfare and
Development (DSWD) or duly appointed
legal guardian by the court; and
(10) Any family member who assumes the
responsibility of head of family as a result
of
the
death,
abandonment,
disappearance, or prolonged absence of
the parents or solo parent for at least one
(1) year. [Sec. 3 (a), RA 8972]

Application for paternity leave


See number 4 under conditions for entitlement.
In case of miscarriage, prior application for
paternity leave shall not be required. [Sec. 4,
IRR, RA 8187]
Non-conversion to cash
In the event that the paternity leave is not
availed of, it shall not be convertible to cash
and shall not be cumulative. [Sec. 7, IRR, RA
8187]
Crediting of existing benefits
(1) If the existing paternity leave benefit under
the CBA, contract, or company policy is
greater than 7 calendar days as provided
for in RA 8187, the greater benefit shall
prevail.
(2) If the existing paternity leave benefit is less
than that provided in RA 8187, the ER shall
adjust the existing benefit to cover the
difference.
Where a company policy, contract, or CBA
provides for an emergency or contingency
leave without specific provisions on paternity
leave, the ER shall grant to the employee 7
calendar days of paternity leave. [Sec. 9, IRR,
RA 8187]

F.4. PARENTAL LEAVE


[RA 8972 (Solo Parents Welfare Act of 2000)]
Leave benefits granted to a solo parent to
enable him/her to perform parental duties and
responsibilities where physical presence is
required. [Sec. 3 (d), RA 8972]

Conditions for entitlement


A solo parent employee shall be entitled to the
parental leave under the following conditions:

Coverage

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F.5. LEAVES FOR VICTIMS OF VIOLENCE


AGAINST WOMEN

(1) He/she has rendered at least one (1) year of


service, whether continuous or broken;
(2) He/she has notified his/her employer that
he/she will avail himself/herself of it,
within a reasonable period of time; and
(3) He/she has presented to his/her employer
a Solo Parent Identification Card, which
may be obtained from the DSWD office of
the city or municipality where he/she
resides. [Sec 19, Art. V, IRR, RA 8972]

[RA 9262 (Anti-Violence against Women and


Their Children Act of 2004)]
Coverage and purpose
VAWC leave is granted to women employees
who are victims of violence, as defined in RA
9262. The leave benefit covers the days that
the women employee has to attend to medical
or legal concerns.

Availment
The parental leave is in addition to leave
privileges under existing laws with full pay,
consisting of basic salary and mandatory
allowances. It shall not be more than seven (7)
working days every year. [Sec. 8, RA 8972]

Definition of Terms
Violence against women and their children
refers to any act or a series of acts committed
by any person against a woman who is his wife,
former wife, or against a woman with whom
the person has or had a sexual or dating
relationship, or with whom he has a common
child, or against her child whether legitimate
or illegitimate, within or without the family
abode, which result in or is likely to result in
physical, sexual, psychological harm or
suffering, or economic abuse including threats
of such acts, battery, assault, coercion,
harassment or arbitrary deprivation of liberty.

Grant of flexible work schedule


The employer shall provide for a flexible
working schedule for solo parents: Provided,
That the same shall not affect individual and
company productivity: Provided, further, That
any employer may request exemption from the
above requirements from the DOLE on certain
meritorious grounds. [Sec. 6, RA 8972]
Protection against work discrimination
No employer shall discriminate against any
solo parent employee with respect to terms
and conditions of employment on account of
his/her status. [Sec. 7, RA 8972]

VAWC includes, but is not limited to, the


following acts:
(1) Physical Violence" refers to acts that
include bodily or physical harm;
(2) "Sexual violence" refers to an act which is
sexual in nature, committed against a
woman or her child. It includes, but is not
limited to:
(a) Rape, sexual harassment, acts of
lasciviousness, treating a woman or
her child as a sex object, making
demeaning and sexually suggestive
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

Termination of the benefit


A change in the status or circumstance of the
parent claiming the benefit under the law,
such that he/she is no longer left alone with
the responsibility of parenthood, shall
terminate his/her eligibility for these benefits.
[Sec. 3 (a), RA 8972]

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thereof, forcing the wife and


mistress/lover to live in the conjugal
home or sleep together in the same
room with the abuser;
(b) Acts causing or attempting to cause
the victim to engage in any sexual
activity by force, threat of force,
physical or other harm or threat of
physical or other harm or coercion;
(c) Prostituting the woman or child.
(3) "Psychological violence" refers to acts or
omissions causing or likely to cause mental
or emotional suffering of the victim such as
but
not
limited
to
intimidation,
harassment, stalking, damage to property,
public ridicule or humiliation, repeated
verbal abuse and mental infidelity. It
includes causing or allowing the victim to
witness
the
physical,
sexual
or
psychological abuse of a member of the
family to which the victim belongs, or to
witness pornography in any form or to
witness abusive injury to pets or to
unlawful or unwanted deprivation of the
right to custody and/or visitation of
common children.
(4) "Economic abuse" refers to acts that make
or attempt to make a woman financially
dependent which includes, but is not
limited to the following:
(a) Withdrawal of financial support or
preventing the victim from engaging in
any legitimate profession, occupation,
business or activity, except in cases
wherein the other spouse/partner
objects on valid, serious and moral
grounds as defined in Article 73 of the
Family Code;
(b) Deprivation or threat of deprivation of
financial resources and the right to the
use and enjoyment of the conjugal,
community or property owned in
common;
(c) Destroying household property;

LABOR LAW

(d) Controlling the victims' own money or


properties or solely controlling the
conjugal money or properties. [Sec.3,
RA 9262]
Requirement for entitlement
To be entitled to the leave benefit, the only
requirement is for the victim-employee to
present to her employer a certification from the
barangay chairman or barangay councilor or
prosecutor or the Clerk of Court, as the case
may be, that an action relative to the matter is
pending.
Benefit
In addition to other paid leaves under existing
labor laws, company policies, and/or CBA, the
qualified victim-employee shall be entitled to a
leave of up to 10 days with full pay, consisting
of basic salary and mandatory allowances fixed
by the Regional Wage Board, if any.
Usage of the benefit
The usage of the 10-day leave shall be at the
option of the woman employee. In the event
that the leave benefit is not availed of, it shall
not be convertible into cash and shall not be
cumulative.
A victim of VAWC who is employed shall be
entitled to a paid leave of up to ten (10) days in
addition to other paid leaves under the Labor
Code and Civil Service Rules and Regulations
and other existing laws and company policies:
(1) At any time during the application of any
protection order, investigation, prosecution
and/or trial of the criminal case, extendible
when the necessity arises as specified in
the protection order.
(2) Upon the issuance of the Punong
Barangay/kagawad or prosecutor or the
Clerk of Court, as the case may be, of a
certification (at no cost) to the woman that
such an action is pending, and this is all

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that is required for the employer to comply


with the 10- day paid leave.
(3) For government employees, in addition to
the aforementioned certification, the
employee concerned must file an
application for leave citing as basis R.A.
9262. [Sec. 42, IRR, RA 8972]

within the said 12-month period is sufficient to


entitle her to avail of the special leave benefit.

F.6. SPECIAL LEAVE BENEFITS (SLB) FOR


WOMEN

Competent physician
A medical doctor preferably specializing in
gynecological disorders or is in the position to
determine the period of recuperation of the
woman employee. [Sec. 1, DO 112, as amended]

Employment service
Includes absences with pay such as use of
other mandated leaves, company-granted
leaves and maternity leaves

[RA 9710 (The Magna Carta of Women), DOLE


DO No. 112, Series of 2011 as amended by DO
No. 112-A Series of 2012]

Conditions for entitlement of special leave


Any female employee, regardless of age and
civil status, shall be entitled to a special leave
benefit, provided she has complied with the
following conditions:
(1) She has rendered at least 6 months
continuous aggregate employment service
for the last 12 months prior to surgery;
(2) She has filed an application for special
leave
(3) She has undergone surgery due to
gynecological disorders as certified by a
competent physician. [Sec. 2, DO 112]

Special leave benefit for women


A female employees leave entitlement of two
(2) months with full pay from her employer
based on her gross monthly compensation
following surgery caused by gynecological
disorders, provided that she has rendered
continuous aggregate employment service of
at least six (6) months for the last 12 months.
Gynecological disorders
Disorders that would require surgical
procedures such as, but not limited to,
dilatation and curettage and those involving
female reproductive organs such as the vagina,
cervix, uterus, fallopian tubes, ovaries, breast,
adnexa and pelvic floor, as certified by a
competent physician. It shall also include
hysterectomy, ovariectomy, and mastectomy.

Application for special leave


Application before surgery
The employee shall file her application for
leave with her employer within a reasonable
period of time from the expected date of
surgery, or within such period as may be
provided by company rules and regulations or
by CBA.

Gross monthly compensation


The monthly basic pay plus mandatory
allowances fixed by the regional wage boards.
[Sec. 7, Rule II, IRR, RA 9710]

Application after surgery


Prior application for leave shall not be
necessary in cases requiring emergency
surgical procedure, provided that the employer
shall be notified verbally or in written form
within a reasonable period of time and
provided further that after the surgery or
appropriate recuperating period, the female

At least six months continuous aggregate


employment service for the last 12 months prior
to surgery
The woman employee should have been with
the company for 12 months prior to surgery. An
aggregate service of at least six (6) months

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employee shall immediately file her


application using the prescribed form. [Sec. 3,
DO 112]

LABOR LAW

victims of VAWC, Parental leave for solo


parents). The grant of SLB under the law is in
recognition of the fact that patients with
gynecological disorder needing surgery require
a longer period of recovery. The benefit is
considered an addition to the leave benefits
granted under existing laws and should be
added on top of said statutory leave
entitlements.

Period of entitlement
The 2 months special leave is the maximum
period of leave with pay that a woman
employee may avail of under RA 9710.
For purposes of determining the period of
leave with pay that will be allowed to a female
employee, the certification of a competent
physician as to the required period of
recuperation shall be controlling. [Sec. 4, DO
112, as amended]

If the SLB has already been exhausted, the


company leave and other mandated leave
benefits may be availed of by the woman
employee. [Sec. 8, DO 112, as amended]
Special leave benefit vis--vis maternity leave
benefit
Where the woman employee had undergone
surgery due to gynecological disorder during
her maternity leave, she is entitled only to the
difference between the SLB and maternity
leave benefit. [Sec. 9, DO 112, as amended]

Availment
The special leave shall be granted to the
qualified employee after she has undergone
surgery. [Sec. 5, DO 112, as amended]
Frequency of availment
A woman employee can avail of the SLB for
every instance of surgery due to gynecological
disorder for a maximum total period of 2
months per year. [Sec. 6, DO 112, as amended]

Crediting of existing or similar benefits


If there are existing or similar benefits under a
company policy, practice or CBA providing
similar or equal benefits to what is mandated
by law, the same shall be considered as
compliance, unless the company policy,
practice or CBA provides otherwise.

Special leave benefit vis--vis SSS sickness


benefit
The SLB is different from the SSS sickness
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
shall grant the difference.

It is granted to a woman employee who has


undergone surgery due to gynecological
disorder. The SSS sickness benefit, on the
other hand, is administered and given by the
SSS in accordance with RA 1161 as amended by
RA 8282. [Sec. 7, DO 112, as amended]

More liberal existing or similar benefits cannot


be withdrawn or reduced by reason of the
mandate of RA 9710.
The term similar or equal benefits refers to
leave benefits which are of the same nature
and purpose as that of the SLB. [Sec. 10, DO
112, as amended]

Special leave benefit vis--vis existing statutory


leaves
The SLB cannot be taken from existing
statutory leaves (i.e. 5-day SIL, leave for
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Mode of payment
The SLB is a leave privilege. The woman
employee shall not report for work for the
duration of the leave but she will still receive
her salary covering said period. The employer,
in its discretion, may allow said employee to
receive her pay for the period covered by the
approved leave before or during the surgery.
The computation of her pay shall be based
on her prevailing salary at the time of the
surgery. [Sec. 11, DO 112, as amended]

LABOR LAW

employees not falling within this definition


shall be considered rank-and-file employees.
(Sec 2, Rule VI, Book 3, IRR)
Distribution
Service charges are distributed in accordance
with the following percentage of sharing:
Eighty-five percent (85%) for the
employees to be distributed equally
among them;
Fifteen percent (15%) for the management
to answer for losses and breakages and, at
the discretion of the management,
distribution to managerial employees. (Sec
3, Rule VI, Book 3, IRR)

Non-commutation of the benefit


The SLB shall be non-cumulative and nonconvertible to cash unless otherwise provided
by a CBA [Sec. 12, DO 112, as amended]

The shares shall be distributed to employees


not less than once every 2 weeks or twice a
month at intervals not exceeding 16 days. (Sec
4, Rule VI, Book 3, IRR)

G. SERVICE CHARGES
Coverage
Employers (Sec 1, Rule VI, Book 3, IRR)
This rule shall apply only to establishments
which collect service charges such as:
(1) Hotels, restaurants, lodging houses, night
clubs, cocktail lounge, massage clinics,
bars, casinos and gambling houses and
similar enterprises
(2) Including those entities operating primarily
as private subsidiaries of the Government

Note: The P2,000.00 salary ceiling for


entitlement thereto is no longer applicable.
Integration
In case service charge is abolished, the shares
of covered employees shall be considered
integrated in their wages. (Art 96, LC)
The basis of the amount to be integrated shall
be the average monthly share of each
employee for the past twelve (12) months
immediately preceding the abolition of
withdrawal of such charges. (Sec. 5, Rule VI,
Book 3, IRR)

Employees
Shall apply to ALL employees of covered
employers
(1) Regardless of their positions, designations,
or employment status,
(2) Irrespective of the method by which their
wages are paid.

Synthesis of the Rules


Service charges must be pooled;
Where
a
restaurant
or
similar
establishment does not collect service
charges but has a practice or policy of
monitoring and pooling tips given
voluntarily by its customers to its
employees, the pooled tips should be
monitored, accounted for and distributed

Exceptions
Managerial employees or one who is vested
with powers or prerogatives to lay down and
execute managerial policies and/or hire,
transfer, suspend, layoff, recall, discharge,
assign or discipline employees or to effectively
recommend such managerial actions. All
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in the same manner as the services


charges. (DOLE Handbook on Workers
Statutory Monetary Benefits, 2014ed.)
The amount collected is divided between
the company (15%) and employees (85%);
It shall be given twice a month with
intervals of not more than 15 days;
If discontinued, removed, or stopped, the
average share of the employees of their
service charge or tips shall be integrated
with their basic wage.

LABOR LAW

(2) Employers already paying their employees


a 13th month pay or more in a calendar
year or its equivalent at the time of this
issuance; and
(3) Employers of those who are paid on purely
commission, boundary or task basis and
those who are paid a fixed amount for
performing specific work, irrespective of
the time consumed in the performance
thereof (except those workers who are paid
on piece-rate basis, in which case their
employer shall grant them 13th month pay).

H. THIRTEENTH (13TH) MONTH PAY


AND OTHER BONUSES

Note:
Equivalent includes:
(1) Christmas bonus, mid-year bonus, cash
bonuses
(2) and other payments amounting to not
less than 1/12 of the basic salary
(3) but shall NOT INCLUDE cash and stock
dividends, cost of living allowances and
all other allowances regularly enjoyed
by the employee as well a nonmonetary benefits.

(PD 851 (The 13th-Month Pay Law) and the


Revised Guidelines on the Implementation of
the 13th Month Pay Law)
Rationale
To further protect the level of real wages
from the ravage of world-wide inflation;
There has been no increase in the legal
minimum wage rates since 1970;
The Christmas season is an opportune time
for society to show its concern for the
plight of the working masses so they may
properly celebrate Christmas and New
Year.

Workers paid on a piece-rate basis


Those who are paid a standard amount for
every piece or unit of work produced that is
more or less regularly replicated, without
regard to the time spent in producing the
same.

Coverage
General Rule: ALL EMPLOYERS are hereby
required to pay all their rank and file
employees a 13th month pay not later than Dec
24 of every year, Provided that they have
worked for at least one (1) month during a
calendar year.

Minimum Amount: 1/12 of the total basic


salary earned by an employee within a
calendar year
BASE AMOUNT, which is the basic salary shall
include:
(1) Cost of living allowances (COLA) integrated
into the basic salary of a covered employee
pursuant to EO 178.
(2) All remunerations or earnings paid by this
employer for services rendered.
(3) But not the allowances and monetary
benefits which are not considered or

Exempted Employers:
(1) Government, its political subdivisions,
including GOCCs except those operating
essentially as private subsidiaries of the
Government;

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integrated as part of the regular or basic


salary, such as the cash equivalent of:
(a) Unused vacation and sick leave
credits,
(b) Overtime,
(c) Premium,
(d) Night differential,
(e) Holiday pay and, and
(f) Cost-of-living allowances.

LABOR LAW

from all their private Employers regardless


of their total earnings from each or all their
employers. (Revised Guidelines)
(4) Private School Teachers: Private school
teachers, including faculty members of
universities and colleges, are entitled to
the required 13th month pay, regardless of
the number of months they teach or are
paid within a year, if they have rendered
service for at least one (1) month within a
year. (Revised Guidelines)

Time of payment
General Rule: paid not later than Dec 24 of
each year.

Overload pay is NOT included in the


computation for 13th month pay; overload is
not overtime as it is additional work done
within the normal shift [Letran Calamba
Faculty vs NLRC, (2008)]
(1) Resigned or Separated Employee: An
Employee who has resigned or whose
services were terminated at any time
before the time for payment of the 13th
month pay is entitled to this monetary
benefit in proportion to the length of time
he worked during the year, reckoned from
the time he started working during the
calendar year up to the time of his
resignation or termination from service.
[Revised Guidelines]
(2) Wage Difference: The difference between
the minimum wage and the actual salary
received by the Employee cannot be
deemed as his 13th month pay as such
difference is not equivalent to or of the
same import as the said benefit
contemplated by law. [JPL Marketing
Promotions vs CA, 2005]
(3) Terminated Employees: The payment of the
13th month pay may be demanded by the
employee upon the cessation of employeremployee
relationship.
[Archilles
Manufacturing Corp. vs NLRC, 1995]

Exception: ER may give to his employees half


() of the required 13th Month Pay before the
opening of the regular school year and the
other half on or before the 24th of December
every year.
The frequency of payment of this monetary
benefit may be the subject of agreement
between the employer and the recognized
CBA of the employees.
13th Month Pay in Special Cases
(1) Paid by Results: Employees who are paid
on piece work basis are, by law, entitled to
the 13th Month Pay. (Revised Guidelines on
the Implementation of the 13th Month Pay
Law)
(2) Fixed or Guaranteed Wage: Employees who
are paid a fixed or guaranteed wage plus
commission are entitled to 13th month pay
(not purely commission); the basis for
computation shall be both their fixed or
guaranteed wage and commission.
(Revised Guidelines)
(3) Those
with
Multiple
Employers:
Government Employees working part time
in a private enterprise, including private
educational institutions, as well as
Employees working in two or more private
firms, whether on full or part time bases,
are entitled to the required 13th Month Pay
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Additional Rules:
(1) Commissions: If the commissions may be
properly considered part of the basic
salary, then they should be INCLUDED. If
they are not an integral part of the basic
salary, then they should be EXCLUDED.
[Phil. Duplicators Inc. vs NLRC (1995)]
(2) Substitute Payment not allowed: Benefits
in the form of food or free electricity,
assuming they were given, were not a
proper substitute for the 13th month pay
required by law. Neither may year-end
rewards for loyalty and service be
considered in lieu of 13th month pay.
[Framanlis Farms, Inc. vs MOLE (1989)]
(3) 14th Month Pay is not mandated: Employers
already paying their employees a 13th
month pay or its equivalent are not covered
by this Decree.[Kamaya Point Hotel vs
NLRC (1989)]

LABOR LAW

the other. The two cases present quite


different factual situations (although the
same word commissions was used or
invoked) the legal characterizations of which
must accordingly differ.
In the instant case, there is no question that
the sales commission earned by the salesmen
who make or close a sale of duplicating
machines constitute part of the compensation
or remuneration paid to salesmen for serving
as salesmen, and hence as part of the wage
or salary of petitioners salesmen. It appears
that petitioner pays its salesmen a small fixed
or guaranteed wage; the greater part of the
salesmens wages or salaries being composed
of the sales or incentive commissions earned
on actual sales closed by them. The sales
commissions were an integral part of the basic
salary structure. They are not overtime
payments, or profit sharing payments or any
other fringe benefit. [Phil. Duplicators vs
NLRC (1995)]

Commissions vis--vis 13th month pay


The Rule on Productivity Bonuses. The socalled commissions paid to or received by
medical representatives of Boie-Takada
Chemicals or by the rank-and-file employees
of Philippine Fuji Xerox Co., were excluded
from the term basic salary because these
were paid to the medical representatives and
rank-and-file employees as productivity
bonuses. These have no clear direct or
necessary relation to the amount of work
actually done by each individual employee.
More generally, a bonus is an amount granted
and paid ex gratia to an employee. If an
employer cannot be compelled to pay a
productivity bonus to its employees, it should
follow that such productivity bonus, when
given, should not be deemed to fall within the
basic salary of employees when the time
comes to compute their 13th month pay [BoieTakeda vs de la Serna (1993)]

CBA vis--vis 13th month pay


The Presidential Decree is specific and
mandatory. However, if the employers actually
grant such for the 13th month pay in the
monetary benefits provided for in the CBA,
they could be exempted from the operation of
the decree. To be exempted, there must be
actual payment. [Marcopper Mining Corp. vs.
Ople (1981)]

I. SEPARATION PAY
[(Art. 283 & 284, LC, DOLE Handbook on
Workers Statutory Monetary Benefits, 2014)
Separation pay is defined as the amount that
an employee receives at the time of his
severance from the service and is designed to
provide the employee with the wherewithal
during the period that he is looking for
another employment. [A Prime Security
Services vs NLRC (1993)]

The decision in Boie-Takeda and the doctrine


enunciated in this case in fact co-exist with
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General rule: The rule embodied in the Labor


Code is that a person dismissed for cause as
defined therein (see Art. 282, LC) is not
entitled to separation pay. [PLDT vs NLRC
(1988)]

LABOR LAW

Handbook on Workers Statutory Monetary


Benefits, 2014 ed.)
One-Month Pay per Year of Service
An employee is entitled to separation pay
equivalent to his/her one-month pay for every
year of service, a fraction of at least 6 months
being considered as one whole year, if his/her
separation from service is due to any of the
following:
(1) Installation by employer of labor-saving
devices;
(2) Redundancy, as when the position of the
employee has been found to be excessive
or unnecessary in the operation of the
enterprise;
(3) Impossible reinstatement of the employee
to his/her former position or to a
substantially equivalent position for
reasons not attributable to the fault of the
employer, as when the reinstatement
ordered by a competent authority cannot
be implemented due to closure of
cessation
of
operations
of
the
establishment/employer, or the position to
which he/she is to be reinstated no longer
exists and there is no substantially
equivalent position in the establishment to
which he/she can be assigned. [Gaco vs
NLRC (1994)]

Exceptions: Considerations of equity as in the


cases of Filipro, Inc. v. NLRC, Metro Drug
Corp. v. NLRC, Engineering Equipment, Inc. v.
NLRC, San Miguel Corp v. NLRC. [PLDT vs
NLRC (1988)]
An employee who voluntarily resigns is not
entitled to separation pay unless stipulated in
the employment contract, or the collective
bargaining agreement, or is sanctioned by
established practice or policy of the employer.
[Phimco Industries vs NLRC (1997); Hinatuan
Mining Corp vs NLRC (1997) cited in JPL
Marketing Promotions v. CA (2005)]
Amount
One-Half (1/2) Month Pay per Year of Service
An employee is entitled to receive separation
pay equivalent to month pay for every year
of service, a fraction of at least six (6) months
being considered as one whole year, if his/her
separation from the service is due to any of the
following authorized causes:
(1) Retrenchment to prevent losses (i.e.
reduction of personnel effected by
management to prevent losses);
(2) Closure or cessation of operation of an
establishment not due to serious losses or
financial reverses; and,
(3) When the EE is suffering from a disease
not curable within a period of six (6)
months
and
his/her
continued
employment is prejudicial to his/her health
or to the health of his/her co-employees
In no case will an employee get less than one
(1) month separation pay if the separation is
due to the above stated causes and he/she
has served for at least six (6) months. (DOLE

Notice of Termination
The employer may terminate the employment
of any employee due to the above-mentioned
authorized causes by serving a written notice
on the employee and the DOLE through its
regional office having jurisdiction over the
place of business at least 1 month before the
intended date thereof.
Basis of Separation Pay
The computation of separation pay of an
employee shall be based on his/her latest
salary rate. [DOLE Handbook on Workers
Statutory Monetary Benefits, 2014 ed.]
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Inclusion of Regular Allowance in the


Computation
In the computation of separation pay, it would
be error not to integrate the allowance with
the basic salary. The salary base properly used
in computing the separation pay should
include not just the basic salary but also the
regular allowances that an employee has
been receiving. [Planters Products, Inc. vs
NLRC (1989)]

LABOR LAW

Retirement - the result of a bilateral act of the


parties, a voluntary agreement between the
employer and the employee whereby the latter,
after reaching a certain age agrees to sever his
or her employment with the former ... an
employer is free to impose a retirement age
less than 65 for as long as it has the
employees consent having terminated
petitioner solely on the basis of a provision of a
retirement plan which was not freely assented
to by her, respondent was guilty of illegal
dismissal [Jaculbe vs Silliman University, 2007]

J. RETIREMENT PAY
[RA 7641 - The Retirement Pay Law]

J.1. ELIGIBILITY
General Rule: All employees in the private
sector, regardless of their position,
designation, or status, and irrespective of the
method by which their wages are paid [Sec. 1,
IRR, RA 7641]

Rationale
RA 7641 is undoubtedly a social legislation.
The law has been enacted as a labor protection
measure and as a curative statute that absent
a retirement plan devised by, an agreement
with, or a voluntary grant from, an employer
can respond, in part at least, to the financial
well-being of workers during their twilight
years soon following their life of labor. There
should be little doubt about the fact that the
law can apply to labor contracts still existing at
the time the statute has taken effect, and that
its benefits can be reckoned not only from the
date of the law's enactment but retroactively to
the time said employment contracts have
started. [Enriquez Security Services, Inc. v.
Cabotaje, 2006]
Pursuant thereto, this Court imposed two (2)
essential requisites in order that R.A. 7641 may
be given retroactive effect:
(1) the claimant for retirement benefits was
still in the employ of the employer at the
time the statute took effect; and
(2) the claimant had complied with the
requirements for eligibility for such
retirement benefits under the statute.
[Universal Robina Sugar Milling Corp. vs
Caballeda, 2008]

Exceptions:
(1) employees covered by the Civil Service
Law;
(2) domestic helpers and persons in the
personal service of another, and
(3) employees in retail, service and
agricultural establishments or operations
regularly employing not more than ten
employees [Sec. 2, IRR, RA 7641]
Exclusions from coverage
R.A. No. 7641, otherwise known as "The
Retirement Pay Law," only applies in a
situation where:
(1) there is no collective bargaining
agreement
or
other
applicable
employment contract providing for
retirement benefits for an employee; OR
(2) there is a collective bargaining agreement
or other applicable employment contract
providing for retirement benefits for an
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
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is otherwise deserving, is denied retirement


benefits by the nefarious scheme of employers
in not providing for retirement benefits for their
employees. The reason for the second situation
is expressed in the Latin maxim pacta private
juri public derogare non possunt. Private
contracts cannot derogate from the public law.
[Oxales vs Unilab, 2008]

LABOR LAW

(2) Cash equivalent of five (5) days of service


incentive leave;
(3) One-twelfth (1/12) of the 13th month pay.
(1/12 x 365/12 = .083 x 30.41 = 2.52)
Thus, one-half month salary is equivalent to
22.5 days. [Capitol Wireless, Inc. vs Sec.
Confessor, 1996; Reyes v NLRC, 2007]
Other benefits may be included in the
computation of the retirement pay upon
agreement of the ER and the EE or if provided
in the CBA.

Age of retirement
In the absence of a retirement plan or
agreement providing for retirement benefits of
employees in the establishment, an employee
upon reaching the age of sixty (60) years or
more, but not beyond sixty-five (65) years
which is hereby declared the compulsory
retirement age (and have served the
establishment for at least 5 years). [Sec. 1, IRR,
RA 7641]

Retirement pay under RA 7641 vis--vis


retirement benefits under SSS and GSIS laws
RA 7641 mandates payment of retirement
benefits. All private sector employees
regardless of their position, designation or
status and irrespective of the method by which
their wages are paid are entitled to retirement
benefits upon compulsory retirement at the
age of sixty-five (65) or upon optional
retirement at sixty (60) or more but not 65. The
minimum retirement pay due covered
employees shall be equivalent to one-half
month salary for every year of service, a
fraction of at least six (6) months being
considered as one whole year. The benefits
under this law are other than those granted by
the SSS or the GSIS.

Optional retirement in the absence of a


retirement plan or other applicable agreement
providing for retirement benefits of EEs in an
establishment, an EE may retire upon reaching
the age of 60 or more if he has served for at
least 5 years in said establishment.
Compulsory retirement in the absence of a
retirement plan or other applicable agreement
providing for retirement benefits of EEs in an
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
Any EE may retire or be retired by his/her ER
upon reaching the age established in the CBA
or other applicable agreement/contract and
shall receive the retirement benefits granted
therein; provided, however, that such
retirement benefits shall not be less than the
retirement pay required under RA 7641, and
provided further that if such retirement
benefits under the agreement are less, the ER
shall pay the difference.

J.2. AMOUNT OF RETIREMENT PAY


The minimum retirement pay shall be
equivalent to one-half (1/2) month salary for
every year of service, a fraction of at least six
(6) months being considered as one whole
year.
For the purpose of computing retirement pay,
one-half month salary shall include all of the
following:
(1) Fifteen (15) days salary based on the latest
salary rate;
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LABOR LAW

J.5. TAXABILITY

Where both the ER and the EE contribute to a


retirement fund pursuant to the applicable
agreement, the ERs total contributions and
the accrued interest thereof should not be less
than the total retirement benefits to which the
EE would have been entitled had there been no
such retirement benefits fund. If such total
portion from the ER is less, the ER shall pay
the deficiency.

Any
provision of law to the contrary
notwithstanding, the retirement benefits
received by officials and employees of private
firms, whether individual or corporate , in
accordance with a reasonable private benefit
plan maintained by the employer shall be
exempt from all taxes and shall not be liable to
attachment, garnishment, levy or seizure by or
under any legal or equitable process
whatsoever except to pay a debt of the official
or employee concerned to the private benefit
plan or that arising from liability imposed in a
criminal action: Provided, That the retiring
official or employee has been in the service for
at least ten (10) years and is not less than fifty
years of age at the time of his retirement:
Provided, further, That the benefits granted
under this Act shall be availed of by an official
or employee only once; Provided, finally, That
in case of separation of an official or employee
from the service of the employer due to death,
sickness, or other physical disability or for any
cause beyond the control of the said official or
employee, any amount received by him or by
his heirs from the employer as a consequence
of such separation shall likewise be exempt as
hereinabove provided.

J.3.
RETIREMENT
BENEFITS
OF
WORKERS WHO ARE PAID BY RESULTS
For covered workers who are paid by result and
do not have a fixed monthly salary rate, the
basis for the determination of the salary for 15
days shall be their average daily salary (ADS).
The ADS is derived by dividing the total salary
or earning for the last 12 months reckoned
from the date of retirement by the number of
actual working days in that particular period,
provided that the determination of rates of
payment by results are in accordance with
established regulations.

J.4. RETIREMENT BENEFIT OF PARTTIME WORKERS


Part-time workers are also entitled to
retirement pay of one-month salary for every
year of service under RA 7641 after satisfying
the following conditions precedent for optional
retirement:
(a) Theres no retirement plan between the ER
and the EE; and,
(b) The EE should have reached the age of 60
years, and should have rendered at least 5
years of service with the ER.

As used in this Act, the term "reasonable


private benefit plan" means a pension,
gratuity, stock bonus or profit sharing plan
maintained by an employer for the benefit of
some or all of his officials and employees,
wherein contributions are made by such
employer or officials and employees, or both,
for the purpose of distributing to such officials
and employees the earnings and principal of
the fund thus accumulated, and wherein it is
provided in said plan that at no time shall any
part of the corpus or income of the fund be
used for, or be diverted to, any purpose other
than for the exclusive benefit of the said
officials and employees.[Sec. 1, RA 4917]

Applying the foregoing principle, the


components of retirement benefit of part-time
workers may likewise be computed at least in
proportion to the salary and related benefits
due them. [DOLE Handbook on Workers
Statutory Monetary Benefits, 2014 ed.]

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Any provision of law to the contrary


notwithstanding, the retirement benefits
received by officials and employees of private
firms, whether individual or corporate, in
accordance with a reasonable private benefit
plan maintained by the employer
(1) shall be exempt from all taxes and
(2) shall not be liable to attachment,
garnishment, levy or seizure by or under
any legal or equitable process whatsoever
[Intercontinental Broadcasting Corp. v
Amorilla, 2006]

LABOR LAW

and employees the earnings and principal of


the fund thus accumulated, and wherein it is
provided in said plan that at no time shall any
part of the corpus or income of the fund be
used for, or be diverted to, any purpose other
than for the exclusive benefit of the said
officials and employees.

K. WOMEN WORKERS
The State recognizes the role of women in
nation-building, and shall ensure the
fundamental equality before the law of women
and men.[Consti Art II Sec 14]

Exception
Except to pay a debt of the official or employee
concerned to the private benefit plan or that
arising from liability imposed in a criminal
action:

The State shall protect working women by


providing safe and healthful working
conditions, taking into account their maternal
functions, and such facilities and opportunities
that will enhance their welfare and enable
them to realize their full potential in the service
of the nation.[Consti Art XIII Sec 14]

Additional conditions
(a) That the retiring official or employee has
been in the service of the same employer
for at least ten (10) years and is not less
than fifty years of age at the time of his
retirement;
(b) That the retirement benefits shall be
availed of by an official or employee only
once; and,
(c) That in case of separation of an official or
employee from the service of the employer
due to death, sickness or other physical
disability or for any cause beyond the
control of the said official or employee, any
amount received by him or by his heirs
from the employer as a consequence of
such separation shall likewise be exempt
as hereinabove provided.

General Statement on Coverage. This Rule


shall apply to all employers, whether operating
for profit or not, including educational,
religious and charitable institutions, except to
the Government and to government-owned or
controlled corporations and to employers of
household helpers and persons in their
personal service insofar as such workers are
concerned.[Omnibus Rules Bk III Rule XII Sec 1]

K.1.
PROVISIONS
DISCRIMINATION

AGAINST

It shall be unlawful for any employer to


discriminate against any woman employee
with respect to terms and conditions of
employment solely on account of her sex.
The following are acts of discrimination:
(1) Payment of a lesser compensation,
including wage, salary or other form of
remuneration and fringe benefits, to a
female employees as against a male
employee, for work of equal value; and

Reasonable private benefit plan - means a


pension, gratuity, stock bonus or profit sharing
plan maintained by an employer for the benefit
of some or all of his officials and employees,
wherein contributions are made by such
employer or officials and employees, or both,
for the purpose of distributing to such officials
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LABOR LAW

K.3. PROHIBITED ACTS

(2) Favoring a male employee over a female


employee with respect to promotion,
training
opportunities,
study
and
scholarship grants solely on account of
their sexes. [Art.133, Labor Code]

[Art. 135]
Note: Nightwork/ Exception (Art 130-131) No
more nightwork prohibition under R.A. 10151
(An Act Allowing the Employment of Night
Workers, thereby Repealing Articles 130 and
131 of PD 442, as amended, otherwise known
as the Labor Code of the Philippines)

K.2. STIPULATION AGAINST MARRIAGE


It shall be unlawful for an employer to:
(1) require as a condition of employment or
continuation of employment that a woman
employee shall not get married, or
(2) stipulate expressly or tacitly that upon
getting married a woman employee shall
be deemed resigned or separated or
(3) actually dismiss, discharge, discriminate or
otherwise prejudice a woman employee
merely by reason of her marriage. [Art. 134,
Labor Code][Duncan Assoc of Detailman
PTGWO v Glaxo Wellcome, 2004]

Coverage. - This chapter shall apply to all


persons, who shall be employed or permitted
or suffered to work at night, except those
employed in agriculture, stock raising, fishing,
maritime transport and inland navigation,
during a period of not less than seven (7)
consecutive hours, including the interval from
midnight to five o'clock in the morning, to be
determined by the Secretary of Labor and
Employment, after consulting the workers'
representatives/labor
organizations
and
employers.
Night worker means any employed person
whose work requires performance of a
substantial number of hours of night work
which exceeds a specified limit. This limit shall
be fixed by the Secretary of Labor after
consulting the workers' representatives/labor
organizations and employers. [Article 154, RA
10151]

Bona fide occupational qualification exception


When the employer can prove that the
reasonable demands of the business require a
distinction based on marital status and there is
no better available or acceptable policy which
would better accomplish the business purpose,
an ER may discriminate against an EE based in
the identity of the EEs spouse. [Star Paper
Corp. vs. Simbol, 2006]
The Court sustained the validity of employer
policy prohibiting an employee from having a
personal or marital relationship with an
employee of a competitor. The prohibition was
reasonable under the circumstances because
relationships of such nature might compromise
the interests of the company. [Duncan
Association of Detailmen vs. Glaxo Wellcome,
2004]

Women Night Workers. - Measures shall be


taken to ensure that an alternative to night
work is available to women workers who would
otherwise be called upon to perform such
work:
(a) Before and after childbirth, for a period of at
least sixteen (16) weeks, which shall be
divided between the time before and after
childbirth;
(b) For additional periods, in respect of 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
pursuant to subparagraph (a) above,
the length of which shall be
determined by the DOLE after
consulting the labor organizations
and employers.

LABOR LAW

Discharge to prevent enjoyment of benefits


To deny any woman employee the benefits
provided for in this Chapter or to discharge any
woman employed by him for the purpose of
preventing her from enjoying any of the
benefits provided under this Code. [Art. 135 (1)]
Discharge on account of pregnancy
To discharge such woman on account of her
pregnancy, while on leave or in confinement
due to her pregnancy. [Art. 135 (2)]

During the periods referred to in this article:


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

Discharge on account of testimony


To discharge or refuse the admission of such
woman upon returning to her work for fear that
she may again be pregnant. [Art. 137 (3)]
It shall be unlawful for any employer: to
discharge any woman or child or any other
employee for having filed a complaint or
having testified or being about to testify under
the Code [Book III, Rule XII, Sec 13(d), IRR]

Pregnant women and nursing mothers may be


allowed to work at night only if a competent
physician, other than the company physician,
shall certify their fitness to render night work,
and specify, in the case of pregnant employees,
the period of the pregnancy that they can
safely work. The measures referred to in this
article may include transfer to day work where
this is possible, the provision of social security
benefits or an extension of maternity leave.

Expulsion of Women faculty/ female student


due to pregnancy outside of marriage
Expulsion and non-readmission of women
faculty due to pregnancy outside of marriage
shall be outlawed. No school shall turn out or
refuse admission to a female student solely on
the account of her having contracted
pregnancy outside of marriage during her term
in school. [Sec. 13(c), RA 9710]

The measures referred to in this article may


include transfer to day work where this is
possible, the provision of social security
benefits or an extension of maternity leave.

K.4. ANTI-SEXUAL HARASSMENT


[RA 7877 - Anti-Sexual Harassment Act of 1995]
Forms of Sexual Harassment
(1) Employment or Work Related
(a) The sexual favor is made as a condition
(i) in the hiring or in the employment,
re-employment
or
continued
employment of said individual or
(ii) in granting said individual favorable
compensation, terms, conditions,
promotions, or privileges, or

The provisions of this article shall not leave the


effect of reducing the protection and benefits
connected with maternity leave under existing
laws.[Article 158, RA 10151]
Discrimination [Art 133, RA 9710]
See previous section
Stipulation against marriage [Art 134]
See previous section
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(iii) in the refusal to grant the sexual


favor results in limiting, segregating
or classifying the EE which in any
way would discriminate, deprive or
diminish employment opportunities
or otherwise adversely affect said
employee;
(b) The above acts would either:
(i) impair the employees rights or
privileges under existing labor laws;
or
(ii) result in an intimidating, hostile, or
offensive environment for the
employee.

LABOR LAW

(2) Any person who directs or induces another


to commit any act of sexual harassment as
herein defined. OR
(3) Any person who cooperates in the
commission by another without which it
would NOT have been committed, shall
also be held liable under this Act [Sec. 3,
RA 7877]
Role of the employer or Head of Office
The Employer or Head of Office shall have the
duty:
(1) to prevent the commission of such acts and
(2) to lay down the procedure for the
resolution, settlement or prosecution of
committed acts. [Sec. 4, RA 7877]

(2) Education or Training environment. In an


education or training environment, sexual
harassment is committed:
(a) Against one who is under the care, custody
or supervision of the offender
(b) Against one whose education, training,
apprenticeship or tutorship is entrusted to
the offender;
(c) When the sexual favor is made a condition
to the giving of a passing grade, or the
granting of honors and scholarships, or the
payment of a stipend, allowance or other
benefits, privileges, or considerations; or
(d) When the sexual advances result in an
intimidating,
hostile
or
offensive
environment for the result, trainee or
apprentice.

He shall be solidarily liable for damages:


(1) if he is informed of such acts by the
offended party and
(2) no immediate action is taken thereon. [Sec.
5, RA 7877]
Independent Action for Damages
The victim of work, education or trainingrelated sexual harassment can institute a
separate and independent action for damages
and other affirmative relief. [Sec. 6, RA 7877]
Sanctions
Criminal: imprisonment of 1 month to mos. Or
fine of P10k to P20k or both
Prescription of such action is in 3 years.

Persons who may be liable


(1) Any employer, employee, manager,
supervisor, agent of the employer, teacher,
instructor, professor, coach, trainer or any
other person, regardless of whether the
demand, request for requirement for
submission is accepted by the object of
said act having authority, influence or
moral ascendancy over another in a work or
training or education environment, who
demands, requests or otherwise requires
any sexual favor from another,

Termination
As a managerial employee, petitioner is bound
by more exacting work ethics. When such
moral perversity is perpetuated against his
subordinate, he provides a justifiable ground
for his dismissal for lack of trust and
confidence. It is the right, nay the duty of every
employer to protect its employees from
oversexed superiors. [Sec. 7, RA 7877] [Libres vs
NLRC, 1999]
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General Rule: Children below 15 shall NOT be


employed

The gravamen of the offense in sexual


harassment is not the violation of the
employee's sexuality but the abuse of power by
the employer. Any employee, male or female,
may rightfully cry "foul" provided the claim is
well substantiated. Strictly speaking, there is
no time period within which he or she is
expected to complain through the proper
channels. The time to do so may vary
depending upon the needs, circumstances, and
more importantly, the emotional threshold of
the employee.

Employment of Children - Children below


fifteen (15) years of age shall not be employed
except:
(1) When a child works directly under the sole
responsibility of his/her parents or legal
guardian and where only members of
his/her family are employed: Provided,
however, That his/her employment neither
endangers his/her life, safety, health, and
morals, nor impairs his/her normal
development: Provided, further, That the
parent or legal guardian shall provide the
said child with the prescribed primary
and/or secondary education; or
(2) Where a child's employment or
participation in public entertainment or
information through cinema, theater,
radio, television or other forms of media is
essential: Provided, That the employment
contract is concluded by the child's parents
or legal guardian, with the express
agreement of the child concerned, if
possible, and the approval of the
Department
of
Labor
and
Employment: Provided, further, That the
following requirements in all instances are
strictly complied with:
(a) The employer shall ensure the
protection, health, safety, morals and
normal development of the child;
(b) The employer shall institute measures
to prevent the child's exploitation or
discrimination taking into account the
system and level of remuneration, and
the duration and arrangement of
working time; and
(c) The employer shall formulate and
implement, subject to the approval
and
supervision
of
competent
authorities, a continuing program for
training and skills acquisition of the
child.

Not many women are made of the stuff that


can endure the agony and trauma of a public,
even corporate, scandal. If petitionercorporation had not issued the third
memorandum that terminated the services of
private respondent, we could only speculate
how much longer she would keep her silence.
Perhaps, to private respondent's mind, for as
long as she could outwit her employer's ploys
she would continue on her job and consider
them as mere occupational hazards. [Phil.
Aelous Automotive United Corp. vs NLRC,
2000]

L. MINOR WORKERS
Relevant Laws: RA 7610 (Special Protection of
Children Against Abuse, Exploitation and
Discrimination Act), RA 9231 (Special
Protection of Children Against Child Abuse,
Exploitation and Discrimination Act), Art.
137(a)
Constitutional basis: The State recognizes the
vital role of the youth in nation-building and
shall promote and protect their physical,
moral, spiritual, intellectual, and social wellbeing. It shall inculcate in the youth patriotism
and nationalism, and encourage their
involvement in public and civic affairs.[Art II,
Sec. 13 of the 1987 Constitution]

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LABOR LAW
prescribed primary and/or secondary
education; [Sec. 12 of RA 7610 as
amended by RA 7658]

In the above-exceptional cases where any such


child may be employed, the employer shall first
secure, before engaging such child, a work
permit from the Department of Labor and
Employment which shall ensure observance of
the above requirements.

(2) childs employment or participation in


public entertainment or information
through cinema, theater, radio or television
is essential, provided that [Sec. 12 of RA
7610 as amended by RA 7658]:
(a) employment does NOT involve ads or
commercials
promoting
alcohol,
tobacco and its by-products or violence
[Sec. 14, RA 7610]
(b) the employment contract is concluded
by the childs parents or guardian, and
approved by DOLE
(c) The ER shall ensure the protection,
health, safety and morals of the child
(d) The ER shall institute measures to
prevent the childs exploitation or
discrimination taking into account the
system and level of remuneration, and
the duration and arrangement of
working time
(e) The ER shall formulate and
implement, subject to the approval
and
supervision
of
competent
authorities, a continuing program for
training and skills acquisition of the
child. [Sec. 12 of RA 7610 as amended
by RA 7658]

For purposes of this Article, the term "child"


shall apply to all persons under eighteen (18)
years of age.[Sec 2, RA 9231]
Child - refers to any person under 18 years of
age
Child labor - refers to any work or economic
activity performed by a child that subjects
him/her to any form of exploitation or is
harmful to his/her health and safety or
physical, mental or psychosocial development
Working child - refers to any child engaged as
follows:
(1) when the child is below eighteen (18) years
of age, in work or economic activity that is
not child labor as defined in the
immediately preceding subparagraph; and
(2) when the child is below fifteen (15) years of
age, in work where he/she is directly under
the responsibility of his/her parents or
legal guardian and where only members of
the childs family are employed; or in
public entertainment or information. [SEC
3, DO 65-04]

Employment of Children from 15 to 18


Employment is allowed but restricted to nonhazardous work.

Exceptions
(1) Child works directly under the sole
responsibility of his parents or legal
guardian and where only members of the
ERs family are employed, provided:
(a) his employment does NOT endanger
his life, safety, health and morals,
(b) nor impairs his normal development,
and
(c) the parent or legal guardian shall
provide the said minor child with the

Non-hazardous work shall mean any work or


activity in which the EE is not exposed to any
risk which constitutes an imminent danger to
his safety and health. [Sec. 3, Rule XII, Book III,
IRR of LC]
The Secretary of Labor shall from time to time
publish a list of hazardous work and activities
in which persons 18 years of age and below
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cannot be employed [Sec. 3, Rule XII, Book III,


IRR of LC]

LABOR LAW

nursemaid or yaya, cook, gardener, or


laundry person. [Sec 4(D). RA 10361]
The term domestic worker or kasambahay
excludes any person who performs domestic
work only occasionally or sporadically and not
on an occupational basis. [Sec.4(D), RA 10361]

The following are HAZARDOUS workplaces:


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

Rights and Privileges


(a) Minimum wage
The minimum wage of domestic workers shall
not be less than the following:
i. P2,500 a month for those employed in
NCR
ii. P2,000 a month for those employed in
chartered cities and first class
municipalities
iii. P1,500 a month for those employed in
other municipalities
Within one year from the effectivity of the Act,
and periodically thereafter, the Regional
Tripartite and Productivity Wage Boards shall
review, and if proper, determine and adjust the
minimum wage rates of domestic workers.
[Sec. 24, RA 10361]

Working Hours of a Child


Quantity
Age Bracket
Daily Max
Weekly Max
Below 15 y
4 hrs
20 hrs
15 to below 18 8hrs.
40 hrs
Night work prohibition
Age Bracket
Prohibited Hours
Below 15 y
8 pm to 6 am (10 hrs.)
15 to below 18
10 pm to 6 am (8 hrs.)

SECTION 1. Subparagraphs (1), (2) and (3),


Article 143 of Presidential Decree No. 442, as
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
rates;
(1) Eight hundred pesos (P800.00) a
month for househelpers in Manila,
Quezon, Pasay and Caloocan cities
and municipalities of Makati, San
Juan, Mandaluyong, Muntinlupa,
Navotas, Malabon, Paraaque, Las
Pias, Pasig, Marikina, Valenzuela,
Taguig and Pateros in Metro Manila
and in highly urbanized cities;
(6) Six hundred fifty pesos (P650.00) a
month for those in other chartered
cities and first class municipalities;

Relevant Law: RA 10361 (Batas Kasambahay or


Domestic Workers Act)
Note: RA 10361 has expressly repealed Chapter
III, Employment of Househelpers, Title III of
Book III of the Labor Code
Domestic work - This refers to work performed
in or for a household or households. [Sec 4(C).
RA 10361]
Domestic worker or Kasambahay - Refers to
any person engaged in domestic work within
an employment relationship such as, but not
limited to, the following: general househelp,
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access to communication shall be granted


even during work time. [Sec. 8, RA 10361]

and
(7) Five hundred fifty pesos (P550.00) a
month
for
those
in
other
municipalities; Provided, that the
employees
shall
review
the
employment contracts of their
househelpers every three (3) years
with the end in view of improving the
terms and conditions thereof.
Provided, further, that those
househelpers who are receiving at
least
One
thousand
pesos
(P1,000.00) shall be covered by the
Social Security System (SSS) and be
entitled to all the benefits provided
thereunder."

(f) Education and Training


The employer shall afford the domestic worker
the opportunity to finish basic education and
may allow access to alternative learning
systems and, as far as practicable, higher
education or technical and vocational training.
[Sec. 9, RA 10361]
(g) Social and Other Benefits
A domestic worker who has rendered at least
one (1) month of service shall be covered by the
Social Security System (SSS), the Philippine
Health Insurance Corporation (PhilHealth), and
the Home Development Mutual Fund or PagIBIG, and shall be entitled to all the benefits in
accordance with the pertinent provisions
provided by law.

(b) Standard of Treatment


The employer or any member of the household
shall not subject a domestic worker or
kasambahay to any kind of abuse nor inflict
any form of physical violence or harassment or
any act tending to degrade the dignity of a
domestic worker. [Sec. 5, RA 10361]

(h) Leave Benefits


A domestic worker who has rendered at least
one (1) year of service shall be entitled to an
annual service incentive leave of five (5) days
with pay [Sec. 29, RA 10361]

(c) Board, Lodging and Medical Attendance


The employer shall provide for the basic
necessities of the domestic worker to include at
least three (3) adequate meals a day and
humane sleeping arrangements that ensure
safety and shall provide appropriate rest and
assistance to the domestic worker in case of
illnesses and injuries sustained during service
without loss of benefits. [Sec. 6, RA 10361]

Pre-Employment Requirement
Prior to the execution of the employment
contract, the employer may require the
following from the domestic worker:
(1) Medical certificate or a health certificate
issued by a local government health
officer;
(2) Barangay and police clearance;
(3) National Bureau of Investigation (NBI)
clearance; and
(4) Duly authenticated birth certificate or if not
available, any other document showing the
age of the domestic worker such as voters
identification card, baptismal record or
passport.
However, Section 12(a), (b), (c) and (d) shall be
standard requirements when the employment
of the domestic worker is facilitated through
the PEA.

(d) Privacy
Respect for the privacy of the domestic worker
shall be guaranteed at all times and shall
extend to all forms of communication and
personal effects [Sec. 7, RA 10361]
(e) Access to Outside Communication
The employer shall grant the domestic worker
access to outside communication during free
time: Provided, That in case of emergency,
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The cost of the foregoing shall be borne by the


prospective employer or agency, as the case
may be. [Sec. 12, RA 10361]

(c)

Time and Manner of Payment: Payment of


wages shall be made on time directly to the
domestic worker in cash at least once a month
and unless allowed by the domestic worker
through a written consent, employer shall
make no deductions from the wages other than
that which is mandated by law. [Sec. 25, RA
10361]

(d)

(e)
(f)

Right against assignment to non-household


work at a wage rate lower than that mandated
for agricultural or non-agricultural enterprises
depending on the case. [Sec. 22, RA 10361]

LABOR LAW
employer or any member of the
household;
Commission of a crime or offense
against the domestic worker by the
employer or any member of the
household;
Violation by the employer of the terms
and conditions of the employment
contract and other standards set forth
under this law;
Any disease prejudicial to the health of
the domestic worker, the employer, or
member/s of the household; and
Other causes analogous to the
foregoing. [Sec. 33, RA 10361]

(2) Initiated by the employer


An employer may terminate the services of the
domestic worker at any time before the
expiration of the contract, for any of the
following causes:
(a) Misconduct or willful disobedience by
the domestic worker of the lawful order
of the employer in connection with the
formers work;
(b) Gross or habitual neglect or
inefficiency by the domestic worker in
the performance of duties;
(c) Fraud or willful breach of the trust
reposed by the employer on the
domestic worker;
(d) Commission of a crime or offense by
the domestic worker against the
person of the employer or any
immediate member of the employers
family;
(e) Violation by the domestic worker of the
terms and conditions of the
employment contract and other
standards set forth under this law;
(f) Any disease prejudicial to the health of
the domestic worker, the employer, or
member/s of the household; and
(g) Other causes analogous to the
foregoing. [Sec. 34, RA 10361]

Employment Age of Domestic Workers:


Unlawful to employ any person below fifteen
(15) years of age as a domestic worker [Sec. 16,
RA 10361]
Persons between 15-18 years old should only
be employed in non-hazardous work. [DO 4-99
Sec. 4]
Daily Rest Period: Aggregate of eight (8) hours
per day. [Sec. 20, RA 10361]
Employment Certification: ER shall give the
househelper a written statement of the nature
and duration of the service and his or her work
performance as househelper upon severance.
[Sec. 35, RA 10361]
Termination
(1) Initiated by the domestic worker
The domestic worker may terminate the
employment relationship at any time before
the expiration of the employment contract for
any of the following causes:
(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
Neither the domestic worker nor the employer
may terminate the contract before the
expiration of the term except for grounds
provided in Sec. 33 and 34 of RA 10361.

(2) Materials may or may not be furnished by


the ER or contractor.
(3) Decentralized form of production, where
there is ordinarily very little supervision or
regulation of methods of work. (Sec. 2(a),
Rule XIV, Book III, IRR)

If the domestic worker is unjustly dismissed,


the domestic worker shall be paid the
compensation already earned plus the
equivalent of 15 days work by way of indemnity.

Industrial Homeworker - a worker who is


engaged in industrial homework
Employer means any person who
(1) Acts as a contractor delivers or causes to
be delivered any goods, articles, or
materials to be processed or fabricated in
or about a home and thereafter to be
returned or to be disposed of or distributed
in accordance with ERs direction; OR
(2) Sells any goods, articles, or materials to be
processed or fabricated in or about a home
and then rebuys them after. [Art. 153, LC]

Leaving without justifiable reason by the


domestic worker
(a) any unpaid salary due not exceeding the
equivalent 15 days work shall be forfeited
AND
(b) the employer may recover from the
domestic worker the costs incurred related
to the deployment expenses, if any:
Provided, that the service has been
terminated within 6 months from the
domestic workers employment.

Note: Sec 2(d), Rule XIV, Book III is


substantially similar to the above.
Rights and benefits accorded homeworkers
(1) Right to form, join or assist organizations

Notice to end the working relationship


If the duration of the domestic service is not
determined either in stipulation or by the
nature of the service, the employer or the
domestic worker may give notice to end the
working relationship five (5) days before the
intended termination of the service.
The domestic worker and the employer may
mutually agree upon written notice to preterminate the contract of employment to end
the employment relationship. [Sec. 32, RA
10361]

[Sec 3, Rule XIV, Book III, IRR]


(2) Right to acquire legal personality and the
rights and privileges granted by law to
legitimate labor organizations upon
issuance of the certification of registration

[Sec 4, Rule XIV, Book III, IRR]


(3) Immediate payment upon ERs receipt of
finished goods or articles [Sec 6, Rule XIV,

Book III, IRR]


(4) SSS, MEDICARE and ECC

premium
contributions shall be deducted from their
pay and shall be remitted by
ER/contractor/subcontractor to the SSS

N. EMPLOYMENT OF
HOMEWORKERS

[Sec 6, Rule XIV, Book III, IRR]

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


Rule XIV, Book III of the IRR.
Industrial homework
(1) Is a system of production under which work
for an ER or contractor is carried out by a
homeworker at his/her home.

Liability of Employer
(1) ER may require homeworker to redo work
improperly executed without additional
pay [Sec 9a, Rule XIV, Book III, IRR]
(2) ER need not pay homeworker for any work
done on goods or articles not returned due
to homeworkers fault [Sec 9b, Rule XIV,
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Book III, IRR]

LABOR LAW

O. APPRENTICES AND LEARNERS

(3) If subcontractor/contractor fails to pay


homeworker, ER is jointly and severally
liable with the former to the homeworker
for his/her wage [Sec 11, Rule XIV, Book III,

Relevant Law: RA 7796 (Technical Education


and Skills Development Act of 1994 or TESDA
Act of 1994)
Statement of objectives. - This Title aims: (1) To
help meet the demand of the economy for
trained manpower; (2) To establish a national
apprenticeship
program
through
the
participation of employers, workers and
government and non-government agencies;
and (3) To establish apprenticeship standards
for the protection of apprentices.[Art 57, RA

IRR]
(4) ER shall assist the homeworkers in the
maintenance of basic safe and healthful
working conditions at the
(5) homeworkers place of work. [Sec 11, Rule

XIV, Book III, IRR of LC]


Regional Office shall provide technical
assistance to registered homeworkers
organizations [Sec 14, Rule XIV, Book III, IRR of

7796]

LC]

O.1. APPRENTICES

Prohibited Homework
Homework is prohibited in the ff:
(1) explosives, fireworks and articles of like
character;
(2) drugs and poisons; and
(3) other articles, the processing of which
requires exposure to toxic substances. [Sec

Note: Art. 58 has been superseded by Section


4 (j), (k), (l), (m) of RA 7796 quoted below:
(j)
"Apprenticeship"
training
within
employment with compulsory related
theoretical instruction involving a contract
between an apprentice and an employer
on
an
approved
apprenticeable
occupation.
(k) Apprentice" is a person undergoing
training for an approved apprenticeable
occupation during an apprenticeship
agreement. [Art 58(b) Labor Code; Sec 4

13, Rule XIV, Book III, IRR]


Conditions for deduction from homeworkers
earnings
No deduction from the homeworkers earnings
for the value of materials lost, destroyed or
damaged unless:
(1) Homeworker is clearly shown to be
responsible for loss or damage
(2) Reasonable opportunity to be heard
(3) Amount of deduction is fair and
reasonable, and does not exceed actual
loss or damage
(4) Deduction does not exceed 20% of
homeworkers weekly earnings [Sec. 8,

(k), RA 7796]
(l) "Apprenticeship Agreement" is a contract
wherein a prospective employer binds
himself to train the apprentice who in turn
accepts the terms of training for a
recognized apprenticeable occupation
emphasizing the rights, duties and
responsibilities of each party.
(m) Apprenticeable Occupation is an
occupation officially endorsed by a
tripartite body and approved to be
apprenticeable by the authority. [Sec. 4,

Rule XIV, Book III, IRR]

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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LABOR STANDARDS

instantaneously give rise to an employerapprentice relationship. It must be duly


approved by the Minister of Labor and
Employment. Hence, since the apprenticeship
agreement between petitioner and respondent
has no force and effect, respondent's assertion
that he was hired not as an apprentice but as a
delivery boy deserves credence. (Nitto

LABOR LAW

The employer shall formulate and implement,


subject to the approval and supervision of
competent authorities, a continuing
program for training and skills acquisition
of the child.
In the above exceptional cases where any such
child may be employed, the employer shall first
secure, before engaging child, a work permit
from the Department of Labor and
Employment which shall ensure observance of
the above requirements.
The Department of Labor and Employment
shall promulgate rules and regulations
necessary for the effective implementation of
this Section. [RA 7160, Sec. 12 as amended by

Enterprises vs. NLRC, 1995)


Conditions under which children below 15 may
be employed
Children below fifteen (15) years of age shall
not be employed except:
(1) When a child works directly under the sole
responsibility of his parents or legal
guardian and where only members of the
employer's family are employed: Provided,
however, That his employment neither
endangers his life, safety, health and
morals,
nor
impairs
his
normal
development: Provided, further, That the
parent or legal guardian shall provide the
said minor child with the prescribed
primary and/or secondary education; or
(2) Where
a child's employment or
participation in public entertainment or
information through cinema, theater, radio
or television is essential: Provided, The
employment contract is concluded by the
child's parents or legal guardian, with the
express agreement of the child concerned,
if possible, and approval of the
Department of Labor and Employment:
and Provided, That the following
requirements in all instances are strictly
complied with:
The employer shall ensure the protection,
health, safety, morals and normal
development of the child;
The employer institute measures to prevent
the child's exploitation or discrimination
taking into account the system and level of
remuneration and the duration and
arrangement of working time; and

RA 7658, Sec. 1]
Qualifications of apprentice
(a) Be at least 14 years of age;
(b) Possess vocational aptitude and capacity
for appropriate tests; and
(c) Possess the ability to comprehend and
follow oral and written instructions.
Trade and industry associations may
recommend to the Secretary of Labor
appropriate educational requirements for
different occupations. [Art. 59, LC]
Integrating
both
the
abovementioned
provisions then the qualifications of an
apprentice are as follows:
(1) At least 15 years of age [as amended by
R.A. 7610], provided that if he is below 18
years, he shall not be eligible for
hazardous occupation;
(2) Possess vocational aptitude and capacity
for appropriate tests;
(3) Possess the ability to comprehend and
follow oral and written instructions. [Art.

59 of the LC, as amended by R.A. 7610]


(4) Physically fit for occupation
Allowed employment
SEE: RA 7769, Sec. 4 (m) above

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Employment of Apprentices
When applicable:
(1) Only employers in highly technical
industries may employ apprentices; and
(2) Only in apprenticeable occupations
approved by the Secretary of Labor. [Art.

LABOR LAW

Appeal to the Secretary of Labor and


Employment. - The decision of the authorized
agency of the Department of Labor and
Employment may be appealed by any
aggrieved person to the Secretary of Labor and
Employment within five (5) days from receipt of
the decision. The decision of the Secretary of
Labor and Employment shall be final and
executory. [Art.66, Labor Code]

60, Labor Code]


Terms and conditions
Apprenticeship agreements, including the
wage rates of apprentices, shall conform to the
rules issued by the Secretary of Labor and
Employment.
The period of apprenticeship shall not
exceed six months.
Apprenticeship agreements providing for
wage rates below the legal minimum wage,
which in no case shall start below 75 percent of
the applicable minimum wage, may be entered
into only in accordance with apprenticeship
programs duly approved by the Secretary of
Labor and Employment. [Art. 61, Labor Code]

Exhaustion of administrative remedies. No


person shall institute any action for the
enforcement of any apprenticeship agreement
or damages for breach of any such agreement,
unless he has exhausted all available
administrative remedies. [Art. 67, Labor Code]

The Secretary of Labor and Employment may


authorize the hiring of apprentices without
compensation whose training on the job is
required by the school or training program
curriculum or as requisite for graduation or
board examination. [Art. 72, Labor Code]
The wages of apprentices and learners shall in
no case be less than seventy-five percent (75%)
of the applicable minimum wage rates. [Sec. 7,

Incentives for employers


An additional deduction from taxable income
of one-half (1/2) of the value of labor training
expenses incurred for developing the
productivity and efficiency of apprentices shall
be granted to the person or enterprise
organizing an apprenticeship program:
Provided, That such program is duly
recognized by the Department of Labor and
Employment: Provided, further, That such
deduction shall not exceed ten (10%) percent
of direct labor wage: and Provided, finally,
That the person or enterprise who wishes to
avail himself or itself of this incentive should
pay his apprentices the minimum wage. [Art.

Wage Order No. NCR-19]

71, Labor Code]

Enforcement
Investigation of violation of apprenticeship
agreement. - Upon complaint of any interested
person or upon its own initiative, the
appropriate agency of the Department of
Labor and Employment or its authorized
representative shall investigate any violation of
an apprenticeship agreement pursuant to such
rules and regulations as may be prescribed by
the Secretary of Labor and Employment. [Art.

Requisites of the deduction:


a. Apprenticeship program must be duly
approved by the DOLE;
b. Deduction shall NOT exceed 10% of direct
labor wage;
c. Employer must pay his apprentices the
minimum wage.

65, Labor Code]


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LABOR LAW

Sec 4(n), RA 7796]

Summary of Rules:
(1) The apprentice must be paid not less than
75% of the prescribed minimum salary
[Art. 61, Labor Code];
HOWEVER, the employer MAY NOT pay
any wage if the apprenticeship training is:
a. part of the school curriculum,
b. a requirement for graduation, or
c. a requirement for board examination

When may learners be hired


(1) No experienced workers are available;
(2) The employment of learners being
necessary to prevent the curtailment of
employment opportunities; and
(3) The employment will neither create unfair
competition in terms of labor costs nor
impair working standards. [Art. 74, Labor

[Art. 72]

Code]

(2) The apprenticeship agreement must be


approved by the DOLE Secretary (without
such one shall be deemed a regular
employee) [Nitto Enterprises v. NLRC,
Sept. 29, 1995];
(3) The employer is not compelled to
continue ones employment upon
termination of apprenticeship;
(4) One-half (1/2) of the value of labor
training expenses incurred for developing
the productivity and efficiency of
apprentices of the training cost is
deducted from the employers income tax
but it shall not exceed 10% of direct labor
wage [Art. 71]

Terms and conditions of employment


Any employer desiring to employ learners shall
enter into a learnership agreement with them,
which agreement shall include:
(1) The names and addresses of the learners;
(2) The duration of the learnership period,
which shall not exceed three (3) months;
(3) The wages or salary rates of the learners
which shall begin at not less than seventyfive percent (75%) of the applicable
minimum wage; and
(4) A commitment to employ the learners if
they so desire, as regular employees upon
completion of the learnership. All learners
who have been allowed or suffered to work
during the first two (2) months shall be
deemed regular employees if training is
terminated by the employer before the end
of the stipulated period through no fault of
the learners.

Working scholars there is no employeremployee relationship between students on


one hand, and schools, colleges or universities
on the other, where there is written agreement
between them under which the former agree to
work for the latter in exchange for the privilege
to study free of charge, provided, the students
are given real opportunities, including such
facilities as may be reasonable and necessary
to finish their chosen courses under such
agreement. [Sec. 14, Rule X, IRR]

The learnership agreement shall be subject to


inspection by the Secretary of Labor and
Employment or his duly authorized
representative. [Art. 75, LC]

O.2. LEARNERS

Learners employed in piece or incentive-rate


jobs during the training period shall be paid in
full for the work done. [Art. 76, LC]

Learners - persons hired as trainees in semiskilled and other industrial occupations which
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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Summary of Rules
(1) The duration of learnership shall not
exceed 3 months [Art. 73, LC];
(2) If the learnership of 3 months is
completed, the employer may be
compelled to continue with the services of
the learner as a regular employee;
(3) There is a commitment from the employer
to employ the learners if they so desire, as
regular employees upon completion of the
learnership;
(4) If the learner is dismissed from service
without just and valid cause and without
due process after 2 months of service, he
will be deemed as regular employee; and

are at least 15 years


of age but less than
18 may be eligible
for apprenticeship
only
in
nonhazardous
occupation;
2.The
person
is
physically fit for the
occupation in which
he desires to be
trained;
3. The
person
possesses
vocational aptitude
and capacity for the
particular
occupation
as
established through
appropriate tests;
and
4.The person is able to
comprehend
and
follow oral and
written instructions.
Wage rate shall begin
at not less than 75%
of the minimum wage

[Art. 75(d)]
(5) The wages or salary rates of the learners
which shall begin at not less than 75% of
the applicable minimum wage. [Art. 75(c)]
Distinctions
between
Apprenticeship

Apprenticeship
Highly
industries

technical

Practical
training
supplemented
by
related
theoretical
instruction
Apprenticeable
occupations approved
by the SOLE
Written
apprentice
agreement ratified by
the
appropriate
committees
More than 3 months,
shall not exceed 6
months
1. The person is at
least 15 years of age,
provided those who

Learnership

and

Learnership
Semi-skilled
industrial
occupations
Practical
training
whether or not such
practical training is
supplemented
by
theoretical
instructions

available;
2. The employment of
learners
is
necessary
to
prevent
curtailment
of
employment
opportunities; and
3. The employment
does not create
unfair competition
in terms of labor
costs or impair or
lower
working
standards.

Wage rate shall begin


at not less than 75%
of the minimum wage

No compensation if
Learners in piecework
SOLE authorizes, as
shall be paid in full
OJT is required by the
for the work done
school
A commitment to
employ the learners if
they so desire, as
regular
employees
upon completion of
the learnership.

Non-apprenticeable
occupations
Learnership
agreement
Shall not exceed 3
months
1. When
experienced
workers

LABOR LAW

All learners who have


been allowed or
suffered to work
during the first 2
months shall be

no
are
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LABOR STANDARDS

LABOR LAW

(c) being regarded as having


impairment [Sec 4(c), RA 7277]

deemed
regular
employees if training
is terminated by the
employer before the
end of the stipulated
period through no
fault of the learners.

such

an

Handicap refers to a disadvantage for a given


individual, resulting from an impairment or a
disability that limits or prevents the function,
or activity that is considered normal given the
age and sex of the individual. [Sec 4(d), RA
7277]

Deductibility of of
training
costs
incurred, provided:
Program is duly
recognized by DOLE
Deduction shall not
exceed 10% of direct
labor wage
Payment
of
minimum wage to
apprenticeship

Declaration of Policy. The grant of the rights


and privileges for disabled persons shall be
guided by the following principles:
(a) Disabled persons are part of the Philippine
society, thus the Senate shall give full
support to the improvement of the total
well-being of disabled persons and their
integration into the mainstream of society.
Toward this end, the State shall adopt
policies ensuring the rehabilitation, selfdevelopment and self-reliance of disabled
persons. It shall develop their skills and
potentials to enable them to compete
favorably for available opportunities.
(b) Disabled persons have the same rights as
other people to take their proper place in
society. They should be able to live freely
and as independently as possible. This
must be the concern of everyone the
family, community and all government and
non-government organizations. Disabled
persons rights must never be perceived as
welfare services by the Government.
(c) The rehabilitation of the disabled persons
shall be the concern of the Government in
order to foster their capability to attain a
more
meaningful,
productive
and
satisfying life. To reach out to a greater
number of disabled persons, the
rehabilitation services and benefits shall be
expanded beyond the traditional urbanbased centers to community based
programs,
that
will
ensure
full
participation of different sectors as
supported by national and local

P. HANDICAPPED WORKERS
DIFFERENTLY-ABLED WORKERS
[RA 7277 - Magna Carta for Disabled Persons,
as amended by RA 9442]
Disabled Persons are those suffering from
restriction or different abilities, as a result of a
mental, physical or sensory impairment, to
perform an activity in the manner or within the
range considered normal for a human being
[Sec. 4 (a), RA 7277]
Impairment is any loss, diminution or
aberration of psychological, physiological, or
anatomical structure or function [Sec. 4(b), RA
7277]
Disability shall mean:
(a) physical or mental impairment that
substantially limits one or more
psychological, physiological or anatomical
function of an individual or activities of
such individual; OR
(b) a record of such an impairment; OR
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LABOR STANDARDS

government agencies
(d) The State also recognizes the role of the
private sector in promoting the welfare of
disabled persons and shall encourage
partnership in programs that address their
needs and concerns
(e) To facilitate integration of disabled
persons into the mainstream of society, the
State shall advocate for and encourage
respect for disabled persons. The State
shall exert all efforts to remove all social,
cultural, economic, environmental and
attitudinal barriers that are prejudicial to
disabled persons.

LABOR LAW

(3) Sheltered employment


Sheltered Employment refers to the provision
of productive work for disabled persons
through workshop providing special facilities,
income producing projects or homework
schemes with a view to given them the
opportunity to earn a living thus enabling them
to acquire a working capacity required in open
industry. [Sec 4(i), RA 7277]
If suitable employment for disabled persons
cannot be found through open employment,
the State shall endeavor to provide it by means
of sheltered employment.

[Sec 2, RA 7277]
In the placement of disabled persons in
sheltered employment, it shall accord due
regard to the individual qualities, vocational
goals and inclinations to ensure a good
working atmosphere and efficient production.

Coverage. This Act shall covers all disabled


persons and, to the extend herein provided,
departments, offices and agencies of the
National Government or non-government
organization involved in the attainment of the
objectives of this Act. [Sec 2, RA 7277]

[Sec 6, RA 7277]

Rights of disabled workers


(1) Equal opportunity for employment
No disabled person shall be denied access to
opportunities for suitable employment. A
qualified disabled EE shall be subject to the
same terms and conditions of employment and
the same compensation, privileges, benefits,
fringe benefits, incentives or allowances as a
qualified able-bodied person. [Sec. 5 (par. 1),

Apprenticeship Opportunities.
Disabled
persons shall be eligible as apprentices or
learners: Provided, that their handicap is NOT
as much as to effectively impede the
performance of job operations in the particular
occupation for which they are hired; provided,
further, That after the lapse of the period of
apprenticeship, if found satisfactory in the job
performance, they shall be eligible for
employment. [Art. 81 Labor Code; Sec. 7, RA

RA 7277]

7277][Bernardo v NLRC & FEBTC, 1999]

(2) Reserved contractual positions


5% of all casual, emergency and contractual
positions in the DSWD; DOH, DepEd; and other
government agencies, offices or corporations
engaged in social development shall be
reserved for disabled persons. [Sec 5 (par. 2),

(4) Full minimum wage


All qualified handicapped workers shall receive
the full amount of the minimum wage rate
prescribed herein. [Sec 7, Wage Order No.

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

NCR-19]

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LABOR STANDARDS

the rights of qualified able-bodied persons,


they are thus covered by Article 280 of the
Labor Code. In the present case, the handicap
of petitioners (deaf-mutes) is NOT a hindrance
to their work. The eloquent proof of this
statement is the repeated renewal of their
employment contracts. (Bernardo v. NLRC,

LABOR LAW

(f) At least 20% discount on fare for domestic


air and sea travel for the exclusive use or
enjoyment of persons with disability;
(g) At least 20% discount in public railways,
skyways, and bus fare for the exclusive use
and enjoyment of persons with disability.
(h) Educational assistance to persons with
disability, for them to pursue primary,
secondary, tertiary, post tertiary, as well as
vocational or technical education, in both
public and private schools, through the
provision of scholarships, grants, financial
aids, subsidies and other incentives to
qualified persons with disability, including
support for books, learning materials and
uniform allowance to the extent feasible;
Provided, That persons with disability shall
meet minimum admission requirements;
(i) To the extent practicable and feasible, the
continuance of the same benefits and
privileges given by the GSIS, SSS, and
PAG-IBIG, as the case may be, as are
enjoyed by those in actual service;
(j) To the extent possible, the government
may grant special discounts in special
programs for persons with disability on
purchase of basic commodities, subject to
guidelines to be issued for the purpose by
the DTI and the DA; and
(k) Provision of express lanes for persons with
disability in all commercial and
government establishments; in the
absence thereof, priority shall be given to
them. [Sec 32, RA 7277, as amended by RA
9442]

1999)
Discounts and other privileges
Persons with disability shall be entitled to the
following:
(a) At least 20% discount from all
establishments relative to the utilization of
all services in hotels and similar lodging
establishments; restaurants and recreation
centers for the exclusive use or enjoyment
of persons with disability;
(b) A minimum of 20% discount on admission
fees charged by theaters, cinema houses,
concert halls, circuses, carnivals and other
places of culture, leisure and amusement
for the exclusive use or enjoyment of
persons with disability;
(c) At least 20% discount for the purchase of
medicines in all drugstores for the
exclusive use or enjoyment of persons with
disability;
(d) At least 20% discount on medical and
dental services including diagnostic and
laboratory fees such as, but not limited to,
x-rays, computerized tomography scans
and blood tests, in all government
facilities, subject to guidelines to be issued
by the DOH in coordination with the
PHILHEALTH.
(e) At least 20% discount on medical and
dental services including diagnostic and
laboratory fees and professional fees of
attending doctors in all private hospitals
and medical facilities, in accordance with
the rules and regulations to be issued by
the
DOH,
in
coordination
with
PHILHEALTH;

Conditions for entitlement


(1) Persons with disability who are Filipino
citizens upon submission of any of the
following as proof of his/her entitlement
thereto:
(a) An identification card issued by the city
or municipal mayor or the barangay
captain of the place where the persons
with disability reside;
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LABOR STANDARDS

(b) The passport of the persons with


disability concerned; or
(c) Transportation discount fare ID issued
by the National Council for the Welfare
of Disabled Persons (NCWDP).
(2) The privileges may not be claimed if the
persons with disability claim a higher
discount as may be granted by the
commercial establishment and/or under
other existing laws or in combination with
other discount program/s. [Sec 32, RA

LABOR LAW

qualified disabled employee, by reason


of his disability, than the amount to
which
a
non-disabled
person
performing the same work is entitled;
(e) Favoring a non-disabled employee over
a qualified disabled employee with
respect
to
promotion,
training
opportunities, study and scholarship
grants, solely on account of the latter's
disability;
(f) Re-assigning or transferring a disabled
employee to a job or position he cannot
perform by reason of his disability;
(g) Dismissing or terminating the services
of a disabled employee by reason of his
disability unless the employer can prove
that he impairs the satisfactory
performance of the work involved to the
prejudice of the business entity;
Provided, however, That the employer
first sought to provide reasonable
accommodations for the disabled
persons;
(h) Failing to select or administer in the
most effective manner employment
tests which accurately reflect the skills,
aptitude or other factor of the disabled
applicant or employee that such test
purports to measure, rather than the
impaired sensory, manual or speaking
skills of such applicant or employee, if
any; and
(i) Excluding disabled persons from
membership in labor unions or similar
organizations. [Sec. 32, RA 7277 as
amended by RA 9442]

7277, as amended by RA 9442]


Other Provisions Against Discrimination
(1) Discrimination of Employment
No entity, whether public or private shall
discriminate against a qualified disabled
person by reason of disability in regard to job
application procedures, the hiring, promotion,
or discharge of employees compensation, job
training and other terms, conditions and
privileges of employment. The following
constitute acts of discrimination:
(a) Limiting, segregating or classifying a
disabled job applicant in such a manner
that adversely affects his work
opportunities
(b) Using
qualification
standards,
employment tests or other selection
criteria that screen out or tend to screen
out a disabled person unless such
standards, tests or other selection
criteria are shown to be related for the
position in question and are consistent
with business necessity;
(c) Utilizing standards, criteria, or methods
of administration that:
(i) have the effect of discrimination
on the basis of disability; or
(ii) perpetuate the discrimination of
others who are the subject to
common administrative control.
(d) Providing less compensation, such as
salary, wage or other forms of
remuneration and fringe benefits, to

(2) Employment Entrance Examination


Upon an offer of employment, a disabled
applicant may be subjected to medical
examinations, on the following occasions:
(a) all entering employees are subjected to
such an examination regardless of
disability;

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LABOR LAW

(b) Information obtained during the


medical condition or history of the
applicant is collected and maintained
on separate forms and in separate
medical files and is treated as a
confidential medical record; Provided,
however, That:
(i) supervisors and managers may
be informed regarding necessary
restrictions on the work or duties
of the employees and necessary
accommodations:
(ii) first aid and safety personnel
may
be
informed,
when
appropriate, if the disability
might
require
emergency
treatment;
(iii) government
officials
investigating compliance with
this Act shall be provided
relevant information on request;
and
(iv) the results of such examination
are used only in accordance with
this Act. (Sec. 35, RA 7277 as
amended by RA 9442)

Public Ridicule - The act of making fun of or


contemptuous imitating or making mockery of
persons with disability whether in writing, or in
words, or in action due to their impairments.

(3) Prohibition on Verbal, Non-Verbal


Ridicule and Vilification Against Persons with
Disability
(a) No individual, group or community shall
execute any of these acts of ridicule
against persons with disability in any
time and place which could intimidate
or result in loss of self-esteem of the
latter. [Sec. 40, RA 7277, as amended by
RA 9442]
(c) Any individual, group or community is
hereby prohibited from vilifying any
person with disability which could result
into loss of self-esteem of the latter.
[Sec. 42, RA 7277, as amended by RA
9442]

(2) For construction of disabled-friendly


facilities - additional deduction from their
net taxable income, equivalent to 50% of
the direct costs of the improvements or
modifications
(a) Private entities
(b) That improve or modify their physical
facilities in order to provide reasonable
accommodation for disabled persons
(c) Does NOT apply to improvements or
modifications or facilities required
under BP 344. [Sec. 8 (c), RA 7277]

[Sec. 33, RA 7277, as amended by RA 9442]


Vilification includes:
(1) The utterance of slanderous and abusive
statements against a person with
disability; and/or,
(2) An activity in public which incites hatred
towards, serious contempt for, or severe
ridicule of persons with disability. [Sec. 41,
RA 7277, as amended by RA 9442]
Tax Incentives for Employers/Establishments
(1) For employment of disabled persons additional deduction, from their gross
income, equivalent to 25% of the total
amount paid as salaries and wages to
disabled persons
(a) Private entities
(b) Employ disabled persons either as
regular EEs, apprentice or learner
(c) Provided such entities present proof as
certified by the DOLE and the DOH
[Sec. 8[b], RA 7277]

(3) For establishments giving discounts may


claim such discounts as tax deductions
based on the net cost of the goods sold or
services rendered

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LABOR STANDARDS

(a) The cost of the discount shall be


allowed as deduction from gross
income for the same taxable year that
the discount is granted
(d) The total amount of the claimed tax
deduction net of VAT if applicable,
shall be included in their gross sales
receipts for tax purposes and shall be
subject to proper documentation and
to the provisions of the National
Internal Revenue Code, as amended.
[Sec. 32, RA 7277, as amended by RA
9442]

LABOR LAW

(c) making facilities readily accessible to and


usable by individuals with disabilities.

[Sec 45, RA 7277]


Penal Clause
(a) Any person who violates any provision of
this Act shall suffer the following penalties:
(i) for the first violation, a fine of not less
than Fifty
thousand pesos (P
50,000.00) but not exceeding One
hundred
thousand
pesos
(P100,000.00) or imprisonment of
not less than six (6) months but not
more than two (2) years, or both at the
discretion of the court; and
(ii) for any subsequent violation, a fine of
not less than One hundred thousand
pesos
(P100,000.00) but
not
exceeding Two hundred thousand
pesos
(P
200,000.00)
or
imprisonment for less than two (2)
years but not more than six (6) years,
or both at the discretion of the court.
(b) Any person who abuses the privileges
granted herein shall be punished with
imprisonment of not less than six (6)
months or a fine of not less than Five
thousand pesos (P 5,000.00) but not more
than Fifty thousand pesos (P 50,000.00),
or both, at the discretion of the court.
(c) If the violator is a corporation, organization
or any similar entity, the officials thereof
directly involved shall be liable therefor.
(d). If the violator is an alien or a foreigner,
he shall be deported immediately after
service of sentence without further
deportation proceedings. [Sec 46, RA

Enforcement
Enforcement by the Secretary of Justice
(a) Denial of Right
Duty to Investigate. The Secretary of Justice
shall investigate alleged violations of this
Act, and shall undertake periodic reviews
of compliance of covered entities under
this Act.
(b) Potential Violations
The Secretary of Justice may commence a
legal action in any appropriate court if the
Secretary has reasonable cause to believe
that
(1) any person or group of persons is
engaged in a pattern of practice of
discrimination under this Act; or
(2) any person or group of persons has
been discriminated against under
this Act and such discrimination
raises and issue of general public
importance. [Sec 44, RA 7277]
Authority of Court. The court may grant any
equitable relief that such court considers to be
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

7277]

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IV. Termination of
Employment

(h) "Person" means any individual, partnership,


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

Art. 218, LC: Definitions.

A. EMPLOYER-EMPLOYEE
RELATIONSHIP

(e) "Employer" includes any person acting in


the interest of an employer, directly or
indirectly. The term shall not include any labor
organization or any of its officers or agents
except when acting as employer.

Art. 97, LC: As used in this Title:


(a) "Person" means an individual, partnership,
association, corporation, business trust, legal
representatives, or any organized group of
persons.

(f) "Employee" includes any person in the


employ of an employer. The term shall not be
limited to the employees of a particular
employer, unless the Code so explicitly states.
It shall include any individual whose work has
ceased as a result of or in connection with any
current labor dispute or because of any unfair
labor practice if he has not obtained any other
substantially
equivalent
and
regular
employment.

(b) "Employer" includes any person acting


directly or indirectly in the interest of an
employer in relation to an employee and shall
include the government and all its branches,
subdivisions
and
instrumentalities,
all
government-owned or controlled corporations
and institutions, as well as nonprofit private
institutions, or organizations.
(c) "Employee" includes
employed by an employer.

any

LABOR LAW

The existence or absence of ER-EE relationship


is a question of law and a question of fact, each
in its defined sense.

individual

The recognition of the existence of ER-EE


relationship is not dependent upon the
agreement of the parties. The characterization
of the law prevails over that in the contract. In
this sense, the existence of an EE-ER
relationship is a matter of law. (Tabas et.al. v.

Art. 173, LC. As used in this Title, unless the


context indicates otherwise:
(f) "Employer" means any person, natural or
juridical, employing the services of the
employee.

California Manufacturing Co., et. al., G.R. No.


80680, January 26, 1989).

(g) "Employee" means any person compulsorily


covered by the GSIS under Commonwealth Act
Numbered One hundred eighty-six, as
amended, including the members of the
Armed Forces of the Philippines, and any
person employed as casual, emergency,
temporary, substitute or contractual, or any
person compulsorily covered by the SSS under
Republic Act Numbered Eleven hundred
sixtyone, as amended.

The conclusion that an EE-ER relationship


depends upon the facts of each case. In this
sense, it is a question of fact. (SSS v. CA, G.R.

No. 100388, Dec. 14, 2000).

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A.1. FOUR-FOLD TEST

Economic Dependence Test

TEST OF EMPLOYER-EMPLOYEE
RELATIONSHIP
(a) Selection and engagement of the
employee;
(b) Payment of wages;
(c) Power of dismissal; and
(d) Employers power to control the
employees conduct with respect to the
means and methods by which the work is
to be accomplished (Brotherhood Labor

Two-tiered approach.

LABOR LAW

(1) First Tier: Control Test (refer to the FourFold Test)


(2) Second Tier: The underlying economic
realities of the activity or relationship.

(Sevilla v. Court of Appeals, G.R. Nos. L41182-3, Apr. 15, 1988).


The economic realities prevailing within the
activity or between the parties are examined,
taking into consideration the totality of
circumstances surrounding the true nature of
the relationship between the parties.

Unity Movement of the Philippines et. al. v.


Zamora, G.R. No. 48645, Jan. 7, 1987).
The most important element is the employers
control of the employees conduct, not only as
to the result of the work to be done, but also as
to the means and methods to accomplish it.

The benchmark of economic reality in


analyzing possible employment relationships
for purposes of applying the Labor Code ought
to be the economic dependence of the worker
on his employer.

(Lirio v. Genovia, G.R. No. 169757, Nov. 23,


2011).
The control test calls merely for the
existence of the right to control and not the
actual exercise of the right. (Zanotte Shoes v.

The standard of economic dependence is


whether the worker is dependent on the
alleged
employer
for
his
continued
employment in that line of business. (Orozco v.

NLRC, G.R. No. 100665, Feb. 13, 1995).


Not every form of control will have the effect of
establishing ER-EE relationship. The line
should be drawn between:

CA, GR No. 155207, Aug. 13 2008).


Evidence of employee status
No particular form of evidence is required to
prove the existence of an employer-employee
relationship. Any competent and relevant
evidence to prove the relationship may be
admitted. For, if only documentary evidence
would be required to show that relationship,
no scheming employer would ever be brought
before the bar of justice, as no employer would
wish to come out with any trace of the illegality
he has authored considering that it should take
much weightier proof to invalidate a written
instrument. (Tenazas, et al., v. R. Villegas Taxi

(1) Rules that merely serve as guidelines


towards the achievement of mutually
desired results without dictating the
means or methods to be employed in
attaining it. These aim only to promote the
result. In such case, NO EE-ER relationship
exists.
(2) Rules that control or fix the methodology
and bind or restrict the party hired to the
use of such means. These address both the
result and the means used to achieve it
and hence, EE-ER relationship exists.

Transport, G.R. No. 192998, Apr. 2, 2014).

(Insurance Life Assurance Co, LTD v. NLRC,


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


must first be established. It is incumbent upon
the employee to prove the employer-employee
relationship by substantial evidence. (Javier v.

LABOR LAW

Exceptions:
(1) When it is covered by an apprenticeship
agreement stipulating a longer period (Art.
287, LC);
(2) When the parties to an agreement contract
otherwise, such as when established by
company policy or required by the nature
of the work performed by the employee

Fly Ace Corporation, G.R. No. 192558, Feb. 15,


2012).

A.2. KINDS OF EMPLOYMENT


I. PROBATIONARY
Art. 287, LC: Probationary employment shall

(San Miguel Corp, v. del Rosario, G.R. Nos.


168194 & 168603, December 13, 2005,
citing Buiser v. Leogardo, G.R. No. L63316, July 31, 1984); or

not exceed 6 months from the date the


employee started working, unless it is covered
by an apprenticeship agreement stipulating a
longer period. The services of an employee
who has been engaged on a probationary basis
may be terminated for a just cause or when he
fails to qualify as a regular employee in
accordance with reasonable standards made
known by the employer to the employee at the
time of his engagement. An employee who is
allowed to work after a probationary period
shall be considered a regular employee.

(3) When it involves the 3 year probationary


period of teachers (Mercado v. AMA

Computer College, G.R. No. 183572, April


13, 2010).
Purposes
(1) Observance Period for employer to
determine if employee is qualified and for
employee to demonstrate to the ER his
skills
(2) Restrictive - As long as the termination was
made before the expiration of the sixmonth probationary period, the employer
has a right to sever the employer-employee
relationship

Book VI, Rule 1, Sec. 6(d), IRR: In all cases of


probationary employment, the employer shall
make known to the employee the standards
under which he will qualify as regular
employee at the time of his engagement.
Where no standards are made known to the
employee at the time of engagement, he shall
be deemed a regular employee.

Indeed, the employer has the right or is at


liberty to choose as to who will be hired and
who will be declined. It is within the exercise of
this right to select his employees that the
employer may set or fix a probationary period
within which the latter may test and observe
the conduct of the former before hiring him
permanently. (Grand Motors Corp. v. MOLE,

Definition
A probationary employee is one who is on trial
by an employer during which the employer
determines whether or not he is qualified for
permanent employment (Robinsons Galleria

1984)

et al. v. Ranchez, G.R. No. 177937, Jan. 19,


2011)

Standards to qualify as a regular employee


REQUIREMENTS:
(a) The employer must communicate the
regularization
standards
to
the
probationary employee; and

Duration
General Rule: Probationary employment shall
not exceed six (6) months from the date the
employee started working.

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LABOR LAW

(Bernardo v. NLRC, G.R. No. 122917, July 12,


1999)

(b) The
employer
must
make
such
communication at the time of the
probationary employees engagement.

Double probation
There is no basis for subjecting an employee to
a new probationary or temporary employment
where he had already become a regular
employee when he was absorbed by a sister
company. (A Prime Security Services, Inc. v.

If the employer fails to comply with either, the


employee is deemed as a regular and not a
probationary employee.
An employer is deemed to have made known
the standards that would qualify a
probationary employee to be a regular
employee when it has exerted reasonable
efforts to apprise the employee of what he is
expected to do or accomplish during the trial
period of probation. This goes without saying
that the employee is sufficiently made aware of
his probationary status as well as the length of
time of the probation.

NLRC, G.R. No. 107023, Jan. 19, 2000)

Absorbed employees not probationary


The private respondents could not be
considered probationary employees because
they were already well-trained in their
respective functions. As stressed by the
Solicitor General, while private respondents
were still with the CCAS they were already
clerks. Respondent Gelig had been a clerk for
CCAS for more than ten (10) years, while
respondent Quijano had slightly less than ten
(10) years of service. They were, therefore, not
novices in their jobs but experienced workers.

The exception to the foregoing is when the job


is self-descriptive in nature, for instance, in the
case of maids, cooks, drivers, or messengers.

(Abbott Laboratories Phil. et al. v. Alcaraz, G.R.


No. 192571, July 23, 2013)

[Cebu Stevedoring Co., Inc. v. Regional


Director, G.R. No. L-54285, Dec. 8, 1988]

In all cases of probationary employment, the


employer shall make known to the employee
the standards under which he will qualify as a
regular employee at the time of his
engagement. Where no standards are made
known to the employee at that time, he shall
be deemed a regular employee. Conversely, an
employer is deemed to substantially comply
with the rule on notification of standards if he
apprises the employee that he will be
subjected to a performance evaluation on a
particular date after his hiring. (Alcira v. NLRC,

Private school teachers


Questions respecting a private school teachers
entitlement to security of tenure are governed
by the Manual of Regulations for Private
Schools and not the Labor Code. [Aklan

College v. Guarino, G.R. No. 152949, Aug. 14,


2007]
The legal requisites, therefore, for acquisition
by a teacher of permanent employment, of
security of tenure are:
(a) A full time teacher;
(b) Must have rendered three consecutive
years of service; and
(c) Service must have been satisfactory. (La

G.R. No. 149859, June 9, 2004)


Regular status after probation
When the bank renewed the contract after the
lapse of the six-month probationary period, the
employees thereby became regular employees.
No employer is allowed to determine
indefinitely the fitness of its employees.

Salette of Santiago v. NLRC, G.R. No.


82918, Mar. 11, 1991)

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Mere completion of the three-year probation,


even with an above-average performance,
does not guarantee that the employee will
automatically
acquire
a
permanent
employment status. The probationer can only
qualify upon fulfillment of the reasonable
standards set for permanent employment as a
member of the teaching personnel. (Herrera-

LABOR LAW

(3) Failure to qualify as a regular employee in


accordance with reasonable standards
made known by the employer to the
employee at the time of engagement.

(Robinsons Galleria et al. v Ranchez, G.R.


No. 177937, Jan. 19, 2011)
The probationary employee is entitled to
substantial and procedural due process before
termination.

Manaois v. St. Scholasticas College, G.R. No.


188914, Dec. 11, 2013)
These standards should be made known to the
teachers on probationary status at the start of
their probationary period, or at the very least
under the circumstances of the present case, at
the start of the semester or the trimester
during which the probationary standards are to
be applied. Of critical importance in invoking a
failure to meet the probationary standards, is
that the school should show as a matter of
due process how these standards have been
applied. (Colegio del Santisimo Rosario v.

Limits to termination
(1) It must be exercised in accordance with the
specific requirements of the contract
(2) If a particular time is prescribed, the
termination must be within such time and
if formal notice is required, then that form
must be used;
(3) The employers dissatisfaction must be real
and in good faith, not feigned so as to
circumvent the contract or the law;
(4) There must be no unlawful discrimination
in the dismissal. (Manila Hotel Corporation

Rojo, G.R. No. 170388, Sept. 4, 2013)

v. NLRC, G.R. No. 53453, January 22, 1986)


Termination
A probationary employee enjoys only a
temporary employment status. This means
that he is terminable at any time, permanent
employment not having been attained in the
meantime. The employer could well decide he
no longer needed the probationary employees
services or his performance fell short of
expectations, etc. As long as the termination
was made before the termination of the sixmonth probationary period, the employer was
well within his rights to sever the employeremployee
relationship.
A
contrary
interpretation would defect the clear meaning
of the term probationary. (De la Cruz, Jr. v.

In order to invoke failure to meet the


probationary standards as a justification for
dismissal, the employer must show how these
standards have been applied to the subject
employee. (Univac Development, Inc. v.

Soriano, G.R. No. 182072, June 29, 2013).

II. REGULAR
Art. 286, LC: The provisions of written
agreement to the contrary notwithstanding
and regardless of the oral agreement of the
parties, an employment shall be deemed to be
regular where the employee has been engaged
to perform activities which are
usually necessary or desirable in the usual
business or trade of the employer, except
where the employment has been fixed for a
specific project or undertaking the completion
or termination of which has been determined
at the time of the engagement of the employee

NLRC, G.R. No. 145417. Dec. 11, 2003)


A probationary employee
terminated for:
(1) Just causes;
(2) Authorized causes; or

can

only

be

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LABOR LAW

Art. 287, Last sentence, LC: An employee who

between the particular activity performed by


the employee in relation to the business or
trade of the employer. The test is whether the
former is usually necessary or desirable in the
usual business or trade of the employer. If the
employee has been performing the job for at
least one year, even if the performance is not
continuous or merely intermittent, the law
deems the repeated and continuing need for
its performance as sufficient evidence of the
necessity, if not indispensability of that activity
to the business of the employer. Hence, the
employment is also considered regular, but
only with respect to such activity and while
such activity exists. (Forever Richons Trading

is allowed to work after a probationary period


shall be considered a regular employee.

Corp. v. Molina, G.R. No. 206061, Sept. 16,


2013).

Regular employment is not synonymous with


permanent employment, because there is no
such thing as a permanent employment. Any
employee may be terminated for just cause.

Art. 286: When applicable


Art. 286 is not the yardstick for determining
the existence of an employment relationship
because it merely distinguishes between two
kinds of employees, i.e., regular employees
and casual employees, for purposes of
determining the right of an employee to
certain benefits, to join or form a union, or to
security of tenure; it does not apply where the
existence of an employment relationship is in
dispute. (Atok Big Wedge Co., Inc. v. Gison,

or where the work or service to be performed is


seasonal in nature and the employment is for
the duration of the season.
An employment shall be deemed to be casual
if it is not covered by the preceding paragraph:
Provided, That any employee who has
rendered at least one year of service, whether
such service is continuous or broken, shall be
considered a regular employee with respect to
the activity in which he is employed and his
employment shall continue while such activity
exists.

A regular employee is one who is engaged to


perform activities which are necessary and
desirable in the usual business or trade of the
employer as against those which are
undertaken for a specific project or are
seasonal.

G.R. No. 169510, Aug. 8, 2011)


Art 286 provides two kinds of regular
employees:
(1) Those engaged to perform activities which
are necessary or desirable in the usual
business or trade of the employer; and
(2) casual employees who have rendered at
least 1 year of service, whether continuous
or broken, with respect to the activity in
which they are employed. (Romares v.

Hiring for an extended period


Where the employment of project employees is
extended long after the supposed project has
been finished, the employees are removed
from the scope of project employees and
considered regular employees. (Audion Electric

Co., Inc. v. NLRC, G.R. No. 106648, June 17,


1999)

NLRC, G.R. No. 122327. Aug. 19, 1998)


While length of time may not be a controlling
test for project employment, it can be a strong
factor in determining whether the employee
was hired for a specific undertaking or in fact
tasked to perform functions which are vital,

Primary standard to determine regular


employment: reasonable connection rule
The primary standard to determine a regular
employment is the reasonable connection
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necessary and indispensable to the usual


business or trade of the employer. (Tomas Lao

LABOR LAW

Whether or not the project has a direct relation


to the business of the employer is not
important, BUT:
(1) Employee must be informed of the nature
and duration of project
(2) Project and principal business of ER are
two separate things
(3) No attempt to deny security of tenure to
the worker

Const. v. NLRC, G.R. No. 116781. Sept. 5, 1997)


Repeated renewal of contract
While the Court has recognized the validity of
contractual stipulations as to the duration of
employment, this cannot apply where the
contract-to-contract arrangement was but an
artifice to prevent her from acquiring security
of tenure and to frustrate constitutional
decrees. (Beta Electric Corp. v. NLRC, G.R. No.

Rationale for project employment


If a project has already been completed, it
would be unjust to require the employer to
maintain them in the payroll while they are
doing absolutely nothing except waiting until
another project is begun, if at all. In effect,
these stand-by workers would be enjoying the
status of privileged retainers, collecting
payment for work not done, to be disbursed by
the employer from profits not earned. (De

86408, Feb. 15, 1990)


Length of time involved
Length of time is not controlling, merely serves
as a badge of regular employment.

(Maraguinot v. NLRC, G.R. No. 120969. Jan.


22, 1998)

III. PROJECT EMPLOYMENT


Art. 286, 1st par, LC: The provisions of written

Ocampo, Jr. v. NLRC, G.R. No. 81077, June 6,


1990)

agreement to the contrary notwithstanding


and regardless of the oral agreement of the
parties, an employment shall be deemed to be
regular where the employee has been engaged
to perform activities which are
usually necessary or desirable in the usual
business or trade of the employer, except
where the employment has been fixed for a
specific project or undertaking the completion
or termination of which has been determined
at the time of the engagement of the employee
or where the work or service to be performed is
seasonal in nature and the employment is for
the duration of the season.

Two Kinds of Project Employee


(1) For a particular job or undertaking that is
WITHIN the regular or usual business of
the employer company, but which is
distinct and separate, and identifiable as
such, from the other undertakings of the
company (i.e. construction)
(2) For a particular job or undertaking that is
NOT within the regular business of the
corporation. Such a job or undertaking
must also be identifiably separate and
distinct from the ordinary or regular
business operations of the employer (Villa

v. NLRC, G.R. No. 117043, Jan. 14, 1988)

A project employee is one who is hired for


carrying out a separate job, distinct from the
other undertakings of the company, the scope
and duration of which has been determined
and made known to the employees at the time
of employment. (Hanjin Heavy Industries &

Test of project employment


The litmus test to determine whether an
individual is a project employee lies in setting a
fixed period of employment involving a specific
undertaking the completion or termination of

Const. Co. v. Ibaez, G.R. No. 170181, June 26,


2008)
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LABOR STANDARDS

which has been determined at the time of the


particular employee's engagement.

LABOR LAW

the prescribed form on employees


terminations /dismissals/suspensions;
(7) An undertaking in the employment
contract by the employer to pay
completion bonus to the project employee
as practiced by most construction
companies. (Samson v. NLRC, G.R. No.

The decisive factor in the term employment is


the day certain agreed upon by the parties for
the commencement and termination of their
employment relationship, a day certain being
understood to be that which must necessarily
come, although it may not be known when.

11366, Feb. 1, 1996).

(Caasi v. Kanlungan Centre Foundation, Inc.,


G.R. No. 199769, Sept. 11, 2013)

Length of time not applicable in construction


industry
Generally, length of service provides a fair
yardstick for determining when an employee
initially hired on a temporary basis becomes a
permanent one, entitled to the security and
benefits of regularization. But this standard
will not be fair, if applied to the construction
industry, simply because construction firms
cannot guarantee work and funding for its
payrolls beyond the life of each project. And
getting projects is not a matter of
course. (William Uy Construction Corp. v.

The repeated and successive rehiring of project


employees do not qualify them as regular
employees, as length of service is not the
controlling determinant of the employment
tenure of a project employee, but whether the
employment has been fixed for a specific
project or undertaking, its completion has been
determined at the time of the engagement of
the employee. (William Uy Construction Corp.

v. Trinidad, G.R. No. 183250, Mar. 10, 2010)

Trinidad, G.R. No. 183250, March 12, 2010


Indicators of project employment
(1) The duration of the specific/identified
undertaking for which the worker is
engaged is reasonably determinable;
(2) Such duration, as well as the specific
work/service to be performed, is defined in
an employment
(3) agreement and is made clear to the
employee at the time of the hiring;
(4) The work/service to be performed by the
employee is in connection with the
particular project/undertaking for which he
is engaged;
(5) The employee, while not employed and
awaiting engagement, is free to offer his
services to any other employer;
(6) The termination of his employment in the
particular project/undertaking is reported
to the DOLE Regional Office having
jurisdiction over the workplace following
the date of his separation from work, using

See also: Policy Instructions No. 20 of 1997 and


D.O. 19 of 1993
Work pool employee
A project employee or a member of a work pool
may acquire the status of a regular employee
when the following concur:
(1) There is a continuous rehiring of project
employees even after cessation of a
project; and
(2) The tasks performed by the alleged
project employee are vital, necessary,
and indispensable to the usual business or
trade of the employer. However, the length
of time during which the employee was
continuously rehired is not controlling, but
merely serves as a badge of regular
employment.
A work pool may exist although the workers in
the pool do not receive salaries and are free to
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LABOR LAW

seek other employment during temporary


breaks in the business, provided, that the
worker shall be available when called to report
for a project. Although primarily applicable to
regular seasonal workers, this set-up can
likewise be applied to project workers insofar
as the effect of temporary cessation of work is
concerned. (Maraguinot v. NLRC, G.R. No.

IV. SEASONAL

120969. Jan. 22, 1998)

Regular Seasonal Employees After One


Season
Seasonal workers who are called to work from
time to time and are temporarily laid off during
off-season are not separated from service in
said period, but are merely considered on leave
until reemployed

Seasonal employees are those whose work or


services to be performed are seasonal in
nature, employment is for the duration of the
season.
There is no continuing need for the worker.

Members of a work pool from which a


construction company draws its project
employees, if considered employees of the
construction company while in the work pool,
are non-project employees or employees for an
indefinite period. If they are employed in a
particular project, the completion of the
project or any phase thereof will not mean
severance
of
the
employer-employee
relationship. (J. & D.O. Aguilar Corp. v. NLRC,

The nature of their relationship . . . is such that


during off season they are temporarily laid off
but during summer season they are reemployed, or when their services may be
needed. They are not strictly speaking
separated from the service but are merely
considered as on leave of absence without pay
until they are re-employed. (Philippine

G.R. No. 116352, Mar. 13, 1997)


Rule on reportorial requirement
A report of termination to the nearest public
employment
office
every
time
their
employment was terminated due to
completion
of
each
construction
project. Failure of the employer to file
termination reports after every project
completion proves that the employees are not
project employees. (Pasos v. Philippine

Tobacco Flue-Curing &Redrying Corp. v. NLRC,


G.R. No. 127395, Dec. 10, 1998)

V. CASUAL
Art. 286, 2nd par. LC: An employment shall be
deemed to be casual if it is not covered by the
preceding paragraph: Provided, That any
employee who has rendered at least one year
of service, whether such service is continuous
or broken, shall be considered a regular
employee with respect to the activity in which
he is employed and his employment shall
continue while such activity exists.

National Construction Corp., G.R. No. 192394,


July 3, 2013)
Repeated renewal of contract
When an employer renews a contract of
employment after the lapse of the six-month
probationary period, the employee thereby
becomes a regular employee. No employer is
allowed to determine indefinitely the fitness of
its employees. (Malicdem v. Marulas Industrial

Book VI, Rule 1, Sec. 5 (b), IRR: Casual


employment. There is casual employment
where an employee is engaged to perform a
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

Corp., G.R. No. 204406, Feb. 26, 2014)

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VI. FIXED-TERM

engagement: Provided, That any employee


who has rendered at least one year of service,
whether such service is continuous or not, shall
be considered a regular employee with respect
to the activity in which he is employed and his
employment shall continue while such activity
exists.

Art. 286 has no application to instances where


a fixed period of employment was agreed upon
knowingly and voluntarily by the parties,
without any force, duress or improper pressure
being brought to bear upon the employee and
absent any other circumstances vitiating his
consent, or where it satisfactorily appears that
the employer and employee dealt with each
other on more or less equal terms with no
moral dominance whatever being exercised by
the former over the latter. (Brent School v.

A casual employee is engaged to perform a 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
engagement.

Zamora, G.R. No. L-48494, Feb. 5, 1990)


Conditions for the validity of fixed contract
agreement between employer and employee
(1) Fixed period of employment was knowingly
and voluntarily agreed upon by the parties
without any force, duress, or improper
pressure or any other circumstances
vitiating his consent; or
(2) The employer and the employee dealt with
each other on more or less equal terms
with no moral dominance exercised by the
former or the latter.

Someone who is not a regular, project or


seasonal employee.
Requirements to become regular employee:
(1) One (1) year service, continuous or broken
with respect to activity employed
(2) Employment shall continue while such
activity exists
Nature of work
What determines regularity or casualness is
not the employment contract, written or
otherwise, but the nature of the job. If the job is
usually necessary or desirable to the main
business of the employer, then employment is
regular. (A. M. Oreta and Co., Inc. v. NLRC,

Project
employment
and
Fixed-term
employment distinguished
A project employee is assigned to carry out a
specific project or undertaking, the duration
and scope of which were specified at the time
the employee is engaged for the project

G.R. No. 74004, Aug. 10, 1989)


One-year service
As held in Philippine Bank of Communications
v. NLRC, a temporary or casual employee,
under Article 281 of the Labor Code, becomes
regular after service of one year, unless he has
been contracted for a specific project. (Tabas v.

The duration of a fixed-term employment


agreed upon by the parties may be any day
certain, which is understood to be "that which
must necessarily come although it may not be
known when." The decisive determinant in
fixed-term employment is not the activity that
the employee is called upon to perform but the
day certain agreed upon by the parties for the
commencement and termination of the
employment relationship. (GMA Network, Inc.

California Marketing Co., Inc., G.R. No. L80680, Jan. 26, 1989).

v. Pabriga, G.R. No. 176419, November 27,


2013)
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No implied renewal of employment contract


It is a settled rule that seafarers are considered
contractual employees. Their employment is
governed by the contracts they sign everytime
they are rehired and their employment is
terminated when the contract expires. Their
employment is contractually fixed for a certain
period of time. Thus, when a contract ends, the
employment
is
deemed
automatically
terminated, there being no mutually-agreed
renewal or extension of the expired contract.

LABOR LAW

The Secretary of Labor and Employment may,


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

(Unica v. Anscor Swire Ship Management


Corp., G.R. No. 184318, Feb. 12, 2014)
As long as the Brent School v. Zamora
guidelines are satisfied, the court will
recognize the validity of the fixed-term
contract, especially if they were informed of
that their engagement was for a specific
period. The Brent doctrine is only applicable in
a few special cases wherein the employer and
employee are on more or less in equal footing
in entering into the contract (Fuji Television

There is "labor-only" contracting where the


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

Network Inc v. Espiritu, G.R. No. 204944-45,


December 03, 2014).

A.3. JOB CONTRACTING


I. ARTICLES 106 109
Art. 106, LC: Contractor or subcontractor.

Art. 107, LC: Indirect employer. The provisions

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 Code.

of the immediately preceding article shall


likewise apply to any person, partnership,
association or corporation which, not being an
employer, contracts with an independent
contractor for the performance of any work,
task, job or project.

In the event that the contractor or


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

Art. 108, LC: Posting of bond. An employer or


indirect employer may require the contractor or
subcontractor to furnish a bond equal to the
cost of labor under contract, on condition that
the bond will answer for the wages due the
employees should the contractor or
subcontractor, as the case may be, fail to pay
the same.

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Art. 109, LC: Solidary liability. The provisions of

LABOR LAW

organization, cooperative or any entity,


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

existing laws to the contrary notwithstanding,


every employer or indirect employer shall be
held responsible with his contractor or
subcontractor for any violation of any provision
of this Code. For purposes of determining the
extent of their civil liability under this Chapter,
they shall be considered as direct employers.

Legitimate contracting or subcontracting


Contracting or subcontracting shall be
legitimate if all the following circumstances
occur:
(1) The contractor must be registered in
accordance with these rules and carries a
distinct and independent business
(2) The contractor undertakes to perform the
job, work or service on its own
responsibility, according to its own manner
and method, and free from control and
direction of the principal in all matters
connected with the performance of the
work except as to the results thereof;
(3) The contractor has substantial capital
and/or investment; and
(4) The
Service
Agreement
ensures
compliance with all the rights and benefits
under Labor laws.

II.
D.O.
NO.
18-A-11:
RULES
IMPLEMENTING ARTICLES 106 TO 109
OF THE LC, AS AMENDED
Coverage
This shall apply to:
(1) all
parties
of
contracting
and
subcontracting arrangements where EREE relationships exist
(2) cooperatives engaging in contracting or
subcontracting arrangements
Contractors and subcontractors referred to in
these rules are prohibited from engaging in
recruitment and placement activities as
defined in Art. 13(b) of the LC whether for local
or overseas employment.
Contracting or subcontracting refers to an
arrangement whereby a principal agrees to put
out or farm out with a contractor the
performance or completion of a specific job,
work or service within a definite or
predetermined period, regardless of whether
such job, work or service is to be performed or
completed within or outside the premises of
the principal.

Rights of contractors employees


All contractors employees, whether deployed
or assigned as reliever, seasonal, week-ender,
temporary, or promo jobbers, shall be entitled
to all the rights and privileges as provided for
in the LC, as amended.
Security of tenure of contractors employees
It is understood that all contractors employees
enjoy security of tenure regardless of whether
the contract of employment is co-terminus
with the service agreement, or for a specific
job, work, or service, or phase thereof.

Service agreement refers to the contract


between the principal and contractor
containing the terms and conditions governing
the performance or completion of a specific
job, work or service being farmed out for a
definite or predetermined period.
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:


(a.1) The contractor does not have substantial
capital or investments in the form of tools,
equipment, machineries, work premises,
among others, and
(a.2) The employees recruited and places are
performing activities which are usually
necessary or desirable to the operation of the
company, or directly related to the main
business of the principal within a definite or
predetermined period, regardless of whether
such job, work or service is to be performed or
completed within or outside the premises of
the principal; or
(b) The contractor does not exercise the right
to control the performance of the work of the
employee.

[Sec. 13, D.O. 18-A-11]


Cause

Effect

Prior
to
the Governed by Art. 284 292
expiration of the of LC
Service
Agreement
Prior to expiration
of the Service
Agreement and
not
due
to
authorized
causes

Due to expiration
of
Service
Agreement,
or
from
the
completion of the
phase of the job,
work or service
for which the
employee
is
engaged

LABOR LAW

The right of the contractor


employee to unpaid wages
and other unpaid benefits
including unremitted legal
mandatory contributions,
e.g., SSS, PhilHealth, Pagibig, ECC, shall be borne by
the party at fault, without
prejudice to the solidary
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
case of corporations, partnerships and
cooperatives; in case of single proprietorship, a
net worth of at least P3,000,000.

Employee may opt for


payment of separation
benefits as may be provided
by law or the Service
Agreement,
without
prejudice
to
his/her
entitlement
to
the
completion bonuses or
other
emoluments,
including
retirement
benefits
whenever
applicable

Other prohibitions
(1) Contracting out of jobs, works or services
when not done in good faith and not
justified by the exigencies of the business
such as the following:
(a) Contracting out of jobs, works or
services when the same results in the
termination or reduction of regular EEs
and reduction of work hours or
reduction or splitting of the bargaining
unit.
(b) Contracting out of work with a Cabo
(c) Taking undue advantage of the
economic situation or lack of
bargaining strength of the contractors
EEs, or undermining their security of
tenure or basic rights, or circumventing
the provisions of regular employment
in any of the following instances:
(i) Requiring them to perform
functions which are currently being

Prohibition against labor-only contracting


Labor-only contracting, a prohibited act, is an
arrangement where the contractor or
subcontractor merely recruits, supplies or
places workers to perform a job, work or
service for a principal. (Polyfoam-RGC

International Corp. v. Concepcion, G.R. No.


172349, June 13, 2012)

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(d)
(e)

(f)

(g)

(h)

(i)

LABOR STANDARDS

performed
by
the
regular
employees of the principal; and
(ii) requiring them to sign, as a
precondition to employment or
continued
employment,
an
antedated resignation letter; a
blank payroll; a waiver of labor
standards including minimum
wages and social or welfare
benefits; or a quitclaim releasing
the principal, contractor or from
any liability as to payment of future
claims.
Contracting out of a job, work or
service through an in-house agency.
Contracting out of a job, work or
service that is necessary or desirable or
directly related to the business or
operation of the principal by reason of
a strike or lockout whether actual or
imminent.
Contracting out of a job, work or
service being performed by union
members when such will interfere with,
restrain or coerce employees in the
exercise of their rights to selforganization as provided in Art. 248(c)
of the LC, as amended.
Repeated hiring of EEs under an
employment contract of short duration
or under a Service Agreement of short
duration with the same or different
contractors, which circumvents the LC
provisions on Security of Tenure.
Requiring EEs under a subcontracting
arrangement to sign a contract fixing
the period of employment to a term
shorter than the term of the Service
Agreement, unless the contract is
divisible into phases for which
substantially different skills are
required and this is made known to the
EE at the time of the engagements.
Refusal to provide a copy of the Service
Agreement and the employment

LABOR LAW

contracts between the contractor and


the EEs deployed to work in the
bargaining unit of the principals
certified bargaining agent to the sole
and exclusive bargaining agents.
(j) Engaging or maintaining by the
principal of subcontracted EEs in
excess of those provided in the
applicable CBA or as set by the
Industry Tripartite Council.
(2) Contracting out of jobs, works, or services
analogous to the above when not done in
good faith and not justified by the
exigencies of the business. (Sec. 7, D.O. 18-

A-11)
Mandatory registration
It shall be mandatory for all persons or entities,
including cooperative, acting as contractors, to
register with the Regional Office of the DOLE
where it principally operates.
Failure to register shall give rise to the
presumption that the contractor is engaged in
labor-only contracting.
Accordingly, the registration system
governing contracting arrangements and
implemented by the Regional Offices of the
DOLE is hereby established, with the Bureau of
Working Conditions (BWC) as the central
registry. (Sec. 14, D.O. 18-A-11)
Solidary Liability of Indirect/Direct Employer
There exists a solidary liability on the part of
the principal and the contractor for purposes of
enforcing the provisions of the LC and other
social legislation to the extent of the work
performed under employment contract.
The principal shall be deemed a direct
employer of the contractors employee in cases
where there is a finding by a competent
authority of labor-only contracting, or
commission of prohibited activities provided in
Section 7 or a violation of either Sections 8 or
9.
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III. DEPARTMENT CIRCULAR NO. 01-12

IV.
EFFECTS
CONTRACTING

Applicability of D.O. 18-A-11 to BPO


DO 18-A speaks of a trilateral relationship that
characterizes the covered contracting/subcontracting arrangement. Thus, vendor-vendee
relationship for entire business processes
covered by the applicable provisions of the Civil
Code on Contracts is excluded.

LABOR LAW

OF

LABOR-ONLY

Employees become regular employees


Where an entity is declared to be a labor-only
contractor, the employees supplied by said
contractor to the principal employer become
regular employees of the latter. Having gained
regular status, the employees are entitled to
security of tenure and can only be dismissed
for just or authorized causes and after they had
been afforded due process. (Norkis Trading v.

DO 18-A contemplates generic or focused


singular activity in one contract between the
principal and the contractor (for example,
janitorial, security, merchandising, specific
production work) and does not contemplate
information
technology-enabled
services
involving an entire process (for example, BPO,
KPO, legal process outsourcing, hardware
and/or
software
support,
medical
transcription, animation services, back office
operations/support).
These
companies
engaged in BPOs may hire employees in
accordance with applicable laws, and maintain
these EEs based on business requirements,
which may or may not be for different clients of
the BPOs at different periods of the EEs
employment.

Buenavista, G.R. No. 182018. Oct. 10, 2012)


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

Applicability of D.O. 18-A-11 to the Construction


Industry
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.

(Sec. 27, D.O 18-A-11)

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V. TRILATERAL RELATIONSHIP IN JOB


CONTRACTING

LABOR LAW

(2) A contractual relationship between the


principal and the contractor as governed
by the provisions of the Civil Code. (Sec. 5,

par. 1, D.O. 18-A-11)

Principal

B. DISMISSAL FROM EMPLOYMENT

Contractor

er-ee

Coverage:
General rule: All establishments (Art. 284, LC)
Exception: Government, and its political
subdivisions, including GOCCs without original
charter. (Book VI, Rule 1, Sec. 1. IRR)

Contractor's
Employee

Security of Tenure

Art. 285, LC: Security of Tenure. In case of


There are three parties involved:
(1) Principal refers to any employer, whether a
person or entity, including government
agencies and GOCCs, who/which puts out
or farms out a job, service or work to a
contractor.
(2) Contractor refers to any person or entity,
including a cooperative, engaged in a
legitimate contracting or subcontracting
arrangement providing either services,
skilled worker, temporary workers or a
combination of services to a principal
under a Service Agreement.
(3) Contractors employee includes one
employed by a contractor to perform or
complete a job, work, or service pursuant
to a Service Agreement with a principal
It shall also refer to regular employees of
the contractor whose functions are not
dependent on the performance or
completion of a specific job, work or service
within a definite period of time i.e.
administrative staff.

regular employment, the employer shall not


terminate the services of an employee except
for a just cause or when authorized by this Tile.
An employee who is unjustly dismissed from
work shall be entitled to reinstatement without
loss of seniority rights and other privileges and
to his full backwages, inclusive of allowances,
and to his other benefits or their monetary
equivalent computed from the time his
compensation was withheld from him up to the
time of his actual reinstatement.

Relationships that exist in a legitimate


contracting or subcontracting:
(1) An
employer-employee
relationship
between the contractor and the employees
it engaged to perform the specific job, work
or service being contracted; and

Limited extent; secured during the period their


respective contracts of employment remain in
effect. (Labajo v. Alejandro, G.R. No. L-80383,

Security of Tenure
Right not be removed from ones job without
valid cause and valid procedure. (Kiamco v.

NLRC, G.R. No. 129449, June 29, 1999)


While probationary employees do not enjoy
permanent status, nonetheless, they were still
entitled to the constitutional protection of
security of tenure. (Espina v. Court of Appeals,

G.R. No. 164582, March 28, 2007)


Contract Employees

September 26, 1988)

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LABOR STANDARDS

Probationary Employees

LABOR LAW

Nature
It is a constitutionally protected right (Art. XIII
Sec. 3, 1987 Constitution); it cannot be blotted
out by an employment contract.

Limited extent; additional limitations on power


of employer to terminate: must be exercised in
accordance with the specific requirements of
the contract; dissatisfaction of the employer
must be real and in good faith, not feigned so
as to circumvent the contract or the law

Termination of employment is not anymore a


mere cessation or severance of contractual
relationship but an economic phenomenon
affecting members of the family. This is the
reason why under the broad principles of social
justice the dismissal of employees is
adequately protected by the laws of the state.

A probationary employee can only be


terminated for:
(1) Just causes;
(2) Authorized causes; or
(3) Failure to qualify as a regular employee in
accordance with reasonable standards
made known by the employer to the
employee at the time of engagement.

(Alhambra Industries, Inc. v. NLRC, G.R. No.


106771, November 18, 1994)
Management Prerogatives and Security of
Tenure
An employer may not be compelled to
continue in its employ a person whose
continuance in the service would patently be
inimical to its interests. (Baguio Central

(Robinsons Galleria et al. v Ranchez, G.R.


No. 177937, Jan. 19, 2011)
Project/seasonal Employees
Limited extent; secured for the duration of the
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
dismissed upon loss of confidence (Maglutac v.

Management prerogative must be exercised in


good faith and with due regard to the rights of
the workers in the spirit of fairness and with
justice
in
mind.
(Philbag Industrial

NLRC, G.R. No. 78345, 78637, September 21,


1990)

Manufacturing Corp. v. Philbag Workers


Union-Lakas at Gabay ng Manggagawang
Nagkakaisa, G.R. No. 182486, June 20, 2012)

Fixed-period Employees / Term Employment


This arrangement does NOT circumvent
security of tenure when:
(1) Fixed period of employment was knowingly
and voluntarily agreed upon by the parties
without any force, duress, or improper
pressure or any other circumstances
vitiating his consent; or
(2) The employer and the employee dealt with
each other on more or less equal terms
with no moral dominance exercised by the
former or the latter (Brent School v.

Requisites for the validity of management


prerogative affecting security of tenure
(a) Exercised in good faith for the
advancement of the Employer's interest,
and
(b) not for the purpose of defeating or
circumventing the rights of the Employees
under special laws or under valid
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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LABOR LAW

presented by them. (Functional, Inc. v. Granfil,

Guide in disposition of labor disputes


Bare and vague allegations as to the manner
of service and the circumstances surrounding
the same would not suffice. A mere copy of the
notice of termination allegedly sent by
respondent to petitioner, without proof of
receipt, or in the very least, actual service
thereof upon petitioner, does not constitute
substantial evidence. (Mansion Printing Center

G.R. No. 176377, November 16, 2011)


Employee must first establish the fact of
dismissal
Before the employer must bear the burden of
proving that the dismissal was legal, the
employee must first establish by substantial
evidence the fact of his dismissal from service.
If there is no dismissal, then there can be no
question as to the legality or illegality thereof.

v. Bitara, Jr., G.R. No. 168120, January 25,


2012)

(MZR Industries v. Colambot, G.R. No. 179001,


August 28, 2013)

Procedural vis--vis substantive issues


A labor case whose substantive issues must be
addressed, more than anything else. Besides,
the nature of the alleged procedural infirmity
cannot prod the Court to dismiss the Petition
outright without first considering its merits.

an illegal dismissal case, the onus


probandi rests on the employer to prove that
In

its dismissal of an employee was for a valid


cause. However, before a case for illegal
dismissal can prosper, an employer-employee
relationship must first be established by the
employee (Javier v. Fly Ace Corp., G.R. No.

(Ang v. San Joaquin, Jr., G.R. No. 185549,


August 7, 2013)

192558, February 15, 2012)

Employers Burden of Proof

Art. 283 (b), 3rd sentence: The burden of

The burden is on the employer to prove that


the termination was for valid cause.
Unsubstantiated accusations or baseless
conclusions of the employer are insufficient
legal
justifications
to
dismiss
an
employee. (Garza v. Coca-Cola Bottlers

Measure of Penalty
While an employer enjoys a wide latitude of
discretion in the promulgation of policies, rules
and regulations on work-related activities of
the employees, those directives, however, must
always be fair and reasonable, and the
corresponding penalties, when prescribed,
must be commensurate to the offense involved
and to the degree of the infraction. (Moreno v.

Philippines, Inc., G.R. No. 180972, January 20,


2014)

San Sebastian College-Recoletos, G.R. No.


175283, March 28, 2008)

proving the termination was for a valid or


authorized cause shall rest on the employer.

In illegal dismissal cases, the burden of proof is


upon the employer to show that the
employee's termination from service is for a
just and valid cause. The employer's case
succeeds or fails on the strength of its evidence
and not the weakness of that adduced by the
employee, in keeping with the principle that
the scales of justice should be tilted in favor of
the latter in case of doubt in the evidence

Termination of Employment by Employee

Resignation
Art. 291, LC: Termination by Employee. (a) An
employee may terminate without just cause
the employer-employee relationship by serving
a written notice on the employer at least one
(1) month in advance. The employer upon
whom no such notice was served may hold the
employee liable for damages
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LABOR STANDARDS

LABOR LAW

To constitute a resignation, it must be


unconditional and with the intent to operate as
such. There must be an intention to
relinquish a portion of the term of office
accompanied by an act of relinquishment

(b) An employee may put an end to the


relationship without serving any notice on the
employer for any of the following
requirements:
1. Serious insult by the employer or his
representative on the honor and person of the
employee;
2. Inhuman and unbearable treatment
accorded the employee by the employer or his
representative;
3. Commission of a crime or offense by the
employer or his representative against the
person of the employee or any of the
immediate members of his family; and
4. Other causes analogous to any of the
foregoing.

(Azcor Manufacturing Inc. v. NLRC, G.R. No.


117963, Feb. 11, 1999)
Well-entrenched is the rule that resignation is
inconsistent with the filing of a complaint for
illegal dismissal. (Blue Angel Manpower and

Security Services Inc. v Court of Appeals, GR


No. 161196, July 28, 2008.)
Mere allegations of threat or force do not
constitute evidence to support a finding of
forced resignation. In order for intimidation to
vitiate consent, the following requisites must
concur: (1) that the intimidation caused the
consent to be given; (2) that the threatened act
be unjust or unlawful; (3) that the threat be
real or serious, there being evident
disproportion between the evil and the
resistance which all men can offer, leading to
the choice of doing the act which is forced on
the person to do as the lesser evil; and (4) that
it produces a well-grounded fear from the fact
that the person from whom it comes has the
necessary means or ability to inflict the
threatened injury to his person or property.

General rule: Written notice to resign


submitted one (1) month in advance
Exception: No notice required for any of the
following:
(1) Serious insult by the employer or his
representative on the honor and person of
the employee;
(2) Inhuman and unbearable treatment
accorded the employee by the employer or
his representative;
(3) Commission of a crime or offense by the
employer or his representative against the
person of the employee or any of the
immediate members of his family; and
(4) Other causes analogous to any of the
foregoing.

(Mandapat v. Add Force Personnel Services,


Inc., G.R. No. 180285, July 6, 2010)
The rule requiring an employee to stay or
complete the 30-day period prior to the
effectivity of his resignation becomes
discretionary on the part of management as an
employee who intends to resign may be
allowed a shorter period before his resignation
becomes effective. (Hechanova Bugay Vilchez

Resignation is the voluntary act of an


employee who finds himself in a situation
where he believes that personal reasons
cannot be sacrificed in favor of the exigency of
the service, such that he has no other choice
but to disassociate himself from his
employment. (Cervantes v. PAL Maritime

Lawyers v. Matorre, G.R. No. 198261, Oct. 16,


2013)

Corp., G.R. No. 175209, January 16, 2013)

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LABOR LAW

Performance of Military or Civic Duty


Art. 292, LC: When Employment Not Deemed
Terminated: The bona fide suspension of the

confidence in him. (Yabut v. Meralco, G.R. No.

operation of a business or undertaking for a


period not exceeding six (6) months, or the
fulfillment by the employee of a military or
civic duty shall not terminate employment. In
all such cases the employer shall reinstate the
employee to his former position without loss of
seniority rights if he indicates his desire to
resume his work not later than one (1) month
from the resumption of operations of his
employer or from his relief from the military or
civic duty

Employers right to dismiss vis--vis employees


right to security of tenure
The managerial prerogative to transfer
personnel must be exercised without grave
abuse of discretion, bearing in mind the basic
elements of justice and fair play. Having the
right should not be confused with the manner
in which that right is exercised. Thus, it cannot
be used as a subterfuge by the employer to rid
himself of an undesirable worker. In particular,
the employer must be able to show that the
transfer is not unreasonable, inconvenient or
prejudicial to the employee; nor does it involve
a demotion in rank or a diminution of his
salaries, privileges and other benefits. (Alert

190436, January 16, 2012)

B.1. JUST CAUSE


Art. 288, LC: Termination by Employer. An
employer may terminate an employment for
any of the following causes:
(a) Serious misconduct or willful disobedience
by the employee of the lawful orders of his
employer or representative in connection with
his work;

Security and Investigation Agency, Inc. v.


Pasawilan, G.R. No. 182397, September 14,
2011)
The right of employers to shape their own work
force is recognize; however, this management
prerogative must not curtail the basic right of
employees to security of tenure. There must be
a valid and lawful reason for terminating the
employment of a worker. Otherwise, it is illegal
and would be dealt with by the courts
accordingly. (Alert Security and Investigation

(b) Gross and habitual neglect by the employee


of his duties;
(c) Fraud or willful breach by the employee of
the trust reposed in him by his employer or
duly authorized representative;

Agency, Inc. v. Pasawilan, G.R. No. 182397,


September 14, 2011)

(d) Commission of a crime or offense by the


employee against the person of his employer
or any immediate member of his family or his
duly authorized representatives; and

Serious Misconduct
ELEMENTS OF SERIOUS MISCONDUCT:
a) There must be misconduct;
b) The misconduct must be of such grave
and aggravated character;
c) It must relate to the performance of
the employees duties; and
d) There must be showing that the
employee becomes unfit to continue
working for the employer.

(e) Other causes analogous to the foregoing.


Basis
As a measure of self-protection against acts
inimical to its interest, a company has the right
to dismiss its erring employees. An employer
cannot be compelled to continue employing an
employee guilty of acts inimical to the
employer's interest, justifying loss of
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LABOR STANDARDS

Accusatory and inflammatory language used


by an employee to the employer or superior
can be a ground for dismissal or termination.

LABOR LAW

management cannot serve basis as


termination. The rule only applies when the
violation is not tantamount to fraud or
commission of illegal activities. One cannot
evade liability based on obedience to the
corporate chain of command (PNB v. Padao,

(Nissan Motors Phils. Inc. v. Angelo, G.R. No.


164181, September 14, 2011)

G.R. No. 180849, 187143, Nov. 6, 2011)

Willful Disobedience
ELEMENTS OF WILLFUL DISOBEDIENCE:
a) There must be disobedience or
insubordination;
b) The disobedience or insubordination
must be willful or intentional
characterized by a wrongful and
perverse attitude;
c) The order violated must be reasonable,
lawful, and made known to the
employee (Mirant Philippines Corp v.

On the principle of respondeat superior or


command responsibility alone, a managerial
employee may be held liable for negligence in
the performance of her managerial duties.

(Jumuad v. Hi-Flyer Food, Inc., G.R. No.


187887, (September 7, 2011)
Gross Negligence includes gross inefficiency
Article 290 of the Labor Code provides that
one of the just causes for terminating an
employment is the employee's gross and
habitual neglect of his duties. This cause
includes gross inefficiency, negligence and
carelessness (Century Iron Works, Inc. v.

Sario, G.R. no. 197598, November 21,


2012); and
d) The order must pertain to the duties
which he has been engaged to
discharge.

Baas, G.R. No. 184116, June 19, 2013)


Gross and Habitual Neglect of Duties
Gross negligence has been defined as the want
or absence of or failure to exercise slight care
or diligence, or the entire absence of care. It
evinces
a
thoughtless
disregard
of
consequences without exerting any effort to
avoid them. In order to constitute just cause for
an EEs dismissal due to negligence, it must
not only be gross, but also habitual. A single or
an isolated act that cannot be categorized as
habitual, hence, not a just cause for their
dismissal. (National Bookstore v. CA, G.R. No.

Loss of Trust and Confidence


The loss of trust and confidence must be based
on willful breach of the trust reposed in the
employee by his employer. Such breach is
willful if it is done intentionally, knowingly, and
purposely, without justifiable excuse, as
distinguished from an act done carelessly,
thoughtlessly, heedlessly or inadvertently.
And, in order to constitute a just cause for
dismissal, the act complained of must be workrelated and shows that the employee
concerned is unfit to continue working for the
employer. In addition, loss of confidence as a
just cause for termination of employment is
premised on the fact that the employee
concerned holds a position of responsibility,
trust and confidence or that the employee
concerned is entrusted with confidence with
respect to delicate matters, such as handling
or case and protection of the property and
assets of the employer. The betrayal of this

146741, Feb. 27, 2002)


Gross negligence connotes want of care in the
performance of ones duties, while habitual
neglect implies repeated failure to perform
ones duties for a period of time, depending on
the circumstances.
Estoppel by toleration of management: breach
of rules and regulations which are tolerated by
110

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LABOR STANDARDS

trust is the essence of the offense for which an


employee is penalized. (Villanueva, Jr. v. NLRC,

LABOR LAW

(d) The loss of trust and confidence should not


be simulated;
(e) It should not be used as a subterfuge for
causes which are improper, illegal, or
unjustified; and
(f) It must be genuine and not a mere
afterthought to justify an earlier action
taken in bad faith (China City Restaurant
Corp. v. NLRC, 217 SCRA 443; Midas Touch
v. NLRC, G.R. No. 111639, 29 July 1996)

G.R. No. 176893, June 13, 2012)


The loss of trust and confidence must be based
not on ordinary breach by the employee of the
trust reposed in him by the employer, but, in
the language of Article 282 (c) of the Labor
Code, on willful breach. A breach is willful if it
is done intentionally, knowingly and purposely,
without justifiable excuse, as distinguished
from an act done carelessly, thoughtlessly,
heedlessly or inadvertently. It must rest on
substantial grounds and not on the employer's
arbitrariness, whims, caprices or suspicion;
otherwise, the employee would eternally
remain at the mercy of the employer.

Loss of trust and confidence to be a valid cause


for dismissal must be based on a willful breach
of trust and founded on clearly established
facts. The basis for the dismissal must be
clearly and convincingly established but proof
beyond reasonable doubt is not necessary.

(Johansen World Group Corp. v. Gonzales III,


G.R. No. 198733, October 10, 2012)

(Prudential Guarantee and Assurance


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


simulated;
(2) It should not be used as a subterfuge for
causes which are improper, illegal or
unjustified;
(3) It may not be arbitrarily asserted in the
face of overwhelming evidence to the
contrary; and
(4) It must be genuine, not a mere
afterthought to justify earlier action taken
in bad faith (Nokom v. NLRC, G.R. No.

(1) Managerial employees - those vested with


the powers or prerogatives to lay down
management policies and to hire, transfer,
suspend, lay-off, recall, discharge, assign or
discipline employees or effectively recommend
such managerial actions.
(2) Fiduciary Rank and file - those who in the
normal and routine exercise of their functions,
regularly handle significant amounts of money
or property. Examples are cashiers, auditors,
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

(a) There must be an act, omission, or


concealment
(b) The act, omission or concealment justifies
the loss of trust and confidence of the
employer to the employee;
(c) The employee concerned must be holding
a position of trust and confidence;

Mere existence of a
basis for the belief of
employees guilt

Fiduciary rank-and-file

Proof of involvement in
the alleged events in
question required;
(Grand Asian Shipping mere uncorroborated
Lines, Inc. v. Galvez,
assertions and
G.R. No. 178184,
accusations
January 29, 2014)
are not enough
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LABOR LAW

mutual loyalty and dedicated service. If an


employer had treated his employee well, has
accorded him fairness and adequate
compensation as determined by law, it is only
fair to expect a long-time employee to return
such fairness with at least some respect and
honesty. Thus, it may be said that betrayal by a
long-time employee is more insulting and
odious for a fair employer. (Moya v. First Solid

(Etcuban, Jr. v.
Sulpicio Lines, Inc.,
G.R. No. 148410,
January 17, 2005)
Employment for a long
time is counted
against the employee

(Salvador v. Philippine
Mining Service Corp.,
G.R. No. 148766,
January 22, 2003)

Rubber Industries, Inc., G.R. No. 184011,


September 18, 2013)
Commission of a crime
Commission of a crime or offense by the
employee against the person of his employer
or any immediate member of his family or his
duly authorized representatives (Art. 288 d,

Managerial Employees: Reason for the Rule


The employer has broader discretion in
dismissing managerial employees on the
ground of loss of trust and confidence than
those occupying ordinary ranks. While plain
accusations are not sufficient to justify the
dismissal of rank and file employees, the mere
existence of a basis for believing that
managerial employees have breached the trust
reposed on them by their employer would
suffice to justify their dismissal. (Grand Asian

LC)

Shipping Lines, Inc. v. Galvez, G.R. No. 178184,


January 29, 2014)

The employer may validly dismiss for loss of


trust and confidence an employee who
commits an act of fraud prejudicial to the
interest of the employer. Neither a criminal
prosecution nor a conviction beyond
reasonable doubt for the crime is a requisite
for the validity of the dismissal (Concepcion v

Acquittal in Criminal Case arising from


Misconduct

Minex Import Corporation /Minerama


Corporation, G.R. No. 153569, January 24,
2012).

Notwithstanding petitioners acquittal in the


criminal case for qualified theft, the company
had adequately established the basis for the
companys loss of confidence as a just cause to
terminate. As opposed to the "proof beyond
reasonable doubt" standard of evidence
required in criminal cases, labor suits require
only substantial evidence to prove the validity
of the dismissal (Paulino v. NLRC, G.R. No.

Other Analogous Causes


One is analogous to another if it is susceptible
of comparison with the latter either in general
or in some specific detail; or has a close
relationship with the latter.

Other Causes
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)

176184, June 13, 2012)


Betrayal by a long-time employee
Length of service is not a bargaining chip that
can simply be stacked against the employer.
After all, an employer-employee relationship is
symbiotic where both parties benefit from
112

Abandonment
Courtesy Resignation
Change of Ownership
Habitual Absenteeism/Tardiness
Past Offenses
Habitual Infractions
Immorality
Conviction/Commission of a Crime

UP LAW BOC

LABOR STANDARDS

Abandonment

LABOR LAW

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


186641, October 8, 2013)

Abandonment is the deliberate and unjustified


refusal of an employee to resume his
employment. It constitutes neglect of duty and
is a just cause for termination of employment
under paragraph (b) of Article 282 of the Labor
Code. To constitute abandonment, however,
there must be a clear and deliberate intent to
discontinue one's employment without any
intention of returning. (Tan Brothers Corp. of

Habitual Absenteeism/ Tardiness


Habitual tardiness is a form of neglect of duty.
Lack of initiative, diligence, and discipline to
come to work on time everyday exhibit the
employee's deportment towards work.
Habitual and excessive tardiness is inimical to
the general productivity and business of the
employer. This is especially true when the
tardiness and/or absenteeism occurred
frequently and repeatedly within an extensive
period of time. (R.B. Michael Press v. Galit,

Basilan City v. Escudero, G.R. No. 188711, July


3, 2013)
ELEMENTS OF ABANDONMENT:
(a) Failure to report for work or absence
without valid or justifiable reason,
(b) A clear intention to sever the employeremployee relationship, with the second
element as the more determinative factor
and being manifested by some overt acts.

G.R. No. 153510, February 13, 2008)


However, there are cases when absenteeism is
not sufficient to justify termination. In the case
of, Cavite Apparel v Michelle Marquez, GR No.
172044, February 6, 2013, the SC held:
Michelle might have been guilty of violating
company rules on leaves of absence and
employee discipline, still we find the penalty of
dismissal imposed on her unjustified under the
circumstances. As earlier mentioned, Michelle
had been in Cavite Apparels employ for six
years, with no derogatory record other than the
four absences without official leave in
question, not to mention that she had already
been penalized for the first three absences, the
most serious penalty being a six-day
suspension for her third absence on April 27,
2000.

Absence must be accompanied by overt acts


unerringly pointing to the fact that the
employee simply does not want to work
anymore. It has been ruled that the employer
has the burden of proof to show a deliberate
and unjustified refusal of the employee to
resume his employment without any intention
of returning. (Tan Brothers Corp. of Basilan

City v. Escudero, G.R. No. 188711, July 3, 2013)


Courtesy Resignation
Resignation
per
se
means voluntary relinquishment of a position
or office. Adding the word "courtesy" did not
change
the
essence
of
resignation. (Batongbacal v. Associated Bank,

Past Offenses
Previous offense may be used as valid
justification for dismissal from work only if the
infractions are related to the subsequent
offense upon which the basis of termination is
decreed. (Century Canning Corporation v.

G.R. No. 72977, December 21, 1988)


Change of Ownership

Ramil, G.R. No. 171630, August 9, 2010)

A mere change in the equity composition of a


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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LABOR LAW

Habitual Infractions

employment by the employer (Alilem Credit

Series of irregularities when put together may


constitute serious misconduct, which under
Article 282 of the Labor Code, as amended, is a
just cause for dismissal (Gustilo v. Wyeth Phil.

cooperative v. Bandiola, Jr. G.R. No. 173489,


February 25, 2013).

Inc., G.R. No. 149629, October 4, 2004)

The charge of drug abuse within the companys


premises and during work hours constitutes
serious misconduct which is one of the just
causes for termination. (Bughaw, Jr. v.

Conviction/Commission of a Crime

Totality of infractions doctrine


The totality of infractions or the number of
violations committed during the period of
employment shall be considered in
determining the penalty to be imposed upon
an erring employee. Fitness for continued
employment cannot be compartmentalized
into tight little cubicles of aspects of character,
conduct and ability separate and independent
of each other. While it may be true that
petitioner was penalized for his previous
infractions, this does not and should not mean
that his employment record would be wiped
clean of his infractions. After all, the record of
an employee is a relevant consideration in
determining the penalty that should be meted
out since an employee's past misconduct and
present behavior must be taken together in
determining the proper imposable penalty.

Treasure Island Industrial, G.R. No. 173151,


Mar. 28, 2008)

B.2. AUTHORIZED CAUSE


(1)
(2)
(3)
(4)

Installation of labor saving device


Retrenchment to prevent losses
Redundancy
Closure of Business

[Art. 289, LC]


Basis
Employment is the lifeblood upon which the
worker and his family owe their survival. (Flight

Attendants and Stewards Ass'n of the


Philippines v. PAL, Inc., G.R. No. 178083,
October 2, 2009)

(Merin v. NLRC, G.R. No. 171790, October 17,


2008)

Installation of Labor-Saving Device


This refers to the installation of machinery to
effect economy and efficiency in the employers
method of production (Edge Apparel, Inc. v.

Immorality
DECS Order No. 92 provides that disgraceful or
immoral conduct can be used as a basis for
termination of employment (Santos, Jr. v.

NLRC, G.R. No. 121314, Feb. 12, 1998)

NLRC, G.R. No. 115795, March 6, 1998)

Requirements for termination


installation of labor-saving device

The act of engaging in extramarital affairs was


specifically provided for by the cooperatives
Personnel Policy as one of the grounds for
termination of employment and said act raised
concerns to the cooperative as the Board
received numerous complaints and petitions
from the cooperative members themselves
asking for the removal of Bandiola because of
his immoral conduct, hence, immorality
(extramarital affair) justified terminating the

(1) The employer exercises its prerogative to


install the labor-saving device in good faith
for the advancement of its interest and not
to defeat or circumvent the employees
right to security of tenure;
(2) The employer served a written notice both
to the employees and to the DOLE at least
30 days prior to the intended date of
termination; and
(3) The employer pays the employees
separation pay equivalent to one-month
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due

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LABOR STANDARDS

pay or at least one-half (1/2) month pay for


every year of service, whichever is higher, a
fraction of at least six months being
considered as one whole year (Samson,

LABOR LAW

(2) The losses are actual or reasonably


imminent;
(3) The retrenchment is reasonably necessary
and is likely to be effective in preventing
the expected losses; and
(4) The alleged losses, if already incurred, or
the expected imminent losses sought to be
forestalled, are proven by sufficient and
convincing evidence (Sanoh Fulton Phils.,

2004)
Retrenchment
ELEMENTS OF RETRENCHMENT:
(a) That retrenchment is reasonably necessary
and likely to prevent business losses which,
if already incurred, are not merely de
minimis, but substantial, serious, actual
and real, or if only expected, are
reasonably imminent as perceived
objectively and in good faith by the
employer;
(b) That the employer served written notice
both to the employees and to the
Department of Labor and Employment at
least one month prior to the intended date
of retrenchment;
(c) The employer pays the retrenched
employees separation pay equivalent to
one (1) month pay or at least one-half (1/2)
month pay for every year of service,
whichever is higher;
(d) That the employer exercises its prerogative
to retrench employees in good faith for the
advancement of its interest and not to
defeat or circumvent the employees' right
to security of tenure; and,
(e) That the employer uses fair and reasonable
criteria in ascertaining who would be
dismissed and who would be retained
among the employees, such as status,
efficiency, seniority, physical fitness, age,
and financial hardship for certain workers.

Inc. v. Bernardo, G.R. No. 187214, August


14, 2013)
Redundancy
Redundancy exists when the service capability
of the workforce is in excess of what is
reasonably needed to meet the demands of the
business enterprise. A position is redundant
when it is superfluous, and superfluity of a
position or positions could be the result of a
number of factors, such as the overhiring of
workers, a decrease in the volume of business
or the dropping of a particular line or service
previously manufactured or undertaken by the
enterprise. (Morales v. Metrobank, G.R. No.

182475, November 21, 2012)


For the implementation of a redundancy
program to be valid, however, the employer
must comply with the following requisites:
(a) Written notice served on both the
employees and the DOLE at least one
month prior to the intended date of
termination of employment;
(b) Payment of separation pay equivalent to at
least one month pay for every year of
service;
(c) Good faith in abolishing the redundant
positions; and
(d) Fair and reasonable criteria in ascertaining
what positions are to be declared
redundant
and
accordingly
abolished. (Morales v. Metrobank, G.R. No.

(Flight Attendants and Stewards Ass'n of


the Philippines v. PAL, Inc., G.R. No.
178083, October 2, 2009)
Standards for losses

182475, November 21, 2012)

(1) The losses incurred are substantial and


not de minimis;

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LABOR LAW

To exhibit its good faith and that there was a


fair and reasonable criteria in ascertaining
redundant positions, a company claiming to be
over manned must produce adequate proof of
the same. Such proof includes but is not
limited to the new staffing pattern, feasibility
studies/proposals on the viability of the newly
created positions, job description and the
approval by the management of the
restructuring. (General Milling Corporation v
Violeta L. Viajar, G.R. No. 181738, January 30,
2013)

allegation in order to avoid the payment of


separation pay. Otherwise, the affected
employees are entitled to separation pay.
(5) The burden of proving compliance with all
the above-stated falls upon the employer.

Closure of Business

Cebu City Hotel v. Jimenez, G.R. No. 174214,


June 13, 2012)

(Manila Polo Club Employees' Union v.


Manila Polo Club, Inc., G.R. No. 172846,
July 24, 2013)
Closure of Department
The closure of a department or division of a
company constitutes retrenchment by, and not
closure of, the company itself. (Waterfront

Guidelines in Closure
(1) Closure or cessation of operations of
establishment or undertaking may either
be partial or total
(2) Closure or cessation of operations of
establishment or undertaking may or may
not be due to serious business losses or
financial servicereverses. However, in both
instances, proof must be shown that:
(a) it was done in good faith to
advance the employer's interest
and not for the purpose of
defeating or circumventing the
rights of employees under the law
or a valid agreement; and
(b) Written notice on the affected
employees and the DOLE is served
at least one month before the
intended date of termination of
employment.
(3) The employer can lawfully close shop even
if not due to serious business losses or
financial reverses but separation pay,
which is equivalent to at least one month
pay as provided for by Article 289 of the
Labor Code, as amended, must be given to
all the affected employees.
(4) If the closure or cessation of operations of
establishment or undertaking is due to
serious business losses or financial
reverses, the employer must prove such

Corporate acquisitions
Asset Sales

Stock Sales
Sale

Corporate entity sells


all or substantially all
of its assets to another
entity.

In stock sales, the


individual or corporate
shareholders sell a
controlling block of
stock to new or
existing shareholders.

Obligation of Seller
Seller in good faith is
authorized to dismiss
the affected
employees, but is
liable for the payment
of separation pay
under the law.

A shift in the
composition of its
shareholders will not
affect its existence and
continuity.
Notwithstanding the
stock sale, the
corporation continues
to be the employer of
its people and
continues to be liable
for the payment of
their just claims.

Obligation of Buyer
The buyer in good
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The corporation or its

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Asset Sales
faith, on the other
hand, is not obliged to
absorb the employees
affected by the sale,
nor is it liable for the
payment of their
claims. The most that
it may do, for reasons
of public policy and
social justice, is to give
preference to the
qualified separated
personnel of the
selling firm.

Stock Sales
new majority
shareholders are not
entitled to lawfully
dismiss corporate
employees absent a
just or authorized
cause.

(SME Bank, Inc. v. De


Guzman, G.R. No.
184517, 186641,
[October 8, 2013])

Procedural steps required


At least 1 month before the intended date of
termination, Employer is to serve written notice
to:
(1) Affected employees;
(2) DOLE (Art. 289, LC)
Criteria in selecting employees for dismissal:
Fair and reasonable criteria in ascertaining
who will be affected:
(1) Preferred status (e.g. temporary, casual or
regular Employees),
(2) Efficiency,
(3) Physical fitness,
(4) Age,
(5) Financial hardship, or
(6) Seniority. (Asian Alcohol Corp. v. NLRC,

Reduction of
personnel
usually due to
poor financial
returns so as to
cut down on
costs of

The service
of an
Employee is
in excess of
what is
required by
an enterprise

operations in
terms of
salaries and
wages

operations
and/or actual
locking-up of
the doors of the
establishment,
usually due to
financial losses

Resorted to
To save
primarily to
production
avoid or
costs
minimize
business losses

Aims to prevent
further financial
drain upon the
Employer

Employee is
entitled to
separation pay
of 1 month pay
or 1/2 month
pay per year of
service,
whichever is
higher

In case of
closure of
business not
due to serious
business losses,
the employer
pays the
employees
terminated
separation pay
of 1 month pay
or 1/2 month
pay per year of
service,
whichever is
higher

Employee is
entitled to
separation
pay of 1
month pay or
1/2 month
pay per year
of service,
whichever is
higher

Temporary Closure / Bona fide suspension of


Operations

Art. 292, LC: When Employment Not Deemed


Terminated: The bona fide suspension of the

G.R. No. 131108, March 25, 1999)


Retrenchment Redundancy

LABOR LAW

operation of a business or undertaking for a


period not exceeding six (6) months, or the
fulfillment by the employee of a military or
civic duty shall not terminate employment. In
all such cases the employer shall reinstate the
employee to his former position without loss of
seniority rights if he indicates his desire to
resume his work not later than one (1) month
from the resumption of operations of his
employer or from his relief from the military or
civic duty

Closure
The reversal of
the fortune of
the employer
whereby there is
a complete
cessation of
business

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LABOR LAW

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


being considered as one (1) whole year.

Under Art. 286 of the Labor Code, a bona


fide suspension of business operations for not
more than six (6) months does not terminate
employment. After six (6) months, the
employee may be recalled to work or be
permanently laid off. In this case, more than
six (6) months have elapsed from the time the
Club ceased to operate. Hence, respondents'
termination became permanent. (SKM Art

Requisites
(1) The employee must be suffering from a
disease which cannot be cured within six
months;
(2) His continued employment is prohibited by
law or prejudicial to his health or to the
health of his co-employees; and
(3) A certification to that effect must be issued
by
a
competent
public
health
authority. [Crayons Processing, Inc. v. Pula,
G.R. No. 167727, July 30, 2007]

Craft Corp. v. Bauca, G.R. Nos. 171282, 183484,


November 27, 2013)
An employer may validly suspend operations
for at most 6 months. Not accepting the
workers back to work after the 6 month period
is equivalent to termination which should be
for cause and with proper procedure (Manila

The burden falls upon the employer to


establish these requisites, and in the absence
of such certification, the dismissal must
necessarily be declared illegal.

Mining Corp v Amor, GR No 182800, April 20,


2015).

It is only where there is a prior certification


from a competent public authority that the
disease afflicting the employee sought to be
dismissed is of such nature or at such stage
that it cannot be cured within six (6) months
even with proper medical treatment that the
latter could be validly terminated from his job.
[Crayons Processing, Inc. v. Pula]

B.3 OTHER CAUSES


(1) Disease incurable in 6 months [Art. 290,
LC]
(2) Enforcement of union security clause in the
CBA
(3) Dismissal of union officers for the conduct
of an illegal strike [Art. 270 (a), LC]
(4) Dismissal of union members for
participating in the commission of illegal
acts [Art. 270 (a), LC]
(5) Termination in conformity with existing
statute/ qualification requirements

II. ENFORCEMENT OF UNION SECURITY


CLAUSE IN CBA
In terminating the employment of an employee
by enforcing the union security clause, the
employer needs only to determine and prove
that:
(1) The union security clause is applicable;
(2) The union is requesting for the
enforcement of the union security provision
in the CBA; and
(3) There is sufficient evidence to support the
union's decision to expel the employee
from the union or company [Inguillo v. First

I. DISEASE
Art. 290, LC: Disease as Ground for
Termination: An employer may terminate the
services of an employee who has been found to
be suffering from any disease and whose
continued employment is prohibited by law or
is prejudicial to his health as well as to the
health of his co-employees: Provided, That he
is paid separation pay equivalent to at least
one (1) month salary or to one-half (1/2) month
salary for every year of service, whichever is

Philippine Scales, Inc., G.R. No. 165407,


June 5, 2009]

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III. DISMISSAL OF UNION OFFICERS FOR


THE CONDUCT OF AN ILLEGAL STRIKE /
DISMISSAL OF UNION MEMBERS FOR
PARTICIPATING IN THE COMMISSION OF
ILLEGAL ACTS
Art. 270, a, 3rd par., 2nd sen., LC: Any union

LABOR LAW

guidelines set by the Department of Labor and


Employment. Any decision taken by the
employer shall be without prejudice to the
right of the worker to contest the validity or
legality of his dismissal by filing a complaint
with the regional branch of the National Labor
Relations Commission. The burden of proving
that the termination was for a valid or
authorized cause shall rest on the employer.

officer who knowingly participates in an illegal


strike and any worker or union officer who
knowingly participates in the commission of
illegal acts during a strike may be declared to
have lost his employment status.

Requisites for Valid Dismissal


(1) Substantive due process: The dismissal
must be for any of the causes provided for
in Article 288 290 of the Labor Code; and
(2) Procedural due process: The employee
must be afforded an opportunity to be
heard and defend himself. [Fujitsu
Computer Products Corporation of the Phil.
v. Court of Appeals, G.R. No. 158232, March
31, 2005]

IV. TERMINATION IN CONFORMITY WITH


EXISTING STATUTE / QUALIFICATION
REQUIREMENTS
While the right of workers to security of tenure
is guaranteed by the Constitution, its exercise
may be reasonably regulated pursuant to the
police power of the State to safeguard health,
morals, peace, education, order, safety, and
the general welfare of the people.
Consequently, persons who desire to engage in
the learned professions requiring scientific or
technical knowledge may be required to take
an examination as a prerequisite to engaging
in their chosen careers. [St. Lukess Medical

Employer may not substitute the required prior


notice & opportunity to be heard with the mere
payment of 30 days' salary. [PNB v. Cabansag,
G.R. No. 157010, [June 21, 2005]
Right to Counsel
The right to counsel, a very basic requirement
of substantive due process, has to be observed.
Indeed, the rights to counsel and to due
process of law are two of the fundamental
rights guaranteed by the 1987 Constitution to
any person under investigation, be the
proceeding administrative, civil, or criminal.
[Salaw v. NLRC, G.R. No. 90786, September 27,
1991]

Center Employees Ass'n-AFW v. NLRC, G.R.


No. 162053, March 7, 2007]

B.4 DUE PROCESS


Art. 283 (b), LC: Subject to the constitutional
right of workers to security of tenure and their
right to be protected against dismissal except
for a just and authorized cause without
prejudice to the requirement of notice under
Article 283 of this Code, the employer shall
furnish the worker whose employment is
sought to be terminated a written notice
containing a statement of the causes for
termination and shall afford the latter ample
opportunity to be heard and to defend himself
with the assistance of his representative if he
so desires in accordance with company rules
and regulations promulgated pursuant to

Burden of Proof
In illegal dismissal cases, the onus of proving
that the employee was not dismissed or, if
dismissed, that the dismissal was not illegal,
rests on the employer, failure to discharge
which would mean that the dismissal is not
justified and, therefore, illegal. [Macasero v.

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Southern Industrial Gases Philippines, G.R. No.


178524, January 30, 2009]
Degree of Proof
In labor cases, as in other administrative
proceedings, substantial evidence is required
and it is such relevant evidence as a
reasonable mind might accept as adequate to
support a conclusion [Andrada v. Agemar
Manning Agency, Inc., G.R. No. 194758, October
24, 2012]

Second
Notice

LABOR LAW
employees. [United
Tourist
Promotions v. Kemplin, G.R. No.
205453, February 5, 2014]
(1) Indicate
all
circumstances
involving the charge against the
employees considered; and
(2) Indicate grounds established to
justify the severance of their
employment (United Tourist
Promotions v. Kemplin, G.R. No.
205453, February 5, 2014])

I. TWIN-NOTICE REQUIREMENT
The employer has the burden of proving that a
dismissed worker has been served two notices:
(1) The first to inform the employee of the
particular acts or omissions for which the
employer seeks his dismissal, and
(2) The second to inform the employee of his
employer's decision to terminate him.

An employee may be dismissed only if the


grounds mentioned in the pre-dismissal notice
were the ones cited for the termination of
employment. [Erector Advertising Sign Group,
Inc. v. Cloma, G.R. No. 167218, July 2, 2010]

(1) Contain the specific causes or


grounds for termination against
them, and
(2) Contain a directive that the
employees are given the
opportunity to submit their
written explanation within a
reasonable period or every kind
of assistance that management
must accord to the employees to
enable
them
to
prepare
adequately for their defense. This
should be construed as a period
of at least five (5) calendar days
from receipt of the notice
(3) Contain a detailed narration of
the facts and circumstances that
will serve as basis for the charge
against the employees.
(4) Specifically
mention
which
company rules, if any, are
violated and/or which among the
grounds under Art. 288 is being
charged
against
the

In employee dismissal cases, the essence of


due process is simply an opportunity to be
heard; it is the denial of this opportunity that
constitutes violation of due process of law.
[Technol Eight Philippines Corporation v. NLRC,
G.R. No. 187605, April 13, 2010]

First
Notice

II.
HEARING;
MEANING
OPPORTUNITY TO BE HEARD

OF

While a formal hearing or conference is ideal, it


is not an absolute, mandatory or exclusive
avenue of due process. [Perez v. PT&T, G.R. No.
152048, April 7, 2009]
Guiding principles in hearing requirement
(1) "Ample opportunity to be heard" means
any meaningful opportunity (verbal or
written) given to the employee to answer
the charges against him and submit
evidence in support of his defense, whether
in a hearing, conference or some other fair,
just and reasonable way.
(2) A formal hearing or conference becomes
mandatory only when requested by the
employee in writing or substantial
evidentiary disputes exist or a company
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PROCEDURE TO BE
TERMINATION CASES
JUST CAUSE

rule or practice requires it, or when similar


circumstances justify it.
(3) The "ample opportunity to be heard"
standard in the Labor Code prevails over
the "hearing or conference" requirement in
the
implementing
rules
and
regulations. [Perez v. PT&T, G.R. No.
152048, April 7, 2009]

OBSERVED IN

Notice specifying the grounds for which


dismissal is sought
Hearing or opportunity to be heard

Use of Position Paper


It is the labor arbiter who is authorized to
determine whether or not there is a necessity
for conducting formal hearings in cases
brought before them for adjudication even
after the submission of the parties of their
position papers or memoranda. A formal trialtype hearing is not at all times and in all
instances essential to due process. It is enough
that the parties are given a fair and reasonable
opportunity to explain their respective sides of
the controversy and to present supporting
evidence on which a fair decision can be based.
(Seastar Marine Services Inc. v. Bul-an, Jr., G.R.
No. 142609, November 25, 2004)

Notice of the decision to dismiss

AUTHORIZED CAUSE
Notice to:
(1) Employee, and
(2) DOLE at least 1 month prior to the
effectivity of the separation
Requisites
(1) Notice not needed when Employee
consented to the retrenchment or
voluntarily applied for one. [International
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


Situation

Validity of
Dismissal

Liability of ER

Just or Authorized Cause


+ Due Process

Valid

No liability.
Separation pay only in authorized cause

No Just or Authorized Cause


+ Due Process

Invalid

Reinstatement or separation pay.


If reinstatement not possible, + full backwages

No Just or Authorized Cause


+ No Due Process

Invalid

Reinstatement or separation pay.


If reinstatement not possible, + full backwages

Just or Authorized Cause


+ No Due Process

Valid

Liable for damages due to procedural infirmity.


Separation pay if for authorized cause
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LABOR LAW

(10) When supervening facts have transpired


which make execution on that score unjust
or inequitable or, to an increasing extent
(Emeritus Security & Maintenance Systems,
Inc. v. Dailig, G.R. No. 204761, April 2,
2014)

C. RELIEFS FOR ILLEGAL DISMISSAL


Art. 285, LC: Security of Tenure. In case of
regular employment, the employer shall not
terminate the services of an employee except
for a just cause or when authorized by this
Title. An employee who is unjustly dismissed
from work shall be entitled to reinstatement
without loss of seniority rights and other
privileges and to his full backwages, inclusive
of allowances, and to his other benefits or
their monetary equivalent computed from the
time his compensation was withheld from him
up to the time of his actual reinstatement.

Prescription Period
An action for reinstatement by reason of
illegal dismissal is one based on an injury
which may be brought within 4 years from the
time of dismissal. [Art. 1146, CC]

I. REINSTATEMENT PENDING APPEAL


[Art. 229]
Art. 229, par. 3 LC: In any event, the decision of
the Labor Arbiter reinstating a dismissed or
separated employee, insofar as the
reinstatement aspect is concerned, shall
immediately be executory, pending appeal.
The employee shall either be admitted back to
work under the same terms and conditions
prevailing prior to his dismissal or separation
or, at the option of the employer, merely
reinstated in the payroll. The posting of a
bond by the employer shall not stay the
execution for reinstatement provided herein.

C.1. REINSTATEMENT
Reinstatement means restoration to a state or
condition from which one had been removed
or separated. The person reinstated assumes
the position he had occupied prior to his
dismissal [Asian Terminals, Inc. v. Villanueva,
G.R. No. 143219, November 28, 2006]
General Rule: Reinstatement
Exceptions:
(1) Separation pay
(2) Closure of business (Retuya v. Hon.
Dumarpa, G.R. No. 148848, Aug. 5, 2003)
(3) Economic business conditions (Union of
Supervisors v. Secretary of Labor, G.R. No.
L-39889, November 12, 1981)
(4) Employees unsuitability (Divine Word High
School v. NLRC, G.R. No. 72207, August 6,
1986)
(5) Employees retirement/ overage (New
Philippine Skylanders, Inc. v. Dakila, G.R.
No. 199547, September 24, 2012)
(6) Antipathy and antagonism (Wensha Spa
Center v. Yung, G.R. No. 185122, Aug. 16,
2010)
(7) Job with a totally different nature (DUP
Sound Phils. v. CA, G.R. No. 168317m Nov.
21, 2011)
(8) Long passage of time
(9) Inimical to the employer's interest

If the order of reinstatement of the Labor


Arbiter is reversed on appeal, it is obligatory
on the part of the employer to reinstate and
pay the wages of the dismissed employee
during the period of appeal until reversal by
the higher court. The Labor Arbiter's order of
reinstatement is immediately executory and
the employer has to either re-admit them to
work under the same terms and conditions
prevailing prior to their dismissal, or to
reinstate them in the payroll, and that failing
to exercise the options in the alternative,
employer must pay the employee's salaries
[Magana v. Medicard Philippines, Inc., G.R. No.
174833, December 15, 2010]

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No refund doctrine
An employee cannot be compelled to
reimburse the salaries and wages he received
during the pendency of his appeal,
notwithstanding the reversal by the NLRC of
the LA's order of reinstatement. [College of the
Immaculate Conception v. NLRC, G.R. No.
167563, March 22, 2010]

viable due to the strained relations


between them; and
(3) When the dismissed employee opted not
to be reinstated, or the payment of
separation benefits would be for the best
interest of the parties involved. (Book VI,
Rule 1, Section 4 (b), Rule I, IRR)
Separation Pay and Reinstatement, Exclusive
Remedies
The payment of separation pay and
reinstatement are exclusive remedies. The
payment of separation pay replaces the legal
consequences of reinstatement to an
employee who was illegally dismissed. [Bani
Rural Bank, Inc. v. De Guzman, G.R. No.
170904, November 13, 2013]

Note, however: Rule XI, Sec. 14 of the 2011


NLRC Rules of Procedure provide for restitution
of amounts paid pursuant to execution of
awards during pendency of the appeal.
However, it expressly disallows restitution of
wages paid due to reinstatement pending
appeal.
Section 14. Effect of Reversal of Executed
Judgment. Where the executed judgment is
totally or partially reversed or annulled by the
Court of Appeals or the Supreme Court, the
Labor Arbiter shall, on motion, issue such
orders of restitution of the executed award,
except wages paid during reinstatement
pending appeal.

II. SEPARATION
REINSTATEMENT

PAY

IN

LIEU

LABOR LAW

Doctrine of Strained Relations


Where reinstatement is not feasible, expedient
or practical, as where reinstatement would
only exacerbate the tension and strained
relations between the parties or where the
relationship between the employer and
employee has been unduly strained by reason
of their irreconcilable differences, particularly
where the illegally dismissed employee held a
managerial or key position in the company, it
would be more prudent to order payment of
separation pay instead of reinstatement
[Quijano v. Mercury Drug Corp., G.R. No.
126561, July 8, 1998]

OF

Kinds of separation pay (SP)


(1) SP as a statutory requirement for
authorized causes
(2) SP as financial assistance found in the
next section
(3) SP in lieu of reinstatement where
reinstatement is not feasible; and
(4) SP as a benefit in the CBA or company
policy

Computation
SP as a statutory requirement is computed by
integrating the basic salary with regular
allowances employee has been receiving
[Planters Products, Inc. v. NLRC, G.R. No.
78524, 78739, January 20, 1989]; allowances
include transportation and emergency living
allowances [Santos v. NLRC, G.R. No. 76721,
September 21, 1987]

Instances when the award of separation pay, in


lieu of reinstatement to an illegally dismissed
employee, is proper:
(1) When reinstatement is no longer possible,
in cases where the dismissed employee's
position is no longer available;
(2) The continued relationship between the
employer and the employee is no longer

Inasmuch as the words "wages", "pay" and


"salary" have the same meaning, and
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LABOR LAW

commission is included in the definition of


"wage", the logical conclusion, therefore, is, in
the computation of the separation pay of
petitioners, their salary base should include
also their earned sales commissions. [Songco
v. NLRC, G.R. Nos. 50999-51000, March 23,
1990]

I. COMPUTATION OF BACKWAGES

A dismissed employee who has accepted


separation pay is not necessarily estopped
from challenging the validity of his or her
dismissal. Neither does it relieve the employer
of legal obligations. [Anino v. NLRC, G.R. No.
123226, May 21, 1998]

Awards including salary differentials are not


allowed [Insular Life Assurance Co. v. NLRC,
1987]

Full
backwages
means
exactly
that, i.e., without deducting from backwages
the earnings derived elsewhere by the
concerned employee during the period of his
illegal dismissal. [Bustamante v. NLRC, G.R.
No. 111651, November 28, 1996]

The salary base properly used should be the


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
to his illegal dismissal; a form of relief that
restores the income lost by reason of such
unlawful dismissal; it is not private
compensation or damages; nor is it a redress
of a private right but, rather, in the nature of a
command to the employer to make a public
reparation for illegally dismissing an
employee. [St. Theresa's School of Novaliches
Foundation v. NLRC, G.R. No. 122955, April 15,
1998]

Emergency cost of living allowances (ECOLA),


transportation allowances, 13th month pay
[Paramount Vinyl Product Corp. v. NLRC, 1990]

Backwages and reinstatement are two reliefs


that should be given to an illegally dismissed
employee. They are separate and distinct from
each other. An illegally dismissed employee is
entitled to (1) either reinstatement, if viable, or
separation pay if reinstatement is no longer
viable, and (2)
backwages. Payment
of
backwages is specifically designed to restore
an employee's income that was lost because
of his unjust dismissal. [Aurora Land Projects
Corp. v. NLRC, G.R. No. 114733, January 2, 1997]

II. LIMITED BACKWAGES

Also included are vacation leaves, service


incentive leaves, and sick leaves
The effects of extraordinary inflation are not to
be applied without an official declaration
thereof by competent authorities [Lantion v.
NLRC, 1990]

General rule: An illegally dismissed employee


is entitled to full backwages.
Exceptions
(1) The Court awarded limited backwages
where the employee was illegally
dismissed but the employer was found to
be in good faith. [San Miguel Corporation v.
Javate, Jr., 1992]
(2) Delay of the EE in filing the case for illegal
dismissal [Mercury Drug Co., Inc. v. CIR,
1974]

Effect of failure to order backwages


A plain error which may be rectified, even if
employee did not bring an appeal regarding
the matter [Aurora Land Projects Corp. v.
NLRC, G.R. No. 114733, January 2, 1997]

Rationale
Feati University Club vs. Feati University (1974)
adopted a consensus policy of pegging the
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amount of backwages to their total equivalent


for three
years (depending
on
the
circumstances)
without
deduction
or
qualification. The rationale for the policy was
stated in the following words:

LABOR LAW

International Corp. (1972)] and attrition and


protracted delay in satisfying such award on
the part of unscrupulous employers who have
seized upon the further proceedings to
determine the actual earnings of the
wrongfully dismissed or laid-off employees to
hold unduly extended hearings for each and
every employee awarded backwages and
thereby render practically nugatory such
award and compel the employees to agree to
unconscionable
settlements
of
their
backwages award in order to satisfy their dire
need. [See La Campana Food Products, Inc. vs.
CIR, (1969) and Kaisahan ng Mga
Manggagawa vs. La Campana Food Products,
Inc., (1970)].

As has been noted, this formula of awarding


reasonable net backwages without deduction
or qualification relieves the employees from
proving or disproving their earnings during
their lay-off and the employers from
submitting counterproofs, and obviates the
twin evils of Idleness on the part of the
employee who would "with folded arms,
remain inactive in the expectation that a
windfall would come to him" [Itogon Suyoc
Mines, Inc. vs. Sangilo-Itogon Workers Union
(1968), as cited in Diwa ng Pagkakaisa vs. Filtex
Indemnity of Employer
Period

Doctrine in
effect

Validity of
Dismissal

Liability of ER

Prior 1989

Pre-Wenphil

Illegal

Reinstatement + Backwages

Feb. 1989 1999

Wenphil

Valid

Dismiss now, indemnity pay later

Jan. 2000 Oct. Serrano


2004

Ineffectual

Full backwages up to reinstatement/finality of


decision

Nov.
2004
present

Valid

Nominal damages

Agabon

during
the
time
of
preventive
suspension. [Gatbonton v. NLRC, G.R. No.
146779, January 23, 2006]

D. PREVENTIVE SUSPENSION
Preventive suspension is a disciplinary
measure for the protection of the company's
property pending investigation of any alleged
malfeasance or misfeasance committed by the
employee. The employer may place the worker
concerned under preventive suspension if his
continued employment poses a serious and
imminent threat to the life or property of the
employer or of his co-workers. However, when
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

Preventive suspension is justified where the


employee's continued employment poses a
serious and imminent threat to the life or
property of the employer or of the employee's
co-workers. Without this kind of threat,
preventive suspension is not proper. [Artificio
v. NLRC, G.R. No. 172988, July 26, 2010]

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this Court will uphold themEven as the law is


solicitous of the welfare of the employees, it
must also protect the right of an employer to
exercise what are clearly management
prerogatives. The free will of management to
conduct its own business affairs to achieve its
purpose cannot be denied. [Ernesto G. Ymbong
vs. ABS-CBN Broadcasting Corp., 2012]

E. CONSTRUCTIVE DISMISSAL
Constructive dismissal is cessation of work
because continued employment is rendered
impossible, unreasonable or unlikely; when
there is a demotion in rank or diminution in
pay or both; or when a clear discrimination,
insensibility, or disdain by an employer
becomes unbearable to the employee.

A. DISCIPLINE

The test of constructive dismissal is whether a


reasonable person in the employee's position
would have felt compelled to give up his
position under the circumstances.

The employers right to conduct the affairs of


his business, according to its own discretion
and judgment, includes the prerogative to
instill discipline in its employees and to
impose penalties, including dismissal, upon
erring employees. This is a management
prerogative where the free will of
management to conduct its own affairs to
achieve its purpose takes form. The only
criterion to guide the exercise of its
management prerogative is that the policies,
rules and regulations on work-related
activities of the employees must always be fair
and reasonable and the corresponding
penalties, when prescribed, commensurate to
the offense involved and to the degree of the
infraction. [Consolidated Food Corporation vs.
NRLC, 1999] [St. Michaels Institute vs. Santos,
2001]

The law recognizes and resolves this situation


in favor of employees in order to protect their
rights and interests from the coercive acts of
the employer. In fact, the employee who is
constructively dismissed may be allowed to
keep on coming to work. [McMer Corp., Inc. v.
NLRC, G.R. No. 193421, June 4, 2014]

V. Management
Prerogative
This Court held that the employers right to
conduct the affairs of his business, according
to its own discretion and judgment, is wellrecognized. An employer has a free reign and
enjoys wide latitude of discretion to regulate
all aspects of employment. This is a
management prerogative, where the free will
of management to conduct its own affairs to
achieve its purpose takes form. [Torreda vs.
Toshiba, 2007]

Right to dismiss or otherwise impose


disciplinary sanctions upon an employee for
just and valid cause, pertains in the first place
to the employer, as well as the authority to
determine the existence of said cause in
accordance with the norms of due process.
[Makati Haberdashery, Inc. v. NLRC, 1989]

So long as a companys management


prerogatives are exercised in good faith for the
advancement of the employers interest and
not for the purpose of defeating or
circumventing the rights of the employees
under special laws or under valid agreements,

Management has the prerogative to discipline


its employees and to impose appropriate
penalties on erring workers pursuant to
company rules and regulations. [Jose P.
Artificio vs. NLRC, 2010]

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It is obvious that the company overstepped the


bounds of its management prerogative in the
dismissal of Mauricio and Camacho. It lost
sight of the Principle that management
prerogative must be exercised in good faith
and with due regard to the rights of the
workers in the spirit of fairness and with justice
in mind. [Philbag Industrial Manufacturing
Corp. vs. Philbag Workers Union-Lakas at
Gabay ng Manggagawang Nagkakaisa, 2012]

LABOR LAW

the consequent transfer of Trycos personnel,


assigned to the Production Department was
well within the scope of its management
prerogative.
When the transfer is not unreasonable, or
inconvenient, or prejudicial to the employee,
and it does not involve a demotion in rank or
diminution of salaries, benefits, and other
privileges, the employee may not complain
that it amounts to a constructive dismissal.
[Bisig ng Manggagawa sa TRYCO v. NLRC,
2008]

Although we recognize the right of employers


to shape their own work force, this
management prerogative must not curtail the
basic right of employees to security of tenure.
[Alert Security & Investigation Agency, Inc. vs.
Saidali Pasawilan, et. al., 2011]

It is management prerogative for employers to


transfer employees on just and valid grounds
such as genuine business necessity. [William
Barroga vs. Data Center College of the
Philippines, 2011]

B. TRANSFER OF EMPLOYEES

Even though transfers or reassignments per se


are indeed valid and fall within the ambit of
management prerogatives, the exercise of
these rights must remain within the
boundaries of justice and fair play. [Michelle T.
Tuason vs. Bank of Commerce, 2012]

An Employees right to security of tenure does


not give him such a vested right in his position
as would deprive the company of its
prerogative to change his assignment or
transfer him where he will be most useful.
The Employer has the right to transfer or
assign Employees from one area of operation
to another, or one office to another or in
pursuit of its legitimate business interest,
Provided there is no demotion in rank or
diminution of salary, benefits and other
privileges and not motivated by discrimination
or made in bad faith, or effected as a form of
punishment or demotion without sufficient
cause. [Westin Phil. Plaza Hotel v. NLRC, 1999]

Re-assignments made by management


pending investigation of
irregularities
allegedly committed by an employee fall
within the ambit of management prerogative.
The purpose of reassignments is no different
from that of preventive suspension which
management could validly impose as a
disciplinary measure for the protection of the
company's property pending investigation of
any alleged malfeasance or misfeasance
committed by the employee. [Ruiz v Wendel
Osaka Realty Corp., 2012]

This prerogative extends to the managements


right to regulate, according to its own
discretion and judgment, all aspects of
employment, including the freedom to
transfer and reassign employees from one are
to another in order to meet the requirements
of the business is, therefore, not general
constitutive of constructive dismissal. Thus,

In cases of a transfer of an employee, the rule


is settled that the employer is charged with
the burden of proving that its conduct and
action are for valid and legitimate grounds
such as genuine business necessity and that
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the transfer is not unreasonable, inconvenient


or prejudicial to the employee. If the employer
cannot overcome this burden of proof, the
employees transfer shall be tantamount to
unlawful constructive dismissal. [Jonathan
Morales v. Harbor Centre Port Terminal Inc.,
2012]

LABOR LAW

D. GRANT OF BONUS
A bonus is "a gratuity or act of liberality of the
giver which the recipient has no right to
demand as a matter of right" [Aragon vs. Cebu
Portland Cement Co., 61 O.G. 4597]. "It is
something given in addition to what is
ordinarily received by or strictly due the
recipient." The granting of a bonus is basically
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 employee's basic salaries or wages" xxx
[Kamaya Point Hotel vs. National Labor
Relations Commission, Federation of Free
Workers and Nemia Quiambao, G.R. No. 75289,
August 31, 1989]. [Traders Royal Bank vs.
NLRC, 1990]

C. PRODUCTIVITY STANDARD
The employer has the right to demote and
transfer an employee who has failed to
observe proper diligence in his work and
incurred habitual tardiness and absences and
indolence in his assigned work. [Petrophil
Corporation vs. NLRC, 1986]
In the consolidated cases of Leonardo vs. NLRC
[G. R. No. 125303, June 16, 2000] and Fuerte vs.
Aquino [G. R. No. 126937, June 16, 2000], the
employer claimed that the employee was
demoted pursuant to a company policy
intended to foster competition among its
employees. Under this scheme, its employees
are required to comply with a monthly sales
quota. Should a supervisor such as the
employee fail to meet his quota for several
consecutive months, he will be demoted,
whereupon his supervisors allowance will be
withdrawn and be given to the individual who
takes his place. When the employee concerned
succeeds in meeting the quota again, he is reappointed supervisor and his allowance is
restored. The Supreme Court held that this
arrangement is an allowable exercise of
company rights since an employer is entitled
to impose productivity standards for its
workers. In fact, non-compliance may be
visited with a penalty even more severe than
demotion.

With regard to the private respondents claim


for the mid-year bonus, it is settled doctrine
that a grant of a bonus is a prerogative, not an
obligation of the employer. The matter of
giving a bonus over and above the workers
lawful salaries and allowances is entirely
dependent on the financial capability of the
employer to give it. [Kimberly-Clark Philippines,
Inc. vs. Dimayuga, 2009]

E. CHANGE OF WORKING HOURS


Further, management retains the prerogative,
whenever exigencies of the service so require,
to change the working hours of its
employees. So long as such prerogative is
exercised in good faith for the advancement of
the employers interest and not for the
purpose of defeating or circumventing the
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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LABOR STANDARDS

F. RULES ON MARRIAGE BETWEEN


EMPLOYEES
OF
COMPETITOREMPLOYERS
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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SOCIAL WELFARE LEGISLATION

VI. Social Welfare


Legislation

LABOR LAW

The domestic worker shall be entitled to all


other benefits under existing laws. [Sec. 30,
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
are also engaged in other vocation or
employment [which is subject of
compulsory coverage];
(2) OFWs
recruited
by
foreign-based
employers;
(3) Employees [previously under compulsory
coverage] already separated from
employment or those self-employed [also
under compulsory coverage] with no
realized income for a given month, who
chose to continue with contributions to
maintain right to full benefit.

A.1. COVERAGE
I. COMPULSORY [SEC. 9 [A]; SEC. 9-A]
(1) Employees not over 60 years including
domestic helpers with at least P1,000
monthly pay; and
(2) Self-employed as may be determined by
the Commission, but not limited to:
I.
Self-employed professionals
II.
Partners and single proprietors of
businesses
III.
Actors and actresses, directors,
scriptwriters,
and
news
correspondents who do not fall
within the definition of the term
employee under Section 8 [d]
IV.
Professional athletes, coaches,
trainers and jockeys
V.
Individual farmers and fishermen

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.

A domestic worker who has rendered at least


one [1] month of service shall be covered by
the Social Security System [SSS], the
Philippine Health Insurance Corporation
[PhilHealth], and the Home Development
Mutual Fund or Pag-IBIG, and shall be entitled
to all the benefits in accordance with the
pertinent provisions provided by law.

A.2. EXCLUSIONS FROM COVERAGE


[SEC. 8 [J]]
(1) Employment purely casual and not for the
purpose of occupation or business of the
employer.
(2) Service performed on or in connection with
an alien vessel by an employee if he is
employed when such vessel is outside the
Philippines;
(3) Service performed in the employ of the
Philippine Government or instrumentality
or agency thereof;
(4) Service performed in the employ of a
foreign government or international

Premium payments or contributions shall be


shouldered by the employer. However, if the
domestic worker is receiving a wage of Five
thousand pesos [P5,000.00] and above per
month, the domestic worker shall pay the
proportionate share in the premium payments
or contributions, as provided by law.

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LABOR LAW

III. RETIREMENT BENEFITS [SEC. 12-B]

organization, or their wholly-owned


instrumentalities; and
(5) Services performed by temporary and
other employees which may be excluded
by SSS regulation. Employees of bona fide
independent contractors shall not be
deemed employees of the employer
engaging the services of said contractors.

Eligibility requirements
(1) 120 monthly contributions;
(2) Age
I.
65 years old; or
II.
a member who has reached 60
years may also avail if he is already
separated from employment or
has ceased to be self-employed.

A.3. BENEFITS
I. MONTHLY PENSION [SEC.12]

Benefit entitlement to monthly pension from


retirement until death.

Computation of monthly pension


The monthly pension shall be the highest of
the following amounts:
(1) P300 + [20% x [average monthly credit]] +
[2% x [average monthly credit] x [# of cash
credited years of service in excess of 10
years]];
(2) 40% x [average monthly credit];
(3) P1,000; provided, that the monthly
pension shall in no case be paid for an
aggregate amount of less than 60
months.

The monthly pension shall be suspended upon


the reemployment or resumption of selfemployment of a retired member who is less
than sixty-five [65] years old.
In Case of Death of Member
(1) His/her primary beneficiaries as of the
date of his/her retirement shall be entitled
to receive the monthly pension; or
(2) If he/she has no primary beneficiaries AND
he/she dies within sixty [60] months from
the start of his/her monthly pension,
his/her secondary beneficiaries shall be
entitled to a lump sum benefit equivalent
to
the
total
monthly
pensions
corresponding to the balance of the fiveyear guaranteed period, excluding the
dependents pension.

Note: Notwithstanding the abovementioned,


minimum pension is P1,200 for members with
at least 10 years credit service, P2,400 for
those with 20 years.

II. DEPENDENTS PENSION [SEC. 12-A]


(1) Paid on account of members
I.
death,
II.
retiring, or
III.
permanent total disability;
(2) Paid to each child conceived on or prior to
contingency, but not exceeding 5,
beginning with the youngest and
preferring the legitimate;
(3) Amount is either P250 or 10% of the
monthly pension as computed above,
whichever is higher.

Lump Sum Alternative


Member may opt to receive his first 18 monthly
pensions in lump sum but such is discounted
at a preferential rate of interest.
Lump Sum Eligibility
A 60 year old member with less than 120
monthly contributions who is no longer
employed or self-employed, and who is not
continuing contributions independently, he is
entitled to a lump sum equal to his total
contributions paid.

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IV. PERMANENT DISABILITY BENEFITS


[SEC. 13-A]

LABOR LAW

In Case of Death of Member


(1) His primary beneficiaries as of the date of
disability shall be entitled to receive the
monthly pension; OR
(2) If he has no primary beneficiaries and he
dies within sixty [60] months from the start
of his monthly pension, his secondary
beneficiaries shall be entitled to a lump
sum benefit equivalent to the total
monthly pensions corresponding to the
balance of the five-year guaranteed period
excluding the dependents pension.

Eligibility requirement
36 monthly contributions prior to the
semester of disability; same as death
benefit; the only difference is that the
pension is paid directly to the member.
In case the permanently disabled member
dies, it would be given the same treatment
as a retiree dying.
For permanent partial disability, the
pension is not lifetime. [e.g. loss of thumb
entitles member to only 10 months of
pension, while loss of arm 50 months]. It
shall be paid in lump sum if the period is
less than 12 months.
For multiple partial disabilities, they shall
be additive when related or deteriorating
the percentage shall be equal to the
number of months the partial disability is
entitled to, divided by 75 months. [e.g. loss
of sight in one eye 25/75; loss of arm
50/75; if both occur due to same cause,
then 25/75 + 50/75 = 100% so treated as
if it were permanent total disability]

V. DEATH BENEFITS [SEC. 13]


Eligibility requirement
36 monthly contributions prior to the semester
of death.
Benefit monthly pension to primary or a
lump sum benefit equivalent to thirty-six [36]
times the monthly pension secondary
beneficiaries.
To those ineligible lump sum benefit which
shall be the higher between the two:
[monthly pension] x 12; or
[monthly pension] x [# of monthly
contributions]

Lump Sum Alternative


A member is entitled to a lump sum benefit
equivalent to the monthly pension times the
number of monthly contributions paid to the
SSS or twelve [12] times the monthly pension,
whichever is higher.

VI. FUNERAL BENEFITS [13-B]


P12,000 in cash or in kind, upon death of
member

VII. LOAN

Lump Sum Eligibility


A member who has not paid at least 36
monthly contributions

Social Security Commission Resolution No.


669. Moreover, several SSS-issued circulars
such as Circular No. 21-P and No. 52 pertain to
the treatment of salary loans, sometimes
providing for more flexible payment terms or
condonation for delinquent payers; Santiago v.
CA and SSS, GR # L-39949 [1984] resolved an
issue involving the treatment of salary loan
repayments; SSS website also shows loans

Note: A member who [1] has received a lump


sum benefit; and [2] is reemployed or has
resumed self-employment not earlier than one
[1] year from the date of his disability shall
again be subject to compulsory coverage and
shall be considered a new member.

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VIII. SICKNESS BENEFITS [SEC. 14]

LABOR LAW

only for each day of confinement starting


from the tenth calendar day immediately
preceding the date of notification to the
SSS.
(3) SSS shall reimburse the employer or pay
the unemployed member only for
confinement within the one-year period
immediately preceding the date the claim
for benefit or reimbursement is received by
the SSS, except confinement in a hospital
in which case the claim for benefit or
reimbursement must be filed within one [1]
year from the last day of confinement.

Eligibility requirements and other conditions


(1) Inability to work due to sickness or injury
(2) Confined for at least 4 days either in a
hospital or elsewhere with SSS approval;
(3) At least 3 months of contributions in the 12
month period immediately before the
semester of sickness or injury has been
paid;
(4) All company sick leaves with pay for the
current year have been used up;
(5) Maximum of 120 days per 1 calendar year
[i.e maximum permissible for the same
sickness and confinement is 240 days for 2
consecutive years];
(6) The employer has been notified, or, if a
separated, voluntary or self-employed
member, the SSS directly notified within 5
days of confinement;
(7) Notice to employer or SSS not needed
when confinement is in a hospital; notice
to employer not required as well when
Employee became sick or injured while
working or within premises of the
employer.

IX. MATERNITY LEAVE BENEFITS [SEC.


14-A]
Eligibility Requirements
(1) A female member
(2) Paid at least three [3] monthly
contributions in the twelve-month period
immediately preceding the semester of her
childbirth or miscarriage
(3) She shall have notified her employer of her
pregnancy and the probable date of her
childbirth, which notice shall be
transmitted to the SSS in accordance with
the rules and regulations it may provide;

Benefit: daily cash allowance paid for the


number of days a member is unable to work
due to sickness or injury equivalent to 90% x
[average daily salary credit]

Process
The full payment shall be advanced by the
employer within thirty [30] days from the filing
of the maternity leave application;

Note: One hundred percent [100%] of the daily


benefits provided in the preceding paragraph
shall be reimbursed by the SSS to said
employer upon receipt of satisfactory proof of
such payment and legality thereof if the
following conditions are met:
(1) The employer notified the SSS of the
confinement within five calendar days
after receipt of the notification from the
employee member
(2) If the notification to the SSS is made by
the employer beyond five calendar days
after receipt of the notification from the
employee member, he shall be reimbursed

Coverage
The maternity benefits provided under this
section shall be paid only for the first four [4]
deliveries or miscarriages;
Employers Reimbursement
That the SSS shall immediately reimburse the
employer of one hundred percent [100%] of
the amount of maternity benefits advanced to
the employee by the employer upon receipt of
satisfactory proof of such payment and legality
thereof. Note: All of these benefits are tax-exempt.
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A.4. BENEFICIARIES
1. PRIMARY

LABOR LAW

B.3. BENEFITS
Computation of Service
From date of original appointment/election,
including periods of service at different times
under one or more employers, those
performed overseas under the authority of the
Republic of the Philippines, and those that
may be prescribed by the GSIS in coordination
with the Civil Service Commission.

(1) Dependent spouse until remarriage [see


above];
(2) Dependent
children
[legitimate,
legitimated,
legally
adopted,
and
illegitimate] [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%.

In case of reinstatement in the service of an


employer and subsequent retirement or
separation which is compensable under this
Act, all service credited for retirement,
resignation or separation for which
corresponding benefits have been awarded
under this Act or other laws shall be excluded
in the computation of service

2. SECONDARY
Shall only receive when the primary
beneficiaries are absent
Dependent parents

3. OTHERS shall only receive when the


primary and secondary beneficiaries are
absent
Any other person designated by
member as his/her secondary
beneficiary.

Note: The GSIS may prescribe rules for the


inclusion of part time and other services with
compensation.

I. MONTHLY PENSION [SEC. 9]


The amount shall be:
(a) 37.5% x [revalued ave. monthly
compensation]
(b) Plus 2.5 x [revalued ave. monthly
compensation] x [years in service in excess
of 15 years].
The monthly pension shall not exceed
90%
of
the
average
monthly
compensation.
It shall not be less than P2,400 for those
with 20 years of service and not less than
P1,300 for everyone else.

B. GSIS [RA 8291]


B.1. COVERAGE
All public sector employees below the
compulsory retirement age of 65, irrespective
of employment status.

B.2. EXCLUSIONS FROM COVERAGE


(1) AFP and PNP;
(2) Members
of
the
Judiciary
and
Constitutional Commissions who are
covered only by life insurance as they have
separate retirement schemes;
(3) Contractual employees with no employeremployee relationship with the agency
they serve.

II. RETIREMENT BENEFITS [SEC. 13]


Eligibility requirements [Sec. 13-A]
(1) 15 years service;
(2) 60 years of age; and
(3) Not receiving pension benefit
permanent total disability.

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Note: Retirement is compulsory for employees


65 years of age who have rendered at least 15
years of service; if employee has less than 15
years of service, he may be allowed to
continue in accordance with civil service laws.

LABOR LAW

an additional cash payment of 18 times


basic monthly pension.
To the ineligible
If member has rendered at least 3 years of
service, then he shall receive cash payment
equal to 100% of ave. monthly compensation
for each year of service [essentially total
amount of contributions made] or P12,000
whichever is higher.

Benefit [Sec. 13]: Choice between


(a) 60 x [basic monthly pension] lump sum
payment at the time of retirement plus
basic monthly pension payable monthly
for life after expiry of the 5-year
guaranteed period which is already
covered by the lump sum; or
(b) Cash payment equivalent to 18 x [basic
monthly pension] plus monthly pension for
life immediately but with no 5-year
guarantee
Note: Subject to periodic adjustment [Sec. 14]

Partial Disability
Paid according to GSIS prescribed schedule
[this is similar to the scheme used by SSS;
refer to section II subsection D-3 above];
member availing of permanent partial
disability must satisfy condition E.1.a. above
regarding the disability not being due to his
own fault and either E.1.b.i. or E.1.b.ii.
regarding employment status and services
rendered.

III. PERMANENT DISABILITY BENEFITS


Eligibility requirements for Permanent Total
Disability
(1) Disability not due to employees own grave
misconduct,
notorious
negligence,
habitual intoxication, or willful intention to
kill himself or another;
(2) Employee is:
(a) in service at the time of disability; or
(b) even if separated, he has paid at least
36 monthly contributions within the 5year period immediately prior to
disability or has paid a total of at least
180 monthly contributions prior to
disability; and
(c) Member is not enjoying old-age
retirement benefit.

IV. DEATH BENEFITS [SEC. 21]


When member dies, the primary beneficiaries
are entitled to only one of the following:
(1) Survivorship pension
a. If he was in the service when he died;
or
b. Even if separated from the service, he
has at least 3 years of service and has
paid 36 monthly contributions within
the 5 years immediately preceding
death; or
c. Even if separated from the service, he
has paid 180 monthly contributions
prior to death.
(2) Survivorship pension plus cash payment of
100% ave. monthly compensation for
every year of service [so essentially,
pension plus total contributions made]
a. If he was in the service when he died;
and
b. With 3 years of service.
(3) Cash payment equivalent to 100% ave.
monthly compensation for each year of

Benefit for Permanent Total Disability


Monthly income benefit for life equal to
basic monthly pension This is effective
from date of disability;
If member is in service at the time of
disability and he has paid at least 180
monthly contributions, in addition to the
monthly income benefit, he shall receive
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LABOR LAW

VIII. SEPARATION BENEFITS

service he paid contributions or P12,000


whichever is higher
a. With 3 years of service; and
b. He has failed to qualify in the prior 2
schemes.

Eligibility requirements
(1) 60 years of age, or separation from service
with at least 3 years but not over 15 years
served
(2) Below 60 years of age, but at least 15
years of service rendered.

V. FUNERAL BENEFITS [SEC. 23]


Fixed by GSIS rules and regulations

Benefit
(1) For 60 years of age or separated from
service with 3 to 15 years of service: cash
payment of 100% of ave. monthly
compensation for each year of service [so
essentially, the total amount of all
contributions paid] or P12,000 whichever
is higher.
(2) Below 60 years of age and at least 15 years
of service: cash payment equivalent to 18 x
[monthly pension] at the time of
resignation or separation plus an old-age
pension benefit equal to basic monthly
pension.

Entitled to this are the following:


(1) Active member;
(2) Member separated from service but still
entitled to funeral benefit;
(3) Pensioner;
(4) Retiree who at the time of retirement was
of pensionable age but opted to retire
under RA 1616.

VI. LOAN
GSIS website provides for this

VII. TEMPORARY DISABILITY BENEFITS


Similar to sickness

IX. UNEMPLOYMENT BENEFITS [SEC. 11]


Eligibility requirements
(1) Employee separated from service due to
abolition of his office or position; and
(2) Employee has been paying integrated
contributions for at least 1 year prior to
separation.

Eligibility requirements and other conditions:


(1) Employee must be:
I.
in service at the time of disability; or
II.
if separated, he has rendered at least
3 years of service and paid at least 6
monthly contributions in the 12
month period immediately prior to
disability;
(2) All sick leave credits including CBA sick
leaves for the current year has been used
up; and
(3) Maximum of 120 days per 1 calendar year
[so maximum permissible for the same
sickness and confinement is 240 days for 2
consecutive years].

Benefit
Monthly cash payments of 50% of average
monthly compensation for a duration which is
proportional to years rendered, ranging from 2
months to 6 months.

X. SURVIVORSHIP BENEFITS
Beneficiaries are entitled to the following:
(1) Basic survivorship pension which is 50% of
basic monthly pension; and
(2) Dependent childrens pension not
exceeding 50% of the basic monthly
pension.

Benefit
75% of the current daily compensation for
every day or fraction thereof of disability or
P70 whichever is higher.

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XI. LIFE INSURANCE BENEFITS

distinguish share of
illegitimate children.

Note:
Judiciary
and
Constitutional
Commissions are entitled to life insurance
only.

and

Shall only receive when the primary


beneficiaries are absent:
(1) Dependent parents
(2) Legitimate descendants, subject to the
restrictions on dependent children.

(1) Dependent spouse until remarriage;


(2) Dependent
children
[legitimate,
legitimated,
legally
adopted,
and
illegitimate] but RA 8291 does not

Definition of
Terms

legitimate

II. SECONDARY

B.4. BENEFICIARIES
I. PRIMARY

Enabling law

LABOR LAW

SSS
RA 1161 as amended by RA 8282:
Social Security Act of 1997
Employer any person, natural or juridical,
domestic or foreign, who carries on in the
Philippines any trade business, industry,
undertaking, and uses the services of
another person who is under his orders as
regards the employment, except those
considered as employer under the GSIS. A
self-employed person shall be both
employer and employee at the same time.
Employee any person who performs
services for an employer in which either or
both mental and physical efforts are used
and who receives compensation for such
services, where there is an employer
employee relationship; also, a selfemployed person who is both employee and
employer at the same time
Self-employed any person whose income
is not derived from employment, including,
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.

137

GSIS
RA 8291 amending PD 1146
Employer National government, its
political
subdivisions,
branches,
agencies
or
instrumentalities,
including
government-owned
or
controlled corporations and financial
institutions with original charters
[GOCCs]; constitutional commissions;
and judiciary
Employee any person receiving
compensation while in service of an
employer whether by election or
appointment, irrespective of status of
appointment; baranggay officials; and
sangguniang officials

Note: No
employed.

counterpart

for

self-

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Dependents:
Legal spouse entitled by law to receive
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
Primary
Dependent spouse until remarriage
[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
employment, including living allowance, as
well as the cash value of any remuneration
paid in any medium other than cash except
that portion already above the max salary
credit under Sec. 18 of the Act.
Compulsory
Employers as defined above;
Employees not over 60 years including
household helpers with at least P1,000
monthly pay; and
Self-employed.

Coverage

LABOR LAW

Same except that a child here is below


18

Same except that RA 8291 does not


distinguish share of legitimate and
illegitimate children

Compensation basic pay received


excluding per diems, bonuses,
overtime, honoraria, allowances and
other emoluments not integrated into
the basic pay under existing laws.
Public sector employees below the
compulsory retirement age of 65.

Exceptions:
(1) AFP and PNP;
(2) Members of the Judiciary and
Constitutional Commissions who
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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LABOR LAW

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.

Effective Date
of Coverage

Summary of
Benefits

Effects of
separation
from
employment

Dispute
Settlement
Prescriptive
Period

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
Employee: 1st day at work
Self-employed: upon registration with SSS
(1) Monthly pension
(2) Dependents pension
(3) Retirement benefits
(4) Permanent disability benefits
(5) Death benefits
(6) Funeral benefits
(7) Loan Social Security Commission
Resolution No. 669. Moreover, several
SSS-issued circulars such as Circular
No. 21-P and No. 52 pertain to the
treatment of salary loans, sometimes
providing for more flexible payment
terms or condonation for delinquent
payers; Santiago v. CA and SSS, GR # L39949 [1984] resolved an issue
involving the treatment of salary loan
repayments; SSS website also shows
loans
(8) Sickness benefits
(9) Maternity leave benefits
(1) Employers contribution, and
(2) Employees
obligation
to
pay
contribution both cease at the end of
the month of separation;
(3) Employee shall be credited with all
contributions paid on his behalf and
entitled to all benefits set forth by the
law.
Social Security Commission CA [Rule 43;
questions of law and fact] SC [Rule 45;
questions of law only]
20 years

139

(1)
(2)
(3)
(4)
(5)
(6)

Monthly pension
Retirement benefits
Permanent disability benefits
Death Benefits
Funeral benefits
Loan GSIS website provides for
this
(7) Temporary
disability
benefits
[similar to sickness]
(8) Separation benefits
(9) Unemployment benefits Sec 11
(10) Survivorship benefits
(11) Life insurance benefits
Note: Judiciary and Constitutional
Commissions are entitled to life
insurance only.

Continued membership for the


unemployed member; and entitlement
to whatever benefits he has qualified
to in the event of any compensable
contingency.

GSIS CA [Rule 43] SC [Rule 45];


appeal does not stay execution.
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SOCIAL WELFARE LEGISLATION

LABOR LAW

(3) An employee over sixty [60] years of age


shall be covered if he had been paying
contributions to the System prior to age
sixty [60] and has not been compulsorily
retired.
(4) An employee who is coverable by both the
GSIS and SSS shall be compulsorily
covered by both Systems. [Sec. 2, IRR of
Title II, Book IV of LC]
(5) Filipinos working abroad in the service of
an employer as defined in Section 3 hereof
shall be covered by the System, and
entitled to the same benefits as are
provided for employees working in the
Philippines. [Sec. 5, IRR of Title II, Book IV
of LC]

C. LIMITED PORTABILITY LAW [RA


7699]
C.1 COVERAGE
(1) Workers who transfer employment from
one sector to another; or
(2) Those employed in both sectors [public
and private].

C.2. PROCESS
The covered worker shall have his credible
services or contributions in both Systems
credited to his service or contribution record in
each of the Systems and shall be totalized for
purposes of old-age, disability, survivorship
and other benefits in case the covered member
does not qualify for such benefits in either or
both systems without totalization: Provided,
however, That overlapping periods of
membership shall be credited only once for
purposes of totalization [Sec. 3]

D.2. EFFECTIVITY
Coverage of employees shall take effect on the
first day of employment. [Sec. 6]

D.3. WHEN COMPENSABLE


Grounds
(1) For the injury and the resulting disability or
death to be compensable, the injury must
be the result of accident arising out of and
in the course of the employment.
(2) For the sickness and the resulting disability
or death to be compensable, the sickness
must be the result of an occupational
disease listed under Annex A of these
Rules with the conditions set therein
satisfied, otherwise, proof must be shown
that the risk of contracting the disease is
increased by the working conditions.

Totalization shall refer to the process of


adding up the periods of creditable services or
contributions under each of the Systems, for
purposes of eligibility and computation of
benefits [Sec. 2e].
Overlapping periods of membership in case of
those employed in both sectors at once are to
be counted only ONCE for purposes of
totalization to be able to satisfy eligibility
requirements of benefits provided for by either
SSS or GSIS.

Limitation: No compensation shall be allowed


to the employee or his dependents when the
injury, sickness, disability, or death was
occasioned by any of the following:
(1) his intoxication;
(2) his willful intention to injure or kill
himself or another; or
(3) his notorious negligence
(4) As otherwise provided by law.

D. EMPLOYEES COMPENSATION
COVERAGE
AND
WHEN
COMPENSABLE
D.1 COVERAGE
(1) Every employer shall be covered.
(2) Every employee not over sixty [60] years of
age shall be covered.
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VII. Labor Relations

LABOR LAW

the Labor Code. Employees have the right to


form, join or assist labor organizations for the
purpose of collective bargaining or for their
mutual aid and protection. (UST Faculty Union
v Bitonio)

A. RIGHT TO SELF-ORGANIZATION
Basis of Right
(1) 1987 Constitution
Art. III Sec. 8. The right of the people, including
those employed in the public and private
sectors, to form unions, associations, or
societies for purposes not contrary to law shall
not be abridged.

Infringement of the right to self-organization


It shall be unlawful for any person to restrain,
coerce, discriminate against or unduly interfere
with employees and workers in their exercise of
the right to self-organization. [] (Art. 252)
Scope of right to self-organization
(1) Right to form, join and assist labor
organizations of their own choosing for the
purpose of collective bargaining through
representatives (Art. 252);
(2) Right to engage in lawful concerted
activities for the same purpose or for their
mutual aid and protection (Art. 252)
(3) Subsumed in the right to join, affiliate with,
or assist any union is the right NOT to join,
affiliate with, or assist any union; or to
leave a union and join another one.
(Heritage Hotel Manila v. PIGLAS-Heritage,
2009)
(4) The right of the employees to selforganization is a compelling reason why
their withdrawal from the cooperative
must be allowed. As pointed out by the
union, the resignation of the memberemployees is an expression of their
preference for union membership over that
of membership in the cooperative. (Central
Negros Electric Cooperative v SOLE, 1991)

Art. XIII Sec. 3. The state shall afford full


protection to labor, local and overseas,
organized and unorganized, and promote full
employment opportunities for all. It shall
guarantee the rights of all workers to selforganization, collective bargaining and
negotiations, and peaceful concerted activities,
including the right to strike in accordance with
law. [...]
(2) Labor Code
Art. 249. All persons employed in commercial,
industrial and agricultural enterprises and in
religious, charitable, medical, or educational
institutions, whether operating for profit or not,
shall have the right to self-organization and to
form, join, or assist labor organizations of their
own choosing for purposes of collective
bargaining.
Ambulant, intermittent, and itinerant
workers, self-employed people, rural workers
and those without any definite employers may
form labor organizations for their mutual aid
and protection.
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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LABOR LAW

A.1. WHO MAY UNIONIZE FOR


PURPOSES
OF
COLLECTIVE
BARGAINING?

work councils and other forms of workers


participation schemes to achieve the same
objectives. (EO 180 2 [1987])

(1) All employees (General Rule)


(2) Employees of the government under the
civil service, and government employees of
corporations created under the Corporation
Code
(3) Supervisory Employees
(4) Aliens with valid working permits
(5) Security personnel

(3) Supervisory Employees


Supervisory employees are those who, in the
interest of 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. (Art. 218 (m))
Supervisory employees shall not be eligible for
membership in a labor organization of the
rank-and-file employees but may join, assist or
form separate labor organizations of their own.
(Art. 251)

(1) All Employees


Any employee, whether employed for a definite
period or not, shall, beginning on his first day
of service, be considered as an employee for
purposes of membership in any labor union.
(Art. 283 [c])

Rationale
Supervisory employees, while in the
performance of supervisory functions, become
the alter ego of the management in the
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
mixture of rank-and-file and supervisory
employees. (Toyota Motor Phil. Corp. v Toyota
Motor Phil. Corp. Labor Union, 1997)

Employees of non-profit organizations are


allowed to join, form and/or assist labor
organizations (FEU-Dr. Nicanor Reyes Medical
Foundation Inc. v Trajano, 1992)
(2) Employees of Government Corporations
Created under the Corporation Code
The right to self-organization shall not be
denied to government employees. (1987
Constitution, Art. IX-B, 2 [5])

Effect of Mixed Membership


The inclusion as union members of employees
outside the bargaining unit shall not be a
ground for the cancellation of the registration
of the union. Said employees are automatically
deemed removed from the list of membership
of said union. (Art. 251-A)

Employees of government corporations


established under the Corporation Code shall
have the right to organize and to bargain
collectively with their respective employers. All
other employees in the civil service shall have
the right to form associations for purposes not
contrary to law. (Art. 250)

Note: [T]he rank and file union and the


supervisors union operating the same
establishment may join the same federation or
national union. (Art. 251)

All government employees can form, join, or


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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LABOR LAW

I. WHO CANNOT FORM, JOIN OR ASSIST


LABOR ORGANIZATIONS

(4) Aliens
General rule: All aliens [] are strictly
prohibited from engaging directly or indirectly
in all forms of trade union activities. (Art. 275)

(1)
(2)
(3)
(4)
(5)
(6)
(7)

Exception: Aliens working in the country []


with valid permits issued by the DOLE [and]
are nationals of a country which grants the
same or similar rights to Filipino workers. (Art.
275)
The DFA provides the certification on the
requirement of reciprocity. (Book V, Rule II, 2,
1, 3rd sentence)

Managerial employees
Confidential employees
Non-employees
Member-employee of a cooperative
Employees of international organizations
High-level government employees
Members of the AFP, police officers,
policemen, firemen and jail guards

(1) Managerial Employees


A managerial employee is one who is vested
with the powers or prerogatives to lay down
and execute management policies and/or to
hire, transfer, suspend, lay-off, recall,
discharge, assign or discipline employees. (Art.
218 (m))

(5) Security Guards


The security guards and other personnel
employed by the security service contractor
shall have the right:
(1) To form, join, or assist in the formation
of a labor organization of their own
choosing for purposes of collective
bargaining and
(2) To engage in concerned activities which
are not contrary to law including the
right to strike.(D.O. No. 14 Series of 2001
Guidelines Governing the Employment
and Working Conditions of Security
Guards and Similar Personnel in the
Private Security Industry)

Managerial employees are not eligible to join,


assist or form any labor organization. [] (Art.
251)
(2) Confidential employees
Nature of Access Test
A confidential employee is one who, by the
nature of his functions, assists or acts in a
confidential capacity, and who formulates,
determines and effectuates management
policies in the field of labor relations.

On Dec. 1986, President C. Aquino issued EO


No. 111 which eliminated the provision which
made security guards ineligible to join any
labor organizations. In 1989, Congress passed
RA 6715 which also did not impose limitations
on the ability of security guards to join labor
organizations. Thus, security guards may now
freely join a labor organization with the rankand-file or the supervisory union, depending on
their rank.(Manila Electric Co. v. SOLE, 1991)

The two criteria are cumulative, and both must


be met if an employee is to be considered a
confidential employee that is,
(1) the confidential relationship must exist
between the employees and his supervisor,
and
(2) the supervisor must handle the prescribed
responsibilities relating to labor relations.
(San Miguel Supervisors and Exempt Union
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
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access to confidential matters of, persons who


exercise managerial functions in the field of
labor relations. (Thus there is a fiduciary and
confidential relationship between manager and
employer.) It is not far-fetched that in the
course of Collective Bargaining, they might
jeopardize that interest which they are duty
bound to protect. (Metrolab Industries Inc. v.
Roldan-Confessor, 1996)

LABOR LAW

(4) Employee-Member of Cooperative


Members of cooperatives are not eligible to
form, assist or join a labor organization for the
purpose of collective bargaining, even though
they do not participate in the actual
management of the cooperative. Irrespective of
their degree of participation, they are still coowners. Thus they cannot invoke the right to
collective bargain because an owner cannot
bargain with himself or his co-owners.
(Benguet Electric Cooperative v. Ferrer-Calleja,
1989)
Exception
Employees who withdrew their membership
from the cooperative are entitled to form or
join a labor union for the negotiations of a
Collective Bargaining Agreement (CBA).
(CENECO v. DOLE, 1991)

The disqualification of managerial and


confidential employees from joining a
bargaining unit for rank and file employees is
already well-entrenched in jurisprudence.
While Article 245 of the Labor Code limits the
ineligibility to join, form and assist any labor
organization to managerial employees,
jurisprudence has extended this prohibition to
confidential employees or those who by reason
of their positions or nature of work are required
to assist or act in a fiduciary manner to
managerial employees and hence, are likewise
privy to sensitive and highly confidential
records. (Standard Chartered Bank Employees
Union v SCB, 2008)

(5) Employees of International Organizations


International organizations are endowed with
some degree of international legal personality.
They are granted jurisdictional immunity.
A certification election cannot be conducted in
an international organization to which the
Philippine Government has granted immunity
from local jurisdiction. (International Catholic
Migration Commission v. Calleja, 1990)

Function Test: nomenclature is not controlling


The mere fact that an employee is designated
manager does not ipso facto make him one.
Designation should be reconciled with the
actual job description of the employee. (Paper
Industries Corp. of the Philippines. v. Laguesma,
2000)

(6) High-level / Managerial Government


Employees
High-level employees of the government
whose functions are normally considered as
policy-making or managerial or whose duties
are of a highly confidential nature shall not be
eligible to join the organization of rank-andfile government employees. (E.O. 180 Sec. 3)

(3) Non-Employees
Persons who are not employees of a Company
are not entitled to the constitutional right to
join or form a labor organization for purposes
of collective bargaining. The question of
whether employer-employee relationship
exists is a primordial consideration before
extending labor benefits under the workmen's
compensation, social security, medicare,
termination pay and labor relations law.[]
(Singer Sewing Machine Co. v. Drilon, 1993)

Managerial functions refer to powers such as


to:
(1) Effectively recommend managerial
actions;
(2) Formulate or execute management
policies or decisions; or
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(3) Hire, transfer suspend, lay-off, recall,


dismiss,
assign
or
discipline
employees.(San Miguel Supervisors and
Exempt Union v Laguesma, 1997)

LABOR LAW

Role of a bargaining unit


The labor organization designated or selected
by the majority of the employees in an
appropriate collective bargaining unit shall be
the exclusive representative of the employees
of such unit for the purpose of collective
bargaining.

(7) Members of the AFP, Policemen, Police


Officers, Firemen and Jailguards
Members of the AFP, Policemen, Police
Officers, Firemen and Jailguards are expressly
excluded by EO 180 4 from the coverage of
the law which provides guidelines for the
exercise of the right to organize of government
employees.

Exception
However, an individual employee or group of
employees shall have the right at any time to
present grievances to their employer. Any
provision
of
law
to
the
contrary
notwithstanding, workers shall have the right,
to participate in the policy and decisionmaking processes of the establishment where
they are employed insofar as said processes
will directly affect their rights, benefits and
welfare. For this purpose, workers and
employers may form labor-management
councils: Provided, that the representatives of
the workers in such labor-management
councils shall be elected by at least the
majority of all employees in said
establishment. (Art. 261)

A.2. BARGAINING UNIT


A Bargaining Unit refers to a group of
employees sharing mutual interests within a
given employer unit, comprised of all or less
than all of the entire body of employees in the
employer unit or any specific occupational or
geographical grouping within such employer
unit. (Book V, Rule 1, Sec. 1[d])
A bargaining unit is a group of employees of a
given employer comprised of all or less than all
of the entire body of employees, which the
collective interests of all the employees
indicate to be best suited to serve reciprocal
rights and duties of the parties consistent with
equity to the employer. (Belyca Corp. v. Calleja,
1988)

CBA Coverage
When there has been a factual determination
by the Labor Arbiter that the petitioners were
regular employees, said employees shall fall
within the coverage of the bargaining unit and
are therefore entitled to CBA benefits as a
matter of law and contract. (Farley Fulache, et
al. v ABS-CBN, 2010)

Functions of an Appropriate Bargaining Unit


(1) An ELECTORAL DISTRICT. It marks the
boundaries of those who may participate in
a certification election.
(2) An ECONOMIC UNIT. They are a group of
employees with community of interests.
(3) A SOVEREIGN BODY. It selects the sole
and exclusive bargaining agent.

Effect of Prior Agreement


A prior agreement as to the inclusion or
exclusion of workers in a bargaining unit or a
prohibition from forming their own union
agreed upon by the corporation with the
previous bargaining representatives can never
bind subsequent federations. (General Rubber &
Footwear Corp. v BLR, 1987)

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Rationale
It is a curtailment of the right to selforganization. During the freedom period, the
parties may not only renew the existing
collective bargaining agreement but may also
propose and discuss modifications or
amendments thereto. (DLSU v. DLSUEA, 2000)

LABOR LAW

Calica, 1992; Diatagon Labor Federation v.


Ople, 1980)
Spun-off corporations
The transformation of companies is a
management prerogative and business
judgment which the courts cannot look into
unless it is contrary to law, public policy or
morals. If, considering the spin-offs, the
companies would consequently have their
respective and distinctive concerns in terms of
nature of work, wages, hours of work and other
conditions of employment. The nature of their
products and scales of business may require
different skills, volumes of work, and working
conditions which must necessarily be
commensurate by different compensation
packages. (San Miguel Union v Confesor, 1996)

Corporate Entities
Two companies having separate juridical
personalities shall NOT be treated as a single
bargaining unit.
Exception: Pervasive Unitary Aspect of
Management Doctrine
The cross-linking of the agencies command,
control, and communication systems indicate
their unitary corporate personality. (Philippine
Scouts Veterans v. Torres)

I.
TEST
TO
DETERMINE
THE
CONSTITUENCY OF AN APPROPRIATE
BARGAINING UNIT

Principles in determining whether to establish


separate bargaining units
(1) The existence of a bona fide business
relationship between the 2 companies is
not proof of being a single corporate entity,
especially when the services provided by
the other company are merely auxiliary.
(2) The fact that there are as many bargaining
units as there are companies in a
conglomeration of companies is a positive
proof that a corporation is endowed with a
legal personality DISTINCTLY ITS OWN,
independent and separate from other
corporations.
(3) Separate legitimate purposes militate
against treating one corporation as an
adjunct or alter ego of the other.
(4) The fact that the businesses are related,
that some of the employees are the same
persons working in the other company and
the physical plants, offices and facilities are
in the same compound are NOT sufficient
to justify piercing the corporate veil.
(Indophil Textile Mills Workers Union v.

4 Factors:
(1) Will of the Employees (Globe Doctrine)
(2) Affinity and unity of employees interest
(3) Prior collective bargaining history
(4) Employment status (UP v. Ferrer-Calleja,
1992)
Note: Of these 4 factors, the court has
identified that it is the 2nd factor which has
emerged as the standard in determining the
proper constituency of a collective bargaining
unit.
Other factors:
(5) Geography and Location
(6) Policy of avoiding fragmentation of the
bargaining unit
(1) Globe Doctrine: Concept
A practice designated as the "Globe doctrine,"
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


represent all employees, but for the specific
purpose of permitting the employees in each of
the several categories to select the group
which each chooses as a bargaining unit.
(Kapisanan ng mga Manggagawa sa Manila
Road Co. v. Yard Crew Union, 1960)

LABOR LAW

of work to which they belong, and the unity of


employees' interest such as substantial
similarity of work and duties. (Belyca Corp. v.
Calleja, 1988)
(5) Geography and Location
Geography and location only play a significant
role if:
(1) The separation between the camps and
the different kinds of work in each all
militate in favor of the system of
separate bargaining units;
(2) When the problems and interests of the
workers are peculiar in each camp or
department;
(3) The system of having one collective
bargaining unit in each camp has
operated satisfactorily in the past.
(Benguet Consolidated Inc. and Balatok
Mining Co. v. Bobok Lumberjack
Assn.,1958)

Rationale
Highly skilled or specialized technical workers
may choose to form their own bargaining unit
because they may be in better position to
bargain with the employer considering the
market value of their skills.
(2) Community or Mutuality of Interests
The basic test of an asserted bargaining units
ACCEPTABILITY is whether or not it is
fundamentally the combination which will best
assure to all employees the exercise of their
collective bargaining rights. This is related to
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
It bears noting that the goal of the DOLE is
geared towards "a single employer wide unit
which is more to the broader and greater
benefit of the employees working force." The
philosophy is to avoid fragmentation of the
bargaining unit so as to strengthen the
employees bargaining power with the
management. To veer away from such goal
would be contrary, inimical and repugnant to
the objectives of a strong and dynamic
unionism. (Phil. Diamond Hotel and Resort Inc v
Manila Diamond Hotel and Employees Union,
2006)

Rationale
There are greater chances of success for the
collective bargaining process. The bargaining
unit is designed to maintain the mutuality of
interest among the employees in such unit.
When the interest between groups has
changed over time, there is reason to dissolve,
change or expand a certain bargaining unit.
(3) Prior Collective Bargaining History
The existence of prior collective bargaining
history is neither decisive nor conclusive in the
determination of what constitutes an
appropriate bargaining unit. (San Miguel Corp.
v. Laguesma, 1994)

Since the confidential employees are very few


in number and are by practice and tradition
identified with the supervisors in their role as
representatives of management vis--vis the
rank and file employees, such identity of
interest has allowed their inclusion in the
bargaining of supervisors for purposes of

(4) Employment status


Among the factors to be considered is the
employment status of the employees to be
affectedthat is the positions and categories
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collective bargaining in turn as employees in


relation to the company as their employer. This
identity of interest logically calls for their
inclusion in the same bargaining unit and at
the same time fulfills the laws objective of
insuring to them the full benefit of their right
to self-organization and to collective
bargaining,
which
could
hardly
be
accomplished if the respondent associations
membership were to be broken up into five
separate ineffective tiny units. Creating
fragmentary units would not serve the interest
of industrial peace. The breaking up of
bargaining units into tiny units will greatly
impair their organizational value. (Filoil
Refinery Corp. v Filoil Supervisory and
Confidential Employees Union, 1972)

LABOR LAW

conspicuous places in the establishment or


bargaining unit where the union seeks to
operate;
(3) The approximate number of employees in
the bargaining unit, accompanied by the
names of those who support the voluntary
recognition comprising at least a majority
of the members of the bargaining unit; and
(4) A statement that the labor union is the only
legitimate labor organization operating
within the bargaining unit.
All accompanying documents of the notice for
voluntary recognition shall be certified under
oath by the employer representative and
president of the recognized labor union.
The employer may voluntarily recognize the
representation status of a union in
unorganized establishments. However, in
cases where an establishment is already
organized, as when a petition for certification
election has already been filed by a union, if
the company voluntarily recognizes a different
union during such time, then the companys
voluntary recognition is void. (SLECC v Sec. of
Labor, 2009)

II. VOLUNTARY RECOGNITION


Voluntary Recognition refers to the process by
which a legitimate labor union is recognized by
the employer as the exclusive bargaining
representative or agent in a bargaining unit,
reported with the Regional office in accordance
to Rule VII, Sec 2 of these Rules. (Book V, Rule
I, Sec. 1 [bbb])
Requirements
Substantive Requirements
(1) Unorganized establishment;
(2) Only one union asking for recognition;
(3) The members of the bargaining unit did not
object to the projected recognition of the
union. (Book V, Rule VII, Sec. 2)

III. CERTIFICATION ELECTION


Certification Election" is the process of
determining, through secret ballot, the sole
and exclusive bargaining agent of the
employees in an appropriate bargaining unit,
for purposes of collective bargaining. (Book V
Rule I Sec. 1 [x])

Procedural Requirements
The notice of voluntary recognition shall be
accompanied by the original copy and two (2)
duplicate copies of the following documents:
(1) A joint statement under oath of voluntary
recognition attesting to the fact of
voluntary recognition
(2) Certificate of posting of the joint statement
of voluntary recognition for fifteen (15)
consecutive days in at least two (2)

The certification election is the best method of


determining the will of the workers on the
crucial question of who shall represent them in
their negotiations with the management for a
collective bargaining agreement that will best
protect and promote their interests. It is
essential that there be no collusion against this
objective
between
an
unscrupulous
management and a union covertly supporting
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it while professing its loyalty to labor, or at


least that the hopes of labor be not frustrated
because of its representation by a union that
does not enjoy its approval and support. It is
therefore sound policy that any doubt
regarding the real representation of the
workers be resolved in favor of the holding of
the certification election. This is preferable to
the suppression of the voice of the workers
through the prissy observance of technical
rules that will exalt procedure over substantial
justice. (Port Workers Union of the Philippines v
Laguesma, 1992)

LABOR LAW

It is a fundamental postulate that the will of


the majority given expression in an honest
election with freedom on the part of the voters
to make their choice, is controlling. (PLUM
Federation of Industrial and Agrarian Workers v
Noriel, 1978)
Certification Election
To determine the Exclusive
Bargaining Agent
All members of the
appropriate
bargaining
unit may vote.

Union Election
To elect union
officers
Only union
members may
vote.

It is a statutory policy. (Belyca Corp. v. FerrerCalleja, 1998)

Purpose
The purpose of a certification election is
precisely the ascertainment of the wishes of
the majority of the employees in the
appropriate bargaining unit: to be or not to be
represented by a labor organization, and in the
affirmative case, by which particular labor
organization. (Reyes v Trajano, 1992)

Implications
Thus it should not be circumvented. There
should be no obstacle in conducting the
Certification election. (George & Peter Lines,
Inc. v. Associated Labor Union, 1985)
Technical rules and objections should not
hamper the correct ascertainment of the labor
union that has the support and confidence of
the majority of the workers and is thus entitled
to represent them in bargaining for the terms
and conditions of their employment. (Port
Workers Union v. DOLE, 1992)

Nature of proceeding
It is not litigation, but a mere investigation of a
non-adversary character. The object of the
proceedings is merely the determination of
proper bargaining units and the ascertainment
of the will and choice of the employees in
respect of the selection of the bargaining
representative. The determination of the
proceeding does not entail the entry of
remedial orders or redress of rights, but
culmination solely in an official designation of
bargaining units and an affirmation of the
employees expressed choice of bargaining
agent. (Young Men Labor Union Stevedores v
CIR, 1965)

Who may vote


All employees whether union members or not,
as long as they belong to the appropriate
bargaining unit can vote.
Who may file a petition for certification election
(1) Legitimate labor organization (registered
w/ DOLE)
(2) Unregistered local chapter with charter
certificate from national union or
federation
(3) National union or federation in behalf of its
local/chapter
(4) Employer (when requested to bargain
collectively and no existing CBA)

It is the most democratic and most efficacious/


effective way of determining the will of the
bargaining unit. (Samahang Manggagawa sa
Permex v Sec. of Labor, 1998)

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(1) Legitimate Labor Organization


"Legitimate labor organization" means any
labor organization duly registered with the
Department of Labor and Employment, and
includes any branch or local thereof. (Art. 218
(f))

LABOR LAW

(2) submitting the list of employees during


the pre-election conference should the
Med-arbiter act favorably on the petition
(Art 258-A introduced by RA 9481)
A companys interference in the Certification
Election creates a suspicion that it intends to
establish a company union. (Oriental Tin Can
Labor Union v. Secretary of Labor, 1998)

(2) Unregistered Chapter with Charter


certificate
A duly registered federation or national union
may directly create a local chapter by issuing a
charter certificate indicating the establishment
of the local chapter. The chapter shall acquire
legal personality only for purposes of filing a
petition for certification election from the date
it was issued a charter certificate. (Art. 240-A)

The employer is not a party to a certification


election, which is the sole or exclusive concern
of the workers. The only instance when the
employer may be involved in that process is
when it is obliged to file a petition for
certification election on its workers request to
bargain collectively pursuant to Art. 258.
(Hercules Industries, Inc. v Sec. of Labor, 1992)

(3) National Union/Federation


In any establishment where there is no certified
bargaining agent, a certification election shall
automatically be conducted by the MedArbiter upon filing of a petition by any
legitimate labor organization, including a
national union or federation which has already
issued a charter certificate to its local/chapter
participating in the certification election, or a
local/chapter which has been issued a charter
certificate by the national union or federation.
In cases where the petition was filed by a
national union or federation, it shall not be
required to disclose the names of the local
chapters officers and members. (Art. 263)

The employer is a total stranger in the process


of certification election. The employer has no
standing to file a motion to dismiss. (PT&T v
Laguesma, 1993)
Venue for filing the petition
BLR Regional Office which issued the
petitioning unions certificate of registration or
certificate of creation of chartered local.

(4) Employer
When requested to bargain collectively, an
employer may petition the Bureau for an
election. (Art. 264)

CERTIFICATION ELECTION IN AN
UNORGANIZED ESTABLISHMENT
Procedure
(1) A petition for certification election shall be
filed by a legitimate labor organization.
(2) Upon filing of the petition, the Med- Arbiter
shall automatically conduct a certification
election.

Bystander rule
The employer shall not be considered a party
in the petition with a concomitant right to
oppose a petition for certification election. The
employers participation shall be limited to:
(1) being notified or informed of petitions of
such nature

Filing of petition is by a legitimate labor


organization
It cannot be an unregistered labor
organization. This is best read in relation to
Art. 242 which enumerates the rights granted
to a legitimate labor organization and one of
those rights is the right to be chosen as the
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exclusive bargaining representative. This is one


way the law encourages union registration.

LABOR LAW

Rule does not apply to Motions for Intervention


The requisite written consent representing
substantial support of the workers in the
bargaining unit [as required in Art. 256 applies
to petitions for certification only, and not to
motions for intervention. (PAFLU v Calleja, 1989)

Venue
BLR Regional Office which issued the
petitioning unions certificate of registration or
certificate of creation of chartered local.

Discretionary rule
If the petition does not comply with the
substantial support requirement, the BLR may
exercise its discretion in determining whether
or not a certification election must be
conducted. (Scout Albano Memorial College v.
Noriel, 1978)

CERTIFICATION ELECTION IN
AN ORGANIZED ESTABLISHMENT
Procedure
(1) A verified petition questioning the majority
status shall be filed by a legitimate labor
organization
(2) It must be filed within the 60-day period
before expiration of CBA (freedom period)
(3) Supported by written consent of at least
25% of ALL employees in the bargaining
unit (substantial support)

Effect of withdrawal of signatures


The employees withdrawal from a labor union
made before the filing of the petition for
certification election is presumed voluntary,
while withdrawal after the filing of such
petition is considered to be involuntary and
does not affect the petition. (S.S. Ventures
International vs. S.S. Ventures Labor Union,
2008)

Substantial support rule


In organized establishments, the incumbent
sole bargaining agent should not be easily
replaced for that would disturb industrial
peace. To justify the disturbance, it must
appear that at least a substantial number
(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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LABOR LAW

Organized vs. Unorganized Establishment


Art. 256:
Organized
Bargaining agent
Petition filed

Freedom Period

Substantial support
rule

Art. 257: Unorganized

Existing, has one


Has to be a VERIFIED petition
No petition for Certification election EXCEPT
within 60 days before the expiration of the
collective bargaining agreement (See Art.
253 & 253-A)

None
No need to be verified
Not applicable.
No freedom period.
Can file petition anytime.

Take note how SC interpreted the term


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
MEMBERS
OF
THE
APPROPRIATE
BARGAINING UNIT.
Percentage base: all members of an
appropriate bargaining unit.

NO substantial support rule.


WHY?
Intention of law is to bring in
71
the union, to implement
policy behind Art. 211a.

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


(1) One year bar rule
(2) Negotiation bar rule
(3) Deadlock bar rule
(4) Contract bar rule

(2) Negotiation bar rule


A petition for certification election may be filed
anytime EXCEPT:
(1) When the duly certified union has
commenced and sustained negotiations in
good faith with the employer
(2) In accordance with Art. 256 of the Labor
Code
(3) Within one year after the certification
election. (Book V, Rule VIII, Sec 3 [b])

(1) One year bar rule


No certification election may be held within 1
year from the fact that voluntary recognition
has been entered, or a valid certification,
consent or run-off election has been conducted
within the bargaining unit.

(3) Deadlock bar rule


A petition for certification election may be filed
anytime, EXCEPT:
[w]hen a bargaining deadlock to which an
incumbent or certified bargaining agent is a
party had been submitted to conciliation or
arbitration or had become the subject of a

If appealed, the reckoning period is the date


when the decision becomes final and
executory. (Book V, Rule VIII, Sec 3 [a])

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valid notice of strike or lockout (Book V, Rule


VIII, Sec. 3 [c])

LABOR LAW

The purpose of the prohibition against the


filing of a petition for certification election
outside the so-called freedom period is to
ensure industrial peace between the employer
and its employees during the existence of the
CBA. (Republic Planters Bank Union v.
Laguesma, 1996)

A deadlock is defined as the counteraction of


things producing entire stoppage; a state of
inaction or of neutralization caused by the
opposition of persons or of factions (as in
government or voting body); standstill. (Divine
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
of a bona fide petition filed within the freedom
period if the clear intention was to frustrate the
constitutional right of the employees to selforganization. (Associated Labor Union v.
Calleja, 1989)

(4) Contract Bar Rule


The Bureau shall not entertain any petition for
certification election or any other action which
may disturb the administration of duly
registered existing collective bargaining
agreements affecting the parties except under
Articles 253, 253-A and 256 of this code. (Art.
238)

What is prohibited is the filing of the petition


for certification election outside the 60-day
freedom period. The signing of the
authorization to file was merely preparatory to
the filing of the Petition for Certification
Election, or an exercise of the right to selforganization. (PICOP Resources Inc. v. Ricardo
Dequita, 2011)

The contract bar rule shall not apply:


(1) When the petition is filed during the
freedom period in Articles 253, 253-A, and
256.
(2) When the CBA is incomplete
(3) When the CBA is substandard
(4) When the CBA is prematurely renewed
(5) When the CBA is unregistered

Expiration of Freedom Period


At the expiration of the freedom period, the
employer shall continue to recognize the
majority status of the incumbent bargaining
agent where no petition for certification
election is filed.

No petition for certification election may be


filed after the lapse of the freedom period. The
old CBA is extended until a new one is agreed
upon by the parties. (Colegio de San Juan de
Letran v. Assoc., 2000)

Petition for cancellation of union registration


does not bar certification election
A petition for cancellation of union registration
shall not suspend the proceedings for
certification election nor shall it prevent the
filing of a petition for certification election. []
(Art. 238-A)

Freedom Period
The last 60 days in a Collective Bargaining
Agreement (CBA) is referred to as the
freedom
period
when
rival
union
representation can be entertained during the
existence of a CBA. It is during this particular
period when the majority status of the
incumbent bargaining agent can be
challenged. (Tanduay Distillery Labor Union v.
NLRC, 1987)

A certification election can be conducted


despite pendency of a petition to cancel the
union registration certificate. For the fact is
that at the time the union, whose registration
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certificate is sought to be cancelled, filed its


petition for certification, it still had legal
personality to perform such act absent an
order directing its cancellation. (Samahan ng
mga Manggagawa v Laguesma, 1997)

LABOR LAW

NOTICE REQUIREMENT
Posting of Notice
Who: Election Officer shall cause the
posting
What: Notice of election
Where: 2 conspicuous places in company
premises
When: At least 10 days before actual
election

SUSPENSION OF ELECTION
Prejudicial Question Rule
A formal charge of Unfair Labor Practice
against the employer for establishing a
company union triggers suspension. (B.F.
Goodrich Phils. Marikina v. B.F. Goodrich
Confidential and Salaried Employees Union)

Contents of Notice
(1) Date and Time of election;
(2) Names of all contending unions;
(3) Description of the bargaining unit
(4) List of eligible and challenged Voters.

Note: The ONLY party who could ask for the


suspension of the Certification Election is the
labor union which filed a complaint for Unfair
Labor Practices against the employer.

The posting of the notice of election, the


information required to be included therein
and the duration of the posting cannot be
waived by the contending unions or the
employer. (Book V Rule IX Sec 6, IRR)

Rationale
If there is a union dominated by the company,
to which some of the workers belong, an
election among workers and employees of the
company would not reflect the true sentiment
and wishes of the said workers and employees
because the votes of the members of the
dominated union would not be free. Such
charge of company domination is a prejudicial
question that until decided, shall suspend or
bar proceedings for certification election.
If it were a labor organization objecting
to the participation in a certification election of
a company-dominated union, as a result of
which a complaint for an unfair labor practice
case against the employer was filed, and when
the court finds that said union is employerdominated in the unfair labor practice case,
the union selected would be decertified and
the whole election proceedings would be
rendered useless and nugatory.' There would
be an impairment of the integrity of the
collective bargaining process if a companydominated union were allowed to participate
in a certification election. (United CMC Textile
Workers Union v. BLR, 1984)

All Employees entitled to vote


All rank-and-file employees in the appropriate
bargaining unit are entitled to vote. The Code
makes no distinction as to their employment
status. All they need to be eligible to support
the petition is to belong to a bargaining unit.
(Airtime Specialists, Inc. v Director of BLR, 1990)
Employees who have been improperly
laid off but who have a present, unabandoned
right to or expectation of reemployment, are
eligible to vote in certification elections. If the
dismissal is under question, employees
concerned could still qualify to vote in the
elections. (Philippine Fruits v Torres, 1992)
Rationale for Non-Distinction Policy
Collective bargaining covers all aspects of the
employment relation and the resultant CBA
binds all employees in the bargaining unit. All
rank and file employees, probationary or
permanent, have a substantial interest in the
selection of the bargaining representative.
(Reyes v. Trajano, 1992)
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Voting List and Voters


The basis of determining voters may be agreed
upon by the parties (i.e. the use of payroll).
(Acoje Workers Union v NAMAWU, 1963)

LABOR LAW

IV. RUN-OFF ELECTION


A "Run-Off election" refers to an election
between the labor unions receiving the 2
highest number of votes in a certification
election.

Effect of Non-participation in previous election


Failure to take part in previous elections is no
bar to the right to participate in future elections.
No law, administrative rule or precedent
prescribes forfeiture of the right to vote by
reason of neglect to exercise the right in past
cases. (Reyes v. Trajano, 1992)

It occurs when a certification election provides


for 3 or more choices and the total number of
votes for all contending unions is at least fifty
percent (50%) of the number of votes cast,
where no choice receives a majority of the valid
votes cast, a Run-Off election will be
conducted

Challenge Voter
An employer has no standing to question a
certification election since this is the sole
concern of the workers but may question the
inclusion of any disqualified employee in the
certification election during the exclusioninclusion
proceedings
before
the
representation officer. (Phil. Telephone &
Telegraph Co. v Laguesma, 1993)

Requirements
(1) majority of the bargaining unit voted (first
majority of the double majority rule)
(2) three or more choices are available (note:
no union is a choice)
(3) not one of the choices receives a majority of
the valid votes cast
(4) total number of votes for all contending
unions is at least 50% of the total number
of votes cast (this means that at least 50%
of the bargaining unit wants to have a
union)
(5) the run-off election shall be conducted
between the labor unions receiving the two
highest number of votes

Voting Day
The election shall be set on a regular business
day. (IRR, Book V Rule IX Sec. 2)
Validity
Double majority requirement: (voters, valid votes)
To have a valid election, at least a majority of
all eligible voters in the unit must have cast
their votes. The labor union receiving the
majority of the valid votes cast shall be
certified as the exclusive bargaining agent of
all the workers in the unit. (Art. 262)

Illustration
The CBU has 100 members and eighty of which
voted. Union A= 30; Union B= 15; Union
C=15 and No Union= 20. There were no
invalid votes. Since none got the majority of
the 80 valid votes and the contending unions
obtained 60 votes (which exceeds of the
total), a run-off election is proper. The run-off
will be between the labor unions receiving the
two highest number of votes. The run-off is
NOT between two unions but between two
highest votes. Thus, the run-off will be among
Union A, B and C. (Azucena)

Appeal from order of Med-Arbiter holding


certification election
Any party to an election may appeal the order
or results of the election [] directly to the
Secretary of Labor [] on the ground that the
rules and regulations or parts established by
the Secretary of Labor for the conduct of
election have been violated. (Art. 265)
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LABOR LAW

V. RE-RUN ELECTION

VI. CONSENT ELECTION

A motion for the immediate holding of another


certification or consent election can be filed
within six (6) months from the date of the
declaration of failure of election. (Book V, Rule
IX Sec 18)

"Consent Election" means the election


voluntarily agreed upon by the parties to
determine the issue of majority representation
of all the workers in the appropriate collective
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)

Purpose

Conduct

Certification election
Aimed at determining the sole and
exclusive bargaining agent of all
employees in an appropriate bargaining
unit for the purpose of collective
bargaining

Consent Election
Merely to determine the issue of
majority representation of all the
workers in the appropriate
collective bargaining unit

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

VI. AFFILIATION AND DISAFFILIATION


OF THE LOCAL UNION FROM THE
MOTHER UNION

Voluntarily agreed upon by the


parties, with or w/o intervention
from DOLE

Independent Union
A labor organization operating at the
enterprise level that required legal personality
through independent registration under
Art.234 of the Labor Code and Rule III Sec. 2-A
of the IRR.(Book V Rule 1 Sec. 1 [w])

Definitions
Affiliate
An affiliate is an independent union affiliated
with a federated, national union or a chartered
local which was subsequently granted
independent registration but did not
disaffiliate from its federation, reported to the
Regional Office and the Bureau in accordance
with Rule III Secs. 6 and 7 of the IRR. (Book V
Rule 1 Sec. 1 [a])

Local Chapter (Chartered Local)


A labor organization in the private sector
operating at the enterprise level that acquired
legal personality through the issuance of a
charter certificate by a duly registered
federation or national union, and reported to
the Regional Office in accordance with Rule III
Sec. 2-E of the IRR. (Book V Rule 1 Sec. 1 [i])
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National Union or Federation


National Union or Federation a group of
legitimate labor unions in a private
establishment organized for collective
bargaining or for dealing with employers
concerning terms and conditions of
employment for their member union or for
participating in the formulation of social and
employment policies, standards and programs,
registered with the BLR in accordance with
Rule III Sec. 2-B of the IRR. (Book V Rule 1 Sec. 1
[kk])

LABOR LAW

Disaffiliation
General rule: Local unions may disaffiliate from
the mother union.
Disaffiliation must be by a majority decision
The members shall determine by secret ballot,
after due deliberation, any question of major
policy affecting the entire membership of the
organization, unless the nature of the
organization or force majeure renders such
secret ballot impractical, in which case, the
board of directors of the organization may
make the decision. (Art. 247 (d))

Purpose of affiliation
To foster the free and voluntary organization of
a strong and united labor movement (Art. 211)

Limitations: Terms of the affiliation agreement


(e.g. agreement may require 2/3 vote to
disaffiliate instead of a majority) (Phil.
Skylanders v. NLRC)

The sole essence of affiliation is to increase, by


collective action, the common bargaining
power of local unions for the effective
enhancement and protection of their interests.
Admittedly, there are times when without
succor and support local unions may find it
hard, unaided by other support groups, to
secure justice for themselves. (Philippine
Skylanders v. NLRC, 1992)

Generally, a labor union may disaffiliate from


the mother union to form a local or
independent union only during the 60-day
freedom period immediately preceding the
expiration of the CBA. However, even before
the onset of the freedom period, disaffiliation
may be carried out when there is a shift of
allegiance on the part of the majority of the
members of the union. (ANGLO KMU v Samana
Bay, G.R. No. 118562 July 5, 1996)

Nature of Relationship (Agency)


The mother union, acting for and in behalf of
its affiliate, had the status of an agent while
the local remained the basic unit of the
association, free to serve the common interest
of all its members, subject only to restraints
imposed by the constitution and by the by-laws
of the association. The same is true even if the
local is not a legitimate labor organization.
(Filipino Pipe and Foundry Corp v. NLRC, 1998)

A local union, being a separate and voluntary


association, is free to serve the interests of all
its members. It has the right to disaffiliate or
declare its autonomy from the federation to
which it belongs when circumstances warrant,
in accordance with the constitutional
guarantee of freedom of association, and such
disaffiliation cannot be considered disloyalty.
(Malayang Samahan ng mga Manggagawa v.
Ramos, 2000)

Effect of Affiliation
Inclusion of [the federation] in the registration
is merely to stress that they are its affiliates at
the time of registration. It does not mean that
said local unions cannot stand on their own.
Affiliation does not mean they lost their own
legal personality. (Adamson v CIR, 1984)

The locals are separate and distinct units


primarily designed to secure and maintain an
equality of bargaining power between the
employer and their employee-members; and
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VIII. UNION DUES


ASSESSMENTS

the association of the locals into the national


union was in furtherance of the same end.
These associations are consensual entities
capable of entering into such legal relations
with their member. The essential purpose was
the affiliation of the local unions into a common
enterprise to increase by collective action the
common bargaining power in respect of the
terms and conditions of labor. (Tropical Hut
Employees Union v. Tropical Hut Food Market
Inc., 1990)

LABOR LAW

AND

SPECIAL

Union dues
Union dues are payments to meet the unions
general and current obligations. The payment
must be regular, periodic, and uniform.
(Azucena)
Every payment of fees, dues or other
contributions by a member shall be evidenced
by a receipt signed by the officer or agent
making the collection and entered into the
record of the organization to be kept and
maintained for the purpose. (Art. 247 (h))

Effect of disaffiliation
A registered independent union retains its
legal personality while a chartered local loses
its legal personality unless it registers itself.

Special assessments
Special assessments are payments for a
special purpose, especially if required only for
a limited time. (Azucena)

SUBSTITUTIONARY DOCTRINE
The substitutionary doctrine provides that
the employees cannot revoke the validly
executed collective bargaining contract with
their employer by the simple expedient of
changing their bargaining agent. And it is in
the light of this that the phrase said new
agent would have to respect said contract
must be understood. It only means that the
employees, thru their new bargaining agent,
cannot renege on their collective bargaining
contract, except of course to negotiate with
management for the shortening thereof.
(Benguet Consolidated v. BCI Employees and
Workers Union-PAFLU, 1998)

No special assessment or other extraordinary


fees may be levied upon the members of a
labor organization unless authorized by a
written resolution of a majority of all the
members of a general membership meeting
duly called for the purpose. (Art. 247 (n))
Other than for mandatory activities under the
Code, no special assessments, attorneys fees,
negotiation fees or any other extraordinary fees
may be checked off from any amount due to an
employee without an individual written
authorization duly signed by the employee.
The authorization should specifically state the
amount, purpose and beneficiary of the
deduction. (Art. 247 (o))

Conditions:
(1) change of bargaining agent (through
affiliation, disaffiliation, or other means)
(2) existing CBA with the previous bargaining
agent

REQUIREMENTS FOR VALIDITY OF SPECIAL


ASSESSMENT
(1) Authorization by written resolution of
majority of ALL the members at the general
membership meeting called for that
purpose

Effects:
(1) new bargaining agent cannot revoke and
must respect the existing CBA
(2) it may negotiate with management to
shorten the existing CBAs lifetime

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(2) Secretarys record of the minutes of the


meetings attested to by the president.
(3) Individual written authorization for checkoff duly signed by the employees
concerned.

LABOR LAW

Requisites for assessment of Agency Fees


Employees of an appropriate bargaining unit
who are not members of the recognized
collective bargaining agent may be assessed a
reasonable fee equivalent to the dues and
other fees paid by members of the recognized
collective bargaining agent, if such non-union
members accept the benefits under the
collective bargaining agreement: Provided,
that the individual authorization required
under Article 242, paragraph (o) of this Code
shall not apply to the non-members of the
recognized collective bargaining agent. (Art.
254 (e))

Attorneys fees, negotiation fees, and similar


charges
No attorneys fees, negotiation fees or similar
charges of any kind arising from any collective
bargaining negotiations or conclusion of the
collective agreement shall be imposed on
individual member of contracting union.
Provided, however, that attorneys fees may be
charged against union funds in an amount to
be agreed upon by the parties. Any contract,
agreement or arrangement of any sort to the
contrary shall be null and void. (Art. 228 (b))

Requirements:
(1) Non-member of SEBA
(2) Member of Collective Bargaining Unit
(3) Reasonable fee equivalent to the dues and
other fees paid by member

General rule: that attorneys fees, negotiation


fees, and similar charges should be charged
against the union funds and not as a special
assessment.

B.
RIGHT
BARGAINING

TO

COLLECTIVE

B.1 DUTY TO BARGAIN COLLECTIVELY


Constitutional Policies
(1) [The State] shall guarantee the rights of
workers to self-organization, collective
bargaining and negotiations. [] [1987

However, if a special assessment is required to


pay such fees, then the requirements above
must be satisfied.

Constitution, Art. XIII, Sec. 3]

Strict compliance for special assessment


There must be strict and full compliance with
the requisites. Substantial compliance is not
enough. (Palacol v. Ferrer-Calleja)

(2) The State shall promote the principle of


shared responsibilities between workers
and employers [] and shall enforce their
mutual compliance therewith to foster
industrial peace. [1987 Constitution, Art.
XIII, Sec. 3]

IX. AGENCY FEES


Agency fee is an amount, equivalent to union
dues, which a non-union member pays to the
union because he benefits from the CBA
negotiated by the union. (Azucena)

Statutory Policies
(1) To promote and emphasize the primacy of
free
collective
bargaining
and
negotiations,
including
voluntary
arbitration, mediation and conciliation, as
modes of setting labor or industrial
disputes. [Art. 217 (a)]
(2) It is the policy of the State to promote and
emphasize the primacy of free and

Rationale for allowing agency fees


Avoiding unjust enrichment on the part of nonunion members who benefit from the union's
efforts without paying any fee therefor, unlike
the members of the bargaining agent.

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responsible exercise of the right to selforganization and collective bargaining,


either through single enterprise level
negotiations or through the creation of a
mechanism by which different employers
and recognized certified labor unions in
their establishments bargain collectively.

LABOR LAW

Nature and Purpose of Collective Bargaining


The institution of collective bargaining is a
prime manifestation of industrial democracy at
work. The two parties to the relationship, labor
and management, make their own rules by
coming to terms to govern themselves in
matters that really count. [United Employees
Union of Gelmart Industries v. Noriel, 1975]

[Book V, Rule XVI, 1]


Definition
The duty to bargain collectively means the
performance of a mutual obligation to meet
and convene promptly and expeditiously in
good faith for the purpose of negotiating an
agreement with respect to wages hours of
work and all other terms and conditions of
employment including proposals for adjusting
any grievances or questions arising under such
agreement and executing a contract
incorporating such agreement if required by
either party but such duty does not compel any
party to agree to a proposal or to make any
concession. [Art. 258]

When Employers May Be Compelled to Bargain


Collectively
While the duty to bargain collectively is a
mutual obligation, the employer is not under
any legal duty to initiate contract negotiation.
[Kiok Loy v NLRC, 1986]

Collective bargaining, which is defined as


negotiations towards a collective agreement, is
one of the democratic frameworks under the
Labor Code designed to stabilize the relations
between labor and management and to create
a climate of sound and stable industrial peace.
It is a mutual responsibility of the employer
and the Union and is characterized as a legal
obligation.
So much so that Article 249, par. (g) of the
Labor Code makes it an unfair labor practice
for an employer to refuse "to meet and
convene promptly and expeditiously in good
faith for the purpose of negotiating an
agreement with respect to wages, hours of
work, and all other terms and conditions of
employment. [Kiok Loy v. NLRC, 1986]

An employer asked by a labor organization


(which is not the SEBA of the establishment) to
bargain collectively may file a petition for
certification election to ascertain the will of the
bargaining unit or it may voluntarily recognize
the
labor
organization
in
proper
circumstances.

Requisites to Compel Employer to Bargain


Collectively:
(1) Proof of majority representation by the
representative
labor
organization
(exclusive bargaining agent)
(2) Demand by the labor organization [Art.
250(a)]

Waiver of Right to Collectively Bargain


The right to free collective bargaining includes
the right to suspend it. [Rivera v. Espiritu,
2000]
Rights of the Parties during Bargaining
To be furnished by the employer, upon written
request, with its annual audited financial
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


the employees in the bargaining unit, or within
sixty (60) calendar days before the expiration
of the existing collective bargaining
agreement, or during the collective bargaining
negotiation. [Art. 248 (c)]

LABOR LAW

[A]t the expiration of the freedom period, the


employer shall continue to recognize the
majority status of the incumbent bargaining
agent where no petition for certification
election is filed. [Art. 256]

B.2
COLLECTIVE
AGREEMENT (CBA)

The parties may agree to make available such


up-to-date financial information which is
normally submitted to relevant government
agencies material and necessary for
meaningful negotiations. They may also agree
to the condition that the information be kept
confidential. [Book V Rule XVI 2]

BARGAINING

A collective bargaining agreement refers to the


negotiated contract between a legitimate labor
organization and the employer concerning
wages, hours of work and all other terms and
conditions of employment in a bargaining unit,
including mandatory provisions for grievances
and arbitration machineries. [Book V Rule I
1(j)]

I. WHEN THERE IS ABSENCE OF A CBA


In the absence of an agreement or other
voluntary arrangement providing for a more
expeditious manner of collective bargaining, it
shall be the duty of employer and the
representatives of the employees to bargain
collectively in accordance with the provisions
of this Code. (Art. 257)

CBA Impressed with Public Policy


A CBA, as a labor contract within the
contemplation of Article 1700 Civil Code which
governs the relations between labor and
capital, is not merely contractual in nature but
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 duty to bargain collectively shall also
mean that neither party shall terminate nor
modify such agreement during its lifetime.

The relations between capital and labor are


not merely contractual. They are so impressed
with public interest that labor contracts must
yield to the common good. Therefore such
contracts are subject to the special laws on
labor unions collective bargaining strikes and
lockouts closed shop wages working
conditions hours of labor and similar subjects.
[Art. 1700 Civil Code]

Exception
In organized establishments, when a verified
petition questioning the majority status of the
incumbent bargaining agent is filed before the
Department of Labor and Employment within
the sixty-day period before the expiration of
the collective bargaining agreement, the MedArbiter shall automatically order an election by
secret ballot when the verified petition is
supported by the written consent of at least
twenty-five percent (25%) of all the employees
in the bargaining unit to ascertain the will of
the employees in the appropriate bargaining
unit.

Substandard CBA
A CBA that falls below the minimum standards
required by law is prohibited. Nonetheless, RA
9481 removed substandard CBAs as a ground
for the cancellation of registration of union
registration. Note: A substandard CBA cannot
bar a petition for certification election under
the contract-bar rule.
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Confidentiality of registered CBA or Parts


Thereof

LABOR LAW

Contract Interpretation
Interpretation Tools
A CBA, just like any other contract, is respected
as the law between the contracting parties and
compliance in good faith is mandated.
Similarly, the rules embodied in the Civil Code
(Art. 1700) on the proper interpretation of
contracts can very well govern.

General rule: CBA is not confidential


Exceptions:
(1) confidentiality authorized by Secretary of
Labor
(2) when it is at issue in any judicial litigation
(3) public interest or national security requires
[Art. 231]

General Rule: If the terms of the contract are


clear, the literal meaning of the stipulations
shall control.

Effect of Unregistered CBA


An unregistered CBA is binding upon the
parties but cannot serve as a bar to a petition
for certification election under the contract-bar
rule.

Exception: If the words appear to be contrary to


the evident intention of the parties, the latter
shall prevail over the former. [Kimberly Clark
Phils. V. Lorredo, 1993]

Beneficiaries of the CBA


The CBA benefits all workers in a collective
bargaining unit. When a collective bargaining
contract is entered into by the union
representing the employees and the employer,
even the non-member employees are entitled
to the benefits of the contract. [New Pacific
Timber and Supply v. NLRC, 2000]

Bargaining Procedure [Book V, Rule XVI]


(1) Private Procedure - The parties may provide
for their own procedures in collective
bargaining. The law only requires that these
procedures be more expeditious than the
procedure in Art. 250. [Art 251]
Rationale - It is the policy of the state
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
constitute undue discrimination against nonmembers.

(2) Labor Code Procedure [Art. 250]


i. Written notice and statement of
proposals. When a party desires to
negotiate an agreement, it shall serve
a written notice upon the other party
with a statement of its proposals.
ii. Reply. The other party shall make a
reply thereto not later than ten (10)
calendar days from receipt of such
notice.
iii. Conference. Should differences arise
on the basis of such notice and reply,
either party may request for a
conference which shall begin not later
than ten (10) calendar days from the
date of request.

Nature of Contract and Contract Interpretation


The terms and conditions of a collective
bargaining contract constitute the law
between the parties. [Mactan Workers Union vs.
Aboitiz, 1972]
Those who are entitled to its benefits can
invoke its provisions. In the event that an
obligation therein imposed is not fulfilled, the
aggrieved party has the right to go to court for
redress. [Babcock-Hitachi (Phils.) v. BabcockHitachi, 2005]
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iv.

v.

vi.

LABOR RELATIONS

Board intervention and conciliation. If


the dispute is not settled, the Board
shall intervene upon request of either
or both parties or at its own initiative
and immediately call the parties to
conciliation meetings. The Board shall
have the power to issue subpoenas
requiring the attendance of the parties
to such meetings. It shall be the duty of
the parties to participate fully and
promptly in the conciliation meetings
the Board may call;
Voluntary arbitration. The Board shall
exert all efforts to settle disputes
amicably and encourage the parties to
submit their case to a voluntary
arbitrator.
Prohibition against disruptive acts.
During the conciliation proceedings in
the Board, the parties are prohibited
from doing any act which may disrupt
or impede the early settlement of the
disputes.

LABOR LAW

Failure to Reply as Indicia of Bad Faith


GMCs failure to make a timely reply to the
proposal sent by the union is indicative of its
utter lack of interest in bargaining with the
union. Its excuse that it felt the union no longer
represented the workers was mainly dilatory as
it turned out to be utterly baseless. GMCs
refusal to make a counter-proposal is an
indication of its bad faith. Where the employer
did not even bother to submit an answer to the
bargaining proposals of the union, there is a
clear evasion of the duty to bargain
collectively. It is guilty of ULP. [General Milling
Corp. v. CA, 2004]
Conciliation / Preventive Mediation Privileged
Communication
Information and statements made at
conciliation proceedings shall be treated as
privileged communication and shall not be
used as evidence in the Commission.
Conciliators and similar officials shall not
testify in any court or body regarding any
matters taken up at conciliation proceedings
conducted by them. [Art. 233]

Period to Reply; Bad Faith


The period to reply is merely procedural, and
non-compliance cannot be automatically
deemed to be an Unfair Labor Practice
(ULP). [National Union of Restaurant Workers
vs. CIR, 1964]

Rationale
i.
a person is entitled to buy his or her
peace without danger of being
prejudiced in case his or her efforts fail
ii.
offers for compromise are irrelevant
because they are not intended as
admissions by the parties making them
[Pentagon Steel v. CA, 2009]

The companys refusal to make a counterproposal to the unions proposed CBA is an


indication of its bad faith. Where the employer
did not even bother to submit an answer to the
bargaining proposals of the union, there is a
clear evasion of the duty to bargain
collectively. The employers actuations show a
lack of sincere desire to negotiate, rendering it
guilty of unfair labor practice. [Colegio de San
Juan de Letran vs. Association, 2000]

Mandatory Bargainable Issues


(1) Wages
(2) Hours of work
(3) All other terms and conditions of
employment including proposals for
adjusting any grievances or questions
arising under such agreement [Art.
252]

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Permissive Issues:
Unilateral benefits extended by the employer
[cf., Union of Filipino Employees-Drug v. Nestle,
2008]

LABOR LAW

agree or that agreement was not reached with


respect to other disputed clauses.
Such refusal will not be deemed as an
unfair labor practice. However, if a party
refuses to contract based on an issue which is
not a mandatory bargainable issue, the party
will be guilty of ULP. [Samahang Manggagawa
sa Top Form v. NLRC, 1998]

A collective bargaining agreement refers to the


negotiated contract between a legitimate labor
organization and the employer concerning
wages, hours of work and all other terms and
conditions of employment in a bargaining unit
[]. As in all other contracts, the parties in a
CBA may establish such stipulations, clauses,
terms and conditions as they may deem
convenient provided they are not contrary to
law, morals, good customs, public order or
public policy. [Manila Fashions v. NLRC, 1996]

I. MANDATORY PROVISIONS OF CBA


Grievance Procedure
The parties to a Collective Bargaining
Agreement shall include therein:
1) Provisions that will ensure the mutual
observance of its terms and conditions.
2) A machinery for the adjustment and
resolution of grievances arising from:
a) The interpretation or implementation
of their CBA; and
b) those arising from the interpretation
or
enforcement
of
company
personnel policies.
All grievances submitted to the grievance
machinery which are not settled within 7
calendar days from the date of its submission
shall be automatically referred to voluntary
arbitration prescribed in the CBA. [Art. 260]

Test for Mandatory Bargainable Issues: NEXUS


Between the Nature of Employment and the
Nature of the Demand.
For other terms and conditions of
employment to become a mandatory
bargainable issue, they must have a
connection between the proposal and the
nature of the work.
Importance of Determining Whether an Issue is
a Mandatory Bargaining Issue or Only a
Permissive Bargaining Issue
"The question as to what are mandatory and
what are merely permissive subjects of
collective bargaining is of significance on the
right of a party to insist on his position to the
point of stalemate. A party may refuse to enter
into a collective bargaining contract unless it
includes a desired provision as to a matter
which is a mandatory subject of collective
bargaining. But a refusal to contract unless the
agreement covers a matter which is not a
mandatory subject is in substance a refusal to
bargain about matters which are mandatory
subjects of collective bargaining; and it is no
answer to the charge of refusal to bargain in
good faith that the insistence on the disputed
clause was not the sole cause of the failure to

Grievances arising from the interpretation or


implementation of the CBA are subjects of the
grievance procedure. [Navarro III v. Damasco,
1995]
It should be remembered that a grievance
procedure is part of the continuous process of
collective bargaining. It is intended to promote
a friendly dialogue between labor and
management as a means of maintaining
industrial peace. [Master Iron Labor Union v.
NLRC, 1993]
No particular setup for a grievance machinery
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


problems arising from
"interpretation or
implementation of their collective bargaining
agreement and
those arising from the
interpretation or enforcement of company
personnel policies. [Caltex Refinery Employees
Association v. Brillantes, 1997]

LABOR LAW

same force and effect as if the has been


selected by the parties as described above.
[Art. 266]
Voluntary Arbitration as a Condition Precedent
The stipulation to refer all future disputes to an
arbitrator or to submit an ongoing dispute to
one is valid. Being part of a contract between
the parties, it is binding and enforceable in
court in case one of them neglects, fails or
refuses to arbitrate. Going a step further, in the
event that they declare their intention to refer
their differences to arbitration first before
taking court action, this constitutes a condition
precedent, such that where a suit has been
instituted prematurely, the court shall suspend
the same and the parties shall be directed
forthwith to proceed to arbitration. A court
action may likewise be proper where the
arbitrator has not been selected by the parties.
[Chung Fu Industries v. CA, 1992]

Voluntary Arbitration
Constitutional Basis
The State shall promote the principle of shared
responsibility between workers and employers
and the preferential use of voluntary modes in
settling disputes, including conciliation, and
shall enforce their mutual compliance
therewith to foster industrial peace. [CONST.
Art. XIII Section 3]
Automatic Referral If Grievance Machinery Fails
All grievances submitted to the grievance
machinery which are not settled within 7
calendar days from the date of its submission
shall automatically be referred to voluntary
arbitration prescribed in the CBA. [Art. 266]

Arbitrable Issues
1. interpretation or implementation of the
CBA [Art. 261]
2. interpretation or enforcement of
company personnel policies [Art. 261]
3. gross violations of CBA provision
(flagrant/malicious refusal to comply
with the economic provisions of the
CBA [Art. 261]
4. all other labor disputes including ULP
and bargaining deadlock, if the parties
agree [Art. 262]

Provision for Voluntary Arbitration in the CBA


(1) Parties to a CBA shall:
a. Name and designate in advance a
Voluntary Arbitrator or panel of
Voluntary Arbitrators, OR
b. Include in the agreement a procedure
for the selection of such Voluntary
Arbitrator or panel of Voluntary
Arbitrators preferably from the listing
of qualified Voluntary Arbitrators duly
accredited by the Board.
2. In case the parties fail to select a Voluntary
Arbitrator or panel of Voluntary
Arbitrators, the Board shall designate the
Voluntary Arbitrator or panel of Voluntary
Arbitrators, as may be necessary, pursuant
to the selection Voluntary Arbitrator or
panel of Arbitrators procedure agreed
upon in the CBA, which shall act with the

In general, the arbitrator [VA] is expected to


decide those questions expressly stated and
limited in the submission agreement.
However, since arbitration is the final resort for
the adjudication of disputes, the arbitrator can
assume that he has the power to make a final
settlement. The VA has plenary jurisdiction
and authority to interpret the CBA and to
determine the scope of his or her own
authority. Subject to judicial review, this
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leeway of authority and adequate prerogative


is aimed at accomplishing the rationale of the
law on voluntary arbitration speedy labor
justice. [Goya, Inc. vs. Goya, Inc. Employees
Union-FFW, 2013]

LABOR LAW

he and the panel are comprehended within the


concept of a "quasi-judicial instrumentality." A
fortiori, the decision or award of the voluntary
arbitrator or panel of arbitrators should
likewise be appealable to the Court of Appeals.
[Luzon Development Bank v. Assoc of Luzon
Devt Employees, 1995]
Costs
The parties to a Collective Bargaining
Agreement
shall
provide
therein
a
proportionate sharing scheme on the cost of
the voluntary arbitration including the
Voluntary Arbitrators fee. [] [Art. 262-B]

Powers of the voluntary arbitrators


(1) hold hearings
(2) receive evidence
(3) take whatever action is necessary to
resolve the issue or issues subject of
dispute, including efforts to effect a
voluntary settlement between parties
(4) determine attendance of any third
parties
(5) determine exclusion of any witness
(6) issue writ of execution for sheriff of
NLRC or regular courts to execute the
final decision, order, or award (Art 268A)

Voluntary Arbitrator's Fee


[] The fixing of the fee of the Voluntary
Arbitrators, whether shouldered wholly by the
parties or subsidized by the special voluntary
arbitration fund, shall take into account the
following factors:
I. nature of the case
II. time consumed in hearing the case
III. professional standing of the voluntary
arbitrator
IV. capacity to pay of the parties. [Art.
268-B]

Finality of the final decision, Order, or Award


[T]he award or decision of the Voluntary
Arbitrator [] shall be final and executory after
10 calendar days from receipt of the copy of the
award or decision by the parties. [] (268-A)

Appeal
While there is an express mode of appeal from
the decision of a labor arbiter, Republic Act
No. 6715 is silent with respect to an appeal
from the decision of a voluntary arbitrator.

No Strike-No Lockout Clause


A "no strike, no lock-out" provision in the CBA
is a valid stipulation although the clause may
be invoked by an employer only when the strike
is economic in nature or one which is
conducted to force wage or other concessions
from the employer that are not mandated to be
granted by the law itself. It would be
inapplicable to prevent a strike which is
grounded on unfair labor practice. [Panay
Electric Co. v. NLRC, 1995; Malayang Samahan
ng mga Manggagawa sa Greenfield v. Ramos,
2000]

Assuming arguendo that the voluntary


arbitrator or the panel of voluntary arbitrators
may not strictly be considered as a quasijudicial agency, board or commission, still both

Labor Management Council


Any provision of law to the contrary
notwithstanding, workers shall have the right,
subject to such rules and regulations as the

No Motion for Reconsideration


The voluntary arbitrator lost jurisdiction over
the case submitted to him the moment he
rendered his decision. Therefore, he could no
longer entertain a motion for reconsideration
of the decision for its reversal or modification.
[Solidbank v. BLR]

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Secretary of Labor and Employment may


promulgate, to participate in policy and
decision-making
processes
of
the
establishment where they are employed
insofar as said processes will directly affect
their rights, benefits and welfare. For this
purpose, workers and employers may form
labor-management councils: Provided, That
the representatives of the workers in such
labor-management councils shall be elected
by at least the majority of all employees in said
establishment. [Art. 255]

LABOR LAW

day period immediately before the date of the


expiry of such five year term of the Collective
Bargaining Agreement. [Contract-bar rule]
CBA Effectivity
If it is the first ever CBA, the effectivity date is
whatever date the parties agree on.
If it is renegotiated CBA, the effectivity date
depends upon the duration of conclusion.
i.
If it is concluded within 6 months from
the expiry date, the new CBA will
retroact to the date following the
expiry date [Illustration: expiry date:
December 13; effectivity date:
December 14].
ii.
If the renegotiated CBA is concluded
beyond 6 months from the expiry
date, the matter of retroaction and
effectivity is left with the parties.

II.
DURATION
OF
COLLECTIVE
BARGAINING AGREEMENT
Any Collective Bargaining Agreement that the
parties may enter into shall, insofar as the
representation aspect is concerned, be for a
term of five (5) years. No petition questioning
the majority status of the incumbent
bargaining agent shall be entertained and no
certification election shall be conducted by the
Department of Labor and Employment outside
of the sixty-day period immediately before the
date of expiry of such five-year term of the
Collective Bargaining Agreement. All other
provisions of the Collective Bargaining
Agreement shall be renegotiated not later
than three (3) years after its execution. Any
agreement on such other provisions of the
Collective Bargaining Agreement entered into
within six (6) months from the date of expiry of
the term of such other. [Art. 259-A]

Art. 253-A serves as the guide in determining


when the CBA at bar is to take effect. It
provides that the representation aspect of the
CBA is to be for a term of 5 years. All other
provisions of the CBA shall be renegotiated not
later than 3 years after its execution. Any
agreement on such other provision of the CBA
entered into within 6 months from the date of
expiry of the term of such other provisions as
fixed in such Collective Bargaining Agreement
shall retroact to the day immediately following
such date. If such agreement is entered into
beyond 6 months, the parties shall agree on
the duration of the effectivity thereof. If no
agreement is reached within 6 months from
the expiry date of the 3 years that follow the
CBA execution, the law expressly gives the
parties not anybody else the discretion to
fix the effectivity of the agreement. The law
does not specifically cover the situation where
6 months have elapsed but no agreement has
been reached with respect to effectivity. In this
eventuality, any provision of law should then
apply. [Manila Electric Co. v. Quisumbing, 1999]

CBA Duration for economic provisions


3 years.
CBA Duration for non-economic provisions
5 years for representational or political issues.
CBA Duration: Freedom Period
No petition questioning the majority status of
the incumbent bargaining agent shall be
entertained and no certification election shall
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Hold Over Principle


[In the absence of a new CBA], [i]t shall be the
duty of the parties to keep the status quo and
to continue in full force and effect the terms
and conditions of the existing agreement
during the 60 day period and/or until a new
agreement is reached by the parties. [Art. 259]

LABOR LAW

issued by the Secretary of Labor pursuant to Art.


263(g), the latter is deemed vested with plenary
and discretionary powers to determine the
effectivity thereof. [Manila Central Line Corp. v.
Manila Central Line Free Workers Union, 1998]
CBA and 3rd Party Applicability
Labor contracts such as employment contracts
and CBAs are not enforceable against a
transferee of an enterprise, labor contracts
being in personam, is binding only between the
parties. As a general rule, there is no law
requiring a bona fide purchaser of the assets of
an on-going concern to absorb in its employ
the employees of the latter. However, although
the purchaser of the assets or enterprise is not
legally bound to absorb in its employ the
employees of the seller of such assets or
enterprise, the parties are liable to the
employees if the transaction between the
parties is colored or clothed with bad faith.
[Sundowner Devt. Corp. v. Drilon, 1989]

The last sentence of Article 253, which


provides for automatic renewal pertains only to
the economic provisions of the CBA, and does
not include representational aspect of the
CBA. An existing CBA cannot constitute a bar
to a filing of petition for certification election.
When there is a representational issue, the
status quo provision insofar as the need to
await the creation of a new agreement will not
apply. Otherwise, it will create an absurd
situation where the union members will be
forced to maintain membership by virtue of the
union security clause existing under the CBA
and, thereafter, support another union when
filing a petition for certification election. If we
apply it, there will always be an issue of
disloyalty whenever the employees exercise
their right to self-organization. The holding of
a certification election is a statutory policy that
should not be circumvented, or compromised.
[PICOP Resources, Inc. v. Taneca et al., 2010]

General Rule: An innocent transferee of a


business establishment has no liability to the
employees of the transferor to continue
employing them. Nor is the transferee liable
for past unfair labor practices of the previous
owner.
Exception: When the liability therefore is
assumed by the new employer under the
contract of sale, or when liability arises
because of the new owner's participation in
thwarting or defeating the rights of the
employees.

Arbitrated CBA
In the absence of an agreement between the
parties, an arbitrated CBA takes on the nature
of any judicial or quasi-judicial award. It
operates and may be executed only
prospectively unless there are legal
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
give preference to the qualified separated
employees in the filling of vacancies in the
facilities of the purchaser. [Manlimos v. NLRC,
1995]

[O]n the other hand, [when the CBA is only]


part of an arbitral award [,] [] it may be made
retroactive to the date of expiration of the
previous agreement. Therefore, in the absence
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


standing of a union entirely comprised of or of
which the employees in interest are a part.
[GMC v. Casio, 2010]

Nothing in this Code or in any other law shall


stop the parties from requiring membership in
a recognized collective bargaining agent as a
condition for employment, except those
employees who are already members of
another union at the time of the signing of the
collective bargaining agreement. [Art. 254 (e)]

Only union members can be hired by the


company and they must remain as members to
retain employment in the company. [Azucena]

Union security is any form of agreement which


imposes upon employees the obligation to
acquire or retain union membership as a
condition affecting employment. [GMC v. Casio,
2010]

Due Process in Termination Under Closed Shop


Provision
The requirements laid down by the law in
determining whether or not an employee was
validly terminated must still be followed even
if it is based on a closed-shop provision of a
CBA, i.e. the substantive as well as the
procedural due process requirements. [Del
Monte v. Saldivar, 2007]

Purpose
To safeguard and ensure the existence of the
union and thus, promote unionism in general
as a state policy.

Construction
The closed shop provision is the most prized
achievement of unionism. However it can also
be a potent weapon wielded by the union
against the workers whom the union is
supposed to protect in the first place. Hence,
any doubt as to the existence of a closed shop
provision in the CBA will be resolved in favor of
the nonexistence of the closed shop provision.

Limitation
Employees who are already members of
another union at the time of the signing of the
collective bargaining agreement may not be
compelled by any union security clause to join
any union. [Art. 254 (e)]
Types
(1)
(2)
(3)
(4)
(5)

LABOR LAW

Closed shop
Maintenance of membership shop
Union shop
Modified union shop
Agency shop

Maintenance of Membership Shop


There is maintenance of membership shop
when employees, who are union members as
of the effective date of the agreement, or who
thereafter become members, must maintain
union membership as a condition for [their]
continued employment until they are
promoted or transferred out of the bargaining
unit or the agreement is terminated. [GMC v.
Casio, 2010]

I. UNION SECURITY CLAUSES; CLOSED


SHOP, UNION SHOP, MAINTENANCE OF
MEMBERSHIP SHOP, ETC.
Closed Shop
A closed shop, on the other hand, may be
defined as an enterprise in which, by
agreement between the employer and his
employees or their representatives, no person
may be employed in any or certain agreed
departments of the enterprise unless he or she
is, becomes, and, for the duration of the

No employee is compelled to join the union,


but all present or future members of the union
must, as a condition of employment, remain in
good standing in the union. [Azucena]

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Union Shop
There is union shop when all new regular
employees are required to join the union within
a certain period as a condition for their
continued employment. [GMC v. Casio, 2010]

LABOR LAW

Jurisdiction over Check-off Disputes


The Bureau of Labor Relations has jurisdiction
to hear, decide and to mete out punishment
any reported violation under Article 241.
Note: Sec of Labor or his duly authorized
representative may inquire into financial
activities of legitimate labor orgs UPON filing
of complaint under oath and supported by
written consent of at least 20% of total
membership, Provided, such inquiry shall not
be conducted during (60)-day freedom period
nor within the thirty (30) days immediately
preceding the date of election of union
officials. [Art. 274]

Non-members may be hired, but to retain


employment, they must become union
members after a certain period. The
requirement applies to present and future
employees. [Azucena]
Modified Union Shop
Employees who are not union members at the
time of signing the contract need not join the
union, but all workers hired thereafter must
join. [Azucena]

B.4 UNFAIR LABOR PRACTICE


COLLECTIVE BARGAINING

Agency Shop
An agreement whereby employees must either
join the union or pay to the union as exclusive
bargaining agent a sum equal to that paid by
the members. [Azucena]

IN

Both employers and labor organizations can


commit acts of unfair labor practices in
collective bargaining. However, the labor
organization must be the representative of the
employees before any act it does may be
considered as a violation of the duty to bargain
collectively. [Art. 248 (g) and Art. 249 (c)]

II.CHECK-OFF, UNION DUES, AGENCY


FEES
Check-off
A check-off is a process or device whereby the
employer, on agreement with the Union,
recognized as the proper bargaining
representative, or on prior authorization from
the employees, deducts union dues or agency
fees from the latters wages and remits them
directly to the Union. [Marino v Gamilla, 2009]

I. BARGAINING IN BAD FAITH


GMCs refusal to make a counter-proposal to
the unions proposal for CBA negotiation on
the excuse that it felt the union no longer
represented the workers is an indication of bad
faith. [] Failing to comply with the mandatory
obligation to submit a reply to the unions
proposals, GMC violated its duty to bargain
collectively, making it liable for unfair labor
practice. [GMC v. CA, 2004]

The system of check-off is primarily for the


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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LABOR LAW

II. REFUSAL TO BARGAIN

IV. BLUE SKY BARGAINING

Statutory Basis of Employers


(1) To violate the duty to bargain
collectively as prescribed by this code.

Blue-Sky Bargaining is defined as "unrealistic


and unreasonable demands in negotiations by
either or both labor and management, where
neither concedes anything and demands the
impossible." It actually is not collective
bargaining at all. [Standard Bank Chartered
Employees Union v. Confesor, 2004]

[Art. 254 (g)]


Statutory Basis of Labor Organizations
(1) To violate the duty, or refuse to
bargain collectively with the employer,
provided it is the representatives of the
employees; [Art. 256 (c)]
(2) [I]t shall be the duty of employer and
the representatives of the employees
to bargain collectively in accordance
with the provisions of this Code. [Art.

V. SURFACE BARGAINING
Surface bargaining is defined as "going
through the motions of negotiating," without
any real intent to reach an agreement. It
violates the Act's requirement that parties
negotiate in "good faith." It is prohibited
because, as one commentator explained: The
bargaining status of a union can be destroyed
by going through the motions of negotiating
almost as easily as by bluntly withholding
recognition [] As long as there are unions
weak enough to be talked to death, there will
be employers who are tempted to engage in
the forms of collective bargaining without the
substance. [K-MART Corporation v NLRB, 1980
626 F.2d 704]

257]
Implied refusal
The school is guilty of unfair labor practice
when it failed to make a timely reply to the
proposals of the union more than one month
after the same were submitted by the union. In
explaining its failure to reply, the school merely
offered a feeble excuse that its Board of
Trustees had not yet convened to discuss the
matter. Clearly, its actuation showed a lack of
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
the workers right to organize. The prohibited
acts are related to the workers right to selforganization and to the observance of a CBA.
Without that element, the acts, no matter how
unfair, are not unfair labor practices. The only
exception is Art. 248 (f) [i.e. to dismiss,
discharge or otherwise prejudice or
discriminate against an employee for having
given or being about to give testimony under
this Code]. [Philcom Employees Union v. Phil.
Global, 2006]

III. INDIVIDUAL BARGAINING


It is an unfair labor practice for an employer
operating under a CBA to negotiate with his
employees individually. That constitutes
interference because the company is still under
obligation to bargain with the union as the
bargaining representative.
Individual bargaining contemplates a situation
where the employer bargains with the union
through the employees instead of the
employees through the union. [The Insular Life
Assurance Co. Ltd., Employees Assn. v. Insular
Life Assurance Co. Ltd, 1971]

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LABOR LAW

I. NATURE OF ULP
Statutory Construction
The Labor Code does not undertake the
impossible task of specifying in precise and
unmistakable language each incident which
constitutes an unfair labor practice. Rather, it
leaves to the court the work of applying the
law's general prohibitory language in light of
infinite combinations of events which may be
charged as violative of its terms. [HSBC
Employee Union V. NLRC, 1997]

a. inimical to the legitimate interests of


both labor and management, including
their right to bargain collectively and
otherwise deal with each other in an
atmosphere of freedom and mutual
respect
b. disrupt industrial peace
c. hinder the promotion of healthy and
stable labor-management relations
d. violations of the civil rights of both
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
with employees in the exercise of their right to
self-organization is an Unfair Labor Practice.

Purpose of the Policy Against ULPs


Protection of right to self-organization and/or
collective bargaining:
a) The employee is not only protected
from the employer but also from labor
organizations.
b) Employer is also protected from ULP
committed by a labor organization.
The public is also protected because it has an
interest in continuing industrial peace.

Interrogation

General rule: employer may interrogate its


employees regarding their union affiliation for
legitimate purposes and with the assurance
that no reprisals would be taken against the
unionists.

Exception: when interrogation interferes with

Employer-Employee Relationship Required


General Rule - An unfair labor practice may be
committed only within the context of an
employer-employee relationship [American
President Lines v. Clave, 1982]

or restrains employees' right to selforganization. [Phil. Steam Navigation Co. v.


Phil. Marine Officers Guild, 1965]

Exception
Yellow Dog condition: to require as a
condition of employment that a person or an
employee shall not join a labor organization or
shall withdraw from one to which he belongs.
[Art 248 (b)]

Speech
The acts of a company which subjects a union
to vilification and its participation in soliciting
membership for a competing union are also
acts constituting a ULP. [Phil. Steam
Navigation Co. v. Phil. Marine Officers Guild,
1965]

Parties Not Estopped from Raising ULP by


Eventual Signing of the CBA
The eventual signing of the CBA does not
operate to estop the parties from raising unfair
labor practice charges against each other.
[Standard Chartered Bank Union v. Confesor,
2004]

An employer may not send letters containing


promises or benefits, nor of threats of
obtaining replacements to individual workers
while the employees are on strike due to a
bargaining deadlock. This is tantamount to
interference and is not protected by the
Constitution as free speech. [Insular Life
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Assurance Co. Employees Assn. v. Insular Life


Assurance Co. Ltd, 1971]

LABOR LAW

4) Company Union
"Company
union" means
any
labor
organization whose formation, function or
administration has been assisted by any act
defined as unfair labor practice by this Code.
[Art. 212(i)]

Espionage
Espionage and/or surveillance by the employer
of union activities are instances of interference,
restraint or coercion of employees in
connection with their right to organize, form
and join unions as to constitute unfair labor
practice. [] The information obtained by
means of espionage is invaluable to the
employer and can be used in a variety of cases
to break a union. [Insular Life Assurance Co.
Employees Assn. v. Insular Life Assurance Co.
Ltd, 1971]

The employer commits ULP if it initiates,


dominates, or otherwise interferes with the
formation or administration of any labor
organization.
Example: giving out financial aid to any union's
supporters or organizers.
5) Discrimination Encourage/Discourage
Unionism
General rule: it is ULP to discriminate in regard
to wages, hours of work and other terms and
conditions of employment in order to
encourage or discourage membership in any
labor organization. [Art. 254 (e)]

(2) Yellow Dog Contracts


Yellow dog contracts require, as a condition of
employment, that a person or an employee
shall not join a labor organization or shall
withdraw from one to which he belongs.
Examples:
1. a representation by the employee that
he is not a member of a labor
organization
2. a promise by the employee that he will
not join a union
3. a promise by the employee that upon
joining a labor organization, he will quit
his employment

Exception [union security clause]:


Nothing in this Code or in any other law shall
stop the parties from requiring membership in
a recognized collective bargaining agent as a
condition for employment. [Art. 254 (e)]
Exception to exception:
Those employees who are already members of
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
Exception:
a. contracted-out services or functions
are performed by union members AND
b. contracting out will interfere with,
restrain, or coerce employees in the
exercise of their right to selforganization. [Art. 248 (c)]

6) Testimony
It is an act of ULP by an employer to dismiss,
discharge or otherwise prejudice or
discriminate against an employee for having
given or being about to give testimony under
this Code. [Art. 254 (f)]
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


imposing on the parties the obligation to live
up to the terms of such a collective bargaining
agreement if entered into, it is undeniable that
non-compliance therewith constitutes an
unfair labor practice. [Shell Oil Workers Union v
Shell Co., 1971]

LABOR LAW

2)
Discrimination:
Encourage/Discourage
Unionism [Art. 255 (b)]
General rule: it is a ULP for a labor
organization to cause an employer to
discriminate against an employee.
Exception: provisions of a valid union security
clause and other company policies applicable
to all employees.

8) Payment of negotiation or attorney's fees


Sweetheart contracts are favorable both to the
union and the employer at the expense of the
employees. The settlement of bargaining
issues must be made by fair bargaining in good
faith, and not through the payment of
negotiation or attorney's fees which will
ultimately lead to sweetheart contracts.

3) Violate duty to bargain or the CBA


Please refer to part B.4 for some examples.
4) Exaction (Featherbedding)
Featherbedding or make-work by the union
is the practice of the union asking (exacting)
for money or other things of value from the
employer in return for services which are not
performed or are not to be performed.

9) To violate a collective bargaining agreement


Flagrant and/or malicious refusal required
Violations of collective bargaining agreements,
except flagrant and/or malicious refusal to
comply with its economic provisions, shall not
be considered unfair labor practice and shall
not be strikeable. [IRR]

5) Asking or accepting negotiation and other


attorney's fees
See counterpart in ULP by employers
(sweetheart contracts).

Note: The list in Art. 254 is not exhaustive.


Other acts which are analogous to those
enumerated can be ULPs.

6) Violate a collective bargaining agreement


Flagrant and/or malicious refusal required
Violations of collective bargaining agreements,
except flagrant and/or malicious refusal to
comply with its economic provisions, shall not
be considered unfair labor practice and shall
not be strikeable. [IRR]

The alleged violation of the CBA, even


assuming it was malicious and flagrant, is not
a violation of an economic provision, thus not
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 selforganization.

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LABOR LAW

Limitation: Concerted activities must be in


accordance with law
The strike is a powerful weapon of the working
class. Precisely because of this, it must be
handled carefully, like a sensitive explosive,
lest it blow up in the workers own hands. Thus,
it must be declared only after the most
thoughtful
consultation
among
them,
conducted in the only way allowed, that is,
peacefully, and in every case conformably to
reasonable regulation. Any violation of the
legal requirements and strictures will render
the strike illegal, to the detriment of the very
workers it is supposed to protect. [Batangas
Laguna Tayabas Bus Co. v NLRC, 1992]

C. RIGHT TO PEACEFUL CONCERTED


ACTIVITIES
Basis
[The state] shall guarantee the rights of all
workers to self-organization, collective
bargaining and negotiations, peaceful
concerted activities, including the right to
strike in accordance with law. [CONST. Art. XIII
3]
Workers shall have the right to engage in
concerted activities for purposes of collective
bargaining or for their mutual benefit and
protection. The right of legitimate labor
organizations to strike and picket and of
employers to lockout, consistent with the
national interest, shall continue to be
recognized and respected. However, no labor
union may strike and no employer may declare
a lockout on grounds involving inter-union and
intra-union disputes. [Art. 269 (b)]

C.1. FORMS OF CONCERTED ACTIVITIES


Concerted Activities by Employees:
a. Strike
b. Picketing
Response to Concerted Activities available to
Employers:
c. Lockout

Definition
A concerted activity is one undertaken by two
or more employees to improve their terms and
conditions of work.

(a) Strike
A strike is any temporary stoppage of work by
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
not be abridged.
It shall be unlawful for any person to restrain,
coerce, discriminate against or unduly interfere
with employees and workers in their exercise of
the right to self-organization. Such right shall
include the right to form, join, or assist labor
organizations for the purpose of collective
bargaining through representatives of their
own choosing and to engage in lawful
concerted activities for the same purpose or for
their mutual aid and protection, subject to the
provisions of Article 264 of this Code. (Art. 252)

Strikes not limited to work stoppages


The term strike shall comprise not only
concerted work stoppages, but also
slowdowns, mass leaves, sit-downs, attempts
to damage, destroy or sabotage plant
equipment and facilities, and similar activities.
[Samahang Manggagawa v. Sulpicio Lines,
2004]
As coercive measure by employees
A strike is a coercive measure resorted to by
laborers to enforce their demands. The idea
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
relationship during lawful strike
Although during a strike the worker renders no
work or service and receives no compensation,
[] his relationship as an employee with his
employer is not severed or dissolved. [Elizalde
Rope Factory, Inc. v. SSS, 1972]

LABOR LAW
employer which he is not required by
law to grant [Consolidated Labor

Payment of wages during lawful strikes


General rule: Striking employees are not
entitled to the payment of wages for unworked days during the period of the strike
pursuant to the no work-no pay principle.

Association of the Phil. v. Marsman


and Company, 1964]
ULP strike called against a company's
unfair labor practice to force the
employer to desist from committing
such practices.

As to how committed
I. Slowdown strike one by which workers,
without a complete stoppage of work,
retard production or their performance of
duties
and
functions to
compel
management to grant their demands.

Exception: Agreement to the contrary.

A slowdown is inherently illicit and


unjustifiable because while the employees
continue to work, they, at the same time,
select what part of their duties they
perform. In essence, they work on their
own terms. [Ilaw at Buklod ng
Manggagawa v. NLRC, 1991]

Reinstatement after a lawful strike


When strikers abandon the strike and apply for
reinstatement despite the existence of valid
grounds but the employer either:
a) refuses to reinstate them or
b) imposes upon their reinstatement new
conditions then the employer commits
an act of ULP.

II. Wild-cat strike one declared and staged


without filing the required notice of strike
and without the majority approval of the
recognized bargaining agent.

The strikers who refuse to accept the new


conditions and are consequently refused
reinstatement are entitled to the losses of pay
they may have suffered by reason of the
employers discriminatory acts from the time
they were refused reinstatement.

III. Sit-down strike one wherein workers take


over possession of the property of such
business to cease production and to refuse
access to owners.

Forms of Strikes
As to legality
(1) Legal strike one called for a valid
purpose and conducted through
means allowed by law.
(2) Illegal strike one staged for a purpose
not recognized by law, or if for a valid
purpose, conducted through means
not sanctioned by law.

IV. Sympathetic strike one in which the


striking workers have no demands of their
own, but strike to make common cause
with other strikers in other establishments.
Conversion from economic to ULP strike
It is possible for a strike to change its character
from an economic to a ULP strike. In the
instant case, initially, the strike staged by the
Union was meant to compel the Company to
grant it certain economic benefits set forth in
its proposal for collective bargaining. However,

As to grounds
Economic strike one staged by
workers to force wage or other
economic concessions from the
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the strike changed its character from the time


the
Company
refused
to
reinstate
complainants because of their union activities
after it had offered to admit all the strikers and
in fact did readmit the others. It was then
converted into an unfair labor practice strike.
[Consolidated Labor Assoc. of the Phil. v.
Marsman and Company, 1964]

LABOR LAW

C.2 WHO MAY DECLARE A STRIKE OR


LOCKOUT?
Who may declare a strike
1. The certified or duly recognized
bargaining representative
2. Any legitimate labor organization in
the absence of #1, but only on grounds
of ULP [Book V, Rule XXII, 6]

Strike cannot be converted to a lockout by a


return to work offer
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
to work during the pendency of the labor
dispute between the union and the employer.
[Rizal Cement Workers Union v. CIR, 1962]

Who may declare a lockout


1. The employer [Book V, Rule XXII, Sec. 6]

C.3 REQUISITES FOR A VALID STRIKE


A valid strike must have a lawful ground and
must
conform
with
the
procedural
requirements set by law.
Substantial Requirements/Grounds
A strike or lockout may be declared in cases of:
a) Bargaining deadlocks
b) ULP [Art. 263 (c)]

(b) Picketing
The right of legitimate labor organizations to
strike and picket and of employers to lockout,
consistent with the national interest, shall
continue to be recognized and respected. [Art.
269 (b)]

When violations of collective bargaining


strikeable as a ULP
Only gross violations of the economic
provisions of the CBA are treated as ULP. [BPI
Employees Union-Davao FUBU v. BPI, 2013]

Picketing is the right of workers to peacefully


march to and fro before an establishment
involved in a labor dispute generally
accompanied by the carrying and display of
signs, placards and banners intended to inform
the public about the dispute. [NCMB Manual,
1]

When no lawful strike can be declared


1. Ground is an inter-union or intra-union
dispute
2. No notice of strike
3. No strike vote obtained and reported to
the NCMB
4. After assumption or certification by the
Secretary of Labor

(c) Lockout
Lockout is the temporary refusal of an
employer to furnish work as a result of an
industrial or labor dispute. [Art. 218 (p)]

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


No labor organization [] shall declare a strike
[] without first having bargained collectively
in accordance with Title VII of this Book. (Art.
270(a))

LABOR LAW

In cases of ULP:
1. Statement of Acts complained of
2. Efforts taken to resolve the dispute
amicably.
Action on Notice
1. Upon receipt of a valid notice of strike
or lockout, the NCMB, through its
Conciliator-Mediators, shall call the
parties to a conference the soonest
possible time in order to actively assist
them to explore all possibilities for
amicable settlement.
2. The
Conciliator-Mediator
may
suggest/offer
proposals
as
an
alternative avenue for the resolution of
their disagreement/conflict which may
not necessarily bind the parties.
3. If conciliation/mediation fails, the
parties shall be encouraged to submit
their dispute for voluntary arbitration.

(2) Filing and service of notice of strike


Bargaining deadlocks
[T]he duly certified or recognized bargaining
agent may file a notice of strike [] with the
Department at least 30 days before the
intended date thereof. [][Art. 269(c)]
Unfair Labor Practice; Union Busting
[I]n cases of unfair labor practice, the period to
file notice of strike shall be 15 days. However,
in cases of union busting (dismissal of duly
elected union officers from employment), the
cooling period shall not apply. [] [Art. 269 (c)]
Note: the notice must be served to the
employer. Failure to do so will constitute
noncompliance
with
the
procedural
requirements and will result to an illegal strike.
Rationale: due process. [IRR]

(3) Observance of cooling-off periods


Cooling off periods
1. Bargaining deadlock 30 days
2. ULP but not union busting 15 days
3. ULP and union busting no cooling-off
period

Contents of Notice of Strike


1. Names and addresses of the employer
and the union involved
2. Nature of the industry to which the
employer belongs
3. Number of union members and of
workers in the bargaining unit
4. Such other relevant data as may
facilitate the settlement of the dispute.
[Book V Rule XXII Sec. 8]

Purpose of Cooling Off Period


During the cooling-off period, it shall be the
duty of the Ministry to exert all efforts at
mediation and conciliation to effect a voluntary
settlement. Should the dispute remain
unsettled until the lapse of the requisite
number of days from the mandatory filing of
the notice, the labor union may strike or the
employer may declare a lockout. [Art. 269 (e)]

Additional Requirements
In case of Bargaining Deadlocks:
1. Statement of Unresolved issues in the
bargaining negotiations
2. Written Proposals of the union
3. Counterproposals of the employer
4. Proof of a request for conference to
settle the differences.

The purpose of the cooling-off period is to


provide an opportunity for mediation and
conciliation. [National Federation of Sugar
Workers v. Ovejera, 1982]

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(4) Strike Vote


Requirements for a declaration of a strike in a
strike vote
1. approval by a majority of the total
union membership in the bargaining
nit concerned
2. approval is obtained by secret ballot in
a meeting/referendum called for the
purpose

take a strike vote and report the same within


the statutory cooling-off period. The coolingoff and 7-day strike ban provisions of law
constitute a valid exercise of police power of
the State. [National Federation of Sugar
Workers v. Ovejera, 1982]
Strike-vote Reported within the Cooling-off
Period
When the strike-vote is reported within the
cooling-off period, the phrase at least 7 days
before the intended strike or lockout, subject to
the cooling-off period herein provided. in
Article 269 (f) admits two interpretations:
(1) Mutually exclusive periods (used in the
NCMB Manual). The cooling off period and
the 7-day period are mutually exclusive.
Thus, in the case of Capitol Medical Center
v. NLRC, the Court held that when the
strike vote is conducted within the coolingoff period, the 7-day requirement shall be
counted from the day following the
expiration of the cooling off period.
(2) Coexistent periods. The cooling-off period
and the 7-day requirement may coexist.
After all, the purpose of the 7-day
requirement is to give time for the DOLE to
verify if the projected strike is supported by
the majority. There is no reason to add it to
the cooling-off period.

Duration of the Validity of the Strike-Vote


[T]he decision shall be valid for the duration of
the dispute based on substantially the same
grounds considered when the strike or lockout
vote was taken. [][Art. 269 (f)]
Department of Labor and Employment
intervention
[T]he Department may, at its own initiative or
upon the request of any affected party,
supervise the conduct of the secret balloting.
[][Art. 269 (f)]
(5) Strike Vote Report
[I]n every case, the union or the employer shall
furnish the Department the results of the
voting at least 7 days before the intended
strike1 or lockout, subject to the cooling-off
period herein provided.[Art. 269 (f)]
(6) Observance of the 7-daywaiting period
The waiting period, on the other hand, is
intended to provide opportunity for the
members of the union or the management to
take the appropriate remedy in case the strike
or lockout vote report is false or inaccurate.
[National Federation of Sugar Workers v.
Ovejera, 1982]

C.4 REQUISITES
LOCKOUT

FOR

VALID

Limitations
[N]o employer may declare a lockout on
grounds involving inter-union and intra-union
disputes. [Art. 269 (b)]
Grounds
Similar to a strike, the proper grounds for a
lockout are
1. bargaining deadlock
2. ULP by labor organizations

Compliance with Both Cooling-off and Waiting


Periods
The observance of both periods must be
complied with, although a labor union may
1

LABOR LAW

7-day Waiting Period.

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2. Written proposals of the union


3. Counterproposals of the employer
4. Proof of a request for conference to
settle the differences.

Requisites
1. Effort to bargain
2. Filing and service of notice of lockout
3. Observance of cooling-off period
4. Lockout vote
5. Report of lockout vote
6. Observance of the waiting period

In cases of ULP
1. Statement of acts complained of
2. Efforts taken to resolve the dispute
amicably.
Action on notice
1. Upon receipt of a valid notice of strike or
lockout, the NCMB, through its ConciliatorMediators, shall call the parties to a
conference the soonest possible time in
order to actively assist them to explore all
possibilities for amicable settlement.
2. The
Conciliator-Mediator
may
suggest/offer proposals as an alternative
avenue for the resolution of their
disagreement/conflict which may not
necessarily bind the parties.
3. If conciliation/mediation fails, the parties
shall be encouraged to submit their
dispute for voluntary arbitration. [Book V
Rule XXII Sec. 9]

(1) Effort to bargain


No employer shall declare a [] lockout
without first having bargained collectively in
accordance with Title VII of this Book. [Art 270
(a)]
(2) Filing and service of Notice of Lockout
Bargaining deadlocks
[T]he duly certified or recognized bargaining
agent may file [] a notice of lockout with the
Department at least 30 days before the
intended date thereof. [] [Art. 269(c)]
Unfair Labor Practice; Union Busting
[I]n cases of unfair labor practice, the period to
file notice of strike shall be 15 days. [] [Art.
269 (c)]

(3) Observance of Cooling-off Periods


Lockout cooling-off periods:
based on bargaining deadlock 30
days
based on ULP 15 days.

Note: the notice must be served to the


employees through the representative union.
Contents of notice
1. Names and addresses of the employer and
the union involved
2. Nature of the industry to which the
employer belongs
3. Number of union members and of workers
in the bargaining unit
4. Such other relevant data as may facilitate
the settlement of the dispute.

(4) Lockout Vote


A decision to declare a lockout must be
approved by a majority of the board of
directors of the corporation or association or of
the partners in a partnership, obtained by
secret ballot in a meeting called for that
purpose.The decision shall be valid for the
duration of the dispute based on substantially
the same grounds considered when the strike
or lockout vote was taken. [Art. 269 (f)]

Additional Requirements
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
furnish the Ministry the results of the voting at
least seven days before the intended strike or
lockout, subject to the cooling-off period
herein provided. [Art. 269 (f)]

Picketing
as
Part
of
Freedom
of
Speech/Expression
General rule: picketing enjoys constitutional
protection as part of freedom of speech and/or
expression.
Exceptions/limitations:
1. When picketing is coercive rather than
persuasive [Security Bank Employees
Union v. Security Bank]
2. When picketing is achieved through
illegal means [Mortera v. CIR]
3. Courts
may
confine
the
communication/demonstration to the
parties to the labor dispute [PCIB v.
Philnabank Employees Association]
4. Innocent bystander rule. Courts may
insulate establishments or persons
with no industrial connection or having
interest totally foreign to the context of
the dispute [PCIB v. Philnabank
Employees Association]

(6) Observance of Waiting Period (7 days)


See notes under strike.
Effect of Illegal Lockout
Any worker whose employment has been
terminated as a consequence of any unlawful
lockout shall be entitled to reinstatement with
full backwages. [Art. 270 (a) Sec. 3, 1st Sentence]

C.5 REQUISITES
PICKETING

FOR

LABOR LAW

LAWFUL

Prohibited activities in picketing


1. By any person. No person shall obstruct,
impede, or interfere with, by force,
violence, coercion, threats or intimidation,
any peaceful picketing by employees
during any labor controversy or in the
exercise of the right to self-organization or
collective bargaining, or shall aid or abet
such obstruction or interference. [Art. 264
(b)]
2. By police force. The police force shall keep
out of the picket lines unless actual
violence or other criminal acts occur
therein: Provided, That nothing herein
shall be interpreted to prevent any public
officer from taking any measure necessary
to maintain peace and order, protect life
and property, and/or enforce the law and
legal order. [Art. 264 (d)]
3. By person engaged in picketing. No person
engaged in picketing shall commit any act
of violence, coercion or intimidation or
obstruct the free ingress to or egress from
the employers premises for lawful
purposes,
or
obstruct
public
thoroughfares. [Art. 264 (e)]

Picketing and Libel


Libel laws are not applied strictly considering
that there is emotional tension in the picket
lines and expected discourteous and impolite
exchanges between the employees and the
employer. [PCIB v. Philnabank Employees
Association, 1981]
Peaceful picketing is legal even in the absence
of employer-employee relationship
Picketing, peacefully carried out, is not illegal
even in the absence of employer-employee
relationship, for peaceful picketing is a part of
the freedom of speech guaranteed by the
Constitution. [De Leon v. National Labor Union,
1957]

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C.6 ASSUMPTION OF JURISDICTION


BY THE DOLE SECRETARY OR
CERTIFICATION OF THE LABOR
DISPUTE TO THE NLRC FOR
COMPULSORY ARBITRATION

LABOR LAW

C.7 NATURE OF ASSUMPTION


ORDER OR CERTIFICATION ORDER
1. Automatic injunction
2. Return-to-work and admission
3. Immediately executory
(1) Automatic injunction of intended of
impending strike or lockout
[S]uch assumption or certification shall have
the effect of automatically enjoining the
intended or impending strike or lockout as
specified in the assumption or certification
order. [] [Art.269 (g)]

When Sec. of Labor can Assume Jurisdiction:


1.Labor
dispute
in
an
industry
indispensable to the national interest
2.Such dispute is causing or is likely to
cause a strike or lockout
Powers of the Secretary of Labor (alternative)
1. Assumption of jurisdiction. The
Secretary of Labor will decide the labor
dispute himself/herself.
2. Certification for compulsory arbitration.
The Secretary of Labor will certify the
labor dispute to the NLRC for
compulsory arbitration.

(2) Return-to-work and readmission if strike or


lockout has already taken place
[I]f one has already taken place at the time of
assumption or certification, all striking or
locked out employees shall immediately
return-to-work and the employer shall
immediately resume operations and readmit
all workers under the same terms and
conditions prevailing before the strike or
lockout. [] [Art.269 (g)]

Powers of the President (Not precluded by the


powers of the Secretary of Labor)
1. Determine the industries indispensable
to the national interest
2. Assume jurisdiction over any such
labor dispute to settle or terminate
such dispute

Nature of return-to-work order


[T]he 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 duty even against the worker's will.
Returning to work in this situation is not a
matter of option or voluntariness but of
obligation. The worker must return to his job
together with his co-workers so the operations
of the company can be resumed and it can
continue serving the public and promoting its
interest. That is the real reason such return can
be compelled. So imperative is the order in fact
that it is not even considered violative of the
right against involuntary servitude. [Kaisahan
ng Mga Manggagawa sa Kahoy v. Gotamco
Sawmills, 1948]

Who determines industries indispensable to the


national interest
[I]t is in the discretion of the Secretary of Labor
to
determine
which
industries
are
indispensable to the national interest.
However, the President may determine such
industries himself:
The foregoing notwithstanding, the President
of the Philippines shall not be precluded from
determining the industries that, in his opinion,
are indispensable to the national interest, and
from intervening at any time and assuming
jurisdiction over any such labor dispute in order
to settle or terminate the same.[Art. 263 (g)]

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(3) Immediately executory


The assumption and certification orders are
executory in character and must be strictly
complied with by the parties. [Allied Banking v.
NLRC, 1996]

Strike/lockout becomes illegal


A strike undertaken despite the issuance by the
Secretary of Labor of an assumption or
certification order becomes a prohibited
activity and thus, illegal, pursuant to Article
264 (a) of the Labor Code. [Allied Banking v.
NLRC, (1996)]

Strikes and lockouts in hospitals, clinics and


similar medical institutions
It shall be the duty of the striking union or
locking-out employer to provide and maintain
an effective skeletal workforce of medical and
other health personnel, whose movement and
services
shall
be
unhampered
and
unrestricted, as are necessary to insure the
proper and adequate protection of the life and
health of its patients, most especially
emergency cases, for the duration of the strike
or lockout.

See notes on liabilities of employer, union


officers, and ordinary workers under illegal
strike.
Summary of Liabilities of Participants in an
Illegal Strike/Lockout [Art. 264]
1. Employer in an illegal lockout workers
terminated due to illegal lockout shall be
entitled to reinstatement plus full
backwages.
2.Union officers who participated in illegal
strike deemed to have lost their
employment
3. Union officers who participated in illegal acts
during a lawful strike deemed to have
lost their employment.
4.Ordinary workers deemed to have lost
their employment only if they
participated in illegal acts.

In such cases, therefore, the Secretary of Labor


and Employment may immediately assume,
within twenty four (24) hours from knowledge
of the occurrence of such a strike or lockout,
jurisdiction over the same or certify it to the
Commission for compulsory arbitration.
Rationale
The highest respect is accorded to the right of
patients to life and health.

C.8 EFFECT OF
ASSUMPTION OR
ORDERS

LABOR LAW

Stricter penalties for non-compliance with


orders, prohibitions, and/or injunctions issued
by the Secretary of Labor in strikes involving
hospitals, clinics, and similar medical
institutions
1. Immediate disciplinary action against
both union and employer
2. Dismissal/loss of employment for
members of the striking union
3. Payment by employer of backwages,
damages, and other affirmative relief
4. Criminal prosecution against either or
both the union and employer

DEFIANCE OF
CERTIFICATION

No strike or lockout shall be declared after


assumption of jurisdiction by the President or
the Minister or after certification or submission
of the dispute to compulsory or voluntary
arbitration or during the pendency of cases
involving the same grounds for the strike or
lockout. [Art. 270 (a)]

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(3)
Noncompliance
with
procedural
requirements
See notes under procedural requirements of a
valid strike.

C.9 ILLEGAL STRIKE


Reasons for being illegal
1. Prohibited by law
2. Improper grounds
3. Noncompliance
with
procedural
requirements
4. Unlawful means and methods
5. Violation of injunction order
6. No strike/lockout provisions in the CBA

A strike which does not strictly comply with the


procedural requirements set by law and the
rules is an unlawful/illegal strike.
Good faith strike must still comply with
procedural requirements
Even if the union acted in good faith in the
belief that the company was committing an
unfair labor practice, if no notice of strike and a
strike vote were conducted, the said strike is
illegal. [Grand Boulevard Hotel v. GLOWHRAIN,
2003]

(1) Prohibited by law


Government employees
While the Constitution guarantees the right of
government employees to organize, they are
otherwise not allowed to strike.
(2) Improper grounds
A legal strike must be based on a bargaining
deadlock and/or a ULP act only.

(4) Unlawful means and methods


Purpose and means test
There must be concurrence between the
validity of the purpose of the strike and the
means of conducting it.

Intra-union and inter-union disputes are not


proper grounds to strike.
Good faith strike
Good faith may be used as a defense if the
strike is held on the basis of an act of ULP by
the employer even if it turned out that there
was no act of ULP. However, the mandatory
procedural requirements cannot be dispensed
with (notice of strike, cooling-off period, strike
vote, strike vote report). [Grand Boulevard Hotel
v. GLOWHRAIN, 2003]

A strike is a legitimate weapon in the universal


struggle for existence. It is considered as the
most effective weapon in protecting the rights
of the employees to improve the terms and
conditions of their employment. But to be valid,
a strike must be pursued within legal bounds.
The right to strike as a means for the
attainment of social justice is never meant to
oppress or destroy the employer. The law
provides limits for its exercise. Among such
limits are the prohibited activities under Art.
264, particularly paragraph (e), which states
that no person engaged in picketing shall:
commit any act of violence, coercion, or
intimidation or
obstruct the free ingress to or egress from
the employer's premises for lawful
purposes or
obstruct public thoroughfares. [Association
of Independent Unions in the Philippines
(AIUP), et. al. v NLRC, 1999]

Good faith strike requires rational basis


A mere claim of good faith would not justify
the holding of a strike under the aforesaid
exception as, in addition thereto, the
circumstances must have warranted such
belief. It is, therefore, not enough that the
union believed that the employer committed
acts of ULP when the circumstances clearly
negate even a prima facie showing to sustain
such belief. [Interwood Employees Assoc. v. Intl
Hardwood, 1956]

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A legal strike may turn into an illegal strike


Even if the strike is valid because its objective
or purpose is lawful, the strike may still be
declared invalid where the means employed
are illegal. [Phil. Diamond Hotel and Resort,
Inc. v. Manila Diamond Hotel Employees Union,
2006]

LABOR LAW

If there be in this case a weighing of interests


in the balance, the ban the law imposes on
unfair labor practices by management that
could provoke a strike and its requirement that
it be conducted peaceably, it would be, to
repeat, unjustified, considering all the facts
disclosed, to stamp the strike with illegality. It
is enough that individual liability be incurred
by those guilty of such acts of violence that call
for loss of employee status. Such an approach
is reflected in our recent decisions. [Shell Oil
Workers Union v. Shell Co. of the Phils, 1971]

Examples of unlawful means and methods


(1) Acts of violence and terrorism
(2) Destruction of property
Guidelines and Balancing of Interest
(1) A strike otherwise valid, if violent in
character, may be placed beyond the
pale.
(2) Care is to be taken especially where an
unfair labor practice is involved, to
avoid stamping it with illegality just
because it is tainted by such acts. To
avoid rendering illusory the recognition
of the right to strike, responsibility in
such a case should be individual and
not collective.
(3) A different conclusion would be called
for if the existence of force while the
strike lasts is pervasive and
widespread,
consistently
and
deliberately resorted to as a matter of
policy. It could be reasonably
concluded then that even if justified as
to ends, it becomes illegal because of
the means employed'.
(4) This is not by any means to condone
the utilization of force by labor to
attain its objectives. It is only to show
awareness that in labor conflicts, the
tension that fills the air as well as the
feeling of frustration and bitterness
could break out in sporadic acts of
violence.

(5) Violation of injunction order


An automatic injunction under Article 263 (g)
or a valid injunction order under the exceptions
to Article 254 must be complied with.
Otherwise, the strike becomes illegal.
(6) No strike/lockout provisions in the CBA
A no strike, no lock-out is a valid provision in
the CBA. However, it only applies to economic
provisions. It cannot prevent a strike which is
grounded on unfair labor practice. [Malayang
Samahan ng mga Manggagawa sa Greenfield v.
Ramos, 2000]

I. LIABILITY OF UNION OFFICERS


Any union officer who knowingly participates in
an illegal strike and any worker or union officer
who knowingly participates in the commission
of illegal acts during a strike may be declared
to have lost his employment status.
Note: Mere participation in an illegal strike by a
union officer is sufficient ground to terminate
his employment. In case of a lawful strike, the
union officer must commit illegal acts during a
strike for him to be terminated.

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II. LIABILITY OF ORDINARY WORKERS

LABOR LAW

Truly, it is more logical and reasonable for


condonation to apply only to strikers who
signified their intention to return and did
return to work. The reason is obvious. These
strikers took the initiative in normalizing
relations with their employer and thus helped
promote industrial peace. However, as regards
the strikers who decided to pursue with the
case, [] the employer could not be deemed to
have condoned their strike, because they had
not shown any willingness to normalize
relations with it. [Philippine Inter-Fashion, Inc.
v. NLRC, 1982]

General rule: Participation by a worker in a


lawful strike is not ground for termination of
his employment.
Exception: When the worker participated in
illegal acts during the strike.
When the strike is or becomes illegal, the
workers who participate in it are not deemed to
have lost their employment status by express
omission in the second sentence of the third
paragraph of Art. 264. Only the union officers
are deemed to have lost their employment
status.

However, the mere act of entering into a


compromise agreement cannot be deemed to
be a waiver of the illegality of the strike, unless
it such a waiver is clearly shown in the
agreement. The court has emphasized that
[for] a waiver to be valid and effective [it] must
be couched in clear and unequivocal terms
which leave no doubt as to the intention of a
party to give up a right or benefit which legally
pertains to him. [Filcon Manufacturing Corp v.
Lakas Manggagawa sa Filcon Lakas
Manggagawa Labor Center]

III. LIABILITY OF EMPLOYER


Any worker whose employment has been
terminated as a consequence of any unlawful
lockout shall be entitled to reinstatement with
full backwages.

IV. WAIVER OF ILLEGALITY OF STRIKE


When defense of illegality of strike is deemed
waived
An employer can be deemed to have waived
the defense that a strike is illegal. In one case,
the Court held that:

C.10 INJUNCTIONS
No temporary or permanent injunction or
restraining order in any case involving or
growing out of labor disputes shall be issued
by any court or other entity, except as
otherwise provided in Articles 218 and 264 of
this Code. [Art. 260]

Admitting for the sake of argument that the


strike was illegal for being premature, this
defense was waived by the [Company], when it
voluntarily agreed to reinstate the radio
operators. [Bisaya Land Transportation Co.,
Inc. v. CIR, 1957]

General Rule: Injunctions are prohibited.


When defense of illegality of strike is not
deemed waived
The ruling cited in the Bisaya case that the
employer waives his defense of illegality of the
strike upon reinstatement of strikers is
applicable only to strikers who signified their
intention to return to work and were accepted
back. []

Exceptions: Those provided under Art. 224


(referring to the Powers of the NLRC) in
connection with Art.270 (on Prohibited
Activities) under the Labor Code.

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I. REQUISITES FOR LABOR INJUNCTIONS

LABOR LAW

shall not constitute sufficient ground for


termination of his employment, even if a
replacement had been hired by the
employer during such lawful strike.

Requisites for injunction to issue (in accordance


with the Powers of the NLRC)
i. actual or threatened commission of a
prohibited or unlawful act OR
requirement of performance of a
particular act in a labor dispute
ii. if unrestrained or unperformed, the act
will cause grave or irreparable damage
to any party OR render ineffectual any
decision in favor of such party [Art. 224
(e)]

(b) No person shall obstruct, impede, or


interfere with, by force, violence, coercion,
threats or intimidation, any peaceful
picketing by employees during any labor
controversy or in the exercise of the right to
self-organization or collective bargaining,
or shall aid or abet such obstruction or
interference.
(c) No employer shall use or employ any
strike-breaker, nor shall any person be
employed as a strike-breaker.

Prohibited Activities
[Art. 270]
(a) No labor organization or employer shall
declare a strike or lockout without first
having
bargained
collectively
in
accordance with Title VII of this Book or
without first having filed the notice
required in the preceding Article or without
the necessary strike or lockout vote first
having been obtained and reported to the
Ministry.

(d) No public official or employee, including


officers and personnel of the New Armed
Forces of the Philippines or the Integrated
National Police, or armed person, shall
bring in, introduce or escort in any manner,
any individual who seeks to replace strikers
in entering or leaving the premises of a
strike area, or work in place of the strikers.
The police force shall keep out of the picket
lines unless actual violence or other
criminal acts occur therein: Provided, That
nothing herein shall be interpreted to
prevent any public officer from taking any
measure necessary to maintain peace and
order, protect life and property, and/or
enforce the law and legal order.

No strike or lockout shall be declared after


assumption of jurisdiction by the President
or the Minister or after certification or
submission of the dispute to compulsory or
voluntary arbitration or during the
pendency of cases involving the same
grounds for the strike or lockout.
Any worker whose employment has been
terminated as a consequence of any
unlawful lockout shall be entitled to
reinstatement with full backwages. Any
union officer who knowingly participates in
an illegal strike and any worker or union
officer who knowingly participates in the
commission of illegal acts during a strike
may be declared to have lost his
employment status: Provided, That mere
participation of a worker in a lawful strike

(e) No person engaged in picketing shall


commit any act of violence, coercion or
intimidation or obstruct the free ingress to
or egress from the employers premises for
lawful purposes, or obstruct public
thoroughfares.

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II. INNOCENT BYSTANDER RULE


Test to Determine if a Party is an Innocent
Bystander
An "innocent bystander," who seeks to enjoin a
labor strike, must satisfy the court that aside
from the grounds specified in Rule 58 of the
Rules of Court, it is entirely different from,
without any connection whatsoever to, either
party to the dispute and, its interests are totally
foreign to the context thereof. [MSF Tire and
Rubber Inc. v. CA, 1999]
Injunction Available to Innocent Bystanders
An innocent by-stander is entitled to injunction
if it is affected by the activities of a picketing
union.
Rationale
The right [to picket] may be regulated at the
instance of [] `innocent bystanders' if it
appears that the inevitable result of its exercise
is [1] to create an impression that a labor
dispute with which they have no connection or
interest exists between them and the picketing
union or [2] constitute an invasion of their
rights. [Liwayway Publishing v. Permanent
Concrete Worker's Union, 1981]

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VIII. Procedure and


Jurisdiction

LABOR LAW

voluntarily settled by the parties. [Art.


124]
(9) Enforcement
of
compromise
agreements when there is noncompliance by any of the parties. [Art.
227]
(10) Other cases as may be provided by law.

A. LABOR ARBITER
A.1 JURISDICTION
Except as otherwise provided under the Code
the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide:
(1) Unfair labor practices cases;
(2) Termination disputes;
(3) If accompanied with a claim for
reinstatement, those cases that
workers may file involving wages, rates
of pay, hours of work and other terms
and conditions of employment;
(4) Claims for actual, moral, exemplary
and other forms of damages arising
from the employer-employee relations;
(5) Cases arising from any violation of Art.
264 of this Code, including questions
involving the legality of strikes and
lockouts;
(6) Except
claims
for
Employees
Compensation,
Social
Security,
Medicare and maternity benefits, all
other claims, arising from employeremployee relations, including those of
persons in domestic or household
service, involving an amount exceeding
five
thousand
pesos
(P5,000)
regardless of whether accompanied
with a claim for reinstatement. [Art.
217]
(7) Money claims arising out of employeremployee relationship or by virtue of
any law or contract, involving claims
for actual, moral, exemplary an other
forms of damages, as well as
employment termination of OFWs;
(8) Wage
distortion
disputes
in
unorganized
establishments
not

Exclusive and Original Jurisdiction subject to


Articles 261 and 262
A case under Art 217 may be lodged instead
with a voluntary arbitrator. The policy of the
law is to give primacy to voluntary modes of
settling dispute.

I. VERSUS REGIONAL DIRECTOR


Jurisdiction on Money Claims (Labor Arbiter vs.
Regional Director)
A money claim arising from employeremployee relations, except SSS, ECC/Medicare
claims, is within the jurisdiction of a labor
arbiter if:
1. The claim, regardless of amount, is
accompanied with a claim of
reinstatement; or
2. The claim exceeds P5,000, whether or
not there is a claim for reinstatement.
The Regional Director has jurisdiction if:
1. the money claim is not accompanied
by reinstatement AND
2. the claim does not exceed P5,000
Notes:
1. The money claim must arise from law
or contracts other than CBA.
2. For money claims arising from the
implementation of a CBA Voluntary
Arbitrator or Panel of Voluntary
Arbitrators have jurisdiction.
3. For money claims which do not arise
from ER-EE relations Regular Courts
have jurisdiction.

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4. Nature of Proceeding: Non-litigious.


The Labor Arbiter is not bound by the
technical rules of procedure.
5. The Labor Arbiter shall use all
reasonable means to ascertain the
facts in each speedily and objectively.
[Art. 221]
6. Employer-employee relationship is a
jurisdictional requisite, absent of
which, the NLRC has no jurisdiction to
hear and decide the case. [HawaiianPhilippine Company v. Gulmatico]
7. Venue: Regional Arbitration Branch
(RAB) having jurisdiction over the
workplace of the complainant or
petitioner.
8. Workplace place or locality where the
employee is regularly assigned at the
time the cause of action arose.
9. In the case of field employees,
ambulant or itinerant workers, their
workplace is (a) where they are
regularly assigned or (b) where they
are supposed to regularly receive their
salaries and wages or work instructions
from, and report the results of their
assignment to their employers.

LABOR LAW
RAB having jurisdiction over the place
where the complainant resides or
where the principal office of any of the
respondents is situated.

A.2 REINSTATEMENT PENDING APPEAL


An order for reinstatement entitles an
employee to receive his accrued backwages
from the moment the reinstatement order was
issued up to the date when the same was
reversed by a higher court without fear of
refunding what he had received. [Garcia v.
Philippine Airlines, Inc., G.R. No.164856, 2009]

A.3 REQUIREMENTS
APPEAL TO NLRC

TO

PERFECT

1) The appeal should be filed within the


reglementary period;
2) The Memorandum of Appeal should be
under oath;
3) The appeal fee should be paid;
4) There should be posting of cash or
surety bond, if judgment involves
monetary award; and
5) There should be proof of service to the
adverse party.

B. NATIONAL LABOR RELATIONS


COMMISSION (NLRC)

Some Rules on Venue


1. Exclusion. Where 2 or more Regional
Arbitration Branches have jurisdiction
over the workplace of the complainant,
that first which acquired jurisdiction
over the case shall exclude others.
2. Waiver. When venue is not objected to
before the filing of position papers,
such issue shall be deemed waived.
3. Transfer. Venue of an action may be
transferred to a different Regional
Arbitration Branch upon written
agreement of the parties or upon order
of the LA in meritorious cases and on
motion of the proper party.
4. OFW Cases. Cases involving overseas
Filipino workers may be filed before the

B.1 JURISDICTION
NLRC divisions
(1) Original Jurisdiction: Over petitions for
injunction or temporary restraining
order under Art. 218 (e).
(2) Exclusive Appellate Jurisdiction: over all
cases decided by labor arbiters (Art
217[b]) and the DOLE regional
directors under Art 129.

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Period of Appeal
1. Labor Arbiter to NLRC: Decisions and
Resolutions of the LA shall be final and
executory unless appealed to the NLRC
by any or both parties within 10
calendar days from receipt thereof.
[2005 NLRC Rules of Procedure]
2. Regional director to NLRC: Decisions of
the Regional director shall be final and
executory unless appealed within 5
days from receipt thereof. [Art. 129]

LABOR LAW

the part of the employer to reinstate and pay


the wages of the dismissed employee during
the period of appeal until reversal by the
higher court.
On the other hand, if the employee has been
reinstated during the appeal period and such
reinstatement order is reversed with finality,
the employee is not required to reimburse
whatever salary he received for he is entitled to
such, more so if he actually rendered services
during the period. [Garcia v. Philippine Airlines,
Inc., G.R. No.164856, 2009]

Note: If the last day of the reglementary period


falls on a Sunday or a holiday, the last day
shall be the next working day.

B.3 REMEDIES
Requisites for Perfection of Appeal to the Court
of Appeals
[Rule 43]
(1) The appeal shall be:
Filed within the reglementary period;
Verified by the appellant himself in
accordance with 4, Rule 7 of the
Rules of Court;
In the form of a memorandum of
appeal which shall state the grounds
relied upon and the arguments in
support thereof, the relief prayed for,
and with a statement of the date the
appellant received the appealed
decision, resolution or order;
In three (3) legibly typewritten or
printed copies; and
Accompanied by (a) proof of
payment of the required appeal fee;
(b) posting of a cash or surety bond
as provided in Section 6 of the 2005
NLRC Rules, (c) a certificate of nonforum shopping; and (d) proof of
service upon the other parties.
(2) A mere notice of appeal without complying
with the other requisites aforestated shall
not stop the running of the period for
perfecting an appeal.
(3) The appellee may file with the Regional
Arbitration Branch or Regional Office

Grounds of Appeal
1. If there is prima facie evidence of abuse
of discretion on the part of the Labor
Arbiter or Regional Director;
2. If the decision, resolution or order was
secured through fraud or coercion,
including graft and corruption;
3. If made purely on questions of law;
and/or
4. If serious errors in the findings of fact
are raised which, if not corrected,
would cause grave or irreparable injury
to the appellant
It is clear from the NLRC Rules of Procedure
that appeals must be verified and certified
against forum-shopping by the parties-ininterest themselves. The purpose of verification
is to secure an assurance that the allegations
in the pleading are true and correct and have
been filed in good faith. [Antonio B. Salenga, et
al. v. CA, 2012]

B.2 EFFECT OF NLRC REVERSAL OF


LABOR
ARBITERS
ORDER
OF
REINSTATEMENT
Even if the order of reinstatement of the Labor
Arbiter is reversed on appeal, it is obligatory on
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where the appeal was filed, his answer or


reply to appellants memorandum of
appeal, not later than 10 calendar days
from receipt thereof. Failure on the part of
the appellee who was properly furnished
with a copy of the appeal to file his answer
or reply within the said period may be
construed as a waiver on his part to file the
same.
(4) Subject to the provisions of Article 218 of
the Labor Code, once the appeal is
perfected in accordance with these Rules,
the Commission shall limit itself to
reviewing and deciding only the specific
issues that were elevated on appeal.

LABOR LAW

earliest time possible and with the end in view


that its action would not only serve the
interests of the parties alone, but would also
have favorable implications to the community
and to the economy as a whole. This is the
clear intention of the legislative body in
enacting Art. 263 paragraph (g) of the Labor
Code, as amended by Section 27 of R.A. 6175
[Union of Filipino Employees v. NLRC, 1990]
Effects of Certification
1. Upon certification, the intended or
impending
strike
or
lockout
is
automatically enjoined, notwithstanding
the filing of any motion for reconsideration
of the certification order nor the nonresolution of any such motion which may
have been duly submitted to the Office of
the Secretary of Labor and Employment.
2. If a work stoppage has already taken place
at the time of the certification, all striking
or locked out employees shall immediately
return to work and the employer shall
immediately resume operations and
readmit all workers under the same terms
and conditions prevailing before the strike
or lockout.
3. All cases between the same parties, except
where the certification order specifies
otherwise the issues submitted for
arbitration which are already filed or may
be filed, and are relevant to or are proper
incidents of the certified case, shall be
considered subsumed or absorbed by the
certified case, and shall be decided by the
appropriate Division of the Commission.
4. The parties to a certified case, under pain
of contempt, shall inform their counsels
and the Division concerned of all cases
pending with the Regional Arbitration
Branches and the Voluntary Arbitrators
relative or incident to the certified case
before it.
5. When a certified labor dispute involves a
business entity with several workplaces

B.4 CERTIFIED CASES


Definition
Certified labor disputes are cases certified to
the Commission for compulsory arbitration
under Art. 263 (g) of the Labor Code. [2, The
2011 NLRC Rules and Procedures]
When, in his opinion, there exists a labor
dispute causing or likely to cause a strike or
lockout in an industry indispensable to the
national interest, the Secretary of Labor and
Employment may assume jurisdiction over the
dispute and decide it or certify the same to the
Commission for compulsory arbitration. Such
assumption or certification shall have the
effect of automatically enjoining the intended
or impending strike or lockout as specified in
the assumption or certification order. [Art. 263]
Function of the NLRC
When sitting in a compulsory arbitration
certified to by the Secretary of Labor, the NLRC
is not sitting as a judicial court but as an
administrative body charged with the duty to
implement the order of the Secretary. Its
function only is to formulate the terms and
conditions of the CBA and cannot go beyond
the scope of the order. Moreover, the
Commission is further tasked to act within the
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located in different regions, the Division


having territorial jurisdiction over the
principal office of the company shall
acquire jurisdiction to decide such labor
dispute; unless the certification order
provides otherwise. [Section 3, 2011 NLRC
Rules and Procedures]

LABOR LAW

which shall include the position papers of


the parties and the order of the SOLE
denying the motion for reconsideration of
the certification order, if any.
b. Where a clarificatory hearing is needed, the
Commission shall, within 5 calendar days
from receipt of the records, issue a notice
to be served on the parties through the
fastest means available, requiring them to
appear and submit additional evidence, if
any. All certified cases shall be resolved by
the Commission within 60 calendar days
from receipt of the complete records by the
assigned Commissioner.
c. No motion for extension or postponement
shall be entertained. [Sec. 5, 2011 NLRC
Rules and Procedures]

Effects of Defiance
Non-compliance with the certification order of
the SOLE shall be considered as an illegal act
committed in the course of the strike or lockout
and shall authorize the Commission to enforce
the same under pain of immediate disciplinary
action, including dismissal or loss of
employment status or payment by the lockingout employer of backwages, damages and/or
other affirmative relief, even criminal
prosecution against the liable parties.

Execution of Judgment
Upon issuance of the entry of judgment, the
Commission motu propio or upon motion by
the proper party, may cause the execution of
the judgment in the certified case. [Sec. 6, 2011
NLRC Rules and Procedures]

The Commission may also seek the assistance


of law enforcement agencies to ensure
compliance and enforcement of its orders and
resolutions. [Sec. 4, 2011 NLRC Rules and
Procedures]

C. BUREAU OF LABOR RELATIONS


MED-ARBITERS

Strict Compliance of Assumption and


Certification Orders
The Secretary's assumption and certification
orders being executory in character are to be
strictly complied with by the parties even
during the pendency of a petition questioning
their validity for this extraordinary authority
given by law to the Secretary of Labor is
"aimed at arriving at a peaceful and speedy
solution to labor disputes, without jeopardizing
national interests." [Union of Filipro Employees
v. NLRC, 1990]

C.1 JURISDICTION
APPELLATE)

(ORIGINAL

AND

The Bureau of Labor Relations and the Labor


Relations Divisions in the regional offices of
the Department of Labor and Employment
shall have original and exclusive authority to
act, at their own initiative or upon request of
either or both parties, on all inter-union and
intra-union conflicts, and all disputes,
grievances or problems arising from or
affecting labor-management relations in all
workplaces whether agricultural or nonagricultural, except those arising from the
implementation or interpretation of collective
bargaining agreements which shall be the

Procedure in certified cases


a. When there is no need to conduct a
clarificatory hearing, the Commission shall
resolve all certified cases within 30
calendar days from receipt by the assigned
Commissioner of the complete records,
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subject of grievance procedure and/or


voluntary arbitration.
The Bureau shall have fifteen (15) calendar
days to act on labor cases before it, subject to
extension by agreement of the parties. [Art.
232]

LABOR LAW

Mediation
A mild intervention by a neutral third party, the
Conciliator-Mediator, wherein the CM advises
the parties or offers solutions or alternatives to
the problems with the end in view of assisting
them towards voluntarily reaching their own
mutually acceptable settlement of the dispute.

Appellate Jurisdiction
1) BLR has the power to review the
decisions of the Regional Director
2) Decisions rendered through its
appellate power are final and
executory. Hence, the remedy of the
aggrieved party is to seasonably avail
of the special civil action of certiorari
under Rule 65 of the Rules of Court.

Conciliation
C-M
facilitates
disputants to keep
things calm, delivers
messages back and
forth between the
parties.

Mediation
C-M assists parties to
voluntarily
reach
mutually acceptable
settlement.

D.3 PREVENTIVE MEDIATION

D. NATIONAL CONCILIATION AND


MEDIATION BOARD

Preventive mediation case refers to the


potential or brewing labor dispute which is the
subject of a formal or informal request for
conciliation and mediation assistance sought
by either or both parties in order to remedy,
contain or prevent its degeneration into a full
blown dispute through amicable settlement.

D.1 NATURE OF PROCEEDINGS


Conciliation
and
mediation
is
nonlitigious/non-adversarial, less expensive, and
expeditious. Under this informal set-up, the
parties find it more expedient to fully ventilate
their respective positions without running
around with legal technicalities and, in the
course thereof, afford them wider latitude of
possible approaches to the problem.

E. DOLE REGIONAL DIRECTORS


E.1 JURISDICTION
Small money claims
Recovery of wages, simple money claims and
other benefits. Upon complaint of any
interested party, the Regional Director of the
Department of Labor and Employment or any
of the duly authorized hearing officers of the
Department is empowered, through summary
proceeding and after due notice, to hear and
decide any matter involving the recovery of
wages and other monetary claims and
benefits, including legal interest, owing to an
employee or person employed in domestic or
household service or househelper under this
Code, arising from employer-employee
relations: Provided, That such complaint does
not include a claim for reinstatement:

D.2 CONCILIATION VS. MEDIATION


Conciliation
A mild form of intervention by a neutral third
party, the Conciliator-Mediator, relying on his
persuasive expertise, takes an active role in
assisting parties by trying to keep disputants
talking, facilitating other procedural niceties,
carrying messages back and forth between the
parties, and generally being a good fellow who
tries to keep things calm and forward-looking
in a tense situation.

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Provided, further, That the aggregate money


claims of each employee or househelper do not
exceed five thousand pesos (P5,000).

LABOR LAW

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.

The Regional Director or hearing officer shall


decide or resolve the complaint within thirty
(30) calendar days from the date of the filing of
the same.

Notwithstanding the provisions of Articles 129


and 217 of this Code to the contrary, and in
cases where the relationship of employeremployee 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. [Art. 128]

Any sum thus recovered on behalf of any


employee or househelper pursuant to this
Article shall be held in a special deposit
account by, and shall be paid, on order of the
Secretary of Labor and Employment or the
Regional Director directly to the employee or
househelper concerned.
Any such sum not paid to the employee or
househelper, because he cannot be located
after diligent and reasonable effort to locate
him within a period of three (3) years, shall be
held as a special fund of the Department of
Labor and Employment to be used exclusively
for the amelioration and benefit of workers.
***
The Secretary of Labor and Employment or his
duly authorized representative may supervise
the payment of unpaid wages and other
monetary claims and benefits, including legal
interest, found owing to any employee or
househelper under this Code. [Art. 129]

The Secretary of Labor or his duly authorized


representatives may, at any time, inspect the
premises, books of accounts and records of any
person or entity covered by this Title, require it
to submit reports regularly on prescribed
forms, and act on violation of any provisions of
this Title. [Art. 37]

F. DOLE SECRETARY

The Secretary of Labor and Employment or his


duly authorized representative is hereby
empowered to inquire into the financial
activities of legitimate labor organizations
upon the filing of a complaint under oath and
duly supported by the written consent of at
least twenty percent (20%) of the total
membership of the labor organization
concerned and to examine their books of
accounts and other records to determine

F.1 VISITORIAL AND ENFORCEMENT


POWERS
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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LABOR LAW

F.5 VOLUNTARY ARBITRATION POWERS

compliance or non-compliance with the law


and to prosecute any violations of the law and
the union constitution and by-laws: Provided,
That such inquiry or examination shall not be
conducted during the sixty (60)-day freedom
period nor within the thirty (30) days
immediately preceding the date of election of
union officials. [Art. 280]

Before or at any stage of the compulsory


arbitration process, the parties may opt to
submit their dispute to voluntary arbitration.
[Art. 269 (h)]
The Secretary of Labor and Employment []
shall decide or resolve the dispute []. [Art.
269 (i)]

F.2 POWER TO SUSPEND/EFFECTS OF


TERMINATION

G. GRIEVANCE MACHINERY AND


VOLUNTARY ARBITRATION

The Secretary of the Department of Labor and


Employment may suspend the effects of the
termination pending resolution of the dispute
in the event of a prima facie finding by the
appropriate official of the Department of Labor
and Employment before whom such dispute is
pending that the termination may cause a
serious labor dispute or is in the
implementation of a mass lay-off. [Art. 283 (b)]

G.1 SUBJECT MATTER OF GRIEVANCE


Grievance is any question by either the ER or
the union regarding the interpretation or
application of the CBA or company personnel
policies or any claim by either party that the
other party is violating any provisions of the
CBA or company personnel policies.

F.3 ASSUMPTION OF JURISDICTION

It is a complaint or dissatisfaction arising from


the interpretation or implementation of the
CBA and those arising from interpretation or
enforcement of personnel policies.

When in his opinion, there exist a labor dispute


causing or likely to cause a strike or lockout in
an industry indispensable to the national
interest, the SOLE may assume jurisdiction
over the dispute and decide it or certify the
same to the Commission for compulsory
arbitration.[Art. 269 (g)]

Grievance Machinery
It refers to the mechanism for the adjustment
and resolution of grievances. It is part of the
continuing process of collective bargaining.

F.4 APPELLATE JURISDICTION


a. Orders issued by the duly authorized
representative of the SOLE under Art. 128
may be appealed to the latter.
b. Denial of application for union registration
or cancellation of union registration
originally rendered by the BLR may be
appealed to the SOLE (if originally
rendered by the Regional Office, appeal
should be made to the BLR)
Decisions of the Med-Arbiter in certification
election cases are appealable to the SOLE
(decisions of med-arbiters in intra-union
disputes are appealable to the BLR) [Art. 259]

G.2 VOLUNTARY ARBITRATOR


I. JURISDICTION
Exclusive and Original Jurisdiction Over
Grievances
The VA or panel of VAs shall have original and
exclusive jurisdiction to hear and decide all
unresolved grievances.
Violations of a CBA, except those which are
gross in character, shall no longer be treated
as ULP and shall be resolved as grievances
under the CBA.
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LABOR LAW

II. PROCEDURE
[IRR, Book V, Rule XI]
Hearing
All parties to the dispute shall be entitled to
attend the arbitration proceedings. The
attendance of any third party or the exclusion
of any witness from the proceedings shall be
determined by the VA or panel of Vas. Hearing
may be adjourned for cause or upon
agreement by the parties.

Note: Gross violations of CBA shall mean


flagrant and/or malicious refusal to comply
with the economic provisions of such
agreement.
The Commission, its Regional Offices and the
Regional Directors of the DOLE shall not
entertain disputes, grievances or matters
under the exclusive and original jurisdiction of
the Voluntary Arbitrator or panel of Voluntary
Arbitrators and shall immediately dispose and
refer the same to the grievance machinery or
Voluntary Arbitration provided in the Collective
Bargaining Agreement. [Art. 261]

Days to render an award/decision


Unless the parties agree otherwise, it shall be
mandatory for the VA or panel of Vas to render
an award or decision within 20 calendar days
from the date of submission of the dispute to
voluntary arbitration.

Other Labor Disputes


The VA or panel of VAs, upon agreement of the
parties, shall also hear and decide all other
labor disputes including ULP and bargaining
deadlocks. [Art. 268]

Form of award/decision
The award or decision of the VA or panel of
VAs must state in clear, concise and definite
terms the facts, the law and/contract upon
which it is based.

Even if the specific issue brought before the


arbitrators merely mentioned the question of
whether an employee was discharged for just
cause, they could reasonably assume that
their
powers
extended
beyond
the
determination thereof to include the power to
reinstate the employee or to grant back wages.
In the same vein, if the specific issue brought
before the arbitrators referred to the date of
regularization of the employee, law and
jurisprudence gave them enough leeway as
well as adequate prerogative to determine the
entitlement of the employees to higher
benefits in accordance with the finding of
regularization. [Manila Pavilion Hotel, etc. vs.
Henry Delada, 2011]

Finality
It shall be final and executory after 10 calendar
days from the receipt of the copy of the award
or decision by the parties.
Execution of award/decision
Upon motion of any interested party, the
Voluntary Arbitrator or panel of Voluntary
Arbitrators or the Labor Arbiter in the region
where the movant resides, in case of the
absence or incapacity of the Voluntary
Arbitrator or panel of Voluntary Arbitrators, for
any reason, may issue a writ of execution
requiring either the sheriff of the Commission
or regular courts or any public official whom
the parties may designate in the submission
agreement to execute the final decision, order
or award. [Art. 262-A]

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III. REMEDIES

LABOR LAW

petition in the proper court, alleging the facts


with certainty and praying that judgment be
rendered commanding the respondent to
desist from further proceedings in the action or
matter specified therein, or otherwise granting
such incidental reliefs as law and justice may
require.

The decision of a Voluntary Arbitrator or panel


of Voluntary Arbitrators is appealable by
ordinary appeal under Rule 43 of the Rules of
Civil Procedure directly to the Court of
Appeals. [Rule 43 1, RULES OF COURT]

H. COURT OF APPEALS

The petition shall likewise be accompanied by


a certified true copy of the judgment, order or
resolution subject thereof, copies of all
pleadings and documents relevant and
pertinent thereto, and a sworn certification of
non-forum shopping as provided in the third
paragraph of section 3, Rule 46.

H.1 RULE 65, RULES OF COURT


Section 1. Petition for certiorari. When any
tribunal, board or officer exercising judicial or
quasi-judicial functions has acted without or in
excess its or his jurisdiction, or with grave
abuse of discretion amounting to lack or
excess of jurisdiction, and there is no appeal, or
any plain, speedy, and adequate remedy in the
ordinary course of law, a person aggrieved
thereby may file a verified petition in the
proper court, alleging the facts with certainty
and praying that judgment be rendered
annulling or modifying the proceedings of such
tribunal, board or officer, and granting such
incidental reliefs as law and justice may
require.

Section 3.Petition for mandamus. When any


tribunal, corporation, board, officer or person
unlawfully neglects the performance of an act
which the law specifically enjoins as a duty
resulting from an office, trust, or station, or
unlawfully excludes another from the use and
enjoyment of a right or office to which such
other is entitled, and there is no other plain,
speedy and adequate remedy in the ordinary
course of law, the person aggrieved thereby
may file a verified petition in the proper court,
alleging the facts with certainty and praying
that judgment be rendered commanding the
respondent, immediately or at some other time
to be specified by the court, to do the act
required to be done to protect the rights of the
petitioner, and to pay the damages sustained
by the petitioner by reason of the wrongful acts
of the respondent.

The petition shall be accompanied by a


certified true copy of the judgment, order or
resolution subject thereof, copies of all
pleadings and documents relevant and
pertinent thereto, and a sworn certification of
non-forum shopping as provided in the third
paragraph of section 3, Rule 46.
Section 2.Petition for prohibition. When the
proceedings of any tribunal, corporation,
board, officer or person, whether exercising
judicial, quasi-judicial or ministerial functions,
are without or in excess of its or his jurisdiction,
or with grave abuse of discretion amounting to
lack or excess of jurisdiction, and there is no
appeal or any other plain, speedy, and
adequate remedy in the ordinary course of law,
a person aggrieved thereby may file a verified

I. SUPREME COURT
[A]ll references in the amended Section 9 of
B.P. No. 129 to supposed appeals from the
NLRC to the Supreme Court are interpreted
and hereby declared to mean and refer to
petitions for certiorari under Rule 65.
Consequently, all such petitions should hence
forth be initially filed in the Court of Appeals in
strict observance of the doctrine on the
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hierarchy of courts as the appropriate forum for


the relief desired. [St. Martin Funeral Home vs.
NLRC, 1998]

LABOR LAW

(1) Money Claims


Money claims. All money claims arising from
employer-employee relations accruing during
the effectivity of this Code shall be filed within
three (3) years from the time the cause of
action accrued; otherwise they shall be forever
barred.

I.1 RULE 45, RULES OF COURT


Section 1. Filing of petition with Supreme Court.
A party desiring to appeal by certiorari from
a judgment or final order or resolution of the
Court of Appeals, the Sandiganbayan, the
Regional Trial Court or other courts whenever
authorized by law, may file with the Supreme
Court a verified petition for review on certiorari.
The petition shall raise only questions of law
which must be distinctly set forth.

All money claims accruing prior to the


effectivity of this Code shall be filed with the
appropriate entities established under this
Code within one (1) year from the date of
effectivity, and shall be processed or
determined
in
accordance
with
the
implementing rules and regulations of the
Code; otherwise, they shall be forever barred.

Appeal from CA to SC should be under Rule 45


(Petition for Review on Certiorari) and not Rule
65 (Special Civil Action for Certiorari). [Sea
Power Shipping Enterprises, Inc. vs. CA, G. R.
No. 138270, 2001]

Workmen's compensation claims accruing


prior to the effectivity of this Code and during
the period from November 1, 1974 up to
December 31, 1974, shall be filed with the
appropriate regional offices of the Department
of Labor not later than March 31, 1975;
otherwise, they shall forever be barred. The
claims shall be processed and adjudicated in
accordance with the law and rules at the time
their causes of action accrued. [Art. 297]

Since the Court of Appeals had jurisdiction


over the petition under Rule 65, any alleged
errors committed by it in the exercise of its
jurisdiction would be errors of judgment which
are reviewable by timely appeal and not by a
special civil action of certiorari. If the aggrieved
party fails to do so within the reglementary
period, and the decision accordingly becomes
final and executory, he cannot avail himself of
the writ of certiorari, his predicament being the
effect of his deliberate inaction. [Tirazona v Phil
EDS Techno-Service Inc, 2009]

The Labor Code has no specific provision on


when a monetary claim accrues. Thus, again
the general law on prescription applies. Article
1150 of the Civil Code provides that:
Article 1150. The time for prescription for all
kinds of actions, when there is no special
provision which ordains otherwise, shall be
counted from the day they may be brought.

J. PRESCRIPTION OF ACTIONS
No claim for compensation shall be given due
course unless said claim is filed with the
System within three (3) years from the time the
cause of action accrued. [Art. 201, as amended
by Section 5, Presidential Decree No. 1921]

The day the action may be brought is the day a


claim started as a legal possibility. In the
present case, the day came when petitioner
learned of Asiakonstrukts deduction from his
salary of the amount of advances he had
received but had, by his claim, been settled,
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the same having been reflected in his payslips,


hence, it is assumed that he learned of it at the
time he received his monthly paychecks.
[Anabe v Asian Const, et al., 2009]

LABOR LAW

(3) Unfair Labor Practice


Offenses penalized under this Code and the
rules and regulations issued pursuant thereto
shall prescribe in three (3) years. All unfair
labor practice arising from Book V shall be
filed with the appropriate agency within one (1)
year from accrual of such unfair labor practice;
otherwise, they shall be forever barred. [Art.
296]

(2) Illegal dismissal


In illegal dismissal cases, the employee
concerned is given a period of four years from
the time of his dismissal within which to
institute a complaint. This is based on Article
1146 of the New Civil Code which states that
actions based upon an injury to the rights of
the plaintiff must be brought within four years.
[Victory Liner, Inc. v Race, 2007]

Concept of unfair labor practice and procedure


for prosecution thereof. [] No criminal
prosecution under this Title may be instituted
without a final judgment finding that an unfair
labor practice was committed, having been
first obtained in the preceding paragraph.
During the pendency of such administrative
proceeding, the running of the period of
prescription of the criminal offense herein
penalized shall be considered interrupted:
Provided, however, that the final judgment in
the administrative proceedings shall not be
binding in the criminal case nor be considered
as evidence of guilt but merely as proof of
compliance of the requirements therein set
forth. [Art. 253, as amended by Batas
Pambansa Bilang 70, May 1, 1980 and later
further amended by Section 19, Republic Act No.
6715, March 21, 1989]

Article 1146. The following actions must be


instituted within four years:
(1) Upon an injury to the rights of the plaintiff;
(2) Upon a quasi-delict;
However, when the action arises from or out of
any act, activity, or conduct of any public
officer involving the exercise of powers or
authority arising from Martial Law including
the arrest, detention and/or trial of the
plaintiff, the same must be brought within one
(1) year. [As amended by PD No. 1755, Dec. 24,
1980.]

(4) Offenses penalized by the Labor Code and


IRR issued pursuant thereto
Offenses penalized under this Code and the
rules and regulations issued pursuant thereto
shall prescribe in three (3) years. [Art. 290]
(5) Prescriptive Period of Illegal Recruitment
Cases
Section 7.Prescription. Illegal recruitment cases
under this Rule shall prescribe in five (5) years;
Provided, however, that illegal recruitment
cases involving economic sabotage shall
prescribed in twenty (20) years. [RA 8040]
200

UP LAW BOC

LABOR RELATIONS

LABOR LAW

SUPREME COURT
Rule 45, Rules of Court
COURT OF APPEALS

Rule 43

Rule 65
NATIONAL LABOR
RELATIONS COMMISSION

VOLUNTARY
ARBITRATOR OR
PANEL OF
VOLUNTARY
ARBITRATORS

LABOR ARBITERS
Original and Exclusive
Jurisdiction to decide
cases of:
1. Unfair
Labor
Practices
2. Termination disputes
3. Those
involving
wages, rates of pay,
hours of work and
other terms and
conditions
of
employment
IF
accompanied with a
claim
for
reinstatement
4. Claims for actual,
moral,
exemplary
and other forms
arising from ER-EE
relations.
5. Any violation the
Labor
Code
provisions
on
Prohibited Activities
including questions
on the legality of
strikes and lockouts.
6. All claims arising
from ER-EE relations
involving an amount
exceeding P5,000,
except claims for
Employee
Compensation, SSS,
Medicare
and
maternity benefits.

1.
2.
3.

4.

Original and exclusive


jurisdiction to hear
and decide:
All
unresolved
grievances
Interpretation
and
implementation
of
CBA
Cases arising from
interpretation
and
enforcement
of
company personnel
policies
Other labor disputes
including ULP and
bargaining deadlocks
upon agreement by
the parties.

Rule 65
BUREAU OF LABOR
RELATIONS
Original and exclusive
authority to act on:
1. All inter-union and
intra-union conflicts
2. Disputes, grievances,
problems arising from
or affecting labormanagements
relations
in
all
workplaces.
Except: those from
implementation or
interpretation of
CBAs.
Cases decided by the BLR
on appeal are final and
executory. Those decided
through original
jurisdiction can be
appealed to the DOLE
Secretary.

Labor Relations
Division in the
Regional Offices of
the DOLE

Department of Labor
and Employment
Regional Director
Money claims and benefits
arising from ER-EE
relations not accompanied
by claim for reinstatement
and not exceeding
P5,000.

1.
2.
3.

Inter-union
and
intra-union disputes
Applications
for
registration of unions
Certification election
and representation
cases

Rule 65
DEPARTMENT OF
LABOR AND
EMPLOYMENT
SECRETARY
Assumption of
jurisdiction over
disputes, in his
opinion, causing or
likely to cause a
strike/lockout in an
industry indispensable
to the national
interest.

National
Conciliation and
Mediation Board
1.

2.
3.

Petition
for
Assumption
of
jurisdiction
or
certification
of
jurisdiction
or
certification
to
NLRC
of
strike/lockout
disputes.
Notice
of
strike/lockout
Any
other
disputes
submitted by the
parties
for
preventive
mediation
proceedings.

Note:
The BLR has jurisdiction over cases involving Federations and National Unions
201involving independently registered unions and chartered
The LRD has jurisdiction over cases
locals.