Relevant Constitutional

provisions
Art. II, Sec. 18 - “The State affirms labor as a primary social economic force. It shall
protect the rights of workers and promote their welfare.”
Art. III, Sec. 18, par. 2 –No involuntary servitude in any form shall exist except as a
punishment for a crime whereof the party shall have been duly convicted.
Art. IX-B, Sec. 2, Par. 1 and 3
(1) The civil service embraces all branches, subdivisions, instrumentalities, and
agencies of the Government, including government-owned or controlled corporations
with original charters.
(2) Appointments in the civil service shall be made only according to merit and
fitness to be determined, as far as practicable, and, except to positions which are
policy-determining, primarily confidential, or highly technical, by competitive
examination.
(3) No officer or employee of the civil service shall be removed or suspended except
for cause provided by law.
(4) No officer or employee in the civil service shall engage, directly or indirectly, in
any electioneering or partisan political campaign.
(5) The right to self-organization shall not be denied to government employees.
(6) Temporary employees of the Government shall be given such protection as may
be provided by law.
Art. IX-B, Sec. 5 - The Congress shall provide for the standardization of
compensation of government officials and employees, including those in
government-owned or controlled corporations with original charters, taking into
account the nature of the responsibilities pertaining to, and the qualifications required
for their positions.
Art. XII, Sec. 6 - The use of property bears a social function, and all economic
agents shall contribute to the common good. Individuals and private groups,
including corporations, cooperatives, and similar collective organizations, shall have
the right to own, establish, and operate economic enterprises, subject to the duty of
the State to promote distributive justice and to intervene when the common good so
demands.
Art. XII, Sec. 12 – The State shall promote the preferential use of Filipino labor,
domestic materials and locally produced goods, and adopt measures that help make
them competitive.
Art. XII, Sec. 14, par. 2 – The sustained development of a reservoir of national
talents consisting of Filipino scientists, entrepreneurs, professionals, managers,
high-level technical manpower and skilled workers and craftsmen in all fields shall be
promoted by the State. The State shall encourage appropriate technology and
regulate its transfer for the national benefit.
The practice of all professions in the Philippines shall be limited to Filipino citizens,
save in cases prescribed by law.
Art. XII, Sec. 16 – The Congress shall not, except by general law, provide for the
formation, organization, or regulation of private corporations. Government-owned or
controlled corporations may be created or established by special charters in the
interest of the common good and subject to the test of economic viability.
Art. XIII, Sec. 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.
Art. XIII, Sec. 2- The promotion of social justice shall include the commitment to
create economic opportunities based on freedom of initiative and self-reliance.
Art. XIII, Sec. 3
The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities
for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining
and negotiations, and peaceful concerted activities, including the right to strike in
accordance with law. They shall be entitled to security of tenure, humane conditions
of work, and a living wage. They shall also participate in policy and decision-making
processes affecting their rights and benefits as may be provided by law.
The State shall promote the principle of shared responsibility between workers and
employers and the preferential use of voluntary modes in settling disputes, including
conciliation, and shall enforce their mutual compliance therewith to foster industrial
peace.
The State shall regulate the relations between workers and employers, recognizing
the right of labor to its just share in the fruits of production and the right of
enterprises to reasonable returns on investments, and to expansion and growth.

What is the protection-to-labor

clause in the Constitution?
“The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities
for all. It shall guarantee the rights of all workers to self-organization, collective
bargaining and negotiations, and peaceful concerted activities, including the right to
strike in accordance with law. They shall be entitled to security of tenure, humane
conditions of work, and a living wage. They shall also participate in policy and
decision-making processes affecting their rights and benefits as may be provided by
law.
“The State shall promote the principle of shared responsibility between workers and
employers and the preferential use of voluntary modes in settling disputes, including
conciliation, and shall enforce their mutual compliance therewith to foster industrial
peace.

“The State shall regulate the relations between workers and employers, recognizing
the right of labor to its just share in the fruits of production and the right of
enterprises to reasonable returns on investments, and to expansion and growth.”
(Section 3 (Labor), Article XIII [Social Justice and Human Rights] of the 1987
Constitution)

What are the basic principles

enunciated in the Labor Code on
protection to labor?
a. 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.
b. Labor contracts are not ordinary contracts as the relation between capital and
labor is impressed with public interest.
c. In case of doubt, labor laws and rules shall be interpreted in favor of labor.
d. Labor Code applies to all workers, whether agricultural or non-agricultural.

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

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

Survey of doctrinal cases in

Labor based on Constitutional
provisions
Waterous drugs and Andre Marti cases on unreasonable search and seizure
***WON the right against unreasonable searches and seizures and right to privacy of
communication guaranteed under the Constitution may be invoked by an employee
against her employer. ---------SC reasoned: "As regards the constitutional violation
upon which the NLRC anchored its decision, we find no reason to revise the doctrine
laid down in People v. Andre Marti, that the Bill od Rights does not protect citizens
from unreasonable searches and seizures perpetrated by private individuals. It is not
true, as counsel for Catolico claims, that the citizens have no recourse against such
assaults. On the contrary, and as said counsel admits, such an invasion gives rise to
both criminal and civil liabilities". Alleged violations against unreasonable search and
seizure may only be invoked against the State by an individual unjustly traduced by
the exercise of sovereign authority. To agree with appellant that an act of a private
individual in violation of the Bill of Rights should also be construed as an act of the
State would result in serious legal complications and an absurd interpretation of the
Constitution. Similarly, the admissibility of the evidence procured by an individual
effected through private seizure equally applies, in pari passu, to the alleged
violation, non-governmental as it is, of appellant's constitutional rights to privacy and
communication.
Lopez v. Alturas Group of Companies on right to counsel
***Would the failure of the employer to inform the employee who is undergoing
administrative investigation of his right to counsel amount to deprivation of due
process? -------NO. The SC held that "the right to counsel and the assistance of one
in investigations involving termination cases is neither indispensable nor mandatory,
except when the employee himself request for one or that he manifests that he
wants a formal hearing on the charges against him. In petitioner's case, there is no
showing that he requested for a formal hearing to be conducted or that he be
assisted by counsel".
THE CONFERENCE OF MARITIME MANNING AGENCIES, INC., CASE:
CONSTITUTIONA PROHIBITION AGAINST IMPAIRING CONTRACTUAL
OBLIGATIONS IS NOT ABSOLUTE.[1]
The constitutional prohibition against impairing contractual obligations is not absolute
and is not to be read with literal exactness. It is restricted to contracts with respect to
property or some object of value and which confer rights that maybe asserted in a
court of justice; it has no application to statutes relating to public subjects within the
domain of the general legislative powers of the State and involving the public rights
and public welfare of the entire community affected by it. It does not prevent a proper
exercise by the State of its police power by enacting regulations reasonably
necessary to secure the health, safety, morals; comfort, or general welfare of the
community, even though contracts may thereby be affected, for such matters cannot
be placed by contract beyond the power of the State to regulate and control them.
Serrano doctrine , Ineffectual Dismissal
The rule on the extent of the sanctions was changed in the en banc decision in
Serrano vs. NLRC. The Court held that the violation by the employer of the notice
requirement in termination for just and authorized causes was not a denial of due
process that will nullify the termination. However the dismissal is declared ineffectual
and the employer must pay full back wages from the time of the termination until it is
judicially declared that the dismissal was for a just and authorized cases.
Anucension case on religious sects exemptions
“ The right to refrain from joining labor organizations recognized by section 3 of the
industrial peace Act is however limited. The legal protection, granted to such right to
refrain from joining is withdrawn by operation of law, where a labor union and an
employer have agreed on a closed shop by virtue of the collective bargaining unit,
and the employess must continue to be members of the union for the duration of the
contract  in order to keep their jobs. RA 3350, provides that although it would be an
unfair labor practice for an employer to discriminate in regard to hire or tenure of
employment or any term or condition of employment to encourage or discourage
membership in any labor organization, the employer is however not precluded from
making an agreement with the labor organization to require a condition of
employment  membership therein.
“ The constitutional provision not only prohibits legislation for the support of any
previous tenets or the modes of worship of any sect, thus forestalling compulsion by
law of the acceptance of any creed or the practice of any form of worship but also
assures the free exercise of one’s chosen form of religion within the limits of utmost
amplitude. It has been said that religion clauses of religion clauses of the
Constitution are all designed to protect the broadest possible liberty of conscience, to
allow each man to believe as his conscience directs, to profess his beliefs, and to
live as he believes he ought to live, consistent with the liberty of others and the
common good.
Any legislation whose effect or purpose is to impede the observance of one or all
religions, or discriminate invidiously between the religions, is invalid even though the
burden may be characterized as being only indirect.
Strike and picketing on publicizing the labor dispute
To strike is to withhold or to stop work by concerted action of the employees as a
result of an industrial or labor dispute. The work stoppage may be accompanied by
the striking employees outside the company accompanied by picketing by the
striking employees outside of the company compound. While a strike focuses on
stoppage of work, picketing focuses on publicizing the labor dispute and its incidents
to inform the public of what is happening in the company struck against.
 A picket simply means to march to and from the employers premises, usually
accompanied by the display of placards and other signs making known the facts
involved in a labor dispute. It is a strike activity separate and different from the actual
stoppage of work.
BPI vs BPI employees union-involuntary servitude
In the case of BPI vs BPI Employees union, it involves the merger of BPI with
FEBTC, where the Voluntary Arbitrator ruled that, in accordance with Section 80 of
the Corporation Code, the employees of FEBTC from part of the assets and liabilities
transferred to the surviving bank, petitioner BPI, by virtue of the merger. The SC,
however, did not agree to this postulation. In legal parlance, human beings are never
embraced in the term asset and liabilities. It is contrary to public policy to declare the
FEBTC employees as forming part of the assets or liabilities of FEBTC that were
transferred and absorbed by BPI on the Assets and Liabilities. Assets and Liabilities,
in this instance, should be deemed to refer only to property rights and obligations of
FEBTC and do not include the employment contracts of its personnel. A corporation
cannot unilaterally transfer its employees to another employer like chattel. Certainly,
if BPI as an employer had a right to choose who to retain among the FEBTC’s
employees, FEBTC employees had the concomitant right to choose not to be
absorbed by BPI. Certainly nothing prevented the FEBTC’s employees from
resigning or retiring and seeking employment elsewhere instead of going along with
the proposed absorption. Employment is a personal consensual contract and
absorption by BPI of a former FEBTC employee without the consent of the employee
is in violation of an individual’s freedom to contact. It would have been a different
matter if there was an express provision in the Articles of Merger that as a condition
for the merger, BPI was being required to assume all the employment contracts of
existing FEBTC employees with the conformity of the employees. In the absence of
such a provision in the Articles of Merger, then BPI clearly had the business
management decision as to whether or not to employ FEBTC’s emplyees. FEBTC
employees likewise retained the prerogative to allow themselves to be absorbed or
not; otherwise, that would be tantamount to involuntary servitude.
 Marcopper and Adamson on protection to labor
When conflicting interests of labor and capital are to be weighed on the scales of
social justice, the heavier influence of the latter should be counter-balanced by
sympathy and compassion the law must accord the underprivileged
worker (Marcopper vs NLRC). In interpreting the protection to labor and social justice
provisions of the Constitution and the labor laws or rules and regulations
implementing the constitutional mandates, we have always adopted the liberal
approach which favors the exercise of labor rights should always be
adopted (Adamson vs CIR).
 Central Bank Case on Equality
It is the fundamental policy of the State to promote social justice in all phases of
national development. Central bank pronounces that equality is one ideal which cries
out for bold attention and action in the constitution.
The disparity of treatment between BSP rank-and-file and the rank-and-file of the
other seven Government Financial Institutions definitely bears the unmistakable
badge of invidious discrimination - no one can, with candor and fairness, deny the
discriminatory character of the subsequent blanket and total exemption of the seven
other GFIs from the Salary Standardization Law when such was withheld from the
BSP. Alikes are being treated as unalikes without any rational basis.
Again, it must be emphasized that the equal protection clause does not demand
absolute equalitybut it requires that all persons shall be treated alike, under like
circumstances and conditions both as to privileges conferred and liabilities
enforced. Favoritism and undue preference cannot be allowed. For the principle is
that equal protection and security shall be given to every person under
circumstances which, if not identical, are analogous. If law be looked upon in terms
of burden or charges, those that fall within a class should be treated in the same
fashion; whatever restrictions cast on some in the group is equally binding on the
rest.

68. Century Canning Corp vs. Ramil -doubt or ambiguity in evidence

The law mandates that the burden of proving the validity of the termination of
employment rests with the employer. Failure to discharge this evidentiary burden
would necessarily mean that the dismissal was not justified and, therefore, illegal.
Unsubstantiated suspicions, accusations, and conclusions of employers do not
provide for legal justification for dismissing employees. In case of doubt, such cases
should be resolved in favor of labor, pursuant to the social justice policy of labor laws
and the Constitution.
 COLEGIO DE SAN JUAN DE LETRAN VS VILLAS
In the case of Colegio De San Juan De letran v. Villas, the Supreme Court found that
the provisions of the Faculty Manual is ambiguous as the term employment connotes
a number of meanings. Employment in its general sense connotes any work or
service in exchange for money. The loose connotation of employment may therefore
cover jobs without an employer-employee relationship. However, inasmuch as in this
case, petitioner School drafted the said policy, the term “employment” should be
strictly construed against it. Moreover, it is settled rule that in controversies
between a labourer and his master, doubts reasonably arising from the
evidence, or in the interpretation of agreements and writings should be
resolved in the former’s favour. The act of respondent in selling insurance and
cookware was not the “employment” prohibited by the Faculty Manual. The
prohibition against outside employment was enacted to prevent the teacher from
using the study leave period for unsanctioned purposes since the School pays the
teacher while pursuing further studies. That rationale was not violated by respondent
for the reason that her part-time activity of selling insurance and cookware could not
have prevented her in any way from studying and, more importantly, she was not
being paid by the School while on leave. How did the School expect her and her
family to survive without any income for one whole year?
Philippine Long Distance Telephone Co., v. NLRC (page 6)
The Philippine Constitution, while inexorably committed towards the protection of the
working class from exploitation and unfair treatment, nevertheless mandates the
policy of social justice so as to strike a balance between an avowed predilection for
labor, on the one hand, and the maintenance of the legal right of capital, the
proverbial hen that lays the golden egg, on the other. The Supreme Court, in PLDT
v. NLRC, underscored that although it is bound by the social justice mandate of the
Constitution and the laws, such policy of social justice is not intended to
countenance wrongdoing.
International School Alliance case on inequality and discrimination (page 21,
Chan 2019)
International School Alliance of Educators (ISAE) vs. Quisumbing, G.R. No. 128845,
June 1, 2000
 In the workplace, where the relations between capital and labor are often skewed in
favor of capital, inequality and discrimination by the employer are all the more
reprehensible. Section 3 specifically provides that labor is entitled to “humane
conditions of work.” These conditions are nor restricted to the physical work place –
the factory, the office or field – but include as well the manner by which employers
treat their employees. The same provision of the Constitution also directs the state to
promote “equality of employment opportunities for all.” Similarly, the Labor Code
provides that the state shall “ensure equal work opportunities regardless of sec, race
or creed.” It would be an affront both to the spirit and letter of these provisions if the
State, in spite of its primordial obligation to promote and ensure equal employment
opportunities, closes its eyes to unequal and discriminatory terms and conditions of
employment.
Discrimination, particularly in terms of wages, is frowned upon by the Labor Code.
Article 133(135), for example, prohibits and penalizes the payment of lesser
compensation to a female employee as against a male employee for work of equal
value. Article 259(248) declares it an unfair labor practice for an employer to
discriminate in regard to wages in order to encourage or discourage membership in
labor organization.

Interpretation of the Labor Code

Article 4 enunciates the time-honored principle that all doubts in the implementation
and interpretation of its provisions should be resolved in favor of labor. This rule
applies not only in the interpretation of the provisions of the Labor Code but also of
its Implementing Rules.
It applies to all workers - whether in the government or in the private sector - in order
to give flesh and vigor to the pro-poor and pro-labor provisions of the Constitution. It
is in keeping with the constitutional mandate of promoting social justice and affording
protection to labor. Thus, when conflicting interests of labor and capital are to be
weighed on the scales of social justice, the heavier influence of the latter should be
counterbalanced by sympathy and compassion the law must accord the
underprivileged worker.
The Labor Code is one of the rare laws which expressly mandate the appropriate
rule of interpreting or construing its provisions. This is one unique feature of the
Labor Code. The rules on legal hermeneutics applicable to most statutes are not
followed. Consequently, from the inception of a legal controversy or case, labor has
already an upper hand over the employer. Once the doubt is not effectively
overturned by clear and convincing evidence expected to be propounded by the
employer who, in most cases, has the burden of proof, the controversy should by
clear directive of the law, be decided in favor of labor.
This is of course, is not a harsh rule. The framers of the law (Labor Code and the
Civil Code) had fully taken cognizance of the disparity in terms of resources and
standing between labor and capital in any legal controversy between them, the
former always suffers the most. Hence, the common adage that those who have less
in life should have more in law is best exemplified and made real in Articles 4 and
1702 of the Labor Code and Civil Code respectively. The worker must look up to the
law for his protection. The law regards him with tenderness and even favor and
always with faith and hope in his capacity to help in shaping the nation’s future. He
must not be taken for granted.

Art. 1702, CC and Art. 4, LC,

harmonized
Article 1702 of the Civil Code ordains that "In case of doubt, all labor legislation and
all labor contracts shall be construed in favor of the safety and decent living of the
laborer. Compared to the provision of Article 4 of the Labor Code, it appears that
Article 1702 is broader in scope in that it pertains to "all labor legislation and all labor
contracts" and not merely to the implementation and interpretation of the provisions
of one single code, the Labor Code, as well as its implementing rules and
regulations, as enunciated in Article 4. Moreover, the Civil Code embodies a
standard which would justify the invocation of the labor-tilted rule of interpretation in
that the same should be done "in favor of the safety and decent living for the
laborer."
Having made such observation, it may well be said that the provisions of the Civil
Code and the Labor Code do not really differ since the policy of the law is clear - any
doubt should always be interpreted or construed in favor of labor - which means, in
more specific terms the safety and decent living for the laborer.

When Art. 4, LC does not apply

The provision that in case of doubt in the interpretation of the provisions of the Labor
Code, the doubt should be resolved in favor of the laborer does not apply where the
pertinent provisions of the Labor Code leave no room for doubt either in their
interpretation or application. (Bonifacio v. GSIS, G.R. no. 62207, Dec. 15, 1986, 146
SCRA 276)
The employer has the right to expect from the employee no less than adequate work,
diligence and good conduct. (Coca-Cola Bottlers Philippines Incorporated v. NLRC,
G.R. nos. 82580 & 84075, April 25, 1989, 172 SCRA 751; Firestone Tire and Rubber
Co. of the Phils. v. Lariosa, G.R. no. L-70479, February 27, 1987, 148 SCRA 187)

Applicability of LC; excepted

workers
Employees covered:
The existence of employer-employee relationship is necessary. Without this
relationship, the Labor Code does not apply.

Applicable to all workers irrespective of the nature of their work, that is whether it be
agricultural or non-agricultural, whether operated for profit or not.
Employees not covered:
The Labor Code has, in certain specified cases, excepted certain groups of workers
from the application of the rights and benefits provided therein, such as the following:
Article 82, Title I, Book III, which excludes the following workers from the coverage of
the provisions on working conditions and rest periods, more specifically on normal
hours of work, meal periods, night shift differential, overtime work, weekly rest
periods, holidays, service incentive leaves and service charges:

1. Government employees;
2. Managerial employees;
3. Field personnel;
4. Members of the family of the employer who are dependent on him for
support;
5. Domestic helpers;
6. Persons in the personal service of another; and
7. Workers who are paid by results, as determined by the Secretary of Labor
in appropriate regulations.

Article 98, Title 11, Book III, which excludes the following workers from the coverage
of the provisions on wages:

1. Farm tenancy or leasehold;

2. Domestic service; and
3. Persons working in their respective homes in needle work or in any
cottage industry duly registered in accordance with law.

Article 255 [245], Title V, Book V, which provides for the ineligibility of managerial
employees to join, assist or form any labor organization.
Article 302 [287], Title 11, Book VI, which excepts from the coverage of the
retirement pay benefit, employees of retail, service and agricultural establishments or
operations employing not more than ten (10) employees or workers.

4 Elements/tests of employeer-
employee relationship
There is no uniform test of employment relationship but the four (4) elements of an
employer-employee relationship are as follows:
(a) Selection and engagement of the employee;
(b) Payment of wages;
(c) Power of dismissal; and
(d) Employer’s power to control the employee’s conduct with respect to the means
and methods by which the work is to be accomplished [Brotherhood Labor Unity
Movement of the Philippines et. al. v. Zamora, G.R. No. 48645, (1987)]
The most important element is the employer’s control of the employee’s conduct, not
only as to the result of the work to be done, but also as to the means and methods to
accomplish it. [Lirio v. Genovia, G.R. No. 169757, (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. NLRC, G.R. No. 100665, (1995)].
Not every form of control will have the effect of establishing ER-EE relationship. The
line should be drawn between:
(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. [Insular Life Assurance Co, LTD v. NLRC,
G.R. No. 84484, (1989)].

Two-tiered test as a better and

more comprehensive test
TWO-TIERED APPROACH.
(1) First Tier: Control Test (refer to the Four-Fold Test)
(2) Second Tier: The underlying economic realities of the activity or relationship.
[Sevilla v. Court of Appeals, G.R. Nos. L41182-3, (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. 
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. 
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.
CA, G.R. No. 155207, (2008)]

Cases where employer-employee

relationship is suspended, not
terminated
Note: Termination of employer-employee relationship will be discussed separately
In the following cases, the employment relationship is deemed suspended by
express provisions of the Labor Code or its implementing rules:

1. In case of preventive suspension of an employee who is undergoing an

administrative investigation for an offence and his presence in the
 company premises poses a serious or imminent threat to the life or
property of the employer or of his co-employees.
2. In case of imposition of punitive suspension as a form of disciplinary
penalty on an employee who is found guilty of committing a wrongful act
under Art 297 of the Labor Code or under the Company Rules and
Regulations.
3. During off-season, in case of regular seasonal employment. The nature of
the relationship of regular seasonal workers with their employer is such
that during the off-season, they are temporarily laid off but they are re-
employed during next season or when their services may be needed.They
are not separated from the service but are merely considered as on leave
of absence without pay until they are re-employed. Their employment
relationship during off-season is never severed but only suspended.
4. Under the following circumstances, Article 301 of the Labor Code deems
he employment relationship not terminated but merely suspended:


o Bona-fide suspension by the employer of the employer of the
operation of his business or undertaking for a period not
exceeding 6 months;
o Fulfillment by the employee of a military duty; or
o Fulfilment by the employee of a civic duty.

Requisites of recruitment and

placement
In order for an activity to be considered as “recruitment and placement” as described
in Article 13 [b] of the Labor Code, the following elements must concur:

1. A person or entity is engaged in any act of canvassing, enlisting,

contracting, transporting, utilizing, hiring or procuring workers, including
referrals, contract services, promising or advertising for employment;
2. The recruitment and placement of workers is either for local or overseas
employment; and
3. The recruitment and placement may or may not be for profit. (See also Section 1,
Rule I, Book I, Rules to Implement the Labor Code).

Distinctions between Private

Employment Agency (PEA) and
Private Recruitment Entity (PRE)
As defined in Article 13 of the Labor Code, a private employment agency technically
may be distinguished from a private recruitment entity as follows:
 1. A PEA has a right duly recognized in law to charge a fee, directly or
indirectly, from the workers or the employers or from both; while a PRE
does not charge any fee either directly or indirectly from the workers or
employers to which they would be deployed;
2. PEA is authorized to recruit only for overseas placement or deployment;
while PRE is allowed to recruit for both local and overseas deployment.
3. PEA derives its authority to recruit and place workers from a document
denominated as a “license”; while PRE sources its authority from a
document called “authority.”

4. Four requisites before

deployment of OFWs (Sec. 4
RA 8042)
5. SEC. 4. Deployment of Migrant Workers - The State shall deploy overseas
Filipino workers only in countries where the rights of Filipino migrant workers
are protected. The government recognizes any of the following as guarantee
on the part of the receiving country for the protection and the rights of
overseas Filipino workers:
6. (a) It has existing labor and social laws protecting the rights of migrant
workers;
7. (b) It is a signatory to multilateral conventions, declaration or resolutions
relating to the protection of migrant workers;
8. (c) It has concluded a bilateral agreement or arrangement with the
government protecting the rights of overseas Filipino workers; and
9. (d) It is taking positive, concrete measures to protect the rights of migrant
workers.

Documented vs. undocumented

OFWs
Regular/Documented Filipino migrant workers.
The term "Regular/Documented Filipino migrant workers" is mentioned once in RA.
No. 10022 but it was not defined therein. The 2010 Omnibus Rules and Regulations
define it as referring to the following:

1. Those who possess valid passports and appropriate visas or permits to

stay and work in the receiving country; and
 2. Those whose contracts of employment have been processed by the
POEA, or subsequently verified and registered on-site by the POLO, if
required by law or regulation.

Irregular/Undocumented Filipino migrant workers.

The term "Irregular/Undocumented Filipino migrant workers" is also mentioned only
once in R.A. No. 10022 but it was not defined therein. The 2010 Omnibus Rules and
Regulations define it as referring to the following:

1. Those who acquire their passports through fraud or misrepresentation;

2. Those who possess expired visas or permits to stay;
3. Those who have no travel document whatsoever;
4. Those who have valid but inappropriate visas; or
5. Those whose employment contracts were not processed by the POEA or
subsequently verified and registered on-site by the POLO, if required by
law or regulation.

6. OFW in distress
7. The term “overseas Filipinos in distress” is defined under the Omnibus Rules
as referring to overseas Filipinos who have valid medical, psychological or
legal assistance problems requiring treatment, hospitalization, counseling,
legal representation as specified in Sections 24 and 26 of R.A. No. 8042 or
any other kind of intervention with the authorities in the country where they
are found.

8. Nationality of the employer,

immaterial
9. "It must be emphasized that both the statute, specifically Section 14 (a) of EO
No. 797, as well as the relevant regulations, generally make reference to
Employment to Filipinos overseas. They do not limit the coverage to non-
Filipino employers. Filipinos working overseas share the same risks and
burdens whether their employers be Filipino or foreign."  (Philippine-
Singapore Parts Corporation v. NLRC, G. R. No. 67035; Eastern Shipping
Lines, Inc. v. POEA, G. R. No. 77828)
10. "It is well-known that foreign-owned and foreign-registered vessels have
frequently also secured Philippine registration where the interest of
convenience of the owners dictated such second or dual registration. The
underlying regulatory policy is that Filipino seafarers working on ocean-going
vessels should receive the same wages and benefits without regard to
nationality or nationalities of the vessels on which they serve." (Eastern
Shipping Lines, Inc. v. POEA, G. R. No. 77828)
Survey of doctrinal cases on the
nature of employment of OFWs
OFWs can never acquire regular employment
OFWs are contractual employees, NOT REGULAR EMPLOYEES
Related cases:
Brent School Inc. v Zamora (G. R. No. 48494, February 5, 1990, 181 SCRA 702)
Seamen (now Seafarers) and overseas contract workers are NOT COVERED by the
term “regular employment” as defined in Article 280 of the Labor Code;
Coyoca v. NLRC (G. R. No. 113658, March 31, 1995, 240 SCRA 190, 194)
Employment of Filipino Seamen is governed by the Rules and Regulations of the
POEA. The Standard Employment Contract governing the Employment of All Filipino
Seamen on Board Ocean-Going Vessels of the POEA, particularly Part 1, Sec. C
which provides that contract of Seamen shall be for a fixed period, shall not be
longer than twelve (12) months;
Millares v. NLRC (G. R. No. 110524, July 29, 2002, 385 SCRA 306)
OFW’s cannot acquire regular employment, the fact that employment of seafarers is
governed by the contracts they sign everytime they are re-hired and their
employment is terminated when the contract expires;
Employment is fixed for a certain period of time;
They fall under the exception of Art. 280 whose employment has been fixed for a
specific project or undertaking the completion or termination of which has been
determined at the time of engagement of the employee or where the work or service
to be performed is seasonal in the nature and the employment is for the duration of
the season.
Indefinite Period of Employment of OFW’s held NOT VALID
Pentagon international Shipping, Inc. v Adelantar (G. R. No. 157373, July 27,
2004)
Even if the employment contract of an OFW provides for an unlimited period, it is not
valid as it contravenes the explicit provision of the POEA Rules and Regulations on
fixed-period employment
OFWs do not become regular employees by reason of nature of work
An OFW cannot be considered a regular employee by reason of the fact that the
work he performs is usually necessary and desirable in the usual business or trade
of the employer.
Millares v. NLRC (G. R. No. 110524, July 29, 2002, 385 SCRA 306)
Petitioners Claim: they be considered as regular employees since they are
performing useful and desirable works and that they have rendered 20 years of
service; in Brent School Inc. v Zamora (G. R. No. 48494, February 5, 1990, 181
SCRA 702) Ruling, there are certain forms of employment which also require the
performance of usual and desirable functions and which exceed one year but do not
necessarily attain regular employment status; OFWs and seafarers fall under this
type of employment which are governed by mutual agreement of the parties.
Regular employment does not result from the series of re-hiring of OFWs
Gu-Miro v. Adorable (G. R. No. 160952, August 20, 2004); continued re-hiring by the
company of the OFW to serve as Radio Officer on board the employer’s different
vessels should be interpreted not as a basis of regularization but rather as a series
of contract renewals.
TAKE NOTE: Unique cases where OFWs were declared regular employees
ATCI Overseas Corp. v CA (G. R. No. 143949, August 9, 2001); OFWs may attain
regularity of employment. Here the Filipino doctors were hired by the Ministry of
public health of Kuwait for a period of two years but were summarily terminated after
2 months on the ground that they are physically unfit for the job. After seven months
they had ceased to work, they were repatriated to the Philippines. They claimed that
they are probationary employees at the time of their termination. Supreme Court said
they are regular employees because of the following reasons:

1. there is nothing in the record that shows and proves that they are
probationary employees at the time they were dismissed from
employment;
2. there is no stipulation included in the employment contract and
Memorandum of Understanding of the petitioner and the Ministry providing
for a probationary period;
3. there’s no finding of probationary employment in the decisions of POEA,
NLRC and CA;
4. petitioners were not apprised of the fact that they were to be placed on a
probationary period;

(this decision was reversed: OFWs can never become regular employees as their
engagement is required under the law to be on a fixed-term basis, Millares v. NLRC
GR No. 110524)
The fixed –period employment of OFWs not discriminatory
not discriminatory against them nor does it favor foreign employers (particularly
seafarers); seafarers nature of employment are peculiar and unique, they cannot
stay for a long and indefinite period of time at sea; national, cultural and lingual
diversity necessitates the limitation of its period.
The expiration of employment contracts of OFWs marks its ending
since OFWs are not regular employees, their employment ceases upon the
expiration of  their employment contracts
Effect of hiring of seamen for overseas employment but assigning him to local
vessel
The non-deployment of the ship overseas does not affect the validity of the perfected
employment contract (OSM Shipping Philippines Inc. v NLRC GR No. 138193,
March 5, 2013);
Effect on the status of a seaman hired for overseas deployment but later
assigned to domestic operations after the expiration of his overseas contract
the employee is considered now as a domestic employee (his overseas employment
is automatically terminated upon expiration of his overseas employment contract)
Delos Santos vs. Jebsen Maritime, Inc., GR No. 154185

Very important: Sameer and

Serrano cases
Comparison between Sameer Overseas Placement case and Serrano case
doctrines on OFWs dismissal
SAMEER OVERSEAS PLACEMENT DOCTRINE
Respondent’s dismissal grounded on inefficiency and negligence less than one year
from hiring and her repatriation on the same day show not only failure on the part of
petitioner to comply with the requirement of the existence of just cause for
termination; they patently show that the employers did not comply with the due
process requirement. Thusly:
“A valid dismissal requires both a valid cause and adherence to the valid procedure
of dismissal. The employer is required to give the charged employee at least two
written notices before termination. One of the written notices must inform the
employee of the particular acts that may cause his or her dismissal. The other notice
must [inform] the employee of the employer’s decision. Aside from the notice
requirement, the employee must also be given ‘an opportunity to be heard’”.
SERRANO DOCTRINE
The phrase “of for three months for every year of the unexpired term, whichever is
less” of Sec. 10 paragraph 5 of RA 8042 has been declared unconstitutional for
being discriminatory, among other significant reasons cited thereon. Consequent to
tis ruling, illegally dismissed OFWs are now entitled to all the salaries for the entire
unexpired portion of their employment contracts, irrespective of the stipulated term or
duration thereof.
Although the subject clause was declared not violative of Section 10 Article III of the
Constitution on non-impairment of contracts, it was, however, pronounced that it
violated Section 1, Article III; Section 18, Article II; and Section 3, Article XIII of the
Constitution on labor as a protected sector. A closer examination of the subject
clause reveals that it has a discriminatory intent against, and an invidious impact on,
OFWs at the following levels: First, OFWs with employment contract of less than
one year vis-à-vis OFWs with employment contracts of one year or more; Second,
among OFWs with employment contracts of more than one year; and Third, OFWs
vis-à-vis local workers with fixed-period employment.
On the first, the enactment of the subject clause in RA 8042 introduced a differential
rule of computation of the money claims of illegally dismissed OFWs based on their
employment periods, in the process singling out one category whose contracts have
an unexpired portion of one year or more and subjecting them to the peculiar
disadvantage of having their monetary awards limited to their salaries for 3 months
or for the unexpired portion thereof, whichever is less, but all the while sparing the
other category from such prejudice, simply because the latter’s unexpired contracts
fall short of one year.
On the second, the subject clause “or for three months for every year of the
unexpired term, whichever is less” contains the qualifying phrases “every year” and
“unexpired term.” Corollarily, the unexpired term must be at least one year for if it
were any shorter, there would be no occasion for such unexpired term to be
measured by every year; and the original term must be more than one year, for
otherwise, whatever would be the unexpired term thereof will not reach even a year.
Consequently, the more decisive factor in the determination of when the subject
clause shall apply is not the length of the original contract period, but the length of
the unexpired portion of the contract period – the subject clause applies in cases
when the unexpired portion of the contract period is at least one year, which
arithmetically requires that the original contract period be more than one year.
Viewed in that light, the subject clause creates a sub-layer of discrimination among
OFWs whose contract periods are for more than one year: those who are illegally
dismissed with less than one year left in their contracts shall be entitled to their
salaries for the entire unexpired portion thereof, while those who are illegally
dismissed with one year or more remaining in their contracts shall be covered by the
subject clause and their monetary benefits limited to their salaries for the 3 months
only.
On the third, prior to RA 8042, OFWs and local workers with fixed-term employment
who were illegally discharged were treated alike in terms of the computation of their
money claims: they were uniformly entitled to their salaries for the entire unexpired
portions of their contracts. But with the enactment of RA 8042, specifically the
adoption of the subject clause, the illegally dismissed OFWs with an unexpired
portion of one year or more in the employment contract have since been differently
treated in that their money claims are subject to the 3-month cap, whereas no such
limitation is imposed on local workers with fixed-term employment. The subject
clause singles out one classification of OFWs and burdens it with a peculiar
disadvantage.
There can never be a justification for any form of government action that alleviates
the burden of one sector, but imposes the same burden on another sector, especially
when the favored sector is composed of private business such as placement
agencies, while the disadvantaged sector is composed of OFWs whose protection
no less than the Constitution commands. The idea that private business interest can
be elevated to the level of a compelling interest is odious.
The subject clause does not state or imply any definitive governmental purpose; and
it is for that precise reason that the clause violates not just the petitioner’s right to
equal protection, but also her righto substantive due process under Section 1 Article
III of the Constitution.
 In the computation of the lump-sum salary due an illegally dismissed OFW, there
are two clauses as points of reckoning: first, is the cumulative salary for the
unexpired portion of his employment; and second, is the grant of 3 months’ salary
for every year of the unexpired term, whichever is less. By reason of this latest
Serrano doctrine, al past decision apply.
APPLICATION OF THE SERRANO AND SAMEER RULINGS
The clause “or for three months for every year of the unexpired term, whichever is
less” having been declared unconstitutional in Serrano and Sameer after the
provision found its way again in RA 10022 which took effect in 2010, the proper
indemnity in illegal dismissal cases, according to Gopio, should be the amount
equivalent to the unexpired term of the employment contract. In this case, since
Bautista’s contract is for 31 months with a monthly salary of P115,850.00 and he
was illegally dismissed just 9 months after his deployment in Papua New Guinea,
therefore, there remain 22 months of his unexpired contract. Hence, said amount
should be multiplied by 22 months, the remaining term of his employment contract,
or a total amount of P2,548,700.00.
COMPONENT OF CONTRACT’S UNEXPIRED PORTION
In the computation of the amount due to an illegally dismissed OFW, only the
salaries for the unexpired portion of the employment contract should be included, as
pronounced in Serrano, thus:
“The word salaries in Section 10(5) do not include overtime and leave pay. For
seafarers like petitioner, DOLE Department Order No. 33, series of 1996, provides a
Standard Employment Contract of Seafarers, in which salary is understood as the
basic wage, exclusive of overtime, leave pay and other bonuses; whereas
overtime pay is compensation for all work ‘performed’ in excess of the regular 8
hours and holiday pay is compensation for any work ‘performed’ on designated rest
days and holidays.”
Substantive and Procedural Due Process in OFW Termination Cases
OFWs are entitled to security of tenure as guaranteed under the Constitution and the
laws of the Philippines. Thus, OFWs may only be terminated for a just or authorized
cause (substantive due process) and after compliance with procedural due process
requirements. Article 297 of the Labor Code enumerates the just causes of
termination by the employer and Articles 298 [283] and 299 [284] thereof enumerate
the authorized causes.
The fundamental procedural rights afforded under the Philippines laws to workers
equally apply to OFWs. This means that the employer must give the concerned
employee at least two notices before his or her termination. Specifically, the
employer must inform the employee of the cause or causes for his or her termination
and thereafter, the employer’s decision to dismiss him. Aside from the notice
requirement, the employee must be accorded the opportunity to be heard.
 Damages entitlement of OFW
Private employment agency must “assume joint and solidary liability with the
employer for all claims and liabilities which may arise in connection with the
implementation of the contract, including but not limited to payment of wages, death
and disability compensation and repatriations”.  Moreover, an agency which is a
corporation or a partnership must agree that its officers, partners and directors “will
be jointly and severally liable with the company over claims arising from employer
employee relationship”. What this means is that if an OFW wants to make a claim for
compensation for an illegal action or breach of contract by the employer, he or she
may make that claim, not only against the employment agency, but also against its
partners or directors.

Termination of employment of
OFWs
OFWs are entitled to security of tenure as guaranteed under the Constitution and the
laws of the Philippines. Thus, OFWs may only be terminated for a just or authorized
cause (substantive due process) and after compliance with procedural due process
requirements. Art. 297 [282] of the Labor Code enumerates the just causes of
termination by the employer and Articles 298 [283] and 299 [284] thereof enumerate
the authorized causes. The fundamental procedural rights afforded under the
Philippine laws to workers equally apply to OFWs. This means that the employer
must give the concerned employee at least two (2) notices before his or her
termination. Specifically, the employer must inform the employee of the cause or
causes for his or her termination, and thereafter, the employer’s decision to dismiss
him. Aside from the notice requirement, the employee must be accorded the
opportunity to be heard.
In Agabon vs. NLRC [G.R. No. 158693: November 17, 2004], The procedure for
terminating an employee is found in Book VI, Rule I, Section 2(d) of the Omnibus
Rules Implementing the Labor Code:
Standards of due process: requirements of notice. - In all cases of termination of
employment, the following standards of due process shall be substantially observed:

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

282 of the Code.

 A written notice served on the employee specifying the ground or grounds

for termination, and giving to said employee reasonable opportunity within
which to explain his side;

 A hearing or conference during which the employee concerned, with the

assistance of counsel if the employee so desires, is given opportunity to
respond to the charge present his evidence or rebut the evidence resented
against him; and
 A written notice of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to
justify his termination.
     *In case of termination, the foregoing notices shall be served on the employee’s
last known address

Awards of indemnity in OFW

cases applying Agabon case
Background:
SC upheld the dismissal against the petitioners (Jenny Agabon and Virgilio Agabon)
because it was established that the petitioners abandoned their jobs to work for
another company. Private respondent, however, did not follow the notice
requirements and instead argued that sending notices to the last known addresses
would have been useless because they did not reside their anymore. Unfortunately,
this is not a valid excuse because the law mandates the twin notice requirements to
the employee’s last known address. Thus it should be held liable for non-compliance
with the procedural requirements of due process.
Art. 279 means that the termination is illegal if it is not for any of the justifiable or
authorized by law. Where the dismissal is for just cause but, the lack of statutory due
process should not nullify but the employer should indemnify the employee for the
violation of his statutory rights The indemnity should be stiffer to discourage the
abhorrent practice of “dismiss now, pay later” which we sought to deter in Serrano
ruling. The sanction should be in the nature of indemnification or penalty and should
depend on the facts of each case, taking into special consideration the gravity of due
process violation of the employer.
ART. 279. Security of Tenure. - In cases of regular employment, the employer shall
not terminate the services of an employee except for a just cause or when
authorized by this Title. An employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and other privileges and to
his full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from
him up to the time of his actual reinstatement.
The Supreme Court upheld the decision of the Court of Appeals in fixing the amount to
P30,000.00 each as nominal damages for non-compliance with statutory due process. The CA
believes that this form of damages would serve to deter employers from future violations of
the statutory due process rights of employees. At the very least, it provides a vindication or
recognition of this fundamental right granted to the latter under the Labor Code and its
Implementing Rules.
Private respondent is liable for petitioners' holiday pay, service incentive leave pay
and 13th month pay without deductions. (Agabon vs. NLRC, G.R. No. 158693,
November 17, 2004)
Application:
Indemnity in the form of nominal damages.  If an OFW is dismissed for a just and
authorized cause and after affording him procedural process, his dismissal is
considered perfectly valid and legal, and therefore, he is not entitled to any salary for
the unexpired portion of his employment contract or any other form of relief.
However, if there is just or authorized cause but procedural process was not afforded
to him, the rule that applies is the Agabon Doctrine.

Monetary awards to OFWs, do

not apply Art. 279 on local
employment
The reliefs under article 279 of the Labor code are  not available to OFWs.
Any and all claims arising from the employment of OFWs, including those for death
or illness compensations, are not rooted from the provisions of the Labor Code
(NYK-Fil Ship Management, Inc.  v. NLRC).
Reinstatement or separation pay in lieu of reinstatement or full backwages, are not
available to OFWs as provided for in ART 279.
A validly dismissed OFW is not entitled to his salary for the unexpired portion
of his employment contract.
How to reckon the monetary awards to OFWs illegally dismissed prior to the
effectivity of R.A. No. 8042.
EDI- Staffbuilders international, Inc. v. NLRC) instructs that in termination cases
arising before the effectivity of R. A No. 8042, on August 25, 1995 [approved on
June 7, 1995] where the OFWs are dismissed without just cause, they are entitled to
payment of their salaries corresponding to the unexpired portion of their fixed-term
contract. Consequently, since the OFW in this case was dismissed prior to the
effectivity of R.A No. 8042, he is entitled to all his salaries for the unexpired portion
of his contract, without the qualification now found in Section 10 of said law. *This is
still a good rule
Qualification in par. 5 section 10 of R.A no. 8042 declared unconstitutional.
The 5th paragraph of section 10 of R. A. No. 8042 qualifies, as a form of relief, the
amount of monetary award to which an illegally dismissed OFW is entitled. The
amount of monetary award is made dependent on the term or duration of his contract
of employment, thus:
“In case of termination of overseas employment without just, valid or authorized
cause as defined by law or contract, the worker shall be entitled to the full
reimbursement of his placement fee with interest at 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.”
*Unconstitutional so go back to EDI case
Monetary award to OFW is not in the nature of separation pay or backwages
but a form of indemnity.
Only salaries are to be included in the computation of the amount de for the
unexpired portion of the contract.
Entitlement to overtime pay of OFWs.
Reimbursement of placement fee included in the monetary award to an OFW.
Costs of repatriation and transport of personal belongings should be included
in the monetary award to an illegally dismissed OFW.

Indemnity for OFWs; Separation

pay or backwages for local
employment
“Monetary award to OFW is not in the nature of separation pay or backwages but a
form of indemnity.”
The award of salaries for the unexpired portion of an OFW’s employment contract is
not an award of backwages or separation pay but a form of indemnity for the OFW
who was illegally dismissed. (Skippers United Pacific, Inc. v. NLRC, G.R. 148893,
July 12, 2006).

Entitlement of OFWs of damages

& attorney’s fees
In the 2005 case of Athenna, the High Tribunal ruled that because of the breach of
contract and bad faith alleged against the employer and the petitioner recruitment
agency, the award of P50,000 in moral damages and P50,000 as exemplary
damages, in addition to attorney’s fees of ten percent (10%) of the aggregate
monetary awards, must be sustained.
Likewise, in the case of ATCI Overseas , the award of attorney’s fees equivalent to
ten percent (10%) of the total award was held legally and morally justified as the
OFWs were compelled to litigate and thus incur expenses to protect their rights and
interests

Basis of computation of death

benefits of OFW
The basis of computation of death benefits of OFW generally, is whichever is greater
between Philippine law and foreign law.
The family of an active OFW at the time of his death is entitled to receive P100,
000.00 if the cause of death is natural, and P200, 000.00 if the cause of death is
accident. On top of that is a burial benefit of P20,000.00 shall be provided in case of
the member’s death.

Rules on repatriation of OFWs

Repatriation of workers, in general.
The repatriation of a land-based worker or seafarer and the transport of his personal
belonging are the primary responsibility of the agency which recruited or deployed
the worker overseas. All costs attendant to repatriation should be charged to the
agency concerned and/or it’s principal. Likewise, the repatriation of remains and
transport of the personal belongings of a deceased land-based worker or seafarer
and all costs attendant thereto should be borne by the principal and/or the local
agency. However, in cases where termination of employment is due solely to the
fault of the employee, the principal/employer or agency is not in any manner
responsible for the repatriation of the former and/or his belongings. (Sec. 1, Rule III,
Part VIII; Sec. 1, Rule II, Part VII)
Repatriation costs when employment is terminated.
The principal or agency is required to advance the cost of plane fare without prior
determination of the cause of the termination of the land-based worker’s or
seafarer’s employment. However, the principal or agency may recover the cost of
repatriation from the worker or seafarer upon his return to the Philippines if
termination of employment is due solely to the employee’s fault. (Sec. 2, Rule III,
Part VIII; Sec. 2, Rule II, Part VII; Sec. 53, Omnibus Rules and Regulations
Implementing Migrant Workers and Overseas Filipinos Act of 1995)
Repatriation in case of fault of migrant worker.
In cases where the termination of employment is due solely to the fault of the worker,
the principal/employer or agency is not in any manner responsible for the repatriation
of the former and/or his belongings. (Sec. 15, RA No. 8042)
Repatriation procedure.
When the need for repatriation arises and the principal fails to provide the costs, the
Philippine Embassy/Consulate/Overseas Labor Office at worksite should
simultaneously notify the POEA and OWWA of such need. POEA should require the
agency to provide the plane ticket or a pre-paid ticket advice to the Philippine
Embassy/Consulate/Overseas Labor Office and to report its compliance to the POEA
which should advise OWWA accordingly. (Sec. 3, Rule III, Part VIII, 2002 POEA
Rules for Land-Based Overseas Worker; Sec. 3, Rule II, Part VII, 2003 POEA Rules
for Seafarers; Sec. 15, RA No. 8042; Secs. 52 and 54, Omnibus Rules and
Regulations Implementing the Migrant Workers and Overseas Filipinos Act of 1995)
Administrative sanction for non-compliance.
If the employment agency fails to provide the ticket or pre-paid ticket advise within 48
hours from receipt of notice, POEA should suspend the documentary processing of
the agency or impose such sanctions, as it may deem necessary. POEA may
request OWWA in advance the costs of repatriation with legal interest. (Sec. 4, Rule
III, Part VIII; Sec. 4, Rule II, Part VII; Sec. 55, Omnibus Rules and Regulations
Implementing Migrant Workers and Overseas Filipinos Act of 1995)
Repatriation in case of war and other events.
OWWA, in coordination with appropriate international agencies, should undertake
the repatriation of workers in cases of war, epidemic, disasters or calamities, natural
or man-made, and other similar events without prejudice to reimbursement by the
responsible principal or agency within 60 days from notice. In such case, POEA
should simultaneously identify and give notice to the agencies concerned. However,
in cases where the principal or recruitment agency cannot be identified, all costs
attendant to repatriation should be borne by the OWWA. Sec. 15, RA No. 8042; Sec.
56, Omnibus Rules and Regulations Implementing Migrant Workers and Overseas
Filipinos Act of 1995)
Mandatory repatriation of underaged migrant workers.
Upon discovery or being informed of the presence of migrant workers whose actual
ages fall below the minimum age requirement for overseas deployment, the
responsible officers in the foreign service should, without delay, repatriate said
workers and advise the Department of Foreign Affairs through the fastest means of
communications available, of such discovery and other relevant information. The
cost mandated under RA No. 8042 should be borne correspondingly by the agency
and/or principal of OWWA, as the case may be. (Sec. 16, RA No. 8042; Sec. 57,
Omnibus Rules and Regulations Implementing Migrant Workers and Overseas
Filipinos Act of 1995)
Other cases of repatriation.
In all cases where the principal or agency of the worker cannot be identified, cannot
be located or had ceased operations, and the worker is in need and without means,
OWWA personnel at jobsite, in coordination with DFA, should cause the repatriation.
All costs attendant to repatriation borne by the OWWA are chargeable to the
Emergency Repatriation Fund provided under RA NO. 8042, without prejudice to
OWWA requiring the agency/employer of the worker to reimburse the cost of
repatriation in appropriate cases. (Sec. 58, Omnibus Rules and Regulations
Implementing Migrant Workers and Overseas Filipinos Act of 1995)

Existence and degree of

seafarer’s disability; how
determined and declared
1. Disability should be understood on the basis of loss of earning capacity
and not on its medical signifance.
2. Certification by a company-designated physician; accreditation with POEA
not necessary.
 3. Findings of company-designated physician, not conclusive.
4. OFW should present controverting evidence.
5. Right of OFW to seek a second opinion from physicians other than
company-designated physician. *2019 BAR on  third-doctor conflict
resolution.

In case of conflict opinions, that which is favorable to the OFW should be adopted

Award in foreign currency; how

computed
In case the salary of an illegally dismissed employee is in foreign currency (say, US
Dollars) as in the case of OFWs, the monetary award equivalent to the salary for the
unexpired portion should be paid at its prevailing peso equivalent at the time of
payment in accordance with Republic Act No. 8183 which provides in its Section 1
that “[a]ll monetary obligations shall be settled in the Philippine currency which is
legal tender in the Philippines.  However, the parties may agree that the obligation or
transaction shall be settled in any other currency at the time of payment.” (Republic
Act No. 8183 entitled “An Act Repealing Republic Act Numbered Five Hundred
Twenty-Nine Entitled ‘An Act to Assure the Uniform Value of Philippine Coin and
Currency’”; Asia World Recruitment, Inc. vs. NLRC, G. R. No. 113363, Aug. 24,
1999).

Funds established for OFWs

RA 8042 has established the following funds for availment by migrant and overseas
Filipinos:

1. Migrant Workers Loan Guarantee Fund

2. Emergency Repatriation Fund
3. Legal Assistance Fund
4. Congressional Migrant Workers Scholarship Fund

Mandatory obligation to remit

foreign exchange earnings
It shall be mandatory for all Filipino workers abroad to remit a portion of their foreign
exchange earnings to their families, dependents and/or beneficiaries in the country in
accordance with rules and regulations prescribed by the Secretary of Labor and
Employment.
Mandatory remittance – the amount or portion of the basic salary of Overseas
Filipino workers required under existing laws and regulations to be remitted by the
workers to their beneficiaries in the Philippines and sold for pesos to the Philippine
banking system.
Exceptions to mandatory remittance:

1. Where the worker’s immediate family members, dependents, or

beneficiaries are residing with him abroad;
2. Filipino servicemen working in U.S. military installations;
3. Immigrants and Filipino professionals and employees working with United
Nations agencies or specialized bodies (Resolution No. 1-83 Inter-Agency
Committe for implementation of E.O. 857).

Amount of remittance
(% of basic salary)

1. Seafarers or mariners - 80 %
2. Workers of Filipino contractors and construction companies - 70 %
3. Doctors, engineers, teachers, nurses, and other professional workers
whose employment contracts provide for free board and lodging - 70 %
4. Other professionals whose employment contracts do not provide for free
board and lodging - 50 %
5. Domestic and other service workers - 50 %

Consequences of failure to remit

earnings
 Workers who fail to comply shall be suspended or excluded from the list of
eligible workers for overseas employment.
 Subsequent violations shall warrant his repatriation from the job site at the
expense of the employer or at his expense.
 Filipino or foreign employers and/or their representatives who fail to
comply with the mandatory remittance requirements shall be excluded
from the overseas employment program, while local private employment
agencies or entities shall face cancellation or revocation of their licenses
or authority to recruit, without prejudice to other liabilities under existing
laws and regulations ( Sec. 9, E.O. 857, Dec 13, 1982).

*remember substantial compliance rule

Rules on POEA Standard

Employment Contracts (POEA-
SEC) interpretation
Validity of standard form contracts.
The POEA Standard Employment Contract (POEA-SEC) for OFWs is designed
primarily for their protection and benefit in the pursuit of their employment overseas.
It's provisions must, therefore, be construed and applied fairly, reasonably and
liberally in their favor. Only then can its beneficent provisions be fully carried into
effect. (Philippine Transmarine Carriers, Inc v. NLRC, G. R. no.
123891,Feb.28,2001)
Invalidity of contract diminishing salary and benefits ;exception.
A contract which diminishes the pay and benefits of the employee as embodied in
the contract duly approved by the POEA is null and void. The exception is when
such subsequent contract providing for lesser pay and benefits is approved by the
POEA. (Chavez v. Bonto-Perez, G. R. no. 109808, March 1 1995)
Interpretation of overseas employment contract
Any ambiguity in the overseas employment contract shall be interpreted against the
parties that drafted it. (Cadalin v. POEA's Administrator, G. R. no. 104776, Dec
5,1995)
Labor Contracts must be interpreted liberally in favor of the worker.
The provisions contained in the standard contract of employment for Filipino seamen
pursuant to Memorandum Circular no. 2 are manifestations of the state in favor of
the working class provisions of the Constitution. Consequently, the payment of death
benefit pension, funeral benefit and burial gratuity to private respondent will not
preclude allowance to private respondent’s claim against petitioner which is
specifically reserved in the said standard contract of employment.
Stipulation on SSS coverage of OFWs.
Foreign shipowners and manning agencies had generally expressed their conformity
to the inclusion of Filipino seafarers on board foreign vessels, within the coverage of
the Social Security Act. The extension of coverage of the Social Security system to
Filipino seafarers arises by virtue of the assent given in the contract of employment
signed by the employer and the seafarer. By extending the benefits of the Social
Security Act to Filipino seafarers, the individual employment agreement entered into
with a stipulation of such coverage contemplated in the DOLE-SSS Memorandum of
Agreement merely gives effect to the constitutional mandate of affording protection
to labor. (Sta. Rita v. CA, G. R. no. 119891,Aug 21 1995)

Prohibited practices under Art.

34, LC
1. 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;
 2. To furnish or publish any false notice or information or document in
relation to recruitment or employment;
3. 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.
4. 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;
5. 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;
6. 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;
7. To obstruct or attempt to obstruct inspection by the Secretary of Labor or
by his duly authorized representatives;
8. 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.
9. 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;
10. 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
11. 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.

Employment of non-resident
aliens
The following are Aliens required to apply for an Alien Employment Permit
(AEP): 

1. All foreign nationals seeking admission to the Philippines, for the purpose
of employment;
2. Missionaries or religious workers who intend to engage in gainful
employment;
3. Holders of Special Investors Resident Visa (SIRV), Special Resident
Retiree’s Visa (SRRV), Treaty Traders Visa (9D) or Special Non-
Immigrant Visa (47(a)2) for as long as they occupy any executive,
advisory, supervisory, or technical position in any Philippines
establishment.
 4. Agencies, organizations or individuals whether public or private, who
secure the services of foreign professionals to practice their professions in
the Philippines under reciprocity and other international agreements;
5. Non-Indo-Chinese Refugees who are asylum seekers and given refugee
status by the United Nations High Commissioner on Refugees (UNHCR)
or the Department of Justice under DOJ Department Order No. 94, series
of 1998;
6. Resident foreign national seeking employment in the Philippines

Aliens exempted from AEP

The following are Aliens exempted from securing an AEP

1. Resident Foreign Nationals employed or seeking employment in the

Philippines (DO 41-03);
2. Members of the diplomatic services and foreign government officials
accredited by the Philippine government;
3. Officers and staff of international organizations of which the Philippine
government is a cooperating member, and their legitimate spouses
desiring to work in the Philippines;
4. Foreign nationals elected as members of the Governing Board who do not
occupy any other position, but have only voting rights in the corporation;
5. All foreign nationals granted exemption by special laws and all other laws
that may be promulgated by the Congress;
6. Foreign nationals who come to the Philippines to teach, present and/or
conduct research studies in universities and colleges as visiting, exchange
or adjunct professors under formal agreements between universities or
colleges in the Philippines and foreign universities or colleges; or between
the Philippine government and foreign government; provided that the
exemption is on a reciprocal basis; and
7. Owners and representatives of foreign principals, whose companies are
accredited by the Philippine Overseas Administration (POEA), who come
to the Philippines for a limited period solely for the purpose of interviewing
Filipino applicants for employment abroad.

SVEG definition; rationale; who

may avail
Definition:
Special Visa for Employment Generation is a special visa issued to a qualified non-
immigrant foreigners who shall actually employ at least 10 Filipinos in a lawful and
sustainable enterprise, trade, or industry. Qualified foreigners who are granted the
SVEG shall be considered special non-immigrants with multiple entry privileges and
conditional extended stay, without the need of prior departure from the Philippines.
The privileges of this Executive Order may extend to the qualified foreigner’s spouse
and dependent unmarried child/children below 18 years of age whether legitimate,
illegitimate or adopted. (Sec. 1 of EO 758)
Rationale:
There are foreigners who want to maintain a lawful presence in the Philippines by
actually, directly or exclusively engaging in lawful, viable, and sustainable trade,
business, industry, or activity offering local employment. A survey of NSO shows
millions of unemployed Filipinos. SVEG is for the creation of job opportunities for the
Filipino.
Who may avail:
Non-immigrant foreigners who wish to avail of the SVEG should comply with the
following conditions:

1. The foreigner shall actually, directly or exclusively engage in a viable and

sustainable commercial investment/enterprise in the Philippines,
exercises/performs management acts or has the authority to hire, promote
and dismiss employees;
2. He evinces a genuine intention to indefinitely remain in the Philippines;
3. He is not a risk to national security; and
4. The foreigner’s commercial investment/enterprise must provide actual
employment to at least 10 Filipinos in accordance with Philippine labor
laws and other applicable special laws.

The above mentioned requirements must be continually satisfied by the foreigner for
him/her to continue to be a holder of the SVEG.  (sec. 2 of EO 758)

TESDA Act of 1994, goals and

objectives
RA 7796 or the “TESDA Act of 1994” has the following goals and objectives:

1. Promote and strengthen the quality of technical education and skills

development programs to attain international competitiveness;
2. Focus technical education and skills development on meeting the
changing demands for quality middle-level manpower;
3. Encourage critical and creative thinking by disseminating the scientific and
technical knowledge base of middle-level manpower development
programs;
4. Recognize and encourage the complementary roles of public and private
institutions in technical education and skills development and training
systems; and
5. Inculcate desirable values through the development of moral character with
emphasis on work ethic, self-discipline, selfreliance and nationalism.
Dual training system of TESDA
Dual Training System is the framework where a worker-trainee receive training both
in school through theoretical instructions and in the workshop or factory with actual
practice or application.
This is to:

1. Promote maximum protection and welfare of the worker-trainee;

2. Improve the quality, relevance, and accountability of technical education and skill
development;
3. Accelerate the employment-generation efforts of the government; and
4. Expand the range of opportunities for upward social mobility of the school-going
population beyond traditional higher levels of formal education (Sec.21 RA 7796)

5. Coverage
6. The provisions of this Title I [Working Conditions and Rest Periods] , Book III
[Conditions of Employment], Arts. 82-96, shall apply to employees in all
establishments and undertakings whether for profit or not, but not to
government employees (Remember: GOCCs vs. chartered rule), managerial
employees, field personnel, members of the family of the employer who are
dependent on him for support, domestic helpers, persons in the personal
service of another, and workers who are paid by results as determined by the
Secretary of Labor in appropriate regulations.

Definition of managerial
employee: Art. 82 vs. Art. 212
(m), LC
Article 82
-“Managerial employees” refer to 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.
- Used only for purposes of Book III (working conditions and rest periods and
benefits)
-Supervisors are members of the managerial staff
Article 212 (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.
-Used only for purposes of Book V (forming, joining and assisting of unions,
certification election and collective bargaining)
-Supervisors are not manager employees under Book V

Rule on domestic helper

assigned to the employer’s
business establishment
The general criterion that distinguishes domestic or household service is the
rendition of work for the personal comfort and enjoyment of the family of the
employer in the home of said employer.
Thus, if an employer assigns the domestic workers or kasambahay to work, whether
in full or part-time, in a commercial, industrial or agricultural enterprise, the
kasambahay ceases to be one and thus shall be treated as a regular employee of
such enterprise and be entitled to all the labor standards provided in the Labor Code.

Survey of relevant jurisprudence

on the above-mentioned rule
(1) Apex Mining Company, Inc v. NLRC - In this case, the High Court held that a
househelper in the staff-houses of an industrial company is considered a regular
employee thereof. The mere fact that the house helper is working within the
premises of the business of the employer and in relation to or in connection with its
business, as in its staff-houses for its guest or even for its officers and employees,
warrants the conclusion that such house helper is and should be considered as a
regular employee of the employer and not as a mere family house helper or as
contemplated in the law.
(2)  Remington Industrial Sales Corp. V. Castaneda - The same ruling as in Apex
was made in this case. Respondent worked at the company premises and her duty
was to cook and prepare its employees' lunch and merienda. Clearly, the situs as
well as the nature of respondent's work as a cook, who caters not only to the needs
of Mr. Tan (Managing Director of petitioner) and his family but also to that of the
petitioner's employees, made her fall squarely within the definition of a regular
employee under the doctrine enunciated in the Apex Mining case. That she works
within company premises and that she does not cater exclusively to the personal
comfort of Mr. Tan and his family, is reflective of the existence of the petitioner's right
of control over her functions, which is the primary indicator of the existence of an
employer-employee relationship.
(3)   Barcenas V. NLRC - In this case, private respondent contends that petitioner
was not an employee but a servant at the Manila Buddhist Temple. The Supreme
Court, however, disagreed. It held that petitioner was a regular employee thereof
considering that the work that she performed in the temple could not be categorized
as mere domestic work. Petitioner, being proficient in the Chinese language,
attended to the visitors, mostly Chinese, who came to pray or seek advice before
Buddha for personal or business problems ; arranged meetings between these
visitors and the Head Monk and supervised the preparation of the food for the temple
visitors; acted as tourist guide of foreign visitors ; acted as liaison with some
government offices; and made the payment for the temple's Meralco, MWSS and
PLDT bills. Indeed, these tasks may not be deemed activities of a household helper.
They were essential and important to the operation and religious functions of the
temple.

2 categories of employees paid

by result; distinguished
1. Those whose time and performance are supervised by the employer.

    -there is an essential element of control and supervision over the manner as how
to work is to be performed

2. Those whose time and performance are unsupervised

               -The employer's control is over the result of the work.

Work is measured either:
1) By piece;
2) By task
“By piece” refers to those who are compensated based on the units or pieces of work
they produced and accomplished. The work process involved is usually repetitive
and the compensation is uniform per unit or per piece.
“By task”, on the other hand, refers to those who are compensated based on the
completion or accomplishment of a certain specified task. This is commonly known
as pakyao which simply means wholesale

Work day; work week, reckoning

point
Work day means 24 consecutive-hour period which commences from the time the
employee regularly starts to work. It does not necessarily mean that it based on the
ordinary calendar day from 12:00 midnight to 12:00 midnight unless the employee
starts to work at this unusual hour.
Work week is a week consisting of 168 consecutive hours or 7 consecutive 24 hour
work days beginning at the same hour and on the same calendar day each calendar
week.
The reckoning point on how a work day or work week is from the time the
employee regularly starts to work on a work day or from the time and day the
employee regularly starts to work on a work week.

Compressed Workweek policy

A compressed work week is allowed provided that the employees voluntarily agree
thereto, that there is no diminution in pay, and it is only for a temporary duration.
The employer may compress the work days from 6 days (Monday to Saturday) to
five days (Monday to Friday) under certain conditions imposed by the Department of
Labor and Employment; and
In situation, for instance, where the employees’ workweek was forty five (45) hours
consisting of eight hours daily from Monday to Friday and five (5) hours on Saturday,
the employer may propose to compress or shorten the work week from Monday to
Friday with work for nine (9) hours per day without overtime pay for the excess one
(1) hour , provided the following conditions are met:

1. Employees VOLUNTARILY AGREE to work 9 hours a day from Monday to

Friday;
2. There is no diminution in the take-home pay and fringe benefits of the
employees;
3. Value of benefits that will accrue to the Employee under proposed work
schedule is MORE THAN or, at least, COMMENSURATE with, or equal to,
the one-hour overtime pay that is due them during weekdays based on the
Employees quantification;
4. The one-hour overtime pay of the employees will become due and
demandable if ever they permitted or made to work on any Saturday
during the effectivity of the new working time arrangement, since the
agreement between the employees and management is that there will be
no Saturday work in exchange for a longer work day during week-days;
5. The work of the employees DOES NOT involve STRENUOUS PHYSICAL
EXERTION and they are provided with adequate rest periods or coffee
breaks in the morning and afternoon; and
6. The effectivity of the proposed working time arrangement should be of
TEMPORARY duration as determined by the Secretary of Labor

*Maximum working hours per day-12 hours otherwise OT applies

Leading cases on CWW

Bisig Manggagawa sa Tryco vs NLRC GR No. 151309, Oct. 15, 2006
COMPRESSED WORK WEEK
            Private respondent Tryco and the petitioners signed separate Memoranda of
Agreement, providing for a compressed work week schedule to be implemented in
the company effective May 20, 1996. The MOA was entered into pursuant to DOLE
Dept. Order No. 21, Series of 1990 enunciating the Guidelines on the
implementation of Compressed Work Week.
            As provided in the MOA, 8:00 am to 6:12 pm, from Monday to Friday, shall
be considered as the regular working hours, and no overtime pay shall be due and
payable to the employee for work rendered during those hours.
            The MOA specifically stated that the employee waives the right to claim
overtime pay for work rendered after 5:00 pm until 6:12 pm from Monday to Friday
considering that the compressed workweek schedule is adopted in lieu of the regular
workweek schedule which also consists of 46 hours. However, should an employee
be permitted or required to work beyond 6:12 pm, such employee shall be entitled to
overtime pay.
            Tryco informed the Bureau of Working Conditions of the DOLE of the
implementation of the said compressed workweek in the company.
            In upholding the validity of the compressed workweek, it was noted that 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 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 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 6 days is shortened to 5
days but prolonging the working hours from Monday to Friday without the employer
being obliged to pay overtime premium compensation for work performed in excess
of 8 hours on weekdays, in exchange for the benefits above-cited that will accrue to
the employees.
Linton Commercial Co., Inc. vs. Hellera GR No. 163147, Oct 10 2007
In declaring the compressed workweek arrangement as unjustified and illegal and in
holding that the petitioners are guilty of illegal reduction of work hours, the Supreme
Court found specious the petitioners attempt to justify their action by alleging that the
company was suffering from financial losses owing to the Asian currency crisis.
Petitioners’ claim of financial losses was not supported by evidence.
A close examination of petitioners’ financial reports for 1997-1998 shows that while
the company suffered a loss of ₱3,645, 422.00 in 1997, it retained a considerable
amount of earnings and operating income. Clearly then, while Linton suffered from
losses for that year, there remained enough earnings to sufficiently sustain its
operation.
In business, sustained operations in the black is the ideal but being in the red is a
cruel reality. However, a year of financial losses would not warrant the immolation of
the welfare of the employees which in this case was done through a reduced
workweek that resulted in an unsettling diminution of the periodic pay for a protracted
period.
Permitting reduction of work and pay at the slightest indication of losses would be
contrary to the State’s policy to afford protection to labor and provide full
employment. All taken into account, the compressed workweek arrangement was
unjustified and illegal. Thus, petitioners committed illegal reduction of work hours.
Case synthesis: Bisig Manggagawa sa Tryco vs NLRC Linton Commercial Co.,
Inc. vs. Hellera  cases
MOA: employee waives the right to claim overtime pay for work rendered after 5:00
pm until 6:12 pm from Monday to Friday considering that the compressed workweek
schedule is adopted in lieu of the regular workweek schedule which also consists of
46 hours. However, should an employee be permitted or required to work beyond
6:12 pm, such employee shall be entitled to overtime pay.           
CWW: 3 days on a rotation basis
-  each worker would be working on a rotation basis for three working days only
instead of 6 days a week.
The MOA is enforceable  and binding against petitioners. The CWW was unjustified
and illegal. Thus, petitioners committed illegal reduction of work hours.
Where it is shown that the person making the waiver did so voluntarily, with full
understanding of what he was doing, and the consideration or the quitclaim is
credible and reasonable, the transaction must be recognized as a valid and binding
undertaking.       Financial losses must be shown before a company can validly opt to
reduce the work hours of its employees.
If the standards set in determining the justifiability of the financial losses under Art.
283 or Article 286  of the Labor Code were to be considered, petitioners would end
up failing to meet the standards.

Bisig Manggagawa sa Tryco vs NLRC Linton Commercial Co., Inc. vs. Hellera

MOA: employee waives the right to claim

overtime pay for work rendered after 5:00 CWW: 3 days on a rotation basis
pm until 6:12 pm from Monday to Friday
considering that the compressed workweek -       each worker would be working on a
schedule is adopted in lieu of the regular rotation basis for three working days only
workweek schedule which also consists of instead of 6 days a week
46 hours. However, should an employee  
be permitted or required to work beyond
6:12 pm, such employee shall be entitled  
to overtime pay.
 The CWW was unjustified and
The MOA is enforceable  and binding
illegal. Thus, petitioners committed illegal
against petitioners.
reduction of work hours.

Financial losses must be shown before a

Where it is shown that the person making
the waiver did so voluntarily, with full
understanding of what he was doing, and
the consideration or the quitclaim is
credible and reasonable, the transaction
must be recognized as a valid and binding
undertaking.
company can validly opt to reduce the work
hours of its employees.
If the standards set in determining the
justifiability of the financial losses under
Art. 283 or Article 286  of the Labor Code
were to be considered, petitioners would
end up failing to meet the standards.

COVID-19
Personal case: Historical background of FWA and COVID advisory.
Jan. 29, 2002: Advisory No. 02 with attachment requiring conformity of the union with
reporting to DOLE.
March 4, 2020: Advisory No. 09 which is a reconfigured advisory 02 to address
Covid situation (it appears that Advisory No. 09 has no attachment thus refer to
Advisory No. 02 attachment)
March 17, 2020: Advisory No. 209 (CAMP advisory which erroneously referred on
sec 1(b) art IV the use of Advisory No. 09 attachment which is non-existent or
referred to Advisory No. 02)
March 18, 2020: Advisory No. 12 amending sec 1(b) art IV of Advisory No. 209 and
introducing the Establishment Report for CAMP instead of the non-existent or not
applicable 09 attachment.
DOLE apparently realized that Advisory No. 09 has no attachment or the attachment
being referred to is the attachment of Advisory No. 02 which is not applicable to
Advisory No. 209 thus the amendment in Advisory No. 12.

Flexi-work schedule under RA

8972; during economic difficulties
and emergencies
FLEXI-WORK SCHEDULE UNDER RA 8972
RA 8972 known as “The Solo Parent’s Welfare Act of 2000” allows SOLO PARENT
to work on Flexible Schedule.
Flexible Work Schedule (Sec 3) is defined by Law as the right granted to a solo
parent employee to vary his/her arrival and departure time without affecting the core
work hours as defined by the employer, provided: (Sec 6)

1. Individual and company productivity is not affected; and

2. Employer may request exemption from above requirements from DOLE for
certain meritorious grounds.

FLEXI-WORK SCHEDULE DURING ECONOMIC DIFFICULTIES AND

EMERGENCIES

1. Specific Guideline - Department Advisory No. 2 Series of 2009

2. Purpose – Adoption of flexible work arrangements is considered as better
ALTERNATIVE than OUTRIGHT TERMINATION of the services of
employees or the TOTAL CLOSURE of the establishments
3. Concept – “Flexible work arrangements” refers to alternative
arrangements or schedules other than the traditional or standard work
hours, workdays and work week
4. Flexible Work Arrangements

 Compressed Workweek
 Reduction of Workdays – refers to one where the normal workdays per
week are reduced but should not last for more than 6 months
 Rotation of Workers- refers to one where the employees are rotated or
alternately provided work within the workweek
 Forced Leave – refers to one where employees are require to go on leave for
several days or weeks utilizing their leave credits, if there are any
 Broken Time Schedule – refer to one where the work schedule is not continuous
but the work-hours within the day or week remain
 Flexi-holidays Schedule – refers to one where the employees agree to avail of the
holidays at some other days provided there is no diminution of existing benefits as
a result of such agreement.

Administrative Flexible Work Arrangements

1. Primary Responsible for administration – Parties to the flexible work

schemes
2. In case of differences, following guidelines are observed:

 Differences are treated as grievances under applicable grievance of the

company
 If no grievance mechanism or if it is inadequate, the grievance shall be
referred to the Regional Office which has jurisdiction over the workplace
for appropriate conciliation
 Employees are required to maintain, as part of their records, the
documentary requirements providing that the flexible work arrangement
was voluntarily adopted
Notice Requirement- Employer shall NOTIFY the DOLE through the Regional
Office which has jurisdiction over the workplace.

Rules on power interruptions in

the workplace
Policy Instructions No. 36 dated May 22,1978 was issued by the Undersecretary of
Labor and Employment to clarify the effects of power interruptions or brown-outs on
productive man-hours.

1. Brown-outs of short duration but not exceeding 20 minutes shall be treated

as worked or compensable hours whether used productively by the
employees or not.
2. Brown-outs running for more than 20 minutes may not be treated as hours
worked provided any of the following conditions are present: a) the
employees can leave their workplace or go elsewhere, whether within or
without the work premises; or b) the employees can use the time
effectively for their own interest.
3. In each case, the employer may extend the working hours of his
employees outside the regular schedules to compensate for the loss of
productive man-hours without being liable for overtime pay.
4. Industrial enterprises with one or two work shifts may adopt any of the
workshifts prescribed for enterprises with 3 workshifts to prevent serious
loss or damage to materials, machineries or equipment that may result in
case of power interruptions.
5. The days when work was not required and no work could be done
because of shutdown due to electrical power interruptions, lack of raw
materials and repair of machines, are not deemed hours worked.

Meal time not less than 20 mins.:

a) when compensable; b) when
not compensable
Shortening of meal time to not less than 20 minutes; when compensable
A meal period of not less than 20 mins may be given by the employer 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 strenous
physical exertion;
2. Where the establishment regularly operated for not less than 16 hrs a day;
 3. In cases of actual or impending emergencies or when 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

When not compensable

The law allows a situation where the employees themselves request for the
shortening of meal period to not less than 20 minutes for the purpose of allowing
them to leave work earlier than the lapse of the 8 hours required by law. This
shortened period, however, shall not be considered compensable working time
provided the following conditions are complied with:

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 should be no diminution in the benefits of the employees which they
receive prior to 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
mins 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 to work beyond 4:30 pm;and
6. The effectivity of the proposed working time arrangement shall be for a
temporary duration as determined by the Secretary of Labor and
Employment.

*5-20 minutes: considered as coffee break or rest period of short duration thus,
compensable.

Waiting time
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.
In Arica vs. NLRC, The 30-minute assembly time practiced by the employees of the
company cannot be considered “waiting time” and should not therefore be
compensable.
Although it is clear that employers must compensate employees for time actually
spent working, questions arise as to whether the minimum wage and overtime
provisions also apply to time spent waiting to perform productive work. Under the
regulations, whether waiting time is time worked depends on the particular
circumstances.
Time spent waiting for work is compensable if it is spent “primarily for the benefit of
the employer and its business.” Conversely if the time is spent primarily for the
benefit of the employee, the time is not compensable. In determining whether waiting
time constitutes hours worked, the amount of control the employer has over the
employee during the waiting time, and whether the employee can effectively use that
time for his own purposes is material.
Arica vs NLRC GR No. 78210, February 28,1989
Facts: Arica filed by a complaint against STANFILCO for allegedly not paying the
workers for their assembly time which takes place every work day from 5:30am-
6:00am.
The assembly time consists of the following activities: (1) roll call of the workers; (2)
getting their assignments from the foreman; (3) getting tools and equipment from the
stockroom; and (4) going to the field to work.
The 30-minute assembly time practiced by the employees of the company cannot be
considered “waiting time” and should not therefore be compensable.

Night Shift Differential sample

computation
For regular work in the night shift on an ordinary day, the night shift
differential pay is plus 10% of the basic hourly rate or a total of 110% of the
basic hourly rate. Thus using as basis P382.00 which is the minimum daily
wage rate of a private sector non-agricultural workers and employees in the
NCR, the night shift differential pay under this situation may be computed as
follows:
Night shift differential pay for regular night shift work on an ordinary day
            P382 + 10% of P382 = P382 + (0.10 x P382)
                                                = 382 + P38.20
                                                P420.20/day
            Or
            110% of P382 = 1.1 x P382
                                    =P420.20/day
For regular work in the night shift on a rest day, the night shift differential pay
is plus 10% of the basic hourly rate on a rest day or a total of 110% of the
regular hourly rate. Thus, using the same P382.00 as basis, the night shift
differential pay under this situation may be computed as follows:
Night shift differential pay for regular night shift work on a rest day:
            (130% of P 382) + 10% of (130% of P382)
            = (1.3 x P382) + 0.10 x (1.3 x P382)
            = P496.60 + P49.66
            = P546.26/day
Or
            110% of (130% of P382)
            =1.1 x (1.3 x P382)
            =P546.26/day
For regular work in the night shift on a special holiday or regular holiday, it is
important to note that since special holidays and regular holidays are calendar
days (i.e., 24-hour period from 12 midnight to 12 midnight of the following
day), the night shift is either cut-off at 12 midnight or starts only at 12
midnight. Hence, the night shift differential pay for such days may be
determined by the hour on the basis of the hourly rate not the daily rate.
Thus, using the same P382.00 or the equivalent hourly rate of P47.75 (P382/8
hours) as basis, the night shift differential pay may be computed as follows:
1. On a special day:
Night shift differential pay for regular night shift work on a special holiday:
            (130% of P47.75) + 10% of (130% of P47.75)
            = (1.3 x P47.75) + 0.10 x (1.3 x P47.75)
            =P62.08 + P6.21
            =P68.29/hour
Or
110% of (130%of 47.75)
=1.1 x (1.3 x P47.75)
=P68.29/hour
2. On a regular holiday:
Night shift differential pay for regular night shift work on a regular holiday:
(200% of P47.75) + 10% of (200% of 47.75)
            = (2.0 x P47.75) + 0.10 x (2.0 x P47.75)
            =95.50 + P9.55
            =P105.05/hour
Or
            =110% of (200% of P47.75)
            =1.1 x (2.0 x P47.75)
            =105.05/hour
For overtime night shift work falling on an ordinary day, the overtime night
shift differential pay is plus 100% of 125% of basic hourly rate or a total of
110% of 125% of basic hourly rate. Thus, using P382.00 or the hourly rate of
P47.75 (P382/8 hours) as basis, the overtime night shift differential pay under
this situation may be computed as follows:
Overtime night shift differential pay for overtime night shift work on an ordinary day:
            (125% of P47.75) + 10% of (125% of P47.75)
            = (1.25 x P47.75) + 0.10 x (1.25 x P47.75)
            =P59.69 + P5.97
            = P65.66/hour
Or
            =110% of (125% of P47.75)
            = 1.1 x (1.25 x P47.75)
            =P65.66/hour
For overtime night shift work falling on rest day, special holiday or regular
holiday, the following illustrations of computation may prove helpful (using the
same basis as above, i.e., P382.00 or P47.75 per hour):
1. On a special holiday or rest day:
Overtime night shift differential pay for overtime night shift work on a special holiday
or rest day:
130% x (130% of P47.75) + 10% of (130% of 130% of P47.75)
=1.3 x (1.3 x P47.75) + 0.10 x (1.3 x 1.3 x P47.75)
=P80.70 + P8.07
=P88.77/hour
Or
169% of P47.75 + 10% of (169% of P47.75)
=80.70 + P8.07
=P88.77/hour
2. On a regular holiday:
Overtime night shift differential pay for overtime night shift work on a regular holiday:
            130% x (200% of P47.75) + 10% of (130% of 200% of P47.75)
            =1.3 x (2.0 x P47.75) + 0.10 x (1.3 x 2.0 x P47.75)
            =P124.15 + P12.42
            =P136.57/hour
Or
            260% of P47.75 + 10% of (260% of P47.75)
            =P124.15 + P12.42
            =P136.57/hour

Guide in the computation of

Premium and OT pay vis-a-vis
NSD
Ordinary day 100& or 1

Sunday or rest day 130 % or 1.3

Special day 130% or 1.3

Special day falling on a rest day 150% or 1.5

Regular Holiday 200% or 2

Regular holiday falling on rest day 260% or 2.6

Ordinary day, night shift 1 x 1.1 = 1.1 or 110%

Rest day, night shift 1.3 x 1.1 =1.43 or 143%

Special day, night shift 1.3 x 1.1 = 1.43 or 143%

Special day, rest day, night shift 1.5 x 1.1 = 1.65 or 165%

Regular holiday, night shift 2 x1.1 = 2.2 or 220%

Regular holiday. Rest day, night shift 2.6 x 1.1 = 2.86 or 286%
Double holiday, night shift 3 x 1.1 = 3.3 or 330%

Double holiday, rest day, night shift 3.9 x 1.1 = 4.29 or 429

Ordinary day, overtime (OT) 1 x 1.25 = 1.25 or 125%

Rest  day, overtime 1.3 x 1.3 = 1.69 or 169%

Special day, rest day, overtime 1.5 x 1.3 = 1.95 or 195%

Regular holiday, overtime 2 x 1.3 = 2.6 or 260%

Regular holiday, rest day. Overtime 2.6 x 1.3 = 3.38 or 338%

Double holiday, overtime 3 x 1.3 = 3.9 or 390%

Double holiday, rest day, overtime 3.9 x 1.3 = 5.07 or 507%

Ordinary day. Night shift, overtime 1 x 1.1 x 1.25 = 1.375 or 137.5%

Rest day, night shift, overtime 1.3 x 1.1 x 1.3 = 1.859 or 185.9%

Special day, night shift, overtime 1.3 x 1.1 x 1.3 = 1.859 or 185.9%

Special day, rest day, night shift, OT 1.5 x 1.1 x 1.3 = 2.145 or 214.5%

Regular holiday, night shift, OT 2 x 1.1 x 1.3 = 286 or 286%

Regular holiday, rest day, night shift, OT 2.6 x 1.1 x 1.3 = 3.718 or 317.8%

Double holiday, night shift, OT 3 x 1.1 x 1.3 = 4.29 or 429%

Double holiday, rest day, night shift, OT 3.9 x 1.1 x 1.3 = 5.577 or 557.7%

*ask your accountant classmate or friend

Validity of stipulated OT on CBA;

Built in OT; Seafarer’s OT
Validity of Stipulated OT
Generally, the premium pay for work performed on the employee’s rest days or on
special days or regular holidays is included as part of the regular rate of the
employee in the computation of overtime pay for any overtime work rendered on said
days, especially if the employer pays only the minimum overtime rates prescribed by
law. The employees and employer, however, may stipulate in their CBA the payment
of overtime rates higher than those provided by law and exclude the premium
payments in the computation of overtime pay. Such agreement may be considered
valid only if the stipulated overtime pay rates will yield to the employees not less than
the minimum prescribed by law.
Built in OT
In case the employment contract stipulates that the compensation includes built-in
overtime pay and the same is duly approved by the Director of the Bureau of Local
Employment, the non-employment by the employer of any overtime pay for overtime
work is justified and valid.
In PAL Employees Savings and Loan Association, Inc. v. NLRC, where the period of
normal working hours per day was increased to 12 hours, it was held that the
employer remains liable for whatever deficiency in the amount for overtime work in
excess of the first 8 hours, after recomputation shows such deficiency.
Entitlement of Seafarers to OT pay
Actual overtime service necessary to justify claim for overtime pay.
The correct criterion in determining whether or not the sailor are entitled to overtime
pay is not whether they are on board and cannot leave ship beyond the regular 8
working hours a day, but whether they actually rendered service in excess of said
number of hours.
In the case of Stolt-Nielsen, the SC ruled that the rendition of overtime work and the
submission of sufficient proof that said work was actually performed are conditions to
be satisfied before a seaman could be entitled to overtime pay which should be
computed on the basis of 30% of the basic monthly salary.
In PCL Shipping, the SC found that the private respondent was not entitled to
overtime pay because he failed to present any evidence to prove that he rendered
service in excess of regular 8 working hours a day. But in Acuña, petitioners’ claims
for overtime pay were allowed despite their failure to substantiate them. It was
declared that the claims of OFWs against foreign employers could not be subjected
to the same rules of evidence and procedure applicable to complainants whose
employers are locally based.
Guaranteed overtime pay, not included in the computation of salary for
unexpired portion.
Raised as one of the issues in 2008 case Bahia Shipping Services, Inc v. Chua,
whether in the computation of the monetary award to an illegally dismissed OFW,
respondent’s “guaranteed overtime” pay amounting to 197 USD per month should be
included as part of his salary. Petitioner contends that there is no factual or legal
basis for the inclusion of said amount because, after respondent’s repatriation, he
could have not have rendered any overtime work. The SC ruled in favor of the
Petitioner.
In the computation of the monetary award to an illegally dismissed OFW, the
“guaranteed overtime” pay should not be included as part of his salary for the
unexpired portion of his contract. This is so because it is improbable that the OFW
has rendered overtime work during the unexpired term of his contract. Consequently,
there is no factual or legal basis therefor.
*will explain more on this

Rule on waiver and laches on OT

Waiver
The right to claim overtime pay is not subject to waiver. Such right is governed by
law and not merely by the agreement of the parties. While rights may be waived, the
same must not be contrary to law, public order, public policy, morals, good customs
or prejudicial to a third person with a right recognized by law.
But if the waiver is done in exchange for and in consideration of certain valuable
privileges, among them that the value of said privileges did not compensate for such
work, such waiver may be considered valid.
Effect of laches or estoppel
The principle of laches or estoppel does not apply to the right of employees to claim
past overtime pay. Mere lapse of time or silence of the employees is not sufficient to
defeat and frustrate the purpose of the law in granting such right by mere indirection.
Laches is the failure or neglect for an unreasonable and unexplained length of time
to do that which, by exercising due diligence, could or should have been done
earlier. Stated differently, laches may also be defined as such neglect or omission to
assert a right taken in conjunction with the lapse of time and other circumstances
causing prejudice to an adverse party as will operate as a bar in equity.
The question of laches is addressed to the sound discretion of the court, and since it
is an equitable doctrine, its application is controlled by equitable considerations. It
cannot work to defeat justice or to perpetrate fraud or injustice. Laches cannot be
charged against a worker when he has not incurred undue delay in the assertion of
his rights because he filed his complaint within the 3-year reglementary period for the
filing of monetary claims. Under this situation, he cannot be said to have slept on his
rights for an unreasonable length of time.
When an employee fails to assert his right immediately upon violation thereof, such
failure cannot ipso facto be deemed as a waiver of the oppression. The worker and
his employer are not equally situated. When a worker keeps silent inspite of flagrant
violations of his rights, it may be because he is seriously fearful of losing his job. The
dire consequences thereof on his family and his dependents must have prevented
him from complaining. In short his thoughts of sheer survival weigh heavily  against
launching an attack upon his more powerful employee.
Rationale behind Art. 88
prohibition on undertime & leave
of absence offsetting
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 by law. (Art. 88 LC)
When undertime is offset against the overtime, the employee is ‘made to pay’ twice
for his undertime hours. This is because the employee’s leave credits are reduced to
the extent of the undertime hours while he is made to pay for the undertime hours
with work beyond the regular working hours.  Clearly, this is not a fair situation for
the employee, even when the undertime is his fault.
The proper approach should be to deduct the undertime hours from the available
leave credits of the employee and to pay the employee overtime for the extended
hours of work.
If the employee has consumed his leave credits, his undertime hours may be
deducted from his salary, but he should still be paid his overtime compensation for
work performed beyond his regular working hours. (NATIONAL WATERWORKS and
SEWERAGE AUTHORITY, vs.  NWSA CONSOLIDATED UNIONS, ET AL.

Rule on rest day based on

religious grounds
Every employer shall give his employees a rest period of not less than twenty-four
consecutive hours for each period of seven days. 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 may
prescribe; Provided, however, That the preference of an employee as to his weekly
rest day shall be respected by the employer if the same is based on religious
grounds.
Th employee should make known his preference to the employer in writing at least 7
days before the desired effectivity of the initial rest day so preferred.
Where, however, the choice of the employee as to their rest day base don religious
grounds will be inevitably result in serious prejudice or obstruction to the operations
of the undertaking and the employer cannot normally be expected to resort to other
remedial measures, the employer may so schedule the weekly rest day of their
choice for at least 2 days in a month.
Rest day premium sample
computation
For work performed on rest days or on special holidays, the premium pay is plus
30% of the daily wage rate of 100% or a total of 130%. Thus, using as
basis Php.382.00 which is the minimum daily wage rate of private sector non-
agricultural workers and employeesin the National capital region, as mandated by
Wage Order No. NCR-14 effevtive on June 14, 2008:
            For work performed on rest days or on special holidays - plus   30% of
the daily basic rate of 100% or a total of 130%:
30% of P382 = 0.30 x P382.00 = P114.60
P382.00 + P114.60 = P496.60
                                    or       
130% of P382 = 1.3 x P382 = P496.60
For work performed on a rest day which is also a special holiday, the premium
pay is plus 50% of the daily wage rate at 100% or a total of 15%. Thus, using the
same P382.00 as basis.
For work performed on a rest day which is also a special day – plus 50% of the
daily basic rate of 100% or a total of 150%:
 50% of P382.00        = 0.5 x P382.00 = P191.00
P382.00 + P191.00 = P573.00
                                    or
150% of Php.382.00 = 1.5 x Php382.00 = Php 573.00

Special and regular holidays;

Holiday pay meaning and
purpose
Regular Holidays
New year’s Day-January 1
Maundy Thursday-Movable date
Good Friday-Movable date
Eidul Fitr-Movable date
Araw ng Kagitingan-Monday nearest April 9
Eidul Adha - Movable date
Labor Day-Monday nearest May 1
Independence Day-Monday nearest June 12
National Heroes Day-Last Monday of August
Bonifacio Day-Monday nearest November 30
Christmas Day-December 25
Rizal Day-Monday nearest December 30

Nationwide Special Holidays:

Ninoy Aquino Day-Monday nearest August 21
All Saints Day-November 1
Last Day of the Year-December 31
 
*Holiday pay is a day’s pay given by law to an employee even if he does not work on
a regular holiday, provided that he is present or is in leave with pay on the work day
immediately preceding the holiday. The purpose is to prevent diminution of the
monthly income of workers on account of work interruptions declared by the State.
(In other words, although the worker is forced by law to take a rest, he is not
deprived of what he should earn)

Holiday pay sample computation,

employee’s regular workday; rest
day; over time.
Regular wage per hour = P100
Regular work Hours = 8 hours    
Daily Wage = P800
 
Regular holiday pay on regular workday (200%)
 
If the employee worked = 200% of regular wage
800 X 200% = P1600 Take home pay
 
If the employee did not work (100%)
800 X 100% = P800 Take home pay
 
Regular holiday pay on rest day (200% + 30%)
 
800 X 200% = 1600 Regular holiday pay
1600 x 30 % = 480 Rest day premium
1600 + 480 = P2080 Take home pay
Regular holiday pay with over time (200% + (25% x hours worked))
 
(Let’s say 2 hours OT)
 
800 X 200% = 1600 Regular holiday pay
1600/8 = 200 per hour rate
2hrs (OT) x 200 = 400 OT pay
400 x 25% = 100 OT premium pay
1600 + 400 + 100 = P2100 Take home pay

Distinctions between regular and

special holidays
The following are the distinctions between “regular holidays” and “special days”:
 
a. A covered employee who does not work during regular holidays is paid 100% of his
regular daily wage; while a covered employee who does not work during a special day does
not receive any compensation under the principle of “no work, no pay.”
 
b. A covered employee who works during regular holidays is paid 200% of his regular daily
wage; while a covered employee who works during special days is only paid an additional
compensation of not less than 30% of the basic pay or a total of 130% and at least 50% over
and above the basic pay or a total of 150%, if the worker is permitted or suffered to work on
special days which fall on his scheduled rest day.
 
*as I always say, in labor 30% plus 30% is equals to 50%, go figure
Effect of absence on entitlement
of holiday pay
The following are the effect of absences on entitlement to regular holiday pay:
 
a. Employees on leave of absence with pay - entitled to regular holiday pay.
b. Employees on leave of absence without pay on the day immediately preceding a regular
holiday - may not be paid the required holiday pay if he has not worked on such regular
holiday.
c. Employees on leave while on SSS or employee's compensation benefits- Employers shall
grant the same percentage of the holiday pay as the benefit granted by competent authority in
the form of employee’s compensation or social security payment, whichever is higher, if they
are not reporting for work while on such benefits.
d. When the day preceding regular holiday is a non-working day or scheduled rest day -
Employee shall not be deemed to be on leave of absence on that day, in which case, he shall
be entitled to the regular holiday pay if he worked on the day immediately preceding the non-
working day or rest day.

Successive holiday; holidays

falling on the same day
The rule in case of successive regular holidays is as follows:
An employee may not be paid for both holidays if he absents himself from work on
the day immediately preceding the first holiday, unless he works on the first holiday,
in which case, he is entitled to his holiday pay on the second holiday.
Holidays falling on the same day
DOLE Explanatory Bulletin on Workers’ Entitlement to Holiday Pay on 9 April 1993,
Araw ng Kagitingan and Good Friday enunciated the following rule in case of two
regular holidays falling on the same day (e.g., Araw ng Kagitingan and Good Friday
falling in 1993, 2004 and 2020):

1. If employee did not work: 200% of basic pay;

2. If employee worked: 300% of basic pay.

Holiday pay for private school

teachers; workers paid by result;
field personnel & seasonal
workers
Rule IV: Holiday pay
Section 1. This rule shall apply to all employees except:

 Those of the government and any of the political subdivision, including

government-owned and controlled corporation;

 Those of retail and service establishments regularly employing less than

ten (10) workers;

 Domestic helpers and persons in the personal service of another;

 Managerial employees as defined in Book Three of the Omnibus Rules to

Implement the Labor Code of the Philippines;
 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.

Holiday pay of certain employees

 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;

 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;

 Seasonal workers may not be paid the required holiday pay during off-
season when they are not at work;
 Workers who have no regular working days shall be entitled to the benefits
provided in this Rule.

Book 3, Rule IV, Section 8, Omnibus Rules to Implement the Labor Code
of the Philippines
Rule on offsetting of holiday pay
with regular workday
Offsetting of holiday pay with regular workday is not allowed. Following the
prohibition that overtime cannot be offset by undertime, to allow offsetting would
prejudice the worker. He would be deprived of the additional pay for the holiday work
he has rendered and which is utilized to offset his equivalent time off on regular
workdays. To allow employers to do so would be to circumvent the law on payment
of premiums for holiday work.

Rationale of SIL; exceptions

Rationale:
To afford an employee the chance to get much-needed rest to replenish his worn-out
energies and acquire new vitality to enable him to efficiently perform his duties and
not merely to give him additional salary or bounty. An employee, as a matter of
public policy, is entitled to this leave benefit in order to improve his health and
physical well-being.
This benefit applies to all employees except:

1. Government employees, whether employed by the National Government

or any of its political subdivisions, including those employed in
government-owned and/or controlled corporations with original charters or
created under special laws;
2. Persons in the personal service of another;
3. Managerial employees, if they meet all the following conditions: Their
primary duty is to manage the establishment in which they are employed
or of a department or subdivision thereof; They customarily and regularly
direct the work of two or more employees therein; and They have the
authority to hire or fire other employees of lower rank; or their suggestions
and recommendations as to hiring, firing and promotion, or any other
change of status of other employees are given particular weight.
4. Officers or members of a managerial staff, if they perform the following
duties and responsibilities: Primarily perform work directly related to
management policies of their employer; Customarily and regularly
exercise discretion and independent judgment; (i)Regularly and directly
assist a proprietor or managerial employee in the management of the
establishment or subdivision thereof in which he or she is employed; or (ii)
execute, under general supervision, work along specialized or technical
lines requiring special training, experience, or knowledge; or (iii) execute,
under general supervision, special assignments and tasks; and Do not
devote more than 20 % of their hours worked in a workweek to activities
which are not directly and closely related to the performance of the work
described in paragraphs 4.1, 4.2 and 4.3 above;
 5. Field personnel and those whose time and performance are 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;
6. Those already enjoying this benefit;
7. Those enjoying vacation leave with pay of at least 5 days; and
8. Those employed in establishments regularly employing less than 10
employees.

Meaning of one-year service

It means service within twelve (12) months, whether continuous or broken, reckoned
from the date the employee started working, including authorized absences and paid
regular holidays, unless the number of working days in the establishment as a matter
of practice or policy, or that provided in the employment contract, is less than twelve
(12) months, in which case, said period shall be considered as one (1) year for the
purpose of determining entitlement to the service incentive leave.

SIL as part of retirement pay;

explain
SIL is included as part of the retirement benefits that an employee who is retiring
optionally or compulsorily in entitled to.
However, it bears stressing that the inclusion of the SIL benefit as part of the
retirement benefits presupposes that during the employment of the retiring
employee, he was entitled to such benefit. If not so entitled, then the SIL should not
be excluded in the computation of the retirement benefits.
For instance, a taxi driver, while entitled to retirement benefits, was entitled to SIL
during his employment, he being field personnel. Consequently, the SIL component
of his retirement benefits should not be included in the computation thereof.

New rule on Service charge (RA

11360)
Article 96 of the Labor Code of the Philippines provides that 85% of the total service
charge collected by the establishments would be distributed to covered employees,
while 15% would account for losses and breakages and be given to managerial
employees, at the discretion of management in the latter case.
The enactment of Republic Act No. 11360  — or “An Act Providing that Service
Charges Collected by Hotels, Restaurants and other Similar Establishments be
Distributed in Full to All Covered Employees” — amends Article 96 of the Labor
Code of the Philippines. It provides that rank-and-file employees of restaurants,
hotels and similar establishments are now entitled to 100% of the service charges
collected from customers.

Wages: Who are included in the

term agriculture? Significance
For purposes of wages, the term “agriculture” includes farming in all its branches
and, among other things, includes:

1. Cultivation and tillage of soil;

2. Dairying;
3. Production, cultivation, growing, and harvesting of any agricultural and
horticultural commodities;
4. Raising of livestock or poultry; and
5. Any practices performed by a farmer on a farm as an incident to or in
conjunction with such farming operations.

The term does not include the manufacturing or processing of sugar, coconuts,
abaca, tobacco, pineapples, or other farm products. Its significance is in the light of
the classification of workers into agricultural and non-agricultural in the grant of
minimum wages. It is the nature of work which determines the classification of
workers.
The significance in the distinction lies in the fact that the rates of wages of
agricultural workers are often fixed by law lower than those of non-agricultural
workers.

Facilities v. Supplement
Facilities include articles or services for the benefit of the employee or his family, but
shall not include tools of the trade or articles or services for the benefit of the
employer or necessary to the conduct of the employer’s business.
Supplement means extra remuneration or special privileges or benefits given to or
received by the laborers over and above their ordinary earnings or wages.

“Equal pay for equal work”

principle; relevant jursprudence
It is a principle requiring an employer to pay its employees, regardless of race,
ethnicity, or gender, equal pay for equal work. It serves as a prohibition against
discrimination with respect to pay.
It enshrines the notion of equal remuneration for the same class of workers doing the
same kind of work.
Doctrine of “equal pay for equal work” G.R. No. 149758 August 25, 2005
PHILEX GOLD PHILIPPINES, INC., GERARDO H. BRIMO, LEONARD P. JOSEF,
and JOSE B. ANIEVAS, Petitioners, vs. PHILEX BULAWAN SUPERVISORS
UNION, represented by its President, JOSE D. PAMPLIEGA, Respondent.
Facts:
Philex Gold (PG) and Philex Bulawan Supervisors Union (Mining site in Negros
Occidental) entered into a CBA.  PG assigned its Padcal, Benguet employees as
Supervisors in its mining site in Negros Occidental. It was discovered that Padcal
Supervisors has a higher salaries and benefits than that of the Bulawan Supervisors.
Issue:
Whether the doctrine of "equal pay for equal work" should not remove management
prerogative to institute difference in salary within the same supervisory level.
Held:
cause petitioners failed to adduce evidence to show that an ex-Padcal supervisor
and a locally hired supervisor of the same rank are initially paid the same basic
salary for doing the same kind of work. They failed to differentiate this basic salary
from any kind of salary increase or additional benefit that may have been given to
the ex-Padcal supervisors due to their seniority, experience and other factors. It is
noteworthy to state that an employer is free to manage and regulate, according to his
own discretion and judgment, all phases of employment, which includes hiring, work
assignments, working methods, time, place and manner of work, supervision of
workers, working regulations, transfer of employees, lay-off of workers, and the
discipline, dismissal and recall of work. While the law recognizes and safeguards this
right of an employer to exercise what are clearly management prerogatives, such
right should not be abused and used as a tool of oppression against labor. The
company’s prerogative must be exercised in good faith and with due regard to the
rights of labor. A priori, they are not absolute prerogatives but are subject to legal
limits, collective bargaining agreements and the general principles of fair play and
justice
International School Alliance of Educators vs Quisumbing (2000) 333 SCRA 13
Facts:
International School, Inc., pursuant to PD 732, is a domestic educational institution
established primarily for dependents of foreign diplomatic personnel and other
temporary residents. To enable the School to continue carrying out its educational
program and improve its standard of instruction, Section 2(c) of the same decree
authorizes the School to employ its own teaching and management personnel
selected by it either locally or abroad, from Philippine or other nationalities, such
personnel being exempt from otherwise applicable laws and regulations attending
their employment, except laws that have been or will be enacted for the protection of
employees.
The School hires both foreign and local teachers as members of its faculty,
classifying the same into two: (1) foreign-hires and (2) local-hires. The School
employs four tests to determine whether a faculty member should be classified as a
foreign-hire or a local hire: (a) What is one's domicile? (b) Where is one's home
economy? (c) To which country does one owe economic allegiance? (d) Was the
individual hired abroad specifically to work in the School and was the School
responsible for bringing that individual to the Philippines? Should the answer to any
of these queries point to the Philippines, the faculty member is classified as a local
hire; otherwise, he or she is deemed a foreign-hire.
The School grants foreign-hires certain benefits not accorded local- hires. These
include housing, transportation, shipping costs, taxes, and home leave travel
allowance. Foreign-hires are also paid a salary rate twenty-five percent (25%) more
than local-hires. The School justifies the difference on two "significant economic
disadvantages" foreign-hires have to endure, namely: (a) the "dislocation factor" and
(b) limited tenure. The compensation scheme is simply the School's adaptive
measure to remain competitive on an international level in terms of attracting
competent professionals in the field of international education.
Issue:
WON local hire teachers shall enjoy same salary as foreign hire teachers where they
perform the same work.
Held:
Employees are entitled to same salary for performance of equal work.
Notably, the International Covenant on Economic, Social, and Cultural Rights, supra,
in Article 7 thereof, provides: The States Parties to the present Covenant recognize
the right of everyone to the enjoyment of just and favorable conditions of work, which
ensure, in particular: ( a) Remuneration which provides all workers, as a minimum,
with: (i) Fair wages and equal remuneration for work of equal value without
distinction of any kind, in particular women being guaranteed conditions of work not
inferior to those enjoyed by men, with equal pay for equal work; The foregoing
provisions impregnably institutionalize in this jurisdiction the long honored legal
truism of "equal pay for equal work." Persons who work with substantially equal
qualifications, skill, effort and responsibility, under similar conditions, should be paid
similar salaries. This rule applies to the School.
The School contends that petitioner has not adduced evidence that local-hires
perform work equal to that of foreign-hires. The Court finds this argument a little
inconsiderate. If an employer accords employee the same position and rank, the
presumption is that these employees perform equal work. If the employer pays one
employee less than the rest, it is not for that employee to explain why he receives
less or why the others receive more. The employer has discriminated against that
employee; it is for the employer to explain why the employee is treated unfairly.
In this case, the employer has failed to discharge this burden. There is no evidence
here that foreign-hires perform 25% more efficiently or effectively than the local-
hires. Both groups have similar functions and responsibilities, which they perform
under similar working conditions.
Factors/divisors in the
computation of benefits & wages
The use of factors or divisors in the computation of estimated monthly rates of
employees pursuant to Republic Act No. 9492, or an “Act Rationalizing the
Celebration of National Holidays.”
Section 9. Suggested Formulae in Determining the Equivalent Monthly Regional
Minimum Wage Rates. Without prejudice to existing company practices, agreements
or policies, the following computation of the Estimated Equivalent Monthly Rate
(EEMR) of employees in the private sector because of the National Heroes’ Day
which is now observed on the Last Monday of August, shall accordingly use the
following formulae in the determining the EEMR of the employees:
For those who are required to work every day including Sundays or rest days,
special days and regular holidays, the previous factor of 392.8 will now be 392.5,
thus:
Applicable Daily Wage Rate (ADR) X 392.5/12 months = EEMR; where 392.5
days/year is equal to:

299         -Ordinary working days

 22           -Regular holidays
 67.6 52   -rest days X 130%
 3.9 3       -special days X 130%

392.5-Total number of days/year.

For those who do not work and are not considered paid on Sundays or rest days, the
previous factor of 314 will now be 313, thus:
Applicable Daily Wage Rate (ADR) X 313/12 months = EEMR; where 313 days/year
is equal to:

299      ordinary working days

   11      regular holidays
     3       special days

313 Total number of days/year.

For those who do not work and are not considered paid on Saturdays and Sundays
or rest days, the previous factor of 262 will now be
261, thus:
Applicable Daily Wage Rate (ADR) X 261/12 months = EEMR; where 261 days/year
is equal to:

247     ordinary working days

   11    regular holidays
     3    special days

261 Total number of days/year.

As to 365 days/year factor, although there is no effect as to the payment in the

monthly salary of employees as they are paid all days of the year, its breakdown will
be modified as follows:
Applicable Daily Wage Rate (ADR) X 365/12 months = EEMR where 365 days/year
is equal to:

299        ordinary working days

  52         Sundays/rest days
  11         regular holidays
    3         special days

365 Total number of days/year.

Significance of divisor
The "divisor" is the factor or number of days used by an employer in determining the
daily rate of monthly-paid employees. Depending on the divisor used, the
presumption that the unworked regular holidays are paid off-days may arise or not.
While the holiday pay provisions are easy to implement as to daily paid employees,
questions arise on whether the compensation of monthly-paid employees already
includes payment for holidays occurring within the month.
For purposes of this study, the term "divisor test" signifies the method of computing
the daily wage rate of monthly-paid employees.
It is well to note that the "divisor" forms an integral element of the "divisor test."
The conversion of the monthly wage into a daily rate is of utmost importance to the
employees considering that the benefits due them are denominated in terms of daily
compensation. A peso difference in the daily rate owing to the use of a different
divisor could add up to a substantial amount depending on the circumstances
involved in the case.
More than just an arithmetical process, the very nature of employment is brought to
the fore via the divisor test. Thus, the divisor test is an invaluable tool in resolving the
legal issues with respect to the application of the holiday pay provisions of the law to
monthly-paid employees.
More importantly, only monthly-paid employees are entitled to be paid unworked rest
days and unworked special days. The monthly-paid employee can demand payment
for such days because his nature of employment is such that he is paid for all the
days of the month, whether he worked on those days or not. On the other hand, a
daily-paid employee cannot demand payment for unworked rest days and special
days since as to him, the principle of "no-work, no-pay" applies.
However, by express mandate of the law, all workers are entitled to receive their
regular wage for regular holidays irrespective of whether they worked on those days
or not.
The following benefits are computed on the basis of the daily rate:

1. Overtime pay;
2. Night differential pay;
3. Vacation leave;
4. Sick leave pay;
5. Service incentive leave;
6. Holiday premium pay; and
7. Bonus.

For purposes of computation of the salary deductions due to the absences of the
employee, the daily rate is also relevant.

Wage Rules affecting HEIs

Under PD 451, it prescribes that the 60% of increases in tuition shall be allocated for
increase of salaries and wages of teaching and non-teaching personnel and the
balance be allocated to institutional development, student assistance and extension
services.
Under BP 232, each private school shall determine its rate of tuition and other school
fees and charges. The rates and charges adopted by the schools pursuant to this
provision shall be collectible, and their application or use authorized, subject to the
rules and regulations promulgated by DepEd.
RA 6728 allows increase in school tuition fees on the condition that 70% of the
increase shall go to the payment of salaries, wages, allowances and other benefits of
teaching and non-teaching personnel.

Rationale for the 70%

chargeability
The law allows increase in school tuition fees on the condition that 70% of the
increase shall go to the payment of salaries, wages, allowances and other benefits of
teaching and non-teaching personnel.

2 Principles enunciated in Art.

100
Principle of Non-diminution and Principle of Non-elimination, the reduction,
elimination, or withdrawal by employers of any benefits, supplements or payments as
provided in existing laws, individual agreements, or collective bargaining agreements
between workers and employers or voluntary employer practice or policy, is not
allowed.

Art. 100 application, explained

Article 100 is clear that the principle of non-elimination and non-diminution of
benefits apply only to the benefits being enjoyed “at the time of promulgation” of the
Labor Code, although the SC has consistently cited Article 100 as being applicable
even to benefits granted after said promulgation. It has, in fact, been treated as the
legal anchor for the declaration of the invalidity of so many acts of employers
deemed to have eliminated or diminished the benefits of employees.
Nevertheless, the proper basis for non-elimination or non-diminution is not Art. 100.
Strictly speaking, the proper legal bases for the invocation of the non-elimination or
non-diminution principle, based on Arco Metal case are:

1. Express terms of an employment agreement;

2. Company practice which refers to the implied terms of an employement
agreement which the employer has freely, voluntarily, and consistently
extended to its employees and thus cannot be withdrawn except by mutual
consent or agreement of the contracting parties;
3. The constitution particularly Sec. 18 of Art. II and Sec. 3 of Art. XIII; and
4. Art. 4 of the Labor Code.

Globe Mackay Cable and TSPIC

Corp compared to Arco Metal
Products
Globe Mackay Cable case and TSPIC Corp case vs. Arco Metal Products case
for the erroneous interpretation of law re Article 100.
            The following criteria may be used to determine whether an act has ripened
into a company practice:
 1. The act of the employer has been done for a considerable period of time;
2. The act should be done consistently and intentionally; and
3. The act should not be a product of erroneous interpretation or construction
of a doubtful or difficult question of law or provision in the CBA.

The act should not be a product of erroneous interpretation or construction of

a doubtful or difficult question of law or provision in the CBA
The general rule is that if it is a past error that is being corrected, no vested right
may be said to have arisen therefrom nor any diminution of benefit may have
resulted by virtue of the correction thereof. The error, however, must be corrected
immediately after its discovery, otherwise, the rule on non-diminution of benefits
would still apply.
The following are the cases:
GLOBE MACKAY CABLE and RADIO CORPORATION vs NLRC
The Supreme Court ruled on the proper computation of the cost-of-living allowance
(COLA) for monthly paid employees.
The petitioner corporation pursuant to Wage Order No. 6, increase the cola of its
monthly paid employees by multiplying the P3.00 daily COLA by 22 days which is
the number of working days in the company. The union disagreed with the
computation claiming that the daily COLA rate should be multiplied by 30 days which
has been the practice of the company for several years.
The Supreme Court upheld the contention of the petitioner corporation. It held
that the grant by the employer of the benefits through an erroneous application of
law due to absence of clear administrative guidelines is not considered a voluntary
act which cannot be unilaterally discontinued.
TSPIC CORP vs. TSPIC EMPLOYEES UNION
An erroneously granted benefit may be withdrawn without violating the prohibition
against non-diminution of benefits.
No vested right accrued to individual respondents when TSPIC corrected its error by
crediting the salary increase for the year 2001 against the salary increase granted
under Wage Order no. 8, all in accordance with the CBA. Thus, any amount given to
the employees in excess of what they were entitled to, as computed above, may be
legally deducted by TSPIC from the employees’ salaries.
But if the error does not proceed from the interpretation or construction of a law or a
provision in the CBA, the same may ripen into a company practice.
Case example:
Arco Metal Products Inc Vs Samahan Ng Mga Manggawa
Petitioner despite the provision of the law and the CBA that 13 th month pay, vacation
leave and sick leave conversion to cash should be computed in amounts
proportional to the service the employees have actually rendered within a year, had
not pro-rated the payment of the same benefits to 7 employees who had not served
for the full 12 months in 1992, 1993, 1994, 1996, 1999, 2003, and 2004. It claims
that its full payment of benefits regardless of the length of service to the company
does not constitute voluntary employer practice. It points out that the payments had
been erroneously made and they occurred in isolated cases. It was only in 2003 that
the accounting department discovered the error when there were already 3
employees involved with prolonged absences and the error was corrected by
implementing the pro rata payment of benefits pursuant to law and their CBA. It adds
that 7 earlier cases of full payment of benefits went unnoticed considering the
proportion of one employee concerned vis a vis the 170 employees of the company.
It claimed the situation as a “clear oversight” and should not be taken against it.
The Supreme Court, in disagreement, pronounced:
 In those said years, the petitioner had adopted a policy of FREELY, VOLUNTARILY,
and CONSISTENTLY GRANTING full benefits to its employees regardless of the
length of service rendered. True, there were only a total of 7 employees who
benefited from such a practice, but it was an established practice
nonetheless. Jurisprudence has not laid down any rule specifying a minimum
number of years within which a company practice must be exercised in order to
constitute voluntary company practice. Petitioner   cannot shirk away  from its
responsibility by merely claiming that it was a mistake or an error, supported only by
an affidavit of its manufacturing group head.
 
*Very Important: The Globe Mackay Cable case is not the Globe doctrine

Elimination or diminution of
benefits may constitute
constructive dismissal; relevant
jurisprudence from a personal
case
Constructive dismissal is an involuntary resignation resorted to when continued
employment becomes impossible, unreasonable, or unlikely, due to any of the
following:

1. demotion in rank or a diminution in pay; or

2. when a clear discrimination, insensibility, or disdain by an employer
becomes unbearable to an employee.

Constructive dismissal is illegal and usually occurs when an employee resigns as a

result of unfavorable work conditions instigated by the employer. It is typically
resorted to by employers who do not want to undergo the procedural due process
involved in legally terminating an employee.
Jurisprudence
Constructive dismissal occurs not when the employee ceases to report for
work, but when the unwarranted acts of the employer are committed to the end
that the employee’s continued employment shall become so intolerable. In
these difficult times, an employee may be left with no choice but to continue
with his employment despite abuses committed against him by the employer,
and even during the pendency of a labor dispute between them. This should
not be taken against the employee. Instead, we must share the burden of his
plight, ever aware of the precept that necessitous men are not free men.
The burden of proof in constructive dismissal cases is on the employer to
establish that the transfer of an employee is for valid and legitimate
grounds xxx.
Mere title or position held by an employee in a company does not determine
whether a transfer constitutes a demotion. Rather, it is the totality of the following
circumstances, to wit: economic significance of the work, the duties and
responsibilities conferred, as well as the same rank and salary of the
employee, among others, that establishes whether a transfer is a demotion.
The admissions of the petitioner are conclusive on it. An employee cannot be
promoted, even if merely as a result of a transfer, without his consent. A transfer that
results in promotion or demotion, advancement or reduction or a transfer that aims
to lure the employee away from his permanent position cannot be done
without the employees consent.

Criteria to ascertain the existence

of a binding and enforceable
company practice
1. The act of employer has been done for a considerable period of time;
2. The act should be done consistently and intentionally;
3. The act should not be a product of erroneous interpretation or construction
of a doubtful or ambiguous question of law or provisions of the CBA;
4. Existence of a company practice should be duly proved by evidence; and
5. The grant of benefit should not be by reason of legal or contractual
obligation but by reason of liberality.

“Done for a considerable period

of time” meaning
To be considered a company practice, the giving of the benefits should have been
done over a long period of time, and must be shown to have been consistent and
deliberate.
            In the following cases, the act of the employer has been declared as having
ripened to a company practice for having been done for a considerable period of
time, thus can no longer be withdrawn:
            (1) In Davao Fruits Corp. v. ALU, involving the employer’s act for six (6)
years of freely and continuously including in the computation of the 13 th month pay,
certain items that were expressly excluded by law.
            (2) In Sevilla Trading Co. v. Semana, where petitioner kept the practice of
including non-basic benefits such as paid leaves for unused sick leave and vacation
leave in the computation of the employee’s 13 thmonth pay for at least two (2) years.
            (3) In Central Azucarera v. Central Azucarera, where petitioner, for thirty (30)
years, granted its workers the mandatory 13th month pa computed in accordance with
the following formula: Total Basic Annual Salary divided by twelve (12). Included
in petitioner’s computation of the Total Basic Annual Salary were the following: basic
monthly salary; first eight (8) hours overtime pay on Sunday and legal/special
holiday; night premium pay; and vacation and sick leaves for each year.

"Consistently and intentionally"

meaning
To be considered as a practice, policy or tradition, the giving of the benefits should
be shown to have been consistently and deliberately done. The intention to make a
certain act a company practice may be logically inferred from the peculiar
circumstances obtaining in each case. An example is Tiangco v. Leogardo, Jr.,
where the discontinuance by the employer effective February, 1980 of the fixed
monthly emergency allowance which it has consistently granted to the employees
since November, 1976, insofar non-working days are concerned based on the
principle of “no work, no pay” was declared violative of the non-diminution principle in
Article 100 of the Labor Code.
In Standard Chartered Bank v. SCBEU, it was held the petitioners employees are
entitled to “outpatient medicine reimbursements” distinct and separate from the
“medicine allowances” granted in the CBA because there is an established company
practice of reimbursement of outpatient services, including medicine reimbursement,
despite the absence of a provision in the group hospitalization insurance plan
regarding outpatient benefits.
Another example is Republic Planters Bank v. NLRC, where it was ruled that since
petitioner PNB-RB has consistently and deliberately adopted the practice of granting
gratuity benefits to its retiring officers based on the salary rate of the next higher rank
even after the expiration of the 1971-1973 CBA, although I knew fully well that it was
not required to give the benefits after the expiration of the 1971-1973 CBA, such
grant of gratuity pay has already ripened into a company practice or policy which can
no longer be peremptorily withdrawn.
Bonus, general rule; exemption
Bonus, as a general rule, is an amount granted and paid ex gratia to the employee.
Its payment constitutes an act of enlightened generosity and self-interest on the part
of the employer rather than as a demandable or enforceable obligation. (GR100701;
GR 110068)
In certain situations, however, the SC, on the basis of equitable considerations, long
practice, and other peculiar circumstances has recognized the demandability and
enforceablity of bonuses although the grant thereof is undoubtedly discretionary and
notwithstanding the fact that they do not form part of the wages or salary of the
employee.
Unlike 13th month pay though, bonus may be forfeited in case employee is found
guilty of an administrative charge.

Meaning of basic salary; Honda

Philippines case
Basic salary or basic wage means all the remuneration or earnings paid by an
employer to a worker for services rendered on normal working days and hours,
which is 8 hours, but does not include cost of living allowances, profit-sharing
payments, premium payments, 13th month pay or other monetary benefits which are
not considered as part of or integrated into the basic salary of the workers.
In the case of Honda Philippines, it has been held that the following should be
excluded from the computation of “basic salary” to wit: payments for sick, vacation
and maternity leaves, night differentials, regular holiday pay and premiums for work
done on rest days and special holidays.

13th month pay law, exemption

The following are not covered by the 13 th month pay law:

1. The government and any of its political subdivisions, including

government-owned and controlled corporations, except those corporations
operating essentially as private subsidiaries of the government;
2. Employers already paying their employees 13 th month pay or more in a
calendar year or its equivalent at the time of the issuance of the Revised
Guidelines;
3. Employers of those who are paid on purely commission, boundary, or task
basis, and those who are paid a fixed amount for performing a specific
work, irrespective of the time consumed in the performance thereof,
except when the workers are paid on piece-rate basis, in which case, the
employer shall be covered by the Revised Guidelines insofar as such
workers are concerned. Workers paid on piece-rate basis shall refer to
 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.

*Creditability issue- the interpretation of the term "its equivalent" ha sgiven rise to the
issue of creditability of bonuses to 13th month pay. Discuss Marcopper, NFSW,
Dole, etc cases (11 cases)

13th month pay as part of

retirement; 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. Thus, if he worked only from January up to September, his
proportionate 13th-month pay should be the equivalent of 1/12 of his total basic
salary which he earned during that period. (No. 6, Revised Guidelines on the
Implementation of the 13th-Month Pay Law; No. X [G], DOLE Handbook on Workers
Statutory Monetary Benefits; International School of Speech vs. NLRC, et al., G. R.
No. 112658, March 18, 1995; Villarama vs. NLRC, et al., G. R. No. 106341, Sept. 2,
1994, 236 SCRA 280).
In the 2005 case of Clarion Printing House, Inc. vs. NLRC, [G. R. No. 148372, June
27, 2005], an employee who was receiving P6,500.00 in monthly salary and who had
worked for at least six (6) months at the time of her retrenchment, was held to be
entitled to her proportionate 13th month pay computed as follows:
(Monthly Salary x 6 ) / 12 = Proportionate 13th month pay
(P6,500.00 x 6) / 12 = P3,250.00
The payment of the 13th-month pay may be demanded by the employee upon the
cessation of employer-employee relationship. This is consistent with the principle of
equity that as the employer can require the employee to clear himself of all liabilities
and property accountability, so can the employee demand the payment of all benefits
due him upon the termination of the relationship. (No. 6, Revised Guidelines on the
Implementation of the 13th-Month Pay Law).
Regarding pro-ration of the 13th month pay, the Supreme Court in Honda Phils., Inc.
vs. Samahan ng Malayang Manggagawa sa Honda, [G. R. No. 145561, June 15,
2005], took cognizance of the fact that the said Revised Guidelines on the
Implementation of the 13th Month Pay Law provided for a pro-ration of this benefit
only in cases of resignation or separation from work. As the rules state, under these
circumstances, an employee is entitled to a pay in proportion to the length of time he
worked during the year, reckoned from the time he started working during the
calendar year. (Section 6 thereof). The Court of Appeals thus held that:
“Considering the foregoing, the computation of the 13th month pay should be based
on the length of service and not on the actual wage earned by the worker. In the
present case, there being no gap in the service of the workers during the calendar
year in question, the computation of the 13th month pay should not be pro-rated but
should be given in full.” (Emphasis supplied)
More importantly, it has not been refuted that Honda has not implemented any pro-
rating of the 13th month pay before the instant case. Honda did not adduce evidence
to show that the 13th month, 14th month and financial assistance benefits were
previously subject to deductions or pro-rating or that these were dependent upon the
company’s financial standing. As held by the Voluntary Arbitrator:
“The Company (Honda) explicitly accepted that it was the strike held that prompt[ed]
them to adopt a pro-rata computation, aside [from] being in [a] state of rehabilitation
due to 227M substantial losses in 1997, 114M in 1998 and 215M lost of sales in
1999 due to strike. This is an implicit acceptance that prior to the strike, a full month
basic pay computation was the “present practice” intended to be maintained in the
CBA.”
The memorandum dated November 22, 1999 which Honda issued shows that it was
the first time a pro-rating scheme was to be implemented in the company. It was a
convenient coincidence for the company that the work stoppage held by the
employees lasted for thirty-one (31) days or exactly one month. This enabled them to
devise a formula using 11/12 of the total annual salary as base amount for
computation instead of the entire amount for a 12-month period.
That a full month payment of the 13th month pay is the established practice at
Honda is further bolstered by the affidavits executed by Feliteo Bautista and Edgardo
Cruzada. Both attested that when they were absent from work due to motorcycle
accidents, and after they have exhausted all their leave credits and were no longer
receiving their monthly salary from Honda, they still received the full amount of their
13th month, 14th month and financial assistance pay.
The case of Davao Fruits Corporation vs. Associated Labor Unions, et al. [G.R. No.
85073, August 24, 1993, 225 SCRA 562] presented an example of a voluntary act of
the employer that has ripened into a company practice. In that case, the employer,
from 1975 to 1981, freely and continuously included in the computation of the 13th
month pay those items that were expressly excluded by the law. It was held that this
act, which was favorable to the employees though not conforming to law, has
ripened into a practice and, therefore, can no longer be withdrawn, reduced,
diminished, discontinued or eliminated. Furthermore, in Sevilla Trading Company vs.
Semana, [G.R. No. 152456, 28 April 2004, 428 SCRA 239], it was stated:
“With regard to the length of time the company practice should have been exercised
to constitute voluntary employer practice which cannot be unilaterally withdrawn by
the employer, we hold that jurisprudence has not laid down any rule requiring a
specific minimum number of years. In the above quoted case of Davao Fruits
Corporation vs. Associated Labor Unions, the company practice lasted for six (6)
years. In another case, Davao Integrated Port Stevedoring Services vs. Abarquez,
the employer, for three (3) years and nine (9) months, approved the commutation to
cash of the unenjoyed portion of the sick leave with pay benefits of its intermittent
workers. While in Tiangco vs. Leogardo, Jr. the employer carried on the practice of
giving a fixed monthly emergency allowance from November 1976 to February 1980,
or three (3) years and four (4) months. In all these cases, this Court held that the
grant of these benefits has ripened into company practice or policy which cannot be
peremptorily withdrawn. In the case at bar, petitioner Sevilla Trading kept the
practice of including non-basic benefits such as paid leaves for unused sick leave
and vacation leave in the computation of their 13th-month pay for at least two (2)
years. This, we rule likewise constitutes voluntary employer practice which cannot be
unilaterally withdrawn by the employer without violating Art. 100 of the Labor
Code.” (Emphasis supplied)
Lastly, the foregoing interpretation of law and jurisprudence is more in keeping with
the underlying principle for the grant of this benefit. It is primarily given to alleviate
the plight of workers and to help them cope with the exorbitant increases in the cost
of living. To allow the pro-ration of the 13th month pay in this case is to undermine
the wisdom behind the law and the mandate that the workingman’s welfare should
be the primordial and paramount consideration. [Citing Santos vs. Velarde, 450 Phil.
381, 390-391 [2003]). What is more, the factual milieu of this case is such that to rule
otherwise inevitably results to dissuasion, if not a deterrent, for workers from the free
exercise of their constitutional rights to self-organization and to strike in accordance
with law. (Section 3, Article XIII-Social Justice and Human Rights, Philippine
Constitution; Honda Phils., Inc. vs. Samahan ng Malayang Manggagawa sa Honda,
G. R. No. 145561, June 15, 2005). 
But the rule is different if an employee was never paid his 13th month pay during his
employment. A case in point is JPL Marketing Promotions vs. CA, [G. R. No.
151966, July 8, 2005], where the Supreme Court ruled that, in such a case, the
computation for the 13th month pay should properly begin from the first day of
employment up to the last day of work of the employee. This benefit is given by law
on the basis of the service actually rendered by the employee.

Manner & form of payment of

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

1. Payment through automated teller machine (ATM) of banks provided the

following conditions are met:
2. the ATM system of payment is with the written consent of the employees
concerned;
 3. The employees are given reasonable time to withdraw their wages from
the bank facility which time, if done during working hours, shall be
considered compensable hours worked;
4. The system shall allow workers to receive their wages within the period or
frequency and in the amount prescribed under the Labor Code, as
amended;
5. There is a bank or ATM facility within a radius of one (1) kilometer to the
place of work;
6. Upon request of the concerned employee/s, the employer shall issue a
record of payment of wages, benefits and deductions for a particular
period;
7. There shall be n additional expenses and no diminution of benefits and
privileges as a result of the ATM system of payment;
8. The employer shall assume responsibility in case the wage protection
provisions of law and regulations are not complied with under the
arrangement. (Explanatory Bulletin issued by DOLE Secretary Leonardo
Quisumbing dated November 25, 1996).
9. Payment by check or money order, (the foregoing conditions on existence
of bank facility and other factors should also concur).

Manner as to:
The time of payment of wages

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

 The place of payment of wages

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

undertaking.
2. Exceptions:
3. When payment cannot be effected at or near the place of work by reason
of the deterioration of peace and order conditions, or by reason of actual
or impending emergencies caused by fire, flood, epidemic or other
calamity rendering payment thereat impossible;
4. When the employer provides free transportation to the employees back
and forth; and
5. Under any other analogous circumstances, provided that the time spent by
the employees in collecting their wages shall be considered as
compensable hours worked.
6. Payment of wages in bars, massage clinics or nightclubs is prohibited
except in the case of employees thereof.
 7. Payment through banks - allowed in businesses and other entities with
twenty five (25) or more employees and located within one (1) kilometer
radius to a commercial, savings or rural bank.

Whom should wages be paid

1. General rule: payment of wages shall be made directly to the employee

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

Payment of wages: supervised &

unsupervised workers
Supervised Workers
They are those workers whose time and performance are supervised by the
employer. There is an essential element of control and supervision over the manner
as how to work is to be performed
Unsupervised Workers
They are those workers whose time and performance are unsupervised by the
employer. The employer's control is over the result of the work. 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.

Time of payment of wages of

workers paid by result
GR: Wages shall be paid not less than once every two (2) weeks or twice a month at
intervals not exceeding sixteen (16) days. No employer shall make payment with
less frequency than once a month.
XPT: When payment cannot be made with such regularity due to force majeure or
circumstances beyond the employer’s control, in which case, the employer shall pay
the wages immediately after such force majeure or circumstances have ceased.
PAID BY RESULT
In case of payment of wages by results involving work which cannot be finished in
two (2) weeks, payment shall be made at intervals not exceeding sixteen (16) days
in proportion to the amount of work completed. Final settlement shall be made
immediately upon completion of the work.

Place of payment; prohibition

GR: Place of payment shall be at or near the place of undertaking.
XPT:

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

of the deterioration of peace and order conditions, or by reason of actual
or impending emergencies caused by fire, flood, epidemic or other
calamity rendering payment thereat impossible;
2. When the employer provides free transportation to the employees back
and forth; and
3. Under any other analogous circumstances, provided that the time spent by
the employees in collecting their wages shall be considered as
compensable hours worked.

PROHIBITION: No employer shall pay his employees in any bar, night or day club,
drinking establishment, massage clinic, dance hall, or other similar places or in
places where games are played with stakes of money or things representing money,
except in the case of employees thereof.

Payment through banks/ ATM

Payment through banks – allowed in business and other entities with 25 or more
employees. Provided the following conditions are met:

1. The ATM system of payment is with written consent of the employees

concerned;
2. The employees are given reasonable time to withdraw their wages from
the bank facility which time, if done during working hours, shall be
considered compensable hours worked;
3. The system allows workers to receive their wages within the period or
frequency and in the amount prescribed under the labor code, as
amended;
4. There is a bank or ATM facility within a radius of one (1) kilometer to the
place of work;
5. Upon request of the concerned employee/s, the employer shall issue a
record of payment of wages, benefits, and deductions for a particular
period;
6. There shall be no additional expenses and no diminution of benefits and
privileges as a result of the ATM system of payment;
 7. The employer shall assume responsibility in case the wage protection
provisions of law and regulations are not complied with under the
arrangement.

Direct payment of wages, rule &

exceptions
Direct payment of wages – payment of wages shall be made direct to the employee
entitled thereto except in the following cases:

1. Where the employer is authorized in writing by the employee to pay his

wages to a member of his family;
2. Where payment to another person of any part of the employee’s wages is
authorized by the existing law, including payments for the insurance
premiums of the employee and union dues where the right to check-off
has been recognized by the employer in accordance with a collective
agreement or authorized in writing by the individual employees concerned;
or
3. In case of death of the employee, in which case, the same shall be made
to his heirs without the necessity of intestate proceedings.

Contracting: Trilateral relationship

in contracting
Trilateral Relationship 
It refers to the relationship in a contracting arrangement where there is 1) a Service
Contract for a specific job, work or service between the principal and the contractor,
and 2) an Employment Contract between the contractor and its employees. The
parties are the following:

1. “Principal” refers to any employer who puts out or farms out a job, service,
or work to a contractor or subcontractor, whether or not the arrangement is
covered by a written contract.
2. “Contractor" or "subcontractor” refers to any person or entity engaged in a
legitimate contracting or subcontracting arrangement.
3. "Contractual employee” includes one employed by a contractor or
subcontractor to perform or complete a job, work or service pursuant to an
arrangement between the latter and a principal called “contracting” or
“subcontracting”.
Elements of permissible
contracting
Contracting or subcontracting shall be permissible if the following circumstances
concur:

1. The contractor or subcontractor carries on a distinct and independent

business and undertakes to perform a job, work or service on its own
account under its own responsibility, according to its own manner and
method, and free from the control and directions of the principal in all
matters connected with the performance of the work except as to the
results thereof;
2. The contractor or subcontractor has substantial capital or investment; and
3. The agreement between the principal and the contractor or subcontractor
assures the contractual employees’ entitlement to all labor and
occupational safety and health standards, free exercise of right to self-
organization, security of tenure and social and welfare benefits.

3 tests to determine existence of

legitimate contracting
1. The contractor or subcontractor carries on a distinct and independent
business and undertakes to perform the job, work or service on its own
account and under its own responsibility, according to its own manner and
method, and free from the control and directions of the principal in all
matters connected with the performance of the work except as to the
results thereof;
2. The contractor or subcontractor has substantial capital or
investment: “Substantial capital or investment” refers to capital stocks and
subscribed capitalization in the case of corporations, tools, equipment,
implements, machineries and work premises, actually and directly used by
the contractor or subcontractor in the performance or completion of the
job, work or service contracted out.;
3. The agreement between the principal and the contractor or subcontractor assures
the contractual employees' entitlement to all labor and occupational safety and
health standards, free exercise of the right to self-organization, security of tenure,
and social and welfare benefits.

Elements of labor-only
contracting
Labor-only contracting shall refer to an arrangement where the contractor or
subcontractor merely recruits, supplies or places workers to perform a job, work or
service for a principal and any of the following elements are present:
(a) The contractor or subcontractor does not have substantial investment which
relates to the job, work or service to be performed and the employees recruited,
supplied or placed by such contractor or subcontractor are performing activities
which are directly related to the main business of the principal, or
(b) The contractor does not exercise the right to control over the performance of the
work of the contractual employee

Bases in prohibiting labor-only

contracting
The basis in prohibiting labor-only contracting are:
The Constitution, which mandates that the State shall protect labor and promote its
welfare, and shall guarantee basic labor rights including just and humane terms and
conditions of employment and the right to self-organization.
Article 106 of the Labor Code, which allows the Secretary of Labor to distinguish
between labor-only contracting and job contracting to prevent any violation or

Principal distinctions between

permissible contracting & labor-
only contracting
Subcontracting (Legitimate Job Contracting) vs. Labor-Only Contracting 
The principal distinctions between legitimate, permissible job contracting, on the one
hand, and the prohibited labor-only contracting, on the other.

1. In the former, no employer-employee relationship exists between the

employees of the job contractor and the principal employer (indirect
employer); while in the latter, an employer-employee relationship is
created by law between the principal employer and the employees of the
labor-only contractor.
2. In the former, the principal employer is considered only an “indirect
employer”, as this term is understood under Article 107 of the Labor Code;
while in the latter, the principal employer is considered the “direct
employer” of the employees in accordance with the last paragraph of
Article 106 of the Labor Code.
3. In the former, the joint and several obligation of the principal employer and
the legitimate job contractor is only for a limited purpose, that is, to ensure
 that the employees are paid their wages. Other than this obligation of
paying the wages, the principal employer is not responsible for any claim
made by the employees; while in the latter, the principal employer
becomes solidarily liable with the labor-only contractor for all the rightful
claims of the employees.
4. In the former, the legitimate job contractor provides specific services; while
in the latter, the labor-only contractor provides only manpower.
5. In the former, the legitimate job contractor undertakes to perform a specific
job for the principal employer; while in the latter, the labor-only contractor
merely provides the personnel to work for the principal employer.

Permissible job contracting Labor-only contracting.

Permissible Prohibited by law

no employer-employee relationship exists an employer-employee relationship is

between the employees of the job created by law between the principal
contractor and the principal employer employer and the employees of the labor-
(indirect employer); only contractor

the principal employer is considered only the principal employer is considered the
an “indirect employer “direct employer” of the employees

the joint and several obligation of the

principal employer and the legitimate job
contractor is only for a limited purpose, the principal employer becomes solidarily
that is, to ensure that the employees are liable with the labor-only contractor for all
paid their wages (the principal employer the rightful claims of the employees
is not responsible for any claim made by
the employees)

the legitimate job contractor provides the labor-only contractor provides only
specific services manpower

the labor-only contractor merely provides

the legitimate job contractor undertakes the personnel to work for the principal
to perform a specific job for the principal employer. 
employer
 

TV Host v. News Anchor/ Columnist v. Reporter

TV Host News Anchor

no employer-employee relationship There is an employer-employee

exists relationship

As to Hiring  

Independent contractors: possess

Regular hiring and selection process/
unique skills, expertise or talent to
regular qualifications are set by the
distinguish them from ordinary
company
employees;

As to Payment of Wages  

All the talent fees and benefits were All benefits arose from an employer-
the result of negotiations / employee relationship.
Agreement/stipulations/contract  

Power of Dismissal  

could not be terminated on grounds Termination is based on just and

other than breach of contract, such as authorized causes as provided in the
retrenchment to prevent losses as Labor laws (ie. Retrenchment)
provided under labor laws  

Power of Control  

The company is not exercising control

over the means and methods of the The company/management has full
work control and supervision over the
means and methods of the work (ie.
 (TV/Radio Program Lines, Lines are
appearance and sound on TV/Radio is scripted/prepared/rehearsed)
set by the worker /host himself)

Distinctions: Direct v. indirect

employer
Direct Employer Indirect Employer

There is an employer-employee As a rule, there is no employer-

relationship employee relationship unless there is
 failure to pay wages and other
benefits

Hires employees through

It directly hires employees
agencies/subcontractors

As to extent of civil liability for the

The direct employer is responsible/
payment of wages and other benefits,
liable for all the rightful claims of the
the indirect employer is be
employees as provided for in the labor
considered as direct employer.
laws
(Article 109, Labor Code).

Survey of doctrinal cases in

contracting
Norkis case on lack of control of contractor
IN RE: DIRECT RELATION TO PRINCIPAL’S BUSINESS TEST
The “Direct Relation to Principal’s Business” test seeks to address the issue of
whether the employees recruited, supplied or placed by a contractor are performing
activities which are directly related to the main business of the principal. If this poser
is answered in the affirmative, the contractor is deemed a labor-only contractor and
the employees become direct employees of the principal.
Norkis vs. Buenavista, where the contractor’s employees worked as welders and
machine operators engaged in the production of steel crates which were sent to
Japan for use as containers of motorcycles that are then sent back to Norkis
Trading. Their functions therefore are directly related and vital to Norkis Trading’s
business of manufacturing of Yamaha motorcycles.
Solidary Liability
EPARWA SECURITY AND JANITORIAL SERVICES VS LICEO DE CAGAYAN
UNIVERSITY
FACTS:
On 1 December 1997, Eparwa and LDCU, through their representatives, entered into
a Contract for Security Services which states that LCDU undertakes to pay P5, 000
per guard, in consideration of their services.
On 21 December 1998, 11 security guards whom Eparwa assigned to LDCU filed a
complaint before the NLRC against both Eparwa and LDCU for underpayment of
salary, legal holiday pay, 13th month pay, rest day, service incentive leave, night shift
differential, overtime pay, and payment for attorney’s fees.       
LDCU made a cross-claim and prayed that Eparwa should reimburse LDCU for any
payment to the security guards.         
LA found that the security guards are entitled to wage differentials and premium for
holiday and rest day work.  The Labor Arbiter also held Eparwa and
LDCU solidarily liable pursuant to Article 109 of the Labor Code.  
The NLRC held Eparwa and LDCU solidarily liable for the wage differentials and
premium for holiday and rest day work but did not require Eparwa to reimburse
LDCU for its payments to the security guards. Upon an MR, the NLRC declared that
although Eparwa and LDCU are solidarily liable to the security guards for the
monetary award, LDCU alone is ultimately liable.
The CA reinstated the Labor Arbiter’s decision.  The appellate court also allowed
LDCU to claim reimbursement from Eparwa.  
ISSUE:
Is LDCU alone ultimately liable to the security guards for the wage differentials and
premium for holiday and rest day pay?
HELD:
Yes. For the security guards, the actual source of the payment of their wage
differentials and premium for holiday and rest day work does not matter as
long as they are paid.  This is the import
of Eparwa and LDCU’s solidary liability.  Creditors, such as the security
guards, may collect from anyone of the solidary debtors.  Solidary liability
does not mean that, as between themselves, two solidary debtors are liable for
only half of the payment.
LDCU’s ultimate liability comes into play because of the expiration of the Contract for
Security Services.   There is no privity of contract between the security guards and
LDCU, but LDCU’s liability to the security guards remains because of Articles 106,
107 and 109 of the Labor Code.   Eparwa is already precluded from asking LDCU for
an adjustment in the contract price because of the expiration of the contract,
but Eparwa’s liability to the security guards remains because of their employer-
employee relationship.  In lieu of an adjustment in the contract price, Eparwa may
claim reimbursement from LDCU for any payment it may make to the security
guards.   However, LDCU cannot claim any reimbursement from Eparwa for any
payment it may make to the security guards.
Direct Liability
ROSEWOOD PROCESSING, INC. vs. NATIONAL LABOR RELATIONS
COMMISSION, MAMON, GAZZINGAN, VELASCO, BALLON, ALDEZA, and
CABRERA
FACTS:
All private respondents were employed as security guards by Veterans Philippine
Scout Security Agency (security agency). A complaint was filed by private
respondents for illegal dismissal; underpayment of wages; and for nonpayment of
overtime pay, legal holiday pay, premium pay for holiday and rest day, thirteenth
month pay, cash bond deposit, unpaid wages and damages was filed against the
security agency.
Thereafter, petitioner was impleaded as a third-party respondent by the security
agency. Labor Arbiter rendered a decision in favor of herein private respondents
wherein the total money claim adjudged was P789, 154.39. An appeal was filed
before the NLRC. Respondent Commission dismissed petitioner’s appeal, because it
was allegedly not perfected within the reglementary ten-day period. 
ISSUE:
WON herein petitioner can be held solidarily liable for the legal wages due to the
security guards beyond the period which the latter have rendered services to them.
HELD:
No. Withal, fairness dictates that the petitioner should not be held liable for wage
differentials incurred while the complainants were assigned to other
companies.  Under these cited provisions of the Labor Code, should the
contractor fail to pay the wages of its employees in accordance with law, the
indirect employer (the petitioner in this case), is jointly and severally liable
with the contractor, but such responsibility should be understood to be limited
to the extent of the work performed under the contract, in the same manner
and extent that he is liable to the employees directly employed by him. This
liability of petitioner covers the payment of the workers’ performance of any work,
task, job or project.  So long as the work, task, job or project has been performed for
petitioner’s benefit or on its behalf, the liability accrues for such period even if, later
on, the employees are eventually transferred or reassigned elsewhere. 
We repeat:  The indirect employer’s liability to the contractor’s employees extends
only to the period during which they were working for the petitioner, and the fact that
they were reassigned to another principal necessarily ends such responsibility.  The
principal is made liable to his indirect employees, because it can protect itself from
irresponsible contractors by withholding such sums and paying them directly to the
employees or by requiring a bond from the contractor or subcontractor for this
purpose.
The liability arising from an illegal dismissal is unlike an order to pay the statutory
minimum wage, because the workers’ right to such wage is derived from law.  The
proposition that payment of back wages and separation pay should be covered by
Article 109, which holds an indirect employer solidarily responsible with his
contractor or subcontractor for “any violation of any provision of this Code,” would
have been tenable if there were proof -- there was none in this case -- that the
principal/employer had conspired with the contractor in the acts giving rise to the
illegal dismissal.
Problem area: Art. 110 of Labor
Code with Article 2241 and 2242
of New Civil Code and RA 6715
Art. 110. Worker preference in case of bankruptcy. In the event of bankruptcy or
liquidation of an employer’s business, his workers shall enjoy first preference as
regards their wages and other monetary claims, any provisions of law to the contrary
notwithstanding. Such unpaid wages and monetary claims shall be paid in full before
claims of the government and other creditors may be paid. (As amended by Section
1, Republic Act No. 6715, March 21, 1989)
Art. 2241. With reference to specific movable property of the debtor, the following
claims or liens shall be preferred:
(1) Duties, taxes and fees due thereon to the State or any subdivision thereof;
(2) Claims arising from misappropriation, breach of trust, or malfeasance by public
officials committed in the performance of their duties, on the movables, money or
securities obtained by them;
(3) Claims for the unpaid price of movables sold, on said movables, so long as they
are in the possession of the debtor, up to the value of the same; and if the movable
has been resold by the debtor and the price is still unpaid, the lien may be enforced
on the price; this right is not lost by the immobilization of the thing by destination,
provided it has not lost its form, substance and identity; neither is the right lost by the
sale of the thing together with other property for a lump sum, when the price thereof
can be determined proportionally;
(4) Credits guaranteed with a pledge so long as the things pledged are in the hands
of the creditor, or those guaranteed by a chattel mortgage, upon the things pledged
or mortgaged, up to the value thereof;
(5) Credits for the making, repair, safekeeping or preservation of personal property,
on the movable thus made, repaired, kept or possessed;
(6) Claims for laborers' wages, on the goods manufactured or the work done;
(7) For expenses of salvage, upon the goods salvaged;
(8) Credits between the landlord and the tenant, arising from the contract of tenancy
on shares, on the share of each in the fruits or harvest;
(9) Credits for transportation, upon the goods carried, for the price of the contract
and incidental expenses, until their delivery and for thirty days thereafter;
(10) Credits for lodging and supplies usually furnished to travellers by hotel keepers,
on the movables belonging to the guest as long as such movables are in the hotel,
but not for money loaned to the guests;
(11) Credits for seeds and expenses for cultivation and harvest advanced to the
debtor, upon the fruits harvested;
(12) Credits for rent for one year, upon the personal property of the lessee existing
on the immovable leased and on the fruits of the same, but not on money or
instruments of credit;
(13) Claims in favor of the depositor if the depositary has wrongfully sold the thing
deposited, upon the price of the sale.
In the foregoing cases, if the movables to which the lien or preference attaches have
been wrongfully taken, the creditor may demand them from any possessor, within
thirty days from the unlawful seizure. (1922a)
Art. 2242. With reference to specific immovable property and real rights of the
debtor, the following claims, mortgages and liens shall be preferred, and shall
constitute an encumbrance on the immovable or real right:
(1) Taxes due upon the land or building;
(2) For the unpaid price of real property sold, upon the immovable sold;
(3) Claims of laborers, masons, mechanics and other workmen, as well as of
architects, engineers and contractors, engaged in the construction,
reconstruction or repair of buildings, canals or other works, upon said
buildings, canals or other works;
(4) Claims of furnishers of materials used in the construction, reconstruction, or
repair of buildings, canals or other works, upon said buildings, canals or other works;
(5) Mortgage credits recorded in the Registry of Property, upon the real estate
mortgaged;
(6) Expenses for the preservation or improvement of real property when the law
authorizes reimbursement, upon the immovable preserved or improved;
(7) Credits annotated in the Registry of Property, in virtue of a judicial order, by
attachments or executions, upon the property affected, and only as to later credits;
(8) Claims of co-heirs for warranty in the partition of an immovable among them,
upon the real property thus divided;
(9) Claims of donors or real property for pecuniary charges or other conditions
imposed upon the donee, upon the immovable donated;
(10) Credits of insurers, upon the property insured, for the insurance premium for two
years. (1923a)
Republic Act No. 6715 SECTION 1. Article 110 of Presidential Decree No. 442, as
amended, otherwise known as the Labor Code of the Philippines, is hereby further
amended to read as follows:
“ART. 110. Worker preference in case of bankruptcy. — In the event of bankruptcy
or liquidation of an employer’s business, his workers shall enjoy first preference as
regards their unpaid wages and other monetary claims, any provision of law to the
contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in
full before the claims of the Government and other creditors may be paid.”
SUMMARY/SUGGESTED SOLUTION:
Article 110 of the Labor Code does not purport to create a lien in favor of workers
or employees for unpaid wages either upon all of the properties or upon any
particular property owned by their employer. Claims for unpaid wages do not,
therefore, fall at all within the category of specially preferred claims established
under Articles 2241 and 2242 of the Civil Code, except to the extent that such
claims for unpaid wages are already covered by Article 2241, number 6: “claims for
laborer’s wages, on the goods manufactured or the work done;” or by Article 2242,
number 3: “claims of laborers and other workers engaged in the construction,
reconstruction or repair of buildings, canals and other works, upon said buildings,
canals or other works.” To the extent that claims for unpaid wages fall outside the
scope of Article 2241, number 6 and 2242, number 3, they would come within the
ambit of the category of ordinary preferred credits under Article 2244.
RA No. 6715 covers the unpaid wages and other monetary claims of workers in the event
of bankruptcy or liquidation of an employer’s business. Worker’s shall enjoy first preference
and Such unpaid wages and monetary claims shall be paid in full before the claims of the
Government and other creditors may be paid.

Prohibition regarding wages;

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

Prohibition on withholding of
wages
Art. 116 of the Labor code categorically prohibits and considers it unlawful for any
person, whether employer or not, directly or indirectly, to withhold any amount from
the wages of a worker.
In article 1706 of the Civil Code, withholding of wages, except for a debt due, is not
allowed to be made by the employer.
In article 1709 of the Civil Code, the employer is not allowed to seize or retain any
tool or other articles belonging to the laborer.
Thus, an employer cannot simply refuse to pay the wages or benefits of its
employees because he has either defaulted in paying a loan guaranteed by his
employer; or violated heir memorandum of agreement; or failed to render an
accounting of his employer’s property.
Additional prohibitions: Arts. 117,
118, 119 and 248, LC
Article 117 (Deduction to ensure employment)- prohibits and considers it unlawful
for any person, whether the employer himself or his representative or an
intermediary, to require that a deduction be made or to actually make any deduction
from the wages of any employee or worker, for the benefit of such employer or his
representative or an intermediary, as consideration of a promise of employment or,
when already employed, for the continuation of such employment or retention
therein.
Article 118 (Retaliatory measure) – It is unlawful for the employer to:

1. Refuse to pay the wages and benefits of an employer; or

2. Reduce his wages and benefits; or
3. Discharge him from employment; or
4. Discriminate against him in any manner; on account and by reason of said
employee’s: Act of filing any complaint or institution of any proceeding
under Title II (Wages), Book III of LC; or Act of testifying in said
proceedings or when he is about to testify therein.

*** These retaliatory acts are considered unfair labor practice under Art. 248 (f) of the
LC
Art. 248. Unfair labor practices of employers. It shall be unlawful for an employer
to commit any of the following unfair labor practice:
(f) To dismiss, discharge or otherwise prejudice or discriminate against an employee
for having given or being about to give testimony under this Code
Article 119 (False Reporting)- prohibits and considers it unlawful for any person,
whether employer or not, to make any false statement, report or record required to
be filed or kept in accordance with and pursuant to the provision of Labor Code,
knowing such statement, report, or record to be false in any material respect (Sec.
13, Book III).

Wage studies, agreements and

determination
The term “Wage order” refers to the Order promulgated by the Regional Tripartite
Wages and Productivity Board (RTWPB) pursuant to its wage fixing authority.
The minimum wage rates prescribed by law shall be the basic cash wages without
deduction therefrom of whatever benefits, supplements or allowances which the
employees enjoy free of charge aside from the basic pay.
 The term STATUTORY minimum wage refers to the lowest basic wage rate fixed by
law that an employer can pay his workers.
The term REGIONAL minimum wage rates refers to the lowest basic wage rates that
an employer can pay his workers, as fixed by the Regional Tripartite Wages and
Productivity Boards (RTWPB), and which shall not be lower than the applicable
statutory minimum wage rates.
The minimum wage rates for agricultural and non-agricultural employees and
workers in each and every region of the country shall be those prescribed by the
RTWBs. These wage rates may include wages by industry, province, or locality as
may be deemed necessary by the RTWBs.
 The term wage rates include cost-of-living allowances as fixed by the RTWBs, but
excludes other wage-related benefits such as overtime pay, bonuses, night shift
differential pay, holiday pay, premium pay, 13 th  month pay, leave benefits, and
others.
Standards/ criteria in wage fixing:
In the determination of regional minimum wages, the Regional Board shall, among
other relevant factors, consider the following:
(a) The demand for living wages;
(b) Wage adjustment vis-à-vis the consumer price index;
(c) The cost of living and changes or increases therein;
(d) The needs of workers and their families;
(e) The need to induce industries to invest in the countryside;
(f) Improvements in standards of living;
(g) The prevailing wage levels;
(h) Fair return of the capital invested and capacity to pay of employers;
(i) Effects on employment generation and family income; and
(j) The equitable distribution of income and wealth along the imperatives of economic
and social development.
 
2 methods of fixing minimum wage order; distinguished
(a) Motu Proprio by the Board.
Whenever conditions in the region, province or industry so warrant, the Board may,
motu proprio or as directed by the Commission mandate action or inquiry to
determine whether a wage order should be issued. The Board shall conduct public
hearings/consultations in the manner prescribed herein.
(b) Wage Fixing by Virtue of a Petition Filed.
 1. Form and Content of Petition. Any party may file a verified petition for
wage increase with the appropriate Board in ten (10) typewritten legible
copies which shall contain the following:

(a) name/s, and address/es of petitioner/s and signature/s of authorized official/s;

(b) grounds relied upon to justify the increase being sought;
(c) amount of wage increase being sought;
(d) area and/or industry covered.

2. Board Action.

If the petition conforms with the requirements prescribed in the preceding sub-
section b.1, the Board shall conduct public hearings/consultations in the manner
prescribed herein, to determine whether a wage order should be issued.

3. Publication of Notice of Petition/Public Hearing.

A notice of the petition and/or public hearing shall be published in a newspaper of

general circulation in the region, and/or posted in public places as determined by the
Board. The notice shall include the name/s and address/es of the petitioner/s, the
subject of the petition and the date/s, place/s and time of the hearings. The
publication or posting shall be made at least fifteen (15) days before the date of initial
hearing and shall be in accordance with the suggested form herein attached as
Annex "A".

4. Opposition.

Any party may file his opposition to the petition on or before the initial hearing, copy
furnished the petitioner/s. The opposition shall be filed with the appropriate Board in
ten (10) typewritten legible copies which shall contain the
following:chanroblesvirtuallawlibrary
(a) name/s and address/es of the oppositor/s and signature/s of authorized official/s;
(b) reasons or grounds for the opposition; and
(c) relief sought.

5. Consolidation of Petitions.

If there is more than one petition filed, the Board may, motu proprio or on motion of
any party, consolidate these for purposes of conducting joint hearings or
proceedings to expedite resolutions of petitions. Petitions received after publication
of an earlier petition need not go through the publication/posting requirement.

6. Assistance of Other Government and Private Organizations.

The Board may enlist the assistance and cooperation of any government agency or
private person or organization to furnish information in aid of its wage fixing function.
What is wage distortion;
elements; remedies
Wage distortion as defined – is a situation where an increase 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.
Wage distortion refers to a situation where an increase in the 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 and other logical bases of differentiation (Article 124 of the
Labor Code).
It is the disappearance or virtual disappearance of pay differentials between lower
and higher positions in an enterprise because of compliance with a wage order (P.I.
Manufacturing v. P.I. Manufacturing Supervisors and Foreman, G.R. No. 167217,
February 4, 2008). In mandating an adjustment, the law did not require that there be
an elimination or total abrogation of quantitative wage or salary differences; a severe
contraction is enough (Metrobank v. NLRC, G.R. No. 102636, September 10, 1993).
Where a significant change occurs at the lowest level of positions in terms of basic
wage without a corresponding change in the other level in the hierarchy of positions,
negating as a result thereof the distinction between one level of position from the
next higher level, and resulting in a parity between the lowest level and the next
higher level or rank, between new entrants and old hires, there exists a wage
distortion (Prubankers Association v. Prudential Bank & Trust Company, 302 SCRA
74).
The issue of whether or not a wage distortion exists is a question of fact that is within
the distinction of the quasi-judicial tribunals.
The four (4) elements of wage distortion are as follows:
(1) An existing hierarchy of positions with corresponding salary rates;
(2) A significant change in the salary rate of a lower pay class without a concomitant
increase in the salary rate of a higher one;
(3) The elimination of the distinction between the two levels; and
 (4) The existence of the distortion in the same region of the country.
Normally, a company has a wage structure or method of determining the wages of its
employees. In a problem dealing with “wage distortion”, the basic assumption is that
there exists a grouping or classification of employees that establishes distinctions
among them on some relevant or legitimate bases.
 Involved in the classification of employees are various factors such as the degrees
of responsibility, the skills and knowledge required, the complexity of the job,
or other logical basis of differentiation. The differing wage rate for each of the
existing classes of employees reflects the classification.
Remedies:

1. Cases in organized establishments 

In establishments where there are existing collective bargaining agreement or

recognized bargaining unions, RA NO. 6727, vests upon the Voluntary Arbitrator or
panel of arbitrators, the jurisdiction to hear and decide wage distortion cases, after
the grievance procedure in the cba failed to settle the same.

2. Cases in unorganized establishments

In establishments where there are no certified collective bargaining unions or

existing bargaining collective agreements, the Labor Arbiters have jurisdiction to
hear and decide wage distortion cases after the parties and the National Conciliation
and Mediation Board (NCMB) failed to correct the distortion.
  3. Disputes over legislated wage increases and wage distortion made subject
of notice of strike or lockout.
Wage distortion is not a proper ground to be invoked in support of a strike or lockout.
Disputes arising from wage distortion resulting from wage orders issued by the
Regional Tripartite Wages and Productivity Board (RTWPB) which are alleged in the
notice of strike or lockout, should be referred to the Labor Arbiter if not settled within
ten (10) calendar days of conciliation by t NCMB.

Wage Distortion: Prubankers

Association vs. Prudential Bank
And Trust Company doctrine
DOCTRINE:
A Disparity in wages between employees holding similar positions but in different
regions does not constitute wage distortion as contemplated by law
CASE:
Wage orders by the RTWPB was issued in Naga (Region V) and Cebu (Region VII)
which created different wages for same employee groups in the different regions.
The Court ruled there was no WAGE DISORDER.
Wage distortion presupposes an increase in the compensation of the lower ranks in
an office hierarchy without a corresponding raise for higher-tiered employees in the
same region of the country, resulting in the elimination or the severe diminution of
the distinction between the two groups.  Such distortion does not arise when a wage
order gives employees in one branch of a bank higher compensation than that given
to their counterparts in other regions occupying the same pay scale, who are not
covered by said wage order.  In short, the implementation of wage orders in one
region but not in others does not in itself necessarily result in wage distortion.

Special workers and special

group of employees
The three groups considered as “special workers” are apprentices, learners, and
handicapped workers while the “special group of workers” refer to women, minors,
househelpers, and homeworkers. Being “special workers” and “special group of
employees”, they are governed by rules separate and distinct from those applicable
to all other workers.

Distinctions between
apprenticeship and learnership
Point of Distinctions Apprenticeship Learnership

means practical training refers to any practical

on the job supplemented training on learnable
by related theoretical occupation which may or
1. As to their definition instructions involving may not be
apprenticeable supplemented by
occupations and trades theoretical instructions.
as may be approved by
the DOLE Secretary.  

with compulsory related

theoretical instructions
may or may not be
(100 hours of theoretical
2. As to the requirement of supplemented by a
instructions for every
Theoretical Instructions theoretical instruction.
2000 hours of on-the-job
training).  
 

     
3. Qualifications An apprentice should be: A learner may be
employed:
a.) at least 15 years of

4. As to the no. of
apprentices/learners that
companies may take in
5.  As to the period of
employment
6. As to wage rate
7. As to rules on their rehire
age, provided those who
are at least 15 years of
age but less than 18
years old may be eligible
for apprenticeship only in a.) when no experienced
non-hazardous workers are available
occupation
b.) the employment of
b.) physically fit for the learner is necessary to
occupation in which he prevent curtailment of
desires to be trained employment
opportunities
c.) possess vocational
aptitude and capacity for c.) the employment does
the particular occupation not create unfair
as established through competition in terms of
appropriate tests labor costs or impair or
lower working standards
d.) possess the ability to
comprehend and follow  
oral and written
instructions
A participating enterprise is allowed to take in
learners or apprentices only up to a maximum of
20% of its regular workforce.
it should be more than 3
it shall not be more than
months but not over 6
3 months
months
entitled to not less than
75% of the prevailing
statutory minimum wage entitled to not less than
rate for the 6 months. 75% of the applicable
After the first months,  an adjuated minimum wage
apprentice should be paid
the full minimum wage  
it is the option of the the enterprise is obliged
employer to hire the to hire the learner after
apprentice even prior the
 completion of the
the learnership period
apprenticeship period
 
 

the apprentice becomes a no learnership training

8. As to the effect of regular employee if will commence until the
Apprenticeship/Learnership program is not registered. agreement has been
Agreement
  forged.

PWD: prohibition on
discrimination
No entity, whether public or private, shall discriminate against a qualified PWD by
reason of disability in regard to job application procedures, the hiring, promotion, or
discharge of employees, employee compensation, job training, and other terms,
conditions and privileges of employment. The following constitutes  acts of
discrimination:
a) Limiting, segregating or classifying a job applicant with disability 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 PWD unless such standards, tests or other
selection criteria are shown to be job-related for the position in question and are
consistent with business necessity;
c) Utilizing standards, criteria, or methods of administration that:

 1) have the effect of discrimination on the basis of disability; or

 2) perpetuate the discrimination of others who are subject to common
administrative control.

d) Providing less compensation, such as salary, wage or other forms of

remuneration and fringe benefits, to a qualified employee with disability, 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 employee with disability with
respect to promotion, training opportunities, study and scholarship grants, solely on
account of the latter's disability;
f) Re-assigning or transferring an employee with disability to a job or position he
cannot perform by reason of his disability;
g) Dismissing or terminating the services of an employee with disability 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, the employer first sought to provide reasonable accommodations for
PWDs;
h) Failing to select or administer in the most effective manner employment tests
which accurately reflect the skills, aptitud3 or other factor of the applicant or
employee with disability that such tests purports to measure, rather than the
impaired sensory, manual or speaking skills of such applicant or employees, if any;
and
i) Excluding PWDs from membership in labor unions or similar organizations.

Lecture
LABOR LAW REVIEW
 
**Labor law is the substantive law that governs the relationship between the
government, laborer, and labor. (Tripartism)
 
November 2020, new wage order 350 – 370 and it is deemed included into the labor
contract.
 
Legal Basis of Labor Law (Social Justice)
 
**Calalang v. Williams – humanization of all laws.
 

 Constitutional Provisions Related to Labor

 Article 13 the heart of the Constitution;
 Article 1-6 of the Labor Code,

 
**Principle of Codification – Codify all existing laws
 
**May 1, 1974 – promulgation of the labor code
 

 Article 4-6 of the Labor Code

o Article 4 is only applied when there is doubt. An employment
contract is a contract of adhesion which should be construed in
favor of the laborer only when there is doubt.
 o In case of doubt, all things are equal interpret in favor of laborer.
o Article 4 is only interpreted in favor of the laborer when you are
the labor arbiter or if you are the government.

 
**If there is a clear distinction or violation of the right of the employer we rule
in favor of labor or the employer.
 
 
**Not self-executing provision needs an enabling law.
 
**Feather Bedding Principle – payment of work not performed by the union.
This is prohibited because the employer is required to pay something that is
not for an equivalent work. It is exaction because you are asking for something
when in fact it is not due.
 

 Bill of Rights

 
**You cannot invoke your constitutional rights against private entities.
 
**Unionism is useless if you do not weaponize it. The right to strike, right to
picket weaponizes the constitutional provision of the right to organize.
 
**There shall be no laws that would impair the rights and obligations of the
parties. However, the law must be enacted subsequent to the execution of the
contract.
 
**Elizalde Rope case – In the hierarchy of rights the right to religious freedom
enjoys primacy over other constitutional rights.
 
**Abella case – providing for separation pay. They entered an agreement valid
for 10 years before enactment of BP130. When they were dismissed they
invoked BP 130. The Supreme Court stated that they should enjoy the benefit
and it does not impair your obligations and contracts.
 
**Waterous Drug Corporations v. NLRC – the bill of rights does not protect
citizens from unreasonable searches and seizures perpetrated by private
individuals.
 
**Serrano Doctrine – RA 8042 was enacted in 1995 and then the contract was
entered into in 1998. By virtue of police power the enactment of the law is valid
and effective. There is no impairment of obligations and Contracts. (Gallant
Maritime Services)
 
**Conference Maritime Manning Agencies v. POEA – a provision stating that it
is applied to all seafarers on board any vessel. Violation of non-impairment
clause? No, the non-impairment clause is not absolute.
 
Observation: It is a policy that it is okay to violate the non-impairment clause
of the constitution as long as you are doing it for the general welfare.
 
Built in overtime - If the overtime work rendered by the employee exceeds the
5000 pesos then you must recompute. If below 5000 pesos no need to
recompute the employer must pay the OT pay.
 
CBA – states that the employer must pay the 30% regardless of the
circumstance. Violation of non-impairment clause? No. general welfare of
workers.
 
Involuntary servitude – BPI v. BPI Employees Union Davao. There was a
merger and the employees were included as assets and liabilities of the
company. Supreme Court stated that you cannot include the employment
contract as assets and liabilities.
 
**Involuntary resignation is illegal dismissal.
 
**Constructive Dismissal is illegal dismissal. A lady was not invited to a
company outing is constructive dismissal. It is employee initiated dismissal.
 
**Government initiated dismissal – closure of an establishments.
 
**Foreign hired employees are paid more is discriminatory. There is no
substantial distinction on locally hired and foreign hired employees.
 
 
Humane Condition of Work

 It is not restricted to the physical work place, but the treatment of the
employers.

 
Protection of Women

 The DOLE issued DO regarding discrimination involving women. Example

– wearing of high heels and women are allowed to sit already.

 
Abbott Laboratories Doctrine – Statutory Due Process should include
substantive and procedural compliance. In this case they failed to comply to
procedures agreed upon by the parties in the CBA. The procedure agreed
upon the CBA should be complied with and this is Contractual due process.
 
Perez Doctrine regarding the hearing requirement.  First notice should inform
the employee of the charges against him or her. Second notice is the result of
the investigation informing the employee of the outcome. In between the two
notices is a hearing requirement (as a general rule you need not have a
hearing) the only requirement is the opportunity to be heard. A filing of an
answer would constitute compliance with the opportunity to be heard unless
employee requests a hearing.
 
**Constitutional due process becomes necessary when the case is filed with
the labor arbiter. 
 
**Right against self-incrimination cannot be invoked in labor.
 
Waterous Drug Corp. v. NLRC – unwanted searches and seizure filed against a
private entity. Supreme Court stated that no it cannot be applied.
 

 Article 1700 and 1702 of the Civil Code.

 
An employment contract is a contract of adhesion and should be construed
strictly against the person who prepared the contract.
 
Labor contracts are impressed with public interest.
 
There is a delicate balance between the employer and the employee.

RECRUITMENT AND PLACEMENT

 
What is recruitment?

 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 a non-licensee or non-holder of authority: 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 as engaged in such act.
 Non-licensee or non-holder of authority - means any person, corporation
or entity which has not been issued a valid license or authority to engage
in recruitment and placement by the Secretary of Labor and Employment,
or whose license or authority has been suspended, revoked or canceled
by the POEA or the Secretary of Labor and Employment.

 
Private Employment Agency v. Private Recruitment Entity
 

 A PEA has a right duly recognized in law to charge a fee, directly or

indirectly, from the workers or the employers or from both; while a PRE
does not charge any fee either directly or indirectly from the workers or
employers to which they would be deployed;
 PEA is authorized to recruit only for overseas placement or deployment;
while PRE is allowed to recruit for both local and overseas deployment.
 PEA derives its authority to recruit and place workers from a document
denominated as a “license”; while PRE sources its authority from a
document called “authority.”

 
Acts Constituting Illegal Recruitment:

 Non-licensee or no authority; and

 Licensed or with authority, but did any of the illegal acts.
 
Simple Recruitment

 Basic Principle one on one.

 
Recruitment Considered Economic sabotage

 Illegal recruitment is considered economic sabotage - when the

commission thereof is attended by the qualifying circumstances as follows:
o By a syndicate - if carried out by a group of 3 or more persons
conspiring and confederating with one another;
o In large scale - if committed against 3 or more persons
individually or as a group.

 
**Estafa and illegal recruitment can be simultaneous. Acquittal of one does not
bar the conviction of the other because there is no double jeopardy. Estafa is a
crime mala in se and Illegal Recruitment is a crime mala prohibita.
 
**The agent and the recruitment entity is solidarily liable.
 
Theory of Imputed Knowledge – Whatever knowledge acquired by the principal
does not mean that the agent is aware of such knowledge. We do not use this.
 
**Security of Tenure Doctrine for Overseas Filipino Workers does not apply
because of the peculiar nature of OFWs. They will never attain permanency
status BUT they MUST BE PROTECTED.
 
POEA SEC RULES

 Standard contract should be signed before departure and should have

POEA approval.

 
**Direct hiring is prohibited because they do not undergo the process of the
POEA and they could no longer assure the security and protection of OFWs.
 
**EDI Staff Builders International v. NLRC – Processual Presumption. A foreign
law must be proven failure to do so would allow the application of processual
presumption where the court presumes that foreign laws are the same with
Philippine laws.
 
Agabon v. NLRC – if the dismissal was for just cause but procedural due process
was not observed, the dismissal should be upheld. Where the dismissal is for just
cause, as in the instant case, the lack of statutory due process should not nullify the
dismissal or render it illegal or ineffectual. However, the employer should indemnify
the employee for the violation of his right to procedural due process
 
Jaka Food Doctrine v. Darwin Pacot – if the dismissal is based on a just cause,
but the employer failed to comply with the notice requirement, the sanction to be
imposed upon him should be tempered because the dismissal process was initiated
by an act imputable to the employee. If the dismissal is based on an authorized
cause, but the employer failed to comply with the notice requirement, the sanction
should be stiffer because the dismissal was initiated by the employer’s exercise of
his management prerogative.
 
Ideal Scenario of Dismissal

 There was compliance with substantive and procedural due process.

 
Nationality of the Employer

 The nationality of the employer is immaterial as long as you are working

outside the Philippines, you are an OFW.

 
PCL Shipping Philippines v. NLRC – Employer should strictly comply with the twin
requirements regardless of the situs of employment or nationality of employer.
 
**Burden of proof lies with the employer to prove that there was compliance
with substantive and procedural due process and if there is an agreement
contractual due process.
 
8042 – abandoned by the Supreme Court in 2009, However in 2010 RA 10022 it
was reinserted.
 
SERRANO DOCTRINE
  The phrase “of for three months for every year of the unexpired term,
whichever is less”of Sec. 10 paragraph 5 of RA 8042 has been declared
unconstitutional for being discriminatory, among other significant reasons
cited thereon. Consequent to tis ruling, illegally dismissed OFWs are now
entitled to all the salaries for the entire unexpired portion of their
employment contracts, irrespective of the stipulated term or duration
thereof.
 Although the subject clause was declared not violative of Section 10
Article III of the Constitution on non-impairment of contracts, it was,
however, pronounced that it violated Section 1, Article III; Section 18,
Article II; and Section 3, Article XIII of the Constitution on labor as a
protected sector. A closer examination of the subject clause reveals that it
has a discriminatory intent against, and an invidious impact on, OFWs at
the following levels: First, OFWs with employment contract of less than
one yearvis-à-vis OFWs with employment contracts of one year or more;
Second, among OFWs with employment contracts of more than one
year; and Third, OFWs vis-à-vis local workers with fixed-period
employment.

 
Burden of Proof

 In termination cases where the employee-employer relationship has been

established the burden of proof that the dismissal of an employee is for a
just cause, lies with the employer. The employer must show adequate
evidence.

 
Quantum of Evidence in OFW Cases

 Substantial evidence is required before quasi-judicial bodies like the

POEA and NLRC.

 
**Illegally dismissed OFW is not entitled to benefits under Article 279. We
invoke RA 8042.
 
**The benefit given to an illegally dismissed OFW is indemnity.
 
Prevailing Jurisprudence
SAMEER OVERSEAS PLACEMENT DOCTRINE (Reiteration of Serrano Doctrine)

 Respondent’s dismissal grounded on inefficiency and negligence less than

one year from hiring and her repatriation on the same day show not only
 failure on the part of petitioner to comply with the requirement of the
existence of just cause for termination; they patently show that the
employers did not comply with the due process requirement.
 “A valid dismissal requires both a valid cause and adherence to the valid
procedure of dismissal. The employer is required to give the charged
employee at least two written notices before termination. One of the
written notices must inform the employee of the particular acts that may
cause his or her dismissal. The other notice must [inform] the employee of
the employer’s decision. Aside from the notice requirement, the employee
must also be given ‘an opportunity to be heard”.

 
**Moral and Exemplary damages plus attorney’s fees – both OFW and local
employees are entitled.
 
 
Repatriation

 If illegally dismissed, employee the repatriation should be shouldered by

the employer.
 If legally dismissed, employee shall shoulder the repatriation.

 
Direct Hiring

 Rationale: We cannot protect our OFWs if they are undocumented. This

is to ensure that the employment is fully regulated by the government
through its agencies, such as the POEA. In this ways,
adverse exploitation of the migrant workers by foreign employers is
minimized, if not eradicated.
 This is prohibited by law.
 Exemption to direct hiring:
 Members of the Diplomatic Corp;
 International Organizations;
 Heads of state and government officials with the rank of at least deputy
minister; or
 Other employees as may be allowed by the DOLE.

 
**If you are an undocumented worker then you can be deported anytime.
 
**A non-resident foreign corporation domiciled outside of the Philippines
which recruits Filipino workers for employment abroad is, in law, doing
business in the Philippines. If a foreign corporation is not engaged in business
in the Philippines, then he is not barred from seeking redress.
 
RA 7730 – When it comes to the supervisory or visitorial power of the DOLE
you always go to the DOLE regardless of the violation.
 
Servando Case – what is invoked and involved is not the visitorial or
enforcement power, but the limited adjudicatory or quasi-judicial power, of the
Regional Directors. The situations being dissimilar, their regulation and
governance are, as they should be, also different. Article 129 is applied if there
is severance of employer-employee relationship. (Servando’s Incorporated v.
Secretary of Labor and Employment, G.R. No. 85840, June 5, 1991)
 
GUICO Case – even if the claim exceeds 5000 pesos you still go to the DOLE.
Article 129 is applied if there is severance of employee-employer relationship.
(Francis Guico Jr. v. Hon. Secretary Leonardo Quisumbing, G.R. No. 131750,
Nov. 16, 1998)
 
Employment of Non-Resident Aliens.

 Must secure alien employment permit. An alien employment permit is a

document issued by the DOLE Secretary through the DOLE-Regional
Director who has jurisdiction over the intended place of work of the foreign
national, authorizing the foreign national to work in the Philippines.

 
**Foreign Professionals must secure an STR from the PRC.
 
Special Visa for Employment Generation (Foreign investors)

 Special Visa for Employment Generation is a special visa issued to a

qualified non-immigrant foreigner who shall actually employ at least 10
Filipinos in a lawful and sustainable enterprise, trade, or industry. Qualified
foreigners who are granted the SVEG shall be considered special non-
immigrants with multiple entry privileges and conditional extended stay,
without the need of prior departure from the Philippines. The privileges of
this Executive Order may extend to the qualified foreigner’s spouse and
dependent unmarried child/children below 18 years of age whether
legitimate, illegitimate or adopted. (Sec. 1 of EO 758)

 
Rationale:
  There are foreigners who want to maintain a lawful presence in the
Philippines by actually, directly or exclusively engaging in lawful, viable,
and sustainable trade, business, industry, or activity offering local
employment. A survey of NSO shows millions of unemployed Filipinos.
SVEG is for the creation of job opportunities for the Filipino.

 
Who may avail:

 Non-immigrant foreigners who wish to avail of the SVEG should comply

with the following conditions:
 The foreigner shall actually, directly or exclusively engage in a viable and
sustainable commercial investment/enterprise in the Philippines,
exercises/performs management acts or has the authority to hire, promote
and dismiss employees;
 He evinces a genuine intention to indefinitely remain in the Philippines;
 He is not a risk to national security; and
 The foreigner’s commercial investment/enterprise must provide actual
employment to at least 10 Filipinos in accordance with Philippine labor
laws and other applicable special laws.

 
**The above mentioned requirements must be continually satisfied by the
foreigner for him/her to continue to be a holder of the SVEG.  (sec. 2 of EO 758)
 
APPRENTICE AND LEARNER
 
Apprenticeship

 Apprenticeship means any training on the job supplemented by related

theoretical instruction involving apprenticeable occupations and trades as
may be approved by the Secretary of Labor and Employment.

 
Who is an apprentice?

 An “apprentice” is a worker who is covered by a written apprenticeship

agreement with an employer.

 
Qualifications of an apprentice?
  Be at least fifteen (15) years of age, provided those who are at least fifteen
(15) years of age but less than eighteen (18) may be eligible for
apprenticeship only in non-hazardous occupation;
 Be physically fit for the occupation in which he desires to be trained;
 Possess vocational aptitude and capacity for the particular occupation as
established through appropriate tests; and
 Possess the ability to comprehend and follow oral and written instructions.

 
**Wage rate of apprentices - 75% of the statutory minimum wage.
 
**Apprentices become regular employees if program is not approved by DOLE.
(Century Canning Corporation v. CA)
 
Century Canning Case -  The requisite TESDA approval of the apprenticeship
program prior to the hiring of apprentices was further emphasized by the DOLE with
the issuance of Department Order No. 68-04 on 18 August 2004 specifically states
that no enterprise shall be allowed to hire apprentices unless its
apprenticeship program is registered and approved by TESDA. In the case the
respondent is not considered an apprentice because the apprenticeship agreement
was enforced before the TESDA's approval of petitioner's apprenticeship program,
respondent is deemed a regular employee performing the job of a "fish cleaner."
Clearly, the job of a "fish cleaner" is necessary in petitioner's business as a tuna and
sardines’ factory. Under Article 280 of the Labor Code, an employment is deemed
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. (Century Canning Corporation v. Court of Appeals, G.R No. 152894,
August 17, 2007)
 
**Ratio of theoretical instructions and on-the-job training - 100 hours of
theoretical instructions for every 2,000 hours of practical training on-the-job.
 
Who is a learner?

 A “learner” is a person hired as a trainee in industrial occupations which

are non-apprenticeable and which may be learned through practical
training on the job for a period not exceeding three (3) months, whether or
not such practical training is supplemented by theoretical instructions.

 
**Wage rate of learners is 75% of the statutory minimum wage.
 
Pre-requisites before learners may be hired.

 When no experienced workers are available;

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

 
CONDITIONS OF EMPLOYMENT
Exclusions

 Government employees;
 Persons in the personal service of another;
 Managerial Employees
 Domestic servants or Kasambahay;
 Workers paid by result;
 Field personnel
 Members of the Family of the employer
 Employers with less than 10 employees.

 
**Kasambahays – they are still excluded from night shift differential, premium
pay, and holiday pay, but they are entitled to 13 th month pay.
 
**Supervised – covered by the provisions of the conditions of work. (If
unsupervised then they are not covered by the provisions).
 
**Field personnel – doctrine of constant supervision. They don’t usually stay in
the workplace because the nature of their work provides them to leave the
workplace. If the field personnel’s work is under constant supervision, then
the personnel is entitled to the provisions of conditions of employment.
 
HOURS OF WORK
 
**Normal hours of work of employees for eight (8) hours per day.
 
**Work day – means 24 consecutive-hour period which commences from the
time the employee regularly starts to work. It does not necessarily mean the
ordinary calendar day from 12:00 midnight to 12:00 midnight unless the
employee starts to work at this unusual hour.
 
Work Week – it is a week consisting of 168 consecutive hours or 7 consecutive
24-hour work days beginning at the same hour and on the same calendar day
each calendar week. 
 
**It is part of the managerial prerogative to change the time of the 8 hours of
work as long as it is still within the 8-hour period.
 
Manila Jockey Club Employees Labor Union v. Manila Jockey Club, Inc., G.R.
No. 167760 - While it is true that Section 1, Article IV of the CBA provides for a 7-
hour work schedule from 9:00 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m.
from Mondays to Saturdays, Section 2, Article XI, however, expressly reserves on
respondent the prerogative to change existing methods or facilities to change the
schedules of work.
 
Broken Hours

 The normal hours of work do not always mean continuous or

uninterrupted. As long as the 8 hours is accomplished within one work day
as this term is given by law.

 
Reduction of 8-hour Working Day

 It is allowed and the employer can lawfully exercise the prerogative to

reduce 8-hour normal working time per day provided that no reduction is
made on the wage or salary.

 
Compressed Work Week

 It refers to a situation where the normal workweek is reduced to less than

six days but the total number of work-hours of 48 hours per week remains.

 
Advisory No. 02 (January 29, 2002) – granting of a compressed work week in
case of national emergency and economic difficulties.
 
Advisory No. 09 (March 04, 2020) – released for the compressed work week
arrangement in response to COVID 19.
 
Regular Working Days of Hospital or Clinic

 The regular working days of covered employees shall not be more than
five days in a workweek.
 You are required to work 40 hours a week and if you exceed 40 hours you
are entitled to overtime pay.

 
Policy Instruction No. 54 – unconstitutional because it expanded the coverage
of article 83 granting the hospital workers compensation worth 7 days of
compensation for 5 days work a week (San Juan De Dios Hospital Employees
Association v. NLRC, G.R. No. 126383).
 
COMPENSABLE HOURS WORKED

 All time during which an employee is required to be on duty or to be at the

employer’s premises or to be at a prescribed workplace; and
 All time during which an employee is suffered or permitted to work.
 Coffee breaks and rest period of short duration - considered compensable
hours worked.
 Waiting time - considered compensable if waiting is an integral part of the
employee's work or he is required or engaged by the employer to wait.
 Sleeping while on duty is compensable if the nature of the employee’s
work allows sleeping without interrupting or prejudicing work or when there
is an agreement between the employee and his employer to that effect.
For example, a truck helper may sleep after performing his task and while
his truck is traveling on its way to its assignment. But the same may not be
done by the driver.
 Working while on call - compensable if employee is required to remain on
call in the employer’s premises or so close thereto that he cannot use the
time effectively and gainfully for his own purpose.
 Travel time:
o Travel from home to work -not compensable working time;
o Travel that is all in the day’s work - compensable hours worked;
o Travel away from home - compensable hours worked.
 Attendance in lectures, meetings, and training periods sanctioned by
employer - considered hours worked. 9. Attendance in CBA negotiations
or grievance meeting - compensable hours worked.
 Attendance in hearings in cases filed by employee - not compensable
hours worked.
 Participation in strikes - not compensable working time.
 Seafarers are entitled to overtime pay as long as the seafarer can prove
that there was work rendered beyond the 8 hours of work.

 
University of Pangasinan Faculty Union v. University of Pangasinan and NLRC,
G.R. No. L-63122 - "NO WORK, NO PAY" PRINCIPLE NOT APPLICABLE’ CASE
AT BAR. — It is beyond dispute that the petitioner’s members are full-time
employees receiving their monthly salaries irrespective of the number of working
days or teaching hours in a month. However, they find themselves in a most peculiar
situation whereby they are forced to go on leave during semestral breaks. These
semestral breaks are in the nature of work interruptions beyond the employees’
control. The duration of the semestral break varies from year to year dependent on a
variety of circumstances affecting at times only the private respondent but at other
times all educational institutions in the country. As such, these breaks cannot be
considered as absences within the meaning of the law for which deductions may be
made from monthly allowances. The "No work, no pay" principle does not apply in
the instant case. The petitioner’s members received their regular salaries during this
period. It is clear from the aforequoted provision of law that it contemplates a "no
work" situation where the employees voluntarily absent themselves. Petitioners, in
the case at bar, certainly do not, ad voluntatem, absent themselves during semestral
breaks. Rather, they are constrained to take mandatory leave from work. For this
they cannot be faulted nor can they be begrudged that which is due them under the
law.
 
MEAL PERIOD
 
Meal Periods

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

 
**If the one-hour break is beyond an 8-hour work period, then the one-hour
break is compensable.
 
Sime Darby Pilipinas Inc., v. NLRC, G.R. No. 119205 – Petitioner states that the
 
Shortening of Meal Time to less than 20 minutes is compensable if:

 Where the work is non-manual work in nature or does not involve

strenuous physical exertion;
  Where the establishment regularly operates for not less than 16 hours a
day;
 In cases of actual or impending emergencies or when there is installations
to avoid serious losses which the employer would otherwise suffer; and
 Where the work is necessary to prevent serious loss of perishable goods.

 
**Shortened meal period would actually allow you to leave earlier.
 
Shortening of meal time to not less than 20 minutes is not compensable

 The law allows a situation where the employee agrees to shorten the meal
time to 30 minutes instead of the one hour. For the purpose of allowing
them to leave work earlier than the lapse of the eight hours required by
law.
 This shall be considered compensable working time provided the following
conditions are complied with:
o 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;
o There should be no diminution in the benefits of the employees
which they receive prior to the effectivity of the shortened meal
period;
o The work of the employees does not involve strenuous physical
exertion and they are provided with adequate coffee breaks in
the morning and afternoon.
o The value of the benefits derived by the employees from the
proposed work arrangements 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;
o The overtime pay of the employees will become due and
demandable if they are permitted to work beyond 4:30 p.m. and
o The effectivity of the proposed working tine arrangement shall
be for a temporary duration.

 
NIGHT SHIFT DIFFERENTIAL
 
What is Night Shift Differential?

 Night shift differential is equivalent to 10% of employee's regular wage for

each hour of work performed between 10:00 p.m. and 6:00 a.m. of the
following day. 
  When the work of an employee falls at nighttime, the receipt of overtime
pay shall not preclude the right to receive night differential pay. The
reason is, the payment of the night differential pay is for the work done
during the night; while the payment of the overtime pay is for work in
excess of the regular eight (8) working hours.
 It is given as a premium for working at a time when the employee is
supposed to sleep and rest in accordance with the law of nature.
Night work cannot be regarded as desirable.
 Where night shift (10 p.m. to 6 a.m.) work is regular work.
o On an ordinary day: Plus 10% of the basic hourly rate or a total
of 110% of the basic hourly rate.

 
OVERTIME WORK
 
**Premium – given within the 8 hours of work.
Overtime Work

 Work rendered after normal eight (8) hours of work is called overtime
work.
 In computing overtime work, "regular wage" or "basic salary" means
"cash" wage only without deduction for facilities provided by the employer.

 
**Premium pay – means the additional compensation required by law for work
performed within 8 hours on non-working days, such as rest days and special
days.
 
**Overtime pay – means the additional compensation for work performed
beyond 8 hours. Every employee entitled to premium pay is also entitled to the
benefit of overtime pay.
 
**Overtime work must be approved by the management.
 

 For overtime work performed on an ordinary day, the overtime pay is plus
25% of the basic hourly rate.
 For overtime work performed on a rest day or on a special day, the
overtime pay is plus 30% of the basic hourly rate which includes 30%
additional compensation as provided in Article 93 [a] of the Labor
Code.
 For overtime work performed on a rest day which falls on a special day,
the overtime pay is plus 30% of the basic hourly rate which includes
 50% additional compensation as provided in Article 93 [c] of the
Labor Code.
 For overtime work performed on a regular holiday, the overtime pay
is plus 30% of the basic hourly rate which includes 100% additional
compensation as provided in Article 94 [b] of the Labor Code.
 For overtime work performed on a rest day which falls on a regular
holiday, the overtime pay is plus 30% of the basic hourly rate which
includes 160% additional compensation.

 
South Cotabato Communications Corporation v. Hon. Partricia Sto. Tomas,
G.R. No. 217575 – straight method of computation of overtime pay is not
allowed.
 
Stolt-Nielsen Marine Services Inc., v. NLRC – the seafarer is entitled to the
remaining six months and three days of his contract, at which time he was no
longer rendering services. The fixed overtime pay of 30% is guaranteed BUT
the right must be established A seafarer by nature of his job, stays on board a
vessel beyond the 8-hour work schedule. For the seafarers the overtime pay
must be proved that work was rendered.
 
PCL Shipping Philippines Inc., v. NLRC, G.R. No. 153031 – failure to prove that
overtime work has actually been rendered does not entitled the seafarer to
overtime pay.
 
Bahia Shipping Services v. Chua, G.R. No. 162195 – guaranteed overtime pay
should not be included in his salary for the unexpired portion of his contract.
This is because it is improbable that the OFW has rendered overtime work
during the unexpired term of his contract.
 
Philippine Airlines Employees Savings and Loan Association v. NLRC, G.R.
No. 109156 – The agreed salary ate in the employment contract which provides
12 normal working hours per day should be deemed to cover overtime pay,
otherwise serious distortions in wages would result. How can paying an
employee the overtime payment due him cause serious distortions in salary
rates or scales.
 
Waiver of Overtime Pay

 The right to claim overtime pay is not subject to a waiver.

 
**Under time is not offset by overtime work. Permission given by the employee
to go on leave on some other day of the week shall not exempt the employer
from paying the additional compensation required by law.
 
Employer may compel employee to render overtime work

 The general rule remains that no employee may be compelled to render

overtime work against his will.
 Exceptions when employee may be compelled to render overtime work:
o 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;
o When overtime work is necessary to prevent loss of life or
property or in case of imminent danger to public safety due to
actual or impending emergency in the locality caused by serious
accident, fire, floods, typhoons, earthquake, epidemic or other
disasters or calamities;
o When there is urgent work to be performed on machines,
installations or equipment, or in order to avoid serious loss or
damage to the employer or some other causes of similar nature;
o When the work is necessary to prevent loss or damage to
perishable goods;
o When the completion or continuation of work started before the
8th hour is necessary to prevent serious obstruction or prejudice
to the business or operations of the employer; and
o When overtime work is necessary to avail of favorable weather
or environmental conditions where performance or quality of
work is dependent thereon.

 
**An employee cannot validly refuse to render overtime work if any of the
afore-mentioned circumstances is present. When an employee refuses to
render emergency overtime work under any of the foregoing conditions, he
may be dismissed on the ground of insubordination or willful disobedience of
the lawful order of the employer.
 
REST PERIOD
 
Weekly Rest Period

 Every employer shall give his employees a rest period of not less than 24
consecutive hours after every 6 consecutive normal work days.
 If business is open on Sundays/holidays, rest day may be scheduled on
another day.
  Preference of employee as to his rest day should be respected if based on
religious grounds.
 Waiver of compensation for work on rest days and holidays is not valid.

 
**Blue Sunday Rule has been repealed by the Labor Code. Sunday is no longer
the sole rest day.
 
Employer may compel his employees to render work on a rest day if:

 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 in case of force majeure or imminent
danger to public safety; 
 In case of urgent work to be performed on machineries, equipment, or
installations, to avoid serious loss which the employer would otherwise
suffer;
 In the event of abnormal pressure of work due to special circumstances,
where the employer cannot ordinarily be expected to resort to other
measures;
 To prevent serious loss of perishable goods;
 Where the nature of the work is such that the employees have to work
continuously for seven (7) days in a week or more, as in the case of the
crew members of a vessel to complete a voyage and in other similar
cases; and
 When the work is necessary to avail of favorable weather or environmental
conditions where performance or quality of work is dependent thereon.

 
**The employer has the prerogative to determine and schedule the weekly rest
day of his employees’ subject to the CBA and such rules and regulations as
the DOLE Secretary may provide.
 
HOLIDAY PAY
 
Holiday Pay

 Holiday pay is a premium given to employees pursuant to law even if he is

not suffered to work on a regular holiday.
o If worker did not work on regular holiday, he is entitled to 100%
of his basic pay;
o If he worked, he is entitled to 200% thereof.

 
**Seasonal workers are entitled to holiday pay while working during the
season. They may not be paid the required holiday pay during off-season
where they are not at work.
 
**Jose Rizal College v. NLRC, G.R. No. 65482 – A school is exempted from
paying hourly-paid faculty members their pay for regular holidays, whether the
same be during the regular semester school year or during semestral.
However, it is liable to pay the faculty their regular hourly rate on days
declared as special holidays or for some reason classes are called off or
shortened for the hours they are supposed to have taught.
 
**Holiday pay for piece workers – a covered employee is paid by result or
output such as payment on piece-work, his holiday pay should not be less
than his average daily earnings for the last seven actual working days
preceding the regular holiday.
 
Insular Bank of Asia and America Employees Union [IBAAEU] vs. Inciong, et
al., G. R. No. L-52415 – The Labor Code does not exclude monthly-paid
employees from the benefits of holiday pay. However, the implementing rules
on holiday pay excluded monthly-paid employees from the said benefits by
inserting under Rule IV, Book III of the said rules, Section 2 which provides
that monthly-paid employees are presumed to be paid for all days in the
month, whether worked or not. In Policy Instructions No. 9, the Secretary of
Labor categorically declared that the benefit is intended primarily for daily-
paid employees when the law clearly states that every worker should be paid
their regular holiday pay. This is a flagrant violation of the mandatory directive
of Article 4 of the Labor Code which states that doubts in the implementation
and interpretation of the Code, including its implementing rules, shall be
resolved in favor of labor. Moreover, it shall always be presumed that the
legislature intended to enact a valid and permanent statute which would have
the most beneficial effect that its language permits.
There’s already so much pressure surrounding us on an everyday basis, so let’s try
to make it easier on ourselves. Focus on the step in front of you, and don’t
overthink the whole staircase. It doesn’t make you weak if you need to breathe for
a minute. Little by little. You’ll get there, you’ll see.

SSS Law Primer

1. Explain why the Social Security Law is not considered a law on
succession?

The Social Security Law is not a law of succession because it is not the heirs of the
employee, but the designated beneficiaries who are to receive the benefits that
actually receives such benefits.
 2. Exception on why the Social Security Law is not a law on succession.

It is only when the beneficiary is the estate, or when the designated beneficiary or
the designation of beneficiary is void, then the heirs of the employee would receive
the benefits.

3. The inclusion of religious organizations under the coverage of the Social

Security Law is deemed to be valid in the case of Roman Catholic
Archbishops of Manila. Explain.

Religious organizations under the coverage of the Social Security Law does not
violate the constitutional prohibition against the use of public funds for the application
for the use, benefit, or support of any priests because the funds of the Social
Security System are private funds and not public funds.
  4. Enumerate the people covered by compulsory coverage of the Social Security
Law.

 All employers engaged in business in the Philippines, including religious,

charitable or non-profit institutions.
 All employees not over sixty (60) years of age
 Domestic helpers receiving PhP. 1000 per month
 Aliens employed in the Philippines
 Self-employed person, including but not limited to the following:
1. Self-employed professionals
2. Partners and single proprietors of businesses
3. Actors, actresses, directors, scriptwriters, and news
correspondents
4. Professional athletes, coaches,, trainers, and jockeys and
5. Individual farmers and fishermen

   5. Explain the effective date of coverage from employers, employees, and the self-
employed.
For employers, the date of coverage for the Social Security Law begins on the first
day of his operation. For employees it begins on the first day of his employment and
for the self-employed, it begins upon the registration with the SSS.

6. Enumerate the people who can avail of voluntary coverage.

 Spouses who devote full time to managing the household and family
affairs; and
 Filipinos recruited for overseas employment by foreign-based employers.

7. Can a member withdraw his membership with the SSS?’

No, when a person registers for SSS membership, he becomes a member for life.
During such time that the member failed to remit contributions, the benefits and loan
privileges provided by the SSS can still be availed as along as the member meets
the qualifying conditions for entitlement thereto.
   8. Enumerate the employees not covered by the Social Security Law.

 Purely Casual employees

 Employees serving on an alien vessel, when such vessel is outside of the
Philippines;
 Employees of the Philippine government or any of its instrumentalities and
agencies;
 Employees of foreign government, international organization and their
wholly-owned instrumentality
 Temporary employees, if excluded by regulation of the SSC

   9. What are the obligations of an employer under the Social Security Law

 To make a timely report of its employees for coverage; and

 To make timely remittance of premiums

10. Enumerate the benefits under the Social Security Act.

 Maternity Leave Benefits

 Sickness Benefits
 Permanent Disability Benefits
 Retirement Benefits
 Death Benefits
 Funeral Benefits

GSIS Law Primer

1. Enumerate the coverage of the Government Service Insurance System.
The GSIS covers government employees, irrespective of employment
status who are employed with:

 The national government, its political subdivisions, branches, agencies or

instrumentalities;
 Government-owned or controlled corporations
 Government financial institutions with original charters
 Constitutional commissions
 Judiciary

2. Enumerate the benefits under the GSIS

 Separation benefits
 Unemployment or involuntary separation benefits
 Permanent total disability benefits
 Permanent partial disability benefits
 Temporary total disability benefits
 Retirement benefits
 Survivorship benefits
  Funeral benefit
 Life insurance benefit

3. Will separation from service terminate GSIS membership?

No, separation from service will not terminate GSIS membership. He/She continues
to be a member and is entitled to whatever benefits he has qualified to in the event
of any compensable contingency.

4. Enumerate the employees not subject to compulsory coverage of the

GSIS

 Uniformed personnel of the AFP, PNP, Bureau of Fire Protection and

Bureau of Jail Management and Penology;
 Barangay and Sanggunian Officials who are not receiving fixed monthly
compensation
 Contractual employees who are not receiving fixed monthly compensation;
and
 Employees who do not have monthly regular hours of work and are not
receiving fixed monthly compensation

5. Who are Active Members of the GSIS?

Active members refer to a member who is still in government service and together
with the government agency to which he belongs is required to pay monthly
contributions.

6. Who are Inactive Members of the GSIS?

A member who is separated from the service either by resignation, retirement,

disability, dismissal from the service, retrenchment or, who is deemed retired from
the service under the GSIS Act.

7. Who are Regular Members of the GSIS?

A member employed by the government, national, local, legislative bodies, GOCC

with original charters, government financial institutions.

8. Who is a Special Member of the GSIS?

The constitutional commissioners, members of the judiciary, including those with

equivalent ranks, who are required by law to remit regular monthly contributions for
life insurance policies to the GSIS in order to answer for their life insurance benefits.

9. Enumerate the conditions for entitlement to unemployment benefit.

GSIS members are entitled to this benefit if the following are met:

 He was a permanent employee at the time of separation

  His separation was involuntary due to abolition of his office; and
 He has been paying the required premium contributions for at least 1 year
prior to separation.

10. When can the disability benefits be suspended?

If the member has reached the minimum retirement age, disability benefits are
suspended when he:

 Is reemployed or
 Recovers from the disability as determined by GSIS or
 Fails to present himself for medical examination when required by GSIS

Agrarian Law Primer

1. What is Agrarian Law?

It refers to the distribution of public agricultural lands, large estates and regulation of
the relationship between landowner and the farmer who works on the land.

2. What is the primary objective of the Agrarian Reform Program?

The primary objective of the Agrarian Reform Program is to breakup agricultural

lands and transform them into economic-size farms to be owned by the farmers to
uplift their socio-economic status.

3. What is the meaning of Agrarian Reform?

It means the redistribution of lands regardless of crops or fruits produced to farmers

and regular farmworkers who are landless, irrespective of tenurial arrangement, to
include the totality of factors and support services designed to lift the economic
status of the beneficiaries.

4. What does the law mean by Economic Family-Size Farm?

It means an area of farm land that permits efficient use of labor and capital resources
of the farm family and will produce an income sufficient to provide a modest standard
of living to meet a farm family’s need for food, clothing, shelter and education with
possible allowance for payment of yearly instalments on the land.

5. What are the terms not included in the word Agriculture?

Lands devoted to the raising of livestock, poultry, and swine are classified as
industrial, not agricultural, hence exempt from agrarian reform program.

6. Enumerate the lands NOT covered by the Comprehensive Agrarian

Reform Law
 

 Private lands with a total area of 5 hectares and below

 Lands actually, directly, and exclusively used for perks, wildlife, forest,
reserves, reforestation, fish sanctuaries and breeding grounds,
watersheds and mangroves;
 Private lands actually, directly, and exclusively used for prawn and
fishponds;
 Lands actually, directly and exclusively used and found to be necessary
for:
1. National defense
2. School sites and campuses
3. Experimental farm stations operated for educational purposes
4. Seeds and seedling research and pilot production center
5. Church sites and convents
6. Mosque sites and Islamic centers
7. Communal burial grounds
8. Penal colonies and penal farms worked by inmates
9. All lands with 18 percent slope and over except those already
developed.

7. Enumerate the lands covered by the Agrarian Reform Law

 All public and private agricultural lands; and

 Other lands of the public domain suitable for agriculture

8. What is the Retention Rights of the Landowner? Explain

Under section 6 of the Comprehensive Agrarian Reforms Law, the landowner has
the right to retain not more than five (5) hectares of his landholdings. The retained
area need not be personally cultivated by the landowner – cultivation can be done
indirectly through labor administration.

9. Can a landowner who has already exercised his retention rights under PD
27 be entitled to the retention right under the Comprehensive Agrarian
Reform Law?

If the landowner has already exercised his retention right under PD 27 then he can
no longer exercise that right under the Comprehensive Agrarian Reform Law.
However, if the landowner chooses to retain 5 hectares under CARL, the 7 hectares
retained by him under PD 27 is placed under the CARL.

10. Can spouses retain 5 hectares under the Agrarian Reform Law?

It depends, if the property regime is conjugal or absolute community – the spouses

can retain only 5 hectares. If the property regime is separation of property – the
spouses can retain 5 hectares each.

11. Who has the right to choose the retention area?

The landowner has the right to choose the area to be retained. The chosen area
should be compact or contiguous and should not exceed the retention ceiling of 5
hectares, the landowner’s choice of the area to be retained must prevail.

12. What is the rule when the title of land is transferred to the state?

Title and ownership of land would only be transferred to the Republic only upon full
payment of the just compensation. Until the just compensation is determined and
fully paid the title and ownership will remain with the landowner.

13. What are the two notices need for validity of implementation?

 Notice of coverage pursuant to DAR Administrative Order 12 s. 1989; and

 Notice of acquisition pursuant to section 16 of the Comprehensive
Agrarian Reform Law.

The first notice is in compliance with administrative due process, considering the
implementation of the agrarian reform law is an exercise of police power and power
of eminent domain.
 14. Enumerate the factors used for the valuation of lands

 Capitalized net income which is based on land use and productivity

 Comparable sales which is based 70% of the BIR zonal value; and
 Market value which is based on the Tax Declaration

15. What is the procedure for determination of Just Compensation under the
Comprehensive Agrarian Reform Law?

The determination of just compensation begins with the Land Bank determining the
value of the lands. Using the valuation of the Land Bank, the DAR makes an offer to
the landowner. If the landowner rejects, the DAR conducts a summary administrative
proceeding to determine the compensation by requiring the landowner, Land Bank
and other interested parties to submit evidence.

16. Enumerate the qualifications of an agrarian reform beneficiary.

To qualify he must be a

 Filipino Citizen
 Resident of the barangay or municipality where the landholding is located
 At least 15 years old at the time of identification, screening and selection;
 Willing, able, and equipped with aptitude to cultivate and make the land
productive.

17. Enumerate the factors to be considered in determining the size of the land
to be awared.

 Types of crop
 Type of soil
  Weather patterns; and
 Other pertinent factors critical for the success of the beneficiaries.

18. Is the transfer of ownership to the beneficiaries automatic?

It is not automatic. Compulsory acquisition does not mean automatic transfer of

ownership of the land to the tenant, lessee, or farm worker. Title and ownership over
the land can be transferred to the beneficiaries only upon full payment of the just
compensation to the landowner.

19. When does the DAR issue a Certificate of Land Ownership Award
(CLOA)?

The DAR will issue the CLOA only upon the full payment of amortization by the
farmer-beneficiary. The CLOA in turn becomes the basis for the issuance in his
name of an original or transfer certificate title.

20. Enumerate the grounds for the cancellation of a CLOA.

 Abandonment of the land

 Neglect or misuse of the land
 Failure to pay three annual amortizations
 Misuse or diversion of financial support services
 Sale, transfer or conveyance of the right to use the land; and
 Illegal conversion of the land.

21. What are the support services given by the Comprehensive Agrarian
Reform Law to beneficiaries?

The government is mandated to extend support services to agrarian reform

beneficiaries in the form of the following:

 Land surveys and titling;

 Liberalized access to credit;
 Socialized terms on agricultural credit facilities;
 Technology transfer;
 Infrastructure, such as storage facilities, mini dams, etc.

22. What does the law mean by Rural Women?

Rural women are those engaged directly or indirectly in farming or fishing as their
source of livelihood, whether paid or unpaid, regular or seasonal, or in food
preparation, managing the household, caring for the children, and other similar
activities.

23. The law provides Rural Women with assurance and guarantees.
Enumerate them.

 Equal right to ownership of the land

  Equal shares of the farm’s produce; and
 Representation in advisory or appropriate decision-making bodies.

24. Where can special agrarian settlements be set up?

In special areas such as:

 Logging and mining concessions – farm settlements may be opened up

here provided that the beneficiaries will undertake reforestation and
conservation production methods.
 Sparsely occupied public agricultural lands – farms settlements may be
opened up here for qualified landless people pursuant to an organized
program to ensure orderly development.

25. Explain the rule on the distribution of corporate farms.

There are two modes of distribution of corporate farms namely:

 Direct or
 Indirect

As a rule, corporate farms are to be distributed directly to the individual worker-

beneficiaries. If it is not economically feasible and sound to divide the land, then it
shall be distributed indirectly to the worker-beneficiaries through a worker’s
cooperative or association.

26. Who has the right over standing crops at the time of acquisition?

The landowner retains his right over crops not yet harvested at the time the
Department of Agrarian Reform took possession of the land.

27. Can the beneficiary lease the land to another person?

The law prohibits the transfer of ownership and not the transfer of possession. The
beneficiary can lease the land to another person, provided that the lease is also for
agricultural purposes. If the lease is not for agricultural purposes then the Agrarian
Reform should approve the lease.

28. Can the beneficiary lease the land to the former landowner?

The beneficiary can lease the land to its former owner. However, this can only be
done by obtaining approval from the Department of Agrarian Reform.

29. Explain the quasi-judicial power of the DAR.

The Department of Agrarian Reform was given quasi-judicial powers which it

exercises through the DAR Adjudication Board which has primary jurisdiction to
determine and adjudicate agrarian reform matters; and appellate jurisdiction over
orders and decisions of the Agrarian Reform Adjudicators.
 30. Does the DAR Adjudication Board have jurisdiction matters pertaining to
ownership?

No, when the matter pertains to issues involving or regarding ownership and not
agrarian dispute then the matter is beyond the jurisdiction of the DAR Adjudication
Board. (Heirs of Herman Rey Santos v. Court of Appeals GR No. 10992)

31. Enumerate the additional jurisdiction of the Special Agrarian Court.

In addition to their vested jurisdiction, the Special Agrarian Court are conferred
original and exclusive jurisdiction to hear and decide: a) petitions for the
determination of just compensation; and b) criminal violations of the Comprehensive
Agrarian Reform Law.

32. What is the remedy of the landowner from an adverse decision of the
Special Agrarian Court and adverse decision from the Court of Appeals?

The remedy from an adverse decision rendered by the SAC is appeal via petition for
review under Rule 43 of the Rules of Court, and not an ordinary appeal. The remedy
for an adverse decision of the Court of Appeals is to file a petition for certiorari with
the Supreme Court.

33. Explain the applicability of the Rules of Court with regard to cases
involving the Comprehensive Agrarian Reform Program.

The procedures outlined in the Rules of Court will govern if the adverse decision is
on appeal. This will expedite the proceedings and the court may require the parties
to submit simultaneous memorandum within 15 days after which the case will be
deemed submitted for decision.

34. Explain the rule of Funding of Just Compensation.

The just compensation payments to landowners can only be sourced from the
Agrarian Reform Fund. If the annual budget for the Agrarian Reform fund is not
sufficient, the just compensation payments shall be charged against the debt service
program of the national government.

35. What is the role of the Land Bank?

The Land Bank is the financial arm of the agrarian reform program. The
determination of just compensation under the Comprehensive Agrarian Reform Law
commences with the Land Bank determining the value of the lands.

36. What does the law mean by conversion of lands?

Conversion is the act of changing the current use of a piece of agricultural land into
some other use as approved by the Department of Agrarian Reform for different
uses such as residential, commercial, industrial, and other non-agricultural purposes.

37. What does the law mean by reclassification of lands?

Reclassification is the act of specifying how agricultural lands shall be utilized for
non-agricultural uses such as residential, industrial, commercial and other non-
agricultural purposes.

38. What is the effect of reclassification?

A mere reclassification of an agricultural land does not automatically allow the

landowner to change its uses. He has to undergo the process of conversion before
he is permitted to use the agricultural land for other purposes.

39. Who can apply for conversion?

The following persons can apply for conversion: a) beneficiary; or b) the landowner
with respect only to his retained area which is tenanted.

40. Under what conditions can an application for conversion be filed?

The application for conversion can be filed if any of the following conditions exist: a)
when the land ceases to be economically feasible for agricultural purposes; or b)
when the locality has become urbanized and the land will have a greater economic
value for residential, commercial, or industrial purposes.

41. In the Tenant Emancipation Law, Section 1 states that all qualified farmers
are now deemed full owners. Explain

The phrase shall be deemed owner or are now deemed full owners does not mean
automatic transfer of title or ownership of the land to the tenant or lessee. There has
to be full payment of just compensation before the landowner could be divested of
his land, otherwise the land would be taken without just compensation in violation of
the constitution. The title of land will only be transferred upon full payment of just
compensation.

42. What are the sized of land entitled to the tenant-farmer?

The tenant-farmer is entitled to: a) five (5) hectares, if not irrigated; or b) three (3)
hectares if irrigated.

43. Enumerate the stages of land transfer.

The land transfer under PD 27 is effected in two stages, namely:

 Issuance of Certificate of Land Transfer to the famer-beneficiary; and

 Issuance of Emancipation Patent

44. What is significance of an Emancipation Patent?

The patent vests upon the farmer-beneficiary absolute ownership over the
landholding, and it constitutes conclusive authority for the issuance of an original or
transfer certificate of title in the holder’s name.
 45. Enumerate the grounds for the cancellation of Emancipation Patent.

The following are the grounds for the cancellation of the Emancipation Patent:

 Abandonment of the land

 Neglect or misuse of the land
 Failure to pay 3 annual amortizations
 Misuse or diversion of financial and support services
 Sale, transfer or conveyance of the right to use the land
 Illegal conversion of the land

46. Who has jurisdiction over the cancellation of Emancipation Patents

All cases involving the cancellation of registered emancipation patents are within the
exclusive and original jurisdiction of the Secretary of the Department of Agrarian
Reform.

47. Can the Tenant-beneficiary sell or transfer ownership of the land under PD
27?

The tenant-beneficiary cannot sell or transfer ownership of the land acquired under
the Tenant Emancipation law except to the government or by hereditary succession.

48. What happens if the tenant-beneficiary fails to pay 3 annual

amortizations?

If the farmer fails to pay 3 annual amortizations the Land Bank shall cause for the
foreclosure of the mortgage. The tenant-farmer or any of his heirs may lift the
foreclosure within a period of two-years from its registration by paying the Land Bank
all unpaid amortizations on the land with interest of 6 percent per annum.

49. Explain the Right of Retention of the Landowner under PD 27.

The landowner is entitled to retain an area of not more than 7 hectares if he is

cultivating, or will cultivate it. Personal cultivation by the landowner is not required –
cultivation can be done indirectly through labor administration.

50. Who has jurisdiction over retention or exemption issues?

Issues pertaining to retention rights of the landowner and the exclusion or exemption
from agrarian reform coverage are cognizable by the Secretary of the Department of
Agrarian Reform.

51. What is the main objective of the Code of Agrarian Reform?

The main objective of the code is to create a system of owner-cultivatorship and

economic family-size farm as basis of Philippine agriculture.

52. Enumerate the salient features of the Code of Agrarian Reform

The salient features of the Code of Agrarian Reforms are as follows:

 It abolished the share tenancy system and replaced it with agricultural

leasehold.
 It established a bill of rights for agricultural workers
 It established the Department of Agrarian Reform as the machinery for the
acquisition and distribution of agricultural land; and
 It established the Land Bank as the financial arm of the agrarian reform.

53. What is share tenancy?

Share tenancy is a situation where two persons agree on a joint undertaking for
agricultural production wherein one party furnishes the land and the other his labor,
with either or both, contributing any one or several of the items of production. The
produce thereof is divided between the landholder and the tenant.

54. What are the modes of payment of rentals?

The rental may be paid by the agricultural lessee in money or in produce, or both. If
the rental is to be paid in produce, it should be paid immediately after threshing or
processing. If the payment to be paid in money, it should be paid within a reasonable
time from threshing or processing.

55. Does the transfer of ownership of land transfer the leasehold relation?

If the landowner-lessor sells or transfers ownership of the land, the leasehold

relationship is not extinguished. The buyer or transferee becomes the lessor.

56. When can the agricultural leasehold be extinguished?

The agricultural leasehold under the code of agrarian reform is extinguished by:

 Abandonment of the landholding without the knowledge of the agricultural

lessor
 Voluntary surrender of the landholding by the agricultural lessee; or
 Absence of the persons to succeed the lessee, in the event of death or
permanent incapacity of the lessee.

57. What are the elements of abandonment?

The following are the essential elements of abandonment:

 There must be intent to abandon; and

 There must be actual act of abandonment, i.e. the lessee must actually
stop occupying and working the land for substantial period of time.

58. What constitutes voluntary surrender of the landholding?

The following constitutes voluntary surrender of the landholding:

  The surrender of the landholding must be voluntary on the part of the
farmer-lessee, i.e. the decision to relinquish the leasehold relation must
not be influenced by any factor from the landowner; and
 The farmer lessee must serve three months advance notice

59. What are the obligations of an agricultural lessor?

The agricultural lessor is obliged to:

 Keep the agricultural lessee in peaceful possession and cultivation of his

landholding; and
 Keep intact such permanent useful improvements existing on the
landholding at the start of the leasehold relation

60. What are the rights of an agricultural lessor?

The following are the rights of an agricultural lessor:

 To inspect and observe the extent of compliance with the terms and
conditions of the lease contract;
 To propose a change in the use of the landholding to other agricultural
purposes, or in the kind of crops to be planted;
 To require the agricultural lessee to adopt in his farm proven farm
practices necessary to the conservation of the land, improvement of its
fertility and increase of its productivity; and
 To mortgage expected rentals.

Salient features of Portability Law

AN ACT INSTITUTING LIMITED PORTABILITY SCHEME IN THE SOCIAL
SECURITY INSURANCE SYSTEMS BY TOTALIZING THE WORKERS'
CREDITABLE SERVICES OR CONTRIBUTIONS IN EACH OF THE SYSTEMS.
SECTION 1. It is hereby declared the policy of the State to promote the welfare of
our workers by recognizing their efforts in productive endeavors and to further
improve their conditions by providing benefits for their long years of contribution to
the national economy. Towards this end, the State shall institute a scheme
for totalization and portability of social security benefits with the view of
establishing within a reasonable period a unitary social security system.
Sec. 2. Definition of Terms. — As used in this Act, unless the context indicates
otherwise, the following terms shall mean:
(a) Xxx.
(b) "Portability" shall refer to the transfer of funds for the account and benefit of
a worker who transfers from one system to the other;
(c) Xxx.
(e) "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. 3. Provisions of any general or special law or rules and regulations to the
contrary notwithstanding, a covered worker who transfers employment from one
sector to another or is employed in both sectors 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.
*If qualified under RA 8291, all benefits shall apply EXCEPT cash payment.
RA No. 7699 provides that only benefits common to both GSIS and SSS shall
be paid.
The SSS does not include cash payment in the benefits being provided to
members.

Salient features of Solo-parent

Law
Who is a Solo Parent?
Any individual who falls under any of the following categories:
(1) A woman who gives birth as a result of rape and other crimes against chastity
even without a final conviction of the offender: Provided, That the mother keeps and
raises the child;
(2) Parent left solo or alone with the responsibility of parenthood due to death of
spouse;
(3) Parent left solo or alone with the responsibility of parenthood while the spouse is
detained or is serving sentence for a criminal conviction for at least one (1) year;
(4) Parent left solo or alone with the responsibility of parenthood due to physical
and/or mental incapacity of spouse as certified by a public medical practitioner;
(5) Parent left solo or alone with the responsibility of parenthood due to legal
separation or de facto separation from spouse for at least one (1) year, as long as
he/she is entrusted with the custody of the children;
(6) Parent left solo or alone with the responsibility of parenthood due to declaration
of nullity or annulment of marriage as decreed by a court or by a church as long as
he/she is entrusted with the custody of the children;
(7) Parent left solo or alone with the responsibility of parenthood due to
abandonment of spouse for at least one (1) year;
(8) Unmarried mother/father who has preferred to keep and rear her/his
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;
(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.
A change in the status or circumstance of the parent claiming benefits under this
Act, such that he/she is no longer left alone with the responsibility of
parenthood, shall terminate his/her eligibility for these benefits.
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.
Under RA 8972 Solo Parents' Welfare Act of 2000, flexible work schedule is
defined as the right granted to a solo parent employee to vary his/her arrival and
departure time without affecting the core work hours as defined by the employer.
Parental Leave. - In addition to leave privileges under existing laws, parental leave of
not more than seven (7) working days every year shall be granted to any solo parent
employee who has rendered service of at least one (1) year.
A flexible work schedule of a solo parent employee may only be denied if:
1.    The core work-hours are affected.
2.    The employer is exempted on meritorious grounds. In such case, the employer
files a request for exemption with the Department of Labor and Employment.
3.    The employee is in government service in which case flexible work schedule is
subject to the discretion of the head of agency.

Salient features of Kasambahay

Law
Refers to a person engage to work for a household within an employment
relationship.
Note: To be considered as domestic worker, one should be hired specifically to
perform household work.
Coverage:

 General househelp
 Yaya
 Cook
 Gardener
  Laundry Person
 Person who regularly performs domestic work in one household on an
occupational basis

Not covered:

 Service Providers
 Family drivers
 Children under foster family arrangement
 Person who performs work occasionally or sporadically and not on an
occupational basis

Employment of Children:
Employable age:
Fifteen (15) years old and above
Conditions:
Hours of work – 8 hours per day 40 hours   per week
No work – 10pm – 6am
No hazardous work
Access to education and training
Mode of Hiring:
(a) Direct
(b) Through a private   employment agency
Pre-employment requirements:
Medical or Health Certificate issued by a local government health officer

 Baranggay and Police Clearance

 NBI Clearance
 Authenticated birth certificate , voter’s ID, baptismal record, or passport
showing the kasambahay’s age.

NOTE: The cost shall be paid by the prospective employer or PEA

Cost of Hiring:

 Employer pays the cost of hiring. Whether hired through PEA

 Kasambahay shall NOT be charged of any recruitment or finder’s fees
 Employer pays for the development expenses
 Exception: employer may recover the development costs when
kasambahay leaves without justifiable reason within 6 months.

Contents of employment contract:

  Duties and responsibilities
 Period of employment
 Compensation
 Authorized deductions
 Hours of work
 Rest days and allowance leaves
 Board , Lodging and medical attention
 Agreements on deployment expenses
 Loan agreement
 Termination of employment
 Termination of employment
 Any other lawful condition

Mandatory benefits:

 Monthly Minimum Wage

 Daily rest period
 5 days annual SIL with pay
 13th Month pay
 SSS, Philhealth and Pag-IBIG benefits

NOTE: SSS, PhilHealth and Pag-IBIG benefits is covered:

 After one (1) month from employment

 payment of premium contributions

 wage is less than P5,000, employer will pay.

 If monthly wage is P5,000 or more, kasambahay will pay his/her share in the
premium contributions.
Payment of wages:

 In cash, at least once a month

 No payment by promisory note, voucher, coupon, token, ticken, chit.
 Provide Kasambahay with PAYSLIP every pay day containing the amount
paid and all edeductions made, if any

Other rights and privileges:

 Right to Humane Treatment

 Right to Privacy.
 Right to Education and Training

Obligations of Kasambahay:

 Render satisfactory service at all times

 Observe the Terms and Conditions of the contract
  Refrain from publicly disclosing any communication or information
pertaining to the employer or members of the household during and after
employment

Criminal acts of the eployer:

 Employing a Domestic Worker who is below 15 years old

 Physical and Sexual Abuse
 Prohibited Activities mentioned a while ago

Rescue and rehabilitation of abused Kasambahay:

 Rescue by municipal/city social welfare officer in coordination with

baranggay officials and law enforcement personnel
 Rehabilitation services by Local Social Welfare and Development Offices
(LSWDOs):

  → Temporary shelter
    → Counselling
    → Free legal services
    → Medical or Psychological services
    → Livelihood and skills training

Elizalde Case (Iglesia ni Cristo

case)
An employee has the right to join or not to join a labor union. A member of a labor
union may leave and cancel his membership at any time. An employee who joins a
union does not make any commitment or assume any undertaking to continue his
membership therein for a fixed period of time, much lesser indefinitely. He is a free
agent. However, in case there is a closed-shop or union-shop agreement, the
employee concerned is duty-bound to keep his union membership for the duration of
the CBA as a condition for his continued employment. If such membership is validly
terminated, he may likewise be dismissed from employment. The only exception to
this is when the employee objects to such membership on the ground of religious
belief.
In the case of Victoriano vs. Elizalde Rope Workers Union, the defendants
questioned the constitutionality of Republic Act No. 3350 which prescribed that
closed shop agreements shall not cover members of any religious sects which
prohibit affiliation of their members in any such labor organization. The main issues
were:

1. It infringes on the fundamental right to form lawful associations;

2. It impairs the obligation of contracts;
 3. It discriminatorily favors those religious sects which ban their members
from joining labor unions. It unduly protects certain religious sects and
leaves no rights or protection to labor organizations.

The issues were resolved as follows:

1. The assailed Act, far from infringing the constitutional provision on

freedom of association, upholds and reinforces it. It does not prohibit the
members of said religious sects from affiliating with labor unions. It still
leaves to said members the liberty and the power to affiliate, or not to
affiliate, with labor unions. If, notwithstanding their religious beliefs, the
members of said religious sects prefer to sign up with the labor union, they
can do so. If in deference and fealty to their religious faith, they refuse to
sign up, they can do so; the law does not coerce them to join; neither does
the law prohibit them from joining; and neither may the employer or labor
union compel them to join. Republic Act No. 3350, therefore, does not
violate the constitutional provision on freedom of association.
2. The free exercise of religious profession or belief is superior to contract
rights. In case of conflict, the latter must, therefore, yield to the former.
Religious freedom, although not unlimited, is a fundamental personal right
and liberty, and has a preferred position in the hierarchy of values.
Contractual rights, therefore, must yield to freedom of religion. It is only
where unavoidably necessary to prevent an immediate and grave danger
to the security and welfare of the community that infringement of religious
freedom may be justified, and only to the smallest extent necessary to
avoid the danger.
3. To compel persons to join and remain members of a union to keep their
jobs in violation of their religious scrupples, would hurt, rather than help,
labor unions. Congress has seen it fit to exempt religious objectors lest
their resistance spread to other workers, for religious objections have
contagious potentialities more than political and philosophic objections.
Furthermore, coerced unity and loyalty even to a labor - union assuming
that such unity and loyalty can be attained through coercion - is not a goal
that is constitutionally obtainable at the expense of religious liberty. A
desirable end cannot be promoted by prohibited means.

Doctrine of Necessary Implication

The doctrine of necessary implication is the legal basis for ineligibility of confidential
employees to join, assist or form any union. Article 255 [245] of the Labor Code does
not directly prohibit confidential employees from engaging in union activities. Their
disqualification proceeds merely from the application of the doctrine of necessary
implication because what Article 255 [245] singles out as ineligible to engage in
union activities are managerial employees. By necessary implication, the
disqualification extends to a confidential employee who, by reason of his position or
nature of work, assist or act in a fiduciary manner to managerial employees and are
likewise privy to sensitive and highly confidential records and information related to
labor relations. This doctrine states that what is implied in a statute is as much a part
thereof as that which is expressed.
The Doctrine of Necessary Implication is therefore the legal basis for ineligibility of
confidential employees to join a union.

Cases where confidential

employees were allowed to join
unions
(Filoil vs. Filoil Supervisory and Confidential Employees’ Assocation, L-267336,
1972)
Doctrine: The inclusion of confidential employees with the union of supervisory
employees may be valid if the confidential employees are very few in number and
are, by practice and tradition, identified with supervisors in their role as
representatives of management vis-à-vis the rank-and-file employees. Such identity
of interest has allowed their inclusion in the bargaining unit of supervisors for
purposes of collective bargaining.
(Southern Philippines Federation of Labor V. Ferrer-Calleja)
It is maintained by the petitioner that under the Labor Code, managerial employees
are excluded from forming or joining a collective bargaining unit; and under the
collective bargaining agreement executed between Apex and respondent union,
among those who are excluded from the bargaining unit are: a) managerial
employees as defined in paragraph K, Article 212 of the Labor Code; b) those
performing supervisory functions; and c) those holding confidential positions as
determined by the company. Therefore, the employees holding the positions of
Supervisors II and III and those in the
confidential payrolls should be excluded from joining the bargaining unit and from
voting in the certification election. Likewise, those employees who are not paying
union dues should be excluded from the same since the existing CBA contains a
Union shop provision.
The contentions have no merit.
Although we have upheld the validity of the CBA as the law among the parties, its
provisions cannot override what is expressly provided by law that only managerial
employees are ineligible to join, assist or form any labor organization (See Art. 247,
Labor Code). Therefore, regardless of the challenged employees' designations,
whether they are employed as Supervisors or in the confidential payrolls, if the
nature of their job does not fall under the definition of "managerial" as defined in the
Labor Code, they are eligible to be members of the bargaining unit and to vote
in the certification election. Their right to self-organization must be upheld in the
absence of an express provision of law to the contrary. It cannot be curtailed by a
collective bargaining agreement.
(San Miguel Corporation Supervisors and Exempt Employees Union V. Laguesma)
This Court rules that said employees do not fall within the term "confidential
employees" who may be prohibited from joining a union. There is no question that
the said employees, supervisors and the exempt employees, are not vested with the
powers and prerogatives to lay down and execute management policies and/or to
hire, transfer, suspend, layoff, recall, discharge or dismiss employees. They are,
therefore, not qualified to be classified as managerial employees who, under Article
245 of the Labor Code, are not eligible to join, assist or form any labor organization.
In the very same provision, they are not allowed membership in a labor organization
of the rank-and-file employees but may join, assist or form separate labor
organizations of their own. The only question that need be addressed is whether
these employees are properly classified as confidential employees or not.
Confidential employees are those who (1) assist or act in a confidential capacity, (2)
to persons who formulate, determine, and effectuate management policies in the
field of labor relations. The two criteria are cumulative, and both must be met if an
employee is to be considered a confidential employee — that is, the confidential
relationship must exist between the employee and his supervisor, and the supervisor
must handle the prescribed responsibilities relating to labor relations. The exclusion
from bargaining units of employees who, in the normal course of their duties,
become aware of management policies relating to labor relations is a principal
objective sought to be accomplished by the ''confidential employee rule." The broad
rationale behind this rule is that employees should not be placed in a position
involving a potential conflict of interests. "Management should not be required to
handle labor relations matters through employees who are represented by the union
with which the company is required to deal and who in the normal performance of
their duties may obtain advance information of the company's position with regard to
contract negotiations, the disposition of grievances, or other labor relations matters."
An important element of the "confidential employee rule" is the employee's need to
use labor relations information. Thus, in determining the confidentiality of certain
employees, a key question frequently considered is the employee's necessary
access to confidential labor relations information. It is the contention of respondent
corporation that Supervisor employees 3 and 4 and the exempt employees come
within the meaning of the term "confidential employees" primarily because they
answered in the affirmative when asked "Do you handle confidential data or
documents?" in the Position Questionnaires submitted by the Union. In the same
questionnaire, however, it was also stated that the confidential information handled
by questioned employees relate to product formulation, product standards and
product specification which by no means relate to "labor relations." Granting
arguendo that an employee has access to confidential labor relations information but
such is merely incidental to his duties and knowledge thereof is not necessary in the
performance of such duties, said access does not render the employee a confidential
employee. "If access to confidential labor relations information is to be a factor in the
determination of an employee's confidential status, such information must relate to
the employer's labor relations policies. Thus, an employee of a labor union, or of a
management association, must have access to confidential labor relations
information with respect to his employer, the union, or the association, to be
regarded a confidential employee, and knowledge of labor relations information
pertaining to the companies with which the union deals, or which the association
represents, will not cause an employee to be excluded from the bargaining unit
representing employees of the union or association." "Access to information which is
regarded by the employer to be confidential from the business standpoint, such as
financial information or technical trade secrets, will not render an employee a
confidential employee."
(Nat’l Association of Trade Unions-Republic Planters Bank Supervisors Chapter V.
Torres)
Albeit included in the book of Chan, SC decided in this case that the confidential
employees which the respondent bank petitioned to be disqualified to form, join, or
assist in a union because of the Doctrine of Necessary Implication. Under the
doctrine of necessary implication, confidential employees are similarly disqualified.
This doctrine states that what is implied in a statute is as much a part thereof.

Rule on commingling union

membership
Article 245 of the Labor Code states the prohibition on commingling union
membership. 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. (As amended by Section 18, Republic Act No. 6715,
March 21, 1989).
However, it bears noting that in case there is commingling membership of
supervisors and rank-and-file employees in one union, the new rule enunciated in
Article 256 of the Labor Code is that it cannot be invoked as a ground for the
cancellation of the registration of the union. The employees so improperly included
are automatically deemed removed from the list of members of said union. In other
words, their removal from the said list is by operation of law.

Substitutionary doctrine
This doctrine holds that the employees cannot revoke the validly executed collective
bargaining contract with their employer by the simple expedient of changing their
bargaining agent. The new agent must respect the contract. The employees, thru
their new bargaining agent, cannot renege on the collective bargaining contract,
except to negotiate with the management for the shortening thereof. (Elisco-Elirol
Labor Union, December 29, 1977) The CBA continues to bind the members of the
new or disaffiliated and independent union up to the CBA’s expiration date.
(Associated Workers Union, July 30, 1990)

Check-off, assessments and

agency fees
“Check-off” means a method of deducting from the employee’s pay at prescribed
periods, any amount due for fees, fines or assessments. It is a process or device
whereby the employer, on agreement with the union recognized as the proper
bargaining representative, or on prior authorization from its employees, deducts
union dues and assessments from the latter’s wages and remits them directly to the
union. Assessments are fees charged to union members in addition to their normal
dues. The following requisites must concur in order for union dues and special
assessments for the union’s incidental expenses, attorney’s fees and representation
expenses to be valid, namely:

(a) Authorization by a written resolution of the majority of all the members at a

general membership meeting duly called for the purpose;
(b) Secretary’s record of the minutes of said meeting; and
(c) Individual written authorizations for check-off duly signed by the employees
concerned.

The dues and other fees that may be assessed from non-union members within the
bargaining unit who accept and avail of the benefits flowing from the CBA are called
“agency fees.” Payment of agency fee to the bargaining union/agent which
negotiated the CBA is but a reasonable requirement recognized by law, to prevent
non-union members from enriching themselves at the expense of union members.
(See Article 248 [e], Labor Code; Section 4, Rule XXV, Book V, Rules to Implement
the Labor Code, as amended by Department Order No. 40-03, Series of 2003, [Feb.
17, 2003]).
It must be emphasized that non-members of the certified bargaining agent which
successfully concluded the CBA are not required to become members of the latter.
Their acceptance of the benefits flowing from the CBA and their act of paying the
agency fee does not make them members thereof.
All unions are authorized to collect reasonable amounts of:

1. Membership fees
2. Uniond dues
3. Assessments
4. Fines
5. Contributions for labor education and research, mutual death and
hospitalization benefits, welfare fund, strike fund and credit and
cooperative undertakings
6. Agency fees

Requisites for validity of union dues and special assessments:

1. Authorization by written resolution of the majority of all the members at a

general membership meeting duly called for that purpose;
2. Secretary’s record of the minutes of said meetings;
3. Individual written authorization for check-off duly signed by the employees

Assessment for Attorney’s fees, Negotiation fees and similar charges

Attorney’s fees, Negotiation fees and similar charges arising from negotiation or
conclusion of the CBA shall not be imposed on any individual member of the
contracting union. Such fees and charges may be charged only against the union
funds in an amount to be agreed upon by the parties.
Individual written authorization, when not required.
In the following cases, individual written authorization is not required:

1. Assessment from non-members of the SEBA of agency fees.

2. Deductions for fees for mandatory activities such as labor relations
seminars and labor education activities.
3. Check-off for union service fees authorized by law.
4. Deductions for withholding tax.
5. Deductions for withholding of wages because of employee’s debt to the
employer which is already due.
6. Deductions made pursuant to a judgment against the worker under
circumstances where the wages may be the subject of attachment or
execution but only for debts incurred for food, clothing, shelter and medical
attendance.
7. Deductions from wages ordered by the court.
8. Deductions authorized by law such as for premiums for PhilHealth, Social
Security, PAG-IBIG, Employee’s compensation and the like.

Agency fees
Fees collected from non-members of the SEBA but covered by and included in the
CBU who accept the benefits provided in the CBA. It is called agency fees because
by availing of the benefits of the CBA, they, in effect, recognize and accept the SEBA
as their agent as well.

 Non-SEBA members refer to members of minority union. They are

obligated to pay two kinds of dues:
1. Union dues and special assessments to their own union; and
2. Agency fee to the SEBA.

Check-off of Agency Fees

 Check-off agency fees is a process whereby the employer, upon

agreement with the SEBA, deducts agency fees from the wages of non-
SEBA members who avail of the benefits from the CBA and remits them
directly to the SEBA.
 The right of the SEBA to demand from the employer the check-off of
agency fees accrues from the moment the non-SEBA member accepts the
benefits from the CBA.

Limitations on the amount of Agency fee

1. It should be reasonable in amount; and

2. It should be equivent to the dues and other fees paid by the members of
the SEBA.
Mandatory provisions of the CBA
The following are the mandatory provisions of the CBA:
1. Grievance Procedure;
2. Voluntary Arbitration;
3. No Strike-No Lockout Clause; and
4. Labor-Management Council (LMC).
If these provisions are not reflected in the CBA, its registration will be denied by the
BLR.

Labor Management Council

(LMC) vs Grievance
Machinery(GM)
The differences between LMC and GM are:

1. As to Constitutional Origin, the creation of the LMC is based on the

constitutional grant to workers of the right to participate in policy and
decision-making processes under 1st paragraph, Section 3, Article XIII of
the 1987 Constitution while the creation of a GM is based on the
2nd paragraph, Section 3, Article XIII of the 1987 Constitution.
2. As to Legal Anchor, the creation of LMC is provided under Article
267(255) of the Labor Code while the formation of a GM is mandated
under Article 273 (260) of the same Code.
3. As to Compulsory provision in the CBA, Both LMC and GM are
compulsory required to be embodied in the CBA in order for it to be
considered a valid agreement.
4. As to purpose for creation, the LMC is created for the purpose of
affording workers the right to participate in policy and decision-making
processes in matters affecting their rights, benefits, and welfare while that
of the GM is to resolve disputes and grievances arising from such policies
or decisions or more specifically, to adjust and resolve grievances arising
from (1) the interpretation or implementation of the CBA or (2) the
interpretation or enforcement of company personnel policies.
5. As to nature of functions, the LMC is in the nature of a preventive
mechanism meant to prevent and avoid disputes or grievances by co-
determining the proper policies that should be implemented by the
employer in respect of the workers’ rights, benefits and welfare while a GM
is an adjudicatory mechanism is set into motion only when a dispute or
grievance occurs.
6. As to nature of cognizable issues, the LMC performs non-adversarial
and non-adjudicatory tasks as it concerns itself only with policy
formulations and decisions affecting the workers’ rights, benefits and
welfare and not violations or transgression of any policy, rile or regulation
 while that of the GM is adversarial and adjudicatory in character since its
jurisdiction is confined to resolving and deciding disputes and grievances
between management and the workers arising from violations or
transgression of existing policies, rules or regulations. In other words, the
LMC does not resolve grievable or contentious issues; the GM does.
7. As to kinds of establishment where it is required to be set up, the
classification of the establishment, whether organized or unorganized, is
not material as far as LMC is concerned since it is required to be
established in all establishments – whether organized and unorganized;
while the GM is required only in case of organized establishments since it
is mandated to be stipulated in the CBA.
8. As to compositions, the representative of the workers to the LMC or may
not be nominated by the recognized or certified bargaining agent,
depending on whether the establishment is organized or unorganized.
Thus, in organized establishments, the workers’ representatives to the
LMC should be nominated by the exclusive bargaining agent. In
establishments where no legitimate labor organization exists, the workers’
representative should be elected directly by the employees of the
establishment at large; while those in the GM are nominated solely by the
bargaining agent.
9. As to procedure, the LMC does not involve any specific procedure
prescribed by law to govern its proceedings while the GM is required to
follow a multi-step procedure starting from a discussion of the grievance
between the employee and the union steward, on the one hand, and the
foreman and supervisor, on the other, and ending with the highest
decision-making officials of the company, reflecting the hierarchy of
command responsibility.
10. As to appeals, the LMC does not make any decisions since no dispute or
grievance is cognizable by it, hence, any policy formulations are not
“appealable” to any office or authority; while the decision of the GM on any
dispute or grievance should be elevated to voluntary arbitrators if not
resolved with finality by the GM within seven (7) calendar days from the
date of submission.

Summary:
As to the matter of the disputes to be resolved in a Labor Management Council
disputes, grievances, or other matters arise from the interpretation or implementation
of the productivity incentives program while the Grievance Machinery focuses
disputes arising from the interpretation or implementation of their Collective
Bargaining Agreement and those arising from the interpretation or enforcement of
company personnel policies.
As to the composition of its body in a labor management council it shall be made up
of an equal number of representatives from the management and from the rank-in-
file employees, while in a grievance machinery it shall be composed of at least two
representatives each from the members of the bargaining unit and the employer.
As to the time allocated for a solution to be made in a Labor Management Council
any dispute shall be resolved within 20 days from the time of its submission to
the labor-management committee, while in a Grievance Machinery they are allotted
seven days to resolve the dispute.

Case study: Kawashima case

and the Toyota and Dunlop cases
All three cases are regarding the legal personality of a labor union requesting for a
petition for certification election-- but the same was questioned because the unions
comprised of both R-N-F employees as well as supervisory employees.
Dunlop v. SOL (1998) and Toyota Motor PH v. Toyota Motors PH Labor Union
(1997) were decided based on RA 6715 which became effective in 1989. Under said
law, supervisory employees shall not be eligible for membership in a labor
organization of the R-N-F employees but may join or form their own separate
organizations. Hence, both cases held that such organization that is composed of
both
R-N-F and supervisory employees is no organization at all. Therefore, the
certification election must be denied.
In the case of Rep of PH v. Kawashima (2008), there was an amendment by Dep.
Order No. 9 S. 1997 where the prohibition on mingling of supervisory employees and
RNFs was removed. Hence, the petition for certification election in this case was
granted.
Toyota Doctrine
Supervisory employees are allowed to form their own labor organization but they
cannot join the labor organization of rank-and-file employees. Due to antipathy and
irreconcilability of the interests between supervisors and rank-and-file employees, a
labor organization composed of both rank-and-file and supervisory employees is not
a legitimate labor organization. Not being one, it cannot possess any of the rights of
a legitimate labor organization including the right to file a petition for certification
election for the purpose of collective bargaining.
Dunlop Doctrine
For as long as the supervisors' union counts rank-and-file employees among its
members, it has no legal right to file a petition for certification election to represent a
bargaining unit composed of supervisors.
Kawashima Doctrine
The inclusion as union members of employees outside the bargaining unit is not a
ground for the cancellation of the registration of the union. The employees so
improperly included are automatically deemed removed from the list of legitimate
members of said union by operation of law. Thus, if supervisory employees are
included as members of a rank-and-file union, they are deemed automatically
removed from the roster of members of said union and vice versa.
Test in determining an
appropriate bargaining unit
The tests which may be used in determining the appropriate collective bargaining
unit are the following:

1. Community or mutuality of interest doctrine;

2. Globe doctrine;
3. Collective bargaining history doctrine; and
4. Employment status doctrine.

Globe doctrine
This principle is based on the will of the employees. In the United States case of
Globe Machine and Stamping Co., it is ruled that the determining factor of an
appropriate bargaining unit is the desire or will of the employees themselves. It is
called Goble doctrine because this principle was first enunciated in the United States
case of Globe Machine and Stamping Co., where it was first ruled, in defining the
appropriate bargaining unit, that in a case where the company's production workers
can be considered either as a single bargaining unit appropriate for purposes of
collective bargaining or as three separate and distinct bargaining units, the
determining factor is the desire of the workers themselves. Consequently, a
certification election should be held separately to choose which representative union
will be chosen by the workers.
The same is enunciated in the case of International School Alliance of Educators
(ISAE) vs. Quisumbing where the Supreme Court held that foreign-hired teachers do
not belong to the bargaining unit of the local-hires because the former have not
indicated their intention to be grouped with the latter for purposes of collective
bargaining.

Case study: San Miguel, UP & St.

James Cases
Under the substantial mutual interests rule, the employees sought to be represented
by the collective bargaining agent must have substantial mutual interests in terms of
employment and working conditions as evinced by the type of work they perform. It
is characterized by similarity of employment status, same duties and responsibilities
and substantially similar compensation and working conditions. (San Miguel
Corporation Employees Union-PTGWO vs. Confesor, G. R. No. 111262, Sept. 19,
1996, 262 SCRA 81, 98).
Since it is impossible for all employees in one company to perform exactly the same
work, there should be a logical basis for the formation of the bargaining unit.
Certainly, in one company, it is highly fragmentatious for typists and clerks to
organize one bargaining unit, janitors, another unit, accountants, another unit,
messengers, another unit, and so on. There is commonality of interest among them -
which is the progress of their company and their desire to share equitably in the
profits or fruits of their endeavors. On the part of the company, they are all needed
and important for its continued existence and smooth operations. (Philtranco Service
Enterprises vs. Bureau
of Labor Relations, G. R. No. 85343, June 28, 1989).
In the case of San Miguel Corporation vs. Laguesma, [G. R. No. 100485, September
21, 1994], the Supreme Court applied this principle in a petition of the union which
seeks to represent the sales personnel in the various Magnolia sales offices in
Northern Luzon, contrary to the position taken by the company that each sales office
consists of one bargaining unit. Said the Court: “What greatly militates against this
position (of the company) is the meager number of sales personnel in each of the
Magnolia sales office in Northern Luzon. Even the bargaining unit sought to be
represented by respondent union in the entire North Luzon sales area consists only
of approximately fifty-five (55) employees. Surely, it would not be for the best
interests of these employees if they would further be fractionalized. The adage ‘there
is strength in number’ is the very rationale underlying the formation of a labor union.”
In another case involving the same company, San Miguel Corporation
Supervisors and Exempt Employees Union vs. Laguesma, [G. R. No. 110399,
August 15, 1997, 277 SCRA 370, 380-381], the fact that the three plants comprising
the bargaining unit are located in three different places, namely, in Cabuyao,
Laguna, in Otis, Pandacan, Metro Manila, and in San Fernando, Pampanga was
declared immaterial. Geographical location can be completely disregarded if the
communal or mutual interests of the employees are not sacrificed as demonstrated
in University of the Philippines vs. Ferrer-Calleja, [211 SCRA 451 (1992)], where all
non-academic
rank-and-file employees of the University of the Philippines in Diliman, Quezon City,
Padre Faura, Manila, Los Banos, Laguna and the Visayas were allowed to
participate in a certification election. The distance among the three plants is not
productive of insurmountable difficulties in the administration of union affairs. Neither
are there regional differences that are likely to impede the operations of a single
bargaining representative.
In St. James School of Quezon City vs. Samahang Manggagawa sa St. James
School of Quezon City, [G.R. No. 151326, Nov. 23, 2005], respondent union sought
to represent the rank-and-file employees (consisting of the motor pool, construction
and transportation employees) of petitioner-school’s Tandang Sora campus.
Petitioner-school opposed it by contending that the bargaining unit should not only
be composed of said employees but must include administrative, teaching and office
personnel in its five (5) campuses.. The Supreme Court disagreed with said
contention. The motor pool, construction and transportation employees of the
Tandang Sora campus had 149 qualified voters at the time of the certification
election, hence, it was ruled that the 149 qualified voters should be used to
determine the existence of a quorum during the election. Since a majority or 84 out
of the 149 qualified voters cast their votes, a quorum existed during the certification
election. The computation of the quorum should be based on the rank-and-file motor
pool, construction and
transportation employees of the Tandang Sora campus and not on all the employees
in St. James’ five (5) campuses. Moreover, the administrative, teaching and office
personnel are not members of the union. They do not belong to the bargaining unit
that the union seeks to represent.
Summary:
In St. James School of Quezon City v. Samahang Manggagawa sa St. James
School of Quezon City, the court allowed respondent union to represent only the
rank-and employees (consisting of the motor pool, construction and transportation
employees) of petitioner-school’s Tandang Sora campus. It debunked petitioner-
school’s contention that the bargaining unit should not only be composed of said
employees but must include administrative, teaching and office personnel in its five
(5) campuses. The motor pool, construction and transportation employees of the
Tandang Sora campus had 149 qualified voters at the time of the certification
election, hence, it was ruled that the 149 qualified voters should be used to
determine the existence of a quorum during the election and not all the employees of
the petitioner’s 5 campuses.
Other cases:
(1) San Miguel Corporation v. Laguesma, the Supreme Court applied the principle in
the petition of the union which seeks to represent the sales personnel in the various
Magnolia sales office in Northern Luzon. Petitioner company took the position that
each sales office should constitute one bargaining unit. In disagreeing with this
proposition of petitioner, the High Court said: “What greatly militates against this
position (of the company) is the meager number of sales personnel in each of the
Magnolia sales office in Northern Luzon. Even the bargaining unit sought to be
represented by respondent union in the entire Northern Luzon sales area consists
only of approximately fifty-five (55) employees. Surely, it would not be for the best
interest of these employees if they would further be fractionalized. The adage ‘there
is strength in number’ is the very rationale underlying the formation of a labor union.”
(2) San Miguel Corporation Supervisors and Exempt Employees Union v. Laguesma,
the fact that 3 plants comprising the bargaining unit are located in in three (3)
different places, namely: (1) in Cabuyao, Laguna, (2) in Otis, Pandacan, Metro
Manila, and (3) in San Fernando, Pampanga, was declared immaterial. Geographical
location can be completely disregarded if the communal or mutual interest of the
employees are not sacrificed. The distance among the 3 plants is not productive of
insurmountable difficulties in the administration of union affairs. Neither are there
regional differences that are likely to impede the operations of a single bargaining
representative.
(3.) University of the Philippines vs Ferre-Calleja, all non-academic rank and file
employees of the University of the Philippines in its various campuses, to wit: 1)
Diliman, Quezon;2) Padre Faura, Manila; 3) Los Banos, Laguna; and 4) the Visayas,
were allowed to participate in a certification election as one bargaining unit.
5 modes of determining the Sole
and Exclusive bargaining Agent
(SEBA)
The following are the modes of determining SEBA:
1.Request for SEBA Certification - is the process where a union requests the DOLE
regional director to recognize and certify the union as the SEBA of the bargaining
unit it purports to represent to negotiate a CBA with the employer.
The SEBA Certification may be issued if it is proved that:
a. the bargaining unit is unionized;
b. the requesting union is the only union in that bargaining unit;
c. the CBU majority are members of the union.
2. Certification election - means the process of determining through secret ballot the
sole and exclusive bargaining representative of the employees in an appropriate
bargaining unit, for purposes of collective bargaining.
The petition may be filed by:
a. A legitimate labor organization (independent union, national union or federation, or
a local chapter);
b. An employer when requested by a labor organization to bargain collectively and its
majority status is in doubt.
3. Consent election - refers to the election voluntarily agreed upon by the parties,
with or without the intervention of the Department of Labor and Employment, to
determine the issue of majority representation of all the workers in the appropriate
collective bargaining unit.
4. Run-off election - refers to an election between the labor unions receiving the two
(2) highest number of votes when a certification election which provides for three (3)
or more choices results in no choice receiving a majority of the valid votes cast;
provided, that the total number of votes for all contending unions is at least fifty
percent (50%) of the number of votes cast.
5. Re-run election - refers to an election conducted to break a tie between
contending
unions, including between ‘no union’ and one of the unions. It shall likewise refer to
an
election conducted after a failure of election has been declared by the Election
Officer
and/or affirmed by the Mediator-Arbiter.”
Significance of D.O. No. 4-1 15 S.
2015
The significance of D.O. No. 4-1-15 S.2015 is that it repealed voluntary recognition
of the management of a union and replaced the same with the provision for a SEBA
certification. Beyond this the D.O. also did not consider an abstention or blank or
unfilled vote validly cast by an eligible voter as a negative vote. A re-run election has
been added which refer to an election conducted after a failure of elections or to a
break a tie between contending unions including “no union” and one of the unions. It
also adds a spoiled ballot or that which is torn, defaced or contains markings which
can lead another to clearly identify the voter which cast the vote.
The DO also amended the rule on Certification Election which includes any
legitimate labor organization, including a national union or federation that has issued
a charter certificate to its local or chapter as well as where the petition should be filed
and other requisites of the certification elections (i.e. posting and employer as by-
stander rule.)
The justification for the repeal states that the employer should be a mere bystander
and should never be considered a party. It has no concomitant right to oppose in any
way the petition for certification election (PCE). This rule holds true irrespective of
whether the PCE is filed by the employer or by a legitimate labor organization. If ever
one may call it as participation at all, the employer’s role in such proceeding is
limited to only two matters to wit;

1. To be notified or informed of the filing of the PCE; and

2. To submit the list of employees during the pre-election conference, should
the Med-Arbiter act favourable on the PCE.

Organized and unorganized

establishments; distinctions
An organized establishment refers to an enterprise where there exists a SEBA,
regardless of whether a CBA has been concluded or not by such SEBA with the
employer.
While an unorganized establishment is a firm or company where there is no certified
SEBA. Therefore, an establishment may still be considered unorganized:

1. Even if there are several unions in existence in one Collective bargaining

Unit (CBU) for as long as not one of them is duly certified as SEBA.
2. Even if one CBU has a certified SEBA but the other CBUs do not have,
hence, only the former will be considered organized but the latter shall
remain unorganized.
*loosely but erroneously refereed to as unionized and un-unionized

3 requisites of a valid Petition for

Certification Election (PCE)
The following requisites should concur:
1. The union should be legitimate which means that it is duly registered and listed in
the registry of legitimate labor unions of the BLR or that its legal personality has not
been revoked or cancelled with finality.
2. In case of organized establishments, a) the petition for certification election is filed
during: (and not before or after) the 60-day freedom period of a duly registered CBA;
b) the petition complied with the 25% written support of the members of the
bargaining unit.
3. The petition is filed not in violation of any of the four (4) bar rules - Certification
year bar rule; Negotiations bar rule; Bargaining deadlock bar rule; or Contract bar
rule.

Double majority rule

The double majority rule states that there must be two majorities in a certification
election (1) to have a valid certification election and (2) to declare the winning union
that will be certified as the SEBA.
1. To have a valid certification election in the first majority, at least a majority of all
eligible voters in the bargaining unit should have cast their votes.
2. To declare the winning union in the second majority, the winning union, whether
the petitioning union in a single-union contest or any of the unions in a multi-election,
must have the majority vote of the valid votes cast to be chosen as the SEBA.
[Example: In a bargaining union of 100 employees, determine the number of votes
necessary to have a valid CE and the number of votes needed for a contending
union to be declared as the SEBA. To have a valid CE, a majority of the 100
employees or at least 51 must have cast their votes. To declare the SEBA, a majority
of the 51 or at least 26 employees should vote for the winning union.]

Majority vs. plurality vote

Majority means more than half (at least 50.1%) of the employees-electorate have
voted for one candidate-union. While, Plurality means the greater number but less
than half of the employees-electorate have voted for candidate-union that wins
because the vote is split among more than two candidate-unions.
Certification elections follow the majority rule while Election laws follow the plurality
rule.
The five (5) bar rules, exceptions
The following are the 5 bar rules (rules prohibiting the filing of petition for certification
election)
1. Statutory Bar Rule, under the Rules to implement the Labor Code it embodies a
rule that bars the filing of a PCE within one year from the date of a valid conduct of a
certification, consent, run-off or re-run election where no appeal on the results
thereof was made. If there was such an appeal from the order of the Med-Arbiter, the
running of the one-year period is deemed suspended until the decision on the appeal
has become final and executory.
2. Certification Year Bar Rule, under this rule a PCE may not be filed within 1 year; 
a. From the date a union is certified as SEBA by virtue of a REQUEST FOR SEBA
CERTIFICATION.
b. From the date a valid certification, consent, run-off or re-run election has been
conducted within the bargaining unit.
If after this one year period, the SEBA did not commence collective bargaining with
the employer, a PCE may be filed by a rival union to challenge the majority status of
the certified SEBA
3. Negotiations Bar Rule. Under this rule, no PCE should be entertained while the
sole and exclusive bargaining agent (SEBA) and the employer have commenced
and sustained negotiations in good faith within the period of one (1) year from the
date of a valid certification, consent, run-off or re-run election or from the date of
voluntary recognition.
Once the CBA negotiations have commenced and while the parties are in the
process of negotiating the terms and conditions of the CBA, no challenging union are
allowed to file a PCE that would disturb the process and unduly forestall the early
conclusion of the agreement.
4. Bargaining Deadlock Bar Rule. Under this rule, a PCE may not be entertained
when a bargaining deadlock to which an incumbent or Certified Bargaining agent is a
party has been submitted to conciliation or arbitration or has become the subject of a
valid notice of strike or lockout.
In the Case of KAMPIL-KATIPUNAN vs Trajano, the bargaining deadlock bar rule
was not applied because the duly certified exclusive bargaining agent of all rank-
and-file employees did not, for more than four years, take any action to legally
compel the employer to comply with its duty to bargain collectively, hence, no CBA
was executed; nor did it file any unfair labor practice suit against the employer or
initiate a strike against the latter. Under the circumstances, a certification election
may be validly held.
5. Contract Bar Rule. Under this rule, a PCE cannot be filed when a CBA between
the employer and a duly recognized or certified bargaining agent has been
registered with the Bureau of Labor Relations (BLR) in accordance with the Labor
Code. Where the CBA is duly registered, a petition for certification election may be
filed only within the 60-day freedom period prior to its expiry. The purpose of this rule
is to ensure stability in the relationship of the workers and the employer by
preventing frequent modifications of any CBA earlier entered into by them in good
faith and for the stipulated original period.
When contract bar rule does not apply.
The contract-bar rule does not apply in the following cases:
1. Where there is an automatic renewal provision in the CBA but prior to the date
when such automatic renewal became effective, the employer seasonably filed a
manifestation with the Bureau of Labor Relations of its intention to terminate the said
agreement if and when it is established that the bargaining agent does not represent
anymore the majority of the workers in the bargaining unit.
2. Where the CBA, despite its due registration, is found in appropriate
proceedings that:
(a) it contains provisions lower than the standards fixed by law; or
(b) the documents supporting its registration are falsified, fraudulent or tainted
with misrepresentation.
3. Where the CBA does not foster industrial stability, such as contracts where the
identity of the representative is in doubt since the employer extended direct
recognition to the union and concluded a CBA therewith less than one (1) year from
the time a certification election was conducted where the “no union” vote won. This
situation obtains in a case where the company entered into a CBA with the union
when its status as exclusive bargaining agent of the employees has not been
established yet.
4. Where the CBA was registered before or during the last sixty (60) days of a
subsisting agreement or during the pendency of a representation case. It is well-
settled that the 60-day freedom period based on the original CBA should not be
affected by any amendment, extension or renewal of the CBA for purposes of
certification election.

Case study: Capitol; Kampil; and

Kaisahan cases
In the case of Kaisahan ng Manggagawang Pilipino (KAMPIL-KATIPUNAN) v
Trajano, the bargaining deadlock bar rule was not applied because the duly certified
exclusive bargaining agent of all rank-and-file employees did not, for more than four
years, take any action to legally compel the employer to comply with its duty to
bargain collectively, hence, no CBA was executed; not did it file any unfair labor
practice suit against the employer or initiate a strike against the latter. Under the
circumstances, a certification election may be validly held.
In the case of Capitol Medical Center Alliance of Concerned Employees-Unified
Filipino Service Workers v Laguesma, whose factual milieu is similar to the said case
of Kaisahan, the bargaining deadlock bar rule was applied. The Supreme Court
ratiocinated, thus: “This is what is strikingly different between the Kaisahan case and
the case at bench for in the latter case, there was proof that the certified bargaining
agent, respondent union, had taken an action to legally coerce the employer to
comply with its statutory duty to bargain collectively, i.e., charging the employer with
unfair labor practice and conducting a strike in protest against the employer’s refusal
to bargain. It is
only just and equitable that the circumstances, in this case, should be considered as
similar in nature to a bargaining deadlock when no certification election could be
held. This is also to make sure that no floodgates will be opened for the
circumvention fo the law by unscrupulous employers to prevent any certified
bargaining agent from negotiating a CBA. Thus, Sec.3, Tule V, Book B of the
Implementing Rules should be interpreted liberally so as to include a circumstance,
e.g., where a CBA could not be concluded due to that failure of one party to willingly
perform its duty to bargain
collectively.”
Summary:
Collective Bargaining Deadlock refers to a situation where there is failure in the
collective bargaining negotiations between the SEBA and the Employer resulting in
an impasse or stalemate. There is a deadlock when there is a complete blocking or
stoppage in the negotiation resulting from the action of equal and opposing forces.
Capitol Medical Center (CMC) vs. Laguesma (GR No. 118915, February 4, 1997)
The bargaining deadlock bar rule was applied even though no actual CBA
deadlock occurred. In this case, the employment by the employer, CMC, of all legal
means to block the certification of CMCEA-AFW as the bargaining agent and use it
as leverage for failure to bargain is tantamount to “bargaining deadlock” where no
certification election could be held. If the law proscribes the conduct of a certification
election when there is a bargaining deadlock submitted to conciliation or arbitration,
with more reason should it not be conducted if, despite attempts to bring an
employer to the negotiation table by the SEBA, there was “no reasonable effort in
good faith” on the part of the employer to bargain collectively.
“Bargaining Deadlock” should be interpreted liberally so as to include a
circumstance, e.g., where a CBA could not be concluded due to the failure of one
party to willingly perform its duty to bargain collectively.
Kampil-Katipunan vs. Trajano (GR No. 75810, September 9, 1991)
The bargaining deadlock bar rule was not applied because NAFLU, the SEBA,
did not take any steps to compel the employer VIRON to negotiate a CBA – more
than 4 years have already lapsed and yet there is no CBA ever executed, and no
deadlock ever arose from the negotiations between NAFLU and VIRON that would
warrant the submission to conciliation or arbitration proceedings or the filing of a
valid strike notice.
 There is no proof that NAFLU had taken any action to legally coerce VIRON to
comply with its statutory duty to bargain collectively. It could have charged VIRON
with ULP, but it did not. It could have gone on a legitimate strike in protest against
VIRON’s refusal to bargain collectively and compel it to do so, but it did not.
Capitol vs. Kaisahan
In the FORMER, there was proof that the certified SEBA had taken an action to
legally coerce the employer to comply with its statutory duty to bargain collectively,
i.e., charging the employer with ULP and conducting a strike in protest against the
employer’s refusal to bargain. It is thus only just and equitable that the
circumstances therein should be considered as similar in nature to a “bargaining
deadlock” where no certification election could be held. In the LATTER case, there
was no proof that for more than 4 years, the bargaining agent had taken any
action to legally coerce the employer to comply with its statutory duty to bargain
collectively.
In the FORMER, the bargaining deadlock bar rule was applied and in the
LATTER, the bargaining deadlock bar rule was not applied.

Consent Election and

Certification Election;
distinguished
Consent election is but a form of certification election. They may be distinguished
from each other in the following manner:
(1) Consent election is held upon the mutual agreement of the contending unions;
while certification election does not require the mutual consent of the parties as it is
conducted upon the order of the Med-Arbiter (Mediator-Arbiter).
(2) Consent election may be conducted with or without the control and supervision of
the DOLE; while Certification election is always conducted under the control and
supervision of the DOLE.
(3) Consent election is being conducted as a voluntary mode of resolving labor
dispute; while Certification election, although nonadversarial, is a compulsory
method of adjudicating a labor dispute.
(4) Consent election is given the highest priority; while Certification election is
resorted to only when the contending unions fail or refuse to submit their
representation dispute through the former. This is so because under the
Implementing Rules, as amended, even in cases where a PCE is filed, the Med-
Arbiter (Mediator-Arbiter), during the preliminary conference and hearing thereon, is
tasked to determine the “possibility of a consent election.” It is only when the
contending unions fail to agree to the conduct of a consent election during the
preliminary conference that the Med-Arbiter (Mediator-Arbiter) will proceed with the
process of certification election by conducting as many hearings as he may deem
necessary up to its actual holding. But in no case shall the conduct of the certification
election exceed 15 days from the date of the scheduled preliminary
conference/hearing after which time, the PCE is considered submitted for decision.
(5)Consent election necessarily involves at least 2 or more contending unions; while
Certification election may only involve 1 petitioner union.
(6) Consent election be conducted in the course of the proceeding in the Certification
election during its pendency.
Summary:

  CONSENT CERTIFICATION

Does not require the mutual

Held upon the mutual
consent of the parties as it
How conducted agreement of the contending
is conducted upon the order
unions
of the Med-Arbiter

Conducted with or without the ALWAYS conducted with

Control and
control and supervision of the the control and supervision
Supervision of DOLE
DOLE of the DOLE

Conducted as a voluntary
Dispute Resolution
mode of resolving dispute
Although non-adversarial, is
a compulsory method of
adjudicating a labor dispute

Resorted only when the

contending unions
When resorted Given the highest priority fail/refuse to submit their
representation dispute thru
consent election

May involve only 1

Parties 2/more contending unions
petitioner union

Run-off vs. re-run; illustration

In a “run-off election”: There are at least three (3) contending labor unions, either in a
certification election or consent election; a poll has been conducted and eligible
voters validly voted. However, not one of the choices mustered the majority vote or
contending labor unions failed to attain 50% of the total eligible votes; consequently,
two (2) contending labor unions obtaining the highest votes will participate in the
“run-off election”; the union obtaining the majority of the total votes cast shall be
declared winner in the run-off election. Take note that: the total number of votes for
all contending unions, if added, is at least fifty percent (50%) of the number of valid
votes cast; “NO UNION” shall not be a choice in the run-off election; and there
should be no objections or challenges which, if sustained, can materially alter the
results of the election. [i.e. Four (4) unions, namely: Union A, Union B, Union C, and
Union D, participated in a certification election. There are 100 eligible voters who
validly cast their votes. Each garnered are as follows: Union A – 35; Union B – 25;
Union C – 10; Union D - 15; and No Union - 15, a run-off election may be conducted
between Union A and Union B because: Not one of the unions mustered the majority
vote of 51 votes but Union A and
Union B got the first two highest number of votes; If all the votes for the contending
unions are added up, it will result in at least 50% of the valid votes cast (Union A –
35; Union B – 25; Union C – 10; Union D - 15 for a total of 85 or 85%)].
While in a “re-run election,” there are only two (2) contending labor unions: when
there is a tie between two (2) choices during a certification election, consent election
or “run-off election”; or when there is a failure of election declared by the election
officer and/or affirmed by the Mediator-Arbiter. The election officer shall cause the
posting of a notice of a “re-run election” within five (5) days from the: certification,
consent, or “run-off election”; or after the failure of election has been declared. The
choice receiving the highest votes cast during the “re-run election” shall be declared
the winner and shall be certified accordingly.
Summary:
To illustrate, in a certification election involving four (4) unions, namely. Union A,
Union B, Union C, and Union D, where there are 100 eligible voters who validly
cast their votes, and the votes they each garnered are as follows:
Union A-35; Union B-25; Union C-10; Union D-15; and No Union-15, a run-off
election may be conducted between Union A and Union B because:
(1) Not one of the unions mustered the majority vote of 51 votes but Union A and
Union B got the first two highest number of votes;
(2) If all the votes for the contending unions are added up, it will result in at least
50% of the valid votes cast (Union A 35; Union B 25; Union C 10; Union D 15 for a
total of 85 or 85%); and
(3) Then: we no objections or challenges which, if sustained, can materially alter the
results of the election.
RE-RUN ELECTION
Rule on re-run election, not found in labor code but lately provided in a Dole
department order. There are 2 situations contemplated thereunder that justify the
conduct of a re-run election, to wit:
(1) To break a tie; or
(2) To cure a failure of election.
(3) A third ground. A re-run election is obviously in the nature of a corrective action
meant to cure a seriously defective and distorted certification election. Consequently,
a 3rd ground that may be cited as would justify the conduct of a fair re-run election is
when the certification election is invalidated or nullified by a multitude of reasons that
negate the true will, undistorted desire and informed choice of the employees-
electorate.
2 situations contemplated in duty
to bargain collectively
The duty to bargain collectively involves two (2) situations. namely:

1. Duty to bargain collectively in the absence of a CBA; and

The duty to bargain collectively when there has yet been no CBA in the bargaining
unit where the bargaining agent seeks to operate should be complied with in the
following order: First, in accordance with any agreement or voluntary arrangement
providing for a more expeditious manner of collective bargaining; and Secondly, in its
absence in accordance with the provisions of the Labor Code, referring to Article 261
[250] thereof which lays down the procedure in collective bargaining.

2. Duty to bargain collectively when there is an existing CBA.

When there is a CBA, the duty to bargain collectively shall mean that neither party
shall terminate nor modify such agreement during its lifetime. However, either party
can serve a written notice to terminate or modify the agreement at least sixty (60)
days prior to its expiration date. It shall be the duty of both 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.

Freedom period, rationale

“Freedom period” is the last sixty (60) days of the lifetime of a collective bargaining
agreement immediately prior to its expiration. It is so called because it is the only
time when the law allows the parties to serve notice to terminate, alter or modify the
existing agreement. It is also the time when the majority status of the bargaining
union or agent may be challenged by another union by filing appropriate petition for
certification election.

The Kiok Loy Doctrine

This doctrine is based on the ruling In Kiok Loy v. NLRC, 1 where the petitioner,
Sweden Ice Cream Plant, refused to submit any counter-proposal to the CBA
proposed by its employees’ certified bargaining agent. The High Court ruled that the
employer had thereby lost its right to bargain the terms and conditions of the CBA.
Thus, the CBA proposed by the union was imposed lock, stock and barrel on the
erring company.
The Kiok Loy case epitomizes the classic case of negotiating a CBA in bad faith
consisting of the employer’s refusal to bargain with the collective bargaining agent by
ignoring all notices for negotiations and requests forcounter-proposals. Such refusal
to send a counter-proposal to the union and to bargain on the economic terms of the
CBA constitutes an unfair labor practice under Article 248(g) of the Labor Code.
Doctrine:
The refusal of the employer to bargain with the collective bargaining representative,
by ignoring all notices for negotiations and requests for counter-proposals so much
so that the union had to resort to conciliation proceedings, may indicate bad faith.
If the employer refuses to submit an answer or reply to the written bargaining
proposals of the SEBA, unfair labor practice is committed. While the law does not
compel the parties to reach an agreement, it does not contemplate that both parties
will approach the negotiation with an open mind and make a reasonable effort to
reach a common ground of agreement.

Essential requisites of Collective

Bargaining
Prior to any collective bargaining negotiations between the management and the
bargaining union, the following requisites must first be satisfied:
1) Employer-employee relationship must exist between the employer and the
members of the bargaining unit being represented by the bargaining agent. (Allied
Free Workers Union v. Compania Maritima, G.R. No. L-22951, January 31, 1967);
2) The bargaining agent must have the majority support of the members of the
bargaining unit established through the modes sanctioned by the law. (Articles 255
to 258, Labor Code). Proof of the majority status of the bargaining union should be
clearly established, otherwise, the employer has no obligation to engage in collective
bargaining negotiations with the former and it has the right to refuse to negotiate until
such official proof is presented. (Lakas ng Manggagawang Makabayan v. Marcelo
Enterprises, G.R. No. L-38258, 118 SCRA 422).
3) A lawful demand to bargain is made in accordance with law. (Article 250, Labor
Code; Kiok Loy v. NLRC, G.R. No. L-54334, January 22, 1986). The duty on the part
of the employer to recognize and bargain collectively with the bargaining union does
not arise until the latter makes a demand for the former to bargain with it. Without
demand, an employer cannot be in default.
Moreover, the demand to bargain should be reduced in writing with clear statement
of the proposals. (Article 250 [a], Labor Code; American President Lines v. Clave,
G.R. No. L-51641, January 29, 1982, 114 SCRA 826).
Stated otherwise:
The essential requisites of collective bargaining are:

1. Employer-employee relationship must exist between the employer and the

members of the bargaining unit being represented by the SEBA.
2. The majority status of the SEBA must be duly established through any of
the modes sanctioned by law such as SEBA Certification (which replaced
 the mode of Voluntary Recognition) or certification, consent, run-off or re-
run election.
3. The bargaining unit being sought to be represented by the SEBA should
be validly constituted and established in accordance with law.
4. There should be a lawful written demand to bargain and a clear statement
of the proposals by one party to negotiate an agreement and the
equivalent counter-proposals thereto by the other party before the
collective bargaining negotiations process may validly commence.

Totality of conduct doctrine,

explained
Totality Conduct Doctrine means that the expressions of opinion by an employer,
though innocent in themselves, may be held to constitute ULP because of the
circumstances under which they are uttered, the history of the particular employers’
relations or anti-union bias or because of their connection of an established collateral
plan of coercion or interference.
The totality of conduct doctrine may be applied in order to ascertain whether an
employer’s act constitutes interference with, restraint or coercion of the employees’
exercise of their right to self organization and collective bargaining. Under this
doctrine, an employer’s act perceived to constitute ULP must not be viewed in
isolation or merely in itself and must be weighed on the basis of the totality of the
conduct of the entity charged. This means that expressions of opinion by an
employer, though innocent in themselves, may be held to constitute an unfair labor
practice because of the circumstances under which they were uttered, the history of
the particular employer’s labor relations or anti-union bias or because of their
connection with an established collateral plan of coercion or interference. The past
conduct of an employer, the surrounding circumstances coupled with a connection
between the employer’s action and a particular employee or employees’ union
affiliation or activities taken as a whole, may raise a suspicion as to the motivation for
the employer’s conduct.

Yellow Dog contract

A “yellow dog contract” is an agreement which exacts from workers as a condition of
employment, that they shall not join or belong to a labor organization, or attempt to
organize one, during their period of employment or that they shall withdraw
therefrom, in case they are already members of a labor organization.
Common Stipulations of a Yellow Dog Contract:

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.
Illustrative cases of company
union
The following cases illustrate the existence of company union:
1. Initiation of the company union idea by:
a. Outright formation by Er or his representatives
b. Ees formation on outright demand or influence by Er
c. Managerially motivated formation by Ees
2. Financial support to the union by:
a. Er defrays union expenses
b. Er pays attorney's fees to the attorney who drafted the Constitution or by-laws
of the union
3. Er encouragement assistance – Immediately granting of exclusive recognition as
bargaining agent without determining whether the union represents the majority of
the
employees
4. Supervisory assistance – Soliciting membership, permitting union activities during
work time or coercing Ees to join the union by threats of dismissal or demotion
Jurisprudence:
In Kapisanan Ng Mga Manggawa ng Alak vs Hamilton Distillery Company:
There were two unions existing in the company, namely: Kapisanan ng mga
Mangagawa ng Alak (NAFLU), and respondent Hamilton Workers Union, (Workers’
Union). The company preferred the latter union over the former. It asked the
president of the former to dissolve NAFLU and when he refused, he was dismissed.
Subsequently, some members of NAFLU resigned and joined the Workers’ Union
because otherwise they would be dismissed by the Company and those remained
affiliated with NAFLU were allowed to work only two days a week. Later, 52
employees who are members of NAFLU were also terminated for refusing to join the
Workers” Union. Because of these circumstances, the Supreme Court declared that
the Workers’ Union is a company union.
In Oceanic Air Products vs CIR, several employees were forced by company
officers to join a union. No member of the union had been dismissed despite the
implementation of a retrenchment policy which resulted in the dismissal of other
employees who are officers and members of another union. After the dismissals, the
company hired several laborers. All these circumstances indicate that the union is
company-dominated.

PAL-PALEA Case (Suspension of

CBA negotiations)
If warranted by circumstances, a CBA may be suspended for more than the usual 5-
year lifetime thereof. During the period of suspension, the parties may mutually
agree that the exclusive bargaining union’s status shall continue to be recognized as
such.
PAL-PALEA case, where the CBA between the management of Philippine Airlines
(PAL) and the bargaining union, Philippine Airlines Employees Association (PALEA),
with expiry date of September 30,2000, was mutually agreed by the parties to be
suspended until 2008, to prevent the closure of PAL because of severe financial
losses. It was accordingly stipulated in the agreement of suspension that:
            “a. PAL shall continue recognizing PALEA as the duly certified-bargaining
agent of the regular rank-and-file ground employees of the Company;”
Petitioners allege that the 10year suspension of the CBA under the PAL-PALEA
agreement virtually installed PALEA as a company union for said period, amounting
to unfair labor practice, in violation of Article 265[253-A] of the Labor Code
mandating that an exclusive bargaining agent serves for five (5) years only. The
Supreme Court, disagreed and pronounced that the PAL-PALEA agreement
dated September 27,1998, is a valid exercise of the freedom to contract. Under
the principle of inviolability of contracts guaranteed by the Constitution, the
contract must be upheld.
Case brief:
Rivera vs. Espiritu (G.R. No.135547, January 23, 2002)
Topic: Suspension of CBA negotiations
Facts:
PAL was suffering from a difficult financial situation in 1998. It was faced with
bankruptcy and was forced to adopt a rehabilitation plan and downsized its labor
force by more than 1/3. PALEA (PAL Employees Association) went on a four-day
strike to protest retrenchment measures in July 1998. PAL ceased operations on
Sep 23, 1998. PALEA board again wrote the President on Sep 28, 1998. Among
others, it proposed the suspension of the PAL-PALEA CBA for a period of ten years,
subject to certain conditions. PALEA members accepted such terms through a
referendum on Oct 2, 1998. PAL resumed domestic operations on Oct 7, 1998.
Seven officers and members of PALEA filed instant petition to annul the Sep 27,
1998 agreement entered into between PAL and PALEA.
Issue: Whether or not negotiations may be suspended for 10 years
Ruling:
Yes, CBA negotiations may be suspended for 10 years. The assailed PAL-PALEA
agreement was the result of voluntary collective bargaining negotiations undertaken
in the light of the severe financial situation faced by the employer, with the peculiar
and unique intention of not merely promoting industrial peace at PAL, but preventing
the latter’s closure. There is no conflict between said agreement and Article 253-A of
the Labor Code. CBA under Article 253-A of the Labor Code has a two-fold purpose.
One is to promote industrial stability and predictability. Inasmuch as the agreement
sought to promote industrial peace, at the PAL during its rehabilitation, said
agreement satisfied the first purpose of said article. The other purpose is to assign
specific timetable, wherein negotiations become a matter of right and requirement.
Nothing in Article 253-A prohibits the parties from waiving or suspending the
mandatory timetable and agreeing on the remedies to enforce the same.

Runaway Shop, concept

A “runaway shop" is a form of discriminate act of the employer. Technically. It is
defined as an industrial plant moved by its owners from one location to another to
escape union labor regulations or state laws. The term is also used to describe a
plant moved to a new location in order to discriminate against employees at the old
plant because of their union activities. A “runaway shop” in this sense is a relocation
motivated by anti-union animus rather than for legitimate business reasons.
In Philippine American Cigar and Cigarette Factory Workers lndependent
Union v. Philippine American Cigar and Cigarette Manufacturing Co., the
employer dismissed the brother of an employee who filed a case against it. The
Supreme Court ruled that such act of the employer constitutes unfair labor practice.
Although Section 4[a] 5 of RA. No. 815 would seem to refer only to the dismissal of
the one who filed charges against the company as constituting an unfair labor
practice, the legislative intent is to assure absolute freedom of the employees to
establish labor organizations and unions as well as to proffer charges for violation of
labor laws. If the dismissal of an employee due to the filing by him of said charges
would be and is an undue restraint upon said freedom, the dismissal of his brother
owing to the non- withdrawal of the charges of the former would be and constitutes
as much, in fact a greater and more effective, restraint upon the same freedom.
What is prohibited to be done directly shall not be allowed to be accomplished
indirectly.

Featherbedding Law, explained

Article 260(d) [249(d)] is the “featherbedding” provision in the Labor Code. Patterned
after a similar provision in the Taft-Hartley Act, “featherbedding” or “make-work”
refers to the practice, caused and induced by a union, of hiring more workers than
are needed to perform a given work, job or task or to adopt work procedures which is
evidently senseless, wasteful, inefficient and without legitimate justifications since it
is meant purely for the purpose of employing additional workers than are necessary.
“Featherbedding” is the insistence by unions on employment of unnecessary
workers, i.e., demanding payment for work no longer performed by workers because
of machines or robots. Featherbedding dramatically increase labor costs and
decreased productivity.
According to this doctrine, it shall be unfair labor practice for a labor organization, its
officers, agents or representatives to cause or attempt to cause an employer to pay
or deliver or agree to pay or deliver any money or other things of value, in the nature
of an exaction, for services which are not performed or not to be performed,
including the demand for fee for union negotiations.
As considered as ULPs of a labor organization: To cause or attempt to cause an
employer to pay or deliver or agree to pay or deliver any money or other things of
value, in the nature of an exaction, for services which are not performed or not to be
performed, including the demand for fee for union
negotiations.
The requisites for featherbedding are as follows:
(1) The labor organization, its officers, agents or representatives have caused or
attempted to cause an employer either: (a) to pay or agree to pay any money,
including the demand for fee for union negotiations; or (b) to deliver or
agree to deliver any things of value;
(2) Such demand for payment of money or delivery of things of value is in the nature
of an exaction; and
(3) The services contemplated in exchange for the exaction are not actually
performed or will not be performed.
The concept of featherbedding based from Article 260 (d) of the Labor code is
patterned after a similar 1 provision in the Taft-Hartley Act, “featherbedding” or
“make-work” refers to the practice, caused and induced by a union, of hiring more
workers than are needed to perform a given work, job or task or to adopt work
procedures which is evidently senseless, wasteful, inefficient and without legitimate
justifications since it is meant purely for the purpose of employing additional workers
than are necessary. This is resorted to by the union as a response to the laying-off of
workers occasioned by their obsolescence because of the introduction of machines,
robots or new and innovative technological changes and improvements in the
workplace or as required by minimum health and safety standards, among other
reasons. Its purpose is to unduly secure the jobs of the workers. Because of these
lay-offs, the unions are constrained to resort to some featherbedding practices.
Accordingly, they usually request that the technological changes be introduced
gradually, or not at all, or that a minimum number of personnel be retained despite
such changes. They resort to some ways and methods of retaining workers even
though there may be little work left for them to do and perform. It therefore
unnecessarily maintains or increases the number of employees used or the amount
of time consumed to work on a specific job, work or undertaking. By so increasing
the demand for workers, featherbedding obviously keeps wages higher.

Unfair Labor Practice (ULP);

management vs SEBA
One obvious difference between the two is that the management cannot interfere,
restrain or coerce the employees with matters related to the labor union; for the
SEBA, interference is not unlawful because it is needed for the labor organization to
be formed in recruiting and convincing employees– it is part of their right to self-
organization.
An employer commits ULP against the SEBA when it commits any of the
following acts:
(a) To interfere with, restrain or coerce employees in the exercise of their right to
self-organization;
(b) To require as a condition of employment that a person or an employee shall not
join the SEBA or shall withdraw from it if he is already a member;
(c) To contract out services or functions being performed by union members of the
SEBA when such will interfere with, restrain or coerce employees in the exercise of
their rights to self-organization;
(d) To initiate, dominate, assist or otherwise interfere with the formation or
administration of the SEBA, including the giving of financial or other support to it or
its organizers;
(e) To discriminate in regard to wages, hours of work and other terms and conditions
of employment in order to encourage or discourage membership in the SEBA;
(f) To violate the duty to bargain collectively as prescribed by this Code;
(g) To pay negotiation or attorney’s fees to the union or its officers or agents as part
of the settlement of any issue in collective bargaining or any other dispute; or
(h) To violate a collective bargaining agreement (but only if gross in character).
The SEBA commits ULP against the employer when it commits any of the
following acts:
(a) To violate the duty, or refuse to bargain collectively with the employer;
(d) To cause or attempt to cause an employer to pay or deliver or agree to pay or
deliver any money or other things of value, in the nature of an exaction, for services
which are not performed or not to be performed, including the demand for fee for
union negotiations (a.k.a. FEATHER-BEDDING);
(e) To ask for or accept negotiation or attorney’s fees from employer as part of the
settlement of any issue in collective bargaining or any other dispute;
(f) To violate a collective bargaining agreement. (But only if gross in character).

Classifications of strike
A strike may be classified:
1. As to nature:
a. Legal strike - one called for a valid purpose and conducted through means
allowed by law.
b. Illegal strike - one staged for a purpose not recognized by law or, if for a valid
purpose, it is conducted through means not sanctioned by law.
c. Economic strike - one declared to demand higher wages, overtime pay, holiday
pay, vacation pay, etc. It is one which is declared for the purpose of forcing wage or
other concessions from the employer which he is not required by law to grant.
d. Unfair labor practice (ULP) or political strike - one called to protest against the
employer’s unfair labor practices enumerated in Article 248 of the Labor Code,
including gross violation of the CBA under Article 261, and union-busting under
Article 263 [c] of the Labor Code.
e. Slowdown strike - one staged without the workers quitting their work but by merely
slackening or reducing their normal work output.
f. Wildcat strike - one declared and staged without the majority approval of the
recognized bargaining agent. Wildcat strike is deemed to aggravate the illegality of
concerted actions for the purpose of applying the proper penalty to those responsible
for illegal work stoppages. It includes concerted actions staged by a group of
employees or union officers without the sanction or authorization of the union or in
violation of the union’s constitution and by-laws.
g. Sit-down strike - one where the workers stop working but do not leave their place
of work.
2. As to coverage:
a. “General strike” – one which covers and extends over a whole province or country.
In this kind of strike, the employees of various companies and industries cease to
work in sympathy with striking workers of another company. It is also resorted to for
the purpose of putting pressure on the government to enact certain labor-related
measures such as mandated wage increases or to cease from implementing a law
which workers consider inimical to their interest. It is also mounted for purposes of
paralyzing or crippling the entire economic dispensation.
b. “Particular strike” – one which covers a particular establishment or employer or
one industry involving one union or federation.
3. As to purpose:
a. “Economic strike”
b. “Unfair labor practice strike” or “political strike”
4. As to the nature of the strikers’ action:
a. “Partial strike” – one which consists of unannounced work stoppages such as
slowdowns, walkouts or unauthorized extension of rest periods.
b. “Sit-down strike”
c. “Slowdown strike”
5. As to the extent of the interest of strikers:
a. “Primary strike” – refers to a strike conducted by the workers against their
employer, involving a labor dispute directly affecting them.
b. “Secondary strike” - refers to a strike staged by the workers of an employer
involving an issue which does not directly concern or affect their relationship but
rather, by some circumstances affecting the workers such as when the employer
persists to deal with a third person against whom the workers have an existing
grievance. Workers stage this kind of strike to secure the economic assistance of
their employer to force the third person to yield to the union on the issues involving it
and said third person.
c. “Sympathy strike” - refers to a strike where the strikers have no demands or
grievances or labor dispute of their own against their employer but nonetheless
stage the strike for the purpose of aiding, directly or indirectly, other strikers in other
establishments or companies, without necessarily having any direct relation to the
advancement of the strikers’ interest. This is patently an illegal strike. An example of
a sympathy strike is the “welga ng bayan” where workers refuse to render work to
join a general strike which does not involve a labor or industrial dispute between the
strikers and the employer struck against but it is staged in pursuit of certain ends
such as reduction in the electric power rates, increase in the legislated wages, etc.

7 requirements of a valid
strike/lock-out
A strike/lock-out, in order to be valid and legal, must conform to the following
procedural requisites:
1st requisite - It must be based on a valid and factual ground;
2nd requisite - A notice of strike/lock-out must be filed with the NCMB-DOLE;
3rd requisite - A notice must be served to the NCMB-DOLE at least twenty-four (24)
hours prior to the taking of the strike/lock-out vote by secret balloting, informing said
office of the decision to conduct a strike/lock-out vote, and the date, place, and time
thereof;
4th requisite - A strike/lock-out vote must be taken where a majority of the members
of the union or members of the Board of Directors of the corporation or association
or of the partners in a partnership (in the case of a lock-out) obtained by secret ballot
in a meeting called for the purpose, must approve it;
5th requisite - A strike/lock-out vote report should be submitted to the NCMB-DOLE
at least seven (7) days before the intended date of the strike;
6th requisite - Except in cases of union-busting, the cooling-off period of 15 days, in
case of unfair labor practices of the employer, or 30 days, in case of collective
bargaining deadlock, should be fully observed; and
7th requisite - The 7-day waiting period/strike or lock-out ban reckoned after the
submission of the strike vote report to the NCMB-DOLE should also be fully
observed in all cases.

Liability of union officers and

members
As a rule, an employee who participates in a lawful strike is not deemed to have
abandoned his employment but is merely exercising his right to self-organization
precisely to protect his rights as an employee and/or to obtain better working
conditions. The participation in a legal strike should not constitute sufficient ground
for the termination of his employment even if a replacement has already been hired
by the employee during the strike.
This rule however, finds exception when a strike that was legal in the beginning
becomes illegal by way of the strikers’ commission of illegal acts. If the strike is legal
in the beginning and the officers or the ordinary union members commit illegal acts
during and in the course of the strike, then they cannot evade personal and
individual liability for said acts.
In the liability for illegal strike, the Labor Code makes a distinction in the liability
between union officers and ordinary union members. For union officers, the mere
finding or declaration of the illegality of the strike will result in the termination of all
union officers who knowingly participated in the illegal strike. It is not required that
the officers should be proven to have committed illegal acts during the strike in order
to be held liable therefore. In essence, the union officers who knowingly participated
in the illegal strike, whether they committed illegal acts, may be terminated.
On the other hand, for union members, mere participation in the illegal strike is not
sufficient ground for termination. The mere finding or declaration that the strike is
illegal will not result in termination. For a union member to suffer the consequence of
loss of employment, it must be shown that he has knowingly participated in the
commission of the illegal acts during the strike.
*The mere declaration of illegality of the strike will result in the termination of all
union officers who knowingly participated in the illegal strike. The reason for this is
that the union officers have the duty to guide their members to respect the law.
Unlike ordinary members, it is not required, for purposes of termination, that the
officers should commit an illegal act during the strike. The mere finding or declaration
of illegality of a strike will not result in termination of ordinary union members. For an
ordinary union member to suffer termination, it must be shown by clear evidence that
he has committed illegal acts during the strike.

Arellano case (evidence required)

MERE SUBSTANTIAL EVIDENCE REQUIRED TO HOLD STRIKERS GUILTY OF
COMMISSION OF ILLEGAL ACTS.
While in all cases, it is required that the striker must be identified, proof beyond
reasonable doubt, however, is not required; substantial evidence available under the
attendant circumstances suffices to justify the imposition of the penalty of dismissal
on participating workers and union officers. Liability for illegal acts should be
determined on an individual basis. For this purpose, the individual identity of the
union members who participated in the commission of illegal acts may be proved
thru affidavits and photographs. Simply referring to them as “strikers,” or
“complainants in this case” is not enough to justify their dismissal.
However, photographs alone will not suffice. In ARELLANO UNIVERSITY
EMPLOYEES AND WORKERS UNION v. CA, while the university adduced
photographs showing the strikers picketing outside its premises, it failed to
identify who they were. It thus failed to meet the “substantiality of evidence
test” applicable in dismissal cases.

Picketing and strike;

distinguished
To strike is to withhold or to stop work by the concerted action of employees as a
result of an industrial or labor dispute. The work stoppage may be accompanied by
picketing by the striking employees outside of the company compound.
While a strike focuses on stoppage of work, picketing focuses on publicizing the
labor dispute and its incidents to inform the public of what is happening in the
company struck against.
A picket simply means to march to and from the employer’s premises, usually
accompanied by the display of placards and other signs making known the facts
involved in a labor dispute. It is a strike activity separate and different from the actual
stoppage of work. (PHIMCO INDUSTRIES, INC., vs. PHIMCO INDUSTRIES LABOR
ASSOCIATION, G.R. No. 170830, August 11, 2010)

Jurisdiction of the DOLE

Secretary; Whose benefit; Effects
A. Jurisdiction
The jurisdiction of the DOLE Secretary is when he or she exercises his power under
Art. 263(g), L.C. to assume jurisdiction over a labor dispute causing or likely to cause
a strike or lockout in an industry indispensable to the national interest cases and
then decide them himself or certify it to the NLRC for compulsory arbitration. The
jurisdiction over the labor dispute includes and extends to all questions and
controversies arising therefrom including cases over which LA has exclusive
jurisdiction.
The DOLE Secretary may immediately assume jurisdiction over the labor dispute of
hospitals and the like within 24 hours from his knowledge thereof. In labor disputes
adversely affecting the continued operation of such hospitals, clinics or 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.
B. Benefit
The power to assume jurisdiction in such cases by the DOLE Secretary is for the
benefit of the people as well as the parties involved. One of the substantive evils
which Article 263(g) of the Labor Code seeks to curb is the exacerbation of a labor
dispute to the further detriment of the national interest.
C. Effects
The effect when the DOLE Secretary exercises powers vested under Art. 263-264,
L.C. is that the jurisdiction over the civil aspect of all cases involving ULP, including
damages, attorney’s fees and other affirmative reliefs, shall no longer be vested with
the LAs.
Moreover:
1. Principle of subsumation or absorption entails that all cases between the same
parties, except if assumption or certification order specifies otherwise, shall be
considered subsumed or absorbed by the assumed or certified case, and shall be
decided accordingly by the DOLE Secretary in the case of an assumed dispute or by
the NLRC in case of a certified dispute. The parties are required to immediately
inform the SOLE or NLRC of all cases related to the dispute between them pending
before the LA and the LA concerned is required to forward within 2 days from notice
entire records of the case to the SOLE or NLRC for proper disposition. In case of a
certified case, parties thereto shall inform their counsels and the NLRC Division
concerned of all cases pending with the LA or VA relative or incident to the certified
case
2. Principle of territoriality entails that when a certified labor dispute involves a
business entity with several workplaces located in different regions, the NLRC
Division having territorial jurisdiction over the principal office of the company shall
acquire jurisdiction unless certification provides otherwise.
The effect of such assumption or certification of labor dispute to the NLRC:
1. On intended or impending strike or lockout - automatically enjoined even if a
Motion for Reconsideration is filed.
2. On actual strike or lockout - strikers or locked out employees should immediately
return to work and employer should readmit them back.
3. On cases filed or may be filed - All shall be subsumed/absorbed by the assumed
or certified case except when the order specified otherwise. The parties to the case
should inform the DOLE Secretary of pendency thereof.

Return-to-work Order; Effects

When the Secretary of Labor assumes jurisdiction over a strike, all striking
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. 278 (g) Labor Code].
The mere issuance of an assumption order by the Secretary of Labor automatically
carries with it a return-to-work order, even if the directive to return to work is not
expressly stated in the assumption order - it is immediately executory. The defiance
of a return to work order of the Secretary of Labor is an illegal act and could be the
basis of a legal dismissal of these defiant workers whether union officers or ordinary
workers.

Department Order No. 40-H-13 s.

2013, Section 16. Industries
Indispensable to the National
Interest: (HEWAO)
1. Hospital sector;
2. Electric power industry;
3. Water supply services, to exclude small water supply services such as
bottling and refilling stations;
4. Air traffic control; and
5. Other industries as may be recommended by the Nat’l Tripartite Industrial
Peace Council (TIPC).

Prescription: Money claims vs

ULP vs Illegal dismissal
The prescriptive period of money claims and benefits arising from employer-
relationship is three years, reckoned from the time the case of action accrued;
otherwise, they shall be forever barred. Money claims under Article 306 of the Labor
Code include those arising from law, CBA, incremental proceeds from tuition
increases, and overseas employment of OFWs.
The prescriptive period of illegal dismissal cases in four years and not three years,
based on the Civil Code and not on the Labor Code. The three-year prescriptive
period under the Labor Code does not apply in illegal dismissal cases which are not
in the nature of money claims.
The prescriptive period for criminal complaints involving ULP is one year from the
time the acts complained of were committed; otherwise, they shall forever be barred.
A labor case for ULP based on the same set of facts interrupts the one year
prescription for the criminal aspect of the case. After the decision on the labor case
has become final and executory, the one year prescriptive period for the criminal
case begins to run again.

Sarmiento v. Tuico case (G.R.

No. 75271-73 June 27, 1988)
A return-to-work order was issued but 44 defiant workers instead of complying with
the return-to-work order, as most of the other workers have done, insisted on staging
the restrained strike and defiantly picketed the company premises to prevent the
resumption of operations. Thus, they were declared to have lost their employment
status by the employer Asian Transmission Corporation.
A return-to-work order may be validly issued pending the determination of the
legality or illegality of the strike. It is not correct to say that it may be enforced only
if the strike is legal and may be disregarded if the strike is illegal, for the purpose
precisely is to maintain the status quo while the determination is being made.
Otherwise, the workers who contend that their strike is legal can refuse to return to
their work and cause a standstill in the company operations while retaining the
positions they refuse to discharge or allow the management to fill. Worse, they win
also claim payment for work not done, on the ground that they are still legally
employed although actually engaged in activities inimical to their employer's interest.
Another purpose is to protect the workers who might otherwise be locked out
by the employer for threatening or waging the strike but the more important
reason is to prevent impairment of the national interest in case the operations
of the company are disrupted by a refusal of the strikers to return to work as
directed. In the instant case, stoppage of work in the firm will be hurtful not only to
both the employer and the employees. More particularly, it is the national economy
that will suffer because of the resultant reduction in our export earnings and our
dollar reserves, not to mention possible cancellation of the contracts of the company
with foreign importers.
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. 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 because the worker can of course
give up his work, thus severing his ties with the company, if he does not want to
obey the order; but the order must be obeyed if he wants to retain his work even if
his inclination is to strike.
Brief:
In this case the Asian Transmission Corporation (ATC) terminated Catalino
Sarmiento the vice president of Bisig ng Asian Transmission Labor Union (BATU) for
allegedly carrying a deadly weapon in the company premises. As a result BATU filed
a notice of strike claiming ATC committed ULP. ATC reacted by filing a petition to the
then Ministry of Labor and Employment(MOLE) to assume jurisdiction of the matter
or certify it to the NLRC for compulsory arbitration. MOLE certified the issue to the
NLRC. NLRC issued a return to work order to the striking union and employees and
finally ordered ATC to accept the returning employees and reinstate them in their
payroll immediately. This was challenged by ATC contending that NLRC had no
jurisdiction in issuing the return to work order and that any case should be annulled
for being oppressive.
The Supreme Court held that the order of NLRC was valid. There can be no question
that the MOLE acted correctly in certifying the labor dispute to the NLRC, given the
predictable prejudice the strike might cause not only to the parties but more
especially to the national interest. Affirming this fact, we conclude that the return-to-
work order was equally valid as a statutory part and parcel of the certification order
issued by the MOLE on November 24, 1986. The law itself provides that "such
assumption or certification shall have the effect of automatically enjoining the
intended or impending strike. If 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."
The challenged order of the NLRC was actually only an implementation of the above
provision of the Labor Code and a reiteration of the directive earlier issued by the
MOLE in its own assumption order of September 9, 1986.

Case study: UST and UIC cases

University of Sto. Tomas vs. NLRC
In the UST case, the Secretary assumed jurisdiction over the labor dispute between
striking teachers and the university. He ordered the striking teachers to return to
work and the university to accept them under the same terms and conditions.
However, in a subsequent order, the NLRC provided payroll reinstatement for the
striking teachers as an alternative remedy to actual reinstatement. The SC affirmed
the validity of such an order and ruled that NLRC did not commit grave abuse of
discretion in providing for the alternative remedy of payroll reinstatement.
Where the teachers ordered to return to work could not be given back their academic
assignments since the return-to-work order of the DOLE Secretary was issued in the
middle of the first semester or academic year. The Supreme Court affirmed the
validity of the payroll reinstatement order of NLRC and ruled that the NLRC did not
commit grave abuse of discretion in providing for the alternative remedy of payroll
reinstatement. It observed that the NLRC was only trying its best to work out a
satisfactory as hoc solution to a festering serious problem.
University of Immaculate Concepcion Inc. Vs. The Honorable Secretary of
Labor
Where by virtue of special circumstances in this case involving the final decision of
the panel arbitrations to the confidential nature of the positions of the twelve private
employees actual and physical reinstatement was rendered impracticable and more
likely to exacerbate the situation. The payroll reinstatement in lieu of actual;
reinstatement therefore, appears justified as an exception to the rule until the validity
of their termination is finally resolved

 Non Waiver of demands upon voluntary return to work. The act of the
strikers in voluntary returning to work does not result in waiver of their
original demands. Such act of returning to work only means that they
desisted from the strike which desistance is a personal act of the strikers
and cannot be used against the union and interpreted as a waiver by its
original demands for which the strike was adopted as a weapon.

In the case of UIC v The Honorable Secretary of Labor, the Supreme Court allowed
payroll reinstatement.
“ Article 263(g) of the Labor Code aforementioned states that all workers must
immediately return to work and all employers must readmit all of them under the
same terms and conditions prevailing before the strike or lockout. The phrase “under
the same terms and conditions” makes it clear that the norm is actual reinstatement.
This is consistent with the idea that any work stoppage or slowdown in that particular
industry can be detrimental to the national interest.” “They are hereby ordered placed
under payroll reinstatement UNTIL THE VALIDITY OF THEIR TERMINATION IS
FINALLY RESOLVED.” Payroll reinstatement must rest on special circumstances
that render actual reinstatement impracticable or otherwise not conducive to
attaining the purposes of the law.

Francisco doctrine; 2 tiered test

of employment relationship
Week 4-6 (Labor Standards: September 7-26, 2020)
While the control test may be the most important index to determine the existence of
the employer-employee relationship, however, in certain cases, the control test is not
sufficient to give a complete picture of the relationship between the parties, owing to
the complexity of such a relationship where several positions have been held by the
worker. There are instances when, aside from the employer’s power to control the
employee with respect to the means and methods by which the work is to be
accomplished, economic realities of the employment relations help provide a
comprehensive analysis of the true classification of the individual, whether as
employee, independent contractor, corporate officer or some other capacity.
Recent jurisprudence adds another test, applied in conjunction with the control test,
in determining the existence of employment relations. This is the two tiered test
enunciated in Francisco v. NLRC, which involves an inquiry into the following:
(1) The putative employer’s power to control the employee with respect to the means
and methods by which the work is to be accomplished [control test]; and
(2) The underlying economic realities of the activity or relationship [economic reality
test].
Employment relationship under the control test is determined by asking whether “the
person for whom the services are performed reserves the right to control not only the
end to be achieved but also the manner and means to be used in reaching such end.
The broader economic reality test calls for the determination of the nature of the
relationship based on the circumstances of the whole economic activity. Under this
test, the proper standard of economic dependence is whether the worker is
dependent on the alleged employer for his continued employment in that line of
business. By analogy, the benchmark of economic reality in analyzing possible
employment relationships for purposes of the Labor Code ought to be the economic
dependence of the worker on his employer.
This two-tiered test provides a framework of analysis which would take into
consideration the totality of circumstances surrounding the true nature of the
relationship between the parties. This is especially appropriate in a case where there
is no written agreement or terms of reference to base the relationship on and there
exists a complexity in the relationship based on the various positions and
responsibilities given to the worker over the period of the latter’s employment.
Applying this two-tiered test, the Court ruled that petitioner Angelina Francisco in this
case of Francisco, was an employee of private respondent Kasei Corporation, where
she simultaneously held several positions because she was under the direct control
and supervision of Seiji Kamura, the corporation’s Technical Consultant. She
reported for work regularly and served in various capacities as Accountant, Liaison
Officer, Technical Consultant, Acting Manager and Corporate Secretary, with
substantially the same job functions, that is, rendering accounting and tax services to
the company and performing functions necessary and desirable for the proper
operation of the corporation, such as securing business permits and other licenses
over an indefinite period of engagement. Under the broader economic reality test,
the petitioner can likewise be said to be an employee of respondent corporation
because she had served the company for six years before her dismissal, receiving
check vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses
and allowances, as well as deductions and Social Security contributions from August
1, 1999 to December 18, 2000. When petitioner was designated General Manager,
respondent corporation made a report to the SSS. Petitioner’s membership in the
SSS as manifested by a copy of the SSS specimen signature card which was signed
by the President of Kasei Corporation and the inclusion of her name in the online
inquiry system of SSS evinces the existence of an employer-employee relationship
between petitioner and respondent corporation.
Based on the foregoing, it is clear that the two-tiered test gives a complete picture of
the relationship between the parties. Aside from the employer’s power to control the
employee, and inquiry into the economic realities of the relationship helps provide a
comprehensive analysis of the true classification of the individual, whether as
employee, independent contractor, corporate officer or some other capacity.

Following the broader economic reality

test, the Supreme Court found
petitioner in OROZCO, who is a
columnist in the Philippine Daily
Inquirer (PDI), not an employee of PDI
but an independent contractor.
Petitioner’s main occupation is not as
a columnist for respondent but as a
women’s rights advocate working in
various women’s organizations.
Likewise, she herself admits that shge
also contributes articles to other
publications. Thus, it cannot be said
that petitioner was dependenton
respondent PDI for her continued
employment in respondent’s line of
business. The inevitable conclusion is
that petitioner was not respondent
PDI’s employee but an
inClassification of employees
Regular/Permanent Employment
Regular or Permanent Employment is when an employee performs activities that are
necessary or desirable to the business/trade of the employer. Regular employees
enjoy the benefit of tenure and cannot be terminated for causes other than those
provided by law and only after due process.
Most companies in the Philippines require their new employees to undergo
probationary employment for a maximum of six (6) months to evaluate their skills
and performance and determine if they are able to meet the reasonable standards to
become permanent employees.
Casual Employment
Casual Employment is when an employee performs work that is usually not
necessary or primarily related to the employer’s business/trade. The period of
employment must be made clear to the employee at the time they started rendering
service.
However, employees that have rendered service for at least one (1) year in the same
company, whether continuous or not, shall be considered regular employees with
respect to the activities they perform and will continue rendering service while such
activities exist in the company.
Term/Fixed-Term Employment
Term or Fixed-Term Employment is a type of employment that is not determined by
the activities that employees are required to perform but by the commencement and
termination of the employment contract. A fixed-term employee can only render
services within the set period of time stipulated in the employment contract and the
employer must terminate his/her employment after such period expires.
Fixed-term employment in the Philippines is highly regulated and subject to the
following guidelines:
  be voluntarily agreed upon by the parties without coercion or improper
pressure to the employee
 employer and employee dealt with each other on more or less equal terms
with no dominance exercised by the former over the latter

*Not included in the enumeration but recognized by jurisprudence (Brent

Case)
Project Employment
Project Employment is when an employee is hired for a specific project and the
duration of employment is defined by the scope of work and/or length of the project.
A project employee can acquire the status of a permanent employee if they are
continuously rehired to undertake other projects for the company or the tasks they
perform are necessary and indispensable to the usual operations of the company.
Seasonal Employment
Seasonal Employment is defined when an employment contract is only for a certain
time or season of the year. This is common practice in service industries, such as
Retail, Food and Beverage, and Hospitality to increase manpower and cover labor
demand during peak seasons.
Many companies hire “regular seasonal employees” who are only called to work
during peak seasons (e.g. Christmas season) and are temporary suspended during
off-seasons. These employees are not separated from service but are only on Leave
of Absence (LOA) without pay until re-employed.
dependent contractor, engaged to do independent work.

Probationary period: 18 months

ILUMINADA VER BUISER, MA. CECILIA RILLOACUÑA and MA. MERCEDES P.
INTENGAN, petitioners, vs. HON. VICENTE LEOGARDO, JR., in his capacity as
Deputy Minister of the Ministry of Labor & Employment, and GENERAL
TELEPHONE DIRECTORY, CO., respondents.
Generally, the probationary period of employment is limited to six (6) months.
However, the exception to this general rule is when the parties to an employment
contract agreed otherwise, such as when the same is established by company policy
or when the same is required by the nature of work to be performed by the
employee.
In the latter case, there is recognition of the exercise of managerial prerogatives in
requiring a longer period of probationary employment, especially where the
employee must learn a particular kind of work such as selling, or when the job
requires certain qualifications, skills, experience or training. In the case, it was shown
that private respondent GENERAL TELEPHONE DIRECTORY COMPANY needs at
least eighteen (18) months to determine the character and selling capabilities of the
petitioners as sales representatives.
Publication of solicited ads are only made a year after the sale has been made and
only then will the company be able to evaluate the efficiency, conduct, and selling
ability of its sales representatives, the evaluation being based on published ads.
Moreover, an eighteen month probationary period is recognized by the Labor Union
in their Collective Bargaining Agreement. Hence, the probationary employment of
petitioners set to eighteen (18) months is legal and valid.

Termination of employment
(er,ee, gov’t, automatic)
Security of tenure. - In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when
authorized by this Title. An employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and other privileges and to
his full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from
him up to the time of his actual reinstatement
Types of Employment Termination
There are two types of employment termination in the Philippines: termination by
employer and voluntary resignation or termination by employee. Employers can
dismiss an employee based on just and authorized causes. Just causes are based
on acts attributable to an employee’s own wrongful actions or negligence while
authorized causes refer to lawful grounds for termination which do not arise from
fault or negligence of the employee.
Voluntary resignation is defined as a voluntary act committed by employees who
knowingly dissociate themselves from their employment for personal reasons. It
does not cover instances where employees are forced to resign with the use of
threats, intimidation, coercion, manipulation, or where dismissal is imposed as a
penalty for an offense. Forced or coerced resignation is illegal and considered
“constructive” dismissal – a dismissal in disguise.
Termination by Employer
According to Article 282 of the Labor Code, an employer can terminate an employee
for just causes, which could be any of the following:

 serious misconduct or willful disobedience by the employee of the lawful

orders of his employer or representative in connection with his work;
 gross and habitual neglect by the employee of his duties;
 fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representatives;
 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
 other similar causes.
Employers can also terminate an employee based on authorized causes like
business and health reasons. Art. 283 of the Labor Code states that an employee
can be terminated due to business reasons such as:

 installation of labor-saving devices;

 redundancy;
 retrenchment (reduction of costs) to prevent losses; or
 the closing or cessation of operation.

For termination of employment based on health reasons, employers are allowed to

terminate employees found 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-workers (Art. 284, Labor Code). The employer must obtain from a
competent public health authority a certification that the employee’s disease is of
such a nature and at such a stage that it can no longer be cured within a period of
six (6) months even with medical attention.
Voluntary Resignation
This type of termination is strengthened by the provisions of Art. 285 of the Labor
Code which recognizes two kinds of termination an employee can initiate – without
just cause and with just cause. If the resignation is without just cause, the employee
must give a one (1) month advance written notice for resignation (commonly referred
to as a “resignation letter”) to the employer to enable them to look for a replacement
and prevent work disruption. If the employee fails to provide a resignation letter, he
or she runs the risk of incurring liability for damages.
If the resignation is with just cause, however, the employee need not serve a
resignation notice. Art. 285 indicates the just causes for resignation as follows:

 serious insult to the honor and person of the employee;

 inhuman and unbearable treatment accorded the employee by the
employer or his representative;
 crime committed against the person of the employee or any immediate
members of the employee’s family; and
 other similar causes.

It should be noted that employees who voluntarily resign from work are not entitled to
separation pay. Philippine laws only grant separation pay to those who were
dismissed from service not due to their own fault or negligence but for reasons that
are beyond their control, i.e. business closure, cessation of operation, retrenchment
(reduction of costs) to prevent losses, etc. However, there are at least two cases
where employees who resign voluntarily may be entitled to separation pay, and they
are as follows:

 when payment of separation pay is provided in the employment contract or

Collective Bargaining Agreement (CBA, for companies with existing
bargaining agent or labor union); and
 when it is authorized by established company practice or policy.
Due Process in Termination of Employment
Due process in the context of employment termination is the right of an employee to
be notified of the reason for his or her dismissal and, in case of just causes, to be
provided the opportunity to defend himself or herself.
The due process is different for both authorized and just causes. Just cause involves
a two-notice rule while authorized cause requires a 30-day notice. If due process is
not accorded to the employee before termination of the employment or the
termination itself is declared illegal, the employee is entitled to receive reinstatement
and full backwages (Art. 279, Labor Code). If reinstatement is no longer possible
where the dismissal was unjust, separation pay may be granted.
Dismissals based on just causes involve the two-notice rule:

1. A written notice, commonly referred to as a notice to explain specifying the

grounds for termination and giving the employee ample opportunity to
explain their side;
2. A hearing or conference to allow the employee to respond to the charge/s,
present evidence, or rebut the evidence presented against them; and
3. A notice of decision indicating the justification for termination as well as
the corresponding sanctions (if any) after due consideration of all
evidence.

Due Process for Authorized Causes

Dismissals based on authorized causes involve the following:

1. Submission of a written notice of dismissal to the employee specifying the

grounds for dismissal at least 30 days before the date of termination; and
2. A copy of the notice which shall be provided to the Regional Office of the
Department of Labor and Employment (DOLE) where the employer is
located.

2-fold due process requirement

Dismissal of employees requires the observance of the two-fold due process
requisites, namely:

1. Substantive aspect which means that the dismissal must be for any of the
(1) just causes provided under Article 282 of the Labor Code or the
company rules and regulations promulgated by the employer; or (2)
authorized causes under Articles 283 and 284 thereof; and
2. Procedural aspect which means that the employee must be accorded due
process, the elements of which are notice and the opportunity to be heard
and to defend himself.

It is now the prevailing rule that it is not the due process provided in the Constitution
that is required in termination of employment but the statutory due process provided
under Article 292(b) (2779b)) of the Labor Code
“Constitutional due process” protects the individual from the government and
assures him his rights in criminal, civil or administrative proceedings;
while “statutory due process” protects employees from being unjustly terminated
without just cause after notice and hearing. Put differently the Bill of Rights is not
meant to be invoked against acts of private individuals like employers. Private
actions, no matter how egregious, cannot violate the constitutional guarantees.

Seven standard situations in

termination cases
The rules on termination of employment in the Labor Code and pertinent
jurisprudence are applicable to seven (7) different situations, namely:

1. The dismissal was for a just cause under Article 297 (282), for an
authorized cause under Article 298 (283), or for health reasons under
Article 299 (284), and due process was observed- This termination is
2. The dismissal was without a just or authorized cause but due process was
observed- This termination is
3. The dismissal was without a just or authorized cause and due process
was not observed- This termination is ILLEGAL
4. The dismissal was for a just or authorized cause but due process was not
observed- This termination is
5. The dismissal was for a non-existent cause- This termination is
6. The dismissal was not supported by any evidence of termination- This
termination is NEITHER LEGAL OR ILLEGAL as there is no dismissal
to speak of. Reinstatement is ordered not as a relief for illegal dismissal
but on equitable ground.
7. The dismissal was brought about by the implementation of a law- This
termination is LEGAL

Stated otherwise:

1. The dismissal is LEGAL, if it was done with both substantive and

procedural due process.
2. The dismissal is ILLEGAL, if it was done without substantive due process
although procedural due process was observed.
3. The dismissal is ILLEGAL, if it was done without substantive and
procedural due process.
4. The dismissal is LEGAL, if it was done with substantive due process but
without procedural due process.

Wenphil Doctrine (1989): Belated Dismissal Rule.

Where the employer had a valid reason to dismiss an employee but it did not follow
the due process requirement, the dismissal may be UPHELD but the employer will
be penalized to pay an indemnity to the employee amounting Php 1000.
Serrano doctrine (2000): Ineffectual Dismissal Rule
The violation by the employer of the notice requirement in termination for just or
authorized causes was not a denial of due process that will nullify the termination.
But, the dismissal is declared INEFFECTUAL and the employer must pay full
backwages from the time of termination until it is judicially declared that the dismissal
was for just and authorized cause.
Agabon Doctrine (2004): Statutory Due Process Rule
Abandoned the Serrano Doctrine and reverted to Wenphil Doctrine. Where the
dismissal is for just cause, the lack of statutory due process should not nullify the
dismissal nor render it ineffectual. The employee is entitled to nominal damages
amounting to Php 30,000. 
Abbott Laboratories Doctirine (2013): Contractual Due Process
Where there is an existing company policy enunciating the procedural due process
( Contractual Due Process) that must be observed in termination of an employment,
compliance alone with the statutory due process, would not suffice. Otherwise, the
same consequence as in Agabon will ensue, that is, the termination shall be legal
but the employer is liable to the payment of indemnity in the form of nominal
damages amounting to Php 30,000.

Abbott Laboratories doctrine on

Contractual due process
Abbott Laboratories, Philippines vs Alcaraz, it was held here that in a situation where
there is an existing company policy enunciating ng procedural due process that must
be observed in termination of employment, compliance alone with the statutory due
process, would not suffice. Additionally, there must be compliance too with the
company prescribed due process procedure or the so called contractual due
process. Otherwise, the employer will be penalized with the payment of indemnity in
the form of nominal damages in the same amount of P30,000.00 as awarded in
Agabon case.

The Kings of Kings Transport

Doctrine
THE KING OF KINGS TRANSPORT DOCTRINE: PROCEDURAL DUE PROCESS
IN JUST CAUSE
Procedural steps.
In just cause termination, the twin-notice requirement applies. More particularly the
following procedure in the order presented below should be followed:

1. Service of written notice;

2. Conduct of hearing; and
 3. Service of second written notice.

Based on this doctrine which was enunciated in King of Kings Transport Inc. v.
Mamac, the following requirements should be complied with:
(1) First written notice.
The First written notice to be served on the employee should:
a) Contain the specific causes or grounds for termination against him;
b) Contain a directive that the employee is given the Opportunity to submit his written
explanation within the reasonable period of FIVE (5) CALENDAR DAYS from receipt
of the notice:

1. to enable him to prepare adequately for his defense;

2. to study the accusation against him;
3. to consult a union oflicial or lawyer;
4. to gather data and evidence; and
5. to decide on the defenses he will raise against the complaint.

c) Contain a detailed narration of the facts and circumstances that will serve as basis
for the charge against the employee. This is required in order to enable him to
intelligently prepare his explanation and defenses. A general description of the
charge will not suffice.
d) Specifically mention which company rules, if any, are violated and/or which among
the grounds under Article 297 [282] is being charged against the employee.
(2) Hearing required
After serving the first notice, the employer should schedule and conduct a hearing or
conference wherein the employee will be given the opportunity to:

1. explain and clarify his defenses to the charge/s against him;

2. present evidence in support of his defenses; and
3. rebut the evidence presented against him by the management.

During the hearing or conference, the employee is given the chance to defend
himself personally, with the assistance of a representative or counsel of his choice.
Moreover, this conference or hearing could be used by the patties as an Opportunity
to come to an amicable settlement.
(3) Second written notice.
After determining that termination of employment is justified, the employer shall
serve the employees a written notice of termination indicating that:

1. all circumstances involving the charge/s against the employee have been
considered; and
2. 2) grounds have been established to justify the severance of his
employment.
3. The foregoing rule does not apply in case of abandonment.
Abandonment is a just cause to terminate employment. It is considered a form of
gross neglect of duties under Article 297(b) [282(b)] of the Labor Code. However, the
procedural due process is different from the process described above. For obvious
reason, due process in abandonment cases does not involve the conduct of hearing.
Compliance with the following two (2) notices suffices, viz.:

1. First notice asking the employee to explain why he should not be declared
as having abandoned his job; and
2. Second notice informing him of the employer’s decision to dismiss him on
the ground of abandonment.

The Perez doctrine.

The 2009 Perez doctrine enunciates the new guiding principles on the hearing
aspect of procedural due process. This dramatically modified the concept of hearing
in just cause termination.

Application of the 2nd notice

requirement
The second written notice (notice of termination) is not applicable in cases of
termination due to authorized causes. Procedural due process in termination due to
any of the authorized causes, of installation of labor-saving device, redundancy,
retrenchment and closure of business or establishment is deemed complied with
upon the separate and simultaneous service of a written notice of the intended
termination to both:
            1.) the employee to be terminated; and
            2.) the appropriate DOLE Regional Office,
At least one month before the intended date of the termination specifying the
ground/s therefor and the undertaking to pay the separation required under Article
298 [283] of the Labor Code or the employment contract or the CBA, whichever is
higher.

Important: Perez Doctrine on

New Guiding Principle on the
Hearing Requirement
The concept of hearing as part of due process has been significantly changed by the
Perez doctrine. It enunciates the new guiding principles on the hearing aspect of
procedural due process. It has interpreted the term “ample opportunity to be heard”
in a new light, thus:
 1. “Ample opportunity to be heard” means any meaningful opportunity given
to the employee to answer the charges against him and submit evidence
in support of his defense, whether in hearing conference or some other
fair, just and reasonable way
2. A formal hearing or conference is no longer mandatory.. It becomes
mandatory only under any of the following circumstances:

 When requested by the employee In writing; or

 When substantial evidentiary disputes exist; or
 When a company 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 its Implementing Rules and Regulations. This
is how the Supreme Court resolved the conflict in the following provisions of the
Labor Code and its implementing rules:

 Under Article 292(b) [277(b)] of the Labor Code, the employer is required
to afford the employee “ample opportunity to he heard and to defend
himself with the assistance of his representative if he so desires”; while
 Under Section 2(d), Rule 1, Book VI of the Implementing Rules of the
Labor Code, the employer is required to afford to the employee a “hearing
or conference during which the employee concerned, with the assistance
of counsel, if he so desires, is given opportunity to respond to the charge,
present his evidence or rebut the evidence presented against him. ”

The Perez doctrine is now the prevailing rule as shown by a catena of cases which
cited it after its promulgation.

Reliefs against illegal dismissal

An illegally dismissed employee is entitled to the following reliefs under Article 294:

1. Reinstatement without loss of seniority rights and other privileges;

2. Full Back Wages, inclusive of allowances; and
3. Other benefits or their monetary equivalent.

Other reliefs not found in Article 294

1. Award of separation pay in lieu of reinstatement.

2. Award of penalty in the form of nominal damages in case of termination
due to just or authorized cause but without observance of procedural due
process.
3. For fixed term employees: salaries for the unexpired portion of
employment contract.
4. Award for damages and attorney’s fees.
 5. Award of financial assistance in cases where employee’s dismissal is
declared legal but because of long years of service, and other
considerations, financial assistance is awarded.

Imposition of legal interest on separation pay, backwages and other monetary

awards.

Strained Relations Rule

The doctrine of “strained relations” or “antipathy and antagonism” or “irretrievable
estrangement” applies when reinstatement will no longer be in the best interest of
both employee and employer considering the animosity and antagonism that exist
between them brought about by the filing of the labor case.
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. ( Johnson & Johnson (Phils), Inc., et al. vs Johnson Office &
Sales Union- Federation of Free Workers, et al., G.R. No. 172799, July 6,2007)
The Principle of “strained relations” cannot be applied indiscriminately. Otherwise,
reinstatement can never be possible simply because some hostility is invariably
engendered between the parties because of litigation. That is human
nature. (Gabriel vs Bilon, G.R No. 146989, February 7, 2007). Straine relations, to
warrant separation pay in lieu of reinstatement, “must be demonstrated as a matter
of fact” (Tower Industrial Sales vs CA, G.R No. 165727, April 19, 2006)
Some Principles on Strained Relations (optional if you will include these in
your answer)

1. It must be proved and demonstrated as a fact.

2. Litigation, itself, does not give rise to strained relations that may justify
non-reinstatement. The filing of the complaint for illegal dismissal does not
by itself justify the invocation of strained relations.
3. No strained relations should arise from a valid and legal act of asserting
one’s right.
4. The nature of position is material in determining the validity of strained
relations.
5. Non-settlement of dispute after long period of time is not indicative of
strained relations.
6. The refusal of the employee to be reinstated is indicative of strained
relations.
7. Criminal prosecution confirms existence of strained relations which would
render the employee’s reinstatement highly undesirable.
8. A managerial employee should not be reinstated if strained relations exist.
  Strained Relations Rule
The doctrine of “strained relations” or “antipathy and antagonism” or “irretrievable
estrangement” applies when reinstatement will no longer be in the best interest of
both employee and employer considering the animosity and antagonism that exist
between them brought about by the filing of the labor case.
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. ( Johnson & Johnson (Phils), Inc., et al. vs Johnson Office &
Sales Union- Federation of Free Workers, et al., G.R. No. 172799, July 6,2007)
The Principle of “strained relations” cannot be applied indiscriminately. Otherwise,
reinstatement can never be possible simply because some hostility is invariably
engendered between the parties because of litigation. That is human
nature. (Gabriel vs Bilon, G.R No. 146989, February 7, 2007). Straine relations, to
warrant separation pay in lieu of reinstatement, “must be demonstrated as a matter
of fact” (Tower Industrial Sales vs CA, G.R No. 165727, April 19, 2006)
Some Principles on Strained Relations (optional if you will include these in
your answer)

1. It must be proved and demonstrated as a fact.

2. Litigation, itself, does not give rise to strained relations that may justify
non-reinstatement. The filing of the complaint for illegal dismissal does not
by itself justify the invocation of strained relations.
3. No strained relations should arise from a valid and legal act of asserting
one’s right.
4. The nature of position is material in determining the validity of strained
relations.
5. Non-settlement of dispute after long period of time is not indicative of
strained relations.
6. The refusal of the employee to be reinstated is indicative of strained
relations.
7. Criminal prosecution confirms existence of strained relations which would
render the employee’s reinstatement highly undesirable.
8. A managerial employee should not be reinstated if strained relations exist.

  Agabon vs Jaka Doctrines

In Agabon Doctrine, the dismissal of the employee was based on just cause but due
process was not observed. Hence, the employee is entitled to nominal damages
amounting to Php 30,000. The sanction imposed upon the employer is tempered
because the employee has committed a wrongful act.
In Jaka Doctrine, the dismissal of the employee was based on authorized cause but
due process was not observed. Hence, the employee is entitled to nominal damages
amounting Php 50,000. The sanction imposed upon employer is stiffer because the
employee has not committed any blameworthy act nor any delinquency or culpability.

Bustamante Doctrine
In Bustamante vs NLRC, the Supreme Court changed the rule on the reckoning of
backwages. Under the Bustamante doctrine, the term “full backwages” was
interpreted to mean exactly that, i.e., without deducting from backwages the earnings
derived elsewhere by the concerned employee during the period of his illegal
dismissal. 

Cases where SC award

reinstatement without backwages
and reinstatement with limited
backwages
Reinstatement without backwages:
Under the following situations, reinstatement of an illegally dismissed employee is
granted without the accompanying backwages:
When the dismissal is deemed too harsh a penalty;
ALU-TUCP vs NLRC: The penalty of dismissal was reduced to suspension due to
mitigating circumstances. The justification was that the entire period when the
employee was out of job because of his dismissal should already be considered as
the period of his suspension; hence, he should no longer be entitled to backwages
for the same period.
Yupangco vs NLRC: The employee was illegally dismissed but at the same time
guilty of misconduct. The penalty of suspension without backwages is proper.
Pepsi-Cola vs NLRC: Employee was absent for 25 days without prior leave. He was
ordered reinstated but he was denied backwages.
When the employer acted in good faith; or
Itogon-Suyoc vs NLRC: “The ends of social and compassionate justice would
therefore be served if the private respondent is reinstated but without backwages in
view of petitioner’s good faith.”
Pepsi-Cola vs Molon: Employee was reinstated but without backwages because the
penalty of dismissal is too harsh for his infractions considering that his failure to
report to work was clearly prompted by a medical emergency and not by any
intention to defy the return-to-work order.
Integrated Microelectronics, Inc. (IMI) vs Pionella: Backwages was deleted on the
grounds that (a) the penalty of dismissal was too harsh a penalty to be imposed
against Pionella fo his infractions and (b) IMI was in good faith when it dismissed
Pionella.
Where there is no evidence that the employer dismissed the employee.
Best Wear Garments vs De Lemos: There being no termination of employment by
the employer in this case, the award of backwages cannot be sustained. It is well
settled that backwages may be granted only when there is a finding of illegal
dismissal. In cases where there is no dismissal, the remedy is reinstatement but
without backwages.
Leopard vs Quitoy: Reinstatement without backwages was ordered because the
petitioners/employers were found not to have dismissed respondents/security guards
and that the latter, for their part, have not abandoned their employment.
Leonardo vs NLRC: The Court ordered the reinstatement without backwages of the
employee who was declared neither to have abandoned his job nor was he
constructively dismissed.
Reinstatement with limited backwages:
There are instances where backwages were not awarded in full but merely limited for
the same reason of good faith on the part of the employer. Award of backwages was
limited to:
1 year;
San Miguel Corporation vs Javate, Jr.: The employer’s liability was mitigated by its
evident good faith in terminating the employee’s services based on the terms of its
Health, Welfare and Retirement Plan. The award of backwages was limited to only
one (1) year considering the mitigating circumstance of good faith attributed to the
employer.
2 years; or
Dolores vs NLRC: Employee was awarded backwages limited to a period of two (2)
years, given that the employer acted without malice or bad faith in terminating the
employee’s services.
5 years.
Victory Liner, Inc. vs Race: The Court reduced and limited the original award of full
backwages to five (5) years in the light of the evident good faith of the employer.

Common requisites of authorized

causes under article 298 (283)
There are certain requites that are common to the five (5) grounds in Article 298
[283]. To simplify the discussion, the following five (5) common requisites are
applicable to the said grounds:

1. There is good faith in effecting the termination;

2. The termination is a matter of last resort, there being no other option
available to the employer after resorting to cost-cutting measures;
3. Two (2) separate written notices are served on both the affected
employee and the DOLE at least one (1) month prior to the intended
date of termination;
4. Separation pay is paid to the affected employee, to wit:

             (a) If based on (1) installation of labor-saving device, or (2) redundancy. –

One (1) month pay or at least (1) month pay for every year of service, whichever is 
higher, a fraction of at least six (6) months shall be considered as one (1)  whole
year;
             (b) If based on one (1) retrenchment, or two (2) closure NOT due serious
business losses or financial reverses. – One (1) month pay or at least one- half (1/2)
month pay for every year of service, whichever is higher, or a fraction of at least six
(6) months shall be considered as one (1) whole year.