Labor Law

LABOR LAW AND SOCIAL LEGISLATION
I. FUNDAMENTAL PRINCIPLES AND CONCEPTS
A. Legal basis
Labor Statutes; Classification (1995 No. 1 Bar Q)
1. What are the three (3) general classifications of labor statutes? Describe and give an example
of each classification.
The three (3) general classifications of labor statutes are:

a) Labor Relations Laws;
b) Labor Standards Laws; and
c) Social Security Laws or Social Legislation.
LABOR RELATIONS Laws are those labor statutes that deal with the relations of labor and
management or matters arising from employer-employee relationship like the laws on unions, self
organization, collective bargaining, unfair labor practices, strikes, lockouts and picketing.
LABOR STANDARDS are those labor statutes that prescribe standards or terms and conditions
of employment for compliance by employers, like the laws on monetary benefits, hours of work,
weekly rest periods, holiday pay, wages, and laws dealing with women, minors, house-helpers,
and industrial home-workers.
SOCIAL SECURITY Laws or Social Legislation are those labor statutes that provide protection
not only to a worker but also to members of his family in case of loss of income or when there is
need for medical care brought about by contingencies or hazards beyond his control like sickness,
disability, death, and old age. Examples of social security laws are the Social Security Law,
Revised Government Service Insurance Act, the Articles of the Labor Code on Employees
Compensation, the State Insurance Fund, and the National Health Insurance Act, Retirement Law.
 Labor Legislations; Purpose (2006 BAR)

What is the purpose of labor legislation?
SUGGESTED ANSWER:
Labor legislation is an exercise of police power. The purpose of labor legislation is to regulate
the relations between employers and employees respecting the terms and conditions of
employment, either by providing for certain standards or for a legal framework within which
better terms and conditions of work could be negotiated through collective bargaining. It is
intended to correct the injustices inherent in employer-employee relationship.
***Legislative discrimination is allowed provided there is a reasonable and substantive classification.
***Right to property is not a limitation to police power
Labor Standard vs. Labor Relation (1997 BAR)

Differentiate labor standards law from labor relations law. Are the two mutually exclusive?
SUGGESTED ANSWER:
LABOR STANDARDS law is that labor law which prescribes terms and conditions of employment like
Book in Book IV, Title I and Book VI of the Labor Code. These Books of the Labor Code deal with
working conditions, wages, working conditions for women, minors, househelpers and homeworkers,
medical and dental services, occupational health and safety, termination and retirement. On the other
hand, LABOR RELATIONS law is that labor law which regulates the relations between employers and
workers like Book V of the Labor Code which deals with labor organizations, collective bargaining,
unfair labor practices and strikes and lockouts.
Labor standards laws and labor relations laws are not mutually exclusive; they are complement to each
other. Thus, the law on strikes and lockouts which is an example of labor relations law includes some
provisions on the security of tenure of workers who go on strike or who are locked out. These provisions
are examples of labor standards law.
 Labor Standard vs. Labor Relation (2003)

How do the provisions of the law on labor relations interrelate, if at all, with the provisions
pertaining to labor standards?
SUGGESTED ANSWER:
LABOR RELATIONS law focuses its provisions on the collective aspects of employer-employee
relationship. Its legal provisions deal with employees organizing unions and how through these
unions, employees are able to have collective bargaining with their employer. On the other hand,
LABOR STANDARDS law focuses on the terms and conditions of employment of employees as
individual employees or those legal provisions dealing with wages, hours of work and other terms and
conditions of employment.
There may be instances when the provisions of labor relations law may interrelate with provisions of
labor standards law. Thus, a CBA which is dealt with in labor relations law may have provisions that
improves upon the minimum terms and conditions of employment prescribed in labor standardslaw,
like a CBA providing for a higher minimum wage, or for the computation of a higher overtime pay or
the payment of holiday pay not only for regular holidays but also for certain special holidays.
B. CONSTITUTIONAL PROVISIONS
1987 Constitution (State Policies, Bill of Rights & Social Justice)
Important labor-related constitutional principles
1. Article II, Sections 9, 10, 18, 20 (Declaration of Principles and State Policies):
Section 9. The State shall promote a just and dynamic social order that will ensure the prosperity and
independence of the nation and free the people from poverty through policies that provide adequate social
services, promote full employment, a rising standard of living, and an improved quality of life for all.
Under the ESCALATOR CLAUSE IN THE CBA, wage rates rise periodically usually with specific rise
in the consumer price index or cost of living index, but prohibits a decrease to reflect a drop in the cost of
living.
Section 10. The State shall promote social justice in all phases of national development.
SOCIAL JUSTICE is neither communism nor depotism, nor anarchy, nor atomism but the humanization
of laws and equalization of social and economic forces of the State so that justice in it’s rational and
objectively secular conception may at least be approximated. It is the promotion of the welfare of the
people and the adoption by the government of calculated measures to insure economic stability of all
component elements of the society through the maintenance of proper economic and social equilibrium in
the inter relations of the members of the community; constitutionall, through the adoptions of measures
legally justifiable, or extra-constitutionally, through the existence of all governments on the time honored
principle of ‘Salus Populi Est Suprema Lex’.
Social Justice as Guiding Principles in Labor (2003)

May social justice as a guiding principle in labor law be so used by the courts in sympathy with the
working man if it collides with the equal protection clause of the Constitution? Explain.
SUGGESTED ANSWER:
Yes. The State is bound under the Constitution to afford full protection to Labor; and when conflicting
interests collide and they are to be weighed on the scales of social justice, the law should accord more
sympathy and compassion to the less privileged workingman. (Fuentes v. NLRC. 266 SCRA 24 f 19971)
However, it should be borne in mind that social justice ceases to be an effective instrument for the
"equalization of the social and economic forces" by the State when it is used to shield wrongdoing.
(Corazon Jamer v. NLRC. 278 SCRA 632 F1 99711
ANOTHER SUGGESTED ANSWER:

No, social justice as a guiding principle in law may not be used by the courts if it collides with the equal
protection clause of the Constitution. Social justice is not a magic wand applicable in all circumstances.
Not all labor cases will be automatically decided in favor of the worker. Management has also rights
which are entitled to recognition and protection; justice must be dispensed according to facts and law; and
social justice is not designed to destroy or oppress the employer.
***Social Justice cannot be properly resorted to trample upon the rights of others or shield wrongdoings
or illegal acts prejudicial to the rights of property owners who, under the Constitution are also entitled
protection.

Social justice as a guiding principle in Labor Law can be implemented side by side with the equal
protection clause of the Constitution. In implementation of the principle of social justice, the Constitution
commands that the State shall afford protection to labor. Thus, Labor Law may be pro-labor in the sense
that labor is given certain benefits not given to management. But this is not necessarily violative of the
equal protection clause of the Constitution because said clause allows reasonable classification.
FIRST OF TWO PROTECTION-TO-LABOR CLAUSES:

Section 18. The State affirms labor as a primary social economic force. It shall protect the rights of
workers and promote their welfare.
Section 20. The State recognizes the indispensable role of the private sector, encourages private
enterprise, and provides incentives to needed investments.
Laissez faire vs Welfare State Concept

The State recognizes the significant role of the private or business sectors; however, it has not fully
embraced fully the concept of laissez faire, or, otherwise, relied on pure markets to govern the economy.
What the Constitution adopted, is the welfare state concept which is manifested in it’s provisions such as
the principle of social justice and the protection to labor clause. (Alalayan vs Natl Power Corporation)
• Under Article III (Bill of Rights) Sections1, 4, 8, 10, 16, 18(2)
a. Due process and equal protection of the law.
Section 1. No person shall be deprived of life, liberty, or property without due process of law, nor shall
any person be denied the equal protection of the laws.
NOTE: THIS CANNOT BE INVOKED BY EMPLOYEES AGAINST THEIR EMPLOYERS IN

CASES OFTERMINATION OF THEIR EMPLOYMENT.
 What are the kinds of procedural due process that may be asserted in labor cases?
The following are the kinds of procedural due process that may be invoked in labor cases, to wit:
(1) Procedural due process that may be invoked against the employer during the investigation of the
employee’s administrative case at the company-level that may lead to his dismissal:
a. Statutory due process per Agabon doctrine which refers to the due process provision in the Labor Code
(Article 277[b]); and
b. Contractual due process per Abbott Laboratories doctrine which refers to the due process prescribed in
the Company Rules and Regulations or Code of Conduct or Code of Discipline.
NOTE: CONSTITUTIONAL DUE PROCESS UNDER ARTICLE III, SECTION 1 OF THE

CONSTITUTION CANNOT BE INVOKED AGAINST A PRIVATE PARTY LIKE THE EMPLOYER.
IT CAN ONLY BE ASSERTED AGAINST THE STATE OR GOVERNMENT. HENCE, THE
EMPLOYEE BEING INVESTIGATED CANNOT INVOKE CONSTITUTIONAL DUE PROCESS
BUT ONLY STATUTORY AND CONTRACTUAL DUE PROCESS.
(2) Procedural due process that may be invoked once a case has already been filed in the labor court, such
as the Labor Arbiter or the NLRC, and/or brought to higher courts:
a. Constitutional due process under Section 1, Article III of the Constitution since this right cannot be
invoked against the private employer but only against the State or government as represented by Labor
Arbiters, NLRC, CA and SC.
The rule since Agabon is that compliance with the statutorily-prescribed procedural due process under
Article 292(b) [277(b)] of the Labor Code would suffice. It is not important in determining the validity of
the termination whether there is an existing company policy which also enunciates the procedural due
process in termination cases. However, under the latest doctrinal en banc ruling in the 2013 case of
Abbott Laboratories, Philippines v. Pearlie Ann F. Alcaraz, it is now required that in addition to
compliance with the statutory due process, the employer should still comply with the due process
procedure prescribed in its own company rules now called CONTRACTUAL DUE PROCESS. The
employer’s failure to observe its own company-prescribed due process, IN ADDITION TO
STATUTORY DUE PROCESS, will make it liable to pay an indemnity in the form of nominal damages,
the amount of which is similar to the P30,000.00 awarded under the Agabon doctrine.
• When can an employee invoke constitutional due process and right to equal protection of the laws?
As distinguished from company-level investigation conducted by the employer where only STATUTORY
and CONTRACTUAL DUE PROCESS can be invoked, a dismissed employee can invoke constitutional
due process only when he files an illegal dismissal case in the labor court and he is deprived due process
by a government functionary like the Labor Arbiter or the Commission (NLRC), or Court of Appeals on
Rule 65 certiorari petition. The reason is that, at this stage, the government is now involved through said
labor tribunals.
• Is right to counsel mandatory?
(1) When the employee himself requests for counsel; or

(2) When he manifests that he wants a formal hearing on the charges against him, in which case, he
should be assisted by counsel.
b. Freedom of speech, of expression, or of the press, or the right of the people peaceably to assemble and
petition the government for redress of grievances.
Section 4. No law shall be passed abridging the freedom of speech, of expression, or of the press, or the
right of the people peaceably to assemble and petition the government for redress of grievances.
NOTE: THIS FREEDOM IS RELEVANT ONLY IN PICKETING AND NOT IN STRIKE.
c. Right of public and private sector employees to form unions, associations, or societies for purposes not
contrary to law shall not be abridged.
Section 8. The right of the people, including those employed in the public and private sectors, to form
unions, associations, or societies for purposes not contrary to law shall not be abridged.
NOTE: THIS IS KNOWN AS “FREEDOM OF ASSOCIATION.” THIS PROVISION IS THE BASIS

FOR THE EMPLOYEES’ RIGHT TO SELF-ORGANIZATION.
***Government employees have the rights to organize and negotiate but they cannot call or join a strike
arising from dissatisfaction on terms and conditions of employment. Otherwise, it would be an
insurrection against public authority.
d. Non-impairment of obligations of contracts.
Section 10. No law impairing the obligation of contracts shall be passed.
***The obligation of contracts is subordinated to the valid exercise of police power.
NOTE: THE CONCEPT OF THIS RIGHT IN POLITICAL LAW IS SIMILAR IN LABOR LAW.
e. Right to speedy disposition of cases in judicial, quasi-judicial or administrative bodies.
Section 16. All persons shall have the right to a speedy disposition of their cases before all judicial, quasi-
judicial, or administrative bodies.
NOTE: THIS CAN BE INVOKED IN LABOR CASES AT ALL LEVELS.
f. Prohibitions against involuntary servitude.
Section 18 (2)
No involuntary servitude in any form shall exist except as a punishment for a crime whereof the party
shall have been duly convicted.
NOTE: THIS PRINCIPLE IS RELEVANT ONLY IN TWO (2) SITUATIONS: NAMELY: (1)
RESIGNATION AND (2) RETURN-TO-WORK ORDER IN NATIONAL INTEREST CASES.
THIS MEANS THAT:

(1) AN EMPLOYEE HAS THE RIGHT TO RESIGN SINCE HE CANNOT BE FORCED TO
WORK AGAINST HIS WILL;
(2) A STRIKER CAN BE ORDERED TO RETURN TO WORK EVEN AGAINST HIS WILL IN
NATIONAL INTEREST CASES. ACCORDINGLY, IT IS NOT IN VIOLATION OF THE
INVOLUNTARY SERVITUDE PRINCIPLE.
• Under Article XIII

Section 2. The promotion of social justice shall include the commitment to create economic opportunities
based on freedom of initiative and self-reliance.
SECOND OF TWO PROTECTION-TO-LABOR CLAUSES

Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized,
and promote full employment and equality of employment opportunities for all.
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 to investments, and
to expansion and growth.
ART 3 LABOR CODE (side by side with Art 13 Sec 3 of the constitution)
Article 3. Declaration of basic policy. The State shall afford protection to labor, promote full
employment, ensure equal work opportunities regardless of sex, race or creed and regulate the relations
between workers and employers. The State shall assure the rights of workers to self-organization,
collective bargaining, security of tenure, and just and humane conditions of work.
Constitutional (2009)
Provisions on No. II. a. Enumerate at least four (4) policies enshrined in Section 3, Article XIII of the
Constitution that are not covered by Article 3 of the Labor Code on declaration of
basic policy. (2%)
SUGGESTED ANSWER:
Four (4) policies enshrined in Section 3, Article XIII of the 1987 Constitution which are not covered by
Article 3 of the Labor Code on declaration of basic policy are:
(1) All workers shall have the right to peaceful concerted activities,
(2) Including the right to strike in accordance with the law
(3) They shall be entitled to a living wage
(4) They shall participate in policy and decision making processes affecting their rights and benefits as
may be provided by law.
(5) The state shall promote the principle of shared responsibility between workers and employers.
Constitutional Provisions on Labor (1998 Bar Q)

What are the salient features of the protection to labor provision of the Constitution? [5%]
SUGGESTED ANSWER:
The salient features of the Protection to Labor provision of the Constitution (Article XIII. Section 3) are
as follows:
1. Extent of Protection - Full protection to labor;
2. Coverage of Protection - Local and overseas, organized and unorganized;
3. Employment Policy - Full employment andequality of employment opportunities for all;
4. Guarantees
4.1. Unionism and Method of Determination Conditions of Employment - Right of all workers to self-
organization, collective bargaining and negotiations.
4.2. Concerted Activities - Right to engage in peaceful concerted activities, including the right to strike in
accordance with law.
4.3. Working Conditions - Right to security of tenure, humane conditions of work and a living wage.
4.4. Decision Making Processes - Right to participate hi policy and decision making processes affecting
their rights and benefits as way to provided by law.
5. Share in Fruits of production - Recognition of right of labor to its just share in fruits of production.

o The Constitution (In Article XIII, Section 3) provides that the State shall afford protection to labor,
local and overseas, organized and unorganized.
o The State shall afford protection to labor by promoting full employment and equality of employment
opportunities for all.
o Workers are entitled to security of tenure, humane conditions of work and a living wage.
o The State shall guarantee the right of all workers to self organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike, in accordance with law.
o Workers shall also participate in policy and decision making processes affecting their rights and
benefits as may be provided by law.
o The State shall promote the principle of shared responsibility between workers and employers and the
preferential use of voluntary modes in settling labor disputes, including conciliation, and shall enforce
o 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.
Constitutional Codetermination (2007)

SUGGESTED ANSWER:
No. I. a. What is the principle of codetermination?
The principle of codetermination is one which grants to the workers the right to participate in policy and
decision making processes affecting their rights and benefits (Art. 255, Labor Code).
FIRST ALTERNATIVE ANSWER:
By the principle of codetermination, the workers have a right to participate in the decision making process
of employers on matters affecting their rights and benefits, through collective bargaining agreements,
grievance machineries, voluntary modes of settling disputes and conciliation proceedings mediated by
government.
SECOND ALTERNATIVE ANSWER:
Codetermination is a term identified with workers‘ participation in the determination of business policy.
Under the German model, the most common form of codetermination, employees of some firms are
allocated control rights by law, in the form of board seats. It is based on the conviction that democratic
legitimacy cannot be confined to government but must apply to all sectors of society. Besides corporate
control rights, the German system deals with dual channels of representation of employees by unions (at
the industry- wide, and microeconomic level) and works councils (at the firm level).
Constitutional Provision; Right to Security of Tenure (2009)
No. XII. In her State of the Nation Address, the President stressed the need to provide an investor-
friendly business environment so that the country can compete in the global economy that now suffers
from a crisis bordering on recession. Responding to the call, Congress passed two innovative legislative
measures, namely: (1) a law abolishing the security of tenure clause in the Labor Code; and (2) a law
allowing contractualization in all areas needed in the employer’s business operations. However, to soften
the impact of these new measures, the law requires that all employers shall obtain mandatory
unemployment insurance coverage for all their employees.
The constitutionality of the two (2) laws is challenged in court. As judge, how will you rule? (5%)
SUGGESTED ANSWER:
The first innovative measure, on abolition of the security of tenure clause in the Labor Code, is security of
tenure clause in the L:abor Code, is unconstitutional as it goes against the entitlement of workers to
security of tenure under Section 3, Article XIII of the 1987 Constitution.
The second innovation measure, on a law allowing contractualization in all areas needed in the
employer‘s business operations, is legal. Article 106 of the Labor Code already allows the Secretary of
labor and Employment not to make appropriate distinction between labor- only and job contracting. This
means that the Secretary may decide, through implementing regulation, arrangement where the person
supplying workers to an employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, and the workers recruited and place by such
person are performing activities which are directly related to the principal business of the employer.
Hence, it would be legal for Congress to do any with the prohibition on labor-only contracting and allow
contractualization in all areas needed in the employer‘s business operations. Assuming, of course, that
contractual workers are guaranteed their security of tenure.
Interpretation of Labor Laws (2009)

No. II. b. Clarito, an employee of Juan, was dismissed for allegedly stealing Juan’s wristwatch. In the
illegal dismissal case instituted by Clarito, the Labor Arbiter, citing Article 4 of the Labor Code, ruled in
favor of Clarito upon finding Juan’s testimony doubtful. On appeal, the NLRC reversed the Labor Arbiter
holding that Article 4 applies only when the doubt involves "implementation and interpretation" of the
Labor Code provisions. The NLRC explained that the doubt may not necessarily be resolved in favor of
labor since this case involves the application of the Rules on Evidence, not the Labor Code. Is the NLRC
correct? Reasons. (3%)
SUGGESTED ANSWER:
The NLRC is not correct. It is well settled doctrine that if doubts exist between the evidence presented by
the employer and the employee, the scale of justice must be tilted in favor of the latter. It is a time
honored rule that in controversies between labor and the employee, doubts necessarily arising from the
evidence, or in the implementation of the agreement and writing should be resolved in favor of the labor.
ALTERNATIVE ANSWER:
No, the NLRC is not correct. Article 221 of the Labor Code read: ―In any proceeding before the
Commission....the rules of evidence prevailing in Courts of law....shall not be controlling and it is the
spirit and intention of this Code that the Commission and its members and the Labor Arbiters shall use
every and reasonable means to ascertain the facts in each case speedily and objectively without regard to
technicalities of law and procedure, all in the interest of due process. The question of doubt is not
important in this case.
• May cases be filed for violation of the foregoing constitutional provisions?
The labor-related provisions of the Constitution are merely statements of principles and are all NOT self-
executing provisions. They are used only as guides for judicial decisions or legislative enactments. Being
mere statement of principles and policies, no case can be filed for their violation. Only violation of the
laws passed to implement these principles and policies can be proper subject of court litigation.
C. Civil Code (Articles 1700 to 1703)
Art. 1700. The relations between capital and labor are not merely contractual. They are so impressed with
public interest that labor contracts must yield to the common good. Therefore, such contracts are subject
to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages,
working conditions, hours of labor and similar subjects.
Art. 1701. Neither capital nor labor shall act oppressively against the other, or impair the interest or
convenience of the public.
Art. 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the
safety and decent living for the laborer.
Applies only in case of doubt. If the contractual provision is crystal clear, then it must be applied in
accordance with it’s expressed terms.
Art. 1703. No contract which practically amounts to involuntary servitude, under any guise whatsoever,
shall be valid.
***EXCEPTION: A VALID EXERCISE OF POLICE REGULATION
Art. 1704. In collective bargaining, the labor union or members of the board or committee signing the
contract shall be liable for non-fulfillment thereof.
Art. 1705. The laborer's wages shall be paid in legal currency.
Art. 1706. Withholding of the wages, except for a debt due, shall not be made by the employer.
Art. 1707. The laborer's wages shall be a lien on the goods manufactured or the work done.
Art. 1708. The laborer's wages shall not be subject to execution or attachment, except for debts incurred
for food, shelter, clothing and medical attendance.
***Earned salaries of government employees still in the hands of public officers cannot be garnished until
they are paid to employees for to do otherwise would violate the non suability of the State. However,
salaries of employees in the private sector can be subject to garnishment or attachment. (Gaa vs. CA)
Art. 1709. The employer shall neither seize nor retain any tool or other articles belonging to the laborer.
Art. 1710. Dismissal of laborers shall be subject to the supervision of the Government, under special
laws.
***The right to hire and dismiss is a management prerogative subject to special laws.
Art. 1711. Owners of enterprises and other employers are obliged to pay compensation for the death of or
injuries to their laborers, workmen, mechanics or other employees, even though the event may have been
purely accidental or entirely due to a fortuitous cause, if the death or personal injury arose out of and in
the course of the employment. The employer is also liable for compensation if the employee contracts any
illness or disease caused by such employment or as the result of the nature of the employment. If the
mishap was due to the employee's own notorious negligence, or voluntary act, or drunkenness, the
employer shall not be liable for compensation. When the employee's lack of due care contributed to his
death or injury, the compensation shall be equitably reduced.
Art. 1712. If the death or injury is due to the negligence of a fellow worker, the latter and the employer
shall be solidarily liable for compensation. If afellow worker's intentional malicious act is the only cause
of the death or injury, the employer shall not be answerable, unless it should be shown that the latter did
not exercise due diligence in the selection or supervision of the plaintiff's fellow worker.
ART 1702 IN RELATION TO ARTICLE 4 OF LABOR CODE
Both articles of speak of the rule on interpretation and construction provisions of law and labor contracts:
- Art. 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor
of the safety and decent living for the laborer.
Applies to doubts and ambiguities in:

1. Labor Legislation
2. Labor Contracts
3. Evidence presented in labor cases.
Article 4. Construction in favor of labor. All doubts in the implementation and interpretation of the
provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of
labor.
Applies to ambiguities in:

1. the Labor Code
2. the Implementing rules of the LC
• Is Article 1700 of the Civil Code applicable to labor cases?
Yes, Article 1700 of the Civil Code provides:
“Art. 1700. The relations between capital and labor are not merely contractual. They are so impressed
with public interest that labor contracts must yield to the common good. Therefore, such contracts are
subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop,
wages, working conditions, hours of labor and similar subjects.”
In Davao Integrated Port Stevedoring Services v. Abarquez, March 19, 1993. It was held that a CBA, as a
labor contract within the contemplation of Article 1700 of the Civil Code, is not merely contractual in
nature but impressed with public interest, thus, it must yield to the common good.
Similarly, an employment contract or any other labor contract is treated as not merely contractual in
nature similar to an ordinary contract like a lease contract because it is impressed with public interest.
Consequently, all labor laws are deemed incorporated therein even if not so expressly provided or
stipulated in its provisions.
Interpretation of Labor Laws (1998 BAR Q)
Article 4 of the Labor Code provides that in case of doubt in the implementation and interpretation of the
provisions of the Code and its Implementing Rules and Regulations, the doubt shall be resolved in favor
of labor. Article 1702 of the Civil Code also provides that in case of doubt, all labor legislation and all
labor contracts shall be construed in favor of the safety and decent living for the laborer.
Mica-Mara company assails the validity of these statutes on the ground that they violate its constitutional
right to equal protection of the laws. Is the contention of Mica Mara Company tenable?
SUGGESTED ANSWER:
No, the Constitution provides that the state shall afford full protection to labor. Furthermore, the State
affirms labor as a primary economic force. It shall protect the rights of workers and promote their welfare.
ALTERNATIVE ANSWER:
a) No, because a law which promotes a constitutional mandate does not violate the equal protection
clause. The constitutional mandate is for the State to afford full protection to labor such that, when
conflicting interests of labor and capital are to be weighed on the scales of justice, the heavier influence of
the latter should be counter- balanced by the sympathy the law should accord the underprivileged.
b) The contention of Mica-Mara Company is not tenable. The constitutional right to equal protection of
the laws is not violated by reasonable classification. Thus, it is constitutionally possible to treat workers
differently from employers.
The social justice principle embodied in the Constitution could be the basis for treating workers more
favorably than employers, in the implementation and interpretation of the provisions of the Labor Code
and of its implementing rules and regulations.
Interpretation of Labor Laws; Liberal Approach (2006 BAR Q)

What is the concept of liberal approach in interpreting the Labor Code and its Implementing Rules and
Regulations in favor of labor?
SUGGESTED ANSWER:
The workers' welfare should be the paramount consideration in interpreting the Labor Code and its
Implementing Rules and Regulations. This is rooted in the Constitutional mandate to afford full
protection to labor. Article 4 of the Labor Code provides that "all doubts in the implementation and
interpretation of the provisions of the Labor Code including its implementing rules and regulations shall
be resolved in favor of labor" (PLOT v. NLRC, G.R No. 111933, July 23,1997). It underscores the
policy of social justice to accommodate the interests of the working class on the humane
justification that those who have less in life shall have more in law (PAL v. Santos, G.R. No. 77875,
February 4, 1993).
 Employer- Employee Relationship

- Created by employment contract, whether express or implied. Such contract may be shown to
exist by proof of hire by competent person, either by the employer himself or through authorize
agent.
Tests in determination of the existence of Employer- Employee Relationship (page 46-50 Poquiz
book)
Four-fold test; Economic or Economic Reality Test
- The manner of selection and engagement of the putative employee.

- The mode of payment of wages.
- The presence or absence of the power of dismissal.
- The power or absence of a power to control the putative employee’s conduct.
These tests, however, are not fool-proof as they admit of exceptions.
• Control Test (Most decisive)The 4th test above, the control test, is the controlling test which means
that the employer controls or has reserved the right to control the employee not only as to the result of
the work to be done but also as to the means and methods by which the same is to be accomplished.
The three (3) terms: (1) means, (2) methods and (3) results are the critical elements of the control test,
thus:
Situation 1: If the employer controls the means and methods of performing the job, work or service,
including the results thereof, then the arrangement is one of employer-employee relationship.
Situation 3: If the so-called employer does not control such means and methods but is only interested
in the results thereof, then the arrangement is called “independent job contracting” or
“contractualization”, the party controlling the means and methods is called the independent contractor
and the party interested only in the results is called the principal/client/indirect employer/statutory
employer.
 Two-Tiered Test The two-tiered test enunciated in Francisco v. NLRC,1 is composed of:
(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 [broader economic reality test].
Employment relationship under the control test is determined under the same concept as discussed
above, that is, 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.” Under the economic reality 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.
These 2-tiered test applies to cases where there are several parties alleged to be employers of one
individual. The determinant factor is economic dependency of such individual. In other words, under
the economic reality test, the question to ask is - among the parties alleged to be the employer, to
whom is the individual economically dependent?
Following the broader economic reality test, the Supreme Court found petitioner in Orozco v. The
Fifth Division of the Hon. CA,5 who is a columnist in the Philippine Daily Inquirer (PDI), not an
employee of PDI but an independent contractor. Thus:
“Petitioner’s main occupation is not as a columnist for respondent but as a women’s rights advocate
workinginvariouswomen’sorganizations.
Likewise,sheherselfadmitsthatshealsocontributesarticlestoother publications. Thus, it cannot be said
that petitioner was dependent on 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 independent
contractor, engaged to do independent work.”
• Is it necessary to have a written contract of employment in order to establish employer-employee

relationship?
No. It may be an oral or written contract. A written contract is not necessary for the creation and
validity of the relationship. The only exception is in the case of Kasambahay where, under the
Kasambahay Law, it is required that the contract of employment should be in writing.
 Labor; as Property Right (2006)

What property right is conferred upon an employee once there is an employer-employee
relationship? Discuss briefly. (5%)
SUGGESTED ANSWER:
His employment is not merely a contractual relationship. One's employment is a property right
within the mantle of constitutional protection (Callanta v. Carnation Phil., No. L-70615,
October 28, 1986). Hence, the employee enjoys security of tenure and he cannot be dismissed
except for cause and only after due process. The worker is thus protected and insulated against
any arbitrary deprivation of his job (Philips Semi Conductors [Phils.] v. Fadriquela, G.R. No.
141717, April 14, 2004).
Rights of Employer/Employee (1996)

2) What are the rights of an employer and an employee?
SUGGESTED ANSWER:
The Constitution in Art. XIII, Section 3 provides for the following rights of employers and
employees:
A. Employers Right to a reasonable return on investments, and to expansion and growth.
B. Employee’s Right:
1. To a just share in the fruits of production;
2. Right to self organization, collective bargaining and negotiations and peaceful concerted
activities, including the right to strike inaccordance with law;
3. To security of tenure, humane conditions ofwork, and a living wage; and
4. To participate in policy and decision-makingprocesses affecting their rights and benefits
as may be provided by law.
ALTERNATIVE ANSWER:
In an employer-employee relationship, it is the right of the employer to use the services of an
employee who is under his (employer's) orders as regards the employment. On the other
hand, it is the right of the employee to receive compensation for the services he renders for
the employer.
Rights of the Employer; Management Prerogative (2000)
a) An exclusive school for girls, run by a religious order, has a policy of not employing unwed
mothers, women with live-in partners, and lesbians. Is the policy violative of any provision of the
Labor Code on employment of women? (3%)
b) The same school dismissed two female faculty members on account of pregnancy out of
wedlock. Did the school violate any provision of the Labor Code on employment of women?
(3%)
a) No, the policy does not violate the Labor Code. The practice is a valid exercise of
management function. Considering the nature and reason for existence of the school, it may
adopt such policy as will advance its laudable objectives. In fact, the policy accords with the
constitutional precept of inculcating ethical and moral values in schools. The school policy
does not discriminate against women solely on account of sex (Art. 135, Labor Code) nor are
the acts prohibited under Art. 137 of the Labor Code.
ALTERNATIVE ANSWER:
The school violated Art. 137 (2) of the Labor Code which states that: "It shall be unlawful for
any employer to discharge such woman on account of pregnancy". The pregnancy here could
obviously have resulted from love and such only lends substance to the saying that "the heart
has reasons of its own which reason does not know", a matter that cannot "be so casually
equated with immorality". [Chua-Qua v. Clave, 189 SCRA 117 (1990)].
SUGGESTED ANSWER:
b) No, because to tolerate pregnancy out of wedlock will be a blatant contradiction of the
school's laudable mission which, as already stated, accords with high constitutional precepts.
This answer does not contradict the ruling in Chua- Qua where the teacher merely fell in love
with a bachelor student and the teacher, also single, did not get pregnant out of wedlock.
Rights of the Employer; Management Prerogative; Contracting Out Services (1994)
Harbor View Hotel has an existing Collective Bargaining Agreement (CBA) with the union of rank-and-
file employees consisting, among others, of bartenders, waiters, roomboys, housemen and stewards.
During the lifetime of the CBA,Harbor View Hotel, for reasons of economy and efficiency, decided to
abolish the position of housemen and stewards who do the cleaning of the hotel's public areas. Over the
protest of the Union, the Hotel contracted out the aforementioned job to the City Service Janitorial
Company, a bonafide independent contractor which has a substantial capital in the form of Janitorial
tools, equipment, machineries and competent manpower. Is the action of the Harbor View Hotel legal and
valid?
SUGGESTED ANSWER:
The action of Harbor View Hotel is legal and valid. The valid exercise of management prerogative,
discretion and judgment encompasses all aspects of employment, including the hiring, work assignments,
working methods, time, place and manner of work, tools to be used, processes to be followed, supervision
of workers, working regulations, transfer of employees, work supervision, lay-off of workers, and the
discipline, dismissal and recall of workers, except as provided for, or limited by special laws.
Company policies and regulations are, unless shown to be gross oppressive or contrary to law, generally
binding and valid on the parties and must be complied with until finally revised or amended unilaterally
or preferably through negotiation or by competent authority. (San Miguel Corporation vs. Reynaldo R.
Ubaldo and Emmanuel Noel A. Cruz, Chairman and Member respectively of the Voluntary Arbitration
Panel, et al G.R No. 92859, 1 February 1993. J. Campos, Jr., 218 SCRA 293)
ALTERNATIVE ANSWER:
a) The action of the Harbor View Hotel is legal and valid. CONTRACTING OUT SERVICES or
functions being performed by union members is not illegal per se. In fact, it is the prerogative of
management to adopt cost-saving measures to ensure economy and efficiency. Contracting out services or
functions being performed by Union members becomes illegal only when it interferes with, restrains or
coerces employees in the exercise of their right to self-organization.
b) The action of Harbor View Hotel would, at first glance, appear to be an unfair labor practice under
Article 248(c), e.g.. "to contract out services or functions being performed by union members if such will
interfere with, restrain or coerce employees in the exercise of their right to self- organization."
Considering, however, that in the case at bar, there is no showing that the contracting out of services
would violate the employees right to self- organization, it is submitted that the hotel's action is a valid
exercise of its management prerogatives and the right to make business judgments in accordance with
law.
Rights of the Employer; Management prerogatives (1994)
Bulacan Medical Hospital (BMH) entered into a Collective Bargaining Agreement (CBA) with its Union,
wherein it is expressly stipulated in the Management Prerogative Clause that BMH shall, in the exercise
of its management prerogatives, have the sole and exclusive right to promulgate, amend and modify rules
and regulations for the employees within the bargaining unit. A year after the contract was signed, BMH
issued its Revised Rules and Regulations and furnished a copy thereof to the Union for dissemination to
all employees covered by the CBA. The Union wrote BMH demanding that the Revised Rules and
Regulations be first discussed with them before its implementation. BMH refused. So, the Union filed an
action for unfair labor practice (ULP) against BMH.
1. Is the Union correct?

2. Assuming that the CBA was signed "or
executed before the 1987 Constitution was ratified, would your answer to the preceding question be
different?
SUGGESTED ANSWER:
1) The Union is correct. A provision in the collective bargaining agreement concerning management
prerogatives, may not be interpreted as cession of the employees right to participate in the deliberation of
matters which may affect their right and the formulation of policies relative thereto, such as the
formulation of a code of discipline. A line must be drawn between management prerogatives regarding
business operations per se and those which affect the rights of the employees, and in treating the latter,
management should see to it that its employees are at least properly informed of its decisions or modes of
action.
The attainment of a harmonious labor- management relationship and the existing state policy of
enlightening workers concerning their rights as employees demand no less than the observance of
transparency in managerial moves affecting employees' rights. [Philippine Airlines, Inc. vs. National
Labor Relations Commission, et al, G.R No. 85985, 13 August 1993. J. Melo. 225 SCRA 258, 301.)
ALTERNATIVE ANSWER:
a) The Union is correct. Workers have the right to participate in policy and decision-making processes
affecting their rights, benefits and welfare. (Art. 255J.
b) Yes. The Union is correct in asking for discussion of the revised rules prior to their effectivity. The
reason is Art. XIII, Sec. 3 of the 1987 Constitution, allowing workers the right to participate in policy and
decision-making on matters related to their welfare and benefits.
The Union's remedy however should not be to file a ULP case but to initiate a GRIEVANCE proceeding,
and if unresolved, submit the matter to voluntary arbitration.
SUGGESTED ANSWER:
2) The answer would be the same even if the CBA was signed or executed before the ratification of the
1987 Constitution because it has always been the policy of the State to promote the enlightenment of
workers concerning their rights and obligations as employees. (Art. 211; PAL vs. NLRC, GR 85985,
August 13, 1993)
II. RECRUITMENT AND PLACEMENT (Labor Code and R.A. No. 8042 or the Migrant Workers and
Overseas Filipinos Act of 1995, as amended by R.A. No. 10022)
"Recruitment and placement" refers to any act of canvassing, enlisting, contracting, transporting,
utilizing, hiring or procuring workers, and includes referrals, contract services, promising or advertising
for employment, locally or abroad, whether for profit or not: Provided, That any person or entity which,
in any manner, offers or promises for a fee, employment to two or more persons shall be deemed engaged
in recruitment and placement.
A. Illegal recruitment
Article 38. Illegal recruitment
Any recruitment activities, including the prohibited practices enumerated under Article 34 of this Code, to
be undertaken by non-licensees or non-holders of authority, shall be deemed illegal and punishable under
Article 39 of this Code. The Department of Labor and Employment or any law enforcement officer may
initiate complaints under this Article.
Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense
involving economic sabotage and shall be penalized in accordance with Article 39 hereof.
Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more
persons conspiring and/or confederating with one another in carrying out any unlawful or illegal
transaction, enterprise or scheme defined under the first paragraph hereof. Illegal recruitment is deemed
committed in large scale if committed against three (3) or more persons individually or as a group.
The Secretary of Labor and Employment or his duly authorized representatives shall have the power to
cause the arrest and detention of such non-licensee or non-holder of authority if after investigation it is
determined that his activities constitute a danger to national security and public order or will lead to
further exploitation of job-seekers. The Secretary shall order the search of the office or premises and
seizure of documents, paraphernalia, properties and other implements used in illegal recruitment activities
and the closure of companies, establishments and entities found to be engaged in the recruitment of
workers for overseas employment, without having been licensed or authorized to do so.
What are some relevant principles on illegal recruitment?
1. Mere impression that a person could deploy workers overseas is sufficient to constitute illegal
recruitment. But if no such impression is given, the accused should not be convicted for illegal
recruitment.
2. Mere promise or offer of employment abroad amounts to recruitment.
3. There is no need to show that accused represented himself as a licensed recruiter.
4. Referrals may constitute illegal recruitment.
5. It is illegal recruitment to induce applicants to part with their money upon false misrepresentations an
promises in assuring them that after they paid the placement fee, jobs abroad were waiting for them and
that they would be deployed soon.
6. Recruitment whether done for profit or not is immaterial.
7. The act of receiving money far exceeding the amount as required by law is not considered as
“recruitment andplacement” as this phrase is contemplated under the law.
8. Actual receipt of fee is not an element of the crime of illegal recruitment.
9. Conduct of interviews amounts to illegal recruitment.
10. Absence of receipt is not essential to hold a person guilty of illegal recruitment.
11. Conviction for illegal recruitment may be made on the strength of the testimonies of the complainants.
12.Absence of documents evidencing the recruitment activities strengthens, not weakens, the case for
illegal recruitment.
13. Only one person recruited is sufficient to convict one for illegal recruitment.
14. Non-prosecution of another suspect is immaterial.
15. Execution of affidavit of desistance affects only the civil liability but has no effect on the criminal
liability for illegal recruitment.
16.Defense of denial cannot prevail over positive identification. Positive identification where categorical
and consistent and not attended by any showing of ill motive on the part of the eyewitnesses on the matter
prevails over alibi and denial. Between the categorical statements of the prosecution witnesses, on the one
hand, and bare denials of the accused, on the other hand, the former must prevail.
ADMINISTRATIVE SANCTION: Automatic revocation of license or registration of the manning

agency.
VENUE OF CRIMINAL ACTION:
1. RTC of the province or city where the offense is committed.
2. Where the offended party actually resides at the time of commission of the offense.
Elements
The essential elements of illegal recruitment vary in accordance with the following classifications:
(1) Simple illegal recruitment; (non licensee) (ACTION PRESCRIBES IN 5 YEARS)

(2) When committed by a syndicate; or
(3) When committed in large scale.
When illegal recruitment is committed under either Nos. 2 or 3 above or both, it is considered an offense
involving economic sabotage.
SIMPLE ILLEGAL RECRUITMENT
• What are the 2 elements of simple illegal recruitment?

(1) The offender has no valid license or authority required by law to enable one to lawfully engage in
recruitment and placement of workers; and
(2) He undertakes either any activity within the meaning of “recruitment and placement” defined under
Article 13(b), or any prohibited practices under Article 34 of the Labor Code.
Illegal recruitment committed by a syndicate

If it is carried out by a group of three (3) or more persons conspiring or confederating with one another.
• The essential elements of the crime of illegal recruitment committed by a syndicate are as follows:
1. There are at least three (3) persons who, conspiring and/or confederating with one another, carried out
any unlawful or illegal recruitment and placement activities as defined under Article 13(b) or committed
any prohibited activities under Article 34 of the Labor Code; and
2. Said persons are not licensed or authorized to do so, either locally or overseas.
The law does not require that the syndicate should recruit more than one (1) person in order to constitute
the crime of illegal recruitment by a syndicate. Recruitment of one (1) person would suffice to qualify the
illegal recruitment act as having been committed by a syndicate.
Illegal recruitment considered in large scale
If committed against three (3) or more persons individually or as a group.
• The elements of illegal recruitment in large scale, as distinguished from simple illegal recruitment, are
as follows:
1.The accused engages in the recruitment and placement of workers as defined under Article 13(b) or
committed any prohibited activities under Article 34 of the Labor Code; and
2. The accused commits the same against three (3) or more persons, individually or as a group.
As distinguished from illegal recruitment committed by a syndicate, illegal recruitment in large scale may
be committed by only one (1) person. What is important as qualifying element is that there should be at
least three (3) victims of such illegal recruitment, individually or as a group.
• Can a recruiter be a natural or juridical person? Yes
• What are some relevant principles on illegal recruitment involving economic sabotage?
1. The number of persons victimized is determinative of the crime. A conviction for large scale illegal
recruitment must be based on a finding in each case of illegal recruitment of three (3) or more persons
having been recruited, whether individually or as a group.
2. Failure to prove at least 3 persons recruited makes the crime a case of simple illegal recruitment.
3. There is no illegal recruitment in large scale based on several information filed by only one
complainant.
4. The number of offenders is not material in illegal recruitment in large scale.
5. Recruitment in large scale or by a syndicate is malum prohibitum and not malum in se.
Recruitment & Placement; illegal recruitment to economic sabotage (2005)

(1) During the open forum following your lecture to a group of managers and HRD personnel, you were
asked the following questions:
(a) What qualifying circumstances will convert "illegal recruitment" to "economic sabotage," thus
subjecting its perpetrator or perpetrators to a penalty of life imprisonment and a fine of at least
P500,000.00? Please explain your answer briefly. (3%)
SUGGESTED ANSWER.
Under Article 38(b) of the Labor Code, as amended by P.D. No. 2018, it provides that illegal recruitment
shall be considered an offense involving economic sabotage if any of the following qualifying
circumstances exists:
(1) When illegal recruitment is committed by a SYNDICATE, requiring three or more persons who
conspire or confederate with one another in carrying out any unlawful or illegal transaction, enterprise or
scheme; When illegal recruitment is committed in a LARGE SCALE, as when it is committed against
three or more persons individually or as a group. (People v. Navarra, G.R. No. 119361, February 19,
2001; See also Sec. 6 of R.A. No. 8042)
Recruitment & Placement; illegal recruitment; Economic Sabotage (2002)

When is illegal recruitment considered a crime of economic sabotage? Explain briefly. (3%)
SUGGESTED ANSWER:
According to Art. 28 of the Labor Code, illegal recruitment is considered a crime of economic sabotage
when committed by a syndicate or in large scale. Illegal recruitment is deemed committed by a syndicate
if carried out by a group of three (3) or more persons conspiring and/or confederating with one another in
carrying out any unlawful or illegal transaction, enterprise or scheme which is an act of illegal
recruitment. Illegal recruitment is deemed committed in large scale if committed against three (3) or more
persons individually or as a group.
Recruitment & Placement; Large Scale Illegal Recruitment (2005)
Maryrose Ganda's application for the renewal other license to recruit workers for overseas employment
was still pending with the Philippine Overseas Employment Administration (POEA). Nevertheless, she
recruited Alma and her three sisters, Ana, Joan, and Mavic, for employment as housemates in Saudi
Arabia. Maryrose represented to the sisters that she had a license to recruit workers for overseas
employment. Maryrose also demanded and received P30,000.00 from each of them for her services.
However, Maryrose's application for the renewal of her license was denied, and consequently failed to
employ the four sisters in Saudi Arabia.
The sisters charged Maryrose with large scale illegal recruitment. Testifying in her defense, Maryrose
declared that she acted in good faith because she believed that her application for the renewal of her
license would be approved. Maryrose adduced in evidence the Affidavits of Desistance which the four
private complainants had executed after the prosecution rested its case. In the said affidavits, they
acknowledge receipt of the refund by Maryrose of the total amount of P120,000.00 and indicated that
they were no longer interested to pursue the case against Maryrose. Resolve the case with reasons. (5%)
ALTERNATIVE ANSWER:
Illegal recruitment is defined by law as any recruitment activities undertaken by non-licenses or non-
holders of authority. (People v. Senoron, G.R. No. 119160, January 30,1997) And it is large scale illegal
recruitment when the offense is committed against 3 or more persons, individually or as a group. (Article
38[b], Labor Code) In view of the above, Maryrose is guilty of large scale illegal recruitment. Her
defense of good faith and the Affidavit of Desistance as well as the refund given will not save her because
R.A. No. 8042 is a special law, and illegal recruitment is malum prohibitum. (People v. Saulo, G.R. No.
125903, November 15, 2000)
ALTERNATIVE ANSWER:
With the execution of the affidavit of desistance by the complainants and the refund made by Maryrose,
the case against her for large scale illegal recruitment will surely fail.
2. Prohibited activities (Article 34, Labor Code)
It shall be unlawful for any individual, entity, licensee, or holder of authority:
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;
To furnish or publish any false notice or information or document in relation to recruitment or

employment;
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.
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;
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;
To engage in the recruitment or placement of workers in jobs harmful to public health or morality or to
the dignity of the Republic of the Philippines;
To obstruct or attempt to obstruct inspection by the Secretary of Labor or by his duly authorized
representatives;
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.
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;
To become an officer or member of the Board of any corporation engaged in travel agency or to be
engaged directly or indirectly in the management of a travel agency; and
To withhold or deny travel documents from applicant workers before departure for monetary or financial
considerations other than those authorized under this Code and its implementing rules and regulations.
3. Types of illegal recruitment
Simple, Non-licensee, Large scale, Syndicated
Illegal recruitment committed by:
(1) By Non-Licensee or Non-holder of authority; or

(2) By ANY PERSON, regardless of whether a non-licensee, non-holder, licensee or holder of authority.
NON-LICENSEE or NON-HOLDER OF AUTHORITY
When what is committed by such NON-LICENSEES or NON-HOLDERS OF AUTHORITY is any of

the acts of recruitment allowed only to be done by licensees or holders of authority such as the 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.
In other words, had they possessed of license or authority, their commission of any of the foregoing acts
could have been valid and not constitutive of illegal recruitment.
NOTE: The non-licensee or non-holder of authority is presumed to be engaged in such recruitment if he

in any manner, offers or promises for a fee employment abroad to two or more persons.
ANY PERSON, whether a NON-LICENSEE, NON-HOLDER OF AUTHORITY or even by a
LICENSEE or HOLDER OF AUTHORITY
(a) To charge or accept, directly or indirectly, any amount greater than that specified in the schedule of
allowable fees prescribed by the DOLE Secretary, or to make a worker pay or acknowledge any amount
greater than that actually received by him as a loan or advance;
(b) To furnish or publish any false notice or information or document in relation to recruitment or
employment;
(c) To give any false notice, testimony, information or document or commit any act of misrepresentation
for the purpose of securing a license or authority under the Labor Code, or for the purpose of
documenting hired workers with the POEA, which include the act of reprocessing workers through a job
order that pertains to non-existent work, work different from the actual overseas work, or work with a
different employer whether registered or not with the POEA;
(d) To induce or attempt to induce a worker already employed to quit his employment in order to offer
him another unless the transfer is designed to liberate a worker from oppressive terms and conditions of
employment;
(e) To influence or attempt to influence any person or entity not to employ any worker who has not
applied for employment through his agency or who has formed, joined or supported, or has contacted or is
supported by any union or workers' organization;
(f) To engage in the recruitment or placement of workers in jobs harmful to public health or morality or to
the dignity of the Republic of the Philippines;
(g) To fail to submit reports on the status of employment, placement vacancies, remittance of foreign
exchange earnings, separation from jobs, departures and such other matters or information as may be
required by the Secretary of Labor and Employment;
(h) To substitute or alter to the prejudice of the worker, employment contracts approved and verified by
the DOLE from the time of actual signing thereof by the parties up to and including the period of the
expiration of the same without the approval of the DOLE;
(i) For an officer or agent of a recruitment or placement agency to become an officer or member of the
Board of any corporation engaged in travel agency or to be engaged directly or indirectly in the
management of travel agency;
(j) To withhold or deny travel documents from applicant workers before departure for monetary or
financial considerations, or for any other reasons, other than those authorized under the Labor Code and
its implementing rules and regulations;
(k) Failure to actually deploy a contracted worker without valid reason as determined by the Department
of Labor and Employment;
(l) Failure to reimburse expenses incurred by the worker in connection with his documentation and
processing for purposes of deployment, in cases where the deployment does not actually take place
without the worker's fault. Illegal recruitment when committed by a syndicate or in large scale shall be
considered an offense involving economic sabotage; and
(m) To allow a non-Filipino citizen to head or manage a licensed recruitment/manning agency.”
Recruitment & Placement; Non- Transferability of License (1998)

A Recruitment and Placement Agency declared voluntary bankruptcy. Among its assets is its license to
engage in business.
Is the license of the bankrupt agency an asset which can be sold in public auction by the liquidator? [5%]
SUGGESTED ANSWER:
No, because of the non-transferability of the license to engage in recruitment and placement.
The Labor Code (in Article 29) provides that no license to engage in recruitment and placement shall be
used directly or indirectly by any person other than the one in whose favor it was issued nor may such
license be transferred, conveyed or assigned to any other person or entity.
It may be noted that the grant of a license is a governmental act by the Department of Labor and
Employment based on personal qualifications, and citizenship and capitalization requirements. (Arts. 27-
28, Labor Code)
Recruitment & Placement; Recruitment Agencies (2002)

Is a corporation, seventy percent (70%) of the authorized and voting capital of which is owned and
controlled by Filipino citizens, allowed to engage in the recruitment and placement of workers, locally or
overseas? Explain briefly. (2%)
SUGGESTED ANSWER:
No. A corporation, seventy percent (70%) of the authorized and voting capital stock of which is owned
and controlled by Filipino citizens cannot be permitted to participate in the recruitment and placement of
workers, locally or overseas, because Art 27 of the Labor Code requires at least seventy- five percent
(75%).
4. ILLEGAL RECRUITMENT VS. ESTAFA
ESTAFA; where a person defrauds another by using fictitious name or falsely pretending to possess
power, influence, qualifications, property, credit, agency business or imaginary transactions or by similar
means of deceits may be charged swindling or estafa.
Elements:
1. Accused defrauds another by abuse of confidence or by means of deceit.

2. Damage or prejudice capable of pecuniary estimation is caused o the offended party or third
person.
Estafa is a malum in se where criminal intent is necessary while illegal recruitment is a malum
prohibitum where criminal intent needs not be proved.
• Can a person be charged and convicted separately for illegal recruitment and estafa involving one
and the same act of recruitment? Yes. It is clear that conviction under the Labor Code does not
preclude conviction for estafa or other crimes under other laws.
▪ Same evidence to prove illegal recruitment may be used to prove estafa.
▪ Conviction for both illegal recruitment and estafa is not double jeopardy.
5. NATURE OF LIABILITY OF LOCAL RECRUITMENT AGENCY AND FOREIGN EMPLOYER
- The nature of their liability is “solidary” or “joint and several” for any and all claims arising out
of the employment contract of OFWs.
- Immunity from suit of the foreign principal, a foreign government instrumentality cannot be
invoked to defeat solidary nature of liability.
- THEORY OF IMPUTED KNOWLEDGE
Knowledge of the agent is deemed knowledge of the principal but not the other way around. The theory
of imputed knowledge is a rule that any information material to the transaction, either possessed by the
agent at the time of the transaction or acquired by him before its completion, is deemed to be the
knowledge of the principal, at least insofar as the transaction is concerned, even though the knowledge, in
fact, is not communicated to the principal at all.
Sunace International Management Services, Inc. v. NLRC2
OFW (Divina), a domestic helper in Taiwan, has extended her 12-month contract, after its expiration, for
two (2) more years after which she returned to the Philippines. It was established by evidence that the
extension was without the knowledge of the local recruitment agency, petitioner Sunace. The Court of
Appeals, however, affirmed the Labor Arbiter’s and NLRC’s finding that Sunace knew of and impliedly
consented to the extension of Divina’s 2-year contract. It went on to state that “It is undisputed that
[Sunace] was continually communicating with [Divina’s] foreign employer.” It thus concluded that “[a]s
agent of the foreign principal, ‘petitioner cannot profess ignorance of such extension as obviously, the act
of the principal extending complainant (sic) employment contract necessarily bound it.’”
In finding that the application by the CA of this theory of imputed knowledge was misplaced, the High
Court ruled that this theory ascribes the knowledge of the agent, Sunace, to the principal, employer
Xiong, not the other way around. The knowledge of the principal-foreign employer cannot, therefore, be
imputed to its agent, Sunace. There being no substantial proof that Sunace knew of and consented to be
bound under the 2-year employment contract extension, it cannot be said to be privy thereto. As such,
Sunace and its owner cannot be held solidarily liable for any of Divina’s claims arising from the 2-year
employment extension. As the New Civil Code provides: “Contracts take effect only between the parties,
their assigns, and heirs, except in case where the rights and obligations arising from the contract are not
transmissible by their nature, or by stipulation or by provision of law.”
• Is the solidary liability of corporate officers with the recruitment agency “automatic” in character? No.
In order to hold the officers of the agency solidarily liable, it is required that there must be proof of their
culpability therefore. Thus, it was held in the 2013 case of Gagui v. Dejero,1 that while it is true that R.A.
8042 and the Corporation Code provide for solidary liability, this liability must be so stated in the
decision sought to be implemented. Absent this express statement, a corporate officer may not be
impleaded and made to personally answer for the liability of the corporation.
• What are some relevant principles on the persons liable for illegal recruitment?
1. Employees of a licensed recruitment agency may be held liable for illegal recruitment as principal by
direct participation, together with his employer, if it is shown that he actively and consciously participated
in illegal recruitment.
2. Good faith and merely following orders of superiors are not valid defenses of an employee.
3. A manager of a recruitment/manning agency is not a mere employee. As such, he receives job
applications, interviews applicants and informs them of the agency’s requirement of payment of
performance or cash bond prior to the applicant’s deployment. As the crewing manager, he was at the
forefront of the company’s recruitment activities.
6. Termination of contract of migrant worker without just or valid cause
• Can an OFW acquire regularity of employment? No. The prevailing rule is that OFWs are contractual
(fixed-term only), not regular, employees. In fact, they can never attain regularity of employment. Theirs
is always fixed-term in nature.
• What are some relevant principles?

1. Indefinite period of employment of OFWs is not valid as it contravenes the explicit provision of the
POEA Rules and Regulations on fixed-period employment.
2. OFWs do not become regular employees by reason of nature of work, that is, that they are made to
perform work that is usually necessary and desirable in the usual business or trade of the employer. The
exigencies of their work necessitate that they be employed on a contractual basis. This notwithstanding
the fact that they have rendered more than twenty (20) years of service.
3. Regular employment does not result from the series of re-hiring of OFWs.
4. The fixed-period employment of OFWs is not discriminatory against them nor does it favor foreign
employers. It is for the mutual interest of both the seafarer and the employer why the employment status
must be contractual only or for a certain period of time. Seafarers spend most of their time at sea and
understandably, they cannot stay for a long and an indefinite period of time at sea. Limited access to
shore society during the employment will have an adverse impact on the seafarer. The national, cultural
and lingual diversity among the crew during the contract of employment is a reality that necessitates the
limitation of its period.
5. The expiration of the employment contracts of OFWs marks its ending.
• What is the effect of hiring a seafarer for overseas employment but assigning him to local vessel?
As held in OSM Shipping Philippines, Inc. v. NLRC, the non-deployment of the ship overseas did not
affect the validity of the perfected employment contract. After all, the decision to use the vessel for
coastwise shipping was made by petitioner only and did not bear the written conformity of private
respondent. A contract cannot be novated by the will of only one party. The claim of petitioner that it
processed the contract of private respondent with the POEA only after he had started working is also
without merit. Petitioner cannot use its own misfeasance to defeat his claim.
• What is the effect of non-deployment of OFW to overseas employment?

Petitioner-seafarer, in Santiago v. CF Sharp Crew Management, Inc.2 was not deployed overseas despite
the signing of a POEA-approved employment contract. One of his contentions is that such failure to
deploy was an act designed to prevent him from attaining the status of a regular employee. The Supreme
Court, however, disagreed and ruled that “seafarers are considered contractual employees and cannot be
considered as regular employees under the Labor Code. Their employment is governed by the contracts
they sign every time they are rehired and their employment is terminated when the contract expires. The
exigencies of their work necessitate that they be employed on a contractual basis.”
• What is the doctrine of processual presumption?
“Presumed-identity approach” or “processual presumption” is an International Law doctrine which

dictates that where a foreign law is not pleaded or, even if pleaded, is not proved, the presumption is that
foreign law is the same as Philippine law. Thus, under this situation, Philippine labor laws should apply in
determining the issues presented in a case.
• Is due process under Philippine law applicable to termination of employment of OFWs?

Yes. In the absence of proof of applicable foreign law, OFWs are entitled to due process in accordance
with Philippine laws.
• Is the Agabon doctrine applicable to OFWs who are dismissed for cause but without due process? Yes.
The Agabon doctrine of awarding indemnity in the form of nominal damages in cases of valid termination
for just or authorized cause but without procedural due process also applies to termination of OFWs.
• Who has the burden of proof to show that the dismissal of the OFW is legal? Burden of proof devolves
on both recruitment agency and its foreign principal.
• Are OFWs entitled to the reliefs under the Labor Code? No. They are not entitled to such reliefs under
Article 279 of the Labor Code as reinstatement or separation pay in lieu of reinstatement or full
backwages. This is for the mere reason that the nature of their employment is contractual whose rights
and obligations are governed primarily by POEA Standard Employment Contract.
They are entitled to the reliefs provided under Section 10 of R.A. No. 8042, as amended, to wit: (1) All
salaries for the unexpired portion of the contract;
(2) Full reimbursement of placement fees and deductions made with interest at 12% per annum.
All the reliefs available to an illegally dismissed OFW are always monetary in nature.
It must be noted that under the 2009 Serrano doctrine, (Serrano v. Gallant Maritime Services, Inc.,), an
illegally dismissed OFW is now entitled to all the salaries for the entire unexpired portion of their
employment contracts, irrespective of the stipulated term or duration thereof. The underlined phrase in
Section 10 below has been declared unconstitutional in this case:
“In case of termination of overseas employment without just, valid or authorized cause as defined by law
or contract, or any unauthorized deductions from the migrant worker's salary, the worker shall be entitled
to the full reimbursement of his placement fee and the deductions made 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.”
However, R.A. No. 10022 (March 8, 2010), which amended R.A. No. 8042 (Migrant Workers and
Overseas Filipinos Act of 1995), has replicated and re-enacted the same unconstitutional provision
exactly as above quoted. The question is: was the unconstitutionality of the above-underlined part of the
provision cured by such replication or re-enactment in the amendatory law? The 2014 en banc case of
Sameer Overseas Placement Agency, Inc. v. Joy C. Cabiles,2 answered this in the negative. The said
provision was thus declared still unconstitutional and null and void despite its replication in R.A. No.
10022.
• What are some principles in regard to monetary awards to OFWs?
1. Monetary award to OFW is not in the nature of separation pay or backwages but a form of indemnity.
2. Only salaries are to be included in the computation of the amount due for the unexpired portion of the
contract. Overtime, holiday and leave pay and allowances are not included. However, this rule on
exclusion of allowance does not apply in case it is encapsulated in the basic salary clause.
3. Entitlement to overtime pay of OFWs. - As far as entitlement to overtime pay is concerned, the correct
criterion in determining whether or not sailors are entitled to overtime pay is not whether they were on
board and cannot leave ship beyond the regular eight (8) working hours a day, but whether they actually
rendered service in excess of said number of hours. An OFW is not entitled to overtime pay, even if
guaranteed, if he failed to present any evidence to prove that he rendered service in excess of the regular
eight (8) working hours a day.
4. In case of unauthorized deductions from OFW’s salary, he shall be entitled to the full reimbursement of
the deductions made with interest at 12% per annum. This is in addition to the full reimbursement of his
placement fee with the same interest of 12% per annum plus his salaries for the unexpired portion of his
employment contract if he is terminated without just, valid or authorized cause as defined by law or
contract.
CLAIMS FOR DISABILITY AND DEATH BENEFITS OF OFWs
• Which/Who has jurisdiction over an OFW’s claims for disability and death benefits?
a) The Labor Arbiters, NOT the SSS, have jurisdiction over claims for disability, death and other benefits
of OFWs.
b) Labor Arbiters have jurisdiction even if the case is filed by the heirs of the deceased OFW.
• Is the Labor Code’s concept of permanent total disability similar to that of OFWs?
Yes. The concept of this kind of disability under Article 192 of the Labor Code is applicable to them as
reiterated lately in the 2013 case of Kestrel Shipping Co., Inc. v. Munar.
• What are the requisites for compensability of injury or illness of seafarers?

1. It should be work-related; and
2. The injury or illness existed during the term of the seafarer’s employment contract.
7. Ban on direct hiring
Article 18. Ban on direct-hiring. No employer may hire a Filipino worker for overseas employment
except through the Boards and entities authorized by the Secretary of Labor. Direct-hiring by members of
the diplomatic corps, international organizations and such other employers as may be allowed by the
Secretary of Labor is exempted from this provision.
“Direct Hiring” refers to the process of directly hiring workers by employers for overseas employment as
authorized by the DOLE Secretary and processed by the POEA, including:
1. Those hired by international organizations;

2. Those hired by members of the diplomatic corps;
3. Name hires or workers who are able to secure overseas employment opportunity with an employer
without the assistance or participation of any agency.
▪ Does the POEA Administrator or the DOLE Secretary or DOLE Regional Director have the power to
issue closure order? Yes. If upon preliminary examination or surveillance, the DOLE Secretary, the
POEA Administrator or DOLE Regional Director is satisfied that such danger or exploitation exists, a
written order may be issued for the closure of the establishment being used for illegal recruitment activity.
• Does the DOLE Secretary have the power to issue warrant of arrest and search and seizure orders? No.
Salazar v. Achacoso declared that the exercise by the DOLE Secretary of his twin powers to issue arrest
warrant and search and seizure orders provided under Article 38[c] of the Labor Code is unconstitutional.
Only regular courts can issue such orders.
REMITTANCE OF FOREIGN EXCHANGE EARNINGS

• Is remittance of foreign exchange earnings by OFWs mandatory?
Yes. 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 DOLE Secretary. It should be made through the Philippine banking system.
B. Regulation of Recruitment and Placement Activities
1. Suspension or cancellation of license or authority

Art 35; The Secretary of Labor shall have the power to suspend or cancel any license or authority to
recruit employees for overseas employment for violation of rules and regulations issued by the Secretary
of Labor, the Overseas Employment Development Board, the National Seaman Board, or for violation of
the provisions of this and other applicable laws, general orders and letter of instructions.
LICENSE VS. AUTHORITY
“License” refers to the document issued by the DOLE Secretary authorizing a person, partnership or
corporation to operate a private recruitment or manning agency. “Authority” refers to the document
issued by the DOLE Secretary authorizing the officers, personnel, agents or representatives of a licensed
recruitment or manning agency to conduct recruitment and placement activities in a place stated in the
license or in a specified place.
Recruitment & Placement; Cancellation; Certificate of Registration; Travel Ban (2004) Concerned
Filipino contract workers in the Middle East reported to the Department of Foreign Affairs (DFA) that
XYZ, a private recruitment and placement agency, is covertly transporting extremists to terrorist training
camps abroad. Intelligence agencies of the government allegedly confirmed the report. Upon being
alerted by the DFA, the Department of Labor and Employment issued orders cancelling the licenses of
XYZ, and imposing an immediate travel ban on its recruits for the Middle East. XYZ appealed to the
Office of the President to reverse and set aside the DOLE orders, citing damages from loss of
employment of its recruits, and violations of due process including lack of notice and hearing by DOLE.
The DOLE in its answer claimed the existence of an emergency in the Middle East which required
prompt measures to protect the life and limb of OFWs from a clear and present danger posed by the
ongoing war against terrorism. Should the DOLE orders be upheld or set aside? (5%)
SUGGESTED ANSWER:
1. The DOLE order cancelling the licenses of XYZ is void because a report that an agency is covertly
transporting extremists is not a valid ground for cancellation of a Certificate of Registration (Art. 239,
Labor Code) and there is failure of due process as no hearing was conducted prior to the cancellation (Art.
238, Labor Code).
2. The DOLE order imposing the travel ban is valid because it is a valid exercise of police power to
protect the national interest (Sec. 3, Art. XIII, Constitution on full protection to labor safety of workers)
and on the rule making authority of the Secretary of Labor (Art. 5, Labor Code; Phil. Assn. of Service
Exporters v. Drilon, 163 SCRA 386 11988]).

The DOLE orders should be set aside. It is true that the Migrant Workers and Overseas Filipinos Act,
particularly its Section 5, could be the basis of the power of DOLE to effect a ban on the deployment of
OFWs by XYZ. If the ban, however, is for the purpose of preventing XYZ from transporting extremists to
terrorist training camps abroad, this is a police and national security problem better dealt with by the
police or the Office of the National Security Adviser. More importantly, the cancellation of the license of
XYZ requires notice and hearing. Absent such notice and hearing, the order of cancellation of the
Secretary of Labor and Employment is null and void because of the denial of due process.
2. Regulatory and visitorial powers of the Department of Labor and Employment (DOLE) Secretary
Art 36; REGULATORY POWER – The Secretary of Labor shall have the power to restrict and regulate
the recruitment and placement activities of all agencies within the coverage of this Title and is hereby
authorized to issue orders and promulgate rules and regulations to carry out the objectives and implement
the provisions of this title.
Art 37; VISITORIAL POWER - The Secretary of Labor or his duly authorized representatives may, at
any time, inspect the premises, books of accounts and records of any person or entity covered by this
Title, require it to submit reports regularly on prescribed forms and act in violations of any provisions of
this Title.
DOLE Regional Director; Visitorial and Enforcement Power; Compliance Order (2008)
No. III. c. Savoy Department Store (SDS) adopted a policy of hiring salesladies on five-month cycles. At
the end of a saleslady's five-month term, another person is hired as replacement. Salesladies attend to
store customers, were SDS uniforms, report at specified hours, and are subject to SDS workplace rules
and regulations. Those who refuse the 5-month employment contract are not hired.
The day after expiration of her 5-month engagement, Lina wore her SDS white and blue uniform and
reported for work but was denied entry into the store premises. Agitated, she went on a hunger strike and
stationed herself in front of one of the gates of SDS. Soon thereafter, other employees whose 5-month
term had also elapsed, joined Lina's hunger strike.
Assume that no fixed-term worker complained, yet in a routine inspection a labor inspector of the
Regional Office of the Labor Code's security of tenure provisions and recommended to the Regional
Director the issuance a compliance order. The
Regional Director adopted the recommendation and issued a compliance order. Is the compliance order
valid? Explain your answer. (3%)
SUGGESTED ANSWER:
No, the compliance order is not valid.
The Regional Director exercises only visitorial and enforcement power over the labor standard cases, and
the power to adjudicate uncontested money claims of employees. The Regional Director has no power to
rule on SDS‘s 5-month term policy.
ALTERNATIVE ANSWER:
Yes, the Compliance Order is valid
because the Secretary of Labor and Employment or his duly authorized representatives has the power
to issue compliance orders to give effect to the labor standards based on the findings of labor employment
and enforcement officers or industrial safety engineers made during inspection. The Secretary ot his duly
authorized representatives may issue writs of execution to the appropriate authority for the enforcement
of their orders (Art. 128, Labor Code; V.L. Enterprises and/or Visitacion v. CA, G.R. No. 167512, March
12, 2007).
DOLE Regional Director; Visitorial and Enforcement Power; Money Claims (2009)
No. I. a. The visitorial and enforcement powers of the DOLE Regional Director to order and enforce
compliance with labor standard laws can be exercised even when the individual claim exceeds P5,000.00.
(5%)
SUGGESTED ANSWER:
TRUE. The visitorial and enforcement power of the DOLE Regional Director to order and enforce
compliance with labor standards laws can be exercised even when the individual claims exceeds
P5,000.00 the authority under Article 128 may be exercised regardless of the monetary value involved.
Under Article 129, however the authority is only for claims not exceeding P5,000.00 per claimant.
3. Prohibited activities
Besides illegal recruitment, the law additionally provides that it shall also be unlawful for any person
orentity to commit the following prohibited acts:
(1) Grant a LOAN to an overseas Filipino worker with interest exceeding eight percent (8%) per annum,
which will be used for payment of legal and allowable placement fees and make the migrant worker issue,
either personally or through a guarantor or accommodation party, post-dated checks in relation to the said
loan;
(2) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to
avail of a LOAN only from specifically designated institutions, entities or persons;
(3) Refuse to condone or renegotiate a LOAN incurred by an overseas Filipino worker after the latter's
employment contract has been prematurely terminated through no fault of his or her own;
undergo HEALTH EXAMINATIONS only from specifically designated medical clinics, institutions,
entities or persons, except in the case of a seafarer whose medical examination cost is shouldered by the
principal/ shipowner;
undergo TRAINING, SEMINAR, INSTRUCTION OR SCHOOLING of any kind only from specifically
designated institutions, entities or persons, except for recommendatory trainings mandated by
principals/shipowners where the latter shoulder the cost of such trainings;
(6) For a SUSPENDED RECRUITMENT/MANNING AGENCY to engage in any kind of recruitment
activity including the processing of pending workers' applications; and
(7) For a recruitment/manning agency or a foreign principal/employer to pass on the overseas Filipino
worker or deduct from his or her salary the payment of the cost of INSURANCE fees, premium or other
insurance related charges, as provided under the compulsory worker's INSURANCE coverage.
Article 26. Travel agencies prohibited to recruit. Travel agencies and sales agencies of airline companies
are prohibited from engaging in the business of recruitment and placement of workers for overseas
employment whether for profit or not.
Recruitment & Placement; Travel Agency; Prohibition (2006)

Wonder Travel and Tours Agency (WTTA) is a well-known travel agency and an authorized sales agent
of the Philippine Air Lines. Since majority of its passengers are overseas workers, WTTA applied for a
license for recruitment and placement activities. It stated in its application that its purpose is not for profit
but to help Filipinos find employment abroad.
Should the application be approved? (5%)
ALTERNATIVE ANSWER:
The application should be disapproved, as it is prohibited by Article 26 of the Labor Code, to wit: "Article
26. Travel agencies and sales agencies of airline companies are prohibited from engaging in the business
of recruitment and placement of workers for overseas employment whether for profit or not."
Rule I, Part IIPOEA Rules and Regulations Governing the Recruitment and Employment of Land-Based
Workers (2002) disqualifies any entity having common director or owner of travel agencies and sales
agencies of airlines, including any business entity from the recruitment and placement of Filipino workers
overseas, whether they derive profit or not.
ALTERNATIVE ANSWER:
No. Section 6 of RA No. 8042 considers the following act as illegal recruitment: "(j) For an officer or
agent of a recruitment agency to become an officer or member of the Board of any corporation engaged in
travel agency or to engage directly or indirectly in the management of a travel agency." The law considers
the operation of travel agencies and recruitment agencies as incompatible activities.
REGULATORY POWERS OF THE POEA

1. Issuance of license
2. Suspension, cancellation or revocation of license
3. Approval of transfer of business address
4. Approval for establishment of executive office outside of the registered address
5. Approval of appointment of representatives or agent
6. Accreditation of principals or projects
7. Revocation of accreditation
8. Closure of agencies engage in illegal recruitment activities
9. Registration of any change in the composition of the Board of Directors, officers and personnel of
a recruitment agency.
EMPLOYMENT OF NON-RESIDENT ALIENS
• What is an ALIEN EMPLOYMENT PERMIT (AEP)?

AEP - 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.
• Who are required to procure AEP?
- All foreign nationals who intend to engage in gainful employment in the Philippines.
- Domestic or foreign employer who desires to engage an alien for employment in the Philippines.
“Gainful employment” refers to a state or condition that creates an employer-employee relationship

between the Philippine-based company and the foreign national where the former has the power to hire or
dismiss the foreign national from employment, pays the salaries or wages thereof and has authority to
control the performance or conduct of the tasks and duties.
• What are the categories of foreign nationals EXEMPTED from securing AEP?
a) All members of the diplomatic service and foreign government officials accredited by and with
reciprocity arrangement with the Philippine government;
b) Officers and staff of international organizations of which the Philippine government is a member, and
their legitimate spouses desiring to work in the Philippines;
c) All foreign nationals granted exemption by law;
d) Owners and representatives of foreign principals whose companies are accredited by the POEA, who
come to the Philippines for a limited period and solely for the purpose of interviewing Filipino applicants
for employment abroad;
e) 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 the
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 •
f) Permanent resident foreign nationals and probationary or temporary resident visa holders under
Section 13 of the Philippine Immigration Act of 1940.
g.) Foreign nationals elected as members of the governing board who do not occupy any other position,
but only voting rights in the corporation.
What are the categories of foreign nationals EXCLUDED from securing AEP?
a) Members of the governing board with voting rights only and do not intervene in the management of the
corporation or in the day-to-day operation of the enterprise.
b) Corporate officers as provided under the Corporation Code of the Philippines, Articles of
Incorporation, and By-laws of the Corporation such as President, Secretary and Treasurer.
c) Those providing consultancy services who do not have employers in the Philippines.
d) Intra-corporate transferee who is a manager, executive or specialist as defined below in accordance
with Trade Agreements and an employee of the foreign service supplier for at least one (1) year prior to
deployment to a branch, subsidiary, affiliate or representative office in the Philippines:
(i) an EXECUTIVE: a natural person within the organization who primarily directs the management of
the organization and exercises wide latitude in decision making and receives only general supervision or
direction from higher level executives, the board of directors or stockholders of the business; an executive
would not directly perform tasks related to the actual provision of the service or services of the
organization;
(ii) a MANAGER: a natural person within the organization who primarily directs the organization/
department/ subdivision and exercises supervisory and control functions over other supervisory,
managerial or professional staff; does not include first-line supervisors unless employees supervised are
professionals; does not include employees who primarily perform tasks necessary for the provision of the
service; or
(iii) a SPECIALIST: a natural person within the organization who possesses knowledge at an advanced
level of expertise essential to the establishment/provision of the service and/or possesses proprietary
knowledge of the organization's service, research equipment, techniques or management; may include,
but is not limited to, members of a licensed profession.
e) Contractual service supplier who is a manager, executive or specialist and an employee of a foreign
service supplier which has no commercial presence in the Philippines:
(i) who enters the Philippines temporarily to supply a service pursuant to a contract between his/her
employer and a service consumer in the Philippines;
(ii) must possess the appropriate educational and professional qualifications; and
(iii) must be employed by the foreign service supplier for at least one (1) year prior to the supply of
service in the Philippines.
What is the validity of an AEP?
One (1) year is the validity of an AEP.
Exception: When employment contract provides otherwise but not to exceed 5 years. The AEP may be
renewed subject to the conditions imposed by law.
Employment; Aliens; Requisites (1995)

Phil-Norksgard Company, Inc., a domestic corporation engaged in the optics business, imported from
Sweden highly sophisticated and sensitive instruments for its laboratory. To install the instruments and
operate them, the company intends to employ Borja Anders, a Swedish technician sojourning as a tourist
in the Philippines. As lawyer of the company, what measures will you take to ensure the legitimate
employment of Borja Anders and at the same time protect Philippine labor. Discuss fully.
SUGGESTED ANSWER:
To ensure the legitimate employment of Borja Anders, a non-resident alien, I will apply at the
Department of Labor and Employment for the Issuance of an employment permit claiming that there is no
one in the Philippines who can do the work that Anders is being asked to do.
At the same time, to protect Philippine labor, I will see to it that Anders will have an understudy who will
learn, by working with Anders, how to install and operate the highly sophisticated and sensitive
instruments from Sweden.
ALTERNATIVE ANSWER;
To protect Philippine Labor, the Labor Code provides that the alien employee shall not transfer to another
Job or change his employer without prior approval of the Secretary of Labor.
Employment; Non-Resident Alien (2007)
No. XX. AB, a non-resident American, seeks entry to the country to work as Vice- President of a local
telecommunications company. You are with the Department of Labor and Employment (DOLE). What
permit, if any, can the DOLE issue so that
AB can assume as Vice-President in the telecommunications company? Discuss fully. (5%)
SUGGESTED ANSWER:
The Labor Code provides that ―any alien seeking admission to the Philippine for employment purposes
and any domestic or foreign employer who desires to engage an alien for employment in the Philippines
shall obtain an employment permit from the Department of Labor.‖
‖The employment permit may be issued to a non-resident alien or to the applicant employer after a
determination of the non-availability of a person in the Philippines who is competent, able and willing at
the time of application to perform the services for which the alien is desired.
Thus, AB (or Telecommunication company) should be issued the above- mentioned alien employment
permit so that AB can assume as Vice President of the Telecommunication Company.
HUMAN RESOURCES DEVELOPMENT PROGRAM - superseded by Technical

Education and Skills Development Act of 1994 (RA 7796)
Goals and objectives of R.A 7796:
A.) Promote and strengthen the quality of technical and education and development programs to attain
int'l competitiveness;
B.) Focus technical and education and as dev't on meeting the changing demands for qualoty middle-level
manpower;
C.) Encourage critical and creative thinking by disseminating in the scientific and technical Knowledge
base of middle-levelanpower devt programs;
D.) Recognize and encourage the complementary roles of publoc and private institutions in technical
education and skills development and training as systems;and
E.) Inculcate desirable values through the devt of oral character with emphasis of work ethics, self-
discipline, self-reliance and nationalism.
Workhorse of TESDA
Power of review by the Secretariat: exercises general and supervision and control over its technical and
administrative personnel.
TESDA Board Rule Making Power: vested with the power to issue appropriate rules and regulations
necessary for the effective implementation of the provisions of R.A. no. 7796.
TESDA is mandated to:
a.) Establish technical education and skills devt commitees at regional and local levels to coordinate and
monitor the delivery of all skills devt activities by the private and phblic sectors.
b.) Strengthen the network of natl, regional and local skills training centers for the purpose of promoting
skills devt.
c.) Formulate a comprehensive devt plan for middle-level manpower.
c.1. Middle-level manpower refers to those who have acquited practical skills and knowledge
through formal or non-formal educ. and training equivalent to at least a secondary educ. but preferrably a
post-secondary education with corresponding degree or diploma or skilled workers who have become
highly competent in their trade or craft as attested by the industry.
d.) Establish and administer Natl trade skills standards:
d.1) Skills standards refers to a level or graduated level of proficiency generally accepted by industry in
specific jobs, tasks, trades or occupation.
e.) Design and administer training programs and schemes:
e.1) Training is the systematic development of the attitude/knowledge/ skill behavior

pattern requiredfor the adequate performance of a given task.
f.) Establish an effective and efficient arrangment with industry boards.
f.1) Industry board is a trisectoral body composed of representatives from the employers, workers and
the govt, primarily established to promote an effective manpower devt within the industry group where it
is established.
g.) Develop and administer appropriate incentive schemes:

g.1) Grant of an incentive in the form of tax deduction which is equivalent to a certain percentage of
the value of labor training expenses incurred for devt programs.
h.) To develop the capability of local governments to assume ultimately the responsibility for effectively
providing community-based tech. educ. and skills devt opportunities.
TRAINING AND EMPLOYMENT OF SPECIAL WORKERS

Art. 57: Objectives:
a.) To help meet the demand of the economy for trained manpower;
b.) To establish a natl apprenticeship program through the participation of employers, workers and
government amd non-govenment agencies; and
c.) To establish apprenticeship standards for the protection of apprentices.
1. APPRENTICESHIPS
Art. 58: Definition of terms.

a.) Apprenticeship means practical training on the job suplemented by related theoretical instruction.
b.) Apprentice is a worker who is covered by a written apptenticeship agreement with an individual
employer or any of the entities recognized under this Chapter.
c.) Apprenticeable Occupation means any trade, form of employment or occupation which requires more
than three months of practical training on the job with complusory related theoretical instructions.
d.) Apprenticeship agreement is an employment contract wherein the employer binds himself to train the
apprentice and in turn latter accepts the terms and training for a recognized apprenticeable occupation
emphasizing for the rights, duties and responsibilities of each party.
e.) On-the-job training is the practical work experience through actual participation in productive
activities given to or acquired by an apprentice.
Significance of apprenticeship: It fills the demand of employers for workers in certain trades or
occupations which require special skills.
Nature of Apprenticeship programs: It is primarily voluntary undertaking of employers EXCEPT:
a.) when natl security or particular requirements of economic devt so demand; and
b.) where services of foreign technicians are utilized by private companies in apprenticeable trades.
If an apprenticeship standards are found in order, a certficate of recognition shall be issued by
the apprenticeship Division concerned within five days from receipt thereof.
Art. 60. Employment of Apprentices. Only employers in the highly technical industries may employ
apprentices and only in appreticeable occupations approved by the secretary of Labor and Employment.
Highly technical industry refers to a trade, business, enterprise, industry or other activity which utilized
the application of advanced technology.
Tesda's approval of the employer's apprenticeship program is required before the employer is allowed to
hire apprentices. It is a condition sine qua non.
In absence of a valid apprenticeship program, the agreement has no force and effect. Thus, the apprentice
is deemed a regular employee.
Art. 60. Contents of apprenticeship contract.
a.) Full name and address of contracting parties.
b.) Date of birth of apprentice.
c.) Name of trade, occupation or job in which the apprentice will be trained and dates it will begin and
end.
d.)Approximate number of hours of OJT.
e.) Schedule of work processes.
f.) Graduated scale of wages ( Wage rate of apprentice should start at 75% of the statutory minimum
wages fro the first 6 months.Threafter, he shall be paid the full minimum wage including the cost of
living allowance. However, no compensation be receive of OJT is required by the school curriculum as a
prerequisite for graduation or for taking a govt board examination.)
g.) Probationary period of the apprentice.
h. ) A clause that if employer is unable to fulfill his obligation he may transfer the agreement to any other
employer willing to assume the obligation.
Note: No person shall institute any action for the enforcement of any apprenticeship agreement or for
damages for breach thereof, UNLESS he has exhausted all the administrative remedies available.
Valid causes of termination:
By the employer:
1) Habitual absenteeism;
2) Willful disobedience or insubordination;
3) Poor physical condition or health;
4) Theft or malicious destruction of company property or equipment;
5) Poorefficiency of performance despite warnings duly given; and
6) Engaging in violence or other forms of gross misconduct inside employer's premises.
By the apprentice:
1) Substandard or delerious working conditions;

2) Repeated violations of terms of employment;
3) Cruel or inhuman treatment;
4) Personal problems that prevents him from a satisfactory performance of his job; and 5) Bad health or
continuing illness.
Art. 62. Signing of apprenticeship agreement.
It shall be signed by the employer or his agent or by an authorized representative of any of the recognized
organization, associations or groups and by the apprentice. If the apprentice is a minor, it sahll
be signed in his behalf by his parents or guardian or by an authorized representative of the Department of
Labor.
Art. 63. Venue of apprenticeship programs.
a.) Sponsoring firm's or employer's premises
b.) Training centers of the TESDA; or
c.) Public training institutions or a combination of both.
Art. 64. Apprenticeship schemes may be undertaken or sponsored by a single employer, firm or by a
group or association or by a civic organization.
Art. 65. Upon complaint of any interested person or upon its own initiative, the appropriate agency of
Department of Labor or its representative shall investigate any violation of an apprenticeship agreement.
Art. 66. Decision above may be appealed by an aggrieved person to the Secretary of Labor within 5 days
from receipt of the decision.
Art. 67. Exhaustion of Administrative
Remedies. No person shall institute any action for the enforcementof any apprenticeship agreement or for
damages for breach threof, UNLESS he has exhausted all theadministrative remedies available.
Art. 68. Apptitude test. It is provided in the selection of apprentices which shall be free of charge.
Art. 69. It is the responsibility of employer to give supplementary theoretical instruction to the apprentice.
Art. 70. The organization of apprenticeship programs shall
be primarily voluntary undertaking ofemployers EXCEPT a.) when national security or particular require
ments of economic development sodemand; and b.) where services of foreign technicians are utilized by p
rivate companies in apprenticeabletrades.
Art. 71. Deductibility of training costs.
Incentive in the form of addtl tax deduction to persons or enterprises undertaking apprenticeship
programs subject to the following conditions: a) apprenticeship program undertaken by the employer is
recongnized by the TESDA; b) apprentices should be paid the minimum wage; and c)
deduction should not exceed 10% of the total direct labor wage expended by the employer during the
taxable year.
Art. 72. Apprenticeship without compensation.
No compensations be receive if OJT is required by the school curriculum as a prerequisite for graduation
or for taking a govt board examination.
2. LEARNERSHIP
Art. 73. Learners are persons hired as trainees in semi-skilled and other indistrial occupations which are
non-apprenticeable and which may be learned through practical training on-the-job in a relatively short
period of time which shall not exceed 3 hours.
Art. 75. Learnership agreement refers to the employment and training contract entered into between the
employer and the learner. It contains the ff:
a.) Names and addresses of the learners and employers;
b.) Occupation to be learned and its duration which shall not exceed 3 months;
c.) Wages of learners equivalent to 75% of the prevailing minimum wage and other benefits; and
d.) Commitment to employ learner as regular employee if so desires.
Art. 76. Learners in peicework or incentive-rate jobs during the training period shall be paid in full for the
work done.
Art. 77. Penalty Clause.
Fine: Not less than P1k but not more than P 10k
Imprisonment: Not less than 3 months but not more than 3 years at the discretion of the court.
APPRENTICES AND LEARNERS

What are the distinctions between learnership and apprenticeship?
The following are the distinctions:
1. Practical training. Both learnership and apprenticeship involve practical training on-the-job.
2. Training agreement. Learnership is governed by a learnership agreement; while apprenticeship is
governed by an apprenticeship agreement.
3. Occupation. Learnership involves learnable occupations consisting of semi-skilled and other industrial
occupations which are non-apprenticeable; while apprenticeship concerns apprenticeable occupations or
any trade, form of employment or occupation approved for apprenticeship by the DOLE Secretary.
4. Theoretical instructions. Learnership may or may not be supplemented by related theoretical

instructions; while apprenticeship should always be supplemented by related theoretical instructions.
5. Ratio of theoretical instructions and on-the-job training. For both learnership and apprenticeship, the
normal ratio is one hundred (100) hours of theoretical instructions for every two thousand (2,000) hours
of practical or on-the-job training. Theoretical instruction time for occupations requiring less than two
thousand (2,000) hours for proficiency should be computed on the basis of such ratio.
6. Competency-based system. Unlike in apprenticeship, it is required in learnership that it be implemented
based on the TESDA-approved competency-based system.
7. Duration of training. Learnership involves practical training on the job for a period not exceeding three
(3) months; while apprenticeship requires for proficiency, more than three (3) months but not over six (6)
months of practical training on the job.
8. Qualifications. The law does not expressly mention any qualifications for learners; while the following
qualifications are required to be met by apprentices under Article 59 of the Labor Code:
(a) Be at least fourteen (14) years of age; (15 as amended by Sec. 12 RA 7610)
(b) Possess vocational aptitude and capacity for appropriate tests; and
(c) Possess the ability to comprehend and follow oral and written instructions.
CONFLICT IN THE AGE REQUIREMENT FOR APPRENTICES:

Under the Labor Code as stated above – 14 years of age
Under the Labor Code’s Implementing Rules – “Be at least 15 years of age, provided those who are at
least 15 years of age but less than 18 may be eligible for apprenticeship only in non-hazardous
occupations.”
CONFLICT, HOW RESOLVED:

It should be 15 years of age but the more appropriate basis is not the Labor Code’s Implementing Rules
(which cannot amend the Labor Code) but another law, R.A. No. 9231, (“AN ACT PROVIDING FOR
THE ELIMINATION OF THE WORST FORMS OF CHILD LABOR AND AFFORDING STRONGER
PROTECTION FOR THE WORKING CHILD“) where it is provided that:
(1) All persons under eighteen (18) years of age shall be considered as a “child”; and
(2) Children below fifteen (15) years of age shall not be employed EXCEPT if he/she falls under any of
the exceptions mentioned and enumerated in the law.
Employment; Children; Below 15 yrs old (2004)
A spinster school teacher took pity on one of her pupils, a robust and precocious 12-year old boy whose
poor family could barely afford the cost of his schooling. She lives alone at her house near the school
after her housemaid left. In the afternoon, she lets the boy do various chores as cleaning, fetching water
and all kinds of errands after school hours. She gives him rice and P30.00 before the boy goes home at
7:00 every night. The school principal learned about it and charged her with violating the law which
prohibits the employment of children below 15 years of age. In her defense, the teacher stated that the
work performed by her pupil is not hazardous, and she invoked the exception provided in the Department
Order of DOLE for the engagement of persons in domestic and household service.
Is her defense tenable? Reason. (5%)
SUGGESTED ANSWER:
No, her defense is not tenable. Under Article 139 of the Labor Code on "minimum employable age", no
child below 15 years of age shall be employed except when he works directly under the sole
responsibility of his parents or guardian, the provisions of the alleged Department Order of DOLE to the
contrary notwithstanding. A mere Department Order cannot prevail over the express prohibitory
provisions of the Labor Code.
[Note: Sec. 3, RA 9231 allows a child below 15 years of age to work for not more than 20 hours a week;
provided, that the work shall not be more than four (4) hours at any given day; provided, further, that he
does not work between 8 o'clock in the evening and 6 o'clock in the morning of the following day; and
provided, finally, that the work is not hazardous or deleterious to his health or morals. THIS IS A
RECENT LAW APPROVED ONLY ON JULY 28, 2003, which is beyond the cut-off period of the Bar
Exams]
8. Circumstances justifying hiring of trainees. Unlike in apprenticeship, in learnership, the law, Article74
of the Labor Code, expressly prescribes the pre-requisites before learners may be validly employed, to
wit:
(a) When no experienced workers are available;

(b) The employment of learners is necessary to prevent curtailment of employment opportunities; and
(c) The employment does not create unfair competition in terms of labor costs or impair or lower working
standards.
9. Limitation on the number of trainees. In learnership, a participating enterprise is allowed to take in

learners only up to a maximum of twenty percent (20%) of its total regular workforce. No similar cap is
imposed in the case of apprenticeship.
10. Option to employ. In learnership, the enterprise is obliged to hire the learner after the lapse of the
learnership period; while in apprenticeship, the enterprise is given only an “option” to hire the apprentice
as an employee.
11. Wage rate. The wage rate of a learner or an apprentice is set at seventy-five percent (75%) of the
statutory minimum wage.
 DISABLED WORKERS AND HANDICAPPED (R.A. No. 7277, as Amended by R.A. No.
9442)
Art. 78. Definition.Handicapped workers are those whose earning capacity is impaired by age or physical
or mental deficiency or injuiry. No entity whether public or private shall discriminate against a qualified
disabled person by reason of disability in regard to job application procedures, the hiring, promotion, or
discharge of employees, employee compensation, job training, and other terms, condition, and privileges
of employment.
Incentives for employing disabled persons: entitled to an addt’l deduction from their gross income
equivalent to 25% of the total amount paid as salaries and wages to disabled persons.
Sheltered employment is a new labor concept where disabled workers with the same
qualifications, skills,training and qualities cannot compete fairly with other workers in an open labor
market. Thus, govt is tasked to create and organize its own employment opportunities only for
the disabled workers that will suit their qualifications, skills, training and experience.
Art. 80. Employment Agreement entered into by the handicapped workers and employer shall include the
ff.:
a.) Names and addresses of the handicapped;
b.) Wages to be paid to handicapped workers which shall not be less
than 75% of the prevailing minimumwage and other benefits;
*** RA 7277, the Magna Carta for disabled persons provides that persons with disability are entitled to
equal opportunity for employment and resultantly, they are subject to the same terms and conditions of
employment and the same compensation, privileges and benefits as a qualified able bodied person.
Thus, all qualified disabled workers shall receive the full amount of the minimum wage rate.
c.) Duration of employment period;and
d.) Work to be performed by handicapped workers.
Art. 81. Eligibility for Apprenticeship. Handicapped workers may be hired as apprentices or learners if
their handicap is not as to effectively impede the performance of job operations in the particular
occupations for which they are hired.
 Who are persons with disability (PWDs)?
“Persons with Disability” are those suffering from restriction or different abilities, as a result of a
mental, physical or sensory impairment, to perform an activity in the manner or within the range
considered normal for a human being.
• What is impairment?
“Impairment” refers to any loss, diminution or aberration of psychological, physiological, or anatomical.
“Disability” means (1) a physical or mental impairment that substantially limits one or more
psychological, physiological or anatomical functions of an individual or activities of such individual; (2) a
record of such an impairment; or (3) being regarded as having such an impairment.
 What is handicap?
“Handicap” refers to a disadvantage for a given individual, resulting from an impairment or a

disability that limits or prevents the function or activity that is considered normal given the age and sex
of the individual.
a. EQUAL OPPORTUNITY
• What are the rights of PWDs?
Under the law, PWDs are entitled to equal opportunity for employment. Consequently, no PWD shall be
denied access to opportunities for suitable employment. A qualified employee with disability shall be
subject to the same terms and conditions of employment and the same compensation, privileges, benefits,
fringe benefits, incentives or allowances as a qualified able-bodied person.
• What is the wage rate of PWDs?
The wage rate of PWDs is 100% of the applicable minimum wage.
• What is the wage rate of PWD if hired as apprentice or learner?
A PWD hired as an apprentice or learner shall be paid not less than seventy-five percent (75%) of the
applicable minimum wage.
b. DISCRIMINATION ON EMPLOYMENT
• What is the rule on discrimination against employment of PWDs?
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
constitute 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 a 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, that the employer first sought to provide reasonable
accommodations for persons with disability;
(h) Failing to select or administer in the most effective manner employment tests which accurately reflect
the skills, aptitude 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 employee, if
any; and
(i) Excluding PWD from membership in labor unions or similar organizations.
Employment; Handicapped Employee (1998)

A lady worker was born with a physical deformity, specifically, hard of hearing, speech impaired, and
color blind. However, these deficiencies do not impair her working ability. Can the employer classify the
lady worker as a handicapped worker so that her daily wage will only be seventy-five percent (75%) of
the applicable daily minimum wage? [5%]
SUGGESTED ANSWER:
No, the employer cannot classify the lady worker as a handicapped worker because according to the facts
in the question, her deficiencies do not impair her working ability. If her earning capacity is therefore not
also impaired, then she cannot be considered a handicapped worker.
Because of the above fact, the employer shall not pay her less than the applicable daily minimum wage.
(See Article 78 of the Labor Code)
Yes, the employer can classify the lady worker as a handicapped worker because her earning capacity
may be impaired by her physical deficiencies As such handicapped worker, the employer may enter into
an employment agreement with her whereby the rate to be paid to her may be less than the applicable
legal minimum wage but not less than 75% of such wage.
Employment; Handicapped Employee (2000)

Ana Cruz has a low IQ. She has to be told at least three times before she understands her daily work
assignment. However, her work output is at least equal to the output of the least efficient worker in her
work section. Is Ms, Cruz a handicapped worker? Explain. (5%)
SUGGESTED ANSWER:
No, low IQ or low efficiency does not make the worker "handicapped" in the contemplation of law.
Handicap means such physical or mental infirmity that impairs capacity to work. The deficiency may also
be due to age or injury. (Art 78. Labor Code).
Employment; Handicapped Workers; Contractual Employees (2006)

For humanitarian reasons, a bank hired several handicapped workers to count and sort out currencies.
Their employment contract was for six (6) months. The bank terminated their employment on the ground
that their contract has expired prompting them to file with the Labor Arbiter a complaint for illegal
dismissal. Will their action prosper? (5%)
ALTERNATIVE ANSWER:
Their action will not prosper because they are covered by the fixed term employment contract which
automatically lapsed at the end of the 6- month period (Brent School v. Zamora, G.R. No. 48494,
February 5, 1990; Art. 280, Labor Code). A contract of employment for a definite period terminates on its
own term at the end of its period. It does not necessarily follow that the parties are forbidden from
agreeing on a fixed period of time for the performance of activities usually necessary and desirable in the
usual business of the employer (Pangilinan v. Gen. Milling, G.R. No. 149329, July 12, 2004).
ALTERNATIVE ANSWER:
Yes. Undeniably, handicapped workers are never on equal terms with the bank as employer. In Philippine
National Oil Company-Energy Development Corporation v. NLRC, G.R. No. 97747, March 31, 1993, the
Supreme Court set down two criteria under which fixed contracts of employment do not circumvent
security of tenure, to wit:
1. The fixed period of employment was knowingly

and voluntarily agreed upon by the parties, without any force, duress or improper pressure being brought
to bear upon the employee and about any other circumstances vitiating his consent; or
2. It satisfactorily appears that the employer and the employee dealt with each other on more or less equal
terms with no moral dominance whatever being exercised by the former on the latter.
Even granting that the handicapped workers and the bank agreed to term employment, it could not be said
that they "dealt with each other on more or less equal terms with no moral dominance whatever being
exercised by the former over the latter."
BOOK THREE
CONDITIONS OF EMPLOYMENT
A. CONDITIONS OF EMPLOYMENT
Article 82. Coverage. The provisions of this Title shall apply to employees in all establishments and
undertakings whether for profit or not, but not to government employees, 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. (GM FWD)
As used herein, "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.
"Field personnel" shall refer to non-agricultural employees who regularly perform their duties away from
the principal place of business or branch office of the employer and whose actual hours of work in the
field cannot be determined with reasonable certainty.
Gov’t employee - those employed by the national gov’t or any of its political subdivision including those
employed in GOCC (with original charters). They shall be governed by the civil service law, rules and
regulations. Subsidiaries of GOCC’s or non chartered corporations are governed by specific labor laws,
rules and regulations.
Managerial Employee - those who meet the FF: 1.) Primary duty consist of management of the
establishment; 2.) Customarily direct the work of 2 or more employee; 3.) They have the authority to
hire/ fire employee.
Officers or members of the managerial staff
Exempt if they perform the ff duties: a.) primary duty consist in the performance of work directly related to
the management policies of the employer; b.) customarily exercise discretion and
independent judgement( not subject to evaluation by the department heads or other higher executives of the
company; c.) regularly assist proprietor or managerial employee whose primary duty consist of the mgt.;
d.) do not devote more than 20% of their hours in a workweek to activities which are not directly and closely
related to the performance of the work describe above.
Domestic Servants - Those who perform services in the employers home which are usually necessary for
the maintenance or minister to the personal comfort of the employer.
KASAMBAHAY under RA 10361

Any person engaged in domestic work within employment relationship such as, but not limited to,
the ff: general househelp, nursemaid or yaya,cook, gardener or laundry person but shall exclude any person
who performs domestic work only occasionally or sporadicall and not on an occupational basis.
- Works for the personal comfort, convenience and security of the employer and immediate members of the
family home. (PCS)
Employment; Househelper (2009)

No. VI. a. Albert, a 40-year old employer, asked his domestic helper, Inday, to give him a private
massage. When Inday refused, Albert showed her Article 141 of the Labor Code, which says that one of
the duties of a domestic helper is to minister to the employer’s personal comfort and convenience.
Is Inday’s refusal tenable? Explain. (3%)
SUGGESTED ANSWER:
Yes, Inday‘s refusal to give her employer a private massage is not in accordance with law because the
nature of the work of a domestic worker must be in connection with household chores. Massaging is not a
domestic work.
Employment; Homeworkers (2000)

b) Mrs. Josie Juan is the confidential secretary of the Chairman of the Board of the bank. She is presently
on maternity leave. In an arrangement where the Chairman of the Board can still have access to her
services, the bank allows her to work in her residence during her leave. For this purpose, the bank
installed a fax machine in her residence, and gave her a cellphone and a beeper. Is Mrs. Juan a
homeworker under the law? Explain. (3%)
SUGGESTED ANSWER:
No, she is actually an office worker. She is not an industrial homeworker who accepts work to be
fabricated or processed at home for a contractor, which work, when finished, will be returned to or
repurchased by said contractor. (Art. 155, Labor Code).
Employment; Househelpers (2000)

a) Nova Banking Corporation has a resthouse and recreational facility in the highlands of Tagaytay City
for the use of its top executives and corporate clients. The resthouse staff includes a caretaker, two cooks
and a laundrywoman. All of them are reported to the Social Security System as domestic or household
employees of the resthouse and recreational facility and not of the bank. Can the bank legally consider the
caretaker, cooks and laundrywoman as domestic employees of the resthouse and not of the bank? (3%)
SUGGESTED ANSWER:
No, they are not domestic employees. They are bank employees because the resthouse and recreational
facility are business facilities as they are for use of the top executives and clients of the bank. [Art. 141,
Labor Code; Apex Mining Co., Inc. v. NLRC, 196 SCRA 251 (1991); Traders Royal Bank v. NLRC.
G.R. No. 127864, December 22. 1999]
“EMPLOYMENT OF HOUSEHELPERS IN COMMERCIAL, INDUSTRIAL AND AGRICULTURAL

ENTERPRISES ENTITLES THEM TO A SALARY RATE NOT LOWER THAN WHAT IS
PROVIDED FOR AGRICULTURAL AND NON AGRICULTURAL WORKERS. JUST LIKE OTHER
EMPLOYEES, THEY ARE ENTITLED TO LABOR STANDARD BENEFITS GRANTED UNDER
THE LAW, RULES AND REGULATIONS.” (Page 222 of Poquiz)
No. II. b. May a househelp be assigned to non-household work? (5%)
SUGGESTED ANSWER:
A househelper may be assigned to non- household work but a househelper assigned to work in a
commercial, industrial or agricultural enterprise should have a wage or salary rate not lower than
provided for agricultural or non-agricultural workers as prescribed by law.
ALTERNATIVE ANSWER:
No, pursuant to Article 141 of the Labor Code, a househelper is defined as a person who renders domestic
or household services exclusively to a household employer. ―Domestic or household service‖ is defined
as service in the employer‘s home, which is usually necessary or desirable for the maintenance and
enjoyment thereof, and includes ministering to the personal comfort and convenience of the members of
the employer‘s household, including services of family drivers (Rule XIII, Section 1(b), Book 3 of the
Labor Code)
A househelper cannot be assigned non- household work because to do so would
place that person outside the ambit of the special Labor Code provisions on househelpers. In such a
situation, terms and conditions of employment would differ.
Employment; HouseHelper; Non- Household Work (2007)
Inday was employed by mining company X to perform laundry service at its staffhouse. While attending
to her assigned task, she slipped and hit her back on a stone. Unable to continue with her work, she was
permitted to go on leave for medication, but thereafter she was not allowed to return to work. She filed a
complaint for illegal dismissal but her employer X contended that Inday was not a regular employee but a
mere househelp. Decide. (5%)
SUGGESTED ANSWER:
Inday is a regular employee. Under Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended, the
terms ―househelper or ―domestic servant are defined as follows:
―The term ―househelper as used herein is synonymous to the term ―domestic servant and shall refer to
any person, whether male or female, who renders services in and about the employer‘s home and which
services are usually necessary and desirable for the maintenance and enjoyment thereof, and ministers
exclusively to the personal comfort and enjoyment of the employer‘s family.
The foregoing definition clearly contemplates such househelper or domestic servant who is employed in
the employer‘s home to minister exclusively to the personal comfort and enjoyment of the employer‘s
family. The definition cannot be interpreted to include househelp or laundrywomen working in
staffhouses of a company, like Inday who attends the needs of the company‘s guest and other persons
availing of the said facilities. The criteria is the personal comfort and enjoyment of the family of the
employer in the home of said employer. While it may be true that the nature of the work of a house
helper, domestic servant or laundrywoman in a home or in a company staffhouse may be similar in
nature, the difference in their circumstances is that in the former instance they are actually serving the
family while in the latter case, whether it is a corporation or a single proprietorship engaged in business or
industry or any other agricultural or similar pursuit, service is being rendered in the staffhouses or within
the premises of the business of the employer. In such instance, they are employees of the company or
employed in the business concerned entitled to the privileges of a regular employee. The mere fact that
the househelper or domestic servant is working within the premises of the business of the employer and in
relation to or in connection with its officers and employees, warrants the conclusion that such househelper
or domestic servant is and should be considered as a regular employee of the employer and not considered
as a mere family househelper or domestic servant as contemplated in Rule XIII, Section 1(b), Book 3 of
the Labor Code, as amended (Apex Mining Company, Inc. v. NLRC, 196 SCRA 251 [1991]).
Distinguish briefly, but clearly, a "househelper" from a "homeworker." (2%)
SUGGESTED ANSWER:
Art. 141. – Domestic Helper – one who performs services in the employers house which is usually
necessary or desirable for the maintenance and enjoyment thereof and includes ministering to the personal
comfort and convenience of the members of the employer‘s household, including the services of a family
driver.
Art. 153. – Homeworker – is an industrial worker who works in his/her home processing raw materials
into finished products for an employer. It is a decentralized form of production with very limited
supervision or regulation of methods of work.
Employment; Driver as Househelper & in a Commercial Establishment (1998)

The weekly work schedule of a driver is as follows: Monday, Wednesday, Friday - Drive the family car to
bring and fetch the children to and from school. Tuesday, Thursday. Saturday - Drive the family van to
fetch merchandise from suppliers and deliver the same to a boutique in a mall owned by the family. Is the
driver a househelper? [3%]
The same driver claims that for work performed on Tuesday, Thursday and Saturday, he should be paid
the minimum daily wage of a driver of a commercial establishment. Is the claim of the driver valid? [2%]
SUGGESTED ANSWER:
The driver is a househelper. A person is a househelper or is engaged in domestic or household service if
he/she renders services in the employer's home which are usually necessary or desirable for the
maintenance and enjoyment thereof and includes ministering to the personal comfort and convenience
and security of the members of the employer's household including the services of family drivers.
A family driver who drives the family van to fetch merchandise from suppliers and delivers the same to a
boutique in a mall owned by the family for whom he works should be paid the minimum daily wage of a
driver in a commercial establishment. The Labor Code (in Article 143) provides that no househelper shall
be assigned to work in a commercial, industrial or agricultural enterprise at a wage or salary rate lower
than that provided by law for agricultural or non-agricultural workers.
Field personnel
- Refers to non- agricultural employee who regularly perform their duties away from the principal place of
business and whose job is not supervised by employer. His actual hours of work in the field cannot be
determined by reasonable certainty.
THUS, A BUS DRIVER UNDER CONSTANT SUPERVISION WHILE IN THE PERFORMANCE OF

HIS WORK CANNOT BE CONSIDERED AS FIELD PERSONNEL. (Auto bus transport system Inc vs
Bautista)
Members of the Family

- Members of the employer dependent upon him for support include husband and wife, parents and children,
other ascendant and descendant, brothers and sisters whether full or half blood.
Workers paid by results
- Include those who are paid on piece-work, takay, pakiao or tas basis. Payment of this type of worker is
determined by the result of the work or number of units produce. There are 2 categories supervised and
unsupervised.
Workers who are paid by results are to be paid their 13th month pay.
“TAILORS AND SIMILAR WORKERS HIRED IN THE TAILORING ESTABLISHMENTS,

ALTHOUGH PAID WEEKLY WAGES ON PIECE WORK BASIS ARE EMPLOYESSS AND NOT
INDEPENDENT CONTRACTORS AND ACCORDINGLY, AS REGULAR EMPLOYESS PAID ON
A PIECE RATE BASIS, THEY ARE NOT ENTITLED TO OVERTIME PAY, HOLIDAY PAY,
PREMIUM PAY AND SERVICE INCENTIVE LEAVE PAY.” ( page 225 Poquiz )
Wages; Paid by Results; Holiday Pay (2002)

Nemia earns P7.00 for every manicure she does in the barber shop of a friend which has nineteen (19)
employees. At times she takes home P175.00 a day and at other times she earns nothing. She now claims
holiday pay. Is Nemia entitled to this benefit? Explain briefly (5%)
SUGGESTED ANSWER:
No, Nemia is not entitled to holiday pay. Art. 82 of the Labor Code provides that workers who are paid by
results are, among others, not entitled to holiday pay. Nemia is a worker who is paid by results. She earns
P7.00 for every manicure she does.

Yes. Nemia is entitled to holiday pay. The Supreme Court has ruled: "As to the other benefits, namely,
holiday pay, premium pay, 13th month pay, and service incentive leave which the labor arbiter failed to
rule on but which the petitioners prayed for in their complaint, we hold that petitioners are so entitled to
these benefits. Three (3) factors lead us to conclude that petitioners, although piece rate workers, were
regular employees of private respondents.
FIRST as to the nature of the petitioner's tasks, their job of repacking snack food was necessary or
desirable in the usual business of private respondents, who were engaged in the manufacture and selling
of such food products; SECOND, petitioners worked for private respondents throughout the year, their
employment not having been dependent on a specific project or season; and THIRD, the length of time
that petitioners worked for private respondents. Thus, while petitioner's mode of compensation was on a
"per piece basis" the status and nature of their employment was that of regular employees." [Labor
Congress of the Philippines v. NLRC, 290 SCRA 509 (1998)
• Who are covered by the labor standards provisions of the Labor Code?
Employees in ALL establishments, whether operated for profit or not, are covered by the law on labor
standards.
• Who are excluded? (GM FWD)

The following are excluded from the coverage of the law on labor standards:
a. Government employees;
b. Managerial employees;
c. Other officers or members of a managerial staff;
d. Domestic workers or kasambahay and persons in the personal service of another;
e. Workers paid by results;
f. Non-agricultural field personnel; and
g. Members of the family of the employer dependent on him.
Working Hours; Charitable Institution; Overtime Pay (2002)

Socorro is a clerk-typist in the Hospicio de San Jose, a charitable institution dependent for its existence on
contributions and donations from well wishers. She renders work eleven (11) hours a day but has not been
given overtime pay since her place of work is a charitable institution. Is Socorro entitled to overtime pay?
Explain briefly. (5%)
SUGGESTED ANSWER:
Yes. Socorro is entitled to overtime compensation. She does not fall under any of the exceptions to the
coverage of Art. 82, under the provisions of Hours of Work. The Labor Code is equally applicable to non-
profit institutions. A covered employee who works beyond eight (8) hours is entitled to overtime
compensation.
Working Hours; Charitable Institution; Weekly Rest Period; (1998)

A Ladies Dormitory run or managed by a charitable non-profit organization claims that it is exempt from
the coverage of the Weekly Rest Period provision of the Labor Code.
Is the claim valid? [5%]
SUGGESTED ANSWER:
No. The claim is not valid. The provisions on weekly rest periods in the Labor Code cover every
employer, whether operating for profit or not. (See Article 91 of the Labor Code)
E-E Relationship; Workers paid by Results (2004)

B. TRX, a local shipping firm, maintains a fleet of motorized boats plying the island barangays of AP, a
coastal town. At day’s end the boat operators/crew members turn over to the boat owner their cash
collections from cargo fees and passenger fares, less the expenses for diesel fuel, food, landing fees and
spare parts. Fifty percent (50%) of the monthly income or earnings derived from the operations of the
boats are given to the boatmen by way of compensation. Deducted from the individual shares of the
boatmen are their cash advance and peso value of their absences, if any. Are these boatmen entitled to
overtime pay, holiday pay, and 13th month pay? (5%)
SUGGESTED ANSWER:
If the boatmen are considered employees, like jeepney drivers paid on a boundary system, the boatmen
are not entitled to overtime and holiday pay because they are workers who are paid by results. Said
workers, under the Labor Code are not entitled, among others, to overtime pay and holiday pay. In
accordance with the Rules and Regulations implementing the 13th month pay law, however, the boatmen
are entitled to the 13th month pay. Workers who are paid by results are to be paid their 13th month pay.

No. The arrangement between the boat owner and the boat operators/crew members partook of the nature
of a joint venture. The boatmen did not receive fixed compensation as they shared only in the cash
collections from cargo fees and passenger fares, less expenses for fuel, food, landing fees and spare parts.
It appears that there was neither right of control nor actual exercise of such right on the part of the boat
owner over the boatmen. It is clear that there was no employer- employee relationship between the boat
owner and the boatmen. As such, these boatmen are not entitled to overtime pay, holiday pay and 13th
month pay.
HOURS OF WORK
Article 83. Normal hours of work. The normal hours of work of any employee shall not exceed eight (8)
hours a day.
Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in
hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours of
eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the exigencies of
the service require that such personnel work for six (6) days or forty-eight (48) hours, in which case, they
shall be entitled to an additional compensation of at least thirty percent (30%) of their regular wage for
work on the sixth day. For purposes of this Article, "health personnel" shall include resident physicians,
nurses, nutritionists, dietitians, pharmacists, social workers, laboratory technicians, paramedical
technicians, psychologists, midwives, attendants and all other hospital or clinic personnel. (PN DSL
MAO)
 The 8hour work requirement does not preclude the employer in the exercise of
it’s management prerogatives (must be exercised in good faith) to reduce the number of working
hours provided no diminution of existing benefit.
 If by the nature of employment, employee is required to be on the job for only 6hours, such
period is regarded as full working day.
 Workdays can be reduced on account of serious business losses incurred by the company.
• May normal working hours be reduced?
Yes, provided that no corresponding reduction is made on the employee’s wage or salary
equivalent to an 8- hour work day. In instances where the number of hours required by the nature
of work is less than 8 hours, such number of hours should be regarded as the employee’s full
working day.
Purpose of limiting the working hours

- Designed not only to safeguard the health of the laborer but in a way to minimize unemployment by forcing
employers, in cases where more than the 8hour operation is necessary to utilize different shifts of laborers
working only for 8hours each.
Article 84. Hours worked. Hours worked shall include (a) all time during which an employee is required
to be on duty or to be at a prescribed workplace; and (b) all time during which an employee is suffered or
permitted to work. (PWD)
Rest periods of short durations during working hours shall be counted as hours worked.
PRINCIPLES IN DETERMINING HOURS WORKED

• What are compensable hours worked?
The following shall be considered as compensable hours worked:

a) 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
b) All time during which an employee is suffered or permitted to work.
“Fair day’s wage for a fair day’s labor,” remains the basic factor in determining the employees’ wages
and backwages.
• What is overtime work?

Any work in excess of said eight (8) normal hours is considered overtime work.
POWER INTERRUPTIONS/BROWNOUTS
• What are the effects of power interruptions/brownouts?
The following are the effects of work interruption due to brownouts:

a. Brown-outs of short duration but not exceeding twenty (20) minutes shall be treated as worked or
compensable hours whether used productively by the employees or not.
b. Brown-outs running for more than twenty (20) minutes may not be treated as hours worked (It can be
offset) provided any of the following conditions are present:
1. The employees can leave their workplace or go elsewhere whether within or without the work
premises; or
2. The employees can use the time effectively for their own interest.
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.
WORK WHILE ON CALL
Working Hours; When Compensable; “While on Call” (2004)

Gil Bates, a computer analyst and programmer of Hard Drive Company, works eight hours a day for five
days a week at the main office providing customers information technology assistance. On Saturdays,
however, the company requires him to keep his cellular phone open from 8:00 A.M. to 5:00 P.M. so that
the Management could contact him in case of heavy work load or emergency problems needing his
expertise. May said hours on Saturdays be considered compensable working hours “while on call”? If so,
should said compensation be reported to the Social Security System? (5%)
SUGGESTED ANSWER:
Said hours on Saturdays should be considered as compensable working hours "while on call". In
accordance with the Rules and Regulations Implementing the Labor Code, an employee who is not
required to leave work at his home or with company officials as to where he may be reached is not
working while on call. But in the question, Gil Bates was required to keep his cell phone open from 8:00
A.M. to 5:00 P.M. Therefore, Bates should be considered as working while on call, if he cannot use
effectively and gainfully for his own purpose the time from 8:00 A.M. to 5:00 P.M. on Saturdays when he
is required to keep his cellphone open. (Egg Pie)
The compensation actually received by Bates for working while on call on Saturdays should be reported
to the Social Security System because under the Social Security Law, compensation means "all actual
remuneration for employment."

If Gil Bates can effectively utilize the Saturdays in his own interest even "while on call", said hours on
Saturdays are not compensable. However, if during said hours on Saturdays, Bates is actually required to
attend to urgent work to the extent of leaving what he is doing, then the same are compensable working
hours to the extent of the actual hours of work rendered by him.
The compensation paid by the company to Bates for said hours worked on Saturdays should be reported
to the SSS. This is so because the basis of computing the SSS contribution includes all actual
remuneration, including allowances and cash value of any compensation paid in any medium other than
cash.
WAITING TIME (Article 84, Labor Code) “to be at a prescribed workplace.”
•When is waiting time compensable? (IRE Benefit)

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. Time spent waiting for work is
compensable if it is spent “primarily for the benefit of the employer and [its] business.”
Working Hours; When Compensable; “While on Call”; Waiting Time (1997)

Lito Kulangkulang and Bong Urongsulong are employed as truck drivers of Line Movers, Inc. Usually.
Lito is required by the personnel manager to just stay at the head office after office hours because he
could be called to drive the trucks. While at the head office, Lito merely waits in the manager's reception
room. On the other hand. Bong is allowed to go home after office hours required to keep his cellphone on
could be contacted whenever his services as driver becomes necessary. Would the hours that Lito and
Bong are on call be considered compensable working hours?
SUGGESTED ANSWER:
The hours of Lito and Bong while on call can be considered compensable hours. The applicable rule is:
"An employee who 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 shall be considered as working while on
call. An employee who is not required to leave work at his home or with company officials where be may
be reached is not working while on call." Here, Lito is required to stay at the office after office hours so
he could be called to drive the trucks of the Company. As for Bong, he is required to keep his cellular
phone so that he could be contacted whenever his services as driver as needed. Thus, the waiting time of
Lito and Bong should be considered are compensable hours.
Note: It could be argued that in the case of Bong who is not required to stay in the office but is allowed to
go home, if he is not actually asked by cellular phone to report to the office to drive a car, he can use his
time effectively and gainfully to his own purpose, thus, the time that he is at home may mean that there
are not compensable hours.
• What are flexible working hours?
“Flexible work arrangements” refer to alternative arrangements or schedules other than the traditional or
standard work hours, workdays and workweek. The effectivity and implementation of any of the flexible
work arrangements should be temporary in nature.
Under R.A. No. 8972, otherwise known as “The Solo Parents’ Welfare Act of 2000,” solo parents are
allowed to work on a flexible schedule. The phrase “flexible work schedule” is defined in the same 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.
COMPRESSED WORK WEEK (ATR)
“Compressed Workweek” or “CWW” refers to a situation where the normal workweek is reduced to less
than six (6) days but the total number of work-hours of 48 hours per week remains. The normal workday
is increased to more than eight (8) hours but not to exceed twelve (12) hours, without corresponding
overtime premium. This concept can be adjusted accordingly in cases where the normal workweek of the
firm is five (5) days.
• What are the conditions for its validity?
The CWW scheme is undertaken as a result of an express and voluntary agreement of majority of the
covered employees or their duly authorized representatives.
• How should compensation be made under a valid CWW?
Unless there is a more favorable practice existing in the firm, work beyond eight (8) hours will not be
compensable by overtime premium provided the total number of hours worked per day shall not exceed
twelve (12) hours. In any case, any work performed beyond twelve (12) hours a day or forty-eight (48)
hours a week shall be subject to overtime pay.
Working Hours; Compressed Work Week (2005)

(d) Under what conditions may a "compressed work week" schedule be legally authorized as an exception
to the "eight-hour a day" requirement under the Labor Code? (4%)
ALTERNATIVE ANSWER:
The conditions for an allowable "compressed work week" are the following: the workers agree to the
temporary change of work schedule and they do not suffer any loss of overtime pay, fringe benefits or
their weekly or monthly take-home pay. (DOLE Explanatory Bulletin on the Reduction of Workdays on
Wages issued on July 23, 1985)
ALTERNATIVE ANSWER:
"Compressed work week" is resorted to by the employer to prevent serious losses due to causes beyond
his control, such as when there is a substantial slump in the demand for his goods or services or when
there is lack of raw materials. (Explanatory Bulletin on the Reduction of Workdays on Wages Issued by
DOLE, July 23,1985)
MEAL BREAK (Article 85, Labor Code)
Article 85. Meal periods. Subject to such regulations as the Secretary of Labor may prescribe, it
shall be the duty of every employer to give his employees not less than sixty (60) minutes time-off
for their regular meals.
- As a general rule, employees are entitled to at least 1 hour time off for regular meals which can be taken
inside or outside company premises.
- Where the laborer(mechanic) is required to stand by for emergency work or sad meal hour is not one
complete rest, such is considered compensable overtime.
However an employer can prescribe shorter meal period of at least 20mins:
a. Where the work is non-manual nature.

b. Establishment regularly operate not less than 16 hours.
c. In cases of actual or impending emergencies.
d. Work necessary to prevent serious loss of perishable goods.
• Is meal break compensable?
Being time-off, it is not compensable hours worked. In this case, the employee is free to do anything he
wants, except to work. If he is required, however, to work while eating, he should be compensated
therefor.
 NIGHT SHIFT DIFFERENTIAL (ARTICLE 86, LABOR CODE)
Article 86. Night shift differential. Every employee shall be paid a night shift differential of not less than
ten percent (10%) of his regular wage for each hour of work performed between ten o’clock in the
evening and six o’clock in the morning.
• What is the distinction between night shift differential pay and overtime pay?
When the work of an employee falls at night time, 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.
• How is Night Shift Differential Pay computed?
1. Where night shift (10 p.m. to 6 a.m.) work is regular work.

a. On an ordinary day: Plus 10% of the basic hourly rate or a total of 110% of the basic hourly rate.
b. On a rest day, special day or regular holiday: Plus 10% of the regular hourly rate on a rest day, special
day or regular holiday or a total of 110% of the regular hourly rate.
2. Where night shift (10 p.m. to 6 a.m.) work is overtime work.
a. On an ordinary day: Plus 10% of the overtime hourly rate on an ordinary day or a total of 110% of the
overtime hourly rate on an ordinary day.
b. On a rest day or special day or regular holiday: Plus 10% of the overtime hourly rate on a rest day or
special day or regular holiday.
For overtime work in the night shift. Since overtime work is not usually eight (8) hours, the
compensation for overtime night shift work is also computed on the basis of the hourly rate.
a. On an ordinary day. Plus 10% of 125% of basic hourly rate.

b. On a rest day or special day or regular holiday. Plus 10% of 130% of regular hourly rate on
said days or a total of 110% of 130% of the applicable regular hourly rate.
NIGHT WORKERS (R.A. NO. 10151)
• What is the new law on night work?

- R.A. No. 10151 [JUNE 21, 2011]
 Significance of the law.
R.A. No. 10151 has repealed Article 130 [Nightwork Prohibition] and Article 131 [Exceptions] of the
Labor Code and accordingly renumbered the same articles. Additionally, it has inserted a new Chapter V
of Title III of Book III of the Labor Code entitled “Employment of Night Workers” which addresses the
issue on nightwork of all employees, including women workers. Chapter V covers newly renumbered
Articles 154 up to 161 of the Labor Code.
 Coverage of the law.
The law on nightwork applies not only to women but to all persons, who shall be employed or permitted
or suffered to work at night, except those employed in agriculture, stock raising, fishing, maritime
transport and inland navigation, during a period of not less than seven (7) consecutive hours, including
the interval from midnight to five o'clock in the morning, to be determined by the DOLE Secretary, after
consulting the workers’ representatives/labor organizations and employers.
 Night worker, meaning.

“Night worker" means any employed person whose work covers the period from 10 o'clock in the evening
to 6 o'clock the following morning provided that the worker performs no less than seven (7) consecutive
hours of work.
“WHERE THE NIGHT TIME WORK OF AN EMPLOYEE OVERLAPS WITH OVERTIME WORK,
THE RECEIPT OF OVERTIME PAY DOES NOT PRECLUDE THE RECEIPT OF NIGHT SHIFT
DIFFERENTIAL PAY.” (page 234)
Working Hours; Night Shift Differential (2002)

As a tireman in a gasoline station, open twenty four (24) hours a day with only five (5) employees, Goma
worked from 10:00 P.M. until 7:00 A.M. of the following day. He claims he is entitled to night shift
differential. Is he correct? Explain briefly. (3%)
SUGGESTED ANSWER:
Yes. Under Art 86 of the Labor Code, night shift differential shall be paid to every employee for work
performed between 10:00 o'clock in the evening to six o'clock in the morning.
Therefore, Goma is entitled to nightshift differential for work performed from 10:00 pm until 6:00 am of
the day following, but not from 6:00 am to 7:00 am of the same day.
The Omnibus Rules Implementing the Labor Code (In Book III, Rule II dealing with night shift
differential) provides that its provisions on night shift differential shall NOT apply to employees of "retail
and service establishments regularly employing not more than five (5) workers". Because of this
provision, Goma is not entitled to night shift differential because the gasoline station where he works has
only five employees. (page 233 of Poquiz)
Mandatory facilities.
(1) Suitable first-aid and emergency facilities as provided for under Rule 1960 (Occupational Health
Services) of the Occupational Safety and Health Standards (OSHS);
(2) Lactation station in required companies pursuant to R.A. No. 10028 (The Expanded Breastfeeding
Promotion Act of 2009);
(3) Separate toilet facilities for men and women;
(4) Facility for eating with potable drinking water; and
(5) Facilities for transportation and/or properly ventilated temporary sleeping or resting quarters, separate
for male and female workers, shall be provided except where any of the following circumstances is
present:
i. Where there is an existing company guideline, practice or policy, CBA or any similar agreement
between management and workers providing for an equivalent or superior benefit; or
ii. Where the start or end of the night work does not fall within 12 midnight to 5 o'clock in the morning;
or
iii. Where the workplace is located in an area that is accessible 24 hours to public transportation;
iv. Where the number of employees does not exceed a specified number as may be provided for by the
DOLE Secretary in subsequent issuances.
 Maternity leave benefits under existing laws cannot be diminished.
OVERTIME (Article 87, Labor Code)

Article 87. Overtime work. Work may be performed beyond eight (8) hours a day provided that the
employee is paid for the overtime work, an additional compensation equivalent to his regular wage plus at
least twenty-five percent (25%) thereof. Work performed beyond eight hours on a holiday or rest day
shall be paid an additional compensation equivalent to the rate of the first eight hours on a holiday or rest
day plus at least thirty percent (30%) thereof.
 Computation:
Basic (wage)- x 100% ……. Premium
Basic x 125%......... Overtime
Basic x 130% …… Overtime on holiday or rest day
Illustrations on how overtime is computed:
a. For overtime work performed on an ORDINARY DAY, the overtime pay is plus 25% of the
basic hourly rate.
b. For overtime work performed on a REST DAY OR ON A SPECIALDAY, the overtime pay is
plus 30% of the basic hourly rate which includes 30% additional compensation or total of
130% as provided in Article 93 [a] of the Labor Code.
c. For overtime work performed on a REST DAY WHICH FALLS ON A SPECIAL DAY, the
overtime pay is plus 30% of the basic hourly rate which includes 50% additional compensation
or total of 150% as provided in Article 93 [c] of the Labor Code.
d. For overtime work performed on a REGULAR HOLIDAY, the overtime pay is plus 30% of the
basic hourly rate which includes 100% additional compensation or total as provided in Article
94 [b] of the Labor Code.
e. For overtime work performed on a REST DAY WHICH FALLS ON A REGULAR HOLIDAY,
the overtime pay is plus 30% of the basic hourly rate which includes 160% additional
compensation or total of 260% (130% x 2).
 How is premium pay for holidays computed?
a. Regular Holidays
• If the employee did not work, he/she shall be paid 100 % of his/her salary for that day. Computation:
(Daily rate + Cost of Living Allowance) x 100%. The COLA is included in the computation of holiday
pay.
• If the employee worked, he/she shall be paid 200 % of his/her regular salary for that day for the first
eight hours. Computation: (Daily rate + COLA) x 200%. The COLA is also included in computation of
holiday pay.
If the employee worked in excess of eight hours (overtime work), he/she shall be paid an additional 30
percent of his/her hourly rate on said day. Computation: Hourly rate of the basic daily wage x 200% x
130% x number of hours worked.
• If the employee worked during a regular holiday that also falls on his/her rest day, he/she shall be
paid an additional 30 % of his/her daily rate of 200 %. Computation: (Daily rate + COLA) x 200%] +
(30% [Daily rate x 200%)].
• If the employee worked in excess of eight hours (overtime work) during a regular holiday that also
falls on his/her rest day, he/she shall be paid an additional 30 % of his/her hourly rate on said day.
Computation: (Hourly rate of the basic daily wage x 200% x 130% x 130% x number of hours
worked);
Wages; Holiday Pay (2005)

During the open forum following your lecture before members of various unions affiliated with a labor
federation, you were asked the following questions (State your answers and your reasons therefor):
(a) Araw ng Kagitingan and Good Friday are among the 10 paid regular holidays under Article 94 of the
Labor Code. How much will an employee receive when both holidays fall on the same day? (4%)
SUGGESTED ANSWER:
If unworked, the covered employees are entitled to at least 200% of their basic wage, because to do
otherwise would reduce the number of holidays under EO No. 203. If worked, the covered employees are
entitled to compensation equivalent to at least 300% of their basic wage because they are entitled to the
payment not only of the two regular holidays, but also of their regular wage, plus the premium thereof.
(DOLE Explanatory Bulletin on Workers' Entitlement to Holiday Pay on 9 April 1993, Araw ng
Kagitingan and Good Friday).
b. Special (Non-Working) Days
• If the employee did not work, the “no work, no pay” principle shall apply, unless there is a favorable
company policy, practice, or CBA granting payment on a special day.
• If the employee worked, he/she shall be paid an additional 30 % of his/her daily rate on the first eight
hours of work. Computation: [(Daily rate x 130%) + COLA).
• If the employee worked in excess of eight hours (overtime work), he/she shall be paid an additional 30
% of his/her hourly rate on said day. Computation: (Hourly rate of the basic daily wage x 130% x 130% x
number of hours worked).
• If the employee worked during a special day that also falls on his/her rest day, he/she shall be paid an
additional 50% of his/her daily rate on the first eight hours of work. Computation: [(Daily rate x 150%) +
COLA].
• If the employee worked in excess of eight hours (overtime work) during a special day that also falls on
his/her rest day, he/she shall be paid an additional 30 % of his/her hourly rate on said day. Computation:
(Hourly rate of the basic daily wage x 150% x 130% x number of hours worked).
c. Special Holiday for all schools

• For private establishments, 25 February 2014 is an ordinary workday and no premium is required to be
paid for work on said day.
• On the other hand, employees in private schools, whether academic or administrative personnel, shall be
paid in accordance with the rules for pay on special (non-working) days as stated above. (EDSA
Revolution Anniversary)
• What are the effects of absences on the computation of holiday pay?
1. Employees on leave of absence with pay - entitled to holiday pay when they are on leave of absence
with pay.
2. Employees on leave of absence without pay on the day immediately preceding the regular holiday -
may not be paid the required holiday pay if they have not worked on such regular holiday.
3. Employees on leave while on SSS or employee’s compensation benefits - Employers should 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.
4. When day preceding regular holiday is a non-working day or scheduled rest day - should not be
deemed to be on leave of absence on that day, in which case, employees are entitled to the regular holiday
pay if they worked on the day immediately preceding the non-working day or rest day.
Wages; Holiday Pay (2010)

No. IV. A, a worker at ABC Company, was on leave with pay on March 31, 2010. He reported for work
on April 1 and 2, Maundy Thursday and Good Friday, respectively, both regular holidays. Is A entitled to
holiday pay for the two successive holidays? Explain. (3%)
SUGGESTED ANSWER:
Yes, A is entitled to holiday pay equivalent to two hundred percent (200%) of hi regular daily wage for
the two successive holidays that she worked (Section 6[a], Rule IV, Book III of the Omnibus Rule
Implementing the Labor Code).
Wages; Computation; Holiday Pay (2002)

On orders of his superior, Efren, a high-speed sewing machine technician, worked on May 1, Labor Day.
If he worked eight hours on that day, how much should he receive if his daily rate is P400.00? (2%)
SUGGESTED ANSWER:
Efren should receive P800.00. Art 92 of the Labor Code provides that the employer may require an
employee to work on any regular holiday but such employee shall be paid a compensation equivalent to
twice his regular rate.
Wages; Computation; Holiday Pay; Overtime Pay (2002)

This year, National Heroes Day (August 25) falls on a Sunday. Sunday is the rest day of Bonifacio whose
daily rate is P500.00.
A. If Bonifacio is required by his employer to work on that day for eight (8) hours, how much should he
be paid for his work? Explain. (3%)
B. If he works for ten (10) hours on that day, how much should he receive for his work? Explain. (2%)
SUGGESTED ANSWER:
A. For working on his scheduled rest day, according to Art 93(a), Bonifacio should be paid P500.00 (his
daily rate) plus P150.00 (30% of his daily rate) = P650.00. This amount of P650.00 should be multiplied
by 2 = P1 ,300.00 (30% of 500x2). This is the amount that Bonifacio as employee working on his
scheduled rest day which is also a regular holiday, should receive. Art. 94(c) of the Labor Code provides
that an employee shall be paid a compensation equivalent to twice his regular rate for work on any regular
holiday. The "regular rate" of Bonifacio on May 1, 2002 is with an additional thirty percent because the
day is also his scheduled rest day.
B. P1,300.00 which is the amount that Bonifacio is to receive for working on May 1, 2002 should be
divided by 8 to determine his hourly rate of P162.50. This hourly rate should be multiplied by 2 (the
number of hours he worked overtime). Thus, the amount that Bonifacio is entitled to receive for his
overtime work on May 1, 2002 is P325.00.
 Condition for entitlement to overtime pay

- Must first be established by sufficient proof that said overtime work was actually performed before an
employee may avail said benefit.
“Provision of the law prevails over a void contract.” (Pesala vs NLRC)
 Overtime pay for seamen

- The hours worked by a seaman are those for actual service rendered on board and does not include time
spent outside of his place of work where he can rest completely.
 Overtime pay of tugboat engineer

- His presence for more than 8 hours a day might have been required by the nature of his service but there
must still be specific evidence showing that he had been working all the time beyond 8hours.
RIGHT TO CLAIM OVERTIME PAY NOT WAIVABLE – estoppel and lache of time is not applicable.
•Can overtime pay be waived?

No. The right to claim overtime pay is not subject to a waiver. Such right is governed by law and not
merely by the agreement of the parties.
 Wages; Waiver of Compensation (1996)

Jose applied with Mercury Drug Company for the position of Sales Clerk. Mercure Drug
Company maintains a chain of drug stores that are open everyday till late at night. Jose was
informed that he had to work on Sundays and holidays at night as part of the regular course of
employment. He was presented with a contract of employment setting forth his compensation
on an annual basis with an express waiver of extra compensation for work on Sundays and
holidays, which Jose signed. Is such a waiver binding on Jose? Explain.
SUGGESTED ANSWER:
As long as the annual compensation is an amount that is not less than what Jose should receive
for all the days that he works, plus the extra compensation that he should receive for work on his
weekly rest days and on special and regular holidays and for night differential pay for late night
work, considering the laws and wage orders providing for minimum wages, and the pertinent
provisions of the Labor Code, then the waiver that Jose signed is binding on him for he is not
really waiving any right under Labor Law. It is not contrary to law, morals, good customs, public
order or public policy for an employer and employee to enter into a contract where the employees'
compensation that is agreed upon already includes all the amounts he is to receive for overtime
work and for work on weekly rest days and holidays and for night differential pay for late night
work. ALTERNATIVE ANSWER:
The waiver of benefits provided for by law is void. Art. 6 of the New Civil Code provides:
"Rights may be waived, unless the waiver is contrary to law, public order, public policy, morals or
good customs."
Wages; Overtime Pay; Waiver (2009)

No. XI. d. A waiver of the right to claim overtime pay is contrary to law. (5%)
SUGGESTED ANSWER:
True, as a general rule, overtime compensation cannot be waived, whether expressly or impliedly; and
stipulation to the contrary is against the law (Pampanga Sugar Dev. Co., Inc. v. CIR, 114 SRCA 725
[1982]). An exception would be the adoption of a compressed work week on voluntary basis, subject to
the guidelines of Department Order No. 02, Series of 2004.
 Overload work
- Actual addition of workload but it may be overtime or not.
 Chinese Overtime
- is a system of overtime payment in which salaried employees regular rate is calculated by dividing his
salary by the total numbers of hours he works. This is prohibited by law.
• What are some basic principles on overtime work?

1. Work rendered after normal eight (8) hours of work is called “overtime work.”
2. In computing overtime work, "regular wage" or "basic salary" means "cash" wage only without
deduction for facilities provided by the employer.
3. "Premium pay" means the additional compensation required by law for work performed within eight
(8) hours on non-working days, such as regular holidays, special holidays and rest days.
4. "Overtime pay" means the additional compensation for work performed beyond eight (8) hours.
•What is the distinction between PREMIUM PAY and OVERTIME PAY?

“Premium pay” refers to the additional compensation required by law for work performed within the eight
(8) normal hours of work on non-working days, such as rest days and regular and special holidays.
“Overtime pay” refers to the additional compensation for work performed beyond the eight (8) normal
hours of work on a given day. An employee is entitled to both premium pay and overtime pay if he works
on a non- working day and renders overtime work on the same day.
•What is built-in overtime pay?

In case the employment contract stipulates that the compensation includes built-in overtime pay and the
same is duly approved by the DOLE, the non-payment by the employer of any overtime pay for overtime
work is justified and valid.
ART 88. UNDERTIME IS NOT OFFSET BY OVERTIME

“ Undertime work on a 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. “
- To allow such would be to circumvent the law on payment of premiums for rest day and holiday
work.
Working Hours; Saturday Work (2003)

A case against an employer company was filed charging it with having violated the prohibition against
offsetting undertime for overtime work on another day. The complainants were able to show that,
pursuant to the Collective Bargaining Agreement (CBA), employees of the union had been required to
work "overtime" on Saturday but were paid only at regular rates of pay on the thesis that they were not
required to complete, and they did not in fact complete, the eight-hour work period daily from Monday
through Friday. Given the circumstances, the employer contended that the employees were not entitled to
overtime compensation, i.e., with premium rates of pay. Decide the controversy.
SUGGESTED ANSWER:
The employer is correct. While Art. 88 of the Labor Code clearly provides that undertime work on any
other particular day shall not be offset by overtime work on any other day, this rule is inapplicable in this
case pertaining to Saturday work which in reality does not constitute overtime work as Saturday is still a
working day under the law and there is no CBA stipulation against it.
Art, 88 of the Labor Code provides that undertime work on any particular day shall not be offset by
overtime work on any other day. The CBA being the law between the parties and the Union having shown
that the employees rendered overtime work on Saturday, the contention of the employer is not tenable.
The employer cannot use the undertime of Monday through Friday to offset the overtime on Saturday.
Hence, the employees are entitled to overtime compensation, i.e. premium rates of pay on Saturday.
Emergency overtime work (Article 89, Labor Code).
a. General rule.
No employee may be compelled to render overtime work against his will. The reason is that this will
constitute involuntary servitude.
Exceptions when employee may be compelled to render overtime work: (WEN UP8)
1. When the country is at war or when any other national or local emergency has been declared by the
National Assembly or the Chief Executive;
2. When 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;
3. 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;
4. When the work is necessary to prevent loss or damage to perishable goods;
5. 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
6. When overtime work is necessary to avail of favorable weather or environmental conditions where
performance or quality of work is dependent thereon.
• May an employee validly refuse to render overtime work under any of the afore-said
circumstances?
No. 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.
Wages; Undertime off-set by Overtime (2010)

No. XIV. After working from 10 a.m. to 5 p.m. on a Thursday as one of 5,000 employees in a beer
factory, A hurried home to catch the early evening news and have dinner with his family. At around 10
p.m. of the same day, the plant manager called and ordered A to fill in for C who missed the second shift.
May A validly refuse the plant manager’s directive? Explain. (2%)
SUGGESTED ANSWER:
Yes, A may validly refuse to fill in for C. A may not be compelled to perform overtime work considering
that the plant manager‘s directive is not for an emergency overtime work, as contemplated under Article
89 of the Labor Code.
 RESTDAY PROVISION
WEEKLY REST DAY
• What is the duration of weekly rest period?
It shall be the duty of every employer, whether operating for profit or not, to provide each of his
employees a rest period of not less than twenty-four (24) consecutive hours after every six (6) consecutive
normal work days.
• Is the employer’s prerogative to determine the rest period of its employees subject to limitations?
Yes. The employer shall determine and schedule the weekly rest day of his employees subject to CBA
and to such rules and regulations as the DOLE Secretary may provide. However, the employer shall
respect the preference of employees as to their weekly rest day when such preference is based on religious
grounds.
Employee shall make known his preference in writing at least 7 days before the desired effectivity of the
initial rest day so preferred. If it results to serious prejudice to the business operation, employer may make
the weekly rest day for at least 2 days in a month.
 EMERGENCY REST DAY WORK
• When can an employer require work on a rest day?
The employer may require any of its employees to work on their scheduled rest day for the duration of the
following emergency and exceptional conditions: (PAN CUE)
a. 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;
b. In case of urgent work to be performed on machineries, equipment, or installations, to avoid serious
loss which the employer would otherwise suffer;
c. In the event of abnormal pressure of work due to special circumstances, where the employer cannot
ordinarily be expected to resort to other measures;
d. To prevent serious loss of perishable goods;
e. Where the nature of the work is such that the employees have to work continuously for seven (7) days
in a week or more, as in the case of the crew members of a vessel to complete a voyage and in other
similar cases; and
f. When the work is necessary to avail of favorable weather or environmental conditions where
performance or quality of work is dependent thereon.
HOLIDAY PAY/PREMIUM PAY
COVERAGE, EXCLUSIONS
• Who are covered by the law on holiday pay? Generally, all employees are entitled to and covered by the
law on holiday pay.
• Who are EXCLUDED from its coverage? (Includes employees paid by results who are supervised.)
The following are excluded:
a. Those of the government and any of the political subdivisions, including government-owned and
controlled corporations;
b. Those of retail and service establishments regularly employing less than ten (10) workers;
c. Domestic workers or Kasambahays;
d. Persons in the personal service of another;
e. Managerial employees as defined in Book III of the Labor Code;
f. Field personnel and other employees whose time and performance is unsupervised by the employer;
g. Those who are engaged on task or contract basis or purely commission basis;
h. Those who are paid a fixed amount for performing work irrespective of the time consumed in the
performance thereof;
i. Other officers and members of the managerial staff;
j. Members of the family of the employer who are dependent on him for support.
 What are REGULAR and SPECIAL HOLIDAYS?

Special Holiday (for all schools) EDSA Revolution Anniversary – 25 February (Tuesday)
Not included in the enumeration on regular holidays are (1) Eid’l Fitr and (2) Eidul Adha. The reason is
that proclamations declaring the observance of these national holidays are issued after the approximate
dates of the Islamic holidays have been determined in accordance with the Islamic calendar (Hijra) or the
lunar calendar, or upon Islamic astronomical calculations, whichever is possible or convenient. To this
end, the National Commission on Muslim Filipinos (NCMF) shall inform the Office of the President on
which days the holidays shall respectively fall.
What is the total number of regular holidays?
A. Regular Holidays
New Year’s Day - 1 January (Wednesday)
Araw ng Kagitingan- 9 April (Wednesday)
Maundy Thursday - 17 April
Good Friday - 18 April
Labor Day - 1 May (Thursday)
Independence Day - 12 June (Thursday)
National Heroes Day- 25 August (Last Monday of August)
Bonifacio Day - 30 November (Sunday)
Christmas Day - 25 December (Thursday)
Rizal Day - 30 December (Tuesday)
B. Special (Non-Working) Days

Chinese New Year – January 31
Black Saturday – April 19
Ninoy Aquino Day – August 21
All Saints Day – November 1
The total number of regular holidays is twelve (12) days per year. This is important for purposes of
reckoning certain divisors and computation of employee benefits.
• What is the principal distinction between regular and special (non-working) days?
The said 12 regular holidays are considered GUARANTEED WITH PAY since employees should be
paid their wages during regular holidays regardless of whether they work or not on those days.
As far as special (non-working) days are concerned, the principle of ‘NO WORK, NO PAY” applies,
which means that if workers do not work on special (non-working) days, they do not receive any wages
for those days, unlike in the case of regular holidays as above discussed.
• What is premium pay for holidays (and also for rest days)?
“Premium pay” refers to the additional compensation required by law to be paid for work performed
within the regular eight (8) normal working hours on non-working days, such as rest days, regular and
special holiday.
HOLIDAY PAY/PREMIUM PAY OF TEACHERS, PIECE WORKERS, TAKAY, SEASONAL

WORKERS, SEAFARERS
• Are private school teachers entitled to holiday pay during semestral vacations? What about Christmas
vacation?
No, as far as regular holidays during semestral vacations are concerned. Yes, as far as regular holidays
during Christmas vacation are concerned.
• Are hourly-paid teachers entitled to holiday pay?
No. A school is exempted from paying hourly-paid faculty members their pay for regular holidays,
whether the same be during the regular semesters of the school year or during semestral, Christmas, or
Holy Week vacations. However, it is liable to pay the faculty members their regular hourly rate on days
declared as special holidays or if, for some reason, classes are called off or shortened for the hours they
are supposed to have taught, whether extensions of class days be ordered or not; and in case of
extensions, said faculty members shall likewise be paid their hourly rates should they teach during said
extensions.
•Are piece-workers, takay and others paid by results entitled to holiday pay?
Yes. Where a covered employee is paid by results or output such as payment on piece-work, his holiday
pay should not be less than his average daily earnings for the last seven (7) actual working days preceding
the regular holiday. In no case, however, should the holiday pay be less than the applicable statutory
minimum wage rate.
• What are the distinctions between “supervised” and “unsupervised” workers paid by results to determine
their entitlement to holiday pay?
The principal test to determine entitlement to holiday pay is whether the employees’ time and
performance of the work are “supervised” or “unsupervised” by their employer. If supervised, the
employee is entitled to holiday pay. If unsupervised, he is not.
The distinctions between supervised and unsupervised workers paid by results are as follows:
(1) Those whose time and performance are supervised by the employer. Here, there is an element of
control and supervision over the manner as to how the work is to be performed. A piece-rate worker
belongs to this category especially if he performs his work in the company premises; and
(2) Those whose time and performance are unsupervised. Here, the employer’s control is over the result
of the work. Workers on pakyao and takay basis belong to this group. Both classes of workers are paid
per unit accomplished.
Piece-rate payment is generally practiced in garment factories where work is done in the company
premises, while payment on pakyao and takay basis is commonly observed in the agricultural industry,
such as in sugar plantations where the work is performed in bulk or in volumes, hence, difficult to
quantify.
•Are seasonal workers entitled to holiday pay?
Yes. Seasonal workers are entitled to holiday pay while working during the season. They may not be paid
the required regular holiday pay during off-season where they are not at work.
• Are seafarers entitled to holiday pay?
Yes. Any hours of work or duty including hours of watch-keeping performed by the seafarer on
designated rest days and holidays shall be paid rest day or holiday pay accordingly.
What are important principles on holiday pay?
• In case of two (2) regular holidays falling on the same day, the worker should be compensated as
follows: If unworked – 200% for the two regular holidays; If worked – 200% for the two regular holidays
plus premium of 100% for work on that day.
• “Monthly-paid” employees are not excluded from the coverage of holiday pay.
SERVICE INCENTIVE LEAVE
Every covered employee who has rendered at least one (1) year of service is entitled to a yearly service
incentive leave of five (5) days with pay.
The term “at least one year of service” should mean 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 should be considered as one (1) year for the purpose of determining entitlement to the
service incentive leave benefit.
• Who are excluded from its coverage?
All employees are covered by the rule on service incentive leave except:
a. Those of the government and any of its political subdivisions, including government-owned and
controlled corporations;
b. Domestic workers or kasambahays; (Section 29, RA 10361)
c. Persons in the personal service of another;
d. Managerial employees as defined in Book III of the Labor Code;
e. Field personnel and other employees whose performance is unsupervised by the employer;
f. Those who are engaged on task or contract basis, purely commission basis, or those who are paid in a
fixed amount for performing work irrespective of the time consumed in the performance thereof;
g. Those who are already enjoying the benefit provided in the law;
h. Those enjoying vacation leave with pay of at least five (5) days;
i. Those employed in establishments regularly employing less than ten (10) employees;
j. Other officers and members of the managerial staff; and
k. Members of the family of the employer who are dependent on him for support.
• Are unavailed service incentive leaves commutable to cash?

Yes. The service incentive leave is commutable to its money equivalent if not used or exhausted at the
end of the year based on the salary rate at the time of ocommutation.
Employee; Field Personnel vs. Contractual Employee; Benefits (2010)

No. XX. A, a driver for a bus company, sued his employer for nonpayment of commutable service
incentive leave credits upon his resignation after five years of employment. The bus company argued that
A was not entitled to service incentive leave since he was considered a field personnel and was paid on
commission basis and that, in any event, his claim had prescribed. If you were the Labor Arbiter, how
would you rule? Explain. (6%)
SUGGESTED ANSWER:
I will grant the prayer of A. Payment on commission basis alone does not prove that A is a field
personnel. There must be proof that A is left to perform his work unsupervised by his employer.
Otherwise, he is not a field personnel, thus entitled to commutable service incentive leave (SIL) credits
(Auto Bus v. Bautista, 458 SCRA 578 [2005]).
His action has not yet prescribed, in Auto Bus v. Bautista (supra), the Supreme Court recognized that SIL
is such a unique labor standard benefit, because it is commutable. An employee may claim his accrued
SIL upon his resignation, retirement, or termination. Therefore, when A resigned after five years, his right
of action to claim ALL of his SIL benefits accrued at the time when the employer refused to pay his
rightful SIL benefits (Art. 291, Labor Code).
ALTERNATIVE ANSWER:
The money claim as cause of action has prescribed because the claim was filed after five (5) years from
date of negotiation. Art. 291 of the Labor Code provides that all money claims arising from employer-
employee relations occurring during the effectivity of the Code shall be filed within three (3) years form
that time the cause of action has accrued, otherwise, they shall be forever barred.
Working Hours; Sick Leave; Overtime Pay (1997)

Danilo Flores applied for the position of driver in the motor-pool of Gold Company, a multinational
corporation. Danilo was informed that he would frequently be working overtime as he would have to
drive for the company's executives even beyond the ordinary eight-hour work day. He was provided with
a contract of employment wherein he would be paid a monthly rate equivalent to 35 times his daily wage,
regular sick and vacation leaves, 5 day-leave with pay every month and time off with pay when the
company's executives using the cars do not need Danilo's service for more than eight hours a day, in lieu
of overtime. Are the above provisions of the contract of employment in conformity with, or violative of,
the law?
SUGGESTED ANSWER:
Except for the provision that Danilo shall have time off with pay when the company's executives using
the cars do not need Danilo's service for more than eight hours a day, in lieu of overtime, the provisions
of the contract of employment of Danilo are not violative of any labor law because they instead improve
upon the present provisions of pertinent labor laws. Thus, the monthly rate equivalent to 35 times the
daily wage may be sufficient to include overtime pay. There is no labor law requiring the payment of sick
and vacation leaves except the provision for a five-day service incentive leave in the Labor Code. The 5-
day-leave with pay every month has no counterpart in Labor Law and is very generous.
As for the provision in Danilo's contract of employment that he shall receive time off with pay in lieu of
overtime, this violates the provision of the Labor Code which states that 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 the Labor Code.
LEAVES
 MATERNITY LEAVE
“Maternity leave” is the period of time which may be availed of by a woman employee, married or
unmarried, to undergo and recuperate from childbirth, miscarriage or complete abortion during which
she is permitted to retain her rights and benefits flowing from her employment. (RA 8282)
• What is the period of leave?
60 days – for normal delivery

78 days – for caesarian delivery
• What is the amount granted?
Daily maternity benefit equivalent to 100% of her average daily salary credit for sixty (60) days
or seventy-eight (78) days in case of caesarian delivery/
• What is the number of delivery or miscarriage covered?
The maternity benefits shall be paid only for the first four (4) deliveries or miscarriages/
• Is an unmarried woman entitled to maternity leave benefit?
Yes. For as long as a woman is pregnant, she is entitled to maternity leave benefit regardless of
whether she is married or unmarried.
Maternity Benefits (2000)

Ms. Sara Mira is an unwed mother with three children from three different fathers. In 1999, she
became a member of the Social Security System. In August 2000, she suffered a miscarriage, also
out of wedlock, and again by a different father. Can Ms. Mira claim maternity benefits under the
Social Security Act of 1997? Reason. (5%)
SUGGESTED ANSWER:
Yes, she can claim maternity benefit. Entitlement thereto is not dependent on the claimant's being
legally married. (Sec. 14-A, Social Security Act of 1997).
MATERNITY BENEFIT IS OFFERED ONLY TO FEMALE SSS MEMBERS AND

QUALIFIED IF:
a. She has paid at least 3 monthly contributions within the 12 month period immediately
preceding the semester of her childbirth or miscarriage.
b. She has submitted the required notification of pregnancy to her employer or directly to SSS.
 PATERNITY LEAVE
“Paternity leave” covers a married male employee allowing him not to report for work for seven
(7) calendar days but continues to earn the compensation therefor, on the condition that his
spouse has delivered a child or suffered miscarriage for purposes of enabling him to effectively
lend support to his wife in her period of recovery and/or in the nursing of the newly-born child.
“Delivery” includes childbirth or any miscarriage.

“Spouse” refers to the lawful wife. For this purpose, “lawful wife” refers to a woman who is
legally married to the male employee concerned.
“Cohabiting” refers to the obligation of the husband and wife to live together.
•What is the covered total number of deliveries?
Every married employee in the private and public sectors is entitled to a paternity leave of seven
(7) calendar days with full pay for the first four (4) deliveries of the legitimate spouse with whom
he is cohabiting.
Paternity leave benefits are granted to the qualified employee after the delivery by his wife,
without prejudice to an employer allowing an employee to avail of the benefit before or during
the delivery, provided that the total number of days should not exceed seven (7) calendar days for
each delivery.
• Is an unavailed paternity leave benefit convertible to cash? No. In the event that the paternity
leave benefit is not availed of, said leave shall not be convertible to cash. It is also non
cumulative.
Paternity Leave (2002)

How many times may a male employee go on Paternity Leave? Can he avail himself of this
benefit for example, 50 days after the first delivery by his wife? (3%)
SUGGESTED ANSWER:
A male employee may go on Paternity Leave up to four (4) children. (Sec. 2, RA 8187) On the
question of whether or not he can avail himself of this benefit 50 days after the delivery of his
wife, the answer is: Yes, he can because the Rules Implementing Paternity Leave Act says that
the availment should not be later than 60 days after the date of delivery.
Paternity Leave; Maternity Leave (2005)

Mans Weto had been an employee of Nopolt Assurance Company for the last ten (10) years. His
wife of six (6) years died last year. They had four (4) children. He then fell in love with Jovy, his
co- employee, and they got married. In October this year, Weto's new wife is expected to give
birth to her first child. He has accordingly filed his application for paternity leave, conformably
with the provisions of the Paternity Leave Law which took effect in 1996. The HRD manager of
the assurance firm denied his application, on the ground that Weto had already used up his
entitlement under the law. Weto argued that he has a new wife who will be giving birth for the
first time, therefore, his entitlement to paternity leave benefits would begin to run anew. (6%)
(a) Whose contention is correct, Weto or the HRD manager?
ALTERNATIVE ANSWER:
The contention of Weto is correct. The law provides that every married male is entitled to a
paternity leave of seven (7) days for the first four (4) deliveries of the legitimate spouse with
whom he is cohabiting. Jovy is Weto's legitimate spouse with whom he is cohabiting. The fact
that Jovy is his second wife and that Weto had 4 children with his first wife is beside the point.
The important fact is that this is the first child of Jovy with Weto. The law did not distinguish and
we should therefore not distinguish.
The paternity leave was intended to enable the husband to effectively lend support to his wife in
her period of recovery and/or in the nursing of the newly born child. (Sec. 3, RA. No. 8187) To
deny Weto this benefit would be to defeat the rationale for the law. Moreover, the case of Weto is
a gray area and the doubt should be resolved in his favor. ALTERNATIVE ANSWER:
Weto's contention is correct. R.A. No. 8187 provides that paternity leave of (7) days with full pay
shall be granted to all married employees in the private and public sectors for the first four (4)
deliveries of the legitimate spouse with whom he is cohabiting. With the death of Weto's first
wife, the first (4) deliveries provided by law, shall apply to the new legitimate spouse of Weto
with whom he is cohabiting.
ALTERNATIVE ANSWER:
Since R.A. No. 8282 is silent on the matter, the doubt should be resolved in favor of the second
wife.
(b) Is Jovy entitled to maternity leave benefits?
Yes, Jovy's maternity benefit is personal to her and she is entitled under the law to avail herself of
the same for the first four times of her deliver. (R.A. No. 8282)
 PARENTAL LEAVE FOR SOLO PARENTS (R.A. No. 8972)
“Parental leave” is the leave benefit granted to a male or female solo parent to enable him/her to perform
parental duties and responsibilities where physical presence is required.
• How many days may be availed of as parental leave?
The parental leave shall not be more than seven (7) working days every year to a solo parent who has
rendered service of at least one (1) year, to enable him/her to perform parental duties and responsibilities
where his/ her physical presence is required. This leave shall be non-cumulative. It bears noting that this
leave privilege is an additional leave benefit which is separate and distinct from any other leave benefits
provided under existing laws or agreements.
CONDITIONS FOR ENTITLEMENT OF PARENTAL LEAVE
- Has rendered one year of service whether continuous or broken.

- Notified the employer of availment thereof within a reasonable time.
- Has presented a Solo Parent Identification Card to employer. (RA 8972)
• Who is a solo parent?
The term "solo parent" refers to 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;
- while the spouse is detained or is serving sentence for a criminal conviction for at least one (1)
year;
- physical and/or mental incapacity of spouse as certified by a public medical practitioner;
- 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;
- 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;
- abandonment of spouse for at least one (1) year;
(3) 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;
(4) Any other person who solely provides parental care and support to a child or children;
(5) 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.
• What is the effect of change of status of the 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.
• Who are considered children under this law?
"Children" refer to those living with and dependent upon the solo parent for support who are unmarried,
unemployed and not more than eighteen (18) years of age, or even over eighteen (18) years but are
incapable of self- support because of mental and/or physical defect/disability.
• Is an unavailed parental leave convertible to cash?
No. In the event that the parental leave is not availed of, said leave shall not be convertible to cash unless
specifically agreed upon previously.
 SPECIAL LEAVES FOR WOMEN WORKERS (MAGNA CARTA OF WOMEN)
A special leave benefit for women was granted under R.A. No. 9710, otherwise known as “The
Magna Carta of Women” [August 14, 2009]. Thus, any female employee in the public and private
sector regardless of age and civil status shall be entitled to a special leave of two (2) months with
full pay based on her gross monthly compensation subject to existing laws, rules and regulations
due to surgery caused by gynecological disorders under the following terms and conditions:
1. She has rendered at least six (6) months continuous aggregate employment service for the last
twelve (12) months prior to surgery;
2. In the event that an extended leave is necessary, the female employee may use her earned leave
credits; and
3. This special leave shall be non-cumulative and non-convertible to cash. (Unless otherwise
provided by a CBA.) page 269 Poquiz
“Gynecological disorders” refer to disorders that would require surgical procedures such as, but not
limited to, dilatation and curettage and those involving female reproductive organs such as the vagina,
cervix, uterus, fallopian tubes, ovaries, breast, adnexa and pelvic floor, as certified by a competent
physician. Gynecological surgeries shall also include hysterectomy, ovariectomy, and mastectomy.
• Is this leave similar to maternity leave?
No. This leave should be distinguished from maternity leave benefit, a separate and distinct benefit,
which may be availed of in case of childbirth, miscarriage or complete abortion. A woman, therefore,
may avail of this special leave benefit in case she undergoes surgery caused by gynecological disorder
and at the same time maternity benefit as these two leaves are not mutually exclusive.
She is entitled only to the difference between the special leave and the maternity leave benefits. ( Sec 9,
D.O. 112, Series of 2012-A, Series of 2012, IRR of RA 9710).
Pay shall be based on the prevailing salary rate at the time of surgery.
 LEAVE FOR VICTIMS OF VIOLENCE AGAINST WOMEN AND CHILDREN (R.A. No.
9262)
This special leave is granted to a woman employee who is a victim under this law. It is for a total of ten
(10) days of paid leave of absence, in addition to other paid leaves under the law. It is extendible when
the necessity arises as specified in the protection order. Its purpose is to enable the woman employee to
attend to the medical and legal concerns relative to said law. This leave is not convertible to cash. (Non
cumulative and non convertible)
• What is the requirement for its entitlement?
At any time during the application of any protection order, investigation, prosecution and/or trial of the
criminal case, a victim of Violence Against Women and their Children (VAWC) who is employed shall
be entitled to said paid leave of up to ten (10) days. The Punong Barangay/kagawad or prosecutor or the
Clerk of Court, as the case may be, shall issue a certification at no cost to the woman that such an action
is pending, and this is all that is required for the employer to comply with the 10-day paid leave.
SERVICE CHARGE (Art 96)
• What are the kinds of establishment covered by the law on service charge?
The rules on service charge apply only to establishments collecting service charges, such as hotels,
restaurants, lodging houses, night clubs, cocktail lounges, massage clinics, bars, casinos and gambling
houses, and similar enterprises, including those entities operating primarily as private subsidiaries of the
government.
• Who are the employees covered by this law?
The same rules on service charges apply to all employees of covered employers, regardless of their
positions, designations or employment status, and irrespective of the method by which their wages are
paid except those receiving more than P2,000.00 a month.
• Who are not covered?
Specifically excluded from coverage are employees who are receiving wages of more than P2,000.00 a
month. However, it must be pointed out that the P2,000.00 ceiling is no longer realistic considering the
applicable minimum wages prevailing in the country. Hence, it must be disregarded.
•How is the service charge distributed?
a. Percentage of sharing.
All service charges collected by covered employers are required to be distributed at the following
rates:
1. 85% to be distributed equally among the covered employees; and
2. 15% to management to answer for losses and breakages and distribution to employees
receiving more than P2,000.00 a month, at the discretion of the management.
b. Frequency of distribution.
The share of the employees referred to above should be distributed and paid to them not less often
than once every two (2) weeks or twice a month at intervals not exceeding sixteen (16) days.
• Can the service charge be integrated into the wages of covered employees?
Yes. In case the service charge is abolished, the share of covered employees should be considered
integrated in their wages, in accordance with Article 96 of the Labor Code. The basis of the
amount to be integrated is the average monthly share of each employee for the past twelve (12)
months immediately preceding the abolition or withdrawal of such charges.
 With company practice, company is obliged to incorporate service charges to wages. In

case, the company has no policy of collecting service charges, there is nothing to be
integrated into the wages of the employees upon it’s abolition.
• What are some principles on service charge?
 Tips and services charges are two different things. Tips are given by customers voluntarily to
waiters and other people who serve them out of recognition of satisfactory or excellent service.
There is no compulsion to give tips under the law. The same may not be said of service charges
which are considered integral part of the cost of the food, goods or services ordered by the
customers.
 Service charges are not in the nature of profit share and, therefore, cannot be deducted from
wage.
An employee was ordered reinstated with backwages. Is he entitled to the portion f service charges?
Explain briefly. (3%)
SUGGESTED ANSWER:
A. Yes. An employee who is ordered reinstated with backwages is entitled to the benefits and increases
granted during the period of his lay-off. The Supreme Court has ruled: "Backwages are granted for
earnings a worker lost due to his illegal dismissal and an employer is obliged to pay an illegally
dismissed employee the whole amount of salaries plus all other benefits and bonuses and general
increases to which the latter should have been normally entitled had he not been dismissed." [Sigma
Personnel Services v. NLRC, 224 SCRA 181 (1993)]
 Tips are handled similarly as service charges. If a restaurant or similar establishment does not
collect service charges but has a practice or policy of monitoring and pooling the tips given by
customers, the pooled tips should be accounted for and distributed in the same manner as the
service charges. In many restaurants a waiter must drop in a tip box the tips he received;
otherwise, he commits "tip pocketing," a serious offense of dishonesty that may cost him his
job.
COST OF LIVING ALLOWANCE
COLA is not in the nature of an allowance intended to reimburse expenses incurred by employees in the
performance of their official functions. It is not payment in consideration of the fulfillment of official
duty. As defined, “cost of living” refers to “the level of prices relating to a range of everyday items” or
“the cost of purchasing the goods and services which are included in an accepted standard level of
consumption.” Based on this premise, COLA is a benefit intended to cover increases in the cost of living.
• Can COLA be integrated into the minimum wage?

Yes. The cost-of-living allowance (COLA) may be ordered integrated into the minimum wage by the
Regional Tripartite Wages and Productivity Board (“RTWPB” or “Regional Board”). Under EO 178, the
integration of COLA to the minimum wage cannot be given a meaning that will eliminate or reduce
benefits already enjoyed by employees before it’s effectivity.
WAGES – cash wage and facilities
• What is meant by “basic salary” or “basic wage”?
“Basic salary” or “basic wage” contemplates work within the normal eight (8) working hours in a day.
This means that the basic salary of an employee for purposes of computing the 13th month pay should
include all remunerations or earnings paid by the employer for services rendered during normal working
hours. For purposes of computing the 13th month pay, “basic salary” should be interpreted to mean not
the amount actually received by an employee, but 1/12 of their standard monthly wage multiplied by their
length of service within a given calendar year.
WAGE VS. SALARY
The term “wage” is used to characterize the compensation paid for manual skilled or unskilled labor.
“Salary,” on the other hand, is used to describe the compensation for higher or superior level of
employment.
• What is the distinction in respect to execution, attachment or garnishment?
In cases of execution, attachment or garnishment of the compensation of an employee received from work
issued by the court to satisfy a judicially-determined obligation, a distinction should be made whether
such compensation is considered “wage” or “salary.” Under Article 1708 of the Civil Code, if considered
a “wage,” the employee’s compensation shall not be subject to execution or attachment or garnishment,
except for debts incurred for food, shelter, clothing and medical attendance. If deemed a “salary,” such
compensation is not exempt from execution or attachment or garnishment. Thus, the salary, commission
and other remuneration received by a managerial employee (as distinguished from an ordinary worker or
laborer) cannot be considered wages. Salary is understood to relate to a position or office, or the
compensation given for official or other service; while wage is the compensation for labor.
• What are the attributes of wage?
“Wage” has the following attributes: (PREF)
1) It is the remuneration or earnings, however designated, for work done or to be done or for services
rendered or to be rendered;
2) It is capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece
or commission basis, or other method of calculating the same;
3) It is payable by an employer to an employee under a written or unwritten contract of employment for
work done or to be done or for services rendered or to be rendered; and
4) It includes the fair and reasonable value, as determined by the DOLE Secretary, of board, lodging, or
other facilities customarily furnished by the employer to the employee. “Fair and reasonable value” shall
not include any profit to the employer or to any person affiliated with the employer.
• What is basic wage?
“Basic wage” means all the remuneration or earnings paid by an employer to a worker for services
rendered on normal working days and 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 regular salary of the workers.
Further, as held in Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa Honda, 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.
• What is minimum wage?
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.
• What is statutory minimum wage?
The term “statutory minimum wage” refers simply to the lowest basic wage rate fixed by law that an
employer can pay his workers.
• What is regional minimum wage rate?

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 (RTWPBs), and which
shall not be lower than the applicable statutory minimum wage rates.
• What are included/excluded in the term “wage rate”?
The term "wage rate" includes cost-of-living allowances as fixed by the RTWPB, but excludes other
wage-related benefits such as overtime pay, bonuses, night shift differential pay, holiday pay, premium
pay, 13th month pay, premium pay, leave benefits, among others.
• What is the “NO WORK, NO PAY” principle?
The “no work, no pay” or “fair day’s wage for fair day’s labor” means that if the worker does not work,
he is generally not entitled to any wage or pay. The exception is when it was the employer who unduly
prevented him from working despite his ableness, willingness and readiness to work; or in cases where he
is illegally locked out or illegally suspended or illegally dismissed, or otherwise illegally prevented from
working, in which event, he should be entitled to his wage.
 FACILITIES VERSUS SUPPLEMENTS
• What are facilities?
The term “facilities” includes articles or services for the benefit of the employee or his family but does
not include tools of the trade or articles or services primarily for the benefit of the employer or
necessary to the conduct of the employer’s business. They are items of expense necessary for the
laborer’s and his family’s existence and subsistence which form part of the wage and when
customarily furnished by the employer, are deductible therefrom, since if they are not so furnished, the
laborer would spend and pay for them just the same such as rice ration, housing, recreational
facilities, medical treatment to dependents, fuel, snacks. It must be voluntarily accepted in writing by
the employee.
•What are supplements?
The term “supplements” means extra remuneration or special privileges or benefits given to or
received by the laborers over and above their ordinary earnings or wages such as vacation leave pay,
overtime pay in excess of legal rate, profit sharing benefits, sick pension, death benefits, family
allowances, Christmas bonus, war risk or cost of living bonuses.
• What are the distinctions between facilities and supplements?
The benefit or privilege given to the employee which constitutes an extra remuneration over and above
his basic or ordinary earning or wage is supplement; and when said benefit or privilege is made part of
the laborer’s basic wage, it is a facility. The criterion is not so much with the kind of the benefit or item
(food, lodging, bonus or sick leave) given but its purpose. Thus, free meals supplied by the ship
operator to crew members, out of necessity, cannot be considered as facilities but supplements which
could not be reduced having been given not as part of wages but as a necessary matter in the
maintenance of the health and efficiency of the crew during the voyage.
• What is the rule on deductibility of facilities and supplements?
Facilities are deductible from wage but not supplements. Supplements are mainly for the advantage of
the employer, hence, not deductible. This is to ensure that employees are protected in circumstances
where the employer designates a benefit deductible from wages even though it clearly works to his
advantage or convenience.
 Subsidized meals and snacks as facilities shall not be more than 70% of it’s value. Cost of
operation and maintenance should not exceed 5 ½ % interest of the depreciated amount of capital.
(page 279 poquiz)
Wages; (2013) Employee‘sWage;

No. II. Gamma Company pays its regular employees P350.00 a day, and houses them in a dormitory
inside its factory compound in Manila. Gamma Company also provides them with three full meals a day.
In the course of a routine inspection, a Department of Labor and Employment (DOLE) Inspector noted
that the workers' pay is below the prescribed minimum wage of P426.00 plus P30.00 allowance, and thus
required Gamma Company to pay wage differentials. Gamma Company denies any liability, explaining
that after the market value of the company-provided board and lodging are added to the employees' P350
cash daily wage, the employees' effective daily rate would be way above the minimum pay required by
law. The company counsel further points out that the employees are aware that their food and lodging
form part of their salary, and have long accepted the arrangement. Is the company's position legally
correct? (8%)
 SUGGESTED ANSWER:
No, the following requisites were not complied with:
(A) Proof that such facilities are customarily furnished by the trade
(B) The provision of deductible facilities is voluntarily accepted by the employee
(C) The facilities are charged at the fair and reasonable value. Mere availment is not sufficient to
allow deduction from the employees‘ wages. (Mayon Hotel & restaurant v. Adarna, 458 SCRA 609
[2005]).
ALTERNATIVE ANSWER:
No, rule 78, Section 4 provides that there must be a written authorization.
Wages; (2010) Employee‘s Wage; Facilities
No. XXIII. A worked as a roomboy in La Mallorca Hotel. He sued for underpayment of wages before the
NLRC, alleging that he was paid below the minimum wage. The employer denied any underpayment,
arguing that based on long standing, unwritten policy, the Hotel provided food and lodging to its
housekeeping employees, the costs of which were partly shouldered by it and the balance was charged to
the employees. The employees’ corresponding share in the costs was thus deducted from their wages. The
employer concluded that such valid deduction naturally resulted in the payment of wages below the
prescribed minimum. If you were the Labor Arbiter, how would you rule? Explain. (3%)
SUGGESTED ANSWER:
I will rule in favor of A. Even if food and lodging were provided and considered as facilities by the
employer, the employer could not deduct such facilities from its workers‘ wages without compliance with
law (Mayon Hotel & Restaurant v. Adana, 458 SCRA 609 [2005]). In Mabeza v. NLRC (271 SCRA 670
[1997]), the Supreme Court held that the employer simply cannot deduct the value form the employee‘s
wages without satisfying the following: (a) proof that such facilities are customarily furnished by the
trade; b) the provision of deductible facilities is voluntarily accepted in writing by the employee; and (c)
the facilities are charged at fair and reasonable value.
Wages; Wages vs. Salary; Subject to Attachment (1994)

1) Distinguish "salary" from "wages."
2) Are these subject to attachment and execution?
SUGGESTED ANSWER:
1) The term "WAGES" applies to compensation for manual labor, skilled or unskilled, while salary
denotes a compensation for a higher degree of employment. (Gaa vs. Court of Appeals, 140 SCRA 304),
ALTERNATIVE ANSWER:
"WAGES" are those paid to any employee as his remuneration or earnings payable by an employer for
work done or to be done, or for services rendered or to be rendered. On the other hand, "SALARY" is
used in the law that provides for a 13th-month pay. In this law, basic salary includes all remuneration or
earnings paid by an employer to his employees for services rendered, but does not include allowances or
monetary benefits which are not considered or integrated as part of the regular or basic salary. (Art. 97(f),
Labor Code; Sec, 2(b), P.D. No. 851)
2) Under Article 1708 of the Civil Code, only "wages" are exempt from attachment or execution. Salaries
are not exempt from attachment or execution. (Gaa vs. Court of Appeals, 140 SCRA 304).
 BONUS is a right of gratuity which the recipient has no right to demand as a matter of
right.
Wages; Bonus; Nature (1995)

What is a bonus? When is it demandable as a matter of right? Explain.
SUGGESTED ANSWER:
A bonus is money given in addition to an employee's usual compensation. It may be given as a gratuity,
as an act of liberality. But a bonus is demandable as a matter of right if it is made a legal obligation by
law or in a collective bargaining agreement or in a contract of employment, given without condition,
hence, a part of wage or salary, or by account of companies policy or by its having been given for such a
long time such that the receipt of a bonus has ripened into a practice.
ALTERNATIVE ANSWER:
A bonus is an amount granted and paid to an employee for his industry and loyalty which contributed to
the employer's success and realization of profit.
(1) Grant of bonus is a prerogative, not an obligation of the employer: and
(2) It is entirely dependent on the employer's capacity to pay.
Normally discretionary, it becomes part of the regular compensation by reason of long and regular
concession or when the bonus is included as among the benefits granted in a CBA.
 Wages; Bonus (2002)

B. The projected bonus for the employees of Suerte Co. was 50% of their monthly
compensation. Unfortunately, due to the slump in the business, the president reduced the
bonus to 5% of their compensation. Can the company unilaterally reduce the amount of
bonus? Explain briefly. (2%)
SUGGESTEDANSWER:
Yes. The granting of a bonus is a management prerogative, something given in addition to what is
ordinarily received by or strictly due the recipient. An employer, like Suerte Co., cannot be forced to
distribute bonuses when it can no longer afford to pay. To hold otherwise would be to penalize the
employer for his past generosity. [Producers Bank of the Phil. v NLRC, 355 SCRA 489, (2001)]

It depends. If there is a legal obligation on the part of Suerte Co. to pay a bonus of its employees
equivalent to 50% of their monthly compensation, because said obligation is included in a collective
bargaining agreement, then Suerte Co. cannot reduce the bonus to 5% of their monthly compensation.
But if the payment of the bonus is not a legal obligation but only a voluntary act on the part of the
employer, said employer, unilaterally, can only reduce the bonus from 50% to 5% of the monthly
compensation of its employees; the employer can, in fact, not give any bonus at all.
NON-DIMINUTION OF BENEFITS
Albeit 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 the promulgation” of the Labor Code, the Supreme Court 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.
The 2014 case of Wesleyan University-Philippines v. Wesleyan University-Philippines Faculty and Staff
Association, succinctly pointed out that the Non-Diminution Rule found in Article 100 of the Labor Code
explicitly prohibits employers from eliminating or reducing the benefits received by their employees. This
rule, however, applies only if the benefit is based on any of the following:
(1) An express policy;

(2) A written contract; or
(3) A company practice.
There is not much controversy if the benefit involved is provided for under Nos. 1 and 2 above. Thus, if it
is expressly laid down in a written policy unilaterally promulgated by the employer, the employer is duty-
bound to adhere and comply by its own policy. It cannot be allowed to renege from its commitment as
expressed in the policy. If the benefit is granted under a written contract such as an employment contract
or a collective bargaining agreement (CBA), the employer is likewise under legal compulsion to so
comply therewith.
COMPANY PRACTICE
Company practice is a custom or habit shown by an employer’s repeated, habitual customary or

succession of acts of similar kind by reason of which, it gains the status of a company policy that can no
longer be disturbed or withdrawn. To ripen into a company practice that is demandable as a matter of
right, the giving of the benefit should not be by reason of a strict legal or contractual obligation but by
reason of an act of liberality on the part of the employer.
• What are the criteria that may be used to determine existence of company practice?
Since there is no hard and fast rule which may be used and applied in determining whether a certain act of
the employer may be considered as having ripened into a practice, 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.
(See the 2013 case of Vergara, Jr. v. Coca-Cola Bottlers Philippines, Inc.1)
1. THE ACT OF THE EMPLOYER HAS BEEN DONE FOR A CONSIDERABLE PERIOD OF
TIME.
If done only once as in the case of Philippine Appliance Corporation (Philacor) v. CA,2 where the CBA
signing bonus was granted only once during the 1997 CBA negotiation, the same cannot be considered as
having ripened into a company practice. In the following cases, the act of the employer was declared
company practice because of the considerable period of time it has been practiced:
(a) Davao Fruits Corporation v. Associated Labor Unions. - The act of the company of freely and
continuously including in the computation of the 13th month pay, items that were expressly excluded by
law has lasted for six (6) years, hence, was considered indicative of company practice.
(b) Sevilla Trading Company v. A. V. A. Semana.4 - The act of including non-basic benefits such as paid
leaves for unused sick leave and vacation leave in the computation of the employees’ 13th month pay for
at least two (2) years was considered a company practice.
(c) The 2010 case of Central Azucarera de Tarlac v. Central Azucarera de Tarlac Labor Union- NLU,5
also ruled as company practice the act of petitioner of granting for thirty (30) years, its workers the
mandatory 13th month pay computed in accordance with the following formula: Total Basic Annual
Salary divided by twelve (12) and Including in the computation of the Total Basic Annual Salary 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.
2. THE ACT SHOULD BE DONE CONSISTENTLY AND INTENTIONALLY.
The following cases may be cited to illustrate this principle:

(a) Tiangco v. Leogardo, Jr.,6 where the employer has consistently been granting fixed monthly
emergency allowance to the employees from November, 1976 but discontinued this practice effective
February, 1980 insofar as non-working days are concerned based on the principle of “no work, no pay.”
The Supreme Court ruled that the discontinuance of said benefit contravened Article 100 of the Labor
Code which prohibits the diminution of existing benefits.
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 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 cases would illuminate this principle:
(a) Globe Mackay Cable and Radio Corporation v. NLRC,7 where the Supreme Court ruled on the proper
computation of the cost-of-living allowance (COLA) for monthly-paid employees. Petitioner corporation,
pursuant to Wage Order No. 6 (effective October 30, 1984), increased 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 of P3.00 should
be multiplied by 30 days which has been the practice of the company for several years. The Supreme
Court, however, upheld the contention of the petitioner corporation. It held that the grant by the employer
of benefits through an erroneous application of the law due to absence of clear administrative guidelines
is not considered a voluntary act which cannot be unilaterally discontinued.
(b) TSPIC Corp. v. TSPIC Employees Union [FFW],1 where the Supreme Court reiterated the rule
enunciated in Globe-Mackay, that 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. Hence, 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.
Example:
(a) Hinatuan Mining Corporation and/or the Manager v. NLRC,2 where the act of the employer in
granting separation pay to resigning employees, despite the fact that the Labor Code does not grant it, was
considered an established employer practice.
Rights of the Employer; Management Prerogative; Benefits; Unilaterally Given (2005)
Little Hands Garment Company, an unorganized manufacturer of children's apparel with

around 1,000 workers, suffered losses for the first time in history when its US and European
customers shifted their huge orders to China and Bangladesh. The management informed its
employees that it could no longer afford to provide transportation shuttle services.
Consequently, it announced that a normal fare would be charged depending on the distance
traveled by the workers availing of the service. Was the Little Hands Garments Company
within its rights to withdraw this benefit which it had unilaterally been providing to its
employees? Select the best answer(s) and briefly explain your reason(s) therefor.
(a) Yes, because it can withdraw a benefit that is unilaterally given;

(b) Yes, because it is suffering losses for the first time;
(c) Yes, because this is a management prerogative which is not due any legal or contractual
obligation;
(d) No, because this amounts to a diminution of benefits which is prohibited by the Labor
Code;
(e) No, because it is a fringe benefit that has already ripened into a demandable right or
entitlement. (10%)
ALTERNATIVE ANSWER:
(b) Yes, because it is suffering losses for the first time;
(c) Yes, because this is a management prerogative which is not due any legal or contractual
obligation;
An employer cannot be forced to continue giving a benefit, being given as a management

prerogative, when it can no longer afford to pay for it. To hold otherwise, would be to
penalize the employer for his past generosity. (Producer's Bank of the Philippines v. NLRC,
G.R. No. 100701, March 28, 2001)
ALTERNATIVE ANSWER:
(d) No, because this amounts to a diminution of benefits which is prohibited by the Labor
Code;
(e) No, because it is a fringe benefit that has already ripened into a demandable right or
entitlement.
A company practice favorable to employees had indeed been established and the payments
made pursuant thereto, ripened into benefits enjoyed by them. And any benefit and
supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or
eliminated by the employer by virtue of Article 100 of the Labor Code of the Philippines
which prohibits the diminution or elimination of the employer of the employees' existing
benefits. (Sevilla Trading Co. v. Semana, G.R. No. 152456, April 28, 2004)
Wages; Bonus (2003)

XYZ Employees Association filed a complaint against ABC Bank for wrongful diminution of benefits. It
alleged that the bank had been providing for a mid-year bonus equivalents one- month basic pay and a
Christmas bonus equivalent to one-month basic pay since 1971. Upon the effectivity of Presidential
Decree (P.D.) No. 851 in 1975 which granted the 13th month pay, the bank started giving its employees a
one-month basic pay as mid-year bonus, one-month basic pay as Christmas bonus, and one-month basic
pay as 13th month pay. In 1980, the bank was placed under conservatorship and by virtue of a monetary
board resolution of the Central Bank, the bank only gave one month basic pay mandated by P.D. 851, and
it no longer gave its employees the traditional mid-year and Christmas bonuses. Could ABC Bank be
compelled, given the circumstances, to continue paying its employees the traditional mid- year and
Christmas bonuses in addition to the 13th month pay?
SUGGESTED ANSWER:
No. The grant of a bonus is a prerogative, not an obligation, of the employer. (Traders Royal Bank v.
NLRC. 189 SCRA 274 (1990). The matter of giving a bonus over and above that which is required by law
is entirely dependent on the financial capability of the employer to give it. (Businessday v. NLRC. 221
SCRA 9 (1993). Hence, given the circumstances, ABC Bank cannot be compelled to continue paying its
employees the traditional mid-year and Christmas bonuses in addition to the 13th month pay.
13TH MONTH PAY (PD 851)
Who are covered by the 13th month pay law?

Only rank-and-file employees, regardless of their designation or employment status and irrespective of
the method by which their wages are paid, are entitled to the 13th month pay benefit. Managerial
employees are not entitled to 13th month pay.
• What is the minimum period of service required in a calendar year to be entitled to 13th month pay?
To be entitled to the 13th month pay benefit, it is imposed as a minimum service requirement that the
employee should have worked for at least one (1) month during a calendar year.
• When should 13th month pay be paid?
It must be paid not later than December 24 of every year.
The following employees are not covered by the 13th 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 13th month pay or more in a calendar year or its equivalent
at the time of the issuance of the Revised Guidelines.
3. Employees 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 where 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.
Also, an employee who receives a regular commission in addition to his basic pay is entitled to 13 TH
month pay.
• Are domestic workers or Kasambahays covered?

Yes. They are now covered under the Kasambahay Law.
• Are extras, casuals and seasonal employees entitled to 13th month pay?
Yes, they are entitled thereto as rank-and-file employees, regardless of their designation or employment
status and irrespective of the method by which their wages are paid.
 Seafarers and managerial employees are not entitled to 13TH month pay.
•Is 13th month pay part of wage?
13th month pay which is in the nature of additional income, is based on wage but not part of wage.
• What is the minimum amount of the 13th month pay?
The minimum 13th month pay should not be less than one-twelfth (1/12) of the total basic salary earned
by an employee within a calendar year.
Wages; 13th month pay (1994)

Concepcion Textile Co. included the overtime pay, night-shift differential pay, and the like in the
computation of its employees' 13th-month pay. Subsequently, with the promulgation of the decision of
the Supreme Court in the case of San Miguel Corporation vs. Inciong (103 SCRA 139) holding that these
other monetary claims should not be included in the computation of the 13th- month pay, Concepcion
Textile Co. sought to recover under the principle of solutio indebiti its overpayment of its employees'
13th-month pay, by debiting against future 13th-month payments whatever excess amounts it had
previously made.
(1) Is the Company's action tenable?
(2) With respect to the payment of the 13th-month pay after the San Miguel Corporation, ruling, what
arrangement, if any, must the Company make in order to exclude from the 13th-month pay all earnings
and remunerations other than the basic pay.
SUGGESTED ANSWER:
1) The Company's action is not tenable. The principle of salutio indebiti which is a civil law concept is
not applicable in labor law. Thus, solutio indebiti is not applicable to the instant case, (Davao Fruits
Corporations vs. National Labor Relations Commission, et at. 225 SCRA 562)
ALTERNATIVE ANSWERS:
a) The Company's action would be tenable if payment was done by mistake, In which case recovery can
be done under the principle of solutio indebiti. But if there was no mistake, the Company's action would
be untenable because it would violate Article 100 of the Labor Code which prohibits elimination or
diminution of benefits.
b) No. The Company's action is not tenable. The grant by Concepcion Textile Co. of a better formula,
more favorable to the employee, constituted a valid offer by the company as the offerer and the
employees as the offeree. There having been a meeting of the minds of the parties, the rights and
obligations arising therefrom were valid. Thus, any amount received by virtue thereof could not be
recovered, much less taken away unilaterally. The principle does not apply to the case at bar.
SUGGESTED ANSWER:
2} After the 1981 San Miguel ruling, the High Court decided the case of Philippine Duplicators Inc. vs.
NLRC, on 11 November 1993, Accordingly, management may undertake to exclude sick leave, vacation
leave, maternity leave, premium pay for regular holiday, night differential pay and cost of living
allowance. Sales commissions, however, should be included based on the settled rule as earlier enunciated
in Songco vs. NLRC, 183 SCRA 610.
Wages; 13th month pay (1998)

What would be your advice to your client, a manufacturing company, who asks for your legal opinion on
whether or not the 13th Month Pay Law (Presidential Decree No. 851) covers a casual employee who is
paid a daily wage? (5%)
SUGGESTED ANSWER:
I will advise the manufacturing company to pay the casual employee 13th Month Pay if such casual
employee has worked for at least one (1) month during a calendar year. The law on the 13th Month Pay
provides that employees are entitled to the benefit of said law regardless of their designation or
employment status. The Supreme Court ruled in Jackson Building- Condominium Corporation v. NLRC,
246 SCRA 329, (1995) interpreting P.D. No. 851, as follows: xxx employees are entitled to the thirteenth-
month pay benefits regardless of their designation and irrespective of the method by which their wages
are paid.
Wages; Computation of Basic Salary (1997)
Robert Suarez is a salesman for Star Pharmaceuticals, Star Pharmaceuticals has applied with the
Department of Labor and Employment for clearance to terminate (by way of retrenchment) the services of
Suarez due to financial losses. Robert Suarez, aside from his monthly salary, receives commissions on the
sales he makes. He also receives allowances. The existing CBA between Star Pharmaceuticals and the
union, of which Robert Suarez is a member, states that any employee separated from employment for
causes not due to the fault of the employee shall receive from the company a retirement gratuity in an
amount equivalent to one month's salary per year of service. Robert Suarez contends that in computing his
separation pay, his sales commission and his allowances should be included in the monthly salary. Do
you agree?
SUGGESTED ANSWER:
I agree, with some conditions. In computing separation pay, the monthly salary should include
commissions because commissions received by a salesman is part of his salary. But for allowances to be
included as part of salary, they should be for services rendered or to be rendered, like a cost of living
allowance. But transportation and representation allowances are not considered as part of salary because
they are to meet expenses for transportation and representation. Thus, cost of living allowances, but not
transportation or representation allowances, shall be included as part of salary in the computation of
separation pay.
Note: Re: allowances as part of salary, in Santos vs. NLRC 154 SCRA 166, the Supreme Court said: "in
the computation of backwages and separation pay, account must be taken not only of basic salary but also
her transportation and emergency living allowances."
STATUTORY MINIMUM WAGE is the lowest wage rate fixed by law and is mandatory, thus, it
is non waivable and non negotiable.
 KASAMBAHAY in accordance with R.A. 10361
 WORKERS PAID BY RESULTS
According to Article 124 of the Labor Code:

“All workers paid by results, including those who are paid on piecework, takay, pakyaw or task
basis, shall receive not less than the prescribed wage rates per eight (8) hours of work a day, or a
proportion thereof for working less than eight (8) hours.”
 Who are workers paid by results?
They are workers who are engaged on pakyao, piecework, task and other non-time work. They
are so called because they are paid not on the basis of the time spent on their work but according
to the quantity, quality or kind of job and the consequent results thereof.
• What are the categories of workers paid by results?

a) Supervised workers; and
b) Unsupervised workers.
As the term clearly connotes, supervised workers are those whose manner of work is under the
control of the employer; while unsupervised workers are those whose work is controlled more in
the results than in the manner or method of performing it.
The law does not make any categorical differentiation among the workers paid by results. Thus,
the workers may be on pakyao (sometimes spelled “pakyaw”), takay or piece-rate or output basis.
All of them are similar in character in that they are all paid on the basis of the results of their
work. When the law does not distinguish, we should not distinguish.
 APPRENTICES AND LEARNERS (RA 9442)
The wage rate of a learner or an apprentice is set at seventy-five percent (75%) of the statutory
minimum wage.
 PERSONS WITH DISABILITY (RA 10524)
Under R.A. No. 7277, the wage rate of PWDs had been increased to and fixed at 100% of the
applicable minimum wage.
 Wage; Reduction of Minimum Pay & Wages (2006)

Can an employer and an employee enter into an agreement reducing or increasing the
minimum percentage provided for night differential pay, overtime pay, and premium pay?
(5%) SUGGESTED ANSWER:
Article 100 of the Labor Code prohibits the elimination and the diminution of benefits being
enjoyed by employees at the time the law was passed. The employer and employee cannot enter
into an agreement to reduce the minimum percentage provided by law for night differential
pay, overtime pay and premium pay as that would be against public policy. On the other hand,
an agreement increasing the percentage of benefits would be valid for being beneficial to the
employee. However, Art. 227 of the Labor Code authorizes diminution or reduction of benefits
in case of an impelling, reasonable justification arising out of an emergency, exigency or
business losses.
• What are the methods of fixing the minimum wage rates?

There are two (2) methods, to wit:
1. “Floor-Wage” method which involves the fixing of a determinate amount to be added to the
prevailing statutory minimum wage rates. This was applied in earlier wage orders; and
2. “Salary-Cap” or “Salary-Ceiling” method where the wage adjustment is to be applied to
employees receiving a certain denominated salary ceiling. In other words, workers already being
paid more than the existing minimum wage (up to a certain amount stated in the Wage Order) are
also to be given a wage increase.
The “Salary-Cap” or “Salary-Ceiling” method is the preferred mode.
The distinction between the two (2) methods is best shown by way of an illustration. Under the “Floor
Wage Method,” it would be sufficient if the Wage Order simply set P15.00 as the amount to be added to
the prevailing statutory minimum wage rates; while in the “Salary-Ceiling Method,” it would be sufficient
if the Wage Order states a specific salary, such as P250.00, and only those earning below it shall be
entitled to the wage increase.
PROHIBITIONS REGARDING WAGES (See Articles 112 to 119 of the

Labor Code)
(1) NON-INTERFERENCE BY EMPLOYER IN THE DISPOSAL BY EMPLOYEES OF THEIR

WAGES.
Article 112 of the Labor Code - No employer is allowed to limit or otherwise interfere with the
freedom of any employee to dispose of his wages and no employer shall in any manner oblige
any of his employees to patronize any store or avail of the services offered by any person.
(2) WAGES NOT SUBJECT TO EXECUTION OR ATTACHMENT; EXCEPTION.
The general rule is that laborer’s wages are not subject to execution or attachment. The
exception is when such execution or attachment is made for debts incurred for food,
shelter, clothing and medical attendance.
(3) PROHIBITION ON DEDUCTIONS FROM WAGES.
• May employer deduct from wage of employees?
The general rule is that an employer, by himself or through his representative, is PROHIBITED
from making any deductions from the wages of his employees. The employer is not allowed to
make unnecessary deductions without the knowledge or authorization of the employees.
• Are there EXCEPTIONS to this rule? Yes.
(a) In cases where the worker is insured with his consent by the employer, and the deduction is
to recompense the employer for the amount paid by him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his union to check-off has been
recognized by the employer or authorized in writing by the individual worker concerned; and
(c) In cases where the employer is authorized by law or regulations issued by the DOLE
Secretary.
(d) Deductions for loss or damage under Article 114 of the Labor Code;
(e) Deductions made for agency fees 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-bargaining union member concerned;
(f) Deductions for value of meal and other facilities;
(g) Deductions for premiums for SSS, PhilHealth, employees’ compensation and Pag-IBIG;
(h) Withholding tax mandated under the National Internal Revenue Code (NIRC);
(i) Withholding of wages because of the employee’s debt to the employer which is already due;
(j) Deductions made pursuant to a court 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;
(k) When deductions from wages are ordered by the court;
(4) PROHIBITION AGAINST DEPOSIT REQUIREMENT.
Article 114 of the Labor Code prohibits the employer to require that workers should make a
deposit from which deductions shall be made for the reimbursement of loss of tools, materials or
equipment supplied by him, or any damages thereto.
PERMISSIBLE DEDUCTIONS FOR LOSS OR DAMAGES.
If the employer is engaged in a trade, occupation or business where there is such practice of
making deductions or requiring deposits to answer for the reimbursement of loss of or damage
to tools, materials or equipment supplied by the employer to the employee.
(5) PROHIBITION ON WITHHOLDING OF WAGES.
Article 116 of the Labor Code prohibits any person, whether employer or not, directly or
indirectly, to withhold any amount from the wages of a worker. Under Article 1706 of the Civil
Code, withholding of the wages, except for a debt due, is not allowed to be made by the
employer. Moreover, under Article 1709 of the same Code, the employer is not allowed to seize
or retain any tool or other articles belonging to the laborer.
(6) KICKBACKS.
Article 116 of the Labor Code also prohibits “kickback” which consists in the act of any person,
whether employer or not, directly or indirectly, to induce a worker to give up any part of his
wages by force, stealth, intimidation, threat or by any other means whatsoever, without the
worker’s consent.
(7) PROHIBITION AGAINST DEDUCTION TO ENSURE EMPLOYMENT.
Article 117 of the Labor Code prohibits 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.
(8) RETALIATORY ACTIONS BY EMPLOYER.
Article 118 of the Labor Code prohibits the employer:

(a) to refuse to pay the wages and benefits of an employee; or
(b) to reduce his wages and benefits; or
(c) to discharge him from employment; or
(d) to discriminate against him in any manner;
on account and by reason of said employee’s:
(1) act of filing any complaint or institution of any proceeding under Title II [Wages], Book III of
the Labor Code; or
(2) act of testifying in said proceedings or when he is about to testify therein.
(9) FALSE STATEMENT, REPORT OR RECORD.
Article 119 of the Labor Code prohibits 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
provisions of the Labor Code, knowing such statement, report or record to be false in any
material respect.
Examples: Payrolls, time records, employment records and production records, among others.
Wages; Money Claims (1998)

An explosion in a mine site resulted in the death of fifty (50) miners. At the time of the accident
The Mining Company has not yet paid the wages, overtime, holiday and rest day compensation
of the deceased miners; the deceased miners owed the Miners Cooperative Union sums of
money;
The Mining Company was served by a sheriff Writs of Garnishment of Wages of some of the
deceased miners by virtue of final Judgments in several collection suits.
After the accident, the wives, paramours, brothers, sisters and parents of the deceased miners
filed their claims for unpaid wages, overtime, holiday and rest day compensation. The Company
has acknowledged its obligations. However, it is in a quandary as to how to adjudicate the
conflicting claims; and whether it can deduct from the monies due the miners their unpaid debts
with the credit union.
How will you advise the mining company on the following:
1) Can the Mining Company defer payment of
the money claims until an appropriate court
has ruled on the conflicting claims? [3%]
2) Can the Mining Company deduct from the amount due to each miner an amount equivalent to
their debt and remit the same to
the Credit Union?'(2%]
SUGGESTED ANSWER:
1. I will advise the Mining Company to pay to the respective heirs of the deceased miners
whatever were the unpaid wages, overtime, holiday and rest day compensation of said
deceased miners without the necessity of intestate proceedings. The claimants, if they are all of
age shall execute an affidavit attesting to their relationship to the deceased and the fact that
they are his heirs, to the exclusion of all other persons. If any of the heirs is a minor, the affidavit
shall be executed on his behalf by his natural guardian or next of kin. The affidavit shall be
presented to the employer who shall make payment through the Secretary of Labor or his
representative. The representative of the Secretary of Labor shall act as referee in dividing the
amount paid among the heirs. {See Art. 105 (b) of the Labor Code)
2. I will advise the Mining Company not to deduct from the amount due to each miner the
amount equivalent to his debt to the Credit Union. The debts of a deceased worker to the Credit
Union is not one of the allowable deductions under the Labor Code, or any rules and regulations
of the Department of Labor and Employment. (See Art. 113 of the Labor Code)
Yes, if pursuant to CBA provision or authorized by worker in writing; otherwise. No.
Wages; Money Claims; Attorney’s Fees; Damages (2001)
(a) Eduardo Santiago, a project worker, was being assigned by his employer, Bagsak Builders,
to Laoag, Ilocos Norte. Santiago refused to comply with the transfer claiming that it, in effect,
constituted a constructive dismissal because it would take him away from his family and his
usual work assignments in Metro Manila. The Labor Arbiter found that there was no constructive
dismissal but ordered the payment of separation pay due to strained relations between Santiago
and Bagsak Builders plus attorney's fees equivalent to ten percent (10%) of the value of
Santiago's separation pay.
Is the award of attorney's fees valid? State the reasons for your answer. (2%).
SUGGESTED ANSWER:
No, the award of attorney's fees is not valid. According to the Labor Code (Art. 111 (a)),
attorney's fees may be assessed in cases of unlawful withholding of wages which does not exist
in the case. The worker refused to comply with a lawful transfer order, and hence, a refusal to
work. Given this fact, there can be no basis for the payment of attorney's fees.
(b) Could the labor arbiter have validly awarded moral and exemplary damages to Santiago
instead of attorney's fees? Why? (3%).
SUGGESTED ANSWER;
No, moral and exemplary damages can be awarded only if the worker was illegally terminated in
an arbitrary or capricious manner. (Nueva Ecija Electric Cooperative Inc., Employees Assn., us.
NLRC, G.R. No. 116066, January 24, 2000; Cruz us. NLRC, G.R. No. 116384, February 7,
2000; Phil. Aeolus etc., vs. NLRC, G.R. No. 124617
WAGE ORDER
The term “Wage Order” refers to the order promulgated by the Regional Tripartite Wages and
Productivity Board (Regional Board) pursuant to its wage fixing authority.
• When is it proper to issue a Wage Order?
Whenever conditions in the region so warrant, the Regional Board shall investigate and study all
pertinent facts and based on the prescribed standards and criteria, shall proceed to determine
whether a Wage Order should be issued. Any such Wage Order shall take effect after fifteen
(15) days from its complete publication in at least one (1) newspaper of general circulation in
the region.
• What are the standards/criteria for minimum wage fixing?
In the determination of regional minimum wages, the Regional Board shall, among other
relevant factors, consider the following:
 Needs of workers and their families

1) Demand for living wages;
2) Wage adjustment vis-à-vis the consumer price index;
3) Cost of living and changes therein;
4) Needs of workers and their families;
5) Improvements in standards of living.
 Capacity to pay
1) Fair return on capital invested and capacity to pay of employers;
2) Productivity.
 Comparable wages and incomes

1) Prevailing wage levels.
 Requirements of economic and social development
1) Need to induce industries to invest in the countryside;
2) Effects on employment generation and family income;
3) Equitable distribution of income and wealth along the imperatives of economic and
social development.
WAGE DISTORTION
“Wage distortion” contemplates a situation where an increase in prescribed wage rates
results in either of the following:
1. Elimination of the quantitative differences in the rates of wages or salaries; or
2. 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 the following criteria:
a. Skills;
b. Length of service; or
c. Other logical bases of differentiation.
Wage distortion presupposes a classification of positions and ranking of these positions

at various levels. One visualizes a hierarchy of positions with corresponding ranks
basically in terms of wages and other emoluments. 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. xxx. The concept of wage distortion assumes an
existing grouping or classification of employees which establishes distinctions
among such employees on some relevant or legitimate basis. This classification
is reflected in a differing wage rate for each of the existing classes of employees.
• What are the elements of wage distortion?
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 this classification.
•What is the formula for rectifying or resolving wage distortion?
Following is the formula for the correction of wage distortion in the pay scale structures:
Minimum Wage = % x Prescribed Increase = Distortion Adjustment Actual Salary
The above formula was held to be just and equitable.
Wages; Wage Distortion (1997)

(a) Define Wage Distortion.
(b) May a wage distortion, alleged by the employees but rejected by the employer to be such,
be a valid ground for staging a strike? SUGGESTED ANSWER:
(a) A WAGE DISTORTION is that brought about 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 rates based on skills, length of service and
other logical bases of differentiation.
(b) No, the existence of wage distortion is not a valid ground for a strike because Art. 124 of the
Labor Code provides for a specific method of procedure for correcting wage distortion. Ilaw at
Buklod ng Manggagawa vs. NLRC, 198 SCRA 586, the Court said:-
It goes without saying that these joint or coordinated activities may be forbidden or restricted by
law or contract. For the particular instance of "distortions of the wage structure within an
establishment" resulting from the application of any prescribed wage increase by virtue of a law
or wage order. Section 3 of Republic Act No. 6727 prescribes a specific, detailed and
comprehensive procedure for the correction thereof, thereby implicitly excluding strikes or
lockouts or other concerted activities as modes of settlement of the issue.
ALTERNATIVE ANSWER:
(b) A wage distortion, alleged by the employees but rejected by the employer can be a valid
ground for staging a strike if it happens that in rejecting the allegation of wage distortion, the
employer refuses to consider the issue under the grievance procedure provided for in the
applicable CBA, and later on through Voluntary Arbitration. These acts of the employer could be
considered as a violation of its duty to bargain collectively which is unfair labor practice (ULP). A
ULP strike is legal.
Wage Distortion (2002)

A. How should a wage distortion be resolved (1) in case there is a collective bargaining
agreement and (2) in case there is none? Explain briefly. (3%) SUGGESTED ANSWER:
A. According to Art. 124 of the Labor Code, in case there is a collective bargaining agreement, a
dispute arising from wage distortions shall be resolved through the grievance machinery
provided in the CBA, and if remains unresolved, through voluntary arbitration. In case there is
no collective bargaining agreement, the employers and workers shall endeavor to correct such
distortions. Any dispute arising therefrom shall be settled through the National Conciliation and
Mediation Board and if it remains unresolved after ten (10) calendar days of conciliations, then
the dispute is referred to the appropriate branch of the National Labor Relations Commission.
Wage; Wage Distortion; Definition & Elements (2006)
When is there a wage distortion? ALTERNATIVE ANSWER:
A WAGE DISTORTION arises when an increase in prescribed wage rates results in the
elimination or severe contraction of intentional quantitative differences in wage or salary rates
between and among employee groups in an establishment as to effectively obliterate the
distinctions embodied in such wage structure based on skills, length of service, or other logical
bases of differentiation (Article 124, Labor Code of the Philippines). ALTERNATIVE ANSWER:
There is wage distortion when the following four elements concur:
a. An existing hierarchy of positions with
corresponding salary rates;
b. A significant change in the salary rate of a
lower pay class without a concomitant
increase in the salary rate of a higher one;
c. The elimination of the distinction between the
two levels; and
d. The existence of the distortion in the same
region of the country.
Wage; Wage Distortion; Means of Solving (2006)
How should a wage distortion be settled? SUGGESTED ANSWER:
In organized establishments, the wage distortion shall be resolved through the GRIEVANCE
PROCEDURE under their collective bargaining agreement, and if it remains unresolved,
through VOLUNTARY ARBITRATION. On the other hand, in establishments where there are no
collective bargaining agreements or recognized labor unions, the employers and workers shall
endeavor to correct such distortion. Any dispute arising therefrom shall be settled through the
National Conciliation and Mediation Board, and if it remains unresolved after ten (10) calendar
days of conciliation, shall be referred to the appropriate branch of the National Labor Relations
Commission for COMPULSORY ARBITRATION (Article 124, Labor Code of the Philippines).
Wage; Wage Distortion; Not a ground for Strike/Lockout (2006)
Can the issue of wage distortion be raised in a notice of strike? Explain. (10%)
SUGGESTED ANSWER:
NO. Section 16, Chapter I of Rules Implementing RA 6727 provides that "Any dispute involving
wage distortions shall not be a ground for strike/lockout." Article 124 of the Labor Code, as
amended by Republic Act 6727 prescribes a procedure for the correction of a wage distortion,
implicitly excluding strikes or lockouts or other concerted activities as modes of settlement of the
issue. The legislative intent that wage distortion shall be solved by voluntary negotiation or
arbitration is made clear in the rules (Ilaiv at Buklod ng Manggagawa v. NLRC, G.R. No. 91980,
June 27, 1991).
SPECIAL GROUPS OF EMPLOYEES
1. WOMEN
DISCRIMINATION
• What are acts of discrimination under the Labor Code?
(a) Payment of a lesser compensation, including wage, salary or other form of remuneration and
fringe benefits, to a female employee as against a male employee, for work of equal value; and
(b) Favoring a male employee over a female employee with respect to promotion, training
opportunities, study and scholarship grants solely on account of their sexes.
• What are acts of discrimination under the Magna Carta of Women?
R.A. No. 9710, otherwise known as “The Magna Carta of Women,” is a comprehensive
women’s human rights law that seeks to eliminate discrimination against women by recognizing,
protecting, fulfilling and promoting the rights of Filipino women, especially those in marginalized
sector. Based on the definition of the term “Discrimination Against Women” in R.A. No. 9710,
the following are considered discriminatory acts:
1. Any gender-based distinction, exclusion, or restriction which has the effect or purpose of
impairing or nullifying the recognition, enjoyment, or exercise by women, irrespective of their
marital status, on a basis of equality of men and women, of human rights and fundamental
freedoms in the political, economic, social, cultural, civil or any other field;
2. Any act or omission, including by law, policy, administrative measure, or practice, that directly
or indirectly excludes or restricts women in the recognition and promotion of their rights and
their access to and enjoyment of opportunities, benefits or privileges;
3. A measure or practice of general application that fails to provide for mechanisms to offset or
address sex or gender-based disadvantages or limitations of women, as a result of which
women are denied or restricted in the recognition and protection of their rights and in their
access to and enjoyment of opportunities, benefits, or privileges; or women, more than men, are
shown to have suffered the greater adverse effects of those measures or practices; and
4. Discrimination compounded by or intersecting with other grounds, status, or condition, such

as ethnicity, age, poverty or religion.
Additionally, women are guaranteed their right to decent work. The State shall progressively
realize and ensure decent work standards for women that involve the creation of jobs of
acceptable quality in conditions of freedom, equity, security and human dignity.
STIPULATION AGAINST MARRIAGE
• Is the prohibition against marriage valid?
No. Article 136 of the Labor Code considers as an unlawful act of the employer to require as a
condition for or continuation of employment that a woman employee shall not get married or to
stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed
resigned or separated. It is likewise an unlawful act of the employer, to actually dismiss,
discharge, discriminate or otherwise prejudice a woman employee merely by reason of her
marriage.
• What are the relevant pieces of jurisprudence on marriage?
1. Philippine Telegraph and Telephone Company (PT&T) v. NLRC.1 - It was declared

here that the company policy of not accepting or considering as disqualified from
work any woman worker who contracts marriage runs afoul of the test of, and the
right against, discrimination afforded all women workers by our labor laws and by no
less than the Constitution.
2. Star Paper Corp. v. Simbol. - The following policies were struck down as invalid
for violating the standard of reasonableness which is being followed in our
jurisdiction, otherwise called the “Reasonable Business Necessity Rule”:
“1. New applicants will not be allowed to be hired if in case he/she has [a] relative, up to
[the] 3rd degree of relationship, already employed by the company.
“2. In case of two of our employees (both singles [sic], one male and another female)
developed a friendly relationship during the course of their employment and then
decided to get married, one of them should resign to preserve the policy stated above.”
3. Duncan Association of Detailman-PTGWO v. Glaxo Welcome Philippines, Inc.- In this
case, the prohibition against marriage embodied in the following stipulation in the
employment contract was held as valid:
“You agree to disclose to management any existing or future relationship you may have,
either by consanguinity or affinity with co-employees or employees of competing drug
companies. Should it pose a possible conflict of interest in management discretion, you
agree to resign voluntarily from the Company as a matter of Company policy.” The
Supreme Court ruled that the dismissal based on this stipulation in the employment
contract is a valid exercise of management prerogative. The prohibition against personal
or marital relationships with employees of competitor companies upon its employees
was held reasonable under the circumstances because relationships of that nature might
compromise the interests of the company. In laying down the assailed company policy,
the employer only aims to protect its interests against the possibility that a competitor
company will gain access to its secrets and procedures.
PROHIBITED ACTS
• What are the prohibited acts against women under the Labor Code?
Article 137 of the Labor Code and its implementing rule consider unlawful the followings
acts of the employer:
1. To discharge any woman employed by him for the purpose of preventing such woman
from enjoying maternity leave, facilities and other benefits provided under the Labor
Code;
2. To discharge such woman on account of her pregnancy, or while on leave or in
confinement due to her pregnancy;
3. To discharge or refuse the admission of such woman upon returning to her work for
fear that she may again be pregnant;
4. To discharge any woman or any other employee for having filed a complaint or having
testified or being about to testify under the Labor Code; or
5. To require as a condition for or continuation of employment that a woman employee
shall not get married or to stipulate expressly or tacitly that upon getting married, a
woman employee shall be deemed resigned or separated, or to actually dismiss,
discharge, discriminate or otherwise prejudice a woman employee merely by reason of
marriage.
SEXUAL HARASSMENT (ANTI-SEXUAL HARASSMENT ACT) (R.A. No. 7877)
• What are the 3 situations contemplated under this law?
R.A. No. 7877 declares sexual harassment unlawful only in three (3) situations, namely:
(1) employment;
(2) education; and
(3) training environment.
• Can sexual harassment be committed also against a man?
Yes. Sexual harassment is not the sole domain of women as men may also be subjected
to the same despicable act. Said law does not limit the victim of sexual harassment to
women.
• Who may be held liable for sexual harassment?
Work, education or training-related sexual harassment is committed by any employer,

employee, manager, supervisor, agent of the employer, teacher, instructor, professor, coach,
trainor, or any other person who, having authority, influence or moral ascendancy over another
in a work or training or education environment, demands, requests or otherwise requires any
sexual favor from another, regardless of whether the demand, request or requirement for
submission is accepted by the object of said act.
Further, any person who directs or induces another to commit any act of sexual harassment as
defined in the law, or who cooperates in the commission thereof by another without which it
would not have been committed, shall also be held liable under the law.
•How is sexual harassment committed in a work-related or employment environment?
In a work-related or employment environment, sexual harassment is committed when:

1. The sexual favor is made a condition in the hiring or in the employment, re-employment or
continued employment of said individual or in granting said individual favorable compensation,
terms, conditions, promotions, or privileges; or the refusal to grant the sexual favor results in
limiting, segregating or classifying the employee which in any way would discriminate, deprive
or diminish employment opportunities or otherwise adversely affect said employee;
2. The above acts would impair the employee’s rights or privileges under existing labor laws;
or
3. The above acts would result in an intimidating, hostile, or offensive environment for the
employee.
• What are duties of the employer in regard to sexual harassment complaints?
It is the duty of the employer to prevent or deter the commission of acts of sexual harassment
and to provide the procedures for the resolution or prosecution of acts of sexual harassment.
The employer or head of office is required to:
1. promulgate appropriate rules and regulations, in consultation with and jointly approved by
the employees or students or trainees, through their duly designated representatives,
prescribing the procedure for the investigation of sexual harassment cases and the
administrative sanctions therefor. The said rules and regulations issued shall include, among
others, guidelines on proper decorum in the workplace and educational or training institutions.
2. create a committee on decorum and investigation of cases on sexual harassment. The
committee shall conduct meetings, as the case may be, with officers and employees, teachers,
instructors, professors, coaches, trainors and students or trainees to increase understanding
and prevent incidents of sexual harassment. It shall also conduct the investigation of alleged
cases constituting sexual harassment.
MINORS (Labor Code and R.A. No. 7678, R.A. No. 9231)
• Who is a “child” or “working child”?

For legal purposes, the term “child” refers to any person less than eighteen (18) years of age. A
“working child” refers to any child engaged as follows:
i. when the child is below eighteen (18) years of age, in work or economic activity that is not
“child labor;” and
ii.when the child below fifteen (15) years of age:
(a) in work where he/she is directly under the responsibility of his/her parents or legal guardian
and where only members of the child’s family are employed; or
(b) in “public entertainment or information” which refers to artistic, literary, and cultural
performances for television show, radio program, cinema or film, theater, commercial
advertisement, public relations activities or campaigns, print materials, internet, and other
media.
• What are the working hours of a child?
The term “hours of work” includes:
(1) all time during which a child is required to be at a prescribed workplace, and
(2) all time during which a child is suffered or permitted to work. Rest periods of short duration
during working hours shall be counted as hours worked.
The following hours of work shall be observed for any child allowed to work under R.A. No. 9231
and its Implementing Rules:
(a) For a child below 15 years of age, the hours of work shall not be more than twenty (20)
hours per week, provided that the work shall not be more than four (4) hours at any given
day;
(b) For a child 15 years of age but below 18, the hours of work shall not be more than
eight (8) hours a day, and in no case beyond forty (40) hours a week; and
(c) No child below 15 years of age shall be allowed to work between eight (8) o’clock in the
evening and six (6) o’clock in the morning of the following day and no child 15 years of age
but below 18 shall be allowed to work between ten (10) o’clock in the evening and six (6)
o’clock in the morning of the following day.
• What is the prohibition of employing minors in certain undertakings and advertisements?
No child below 18 years of age is allowed to be employed as a model in any advertisement

directly or indirectly promoting alcoholic beverages, intoxicating drinks, tobacco and its
by-products, gambling or any form of violence or pornography.
KASAMBAHAY FORMERLY CALLED “HOUSEHELPERS”

(R.A. No. 10361, otherwise known as “Domestic Workers Act” or
“Batas Kasambahay” Approved on January 18, 2013)
• What is the coverage of the Kasambahay Law?
R.A. No. 10361 applies to all domestic workers employed and working within the country.
It shall cover all parties to an employment contract for the services of the following
Kasambahay, whether on a live-in or live-out arrangement, such as, but not limited to:
(a) General househelp; (b) Yaya;

(c) Cook;
(d) Gardener;
(e) Laundry person; or
(f) Any person who regularly performs domestic work in one household on an occupational
basis.

The following are not covered:
(a) Service providers;
(b) Family drivers;
(c) Children under foster family arrangement; and
(d) Any other person who performs work occasionally or sporadically and not on an
occupational basis.
• Who is a domestic worker or kasambahay?

“Domestic worker” or “kasambahay” refers to any person engaged in domestic work within an
employment relationship, whether on a live-in or live-out arrangement, such as, but not limited
to, general househelp, "yaya", cook, gardener, or laundry person, but shall exclude service
providers, family drivers, children who are under foster family arrangement, or any person who
performs domestic work only occasionally or sporadically and not on an occupational basis.
This term shall not include children who are under foster family arrangement which refers to
children who are living with a family or household of relative/s and are provided access to
education and given an allowance incidental to education, I.e., "baon", transportation, school
projects, and school activities. Because of these new terminologies prescribed in the law, the
use of the term “househelper” may no longer be legally correct.
• Is the employment contract required to be in writing?
Yes. The employment contract must be in writing and should contain the conditions set by law.
• What are the rights and privileges of a kasambahay?
The rights and privileges of the Kasambahay are as follows:
(a) Minimum wage;

(b) Other mandatory benefits, such as the daily and weekly rest periods, service incentive leave,
and 13th month pay;
(c) Freedom from employers' interference in the disposal of wages;
(d) Coverage under the SSS, PhilHealth and Pag-IBIG laws;
(e) Standard of treatment;
(f) Board, lodging and medical attendance;
(g) Right to privacy;
(h) Access to outside communication;
(i) Access to education and training;
(j) Right to form, join, or assist labor organization;
(k) Right to be provided a copy of the employment contract;
(I) Right to certificate of employment;
(m) Right to terminate the employment; and
(n) Right to exercise their own religious beliefs and cultural practices.
• What is the minimum wage of kasambahay?
Under the Kasambahay Law, the following are the minimum wages of kasambahays:
(a) P2,500.00 a month for those employed in the National Capital Region (NCR);
(b) P2,000.00 a month for those employed in chartered cities and first class municipalities; and
(c) P1,500.00 a month for those employed in other municipalities.
• Are the minimum wages subject to review by the RTWPBs or Regional Boards?
Yes. After one (1) year from the effectivity of the Kasambahay Law, and periodically thereafter,
the Regional Tripartite and Productivity Wage Boards (RTPWBs) shall review, and if proper,
determine and adjust the minimum wage rates of domestic workers.”
• What are some important principles on wage of kasambahay?
• Frequency of payment of wages. - The wages of the Kasambahay shall be paid at least
once a month. This is so because the minimum wage rates are on a monthly basis.
• The equivalent minimum daily wage rate of the Kasambahay shall be determined by
dividing the applicable minimum monthly rate by thirty (30) days.
• The amount of the minimum wage depends on the geographical area where the
Kasambahay works.
• Payment of wages:
1. To whom paid. - It should be made on time directly to the Kasambahay to whom they are due
in cash at least once a month.
2. Deductions, prohibition; when allowed. - The employer, unless allowed by the Kasambahay
through a written consent, shall make no deductions from the wages other than that which is
mandated by law such as for SSS, PhilHealth or Pag-IBIG contributions.
3. Mode of payment. - It should be paid in cash and not by means of promissory notes,
vouchers, coupons, tokens, tickets, chits, or any object other than the cash wage as
provided for under this Act.
4. Pay slip. – The employer shall at all times provide the Kasambahay with a copy of the pay
slip containing the amount paid in cash every pay day, and indicating all deductions
made, if any. The copies of the pay slip shall be kept by the employer for a period of
three (3) years.
5. Prohibition on Interference in the disposal of wages. – It shall be unlawful for the employer to
interfere with the freedom of the Kasambahay in the disposition of his/her wages, such as:
(a) Forcing, compelling, or obliging the Kasambahay to purchase merchandise, commodities or
other properties from the employer or from any other person; or
(b) Making use of any store or services of such employer or any other person.
6. Prohibition against withholding of wages. – It shall be unlawful for an employer, directly or
indirectly, to withhold the wages of the Kasambahay. If the Kasambahay leaves without any
justifiable reason, any unpaid salary for a period not exceeding fifteen (15) days shall be
forfeited. Likewise, the employer shall not induce the Kasambahay to give up any part of the
wages by force, stealth, intimidation, threat or by any other means whatsoever.
• What are important terms and conditions of employment of kasambahay?
The following is a rundown of the basic terms and conditions that should be observed in the
employment of
a Kasambahay:
a. Employable age. - Children whose age is below 15 years are absolutely prohibited to work as
Kasambahay.
b. Normaldailyhoursofwork.–BecauseR.A.No.10361doesnotcontainanyprovisiononthenumber of
normal hours of work that a Kasambahay should render in a day but merely prescribes said
daily rest period of eight (8) hours per day, it may be concluded that the Kasambahay should
work for at least a total of sixteen (16) hours per day as normal hours of work. However, it must
be noted that the Labor Code does not contain any provision on the normal hours of work of
househelpers. Article 1695 of the Civil Code, however, specifically provides that househelpers
shall not be required to work for more than ten (10) hours a day. Since R.A. No. 10361, a
special law, is the most recent piece of legislation, it should prevail over the general provision of
the Civil Code.
c. Normal daily hours of work for working child-kasambahay is eight (8) hours per day.
d. 13th month pay. - The Kasambahay who has rendered at least one (1) month of service is
entitled to a
13th month pay which shall not be less than one-twelfth (1/12) of his/her total basic salary
earned in a calendar year.
separation from employment.
The 13th month pay shall be paid not later than December 24 of every year or upon e. Daily rest
period. – The Kasambahay shall be entitled to an aggregate daily rest period of eight (8)
hours.
f. Weekly rest period. - The Kasambahay shall be entitled to at least twenty-four (24)
consecutive hours of rest in a week. The employer and the Kasambahay shall agree in writing
on the schedule of the weekly rest day but the preference of the Kasambahay, when based on
religious grounds, shall be respected.
g. Service incentive leave. - A Kasambahay who has rendered at least one (1) year of service
shall be entitled to an annual service incentive leave of at least five (5) days with pay. Any
unused portion of said annual leave shall not be cumulative or carried over to the succeeding
years. Unused leaves shall not be convertible to cash.
h. Social security benefits. - A Kasambahay who has rendered at least one (1) month of service
shall be covered by the Social Security System (SSS), Employees Compensation Commission
(ECC), Philippine Health Insurance Corporation (PhilHealth), and Home Development Mutual
Fund or Pag-IBIG, and shall be entitled to all the benefits in accordance with their respective
policies, laws, rules and regulations.
i. Obligation of employer to register and enroll with SSS, PhilHealth, and Pag-IBIG. - As
employer of the Kasambahay, he/she shall register himself/herself with, and enroll the latter as
his/her employee to the SSS, PhilHealth, and Pag-IBIG.
j. Deposits for loss or damage. - It shall be unlawful for the employer or any other person to
require a Kasambahay to make deposits from which deductions shall be made for the
reimbursement of loss or damage to tools, materials, furniture and equipment in the household.
k. Standard of treatment. - The Kasambahay shall be treated with respect by the employer or
any member of the household. He/she shall not be subjected to any kind of abuse, including
repeated verbal or psychological, nor be inflicted with any form of physical violence or
harassment or any act tending to degrade his/her dignity, as defined under the Revised Penal
Code, Violence Against Women and their Children Law (R.A. No. 9262), Special Protection of
Children Against Child Abuse, Exploitation and Discrimination Act (R.A. No. 7610) as amended
by R.A. No. 9231, Anti-Trafficking in Persons Act of 2003 (R.A. No. 9208), and other applicable
laws.
l. Board, lodging and medical attendance. - The employer shall provide for the basic necessities
of the Kasambahay, to include the following:
(1) At least three (3) adequate meals a day, taking into consideration the Kasambahay's
religious beliefs and cultural practices;
(2) Humane sleeping condition that respects the person's privacy for live-in arrangement; and
(3) Appropriate rest and medical assistance in the form of first-aid medicines, in case of
illnesses and
injuries sustained during service without loss of benefits.
m. Opportunities for education and training. - The Kasambahay shall be afforded the opportunity
to finish basic education, which shall consist of elementary and secondary education. He/she
may be allowed access to alternative learning systems and, as far as practicable, higher
education or technical vocational education and training.
n. Membership in labor organization. - The Kasambahay shall have the right to join a labor
organization of his/her own choosing for purposes of mutual aid and collective negotiation.
r. Health and safety. - The employer shall safeguard the safety and health of the Kasambahay in
accordance with the standards which the DOLE shall develop through the Bureau of Working
Conditions (BWC) and the Occupational Safety and Health Center (OSHC) within six (6) months
from the promulgation of this IRR. The said standards shall take into account the peculiar nature
of domestic work.
s. Prohibition on debt bondage. - It shall be unlawful for the employer or any person acting on
his/her behalf to place the Kasambahay under debt bondage. “Debt bondage” refers to the
rendering of service by the Kasambahay as security or payment for a debt where the length and
nature of service is not clearly defined or when the value of the service is not reasonably applied
in the payment of the debt.
t. Assignment to non-household work. - The employer shall not assign the Kasambahay to work,
whether in full or part-time, in a commercial, industrial or agricultural enterprise at a wage rate
lower than that provided for agricultural or non-agricultural workers.
If so assigned, the Kasambahay will no longer be treated as such but as a regular employee of
the establishment.
• What are the rules on termination of Kasambahay?
a. Pre-termination of employment. – The following rules shall be observed:
(1) In case the duration of employment is specified in the contract, the Kasambahay and the
employer may mutually agree upon notice to terminate the contract of employment before the
expiration of its term.
(2) In case the duration is not determined by stipulation or by nature of service, the employer or
the Kasambahay may give notice to end the employment relationship five (5) days before the
intended termination of employment.
b. Termination of employment initiated by the Kasambahay. - The Kasambahay may

terminate the employment relationship at any time before the expiration of the contract for any
of the following causes:
(1) Verbal or emotional abuse of the Kasambahay by the employer or any member of the
household;
(2) Inhuman treatment including physical abuse of the Kasambahay by the employer or any
member of the household;
(3) Commission of a crime or offense against the Kasambahay by the employer or any member
of the household;
(4) Violation by the employer of the terms and conditions of the employment contract and other
standards set forth in the law;
(5) Any disease prejudicial to the health of the Kasambahay, the employer, or members of the
household; and
(6) Other causes analogous to the foregoing.
If the Kasambahay leaves without cause, any unpaid salary due, not exceeding the equivalent
of 15 days’ work, shall be forfeited. In addition, the employer may recover from the
Kasambahay deployment expenses, if any, if the services have been terminated within
six (6) months from employment.
c. Termination of employment initiated by the employer. - An employer may terminate the

employment of the Kasambahay at any time before the expiration of the contract for any of the
following causes:
(1) Misconduct or willful disobedience by the Kasambahay of the lawful order of the employer in
connection with the former's work;
(2) Gross or habitual neglect or inefficiency by the Kasambahay in the performance of duties;
(3) Fraud or willful breach of the trust reposed by the employer on the Kasambahay;
(4) Commission of a crime or offense by the Kasambahay against the person of the employer or
any immediate member of the employer's family;
(5)Violation by the Kasambahay of the terms and conditions of the employment contract and
other standards set forth under the law;
(6) Any disease prejudicial to the health of the Kasambahay, the employer, or members of the
household; and
(7) Other causes analogous to the foregoing.
If the employer dismissed the Kasambahay for reasons other than the above, he/she
shall pay the Kasambahay the earned compensation plus indemnity in the amount
equivalent to fifteen (15) days’ work.
d. Invalid ground for termination. - Pregnancy and marriage of the Kasambahay are not valid
grounds for termination of employment.
e. Employment Certification. - Upon the termination of employment, the employer shall issue
the Kasambahay, within five (5) days from request, a certificate of employment indicating the
nature, duration of the service and work description.
HOMEWORKERS
• What are important terms that should be noted in employment of homeworkers?
a. “Industrial homeworker.” – It refers to a worker who is engaged in industrial homework.
b. “Industrial homework.” – It refers to a system of production under which work for an
employer or contractor is carried out by a homeworker at his/her home. Materials may or may
not be furnished by the employer or contractor. It differs from regular factory production
principally in that, it is a decentralized form of production where there is ordinarily very little
supervision or regulation of methods of work.
c. “Home.” - It means any nook, house, apartment or other premises used regularly, in whole
or in part, as a dwelling place, except those situated within the premises or compound of an
employer, contractor/subcontractor and the work performed therein is under the active or
personal supervision by or for the latter.
d. “Field personnel.” – It refers to a non-agricultural employee who regularly performs his
duties away from the principal place of business or branch office of the employer and whose
actual hours of work in the field cannot be determined with reasonable certainty.
e. “Employer.” – It refers to any natural or artificial person who, for his own account or benefit,
or on behalf of any person residing outside the Philippines, directly or indirectly, or through any
employee, agent, contractor, subcontractor or any other person:
1. delivers or causes to be delivered any goods, articles or materials to be processed or

fabricated in or about a home and thereafter to be returned or to be disposed of or distributed in
accordance with his direction; or
2. sells any goods, articles or materials for the purpose of having such goods or articles
processed in or about a home and then repurchases them himself or through another after such
processing.
f. “Contractor” or “subcontractor.” - It refers to any person who, for the account or benefit of
an employer, delivers or causes to be delivered to a homeworker, goods or articles to be
processed in or about his home and thereafter to be returned, disposed of or distributed in
accordance with the direction of the employer.
g. “Processing.” - It refers to manufacturing, fabricating, finishing, repairing, altering, packing,
wrapping or handling in any way connected with the production or preparation of an article or
material.
•How is homework paid?
Immediately upon receipt of the finished goods or articles, the employer is required to pay the
homeworker or the contractor or subcontractor, as the case may be, for the work performed less
the corresponding homeworker’s share of SSS, PhilHealth and ECC premium contributions
which should be remitted by the contractor or subcontractor or employer to the SSS with the
employer’s share. However, where payment is made to a contractor or subcontractor, the
homeworker should likewise be paid immediately after the goods or articles have been collected
from the workers.
•What are prohibited homeworks?

No homework shall be performed on the following:
1. Explosives, fireworks and articles of like character;
2. Drugs and poisons; and
3. Other articles, the processing of which requires exposure to toxic substances.
JOB CONTRACTING
▪ What is the latest Implementing Rules on contractualization issued by the DOLE Secretary?
Department Order No. 174, Series of 2017 (issued on March 16, 2017) – Rules Implementing
Articles 106 to 109 of the Labor Code, as Amended. Shortly after its issuance, Department Circular No.
01, Series of 2017 (Issued on June 09, 2017) was issued by the DOLE Secretary to clarify the
inapplicability of Department Order No. 174, Series of 2017 to BPO, KPO, LPO, IT Infrastructure
Outsourcing, Application Development, Hardware and/ or Software Support, Medical Transcription,
Animation Services, Back Office Operations/Support, and CONSTRUCTION INDUSTRY.
 TRILATERAL RELATIONSHIP IN JOB CONTRACTING

As distinguished from employment relationship which is “bilateral” in nature, involving as it does only two
(2) parties, namely: (1) the employer, and (2) the employee, in legitimate job contracting, it is “trilateral”
in character, there being three (3) parties involved, to wit:
1. The principal who farms out a job, work or service to a contractor;
2. The contractor who has the capacity to independently undertake the performance of the job,
work or service; and
3. The contractor’s workers engaged by the contractor and farmed out to the principal to
accomplish the job, work or service.
▪ What are the contracts involved in this trilateral relationship?
Only two (2) contracts are involved, namely:

1) Service Agreement between the principal and the contractor wherein the obligation arising therefrom
is civil in nature and thus cognizable by the regular courts.
2) Employment contract between the contractor and its workers supplied to the principal.
▪ Is there any employment relationship and/or contractual relationship between the principal and the
contractor’s workers farmed out to the principal?
None. There is no employment relationship nor any form of contractual relationship of whatsoever nature
between the principal and the workers supplied by the contractor. Hence, the principal can ask the
contractor to remove any of the latter’s employees assigned or farmed out to it anytime without need to
observe due process.
EFFECTS OF LABOR-ONLY CONTRACTING
LEGITIMATE JOB CONTRACTING.

▪ What are the elements of legitimate job contracting?
The following four (4) words are very important: CONTROL, MANNER & METHOD and
RESULT in determining the elements of legitimate job contracting arrangement. Here are the elements
based on law, Department Order No. 174 and jurisprudence: (DISC FREE)
(a) The contractor is engaged in a distinct and independent business and undertakes to perform the
job or work on its own responsibility, according to its own manner and method;
(b) The contractor has substantial capital to carry out the job farmed out by the principal on his own
account, manner and method, investment in the form of tools, equipment, machinery and
supervision;
(c) In performing the work farmed out, the contractor is free from the control and/or direction of the
principal in all matters connected with the performance of the work EXCEPT as to the result thereto; and
(d) The Service Agreement ensures compliance with all the rights and benefits for all the employees
of the contractor under labor laws.
Absence of any of the foregoing requisites makes it a labor-only contracting arrangement. Therefore:
➢ If the first party has control over the manner and method of performing the job or work, including its
result, and the second party who supplied the workers to the first party to perform the job or work has no
such control over such manner and method, then the first party is the direct employer of the workers
supplied by the second party to perform the job or work and such second party shall not be considered as
a legitimate “contractor” but a “labor-only contractor.”
➢ Contrarily, if the first party has NO control over the manner and method of performing the job or work
as such control thereover is reposed on the second party, and the first party’s interest pertains only to the
result of the performance of the job or work, then there exists here a legitimate job contracting
arrangement where the first party is considered the principal and the second party, the contractor.
Example:
Principal – ABC University
Contractor – XYZ Security Agency
Contractor’s Employees – Security Guards assigned by Contractor to Principal
Scenario 1: If it is ABC University that controls the manner and method of performing the job or work of
XYZ Security Agency’s security guards (such as when it is ABC University, that (1) sets the schedule of
the Security Guards; (2) makes the assignments to their respective posts; (3) monitors their
attendance/absences; (3) supervises their every action and performance of their duties, and the like),
then, ABC University is the direct employer of the guards and the XYZ Security Agency is but a labor-
only contractor.
Scenario 2: If it is XYZ Security Agency which controls such manner and method of performing the job or
work of the Security Guards it assigned to ABC University, and ABC University is interested only on the
result of the arrangement (such as the safety of the students, teachers and employees, safeguard of
school property and premises, peace and tranquility inside its campus, etc.), then, there is here legitimate
job contracting arrangement where ABC University is the principal, XYZ Security Agency is the contractor,
and the Security Guards, the contractor’s employees.
• What is the amount of SUBSTANTIAL CAPITAL required under the new Rules?
According to Department Order No. 174, Series of 2017 (issued on March 16, 2017), the following
consists of substantial capital:
1. In the case of corporations, partnerships or cooperatives–paid-up capital stocks / shares of at least
P5 Million; or
2. In the case of single proprietorship - a net worth of at least P5 Million.
“Substantial capital” and “investment in tools, etc.” are two separate requirements.
“Substantial capital” and “investment in tools, equipment, implements, machineries and work premises”
should be treated as two (2) distinct and separate requirements in determining whether there is legitimate
job contracting arrangement. It is enough that only one of these two requisites is complied with to
make the job contracting arrangement legitimate.
• May individuals engage in legitimate job contracting?
Yes. Legitimate job contracting may not only be engaged by corporation, partnership or single
proprietorship. Individuals may become legitimate job contractors themselves for as long as they have
SPECIAL SKILLS or TALENTS.
• Are individuals engaged as legitimate job contractors required to fulfill the requisites of legitimate job
contracting as afore-described?
NO. They need not be registered as independent contractors with DOLE; they need not have substantial
capital (such as the P5 Million stated above). All that they are required is to have their tools consisting of
SPECIAL SKILL, TALENT or EXPERTISE.
• What are examples of individuals as independent contractors?
1. Sonza v. ABS-CBN Broadcasting Corporation1 - TV and radio talents and others with special talents
and skills are not employees but legitimate independent contractors.
2. Orozco v. The Fifth Division of the Honorable Court of Appeals2 - A newspaper columnist is not an
employee but an independent contractor of the newspaper publishing the column.
3. Jose Mel Bernarte v. Philippine Basketball Association3 - Basketball or soccer referee or umpire, an
independent contractor.
4. Semblante and Pilar v. CA, Gallera de Mandaue, et al.4 - Cockpit masiador and sentenciador are
independent contractors.
5. Escasinas v. Shangri-la’s Mactan Island Resort5 - A doctor may be engaged as an independent
contractor.
LABOR-ONLY CONTRACTING.
Is labor-only contracting allowed under the law and issuances?

NO, it is absolutely prohibited.
What are the elements of labor-only contracting?
Based on law, Department Order No. 174 and jurisprudence, the following are the elements:
(a) The contractor does not have either (i) SUBSTANTIAL CAPITAL or (ii) INVESTMENTS
in the form of tools, equipment, machineries, supervision, work premises, among others, AND the
contractor's employees recruited and placed are performing activities which are directly related to the
main business operation of the principal; or
(b) The contractor does not exercise the right to control over the performance of the work of the
employee.
NOTE: There is labor-only contracting even if only one of the two (2) elements above is present.
An unregistered contractor is presumed to be a labor-only contractor. Registration should be

made with the DOLE.
What are the EFFECTS of labor-only contracting?
1. The labor only contractor will be treated as the agent or intermediary of the principal. Since the act of
an agent is the act of the principal, representations made by the labor-only contractor to the
employees will bind the principal.
2. The principal will become the direct employer as if it directly employed the workers supplied by
the labor-only contractor to undertake the contracted job or service. The principal will be responsible to
them for all their entitlements and benefits under labor laws.
3. The principal and the labor-only contractor will be solidarily treated as the direct employer.
What are the distinctions between legitimate job contracting and labor-only contracting?
The chief distinctions between legitimate job contracting, on the one hand, and the prohibited labor-only
contracting, on the other, may be summed up as follows:
1. In the former, no employer-employee relationship exists between the contractual employees of the job
contractor and the principal; while in the latter, an employer-employee relationship is created by law
between the principal and the employees supplied by the labor-only contractor.
2. In the former, the principal is considered only an “indirect employer”; while in the latter, the principal is
considered the “direct employer” of the employees supplied by the labor-only contractor.
3. In the former, the solidary obligation of the principal and the legitimate job contractor is only for a
limited purpose, that is, to pay the wages of the contractor’s employees supplied to the principal.. Other
than this obligation of paying the wages, the principal is not responsible for any claim made by the
contractor’s employees; while in the latter, the principal becomes solidarily liable with the labor- only
contractor to the latter’s employees in the same manner and extent that the principal is liable to
employees directly hired by him/her.
What are OTHER ILLICIT FORMS OF EMPLOYMENT IN D.O. 174, Series of 2017, (IN ADDITION TO
LABOR-ONLY CONTRACTING)?
The following are considered as such (formerly called “PROHIBITIONS” under previous Department
Orders):
a) When the principal farms out work to a “Cabo” which term refers to a person or group of persons or to
a labor group which, under the guise of a labor organization, cooperative or any entity, supplies workers
to an employer, with or without any monetary or other consideration, whether in the capacity of an agent
of the employer or as an ostensible independent contractor.
b) Contracting out of job or work through an “In-house Agency” which term refers to a contractor which is
owned, managed, or controlled, directly or indirectly, by the principal or one where the principal
owns/represents any share of stock, and which operates solely or mainly for the principal.
c) Contracting out of job or work through an “In-house Cooperative” which merely supplies workers to the
principal. An “In-house Cooperative” refers to a cooperative which is managed, or controlled directly or
indirectly by the principal or one where the principal or any of its officers owns/represents any equity or
interest, and which operates solely or mainly for the principal.
d) Contracting out of a job or work by reason of a strike or lockout, whether actual or imminent.
e) Contracting out of a job or work being performed by union members and such will interfere with,
restrain or coerce employees in the exercise of their rights to self-organization as provided in
Article 259 [248] of the Labor Code, as amended.
f) Requiring the contractor's/subcontractor's employees to perform functions which are currently being
performed by the regular employees of the principal.
g) Requiring the contractor's/subcontractor's employees to sign, as a precondition to employment or

continued employment, an antedated resignation letter; a blank payroll; a waiver of labor standards
including minimum wages and social or welfare benefits; or a quitclaim releasing the principal or
contractor from liability as to payment of future claims; or require the employee to become member of a
cooperative.
h) Repeated hiring by the contractor/subcontractor of employees under an employment contract of short

duration.
i) Requiring employees under a contracting/subcontracting arrangement to sign a contract fixing the

period of employment to a term shorter than the term of the Service Agreement, unless the contract is
divisible into phases for which substantially different skills are required and this is made known to the
employee at the time of engagement.
j) Such other practices, schemes or employment arrangements designed to circumvent the right of
workers to security of tenure.
Independent Contractor (2001)

(a) "X" is a bona fide service contractor providing manpower services to various companies, possessing
the necessary capital and equipment needed to effectively carry out its commitments. "Y" is an employee
of "X" and assigned to work as a janitor in Company "Z". In the course of Y's assignment, Z's supervisors
and employees would give verbal instructions to Y as to how and where to perform his work. X pays Y
salary. Subsequently, Y's services were terminated by X. Y sued Z for Illegal dismissal. May Y's case
against Z prosper? Why? (2%).
SUGGESTED ANSWER:
Y's case against Z will not prosper, because Z is not the employer of Y. The employer of "Y" is "X". "Y'
would be an employee of "Z" if "X" here is a labor-only contractor but X is not a labor-only contractor. He
possesses the necessary capital and equipment needed to effectively carry out its commitment as a
service contractor.
Applying the control test, the fact that "Z's" supervisors and employees give verbal instructions to Y as to
how and where to perform his work does not necessarily mean that thereby he is under the control of Z
as regards his employment as long as X,as service contractor, actually directs the work of Y. It should
also be noted that X pays the salary of Y as the employee of the former.
ANOTHER SUGGESTED ANSWER;

Yes, Y's case against Company "Z" will prosper. Company "Z" will be deemed the direct employer
because the Company directly and specifically controlled the manner by which the work should be done
and, and by doing so also the result. (See Traders Royal Bank vs. NLRC, December 2. 1999).
The presence of the element or factor of control, which is the most important factor in determining the
existence of an employer-employee relationship is present. In Religious of the Virgin Mary vs. NLRC,
G.R. No. 103606, October 13, 1999, the Supreme Court, ruled: As this Court has consistently ruled, the
power of control is the most decisive factor in determining the existence of employer- employee
relationship.
Independent Contractor (2002)

Pandoy, an electronics technician, worked within the premises of Perfect Triangle, an auto accessory
shop. He filed a complaint for illegal dismissal, overtime pay and other benefits against Perfect Triangle,
which refused to pay his claims on the ground that Pandoy was not its employee but was an independent
contractor. It was common practice for shops like Perfect Triangle to collect the service fees from
customers and pay the same to the independent contractors at the end of each week. The auto shop
explained that Pandoy was like a partner who worked within its premises, using parts provided by the
shop, but otherwise Pandoy was free to render service in the other auto shops. On the other hand,
Pandoy insisted that he still was entitled to the benefits because he was loyal to Perfect Triangle, it being
a fact that he did not perform work for anyone else. Is Pandoy correct? Explain briefly. (5%)
SUGGESTED ANSWER:
Pandoy is not correct. He is not an employee because he does not meet the fourfold test for him to be an
employee of Perfect Triangle. All that he could claim is: he worked within the premises of Perfect Triangle.
Pandoy was NOT engaged as an employee by Perfect Triangle. He was NOT paid wages by Perfect
Triangle. Perfect Triangle does NOT have the power to dismiss him although Perfect Triangle may not
continue to allow him to work within its premises. And most important of all, Pandoy was NOT under the
control of Perfect Triangle as regards the work he performs for customers.
The Supreme Court has ruled: "In stark contrast to the Company's regular employees, there are
independent, free lance operators who are permitted by the Company to position themselves proximate to
the Company premises. These independent operators are allowed by the Company to wait on Company
customers who would be requiring their services. In exchange for the privileges of favorable
recommendation by the Company and immediate access to the customers in need of their services, these
independent operators allow the Company to collect their service fee from the customer and this fee is
given back to the Independent operator at the end of the week. In effect, they do not earn fixed wages
from the Company as their variable fees are earned by them from the customers of the Company. The
Company has no control over and does not restrict the methodology or the means and manner by which
these operators perform their work. These operators are not supervised by any employee of the Company
since the results of their work is controlled by the customers who hire them. Likewise, the Company has
no control as an employer over these operators. They are not subject to the regular hours and days of
work and may come and go as they wish. They are not subject to any disciplinary measures from the
Company, save merely for the inherent rules of general behavior and good conduct" {Ushio Marketing v.
NLRC, 294 SCRA 673(1998)]
Independent Contractor vs. Labor-Only Contracting; Four-Fold Test (2000)
Metro Grocery Inc. arranged with Mr. Juan Dado, a Barangay Chairman, to provide the grocery with
workers who will work as cashiers, bag boys, shelf counter helpers and sanitation workers. The grocery
will pay Mr. Dado an amount equivalent to the direct and hidden costs of the wages of each worker
assigned, plus ten percent (10%) to cover the administrative costs related to their arrangement. Mr. Dado,
in turn, will pay directly the workers their wages. As far as the workers are concerned, Mr. Dado is their
employer. A group of concerned workers consulted you if Mr, Dado is really under the law their employer.
A. How will you analyze the problem in order to formulate your answer? (3%)
B. What is the legal significance, if any, of the question of the concerned workers as to who is
their employer? (3%)
SUGGESTED ANSWER:
a) I will analyze the problem by applying the fourfold test of employer-employee relationship. I will
examine if Mr. Dado exercises power of control or supervision over the workers' manner and method of
doing their work. Control is the most important factor in examining employer-employee relationship. The
other factors are hiring, payment of wages, and power to dismiss, I will also examine whether there was
job contracting or labor-only contracting.
ALTERNATIVE ANSWER:
a) My analytical framework will be an analysis of the law on Independent contractor and labor only
contracting. If there is a valid INDEPENDENT CONTRACTOR situation, Mr. Dado will be the direct
employer, and the Metro Grocery will be the indirect employer. If there is a LABOR-CONTRACTOR only
relationship, the Metro Grocery will be the employer as it directly hired the employees.
SUGGESTED ANSWER:
b) The legal significance is the determination of employee-employer relationship, which gives rise to
certain rights and obligation of both employer and employee, such as SSS membership, union
membership, security of tenure, etc.
Independent Contractor; Liabilities (2004)
A. Clean Manpower Inc. (CMI) had provided janitorial services to the National Economic Development
Authority (NEDA) since April 1988. Its service contract was renewed every three months. However, in the
bidding held on July 1992, CMI was disqualified and excluded. In 1993, six janitors of CMI formerly
assigned at NEDA filed a complaint for underpayment of wages. Both CMI and NEDA were impleaded as
respondents for failure to comply with NCR Wage Orders Nos. 01 and 02, which took effect on November
1, 1990 and January 2, 1992, respectively.
Should NEDA, a government agency subject to budgetary constraints, be held liable solidarily with CMI
for the payment of salary differentials due the complainants? Cite the legal basis of your answer. (5%)
SUGGESTED ANSWER:
NEDA shall be held solidarily liable with CMI for the payment of salary differentials due to the
complainants, because NEDA is the indirect employer of said complainants. The Labor Code provides
that xxx (A) person, partnership, association or corporation which, not being an employer, contracts with
an independent contractor for the performance of any work, task, job or project" xxx "shall be jointly and
severally liable with his contractor or subcontractor to such employees (of the contractor or subcontractor)
to the extent of work performed under the contract xxx." (Arts. 106 and 107, Labor Code)
Labor-Only Contract vs. Job Contracting (1997)
Distinguish between "job contracting" and "labor- only contracting."

SUGGESTED ANSWER:
When a person, not being an employer, contracts with an independent contractor for the performance of
any work, task, job or project, there is "JOB CONTRACTING." When the independent contractor does the
work that is contracted out, he is not under the control of the person who contracted out the work to be
done. In a "LABOR-ONLY CONTRACTING", a person supplies workers to an employer. Said person
does not have substantial capital or investments in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited and placed by such person are performing activities
related to the principal business of the employer to whom the workers are supplied.
Labor-Only Contractor (2002)
Sta. Monica Plywood Corporation entered into a contract with Arnold for the milling of lumber as well as
the hauling of waste wood products. The company provided the equipment and tools because Arnold had
neither tools and equipment nor capital for the job. Arnold, on the other hand, hired his friends, relatives
and neighbors for the job. Their wages were paid by Sta. Monica Plywood Corp. to Arnold, based on their
production or the number of workers and the time used in certain areas of work. All work activities and
schedules were fixed by the company.
A. Is Arnold a job contractor? Explain briefly. (2%) B. Who is liable for the claims of the workers
hired by Arnold? Explain briefly. (3%)
SUGGESTED ANSWER:
A. No. In two cases decided by the Supreme Court, it was held that there is "job contracting" where (1)
the contractor carries on an independent business and undertakes the contract work in his own account,
under his own responsibility according to his own manner and method, free from the control and direction
of his employer or principal in all matters connected with the performance of the work except as to the
results thereof; and (2) the contractor has substantial capital or investment in the form of tools,
equipment, machineries, work premises and other materials which are necessary in the conduct of his
business. [Lim v. NLRC, 303 SCRA 432 (1999); Baguio v. NLRC, 202 SCRA 465(1991)]
In the problem given, Arnold did not have sufficient capital or in vestment for one. For another Arnold was
not free from the control and direction of Sta. Monica Plywood Corp. because all work activities and
schedules were fixed by the company. Therefore, Arnold is not a job contractor. He is engaged in labor-
only contracting.
SUGGESTED ANSWER:
B. Sta. Monica Plywood Corp. is liable for the claims of the workers hired by Arnold. A finding that Arnold
is a labor only contractor is equivalent to declaring that there exist an employer-employee relationship
between Sta. Monica Plywood Corp. and workers hired by Arnold. This is so because Arnold is
considered a mere agent of Sta. Monica Plywood Corp. [Lim v. NLRC, 303 SCRA 432, (1999); Baguio et
al, v. NLRC, 202 SCRA 465 (1991)]
Labor-Only Contractor vs. Independent Contractor (1994)
1) What is a "labor-only" contract?

2) Distinguish the liabilities of an employer who engages the services of a bonafide "independent
contractor" from one who engages a "labor-only" contractor?
SUGGESTED ANSWER:
1) "LABOR-ONLY" CONTRACT is a contract between an employer and a person who supplies workers to
such employer where the person supplying workers does not have substantial capital or investment in the
form of tools, equipment, machineries, work premises, among others, and the workers recruited and
placed by such person are performing activities which are directly related to the principal business of such
employer. (Art. 106, Labor Code)
2) A person who engages the services of a bona fide "INDEPENDENT CONTRACTOR" for the
performance of any work, task, job or project is the indirect employer of the employees who have been
hired by the independent contractor to perform said work, task, job or project.
In the event that the independent contractor fails to pay the wages of his employees, an indirect
employer, in the same manner and extent that he is liable to employees directly employed by him, is
JOINTLY and SEVERALLY LIABLE with the Independent contractor to the employees of the latter to the
extent of the work performed under the contract. As for the person who engages the services of a "labor
only" contractor, the latter is considered merely as an agent of the former who shall be responsible to the
workers hired by the "labor only" contractor in the same manner and extent as if he directly employed
such workers.
ALTERNATIVE ANSWERS;
a) An employer who engages the services of a bona fide "independent contractor" is SOLIDARILY
LIABLE with his contractor or sub-contractor only for non-payment or underpayment of wages and other
labor standards provisions of the Labor Code, whereas an employer who engages a "labor-only"
contractor is liable for all benefits, terms and conditions of employment that it normally grants to its regular
or direct employees.
b) An employer who deals with a bona-fide independent contractor shall be liable only subsidiarily, if the
contractor or sub-contractor fails to pay the wages to the workers in accordance with the Labor Code.
Upon the other hand, an employer who deals with a "labor-only" contractor shall be primarily responsible
to the workers in the same manner and extent as if the latter were directly employed by him. (Arts 106-
107, Labor Code)
1. PROTECTION-TO-LABOR CLAUSE Art 13 Section 3of 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
The State shall regulate the relations between workers and employers, recognizing the right of labor to
its just share in the fruits of production and the right of enterprises to reasonable returns to
investments, and to expansion and growth.”
Constitutional (2009)
Provisions on No. II. a. Enumerate at least four (4) policies enshrined in Section 3, Article XIII of the
Constitution that are not covered by Article 3 of the Labor Code on declaration of
basic policy. (2%)
SUGGESTED ANSWER:
Four (4) policies enshrined in Section 3, Article XIII of the 1987 Constitution which are not covered by
Article 3 of the Labor Code on declaration of basic policy are:
(1) All workers shall have the right to peaceful concerted activities,
(2) Including the right to strike in accordance with the law
(3) They shall be entitled to a living wage
(4) They shall participate in policy and decision making processes affecting their rights and benefits as
(5) The state shall promote the principle of shared responsibility between workers and employers.
Constitutional Provisions on Labor (1998 Bar Q)

What are the salient features of the protection to labor provision of the Constitution? [5%]
SUGGESTED ANSWER:
The salient features of the Protection to Labor provision of the Constitution (Article XIII. Section 3) are as
follows:
1. Extent of Protection - Full protection to labor;
2. Coverage of Protection - Local and overseas, organized and unorganized;
3. Employment Policy - Full employment and equality of employment opportunities for all;
4. Guarantees
4.1. Unionism and Method of Determination Conditions of Employment - Right of all workers to self-
organization, collective bargaining and negotiations.
4.2. Concerted Activities - Right to engage in peaceful concerted activities, including the right to strike in
accordance with law.
4.3. Working Conditions - Right to security of tenure, humane conditions of work and a living wage.
4.4. Decision Making Processes - Right to participate hi policy and decision making processes affecting
their rights and benefits as way to provided by law.
5. Share in Fruits of production - Recognition of right of labor to its just share in fruits of production.

o The Constitution (In Article XIII, Section 3) provides that the State shall afford protection to labor, local
and overseas, organized and unorganized.
o The State shall afford protection to labor by promoting full employment and equality of employment
opportunities for all.
o Workers are entitled to security of tenure, humane conditions of work and a living wage.
o The State shall guarantee the right of all workers to self organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike, in accordance with law.
o Workers shall also participate in policy and decision making processes affecting their rights and
benefits as may be provided by law.
o The State shall promote the principle of shared responsibility between workers and employers and the
preferential use of voluntary modes in settling labor disputes, including conciliation, and shall enforce
o 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.
2a. Who are qualified to put up a placement and recruitment?
REQUIREMENTS: Article 27 -29
Art. 27. Citizenship requirement. Only Filipino citizens or corporations, partnerships or entities at least
seventy-five percent (75%) of the authorized and voting capital stock of which is owned and controlled
by Filipino citizens shall be permitted to participate in the recruitment and placement of workers, locally
or overseas.
Art. 28. Capitalization. All applicants for authority to hire or renewal of license to recruit are required to
have such substantial capitalization as determined by the Secretary of Labor.
Substantial Capital Requirement for recruitment agency (POEA Rules) - Two million
Process:
- Securing a license (Articles of incorporation or partnership or corporation registered with
SEC, Certificate of registration of firm or business of single proprietorship registered with
DTI, Savings account certificate of not less than 500,000 with authority to examine the
same) page 95 of Poquiz
- Payment of filing fees and approval of application.
- Payment of fees and posting of bonds. (Upon approval of the application, the applicant shall
pay a license fee of P50,000. It shall submit a escrow agreement in the amount of P1 million,
confirmation of escrow deposit with accredited reputable bank and a surety bond of
P100,000 from a bonding company acceptable to the POEA and accredited with the
Insurance Commission.
Art 25: “Pursuant to national development objectives and to harness and maximize the
use of private sector resources and initiative in the development and implementation of a
comprehensive employment program, the private employment sector shall participate in
the recruitment and placement of workers locally and overseas, under such guidelines,
rules and regulations as may be issued by the Secretary of Labor.”
Art 16 of LC: “Except as provided, no person or entity, other than the public employment offices,
shall engage in the recruitment and placement of workers.”
- However, the private sector is given the privilege to engage in recruitment and placement,
but limited to employment agencies, recruitment, entities, shipping or manning agents and
other persons as may be authorized by the Secretary of Labor and Employment.
WHO MAY ENGAGE?
- Public employment offices

- Private employment agency with a license (Any person or entity engaged in the recruitment and
placement of workers for a fee which is charged directly or indirectly from workers or employers
or both.)
- Private recruitment entity with an authority (Any person or association engaged in the
recruitment and placement of workers, locally or overseas without charging, directly or
indirectly, any fee from the workers or employers.)
- Shipping or manning agency (Any person, partnership or corporation duly licensed by the
Secretary of Labor and Employment to recruit seafarers for vessels plying international waters
and for related maritime activities.
2b. Recruitment & Placement; Non- Transferability of License (1998)

A Recruitment and Placement Agency declared voluntary bankruptcy. Among its assets is its license to
engage in business. Is the license of the bankrupt agency an asset which can be sold in public auction by
the liquidator? [5%]
SUGGESTED ANSWER:
No, because of the non-transferability of the license to engage in recruitment and placement.
The Labor Code (in Article 29) provides that no license to engage in recruitment and placement shall be
used directly or indirectly by any person other than the one in whose favor it was issued nor may such
license be transferred, conveyed or assigned to any other person or entity.
It may be noted that the grant of a license is a governmental act by the Department of Labor and
Employment based on personal qualifications, and citizenship and capitalization requirements. (Arts. 27-
28, Labor Code)
Art. 29. Non-transferability of license or authority. No license or authority shall be used directly or
indirectly by any person other than the one in whose favor it was issued or at any place other than
that stated in the license or authority be transferred, conveyed or assigned to any other person or
entity. Any transfer of business address, appointment or designation of any agent or representative
including the establishment of additional offices anywhere shall be subject to the prior approval of the
Department of Labor.
Recruitment & Placement; Recruitment Agencies (2002)

Is a corporation, seventy percent (70%) of the authorized and voting capital of which is owned and
controlled by Filipino citizens, allowed to engage in the recruitment and placement of workers, locally or
overseas? Explain briefly. (2%)
SUGGESTED ANSWER:
No. A corporation, seventy percent (70%) of the authorized and voting capital stock of which is owned
and controlled by Filipino citizens cannot be permitted to participate in the recruitment and placement
of workers, locally or overseas, because Art 27 of the Labor Code requires at least seventy- five percent
(75%).
3. LIBERAL APPROACH IN LABOR CODE
ART 1702 IN RELATION TO ARTICLE 4 OF LABOR CODE
Both articles of speak of the rule on interpretation and construction provisions of law and labor
contracts:
- Art. 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in
favor of the safety and decent living for the laborer.
Applies to doubts and ambiguities in:

4. Labor Legislation
5. Labor Contracts
6. Evidence presented in labor cases.
Article 4. Construction in favor of labor. All doubts in the implementation and interpretation of the
provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of
labor.
Applies to ambiguities in:

3. the Labor Code
4. the Implementing rules of the LC
Interpretation of Labor Laws (1998 BAR Q)
Article 4 of the Labor Code provides that in case of doubt in the implementation and interpretation of
the provisions of the Code and its Implementing Rules and Regulations, the doubt shall be resolved in
favor of labor. Article 1702 of the Civil Code also provides that in case of doubt, all labor legislation and
all labor contracts shall be construed in favor of the safety and decent living for the laborer.
Mica-Mara company assails the validity of these statutes on the ground that they violate its
constitutional right to equal protection of the laws. Is the contention of Mica Mara Company tenable?
SUGGESTED ANSWER:
No, the Constitution provides that the state shall afford full protection to labor. Furthermore, the State
affirms labor as a primary economic force. It shall protect the rights of workers and promote their
welfare.
ALTERNATIVE ANSWER:
a) No, because a law which promotes a constitutional mandate does not violate the equal protection
clause. The constitutional mandate is for the State to afford full protection to labor such that, when
conflicting interests of labor and capital are to be weighed on the scales of justice, the heavier influence
of the latter should be counter- balanced by the sympathy the law should accord the underprivileged.
b) The contention of Mica-Mara Company is not tenable. The constitutional right to equal protection of
the laws is not violated by reasonable classification. Thus, it is constitutionally possible to treat workers
differently from employers.
The social justice principle embodied in the Constitution could be the basis for treating workers more
favorably than employers, in the implementation and interpretation of the provisions of the Labor Code
and of its implementing rules and regulations.
Interpretation of Labor Laws; Liberal Approach (2006 BAR Q)

What is the concept of liberal approach in interpreting the Labor Code and its Implementing Rules and
Regulations in favor of labor?
SUGGESTED ANSWER:
The workers' welfare should be the paramount consideration in interpreting the Labor Code and its
Implementing Rules and Regulations. This is rooted in the Constitutional mandate to afford full
protection to labor. Article 4 of the Labor Code provides that "all doubts in the implementation and
interpretation of the provisions of the Labor Code including its implementing rules and regulations
shall be resolved in favor of labor" (PLOT v. NLRC, G.R No. 111933, July 23,1997). It underscores the
policy of social justice to accommodate the interests of the working class on the humane justification
that those who have less in life shall have more in law (PAL v. Santos, G.R. No. 77875, February 4, 1993).
7. COMPENSATION OF SEAMEN IN CASE OF DEATH OR SICKNESS (Occupational Safety)
Bar Question; Rosa was granted vacation leave by her employer to spend three weeks in Africa with her
family. Prior to her departure, the General Manager of the company requested her to visit the plant of
the company in Zimbabwe in order to derive best manufacturing practices useful to the company. She
accepted the request because the errand would be important to the company and Zimbabwe was
anyway in her itinerary. It appears that she contracted a serious disease during the trip. Upon her
return, she filed a claim for compensation, insisting that she had contracted the disease while serving
the interest of her employer. Under the Labor Code, the sickness or death of an employee, to be
compensable, must have resulted from an illness either definitely, accepted as an occupational
disease by the Employee’s Compensation Commission, or caused by employment subject to proof that
the risk of contracting the same is increased by working conditions. Is the serious disease Rosa
contracted during her trip to Africa compensable? Explain your answer. (2.5%)
SUGGESTED ANSWER:
In Government Service Insurance System vs. Besitan, G.R. No. 178901, November 23, 2011, explained
the concept of increased theory as follows:
Under the increased risk theory, there must be a reasonable proof that the employee’s
working condition increased his risk of contracting the disease, or that there is a connection
between his work and the cause of the disease. (Castor-Garupa v. Employees’ Compensation
Commission, G.R. No. 158268, April 12, 2006, 487 SCRA 171, 180) Only a reasonable proof of
work- connection, not direct causal relation, however, is required to establish compensability of
a non-occupational disease. (Government Service Insurance System v. Cordero, G.R. Nos.
171378 & 171388, March 17, 2009, 581 SCRA 633, 640) Probability, and not certainty, is the
yardstick in compensation proceedings; thus, any doubt should be interpreted in favor of the
employees for whom social legislations, like PD No. 626, were enacted. (Government Service
Insurance System v. Corrales, G.R. No. 166261, June 27, 2008, 556 SCRA 230, 243-244)
Applying the above ruling, Rosa must present a reasonable proof that her working condition increased
his risk of contracting the disease, or that there is a connection between his work and the cause of the
disease otherwise the same is not compensable.
Liberal approach in compensability of benefits:
An injury may be regarded as arising out of employment if it results from a risk or danger to
which the workman is exposed by reason of being engaged in the performance of his duties,
although that danger is not inherent in and has no necessary or essential connection with the
particular employment. For injury to be
compensable, it is not necessary that the cause therefor shall take place within the place of
employment. If a workman is acting within the scope of his employment, his protection "in
the course of employment" usually continues, regardless of the place of injury.
For an occupational disease to be compensable, all of the following conditions must be satisfied:
(RR
1. That the employees work must involve the risk described therein;
2. That the disease was contracted as a result of the employee’s exposure to the risk.
3. That the disease was contracted within a period of exposure and other such other factors
necessary to contract it.
4. There was no notorious negligence on the part of the employee. (Not directly attributable to
his willful act)
5. The injury or illness and the ensuing disability occurred during the effectivity of the
employment contract.
Hence, the disease acquired prior to his employment is not compensable. After the employment has
ceased, there must be a showing that his death was work related and died of same illness contracted
during employment inorder to be compensable.
8. If there’s need for a highly technical skilled employee, will the alien undergo or be exempt
from licensing?
Yes! Generally, aliens are not permitted to be employed on entities reserved to Filipinos or
whose capital is at least 60% Filipino owned. However, the Secretary of Justice has rendered
an Opinion, however, that aliens may be employed in entities engaged in nationalized
activities:
(a) where-the Secretary of Justice specifically authorizes the employment of foreign

technical personnel, or (b) where the aliens are elected members of the board of directors
in proportion to their allowable participation in the capital of such entities.
The law provides that any alien seeking admission to the Philippine for employment purposes and any
domestic or foreign employer who desires to engage an alien for employment in the Philippines shall
obtain an employment permit from the Department of Labor. The employment permit may be issued to
a non-resident alien or to the applicant employer after a determination of the non-availability of a
person in the Philippines who is competent, able and willing at the time of application to perform the
services for which the alien is desired.
Enterprises registered under the Omnibus Investments Code (E.O. No. 226) may, for a limited period,
employ foreign nationals in technical, supervisory, or advisory positions.
• Who are required to procure AEP?
- All foreign nationals who intend to engage in gainful employment in the Philippines.
- Domestic or foreign employer who desires to engage an alien for employment in the
Philippines.
“Gainful employment” refers to a state or condition that creates an employer-employee relationship
between the Philippine-based company and the foreign national where the former has the power to
hire or dismiss the foreign national from employment, pays the salaries or wages thereof and has
authority to control the performance or conduct of the tasks and duties.
What is the validity of an AEP?

One (1) year is the validity of an AEP.
Exception: When employment contract provides otherwise but not to exceed 5 years. The AEP may be
renewed subject to the conditions imposed by law.
Employment; Aliens; Requisites (1995)
Phil-Norksgard Company, Inc., a domestic corporation engaged in the optics business, imported from
Sweden highly sophisticated and sensitive instruments for its laboratory. To install the instruments and
operate them, the company intends to employ Borja Anders, a Swedish technician sojourning as a
tourist in the Philippines. As lawyer of the company, what measures will you take to ensure the
legitimate employment of Borja Anders and at the same time protect Philippine labor. Discuss fully.
SUGGESTED ANSWER:
To ensure the legitimate employment of Borja Anders, a non-resident alien, I will apply at the
Department of Labor and Employment for the Issuance of an employment permit claiming that there
is no one in the Philippines who can do the work that Anders is being asked to do. At the same time, to
protect Philippine labor, I will see to it that Anders will have an understudy who will learn, by working
with Anders, how to install and operate the highly sophisticated and sensitive instruments from
Sweden.
ALTERNATIVE ANSWER;
To protect Philippine Labor, the Labor Code provides that the alien employee shall not transfer to
another Job or change his employer without prior approval of the Secretary of Labor.
Employment; Non-Resident Alien (2007)

No. XX. AB, a non-resident American, seeks entry to the country to work as Vice- President of a local
telecommunications company. You are with the Department of Labor and Employment (DOLE). What
permit, if any, can the DOLE issue so that
AB can assume as Vice-President in the telecommunications company? Discuss fully. (5%)
SUGGESTED ANSWER:
The Labor Code provides that ―any alien seeking admission to the Philippine for employment purposes
and any domestic or foreign employer who desires to engage an alien for employment in the Philippines
shall obtain an employment permit from the Department of Labor. The employment permit may be
issued to a non-resident alien or to the applicant employer after a determination of the non-availability
of a person in the Philippines who is competent, able and willing at the time of application to perform
the services for which the alien is desired. Thus, AB (or Telecommunication company) should be issued
the above- mentioned alien employment permit so that AB can assume as Vice President of the
Telecommunication Company.
6. APPRENTICESHIP AND LEARNERSHIP
QUALIFICATIONS: Art. 59. Qualifications of apprentice. To qualify as an apprentice, a person

shall:
- At least 15 ears old;
- Possess vocational aptitude and capacity for appropriate tests; and
- Possess the ability to comprehend and follow oral and written instructions.
CONFLICT IN THE AGE REQUIREMENT FOR APPRENTICES:
Under the Labor Code as stated above – 14 years of age
Under the Labor Code’s Implementing Rules – “Be at least 15 years of age, provided those who are at
least 15 years of age but less than 18 may be eligible for apprenticeship only in non-hazardous
occupations.”
CONFLICT, HOW RESOLVED:

It should be 15 years of age but the more appropriate basis is not the Labor Code’s Implementing Rules
(which cannot amend the Labor Code) but another law, R.A. No. 9231, (“AN ACT PROVIDING FOR THE
ELIMINATION OF THE WORST FORMS OF CHILD LABOR AND AFFORDING STRONGER PROTECTION FOR
THE WORKING CHILD“) where it is provided that:
(1) All persons under eighteen (18) years of age shall be considered as a “child”; and
(2) Children below fifteen (15) years of age shall not be employed EXCEPT if he/she falls under any of the
exceptions mentioned and enumerated in the law.
7. A FAIR DAYS WAGE FOR A FAIR DAYS LABOR
• What is the “NO WORK, NO PAY” principle?
The “no work, no pay” or “fair day’s wage for fair day’s labor” means that if the worker does not work,
he is generally not entitled to any wage or pay. The exception is when it was the employer unduly
prevented him from working despite his ableness, willingness and readiness to work; or in cases
where he is illegally locked out or illegally suspended or illegally dismissed, or otherwise illegally
prevented from working.
8. WAGE DISTORTION
HOW RESOLVED
A wage distortion happens when a wage order increasing the rates of wages removes or significantly
reduces the pay advantage of one position of employees over another. This change has to be
corrected.
 Correction of a wage distortion must first be done in the company's grievance machinery
provided for in the CBA. If the distortion isn't resolved there, the next step is voluntary
arbitration. In case the company has no CBA or recognized labor union, the employers and
workers have to reach an agreement to correct the distortion. If they can't agree, they have to
bring the problem to the NCMB. If after 10 days in the National Conciliation and Mediation
Board(NCMB) there isn't any correction the next place to go is the NLRC.
Wage distortions can't be the cause of a strike or lockout (Ilaw ng Manggagawa vs. NLRC, 198 SCRA 586.)
The correction of a wage distortion should be done by negotiation or arbitration.
Wage Distortion (2002)
A. How should a wage distortion be resolved (1) in case there is a collective bargaining agreement and
(2) in case there is none? Explain briefly. (3%) SUGGESTED ANSWER:
A. According to Art. 124 of the Labor Code, in case there is a collective bargaining agreement, a
dispute arising from wage distortions shall be resolved through the grievance machinery provided in
the CBA, and if remains unresolved, through voluntary arbitration. In case there is no collective
bargaining agreement, the employers and workers shall endeavor to correct such distortions. Any
dispute arising therefrom shall be settled through the National Conciliation and Mediation Board and
if it remains unresolved after ten (10) calendar days of conciliations, then the dispute is referred to the
appropriate branch of the National Labor Relations Commission.
Wage distortions, furthermore, are dangerous; an uncorrected one can lead to insubordination and
weakening of productivity.
“Wage distortion” contemplates a situation where an increase in prescribed wage rates results
in either of the following:
1. Elimination of the quantitative differences in the rates of wages or salaries; or
2. 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 the following criteria:
a. Skills;
b. Length of service; or
c. Other logical bases of differentiation.
Wage distortion presupposes a classification of positions and ranking of these positions at

various levels. One visualizes a hierarchy of positions with corresponding ranks basically in terms
of wages and other emoluments. 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. xxx. The
concept of wage distortion assumes an existing grouping or classification of employees which
establishes distinctions among such employees on some relevant or legitimate basis. This
classification is reflected in a differing wage rate for each of the existing classes of employees.
• What are the elements of wage distortion?
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 this classification.
•What is the formula for rectifying or resolving wage distortion?
Following is the formula for the correction of wage distortion in the pay scale structures:
Minimum Wage = % x Prescribed Increase = Distortion Adjustment Actual Salary
The above formula was held to be just and equitable.
Wages; Wage Distortion (1997)

(a) Define Wage Distortion.
(b) May a wage distortion, alleged by the employees but rejected by the employer to be such, be a valid
ground for staging a strike? SUGGESTED ANSWER:
(a) A WAGE DISTORTION is that brought about 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 rates based on skills, length of service and other logical bases of differentiation.
(b) No, the existence of wage distortion is not a valid ground for a strike because Art. 124 of the Labor
Code provides for a specific method of procedure for correcting wage distortion. Ilaw at Buklod ng
Manggagawa vs. NLRC, 198 SCRA 586, the Court said:-
It goes without saying that these joint or coordinated activities may be forbidden or restricted by law
or contract. For the particular instance of "distortions of the wage structure within an establishment"
resulting from the application of any prescribed wage increase by virtue of a law or wage order.
Section 3 of Republic Act No. 6727 prescribes a specific, detailed and comprehensive procedure for the
correction thereof, thereby implicitly excluding strikes or lockouts or other concerted activities as
modes of settlement of the issue.
ALTERNATIVE ANSWER:
(b) A wage distortion, alleged by the employees but rejected by the employer can be a valid ground for
staging a strike if it happens that in rejecting the allegation of wage distortion, the employer refuses to
consider the issue under the grievance procedure provided for in the applicable CBA, and later on
through Voluntary Arbitration. These acts of the employer could be considered as a violation of its duty
to bargain collectively which is unfair labor practice (ULP). A ULP strike is legal.
Wage; Wage Distortion; Not a ground for Strike/Lockout (2006)

Can the issue of wage distortion be raised in a notice of strike? Explain. (10%)
SUGGESTED ANSWER:
NO. Section 16, Chapter I of Rules Implementing RA 6727 provides that "Any dispute involving wage
distortions shall not be a ground for strike/lockout." Article 124 of the Labor Code, as amended by
Republic Act 6727 prescribes a procedure for the correction of a wage distortion, implicitly excluding
strikes or lockouts or other concerted activities as modes of settlement of the issue. The legislative
intent that wage distortion shall be solved by voluntary negotiation or arbitration is made clear in the
rules (Ilaiv at Buklod ng Manggagawa v. NLRC, G.R. No. 91980, June 27, 1991).
9. ENTITLEMENT TO OVERTIME PAY
Art. 82. Coverage. The provisions of this Title shall apply to employees in all establishments and
undertakings whether for profit or not, but not to government employees, 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.
As used herein, “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.
“Field personnel” shall refer to non-agricultural employees who regularly perform their duties away
from the principal place of business or branch office of the employer and whose actual hours of work in
the field cannot be determined with reasonable certainty.
Working Hours; Charitable Institution; Overtime Pay (2002)

Socorro is a clerk-typist in the Hospicio de San Jose, a charitable institution dependent for its existence
on contributions and donations from well wishers. She renders work eleven (11) hours a day but has not
been given overtime pay since her place of work is a charitable institution. Is Socorro entitled to
overtime pay? Explain briefly. (5%)
 SUGGESTED ANSWER:
Yes. Socorro is entitled to overtime compensation. She does not fall under any of the
exceptions to the coverage of Art. 82, under the provisions of Hours of Work. The Labor Code
is equally applicable to non-profit institutions. A covered employee who works beyond eight
(8) hours is entitled to overtime compensation.
Working Hours; Charitable Institution; Weekly Rest Period; (1998)

A Ladies Dormitory run or managed by a charitable non-profit organization claims that it is exempt from
the coverage of the Weekly Rest Period provision of the Labor Code.
Is the claim valid? [5%]
SUGGESTED ANSWER:
No. The claim is not valid. The provisions on weekly rest periods in the Labor Code cover every
employer, whether operating for profit or not. (See Article 91 of the Labor Code)
10. COMPENSABLE HOURS
Clerk works 8-12 and 1-5. During that day, she has nothing to work and works on another paper, is she
entitled to pay?
 Yes, hours worked refers to all compensable period of work which includes all the time during
which an employee is:
- required to be on duty or to be at a prescribed workplace; and
- is suffered or permitted to work.
Principles in determining hours worked
The following general principles may be used to determine whether the time spent by an employee is
considered hours worked or not:
All hours are hours worked which the employee is required to give his employer, regardless of whether
or not such hours are spent in productive labor or involve physical or mental exertion.
An employee need not leave the premises of the work place in order that his rest period shall not be
counted, it being enough that he stops working, may rest completely and may leave his work place, to
go elsewhere, whether within or outside the premises of his work place.
If the work performed was necessary, or it benefited the employer , or the employee could not abandon
his work at the end of his normal working hours because he had no replacement, all time spent for such
work shall be considered as hours worked, if the work was with the knowledge of his employer or
immediate supervisor.
The time during which an employee is inactive by reason of interruptions in his work beyond his control
shall be considered working time either if the imminence of the resumption of work requires the
employee’s presence at the place of work or if the interval is too brief to be utilized effectively and
gainfully in the employee’s own interest.
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.
On call duty
An employee who 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 shall be considered as working while
on call. The employee must be required to leave a word where he may be reached. An employee who is
not required to leave word at his home or with company officials where he may be reached is not
working while on call.
Lectures, meetings, training programs
Attendance at lectures, meetings, training programs, and other similar activities shall not be counted as
working time if all of the following conditions are met:
Attendance is outside of the employee’s regular working hours;
Attendance is in fact voluntary; and
The employee does not perform any productive work during such attendance.
11. WOMEN AS SPECIAL WORKERS

DISCRIMINATION
• What are acts of discrimination under the Labor Code?
(a) Payment of a lesser compensation, including wage, salary or other form of remuneration and fringe
benefits, to a female employee as against a male employee, for work of equal value; and
(b) Favoring a male employee over a female employee with respect to promotion, training
opportunities, study and scholarship grants solely on account of their sexes.
• What are acts of discrimination under the Magna Carta of Women?
R.A. No. 9710, otherwise known as “The Magna Carta of Women,” is a comprehensive women’s human
rights law that seeks to eliminate discrimination against women by recognizing, protecting, fulfilling and
promoting the rights of Filipino women, especially those in marginalized sector. Based on the definition
of the term “Discrimination Against Women” in R.A. No. 9710, the following are considered
discriminatory acts:
1. Any gender-based distinction, exclusion, or restriction which has the effect or purpose of impairing or
nullifying the recognition, enjoyment, or exercise by women, irrespective of their marital status, on a
basis of equality of men and women, of human rights and fundamental freedoms in the political,
economic, social, cultural, civil or any other field;
2. Any act or omission, including by law, policy, administrative measure, or practice, that directly or
indirectly excludes or restricts women in the recognition and promotion of their rights and their access
to and enjoyment of opportunities, benefits or privileges;
3. A measure or practice of general application that fails to provide for mechanisms to offset or address
sex or gender-based disadvantages or limitations of women, as a result of which women are denied or
restricted in the recognition and protection of their rights and in their access to and enjoyment of
opportunities, benefits, or privileges; or women, more than men, are shown to have suffered the greater
adverse effects of those measures or practices; and
4. Discrimination compounded by or intersecting with other grounds, status, or condition, such as

ethnicity, age, poverty or religion.
 Additionally, women are guaranteed their right to decent work. The State shall progressively
realize and ensure decent work standards for women that involve the creation of jobs of
acceptable quality in conditions of freedom, equity, security and human dignity. (Fesh)
STIPULATION AGAINST MARRIAGE
• Is the prohibition against marriage valid?

 Article 136 of the Labor Code considers as an unlawful act of the employer to require as a
condition for or continuation of employment that a woman employee shall not get married or
to stipulate expressly or tacitly that upon getting married, a woman employee shall be
deemed resigned or separated. It is likewise an unlawful act of the employer, to actually
dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason
of her marriage.
• What are the relevant pieces of jurisprudence on marriage?
3. Philippine Telegraph and Telephone Company (PT&T) v. NLRC.1 - It was declared here that
the company policy of not accepting or considering as disqualified from work any woman
worker who contracts marriage runs afoul of the test of, and the right against,
discrimination afforded all women workers by our labor laws and by no less than the
Constitution.
4. Star Paper Corp. v. Simbol. - The following policies were struck down as invalid for violating
the standard of reasonableness which is being followed in our jurisdiction, otherwise called
the “Reasonable Business Necessity Rule”:
“1. New applicants will not be allowed to be hired if in case he/she has [a] relative, up to [the]
3rd degree of relationship, already employed by the company.
“2. In case of two of our employees (both singles [sic], one male and another female) developed
a friendly relationship during the course of their employment and then decided to get married,
one of them should resign to preserve the policy stated above.”
3. Duncan Association of Detailman-PTGWO v. Glaxo Welcome Philippines, Inc.- In this case, the
prohibition against marriage embodied in the following stipulation in the employment contract
was held as valid:
“You agree to disclose to management any existing or future relationship you may have, either
by consanguinity or affinity with co-employees or employees of competing drug companies.
Should it pose a possible conflict of interest in management discretion, you agree to resign
voluntarily from the Company as a matter of Company policy.” The Supreme Court ruled that
the dismissal based on this stipulation in the employment contract is a valid exercise of
management prerogative. The prohibition against personal or marital relationships with
employees of competitor companies upon its employees was held reasonable under the
circumstances because relationships of that nature might compromise the interests of the
company. In laying down the assailed company policy, the employer only aims to protect its
interests against the possibility that a competitor company will gain access to its secrets and
procedures.
PROHIBITED ACTS
• What are the prohibited acts against women under the Labor Code?
Article 137 of the Labor Code and its implementing rule consider unlawful the followings acts of
the employer:
1. To discharge any woman employed by him for the purpose of preventing such woman from
enjoying maternity leave, facilities and other benefits provided under the Labor Code;
2. To discharge such woman on account of her pregnancy, or while on leave or in confinement
due to her pregnancy;
3. To discharge or refuse the admission of such woman upon returning to her work for fear that
she may again be pregnant;
4. To discharge any woman or any other employee for having filed a complaint or having
testified or being about to testify under the Labor Code; or
5. To require as a condition for or continuation of employment that a woman employee shall not
get married or to stipulate expressly or tacitly that upon getting married, a woman employee
shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or
otherwise prejudice a woman employee merely by reason of marriage.
MINORS (Labor Code and R.A. No. 7678, R.A. No. 9231)
• Who is a “child” or “working child”?
For legal purposes, the term “child” refers to any person less than eighteen (18) years of age. A “working
child” refers to any child engaged as follows:
i. when the child is below eighteen (18) years of age, in work or economic activity that is not “child
labor;” and
ii.when the child below fifteen (15) years of age:
(a) in work where he/she is directly under the responsibility of his/her parents or legal guardian and
where only members of the child’s family are employed; or
(b) in “public entertainment or information” which refers to artistic, literary, and cultural performances
for television show, radio program, cinema or film, theater, commercial advertisement, public relations
activities or campaigns, print materials, internet, and other media.
Mandatory facilities.
(1) Suitable first-aid and emergency facilities as provided for under Rule 1960 (Occupational Health
Services) of the Occupational Safety and Health Standards (OSHS);
(2) Lactation station in required companies pursuant to R.A. No. 10028 (The Expanded Breastfeeding
Promotion Act of 2009);
(3) Separate toilet facilities for men and women;
(4) Facility for eating with potable drinking water; and
(5) Facilities for transportation and/or properly ventilated temporary sleeping or resting quarters,
separate for male and female workers, shall be provided except where any of the following
circumstances is present:
i. Where there is an existing company guideline, practice or policy, CBA or any similar agreement
between management and workers providing for an equivalent or superior benefit; or
ii. Where the start or end of the night work does not fall within 12 midnight to 5 o'clock in the morning;
or
iii. Where the workplace is located in an area that is accessible 24 hours to public transportation;
iv. Where the number of employees does not exceed a specified number as may be provided for by the
DOLE Secretary in subsequent issuances.
Maternity leave benefits under existing laws cannot be diminished.
12. PURPOSE OF LABOR LEGISLATION

To protect the worker from the mighty and to correct the injustices that are inherent in
an employer-employee relationship. It provides the set of restrictions upon the worker in his
relationship with the employer and vice versa in order to maintain industrial peace and
harmony; thereby promoting industrial democracy.
Ultimately, the primordial purpose of Labor Law is to promote the welfare of the people based n
the Latin Maxim, saluspopuliest suprema lex, the welfare of the people is the first law.
 Labor Legislations; Purpose (2006 BAR)

What is the purpose of labor legislation?
SUGGESTED ANSWER:
Labor legislation is an exercise of police power which purpose is to regulate the relations
between employers and employees respecting the terms and conditions of employment, either
by providing for certain standards or for a legal framework within which better terms and
conditions of work could be negotiated through collective bargaining. It is intended to correct
the injustices inherent in employer-employee relationship.
***Legislative discrimination is allowed provided there is a reasonable and substantive classification.
***Right to property is not a limitation to police power
Labor Standard vs. Labor Relation (1997 BAR)

Differentiate labor standards law from labor relations law. Are the two mutually exclusive? SUGGESTED
ANSWER:
LABOR STANDARDS law is that labor law which prescribes terms and conditions of employment like
Book in Book IV, Title I and Book VI of the Labor Code. These Books of the Labor Code deal with working
conditions, wages, working conditions for women, minors, househelpers and homeworkers, medical
and dental services, occupational health and safety, termination and retirement. On the other hand,
LABOR RELATIONS law is that labor law which regulates the relations between employers and workers
like Book V of the Labor Code which deals with labor organizations, collective bargaining, unfair labor
practices and strikes and lockouts.
Labor standards laws and labor relations laws are not mutually exclusive; they are complement to each
other. Thus, the law on strikes and lockouts which is an example of labor relations law includes some
provisions on the security of tenure of workers who go on strike or who are locked out. These provisions
are examples of labor standards law.
 Labor Standard vs. Labor Relation (2003)

How do the provisions of the law on labor relations interrelate, if at all, with the provisions
pertaining to labor standards?
SUGGESTED ANSWER:
LABOR RELATIONS law focuses its provisions on the collective aspects of employer-employee
relationship. Its legal provisions deal with employees organizing unions and how through these
unions, employees are able to have collective bargaining with their employer. On the other hand,
LABOR STANDARDS law focuses on the terms and conditions of employment of employees as
individual employees or those legal provisions dealing with wages, hours of work and other terms and
conditions of employment.
There may be instances when the provisions of labor relations law may interrelate with provisions of
labor standards law. Thus, a CBA which is dealt with in labor relations law may have provisions that
improves upon the minimum terms and conditions of employment prescribed in labor standardslaw,
like a CBA providing for a higher minimum wage, or for the computation of a higher overtime pay or
the payment of holiday pay not only for regular holidays but also for certain special holidays.
12. ESSENTIAL FEATURES OF EMPLOYER-EMPLOYEE RELATIONSHIP
 Employer- Employee Relationship

- Created by employment contract, whether express or implied. Such contract may be shown to
exist by proof of hire by competent person, either by the employer himself or through authorize
agent.
Tests in determination of the existence of Employer- Employee Relationship (page 46-50 Poquiz
book)
Four-fold test; Economic or Economic Reality Test
- The manner of selection and engagement of the putative employee.

- The mode of payment of wages.
- The presence or absence of the power of dismissal.
- The power or absence of a power to control the putative employee’s conduct.
These tests, however, are not fool-proof as they admit of exceptions.
• Control Test (Most decisive)The 4th test above, the control test, is the controlling test which means
that the employer controls or has reserved the right to control the employee not only as to the result of
the work to be done but also as to the means and methods by which the same is to be accomplished.
The three (3) terms: (1) means, (2) methods and (3) results are the critical elements of the control test,
thus:
Situation 1: If the employer controls the means and methods of performing the job, work or service,
including the results thereof, then the arrangement is one of employer-employee relationship.
Situation 3: If the so-called employer does not control such means and methods but is only interested in
the results thereof, then the arrangement is called “independent job contracting” or
“contractualization”, the party controlling the means and methods is called the independent contractor
and the party interested only in the results is called the principal/client/indirect employer/statutory
employer.
 Two-Tiered Test The two-tiered test enunciated in Francisco v. NLRC,1 is composed of:
(2) 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 [broader economic reality test].
Employment relationship under the control test is determined under the same concept as discussed
above, that is, 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.” Under the economic reality 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.
These 2-tiered test applies to cases where there are several parties alleged to be employers of one
individual. The determinant factor is economic dependency of such individual. In other words, under
the economic reality test, the question to ask is - among the parties alleged to be the employer, to
whom is the individual economically dependent?
Following the broader economic reality test, the Supreme Court found petitioner in Orozco v. The
Fifth Division of the Hon. CA,5 who is a columnist in the Philippine Daily Inquirer (PDI), not an
employee of PDI but an independent contractor. Thus:
“Petitioner’s main occupation is not as a columnist for respondent but as a women’s rights advocate
workinginvariouswomen’sorganizations.
Likewise,sheherselfadmitsthatshealsocontributesarticlestoother publications. Thus, it cannot be said
that petitioner was dependent on 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 independent
contractor, engaged to do independent work.”
• Is it necessary to have a written contract of employment in order to establish employer-employee

relationship?
No. It may be an oral or written contract. A written contract is not necessary for the creation and
validity of the relationship. The only exception is in the case of Kasambahay where, under the
Kasambahay Law, it is required that the contract of employment should be in writing.
 Labor; as Property Right (2006)

What property right is conferred upon an employee once there is an employer-employee
relationship? Discuss briefly. (5%)
SUGGESTED ANSWER:
His employment is not merely a contractual relationship. One's employment is a property right
within the mantle of constitutional protection (Callanta v. Carnation Phil., No. L-70615, October
28, 1986). Hence, the employee enjoys security of tenure and he cannot be dismissed except for
cause and only after due process. The worker is thus protected and insulated against any
arbitrary deprivation of his job (Philips Semi Conductors [Phils.] v. Fadriquela, G.R. No. 141717,
April 14, 2004).
Rights of Employer/Employee (1996)
2) What are the rights of an employer and an employee?
SUGGESTED ANSWER:
The Constitution in Art. XIII, Section 3 provides for the following rights of employers and
employees:
C. Employers Right to a reasonable return on investments, and to expansion and growth.
D. Employee’s Right:
1. To a just share in the fruits of production;
2. Right to self organization, collective bargaining and negotiations and peaceful concerted
activities, including the right to strike inaccordance with law;
3. To security of tenure, humane conditions ofwork, and a living wage; and
4. To participate in policy and decision-makingprocesses affecting their rights and benefits as
ALTERNATIVE ANSWER:
In an employer-employee relationship, it is the right of the employer to use the services of
an employee who is under his (employer's) orders as regards the employment. On the other
hand, it is the right of the employee to receive compensation for the services he renders for
the employer.
Management prerogative
 Under the doctrine of management prerogative, every employer has the inherent right to
regulate, according to his own discretion and judgment, all aspects of employment, including
hiring, work assignments, working methods, the time, place and manner of work, work
supervision, transfer of employees, lay-off of workers, and discipline, dismissal, and recall of
employees [See: G.R. No. 198534].
Indeed, the manner in which management conducts its own affairs to achieve its purpose is within the
management’s discretion [See: G.R. No. 179428]. The only limitations to the exercise of this prerogative
are those imposed by labor laws and the principles of equity and substantial justice. The policies, rules,
and regulations on work-related activities of the employees must always be fair and reasonable, and the
corresponding penalties in enforcing discipline in the workplace must be commensurate to the offense
involved and to the degree of the infraction
Rights of the management
It is important to know that management also has rights that need to be respected. Said rights are:
Right to Return of Investments (ROI) – The employer has the right to recover his investments and to
make profit. There is nothing dirty about profit per se. It is profit that creates jobs and improves the
workers’ lot. The Constitution provides that the State shall regulate the relations between workers and
employers, recognizing the right not only of labor to its just share in the fruits of production, but also the
right of enterprises to reasonable returns on investments, and to expansion and growth [See: Azucena,
Labor Code with Comments and Cases, Vol. I, 2004].
The Right to Prescribe Rules – Employers have the right to make reasonable rules and regulations for
the government of their employees, and when employees, with knowledge of an established rule, enter
the service, the rule becomes part of the contract of employment [See: Ibid, citing G.R. No. 121004].
The Right to Select Employees – An employer has a right to select his employees and to decide when to
engage them. The State has no right to interfere in a private employment and stipulate for the parties
the terms of the services to be rendered. Surely, not even the government may interfere with the liberty
of employers to stipulate with its employees the employment terms and conditions except in the
exercise of its regulatory power. If the employer can compel the employee to work against the latter’s
will, this is servitude. If the employee can compel the employer to give him work against the employer’s
will, this is oppression [Ibid].
Right to Transfer or Discharge Employees – The employer has the right to transfer, reduce or lay off
personnel in order to minimize expenses and to insure the stability of the business. It may even decide
to close the business, provided that the resulting transfers or dismissals are done in good faith and are
due to causes beyond control. To hold otherwise would be oppressive and inhuman [See: G.R. No. L-
6846].
Labor standards as limitation to management prerogative
Labor standards refer to the minimum requirements prescribed by existing laws, rules, and regulations
relating to wages, hours of work, cost of living allowance and other monetary and welfare benefits,
including occupational, safety, and health standards [See: G.R. No. 78909]. The parties may stipulate the
terms and conditions of employment, but such terms should never go below the standards prescribed
by law. The parties, though, are not prohibited to stipulate terms above the minimum.
The relations between the employer and the employee are not merely contractual. They are so
impressed with public interest that labor contracts must yield to the common good. Therefore, such
contracts are subject to the special laws on labor unions, collective bargaining, strikes and lockouts,
closed shop, wages, working conditions, hours of labor and similar subjects [See: Art. 1700, Civil Code].
For this reason, provisions of applicable laws are deemed written into every employment contract.
Hence, the parties are not at liberty to insulate themselves and their relationships from the impact of
labor laws and regulations by simply contracting with each other [See: G.R. No. 162839].
Rules on fairness as limitation to management prerogative
Also, employers cannot justify discrimination by claiming that it was merely exercising its prerogatives.
Though the employer’s right to terminate employees on account of retrenchment to prevent losses or
closure of business operations is recognized by law, it cannot justify unequal payment of separation
benefits by simply claiming that it is their prerogative as employers. Surely, discrimination breeds
resentment and ill-will among those who have been treated less generously than others. The employer
may not, in the guise of exercising management prerogatives, grant greater benefits to some and less to
others. Management prerogatives are not absolute prerogatives but are subject to legal limits, collective
bargaining agreements, or general principles of fair play and justice [See: G.R. No. 103575].
Given the foregoing, it is clear that while labor laws protect the welfare of the workers, interference
with an employer’s judgment in the conduct of his business is likewise discouraged. As long as the
employer’s exercise of its prerogatives is in good faith to advance its interests and not for the purpose of
defeating or circumventing the rights of employees under the laws or valid agreements, then such
exercise will be upheld [See: G.R. No. 106256].
▪ The exercise of the prerogative to transfer or assign employees from one office or area of
operation to another is valid provided there is no demotion in rank or diminution of salary,
benefits and other privileges. The transfer should not be motivated by discrimination or made in
bad faith or effected as a form of punishment or demotion without sufficient cause.
▪ Commitment made by the employee like a salesman in the employment contract to be re-
assigned anywhere in the Philippines is binding on him.
▪ Even if the employee is performing well in his present assignment, management may reassign
him to a new post.
▪ The transfer of an employee may constitute constructive dismissal when:
1) When the transfer is unreasonable, inconvenient or prejudicial to the employee;
2) When the transfer involves a demotion in rank or diminution of salaries, benefits and other
privileges; and
3) When the employer performs a clear act of discrimination, insensibility, or disdain towards
the employee, which forecloses any choice by the latter except to forego his continued
employment.
▪ The refusal of an employee to be transferred may be held justified if there is a showing that
the transfer was directed by the employer under questionable circumstances. For instance, the
transfer of employees during the height of their union’s concerted activities in the company
where they were active participants is illegal.
▪ An employee who refuses to be transferred, when such transfer is valid, is guilty of
insubordination or willful disobedience of a lawful order of an employer under Article 282 of the
Labor Code.
▪ Refusal to transfer due to parental obligations, additional expenses, inconvenience, hardship
and anguish is not valid. An employee could not validly refuse lawful orders to transfer based on
these grounds.
▪ Refusal to transfer to overseas assignment is valid.
▪ Refusal to transfer consequent to promotion is valid.
▪ Transfer to avoid conflict of interest is valid.
▪ A transfer from one position to another occasioned by the abolition of the position is valid.
Rights of the Employer; Management Prerogative (2000)
a) An exclusive school for girls, run by a religious order, has a policy of not employing unwed
mothers, women with live-in partners, and lesbians. Is the policy violative of any provision of the
Labor Code on employment of women? (3%)
b) The same school dismissed two female faculty members on account of pregnancy out of
wedlock. Did the school violate any provision of the Labor Code on employment of women?
(3%)
b) No, the policy does not violate the Labor Code. The practice is a valid exercise of
management function. Considering the nature and reason for existence of the school, it may
adopt such policy as will advance its laudable objectives. In fact, the policy accords with the
constitutional precept of inculcating ethical and moral values in schools. The school policy
does not discriminate against women solely on account of sex (Art. 135, Labor Code) nor are
the acts prohibited under Art. 137 of the Labor Code.
ALTERNATIVE ANSWER:
The school violated Art. 137 (2) of the Labor Code which states that: "It shall be unlawful for
any employer to discharge such woman on account of pregnancy". The pregnancy here
could obviously have resulted from love and such only lends substance to the saying that
"the heart has reasons of its own which reason does not know", a matter that cannot "be so
casually equated with immorality". [Chua-Qua v. Clave, 189 SCRA 117 (1990)].
SUGGESTED ANSWER:
b) No, because to tolerate pregnancy out of wedlock will be a blatant contradiction of the
school's laudable mission which, as already stated, accords with high constitutional
precepts. This answer does not contradict the ruling in Chua- Qua where the teacher merely
fell in love with a bachelor student and the teacher, also single, did not get pregnant out of
wedlock.
Rights of the Employer; Management Prerogative; Contracting Out Services (1994)
Harbor View Hotel has an existing Collective Bargaining Agreement (CBA) with the union of rank-and-file
employees consisting, among others, of bartenders, waiters, roomboys, housemen and stewards. During
the lifetime of the CBA,Harbor View Hotel, for reasons of economy and efficiency, decided to abolish the
position of housemen and stewards who do the cleaning of the hotel's public areas. Over the protest of
the Union, the Hotel contracted out the aforementioned job to the City Service Janitorial Company, a
bonafide independent contractor which has a substantial capital in the form of Janitorial tools,
equipment, machineries and competent manpower. Is the action of the Harbor View Hotel legal and
valid?
SUGGESTED ANSWER:
The action of Harbor View Hotel is legal and valid. The valid exercise of management prerogative,
discretion and judgment encompasses all aspects of employment, including the hiring, work
assignments, working methods, time, place and manner of work, tools to be used, processes to be
followed, supervision of workers, working regulations, transfer of employees, work supervision, lay-off
of workers, and the discipline, dismissal and recall of workers, except as provided for, or limited by
special laws.
Company policies and regulations are, unless shown to be gross oppressive or contrary to law,
generally binding and valid on the parties and must be complied with until finally revised or amended
unilaterally or preferably through negotiation or by competent authority. (San Miguel Corporation vs.
Reynaldo R. Ubaldo and Emmanuel Noel A. Cruz, Chairman and Member respectively of the Voluntary
Arbitration Panel, et al G.R No. 92859, 1 February 1993. J. Campos, Jr., 218 SCRA 293)
ALTERNATIVE ANSWER:
a) The action of the Harbor View Hotel is legal and valid. CONTRACTING OUT SERVICES or functions
being performed by union members is not illegal per se. In fact, it is the prerogative of management to
adopt cost-saving measures to ensure economy and efficiency. Contracting out services or functions
being performed by Union members becomes illegal only when it interferes with, restrains or coerces
employees in the exercise of their right to self-organization.
b) The action of Harbor View Hotel would, at first glance, appear to be an unfair labor practice under
Article 248(c), e.g.. "to contract out services or functions being performed by union members if such will
interfere with, restrain or coerce employees in the exercise of their right to self- organization."
Considering, however, that in the case at bar, there is no showing that the contracting out of services
would violate the employees right to self- organization, it is submitted that the hotel's action is a valid
exercise of its management prerogatives and the right to make business judgments in accordance with
law.
Rights of the Employer; Management prerogatives (1994)
Bulacan Medical Hospital (BMH) entered into a Collective Bargaining Agreement (CBA) with its Union,
wherein it is expressly stipulated in the Management Prerogative Clause that BMH shall, in the exercise
of its management prerogatives, have the sole and exclusive right to promulgate, amend and modify
rules and regulations for the employees within the bargaining unit. A year after the contract was signed,
BMH issued its Revised Rules and Regulations and furnished a copy thereof to the Union for
dissemination to all employees covered by the CBA. The Union wrote BMH demanding that the Revised
Rules and Regulations be first discussed with them before its implementation. BMH refused. So, the
Union filed an action for unfair labor practice (ULP) against BMH.
1. Is the Union correct?

2. Assuming that the CBA was signed "or
executed before the 1987 Constitution was ratified, would your answer to the preceding question be
different?
SUGGESTED ANSWER:
1) The Union is correct. A provision in the collective bargaining agreement concerning management
prerogatives, may not be interpreted as cession of the employees right to participate in the deliberation
of matters which may affect their right and the formulation of policies relative thereto, such as the
formulation of a code of discipline. A line must be drawn between management prerogatives regarding
business operations per se and those which affect the rights of the employees, and in treating the latter,
management should see to it that its employees are at least properly informed of its decisions or modes
of action.
The attainment of a harmonious labor- management relationship and the existing state policy of
enlightening workers concerning their rights as employees demand no less than the observance of
transparency in managerial moves affecting employees' rights. [Philippine Airlines, Inc. vs. National
Labor Relations Commission, et al, G.R No. 85985, 13 August 1993. J. Melo. 225 SCRA 258, 301.)
ALTERNATIVE ANSWER:
a) The Union is correct. Workers have the right to participate in policy and decision-making processes
affecting their rights, benefits and welfare. (Art. 255J.
b) Yes. The Union is correct in asking for discussion of the revised rules prior to their effectivity. The
reason is Art. XIII, Sec. 3 of the 1987 Constitution, allowing workers the right to participate in policy and
decision-making on matters related to their welfare and benefits.
The Union's remedy however should not be to file a ULP case but to initiate a GRIEVANCE proceeding,
and if unresolved, submit the matter to voluntary arbitration.
SUGGESTED ANSWER:
2) The answer would be the same even if the CBA was signed or executed before the ratification of the
1987 Constitution because it has always been the policy of the State to promote the enlightenment of
workers concerning their rights and obligations as employees. (Art. 211; PAL vs. NLRC, GR 85985, August
13, 1993)
PROPERTY RIGHTS OF AN EMPLOYEE
The right of a person to his labor, that is, his means of livelihood.
He cannot be deprived of his labor or work without due process of law. He must be protected
and insulated against any arbitrary and unjust deprivation of his job.
Waivers of rights of labor are null and void.
A profession, trade or calling is a property right within the meaning of our constitutional guarantees .
One cannot be deprived of the right to work and the right to make a living because these rights are
property rights, the arbitrary and unwarranted deprivation of which normally constitutes an actionable
wrong.

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LABOR LAW AND SOCIAL LEGISLATION

I. FUNDAMENTAL PRINCIPLES AND CONCEPTS

Labor Statutes; Classification (1995 No. 1 Bar Q)

The three (3) general classifications of labor statutes are:

 Labor Legislations; Purpose (2006 BAR)

***Legislative discrimination is allowed provided there is a reasonable and substantive classification.

***Right to property is not a limitation to police power

Labor Standard vs. Labor Relation (1997 BAR)

 Labor Standard vs. Labor Relation (2003)

1987 Constitution (State Policies, Bill of Rights & Social Justice)

Important labor-related constitutional principles

Social Justice as Guiding Principles in Labor (2003)

ANOTHER SUGGESTED ANSWER:

ANOTHER SUGGESTED ANSWER:

FIRST OF TWO PROTECTION-TO-LABOR CLAUSES:

Laissez faire vs Welfare State Concept

• Under Article III (Bill of Rights) Sections1, 4, 8, 10, 16, 18(2)

a. Due process and equal protection of the law.

NOTE: THIS CANNOT BE INVOKED BY EMPLOYEES AGAINST THEIR EMPLOYERS IN

NOTE: CONSTITUTIONAL DUE PROCESS UNDER ARTICLE III, SECTION 1 OF THE

• Is right to counsel mandatory?

(1) When the employee himself requests for counsel; or

NOTE: THIS FREEDOM IS RELEVANT ONLY IN PICKETING AND NOT IN STRIKE.

NOTE: THIS IS KNOWN AS “FREEDOM OF ASSOCIATION.” THIS PROVISION IS THE BASIS

d. Non-impairment of obligations of contracts.

Section 10. No law impairing the obligation of contracts shall be passed.

***The obligation of contracts is subordinated to the valid exercise of police power.

e. Right to speedy disposition of cases in judicial, quasi-judicial or administrative bodies.

NOTE: THIS CAN BE INVOKED IN LABOR CASES AT ALL LEVELS.

f. Prohibitions against involuntary servitude.

THIS MEANS THAT:

• Under Article XIII

SECOND OF TWO PROTECTION-TO-LABOR CLAUSES

Constitutional Provisions on Labor (1998 Bar Q)

ANOTHER SUGGESTED ANSWER:

Constitutional Codetermination (2007)

Interpretation of Labor Laws (2009)

• May cases be filed for violation of the foregoing constitutional provisions?

***EXCEPTION: A VALID EXERCISE OF POLICE REGULATION

Art. 1705. The laborer's wages shall be paid in legal currency.

ART 1702 IN RELATION TO ARTICLE 4 OF LABOR CODE

Applies to doubts and ambiguities in:

Applies to ambiguities in:

• Is Article 1700 of the Civil Code applicable to labor cases?

Yes, Article 1700 of the Civil Code provides:

Interpretation of Labor Laws; Liberal Approach (2006 BAR Q)

 Employer- Employee Relationship

- The manner of selection and engagement of the putative employee.

These tests, however, are not fool-proof as they admit of exceptions.

• Is it necessary to have a written contract of employment in order to establish employer-employee

 Labor; as Property Right (2006)

Rights of Employer/Employee (1996)

A. Employers Right to a reasonable return on investments, and to expansion and growth.

Rights of the Employer; Management Prerogative (2000)

Rights of the Employer; Management Prerogative; Contracting Out Services (1994)

Rights of the Employer; Management prerogatives (1994)

1. Is the Union correct?

Article 38. Illegal recruitment